Y Pwyllgor Cyllid - Y Bumed Senedd
Finance Committee - Fifth Senedd14/09/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Alun Davies MS|
|Llyr Gruffydd MS||Cadeirydd y Pwyllgor|
|Mark Reckless MS|
|Mike Hedges MS|
|Nick Ramsay MS|
|Rhianon Passmore MS|
|Sian Gwenllian MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Andrew Hewitt||Pennaeth Trethi a Deddfwriaeth, Llywodraeth Cymru|
|Head of Tax Legislation, Welsh Government|
|Emma Williams||Cyfarwyddwr Tai ac Adfywio, Uwch-swyddog Cyfrifol y Bil, Llywodraeth Cymru|
|Director of Housing and Regeneration, Bill Senior Responsible Officer, Welsh Government|
|Julie James MS||Y Gweinidog Tai a Llywodraeth Leol|
|Minister for Housing and Local Government|
|Rebecca Evans MS||Y Gweinidog Cyllid a’r Trefnydd|
|Minister for Finance and Trefnydd|
|Rob Owen||Rheolwr Deddfwriaeth Rhentu Cartrefi, Llywodraeth Cymru|
|Renting Homes Legislation Manager, Welsh Government|
|Simon White||Pennaeth Strategaeth Tai a Deddfwriaeth, Llywodraeth Cymru|
|Head of Housing Strategy and Legislation, Welsh Government|
|Tom Nicholls||Cynghorydd Economaidd, Llywodraeth Cymru|
|Economic Adviser, Welsh Government|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Georgina Owen||Ail Glerc|
|Mike Lewis||Dirprwy Glerc|
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 drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 14:32.
The committee met by video-conference.
The meeting began at 14:32.
Croeso cynnes ichi gyd i gyfarfod cyntaf y Pwyllgor Cyllid o'r tymor newydd, yn dilyn toriad yr haf, ac wrth gwrs rŷn ni'n dal yn cyfarfod yn rhithiol, felly, yn unol â Rheol Sefydlog 34.19, dwi wedi penderfynu gwahardd y cyhoedd o gyfarfod y pwyllgor er mwyn diogelu iechyd y cyhoedd. Yn unol â Rheol Sefydlog 34.21, cafodd hysbysiad o'r penderfyniad hwn ei gynnwys yn agenda'r cyfarfod yma. Mae'r cyfarfod yma, wrth gwrs, yn cael ei ddarlledu'n fyw ar Senedd.tv ac mi fydd Cofnod y Trafodion yn cael ei gyhoeddi yn y ffordd arferol. Ar wahân i'r addasiad gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, mae holl ofynion eraill y Rheolau Sefydlog, wrth gwrs, ar gyfer y pwyllgorau yn parhau.
Gaf i ofyn i gychwyn, felly, a oes gan yr Aelodau unrhyw fuddiannau i'w datgan? Na, dim byd i'w ddatgan, a dŷn ni ddim wedi derbyn ymddiheuriadau—mae pawb yn bresennol. A gaf i nodi hefyd ar gyfer y cofnod, os byddaf i am unrhyw reswm yn colli cysylltiad â'r cyfarfod, dŷn ni eisoes wedi cytuno y bydd Siân Gwenllian yn cymryd y gadair dros dro, wrth i fi geisio ailymuno â'r cyfarfod, ac wedyn, wrth gwrs, mi fyddwn ni'n trio delio â'r sefyllfa honno fel y gallwn ni os ydy'r sefyllfa yn codi.
A very warm welcome to you all to this first meeting of the Finance Committee in this new term, following the summer recess, and, of course, we continue to meet virtually. In accordance with Standing Order 34.19, I have determined that the public are excluded from the committee's meeting in order to protect public health. In accordance with Standing Order 34.21, notice of this decision was included on the agenda for this meeting. The meeting, of course, is being broadcast live on Senedd.tv and a Record of Proceedings will be published as usual. Apart from the procedural adaptations relating to conducting proceedings remotely, all other Standing Order requirements for committees remain in place.
May I ask, first of all, whether any Member has a declaration of interest? No declarations, and we've received no apologies—everyone is in attendance. May I also note for the record that if, for any reason, I lose connection with the meeting, we've already agreed that Siân Gwenllian will temporarily take the chair, whilst I seek to rejoin the meeting, and we will try and deal with the situation as best we can if it arises.
Iawn, mi awn ni at yr ail eitem ar yr agenda, sef papurau i'w nodi. Mae yna nifer ohonyn nhw, wrth gwrs, yn dilyn y ffaith ein bod ni ddim wedi cyfarfod ers cyn yr haf. Gaf i ofyn i Aelodau dynnu fy sylw i os ŷch chi am godi unrhyw fater yn ymwneud â phapur i'w nodi? Af i drwyddyn nhw yn unigol.
Y papur cyntaf: llythyr gan y Cwnsler Cyffredinol a'r Gweinidog Pontio Ewropeaidd at y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol ar fuddsoddiad rhanbarthol ar ôl Brexit. Alun.
Okay, we'll move on to item 2 on our agenda: papers to note. There are a number of papers to note, given that we haven't met since before summer recess. May I ask Members to indicate if you want to raise any issues on the papers to note? I will go through them individually.
The first is a letter from the Counsel General and Minister for European Transition to the External Affairs and Additional Legislation Committee on regional investment after Brexit. Alun.
Thank you, Llyr. I think it is important that we give some consideration to this, whether today or later in our deliberations. The publication of the UK Government's United Kingdom Internal Market Bill is clearly an appalling piece of legislation that will undermine not only two referenda in Wales, but also the UK constitution in the way it's currently set out, and will do so by regulation, rather than through primary legislation. So, I think it's a matter that we will need to discuss at some point. The Counsel General and First Minister and others, the finance Minister, have been having these conversations, but I hope that we ourselves, and perhaps with the external affairs committee, will be able to take a view on these matters, as they will affect the Welsh budget in years to come.
Ocê, iawn. Mark.
Right, okay. Mark.
You need to unmute.
Thanks. I'm not sure whether this committee or this paper's necessarily appropriate to do the substantive work on this, but I would encourage Alun to take part in the debate that I have down for tomorrow on that Bill.
Okay, well, we'll pick up on this later on in our private deliberations. I am aware that the First Minister's made some comments about the shared prosperity fund this afternoon as well in his press conference, so it's something that we might want to take a finer look at and view on. Rhianon wants to come in and then we'll move on. You need to unmute yourself, Rhianon. Thank you. We're all out of practice, I think, aren't we?
I'm still getting this wrong.
In regard to that, then, very briefly, I mean, this is the Finance Committee, and I think this letter is of importance, and I would welcome an opportunity to discuss this very fluid and evolving situation moving forward. I do think it is the place of the Finance Committee also to have that under its mandate.
Yes, indeed. We have previously looked at the shared prosperity fund amongst other things, haven't we? And we are looking at our forward work programme later on in private session, so we'll pick up on it there to see when we can scrutinise that particular area. Okay.
Yr ail bapur i'w nodi, felly—llythyr gan Ombwdsmon Gwasanaethau Cyhoeddus Cymru at y Prif Weinidog ynglŷn ag ymchwiliad cyhoeddus i'r ymateb i bandemig y coronafeirws yng Nghymru. Nodi hwnna.
Y trydydd papur—llythyr gan y Gweinidog Tai a Llywodraeth Leol: gwybodaeth mewn perthynas â'r Bil Llywodraeth Leol ac Etholiadau (Cymru). Dwi yn nodi ei fod yn un o argymhellion y pwyllgor yma ein bod ni'n cael dadansoddiad o gostau a buddion sefydlu cydbwyllgorau corfforaethol. Rŷn ni wedi cael, fel dwi'n dweud, gohebiaeth gan y Gweinidog. Dwi ddim yn teimlo ei bod yn mynd i'r afael, mewn gwirionedd, neu i'r manylder y byddem ni wedi gobeithio, â'r hyn yr oeddem ni'n gofyn amdano fe. Dwi ddim yn gwybod a ydy Aelodau'n hapus inni ysgrifennu eto i ofyn am ddadansoddiad mwy ystyrlon a mwy gwydn o'r costau hynny. Does neb yn gwrthwynebu. Iawn. Mi wnawn ni hynny. Diolch yn fawr.
Y pedwerydd papur i'w nodi—ymateb Llywodraeth Cymru i adroddiad y pwyllgor ar graffu ar gyllideb atodol cyntaf Llywodraeth Cymru. Nodi hwnna.
Papur i'w nodi 5—llythyr gan y Gweinidog Cyllid yn cynnwys gwybodaeth y gall cyrff a ariennir yn uniongyrchol ei defnyddio i lywio cyllidebau yn y dyfodol. Mi fyddwn ni, wrth gwrs, yn eu gwahodd nhw i ddod o'n blaenau ni cyn bo hir. Iawn.
Mae papurau i'w nodi 6 a 7 yn mynd gyda'i gilydd oherwydd mae'r ddau yn ymateb i gais yr anfonon ni, un at y Gweinidog Cyllid a'r Trefnydd yn y Senedd, a'r llall at Ysgrifennydd Gwladol Cymru, yn gofyn am fwy o fanylder ynglŷn â'r ymateb ariannol i COVID-19. Os cofiwch chi, mi oedd y ddau ohonyn nhw â safbwyntiau gwahanol iawn ynglŷn â lefel y gefnogaeth ariannol ychwanegol a oedd yn dod o Lywodraeth y Deyrnas Unedig. Mae'r ddau, am wn i, os ŷch chi'n darllen eu dadansoddiadau nhw, yn gywir; dyna yw natur gwleidyddiaeth, am wn i. Ond dwi yn teimlo efallai y dylem ni fod yn ysgrifennu nôl yn gofyn yn y dyfodol iddyn nhw, y ddau ohonyn nhw, fod yn fwy clir pan fydd yna gyhoeddiadau ariannol yn digwydd pa arian o blith yr arian hwnnw sydd yn bres newydd. Felly, allem ni jest gofyn yn gwrtais am hynny, beth bynnag. Mater arall yw a fydd y dull o gyfleu'r wybodaeth yma newid yn y dyfodol. Dwi ddim yn siŵr.
The second paper to note is a letter from the Public Services Ombudsman for Wales to the First Minister on the public inquiry into the response to the coronavirus pandemic in Wales. We'll note that one.
The third is a letter from the Minister for Housing and Local Government—information relating to the Local Government and Elections (Wales) Bill. I would note that it was a recommendation of this committee that we should have an analysis of the costs and benefits of the establishment of corporate joint committees. Now, as I said, we've received correspondence from the Minister, but I don't think that it truly tackles, in the detail that we would have hoped, what we requested. I'm not sure if Members are happy for us to write again to ask for a more robust analysis of those costs. There seems to be no objection, so we will do that. Thank you.
The fourth paper to note is the Welsh Government's response to the committee's report on scrutiny of the Welsh Government's first supplementary budget. We'll note that one.
Paper to note 5 is a letter from the Minister for Finance containing information that can be drawn upon by directly funded bodies to inform future budgets. We of course will invite them to appear before us in due time.
Papers 6 and 7 go together because they both respond to a request made by us to the Trefnydd and to the Secretary of State for Wales asking for more detail on the financial response to COVID-19. If you recall, both had very different views on the level of additional financial support that was being provided by the UK Government. Now, if you look at their analysis, both are correct. That's the nature of politics, I suppose. But I do feel that perhaps we should be writing back asking in future that both should be clearer when financial announcements are made as to what funding from that funding package is new funding. So, we could perhaps just ask courteously about that issue. It's another issue, of course, as to whether the way this information is conveyed in future does change; I'm not sure.
Mike, you wanted to come in.
Have I unmuted mysel?
Good. I'm just asking the same thing as I continually do: people need to show their workings. We get numbers, we get tables—everybody produces their table, and everybody says 'this is the amount' at the end of it, and we don't get the workings behind it. What we should have is the workings. Then we can see exactly how we come to two different answers with the final number being the same or different. I think it's important that we understand how we get there, rather than people just producing tables. One of the things that frustrates me most is that everybody produces tables—'Here, here's a table.' How you get the table, where that information comes from, seems to be totally immaterial. I think: show your workings. I wouldn't have let any of my students get away with just producing a table and saying, 'Those are the answers', and I don't think that it's really acceptable for either the Welsh or the Westminster Government to just produce a table and say, 'This is it.' 'How did you get that?' 'This is the answer.' We really do want to try and keep on pressurising people to show their workings.
Ie, a gwnawn ni ategu'r neges yna eto fyth yn yr ohebiaeth nesaf, felly, at y Gweinidog Cyllid yn y Senedd ac at yr Ysgrifennydd Gwladol. Diolch, Mike.
Papur i'w nodi rhif 8: llythyr gan y Gweinidog Cyllid a'r Trefnydd, y wybodaeth ddiweddaraf ynghylch cais ffurfiol Llywodraeth Cymru i Lywodraeth y DU i ddatganoli cymhwysedd trethi ymhellach. Mi fydd llawer o hwn, wrth gwrs, yn cael ei bigo lan gan yr ymchwiliad y byddwn ni'n ei wneud ar y fframwaith cyllido, felly dwi'n siŵr y bydd Aelodau'n hapus i nodi hynny am y tro. Mae yna set o gofnodion hefyd i'w nodi o'r cyfarfod a gynhaliwyd ar 13 Gorffennaf eleni. Dyna ni. Bach o farathon yn fanna o nodi papurau, ond fel roeddwn i'n dweud, dydyn ni ddim wedi cwrdd, wrth gwrs, ers tipyn, felly roedd yna lawer ohonyn nhw i'w nodi.
Yes, and we will ensure that that message is included in the next correspondence to the Minister for Finance in the Senedd and the Secretary of State. Thank you, Mike.
The next paper to note is a letter from the Minister for Finance and Trefnydd: update on the Welsh Government's formal request to the UK Government for the devolution of further tax competence. Much of this, of course, will be picked up by the inquiry that we conduct on fiscal frameworks. I'm sure Members will be happy to note that. There's also a set of minutes to be noted from the meeting held on 13 July of this year. Okay. We had a little bit of a marathon there, in terms of papers to note, but as I said, we haven't met for a while, so there were a number of papers to note.
Mi symudwn ni, felly, at y trydydd eitem ar yr agenda, sef sesiwn dystiolaeth ar y Bil Rhentu Cartrefi (Diwygio) (Cymru). Estynnaf groeso cynnes iawn i'r Gweinidog Tai a Llywodraeth Leol, Julie James, aton ni. Croeso, Weinidog, a chroeso hefyd i'ch swyddogion, sef: Emma Williams, cyfarwyddwr tai ac adfywio, sy'n brif swyddog â chyfrifoldeb am y Bil; Simon White, pennaeth strategaeth tai a deddfwriaeth; a Rob Owen, rheolwr deddfwriaeth rhentu cartrefi. Bydd Aelodau'n cofio, wrth gwrs, y cafodd y sesiwn yma, oedd i fod i gael ei chynnal rai misoedd yn ôl, ei gohirio ac, yn sgil hynny, gwnaethon ni ysgrifennu at y Gweinidog yn gofyn nifer o gwestiynau gan nad oeddem ni wedi cael y cyfle i graffu. Felly, yn amlwg, byddwn ni'n defnyddio llawer o'r atebion mae'r Gweinidog eisoes wedi eu darparu fel sail ar gyfer y cwestiynau y byddwn ni efallai yn eu holi dros yr awr nesaf yma o graffu. Felly, croeso i chi i gyd.
Mi awn ni'n syth at gwestiynau, os cawn ni, a gwnaf i ofyn, os caf fi, i'r Gweinidog i gychwyn os oes yna unrhyw oblygiadau i'r amcangyfrifon cyllido yn sgil, wrth gwrs, yr oedi sydd nawr i amserlen y broses ddeddfu oherwydd COVID.
We will move to item 3 on our agenda, which is an evidence session on the Renting Homes (Amendment) (Wales) Bill. I extend a very warm welcome to the Minister for Housing and Local Government, Julie James. A warm welcome, Minister, and welcome to your officials: Emma Williams, director of housing and regeneration, who is the Bill's senior responsible officer; Simon White, head of housing strategy and legislation; and Rob Owen, renting homes legislation manager. Members will recall, of course, that this session, which was to be held a few months ago, was postponed and, in light of that, we wrote to the Minister asking a number of questions as we hadn't had an opportunity for scrutiny. So, clearly, we will be drawing on many of the Minister's answers as the basis for our questions over the next hour or so of scrutiny. So, a very warm welcome to you all.
We will move immediately to questions, if we may, and I will ask the Minister first if there are any implications to the financial estimates as a result of the changes to the timetable for the legislative process because of COVID.
Thanks very much, Chair. It's really nice to be here. Thank you for the invitation. In terms of the effect of the financial implications on the timescale, we're not aware of any such implications. There is, perhaps, a need to shift some expenditure from one financial year to another, because it will possibly go across into the next financial year, but other than that we don't think anything has changed in terms of the overall financial implications. The only thing that's really changed is that we've all learned a great deal about digital technology and communication, so we will be looking to apply those lessons across the board in terms of communicating the implication of the Bill and the way that we interact with Rent Smart Wales. So, it's possible there might be some tiny amount of saving there, but broadly we don't think there are any implications, other than a possible shift across the financial years.
Ocê. Diolch yn fawr iawn. Wel, mae hynny'n ddigon clir. Symudwn ni, felly, at Rhianon Passmore.
Thank you very much. That's quite clear. We will move on to Rhianon Passmore.
Thank you, Chair. The regulatory impact assessment notes that three options have been considered, but the financial implications of only two—the 'do nothing' and preferred option—have been quantified. So, what is the narrative as to why you've retained the option to remove the section 173 no-fault ground if it does not meet the Welsh Government's policy objectives?
Thanks very much, Rhianon, for that question. We looked, obviously, at a large number of options in terms of the removal of the section 173 no-fault ground and various implications of that. Eventually, in the RIA, we included three options. Option 2, which is the one that isn't costed, is referred to, shorthand, as 'the Scottish model'. Forgive me, that's not a particularly—. It's because it's based largely on what they've done in Scotland. We haven't costed it, because we ruled it out really quite early on for a number of good policy reasons, which are largely that the Scottish model has a large number of potential legal loopholes, which an unscrupulous landlord may well exploit. And so far in Scotland there hasn't been any evaluation of the 2016 Act, for all sorts of understandable reasons, so we have no way yet of knowing whether our reservations about that model will be borne out.
Section 7 of the RIA includes a detailed analysis of the option from a policy perspective and explains why, in the end, we didn't think it was the right approach for Wales. For that reason, we didn't commit any officer time to setting out its financial implications as we had ruled it completely out. The financial implications of the other two options are included.
Okay. Thank you very much, Minister. In—
Sorry, Rhianon, could I just go back a little bit on that, then, because if it's not an option, why is it an option in the RIA?
Well, because we felt very strongly, Chair, that if we didn't include the fact that we'd considered it, then we would be constantly asked, 'Why haven't you considered it?' So we're trying to—you're stuck between a rock and a hard place with those things. So, we wanted to show that we'd considered it, which we certainly did extensively, but we didn't want to go to committing—. We've got very, very tight resources, and we didn't want to commit resources to costing it when we're absolutely clear that we don't want to do it, but we didn't want you to think that we hadn't looked at it at all.
Sure. Okay. Thank you. Sorry, Rhianon.
No, that's fine. Thank you. In the letter to the committee, you note that Welsh Government officials attempted to discuss the assumptions for the cost estimates with the Residential Landlords Association, the RLA, and we do have a letter from them, but for a number of reasons these didn't take place. So, can you expand on this and explain how you obtained assurance that the financial implications for landlords and letting agents are complete and accurate?
Thanks, Rhianon. On reflection, we might have worded this better in the letter to the committee. So, what actually happened is we had a series of engagements with the RLA, or the NRLA as they are now known, in developing the cost estimates for the Bill in the first place, and a number of the assumptions we made in the cost-benefit analysis are based on data that was provided to us by the NRLA. We had a series of discussions pencilled in with key stakeholders in the run-up to publication of the Bill to go through them, and one of those specific meetings was arranged with the NRLA, but in the end, very shortly before—I think it might have even been the day before—we had a meeting with a very much wider group of stakeholders in which the reps of the NRLA were, and actually it was mutually agreed, is my understanding, that then the individual meeting with them wouldn't go ahead because they'd been included in the other, and people felt it was a doubling up of the same piece of information. But they were all at official level, so I'm sure one of the officials can tell you the absolute nuts and bolts of who met who when. But my understanding is—and we've had no pushback from them—that they were included in the wider stakeholder meeting, and then they felt that we'd had a sufficient discussion and they didn't need the individual one.
So, in regard to questioning around engagement directly, both at higher official level and with the contract holders directly, you would say that you have engaged directly around the financial implications of the Bill.
Yes, very much so. Officials were in contact with the RLA all the way through the run-up to the Bill, and then I've had a number of meetings with them as well. But, as I say, eventually they were included in the wider stakeholder group.
Thank you very much, Chair.
Diolch yn fawr, Rhianon. Siân.
Thank you, Rhianon. Siân.
Diolch yn fawr. Cwestiynau ynglŷn ag amcangyfrifon cost yr asesiad effaith rheoleiddiol. Dydy o ddim yn adlewyrchu'r holl gostau sy'n debygol o gael eu talu gan landlordiaid, gan gynnwys y ffioedd cyfreithiol. Sut ydych chi'n ymateb i'r feirniadaeth ynglŷn â hynny gan y Gymdeithas Landlordiaid Preswyl? Achos maen nhw'n dweud bod y rhain yn amlwg yn gostau i landlordiaid a bod angen i Lywodraeth Cymru roi cyfiawnhad, gan fod y newidiadau yn deillio o ddeddfwriaeth y bydd y Llywodraeth yn ei chyflwyno.
Thank you very much. These are questions on the cost estimates in the RIA. It doesn't reflect all of the costs likely to be paid by landlords, including legal fees. So, how do you respond to criticism on that point from the Residential Landlords Association? Because they say that these clearly are costs to landlords and that the Welsh Government must justify itself, because these changes do emanate from legislation that the Government will bring forward.
Well, the bottom line here, Siân, is that we are discouraging landlords from using a no-fault eviction ground when there are other grounds for eviction, rather than taking it as an easy way out. And any landlord who's taking on rented property needs to factor in as a business expense the occasional need, perhaps, to evict somebody, with all of the associated costs. So, we just don't agree that there are additional costs to landlords seeking possession of their property under the new arrangements. If a landlord wants to remove a contract holder for non-payment of rent or anti-social behaviour and so on, there are appropriate grounds to do so, and they would expect to have to go through the processes as normal. And in fact, those two things have shorter notice periods, because that's a fault eviction, so to speak.
So, the approach we took was intended to say that situations—. It will make more sense, we hope, as a result of this legislation, for a landlord to seek possession of their property using an appropriate ground, as opposed to just, 'Can't be bothered to look for an appropriate ground—I'll just use a no-fault eviction'. I don't see why that leads to higher court costs or legal fees, or to greater levels of rent arrears or any further damage to property; it just means the landlord has to file the claim promptly and properly evidence it, as they ought to do. I think you agree with me, Siân, that judicial oversight is an important component of the possession process, and it's the right of those who rent their homes to have an opportunity to defend themselves.
So, I just don't see that we're adding any additional cost for the landlord. A person taking on a second home as a business proposition should have to factor some business cost in around appropriate court proceedings, should they be necessary; you'd be a very lucky landlord indeed to always have tenants who were excellent and you never needed to do that. So, I just do not accept, really, that the Bill adds any additional cost. There are costs associated with being a landlord. The Bill, I think, clarifies those costs.
Ocê. Mae hynny'n ddigon clir. Pa dystiolaeth wnaethoch chi ddefnyddio ar gyfer yr asesiad cystadleurwydd o'r darpariaethau yn y Bil a'u heffaith nhw ar y sector rhentu preifat a'r canlyniadau posib ar gyfer tai cymdeithasol?
Okay. That's quite clear. What evidence did you use for the competition assessment of the provisions of the Bill and their impact on the private rented sector and the potential consequences for social housing?
So, in terms of the private rented sector, there isn't any competition element, as far as we're concerned, because it affects all private sector landlords exactly the same. So, no particular set of people are advantaged or disadvantaged by it; they're all affected in the same way.
We don't agree that there's necessarily an impact on social housing. I've seen an argument that private landlords will sell up in horror as a result of the Bill and they'll all go out of business and then there'll be a bigger call on social housing. We've heard in other legislation that the PRS will retract and everybody will be horrified and there won't be a good return on your house, but actually it's never happened before.
We have a number of things in train with the private rented sector where we're, for example, offering, as pilot projects across a number of authorities in Wales, taking a private landlord's house off them for five years or more, guaranteeing the local housing allowance rent and returning it to them at social house standard or better at the end. So, if they were particularly worried about it, they could do something like that and they would get a good return on their money and not ever have to worry about it again. So, there are a number of other things in place to reassure, if you like, the private rented sector. I just don't see the argument. Even if the PRS were to retract slightly as a result of the argument, the houses are still there; they're still going to be used. I'm sorry, I just don't see the strength of that argument at all. And we've had that threat before and it's not materialised.
Mike has indicated he'd like to pick up on this.
Thank you. Of course, what could and probably would happen is that a lot of the people who can't become owner-occupiers of the lower-cost housing, because it's being snapped up by private residential landlords, would actually be able to become owner-occupiers. In areas that you know well in Swansea, owner-occupiers have been driven out by landlords buying up huge swathes of it and renting it out.
I don't disagree at all with that, Mike, you'd be amazed to discover. So, the houses are still there; they're available for somebody to live in by one way or another. The other thing we're doing at the moment—. This isn't appropriate for this committee, Chair, apologies, but just to say we are aware of these sorts of issues and we are looking, for example, to make sure that, where appropriate and where the house fits the appropriate standards, our registered social landlords or councils can buy private-sector housing and turn them into social housing, which is badly needed across most bits of Wales. We're aware of that. So, if we did have people with buy-to-let mortgages suddenly selling up, then we'd be in a good position to buy them up for the social sector anyway, and it's the social rented sector that we're most short of in Wales, actually.
Diolch yn fawr iawn. Mark Reckless.
Thank you very much. Mark Reckless.
Good afternoon, Minister. Just following up on I think the first of Siân's questions, I'm not sure if I understood your answer or not, but were you saying that there was going to be no change in legal costs for landlords under the new system?
It's very difficult to understand why there are increased costs for landlords. There is a cost to being a private sector landlord that a sensible landlord should factor in. So, as I said, you would be a very lucky private sector landlord indeed were you to rent your home out over the space of the lifetime of a home—40 or more years—to always have tenants who never gave you any kind of difficulty. So, a sensible business person would factor in having to take the occasional tenant to court in order to be able to sort something out. This Bill clarifies the position, so I don't really see why anybody can argue that it increases the costs for landlords. In fact, it simplifies the system.
I don't want to comment on the merits or otherwise of the legislation proposed; you made your case for that. But two potential areas where costs might change: under a section 21, if a landlord issues that and serves the notice on a proportion of cases, tenants then vacate in response to that section 21 notice knowing there's a no-fault eviction process. If there's no such process in future, isn't it more likely that more tenants will insist on a court process rather than simply leaving in response to the notice? And aren’t the costs of those processes likely to be greater for landlords since, rather than just showing that section 21 has been complied with, they'll have to produce evidence and make arguments on that evidence and particular facts in each case in court? Isn't that likely to be a more expensive process?
So, we're not, in fact, removing the section 173 process all together. You'll know that what we've done is increase the notice periods for that and so on. But for human rights reasons, there are reasons why a person might want to repossess their house and the tenant's done nothing wrong, for example, if the landlords themselves are homeless, they might well need that house for their own use. So, there are good human rights reasons for that.
What we've done is made sure that the landlord doesn’t do that all the time because they really just can't be bothered to manage their house properly. And what I'm saying to you, Mark, is that a decent landlord who can be bothered to manage their house properly will have factored those costs in. So, I just do not see that, apart from unscrupulous landlords—which, hopefully, we don't have too many of in Wales—who constantly use the section 21 notice when, actually, they should have done something else, will have increased costs. Well, I suppose that's possible. We're not aware of any. But we're not legislating for unscrupulous landlords here; we're legislating to make sure our private rented sector works, and a good landlord would have factored those costs in. So, I just don't see that.
If your tenant is in rent arrears, then it's not very difficult to prove that ground. If you've made reasonable arrangements with the tenant to understand why they're in rent arrears, and it's wilful or whatever, it's not difficult to do that. Some people would choose to do that by going through a solicitor, others would very likely do that themselves. Landlords are reasonable human beings for the most part, and there's help from the Residential Landlords Association. So, I just do not see that there are significant increased costs for landlords as a result of this.
So, is your forecast then that there will be the same number of court possession hearings in Wales after this legislation as before?
I hope they may drop a little.
But we've yet to see—
But is that in the regulatory impact assessment? Are we costing that? If that's your view, that should be part of the RIA.
We're saying it's cost neutral. I, personally, hope it will drop a little, but we don’t think it will have much effect.
Okay. You also said—I think it was to the Equality, Local Government and Communities Committee—that you were going to keep this under ongoing review, and I certainly think that's a good idea in light of the uncertainties we've been discussing. Are there likely to be any costs related to that ongoing review, and should those be in the RIA?
So, I don't think there will be a particular set of costs associated with that. Because we have Rent Smart Wales and because we have good communications with our residential landlord societies and all the rest of it, we have a good way of making sure that we know about it, and quite frankly, Mark, if there are increased problems with this, we'll all know about it through our constituency mailbags, won't we? I'm not suggesting that we put some sort of vigilante force in place where the officials go around and knock on doors and ask or anything. We're just assuming that through our normal stakeholder engagement and through our Members of the Senedd, we will know if there are any kinds of problems associated with that. Obviously, we'll probably do a formal review at some point several years down the line, but now is not the time to look at that.
Okay. Thank you for that. That dealt with that question.
Just finally from me, in a previous ELGC committee I think there was a witness questioning some of what RLA or now NRLA were doing. I've read their survey and their response to that, and as an MS I receive quite a lot of material from them that seems to provide useful information for us. I wonder though what you would be doing with the NRLA going forward in terms of keeping this under review and understanding what's happening in the sector. And what do you say to the two particular points that the landlords the NRLA represent tend to be self-selecting and may be at the more responsible end of the market, to the extent that they're paying to join an organisation that offers support and advice and training? And is there anything that could be done to get more Wales-specific information about the operation of the sector like, say, we've seen in the English housing survey, and are you working with the NRLA on that?
So, that's a series of relatively complex questions. So, I suppose the answer is that we're hoping, through Rent Smart Wales, to have increased contact with all of our landlords. We don't just use the NRLA to do that because we now have a way of doing that. We know who they are, and electronic communications, as I mentioned right at the beginning of this session, we've definitely learned a lot over the pandemic about how to do that so we'll be able to do that.
We've tried to be very small 'c' conservative in our estimates across this Bill. I mean, I'm desperate from a policy perspective to tell you that we'll have hugely decreased numbers of evictions as a result of the Bill and so on, but actually what we've looked at is a reasonable worst-case scenario, which we've got here, and that's based on published figures and stuff that the NRLA have told us and stuff that we've got going. So, it's our best estimate as we are at the moment, Mark. That's the issue. I mean, I think Simon can probably tell you a great deal more than me about exactly how we came to this conclusion and a lot more of the detail of the research, Chair, if you think we've got time for Simon to do so. Simon, do you want to do that?
Yes. Thank you, Minister. I think, certainly, we did work very closely with the NRLA in looking at the evidence that they produced to have a good understanding of what lay behind it. I think the other thing I'd also comment on is the very close engagement we've also had with stakeholders throughout the whole of the period of the pandemic. So, we're having—well, we were meeting weekly, they're now fortnightly calls, and one of the lessons from that is that we do want to continue having that sort of very close engagement. So, I do think that's going to be a key source of ongoing intelligence, if you like, about how this Bill settles down within the rented sector as a whole and we've also looked through the national survey for Wales, for example, at increasing our understanding of the data that's there as well.
So, I think there are a number of actions that were put in place either before the pandemic or, indeed, taking lessons from the pandemic period, which we will be looking to apply, and we did identify within the explanatory memorandum for the Renting Homes (Wales) Act 2016 that we would undertake an evaluation as well, and I think that's where, again, we would be looking at the lived experience of landlords, of tenants, of stakeholders around what this Bill was looking to achieve and making sure that it actually meets those objectives. Thank you.
Thank you. Okay. Happy, Mark?
I am. Thank you.
There we are. Diolch yn fawr. Alun Davies.
Thank you. Can I just put on the record that I am a landlord in terms of a declaration of interest? In terms of the implementation of this legislation, Minister, there's been, from memory, quite a long series of difficulties with the department and the Ministry of Justice, where there's been conflict between the two Governments and certainly there hasn't been agreement on the costs over a number of years of implementing legislation in this field. Now, your position at the moment, or seems to be from the paperwork you've provided us with, is that you're unable to confirm all your costs at the moment. Is that still the position, Minister?
Yes, unfortunately it is, Alun. There are two sets of costs related to implementation. One is—I'm sure you remember that there was a long conversation about the IT system and its various iterations and various amendments we had to make to it, in a long ongoing conversation with the Ministry of Justice about when they were going to do the whole system and whether we had to change it first and various other things. Actually, that, because of just the passage of time and where we are now, seems to be much less significant than we originally had anticipated in the original thing, but unfortunately we still don't thoroughly know that because until we've got this Bill all the way through its processes, we can't tell the Ministry of Justice exactly where we are. So, we're in a little bit of a chicken-and-egg situation with that. Simon has been the official who has—I want to say 'borne the brunt' of that; I suppose he would say 'done the work on it', so I'm sure he can give you chapter and verse on some of that.
I don't think we need chapter and verse on it, but—[Laughter.]
And then the other one is the additional costs on the justice system impact assessments. It's been published after the Bill and the Ministry of Justice has agreed that the legislation would be cost-neutral as far as the court system is concerned as part of that exchange, but, again, Simon is your man in terms of the detail on that. So, I'll just pass over to him for a brief run-through of that, Simon, if you don't mind.
Yes, certainly, Minister. So, we actually had a meeting with Her Majesty's Courts and Tribunals Service and MOJ colleagues last week and we've got a very clear understanding of what needs to be done, but essentially, as in the nature of IT projects, they really need the final specification to be signed off before they can give us a detailed quote, et cetera. And that can't really be done until we've got the finalised Act as amended by this Bill. So, we've got a very good understanding, but until they actually get the i's dotted and the t's crossed, we don't know exactly where we stand.
And on the impact assessment, certainly in the wider context where we're actually looking to significantly reduce the number of possession claims going through the courts, the Ministry of Justice was content that, overall, we're looking at a net zero impact, really, on court costs as a result of this Bill because of those wider changes.
Thank you for that. That's very useful to understand. Can you confirm the Welsh Government's position on this? Carwyn Jones, as First Minister, took quite—I suppose a polite way of putting it is 'a robust view' on these matters, in that justice isn't devolved—it should be, but it isn't—and, therefore, the costs of the judiciary and running the system of justice should lie with the Ministry of Justice and not with the Welsh Government. When these matters are devolved, then clearly that will change. Is that still the approach that the Welsh Government is taking?
So, Alun, it's slightly more nuanced these days. So because we were just going nowhere with the conversation with the Ministry of Justice as a result of that, we did have a conversation with them about how much it might cost us to actually shoulder the burden in this instance, given where we are and the fact that we want to amend it. So, there were lots of caveats and so on around it, and as a result, that's the set of conversations that Simon has been involved in. So, it's a slightly more nuanced position, I would say.
But it is important that the Ministry of Justice, if they want to continue their ludicrous—frankly—proposition of trying to administer justice from two legislators, that both legislators are treated equally and that they implement the legislation that comes to them. It shouldn't be a matter of the Welsh Government or Welsh taxpayer subsidising that system, unless we have control over it.
I'm not disagreeing with you at all, Alun, but sometimes there's just a practicality set of things that you have to do in order to move the thing forward. So, we've had a discussion with them about how much it might cost, given where we are, and we're in the middle of that discussion.
This might be something we might wish to return to, Chair.
Yes, and Mark would wish to raise something immediately, so over to Mark.
I just wanted to declare for the record, if I may, Chair, that I'm also a landlord.
There we are. Well, I should do so as well, but of course, that is all a matter of public record because we have declared as much already, haven't we, really? But there we are. Okay. Thank you, Mark.
And I suppose the last thing I'd want to talk about in terms of the cost, Chair, is that obviously once we do know anything more substantive, we will of course be sharing them with you and the Senedd more generally.
Yes, okay. And that would be appreciated, clearly. Thank you very much. Nick Ramsay.
Diolch. I suppose as everyone else has, I should also make a declaration of interest as a landlord too. Minister, you told the Equality, Local Government and Communities Committee that Welsh Government was in the process of finalising its communication strategy for the 2016 Act, but are you now able to provide an update, and are there any implications for the cost estimates of the Bill as a result of the final communication strategy?
Thank you, Nick. Yes, we set out in the RIA for the 2016 Act the costings for our awareness-raising campaign in the run-up to the implementation of that legislation and ongoing work, as you said. We think that those figures remain relevant to the 2016 Act as amended by the Bill. I also—when I appeared before that committee—agreed to share our communication strategy for implementation of the amended Act, and that document sets out the main approaches we will employ to ensure all those potentially affected by the legislation are aware of the changes. And then again, as I said at the beginning, we've learnt some very valuable lessons during the last six months about how to more effectively engage with individuals traditionally described as 'hard to reach'. So, those lessons will now be applied in the development and delivery of a future Welsh Government campaign, including in relation to this legislation. I shared a paper with the ELGC committee recently, and I'm very happy to make that paper available to this committee also, Chair, if that would be helpful.
Yes, please. Thank you.
I hope Members of this committee noticed—. This is a policy matter, but just for information, I hope Members of the committee did notice the large number of adverts that we were running across social media and tv platforms about recognising yourself if you were potentially homeless, where to go for help and all the rest of it. So, it's those kinds of communication strategies that we've learnt a great deal about during the pandemic. We've been very successful at reaching people and we've housed over 2,200 people as a result, and we're looking to learn those lessons and roll them out in implementation of this and other Acts.
And has that communication strategy, that aspect of it—reaching those people who are harder to reach than others—has that had any major cost implication over and above what you'd expected at the start?
No, it's much more about—. It's not the cost of what we do, it's the target of what we do, Nick, if I can put it like that. So, we're not expecting it to increase radically from what the 2016 Act already set out. I mean, obviously, we're in a very unusual situation here, aren't we; we're amending an Act we haven't yet implemented, which is a very odd place to be. But, when we implement that Act, it will be the amended Act, and we're not expecting this amendment Act to have any particularly big ramifications on the overall implementation plan for the much larger Act.
Thanks. In terms of the familiarisation cost, that's £10,000, I think I'm right in saying, for the third sector. What evidence have you based that on and is it sufficient resource for training as well as familiarisation?
So, this Bill—this is all part of the same thing, isn't it—is tiny compared to the Act that it's amending, and we haven't implemented the Act that it's amending yet. So, any additional familiarisation costs are not likely to be very significant given the scale of the 2016 Act. In the RIA, we set out that, when we were working up this legislation and speaking to various third sector partners about how it implements it, the majority told us they just have somebody who regularly updates all their information as and when the law changes, whether as a result of legislation changes or case law or whatever, and it was very much part of what they did as their core business. So, actually, we think the £10,000 is a maximum indication of what it might cost the sector in relation to the Bill, and that would include us helping them to update training resources, advice documents, website changes and so on. But, anyway, this work is all being done as part of the implementation prep for the whole of the 2016 Act; it's not being done for the amendment Act per se, because we're obviously hoping to implement the whole thing as amended all at once, for obvious reasons.
Okay, thanks. Diolch.
Diolch yn fawr. Mike.
Thank you very much. Mike.
A couple of questions: you estimate that 10 per cent of contract holders will find accommodation before the end of the six-month period. Is that an average of 10 per cent across Wales, or are you expecting 10 per cent everywhere, or will there be different numbers in different areas depending on the pressure on housing? For example, we know that the pressure on housing in some of the cities, like Swansea and Cardiff, is greater than the pressure in other areas, and we also know that certain areas second homes and students make life more difficult in finding rented accommodation. So, is it an average of 10 per cent or do you think it will be 10 per cent everywhere?
No, it's an average, Mike, for all the reasons you just set out. I mean, there obviously will be savings to some authorities because we expect a great number of people to be able to find suitable accommodation for themselves rather than showing up at housing options. That's the whole point of the extension of the time period—so that families have a chance to plan and decide where they want to go rather than having to just panic and go to the next best place they can find, which might not be suitable. And that's the whole policy rationale for this—we're trying to make sure that people have control of their own lives and they have enough time, if they find themselves in those circumstances, to find somewhere else that suits them inside their school's catchment area and all that kind of stuff. But, it's beyond dispute, isn't it, that there will be some savings to local authorities if that works, because those people would, at this point in time—well, actually, no, the pandemic's changed everything—prior to the pandemic those people would have been turning up at very short notice to housing options potentially homeless.
Well, actually, one of the things the pandemic has done is reduce the number of foreign students coming in, which now in university towns has probably created vacancies. I visited Bangor recently, and the number of properties that were still for rent a few weeks before the start of the academic term was substantially more than they'd ever seen before. So, I think we're seeing lots of different things happening, and I don't expect you to comment on that. I'm in serious danger of drifting into policy rather than finance. But, what I will ask is this: the Residential Landlords Association, when they spoke to the Equality, Local Government and Communities Committee, said, given the impact on them, why haven't you produced cost savings for landlords?
It's very hard to understand that this legislation might in any circumstances present us with higher numbers of homeless people, because the whole point is to give people more time to sort themselves out so that they don't become homeless and they retain control over their lives. That's the whole point of the legislation. So, we haven't factored in anything about it increasing the number of homeless people. The rationale for the whole of this is to decrease that number, isn't it?
In terms of the cost for landlords, we discussed the cost of getting somebody out of a house who's not paying rent and so on, but actually we know that there is a whole pile of other options for landlords that we're busy putting in all over Wales. So, I think it's likely, in the end, Mike, to be quite cost neutral. So, we're just trying to present different scenarios to the committee to show—. Obviously, I was here when you were discussing your papers to note earlier. We're kind of trying to show our workings, I suppose, for why we've come to the conclusion that we've come to, rather than just saying that we think it's cost neutral.
Why wouldn't it be cost neutral?
Well, that's the point, isn't it—I do think it will be cost neutral, but we're trying to show what the effect around a cost-neutral pivot will be. I don't see how it can possibly be increased, but it might be decreased by a small amount.
And, finally, the benefit for other stakeholders, such as contract holders.
So, the whole purpose of the whole of the 2016 Act and this amendment Act is to make the system more transparent and also to give people better security of tenure in their homes. One of the things we always forget about the private rented sector, it seems to me, when we talk about it, is that this isn't just a business proposition for people; this is where people live, this is their home. When they say, 'I'm going home', that's what they mean—they're going home to a landlord's property where they reside. So, the whole purpose of this Bill is to make it easier for them to stay there, give them more security, give the landlord a better business income, for sure, because that's the nature of the transaction, isn't it, and to simplify the whole process across Wales so that it's just easier to administer and everybody knows where they are.
The other side effects of that are that we don't have a set of people who are traumatised by being in insecure housing, and we've reduced the cost for our local authorities in finding those people housing. So, it's what I would regard as a win-win scenario right across the piece, which is why we're keen to implement the 2016 Act in its entirety.
I did say in the policy committee, and I think it's worth repeating here, Chair, even though you're looking at the financial aspects of this, that, when I came into this portfolio, I had to be reminded of quite how far-reaching the 2016 Act is. The Senedd did something quite remarkable when it passed that Act, and I think that we've all kind of slightly forgotten about it. If nothing else, the amendment Act is an opportunity to remind ourselves of what a good thing we did.
Finally, the private rented sector is not one homogenous sector. You have those people renting in your constituency down in the marina who are an entirely different group of people to those who are renting the terraced houses in Plasmarl. That is a difference, isn't it? You have the high-value, high-cost, private rented sector—the marina and SA1 are two examples in Swansea, I'm sure other people can give examples in other areas—where there's no problem and they generally go along quite well, but then you've got the low-value housing that has been bought up by a lot of landlords from across the length and breadth of Britain. Sometimes they've bought up large chunks of streets on their own as a business. I'm not criticising that, but it's an entirely different market, isn't it? You've got the two. The high value, high cost, where there's no problem and things get dealt with very well, and the low value, lower rent, where things are more difficult.
Well, yes, Mike, it's obviously not a homogenous system, although I'm not sure, given my own particular post bag, that all of the high-rent stuff is without its problems, I have to say. I certainly have a post bag that shows that some tenants who are paying really quite high rent still have run-ins with their landlords, shall we say.
But I suppose what we really want to emphasise here is the importance of the private rented sector as a sector to Wales, both as a business and as a place that provides homes for people. So, we value it—we very much value it—and what we want to do is make sure that it runs in an efficient and effective fashion.
Actually, we know through Rent Smart Wales that we don't have very many landlords who have very large numbers of multiple properties. So, Wales is actually a nation of people who own a house or two, and actually, at this point, Chair, I feel obliged to say that I haven't declared an interest, which is that I'm not a landlord. That seems to be fairly unusual in the committee, but anyway—[Laughter.]
But it's true to say that most people have one house or two houses—they've got together with a partner who had a house or whatever it is that they've done—and that, actually, the average across Wales is somebody who owns a couple of houses. We do have some big landlords, obviously, but we don't have great numbers of them. So, we have a very specific rented sector in Wales, and we want to make sure that the landlords we value, who are good and reasonable landlords and who know that they're getting a reasonable return for their property and that they're lucky to be able to do so and they're providing good homes for people, that we value them and we make sure that they have a relatively smooth-sailing position in order to stay in the private rented sector, and we've developed a whole range of other options for them. So, I'm very happy that most of our landlords will be very happy with this and it will be easy to implement.
Okay. Finally from me, then, just to conclude, could you tell us a little bit, maybe, about how the proposed legislation will be monitored for effectiveness? We're very good at legislating, but we don't always go back and check whether it did what it said on the tin.
Yes. There are two little bits to that, actually, Chair, if you'll indulge me for a moment. So, as a result of the pandemic and, unfortunately, as a result of some of the reviews we've had to do about what it's possible to get through the Senedd in terms of secondary legislation and so on in the next five or six months, which is all we have left, it looks likely to me that the implementation date for the 2016 Act will move forward a little bit. So, we were always looking to implement it—well, at first I hoped—by the end of this session and then it went a few months over. But I think it's probably going to be in the autumn of next year now.
We're very determined to make sure that the sector works so I've promised everyone that I will give them a six-month implementation period to make sure that they can get all the paperwork sorted out and we can have a smooth transition, and I would very much like to keep to that promise. But I just wanted to alert the committee to the fact that the timescale—. Well, we're currently discussing—that's as most—. But I wouldn't be that surprised to find that it's slipping forward given where we are.
We obviously will need to do a review, but it needs to bed in, doesn't it. I don't know who the next Government is going to be, but whoever it is I hope will allow the legislation to bed in and then do a two- or three-year review of it. We know by then that the Scottish Parliament will have done a review of their legislation, which is not the same as ours, but it would be interesting to see how that pans out. And I do agree with you, and we've said all the way through, that when we've done that, we'll be able to see how it's working on the ground and it may be that it needs tweaking or whatever to make sure that it's still fit for purpose.
Iawn. Dyna ni, felly. Os nad oes yna unrhyw gwestiynau pellach, gaf i ddiolch i'r Gweinidog a'i swyddogion am ddod atom ni? Diolch yn fawr iawn ichi. Mi fyddwn ni, wrth gwrs, yn adrodd ar y ddeddfwriaeth yma erbyn—rwy'n credu mai'r 11 Hydref yw'r dyddiad—pa bynnag ddyddiad sydd angen ei wneud. Ac felly, fe wnawn ni gael toriad neu egwyl am resymau technegol nawr, fel ein bod ni'n gallu paratoi ar gyfer ein panel nesaf. Felly, diolch yn fawr iawn i'r Gweinidog. Mi dorrwn ni tan 15:35.
Okay. Unless there are any further questions, may I thank the Minister and her officials for joining us this afternoon? Thank you very much. We will, of course, be reporting on this legislation—I think it's due by 11 October—by whatever the required date may be. So, we will now take a technical break so that we can prepare for our next panel of witnesses. So, thank you, Minister. We will take a break until 15:35.
Gohiriwyd y cyfarfod rhwng 15:23 ac 15:35.
The meeting adjourned between 15:23 and 15:35.
Wel, croeso nôl i'r Pwyllgor Cyllid. Mi symudwn ni at y pedwerydd eitem ar ein hagenda ni, sef sesiwn dystiolaeth ar y rheoliadau treth trafodiadau tir. Mae gennym ni, wrth gwrs, o'n blaenau ni, banel o dystion yn cael eu harwain gan y Gweinidog Cyllid a'r Trefnydd, Rebecca Evans—croeso cynnes aton ni. Ac yn ymuno â hi mae dau o'i swyddogion hi, sef Andrew Hewitt, sy'n bennaeth deddfwriaeth trethi, a Dr Tom Nicholls, sy'n gynghorydd economaidd. Croeso i'r tri ohonoch chi.
Gwnaf i gychwyn â chwestiwn, os caf i, ar y cychwyn fel hyn, achos rŷch chi, yn flaenorol, wrth gwrs, Gweinidog, wedi dweud bod newidiadau i'r dreth trafodiadau tir, neu'r graddfeydd treth traddodiadau tir, wedi cael eu gwneud mewn ymateb, wrth gwrs, i newidiadau i'r dreth stamp gan Lywodraeth y Deyrnas Unedig: pam eich bod chi'n teimlo bod angen ymateb i'r newidiadau rheini?
Welcome back to the Finance Committee. We move to item 4 on our agenda, which is an evidence session on the land transaction tax regulations. We do have a panel of witnesses, led by the Minister for Finance and Trefnydd, Rebecca Evans—a warm welcome to you. And joining her are two officials—Andrew Hewitt, head of tax legislation, and Dr Tom Nicholls, who is an economic adviser. So, welcome, all three of you.
I will start with a question, if I may, because previously, Minister, you have said that changes to land transaction tax, or the land transaction tax rates, were in response to the UK Government's changes to stamp duty: why did you feel that you needed to respond to those changes?
Well, the temporary changes in stamp duty land tax across the border provided additional funding to the Welsh Government as a result of the impact on the block grant adjustment. So, in that sense, it was inevitable that we would take some kind of action, whether or not that would be to pass all of that additional funding on to house buyers or to pass none of it on and use it for other priorities such as an economic package elsewhere, or whether to do a mixture of things. Those were the kinds of options that we were considering. So, given the proximity of our border to, or so many properties on our border to England, there was a sense that we needed to take some action urgently in response to the UK Government's approach, and that was partly because we know one thing for sure, and that is that uncertainty has a really negative impact on the housing market. So, that was why we sought to take a decision very quickly after the UK Government moved, but to do so in a way that really reflected the situation of the housing market here in Wales, which is very different, both in terms of average prices, but then also in terms of the way in which homes are spread across the spectrum of prices as well. And in making the specific choices that we did, we were also able to free up, then, £30 million of funding to focus on a real priority area, which is providing additional social housing in Wales as well. So, we managed to come up with a package, in response to the changes in England, which was appropriate for the Welsh context.
Ac mi ddown ni at y £30 miliwn yna mewn munud—dwi'n gwybod y bydd Aelodau eisiau holi ynglŷn â hynny. Ond oeddech chi ddim yn ystyried gwneud newid beth bynnag? Hynny yw, rŷch chi'n dweud—. Gwnes i ofyn pam ymateb—hynny yw, oedd e'n rhan o rywbeth roeddech chi'n ystyried ei wneud, beth bynnag oedd yn digwydd yn Lloegr fel rhan o'r ymateb i'r pandemig?
And we will come to that £30 million in a few moments' time—I know Members will want to ask questions on that. But weren't you considering making changes in any case? Now, I asked you why you responded to the UK Government, but was that something that you were considering doing in any case, whatever happened in England, as part of the response to the pandemic?
Well, we always keep our rates and our thresholds for all of our Welsh taxes under review, of course, but, to be perfectly frank, this kind of intervention wasn't at the top of our list in terms of the coronavirus pandemic. Of course, all of our efforts were focused on, in the first instance, supporting the NHS, on creating that economic resilience fund to support businesses across Wales, and then also to ensuring that local authorities had the support that they needed in order to help the most vulnerable people in our society. So, that's where our real focus was. But, nonetheless, the actions across the border in England did allow us to take some action here, both in terms of changing our rates, but also, then, in terms of allowing us to put that extra funding into social housing.
And why £250,000? Why that particular threshold? Maybe you could tell us a little bit about the rationale there and how you identified that as being a sufficient threshold to stimulate the housing market in Wales.
In a sense, you've got almost limitless options of what to do and where to set the threshold. So, I think that it was important to recognise the difference that we have in our housing market in Wales. The average house price here is much lower than it is across the border, so £169,000 here as opposed to £252,000 across the border. And, as I mentioned, the market in Wales also has a very different distribution across the price range than the market in England. So, as an example, just 2 per cent of our houses in Wales are at £500,000 or above, and when you hit the £300,000 mark for a house price in Wales, then you're getting into the top 10 per cent of properties. So, the price of homes here in Wales is very different, and I think that the setting of the threshold at £250,000 was a proportionate one. It took another 20 per cent of people out of paying tax. Previously, of course, in Wales, we were the only part of the UK that had a land transaction tax that was set above the average house price for our country. So, I think we were already in a good starting place, but this additional move to just push things a bit further to take another 20 per cent into that group who are out of tax was something that was a proportionate response. But I recognise that you could almost set it anywhere, but in this case we opted for the £250,000, which does then free up that additional funding for social housing.
Can you tell us, then, of any assessment that you made or analysis that you've done on the economic impact to the housing market in Wales as a consequence of that decision?
Well, I think it's fair to say that there's not a great deal of evidence in terms of the impact that changes to stamp duty land tax or land transaction tax have on the economy. We do understand that if we do make an intervention, then it will provide some economic stimulus. The size of that, I think, again, is up for some debate.
We looked back at the 2008-9 situation, when an intervention like this was made by the UK Government, and, yes, we did see an economic stimulus as a result of that. But this situation that we find ourselves in is so different, because we're coming out of a situation where the property market had essentially stopped and there was lots of pent-up demand behind that, now moving into a situation where it's released again with these additional support measures in place.
Now, it might have been the case that the UK Government had been thinking of introducing this measure in the autumn budget, and in that sense, I think it would have made probably better sense to introduce it later on, so allowing all of that pent-up demand to come through the system and then providing that additional incentive later on in the year. But the UK Government had been briefing that it was going to introduce this in the autumn, and, of course, quite rightly, commentators recognised that that would have the opposite effect then, stalling progress in house moves until later on in the year, so it came into effect back in July, then.
So, all of these things I think will need to be taken into account. I don't know if officials would want to say anything in terms of the kind of considerations that they were looking at and the evidence from elsewhere, because, as I say, there's not strong evidence, and our current situation is so unique that it's hard to read things across from what's happened previously, anyway.
Does anybody want to pick up or are we okay? No, fine. I'm happy with your response, Minister. There's no need to elaborate if—
I just have one extra thought on that, actually, and that is the fact that I mentioned the things that are strange and different in this situation, you know, the housing market that had been stopped and then the pent-up demand, but then also we have a new unknown brought into the situation, where people are starting to think differently about how we live and work in the future. So, again, that might affect the choices that people make about location, about the type of house that they're looking for, the size of house and so on as well. So, plenty of things for people to study in future, I think, when they look back at the impact that these things have had.
[Inaudible.]—that wider cultural change happening across society, isn't there, really? Yes, okay. Alun, did you want to raise any issues or are you—?
Thank you, Chair. Just quite a small issue. I think the Government's done absolutely the right thing in its approach and the decisions it's taken, so I'm very content with the Government's position on all of these matters. I'm interested to understand, Minister, the extent to which the policy differential on both sides of the border actually impacts upon your decision making. It was one of the first matters you referred to in answer to a previous question—that you felt you needed to respond to that. In taking decisions, of course, the relative levels of taxation may or may not have a particular impact on buyers' behaviour either side of the border. Was there a policy intent in terms of driving behaviour in any way in terms of the decision you took to set land transaction tax at the levels you've done, or was it determined by the amount of tax take you believed that you could take from that decision?
The differences across the border I think reflect some of the work that this committee has actually been doing recently on Welsh rates of income tax, and looking at the reasons why people make certain choices about their lifestyles and where they settle. This is very much the same here, in the sense that the amount of tax that you'll pay on the transaction is only one of many factors that people will consider when purchasing their home—they'll look at schools, proximity to work and all of those other things that impact on homes and the choices that people make.
I will say that there are some interesting perspectives. When you look at north Wales, for example, houses in Flintshire and Wrexham are around 25 per cent cheaper than houses just across the border in Cheshire West and Chester and Shropshire, whereas you move down to south Wales, of course, and houses in Monmouthshire are more expensive than Gloucestershire. So, we should see, potentially, some small impact there. But, really, the only real impact will be on those really expensive homes, so where you will likely see large differences in what you would pay on properties in England as compared to Wales will be in those properties over £0.5 million, of which there are very few. So, overall I don't expect the choice in terms of where you buy in England and Wales to be large.
Iawn Diolch yn fawr iawn. Siân.
Right. Thank you very much. Siân.
Diolch yn fawr iawn. Fe wnaethoch chi benderfynu, wrth gwrs, i hepgor y trafodiadau eiddo sy'n gymwys ar gyfer y cyfraddau uwch o'r dreth trafodiadau tir, fel ail gartrefi neu brynu i osod. Gwnaethoch chi benderfynu peidio â'u cynnwys nhw yn y newidiadau dros dro sydd yn digwydd. Fedrwch chi egluro ar gyfer y record, achos dwi'n cytuno'n llwyr efo'r penderfyniad yma, ond ar gyfer y record, fedrwch chi egluro pam wnaethoch chi wneud hynny, yn enwedig o gofio, wrth gwrs, fod Llywodraeth y Deyrnas Unedig wedi cymryd agwedd wahanol at hyn?
Thank you very much. Now, you did, of course, decide to omit property purchases eligible for higher rates of LTT, such as second homes or buy-to-lets. You decided not to include those in the temporary changes. Can you explain for the record, because I agree entirely with the decision, but just for the record, could you explain why you decided to do that, particularly given that the UK Government have taken a different approach in this area?
The rationale there in terms of not providing the reductions for higher rates of land transaction tax is really because this is intended to be more of a targeted tax reduction to help homebuyers who may need some additional support to buy their homes. So, this isn't intended to be a support measure for buy-to-let landlords to increase their empire or for people to be purchasing second homes. It's very much about supporting people who are looking to buy that home that they intend to live in. You're right to say that it's a different approach that we've taken in Wales. So, the UK Government has removed the main rates aspect charged as part of the higher rates, and that gives property investors and second home buyers across the border there a reduction of up to £15,000. Similarly, in Scotland the temporary reduction there provides relief to property investors who might have a smaller maximum saving of £2,100, but that's not something that we were seeking to do with this particular intervention and, really importantly, in taking those purchases out and in setting our threshold where we have, that's been the measure that's been instrumental then in allowing us to have that extra £30 million for social housing, which was clearly a priority for us.
Dwi'n siŵr y byddwn ni'n dod nôl at hwnna. Jest un cwestiwn arall ar y maes ail gartrefi a phrynu i osod: byddwch chi'n gwybod am bryder y cymunedau dwi'n eu cynrychioli ynghylch y twf mewn niferoedd ail gartrefi a sut mae hynny'n effeithio ar brinder yn y stoc tai lleol ac yn rhoi pwysau mawr ar brynwyr lleol. Felly, a fyddwch chi'n ystyried hwn fel ffordd o liniaru'r broblem i'r tymor hir, yn hytrach na—? A oes yna waith yn digwydd i weld beth fyddai oblygiadau cario ymlaen efo'r sefyllfa yma ar gyfer y dyfodol, mewn rhyw ffordd neu'i gilydd, o ddefnyddio'r Ddeddf neu'r trethi yma yn y ffordd yna, felly?
I'm sure we'll come back to that. Just one further question on second homes and buy-to-lets: you will be aware of concerns in communities that I represent about the growth in the number of second homes and how that impacts the local housing stock and puts huge pressure on local purchasers. So, will you consider this as a means of easing that problem in the longer term? Is there any work being undertaken to see what the implications of continuing with this scenario would be for the future, in one way or another, in using this legislation or these taxes for that purpose?
So, in terms of the experience of people who are buying properties to let or second homes at the moment, in a sense, they're not losing anything from the situation they were in before but, equally, they're not gaining, as people who are buying their first—or their house to live in, their only property, as it were—are. But, certainly, I think that there's a role for our tax system in terms of incentivising the kind of purchases that we would like to see. So, we would like people to be buying their homes to live in in Wales, and that's really important, because of the impact that has on Welsh rates of income tax, for example. If people are living here permanently, working here, then, clearly, they're contributing to our tax base as well, which is important.
You'll know the work that's going on with the national development framework, for example, and that's important in terms of setting out our vision for Wales in the future and where we build, how we build, and so forth, and the work that that can do to incentivise people to come and live and work here in Wales as well. But, certainly, there's a role for this to promote the purchases of homes to live in.
Wnes i ddim egluro fy hun yn dda iawn, Cadeirydd, sori. Beth roeddwn i'n ceisio cyrraedd ato fo oedd: a oes yna rôl i'r dreth trafodion eiddo geisio lliniaru'r nifer o ail gartrefi drwy gynyddu'r dreth yna i'r dyfodol? A ydy hwnna'n ystyriaeth y byddech chi'n fodlon rhoi sylw iddo fo?
I didn't explain myself very well, Chair. What I was trying to get at was whether there is a role for the land transaction tax in seeking to reduce the number of second homes by increasing the tax rate there for the future. Is that something that you would be willing to consider?
That would be one option, as we look towards how we use our land transaction rates and thresholds in the future. Obviously, we have a higher rate at the moment for those second purchases, but where you set those particular rates are always up for review and obviously you can try and push certain behaviours as a result of where you set those thresholds.
Ocê. Dwi'n meddwl bod yr ystadegau'n dangos bod angen i'r Llywodraeth fynd i'r afael â'r mater yna, yn sicr, ac wedyn byddwn i'n disgwyl bod ystyriaethau cyllidol fel hyn yn rhan o'r drafodaeth yna, yn sicr, a byddwn i'n awyddus iawn i gael y sicrwydd bod y Llywodraeth yn ystyried hynny o ddifrif. Diolch, Siân, am y cwestiynau yna. Awn ni ymlaen, felly, at Nick Ramsay.
Okay. I think the statistics do show that the Government does need to address that issue, and we would expect that fiscal considerations should be part of that discussion. We'd be very eager to have an assurance that the Government is taking that seriously. Thank you, Siân, for those questions. We will move on to Nick Ramsay.
Diolch, Chair. This question was touched on in Alun Davies's earlier question—I think it was Alun—have you estimated the potential loss of tax revenue resulting from changes to LTT, and how will this affect tax forecasts for 2020-21, Minister?
So, the forecasts for land transaction tax are produced independently by the Office for Budget Responsibility, and it's their forecasts that are really important for us in terms of our budget process. Of course, you'll know that they will only cost stated Government policy, they won't cost policy ideas, for example, and that applies to all Government departments. The OBR is now due to publish their next forecast for the Welsh Government alongside our draft budget later this year, and that will, of course, include the effects of the pandemic on the economy as well as the LTT measure that we're discussing today.
Ahead of providing their next forecast, obviously we needed to cost and model the various options outside of our normal budget process, and the last full public finances forecast by the OBR was back in March. Clearly, so much has changed since then that it was almost out of date straight away. So, we have looked at the document published by the OBR in April, which is a coronavirus reference scenario, and that is a scenario not a forecast, but it did provide that kind of high-level guide as to how public finances might evolve over the course of the year. And, as part of that, there was a profile of property transaction revenues as well, so it's that that we used in terms of helping us understand what the impacts might be of the UK Government's decisions on our Welsh Government's budgets, and it was that then that we used in terms of being able to cost the various options.
Again, I don't know if this is something that officials might want to add some reflections on, given the way in which we used those scenarios.
You mentioned the pandemic and obviously—
Hang on. Do any of the officials want to come in on that?
I think Tom might.
You'll need to—. There we are.
Yes, just to add to that, I think it's quite a quickly—. Sorry, it's a rapidly-changing situation, I think, and in terms of—. As the Minister quite rightly laid out, our first full forecasts and the full sets of information we had were from March and, obviously, we're clearly in a very different environment now. The costs for this policy will change as the property market changes, unfortunately, and it's quite a hard moment in time to forecast the property market. That said, obviously we've done costings internally for this, and where we're looking for it to be is a more complete set-up with the whole budget, and that will be done, as the Minister rightly says, by the OBR—[Inaudible.]—the draft budget, and then you can see how that's been funded fully. But it would be all within the block grant adjustments, so the measure is fully costed within the resources that we have for this year.
Okay. Diolch yn fawr. Back to you, Nick.
Thanks. Minister, you mentioned the impact of the pandemic and how it was difficult to—. Well, the figures and forecast pre pandemic were quite different to the situation now. In terms of your policy change, how do you differentiate between the impact on forecasts of your policy and the changes that are happening due to the coronavirus pandemic and the wider economy? Because, obviously, the changes you've been discussing with us about the changes to the stamp duty—you know, taking more properties out of LTT—that's happened at the same time as the pandemic, so how will you work out which had the greatest effect?
Well, it's been interesting to look back at the data that has just been published on land transaction tax for the period of April to July of this year. So, total revenues from LTT are £36.6 million and that's down 47 per cent compared to the same period last year, so we can see the impact that lockdown had on land transaction tax. So, that's very clear. But it's going to be difficult to disaggregate all of those various different components when we look at the next period, when we look at the pent-up demand that is just coming through that would—you know, those transactions that would have occurred anyway, as compared to those transactions that were brought forward as a result of people making that decision to sell up, to move, to buy because they're aware of this time-limited opportunity to pay less transaction tax as a result of it.
But it's important in terms of evaluation to recognise how difficult it would be, but one of the important things with land transaction tax is that there is a statutory duty to have a full evaluation of land transaction tax within, I think, six years of the passing of the Act. And, inevitably, that will be a really interesting opportunity to look at, and to try to come to a deeper analysis, really, of, the impact that the pandemic had on sales, but then also any impact that our intervention here had, and also that kind of wider economic stimulus that we're hoping this will create as well—so, when people move homes, buy a new home, all of those different things that come alongside it: the purchasing of white goods, contracting local tradespeople to do work in your home, and so on as well. So, it's all of those knock-on things that we would like to see, but, as I say, the evidence base for that isn't strong, because there's not a great evidence base to look at, really.
If I can, Chair, just finally on this issue that was touched on earlier about the stamp duty holiday, obviously, £0.5 million across the border—less here, as you say, because the average house price is lower. It just so happens, of course, that, in south-east Wales, in areas near the border, like in Monmouthshire, you've probably got more of those higher-value houses than further across Wales. So, that happens nearest the border, so there would have been a greater distortion in terms of people thinking, 'Oh, I can buy a house in Hereford and save far more on stamp duty than buy it in Monmouthshire, or just across the border in the south of Powys.' So, will that be evaluated as well in the future? I know you've got to set that balance somewhere, and I hear what you're saying, but will that be evaluated in future, just to make sure that it's not having a really disproportionate effect on house purchases in Wales and then council tax revenues?
We should know, in fairly short order, really, the impact that it's had in terms of the number of homes and numbers of transactions in different parts of Wales. So, we wouldn't have to wait for a formal evaluation to take some kind of view on the impact that that's had. There is some suggestion that we should look to take a regional approach to land transaction tax, but I think that that would have been very difficult, really, in terms of implementation, and in terms of sending a clear message to the housing market as well. So, that's why we do take this national approach, which is much clearer and simpler to administer. But I recognise that there will be different parts of Wales where there might be different knock-on impacts.
Dyna ni. Diolch, Nick. Diolch, Weinidog. Ymlaen â ni nesaf at Rhianon.
There we are. Thank you, Nick. Thank you, Minister. We'll move on now to Rhianon.
Thank you. Obviously, forecasts and modelling are very difficult, it seems, at the best of times, not least in the middle of a pandemic. However, in regard to this issue that we've touched upon in quite some depth, actually, in regard to any potential loss of tax revenue as a result of these changes, how do you predict—to look into that crystal ball, how this would be treated in budgets now and in future years? And obviously taking on board your comments in terms of any economic boost around this, and the fact that we can't really make predictions on policy ideas, but how would you answer that in terms of potential loss of revenue?
Well, in terms of the current financial year, the OBR revenue forecasts will be revised in the autumn, and those are the figures then that we'll use in terms of our second supplementary budget for 2021. So, I think there'll be an opportunity for committee to revisit this when we come to scrutiny of the second supplementary budget later on, because we'll have a much clearer, I think, view of the figures involved then. But you're right to recognise that this not just an impact for this financial year. Despite the fact that this is a temporary relief that ends at the end of March next year, I do expect that there would be some knock-on impact into the next financial year because of forestalling—so, people bringing forward transactions from next year into this year to try and take advantage of the relief, or of the changes in rates. So, there's a potential impact on next year as well, although, of course, our budget for next year, and future years, hasn't yet been set. But, when we do that, we'll have those latest figures again from the OBR, and the latest forecasts for land transaction tax, which will help us better demonstrate the impacts.
And, if I may, just as a short supplementary to that, is there any particular reason why it's a six-year statutory review around this?
No, I think that—. Oh, I can see Andrew coming in; I think it was what was thought was proportionate at the time, but I'll let Andrew answer that one.
Thank you. Yes, it's linked to the date of Royal Assent being given. So, I think, for the LTT, it was sometime in May 2017 it was given, so that gives us May 2023 by which time the review will have to have been completed. It's an independent review, and that was as a result of an amendment laid down by Steffan Lewis AM, as was, and that was to make sure that—you know, he was very keen that there should be this review of the legislation at a point, and six years was chosen in order to give sufficient time. Obviously, there was a year before it went live in 2018, so that gives you only the five years, and it was felt that it was necessary to have a reasonable period of time in order to see how it beds in, to see the changes, to see everything settled, before starting a review of it.
Okay. Thank you.
Thank you very much. Mark.
Thank you. Minister, do you see any implications for the fiscal framework of these changes in property tax rates in England and Wales, and are there any lessons to be learned in terms of spillover effects of the policy?
The fiscal framework says that a policy spillover effect occurs when a decision taken by one Government has an effect on the tax or spending of another Government. We've seen a fair few examples of these, and discussed a few of these in Finance Committee: in recent times, the changes in terms of teachers' pensions, the additional funding for Northern Ireland, and so on. But I think that the impacts in this sphere are much less.
So there are three types of spillover effect. The direct effects: the direct effect is the mechanically driven additional funding for us in the Welsh Government as a result of the decisions that were taken across the border. So that's a change to the block grant, and that's the additional funding that we will receive as a result, and that helped us then make these changes to land transaction tax and also provide that additional funding for social housing. So, that was kind of the direct effect of it.
And then the second effect is the behavioural effect, and we've talked about some of those behavioural effects as well. The fiscal framework says that when behavioural effects should be accounted for in terms of funding moving between the two Governments, actually that should only happen in circumstances where the effects are material and demonstrable. And I think that it's fair to say that, in this case, the effects of those changes aren't going to be material in terms of behavioural effects.
And then the last effects are the second-round effects and they generally refer to macro-economic impacts. Given the fact that land transaction tax and stamp duty land tax are less than 1 per cent of our budgets, both here in Wales and across the border, then I don't think that is engaged either. So I think that we're on fairly clear ground in terms of the fiscal framework on this one.
And finally from me, if you had known how strong the property market was going to be throughout the two and a half months or so since it reopened, would you still have embarked on these stamp duty LTT changes as you did?
I think it would have been—well, a couple of things to say here. First, it would have been much better if the UK Government could have engaged with us and had some discussions with us on this early on. Welsh Government has always been very reliable in terms of being able to treat confidential data appropriately, so we could have had those discussions, I think, in a confidential way that would not have allowed for any leaking, but it could have allowed us to do some early thinking, really, in terms of those particular plans. But then also I think that we could have had a discussion about whether this is something that we would have wanted to do later in the year. We talked earlier on in this session about that pent-up demand being there, and as the property market opened it's coming through now. Would it have been better to wait until later in the year when you could have provided an additional boost again? But I think that, after the UK Government suggested it would do it in the autumn budget, it became very difficult to actually do it in the autumn budget, because obviously you would just continue the kind of stagnation of the housing market at that point. And I think that we could have waited in Wales and said, 'Oh, well, we'll look at the situation later on in the year', but I think that that would have just injected uncertainty into the situation, and people potentially would be holding off making those transactions just in case something transpired later on in the year. So, in that sense, it was important I think to act quickly, but it wouldn't necessarily have been our preferred way of looking at things, all other things being equal.
Diolch yn fawr iawn. Ac yn olaf, Mike Hedges.
Thank you very much. And finally, Mike Hedges.
I want to ask some questions on the £30 million. Before I do that, I'd like to follow on from where Mark Reckless left off. Don't you think that the reduction in land transaction tax is one of the reasons to have driven up house prices and that when, or if, land transaction tax comes back to its previous level then that will again affect house prices? Because in the world that most of us live in the amount of money that we're paying for a house is the amount of money we're paying for the house, so we add in land transaction tax if we're buying a house that has that; we build in all the other costs. So, if you take £2,000 off my land transaction tax payment, I can add £2,000 to my house payment.
Yes, Mike is right: there is evidence to suggest that reductions in property transaction taxes do result in increases in house prices, probably for the reason that he describes. So, that is a very real consideration. That said, house prices in Wales have been increasing at a faster pace over the past year than they have across the border in England. I don't think we've yet fully understood the reasons behind that particular issue at the moment.
I think that there's a lot—. I think when you treat the English market—I'll stop at this point—but when you treat the English market as one homogenous market—. There's London, which is entirely different, and house prices in London are in a different sphere to the rest of Great Britain. So, I think that if you start looking at areas 'similar to', I think that's the best way to compare house prices. So, you perhaps wouldn't compare Monmouthshire with Gloucestershire; you might compare it more with Worcestershire. The areas that are more—. And you probably wouldn't compare Alyn and Deeside with Cheshire, but you might compare Wrexham with Chester. It's those sorts of comparisons, rather than saying, 'This is England, this is Wales', because England and Wales are both fairly mixed up, but that's more a sort of comment than a question.
I wouldn't disagree with anything there, Mike, either.
Coming to the £30 million, it's very welcome. As somebody who's argued for social housing for the whole of my political life, I'm very pleased to see the additional money there. Now, that £30 million, is it going to go to local authorities? Or is it going to go to housing associations? Or is it going to be split between the two?
The £30 million is part of the homelessness phase 2 capital programme, and that's supporting 70 projects across Wales and delivering 700 homes, and I believe this is a combination of local authorities and RSLs. I'm not sure whether officials can confirm that, but that's my understanding. I know they are a mixture of modular construction, refurbishment, reconfiguration and acquisitions. So, it's a kind of mixture of types of housing, but I think it is a combination of local authorities and RSLs.
And it's a one-off, so we won't be having this discussion next year.
Who knows what discussions we'll be having next year, but this is part of the homelessness work that you'll know that Julie James has been really keen to push forward very quickly, so that people who have been housed through the crisis don't find themselves being moved onto the streets. I think Andrew might have some further detail on this.
There was a—. The Minister for Housing and Local Government issued a written statement on 28 July 2020, in which she announced the next phase and this new money being available for this. And it appears, from the written statement, that it is funded through local authorities, so the local authorities submit applications. I think that's the way it works. So, they submit applications to the Welsh Government and then receive funding based on the validity of those applications.
Great. Thank you, Andrew.
Ocê. Diolch yn fawr am yr eglurder. Iawn? Pawb yn hapus? Dyna ni, felly, ddiwedd y sesiwn. Gaf i ddiolch i'r Gweinidog a'i swyddogion am ddod atom ni? Mi fyddwn ni, wrth gwrs, yn pwyso a mesur y dystiolaeth dŷn ni wedi ei chlywed ac mi fyddwn ni'n parhau â'n trafodaeth nawr mewn sesiwn breifat.
Okay. Thank you for that clarity. Everyone content? Okay, that brings our session to a close. May I thank the Minister and her officials for joining us? Of course, we will weigh up the evidence that we've heard this afternoon and we will continue with our discussion in the private session.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
Felly, eitem 5 ar yr agenda, rŷn ni'n mynd i symud i sesiwn breifat. A gaf i gynnig felly, yn unol â Rheol Sefydlog 17.42(ix), ein bod ni fel pwyllgor yn penderfynu gwahardd y cyhoedd o'r cyfarfod heddiw ar gyfer eitemau 6, 7, 8 a 9? Ydy Aelodau yn hapus i wneud hynny? Ie, neb yn gwrthwynebu, felly mi symudwn ni i sesiwn breifat a dyna ddiwedd y rhan gyhoeddus o'r cyfarfod.
So, item 5 on our agenda is a motion to move to private session. And in accordance with Standing Order 17.42(ix), I suggest that we as a committee resolve to exclude the public from the meeting for items 6, 7, 8 and 9. Are Members content? There is no objection, therefore, we will move into private session and that concludes our public meeting.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 16:14.
The public part of the meeting ended at 16:14.