The next item, therefore, is a statement by the Cabinet Secretary for Finance on the tax policy work plan for 2018, including new taxes, and I call on the Cabinet Secretary to make his statement—Mark Drakeford.

Thank you, Llywydd. In just over a month’s time, as Members will be very aware, the first Welsh taxes in hundreds of years will start to be collected, as land transaction tax and landfill disposals tax are switched on. However, tax devolution must not only simply be about replacing one tax system with another. We have a responsibility to think more innovatively about tax, about how taxes operate, about their impact on people, businesses and communities, and how they interact with our wider policy objectives.

The tax policy work plan for 2018, which I published today, sets out the Welsh Government's priorities for this year. It contains a variety of short and long-term priorities in the following areas: tax rates, tax policy, local taxation improvements, tax administration and long-term research. As part of last year's work plan, I set out the Government’s intention to test the Wales Act 2014 powers. The Act enables Wales to propose new taxes in areas of devolved responsibility.

Llywydd, I published a shortlist of four tax ideas in October: a vacant land tax, a disposable plastics tax, a social care levy, and a tourism tax. Over the past six months, we have been working with stakeholders to examine the case for each of these four ideas more fully, including their impact on Wales. The Welsh Government also carried out an informal online opinion poll, via social media, to raise awareness of these tax ideas and to gauge public support for each of the ideas. I published the outcome of that poll earlier today.

Members will be aware that the process set out in the Wales Act and its accompanying documentation was basic. I've been very pleased to have the opportunity to discuss this with the Chief Secretary to the Treasury and to agree a process for devolving new tax powers to the National Assembly. This will involve two distinct stages. The first will be for the Houses of Parliament and the National Assembly to agree the devolution of competence, and secondly, the Welsh Government will bring forward the policy and legislative proposals to the National Assembly. An account of that process was published on our website earlier today.

Llywydd, I've concluded that each of the shortlisted ideas have important merits. It's my judgment that, in testing the machinery for the first time, it will be important to simplify matters by proposing only one tax in the first instance. That does not mean, however, that work will not continue on each of the shortlisted ideas. Let me be clear, too, about what all of this means. The tax proposals with which I intend to test the Wales Act 2014 have the potential to help achieve our policy agenda here in Wales. It does not mean that we are irrevocably committed to introducing such a tax. However, if the power to introduce a specific tax to Wales only is added to the devolved responsibilities of the National Assembly for Wales, then detailed policy work and engagement with stakeholders will follow. If legislation is proposed, it will be subject to all the normal scrutiny arrangements of this legislature.

I now turn to look at each idea in turn.

Llywydd, I turn first of all to a disposable plastics tax. There has been considerable interest in, and support for, a tax on disposable plastics in Wales, and a number of Assembly Members have made persuasive cases for making a plastics tax our first priority in this exercise. Since the original shortlist was published, however, the Chancellor of the Exchequer announced in the autumn budget that the UK Government will launch a call for evidence about how it will address the issue of single-use plastics, including through the use of tax. Whatever its merits, that announcement creates, I believe, a roadblock in the path of any Wales-only proposal. The risk, I believe, is too high that the UK Government would simply respond to a Wales-only plastics tax proposal by saying that its consideration would have to wait until the call-for-evidence process is complete.

More positively, Llywydd, I have been able to discuss the call for evidence with UK Treasury Ministers and, as a result, we have secured Welsh involvement in that process. We will help publicise the call in Wales, to ensure as much engagement here as possible. We will contribute to the analysis of the findings following the call for evidence, and I have agreed to meet the Exchequer Secretary to the Treasury to discuss progress at that point and share Welsh views on the development of policy options.

Wales has the third best recycling rate in the world. We are at the forefront of the waste agenda and have much to offer through our extensive experience and research capabilities. Nevertheless, we will continue to work on a stand-alone disposable plastics tax for Wales. This remains an option and will be informed by the results of an extended producer responsibility study, which the Welsh Government is due to report on shortly.

I turn to the issue of a social care levy. An ageing population brings an increase in the demand for, and the cost of, social care. Paying for care remains an unresolved challenge throughout the United Kingdom, and taxation is one possible response. We will continue to work throughout 2018 to explore whether taxation could be used to fund social care in the longer term here in Wales. This includes Professor Gerry Holtham’s indicative economic analysis of a system of enhanced social insurance, which is due to be available to us in May. The First Minister has agreed that my colleague, Huw Irranca-Davies, will chair an inter-ministerial group to take forward this very important work.

Llywydd, as far as a tourism tax is concerned, the work carried out over the last six months has shown how much tourism varies across Wales. I have concluded that a national tourism tax would not best reflect this breadth of local circumstances. We will now explore ways in which local authorities could be given permissive powers to develop and implement a local tourism tax. In carrying out that work, we will, of course, work with the tourism sector, the Welsh Local Government Association and interested parties to do this.

I turn finally, then, to a vacant land tax. I have concluded that a vacant land tax will be used to test the Wales Act 2014 machinery. Housing is a priority for this Government. A vacant land tax could help to incentivise more timely development by making it more expensive to hold on to land that has been identified as suitable for development.

The Republic of Ireland vacant land sites levy provides a useful starting point for how a vacant land tax could work in Wales. Under this model, planning authorities must establish a register of vacant sites in their areas. Once a registered site has been vacant for a year, the levy begins to apply and is collected annually by the planning authority. The rate is set by the Irish Government as a percentage of the value of the site.

The existence of such a model and the relatively narrow focus of the tax make it the most suitable of the four shortlisted ideas to test the new machinery. We will now move formally to seek a transfer of competence to the National Assembly, and I will write to the Chief Secretary to the Treasury to set this in motion.

Llywydd, this is the start of the process of developing a new tax. If the case is successfully made for the devolution of the power to Wales, we will consult formally on the new proposals here in Wales and in the National Assembly. I look forward to keeping Members fully informed as the process we have embarked upon develops.

Can I thank the Cabinet Secretary for today’s statement? Particularly, I’m sure you’d expect me to welcome the news that common sense has prevailed and the Welsh Government’s much-criticised proposals for a national tourism tax, as it’s now been renamed, have been well and truly land-banked, and not before time. Unless you’ve been living on Mars for the last few months, you will know that the Welsh Conservatives have been opposed to this tax since it was first mooted by the Welsh Government as one of the possibilities. I know that Plaid Cymru weren't supporting it, but we weren’t from the start. We have shared the concerns of the tourism sector about the potential effects of such a tourism tax on business across Wales and the perception that it would potentially create about the cost of holidaying here in Wales. I don’t think that these concerns were ever effectively addressed, even at a point during the process where they could have been.

Now, of course, there was a devil in the detail to the Cabinet Secretary’s announcement today, with the announcement that work will continue, at least notionally, on developing local tourism taxes. That sounds like a way out of a tricky corner to me, but there we are, we all need one of those occasionally. I recognise that this is going to be left to allowing local authorities to develop their own local tourism taxes. So, Cabinet Secretary, can you elaborate a little bit more on the form that these taxes locally could take? Because I’ve already had some concerns expressed to me on e-mail by the sector about the questions that this raises. In particular, would you envisage national guidelines for local authorities in forming those taxes? How rigorous would those guidelines be? Would there be any sort of cap, for instance, on amounts raised, or the types of taxes locally that could be developed?

In principle, I believe in local democracy, and I think that there is merit in developing local taxes. Would the moneys raised locally from these taxes be ring-fenced for tourism in that sector? Would they be left totally with the local authorities? Would they be redistributed? Has any thought been given at the moment to how that would happen? I imagine not, but the jury’s out on that one, so I look forward to some guidance there. What reassurance, importantly—[Interruption.] Following re-engagement, what reassurance can you give to the sector that there will not be a disincentive to tourists coming to Wales? Because that’s ultimately what we all want to avoid in this place.

If I can turn briefly to ‘the chosen one’, the vacant land tax, this clearly has some merits—I would agree with you on that, Cabinet Secretary—particularly in our aim to provide more housing, as we all know there is a deficit of that at the moment in Wales, and anything that can alleviate that problem and remove some inhibitions to developing housing is to be welcomed. You’ve pointed to the example of the Republic of Ireland. I’m not too au fait with the situation there, but I do know that it does have its supporters. I don’t have an objection to the vacant land tax in principle, but, again, there are a number of unanswered questions, and we’ve seen the effects that these unanswered questions have had in other areas throughout this process when you were considering some of the other taxes that have now been put on the backburner.

These aren’t just my concerns, but also some of the concerns of the housing sector—questions such as how much will the tax raise. I believe that the jury is still out on how much a vacant land tax in Wales would raise. And how would you address the concerns of the Federation of Master Builders, for instance, who believe that a vacant land tax, if it is formed in the wrong way, could actually penalise smaller builders in Wales, to the benefit of larger builders? I’m sure we would want to avoid that.

Can I finally say that, going back to the start of your statement, I echo the concerns that you’ve expressed in the past and which others have expressed about this whole process? There is a danger that the two-tier process of developing the consents first of all from the UK Government and then developing the taxes afterwards—it does smack a little bit of the dreaded legislative competence Order system that we had some years back, which proved to be not very streamlined, inefficient and quite costly in the end. So, I do recognise that you have to work within the constraints of that system, but I think that we all agree that, in the future, it probably isn’t ideal.

I thank the Member for what he said, particularly towards the end of his contribution. I absolutely share his anxiety that we design the way in which powers can be drawn down to Wales for these new purposes—that it is carried out in a way that has a clear distinction between the responsibilities that are properly conducted by the UK Government and then the responsibilities of this National Assembly. I hope that when Members see the schematic that we published today, which sets out how this will operate, Members will see that we have succeeded in reaching an agreement with the Treasury in which the Treasury will focus on those matters that I think are legitimate for the UK Government.

I think it's fair for them to want to be convinced that the tax being proposed lies squarely within devolved competence. I think it's fair for them to be sure that we are not proposing something that would gather money in Wales but would have an impact on revenue raising that they are relying upon on a UK-wide basis, for example. But when the power is transferred to the National Assembly, it's then for this Assembly to scrutinise the use of those powers. It's for this Assembly to see whether it believes that any ideas that a Welsh Government comes forward with for legislation stand up to the test of scrutiny, and the detailed questions really do belong to that part of the process. There is no point at all in the Welsh Government committing an enormous amount of time and resources to designing the detail of a tax proposal until we know that the power to bring that tax forward lies in the hands of the National Assembly for Wales.

On the points the Member raised on the actual announcement today, which is of a vacant land tax to be taken forward, of course nobody would wish to design a tax that was formed in the wrong way, and there are important issues that would need to be navigated to make sure that a vacant land tax captured land that is vacant when no effort is being made to bring it into purposeful use, and not, of course, to try to penalise people who are working hard to make use of the permissions that have been granted, or the designations that have been laid out, and are frustrated in being able to do so for reasons that are sometimes beyond their own control. You design the criteria for how land is registered as vacant on the register to capture those things that you want to capture and to make sure that those that are not the object of this tax are excluded from it.

How much would the tax raise? It's too early, of course, to give a proper answer to that question. In the Republic of Ireland a tax is levied at 3 per cent on the value of the land in the first year, rising to 7 per cent of the value of the land in a second year in which it is not being used productively. The republic believe that that would be at least sufficient to cover the costs of the new system, where any money that is left over is dedicated for regeneration purposes.

As to a local tourism tax, as I said in my statement, I will be working with my colleague ministerially responsible for this matter to take the conversation forward. The whole point of a tourism tax, despite the distortion of the idea by some Members in this Chamber, has always been to find better ways of investing in tourism, so that we draw more people to be part of the tourism industry here in Wales. If we are to take forward the idea on the basis of local discretion, it would be clearly on the basis that money raised in that way is used to respond to the demands that tourists rightly make for proper facilities and for services on the ground, and to make those services even better so that people who come to Wales want to visit here many times again in the future.

If I may welcome the statement by the Cabinet Secretary today in saying that I am a little disappointed, of course, that he hasn’t selected the single-use plastics tax, but I do welcome the fact that he will use this new process to test a new tax—we can call it 'taxco' to correspond with the LCO, perhaps. But we, here, do support the fact that this process is to be tested. As he said in his statement, we are not going to commit irrevocably to this vacant land tax. We will want to see how it is developed and what exactly the purpose and use of the tax will be, and the range of the tax here in Wales. But, we certainly support the principle of using that process of drawing up new taxes.

One specific question on the vacant land tax that I can ask now, I believe, is: to whom will this tax apply? The statement talks about land developers, people who hold—and you can think about supermarkets, who are famous for sitting on land for long periods of time. But, the fact is that much of the land in Wales is owned by the public sector—by the Government itself, local authorities and the public sector more broadly, such as universities, colleges and housing associations, who are still in the public sector, unless we pass the legislation that is discussed later today. So, I do want to fully understand: would such a tax apply to the public sector where they hold vacant land? It's slightly strange for one Government to tax another part of Government, and I'm not sure what the purpose of that would be. The Government does have other policy tools to address the problem, other than taxation. That's the question that I have at the moment.

If I could turn to the broader statement, and if I could also say that the oral statement today accords with the written statement and a lengthy policy statement on taxation for 2018 that the Cabinet Secretary has set out. It's far too long to discuss that today, but there are a few things emerging from that that I would like to ask about today. Now, in the taxation policy that you published today, one of the things that you state as one of the objectives of your policy is to use taxation in order to influence behaviour—not only to raise funds but to influence behaviours. In that context, of course, the single-use plastics tax seemed very attractive. I hear what you say about developments at a UK level, but can you tell us a little more now about the involvement and the engagement that you will have with the Westminster Government on the development of a disposable plastics tax? You talk about being part of the evidence-gathering process, but are you also going to be forming policy, influencing policy and ensuring that, if there is a disposable plastics tax, that should be appropriate?

One of the questions that has been raised a number of times in this Assembly as we’ve discussed this issue is that it has to go hand in hand with the high rates of recycling that we have in Wales, and there are different rates of recycling in other parts of the UK. Now, not all taxes are going to be appropriate for us. One of the obvious things emerging, then, is that if there is a disposable plastics tax emerging from Westminster, we—or the Government here—should have some sort of influence on the levy or the level of that tax, or you can't apply the tax to the situation that exists here.

Two questions to close, just arising from the broader context that has been set out today. In the taxation policy, you talk about local taxation and the principle in terms of how these could work. I understand that you are reviewing business rates. We are facing council tax with some very high increases possible this year. You have core funding from central Government that is provided to local authorities, which is also reducing. In England, it is now clear that it is the intention of the Government in England to significantly reduce the funds provided form central sources and to encourage council tax and business rates to be increased in order to make up that deficit. Now, I don't see any statement of intent or policy statement from the current Welsh Government in response to that. So, can you give us some idea as to where you see local taxation going over the next few years?

Finally, of course, we've seen the devolution of income tax, which is on the horizon. You've said in the past that it isn't the policy of this Government to change income tax rates in Wales during this Assembly term. Can you restate in the Assembly today that that remains your policy?

I thank Simon Thomas very much for those questions, and I thank him for Plaid Cymru's support for testing the new system that we have, and to keep an eye on the vacant land tax and how we use that to test the new system. On the one question that Simon Thomas raised on that tax, in Ireland, the tax goes to every person and authority responsible for the vacant land, whether it's in the Government's hands or the local government's hands or anything else in the public sector, because what they say is, if the local authority, for example, isn't doing its work to use the land, where they've been given the permissions and so on to develop that land, well, they're in the same position as any other individual. Now, I'll be going to Ireland, hopefully, next week, and I hope there will be an opportunity for me to meet with those people responsible for that tax once again, and be able to drill down in greater detail on issues such as the question that Simon Thomas posed this afternoon.  

To turn to the questions on the written statement, of course, many of the taxes that we're talking about will have an impact on behaviour rather than on revenue raising. That is true of the vacant land tax, because what they say in Ireland is that they don't expect to generate a great deal of revenue, but they do wish to change the behaviour of people who are just sitting on land and not using the land for important purposes in Ireland. 

How far will we be involved in the UK Government's work on the call for evidence? Well, I was very glad to have an extended conversation with the Exchequer Secretary to the Treasury. I think we've secured a Welsh voice in the call for evidence and being able to shape it here in Wales to make sure that Welsh views are successfully transmitted into that process, that where there are Welsh issues at stake we will be able to flag those up as part of the analysis, and that I will have a meeting with the Exchequer Secretary in that part of the process before anything is said publicly. 

So, all of that I think is reason for being optimistic. Does it mean that I feel we can afford simply to rely entirely on what might come out of a UK exercise? I don't think we can. I do think we have to carry on with shaping our own ideas, and if what came out of the UK exercise didn't fit with Welsh needs and circumstances in the way that Simon Thomas pointed out, didn't take account of the way that we do things here in Wales, and it was still better that we moved ahead with a tax of our own in single-use plastics, we would be in a position to try to draw that power down. If we can do it on a UK basis, then I think I am persuaded that the tax could be more effective and could do even more to pursue the ambitions that the people who support this tax have for it, but we would have to be confident that it is being done in that way.

Simon Thomas is completely right to say that the UK Government, as far as English local authorities are concerned, has a clear, articulated policy of reducing to zero the funding that local authorities receive from central Government, and allowing them to raise all the money that they use through local taxation, including business taxation. It's in a terrible mess, that policy, as they find, of course, that those places that have the greatest need raise the least from local taxes, and they've had to develop all sorts of complicated ways of trying to compensate around the system for that. We have no intention of doing that here in Wales. We have a pooled system for business rates. Eighteen local authorities in Wales gain from it, four contribute to the pool, but that's right and proper if you're interested in matching spend with need, rather than some other ambition.  

I'm in a pleasant position of being able to give a broad welcome to the finance Secretary's statement today, and I applaud his measured and cautious approach to this important area of policy. He's chosen what I think possibly to be the least damaging of the options that he was facing us with, and I welcome much of the detail of the statement. 

I'm pleased that work is continuing on a social care levy. We've raised this in the Chamber before. We have to face up to the problems of long-term finance in this area; it would certainly be irresponsible of us on all sides of the house not to recognise that we do need to raise large sums of money in the future to pay for people to live a dignified life in old age and infirmity. I'm very, very pleased, therefore, to see that Huw Irranca-Davies has been appointed to chair an inter-ministerial group on this topic. I've always regarded him as a very fair-minded and intellectual person, if he doesn't take that as an insult—[Laughter.] It's a complicated subject that will require a huge amount of dedicated work, and I think the right appointment has been made.

I'm naturally pleased that a national tourism tax has been abandoned. I'm not opposed to giving permissive powers to local authorities, if they want to introduce some kind of levy. I think they would be foolish to do so, but as someone who believes in devolution beyond the Assembly, I think that this is something that is not necessarily a bad thing in itself. I fully understand and support the reasons for not proceeding at this stage with work on a disposable plastics tax. I think the Cabinet Secretary is absolutely right on that. I note though that, in respect of the vacant land tax, the Government is not committed to actually introducing it if, in due course, it doesn't seem prudent to do so. So, in a sense, this is rather an academic exercise that we seem to be engaged in. But I do agree that we need to test the powers in the Wales Act and to understand how the procedures work and to identify any faults and flaws that it might contain.

As regards a vacant land tax, I think there are significant difficulties in this. As I understand it, in the Republic of Ireland, it's estimated that the amount that will be raised by their levy is just about enough to cover the costs of collection, which is, I suppose, the tax equivalent of digging holes only to fill them in again. If, of course, the purpose of the tax is to change behaviour then I can understand a motivation behind that, but I mean there are problems. How do you differentiate, for example, between land that has been banked for whatever reason—Simon Thomas referred to supermarkets banking land for long periods of time—? How do we differentiate between land banks of that kind on the one hand and land that is undeveloped for reasons beyond a developer's control? This is going to be important particularly when you're in an economic downturn. Then, often projects that seemed commercial at the time that you purchased the land become unviable and there's no alternative but to stay your hand for development. I think of projects like the Circuit of Wales, for example, where large quantities of land would have effectively been sterilised by the doubt and delay in the circumstances beyond the control of the proposed developers there. It could have a very significant adverse impact on building and construction companies in those circumstances.

And what constitutes the start of development is another interesting point. I remember when I was a planning lawyer that merely digging a spade into the soil could constitute development, or even just marking out by fencing a certain bit of land could constitute for planning purposes the start of development. We have to recognise also that, given that we have a land border with England, if there is no vacant land tax in England, house builders may well be less likely to invest in housing developments in Wales than in England. As Andrew Whitaker of the House Builders Federation says:

'With a national house builder you've obviously got competition between investing your money in Wales and investing your money in England.'

And that's one of the concerns they have.

John McCartney, the director of research for Savills in Ireland, has said that the result of the Irish levy that has been introduced is that

'No developer will now carry a land-bank in a slow market. This means when a recovery follows developers will spend the early years on site assembly rather than the house building they could and should be doing'.

So, we have to be careful that the law of unintended consequences doesn't kick in here. I'm pleased that Simon Thomas raised the question of Government-owned land, whether it's local government or national Government, because the Ministry of Defence sits on vast areas of land that could be usefully developed, and that's been a major scandal, I think, for many, many years. Anything that might help to disgorge land from the public sector that is not going to be used for any practical purpose I think is a good thing.

Many of the problems of vacant property, of course, are in the area of land that has already been developed—empty buildings, particularly in urban areas, that are allowed to decay and become a nuisance to those who are neighbours, as they're unsightly and a problem for local authorities that have to cope with the anti-social consequences that these things create.

So, I hope that the Cabinet Secretary will proceed further with the commendable caution that he's shown in this statement, but I'm very pleased, as I said at the start of my response to the statement today, to be able to welcome what I think is a thoughtful contribution to an important debate.

Llywydd, I thank the Member for those remarks. He and I have agreed previously in the Chamber that paying for social care is one of those issues that successive Governments have failed to grapple with, and to produce a successful policy conclusion. Many of us here will remember our colleague Gwenda Thomas who produced a Green Paper on paying for social care nearly a decade ago here in this Assembly.

I'm very grateful to the First Minister for agreeing that Huw Irranca-Davies will chair this inter-ministerial group to make sure that we draw all our arguments together, but it will also have an important interface with the UK Government, because one of the things that makes legislating on social care in Wales a challenge is that it inevitably has immediate interfaces with responsibilities at the Treasury, at the Department of Health and Social Care and in the Department for Work and Pensions. And successfully designing a Welsh tax in this area would have to be sure that it had seen to the successful resolution of those very important interfaces.

I note what the Member said about his support for permissive powers for local authorities. He was quite right to highlight the fact that I went out of my way in my statement to make it clear that this is about drawing powers down to Wales, it is not a guarantee that if those powers arrived here and we did the detailed work and held the various consultations, that we'll come to a conclusion about what we would then do, faced with that much richer set of knowledge. A number of the questions that the Member raised would exactly be the sorts of things you would want to explore properly in that period to make sure that the law of unintended consequences had been purposefully addressed.

In the Republic of Ireland, they believe that they have got practical answers to many of the points that were raised, but we would have to be confident that we had explored those issues in Welsh circumstances and got solutions of our own.

Can I end by just picking up the point that Neil Hamilton made towards the end? The debate about a vacant land tax tends to focus on housing issues, but in the republic, they were very keen to say to me that they regard it as a tool for dealing with urban dereliction just as much as they think of it as a tool for promoting land for housing, and that where you have parts of our urban areas where houses are being bought up but nothing is being done with them, where you have that downward impact on a whole area that prevents its regeneration, they regard this as a tool—a powerful tool—that they have to try to intervene in those circumstances. So, I’m grateful for the opportunity to say again that housing is a very important policy target for a vacant land tax, but regeneration and tackling dereliction are equally important purposes.

Taxation exists to raise money for public services and to change behaviour—preferably both. No taxation: no public services. There are two taxes currently devolved and soon to be collected. Land transaction tax is there to raise money for public services, and, under the way it has been implemented, to put a greater cost on those who can most afford it That's something I applaud. Landfill disposals tax is a behaviour tax—without it, there would be no financial benefit in recycling, and it has been incredibly effective in its aim to increase recycling, which has taken Wales up to third best in the world.

On the taxes being considered, on a tourism tax, the price of hotel rooms and of staying in caravan parks varies enormously depending on the time of the year. I discovered I paid a tourism tax on my room last year when I was on holiday—not before I went on holiday, but when I looked up countries and cities that charged it, and for the first time I knew that I'd actually paid it.

On a disposable plastics tax, which is something that I think has got to come in, whether it's done by the UK Government or the Welsh Government, to me, doesn't matter a great deal, but we do need it. In fact, when I say 'we need it', I think the world needs it in order to try and stop all this plastic being disposed of and causing such huge problems throughout Britain, but really throughout the world. The old idea that you could throw things in the sea and they would, by some magic, disappear, still seems to exist in people's views on plastic. So, if the Westminster Government does not come up with anything that is acceptable, will the Cabinet Secretary commit himself to bringing back something to here, so that we can take it forward, because I think there is support for it right across the Chamber to deal with what is a huge problem? 

Vacant land tax is interesting. I think there's two things to say about land: it can't be moved and they're not making any more of it. I think those are important things. People can't decide to pick it up and take it to England unless they move the border, so it is important. The Republic of Ireland's vacant sites levy provides an example of how a vacant land tax could work in Wales. Under this model, planning authorities establish a register of vacant sites in their areas. Once a site has been on the register as vacant for a year, the levy begins to apply and is collected annually by the planning authority. Does the Cabinet Secretary agree with me that this will have two advantages? One: it stops land banking, which often stops other developers—people buying land in order to stop other developers being able to develop it; and it will also stop the tendency of people trying to get things into a local development plan in the hope that some time in the future they will be able to develop on it. Once they've got it into that sort of land bank, they'll actually have to start putting some thought into—if I can use a rugby term, 'use it or lose it'—and if they don't actually start developing, it's going to start costing them a lot of money very, very quickly. 

Well, Llywydd, I thank Mike Hedges, both for his strong consistent support for the approach we've taken in the two taxes that will come into being on 1 April, but also for what he said this afternoon. Tourism taxes are normal around the world. We know there's a growing interest in them across our border, in both Birmingham and Bath, and what I've said this afternoon—as I've tried to make clear—we are not turning our back on this idea, we're trying to take it forward in the most suitable way for Wales.

I have a feeling that the Member is right that a plastics tax is coming. There were 125 million single-use cups thrown away in Wales last year. One hundred and twenty five million of them in Wales alone. This is a problem that is ripe for Governments to grapple, and the public, as ever, are ahead of us on this. They expect action to be taken. If action is not taken at the UK level in the way that we hope, and in some ways would prefer, then I certainly would return to the idea here in Wales, and we'll do the work in the meantime to allow us to do that. I believe that testing the system with a vacant land tax will make it easier to be able to take other ideas, sometimes more significant ideas, around that track in the future. 

As far as vacant land tax is concerned, he's quite right. I think it was Mark Twain who replied to somebody who'd asked him for advice on where he could invest his money, and said, 'Buy land, they're not making it anymore.' And it is an area in which we have to do more to make the very best use of the resource we've got. Land banking does happen in order to prevent somebody else from making good and productive use of that land. And there are people who, in a speculative way, try and get permissions for land to be used for particular purposes. The effort that the public has made in giving those permissions allows the value of that land to rise. The person who sits on it has done nothing at all by their own efforts for that to happen, and they hope that they will simply make a windfall profit in which they take all the benefits and the public has borne all the costs. And a vacant land tax is one potential way in which you could make that prospect less attractive.

We're almost out of time on this statement, but I do want to call a few more speakers, but I do need to stress the need for succinct questions now. Mark Reckless.

Diolch, Llywydd. I agree with the finance Secretary that we certainly need to drill down in greater detail on this vacant land tax. He says a vacant land tax would apply to land that has previously been identified as suitable for development. Is the implication of that that it's land that's identified in the LDP, in which case is the 15, 20-year outlook of that really appropriate to have a tax where you're having a 7 per cent charge in year two if you haven't developed? We don't want all the land in the LDP to come forward at once, presumably. Or is it on the basis of planning permissions? In which case, isn't there a very significant risk that people would delay applying for planning permissions, and the amount of planning permissions coming through will decline on account of fear of this tax coming in? He says that planning authorities must establish a register of vacant sites in their areas. Does that then imply that we're talking about something different than places in the LDP or places that have got planning permission? And how on earth is he going to reconcile these three concepts?

He talked, in reply to Simon Thomas, about wanting this to apply to public sector land, and that being important. If the local authority is responsible for drawing up the register of vacant land, why would he expect that local authority to identify its own land so it can pay lots of extra taxes to him, and help out Welsh Government? We also talk potentially about almost—. Sorry, I'll leave that point, just to be a little quicker. But how will you determine the value? Is this value with planning permission? Is this value with the tax applied or not? Presumably having to pay this tax is going to cut the value of the land for whoever owns it. And isn't there also a risk that, combined with his insistence on developers paying 6 per cent rather than the 5 per cent in England when they develop, say, land, including most offices over £1 million, if he then adds to that this additional tax on vacant land, isn't the risk that developers, particularly those from England, look across at Wales under a Labour Government and just see taxes going up, more new taxes coming in, and decide not to invest here at all?

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

Well, almost all the questions the Member raises are proper ones, but he was right in the very beginning that they are proper for a point in the process when the power is available to us in the National Assembly, and not at a point where we couldn't do anything in this field, whether we could answer all those questions or not. I make three points in reply to what the Member has said.

First of all, I share the anxieties of the Chancellor of the Exchequer, which he raised during his budget speech, in which he pointed to the thousands of permissions for housing development in London that go unused. And that's why he has asked Sir Oliver Letwin to produce a report on that matter, and we will look carefully at what that report has to say.

Secondly, he asked why a local authority should put its own vacant land on a register if they're going to be taxed on it. One of the things I was told in the Republic of Ireland, Dirprwy Lywydd, was what a popular success this idea had been with members of the public phoning up the local authority, to say, 'Why isn't that piece of vacant land at the end of my street on your register?' So, this isn't a matter just of the local authority being judge and jury in its own cause here. There will be criteria, and citizens will be amongst those who will police this policy to make sure that it's a success.

And, finally, and thirdly, let me say to the Member that some of us here do not always believe that because something different happens on one side of the border that it is inevitable that the better development will be on the English side, and that Wales will always be at a disadvantage. We do things because we think we do them better here, and that's what we're here to do.

Can I welcome the Cabinet Secretary's decision to test the new power with vacant land tax? It's helpful to know that the Republic of Ireland's vacant site levy provides a useful starting point for such a tax in Wales. Would he agree that such a tax could go some way to addressing the growing inequalities in wealth, and the way it's distributed, and that, of course, is exemplified in land banking? I understand, of course, that the first step is to secure power from Westminster. I just wonder whether discussions have taken place at official or ministerial level with the UK Government regarding all four tax proposals, including the vacant land tax, to pave the way for testing today's announcement. I think it's important to recognise that a vacant land tax will help address the need to secure vacant land for housing. I'm sure this will be welcomed by local authorities and registered social landlords who are seeking to meet local housing need. Has any mapping or sampling of vacant land taken place, on a pilot or wider basis in Wales, to identify the scope and extent of the land that might be subject to this tax?

I also welcome his commitment to work on a stand-alone disposable plastics tax in Wales. I certainly know that'll be welcomed by Jones Dairies in my constituency, which has already embraced the Blue Planet message and seen a rise in orders over the past week of 500 more bottles of milk to be delivered in the milk floats that quietly come down my street early in the morning. It's really important that we provide more information—as you say, the public have embraced this message—so that the call for evidence can include those who want to engage, like Chris Jones from the dairy in my constituency.

Finally, can I welcome his commitment to explore the prospects for a social care levy? Will he commit either himself or, indeed, the Minister Huw Irranca-Davies to report to the Assembly on this enhanced social insurance model? I understand that a report is due in May. I think, Cabinet Secretary, that taking that forward could be a very important response to the parliamentary review on health and social care. Alongside his proposed vacant land tax and, indeed, his work on a disposable plastics tax, I think this all will show that Wales is at the forefront of progressive social reform.

Can I thank Jane Hutt for all those questions? Many of these debates began during the years in which she exercised the responsibilities as finance Minister here in the Assembly, and I know how familiar she will be with them.

I can give her an assurance that I have discussed all four tax proposals with the Chief Secretary to the Treasury, particularly in relation to the social care tax, to get doors open for us to discuss this idea with other parts of Whitehall, and in relation to the plastics tax to make sure that Wales is as much involved as we can be in the call for evidence that the UK Government is taking forward. The fact that we have offered to help make sure that that call for evidence is widely publicised in Wales will, I hope, open doors to her constituents and others to take part in it. She is absolutely right when she points to the fact that the public are ahead of this debate and are already taking actions in their own lives to address the detriment that plastics can have on the environment that we all have to enjoy.

As far as any mapping or pilots are concerned, I can say this to her, that in a sample survey of land identified in local development plans for housing development purposes, 25 per cent of all those sites turned out to have no activity taking place on them at all. It is a small survey, and it's a sample survey, so I wouldn't want to place enormous weight on it, but it's indicative, I think, of the scale of the issue.

In another development, the Welsh Government recently announced a project using £32 million-worth of financial transaction capital and £8 million of conventional capital on a stalled sites fund to bring forward sites so that they can be used for proper public purposes. There are over 400 sites in Wales identified as potential beneficiaries from that fund.

Just a few questions on the work plan in terms of local taxation. Can the Cabinet Secretary tell us whether the work that he’s talking about in terms of renewing council tax is on the radical scale in terms of making the taxation burden fairer, for example, on the kind of lines that my party have proposed in the past, as well as Professor Gerry Holtham? When is that work to be published, and is it his intention to bring recommendations forward during this parliament?

And in terms of the land value tax and related work, has any research been commissioned in terms of when the Cabinet Secretary intends to publish or consult on that? Does he also intend to bring recommendations forward during this Parliament? And, finally, there is a reference to the commitment to review the current devolved taxation within three to five years from April of this year. Well, which will it be? Will it be within three years or within five years? Has the Government made a decision yet?

I thank Adam Price for all of those questions. We haven't made our minds up on the final question because it's still too early, we think, in the process.

In relation to the second home supplement within the land transaction tax, there are two parts of the work programme that have been specifically agreed with Plaid Cymru. We promised to produce a regional analysis of that, once the WRA was up and running, to see whether a tax might be calibratable to a local level, and I've taken seriously the points that Siân Gwenllian has made regularly in this Chamber about the way in which a second home tax may be having an unintended consequence of second home owners switching from domestic taxation to claiming to be businesses, and local authorities losing out on a potential income stream in that way, and that is now part of the work programme.

As far as the future of local taxation altogether is concerned, I hope to be at the radical end of it in that what I've said in the Chamber previously, Dirprwy Lywydd, is that I have set in hand a piece of work in this Assembly term that will look in practical detail at whether alternative forms of local taxation such as land value taxation would be a preferable form of taxation than the one we have presently in Wales. I want the Assembly to be in a position to come to a conclusion on that debate, not on the abstract merits of different policy ideas, but on what it would take to make alternative ways of doing things actually happen in Wales. What would we need to do? Would we have the confidence that it would be a better system than the one that we currently have? We're not in a position of having the information we need to make an informed judgment on that; I hope we will be as a result of the work that's being carried out in this Assembly term.

Thank you. And, finally, Vikki Howells.

Diolch, Dirprwy Lywydd. Thank you, Cabinet Secretary, for your statement today. I think it's a really exciting announcement. Land banking is certainly an issue that is—very passionately expressed views on the doorsteps in Cynon Valley, and my first question in the Chamber when I was elected was actually about land banking.

My question focuses around the statement you made earlier, where you said that, in Ireland, they see this as a tool for dealing with urban dereliction, and that's certainly the way that it is viewed in my constituency, that land banking leads to urban dereliction. In fact, I hosted an event on access to community spaces for the Land Trust just a few weeks ago, and they highlighted the ways in which abandoned sites that have been left in a poor condition affect their local area. Some of the things they said are that that can contribute to mental and physical ill health, anti-social behaviour and community break-up for those who live around such sites.

My question to you, then, Cabinet Secretary, is: are these arguments that you yourself take on board, and are they arguments that you would seek to further as you develop the proposal and perhaps tie in to the future generations goals here in Wales?

Dirprwy Lywydd, I thank Vikki Howells for that question. I'm looking forward very much to working with her if we get the power to introduce a vacant land tax, because of the long-standing interest that she's had in this matter.

I'm glad we're ending this discussion by going back to the usefulness of a vacant land tax in the area of urban dereliction and abandoned sites. We can all of us imagine what it must be like to be left living somewhere where, all around you, buildings are not occupied, where fly-tipping is taking place, and where there is no sense at all that the place that you live in is loved or has a positive future. And so, if we're able to use a vacant land tax to bear down on not people who have acquired land because they've got a plan for it and they're mobilising the necessary energy and effort to make that plan happen, but people who speculatively buy up places and rely on the market without any effort from themselves to see the prices rise, cash in, and leave behind them blighted lives for those who have borne the price for their actions, and if we can use a vacant land tax as part of the policy armoury we have to prevent that happening in parts of Wales, then this whole effort will have been well worth while.

Thank you.