Questions now from the party spokespeople. Conservatives spokesperson, Mark Isherwood. 

Diolch, Llywydd. Last week, Audit Wales published two reports regarding local government in Wales. The report on 'Financial Sustainability of Local Government as a Result of the COVID-19 Pandemic' said that, in the first six months of this year, councils in Wales recorded financial costs of £325 million due to the pandemic and, whilst this has been largely offset by the Welsh Government's local government hardship fund, the report cites figures from the Welsh Local Government Association estimating that, by 2022-23, councils will be facing budget pressures of approximately £600 million. The Auditor General for Wales suggested that some councils were better placed than others to deal with the financial impacts of the crisis, where, overall, they hold usable reserves of around £1.1 billion, as in March this year, but this varies widely: Rhondda Cynon Taf, over £119 million in useable reserves, to Conwy, around £14 million, and Blaenau Gwent, around £12 million. How, therefore, do you respond to the report's statement that, whilst the financial support provided by the Welsh Government has largely offset the immediate financial concerns, it may be the case that councils have to increasingly use their reserves should the financial impact continue over future years? And how will you address the inequality in the ability across councils to do this?

Thank you, Mark. We did rehearse a little bit of this during my recent appearance at the local government committee, during which I was answering some scrutiny questions on the response to COVID-19. So the answer to that is contained in the answer I've just given to a number of Members earlier, which is that we are working with each individual local authority to enable us to understand their very specific circumstances: what their reserve position is; what they would have expected to receive in fees and charges and council tax and national non-domestic rates; what their reduction in income looks like; what their additional costs are; what their particular circumstances in that particular local authority are, in order to be able to assist them in making claims for the hardship fund, which, as I've emphasised on a number of occasions, is paid out on actuals, rather than any kind of formula-driven approach, so that we can understand where each local authority is and understand its resilience plans and so on. 

There are a large number of reasons why different levels of reserve are held in different authorities: as a result of locally determined policies; as a result of earmarked reserves for particular capital projects; and a large number of other reasons too numerous to mention here. So I'm confident, at the moment, that we are on top of that and that we are not in a position where any local authority in Wales faces any particular financial crisis, but, of course, much depends on the UK Government's attitude to budgets going forward. I'd very much hoped that we would have a comprehensive spending review that would have allowed us to give some certainty over a three-year, at least, budget, but that doesn't look like it's going to be so now, and obviously if you have to plan on a year-on-year basis for local authorities that's much more difficult to do in terms of long-term planning and leads to some undesirable short-term effects.

But we've worked very well with local authorities; we've co-operated very well. I'm very grateful indeed to the officers of the local authorities and the WLGA and to all my officials who've worked extremely hard through this period to make sure that we have resilient local government in Wales. 

Thank you. Well, I hope that means that there will be consideration in future years over how to help those with the least reserves specifically who may have less flexibility in all the areas you mention.

But, in their second report, 'Commercialisation in Local Government', Audit Wales argued that

'With future funding at best unpredictable, new thinking is needed to transform the way councils operate to protect and improve services for their communities. The result is that there has never been a more pressing need to innovate and transform local government, to think big and think radically about what councils do and how they do it, and the relationship they have with their residents.'

They found that there is public support for councils to act more commercially, citing a citizens' survey carried out by themselves that found that nine in 10 respondents broadly supported their council pursuing commercial activities that ultimately support the local area through economic growth and investment in the most disadvantaged communities. How, therefore, do you respond to the report's arguments that councils need to define and agree what commercialisation means for themselves, their communities and citizens, and that changing the culture of organisations was the topic flagged most consistently as the key challenge facing councils becoming more entrepreneurial?

I think it's really obvious from the way that local authorities have reacted to the pandemic that they are indeed very flexible and resilient organisations that have been able to turn around the way that they respond to both the public and to service delivery, in what can only be regarded as a miraculous period of time, and have pulled together in order to be able to do that in a way that I think most people would recognise as highly entrepreneurial in any sense. Because some of the innovative ways that they've been able to respond to the pandemic are really very inspirational indeed.

In the Local Government and Elections (Wales) Bill, which has just gone through Stage 2 of the committee just very recently of course, we're also giving councils the power of general competence. You'll be aware, as a member of the committee, that one of the things we are seeking to do is put regulations in place that ensure that, in acting in a commercial way, the power of general competence is used in specific ways, with specific provisions for business planning, company structures, and so on, which will encourage the kinds of thinking that we are expecting to see and also discourage the kinds of speculative commercial ventures that led in the past to some authorities, particularly in England, over-stretching themselves in terms of ventures that went very badly wrong. I know myself, having lived through it, back at the end of the 1980s, that some commercial ventures for local authorities can be spectacularly backfiring on occasion.

So we're very careful to work with our local authorities to ensure that we understand the commercialisations that they want to put in place, that we encourage them as appropriate, that we have the right kinds of guidance and the right kinds of governance structures in place to enable them to do exactly as you suggest, to maximise income for spending on their local services whilst at the same time protecting the public from any over-commercialisation or unduly risky operation that might put those services in jeopardy.

In reference to the early part of your response—and I acknowledge what you say—nonetheless, Audit Wales highlighted the need to change the culture of organisations and the key challenge for them to become more entrepreneurial. And they found that the skills of elected members themselves was a barrier to councils taking advantage of commercial opportunities and greater entrepreneurship, with almost two thirds of elected members themselves who'd responded to their survey saying that elected members' ability to effectively decide on options was a barrier to their council pursuing commercial ventures. And these responses were echoed by corporate management teams, who said that only 19 per cent believed that elected members are sufficiently trained and skilled to be able to consider and approve new commercial ventures. How, therefore, do you respond to the report's argument that the best approaches involve elected members early, and have specific, well-defined and regularly updated policies appropriate to local circumstances and which support councillors to discharge their governance, decision-making and oversight responsibilities?

Of course, we largely agree with that, which is why we're putting the provisions into the Act that allow us to put the regulations in place to do exactly that.

There is also a big issue about diversity in democracy. You cite the skills of particular councillors, and so on, but we know that there's a real lack of diversity in our democracy across local government. And so, together with my colleague the Deputy Minister and Chief Whip, we have been working very hard on a programme of diversity in local democracy, hoping to encourage a much wider range of people to come forward, particularly younger aged people with more commercial skills, perhaps, who are still working, to enable us to ensure that the diversity in the decision making of local authorities, going forward, has a much wider range of voices around its table than we currently see in some local authorities.

And whilst we do that, we will also, as I say, be putting the regulations in place to encourage local authorities to use the general power of competence, but to do so in a fiduciary resilient fashion, both taking the risks that we think are acceptable and protecting the public from undue commercial risks, which, as we have seen in the past, have led to some circumstances in which local authorities have got themselves very close to being not able to carry on. So, we're very keen, Mark, to walk the tightrope between both of those things and to work very closely with Audit Wales in order to do so.

Plaid Cymru spokesperson, Delyth Jewell.

Diolch, Llywydd. Minister, I want to ask about some of the remarks made by the First Minister yesterday about unsafe buildings. I'm sure you'll be aware of the buildings I'm referring to; I'm referring, of course, for example, to flats with unsafe cladding. The First Minister said that developers should pay to make good the deficit in those buildings and that leaseholders should not be footing the bill. The Government has been aware of this issue for a while now, so my question is: why hasn't the Government forced the developers to foot the bill yet?

Well, unfortunately, Delyth, we don't have all the powers necessary to change the basic law in order to be able to do that. Would that we could; I would very much like to be able to do that. There are some things we can do going forward that will protect people from being in that situation with new buildings, but that won't help the people who are currently in very difficult situations in buildings around the place—a large number of them have been mentioned previously in Plenary. 

We are currently investigating ways of being able to assist people to do the works without them losing all of their equity, but if I was—. It's a really difficult thing to do, let's just be clear. The relationship between the leaseholder, the freeholder, and the contractual obligations between the leaseholder, the freeholder and the original builder, the management company and so on are different in every single building. So, it's actually extremely difficult to unpick on a global basis the particular circumstances of each building. And I have a range of meetings coming forward to meet with the residents of particular blocks who've asked to meet with me. And I should say at this point, Llywydd, that I have one of these in my own constituency, in the middle, so colleagues in the Government are dealing with that particular issue for me, because I wish to represent them as their constituency representative.

And what we would like to be able to do—. So, there is a way for the local council to do the works necessary to make the building fire safe. And we're very keen—. We've been working with the fire services—my colleague Hannah Blythyn has been working hard with the fire services as well—to ensure that we've had all the right inspections done and that people are as safe as is humanly possible for them to be without the works that are required to be done to make it 100 per cent. But, of course, if the local council does do works in default for those buildings, then what they do is they land charge the properties in the building to recover the cost of those works, and those poor people lose the whole of their investment in their property. Now, if it was a life and death scenario, of course we would do that because we don't want anybody to be in that situation. But it is a balance between trying to make sure that people do maintain some equity in their leases and that we get the fire safety arrangements in place that we want. And I'm afraid that's just really complicated, and it does require the UK Government to do some things. We're currently working with the UK Government to try and put some of those provisions in place, but it's just not possible to put a blanket kind of court arrangement in place that allows them to sue the builders in the first place. If it was, we would have been able to do so.

I'm not often charitable to the UK Government, but, in this instance, I will say that it's quite a complicated thing to try and unpick. So, we are working very hard to try and put in place a scheme that would allow leaseholders to come forward and claim money off us without losing all of their equity, but it's going to be impossible to do without them losing some of their equity, and it's just a question of how we get that very complicated set of circumstances sorted out. So, it's not possible to talk about it on a global basis. Each individual building, the way the lease is arranged, the way the obligations are arranged, who owns it, where the management company is, and so on, all make a huge difference to what's possible. So, I'm afraid it's just hugely complicated.

Minister, I appreciate your candour with that in setting out the difficulties. I do think it's helpful that you've confirmed that Wales does need further powers in order to give greater protection, and, obviously, Plaid Cymru would support the Government in seeking those extra powers. 

You've set out some of the provisions that you're looking to introduce within the Government's powers as they stand. Some of the things that we would like to see the Government doing, and that we would certainly support, would include some of what you've set out: a change in planning law to allow previous performance by a developer to become a material consideration as well; ensuring planning departments have the resources that they need to ensure that planning conditions for large developers are adhered to, so that we don't see the same developers making the same mistakes or cutting the same corners; and bringing plans forward for regulatory change, as you've just been referring to, and introducing them now because—in the candour of your answer, you did obviously refer to this—the earlier we solve this albeit very complicated situation, it is going to be the better for the mental health of people who live in these housing blocks. Would you consider these other measures, Minister, and would you say so on the record? Because I think the publicity about reputation becoming a material consideration may be enough to make these developers put the situation right without us having to force it.

Yes, of course, we're prepared to look at all possibilities for that. I will say, again, that some of those things sound attractive, but they're actually much more difficult to do in practice. So, I'm going to use my own name as an example: so, I could be Julie James Building Inc. and I could sell Julie James Building Inc. and I could go away and start up Julie Jones Building Inc. and Julie James Building Inc. would be banned from planning because of the poor things I'd done, but actually the person who was behind that could have gone off and started up something else. So, there are a lot of complex issues. This is not just about a headline name. So, again, some of these things sound as if they're easy to implement, but actually in practice are very difficult to pin down so that you're actually making sure that the individuals responsible—because in the end, it is individual policies that are responsible—are there. A lot of these buildings are built by specialist joint-venture vehicles between a variety of different companies, finances and so on. So, it's attractive, and I understand the attraction of saying that we would do it, but it's much more complicated in terms of actual—. In terms of actually writing the regulations, it's much more complicated than that. But we are looking to see what can be done.

And, again, Delyth, I just want to emphasise that, of course, we're very keen to put it right going forward, but that doesn't solve the problem of the people who've got the problem now—I can't retrospectively do that. And so, what we're also looking to do is just to see what can be done to assist the people who find themselves in that terrible position at the moment. So, I have an enormous amount of sympathy for them, but it is very difficult, because in the end, buying a house, buying a home, is where you live, but it's also an investment and it's the dichotomy between those two things that's so very difficult to get right in these circumstances.

But I would like to assure the Senedd that, where it was a life and death risk, there are powers in place for a local authority to do that, but it would mean losing the equity for the people inside the building and that is not generally something that they are prepared to contemplate.

Well, again, thank you for your response to that, Minister.

I should say, Delyth, for understandable reasons, I wasn't blaming them for that. I just want to make that very clear—I'm not putting any onus on them; I understand where they are coming from, but it is very complicated.

No, thank you for clarifying that, Minister. I don't think it did come across in that way, but it's obviously good to have that on the record. I don't doubt for a moment the complicated nature of this. I would urge you not to wait to take action on it because obviously we want to be able to give residents hope. But I am glad to hear that you are considering a range of these different options, and, as you say, not just options that will help future residents, but also trying to put the situation right for residents who are caught in this awful situation already.

Finally, Minister, I wanted to reflect on some of the remarks made by David Melding yesterday, where he blamed a lax regulatory regime in both England and Wales for allowing these scandals to happen in the first place. Again, this touches on some of what we've already covered, but it's not just the fire safety issues here—unfinished estates, the miss-selling of leaseholds, as we've touched on, and broken promises by developers, as we've spoken about, have become a hallmark of development over the past decade. The case for a windfall tax on the profit of large developers is very strong. Would you support that call?

Yes, I think there are calls for all kinds of reactions to this. The UK Government—and we're co-operating with this—has put, of course, a New Homes Ombudsman in place as a result of some of the other issues that are not to do with high-rise buildings. A large number of our scale house builders got themselves into serious difficulties in some of the building practices that they had, and I think those are well known. And that's why the UK Government has put the New Homes Ombudsman in place in order to protect people against, frankly, scandals of that sort. And that's why, here in Wales, we're determined to put our planning system in place robustly so that people have a robust planning system to go through and then, on top of that, a robust building safety inspection regime to go with that, to make sure that we learn those lessons and make sure that we have a robust system. Now, unfortunately, because of the pandemic, our building safety regulations are now delayed. We are about to put out a White Paper on that and we are working very hard with the leasehold reform provisions that the Law Commission has looked at. They recently reported, and we're looking to see what can be done in conjunction with some UK legislation, if at all possible, just due to the lack of time we've now got in Senedd provisions to be able to do this.

It's one of the real sorrows about the pandemic, alongside all of the other things that we know of, that we've lost the chance to put some of those building safety reforms in place. But there is, I think, consensus across the Chamber, so whoever forms the next Government will have a ready plan to go, and I'm sure that, very early in the new term, whoever the Government is will be able to implement those reforms. I don't think they're in any way controversial, and I'm sure we'll be able to that very rapidly.

Question 3 is withdrawn [OQ55673]. Question 4, Adam Price.