The next item on our agenda is a statement by the Cabinet Secretary for Communities and Children on the park homes commission rates. I call on the Cabinet Secretary to make a statement. Carl Sargeant.

Diolch, Lywydd. I wish to update Members on my plans for addressing ongoing concerns about the park homes industry in Wales, following publication last autumn of the research into the economics of the sector. You will recall that we commissioned public and corporate economic consultants to undertake this review. I’m grateful to them for completing the largest and most comprehensive review of the sector in Wales. Their report made four recommendations to the Welsh Government.

The Deputy Presiding Officer (Ann Jones) took the Chair.

It clearly identified a need to raise current residents’ awareness of contractual obligations and to ensure that future residents are clear on the matters before entering into contracts. It also recommended that we consider how poor practice could be identified and addressed. I accept both of these recommendations in principle, and will be inviting colleagues and key stakeholders to work with us on implementing them, including developing materials setting out the very best practice and promoting greater transparency for residents and site owners. In addition, the report highlighted concerns around energy costs and suggested further consideration be given to initiatives to reduce them. Work has already taken place to prevent site owners from charging more than their cost price for energy, and I’m happy to look at how we might encourage site owners to seek out the most cost effective energy deals on the market. Llywydd, it is however the report’s recommendation in relation to commission currently payable to the site owner at the time of sale that causes me most concern and on which I will be focusing today.

Before I do so, it’s worth reflecting on what more has been done to protect park home residents here in Wales than in other parts of the UK. All park home sites in Wales have had to apply for a new licence, and site managers have had to pass a fit-and-proper-person test. Neither England nor Scotland has gone this far. We have consistently sought to help park home residents—for example, site owners can no longer veto sales, and residents must be consulted on changes to site rules. In addition, qualifying residents associations must be recognised in a balanced way, and this will continue to be the case.

Turning back to the commission rate, the consultants’ report rightly highlights the fact that this is a complex issue with the potential for significant consequences. The consultants faced a number of challenges in compiling their report. In spite of the fact that over half the total number of park operators engaged in the research, only a quarter of the operators provided detailed financial information. This is disappointing and means it is difficult to understand fully the economics of the industry at present and the precise implications of making any change to the commission rate. By the same token, Llywydd, neither am I convinced, in the absence of a complete and reliable picture of the industry’s economics, that a case has been made to maintain the status quo. Indeed, I’ve received very strong representations suggesting that there may be good reason to reduce or even abolish the commission rate. Clearly, I must base my final decision on the best possible evidence. I would like, therefore, to invite the park home owners to let me have the evidence that they believe would justify leaving things as they are. Given the paucity of the information submitted to the consultants, it would be particularly useful to have financial evidence drawn from site owners’ business accounts and other relevant sources that they may have.

The options I will consider will include reducing or even abolishing the commission rate, which, at the current time, I am minded to do, but I will not commit further at this stage as I do not want to pre-empt the outcome of the forthcoming public consultation exercise. The report suggests that many park home sites are operating either at a loss or at only a small surplus. This reinforces the need for meaningful financial information because, as well as being fair to residents, in particular, in being able to access homes for themselves, we need to ensure that we do not inadvertently impact on the long-term viability of the park home sector in Wales either, which generally comprises sites smaller than their English counterparts. My portfolio priorities are well-being and economic prosperity. It goes without question therefore that I am anxious to ensure that we strike a balance between the sustainability of the sector and the interests of residents. This will require detailed assessment of the business case for change, but I’m confident we can conduct this exercise with the full engagement of site owners and park home residents.

Llywydd, I will now seek to engage with all those concerned, through representative bodies for both residents and site owners and through further public engagement and consultation. I want to give everyone, on all sides of the debate, a fair and equal chance to have their say, put forward their evidence, and contribute to the debate. I do not believe that the evidence I’ve seen to date points to the desirability of leaving things as they are. I sincerely hope all interested parties will take advantage of the opportunity we will now provide to submit further information and scrutinise the evidence available in greater detail. I intend to commence engagement immediately and will be engaging with the bodies representing both sides, both residents and site owners. The consultation responses will be published as soon as is practicable.

Llywydd, I hope this engagement will provide greater clarity about the issues and enable me to take a balanced view on the next steps regarding the commission rate. In the meantime, my officials will press ahead with developing best practice guidance and addressing the other recommendations of the report. Thank you.

Thank you for your statement. We in Plaid Cymru are happy to say that we are on the side of the park home owners and not the landlords in this instance. The 10 per cent commission is unfair. I don’t think there can be any other conclusion. An arbitrary 10 per cent commission fee to the landlord on top of any other fee a seller may have to pay during a process is something that we don’t see as acceptable.

We know the legislation didn’t specify abolishing the fees because of concerns that pitch fees and maintenance charges would go up. We’ve looked at this and we’re not convinced that this is the case. Actually, we think there is room for also using some of the mechanisms we have to prevent this from happening anyway.

The statement notes that the economics of the industry may be perilous and, obviously, the work being undertaken will shine a light on the wider economics of the business. But, it’s clearly unfair to retain a 10 per cent commission on sales to keep the industry viable as it penalises the home owners, many of whom will be elderly and retired. So, will he be prepared to look at other ways sites could be supported or even taken over by the residents themselves if the owner goes bust? I think a co-operative ownership model, for example, may be worth us looking into.

You also say that you will be consulting on the proposal to reduce or abolish the fees. I want to understand if this will be the usual Government consultation: not accessible to many people and skewed in favour of the industry interests. How are you actually going to ensure you reach a larger number of people, including, for example, people who used to own a park home and no longer do so because of the practices of some of these said site owners? I’m sure these people would be able to provide important insights and input into the decision-making process and we would like to hear from them also.

Your statement also notes the frustration that many people have over energy bills. We’re aware of some excellent practice and schemes where residents are bulk buying fuel to obtain discounts. So, I’m wondering whether you, Cabinet Secretary, think that such schemes should be mandated, or at least spread wide so that more people are aware of them across Wales.

Finally, there is obviously new legislation requiring private landlords to undergo training so that they’re aware of their obligations. I’m wondering whether, as part of the licensing process and the fit-and-proper-person test, you could look at whether compulsory training would be of value for park home landlords. Diolch yn fawr.

I thank the Member for her observations and questions. First of all, what we have to understand fully, and I think I’ve articulated that through the statement today, is the economics of the park. The financial viability of the report was questionable in terms of the detail we received back and that’s why I’ve been unable to make a decision. But, I do understand that some parks will build a 10 per cent commission rate into their business plans. We’ve got to understand that better and, when they come back with evidence, we’ll fully understand that.

I do take issue with the Member suggesting that our consultation exercises are skewed to one side, skewed to businesses, et cetera—that isn’t the case. This will be a full, open and transparent opportunity for all sides or interested parties to be involved. My team are already starting to plot out how we engage stakeholders, both site owners and residents, which is an important process.

The Member broadens out the scope in terms of the opportunity of this statement with regard to energy bills and best practice. I will be looking at issuing guidance around that. The Member raises some issues, or opportunities perhaps, of training et cetera, and mandatory training. I will give that further consideration. Indeed, co-operative models of site ownership are ones that I’m very interested in. I’ve already spoken to my colleague Jeremy Miles, who raised that in the margins of discussions earlier today. Of course, I think what we have to do is make sure we have a sustainable industry, because people are living there, but make sure it’s fair for everybody.

Can I say I agree with the core of the consultants’ report, particularly in respect of raising residents’ awareness about the nature and extent of contractual arrangements, identifying and addressing poor practice and initiatives to regulate and, if possible, reduce energy costs? So, on that bit that doesn’t seem terribly controversial and would benefit the whole sector, I wonder when you will be bringing forward proposals to ensure that that part of the consultants’ report is activated as soon as possible.

We then come to the other part of the matter, and that’s the commission fees. I think he’s right to start with that statement, but the sustainability of this sector is the first thing, because if we have considerable exit, and suddenly, then that's going to cause huge problems. So, we do need to be more fully aware of the economics of this particular sector. It is, indeed, disappointing that this was not sufficiently forthcoming in the consultant’s work and I think we would all encourage site owners, if they've been reluctant so far to submit the financial information, that they now engage, because we probably will need to take action in this area, and we need to fully understand the evidence base to make the most coherent public policy possible.

And I think you're right: the aim is to strike a balance between the sustainability of the sector and residents’ interests, and there, you know, there is a concept of a reasonable return, which we have to face. In general, I don't like commission rates. I think it should be the rent or the cost of the site pitch. That's really where you can most logically focus the costs of providing that service and also that, potentially, is more stable, because, at the minute, if it is embedded in the business model, then there’s an element of chance of when you're going to get the commission—obviously, that’s reliant on people selling. So, I hope there's a more rational structure waiting to be discovered fairly soon. I'd like to know what time frame you're going to set for the consultation, because I think people do want action fairly soon, but, obviously, building up the evidence base, that's probably going to take some time. I think, perhaps, some preparation that certain site owners will exit—I hope it's not a large number, but I think that needs to be now part of the public policy development in this area. Finally, you said, ‘abolish or reduce’. Of course, this commission has already been reduced a long time ago now—1983, I think—when it came down from 15 per cent to 10 per cent. So, if you were to reduce it to something like 8 per cent, I think you could have everyone thinking that’s a poor policy. It does seem to me that your choice is abolish or leave it as it is. I just wonder if you are going to rule out tampering with the rate and rather just confirm that you want to take this question fully on, because it's high time, really, that we give clarity in this sector. Thank you.

I thank the Member for his contribution. I think the Member, in broad principle, is supportive of the statement today. Of course, the other recommendations other than the commission, my team have already started work on that and we’ll be hoping to issue some guidance towards the autumn. In terms of the commission rate specifically, I expect the full process of engagement and consultation to start around Easter time for a full 12-week consultation process for interested parties to take part in that. My team have already started the list of people that they need to personally engage with already, irrespective of the proposals of consultation.

I would probably disagree with the Member at this moment in terms of the statement I made in regards to either reduce or abolish. I think it's important that we fully understand the economics of the park, and this is the reason why I'm doing this. Based upon the report—and the difficulty we had with accounts being submitted was the lack of evidence there. So, I could, upon the basis of just the report, move into consultation on the basis that we’re going to abolish these rates. I think it's fair that we recognise that we have to be supportive of business too. I recognise that they provide a service of housing for many people across Wales. I will make that judgment on the decision following the evidence provided by park owners, but it will be a robust piece of work. I am confident that we can do that. A failure to submit the accounts or evidence to suggest that their businesses are economically unsustainable will not wear with me unless I've got evidence to support that, and I will be looking, as I said, to reduce or remove, subject to the process moving forward.

Thank you, Cabinet Secretary. I attended, with other Members, the lobby lunchtime of park home residents and recognise their anxiety, as many residents are on low incomes, have retired, that they would like action on these charges, and I strongly welcome your suggestion that you are minded to either reduce or remove the charge. Clearly, a balanced judgment needs to be made, and I strongly support the suggestion that, where the charge is reduced and that does make the business unviable, that the Government takes an active approach in allowing a co-operative solution to come forward—not simply being willing to be open to it, but providing the finance and the support to make that a viable option for smaller sites. Of course, not all sites are smaller sites—I recognise the problem you have with the evidence base—many are part of larger corporate concerns, who would be able to absorb the charge. My question, Cabinet Secretary, is: will you be making sure in your consideration that any other opportunities to increase other charges were the commission to be reduced would be looked at and headed off at the pass?

The Member raises a very important point, and thanks for his contribution. I think what’s important is that we do fully understand the nature of the businesses and how they operate here in Wales. You’re right to say that there are a lot more smaller operators than larger ones in Wales, and what does the consequence of that mean—I wouldn’t want to remove the commission rate if we knew, in general terms, that this had a negative effect on the ability for sustainable parks, because you sort of defeat the object, and, actually, you close the park and then make 30 people homeless, or 60 people homeless, and that’s not our intention. This is about fairness, about the ability to afford fair accommodation on parks, and, in fact, David Melding’s point earlier on about the commission process, it is very—you cannot plan, because you don’t know when people are going to exit the parks. So, I was surprised how people build that into their business plan in the first place, because you may not have any exits for 10 years, and therefore no commission rates. So, it doesn’t quite sound so clear in terms of determining their accounts.

The key here is to have some open conversations with park owners to ensure that they can demonstrate that a change in the commission rate is going to adversely affect their business. If I don’t get the evidence to support that, then we will move in a direction to reduce or abolish those rates.

Thank you very much. And, finally, Gareth Bennett.

Thank you, Deputy Presiding Officer, and thanks to the Minister for today’s statement. We do welcome the statement, because we are very sympathetic in UKIP to the concerns of the park home residents. Some of the UKIP Members did meet today with the residents, and it became clear that one of their ongoing concerns is that the Welsh Government consultation is viewed by many of them as simply a means of kicking the issue of the sales commission into touch. There is a petition that has been circulating at the Assembly since 2013 on this issue. A debate took place in 2014, in which the then Minister promised that the Welsh Government would undertake research into the economic impact of the commission rate—so, we have taken rather a long time to get to this point. I do appreciate the need to gather evidence before the Government takes a decision, but I would ask, as my first question, why it has taken so long to get here.

Secondly, many of the residents have complained of the difficulty of meeting with Ministers as a residents’ group, so do you now have plans to meet with the residents as part of your consultations? We feel in UKIP that the service that the park home owners previously supplied in facilitating the sale of these homes is no longer provided, so the 10 per cent commission has become simply a sales tax. Unfortunately, many of the residents, as other speakers have mentioned, are elderly people, with a need in some cases to move into sheltered housing. The 10 per cent tax levied on them does severely limit their capital, and hence restricts their ability to move into suitable alternative accommodation. So, we would support you if you were minded to moving towards abolishing the commission. Do you regard the commission in the same light, as an unnecessary and unwarranted financial burden, and would you agree that what we actually need is a more flexible housing market, which would be more achievable if you did go ahead and abolish the commission? Now, I do appreciate the need for balance in your investigation, and I welcome your remarks that you would be robust in your approach towards further consultations, in particular with the park owners, because, if they want to make a case that their business may be unviable without any commission, then it really is up to them to provide that evidence. Thank you.

The Member raises some interesting points. I think the Member should engage in the consultation exercise on behalf of his party if that’s what he wishes to do. I have met with the park home residents and park home site owners in the past and it is unfortunate that I—as Cabinet Secretaries and Ministers we get lots of requests by individuals to meet them; we just physically can’t do that because of diary commitments. But what I am committed to doing during the 12-week consultation—and prior to that, my team are already planning to meet with stakeholders, so, the residents’ association groups, with the park home site owners’ representative bodies, and we will do that through an open and transparent process. I have many letters from many Members: Lesley Griffiths, Jane Hutt, and many others who have written to me; Kirsty Williams writes to me every other week on park home issues. I have made a commitment to look at this in detail and make a decision this year about what we will do and whether we need to legislate or not or whether we remove or maintain those commission rates. But it is, as the Member quite rightly said, within the gift now of the park home site owners to show to me that their businesses would become unviable if we removed or made alterations to the commission rates.

Thank you very much, Cabinet Secretary.