Questions now from the party spokespeople. The Conservative spokesperson, Nick Ramsay. 

It is groundhog day again, Minister, because I'm going to ask you about income tax again as it is such an important and pressing issue. Last week, we brought the debate to the Chamber on that pressing devolution of income tax, and you were asked by a number of Members on this side what your intentions were in terms of those rates and your commitment to keeping the rates of tax as they are, consistent for at least the next two years. Can you reconfirm that commitment today? 

This really is becoming groundhog day now, because, of course, I reconfirmed that commitment in our debate and the way in which we supported the motion that the Conservatives brought forward last week, I believe on the same day the First Minister had also reconfirmed that commitment. We have no plans to increase income tax during this Assembly term. We've made that very clear. It was a manifesto commitment.

We've also been clear that we can never say that we will never increase income tax here in Wales as well, because income tax is one of the taxes that we pay to ensure that we're all able to enjoy the public services that we have here in Wales. Any thoughts of increasing income tax and any other work that we do on tax would clearly need to be very much evidence based, and very much in terms of listening to what the impact might be on people's lives here in Wales as well. So, no decisions on income tax would ever be taken lightly. 

I would also say that it will be for all of us, as political parties, to set out our future agendas for income tax, in terms of how we present our offer to people across Wales for the next Assembly election, and, again, a manifesto commitment that we would expect to be something that we would all be thinking about. 

Thank you, Minister. I fully appreciate that you have in the past said, and your predecessor has said, that the intention is not to increase income tax, but it does seem that the ground has moved slightly on this. Certainly, the vocabulary has changed. The First Minister, shortly after he came into post, recently said that it is not the intention to do so. You have again said today that it is not your intention to raise it, but that does mean that the door is left open. Should the economic situation change over the next couple of years, will you fundamentally rule out raising income tax levels before the next Assembly election, or are you saying that the door is open? It's a very important question to be answered, because businesses out there and the public are concerned about this issue. 

Businesses and the public I think deserve better than to have unreal fears raised through a series of hypothetical questions and hypothetical scenarios, which have been raised by you on the Conservative benches. I'll just be very clear again: we have a manifesto commitment not to raise income taxes during this Assembly—we have no plans to do so.  

You answered that question without using 'project fear', or I could hear the phrase coming from the other side of the Chamber. I do welcome that commitment, Minister, and I know I've been going on about this now for some time, but I've asked you the question because it is very important to the public. I am starting to get people coming to me, who are concerned. I think it is dawning on people that this massive change in devolution is happening to Wales. The literature has recently gone out to taxpayers in Wales that income tax is going to be now part of the Welsh Government toolbox in terms of dealing with economic decisions. Could you update us on that process of keeping people informed? I know that the letters have been hitting people's doorsteps. Have you had any increased correspondence yourself on this matter? And has the Welsh Revenue Authority had any queries or concerns raised by members of the public about how the process is happening?

Thank you very much for the question. Of course, it's HMRC rather than the Welsh Revenue Authority administering this particular tax. They have had a number of queries from people in Wales. The leaflet and the letter that were sent out offered people the opportunity to have Welsh-language services. So, they had 126 requests to have their service given to them in the Welsh language. We've received a very small number of calls and e-mails—fewer than 20—on this particular issue. We do have a comprehensive programme of communications with taxpayers in terms of notifying them of what the Welsh rates of income tax mean and, of course, what they also don't mean. 

So, we've done some surveys to establish a baseline understanding of where people are with this and we'll be undertaking further work on this in due course. But, of course, we've got our new web pages and the first burst of an eight-week social media campaign—we'll be doing some more of that as well—because it is really important now that we have this opportunity to establish a new relationship with the people of Wales in terms of how they understand that the taxes they pay contribute very meaningfully to the work that we do here in the Assembly.

The Plaid Cymru spokesperson, Rhun ap Iorwerth.

Thank you, Llywydd. On the eleventh of this month, the Minister answered two written questions tabled by me on Barnett consequentials for Wales as a result of the 10 December funding package for the Crossrail project. I was told that discussions are ongoing between Welsh Government officials and UK Government officials. Is there any update from the Government on those negotiations?

Thank you very much for raising this. I'm afraid I don't have a further update beyond the fact that discussions are currently ongoing between HM Treasury officials and Welsh Government officials with regard to that Crossrail investment and what potential consequentials could be in Wales. We are awaiting further detail from the Treasury. I have to say that it is very difficult to get timely answers from the Treasury at the moment, but as soon as we have any further information, of course, we'll share it with Members.

An answer has been given to my parliamentary colleague, Jonathan Edwards MP, who asked a very similar question to mine of the UK Government. He received this response:

'As the Government is providing a loan to the GLA, this is being treated as a long-term reprofiling of DfT’s budget. The Devolved Administrations...have been offered Barnett consequentials of the DfT reprofile and it is up to individual DAs if they take up this offer.'

Can you confirm that the offer has been made? What was the nature of the offer that was made? Were there conditions attached to that? Is it the fact that conditions have been attached to it that is slowing a decision down from Welsh Government, and shouldn't this be a priority to see a potential new source of money as a way of investing in transport—investment that's desperately needed?

As I say, those discussions are ongoing in terms of how any potential consequentials could be used in Wales and over what time period—whether it would require any reprofiling of our existing capital spend. But I will endeavour to update members on this as soon as I possibly can.

We know that transport infrastructure spending in Wales is way behind the curve, compared certainly with the south-east of England and the London area, and, in fact, if capital spend here in Wales had kept pace with capital spend per head in the south-east of England and London, an additional £5.6 billion would have been spent here in Wales over the past 20 years. Now, I see that as £5.6 billion missed. Would you agree that this is a classic case of underfunding Wales by UK Government? Would you agree to making it a priority to see if there is a source of funding here? And would you, perhaps, consider that this has been a failure by Welsh Government to stop that gap from increasing over the 20 years since you came into power in 1999?

I would suggest that comparing spending in Wales to London and the south-east isn't necessarily a particularly accurate comparison to make. Normally, when you make comparisons, they are with other parts of the UK that are relatively similar in terms of population and income per head and those kinds of issues.

We're making really significant investment across Wales in terms of capital investment. You'll know about the plans that we have for the city deals, the north Wales growth deal; we're really keen to see what more progress we can be making on that. Of course, last year, in May alone, we announced another £266 million of new capital investments alongside the publication of the Wales infrastructure investment plan midpoint review. And our budget, which we recently passed through the Assembly, obviously builds on that. So, we have investment of an additional £60 million on road refurbishments, £78 million further for the local transport fund, almost £43 million over two years on the Taff's Well rail depot, £35 million investment in the social housing grant and £25 million to create seven strategic hubs across the south Wales Valleys in line with our ministerial taskforce work on the south Wales Valleys. So, we are certainly making serious capital investment here in Wales.

UKIP spokesperson, Neil Hamilton.

Diolch, Llywydd. I wonder if the Minister saw one of the attractions of her new job as taking responsibility for the complexities of local government finance in the years ahead, and whether she agrees with me that the funding formula for local government is now looking increasingly dated and requires reform. In particular, one of its defects is that the mechanism within it seems to work so as to force councils to raise council tax almost every year. Welsh Government predicts council spending over the next year, and a larger need prediction brings about a larger block grant. The need prediction is based upon council spending in previous years, so if there's a previous history of high council taxes, then you get more money; if you've got lower council taxes, then you get less money. So, councils need to increase the council tax every year to get higher financial need estimates and higher grants from the Welsh Government. So, there's no incentive whatever within the formula as it currently is for local councils to get better value for money or to economise in spending. What we need to do is to have a formula that removes such a perversity.

Thank you for that question. I'm afraid I'm going to disappoint you now and let you know that it is actually Julie James who had this given to her in her portfolio. However, clearly, I have a strong interest in ensuring that we do fund local government properly here in Wales, which is why I attended, alongside Julie James, the finance sub-group very recently. The finance sub-group brings together leaders of local authorities, police and crime commissioners and others to talk about specific issues, such as the local government settlement funding formula.

I will say that we were clear in that meeting that, actually, Julie James and I are very open to other ideas. If local authorities feel, as a collective through the Welsh Local Government Association, that this formula isn't working for them and they want to come forward with other ideas as to how things could be improved, then certainly we would be keen to explore any ideas that they have to bring forward to us.

I'm sorry I misunderstood the complexities of the shuffled portfolios within ministries as well as between them, but rises in council tax are imposing enormous burdens upon individuals and, indeed, businesses. The average band for council tax has more than trebled in Wales since 1997 and it's gone up by two and a half times since the Assembly was created. Even the former CEO of the Welsh Local Government Association, Steve Thomas, has said:

'The fact is that the formula as it currently stands is held together by duct tape and sticking plasters' and can't continue. We do need to have an urgent review of local authority funding and to reconsider the link between the Welsh Government's predictions of local authority need and previous years' council tax rates, which are embedded in the formula. As the finance Minister, of course, the Minister must be a pivotal ingredient in any change that might be brought about in the future. So, I'd just like to get some idea of the extent to which the Welsh Government sees this as a priority. It's not something that can be answered overnight, and it may take several years to bring about meaningful change. So, are we going to see any moves towards some kind of revision being made during the course of this Assembly?

Thank you for that question. I was clear with the finance sub-group that I do take a very strong and direct interest in this agenda. So, whereas a finance Minister would normally have a slot on their agenda, I've been clear that I'd like to actually come along for all of it, to hear for myself, really, the kind of pressures that local authorities are under, and the kind of ideas that they have for things that could alleviate the serious pressures they're under. I think it's fair to say that, when Julie James introduced the local government settlement debate, she was very clear that she wasn't planning to sell the settlement as an excellent settlement to local authorities; she very much reflected on the fact that we are living in the ninth year of austerity, and there is huge pressure right across Government. She made all of those points about Welsh Government funding being comparatively so much less than it was a decade ago.

The core funding that we currently provide to local authorities, as the Member will know, is distributed according to relative need, and that takes into account a formula that has a wealth of information, such as demographic, physical, economic and social characteristics of those local authorities, and also it takes account of their ability to raise their own funds—through council tax, for example. There have been incremental changes to the formula over the years. So, over 2017-18 and 2018-19 significant changes, actually, were made to the funding formula, to take account of the additional costs incurred as a result of increased travel times in relatively sparsely populated areas, for example. So, as I say, the Minister and I are very much all ears for ideas that would come forward from local authorities.

One of the features that I think does need to be looked at is that, when you look at the councils that have had an increase in funding most recently, many of them have seen a substantial increase in their reserves. So, this is money that could be spent on public services but is being held in bank accounts and not available for dealing with the current problems. Rhondda Cynon Taf, for example, has a staggering amount of £152 million in its reserves, up from £148.9 million in the previous year. Torfaen has nearly £30 million in reserves, up from £24 million, and Neath Port Talbot is up to £76 million from £65 million. So, surely, there must be some kind of control on councils keeping an excess of the cash available to them in reserves. After all, the Auditor General for Wales has recently criticised community councils for reserves rising to £38.7 million in Wales by April 2018. So, I hope that the finance Minister will support my call for the role of reserves to be reconsidered in relation to the block grant settlement.

Well, clearly, council leaders will have to manage their budgets effectively, but within those reserves, what perhaps isn't always completely obvious from the top-line figures, certainly, is that much of it, or a certain percentage of it, will already be committed to a number of projects—school building projects and so on. So, I think it's important to delve down into the figures to have a fuller picture, really, as to the plans that the local authority has for those reserves.