Y Pwyllgor Llywodraeth Leol a Thai

Local Government and Housing Committee


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Carolyn Thomas
Jayne Bryant
Joel James
John Griffiths Cadeirydd y Pwyllgor
Committee Chair
Mabon ap Gwynfor Yn dirprwyo ar ran Luke Fletcher
Substitute for Luke Fletcher
Sam Rowlands

Y rhai eraill a oedd yn bresennol

Others in Attendance

Debra Carter Dirprwy Gyfarwyddwr, yr Is-adran Cyllid Llywodraeth Leol, Llywodraeth Cymru
Deputy Director, Local Government and Finance Reform, Welsh Government
Rebecca Evans Y Gweinidog Cyllid a Llywodraeth Leol
Minister for Finance and Local Government
Ruth Cornick Cyfreithiwr, Llywodraeth Cymru
Lawyer, Legal Services. Welsh Government
Simon Tew Rheolwr y Bil, Llywodraeth Cymru
Bill Manager, Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Angharad Era Dirprwy Glerc
Deputy Clerk
Ben Harris Cynghorydd Cyfreithiol
Legal Adviser
Catherine Hunt Clerc
Osian Bowyer Ymchwilydd

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:31.

The committee met in the Senedd and by video-conference.

The meeting began at 09:31.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Welcome, everyone, to this meeting of the Local Government and Housing Committee. We've received apologies today from Luke Fletcher MS, and Mabon ap Gwynfor MS is substituting for his colleague. Welcome back to the committee, Mabon. The meeting is being held in a hybrid format, as usual. Aside from the adaptations relating to conducting proceedings in that way, all other Standing Order requirements remain in place. The public items of this meeting are being broadcast live on Senedd.tv and a Record of Proceedings will be published as usual. The meeting is bilingual and simultaneous translation is available.

2. Y Bil Cyllid Llywodraeth Leol (Cymru): Tystiolaeth gan y Gweinidog Cyllid a Llywodraeth Leol
2. Local Government Finance (Wales) Bill: Evidence from the Minister for Finance and Local Government

Item 2 on our agenda today is an evidence session with the Minister for Finance and Local Government regarding the Local Government Finance (Wales) Bill. Croeso. Welcome, Minister, to committee this morning, and welcome to your officials as well. Would you want to introduce your officials or have them introduce themselves for the record, please?

I'll just ask officials to introduce themselves, Chair.

Thank you, Chair. I'm Debra Carter, deputy director for local government and finance reform and policy lead for the Bill. And if I could just start with two apologies: one is that I have a severe hearing impairment, so if I need to ask you to repeat anything, apologies for that; and the other is that I'm rather croaky today, so if you need to ask me to repeat anything, please do.

Hi, I'm Simon Tew. I'm the Bill manager for the local government finance Bill.

Good morning. Ruth Cornick, Welsh Government legal services lawyer. 

Thank you very much, all of you. And, yes, don't worry at all, Debra. Many of us are suffering slightly with pre-Christmas ailments that tend to be going around and we're well used to dealing with hearing and amplification issues on the committee, so thank you very much for that.

Perhaps I might begin, then, with some initial questions in terms of overview, if I may, Minister. First, generally, how would you say that the provisions in this Bill will make a significant contribution towards reforming non-domestic rates and council tax in Wales, as is the stated intention? 

Well, the Bill forms an important part of our wider work that we're doing to reform council tax and non-domestic rates, and the legislative framework within which both of those local taxes operate is over 30 years old and it's been amended and changed so many times—it's quite a complex framework—and it doesn't give Welsh Ministers the powers that they need to respond, in an agile way, to changes that might require those taxes to be used in different ways. So, in non-domestic rates in particular, the Bill aims to increase how often the values of all properties are updated to every three years. That's very much in response to the business sector, which has been telling us that that's something that they wanted us to move towards. It will also provide more flexibility to make changes to reliefs and exemptions, so that we can adapt to different needs within the economy, and also use our reliefs and exemptions to, perhaps, drive behaviour change, for example, in different ways in future. It will also enable changes to the calculation of payments for different categories of ratepayers and close some of the known loopholes that exist at the moment, particularly in respect of charitable rate relief, and also help us avoid tax avoidance activities in future and enable information to be provided in a better way to the Valuation Office Agency from taxpayers themselves.

And then on the council tax side, again, it's about having those more frequent revaluations to give Ministers the power to make the changes to discounts and also remove the need to publish details about council tax in newspapers. So, we have a very wide programme of council tax and NDR reform; this Bill enables part of it, but there is work outside of this Bill as well.


In terms of that, obviously, this Bill is about operating better, as Welsh Government would say, within the current context of the established non-domestic rates and council tax systems, and, as you say, there is other work going on, Minister, but, notwithstanding that context, you believe that this particular piece of legislation will make that significant contribution that you describe. You're confident that it will have the impact that you want in that way.

Definitely, it will allow the non-domestic rates and council tax systems in future to be much more agile and responsive and enable Welsh Ministers to tailor the system to meet the particular needs of Wales, and also, of course, give us more power within the Senedd to scrutinise and make decisions in that space as well.

Minister, one possibility, of course, is a local tax system based on income. Has that been ruled out?

We did look at alternative models during the work that we undertook in the last Senedd term. So, one of those models was a local income tax system. In the end, we decided that that wasn't something that we wanted to pursue, partly because property-based taxes are much, much harder to avoid. They're stable, they're well understood. Property is the best proxy that you have for wealth beyond income itself, but I think that one of the key reasons, really, is that you can't really hide your property, whereas it's easier to make different arrangements with regard to your income. And, of course, we'd need to work through His Majesty's Revenue and Customs, and it would involve setting up a whole new system, whereas, actually, the council tax system that we have at the moment is a reliable and effective system that has stood the test of time.

Yes, although in the—[Interruption.]—explanatory memorandum—. Sorry, Debra—go on. 

Sorry. I was just going to add the other significant factor about a property-based tax is that it does link the local tax to the local authority and the community in which the tax is being raised, which we found was much less likely to be a recognisable link under local income tax.

Yes, okay. Nonetheless, the explanatory memorandum states

'There is a future choice in respect of whether to continue to raise local revenues based on property or on other measures of wealth and ability to pay.'

It goes on to talk about some of the risks and potential barriers, Minister. So, in terms of the future, then, nothing is ruled out in terms of a local income tax.

This isn't something that I would imagine—. A local income tax wouldn't be something that this Government would pursue for the reasons that we've set out. But there are other interesting models that you could look to in the future, for example a land value tax. Now, you can see the arguments where land value tax might work, particularly in the space of non-domestic rates. I think the case is yet to be made as to why it would be demonstrably better than the property-based system that we have for council tax, but we are still undertaking some work and exploring a potential land value tax for the future. So, that might be a choice that a Government would decide to go for in future. Nothing in this Bill prevents any of that work from taking place or that kind of system being introduced in future.


So, regarding land value tax, if we're interested in that—some people sit on land, don't they, and not develop it as well? So, it might help moving that for development. So, what sort of timescale do you think you might have to look at that in the future, then, if you're not able to look at it at the moment?

In parallel with this work, we are looking at what a land value tax might look like in future. So, we've said that by the end of this Senedd term, we would have some work done in that space, and it could then set out what a road map might look like, were Government to want to introduce a land value tax.

And we know that quite a few landowners have large parcels of land, but it's not all mapped either. And we've talked previously about cadastral mapping of that land, so is that something that maybe is something you're looking at undertaking in the future?

So, that would definitely be a critical part of any land value tax model in future, and that's one of several reasons as to why it wouldn't be something that we would be able to introduce in the very short term. But it's something—. It was the Institute for Fiscal Studies, wasn't it, which did—or was it Bangor? 

Bangor University did some work for us, which we can share with the committee, which looked at what a vacant—a land value tax might look like in future. Sorry, I've got vacant land tax on the brain at the moment as well. [Laughter.]

If you could share that, Minister, it would be useful. We always welcome any information that's going to aid us in our deliberations. In terms of accountability, could you expand on your statement that this Bill, if it goes ahead as planned, would result in a shift in scrutiny of relevant legislation from the UK Parliament to the Senedd?

Yes, certainly. So, in recent years, we've had to rely on UK Government legislation to make changes that we considered to be important and desirable on 13 different occasions. An example of that would be to change the date of the revaluation for non-domestic rates. We've had to do that twice. One was following the pandemic, to allow the situation to settle after the pandemic, and we've had to rely on the UK Government to do that. So, obviously, we want to create a situation where the Senedd is scrutinising legislation, and having the powers to introduce discounts and exemptions and so on through secondary legislation, which would be subject to the draft affirmative procedure, would allow the Senedd to have a greater oversight of the system here in Wales. And non-domestic rates and council tax do require a lot of maintenance and upkeep—a lot of TLC, I like to think of it as, for both of those systems, just because of the kind of range of situations that they have to cater for and the changing economy and so on. So, I think it's important that the Senedd really has the chance to take ownership of that maintenance.

Yes, okay. Minister, it's a pretty complicated scene, really, I think, isn't it, in terms of the way that the law around council tax has grown incrementally, really, over some 30 years now. One possibility, I guess, would have been a consolidation Bill that would have made things a lot more simple and understandable by bringing them together in one piece of legislation, rather than amending existing legislation through this Bill. Is that something that was considered?

Perhaps I'll ask officials to say a bit more about what that would entail, but my understanding is that it would be an absolutely enormous piece of work, just given the fact we've got 30 years of amended legislation to deal with, and just that act of consolidation would take up so much time and resource, we wouldn't actually be able to focus on things that could be making the real improvements that we want to drive.

Shall I pick that up? Yes,we have done some initial scoping of what a consolidation Bill might involve, and exactly as the Minister said, it's a huge undertaking. There are a number of Acts that underpin the current system, and also a raft of subordinate legislation, some of which is very extensive. So, our estimate is that it would take several years just to identify what needed to be incorporated into a consolidation Bill. It would also raise issues of competence because the existing legislation was—or much of it was—developed in a non-devolved environment. So, by no means a simple undertaking.


No. Okay, I think we understand broadly the issues involved in that calculation. Sam Rowlands. Sam.

Thanks, Chair. Morning, all. Thanks for taking the time this morning. What worries you most about this Bill, Minister?

I think that I'm quite confident as to where we are with the Bill in the sense that this is something that is the product of an awful lot of work that we’ve done previous even to the consultation. So, you’ll recall that we’ve had a consultation already on the non-domestic rates side of things and that informed what was in the Bill, but that consultation itself was based on a really wide range of engagement with businesses across Wales and other representative bodies, with those people who are working in the administration of non-domestic rates and so on.

And then I know you’re very familiar as well with our council tax reform consultation documents as well, so I’m really satisfied that the work that we’ve put into this Bill is really extensive and it does respond to what I think are genuine needs out there. Obviously, any Bill is nerve-wracking in the sense that you want to convince your colleagues that it is worthy of being put on the statute book and that the changes that it can make will be positive ones for people in Wales.

Thank you. I want to focus a little bit on the non-domestic rates and, in particular, the local and central rating lists as well. You've made an assertion previously that the current arrangements for non-domestic rates

'were not configured to suit our economy and priorities.'

Can you expand on that a little bit, about what you mean by that?

Yes. So, I think this goes back to the key point about the cycle of revaluations that currently exist in terms of non-domestic rates. So, moving to three-yearly revaluations would respond to what businesses have been telling us that they want. And I think it strikes that balance between giving businesses certainty but then also maintaining a tax base that is reflective of up-to-date conditions. So, I think that that really is something that we would need to have, really, to respond to changes in the economy. And I think also just enabling us to have that on the books here in Wales, I think, is really important as well. So, I’ve mentioned previously, when we’ve had to work with UK Government to change dates of revaluations, that being able to decide that here in Wales, I think, would be important as well. So, that is what that section is about, bringing things up to date and allowing us to be responsive.

And is there anything particular about our economy in Wales that you think this Bill will be able to respond to more quickly or is it just perhaps a general point that any economy anywhere needs to be able to respond to changes within it, or is it anything particular about us here in Wales, do you think?

No, I think what we're looking to do here in Wales actually, in this space, mirrors what's already happening or proposed to happen in England. And I know that, in Northern Ireland, they also intend to have their next revaluation in 2026 as well. So, in that sense, it brings us in line. And, actually, there's a lot in the space of non-domestic rates where there is synergy between what we want to achieve and what other parts of the United Kingdom want to achieve, and the role of the Valuation Office Agency, of course, is really important in all of this as well. So, I don't think there's anything at the moment that is specific to Wales. But the three-year cycle, I think, is beneficial to any part of the UK.

You mentioned the VOA there, so perhaps you could tell the committee about the sort of conversations you've had with the VOA about the capacity to deal with this what perhaps might be extra workload for them?

So, I've met with the VOA on a few occasions. I know that officials are in constant discussion with the VOA, so I might invite them in to reflect on that some more. But the VOA is on standby, if you like, for three-yearly revaluations for Wales, which would be in line with what would be happening across the border in any case. So, it's something that they definitely have the ability and the capacity to deliver. 

I think something that will be interesting in future is how revaluations, both on the non-domestic rates side but also the council tax side, develop. As valuation technology improves and as there's innovation in that space, I think that will be something that's going to be really interesting for the future. 


Yes, if I can just pick up on that, very extensive engagement with the VOA, and I know they're coming to the committee after Christmas. We've always had a close relationship with the VOA, but particularly in relation to the reforms that are planned. These are huge logistical exercises, the revaluations. Just to give the committee an example, the work on the 2026 revaluation has already started. In fact, it started way back at the beginning of the year. So, we are, have to be, in constant contact with the VOA and, in particular, around the reforms, ensuring that they have the capacity to be able to deal with what's required. Council tax revaluation in particular is something that they have not done for a considerable period, so seeking their assurances on that has been critical to be able to deliver what's put in the Bill. 

Thanks. An interesting point you made, Minister, about the use of technology in the future as well—and, well, now—to support and speed up some of these processes; I think that's a really exciting space to be looked at.

Just on the—. Within the Bill, there's this hint that, perhaps—. Well, three years is the intention; there's a hint that perhaps that could be shorter in the future as well. I'm just interested to hear about your intentions to use that potential power to have even more frequent revaluations than three years, what the logic is behind that and how likely you think you may be looking to use that.

So, the intention—. The reason why we've got the three years in the Bill is for the cycle to move to a three-yearly one, but providing that kind of level of flexibility that, were circumstances to change and the technology to develop—. But also in a way that provides that stability and certainty for businesses alongside a proper reflection of the value of properties. I think that there are things that could change in future, but no immediate plans. And I think that three-yearly is definitely a big improvement on the current system.

So, you're expecting three years, but it may be more frequent if and when the opportunity makes sense to do so. Is that right?

Yes, and when you get that balance between the certainty and the up-to-date reflections of values. 

And just going back to the capacity issue again with the VOA, there is also the capacity of local authorities to undertake work as well. I'm just interested to know the conversations again with local authorities in terms of their administrative costs and capacity to deliver what's intended in the Bill as well, how those conversations have been, especially with the pressures that local authorities are under.  

Local authorities are very supportive of what we're proposing, both on the NDR side and also the council tax side. In reality, they have teams in place in any case dealing with non-domestic rates and also with council tax, both in terms of when a new discount or exemption might be in place or when there's a revaluation and so on. So, there'll definitely be some additional work for local authorities, but we would expect some of that to be from within existing capacity and moving people within teams towards different focuses. But I know Debra and the team have had quite extensive discussions with local authorities. 

Absolutely. We have a number of working groups with local government officials to discuss exactly these reforms. Nobody is pretending this is going to be an easy endeavour, but there will be capacity that has to be managed. But, certainly in the discussions we've had with local government, they have seen the benefits of the improvements to the system as well, and so recognise that you don't get that without the investment in that capacity.

And can I just check that you're confident with that information, because, of the 22 local authorities, I think only six responded in terms of the survey that you put out to them, so you're not getting a full picture, perhaps, of what local authority capacity may be. Are you confident, even with only six responding to you, that you have a full picture of the issues they may be facing?


Yes. We have a lot of engagement beyond the responses; so, I've met with all local government leaders a number of times specifically on the issue of council tax and on domestic rates reform. We've got the finance sub-group, we've got other forums as well, but I'll just, again, go to Debra, because I know you've had extensive engagement.

Yes. I mean, the long-standing formal arrangements, which the Minister is involved in, but then, alongside that, extensive kind of official support, and we are looking at every aspect in terms of the work streams involved, including how things need to be resourced.

Okay. Sorry, I just want to check on the capacity issue again, because it's one thing doing a valuation and the other part, I guess, which could create more work, is the challenge back from those property owners who don't necessarily agree or aren't comfortable with the valuation—any potential tribunals or anything like that may occur, or challenges back. Has that discussion taken place as well, I assume, to understand it's not just the capacity to carry out revaluation, it's the fallout off the back of that as well?

I think some of the more detailed, practical implications we will pick up on later in the process, but they're certainly recognised in terms of needing to be attended to. I'm not quite sure I picked up the nuance of your question.

Okay. That's fine. It's more about the point of, I guess, not every premises or property owner will agree with the valuation every three years and will be challenging back the revaluation by the Valuation Office Agency, and that creates a whole new load of work as well. It's not just the valuation itself, it's the pushback. So, it's, again, that capacity issue within both local authorities and the VOA to handle that extra workload.

Yes. No, certainly, that—. We expect there to be an upsurge in enquiries and interaction with the public. In fact, that will probably be one of the largest resource implications for local authorities. With both local taxes, we are looking at reforming the appeals system to strip out some of the need for that routine enquiry. So, rather than people having to contact their local authority to ask for basic information about their valuation, whether that's council tax or NDR, much of that will be provided through more automated data-driven services. But, at the same time, we are conscious that there is likely to be an impact on authorities from the point of view of direct contact with members of the public and business owners.

It's also worth noting as well that, the more frequently you revalue, the less likely there is to be significant churn, and then less likely there are to be so many appeals and so on. And also, we undertook a revaluation of non-domestic rates properties this year and I think most of us have probably had almost no correspondence from constituents, for example, on that, and it went exceptionally smoothly, I think; so, it shows that it can be done in a smooth way.

Thanks for those responses. Just on the—. Within the Bill, you're seeking to take regulation-making powers to confer, amend or withdraw exemptions and reliefs. Perhaps you could just expand on the rationale behind that and how you propose to use those additional powers.

So, at the moment, the situation is very lacking in, I think, both clarity, but also consistency. So, there are some reliefs and discounts and so on that are set in primary legislation—charitable rates relief, for example—and then others that are almost all in secondary legislation; an example would be small business rates relief support. So, just having a lack of consistency, I think, is difficult. I think having the opportunity to make changes through secondary legislation would be beneficial, because it would allow Welsh Ministers to respond in a more agile way to changes or to opportunities, and it would also allow the Senedd the opportunity, then, to scrutinise when those are laid as draft affirmative regulations, which would obviously be accompanied by all of the requisite RIAs, and so on, for scrutiny as well. So, I think it would definitely be an improvement, both in terms of the ability to respond more quickly, but also the opportunities for the Senedd to scrutinise.


Okay, and you don't think there's any issue there in terms of centralisation of powers there. Would any of that be better placed with local authorities directly, for them to make those decisions more locally?

Local authorities will still have the ability to exercise some discretion in relation to their local circumstances and so on. I'll invite Debra in to talk about some of the discussions we've had with authorities.

Yes, again, local authorities already have considerable discretion, in relation to both NDR and council tax powers, to be able to provide relief, for example, or reductions, in the case of council tax. There is nothing in the Bill that will change that general discretion, and, again, we are talking to local authorities as part of reviewing the range of discounts and reliefs. So, part of that conversation is about what flexibility they might need within the regulations. Again, as with all these things, there's a balance to be struck between consistency and local discretion.

Okay, thank you. That's fine. And then the final point, really, is in regard to the support for local authorities to manage the administration and associated cost impact with those changes to reliefs by regulations. Clearly, every time there is a change there, they will have an administration cost. At the moment, you're suggesting that those costs are cost neutral, any changes—a good Government line to use across all Governments, I'm sure, that things are cost neutral. But in terms of that support, as to when changes do happen, there will be a cost. What commitment can you give to the local authorities that they will be supported through that?

Local authorities, at the moment—I feel ridiculous telling you this, because you know this, in any case, from your experience—are already engaged in terms of responding to Welsh Government changes in terms of reliefs and so on. That is already part of the day job of those teams in any case. But when we would look to introduce any changes in future, it would be subject to scrutiny by the Senedd and we would also publish that RIA, which sets out the potential costs to local government and others. But responding to changes in reliefs and so on is part of the day job of those teams, and I think that's well understood, isn't it, by the teams.

It's probably worth adding as well that any mandatory reliefs are taken into account in the settlement calculations, so we build in assumptions about the cost of reliefs when identifying how much rates revenue there will be to distribute each year.

I'm just going to ask you some questions on charitable rate relief and artificial NDR avoidance. The Bill requires that local authorities must satisfy themselves that the property is actually being used for charitable purposes. How would you ensure consistency of approach across all 22 local authorities?

Okay. Debra, can you hear me okay? And will there be guidance on the bar that will need to be met as well, for charities?

Right. I'm not sure I caught all of the question—

Sorry, I'll repeat it. That's okay. The Bill requires that all local authorities must satisfy that the property is being used for charitable purposes. So, how would you—I'm asking how the Minister—satisfy that consistency of approach across all local authorities is being applied? And will there be guidance on the bar that will need to be met by all the charitable organisations as well?


Okay, thank you. So, again, there is an existing mandatory relief for charities. So, local authorities are experienced in being able to identify who is eligible for that relief. So, the powers in the Bill are an extension, in many ways, of that validation process. And that issue around consistency is something that we deal with through guidance and discussion, but we would certainly anticipate that anything new as a result of the Bill requiring additional guidance will form part of the implementation process.

Okay, thank you. And if properties are vacant as well—. I was wondering why this is being brought in, as well. So, why do you feel the need to bring this in? And if properties are vacant for a while as well, how would local authorities be satisfied that the charity is still in existence? If you could just answer that, really, and explain why you are looking to introduce it.

Yes, so this is a very specific area where we know that there is avoidance of paying non-domestic rates. We understand that local authorities are missing out on millions of pounds as a result of schemes that are set up and which make use of what is, essentially, a loophole. So, what we want to do is close the loophole and ensure that genuine charities are able to benefit from support, and those who might be able to demonstrate that they're genuine charities, because they are able to provide annual reports and accounts and so on—the kind of things that they have to provide under charity law in any case. So, we don't want to create a whole new industry of providing evidence and information that they don't already have. And a genuine charity will be able to set out to a local authority what their intention is for a premises. So, really, it is about shutting down avoidance activity, which we know is taking place.

Okay. And do you think that the annual report into the accounts of charities will be enough to provide sufficient information to local authorities? I know that that is what is expected by the charities themselves, to be registered by charities, and it can be looked at online. And, again, going back to capacity, do you think that there will be enough capacity within the benefits department to be able to check that all of this is being presented, and maybe any follow-ups? And would you ensure that there is enough time for the smaller charities that are run by volunteers to be able to complete this in time?

We think the number of cases involved will be relatively low. So, we don't imagine a huge amount of additional work. In terms of the work for the charities, the aim is to try and make it proportionate, so to ensure that we're only asking for things that charities should be able to be providing in any case. And, again, these are just equivalent, really, to the requirements under charity law that exists. So, again, it's not about creating extra work for charities, and, as you say, lots of them are run by volunteers in any case. And local authorities will be well placed to know if what they're being told by a charity is correct. So, they'll have a good understanding of the charitable landscape locally in any case and will be able to assess whether what a charity is saying about its intended use for a property is believable and so on. So, this is definitely not about penalising real charities. I think any charity that can demonstrate that it's functional and is working as a charity will be able to benefit as they should, but it should be able to weed out those situations that are trying to make use of a relief that isn't intended for them.

Many charitable organisations work under the umbrella of voluntary councils as well, don't they, and they help support them. Have they fed into this consultation as well, and been part of this—voluntary organisations?


So, we carried out the consultation specifically on the fraud and avoidance aspects of the Bill, actually, separate from the wider non-domestic rates. So, certainly, the response to that was overwhelmingly supportive of what was being proposed. Most genuine charities want to be able to establish that they are legitimately receiving relief and are equally disturbed by the possibility of the charitable status being abused. So, yes, there is support from that perspective. Yes, there were queries around the administrative aspects and the response encouraging any additional administrative burdens to be kept to the minimum.

Okay, thank you. Thanks very much. Do you want me to carry on to the next question?

Okay. Could you expand on the provisions that give Ministers powers to make regulations that will introduce a form of general anti-avoidance rule for non-domestic rates in Wales and how it might impact on the justice system in the future?

This is about, really, ensuring that we respect that the absolute vast majority of people who pay non-domestic rates are paying the correct amount and are doing so promptly and so on, whilst also recognising the important role that non-domestic rates play alongside council tax in funding all of our local services as well. So, everybody who seeks to avoid those taxes is obviously doing a disservice to the communities that rely on the services. So, it's really important that we do shut down opportunities to avoid. The reason we're taking this approach is because techniques to avoid paying tax are constantly evolving. So, you could put a specific approach into primary legislation and then there will be ways that are sought then to get around that. So, I think that taking this approach is very helpful.

In terms of the core impact on the justice system, that would arise from the right to appeal. So, there could be some impacts there in terms of the justice system. And another potential impact then would be from those provisions that enable a civil penalty. So, if the individual didn't pay the penalty, there could be impacts on the justice system as well. So, I think that the intention would be for the impacts on the justice system to be fully considered when developing the regulations that would follow. So, as we would normally when developing regulations, we'd be considering the impact then, and also engaging with the Ministry of Justice to develop that. So, I think you will get more detail in the regulations that come later.

Just to add that we have engaged with the Ministry of Justice on the provisions in the Bill.

Okay, Carolyn. If I could just ask about completion notices and whether you could expand, Minister, on how the current system works in relation to properties that are temporarily removed from the rating list and how the proposed changes will resolve those issues that have been identified.

So, these proposed changes just aim to make the system more efficient and streamlined. So, completion notices specify the completion date when a new property becomes rateable and enters the ratings list for the purpose of non-domestic rates liability. The current completion notices procedure doesn't include those buildings that have been removed and which have been subject to alterations and then have to go back onto the ratings list. So, at the moment, there isn't that kind of provision in place, which can mean that things take an unduly long amount of time to get resolved for that property to return to the ratings list. So, this really is just about trying to make the system more streamlined and better both for local authorities and also for the ratepayer.

If we just get back, briefly, to capacity issues, Minister, in relation to this particular aspect of completion notices, in the explanatory memorandum it said that this particular provision will result in modest additional administrative costs for local authorities. Have you conducted any analysis as to whether local authorities with large urban areas would be in a different position as far as that's concerned, and whether they would be disproportionately impacted and face more than modest additional administrative costs?


All the feedback that we've had, including from urban authorities, has been supportive of this. They will have that relationship with the owner of that property in any case, because that relationship was established when they were removed from the ratings list, so it shouldn't be unduly onerous to get that person or that property back onto the ratings list. It actually has benefits for local authorities as well, in the sense that the sooner that properties can get back onto the ratings list, the sooner they're liable for NDR again, and the sooner the local authorities can start collecting that. So, there are definitely benefits—and also for the ratepayer themselves, who doesn't have to go through a long, unnecessarily complex process.

Diolch, Cadeirydd. Good morning, Minister. Just on the issues around discretionary relief and varying exemptions, perhaps you could outline some of the types of circumstances in which a discretionary rate relief might be applied by local authorities, and why it's considered beneficial to remove the six-month limit.

Local authorities do have quite broad powers to award discretionary relief; they're able to design their own systems in response to localised priorities. We've had to use those discretionary systems in the past, in actual fact, because we haven't been able to do things through Welsh Government regulations at that point; we've asked local authorities to use their discretion. Some good examples of that occurred throughout the pandemic, when we were providing that support to businesses on that local basis. But on that point about the six months, I'll ask one of the team to come in on that. It's really about providing more consistency for taxpayers.

If I can pick up on that. This is something, actually, that local authorities themselves have asked for. The kinds of situations where the need arises is where a particular relief has been created by a local authority but the business owner might not have been identified readily at the time. The pandemic is a very good example of when a number of these schemes were established. And actually, what we found was that there was quite a lag in owners identifying that they might be eligible for a particular scheme, so therefore their applications were coming in some time after the expected time frame, and also the process of verifying that they were eligible took time. So, this is, really, a technical change to allow authorities to be able to take account of that process.

Thanks very much. How will the provision to remove the limit provide local authorities with more local discretion and flexibility, and what impact would it have on their budgets?

It will allow local authorities more ability to respond to individual cases and circumstances relating to the awarding of reliefs for previous years, which might have not been known. I think that it helps them respond, really, to local need better, and also allows more consistency for the awarding of statutory reliefs and adjusting bills as well.

The decision to award or vary any discretionary relief will remain as one that is wholly for the local authority, so in that way they can retain any control of any budgetary impacts and so on. I know that when people ask local authorities at the moment for discretion in various circumstances, the local authority will consider their circumstances, but also consider the impact on the budget as well, so I think that's an important part of the picture.

Thank you. And just on the issue of NDR multipliers, perhaps you can expand on the provisions that would allow the Welsh Ministers to create a tiered system of multipliers, setting different multipliers for different sectors, and those anticipated benefits.


At the moment, we only have the one multiplier, and you've seen, actually, how that impedes choices very recently. The UK Government has announced, in its autumn statement, changes to the small business multiplier. We don't have that in Wales. So, we have different choices to make in that respect. There could be opportunities in the future, and we're not proposing anything in particular. Again, this is about regulations for the future and proposals for the future. It could be that you could create a tiered system based on business size or business location if you wanted to stimulate the economy in particular areas, or types of business—so, businesses will be registered as different sectors. You might want to support a particular sector or drive behaviour change in some ways as well. I'm thinking about the climate change agenda, for example—there are opportunities there as well. So, really, again, this is about giving Ministers in the future more options as to how to use the multiplier to support different sectors or to create behaviour change in different ways.

So, you haven't done any analysis on anything specific at the moment—that's just for the future, is it?

Yes. There's no particular proposal on the table at the moment, and anything that did come forward as a proposal would have to be subject to consultation and all of the accompanying analysis and so on.

On the multipliers issues, Minister, do you see any risks in terms of creating potential loopholes for avoidance in the future by creating those different categories—so, potentially, businesses moving from one type to another on paper to therefore pay less tax?

I think the way in which businesses are registered and categorised is sound. So, if businesses wanted to change, they can't just decide to change their category themselves—they would need the VOA to agree to that. So, I think that it does provide a sound basis on which to build any future proposal.

And just to expand on that again, I absolutely understand the process, but do you think there's a risk that there will be a significant increase in businesses looking to go through that formal process, and therefore add more pressure onto the system, especially with more frequent revaluations as well? It depends on the significance of the difference in multipliers, I guess, doesn't it? At the moment, there's not a huge incentive for businesses to move the categorisation of their business because they'd be paying the same non-domestic rates no matter what type of business they're registered as. But clearly, if there's a different multiplier in place, there's a massive incentive to adjust the way they look. Do you not think there's a risk at all?

At the moment, there are three pieces of information that are relevant to the multiplier. One is the rateable value of the property, the second is the location, and the third is the description as set by the VOA. I think that changing the multiplier would have to be linked to one of those things. You could change it in relation to the rateable value of the property, and the VOA would have influence over that. It's not something that a business could decide to manipulate themselves. Similarly, location—that's fixed. And the description is a matter for the VOA as well. So, I think that, obviously, all of this would have to be carefully considered in whatever the proposal is, but I think that those three things give you a really strong basis on which to create a new system or new reliefs or differential multipliers in future based on something that is quite robust. But again, at this point, it's just about giving Ministers in the future the opportunity to do that, rather than setting out specific plans.

I was just going to say, again, that information is an integral part of the current system. So, those characteristics, which the Minister has described, are all things that the VOA has to keep an up-to-date record of at the moment, and there is quite an established process for notification of changes to any of those factors. So, in terms of the underlying information requirement, there shouldn't be any additional burden. The implications, if any, would fall on the Welsh Government in identifying how the different characteristics are bracketed together in order to propose different multipliers. So, it's not an area where we would envisage additional complexity for business owners, but yes, there would be some for ourselves and, to a lesser extent, for local authorities.


Just in terms of the explanatory memorandum and what it says about tiered multipliers and the way they currently act in a revenue-neutral manner, so you have a lower multiplier for some hereditaments being subsidised by higher rate for others, is that what you would confidently expect to be the case under the proposals?

That's the way in which we've approached things in Wales thus far. Obviously, in future, different Governments could make different choices, but I don't envisage a departure at this point.

I see. So, it would depend on the Government of the day, really, as to whether there was that revenue-neutral position in the use of that.

I'd say that one of the key drivers for the rates system is that it has to maintain that revenue stream for local government. So, it is always a consideration, in any adjustment to the system, to ensure that there is still a stable revenue stream. Any targeting does add complexity, but the objective is always to enable the collection of the revenue to be maintained in as simple a way as possible.

Yes, because I think there were some concerns around the flexibility that would result to the Welsh Government. But you don't think those concerns are particularly problematic in the way that it would actually operate in practice. 

I think not particularly problematic, no.

Could we move to the information that ratepayers will have to provide to the Valuation Office Agency? There are two new duties, aren't there, to provide information and to update information annually. But the explanatory memorandum states that, although there will be these new duties, the nature of the information required will be similar to the current situation. Could you just expand a little on these new provisions and how ratepayers engage with the Valuation Office Agency, and whether there will be any additional burden on ratepayers?

This is really about keeping the system as up to date as possible. The intention is that ratepayers would annually provide information, or at least confirm the information is correct and up to date, to the VOA. The plan would be for that to happen through a website, but we wouldn't commence that requirement, of course, until the website and so on was up to date and available for use. So, that would be the key requirement, really: that ratepayers provide the latest, up-to-date information. That's an important part of the system, really, and that trust between the ratepayer and the VOA in terms of all of us being satisfied that the system is correct, so people are being asked to pay the correct amount of tax. It's important for them, but also for services and so on more widely. So, yes, it's nothing more exciting than keeping the system up to date, I'm afraid.


Could I ask you about civil penalties for failure to meet the duties? What would be the bar for determining whether those civil penalties on ratepayers should come into play? Will the Welsh Government monitor and assess how the Valuation Office Agency administers that particular part of the new regime?

So, the plan is for the VOA to produce a policy statement, and that will then set out how it will determine the level of penalty that it will impose. It will draw upon existing HMRC practice, in terms of considering whether an individual has reasonable excuse for non-compliance, or whether any mitigations to sanctions are appropriate. So, that's work that the VOA will be undertaking.

And what guidance and support will be available to ratepayers to enable them to, or put them in a better position to, comply with the new duties? And would that include explanations of what would constitute a change that might affect liability regarding non-domestic rates?

So, again, we'll work really closely with the VOA to ensure that ratepayers can be reasonably expected to understand and comply with their duties to provide the information before the associated penalty regime is initiated. And that will include the provision of guidance for ratepayers that will be provided by the VOA. Given the duty to notify provision will be commenced ahead of the enforcement regime, the work is anticipated to happen during the next rating list, following a soft launch of the information duties.

So, would there be a clear explanation, then, of what would constitute a change that would affect liability?

Yes, that should be set out through the guidance that we will work closely with the VOA on.

Thank you, Chair. Thanks ever so much for coming in this morning. As John said, I want to talk about the council tax changes and the calculation of it. I wanted just to touch upon—. In the phase 2 consultation, you've highlighted three possible approaches. I just wanted to know why you went with those three, if that's possible. Because the report itself highlights that there are infinite other choices that could have been chosen, and some of them are far more radical as well, really. And I just wanted to ask why you went with those three as potentials.

We've provided those three particular examples, and, again, as I say, they are only examples, because, as you said, there are so many different ways in which we could approach this. And that's one of the reasons why: because the options are so endless, it was important to bring some life, really, to potential ways forward. So, that was why we provided the three different options, which are progressively more progressive, if you like. So, it was really to bring things to life for people, so that they could see what the changes might mean for them, or for different groups of people, under different kinds of circumstances. Because the level of data that's provided alongside it in the Institute for Fiscal Studies report, for example, is quite huge. So, just having something that, as I say, brings it to life for people I think is helpful.

Okay. Because also one of the points is to try and change the referencing, so to move from that band D referencing. How would that make, then, the whole system fairer, if that makes sense, if you change that referencing? And under those three approaches that have been highlighted, what can you envisage the outcomes would be by changing that reference point?

So, what we're proposing in the legislation is just to change the name of the mid-reference point. So, at the moment, it's set in legislation that it's band D, but as you've seen in some of the examples that we've got in the consultation document, we end up with a larger number of bands. So, one refers to band A1, and then A, B, C, D. So, it might be in future that bands might just want to be 1, 2, 3, 4, 5, but then with a 'D' in the middle, it would—. So, it's literally just about trying to make whatever future decision is taken in respect of how the bands look—that we can name the band at that 100 per cent point in a way that is coherent with the rest of the band, really. 


And what was the rationale behind keeping the banding structure, then? Because you mentioned about the IFS report, and they've basically said they would have liked to have seen you move away from the banding element, in the sense there's an element of unfairness there with that. Were there any reasons why you just haven't gone more radical, in other words, sort of thing?

I think that one of the options was a more proportionate system, so people would pay a proportion of the value of their property as council tax. When you model some of that, it does give you some very, very high levels of council tax at the upper end, which could have been unsustainable if people in very high-value properties were paying 1 per cent of the value of their property. You can imagine the kind of level of council tax that some of those households would be paying. So, we felt that some of those models then just went too far in that direction, and that we could still create a system of council tax that is much fairer with the band system that we have, or a version of that.

Okey-dokey, because I know with those three approaches you've highlighted, then—so in your consultation phase 2 you mentioned that approach 1 is fairer, but 2 and 3 are more progressive. Does that mean that being progressive is seen as better, being fairer, if that makes sense? 

So, the first approach, which is the approach that is essentially a simple revaluation, bringing everything up to date—that makes the system, as I say, more up to date. What it doesn't make it is more progressive, so you'd need changes between bands, really, to be making that more progressive, and that's really what options 2 and 3 provide. So, at the moment, we're in a space of wanting to hear what people think about those different options. You could go in the first instance for a revaluation, and then, at the next stage, introduce different bands, so there are choices within choices as well. 

So, obviously, with section 17, it allows you to change the labelling of the band structure, but some would argue that you can already do that under section 5 of the Local Government Finance Act 1992, something like that. If that's the case, why hasn't that been done already?

Yes, so you're exactly right that some of what we're doing in section 17 is a restatement of the powers that are there already. So, as you say, the Minister does already have the power to change the number of bands and the description of those bands. But then the second part, which is what we're trying to fix, is that there's almost a surprising inconsistency at the moment that although you have the power to change the number and the description of those bands, we don't actually have the power to make changes later on in the Local Government Finance Act 1992, to sections 36 and 47. So, those are really important sections for the calculation of council tax, and that's the bit we're making sure that, when we make a change to the number or the description of the band in section 5, we can follow through so that the system actually works coherently, because, as the Minister has explained, if you changed the descriptions to 1, 2, 3, 4, 5, you need then the calculation of council tax to refer to 5 instead of D, so it really is just a technical change. But, as you say, just from an accessibility of the law point of view, we've restated powers in one new section—subsection (4B)—for the Welsh Ministers. So, rather than leaving our old powers up here and putting some new powers in down below, we've put it all together. 

Joel, just before you go on, could I just ask about the reference point, though, because that's a very significant part of the system, isn't it? So, with the changes that will be enabled by this legislation, if it proceeds as planned, will it also reference the need to change that as well and adapt that? 

Yes, so by changing the reference in sections 36 and 47, you are changing what you used for the calculation for council tax. So, at the moment, band D is that 100 per cent, and then anything lower than band D pays less and anything higher pays more. So, yes, if you decided to shift that point, then the values will change either side. But that’s a sort of technical change to make sure we can be consistent. According to the number of bands that you have, for example, you wouldn’t necessarily want to leave the midpoint at five if you’re suddenly having lots more bands in the structure. 


Thanks, Chair. I've got a couple of questions, if I can, about the IFS report. One of the things it highlighted is, for example, in the Valleys communities, they've seen house prices rise, but income not necessarily rise in comparison, and there's a concern there that any revaluation would adversely impact them. Can I have your thoughts on that?

I suppose that would be separate to the legislation in any case. Just to be clear, as I mentioned at the start, there’s a bigger, wider programme, so this is part of that wider programme. We have seen changes in property values vary in different parts across Wales and I think the IFS report really sets that out quite clearly. Obviously, that will be part of the consideration that people will give as they start to provide their responses to that consultation. So, what we will need to do is make sure that people are fully understanding that the overall aim of this is not to raise more income tax overall, it’s to raise what we raise already more fairly. So, some of the responses that we’ve had to the consultation very much have that fear that, 'My property has increased in value, or properties in my area have increased in value, so that naturally means my council tax will increase.' It doesn’t. What matters is how it is relative to all others. So, just to keep the two things separate, really. So, one’s a live, ongoing consultation at the moment. That’s separate, really, to what we’re seeking to do through the Bill, which would be to provide the structures for changes in future. 

Perfect. And that actually brings me on to my second question there, because you mentioned there that this is meant to be a revenue-neutral exercise rather than a revenue-raising exercise, and the IFS highlighted that there's a concern, then, that local authorities might, as a result then, not provide the same level of service that they have in order to recoup money elsewhere. Can I have your thoughts on that, then? Because that's a concern there that if, for example, then—or they might look to disregard that and then try to raise more money from the system. I just wanted your views on that, then, as well. 

I think what the IFS report was highlighting is that local authorities can, separate to council tax reform, seek to raise council tax in any case, as you know, and they consider it every year afresh, as we consider Welsh rates of income tax and so on. So, I think that they were just setting out that this doesn’t change the autonomy and the important role that local authorities have in terms of setting rates of council tax on that local basis. What we need to think about is when a potential model for the future is decided following the consultation, what if any transitional support might be needed for local authorities, or how we go about implementing the change, recognising then, once we know what the picture is locally, any changes to the tax base. 

With that in mind, then, as you highlight, councillors can still raise council tax and everything. Is there scope, then—? Because I know you've been asked this loads of times in the Chamber, Minister, about the amount of money that councils have in their reserve accounts. For example, mine, Rhondda Cynon Taf, has about £370 million in useable reserves, but it often increases council tax nearly up to the 5 per cent mark every year. Is there scope, then, for that to be taken into consideration when looking at changes to council tax banding and rates?

I don't think that there is anything in this legislation that would enable that consideration. I know we debate quite a lot in the Chamber that wider point about council reserves, and you'll have seen the recent report from Wales Fiscal Analysis, which looks at local authority spending this year and shows how many of them have had to rely significantly on their reserves to get them through this year, and are also planning to do the same next year.

Okay, thank you for that, Minister. I suppose the last couple of questions I have are then on the compilation of the revaluation lists. Obviously, it's intended for it to be every five years, and I just wanted to know about the practicalities of that. Because the report highlights the concerns that could happen with fluctuations in house prices and in the market, but then, also, you have the power to delay those revaluations. Is that something that you could see happening, either by yourself or subsequent Ministers, where you put off those revaluations?


With putting the five-yearly revaluation cycle into legislation, you would expect that that would be the normal way in which revaluations take place. But I think just having that flexibility to delay or change the date, should it be necessary for specific circumstances, is a useful flexibility as well, rather than introducing primary legislation to do so, for example. You do see periods of flux in the housing market, but then you also see long periods of stability as well, so I think we have to recognise that. But I think five yearly should be considered the norm and there should be a reasonable explanation as to why.

Sorry—excuse me. It's probably worth adding as well that the purpose of putting that provision in the Bill is to establish that cycle as a legislative requirement, which hasn't been the case before. So, that, actually, gives it more weight and substance than has previously been the case. 

I think the other thing to mention as well, as we've said before, is that these are huge logistical exercises, they're not things that can be modified without considerable thought beforehand; there needs to be planning, the valuation date has to be set two years before the actual value, at least. So, it is not something that could be changed without, as I say, considerable thought and preparation. And the potential to make use of those powers to adjust would be, we would foresee, in similar circumstances to the way they've been used in relation to non-domestic rates, which is where there has been a major economic change or the pandemic, for example.

Okay. Perfect. You mentioned there that it is going to be a huge logistical exercise, but then, obviously, there's a cost to that—and the explanatory memorandum highlighted it—of about £18 million, so that's just under £20 million. That's a big chunk of money for local authorities to find. Will they be given extra money to do that, then?

The revaluation work, a significant amount of that funding, actually, is required by the Valuation Office Agency in terms of the work that it would be required to do, and, again, maybe Debra can say a bit more about the agreement that we have with the VOA in that case. But I do want to put the cost in perspective as well. So, we're talking about a system that raises £3 billion a year for local services, so I think that the actual cost is pretty good value for money, where we're trying to drive value for money throughout, of course. But those reforms will prove their worth in terms of having a system that is up to date, is fairer and that taxpayers can have full confidence in.

Yes. Just to pick up on that point, most of those costs would fall on the VOA, rather than on local authorities. As we were talking about earlier, we've had extensive discussions with them about the implications of the Bill and how much it would cost. They have directly fed into the cost estimates in the explanatory memorandum.

I think the other point that I would pick up on that the Minister has made is that it is a small investment compared to the scale of the system, and the offsetting benefit really is that, at the moment, we have a system in relation to council tax that is 20 years out of date, so, in effect, people are not paying the right amount of tax. So, there is a cost there that is very difficult to quantify, which we are offsetting by investing in the VOA carrying out more regular revaluations.


Diolch, Gadeirydd. Dwi am holi drwy gyfrwng y Gymraeg i chi wirio bod yr offer yn gweithio. Os ŷn ni'n hapus bod pawb yn fy nghlywed i, dwi am fynd ar drywydd y gostyngiadau a symiau llai, os gwelwch yn dda. Os gwnewch chi, Weinidog, ehangu ar y rhesymeg y tu ôl i'r cynigion i ddisodli'r gofyniad i awdurdodau lleol fabwysiadu cynlluniau gostyngiadau'r dreth gyngor gyda chynllun cenedlaethol. Fedrwch chi ymhelaethu ar hynny?

Thank you, Chair. I want to ask my questions through the medium of Welsh. I take it that the equipment is working. Is everyone happy? I want to focus on discounts and reduced amounts, please. Minister, could you expand on the reasoning behind the proposals to replace the requirement for local authorities to adopt council tax reduction schemes with a national scheme? Could you expand on that, please?

Yes, so, in practice at the moment, the local scheme is almost a legal convenience, or a legal anomaly, in a sense, because we introduced our council tax reduction scheme in 2013-14, and since then we've been providing local authorities with £244 million a year to operate the means-tested scheme. But, locally, authorities are required to make provision for a scheme, but that scheme mirrors the Welsh Government's scheme, and if they don't have a scheme, they have a default scheme, which is the Welsh Government scheme. So, in a sense, it's a kind of legal spider web that doesn't need to exist, and we can create something that is more coherent. But I don't know, Ruth, if you wanted to add anything on that.

I'll pick up on that. The way the council tax reduction schemes work at the moment is that the law requires local authorities to put in place their own schemes by the end of January, so, even though they have a small amount of local discretion, the scheme that operates has to be set in each case by that deadline. That means there's no scope, subsequent to that, to make any changes during the year. Again, this picks up on the issues that we've had, particularly around the pandemic, the cost of living, dealing with the situation in Ukraine, where things have arisen in the year that we have not been able to accommodate in the scheme until the following year.

So, we've had to rely on local authorities using discretion, for example, around supporting households that are hosts to people who are arriving from Ukraine. Local authorities do that, they use their discretion, but creating that kind of national scheme would take that onus on them away and then we could have a more national approach to important issues like that.

Felly, i fynd nôl, rydych chi wedi cyfeirio yn fanna at y disgresiwn, ac mae'r datganiad o fwriad polisi yn nodi bod gan y cynlluniau lleol presennol dim ond nifer bach o feysydd lle y gellir arfer disgresiwn lleol. Fedrwch chi jest fynd i mewn i hynna? Rydych chi wedi cyffwrdd arno fe. Pa feysydd ydych chi'n cyfeirio atyn nhw yn fanna, ac felly ydy'r cynllun cenedlaethol newydd yma yn mynd i wella ar y disgresiwn yna?

So, returning to that point, you've referred there to that element of discretion, and the statement of policy intent indicates that the current local schemes have limited areas of local discretion. So, could you go into that in greater detail? You've touched on it. What areas are you referring to there, and will this new national scheme improve that local discretion?

There are two aspects to this. So, the current council tax reduction scheme regulations allow local authorities discretions in limited areas; they are things like the extent to which they can backdate the award of reductions and the extent to which they disregard income from particular benefits, so, for example, war disablement benefit. The intention would be to incorporate those requirements into the national scheme, but, alongside that, local authorities have a broader discretion to be able to reduce council tax bills by any amount and in any particular circumstances. They would still have that discretion, and that would be a discretion that they could tailor much more to local circumstances and particular needs. So, again, it's striking a balance between having a national scheme that determines that consistency around, certainly, things like the disregards of disablement pensions, but, at the same time, allowing local authorities wider discretion outside the scope of the scheme.


I’m just going to give another example, which is that local authorities have discretion over the period of council tax arrears that can be written off as a result of an individual failing to apply for a council tax reduction during a period which they were entitled to. So, that does introduce some unnecessary variability, really, in terms of the level of support that people would be able to access, and we know that council tax debt has become a real problem for many people. So, removing that kind of discretion I think might be helpful to give people consistency across Wales in terms of what they’re able to receive.

Ac mi ddaru chi sôn yn eich ateb cyntaf fod lefelau yn gorfod cael eu gosod erbyn Ionawr, neu rywbeth; bod yna ddim posib ei newid o wedyn, bod o'n cael ei osod. Pam bod yna ddim posib cael hyblygrwydd yn y system bresennol, felly? Beth sy'n atal hynny rhag digwydd?

You mentioned in your initial response that levels had to be set by January, and that they couldn’t be changed after that. Why isn’t it possible to have that flexibility in the current system? What’s preventing that?

So, currently, legislation requires authorities to approve their schemes by 31 January every year for the following financial year. So, as a result, we can only make one statutory instrument in the Welsh Government to incorporate the changes to the non-devolved benefit system and other updates, and we tend to do that by mid January. And you’ll remember in recent years, we’ve tried to take the approach where we’ve recognised the situation, people coming from Ukraine and so on, so it’s at that point in the year then that we are able to do that. So, prior to that, as I mentioned, we’ve had to rely on local authorities using their discretionary powers in those spaces before we can formalise things through legislation.

So, the Act doesn’t explicitly prevent in-year changes, but the practical effect of requiring authorities to make or amend their schemes annually means that the practical effect is really that it’s something that can only be done the once.

I don't want to go into the history too much, but it’s a product of the fact that when the original provisions were included in the Local Government Finance Act 2012, they were done on an England-and-Wales basis, and the provisions were intended primarily to allow for the creation of local schemes in England, and that rather constrained our ability in Wales to diverge very considerably from that. So, we are taking the opportunity in this Bill to actually create a scheme that is better suited to what the consultation at that time told us, which was that what was desired was consistency and maintenance of the entitlements that had been provided under the previous council tax benefit.

Diolch. O ran y Bil sydd o'n blaenau ni ac rydyn ni'n ei drafod, fedrwch chi, Weinidog, ehangu ychydig ar sut y byddwch chi neu y gallwch chi ddefnyddio’r pwerau arfaethedig sydd yn y Bil mewn perthynas â gostyngiadau a diystyru, os gwelwch yn dda? Ac ydych chi o’r farn y gellid defnyddio’r pwerau hyn i gyflwyno profion modd am ostyngiadau, ac oes modd atodi amodau eraill i ostyngiadau yn y dyfodol?

Thank you. In terms of the Bill before us and that we’re discussing today, could you, Minister, expand on how you can or will use the proposed powers in the Bill in relation to discounts and disregards, please? And are you of the view that these powers could be used to introduce means testing for discounts, and whether other conditions could be attached to discounts in the future?

We've got a full review of the discounts, disregards, exemptions and premiums under way at the moment. So, I think there are more than 50 different categories that we've had a working group looking at, to explore whether or not each of those 50 are fit for purpose at the moment. They've come to conclusions on a number of them, saying, 'Yes, these are the right ones for the future.' But any changes would be made then through regulations, rather than through the Bill, so we'd have a proper consultation on any changes that might be introduced, and with all of the supporting documentation as well. So, the Bill doesn't propose any changes to the current system, but what it does is enable changes in future, but, again, maybe Ruth or Debra can just reflect on how what the powers will be in future vary from what's possible at the moment. 

It's probably worth adding as well that the means testing support within the system is delivered through the council tax reduction scheme rather than a discount scheme. One of the intentions with the discounts is that they are a simpler approach to providing reductions, so they deal with high-volume situations rather than being bespoke to individual circumstances, and there wouldn't be an intention to change that as a broad approach.

I think the other thing as well is that the provisions would allow more and different types of discounts to be developed more readily than they can be at the moment. So, at present, we're constrained to either a 25 per cent or 50 per cent discount. It might be that it would be appropriate to create a new discount at a different kind of level or for different levels for different circumstances.


And I'm right, I think, in saying that the Welsh Government has only ever used its powers in relation to discounts to extend discounts to people rather than to remove discounts from them.

Ar y gostyngiadau, dwi'n meddwl fy mod i'n iawn i ddweud eich bod chi, Weinidog, wedi sôn na fyddwch yn cael gwared ar ostyngiad i oedolion sengl. Ydy hynna'n gywir?

On the discounts, I believe I'm right in saying that you, Minister, have mentioned that you won't be getting rid of the single-person discount. Is that right? 

Ac am ba mor hir mae'r ymrwymiad yna'n mynd i fod? Ydy o'n ymrwymiad parhaol neu ydych chi'n mynd i adolygu hyn ar ryw bwynt yn y dyfodol?

And for how long does that commitment last? Is it a permanent or ongoing commitment or will you be reviewing that in future?

So, the commitment is set out on the face of the Bill. The reality is that the Welsh Government can review that at any point. So, we could review today the single-person discount under the current legislation that we have. But this Welsh Government has no intention to change or remove the single-person discount. So, it will be as set out in the legislation until, and if, a different Government changed that.

Felly, o ystyried y gostyngiadau a'r diystyriadau yma, pam ydych chi'n credu ei bod yn fwy priodol deddfu am ostyngiadau a diystyriadau mewn is-ddeddfwriaeth yn hytrach na mewn Deddf yn y Senedd?

So, bearing in mind the discount and disregards, why do you believe that it's more appropriate to legislate for these discounts and disregards in secondary legislation rather than in an Act of the Senedd?

So, we had a good debate about this in the Legislation, Justice and Constitution Committee earlier this week, and it really is about being able to be responsive. So, we've given some examples today about how we needed to respond rapidly in the case of the pandemic, for example, to support businesses, in relation to supporting local authorities or households through the council tax reduction scheme, to welcome people from Ukraine to their households and so on. So, it's really about being able to be agile, because we know that when things are set out in primary legislation, it's very difficult then to amend them. So, we have to ask if some of the things—. I'll give some examples of what we would look to change through legislation, and they could be the date at which copies of draft council tax valuation lists are sent to local authorities, and the content of notices issued in relation to the duty on ratepayers to provide notifiable information to the VOA. These are not things I think that would be appropriate, really, to put before the Senedd as primary legislation when you think about all the other important transformational things that you can do through primary legislation. So, it's about trying to be proportionate, and using the secondary legislation system in the negative procedure for things like the examples I've just given, or affirmative where we can have full scrutiny and so on through the Senedd for things that are more substantial, particularly those that relate to the entitlements that people have, which we'd obviously want to consult on as well.

It's also intended to try to simplify arrangements. So, at present, discounts, exemptions and so forth are set out in a mix of primary legislation and extensive secondary legislation, some of which predates devolution. So, it's done on an England-and-Wales basis; some of it, since devolution, on a Wales-only basis. So, it's very difficult to navigate, even if you're an expert, what discounts exist and apply in England or Wales, and, even within the same discounts, there can be a mix of primary legislative rules and secondary legislation. So, part of the purpose would be to restate all of the existing provisions within secondary legislation that applies to Wales only.


Okay, Mabon. Diolch yn fawr. If we could move to the publication of notices, Minister, I'd like to ask to what extent you're satisfied that the reach of these notices, the accessibility issues, will not be adversely affected by the proposed changes, and for you to expand a little on what 'electronically' means in this context. 

So, the proposal is that the information will be provided electronically in future. So, that could be a website, for example. We do know that people's ways of accessing and consuming information has changed since the legislation for local government finance was first set. Things have changed a lot, I think, in terms of people's reliance on newspapers as their sole source of news and information. So, I think moving towards something more electronic and up to date is a reasonable thing to do. That said, we know there are some people who don't access the internet, and so on, so we'll make provision in the legislation that authorities should make the information available to people in other ways as well. It might be, for example, through notices in libraries or other community venues, but also recognising that everybody, when receiving council tax bills, will receive a level of information as well. So, there could be opportunities at that point to share that information.

I'm sure you're aware, Minister, that there is concern amongst local newspapers and those that run local newspapers that the removal of the requirement to publish notices changes in local newspapers with regard to council tax will obviously result in challenges to them in terms of their business models, their income stream, but also they would say that there are digital exclusion issues there as well and that, indeed, Wales has a higher level of digital exclusion than is the general picture in the UK. I hear what you say, that there will be the ability for local authorities to use non-electronic methods of publication, but do you understand the concerns of the local newspapers, and do you have any sympathy with that, and might there be an addressing of those concerns as this legislation proceeds?

I do definitely understand and have sympathy with the concerns of local newspapers. I think there is a cold question that we have to ask ourselves about the appropriateness of creating a system whereby we would continue with ensuring that people access that information through newspapers, which was originally set in 1992. A lot has happened since then, and ways of consuming information have changed a lot since then. How appropriate is it to maintain that system because we know it provides an income stream for local newspapers? There's a question there that I think we would have to ask. That said, I completely understand the concerns. I think the viability of local newspapers is probably a separate issue to how we publicise information about council tax. But, I just want to recognise the concerns; I don't dismiss them at all. And I'd want to recognise that the legislation does set out that there must be other ways for people to access the information—so, as I mentioned, libraries, community settings, or using the information that's already provided to people when they receive their council tax bills, either through the post or if people choose to have them digitally as well.

Local authorities could still choose to provide that information in that way if they felt it was the appropriate thing to do. 

Yes. I think it's worth pointing out that the provisions in the Bill are minimum requirements, but local authorities are governed by a whole raft of other legislation, not least equality duties, which they will need to take into account when making local people aware of any decisions, but, probably, particularly council tax levels. So, they individually have to consider the appropriate way to communicate with their local residents, and most of them go well beyond the minimum requirements at the moment in terms of not just publishing notices in newspapers, but providing extensive information, whether that's online or through other local fora, and many of them conduct extensive consultations with their local electorates around the setting of budget and council tax in particular. So, I just want to emphasise here that what's in the Bill is not the extent of the engagement with local people.


Okay. Well, thank you very much, Minister, and thank you to your officials as well for coming in to give evidence to the committee this morning. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.

Diolch yn fawr.

Thank you very much.

3. Papurau i'w nodi
3. Papers to note

Okay, we have one paper to note, item 3, today, and that is a letter from the Minister for Climate Change to the Chair of the Legislation, Justice and Constitution Committee in relation to provisions in the UK Government's Renters (Reform) Bill and the ongoing work of the Welsh Government, including working up a possible legislative consent motion. Is committee content to note that paper? I see that you are. Thank you very much.

4. Cynnig o dan Reol Sefydlog 17.42(ix) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod hwn ac o gyfarfod y pwyllgor ar 10 Ionawr 2024
4. Motion under Standing Order 17.42(ix) to resolve to exclude the public from the remainder of the meeting and from the committee meeting on 10 January 2024


bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod hwn ac o gyfarfod y pwyllgor ar 10 Ionawr 2024, yn unol â Rheol Sefydlog 17.42(ix).


that the committee resolves to exclude the public from the remainder of the meeting and from the committee meeting on 10 January 2024, in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Item 4 is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of this meeting and also from the committee meeting on 10 January 2024, next year. Are you content to do so? Thank you very much. We will then move to private session.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:12.

Motion agreed.

The public part of the meeting ended at 11:12.