Which allows us to move to the debate on the LCM on the Non-Domestic Rating Bill. The Minister for finance to move the motion. Rebecca Evans.

Motion NNDM8341 Rebecca Evans

To propose that the Senedd Cymru, in accordance with Standing Order 29.6, agrees that provisions in the Non-Domestic Rating Bill, insofar as they fall within the legislative competence of the Senedd Cymru, should be considered by the UK Parliament.

Motion moved.

Diolch, Llywydd. I move the motion. I'm grateful to the Legislation, Justice and Constitution Committee, the Finance Committee, the Local Government and Housing Committee and the Economy, Trade, and Rural Affairs Committee for considering and reporting on the memorandum. I welcome the committees' proactive engagement and I recognise that, due to the summer recess and parliamentary timetabling, the opportunity to scrutinise the supplementary memorandum has been limited. 

I thank the Legislation, Justice and Constitution Committee for the report published this morning, which recognises that I had already set out the Welsh Government's position on the subject of the supplementary memorandum in response to questions that arose during the scrutiny of the first memorandum. 

The UK Government introduced the Non-Domestic Rating Bill on 29 March to provide for a number of changes to the NDR system in Wales and England. The Bill provides an opportunity to bring about certain reforms earlier than would otherwise have been possible and when new functions will be conferred on the UK Government bodies to ensure that ratepayers in Wales are not disadvantaged compared with ratepayers in England. The provisions extending to Wales include powers to establish new rate relief schemes and make certain reliefs available to ratepayers on the central rating list. Subject to ongoing consultation, we intend to use powers provided by the Bill to introduce improvement relief and heat networks relief from 1 April 2024. This could not be effected through primary legislation in the Senedd until 1 April 2025 at the earliest.

New functions conferred on UK Government bodies will enable information sharing on the same basis across Wales and England. Requiring the Valuation Office Agency to share more information with ratepayers will improve transparency and understanding of the NDR system. Enabling the exchange of information between HMRC, ratepayers and billing authorities will ensure that we're able to benefit from the shared aims of the digitalising business rates programme. 

The Bill also refines the process by which the annual multiplier is set, removing unnecessary timing constraints and a dependency on the local government finance reports. The changes will help ensure that the Senedd has appropriate time for scrutiny of any regulations and allow for more timely clarity for billing authorities and ratepayers. I believe that these provisions fall within the legislative competence of the Senedd. However, I am content that these provisions should be made in the UK Bill to ensure that ratepayers in Wales are not placed at a comparative disadvantage, and I ask the Senedd to approve this legislative consent motion.

The Chair of the Local Government and Housing Committee, John Griffiths.

Diolch, Llywydd. I'll be speaking in my capacity, as you say, as Chair of the Local Government and Housing Committee. We laid our report on the legislative consent memorandum for the Non-Domestic Rating Bill on 22 June. As the supplementary LCM was laid on 1 August, regrettably, we did not have sufficient time to consider and report on it ahead of this debate today.

We noted in our report that most Members felt that they were able to recommend that the Senedd gives its consent for the UK Government to legislate on these devolved matters. Mabon ap Gwynfor, who was a member of the committee at that time, disagreed with the Majority view. It is unfortunate that the supplementary LCM was laid during the summer recess and therefore, as a committee, we were unable to consider it. However, I note that the SLCM confirms the Welsh Government's updated position in relation to Clause 13, which was outlined by the Minister in correspondence to the Legislation, Justice and Constitution Committee on 1 June, which we were able to consider. Diolch yn fawr, Llywydd.

The Chair of the Legislation, Justice and Constitution Committee, Huw Irranca-Davies.

Thank you, Llywydd. My committee has produced two reports on the Welsh Government's legislative consent memoranda for this Bill.

We agree with the Minister that the clauses of the Bill and the Schedule to the Bill set out in the memoranda fall within a purpose within the legislative competence of the Senedd and therefore require our consent.

A significant portion of our first report focuses on the Welsh Government's approach to the Bill. The Minister requested provisions for Wales in the Bill and confirmed to us that discussions with the UK Government began in March 2022 and provisions for Wales, with the exception of those relating to the digitalisation of business rates, were sought in June 2022. So, we're still not clear why the Welsh Government chose not to bring forward, in the last 18 months, its own Bill, and it's with regret that we say we have not been convinced yet by the arguments put forward by the Minister.

Back in March 2022, the Minister announced, indeed, a programme of non-domestic rates reform that would be delivered over four years, and this reflected in its part an ambition outlined in the Welsh Government's programme for government. So, Welsh Government's intent was clear. When making the announcement to the Senedd in March 2022, the Minister was already in negotiations with the UK Government about requesting provisions in that Government's Bill. These negotiations were taking place, we understand, even though the Welsh Government's legislative programme for 2022-23 was yet to be announced. Now, the Minister told us that it was unclear if and when the UK Government’s Bill would be finalised and introduced, so, in that respect, we're similarly unclear why the Welsh Government didn't simply just take action and pursue its own Bill.

The Minister told us that the changes made by this Bill would be introduced during the course of the 2023 rating list and only potentially prior to Royal Assent of the planned local government finance (Wales) Bill. It does appear to us, therefore, as a committee that there was an opportunity for Welsh Government to use its forthcoming Bill to make the provisions it has now requested in the UK Bill, unless we are missing something. To add to our concern about this approach, the Minister confirmed that she has not pursued other 'desirable' provisions in the Bill and, indeed, has acknowledged that this will lead to discrepancies between the ratings systems in Wales and England.

Now, Welsh Government, as a whole, is aware of our view that it should be possible to look for opportunities for the Senedd and the UK Parliament to legislate in parallel, rather than going down the route of an England-and-Wales Bill: legislate in parallel, talking together, engaging together. This approach would still allow for co-operation between Governments and, if this is the desired effect, would not lead to inconsistencies for citizens or in the law of England and Wales. Just as importantly, it would allow Members of the Senedd to properly scrutinise a Bill made here and to test the legislation at amending stages. So, once again, the focus of our committee is on what is the best, most transparent scrutiny we can do here in this Senedd.

Our first report also focused on the delegated powers in the Bill. The Minister told us that the provisions relating to Clause 13 and the digitalisation of business rates programme were not developed until earlier this year and that, on 17 March, she formally sought the extension of the provisions to Wales. The Minister also confirmed to us that the Welsh Government’s discussions with the UK Government on this matter concluded during the Bill’s passage through the House of Commons and that no amendments to the Bill were required.

So, while the Minister did provide an explanation of the new position she held, we respectfully suggest that the explanation was not as fulsome as we would have expected. Recommendation 2 of our first report asked the Minister to provide further detail to the Senedd, and the Minister told us that this is a complex matter, where a devolved policy area and the functions of a reserved authority are intentionally connected. The Minister also said that this means that any of the options to enable the digitalisation of business rates programme to be delivered in Wales must involve compromise. We understand that. The Minister concluded that, on balance, the delegated powers and duty to consult Welsh Ministers are appropriate to facilitate the administration of the DBR system. Members will be aware that these provisions are the subject of memorandum No. 2.

So, my final comments relate to the Minister’s request for the Bill to alter the scrutiny procedure for a regulation-making power that was delegated to Welsh Ministers via the Local Government and Elections (Wales) Act 2021. There was no detailed explanation given in the memorandum as to why the Minister is using a UK Bill to make this change. The Minister’s correspondence to us does provide an explanation, and I would direct Members to our report for the detail. But our committee does believe that it's regrettable that what we're seeing here is the Minister seeking to use a UK Bill to change the scrutiny procedure for a regulation-making power that Members of the Senedd only agreed in 2021.

I'll again say to the Minister that proper and full detail could have been set out in the memorandum, and, through this, could have been more explicit and transparent with Members of the Senedd about the Welsh Government’s intentions. So, Llywydd, the time has disappeared; I won't carry on ad nauseam. I just hope that our committee's analysis contained in our two reports is helpful for Members of the Senedd, and, once again, I thank all committee members, clerks and the support team for their work on this.

I wish other Members would keep an eye on the clock as well as you do, Huw Irranca-Davies. You even notice when it's not even on—[Laughter.]—which is very impressive. Peredur Owen Griffiths.

Thank you, Llywydd. As I've said previously, Plaid Cymru opposes LCMs as a point of principle. Decisions about Wales should be made in Wales.

In the case of the Non-Domestic Rating Bill, it is disappointing that the Welsh Government has not sought to introduce its own legislation on this matter, especially given the significance of non-domestic rate contributions to the Welsh budget. As was noted in the Legislation, Justice and Constitution Committee's report on this LCM, and also by Huw Irranca just now, the Welsh Government opened discussions on Welsh-specific provisions within this Bill 18 months ago. Can the Minister explain why such an extended period of time was not sufficient for introducing Welsh legislation in parallel with the UK Bill?

There also seems to be something of a contradiction in the Government's position. While the decision to seek these powers through the UK Bill was justified on the grounds of expediency, the Minister has nevertheless acknowledged that there are other desirable provisions in the Bill that won't be extended to Wales. This will inevitably lead to a period of discrepancy between the rating systems in Wales and England. While I note the fact that the absence of these particular provisions is considered to be low risk, it would be helpful if the Minister could elaborate on the nature of these discrepancies. Can she also confirm whether it is the intention of the Welsh Government to legislate for these powers in any future Senedd Bills?

Turning to the broader implications of these powers, and specifically to the provision to enable liability reliefs for new improvements, what is your expectation of the impact that exercising this power will have on the Welsh budget? I'd also be interested to learn more about how the Welsh Government envisages the use of this power within their broader strategy for fostering domestic business growth in Wales.

And finally, in relation to the provision for establishing the HMRC-led digitalisation of business rates programme, could the Minister clarify the mechanisms through which relevant data will be shared with the Welsh Government? Diolch.

The Minister for finance.

Thank you and, again, thank you to all colleagues for their contributions, and to our committees for their scrutiny work. And in the light of the previous debate, I should, I think, just recognise that the experience with this particular piece of legislation has been a very positive one in terms of the collaborative working between Welsh Government and the UK Government. So, I just wanted to put that on record, to demonstrate that it can be done, and I think in this case, it has been a very positive experience, I hope on both sides.

In terms of our approach to this, I was very keen that we were only going to introduce an LCM in cases where the businesses in Wales would otherwise be disadvantaged or if there were things that we needed UK Government departments to be doing for us here in Wales, and I suppose therein lies the issue in terms of those other things and the discrepancies that were mentioned. So, there were lots of things that are desirable in the Bill, and things that we will want to perhaps do for ourselves in Wales, but I really did want to only have the UK Government legislate where it was absolutely necessary to do so, because, obviously, we have a huge piece of reform work going on in terms of local government finance, which stretches across both council tax reform—and there will be further consultation on that later this autumn—but then also non-domestic ratings as well.

We've listened very closely to calls from stakeholders for more frequent revaluations, ensuring that the tax base that we have here in Wales reflects the economic conditions and the environment in which businesses and not-for-profit organisations are operating, and so we intend to bring forward legislation to move towards a three-yearly revaluation cycle, but than considering how we can do it even more often as well. Also, we're looking to explore how we can reduce the gap between the valuation date and the new rating list coming into effect. And those are examples of things that weren't time-critical, and although there's a discrepancy in the legislation, it won't mean that there's a disadvantage for businesses here in Wales. And that was something that was very much at the forefront of my mind: ensuring that there weren't cases of disadvantage.

We're also intending to undertake a review of our rate relief schemes, and that's obviously been a crucial part of our support for businesses, and that's something that, again, we're taking forward as part of this work. But reforming local government finance in such a fundamental and all-encompassing way really is a huge piece of work, and it is taking us years in which to develop and years in which to deliver. But while we're doing that work, we're making sure that our businesses here aren't disadvantaged.

There's so much more I wanted to say in terms of giving examples. I did touch on, I think, in my opening remarks, in terms of our ability now to introduce heat network relief and improvement relief from April of next year. We've consulted on that, so that's something we wanted to do. We could do it from next year, not having to wait until the year after.

And then in terms of the digitalisation agenda, again, this is about having the necessary information gateways, ensuring that the programme that is operated by HMRC across England and Wales is able to benefit us, so we have the ability to use those really powerful databases for the benefit of businesses here in Wales. And again, the multiplier is about ensuring that the Senedd has the opportunity to scrutinise in a more timely way, and I think that's something that I hope colleagues will recognise and appreciate as well.

So, we're only seeking to legislate in these areas where we don't want to be at a disadvantage, but we have a huge programme of exciting reform work also going on at this point.

The proposal is to agree the motion. Does any Member object? [Objection.] There is objection. We will therefore defer voting until voting time.

Voting deferred until voting time.