Questions now from the party spokespeople. The Conservative spokesperson, Laura Jones.

Good afternoon, Minister. Monmouthshire County Council hold regular business forums, which obviously is a fantastic way of helping provide the most up-to-date information, a place to share concerns and ideas. I attended the last one, and the biggest concern that came from that, from businesses, was that there are still many businesses falling through the gaps in terms of being able to access grants and funding. Do you agree with me it's about time that local authorities were given a pot of money to distribute entirely at their own discretion to these sorts of businesses, which trusts their local knowledge of those businesses and knowing what's best? Thank you very much.

I'd like to welcome Laura Anne to her role—it's nice to see you taking the role, Laura. I think this is the first time that we've had a question time together, so very glad to see you there.

We've worked very hard with local authorities to ensure that we have very speedy distribution of grants, especially the grants that go out through the non-domestic rates process. I'm very pleased to say that, as each wave of grants has gone forward, we've been able to speed up the process more and more, and to automate it. We've done that because we've worked with a good piece of teamwork, across local authorities in Wales. Peter Fox in Monmouthshire has been very much a part of that and has been very pleased to be of assistance there.

I'm also pleased to say that there is already, of course, a discretionary fund for local authorities that can assist people in their area. It's up to them whether they decide that particular businesses meet the criteria or not. That's for exactly the reason that you've just outlined—that we do really believe that local authorities are best placed to understand the needs of their local businesses and to understand the nuances. It's very difficult to put a blanket one-size-scheme-fits-all and not have people falling through the cracks of that. So, we very definitely set it up in that way, with a lot of consultation with local authority leaders, and indeed a lot of consultation with local authority treasurers. Again, I reiterate my thanks to the hundreds and hundreds of officers across Wales in local authorities, who have worked their socks off to get these grants out in good time to people—right through Christmas, and through public holidays, and everything else; they've really done a good job. So, I'm delighted to say that that discretionary scheme is up and running, and is being used to good effect by local authorities right across Wales.

Thank you, Minister. Perhaps there needs to be more flexibility in the discretionary fund, because those gaps are still there.

The Institute for Fiscal Studies have undertaken a review into domestic and business rates and stamp duty. They're suggesting that the current system for collecting business rates is no longer fit for purpose and should be scrapped and replaced with a fairer system, which would then result in attracting more businesses to our town centres and encouraging those already there to stay. Has the Welsh Government looked into alternative ways of collecting?

The council tax and NDR system is actually in the portfolio of my colleague Rebecca Evans, although obviously I have a lot to do with that, because local government is one of the main beneficiaries. She very recently in the Senedd introduced a piece of research that we have had done, and I've been working alongside her in doing it, into exactly that—how to reform the council tax and NDR system in Wales on a completely different basis. There's a very interesting research report that's been put out for us as a result of that piece of work that's been going forward, and, of course, we know that—. In fact, I've been very pleased that she and I have been able to support local authorities in looking at the shortfall in NDR collection as a result of both the rate holidays that we've been able to put in because of the pandemic, and because, of course, of the changing nature of the way that retail, in particular, is structured in our city centres. So, she's done a very good piece of research that I've been pleased to be part of in doing that. I'm sure that there'll be an opportunity for whoever the new Welsh Government is to take forward some of the very many excellent suggestions that that research paper has proposed. 

That's great. Thanks for that, Minister. Scotland have gone ahead and announced a much-welcomed extension of business rate relief now for all businesses, not just those with a rateable value of £500,000 and below. This is before they know the moneys that are coming from the UK Government, thus providing much-needed certainty for businesses at the moment. They're including support for non-food retailers with a rateable value above £500,000. Given that announcement, can we expect something similar from the Welsh Government? 

Again, as I say, this is not my portfolio. This is actually split between the portfolio of my colleague Ken Skates and my colleague Rebecca Evans, but obviously I have a large part in the conversation on that, given that local authorities are the distribution mechanism for a very large part of the rates. We have, of course, been looking again at what can be done. My colleague Ken Skates only very recently announced another set of business support arrangements to take us through the next phase of the pandemic, and I'm sure there will be further announcements from my colleagues Ken Skates and Rebecca Evans in due course. 

Plaid Cymru spokesperson, Delyth Jewell.  

Thank you, Llywydd. Minister, in your statement last week, you acknowledged that second homes were an increasing problem in parts of Wales. But the steps taken to date by the Government are very small in tackling this problem. BBC Cymru Fyw recently interviewed a local campaigner for fair housing rights, Rhys Tudur, and Rhys said that young people like him couldn't buy homes locally and remain within their communities. He said that there was a council house for sale in Abersoch for £380,000, which is way beyond the reach of local people, where the average wage is around £21,000 per annum. Plaid Cymru, as you know, has proposed five steps that could be taken, which include the management of the use of second homes by legislative changes, as they've done in Scotland, and closing the loophole in the law that means that people can opt out of domestic rates and council tax premiums. So, why won't you take action now for the benefit of residents and communities where second homes are a serious problem?

Thank you for that, Delyth. Sorry, the sound was very bad there, but I think I got the gist of the question. Forgive me if I missed a nuance.

As you know, we've got a cross-party working group of people looking at the complexity of the second homes issue. I'm certainly aware that Plaid Cymru have put a plan up. A number of us have been working on a number of solutions that might present themselves. I'm pleased to say that, of course, we already have made a lot of steps towards this in Wales, including, as you know, the ability for councils locally to ratchet up the council tax on second homes or unoccupied homes as they see fit. At this point in time, no council in Wales has actually put it up to the 200 per cent, although I understand that Swansea council is currently considering doing so. 

The loophole, as you call it—I'm not sure I agree it's a loophole, but I understand the issue that you're raising. This is for people who rent out a second property in their ownership for a particular number of days a year, having advertised it for another number. We are looking very carefully to see whether that number of days—70 and 140 at the moment—should be extended to be a much longer period; in other words, you have to use the house as a holiday house for a lot longer in order to be able to flip to commercial rates. And we're also looking to see what can be done about the access to small business rate relief by people who do that, because that's another issue.

I just think it is worth emphasising, though, because it's a common misapprehension—I'm not saying you have it, Delyth; I know you haven't—that councils do not lose out themselves in their funding when people go to business rates and claim small business rate relief, because the Welsh Government makes up the shortfall in that funding to the local authority, although I do understand that there's an equity issue for local people about who is paying the council tax. So, I understand that, but I did want to make it clear that the local authority itself is not losing out on that. So, we are looking at a range of pieces of evidence to see where that would best be placed, and what arrangements people who do flip to business rates have to do in order to be a business in order to do that. You'll know yourself that there's real complexity about what we call 'second homes' and who occupies them. So, for example, we know that very large numbers of medical personnel who work in the west and south-west of Wales come from other parts of Wales and occupy houses in the west and south-west of Wales during the week in order to be able to work in NHS services, for example. We certainly wouldn't want to discourage those kinds of uses.

You will know that I have a lot of sympathy with people who can't buy housing for youngsters in the villages in which they grew up in. One of the big ways of solving that is, of course, to build the right kind of social or shared equity or co-operative or—there are lots of different ways of doing it—community land trust-type housing, which allows there to be a public share of some sort in that housing so that it can't be built and then sold on the private market for astronomical sums. We do, unfortunately, have examples around Wales where houses have been built for that purpose with every good intention and then plans have changed and those houses have been sold on the open market for really quite eye-watering amounts of money. So, we do need to find a way of protecting that housing for local people going forward, and not just for the first-time buyer. You'll know that we're looking at a range of measures that allow us to do that. The Scottish example is a really good one to keep an eye on. When some of those experiments were tried, unfortunately, down in St Ives in Cornwall, some of them had really unintended consequences on the local housing market in terms of driving up the prices of pre-loved houses, or whatever the word you want to use is—older houses in the area—and actually having a worse effect than the original market did. 

We're very keen to work across party on a range of solutions to this. We know it's a big issue, especially in the west of Wales, and some of the reasons that we all love Wales, how very beautiful Wales is, are some of the reasons that are driving this. But we do know that one of the highest second house issues for any council in Wales is in Cardiff, and of course, that's because people come into the city to work in the week and go away again. We will want to see what the effects of more remote working and homeworking are on some of those issues as well. But I do understand the issue that you raise, and you'll know that we're doing a large amount of work on looking to see what the most effective way of solving some of the problems is. 

Thank you for that response. In terms of the gap in the law, the loophole, it doesn't matter about the semantics here, but as you said, it's a matter of an ethical injustice in way, so even if local authorities aren't losing out, it is an issue that needs to be resolved, and we need to close that loophole. Clearly, this is something that the next Government will have to tackle.

I would like to turn now—I hope the sound has improved—to a different issue, which I raised in a recent letter to you, namely the fact that two councils had received a financial settlement that was much lower than the rest. The councils of Ceredigion and Wrexham were only offered 2 per cent and 2.3 per cent, which is well below the average of 3.8 per cent. The leader of Ceredigion council, Ellen ap Gwynn, has warned that this could lead to job losses and cuts in services. This would be entirely unfair, I'm sure you'd agree, on the workers and the council, who have been doing such crucial work in keeping local residents safe during the pandemic. 

Now, I understand that your Government uses a formula to allocate funding, so this decision isn't a deliberate decision to underfund them, but in the past, when there have been significant differences within the settlement, the Government has put a funding floor in place, something that the WLGA have called for this year. I know, in the past, Minister, that you've said that you only brought that floor in when some councils identified very negative impacts and that they would get less rather than any increase at all, but the pandemic does bring us into a situation that is unprecedented and the demand on services has been so much the greater. Implementing this now—increasing the contribution to both councils—would only cost some £2.4 million. You've said to me that you would consider everything carefully before announcing the final settlement. So, can you tell us today whether you will implement a funding floor in this case? I hope the sound was better this time.

Indeed. Thank you very much, Delyth. Yes, so, absolutely, we know that the bottom three councils are a little below the average. So, we've got Ceredigion, Wrexham and Caerphilly below the average, but all of them have got positive settlements. So, Ceredigion has 2 per cent—that's the lowest settlement—but 2 per cent is the planning assumption that we had been working on with the treasurers throughout the year, because it's always very difficult for us to know what the settlement to us will be from the UK Government. And, indeed, I have to say that, at this point in time we still don't know what that settlement will be, which obviously puts us in a very difficult position. We're in the process of my colleague Rebecca Evans trying to work out what the best way of dealing with that is. 

And the formula, of course, is based on the finance sub-group and the distribution sub-group of the local authority and Welsh Government partnership council, which has representatives of treasurers and external people, and so on, on it. We've rehearsed it many times—and the Llywydd is almost certainly going to lose patience with me if I start going through the various aspects of the distribution sub-group formula—but the basic premise of it is that the things that are set out there are the things that are most important. So, they are based on population, deprivation, scarcity and rurality, and various other things of that sort that are beyond the control of the council to control. So, they're not based on local decisions that could make a big swing in the way that the council deploys its resources. So, I'd be surprised to find that on a 2 per cent rise, albeit it's less than the average across Wales, any council should be making swingeing cuts of any sort, because that was the planning assumption on which we were basing our projections until very recently.

In terms of the floor, the floor was always there to stop a negative impact on a council—so, where you had a settlement that was below zero and so they were actually dropping from the previous year. The floor was never there to make everybody come to the average. So, there are three things to be considered and, obviously, as we're in the middle of the provisional settlement at the moment, I'm not in a position to say today what the final settlement will be—it's some weeks off yet and there are number of things to work through. But the current situation is that we don't know what our funding envelope will look like and, if we did put a funding floor in, that funding floor would have to come from the envelope that the settlement is in. So, effectively, what you'd be doing is taking money off some councils and giving it to others. So, on that basis, obviously the people who are having the money removed from them are not going to be very happy. The WLGA have written to me and asked for a funding floor on the basis that it's externally funded by the Welsh Government, and that's not something that I'm in any position to say we would be able to do at this point in time. But, again, we're not yet at the final budget and so I am not, I'm afraid, Delyth, in a position to say today where that would be. But I would say that we're happy to work with Ceredigion about why it would say that a 2 per cent rise would result in those kinds of issues because that was the planning assumption that all councils were asked to work to.

Well, thank you, Minister. I'm sure that all councils, including Caerphilly, as you added, will be looking forward expectantly to the final settlement. 

Finally, I'd like to turn now to council tax. Plaid Cymru is calling on the Welsh Government, as I'm sure you know, to provide local authorities with more funding in order to stave off increases in council tax for this year, when many families and individuals are already struggling to make ends meet, and given the fact—and this is something that I know that you will have sympathy with—that council tax is a regressive tax and hits low income groups the hardest. Now, whilst council tax benefit does provide some needed relief to those who qualify for it, there is still a substantial number of people who do not qualify for it and are yet still facing this huge burden. It's not a secret that local authorities continue to face massive financial challenges. So, unless you are minded to provide the funds for a general council tax freeze, can you tell me what you plan to do to ensure that financial challenges faced by our councils are not simply passed on to some of the poorest people in society in the form of council tax increases?  

So, again, Delyth, thank you. Obviously, I know where we are with council tax, but council tax is in the portfolio of my colleague Rebecca Evans. She's been recently able to announce another £33 million, I think it was—although you would have to ask her to confirm the actual figure; I'm trying to see if she's nodding at me—in assistance to councils for council tax relief funding and a number of other assistances to them, to make sure that the scheme is funded at the level it will be.

You are absolutely right: the number of people applying for council tax relief has risen during the pandemic. I'm really delighted to say that we've kept council tax relief here in Wales when it was abolished across the border in England some considerable time ago. We did that because—you are absolutely right—we know that it is a regressive tax, and we absolutely accept that people need some assistance with it where their incomes are so challenged.

As you heard my colleague Vikki saying just now, some councils have been able to do very good things inside a very reasonable council tax envelope, and we would expect councils to work very hard to make sure that they do that and to understand what their cost bases are. So, if they are struggling to cope with the level of increase that they have had—and bear in mind that this is the second good settlement in as many years that they have had—then we would be very pleased to work with them to understand why their cost base was so volatile. But, we would not expect, given the very generous settlement that the provisional settlement, at least, sets out, that very many councils would require enormous hikes in council tax in order to keep their services resilient. That is because, during the pandemic, we have been very pleased, through the local government hardship fund, to be able to fund all of the costs that have been additional to councils through the pandemic. I'm very pleased to have been able to do that. So, we've worked very amicably in local government to understand those charges and costs right across. We've been able to make up for lost income, both in general income from car park charges and so on, from car parks being closed, city centres not being in use, right through to council tax and NDR. So, I would be really surprised to find any council with enormous hikes.

Having said that, you heard me say, in response to a number of colleagues earlier, that we do not believe in capping our councils because we believe in local democracy. The whole of the Local Government and Elections (Wales) Act 2021, which the Senedd has recently passed, is about empowering local democracy to make their decisions locally. So, I don't believe that it's the right role for the Welsh Government to put a cap on that where local, democratically elected councillors think differently.