We now move to questions from the party spokespeople. The Conservative spokesperson, Nick Ramsay.

Diolch, Llywydd. Cabinet Secretary, yesterday, in your statement on the vacant land tax, I described you as a jack of all trades when it came to developing new taxes; you've got a lot of different taxes on the go at the moment. In yesterday's statement, you spoke about testing the machinery in terms of the vacant land tax. If I can widen that question out into other potential new taxes that the Welsh Government might be considering in future, clearly one of those potential taxes would be one to deal with the social care time-bomb problem, and a potential social care levy, as other Members have discussed in this Chamber. Could you tell us: have you given any thought, as of yet, to a potential social care levy, and have you had any discussions with your colleagues about that?

Llywydd, yes, we've been very actively engaged in this topic—particularly recently, following the ideas published by Professor Gerry Holtham. Professor Holtham has provided the Welsh Government with a near-final draft of an updated report, in which he looks in more detail at the way in which a dedicated social care fund, based on the model of the original national insurance fund, might be developed for Wales. The First Minister has set up a cross-ministerial group, chaired by my colleague Huw Irranca-Davies, and that will begin its work by looking at three dimensions. It will look in detail at Professor Holtham's work to make sure that there is a workable economic model there, but it will look, as well, at what the social care services of the future need to look like. If we ever were to be in a position of trying to persuade people in Wales to dig deeper into their pockets to make provision for the future, then they will quite rightly expect us to be able to describe what it is they are going to get for the investment that they are making. And the third strand in the work that that group will do will be to look at the interface with the UK, because a social care solution for Wales has to interface with the benefits system, with the wider tax system, with the work of the Department of Health and so on.

Thank you, Cabinet Secretary. This is clearly a horrendously complicated area. It's an enormous problem that's gone on for a long time, and which will need to be dealt with in some form or other in the not-too-distant future. You mentioned Professor Holtham's research, and Professor Holtham suggested that an age-related, graduated tax might be best, at least in the short term. In her question to you earlier, Julie Morgan mentioned some of the problems that she identified that women could experience in the post-structural-funds world. 

The Commissioner for Older People in Wales has pointed out that there could be potential disadvantages in Professor Holtham's proposals for certain groups of people in the social care levy—particularly women and those on low pay, as well as those older people that you may be asking to pay more under this model. Specifically, the older people's commissioner notes—. She says, and I paraphrase, that you're essentially saying, 'Thanks for everything you've paid in. We told you that when your time came it would be free. Sorry, it's not.' Are you confident that the concerns of the older people's commissioner and others are being taken into account when working out potential proposals for a social care levy?

Well, Llywydd, even in a paraphrase we would not have said to anybody, 'We told you it would be free', because it's one of the defining characteristics of the social care system that it is means-tested. We have many debates here, in this Chamber, about trying to join up the health and social care system and the barriers that exist to that. Personally, I've always believed that one of the real fault lines that makes it difficult to do that is that healthcare is free at the point of use and social care is means-tested. That always makes it difficult to bring those two systems close together.

Now, Professor Holtham, in his paper, talks about inter-generational fairness, and he deals with some other things that Members here will be very familiar with—the arguments that people born after 1980 have, at comparable points in their lives, a less-advantageous financial outlook than people who were born 30 or 40 years earlier than them. He draws on work in Japan, where there is indeed a graduated tax, where the older you are you pay a bit more towards social care. In your twenties, you never believe you'll need social care. By the time you're 50, you begin to realise that this could be you. Therefore, social acceptability, in terms of paying towards things, is calibrated in that way, but it is only one of the factors that Professor Holtham proposes, and he models a series of different ways in which payments could be made into a fund, and a graduated tax rising by age is only one of the models that he investigates.

Well, Cabinet Secretary, the Holtham model potentially doubles the social care levy from £172 to £344 for those aged between 57 and 59 within the space of 12 months, just at the point when income starts to reduce. In 2017, 71 per cent of retirees in Wales took early retirement, and the average age of retirement was 58 years and six months—right in the middle of this age range. I'm not seeking to make any party political points on this issue because I think, actually, it's too big for that—it's bigger than any individual party and any individual Government. This is an issue that's developed under many different parties and Governments over the years.

Cabinet Secretary, I think there is massive potential here for Wales to do something that is groundbreaking if we get it right, but also there are some enormous pitfalls, which the older people's commissioner has alluded to—and others have as well. So, can you give us an assurance that, in dealing with all these issues and giving guidance to the Assembly Members who are looking at this, you will ensure that, at the end of this, we will have a system that is equal and fair, that doesn't lead to some people feeling that they have been hard done by—to paraphrase—and also, of course, a system that means that a fund will be built up over time, and that some way down the line, future Governments won't say, 'Well, actually, that money isn't all there now for us to provide to you, as we said 20 or 30 years ago'? Because I think, and you would agree with me, that ultimately, we want to get this right and we want to make sure that, in the future, people don't feel that they have been cheated out of money that they otherwise would have had.

Llywydd, well, I think the contribution that Nick Ramsay has made does point exactly to both the potential of this idea, but also the pitfalls that get in the way of it, and demonstrates why it has been so difficult for Governments of all political persuasions to make a real inroad into this policy problem. I was due to give evidence to the Finance Committee in your inquiry into this earlier this month, and will do—I hope, now—next year. For that reason, I re-read the Dilnot review that, in 2012, said that this matter was absolutely urgent and couldn't be left any longer, and I re-read Gwenda Thomas's Green Paper of a decade ago, which reflects many of the debates that are still here today. That just shows what a difficult problem it is to address.

However, Professor Holtham does very directly address the final point that Nick Ramsay made. The national insurance fund, Llywydd, began as a funded system. It remained so until 1957, when the Macmillan Government decided that it would dip into it in order to meet current expenditure, and as a result, we now have a pay-as-you-go system. Holtham says clearly if you're going to persuade people to pay into a fund, it has to be organised in a way that people can have confidence that Governments cannot dip their hands in it in tough times, and the money that you pay in really is there for this purpose.

UKIP spokesperson, Neil Hamilton.

Diolch, Llywydd. Well, I applaud the sober and serious work that the finance Secretary is doing on the possibility of a social care levy—a subject to which we'll return in due course. I'm sure that the finance Secretary will agree with me that it's important that dog-whistle politics doesn't intrude upon these potential new taxes and that we don't create unnecessary anxiety amongst groups of people who might potentially be affected by any of them. One of the things that concerned me about the possibility of a vacant land tax, which we discussed in part yesterday, was that a lot of people may not ultimately be affected by it, and may, in the interim period, be worried by such a proposal. So, I wonder if the Cabinet Secretary will do a bit more to allay potential fears in this respect.

I referred yesterday to the work the Welsh Government has already done on this in relation to stalled sites and section 106 agreements. They identified just about 400 sites between 2000 and 2014 where land had not been developed for one reason or another. But the number of cases that might be regarded as true land banking, that were capable of economic development and were viable but weren't proceeded with, is actually very small. It's worth, I think, summarising the figures that are in the document. Where the reasons for stalling were related to land ownership or site sale, that is, those that related only to real land banking as opposed to variations in conditions or other planning matters, there were only 17 cases out of this 400 over a period of 14 years. So, the problem of land banking may not be as great as is feared, and I appreciate the point that was made yesterday, that this is a tax that has been proposed in order to test the system, and is not likely to affect a great many people. So, could the finance Secretary just say a little more on that one point? 

Thank you, Llywydd. Well, I take very seriously the points that the leader of UKIP here made about avoiding dog-whistle politics. I quite certainly agree with him in what he said today on that matter.

Yesterday he made the points that he's made today, that when we come to look at the detail of a land value tax, the potential for one in Wales, we may find that it would apply in a relatively small number of occasions. As the detailed work gets done, I'm sure we will have the actual evidence as to whether or not that is the case. I tried yesterday to offer two reassurances to people in the sector who might have anxieties about this: first of all, that we will do the detailed work, and the policy that we bring forward, if we do, will be thoroughly based upon the evidence; and secondly, that we will take the time necessary to do that properly and thoroughly, and that if the power is drawn down to the Assembly, it will not be a matter of simply jumping to use the power because it's here. If the power comes here, we will make sure that, if we do use it, it's because the case for doing so has been thoroughly tested.

I wonder if the finance Secretary would agree with me also that there ought to be some kind of de minimis element in this, in as much as I referred to the case yesterday of Harry Hyams and the Centre Point building that was empty, right in the centre of London, a prime space, for many, many years in the 1970s. The problem that we're trying to address, if there is such a problem, relates to large potential development sites that have significant numbers of homes that could be built upon the land. There's little point in going after individual plots here or there that might or might not be developed for one reason or another. David Melding yesterday referred also to the need for flexibility in the way in which such a tax might be implemented.

In the review that is currently going on by Oliver Letwin, he's going to be looking at large sites, and he recognises that there are many reasons for even large developments not being proceeded with—limited availability of skilled labour, for example, limited supplies of building materials, limited availability of capital, et cetera. He gives a whole host of potential reasons that are nothing actually to do with the perceived ill of land banking itself. Even in the case of large sites, we will have to hedge around the potential tax with all sorts of reliefs in order to avoid creating injustice, even for significant property development companies.

Llywydd, there are indeed many reasons why vacant sites with planning permissions and so on do not come into productive use, and a vacant land tax would only ever be one tool in a much wider set of tools that policy makers can use to bear down on that. From memory, but I am relying on memory, I believe the Republic of Ireland scheme does have a de minimis part to it, but anybody who had heard Vikki Howells's short debate and had seen the examples that she brought forward would know that sometimes even very small sites that are allowed to go into dereliction spread the misery of that on a much wider scale amongst people who have to live nearby. So, scale is an issue, but it's not, by itself, a complete definition of the problem.

I fully accept what the Cabinet Secretary and, indeed, Vikki Howells have said on this, although dereliction is a separate issue in itself, which could be dealt with in other ways other than by a tax. But I'm also concerned about the potential impact of such a tax upon small house builders in rural areas. It's easy to demonise big companies, but there may be a variety of reasons why even small house builders, who can't afford to bank land for long period of time anyway, might feel that they would be affected by this and which would therefore dissuade them from applying for speculative planning permissions. And, given that economic circumstances can sometimes change quite rapidly, this would be an unfortunate development, because if it indeed resulted in fewer speculative proposals at the local development plan preparation stage, the onus would then be on local planning authorities to approach land owners proactively to identify land that is capable of development and which they would like to see developed. Given that local authorities have enough on their plate anyway, this would be another unfortunate consequence. So, I hope that that's another point that the finance Secretary will bear carefully in mind.

Well, Llywydd, I thank the Member for that point. I've seen the figures myself that do demonstrate that it does take longer in rural parts of Wales to bring land that has got the necessary permissions into development. We talked yesterday in the discussion here about a vacant land tax, about the length of time a piece of land would have to be vacant before it started to become liable for a tax, and, when we come to do the detailed work on all of this, which—. As I keep reminding Members, we're at the very earliest stages of doing that detailed work, but if those figures were borne out then they would lead, I think, to a discussion of whether or not you would need to have a longer period of time available in rural parts of Wales before a tax began to apply, because of the nature of development in those areas. But that is a point we would need to return to when the evidence was clearer. In the meantime, it is a perfectly fair point for the Member to have put into the debate. 

Plaid Cymru spokesperson, Adam Price.

Thank you, Llywydd. A fortnight ago, Cabinet Secretary, you published the mid-term review in terms of the Wales infrastructure investment plan, which originally included a pipeline of projects worth £42 billion in total. Now, of course, in next year’s budget there’s only around £1.5 million—£1.6 million—which is capital investment, and I think we recognise, having done the maths, that it would take many, many years for us to deliver all of the investment needs in terms of infrastructure. You have to contrast this, of course, with the situation in the south-east of England and London, which is the corner of the UK that receives the largest slice of the cake in terms of infrastructure investment, and they are now about to receive an additional £550 million to save the Crossrail project, which, apparently, is overspending. To put this in context, that is a little less than half of what the UK Government intends to invest in the rail network in Wales over this next investment period of five years. So, can you confirm that Wales will not receive any additional funding as a consequence of that additional investment in Crossrail, because, under the financial settlement as it stands, there is a comparison factor of 0 per cent that is used in terms of the formula? And, along the same lines, if railways were to be devolved entirely, as is the situation in Scotland and Northern Ireland, wouldn’t Wales benefit to the tune of some additional £700 million, which could be invested in our network in order to make up for the underspending that has been the case over the past few years, and that could be done over the next five years between 2019 and 2024?

I thank Adam Price for that question, and I can see the point that he is making.

Investment across the United Kingdom is tipped towards London and the south-east in the way that he described. Because this is a relatively very recent development, I will write to him if I've got anything further to say. But my officials have been in contact with the Treasury today. They say, in relation to Crossrail, as I understand it, these things: first of all, that no additional funding has yet been committed to the Department for Transport as a result of the Crossrail developments, and at the moment the Treasury regard that simply as a pressure that the Department for Transport's budget has to manage. We then checked with them, if a further investment from the Treasury to the Department for Transport were to be made for Crossrail, would there be a Barnett consequential for that, and they said to us, 'Yes, there would be', because this is a local rail development, and, if there are to be new funds found for Crossrail and given to the Department for Transport, we would get our Barnett consequential for that through the fiscal framework, which I'll remind Members here of course means we would get 105 per cent of that consequential. 

Now, I have seen too often the way in which the UK Government looks to find Barnett workarounds, so that things that at first glance you would imagine would attract a Barnett consequential, turn out not to. So, you can be sure that our officials will be very closely monitoring the situation, and, if money does become available for Crossrail and if that money does go to the Department for Transport, that we would get our proper share of that here in Wales.

Well, I welcome that news very warmly, and perhaps this is an opportunity to test the dispute resolution agreement within the fiscal framework. We will see in due course. Securing Barnettised funding, not only in terms of this overspend, but across the rail network, would mean that there would be £2 billion per annum rather than £1.3 billion, and £700 million would be a means for us to do a great many things. We could build the new rail line between Carmarthen and Aberystwyth; we could look at putting right the failure or the u-turn of the UK Government on electrification to Swansea; we could look at doing two thirds of the work in terms of building the proposed metro for the western Valleys and Swansea. If truth to be told, all of these projects could be considered. That is, £2 billion or £3 billion in a transport bond would be a means for us to transform our transport system across Wales—the kind of ambitious proposal I would expect from a candidate for the First Ministership of Wales.

Now, you mentioned recently in a statement that you do want to proceed now to create Welsh Government bonds. Isn’t this an opportunity to create an innovative programme of investment that we have been waiting for for decades and to create a Welsh bond? Even I, as a Member of the opposition, would be willing to buy those bonds.

Thank you very much for that.

Of course, Adam Price is right to point to the fact that we are now drawing down the power for the Welsh Government to issue bonds. The reason for doing so is the one that Mike Hedges outlined in the Chamber a week or so ago—it's to keep the UK Government honest in the interest rates that it charges through the Public Works Loan Board, because, if it seeks to increase the interest charges to us in making loans from that source, then we would have another way in which we could raise money in this place, and that tends to encourage the UK Government not to raise interest in the loans that it makes.

The difficulty in the proposition that Adam Price puts—and he puts it persuasively, as he does—is that the ability to issue bonds does not increase the capital limit that the Welsh Government faces. It doesn't bring us an extra £1 in investment. So, we could create a fund of the sort that he has suggested, but it wouldn't be new money—it wouldn't be extra money available to Wales. So, if you did create a fund for that purpose, you would have to decide not to go ahead with various other important investments across other parts of the Welsh public sector.

Of course, that's a proper public debate about where priorities lie, but it wouldn't be right to suggest to people that you could create a bond-filled fund and that that, somehow, would be new money over and above everything we have—it wouldn't be.

I understand the Cabinet Secretary's argument. I wonder, though, if a purpose-specific bond was put together on the lines that I've suggested that, actually, you would be able to convince the UK Treasury, for that specific purpose, to raise the borrowing limit. Indeed, this is something that has been suggested by Professor Holtham, that you mentioned in another context earlier. So, I was wondering whether you would be prepared, at least, to look at this.

There is an alternative mechanism as well, which, actually, to some extent overcomes some of these problems, which is to look at Transport for Wales, which is modelled on Transport for London. Transport for London, of course, has separate borrowing powers, and it has them in particular because, of course, it has revenue-generating capacity; it also has capital-uplift capacity, in terms of regeneration schemes. So, that could be a mechanism. Indeed, the Labour Party in England is strongly advocating that the new body, Transport for the North, is given parallel borrowing powers. So, is the Welsh Government prepared to explore a case for Transport for Wales being given the kind of borrowing powers that have allowed Transport for London to invest extensively in its own network?

Well, Llywydd, this is a very good moment for raising these possibilities, because I have only recently written to the Chief Secretary to the Treasury putting her on alert to the fact that, as part of the forthcoming comprehensive spending review, I will be seeking an extension to the borrowing limit currently available to the Welsh Government. So, it's a moment where there are some new possibilities in play.

The ones that Adam Price has raised are certainly of interest, because this Government has a solid track record, begun by my predecessor, Jane Hutt, of looking for new and innovative ways of extending the pool of capital investment available to Wales. If it would be helpful, I would be very interested to meet the Member and talk with him in more detail than we're able to in these exchanges about how those ideas might be taken forward.

Let's see whether we can pick up some speed on questions and answers. We're on question 3 and we're almost out of time for the session, so that's a challenge for you. Dai Lloyd, question 3.