Questions now from the party spokespeople. UKIP's spokesperson, Neil Hamliton.  

Diolch, Llywydd. On 13 February this year, the Cabinet Secretary said that the vacant land tax is to have an impact on behaviour rather than to raise revenue. In the Republic of Ireland, the tax barely covers the cost of collection, which is just something that has got to be borne in mind. I wonder to what extent the Cabinet Secretary is able to say that land banking is a real problem in Wales, rather than just a perception, because Laura Harry, a planning consultant from Barton Willmore, an independent planning and design consultancy, says that

'while in theory a Vacant Land Tax is intended to increase house building, it may have the opposite effect and make Wales less attractive to housebuilders and undermine the Welsh Government’s housing ambitions', which is something, obviously, that the Cabinet Secretary would not wish to see. So, is this tax perhaps directed at a problem that is more illusory than real?

I don't believe that to be the case. I think there is evidence of land banking happening in some parts of Wales. I've pointed in the Chamber previously to our stalled sites fund, which shows over 400 sites in Wales unable to be brought forward to be put to productive use, because there is remediation work required or the need to provide services for that land means that that land is not in productive use. Our stalled sites fund, with £40 million of Welsh Government investment available for it, is designed to help to remedy that situation.

I think it's very important for me to point out that the purpose of a vacant land tax is not to penalise anybody who is doing their very best to bring that land into active use, but is to provide an additional incentive to people who simply sit on land, hoping that the work that the public have done in providing them with planning permissions and so on will just lead to rising land values and, having done nothing at all themselves, they will be able to cash in on that by selling land in future.

The process, however, Llywydd, is really important, because at this stage we're at the very start of this process and many of the questions that the Member raises and other detailed questions will be part of the work that we will want to do once we know that the power has been transferred to us to bring this idea further forward.

I fully accept what the finance Secretary says there. Obviously, if we are going to have such a tax, we do need to realise that the behavioural effects that it might bring about can also be in the opposite direction—a point to which I'll come in a minute. Although, this is generally thought of as a problem to be addressed in urban areas, there is a potential impact on rural areas too. A rural surveyor for Country Land and Business Association Cymru, Charles De Winton, says that

'Small rural plots may not be viable to develop. A tax which forces them into development will inevitably increase the cost of development—a cost which will passed-on to the end-user. This does not help us tackle the crisis in availability of rural homes.'

The CLA's research in Wales suggested that over a third of the £1.3 billion annually into the economy by rural landowners was already put into residential development. One of the big problems with development sites is, of course, planning permission and the delays that, sometimes, that can bring about. So, potential developers often find themselves unwillingly in a situation where they're sitting on vacant land. We know around us here in Cardiff Bay there are lots of what might appear to be prime sites that still remain to be developed because there are no buyers for one reason or another. So, this is a matter that must be dealt with sensitively and with some delicacy.

All the points the Member makes are important points and ones that we would wish to take seriously. No finance Minister, when the detailed work is done, should that work demonstrate that a potential tax would create more problems than it would solve—nobody would want to take it further forward. So, these are important points and ones we will definitely want to consider.

I recognise the point the Member makes about rural communities and the fact that development often takes longer for specific reasons. But I just repeat the point that I made to him at the very beginning: a vacant land tax is not intended to bear down on those people who are making every effort to bring land into productive use. You've got to design it in a way that makes sure that people who are doing everything they can are not captured by it, while providing an additional incentive for those people—and we do believe that this does exist in the Welsh economy, just as the Chancellor of the Exchequer was anxious that it existed in the London economy—who should be bringing land forward for productive use, but who choose not to do it, in order simply to speculate for a windfall gain.

I'd like to turn to another tax now to explore the impact on behaviour. It seems, in the case of the sugar tax, imposed now by the Westminster Government, that the Welsh Government is due to get £47 million in extra funding over two years because of spending in England linked to that. Forecasts of what the levy would raise have fallen from £520 million to £240 million. The behavioural changes that the sugar tax has brought about already are that Coca-Cola, for example, have reduced the size of their standard regular Coke cans from 330 ml to 250 ml, although that hasn't led to a similar reduction in price in many cases. So, now we could find ourselves in a situation where, instead of buying a third of a litre in a can, people are buying two cans of quarter of a litre. So, they're buying actually more sugary drink than before, at a higher price. So, this would be a perverse outcome for such a tax to bring about. But Wales has a significant problem with obesity—worse than any other part of the UK—with 59 per cent of adults, apparently, overweight—I'm probably one of them—and 23 per cent classed as obese. As to the allocation of the money that is raised, can the Cabinet Secretary confirm whether the Welsh Government is going to allocate this money to solve the problem of obesity predominantly, whilst not regarding it as a wholly hypothecated tax? If it is raised for the purpose of changing behaviour, then the money that is going to be spent from that revenue should be directed towards the problem that it is intended to solve.

Well, Llywydd, I'll begin by welcoming the fact that manufacturers have taken action to reduce the sugar content in their products, and to reformulate the way in which products are brought to market in order to have a bearing on obesity. I regret the fact that the sugar tax was simply announced in a budget, without any reference to the devolved administrations, despite the fact that it has a direct bearing on our responsibilities. Therefore, we weren't able to contribute to a debate, which may have pointed to some of the potential unintended consequences of the tax as it currently stands.

Money has been transferred to the Welsh budget as a result of it. It will partly help to take forward initiatives such as the preventable obesity programme that my colleague Vaughan Gething is undertaking, but it allows us to do other things as well. It allows us to support the programme of free healthy breakfasts in our primary schools; it helps us to introduce the new school holiday enrichment programme, which helps to feed children during the school holidays, who otherwise might go hungry; and it allows us to do a number of other things in the field that the Member mentioned, to help us to bear down on the problems of obesity, which are well-known and well-recognised.

Conservatives' spokesperson, Nick Ramsay.

Diolch, Llywydd. Can I just say that I've spied my former colleague on the Finance Committee, Peter Black, up in the gallery? It took me back to the last Assembly election, when we were looking forward to tax devolution as a distant, although approaching, inevitability. We are now the other side of that devolution.

You said, in answer to Mark Reckless earlier, in relation to land transaction tax, which I want to question you about as well, that we are now in the period of collecting evidence about the introduction of the taxes, and the effect of those taxes, rather than mere speculation. If, as you said in answer to Mark Reckless, there does, at some point, appear to be an issue with the rates of land transaction tax, at what point will you act to make sure that those rates are reduced so that they're more comparable with those across the border?

Well, Llywydd, as I said, we are in the process of evidence collection now. We will look to see how the non-residential property market develops during this year. We will look to see whether there is any evidence that the very small increase in tax turns out to be a decisive factor in very big multimillion pound decisions that companies make. My hypothesis—and it was the one supported in the Bangor report—that a company that is going to be spending many millions of pounds deciding where to locate itself will be interested in things like the price of land, the price of property, both of which are cheaper in Wales than in competitor cities along the border; they will be looking at the supply of skills, and we have a highly skilled population; they will be looking for long-term stability, which we provide here in Wales; and I don't believe that a small amount in a one-off cost on the purchase of the property will be decisive in those people deciding whether to come here or not, but that's my account. There are other accounts. Now, we will have the evidence, and I will take that into account in the decision-making process that we will have every year here as we set tax rates for the future. 

Cabinet Secretary, you are an open-minded person, and it's interesting that your tone today is different to before the devolution of tax. You did say previously—you asked a rhetorical question and you answered it previously:

'Do I think that the marginal additional sum in LTT will be the determining factor in business deals...? No, I don't.'

I gather from your answer today that whilst you still would say that is your personal opinion, you don't shut the door on the fact that it might actually be causing problems for some businesses. Before you come back, if I can just pick out some projects, such as Central Square in Cardiff, for instance, where the marginal 1 per cent rise in rates would mean investors paying around 20 per cent more on their property than with stamp duty, and at least 32 per cent more than land and buildings transactions tax. So, I asked you previously at what point you would act on that evidence. Are you willing to accept that already at this point there are cases, such as in projects such as that, where this not only could make a difference but will make a difference? It might be marginal, but in economic terms it's marginal differences that often make the difference in profit or loss.

I don't think the Member can expect to cite those instances and say that they are actual evidence. We are a couple of weeks into the new tax regime, and I don't think he or anybody else could produce a single decision where a company could say, 'We've decided not to come to Wales because of the 6 per cent rate.' He's able to produce those large percentage figures because he's got low numbers, and the low numbers show that the actual impact from that 1 per cent is a good deal more modest than he's suggesting.

I stand by the thinking that lay behind the decision I made and brought to the floor of this Assembly, that the rate will not deter people from coming here to Wales and that the impact of lowering taxes for the 90 per cent of commercial property transactions in Wales, so they're the lowest in the United Kingdom, will have a much larger stimulative effect on business in Wales than the aspect that he complains of.

However, any sensible person must be open to the actual evidence and there are different views of how this may affect the market, and now over the coming months we will find out whether there is such an impact, and if there is and there is real evidence, then I just repeat what I've said, Llywydd, then of course anybody would take that into account as these decisions come up for review.

To be fair to the Cabinet Secretary, you're right, it is early days, I fully accept that, and we must obviously look at evidence. We'd want an evidence-based approach to this, and I also would accept that I've identified and spoken at length about one tax, but that is just one tax of an overall package, and in the economy there are different levers, and this may well just be one aspect of it. However, that one aspect cannot be ruled out when you're dealing with situations on the margins of an economy. That can make a difference. I'm pleased actually that you have left the door open on potentially altering the stamp duty regime—the LTT regime, I should say—in future, if that evidence does produce a problem.

Cabinet Secretary, I have no doubt at all that you want to be business friendly, that your Welsh Government does want to be business friendly, I've no doubt at all that your intention is to be business friendly, because only a madman would not want that. However, I would say that when you look at the evidence we have to date, businesses are concerned. So, can you tell us, if you look at the multiplier rates in Wales, for instance, compared with other parts of the UK, that's markedly higher. That does make a difference in terms of the business rates. Can you tell us what interaction you have had so far, albeit a short time, but what interaction have you had so far with businesses, and have any businesses expressed real concerns that they will not invest in Wales because of these changes?

Well, I have answered that question, but I'll repeat again: I met a group of businesses who made much the case that you have put very plainly this afternoon, and I've asked my officials to meet them subsequently so that we remain in touch with them and are well placed to gather the evidence that I've talked about this afternoon.

His point about the multiplier is a curious one because in England, where his party is in charge, there is of course a higher rate multiplier for exactly the sort of businesses that you've been talking about this afternoon. The largest businesses in England pay a higher rate of multiplier and we don't have that higher rate of multiplier here in Wales. And that is because in England, of course, they have to collect money from those higher rated businesses because those higher rated businesses pay for the rate relief schemes that smaller businesses enjoy in England, whereas, in Wales, we fully fund all our business rate relief schemes directly from the Welsh Government.

Plaid Cymru spokesperson, Adam Price. 

Thank you very much, Presiding Officer. It's become more and more apparent in light of the report of the auditor general, for example, and then the evidence gathered by the Public Accounts Committee recently, that one of the cornerstones of the procurement policy of the Welsh Government, namely the National Procurement Service, is underachieving to say the least. The target, if Members recall, back in 2012, when the service was created, was to generate £25 million of savings on expenditure of £4.3 billion within the public sector. But, in the most recent years for which we have figures in the auditor's report, only £15 million has been delivered on a spend of £6 billion. We also discover in the report that only 19 per cent of members of the service have declared that they are making financial savings, and only a third of all local authorities are content with the service. And even the Welsh Government are saying that they are dissatisfied with the service that they themselves have created. Isn't it clear, Cabinet Secretary, that Welsh Government procurement policy is currently failing?

Well, Llywydd, I have welcomed the work done by the Auditor General for Wales in relation to procurement, and I welcome the work that the Public Accounts Committee has done in this field as well. It is because of concerns about the National Procurement Service, not simply the service itself, but about the changing context within which such a service has to operate—Brexit, ongoing austerity, emerging models of regional working, for example—that back in September I announced that we were undertaking a review of the service. Now, since then, as Adam Price has said, information has emerged about the extent to which the NPS has been able to reach the benchmarks that were originally set out for it and about the level of confidence that it has commanded amongst those who use it. That's why a plan to refocus NPS and Value Wales is important. That's why I am keen to press on with it. We need a service that is able to use the power of procurement to the advantage of the Welsh economy to the maximum extent, but it has to command the confidence of its key stakeholders, and there are changes that are needed to make sure that that can happen.

One of the main weaknesses as I see it in terms of procurement at the moment in Wales is a lack of staff with appropriate qualifications and the ability of public bodies to retain those experienced staff. In 2012, Cardiff University said in a report by Professor Kevin Morgan that there was a serious skills shortage at the heart of the public sector in Wales in relation to public procurement. He estimated that there was a need for an official with a chartered institute qualification for every £15 million of public spend. Now, the Welsh Government have gone a step further than that, of course, and followed the recommendations made by McClelland, and in their policy on public procurement they talked of a figure of £10 million of expenditure across the public sector as the benchmark. On that basis, of course, we are some 274 professional procurement managers short in Wales, so what actions are the Government taking to recruit and train more staff and experts in procurement?

Well, can I begin by recognising the point that the Member makes? The need for proper capacity and capability in procurement is a challenge. I talked to Kevin Morgan myself about it, and the Member was right that the McClelland methodology does suggest a deficit in Wales of the order that he identified. Now, we've already done some things about this in Wales. We've had the Home Grown Talent project, which has successfully brought new people into the system. We are committed to increasing the pool of procurement professionals in Wales. We're working with schools and colleges to raise the awareness of procurement as a desirable profession. But we also need to work with public sector organisations for them to give the sense of status and recognition to procurement professionals that they do to others. Too often, it seems to me, public organisations regard procurement as a rather handle-turning exercise, where you don't think of the people involved in it as having much of a cutting-edge contribution to the work of the organisation. But we know— some of the points Adam Price has already made—about the ability of procurement to drive value for the public, and not just value, but activity in terms of employment and community benefits and so on. The status of the profession needs to be recognised better, and that's part of the work that we want to do to try to address the recruitment and retention issues that Adam Price has identified.

Can I turn, finally, to a specific example, which I think raises further questions on whether or not NPS and the wider framework of procurement policy is fit for purpose? NPS recently awarded a three-year contract called Arbed 3, which is an all-Wales contract to insulate thousands of homes, to the Scottish based company, Everwarm, which is itself a subsidiary of a much larger firm called Lakehouse, based in Essex, I believe—a company that's been likened to Carillion in terms of its aggressive bidding for public sector contracts based on its ability to cut costs. This has led to questions about standards and probity, and it should be noted that this was the very same company that held the contract for fitting the fire alarms at Grenfell Tower.

Now, you, in the statement that you referred to, Cabinet Secretary, last year on repositioning Welsh Government procurement policy, did emphasise social value. Does this commitment sit comfortably with NPS's decision to appoint a firm that has been the subject of a string of negative reports, from profit warnings to fraud allegations and safety concerns—compared to Melin Homes, which, together with other Welsh-based partners, had, in the previous programme, ensured 100 per cent procurement from Welsh SMEs? Instead of repositioning Welsh Government procurement policy, don't we need a complete rethink?

Well, I thank the Member for raising that point, and it was raised in the Chamber yesterday by Mark Isherwood during business questions, as well. I've written, Llywydd, today, to all Assembly Members who have corresponded with me on this issue. Because there will be Members here who won't have received those replies, I wonder if I might just read the final two paragraphs of that letter, just so that I put the current position on the record for Members to know. So, the letter sets out the process that led to the identification of a successful bidder. It then says that, under the Public Contract Regulations 2015, we are required to allow a mandatory minimum 10-day standstill period. During the initial period, one of the bidders formally raised a number of points of clarification via their legal advisers and asked that the Welsh Government extend the standstill period. That standstill period has been extended. It will now last until 30 April and that will provide time to enable a clear and comprehensive consideration of the points that have been raised as part of this exercise.

Members will understand that, with that issue under further consideration, it wouldn't be right for me to comment further on the outcome of the procurement, but I will make a further statement when the standstill process comes to an end.