3. Will the Cabinet Secretary make a statement on the introduction of a permanent small business rates relief scheme for Wales, following its announcement today through a written statement? 93

Today, I announced that a permanent small business rate relief scheme will be introduced from 1 April 2018, which provides assurances and security for small businesses in Wales. The scheme targets support at businesses, supports jobs and growth, and delivers wider benefits for local communities.

At the time of the Assembly election, the Labour manifesto promised,

'We will offer a tax cut to all small businesses in Wales'.

I presume that this is the policy announcement that is designed to give effect to that pledge. Now, that could have been achieved through a variety of means—by raising the lower and upper thresholds for relief and increasing the rate, introducing a split multiplier differential between small and larger businesses. Can the Cabinet Secretary confirm that he's done none of those things? And so, effectively, by my calculation, the proportion of small businesses that will benefit from the relief that he's announced will be around about 70 per cent, not all small businesses in Wales, as was suggested by the pledge. 

In terms of the detail of what he's announced, could he give us a bit more detail about the targeted support for the small hydropower schemes? I was very glad to see that. That was part of the budget agreement between Plaid Cymru and the Government. But could we have some more of the detail of that? I presume the reference to the living wage is a reference to the real living wage, not the national living wage. And in terms of the forward programme of work, the ideas for future exploration, there seems to be a suggestion that business rate relief will be conditional in future. Does he see it being linked in some way with some of the criteria set out yesterday in the economic action plan in terms of the economic contract between businesses seeking investment and the Government?

I thank Adam Price for those additional questions. Llywydd, it is 70 per cent of business premises in Wales that have help with their rate bills, and more than half of those pay no rates at all. It isn't 70 per cent of small businesses. It's 70 per cent of all businesses. That's why the vast bulk—I would say it's hard to find small businesses that do not benefit from the help that is provided here in Wales, and what we've announced today is that that help is a permanent source of help, not, as Members here will know, a scheme that has had to be brought in front of the Assembly every year with no certainty that it would be available in the year after.

The Member is right to say that I am not proposing, in the changes that we are making today, to change thresholds or indeed to introduce a split multiplier. The idea of a split multiplier was quite heavily opposed in the consultation that we had on changing the small business rate relief scheme. There was a strong sense in that that the fact that we have a single multiplier in Wales is one of the things that helps us to attract people to set up businesses here. I'm very pleased, though, to confirm that the high-street rate relief scheme that we agreed with Plaid Cymru last year on a one-off basis—that we're able to find £5 million to extend that for a further year. It will be half of the amount that we were able to offer in this year, but it will allow high-street businesses to have further help into 2018-19. I'm glad to confirm as well that this package will allow us to provide extra help in the small-hydro area, and detailed discussions are now going on by policy officials with the sector to design that help in the most effective way.

Llywydd, Adam Price is correct to point out that, in the information that we've published today, I also set out a series of ideas that we want to go on exploring. The fact that we are committed to a permanent scheme—there will always be a scheme—should not be confused with a belief that the scheme we have today will never be changed in the future. There are many ways in which I think the scheme could be usefully further developed. Amongst the ideas—and they are ideas for discussion with the sector—are a series of ideas coming out of the Barclay review of business rates, undertaken in Scotland this year, and the idea, which has been developed in Scotland already, although not completely implemented, of linking the help that businesses get from the public purse with key objectives of public policy. How we would do that: certainly the economic action plan that was published yesterday has some ways in which we might be able to link that, and the work being carried out by the fair work board in Wales might provide another series of ways in which we could link the payments that companies get from the public purse with being confident that they conduct their business in ways that are consistent with our policy objectives.

Cabinet Secretary, I've also been perusing yesterday's written statement and a permanent business rates relief scheme of the type you've identified was desperately needed, so we welcome the permanence of the new scheme. I've raised over the last months—and years, probably, now—some of the problems that small businesses, particularly high-street businesses in my constituency in Monmouth and Chepstow, have been facing with some of the extraordinary hikes in business rates that they've experienced. I know that that was out of your control in many ways, but the relief scheme that you implement is within your control.

As you said in answer to the last question, you are able to frame that so that it does meet Welsh needs and the Welsh context. I do share Adam Price's concern that this new scheme doesn't tick all the boxes and there will be notspots, so to speak, out in towns and high streets, particularly in my constituency, and pockets elsewhere. Will you at least undertake that you will keep the new system under review, so permanent it may be, but intransigent and inflexible it won't be, and, in the future, if you do get advice that it needs to be altered and amended that you will do that as soon as possible?

I'm very happy indeed to give that assurance. I want the scheme to be developmental. I want to find new ways in which we can improve it further into the future. I'm interested to make sure that we work with the Chancellor of the Exchequer in the announcement he made in the budget about more frequent revaluations, so that we don't get these major shifts in some parts of the country when revaluations only happen once every five years. I'm sure the Member will welcome the fact that the additional support that we are able to offer through the high-street rate relief scheme will now be continued in 2018-19 to assist those places that did see hikes in their business rates to accommodate themselves to that over a longer period of time.

Will the Cabinet Secretary agree with me that when you have to provide a multiplicity of reliefs and exemptions, it's generally speaking a sign of a bad tax? Whilst the measures that have been announced yesterday are certainly very welcome, they don't actually get to the heart of the problem. Additional support for the childcare sector affects 100 businesses out of nearly 4,400 and for local authorities, £1.3 million divided between 22 means less than £60,000 per authority. There will still be, as Nick Ramsay pointed out a moment ago, lots of small businesses in Wales that will be suffering as a result of the existing system, and any tax that is unrelated to the ability to pay is bound to produce these kinds of anomalies. I take what the Cabinet Secretary said about the Barclay review in Scotland and ways in which we may be able to tweak the existing system, but either we go to a system where we exempt a much larger number of businesses or we design a new tax altogether that removes some of the more objectionable elements of the current tax. I appreciate that that's a long-term solution to the problem, but would the Cabinet Secretary at least commit himself to looking at the possibility of having a better type of tax to tax businesses, which is more related to ability to pay than the existing model, which, as we know, having been in existence for a very, very long time, regularly produces the problems with which he has to grapple today?

Well, Llywydd, I don't think the spirit of Christmas entirely entered into the Member's question, because I think the extra support for childcare providers has been welcomed by that sector, and it's consistent with this Government's policy of being able to provide an extended level of childcare support for working parents. The extra money for local authorities is to help them to go on using their discretionary powers. We know their budgets are under pressure, and some of the areas where they have discretion to offer relief have come under pressure as a result. That extra money will allow local authorities to go on providing targeted relief to support local businesses, where that help is most needed.

I think I ought to have mentioned as well, Llywydd, that, in the announcement, I also made it clear that I have decided to use the money that has come to Wales in the budget to change the way in which the annual uplift in which business rates are calculated in Wales—to move it from retail prices index to consumer prices index. That by itself will be worth £9 million to businesses in Wales next year, and £22 million to businesses in the year after, and that's a very substantial additional support to businesses here in Wales.

On the general point that Mr Hamilton raises, however, I'm happy to say that we are already committed to a more fundamental look at the way in which taxes are raised in this area. Whether we will be able to do it in a way that links ability to pay to taxes paid is something that we will look at. But land value taxation, which it is often argued that, in a practical way, you would be best to try and introduce it in the field of non-domestic rates, rather than trying to do it in domestic rates, in the first instance—we're certainly committed to research that will look at the practical issues that will have to be addressed, if that way of raising money were preferable to the system we have currently.

I thank the Cabinet Secretary.