The committee acknowledges the unprecedented level of uncertainty regarding the UK Government’s budgets and its spending reviews over the past few years as a result of factors such as Brexit, the UK general election and the COVID-19 pandemic. While we understand the difficulties of providing multi-year settlements under the current circumstances, we are concerned that the Welsh Government, for the past three years, has had to produce a draft budget on the basis of a funding allocation for a single year, which of course makes it difficult for the Welsh Government to make funding plans and decisions over the long term. This is an issue that we would have wished to raise with the Chief Secretary. However, we are pleased that the Minister has agreed to our recommendation to continue addressing the need for greater certainty through multi-year funding allocations and clarity on the timing of UK fiscal events with the UK Government.

In 2019, the Public Accounts Committee of the UK Parliament recommended that the Treasury should address the lack of transparency over funding decisions, and the Treasury accepted that recommendation. However, we found that the arrangements for funding Wales are complex and that they lack transparency. We heard about the lack of engagement between the Welsh Government and the UK Government in the period leading up to the spending review. This lack of transparency also makes effective scrutiny more difficult, as it is hard to achieve a clear understanding of the funding available to the Welsh Government. 

We welcome the response by the Minister, who noted that the Welsh Government would fully support increased transparency over funding decisions and that the Government would go even further by suggesting that funding arrangements that are jointly agreed should replace the current system, thereby bringing to an end bilateral deals and agreements and bringing clarity to the fiscal arrangements within the UK. 

In addition to our concerns over how funding decisions are made, we are also concerned that the current process of challenging decisions via the Joint Ministerial Committee is inadequate. Essentially, the UK Government acts as judge and jury in this process, and we believe that there should be an independent adjudication process.

The committee has made a number of recommendations relating to the funding flexibility of the Welsh Government in previous reports during budget cycles. We continue to support calls for flexibility around end-of-year reserves to allow the Welsh Government to be more strategic in its long-term planning. The current pandemic has made the case for this flexibility even more emphatically. The fiscal arrangements for Wales were not designed for a global pandemic, and it's vital that we consider how we can make swift changes to ensure appropriate responses, when this is needed, from devolved governments. Having said that, we are pleased, of course, that the Chief Secretary has agreed to the Welsh Government’s request to carry some of its additional COVID funding forward into the next financial year.

While awareness of fiscal devolution in Wales is increasing, we did hear that awareness of devolved taxes is low among businesses and professionals.  Also, our digital engagement exercise showed that awareness of the fiscal powers devolved to Wales is low among the general public. And that is particularly concerning, the fact that most people weren’t aware of the Welsh rates of income tax, even though most people will be paying them regularly. I reiterate the comments, therefore, that I've made previously in this Chamber, namely that the Welsh Government and the Senedd need to do more to raise awareness of these issues.

And we're pleased that the Minister agrees that it's important to continue raising awareness of Welsh taxes and that she supports the important role that the Senedd has in educating, engaging and informing the Welsh public on fiscal devolution. I am pleased to hear from the Senedd Commission that raising awareness is a part of the communications and engagement strategy of the Commission and that it will continue to work with stakeholders on this issue.

The evidence that we received suggested that there should be a review of both council tax and non-domestic rates, and that now is the opportunity for Wales to put in place tax arrangements that are more progressive. The committee welcomes the work undertaken by the current Welsh Government to explore the feasibility of replacing council tax and NDR with a local land value tax, and its commitment to examining how the revaluation and reform of council tax in Wales would affect the tax base and household incomes in order to make council tax fairer and more progressive.

The 2014 Act provided the Welsh Government with the ability to seek competence to introduce new taxes, and the Welsh Government asked the UK Government for competence over vacant land tax back in 2018, but by the time of the last Plenary meeting of the fifth Senedd today, this competence still has not been devolved. In fact, we heard that the Welsh Government’s experience to date in seeking competence over additional tax powers has not been easy or straightforward. While we recognise the first attempt at seeking competence for a new tax is likely to take longer because of the steps that need to be taken to iron out the process, this is not a particularly controversial tax, and I’m sure none of us here expected the process to take so long.

We did ask the Secretary of State whether the process for devolving competence to introduce new Welsh taxes is fit for purpose, and we appreciate the fact that he is willing to take this matter up with the Treasury, but, in closing, we must emphasise again this is exactly why we were eager to speak directly to the Chief Secretary himself, which is an invitation that he has rejected. Thank you.