Cynulliad Cenedlaethol Cymru

Good afternoon. Welcome, everyone, to the Constitutional and Legislative Affairs Committee. Welcome to the Minister.

If I just deal with the handling items first of all, in the event of a fire alarm, Members should leave the room via the marked fire exits and follow instructions from the ushers and staff. There is no test forecast for today. All mobile devices should be switched to silent mode. The National Assembly for Wales operates in the medium of both Welsh and English languages. Headphones are provided, through which instantaneous translations may be received. For any who are hard of hearing, these may be used to amplify the sound. Do not touch any of the buttons on the microphones, as this can disable the system. And ensure that the red light is showing before speaking. Interpretation is available on channel 1 and verbatim on channel 2.

We move on to the agenda now: introduction, apologies and declarations of interest. None have been received, and I don't know whether there are any. In which case, I need to draw the committee's attention to the fact that when we get to item 7 on the agricultural wages Order, I have a relevant interest there because of my previous role, so I will be adjourning the meeting then in order to appoint a temporary Chair to deal with that particular item.

That having been said, we move on now to item 2. Again, I welcome the Minister. I don't know if you want to introduce your officials with you, or—.

Yes, certainly. I've got Katie Wilson, Welsh Government lawyer, and Ian Williams, deputy director of homes and places.

Okay. Thank you for attending today. Do you want to make some opening remarks?

I would just firstly begin, Chair, by congratulating you on your appointment to Chair of this committee and also say how pleased I am to be taking forward this work, which, of course, Carl Sargeant started and which I think all parties recognise is important in terms of enabling Welsh Government to keep delivering on our ambitious targets for building affordable homes.

Thank you for that, and thank you for your evidence note. I'll move on to the first set of questions and to David Melding.

Thank you, Chair. This is the first time I've had to wish you well with your new duties, Chair.

Thank you very much.

I'm sure that, under your direction, we will continue the excellent work that's been undertaken in this Assembly term.

Minister, can I welcome you also and wish you well with your new responsibilities?

I'm just going to ask a couple of questions initially on competence. We have slight concern, I think, in terms of section 3 and Schedule 1 to the Bill, which deals with the constitutions of registered social landlords. We would like you to reassure us that that part of the Bill does not fall within, and I quote,

'regulation...of types of business association',

which is an exception listed in Schedule 7 to the Government of Wales Act 2006. So, has your department specifically looked at this and whether it might be an exception, and can you reassure us that it is not?

Thank you. I'll ask Katie to perhaps answer on some of the detail on that, but I have received assurances from my team that the Bill does fall completely within the devolved subjects of housing and local government. But perhaps Katie will update on some of the detail there.

Yes, just to say that we did of course consider whether it fell within the exception of the creation, operation, regulation and dissolution of types of business association, and we concluded that the provisions in the Bill do not fall within that exception. We are content that it is within competence and relates to the subjects of housing and local government.

So, why is it not a regulation of a type of business association? Is there a custom and practice or precedent? Why are we not captured by that?

The regulation of types of business association is generally considered to be at a higher level—company law, law relating to co-operative and community benefit societies. This Bill just deals with the regulation and the interaction between the Welsh Ministers and RSLs, who, whilst they may be companies or registered societies, are only individual bodies that are regulated and registered with the Welsh Ministers. It does not affect the regulation of all types of companies or all registered societies.

So, it only has a secondary and incidental effect on their constitutional association, as opposed to principally trying to alter that.

Yes.

Minister, I think you hinted at this in introducing the legal expert, but can you assure us that the Bill is generally within competence, after the due diligence your department has subjected it to?

Yes, those are certainly the assurances that I've had from the team.

And perhaps you could give us a view on whether it would all be within competence under the new model of reserved powers that will come into force in April.

Yes, again, we believe the Bill would be within competence under the new framework. However, it's our intention, obviously, that it would have passed Stage 1 before the Wales Act comes into force anyway. But I can provide those reassurances.

It's useful for us to have that clarification; though, as you say, it would not necessarily have impeded you at this stage. And then finally from me, what consideration did you give to the impact of human rights on the Bill and the way it was drafted?

The compliance with human rights is obviously part of the competence test anyway. The Bill, we believe, would actually have a positive impact on human rights. Although the right to housing isn't an explicit human right, it certainly underpins some of the very important human rights, such as respect for private life and family life and correspondence, freedom of assembly and association, the right to marry and found a family, and also protocol 1, article 1, the right to the peaceful enjoyment of possessions.

Minister, the Bill is obviously quite technical in nature. How did you arrive at the balance as to what to put actually in regulations themselves as opposed to what to put on the face of the Bill itself?

We tried to include as much detail on the face of the Bill as possible, and we were able to do that because the team have had, over quite some period, detailed discussions with the ONS in terms of what they are seeking to see us achieve through the Bill. So, we've put as much on the face as possible, but there are some limited regulation orders also within the Bill and those would be coming into force through secondary legislation. We think that's the appropriate place for them because the kind of circumstances under which we might wish to make those changes aren't yet known to us. So, we think that would be the appropriate point at which to consult there.

The Bill obviously includes quite sweeping powers in respect of the amendment of primary legislation—the ability to do so. Those are down for affirmative procedure, but all other changes of a regulatory nature are down as negative. Why weren't they all put together as, basically, an affirmative procedure?

I think that we're talking about section 18, which is the power to make further amendments, which is essentially a power to make consequential amendments. Consequential amendments under this power, were they to be made, would be subject to the affirmative procedure if they were to be amending primary legislation, or the negative procedure otherwise. That is fully in line with the Counsel General's guidance.

What would be your and obviously Welsh Government's position in respect of regulations and with regard to there being a duty to consult before any changes are made? Has consideration been given to that and to the possibility of that being inserted on the face of the Bill?

It's my understanding that it's not common practice to consult on legislation that makes amendments of a consequential or transitional nature. However, were we to, for example, introduce policies in future that would be under section 7J(1) and 7J(7), then we would obviously consult on any policy change. 

And you are satisfied with the breadth of powers that exist under section 18.

Yes, I think that it's an appropriate breadth of powers to enable us to make amendments that would be of a consequential nature.

May I ask a supplementary?

Yes, of course.

I notice that UK Finance did actually write to you and say that section 18 is cast too widely at the moment. What sort of response did you give to them?

We've had discussions as to what the appropriate wording would be in terms of section 18, and I think the concern there was that the word 'appropriate' is perhaps too wide. However, we believe that, in practical terms, it would enable us to have a reasonable and proper way to approach the consequential powers there in terms of giving effect to the purposes behind the legislation. Anything more narrow might tie our hands unnecessarily and not give us all of the options that would be required.

I was going to ask you about 7J, but you have answered that point. So, I will move on to the next set of questions, with Dai Lloyd.

Can I ask Katie to speak?

By all means.

The directions are going to be very narrow in scope and will only be issued to RSLs. Their content is limited to the delivery, form and content of the notification and the deadline for giving notification. Therefore, they are very administrative in nature. It's appropriate for directions—and we've commonly found that directions aren't subject to any Assembly procedure because they are so administrative. That's consistent with other direction-making powers in the Housing Act 1996, which obviously these are going into, but also in wider legislation. 

Thank you for that question. The reason that we have taken this approach again relates to the fact that we are very clear in terms of what the ONS wishes to see, and that what we have put on the face of the Bill very much meets that requirement. I appreciate that we have taken a slightly different approach to that taken in Scotland on this particular issue, but we think that moving forward with secondary legislation on the same issue would take up unnecessary time, given where we are currently with this piece of legislation—and the need to move quickly and to give others and our stakeholders the confidence and the kind of detail that they need to plan ahead. 

Could I just ask on that one: was there any indication from the ONS that primary legislation would be required, as opposed to regulations?

Not to my knowledge. Making it in primary legislation will not only speed up the process, but it will also add that extra element of transparency to the whole process.

So, it's a matter of judgment, really, that this was the most efficient way.

I believe that's true.

Consolidation of the legislation relating to regulation would be a really significant task. It would be hugely time consuming, and it would certainly take us a lot longer than the time that we have available to us to bring forward this particular Bill. We're really keen to bring forward and make progress on this issue as quickly as possible, and also to do it within the derogation timescales that have been provided to us by the Treasury. So, that's one of the reasons why we haven't looked to do a wider piece of work on this.

I have a supplementary on that if you're not moving on, Dai. Before I ask the supplementary, I think that UK Finance, actually, in its written evidence to the Bill committee—I'm not sure they have written to you, so I apologise if that came from left field to you. But, anyway, it's in the public arena as an issue that concerned them—that was the drafting of section 18 powers being too wide. 

The Bill committee has received evidence from TPAS, the tenant organisation, saying that this is a missed opportunity not to have a consolidated Bill, and you've known about this issue for a little while now. I know there is a need to do this if ONS are to be satisfied, but you're not having to move because of the derogation, and the fact that I think it's in 2015 this was first identified—. So, you have had time to bring forward a consolidated Bill. You've just decided not to do it—that would be the frank answer, wouldn't it? 

Could I ask Ian to perhaps provide some detail on the previous conversations that took place that I wouldn't have been party to?

I think it's been something of a moving feast. We've been working with the Northern Ireland and Scottish Governments to make sure that we will pass the test that the ONS have set us. It has been far more complex throughout the process than we expected and I would say that the timetable that we've been following has been tight just to get this piece of legislation. I think with a full consolidation of all the housing legislation we would probably be looking at this time next year, rather than being able to get it done by March.

We are under very strict timelines from the Treasury, as you know, and should we not have been able to demonstrate significant progress by March, then it is possible that the derogation would have been taken away from us, and we would have had to show the borrowing on our books. 

So, the reason that consolidation wasn't considered was principally on the ground of time, was it? 

We were focused on allowing the sector to be able to borrow. The consequences of not fixing this were catastrophic for the sector, as you know, and this was our key concern, and ensuring that all the necessary work to achieve that outome—that has been our focus, as opposed to making this a consolidation and administrative Bill. Yes, it was a choice, but I simply don't believe that it would have been possible to do that kind of work to be able to introduce it in October.   

The only way it's a choice is if you didn't have enough time, which I think is what you were saying in the latter part of your answer. 

Absolutely. 

Okay. 

I think that it would be clear that if an RSL had failed to comply with requirements they would have failed to comply with an enactment. I've had discussions with the team about this and I believe that this is the normal way in which you would draft this kind of legislation, in the sense that you wouldn't insert the negative at every point and it could lead to unintended confusion, in terms of making a provision, which would potentially call into question a failure to comply with other provisions within the Bill. That's my understanding. It's a drafting issue, but perhaps Katie will want to elaborate. 

Just to add that in the written notification requirement—the new sections—we have specifically put in there that a registered social landlord must comply with a direction under this section. So, therefore, it is clear that if they do not comply with the notification directions then that will be a breach of requirement imposed by or under an enactment, because such a direction would be imposed under an enactment. So, we think it should be clear that that is a failure. 

Yes, because in the same way that all legal requirements, all requirements imposed by or under an enactment, have to be complied with, it's the same test to that as any other piece of legislation. 

So, there are six months from Royal Assent to the last point at which RSLs need to remove the local authority members, so I think that is plenty of time for them to be able to do it.

Okay. Nathan Gill.

Yes, thank you, Chair. Looking at the removal of local authority appointees onto the boards of the RSLs, I just wondered—. You're going to be adding a new section, 7(c)—would it not be clearer to state when local authority appointees can be removed after they have been nominated by the local authority?

This builds on the point that Ian was just making, in the sense that there will be two months before the provisions come into date after the commencement Act, and that will have the effect of RSLs having a six-month period to reduce the local authority appointees to 24 per cent. And that's because paragraph 7C sets out the procedure for RSLs. So, on the commencement date, RSLs that have more than 24 per cent local authority nominees on their board will have two months for the local authority to decide which of their nominees to remove from the board, and a further two months, then, for the RSL to decide which nominees to remove if the local authority itself fails to decide which nominees to remove.

Okay. Are you aware of how many of the RSLs have over 24 per cent of local authority appointees on their boards? Are you aware of those figures at all?

I'm afraid I'd have to come back to you. I think it's nine, and I know Merthyr Valleys haven't, and I'm fairly sure Bron Afon have taken steps, and maybe Newport City Homes. I'd have to let you know exactly how many—.

So, are you saying that there's basically a two-month transition period for them to get in line?

Two months between Royal Assent and commencement, and then two months that the local authorities have to nominate the ones that are going to be removed, and then a two-month period by which the RSLs would have to actually remove them to comply with—

And you're perfectly happy that that's enough time for them to—.

Almost all of them are aware of it. In fact, they are all aware of this going on right now, and they are all, I believe, making plans to do this right now, so they've got a year and a bit.

Okay, that's great.

A bit more technical now. If we look at section 3(2) of the Bill, it refers to section 149 of the Co-operative and Community Benefit Societies Act 2014 for definition purposes. Now, why is this cross-referenced instead of you actually incorporating the wording into the Bill?

I think cross-referencing is, again, common practice, and it's useful in the sense that were there any amendments or changes to be made to the Co-operative and Community Benefit Societies Act, then they would automatically be part of our Act, rather than having to make amendments to our Act as a result of any changes to the other Act.

Okay, thank you. Paragraph 9 of Schedule 2 will not be necessary when the abolition of the right to buy comes into force, as the Bill repeals section 16 of the 1996 Act. So, can you confirm for me that the provisions of the Bill will be reviewed in order to ensure consistency after the abolition of the right to buy Act comes into force?

Yes, we will do that review.

Thank you very much. And paragraph 13 of Schedule 2 does not make clear provisions for the insertion of the words '"notify" means notify in writing'. So, will you be inserting that wording into the Bill in any place?

So, the notification requirements inserted by the Bill are inserted into the Housing Act 1996, and there's already a definitions section in there that says '"notice" means notice in writing', but the wording in our notifications sections just says they have to notify the Welsh Ministers. So, it's just to round it off, really, to say that 'notify' also means 'notify in writing'. So, it will apply to the notification provisions as set out in the Bill.

Okay, thank you very much. 

And finally, section 13(2) omits section 81 of the Housing Act 1988. Section 81 applies to England and Wales. Could you make it clearer that section 81 is only relevant to Wales? 

I believe that's only relevant to Wales now because England, as they've been addressing this particular issue, have already removed the reference to England. So, it does need to be omitted in its entirety.

Thank you very much. Thank you, Chair. 

Okay. Well, I think that that very efficiently, actually, completes most of the questions we wanted to ask. Are there any further points that anyone wants to raise? Well, Minister, you've been through these—it is obviously a very technical piece of legislation, and you've been through it very efficiently. Is there anything that you wish to add to the evidence that—?

No, I don't think so. 

Well, thank you very much for giving evidence. The usual transcription arrangements will be put in place. Thank you very much.

We now move on to item 3: instruments that raise no reporting issues under Standing Order 21.1 or 21.3. I'll just run through these as they're set out, really, for noting, unless there's any issue that's raised by anyone: the Tax Collection and Management (Administration) (Wales) Regulations 2017; the National Health Service (General Dental Services Contracts and Personal Dental Services Agreements) (Wales) (Amendment) Regulations 2017; the Water Resources (Miscellaneous Revocations) (Wales) Order 2017. Those are the negative resolution instruments.

And the affirmative resolution instruments are: the Tax Collection and Management (Permitted Disclosures) (Wales) Regulations 2017; then an item where there is some comment required—the Official Statistics (Wales) Order 2017. This is one this committee, I understand, has already considered. There is a report prepared, and I understand that if there are any further observations to make today—but otherwise the report will be laid for Plenary tomorrow. So, any—? Okay. Those can all be noted. 

Item 4: instruments that raise issues to be reported to the Assembly under Standing Orders 21.2 or 21.3—negative instruments. I think there are a number of comments on these as we go through, and I'll invite the lawyers to comment, and then for Members to comment on each of these as we go through. The Private Water Supplies (Wales) Regulations 2017—

Diolch. Yes, two merits points to note. One: these regulations were made under Section 2(2) of the European Communities Act 1972. This means Welsh Ministers have a discretion to apply the affirmative or negative procedure. The negative procedure has been chosen in this case, and given the nature of the instrument, that seems appropriate.

The second merits point is there is also late implementation of a water directive here. The explanatory memorandum is quite open and transparent that the implementation date was 27 October 2017, but there's no further explanation of why the implementation date has been missed or whether there has been any correspondence with the European Commission regarding late implementation, and we're waiting for a Government response in relation to that. 

Okay. Any comments on that?

We move on to the next item, the Water Abstraction (Transitional Provisions) Regulations 2017— 

Two technical points to report here. The first is they are in English only, and, again, these are composite regulations, meaning they are made by the Welsh Ministers in relation to Wales and the Secretary of State in relation to England, and they are therefore laid before both the Assembly and the UK Parliament. The explanatory memorandum states that because of this, it is not considered reasonably practicable for the regulations to be made bilingually.

The second technical point is the regulations contain one incorrect cross-reference to some other regulations. It's a very minor error and it's very clear what the correct cross-reference should be. The Welsh Government is being made aware of this, and we'd expect them to correct it at the next available legislative opportunity.

There's one merits point as well: there's a footnote in the regulation that refers to section 221 of the Water Resources Act 1991, which gives you a definition of the appropriate authority. The appropriate authority is Natural Resources Wales for Wales and the Environment Agency in relation to England. It might have been much easier just to put in the footnote who the appropriate authority is, rather than sending someone to look at the 1991 Act.

There's also one implication arising from exiting the EU here. These regulations contain definitions that cross-refer to classifications set out in an EU directive. After exiting the EU, the issue of whether the classifications in that EU directive will remain appropriate in a domestic context will have to be considered.

Any comments?

I think the clarity point is important. Why are we expecting people to go to another statute when it could've just been made clear? I think it's important that those sorts of points are raised.

Yes. So that been done, or will be done.

We haven't had a response on that point from the Government.

Okay. If there are no comments on that, we'll move on to the next one, the Water Abstraction and Impounding (Exemptions) Regulations 2017.

Again, a composite instrument made in English only because they are laid before the UK Parliament and the Assembly. That's the only technical reporting point.

There are two implications arising from exiting the EU. Firstly, these regulations say that a conservation site is a site appearing on the list provided by the European Commission. On exiting the EU this reference to the European Commission is unlikely to work and may be a type of deficiency that may need to be corrected on exit.

EU regulations also refer to the Conservation of Habitats and Species Regulations 2010, which are England and Wales regulations implementing EU law. Again, on exiting the EU, this reference to those conservation regulations will have to be considered to see whether it is still appropriate, depending on what environmental arrangements will be in place on exit.

Any points?

Yes.

We are continuing to investigate that matter and will report back to committee as soon as we have some relevant information.

And Dai Lloyd's point merges into the fact on the conservation, habitats and species regs, because they deal with amendments they are presented bilingually, so there's obviously no principle that they can't be presented to Westminster. I do think it is extremely unhelpful that we don't have a clear line, that there isn't one accepted way of doing this, which is that it should be bilingual.

Ultimately, at some stage, we want this resolved, don't we, so that this isn't something that continually emerges? There's clearly a level of resistance that exists in relation to this. If you report back on the next stage, perhaps we can consider, actually, a more formal, a more positive response to that. I presume this is something that has arisen instrument after instrument after instrument. Okay, so we will come back to that, and it's an absolutely correct point. And, of course, with issues with legislative interpretation, legislation will obviously come to the fore as well. I think I have done the Conservation of Habitats and Species Regulations 2017, have I?

There are a couple more points on those regulations, as we've noted. It's a composite SI and it's been made in English only, but in this case, it amends bilingual legislation. So, it has to be in Welsh to amend that bilingual legislation. There's also another merits point. It's made under section 2(ii) of the European Communities Act 1972. Again, it's the discretion as to negative or affirmative procedure. Given the nature of the instrument, we think negative is appropriate.

There are two implications arising from exiting the EU, we've noted. Again, these regulations are an example of domestic legislation that is derived from the European Union, and as the EU withdrawal Bill is currently drafted, these regulations will continue to form part of domestic law on exit and the Welsh Ministers will be given certain powers to amend this kind of legislation. For example, these regulations also make several references to the European Commission and the appropriateness of those references will need to be considered on exit.

Finally, these regulations implement EU directives, and with regard to EU directives, they will not automatically form part of domestic law as the withdrawal Bill is currently drafted. However, where a court or tribunal has recognised before exit that an EU directive can confer rights on an individual that the individual can rely on and enforce in law, then that right will form part of domestic law.

So, in the form of direct effect.

Yes, exactly.

So, we will return to that point. It is an important point to try and resolve.

Item 5—statutory instrument consent memorandum. There is a letter from the Minister, explaining the background to this. It's the same as the old LCM process, isn't it? Pages 366 to 368. We have to report within 35 days, which I understand is the beginning—

The twentieth of December.

What date?

The twentieth of December.

The twentieth of December. Okay. So, we've got it well ahead of that. We'll discuss this in private session.

Item 6—papers to note. There's a letter from the First Minister on 9 November 2017, a letter from the Chair of the External Affairs and Additional Legislation Committee to the Secretary of State for Wales and the Parliamentary Under-Secretary of State for Exiting the European Union, dated 9 November 2017. I think these are there for noting, unless there's anything that particularly needs to be raised.

In which case, in accordance with Standing Order 17.47, I have to adjourn at this stage, for you to consider the next item. Hopefully, I might be back for the private session afterwards.

The committee Chair, Mick Antoniw, Assembly Member, has submitted his apologies for the next two items of business. Therefore, I would like to invite nominations from committee members for a temporary Chair to be elected, under Standing Order 17.22.

Diolch. I see that there are no other nominations, and I declare David Melding elected.

Okay. So, we're now on item 8, which is an instrument that raises issues to be reported under Standing Order 21.2 or 21.3. This relates to the Agricultural Wages (Wales) Order 2017. There are a number of issues that follow on from this, and I invite the lawyers to explain further.

Diolch. So, this Order provides for the minimum rates of remuneration and other terms of conditions of employment for agricultural workers. There are three technical points to report. One: there is some inconsistency and lack of clarity around the translation of 'maternity' into Welsh. In one place, the Order translates 'maternity' as 'bod yn fam'. In another place the Order translates 'maternity' as 'mamolaeth'.

The committee may want to suggest that 'mamolaeth' is a more appropriate translation. We are waiting for a Government response as to why a different translation has been used within the same instrument.

So, we're all looking at you, Dai.

'Mamolaeth' is right. 'Maternity' is 'mamolaeth'.

You will know. [Laughter.] No-one is going to attempt to contradict.

There's a heavy weight on your shoulders in here.

Secondly, there's another inconsistency between the English and the Welsh text. The English expression 'the employer is entitled to deduct' is translated as 'mae gan y gweithiwr hawl i ddiddymu'. So, the English refers to the employer, the Welsh refers to the worker. It's clear from the context that the English is the correct version, but still there's an inconsistency on the face of the Order between the English and the Welsh.

And, finally, the third point is that this Order came into force on 3 November. However, the Order applies as if it had come into force on 1 April 2017, some seven months ago. As the Order has retrospective effect, increases in pay rates will be backdated to 1 April 2017. This means that employers of agricultural workers paying below the new rates will be responsible for paying arrears, and this engages human rights concerns, in particular article 1, protocol 1 of the European convention on human rights, which protects against unjustified interference with property, including money that employers will have to pay in arrears.

It's not clear from the explanatory memorandum why there's been a delay of some seven months in making this Order, and it's not clear what employers were told, or what they were expecting and when. So, we are waiting a Government response as to whether the retrospective effect of the Order can be justified, and whether they believe it is compatible with the European convention on human rights. 

Okay. Comments? I suppose, on the technical matters, we will want to write and indicate the version we think is appropriate. And, then, there is this really quite important issue of retrospection. I just wonder whether committee wants to progress. Do we want to wait for a reply? We'll then see how adequate that is and then may have to return to it, because it's obviously an awkward issue: how reasonable is it to impose this on people who may not have been expecting it, and how will they be informed that they now must put it into effect? There are a number of issues. And seven months, you know, is over half the life of this Order, in effect, isn't it? So, shall we mark this for further attention, and perhaps we can chase the Government if they've not replied in the next few days, because we regard this as a matter of urgency?

Well, the longer they delay, the more retrospective pay people are going to have to find. So, it really does need sorting out immediately. 

Well, particularly being as the agricultural workers wages law, back in the day, was quite seminal in altering the way that legislation now runs in Wales. It's an oft-quoted example of that change in the whole system. So, let's get this one right, I would say.

Perhaps we could say to the Government then that we hope to return to this item next week, and that a response to allow us to conduct that business is required.

Yes.

And can we formally note that the 21-day rule was breached?

Yes.

Do we have anything further on that item? If not, item 9.

I move the relevant Standing Order that we meet for the rest of this meeting in private unless any Member objects. I don't see any Member objecting, so we will now meet in private.