As a result, Dirprwy Lywydd, a protocol has now been agreed, as set out in my letter to the Chair of the Finance Committee on 29 March last. That protocol sets out a two-stage process. First, the Assembly, along with both Houses of Parliament, will be asked to agree a draft Order in Council, which will specify the power for the Assembly to introduce a tax on vacant land in Wales. If that first stage succeeds, it will then be for the Welsh Government to bring detailed proposals before the National Assembly to enable Members to decide whether to pass any proposed tax into law.

While the UK Parliament has a part to play in the decision to devolve these powers to Wales, it is for this Assembly to determine how such powers are to be used. I'm confident that the process we have managed to agree properly reflects those different responsibilities.

Of course, Dirprwy Lywydd, the process for transferring powers not only requires the powers to be transferred from the UK Parliament; they also have to be accepted by this Assembly, should the Assembly choose to do that. I remain committed to joint working with Members in this regard, ensuring that the Assembly is supplied with all the relevant information, and that should happen throughout this process.

If that is the process that we've agreed, I thought it would be helpful to set out expectations for the next steps. It's my intention that we will be in a position by the autumn of this year to submit a formal request to the Financial Secretary to the Treasury, and by the spring of next year, I would hope that legislation will be laid before the Assembly and the UK Parliament to seek agreement to the transfer of these powers.

Dirprwy Lywydd, if these are the means by which the new Wales Act 2014 possibilities are to be tested, I turn now to the purpose of a vacant land tax itself. As discussed previously in this Assembly, taxation can serve a variety of purposes. A vacant land tax is intended to incentivise positive behaviours, rather than primarily to raise revenues. By increasing the cost of holding onto land that has already been identified as suitable for development, a vacant land tax could help to change the balance of incentives so that we encourage the development that will help to provide much-needed housing and economic opportunities in Wales. And at the same time, it is the tax that can be put to work to support our regeneration objectives.

The goal is not to make life more difficult for the majority of responsible businesses and landowners who do the important work of developing land for commercial or residential use. The aim is, rather, to bring about changes in the behaviour of the minority who look to speculate unfairly on rising land values, and to tie up land that could be used to the benefit of people and communities.

Dirprwy Lywydd, for taxation to be an effective way to encourage positive behaviours, it has to be considered not in isolation, but as part of a suite of solutions designed to encourage the effective use and development of land in Wales. It is but one tool available to us in pursuit of that purpose, but the purpose is an important one. Research commissioned by the Welsh Government into stalled development sites found that just over 400 sites were stalled across Wales at the time of publication, in 2015. These stalled sites primarily related to residential development, with at least 7,600 homes being tied up within these sites across Wales.

Last month, my colleague the Minister for Housing and Regeneration announced an independent review of affordable housing supply in Wales. Amongst other things, this review offers us the opportunity to explore ways we can increase the number of homes built through the Welsh Government’s contribution to social housing, and to look at the quality of standards of that affordable housing. We have to continue to be concerned, not just with the quantity but the quality of the homes being built in Wales. 

Dirprwy Lywydd, while a vacant land tax may be a new idea for us, it is certainly not novel in other parts of the world. The issues we face are not unique to Wales; they exist across the United Kingdom and beyond. In England, as a result of remarks made by the Chancellor of the Exchequer in an earlier budget, there is an acknowledgement of these issues, with a review now taking place of the gap between planning permissions granted and housing starts. Chaired by Oliver Letwin, that inquiry issued a preliminary statement in March, identifying factors holding back development once planning permissions have been granted. The review intends to provide a full report in time for the Chancellor’s autumn statement later this year.

Now, other countries are already using tax to help address this problem. In the Republic of Ireland, as Members here know, they have recently introduced a vacant sites levy in order to encourage the development of vacant and derelict land. Similarly, municipalities in the United States have also successfully used taxation to encourage development of derelict land.  

The international picture suggests that taxation can certainly be a powerful tool to drive development. That is not to say, of course, that these experiences in these other jurisdictions can simply be picked up and dropped into the Welsh context, but there is certainly enough evidence to suggest that this is a route worth exploring further. 

Dirprwy Lywydd, it is a fundamental principle of the Welsh Government that policy development, whether tax or otherwise, should be informed by evidence. The first stage of our work will therefore be to work further on building that evidence to ensure that we reach the best possible understanding of the issues and how our interventions could address them. By pressing ahead with this work now, we will be in a strong position to make necessary decisions if and when the necessary powers are agreed. There are important questions as to how we can incentivise positive behaviour in the public as well as the private sector, and how the policy can serve to encourage the regeneration of derelict or underused urban land, as well as to deliver housing.

I recognise that it is only through close co-operation with our stakeholders that we can ensure that we achieve our objectives without placing an unintended burden on responsible developers and builders. To that end, I'm grateful to all of those who have already begun to contribute to the development of these proposals.