The next item, therefore, is the Landfill Disposals Tax (Wales) Act 2017 (Site Restoration Relief) (Amendment) Regulations 2018. I call on the Cabinet Secretary for Finance to move the motion, Mark Drakeford. 

Motion NDM6824 Julie James

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

Approves that the draft Landfill Disposals Tax (Wales) Act 2017 (Site Restoration Relief) (Amendment) Regulations 2018 is made in accordance with the draft laid in the Table Office on 20 July 2018.

Motion moved.

Thank you, Llywydd. I am pleased to introduce the Landfill Disposals Tax (Wales) Act 2017 (Site Restoration Relief) (Amendment) Regulations 2018.

Can I begin by putting on record my thanks to both the Finance Committee and the Constitutional and Legislative Affairs Committee for their work in considering these regulations? The regulations are made under section 33 of the Landfill Disposals Tax (Wales) Act 2017 and relate to the relief available to landfill site operators when undertaking approved site restoration activity.

At present, the Welsh Revenue Authority may only grant relief for disposals forming part of site restoration activity where the material disposed of is a qualified material as listed in Schedule 1 to the Act. The purpose of these regulations is to extend the scope of the relief in respect of disposals made as part of approved site restoration activity to include the disposal of material consisting entirely of topsoil. The effect of these regulations is to ensure that all material required properly to restore a landfill site in line with an environmental permit or planning condition is relieved from tax. Although a minor amendment, these regulations will remove any incentive to use no or minimal topsoil and encourage good site management. This will help to deliver the social, economic and environmental benefits associated with proper site restoration, and I ask Members to support the regulations this afternoon.

I recall at committee stage discussing with the Cabinet Secretary when he'd be bringing forward regulations and the extent to which these would turn on questions of detail or be more substantive. I'm not quite sure which this falls into, but I've got a couple of questions for him. Firstly, has the Welsh Revenue Authority been disapplying or giving a relief in terms of tax to date in the circumstances you fear may be addressed by this?

And, secondly, in these regulations, we're replacing section 29(1)(a), the reference, 'consisting entirely of qualifying material'. That is changing to:

'(i) consisting entirely of qualifying material, or

'(ii) consisting entirely of top-soil'.

And I just wondered, we have in Schedule 1 already the list of qualifying material and soil is part of that. I mean, what is the problem? It says at 1, 'rocks and soil', and there's a condition: it must be naturally occurring. Is the issue as to whether it's naturally occurring, or is this being read as rocks and soil, and therefore soil isn't allowable unless there are also some rocks in it?

Could the Cabinet Secretary also clarify whether he is suggesting that topsoil is something different from soil? And I know he's got an allotment in Pontcanna and is maybe more knowledgeable on these matters of soil than I, but is it suggested that the soil and topsoil are separate categories—the thing—as opposed to the topsoil being covered by the meaning 'soil'? And if the latter, is this really a necessary regulation to bring forward?

Also, just to ask him finally, when he has 'consisting entirely of qualifying material' or 'consisting entirely of top-soil', if that just said, 'consisting of qualifying material or top-soil'—a statutory interpretation, I understand, would allow an inclusive meaning of that and it wouldn't matter if it were both of them. But the way he's written it, 'consisting entirely of qualifying material' on both of them, doesn't that suggest that a mix of qualifying material and topsoil would not be allowable under these new regulations?

The Cabinet Secretary to respond.

Diolch yn fawr, Llywydd. On the Member's final point, that's not my interpretation of the change we are introducing here. This is simply to ensure that there is not a perverse disincentive not to use topsoil when restoring a site. We could, as the Member suggested, have changed the list of qualifying materials to include topsoil and to have brought about the change in regime in that way, but to add topsoil to the list of qualifying materials would mean applying the lower rate of tax on topsoil in all circumstances, whereas what we are trying to do is to make sure that the relief is available only when topsoil is being used in a proper way to enable site restoration to take place. If you were to allow the lower rate of tax on topsoil in all circumstances, this could perversely incentivise sending topsoil to landfill. Of course, topsoil is a finite and valuable resource; it's certainly regarded in that way on the Pontcanna allotments, and it should therefore not be disposed of in landfill.

The way we have gone about bringing forward this amendment I think sensibly separates those aspects of restoration material that would qualify through being on the list, and topsoil, which is a very particular part of restoration. And, indeed, as the Member said, it is the work of the Welsh Revenue Authority in these early months of having landfill disposal tax that has exposed this matter as an issue. The WRA has been collecting tax and allowing tax relief on qualifying material used in site restoration. It has been brought to their attention that that restoration is not being properly completed in a number of cases because landfill operators are reluctant to use topsoil because it does not qualify, at present, for relief while other aspects do.

If Members are prepared to support these regulations this afternoon, they will ensure that landfill site operators can continue to use topsoil as part of approved site restoration work without incurring a liability to tax. And in that way, as I said, we believe that that will incentivise the delivery of the socioeconomic and environmental benefits that are associated with proper site restoration.

The proposal is to agree the motion. Does any Member object? No. The motion is therefore agreed in accordance with standing order 12.36. 

Motion agreed in accordance with Standing Order 12.36.