The next item is the Non-Domestic Rating (Multiplier) (Wales) Order 2018, and I call on the Cabinet Secretary for Finance to move the motion—Mark Drakeford.

Motion NDM6622 Julie James

To propose that the National Assembly for Wales, in accordance with Standing Order 27.5:

Approves that the draft the Non-Domestic Rating (Multiplier) (Wales) Order 2018 is made in accordance with the draft laid in the Table Office on 04/01/2018.

Motion moved.

Thank you very much. I move that we approve the Non-Domestic Rating (Multiplier) (Wales) Order 2018. The Order sets the non-domestic rating multiplier for the purposes of 2018-19. I recognise that there has been limited time for Members to consider the Order. This was necessary because of the timing of the announcement of the Chancellor in the autumn budget to proceed with processes to increase the multiplier in England using the CPI, the consumer price index, rather than the retail price index, the RPI.

Llywydd, the UK Government had previously set out its intention to change the measure of inflation used to calculate the multiplier in England from RPI to CPI from 1 April 2020. These plans were brought forward to 1 April 2018 in the autumn budget. The Welsh Government was not informed of this change of plan ahead of the announcement, and we've had to consider fully the costs and implications of adopting a similar approach for Wales before making a decision to change the basis for calculating the multiplier in Wales, preparing the necessary instrument and bringing it before the National Assembly this afternoon.

The Order needs to be approved before there can be a vote on the local government finance report, and the debate on the local government finance report had already been scheduled for today. I'm very grateful to the Constitutional and Legislative Affairs Committee for its early consideration of the multiplier Order, which has enabled us to debate it today. The committee noted the short time frame for the consideration of the order, but also noted that it was quite short and straightforward. If I could have avoided the tight timescales, Llywydd, I would certainly have wished to do so.

The committee also raised a merits point relating to a figure cited in the explanatory note to the Order and the Order that is not referred to in the explanatory memorandum. I apologise, of course, for this omission, and accept the view of the committee that a fuller explanation would have been helpful in describing the overall effects of the Order. A delay, however, in approving the Order, would mean postponing consideration of the lcoal government finance report, with obvious consequences for the budget planning of local authorities. It would also result in avoidable uncertainty for non-domestic rate payers in Wales, giving them less time to prepare for their plans for next year.

The Non-Domestic Rating (Multiplier) (Wales) Order 2018 will set the multiplier for 2018-19, using the consumer prices index rather than the retail prices index as the basis for calculating the multiplier. This will have the effect of limiting increases in all non-domestic rates bills for the next financial year. Businesses in Wales will benefit by £9 million in the coming financial year, and £22 million in 2019-20, as we intend to adopt the same approach for future years, bringing forward an Order for the Assembly's consideration in 2019-20.

Presiding Officer, non-domestic rates have been devolved to a large extent. This brings responsibilities and opportunities. Otherwise, using the CPI rather than the RPI to calculate the multiplier would add to the bills that taxpayers would face. The change will give a boost to businesses and other taxpayers in Wales whilst maintaining a stable flow of tax revenue for local services. The change will be funded in full by the Welsh Government. There will be no impact on the funding available to local government as a result of the lower bills for non-domestic properties. So, I would ask Members, therefore, to approve this Order this afternoon.

I call on the Chair of the Constitutional and Legislative Affairs Committee, Mick Antoniw.

Diolch, Lywydd. The Constitutional and Legislative Affairs Committee, as has been mentioned by the Cabinet Secretary, considered this instrument at our meeting on 8 January. We reported two merit points identified under Standing Order 21.3.

The first point considered by the committee is that the Order was laid before the Assembly on 4 January 2018. The committee usually has 20 days from the date of laying the report on the statutory instruments. The committee was asked, in correspondence by the Cabinet Secretary, to report on the Order before today to allow for the Order to be approved by resolution of the National Assembly ahead of the Assembly's consideration of the local government finance report for the financial year beginning on 1 April, as the Cabinet Secretary has reported.

In effect, due to the committee's meeting schedule, this meant that we only had four days after the Order was laid to consider this instrument. We do, importantly, acknowledge the time pressures on the Welsh Government as a result of the delayed autumn statement and the action needed to get to this point before the Assembly is able to agree the local government finance report by the required deadline. We are also aware of the serious consequences should this not happen. However, this has meant a greatly reduced timescale for the committee to consider and report on this instrument. As the Order was relatively short and straightforward, we were able to meet the Welsh Government's request. Nevertheless, I would encourage the Government to give the committee as much notice as possible where it would like us to scrutinise statutory instruments within a shorter deadline than is provided for in Standing Orders.

Secondly, the Order specifies the new multiplier figure, and is explained in the explanatory note. However, this number is not referred to at all in the explanatory memorandum, which is a separate document intended to explain the intentions of the instrument. Given this figure is so crucial, it is our view that the explanatory memorandum accompanying this Order could have been more helpful in explaining the effect of the Order.

Plaid Cymru has some sympathy with the technical content of this Order, to a great extent, which is the intention to change the inflationary measure that's used to calculate the non-domestic rating multiplier—changing to CPI rather than RPI. We have been calling for that for some time. But, looking at the bigger picture, when we look at the explanatory memorandum—which is monolingually in English, by the way—you explain that the purpose of the Order is to support economic growth and to reduce the taxation burden on businesses and other non-domestic ratepayers in Wales. You also say that you intend to ensure that businesses in Wales aren't under a disadvantage as compared to other parts of the United Kingdom.

Well, the situation is, of course, that small businesses in Wales are at a disadvantage as compared to other parts of the United Kingdom because whatever inflationary measures are used, the existence of a single multiplier for all businesses, large or small, means that small businesses are under a disadvantage. In Scotland and England, there's a different multiplier available with regard to business rates for large and small businesses, and that means then that there is a way to ensure a greater element of fairness in the system for taxation. So, because of that, we will be symbolically voting against this Order.

We feel an increasing frustration with the speed of policy change in this area where, forever and a day, Assembly Members are aware of the frustration in the business community with a tax that dates back centuries and that isn't fit for purpose in the current era. I look forward to continuing those constructive discussions with the Cabinet Secretary in other fora in looking at amending in a radical way with regard to abolishing this. We do need to look at alternative models, but while we are still discussing the current framework, which is insufficient, then I'm afraid that, in this particular instance, Plaid Cymru will have to oppose this Order as a symbolic vote.

I wasn’t going to speak in this debate, because, as the Cabinet Secretary knows, the Welsh Conservatives will be supporting this instrument. However, I’ve been inspired to do so by the comments made by Adam Price. Whilst I do have a measure of sympathy for the comments that you’ve just made, Adam, in terms of your long-standing commitment to change the whole business rates system in Wales and a desire to do something different here, I do feel that we are where we are in terms of the current system, and if, as I understand it correctly, we are talking about following the model across the border and moving from retail price index to CPI in the same way as is happening there, then I cannot see how—. If you avoid doing that, you’re going to inevitably cause a disadvantage for businesses here. Just because you feel they may be at a disadvantage at the moment, Adam Price, it doesn’t therefore mean that they wouldn’t be at a greater disadvantage until the system was changed. So, on that basis, Cabinet Secretary, you have the support of the Welsh Conservatives in this. But I would at the same time urge you to look further at greater measures—

Would the Member give away?

I have two more words to say, but go for it.

This is a strange case of role reversal, given the positions in the earlier debate. But, surely, what would happen, if the Government were to lose this vote, is that they would have to take it away, listen to the comments that were made and bring it back, and address the particular issue of the split multiplier that I referred to.

No, I think that we're talking at cross purposes here. I think that in terms of the wider issue of business rates and an unfairness that currently exists in Wales, I agree with that. However, we do have the situation of a change across the border. There is, I believe, a Barnett consequential that is going to come here—well, perhaps the Cabinet Secretary can say what that consequential will be that will come here—which is then going to be used in Wales to support businesses. I think that's the situation, and that is certainly one that the Welsh Conservatives will support. However, I was going to finish, before your intervention, Adam, by saying that I do hope this doesn't stop you looking at the broader issue of business rates and greater ways you can support businesses in Wales, and also taking into account the views of Plaid Cymru that perhaps, over the next few years, you could look at coming up with a radically different system. But, in the interim, I want to see that financial support through a Barnett consequential coming to support Welsh businesses in Wales, and I think that businesses would want that as well.

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

Diolch yn fawr, Llywydd. Can I repeat my thanks to the Constitutional and Legislative Affairs Committee for its work? We've accepted the merits points made in its report, and I'm grateful to the committee for recognising the time pressures, which are not of our own making and are a direct result of the awkwardness we discussed during the debate on the final budget of having a major UK fiscal event halfway through our own budget-making processes.

Of course, I agree with Adam Price that it is important to take a more fundamental look at the way in which money is raised in this part of our budget, and he will know, because we've discussed it, that there is work in hand inside the Welsh Government to test in a practical way whether there are alternative ways of raising revenue of this sort in the Welsh context. Does that mean that it is right to vote against the proposal in front of the Assembly this afternoon? Well, I don't think so, of course. My belief is that, if the vote is lost, the effect is that businesses in Wales next year will see their bills rise in line with RPI not CPI, because we have to get on and make the local government budget. We wouldn't be able to come back with alternative proposals in time for next year. Would I be tempted to come back with alternative proposals that included a split multiplier? I don't think I would, Llywydd. It's one of the advantages of our system, businesses tell us, that they don't have the complexity of split multipliers, particularly when the split multiplier would apply to a very small number of large businesses and would not, I think, raise revenue of a sort that would make a material difference to others.

What we do plan to do, and what we have proposed to the National Assembly, is that we do not place Welsh businesses in a different position than the businesses across our border who will see their bills in this area grow more slowly than they would in Wales if the vote today were not to be supported. I confirm for Nick Ramsay that there was a consequential in the autumn budget that comes to Wales. We will apply that consequential to pay for the change that we are proposing to you today. Welsh businesses using that consequential will be £9 million better off next year than they otherwise would be, and £22 million better off the following year than they otherwise would be. You can vote symbolically if you like, but for Welsh businesses, the price of your symbol is to be £30 million worse off than they otherwise would be.

The proposal is to agree the motion. Does any Member object? [Objection.] I will defer voting under this item until voting time.

Voting deferred until voting time.