2. Will the Cabinet Secretary make a statement on the reasons why the starting threshold for land transaction tax will increase for the residential main rates when the tax is devolved in April 2018? 92

Recent changes made by the UK Government to stamp duty land tax have led to additional funds being available for the Welsh Government, and this has allowed me to make some changes that will mean that some 90 per cent of homebuyers in Wales will pay either the same or less tax than would have been the case under the stamp duty land tax.

Thank you, Cabinet Secretary, for that response. I appreciate the fact that he published a written statement on Monday regarding these issues, but, as we look at devolved taxes for the first time, I think it’s appropriate that we have an opportunity before Christmas to share good news or bad news with residents the length and breadth of Wales. So, thank you for confirming that 90 per cent of first-time buyers won’t be affected, or, if they are affected, they will be affected in a positive manner by this change.

May I ask you just two specific questions? Have you had an opportunity to profile the funding that will be collected by the Welsh Government as a result of these changes, and are you, therefore, of the view that when we come to vote on the final budget in the new year that you won’t need to make any changes to that budget? Have you also taken the opportunity to model the impact of this change on house prices in Wales? You will recall that the Office for Budget Responsibility stated that introducing the relief for first-time buyers would increase house prices across the UK, or, rather, across England and Wales, and I think that they suggested that that would be an increase of up to 1 per cent in house prices, which puts housing further out of reach for some first-time buyers. As you’re not doing that here, can you model that and the impact that that would have on house prices in Wales and will there be a report by Bangor University looking at these issues in order to update the situation by the time we come to vote on the final budget?

Well, I thank Simon Thomas for those two additional questions.

Llywydd, just to say that the underlying assumptions behind the decisions we are making in relation to devolved taxes will be independently scrutinised by Bangor University in the way that Simon Thomas suggested. I am committed. I told the Finance Committee that I would do my best to make sure that, alongside the final budget on 19 December, we will lay Bangor's updated assessments, taking into account the changes that we have made, and they will test those assumptions so that Assembly Members will see both the assumptions we've made and their independent look at them.

Simon Thomas is right, of course, to refer to what the OBR said about the Chancellor's decision to raise the starting threshold for stamp duty land tax for first-time buyers in England on prices in the market. There is previous evidence, when there was a previous first-time buyers' rate, that that led not to lower bills for buyers but to higher prices for sellers. We will keep a careful look on that here in Wales. My decision to increase the starting threshold for anybody buying a home in Wales valued at £180,000 or less at least guarantees that other people beyond first-time buyers are not doubly penalised—not having a relief available to them but having to bear the inflated prices that sellers might be able to charge.

We, on these benches, would like to welcome the increase in the tax-exempt amount up to £180,000. Would the Cabinet Secretary similarly welcome the tax cut by the UK Government that made this money available to him? Will he also reflect on whether a written statement is really sufficient to announce changes in tax rates, as he considers the evolving financial procedures in this Assembly?

Could I also ask him is he now engaged in tax competition with England? I think, perhaps, this increase to £180,000 may mitigate the risk of first-time buyers perhaps looking to buy over the border, but actually people who are buying a second or further time—does he think the reduction of up to £1,100 at the £180,000 mark may be sufficient to encourage people to come and buy in Wales? And is that something he would welcome?

Could he also just clarify: is this a grand statement of progressive politics, what he's doing with land transaction tax, or is it just a sensible alignment of the tax rates to the level of house prices prevalent in Wales?

Finally, last week, he said that the commercial 6 per cent rate would lead to just a small number of thousands being raised. On the basis of other data given to us by his department, we calculate it as at least £2.7 million a year. Could he look again at his calculations, and will he at least keep that 6 per cent rate under review in light of its impact on development across Wales?

Well, Llywydd, I did make a conscious decision to use money that is available to Wales as a result of the Chancellor of the Exchequer's decision in relation to first-time buyers in England. I did take a conscious decision to apply that money for broadly the same purpose here in Wales. The Member will be well aware of the awkwardness that we face in our draft budget being laid at the beginning of October and then a major event at the UK level halfway through it. My ambition was to be able to lay information in front of the Assembly at the earliest point that I was able. A written statement was the practical way of doing that. The regulations to give effect to all of this will not appear in front of this Assembly until the new year, and there will be a full opportunity for Members to scrutinise the regulations then. 

I entirely reject the idea that what we are involved in here is tax competition. What the devolution of land transaction tax to Wales does is to allow us to design this tax in a way that reflects the needs of Wales. I understand that the Chancellor of the Exchequer, when he was having to make a decision on an England-and-Wales basis, had to take into account house prices in London and the south-east of England as well as house prices in Merthyr and Blaenau Gwent, here in Wales. He then has to take a very broad-brush approach where some of those figures simply don't meet our circumstances. Having the tax in our hands here in Wales means that I have been able to set thresholds that reflect house prices here in Wales. Eighty per cent of first-time buyers in England will pay no tax at all as a result of the Chancellor's decision. Eighty per cent of first-time buyers in Wales will pay no tax as a result of the threshold that I have set here in Wales. 

The decisions I've made are not part of a grand statement, Llywydd. They are part of a carefully calibrated announcement in which I've tried to remain true to the commitments we have given that we will begin the journey of devolved taxes in a way that is careful, that is focused on doing a competent job, that allows those people who have to do the practical work to have a system that they recognise after 1 April as well as the one that they operate now, but at the same time to concentrate the help that we are able to offer into the hands of those who need it the most.