We move on to item 8 on our agenda, which is a debate on the general principles of the Landfill Disposals Tax (Wales) Bill. I call on the Cabinet Secretary for Finance and Local Government to move the motion—Mark Drakeford.

Motion NDM6262 Mark Drakeford

To propose that the National Assembly for Wales in accordance with Standing Order 26.11:

Agrees to the general principles of the Landfill Disposals Tax (Wales) Bill.

Motion moved.

Thank you very much, Deputy Presiding Officer. I’d like to start by thanking the Chairs and members of the Finance Committee and the Constitutional and Legislative Affairs Committee for their detailed scrutiny of this Bill throughout Stage 1. I’d also like to thank everyone who has been discussing this issue with us and has contributed to our ideas as we’ve developed this legislation on the landfill disposals tax. I believe that we are all agreed that we need to secure a new tax once the current arrangements lapse, in order to ensure that public services in Wales continue to benefit from the revenue raised by landfill tax post 2018.

Both committees have made a number of recommendations: 24 were made by the Finance Committee and 12 by the Constitutional and Legislative Affairs Committee, and I can accept the vast majority of these. Deputy Presiding Officer, as both committees have presented very detailed reports and have made a number of recommendations, it won’t be possible for me to respond to each and every one of them individually in the time available to me this afternoon. I have therefore written to the Chairs of both committees prior to this afternoon’s debate to reply to each and every one of those recommendations.

Ddirprwy Lywydd, cyn troi at rai o'r materion manwl a godwyd yn yr adroddiadau hynny, rwy’n credu y byddai'n ddefnyddiol dechrau'r prynhawn trwy fynd i'r afael â dau fater cyffredinol a godwyd mewn gwahanol ffyrdd gan y ddau bwyllgor. Mae'r cyntaf yn cyfeirio at y dull cyffredinol a gymerwyd gan Lywodraeth Cymru wrth lunio’r ddeddfwriaeth hon. Rwyf wedi dweud yn gyson, yn ystod y craffu ar y ddau Fil treth sydd gerbron y Cynulliad ar hyn o bryd, fy mod yn credu bod budd amlwg i'r cyhoedd mewn sicrhau bod y systemau yr ydym yn eu creu ar gyfer Ebrill 2018 yn gyfarwydd i'r rhai a fydd yn gorfod eu gweithredu yn ddyddiol ac yn diogelu’r refeniw y mae’r trethi hynny yn eu codi. Pan gyfeirir yn ein deddfwriaeth at berthynas gydag arfer sefydledig yn Lloegr neu'r Alban, nid yw hynny oherwydd unrhyw oedi wrth gyflwyno mesurau deddfwriaethol sydd wedi'u cynllunio'n benodol ar gyfer Cymru. Mae oherwydd ein bod yn cymryd y cyngor diamwys gan y gymuned broffesiynol o ddifrif yn y maes hwn, sef bod sefydlogrwydd a sicrwydd yn hanfodol ar ddechrau'r dreth newydd hon ar gyfer parhad busnes, cynllunio busnes a hyder wrth wneud buddsoddiadau.

Nawr, lle gellir gwneud newidiadau i wella eglurder a darparu mwy o sicrwydd, neu warchod yn erbyn cam-drin, yna rydym wedi gwneud hynny. Dyna pam, Ddirprwy Lywydd, rwyf yn hapus i dderbyn y rhan honno o drydydd argymhelliad y Pwyllgor Cyllid i gyhoeddi cyfraddau treth ar gyfer treth gwarediadau tirlenwi erbyn 1 Hydref eleni er mwyn rhoi sicrwydd i drethdalwyr.

Mae’r ail bwynt cyffredinol yr oeddwn yn meddwl y byddwn yn ei wneud yn cyfeirio at y cydbwysedd gafodd ei daro yn y Bil hwn rhwng yr hyn sydd wedi ei osod mewn deddfwriaeth sylfaenol a'r hyn sydd ar ôl i fesurau eilaidd. Fy nod oedd rhoi cymaint â phosibl o fanylion a gweithrediad y dreth hon ar wyneb y Bil fel bod y manylion yn ymddangos mewn deddfwriaeth sylfaenol. Er ein bod wedi gweithio'n galed i sicrhau dilyniant, rydym hefyd wedi mynd ar drywydd nod hygyrchedd mewn modd systematig.  Mae'r Bil yn tynnu ynghyd werth 20 mlynedd o ddeddfwriaeth y DU sydd wedi'u gwasgaru ar draws statudau sylfaenol ac eilaidd, yn ogystal â chanllawiau a hysbysiadau statudol. Yn anochel, mae dull sy'n anelu at roi cymaint â phosibl ar wyneb Bil yn golygu bod pwerau eilaidd yn ofynnol os bydd y gyfraith yn cael ei chadw'n gyfoes ac yn gallu diwallu anghenion y dyfodol. Er mai fy nod i oedd darparu sefydlogrwydd a pharhad ar y cychwyn, rwyf hefyd wedi bod yn awyddus i adeiladu’r Bil mewn ffordd sy'n caniatáu i’r Cynulliad Cenedlaethol hwn ddatblygu mwy o wahaniaethu polisi yn y dyfodol, pe digwydd bod dymuniad i wneud hynny.

The Llywydd took the Chair.

Nawr, gwn na fydd pob Aelod yn cytuno â'r cydbwysedd yr ydym wedi dod iddo yn y Bil, yn enwedig o ran y defnydd o bwerau Harri'r VIII. Ond rwyf am fod yn glir y prynhawn yma ynglŷn â’r rhesymeg sy'n sail i'n dull ni o weithredu. Mae'n adlewyrchu'r hyn, yn ein tŷb ni, yw’r cydbwysedd gorau sydd ar gael rhwng lefel uwch o ddarpariaeth fanwl ar wyneb y ddeddfwriaeth sylfaenol, a’r hyblygrwydd angenrheidiol a gaiff ei arfer o fewn gweithdrefnau craffu’r ddeddfwrfa, y mae pwerau eilaidd yn eu darparu.

Lywydd, mae angen i mi ymdrin yn gyflym â chyfres o argymhellion ar gyfer newidiadau i'r Bil yn adroddiad y Pwyllgor Cyllid yn benodol. Ar yr amod bod cytundeb yn cael ei roi heddiw i symud y Bil hwn i'r cam nesaf, ac ar yr amod y gellir cwblhau’r gwaith cyfreithiol a drafftio angenrheidiol, rwy'n bwriadu cyflwyno, yng Nghyfnod 2, welliannau i gymryd cyngor y pwyllgor mewn cysylltiad â mynwentydd anifeiliaid anwes, gostyngiadau dŵr, defnyddio pontydd pwyso a gostyngiad yn y dreth mewn cysylltiad ag atal llifogydd. Byddaf yn gwneud hynny o fewn telerau fy ymateb ysgrifenedig i argymhellion 7, 9, 13 a 16 yn adroddiad y Pwyllgor Cyllid.

Lywydd, cafwyd llawer o ddiddordeb yn ymrwymiad Llywodraeth Cymru i sefydlu cynllun cymunedol i gefnogi’r ardaloedd hynny yr effeithir arnynt gan safleoedd tirlenwi, ac ysgrifennais at y Pwyllgor Cyllid ddoe i roi’r wybodaeth ddiweddaraf i'r Aelodau ar ymatebion rhanddeiliaid i'r papur a gyhoeddais cyn y Nadolig. Mae'r pwyllgor wedi galw am ddarpariaeth mewn cysylltiad â'r cynllun cymunedol i gael ei chynnwys yn uniongyrchol yn y Bil. Rwyf wedi ystyried barn y pwyllgor a'r rhanddeiliaid yn ofalus, a byddaf yn awr yn gweithio i gyflwyno gwelliant y Llywodraeth i'r perwyl hwnnw, yn nes ymlaen ym mhroses y Bil.

Mewn cysylltiad ag argymhelliad 11 y Pwyllgor Cyllid, manyleb deunydd cymhwyso, mae angen cynnal trafodaethau pellach i brofi'r ymateb yr wyf yn bwriadu ei roi i farn y pwyllgor. Ar yr amod y gellir datrys rhai materion gwirioneddol gymhleth a thechnegol, unwaith eto rwy’n gobeithio gosod cynigion y Llywodraeth i ymateb i'r argymhelliad hwn yn ystod camau diwygio’r Bil.

Mewn cysylltiad ag argymhelliad 5 adroddiad y Pwyllgor Cyllid, y diffiniad o waredu deunydd fel gwastraff, darperais nodyn manwl i’r pwyllgor sy'n nodi’r broses ar gyfer adeiladu diffiniad o warediad trethadwy, a'r rhesymau pam y credwn fod y darpariaethau a gynigir yn angenrheidiol ac yn briodol.

Mae hyn i gyd yn golygu, Lywydd, o ran argymhellion y Pwyllgor Cyllid, mai dim ond un argymhelliad na ellir ei symud ymlaen yn bositif gan y Llywodraeth. Rwyf wedi edrych eto yn ofalus ar farn y Pwyllgor ar gredyd ar gyfer dyledion drwg, fel y nodir yn argymhelliad 18 yr adroddiad. Mae hwn yn faes lle bydd y ddarpariaeth yn dechnegol, yn gymhleth ac yn hir, ac felly rwy’n parhau i ddod i'r casgliad y byddai'n fwy addas iddo gael ei nodi mewn is-ddeddfwriaeth. Er mwyn cynorthwyo'r broses graffu, fodd bynnag, ac i gydnabod y pwyntiau y mae’r ddau bwyllgor wedi'u gwneud am graffu ar y mater hwn, byddaf yn ceisio cyhoeddi rheoliadau drafft, fel y gall y pwyllgor fod yn ymwybodol ohonynt, a’u hystyried cyn cyflwyno fersiynau terfynol gerbron y Cynulliad Cenedlaethol yn yr hydref. Yn y modd hwn, bydd y Llywodraeth yn gallu ystyried unrhyw sylwadau gan y pwyllgor, ar ôl cael cyfle i ystyried y rheoliadau drafft hynny. Byddaf hefyd yn rhoi mwy o fanylion o'r bwriad polisi y tu ôl i’r rheoliadau hyn i'r pwyllgor yn ystod trafodion Cyfnod 2, unwaith eto er mwyn cynorthwyo'r broses graffu.

Lywydd, mae llawer iawn rhagor yn nau adroddiad y ddau bwyllgor yr wyf wedi ymateb iddynt yn fy llythyrau at Gadeiryddion pwyllgorau. Diolch iddynt eto am yr ysbryd manwl ac adeiladol wrth gynnal ystyriaeth Cyfnod 1, ac rwy’n gobeithio y bydd yr Aelodau yn gweld bod yr un ysbryd yn fy ymateb i y prynhawn yma. Rwy’n credu ei fod yn uchelgais a rennir ar draws y Siambr bod y Cynulliad Cenedlaethol yn derbyn cyfrifoldebau cyllidol newydd yn y ffordd orau bosibl, ac rwyf wedi ystyried cyngor y ddau bwyllgor fel cyfraniadau adeiladol i gyflawni hynny. Gobeithio y bydd yr Aelodau yn cytuno i symud y Bil hwn ymlaen y prynhawn yma, fel yr argymhellwyd gan y Pwyllgor Cyllid, fel y gall y gwaith hwn barhau.

I call on the Chair of the Finance Committee, Simon Thomas.

Thank you, Llywydd. I’m pleased, as Chair of the Finance Committee, to table our report on this Bill. I welcome the way that the Cabinet Secretary has responded to this report, and has responded this afternoon as well to the recommendations made by the committee. This is the third piece of legislation relating to the devolution of tax powers in the Wales Act 2014, and the second tax Bill to be considered by the Finance Committee during the fifth Assembly. The committee met to consider the Bill over the spring term, and we’re extremely grateful to everyone who gave evidence and assisted us in the scrutiny process.

It’s a pleasure to say at the beginning of my contribution that we, as the Finance Committee, recommend supporting the general principles of the Bill. It’s clear that the Bill is needed to ensure that landfill does not become the cheapest waste management option available in Wales, thus undermining other environmental policies and encouraging the transportation of waste into Wales. Whilst the tax revenue associated with landfill will continue to decline as the Bill achieves its aims of reducing the waste sent to landfill, the committee also recognises that it is vital to maintain this revenue stream for Wales, given the consequential adjustment to the block grant, following the devolution of this tax. The Office for Budget Responsibility—the OBR—forecasts this to be £25 million in 2018-19, namely the year that the landfill disposals tax will be introduced in Wales.

However, we have made a number of recommendations, and the Cabinet Secretary has spoken about a number of them. I’m pleased that, of the 24 recommendations—and 24 recommendations were plenty—23 have been accepted by the Cabinet Secretary, either in full or in principle. So, I’m going to focus my comments today on just a few of the committee’s recommendations dealing with the fundamental principles with regard to the way that we prepare Bills dealing with tax.

First of all, I want to look at the regulation-making powers within the Bill. The Bill contains 29 provisions that allow Welsh Ministers to make regulations, including 19 that would permit them to amend primary legislation. We believe that a stable tax system is vital for Welsh businesses, and that the level of flexibility provided by regulation-making powers does not meet the Welsh Government’s own principles of providing stability and reassurance to businesses. I accept, of course, that some of the Cabinet Secretary’s comments in the previous contribution go some way towards mitigating our concerns in this area.

We wanted to see more detail being included on the face of the Bill, in four main areas: namely, the proposed rates of taxation; a list of qualifying materials for the tax; the definition of ‘a small amount’; and provisions for bad debt relief. The Cabinet Secretary has just dealt in some detail with the last one of those. Although the majority of regulation-making provisions will be subject to the affirmative procedure, this does not provide the Assembly with the opportunity to amend. The only option would be to vote against those provisions or to accept them.

In our report, we urged the Welsh Government to reconsider the balance of detail on the face of the Bill and, in particular, to reconsider the inclusion of the proposed tax rates. In relation to the setting of tax rates, the Cabinet Secretary indicated, in giving evidence, that he will bring forward the rates as part of the budget-setting process in the autumn. However, should the tax rates not be included on the face of the Bill, as a minimum, we seek assurances that the proposed rates will be published before 1 October 2017, in line with the Welsh Government’s stated principles of providing stability and reassurance to businesses. I’m pleased that the Cabinet Secretary has committed to publishing the tax rates by that date.

I have noted the Cabinet Secretary’s comments that it would be disproportionate to consider the introduction of an annual finance Bill at this time. However, we believe that the Welsh Government should look to introduce a financial framework Bill as soon as possible. We, as a committee, will be undertaking some work on this in the coming months, and the Cabinet Secretary has indicated that he is open to working with the committee to further this work. This is work that we hope that the whole Assembly will have an interest in.

The Bill includes a power for making regulations in relation to tax credits, which the Welsh Government intends to use in relation to bad debt credit in the case of insolvency. The Cabinet Secretary considers the construction of bad debt relief to be complex and technical, as we’ve just heard. However, the committee does not believe that this should prevent some details being included on the face of the Bill. We recommended that the provision for bad debt, and the circumstances in which it may be applied, should be included in the Bill.

Part 4 of the Bill enables the Welsh Revenue Authority to charge tax on the unauthorised disposal of waste at places other than authorised landfill sites. It’s important to note that this is designed primarily to deter tax evasion and not to deter what is commonly regarded as fly-tipping—the tipping of small amounts that happens illegally. We can agree with stakeholders that these new provisions should be supported by a meaningful enforcement and inspection regime, which, of course, needs to be sufficiently resourced. So, we recommended that the Welsh Government should monitor the number of unauthorised disposals and the number of prosecutions arising from this, and publish the figures, to measure the success of the provisions. The Cabinet Secretary has accepted this recommendation.

We heard a range of views with regard to the landfill disposals tax communities scheme, which was proposed by the Government to supersede the current landfill communities fund. This is used to support environmental projects and community projects near landfill sites. Some stakeholders supported this scheme being administered by a single distributive body, and put forward a number of suggestions regarding the scheme’s proposed eligibility criteria, and we’ve asked the Welsh Government to consider those. One thing is clear: stakeholders are concerned that the Welsh Government’s proposal to operate the scheme outside of the Bill will not protect the funding. We acknowledge that expectations will need to be managed as the amount of tax collected inevitably declines. Nevertheless, we recommend that a statutory duty to establish a communities scheme should be included in the Bill to secure this important funding stream, with the details relating to the application of the scheme provided. I’m pleased that the Cabinet Secretary recognises this and that he has announced a Government amendment to the Bill to this end. The Cabinet Secretary has also agreed to give consideration to the evidence we received on the development of the scheme before launching a procurement exercise to appoint a distributive body this spring.

Finally, the committee was disappointed to hear that HMRC intends to make changes to the UK landfill tax legislation in the 2017 Finance Bill. This is something that we need to monitor and the Cabinet Secretary has committed to working with the landfill site operators, HMRC and HM Treasury to ensure that that is as little effect as possible on the operators of landfill sites in Wales during this period.

A number of recommendations with regard to the committee’s report and the Cabinet Secretary’s response are now available on the committee’s Bill page, and I encourage any Member with an interest to have a look at that.

I call on the Chair of the Constitutional and Legislative Affairs Committee, Huw Irranca-Davies.

Diolch, Lywydd, and before commencing, can I give my apologies to you and fellow Members, and to the Minister as well, for being slightly late and missing his very opening remarks? I was taken aback by the progress we’ve made this afternoon. So, my apologies.

You won’t be the only person apologising to me this afternoon. [Laughter.]

Diolch, Lywydd. Well, can I first of all commend the very constructive and engaging way that both the Minister and his team have worked with us on the scrutiny of this Bill? We reported on the Bill on 10 March, we made 12 recommendations, and it is pleasing that, in his speech today and in a letter to the committee, the Cabinet Secretary has accepted 10 recommendations. So, we note the Cabinet Secretary’s comments that he’s sought to put more information on the face of the Bill than exists in current UK legislation, and we welcome that approach, but we do remain concerned in principle about the volume of Henry VIII powers that the Welsh Government is seeking to take in this Bill.

Our first recommendation asks for greater clarity about why it was necessary to take such extensive powers, and we do note the Cabinet Secretary’s comments and reasoning today, and in his letter. But, in our view, increasing the amount of detail on the face of the Bill shouldn’t be seen as a licence for the use of extensive Henry VIII powers to change primary legislation using subordinate legislation, because it carries the risk of parliamentary scrutiny being limited. And we do note that whatever assurances the current Cabinet Secretary, who has engaged so well with this committee, is able to provide to the National Assembly about his intentions in using Henry VIII powers, they are of course not binding on his successors.

We do recognise that this tension between the rights of the legislature and the wishes of the Executive is not new and not limited to this parliamentary institution, but it is our duty to continue to raise these concerns as part of the scrutiny process, and we will do so throughout the fifth Assembly. We do therefore welcome however today the Cabinet Secretary’s acceptance of recommendation 2 and for setting out the justification for the use of each Henry VIII power in the Bill. It will assist our scrutiny of the regulations that arise from these powers.

The Wales Act 2017 now provides powers that will permit the Welsh Government to bring forward an annual finance Bill in future. We agree with the Finance Committee that an annual finance Bill would make for a more transparent and more accessible way to change laws involving tax. Whilst we note the Minister’s argument for not doing so now, in his letter, we do hope the Cabinet Secretary will give further thought to the use of an annual finance Bill in future.

We welcome the Cabinet Secretary’s decision to accept a recommendation in principle to place a list of qualifying material on the face of the Bill at section 15, subject to discussion with stakeholders. Now, as an important matter of principle, we continue to believe that regulations that amend primary legislation should always be subject to the affirmative procedure. Our consistent views are on record. We made three sets of recommendations to apply the affirmative procedure to regulations to be made under sections 40, 59 and 90 of the Bill that amend primary legislation. Whilst we welcome his decision to accept the recommendation in respect of section 59, we regret he was not persuaded to accept the recommendations in relation to sections 40 and 90.

In closing, I turn to section 90, which concerns regulations that may make such incidental, consequential, supplemental, transitional, transitory or saving provision in relation to the Bill. Because of how broadly these powers could be used, we made recommendations seeking clarification about why the Cabinet Secretary needs these powers and how he intends to use them. I’m grateful to the Cabinet Secretary for the information he provided in his letter, which will be helpful to the committee.

But, as I’ve already said, we also recommended tabling an amendment to the Bill such that regulations under section 90 that amend primary legislation are subject to the affirmative procedure. In his response, the Cabinet Secretary noted that the approach follows that taken in the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill. Of course, our report on that Bill also advocated the use of the affirmative procedure, but that recommendation was also rejected. However, of particular note and interest is that equivalent provisions contained in other Welsh Government Bills, such as, for example, the public health Bill and the additional learning needs Bill, are in line with this committee’s views and those recommendations. So, I would be grateful if, in the answers, the Cabinet Secretary could explain this seeming inconsistency of approach within the Welsh Government on this important point of principle.

But in closing, can I thank him and his team again for very constructive engagement with our committee’s scrutiny? I look forward to his response.

Can I say at the outset that the Welsh Conservative Party will be supporting the general principles contained in this Bill? It does, in effect, replace an existing tax and puts into effect our devolved responsibilities in this area. Indeed, I think it’s a great advance in Welsh governance that we now have these powers and responsibilities. It will build the accountability of our system of governance considerably. That, I think, is a very sound principle of the Westminster model. So, it is something that we welcome.

I think the manner in which this Bill has been developed and presented is therefore especially important. It’s one of the earliest Bills—the second, according to the Chair of the Finance Committee. I was pleased, at least, to hear the Cabinet Secretary say that his intentions were for this Bill to be clear, simple and accessible. I think that sets the sort of standard that we would expect and, obviously, the standard that can then be scrutinised as the Bill gets examined in detail both by the respective committees like CLAC and finance but also at Stage 2.

I think compliance and enforcement are at the heart of sound legislation in this tax area. Certainly, compliance should be improved by legislation that is clearer and simpler, so that it is something that people can readily understand. Again, that is definitely a principle that we welcome. I think enforcement will require effective co-operation between Natural Resources Wales and the local authorities. Obviously, that takes us into a broader area, but it is always important to remember that, in setting a framework that is comparatively easy to enforce, then we are doing a service to the public. I think the deterrents in this area in charging those who are unauthorised users and to make that a more expensive option, clearly, that’s beneficial, but it does require a fair chance that those people are caught and that does, I think, in turn, require effective co-operation between the key agencies. Much of the Bill is about, really, the technicalities of imposing a tax and how that is designed and applied efficiently and that really is important and I'm indebted to the Finance Committee for the work they've done in this area.

I am a member of CLAC, so I just wanted to turn, finally, to this issue of Henry VIII powers. They are really a device that puts a lot of power into the hands of the Executive and overrides the legislative function of full and proper scrutiny. Now, I do hear—. The Minister, in his very beguiling manner, and this is not the first time, he sort of soothed us in saying that he uses this because he wants so much on the face of the Bill. I think we've got to be firm here, because whilst I welcome as much detail on the face of the Bill—. And, of course, in areas of tax you realise that things change and adaptations have to be made, but as the Chair of CLAC so ably demonstrated, the way around this would be with an annual finance Bill. So, I continue to oppose resorting to Henry VIII powers in anything but emergency situations, really, but perhaps he could give us some reassurance that it is the Government's intention fairly soon to move to the practice of an annual finance Bill, which then would make these particular stratagems unnecessary. But, in general, we do agree with the general principles and now look forward to Stage 2.

I very much support the Finance Committee's report and I think that the Finance Committee works very well together. We don't all hold the same political views—in fact, some of them are diametrically opposite—but I think that everybody's commitment there was to try and get the best report we possibly could to try and get the best legislation we can for the people of Wales. I think that's got to be our duty. We may hold different political views, but, actually, getting the best we can for the people of Wales is what we're here for. An annual finance Bill is inevitable, whether the Cabinet Secretary wants to do it now or in a couple of years’ time. As more taxes get devolved, it becomes an inevitability. Can I also say how pleased I am by the positive response from the Cabinet Secretary and his willingness to work with the Finance Committee, not just on this, but on a whole range of items that are important for us to get right for the people of Wales?

I very, very much welcome the unanimous decision of the committee to support the Bill going on to Stage 2 via recommendation 1, although I'm probably not as pleased as the Cabinet Secretary is with this unanimous recommendation.

I'm also pleased to see that action is being taken to tax illegal sites. This should end the practice in some areas of waste sites being opened up and not charging landfill and continuing until a court stops them, when an awful lot of material can be dumped on that site. There will now be no financial incentive to allow this type of tipping on some land. We also know that landfill disposal tax income is reducing. We expect it to continue to reduce. All projections show a downward movement in terms of tonnage and tax raised. Swansea council has already reduced landfill by 80 per cent from its peak, and if more people follow the principles of ‘reduce, reuse and recycle’ then we’re going to have less going into landfill and I’m—and I'm sure most people, if not everybody in this Chamber today, are—very pleased that we’re going to have less going into landfill.

There are a number of behaviour taxes described by some as ‘sin taxes’—tobacco and alcohol duty are two. Whilst many people also see them not just as taxes to change behaviour but also a major source of revenue to the Treasury, landfill disposal tax is wholly behavioural; it raises very little income. Still, well over half of this tax is paid by the public sector, mainly local authorities. It’s having a major effect on behaviour. What happens when, or if, the tax raises less than it takes to collect? Because that’s what happened with dog licences. I would argue that it is a tax for public good and it should continue, even if it does cost to collect it. Abolish the tax at that stage and landfill becomes a financially beneficial option, and then some will choose it and the amount going into landfill will increase, and that would not be good for our environment. The committee made a number of what I consider key recommendations. First:

‘The Committee recommends that the Welsh Government considers the definition of disposal of material as waste in section 6…to ensure clarity and simplicity.’

And can I say that’s very important right the way through the Bill, to get clarity and simplicity? It’s easy to complicate things. The simpler you keep it, the easier it is to ensure that is followed and obeyed. Second:

‘The Committee recommends that the Welsh Government considers the wording of section 11 (Pet cemeteries) regarding the disposal of dead pets, with particular consideration to simplifying the law and ensuring bilingual consistency.’

Bilingual consistency is incredibly important. One of the first events that happened here was the Aled Roberts event, which was because there was bilingual inconsistency—that what people thought was going to happen didn’t happen. I think it really is important that the Bill says exactly the same thing in English and Welsh, and if it doesn’t say the same—if the Welsh is open to a different interpretation—then an explanation of what those words actually are meant to mean in Welsh is put in there, so that there’s no ambiguity. There’s a problem—in some legislatures that are bilingual, they write the legislation in two languages. Here we tend to translate from English to Welsh, and I think there are serious dangers in that, and not just for this piece of legislation, but legislation in general. I think it’s important that we ensure that we don’t get things wrong, especially in tax legislation, because the Welsh says something slightly different or is capable of different interpretation.

‘The Committee recommends that the Welsh Government review section 26 (Material removed from bed of river, sea or other water) to ensure that material removed in the course of flood prevention is subject to the same reliefs as materials removed in the interest of navigation.’

Otherwise people are going to pretend that you can navigate up a river that you can’t do, except by canoe, in order to get that. And who’s going to be paying it? Natural Resources Wales in the main, or local authorities, or people who are stopping flooding. Do we want to tax flood relief and flood defence? I think that we certainly don’t want to do that. And, finally, all I would like to say is that I’d love to see the community scheme on the face of the Bill. The community scheme is incredibly important—it has helped a large number of people. Can we please have that on the face of the Bill?

In calling Adam Price, I need to apologise to you for not having called you earlier in the debate, and you were, apparently, one of the very few who was in in time, so—. Adam Price.

I’m more than happy to wait patiently. I’m not sure that my notes had arrived by that point, so I’m grateful to you. Now, every time we discuss taxation, there is some reference to a royal figure—I think it was Llywelyn ein Llyw Olaf the last time, on the land transaction tax. We were reminded that this was the first time that we were to levy a tax as a nation since those days. And today, of course, we are talking of Henry VIII, who has cast a sort of shadow over our deliberations this afternoon. I did want to focus on the general principles, because there will be opportunities for us to digest all of the recommendations put forward by both committees. But is it not an example, perhaps—the details of the recommendations put forward by both committees, and the fact that the Government has given way and accepted many of them—of the crucial role of the legislature in playing a central part in improving legislation, which actually strengthens the argument that I intend to make in the rest of my speech on the need to get that balance right between the ability of the legislature to scrutinise and the Executive’s ability to govern? That’s what’s at the heart of the comments that we have heard to date.

Now, when we refer to Henry VIII powers, they do date back to the proclamation statement of 1537. The Act of Union was the year before that, so the UK is almost as old as the Henry VIII powers. But it does give some false legitimacy to these powers to talk about Henry VIII powers, because they were abolished around 10 years later, and, to be honest, they disappeared entirely from the constitutional process in Britain until the end of the century before last. It’s only since the 1970s and 1980s that they have become part of the mainstream legislative process in the UK. Therefore, let us not accept that this is the usual way of operating. It has become common for political reasons. Of course, it is favourable to the Executive to operate under these kind of procedures. So, let us in this legislature not fall into that trap, and that’s how I interpret the contributions on the core principles contained within the reports, and the speeches that we’ve heard from both Chairs.

There are two main points, of course: we need more detail on the face of the Bill so that the Assembly can scrutinise its content—including the list of qualifying material is an example of that, on the face of the Bill. And the Finance Committee has suggested that the provision in relation to bad debt relief should be on the face of the Bill. The other general point that needs to be made, of course, is that, where there are regulations, there is a need to ensure that that is done through the affirmative procedure. So, there was a reference to sections 40 and 59 in terms of moving from the negative procedure to the affirmative. Unless we get that balance right, then we cannot do our proper work as a Parliament. That is the core principle here: it is very important with these first Bills that have been brought before us in terms of taxation that we do get that balance right.

Mae Biliau Arian yn aml wedi bod wrth wraidd y brwydrau mawr rhwng Seneddau ac Adrannau Gweithredol yn y Deyrnas Unedig, ac, wrth gwrs, ar draws y byd, ac am reswm da. Mae’r gofyniad am sicrwydd y cyfeiriodd Mike Hedges ato, a dyna pam mae cael y cydbwysedd hwnnw'n iawn a sicrhau ein bod yn gallu cyflawni swyddogaeth gyfansoddiadol briodol yn hanfodol bwysig.

Felly, yn olaf, ar y cwestiwn ehangach, y gwnaeth y ddau bwyllgor—argymhelliad 4 gan y Pwyllgor Cyllid, ac argymhelliad 3 gan y Pwyllgor Materion Cyfansoddiadol a Chyfreithiol—. A allem glywed gan Ysgrifennydd y Cabinet beth yw ei safbwynt o ran Bil cyllid blynyddol? Mae'r ddau bwyllgor o blaid hynny. Cafwyd cynnig caredig i weithio gydag ef gan y Pwyllgor Cyllid. Byddem yn dymuno'n dda iddo yn y cydweithio hwnnw, ond a allai ddweud wrth y Senedd beth yw ei safbwynt fel Ysgrifennydd y Cabinet? A yw'n derbyn yr egwyddor sylfaenol honno y dylai fod gan unrhyw Senedd sy’n gweithio'n iawn, i bob pwrpas, Fil cyllid blynyddol y gallwn ei drafod a’i ddiwygio?

Mark Reckless.

Diolch, Lywydd, and I think I owe you the deepest of apologies of the Members that you have, certainly in my case, very indulgently allowed to contribute to this debate; I apologise to the Cabinet Secretary also for not having caught at least the earlier part of his remarks. The thing I’ve most noted is that the Cabinet Secretary has listened and he has thought and he has considered constructive criticism and suggestions and he’s come to the Siambr today with a revised position. Like the Chair and other Members, I’m grateful that so many recommendations of the Finance Committee have been accepted in full or in part.

My party intends to support the general principles of this Bill today. We took a decision prior to the election that the tax devolution that was in the St David’s Day agreement we would support with a view to having a stable devolution settlement. I’m not sure we are going to have that, but, nonetheless, we will be supporting the devolution of this particular tax. I note the discussion we’ve had around, at least in the medium-term, the necessity for a finance Bill. I would think it equally important that that finance Bill, given we’ll be moving to new budgetary structures, should allow not just the Siambr to express its views on the level of or the applicability of tax, but there should be a similar possibility to influence the level or priorities within the spending side of the ledger.

I think the most disappointing thing we have in this at the moment is not having the initial rates on the face of the Bill. Given that this is an early tax that has been devolved to us in this Assembly or Parliament, it would be appropriate to mark that by this legislature determining what the tax rate is. This idea that it should be left to Ministers and that we should, at most, have a positive resolution that, as has been ably said by others, cannot be amended is simply not satisfactory. There is the issue that we’ve discussed of certainty for taxpayers, but I think much more fundamentally there is the issue of principle: should it be the elected legislature that is taxing the people of Wales, or should it be Ministers through some secondary process? I’m quite clear where I and my party stand on that, and I’m surprised that we haven’t at least had the full-throated support of some others in the Siambr for that proposition. It may be they’re making other agreements and having discussions, with which I wish them well, but nonetheless, I think as a principle it would be much better to have the rates initially applicable on the face of the Bill.

Can I just highlight one area where I think the Cabinet Secretary has indicated he’s prepared to change the legislation, which I thought was particularly important? We as a Finance Committee went to the Lamby Way recycling and disposal plant—although the disposal is shortly coming to an end—and as well as seeing the diversion of the Rhymney river, I was very impressed by the way that the weighing happened, and noted that the process was that the lorry with the waste on it came in, was weighed by the weighbridge as it entered, it disposed of the waste then was weighed on the way out, and the difference between those measurements was the amount of waste that was disposed, and it’s that that drives the applicability of the tax. So, we were concerned to see in the Bill, as initially drafted, that there was a requirement to ascertain the weight of the waste being disposed prior to disposal, which would have flown in the face of what was actually done operationally, at least at that site, but potentially at others. So, I’m grateful to the Cabinet Secretary for having taken account of the committee’s views on that particular legislative difficulty, and I think, certainly from what I’ve seen so far, that the way that the Cabinet Secretary has engaged with the committee and the way that this legislative process is working as we take tax legislation into this place is a credit to the institution and to those involved. Thank you.

Can I also thank the Cabinet Secretary for bringing forward this debate today? I also want to thank my friend and colleague here, Dafydd Elis-Thomas, for telling me all about King Henry VIII rules, which I didn’t know much about until before this debate. I probably know marginally more about that now than I do about landfill. But it’s good to take part in this debate today, and I’m delighted, Cabinet Secretary, that you’ve taken on board our concerns about domestic pet cemeteries, or simply pet cemeteries as it was in the Welsh—there was an issue with the drafting of the translated version of the draft Bill—and that was an interesting sideline of our whole discussion on how you form legislation, particularly in the area of taxation, which is a new activity for this Assembly, and which is one that we really do we need to make sure that we get right.

As with the new land transaction tax, we know that the UK landfill tax will be switched off in April 2018 and the block grant reduced accordingly, so the Welsh Government has no real option other than to develop its own. As Mark Reckless has just alluded to, the infamous Lamby Way landfill site visit—I was also fortunate enough as a member of the Finance Committee to take part in the visit to Lamby Way. I had originally planned to visit the CERN institute in Geneva that day. That was planned a few months before, but I clearly got the better end of the deal. [Laughter.] How jealous I was of those people who visited Geneva, as we, at the top of Lamby Way—. I think my hat blew off at one point, didn’t it, Mike Hedges, and you kindly caught it. But it was a fascinating visit. We learnt a lot about rubbish disposal and also had a discussion, as Mike Hedges mentioned, about how existing landfill sites can be seen not just as landfill sites but future resources, as some of that landfill, particularly in the older sites from a number of years ago, is now itself recyclable and will be recyclable, probably, in the future. So, there are possible retrieval opportunities for the future. I think on the Lamby Way site they refer to them as mining opportunities, which raised a whole new set of issues and considerations for us.

Many of the areas I was going to talk about have been covered, but if I can turn just briefly to the recommendations in this report. I would say this, but I think this is an excellent report from the Finance Committee—well done to the Chair for chairing over the sessions that led to this. It’s a straightforward report and, indeed, the Bill is a lot shorter than the stamp duty replacement tax Bill was. It’s good to see that, in the case of this tax, I think the evidence sessions were well advised, witnesses were listened to and the Cabinet Secretary has taken on board many of our recommendations.

Recommendation 3 in particular calls for the rates of taxation to either be evidenced on the face of the Bill, or as a minimum—a compromise—for them to be published before 1 October 2017. I will agree with the calls that other Members have made for those rates of tax to be more evident. I do think we need to be balanced about this. I’m not saying that the Welsh Government’s hands should be tied and that everything should be specified on the face of any finance Bill, and that you shouldn’t leave anything to regulation—I think that would be daft. But in the case of taxation and in the case of this tax, as with land transaction tax, we are all trying to achieve a smooth transition to the new taxation regime as soon as possible. That means the industry having confidence in the new regime and confidence that it will be as similar, at least in the early phases, to the existing UK model as possible. So, I think that having the rate specified on the Bill or having the rates announced at least at some specified point in the future, Cabinet Secretary, will help us all to agree with the tenets of this Bill.

If I can just mention that lovely term ‘waste tourism’, this was a key concern of the committee—well, it became a key concern—and we all had associated mental images of lorries of waste crisscrossing the border, and this clearly has to be avoided. We did learn, and it’s important to remember, that the cost of transporting waste is a proportionally small part of the overall cost of landfill disposal. So, a relatively small differential in landfill rates could potentially have a large effect on behaviour. So, that did need to be dealt with.

Key to the creation of this new tax is the need to maintain the revenue stream, so this legislation must prevent landfill once again becoming the cheapest waste management option. As Mark Reckless said, I do believe that the Cabinet Secretary has got the best intentions when it comes to this Bill ensuring a smooth transition and making sure that we do have the most efficient land disposal tax system here in Wales in the future. I and the Welsh Conservatives are happy to support the general principles of this tax Bill.

I call on the Cabinet Secretary for Finance and Local Government to reply to the debate.

Diolch yn fawr, Lywydd. Thank you to all who’ve taken part in the debate and for the indications from all parties here that they intend to support the progress of the Bill to Stage 2, for which I’m very grateful.

I’ll begin by thanking Simon Thomas for making a point that I really probably ought to have made myself, but didn’t have the time, which is that the Bill is about environmental policy as well as about taxation, and the use of taxation in this field has been very, very effective, as Mike Hedges pointed out. And the tax has a unique status as being an intentionally self-liquidating tax—it hopes to put itself out of business, and has been very successful in moving in that direction. We don’t want to do anything that would stop that from happening, but in the meantime, we need to raise the revenue, because the Treasury will assume that we are and will make a block grant adjustment on that assumption. So, the fact that we will raise the revenue is very important.

We’ve heard a lot in the debate on all sides about King Henry VIII powers, and let me say I begin from the position of sharing the belief that a Government should always be very careful in bringing forward such proposals, and we don’t do it lightly. But the fact that there is such a number of them in this Bill is largely because, as you will see in my letters to the committee Chairs, we have broken down a broad Henry VIII power that is available to Ministers in England to do a great deal of things more or less as they would like, and to make those powers much more specific and narrow and, I think, capable of being scrutinised. There is a balance to be struck. We think we’ve got it the right way. It is interesting—you’d expect me to say it, I guess—that even in the Constitutional and Legislative Affairs Committee’s report, which takes a sceptical line in relation to Henry VIII powers, the committee itself makes a recommendation, in recommendation 6, to place qualifying material on the face of the Bill, which I intend to accept, and in recommendation 7 to take a Henry VIII power to be able to amend that in the future. So, you can see the balance and the debate being taken forward, even in the reports of the committees themselves.

On an annual finance Bill, again, many Members have referred to it. I look forward to working with the committee. I see the time coming when an annual finance Bill will be a part of the landscape of the way we do things here, but at the moment we don’t have any tax-raising powers, and in April 2018, we’ll have only two taxes available to us. As Mike Hedges said, as the system matures, and more such powers come to Wales, I think this has a certain inevitability about it, but I’m very keen to work with the committee to look at the way that such Bills are used elsewhere, and to plan ahead so that we put the best processes in place for when we would be in that position.

As far as unauthorised sites are concerned—Simon Thomas raised this—he will have seen that in England yesterday a consultation was launched on taxation of unauthorised disposals, following what has happened in Scotland and what we intend to do in Wales. At the same time, regulations were published to deal with the changes to the system of landfill disposals tax in England that the Treasury has announced. I think when we look at them—and we need more time to look at them properly—we will see that the changes are less significant than were originally signalled, and I’ve shared with the committee the letter that I have had from the Financial Secretary to the Treasury, which gives us some comfort on that matter.

As to other points that have been made this afternoon, I will listen carefully, of course, to what the Chair of the Constitutional and Legislative Affairs Committee has said about sections 40 and 90 and think about the points that have been made in relation to those powers. David Melding, in an anything but caustic contribution, I thought made some very important points about compliance and enforcement. Because, although this is a shorter Bill, as Nick Ramsay said, compared to LTTA, actually, enforcement and compliance issues are more complex in relation to landfill disposals tax than they are in relation to stamp duty land tax, and that’s part of why we’ve got so much detail on the face of the Bill.

Let me just end by agreeing with a point that Adam Price began with. I’ve been lucky enough to be responsible for a series of Bills that have come before this National Assembly, in the last Assembly term and in this one. I’ve never been involved in a Bill where I did not believe that the process of scrutiny improved that Bill, and I think that’s very much the case in this Bill. My approach has been exactly as Mike Hedges said: that we have a shared interest in getting it right, making it the best possible Bill, and that is the spirit in which the Government will approach Stage 2 and the amendments that I’ve already agreed to this afternoon.

The proposal is to agree the motion. Does any Member object? The motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.