We move now to item 9, the Council Tax (Long-term Empty Dwellings and Dwellings Occupied Periodically) (Wales) Regulations 2022. I call on the Minister for Finance to move the motion—Rebecca Evans.

Motion NDM7959 Lesley Griffiths

To propose that the Senedd, in accordance with Standing Order 27.5:

1. Approves that the draft The Council Tax (Long-term Empty Dwellings and Dwellings Occupied Periodically) (Wales) Regulations 2022 is made in accordance with the draft laid in the Table Office on 1 March 2022.

Motion moved.

Diolch. I welcome the opportunity to bring forward these regulations today. The Council Tax (Long-term Empty Dwellings and Dwellings Occupied Periodically) (Wales) Regulations 2022 increase the maximum level at which local authorities can set council tax premiums on dwellings occupied periodically—more commonly referred to as second homes—and on long-term empty properties, from 100 per cent to 300 per cent. The measures are part of a wider commitment to address the issue of second homes and unaffordable housing facing many communities, as set out in the co-operation agreement between the Welsh Government and Plaid Cymru.

Last summer, we consulted on local taxes for second homes and self-catering accommodation. This was one aspect of the Welsh Government's three-pronged approach to address issues of affordability and the impact that large numbers of second homes and holiday lets can have on communities and the Welsh language. The consultation formed part of a review of the current local tax legislation. We sought views and evidence from individuals and organisations on the discretionary powers that allow local authorities to levy a higher rate of council tax on second homes and long-term empty properties. We received almost 1,000 responses, reflecting a wide spectrum of interest.

The ability to charge additional council tax premiums has been welcomed as a mechanism that can help local authorities to mitigate the negative impacts that second homes and long-term empty properties can have on some communities. While many of the opportunities for addressing housing issues through premiums have not yet fully been realised, increasing the maximum level at this juncture will enable individual local authorities to decide a level appropriate for their local circumstances when the time is right for them. The powers come into effect from April 2023. Local authorities will be able to set the premium at any level up to the maximum, and they'll be able to apply different premiums to second homes and long-term empty dwellings. As now, it will be for individual authorities to decide whether to apply a premium and at what level to apply it. In making these decisions, each authority will need to make an assessment of the possible impacts on individuals, communities and the local economy. Local authorities should consult local people and home owners before introducing premiums, allowing a minimum period of 12 months between making its first determination to introduce a premium and the financial year in which it takes effect. I ask Members to approve these regulations today.

I call on Rhys ab Owen to speak on behalf of the Legislation, Justice and Constitution Committee.

Thank you, Llywydd. I am delighted contribute to this afternoon's debate on behalf of the Legislation, Justice and Constitution Committee, and I wish our Chair, Huw Irranca-Davies, well on the happy occasion of the graduation of his son, which has been postponed a number of times as a result of COVID.

We considered these regulations at our meeting of 14 March, and our report to the Senedd contains three merits reporting points. Two of those required a response from the Welsh Government, and we were grateful to the Minister for providing those responses in good time for us as a committee to be able to consider those before coming to the floor of the Chamber. 

Our first merits point noted that the significant increase in the charging authority’s discretion, from 100 percent to 300 percent, appears to engage article 1 of the first protocol of the European convention on human rights. Whilst it is, of course, recognised and accepted that states can interfere with a citizen's possessions, in this case by increasing the council tax charge on long-term empty dwellings or dwellings occupied periodically, neither the explanatory memorandum or explanatory notes to the regulations—nor, it appears, the original consultation, in fact—sets out any specific consideration of the impact on convention rights. In addition, they do not state that the scheme implemented by the regulation is a proportionate means of achieving a legitimate aim in this regard.

In its response to our report, the Government simply stated that they were satisfied that the regulations are compatible with convention rights. Well, that might be, and probably is the case, Gweinidog, but my colleague, last week, Alun Davies, spoke in this Chamber, again on behalf of the committee, and he on that occasion again raised concerns about the uninformative responses the committee are receiving when we question further the Welsh Government's obligation with regard to human rights and equality impact assessments. So, could we gently ask the Government to reflect further on these two comments, to ensure that in future we do receive a full explanation on these very important issues?

Our second merits point draws attention to the consultation undertaken by the Welsh Government in respect of these regulations, and specifically how this is discussed in the accompanying explanatory memorandum.

Taking into account the very high number of responses to the consultation and the fact—probably hardly surprising—that the majority of those responses did not support the proposal to increase the percentage rate discretion, we were unclear why the approach was adopted in the regulations. In response, we were told that the Welsh Government has taken full account of all consultation responses, and that pursuing option 2, as it was described in the consultation, is a proportionate response in pursuit of the legitimate aim of furthering the Welsh Government’s commitments to reform. The committee is aware that our colleagues in the Local Government and Housing Committee have an inquiry on the policy merits—or otherwise—of what these regulations are seeking to achieve, and we look forward to that report.

Our final merits point, Minister—and as I said, there was no need to respond to this point—notes that the scheme set out in the regulations will likely result in increased revenue to charging authorities for the provision of services covered by the council tax charge, and that the regulations prescribe by amendment the mechanism by which that charge can be increased at the charging authority’s discretion.

So, those are the committee's comments. Thank you.

I'd just remind Members to refer to my own declaration of interests form in terms of property ownership.

Now, these regulations stem from failure. Failure by successive Welsh Labour Governments to provide new homes: only 4,616 new dwellings completed in 2021, when the figure should have been 12,000. Failure to get empty homes back into use: there were 25,725 in 2017-18, 22,140 in 2022-23. Failure to ensure that Wales uses the planning levers that it already has to provide homes, not hotels, for our locals. There are over 7,000 people that have been pushed into homelessness and now living in temporary accommodation.

Now, from my own reading of the explanatory memorandum, the only positive impact that these regulations will have is that they will contribute towards the commitment in the updated programme for government 2021-26 to seek to review council tax, and they will contribute to the objective in the co-operation agreement to provide greater powers to local authorities to charge council tax premiums whilst increasing taxes on second homes.

The discretion given to local authorities to charge a premium is intended to be a tool to help local authorities to bring back long-term empty homes, and support local authorities in increasing the supply of affordable housing. However, there is absolutely no clarification as to how any extra revenue will be spent. As the explanatory memorandum makes clear, local authorities can use the funds as they see fit. In fact, there is clear lack of appetite and support for your proposals, and I think my colleague Rhys ab Owen MS there has just said about the 1,000 people out of 3.1 million who have responded and the proportion of those who are obviously against this, so it does beg the question why you seek to pursue this. To date, only half the authorities have chosen to apply premiums to long-term empty or second homes or both. Only 30 per cent of long-term empty dwellings in 2022-23 will pay a premium, and the majority of responses to the consultation did not support an increase in the maximum premium, so if you're going to ignore a consultation, what is the very point of it? You're just going to ignore the majority view.

Importantly, the consultation yielded limited evidence that stakeholders believe that increasing the maximum percentage could have a positive effect in addressing the issues presented by second homes. What we have here is a set of regulations that you and your coalition—oh, co-operation—partners in Plaid Cymru want, to try and make people think that you are fighting for more homes for local people. However, the reality is that this strategy is merely a facade to failure and flawed policy by socialists and anti—[Interruption.] Hang on. Hey, hang on. Whoa, whoa, whoa. I haven't finished yet. Anti-visitor nationalists. [Interruption.] And your pandering to Plaid comes at a great cost—administrative costs to the Welsh Government, tax collection, enforcement, complaints handling, costs to local authorities, and a cost to actual equality.

I was astounded to read the claim in the explanatory memorandum that the policy will contribute to a more equal Wales. There is absolutely nothing equal about the 300 per cent premium at all, and I would ask—as has been asked of me so many times—why did you suddenly pluck the figure of 300 per cent out of the air? That question—. What evidence, what data, what have you used, what information have you used, to just pluck that figure? You are punishing second home owners and feeding the fire of anti-visitor rhetoric in our nation. The Welsh Conservatives will be voting against these dangerous regulations today, and we will continue to champion the clear policies that we have been proposing since the start of the Senedd to ensure that we build homes—and, yes, homes—for local people. I ask the Senedd, or Welsh Parliament, to say 'no' to this false facade by Welsh Labour and Plaid, and to give other solutions a chance. 

No. 1: let's address affordability by building more homes, with an emphasis on generating mixed communities. Two: remove the block on as many as 10,000 new homes, including 1,700 affordable, due to really inordinate Natural Resources Wales guidance on phosphorus. Three: work with our local authorities to better promote the empty homes loan. Four: review what steps can be taken to convert empty space above retail units into affordable, centrally located houses. Five: bring back into use public sector owned land and buildings that are spread across Wales that could actually be brought back into making good housing for those people who require them. Six: amend technical advice note 6 to allow for children of farmers who live at home but work elsewhere to more easily gain planning permission to build homes on family land. And seven: restore the right to buy in Wales, building houses for locals on the edge of communities, reinvesting sale proceeds into more social housing, and, if you protect those homes from sale for 10 years, you will actually have some good—[Interruption.]

I think you're about to finish, Janet Finch-Saunders.

I am.

Don't listen to him. [Laughter.] Llyr Gruffydd.

I mean right to buy is part of the reason that we're here discussing this, to be honest.

Let us recall that we're talking about discretionary powers here—don't forget that. These are discretionary powers. This isn't an order saying, 'Use these powers', or, 'You must implement these powers.' This is but one element in a far broader range of possible tools that our local authorities could adopt. You mustn't look at this in isolation; this is simply one element of a far broader solution, and some of those are ones that you yourself have referred to, although it took five minutes of negativity to come to some constructive points at the end. But, in isolation, this isn't a solution, and nobody is suggesting that it is, but it is one tool among many that local authorities can adopt. And I emphasise that it's one among many, and there are other steps that we as a party have supported in terms of tackling the affordability of homes, the amount of homes available, changes to planning, changes to statutory registration of holiday lets, and that is alongside the use of the taxation system, in order to start to deal with the problem in those areas where there is a crisis—and we must bear that in mind too. And 'crisis' is the word, if I may say so. And if it is a crisis, then the Government's solution needs to reflect that crisis.

I understand the point that the committee made on human rights. But what of the human rights of those people who are driven out of their communities because they can't afford homes in those communities—these communities where they've been born and raised, where they call home and where they want to live? The right to live at home—'Hawl i Fyw Adra'—is what the campaign is called. Those who have nowhere to live have rights too. So, I would encourage Members to support this motion as one piece of the jigsaw, as one part of the effort to deal with the problem, and to provide an additional option to local authorities. Many may not choose to use it, but it is an option in those areas where the problem is most intensive, and the response demands such a response.

Before I begin, I'd like to state that I'm speaking as a member of the LJC committee, but not on behalf of the LJC committee. I really want to build on the point earlier that Rhys made about equality impact assessments. It's more of a procedural point. But, Llywydd, I would like to ask the Minister about the lack of an equality impact assessment within the explanatory memorandum of these regulations. This is a fundamental point and one that applies to any decision to be made by the Government or the Senedd. Now, I understand that this is a procedural point, as I shared, but I still think that it's an important point to raise, because, regardless of what regulations are about, they still have an impact on people, potentially including those with protected characteristics.

The Minister will be aware of the various pieces of legislation that the Welsh Government is subject to regarding equalities. Indeed, under the Equality Act 2010 (Statutory Duties) (Wales) Regulations 2011, the Welsh Ministers must have appropriate arrangements for carrying out equality impact assessments. Yet, the explanatory memorandum simply states that:

'No negative impact on groups with a protected characteristic has been identified as a result of these Regulations.'

There isn't any additional information provided as to how the Welsh Government carried out an equality impact assessment for these regulations and whether it complies with legal equality duties. Minister, what arrangements has the Welsh Government made to comply with its equality duties when developing these council tax regulations? And if it has complied, where is the evidence of this? Surely, providing all of the information will help to improve Senedd scrutiny on not only these regulations, but future ones as well. Diolch, Llywydd.

Well, everyone here will be aware of the glory of Dwyfor Meirionydd, the constituency that I am privileged to represent. But, while visitors enjoy the incredible beauty of the region, the truth is that families have to scrape a living there, with income per capita among the lowest in this state and the value of homes having shot up. Indeed, we recently heard about a hut on the beach in Abersoch selling for £200,000. My office is deluged at the moment with people contacting me seeking support in relation to housing: young parents who are homeless; parents working in the public sector or the private sector, earning an income but who are homeless; babies being brought up in inappropriate properties, with mothers, more often than not, having to carry the pram up with their shopping and the baby to go up to a damp bedroom—housing that is entirely inappropriate for them. From Aberdovey, Beddgelert, Criccieth, Morfa Nefyn and every other community in between, one in four homes in many of these communities, and on occasion one in two houses, are vacant for most of the year, whilst these families, bringing up their children in inappropriate accommodation, full with grandparents and other members of the wider family, are having to look at these homes sitting empty.

As Llyr said, it is a crisis and it is entirely immoral. We must take steps to resolve this, and I speak on behalf of every one of these people I have seen over the past few weeks who are living in inappropriate accommodation or are homeless, and I welcome any steps brought forward in order to seek to address his huge inequality and injustice.

Today, I want to speak on behalf of those genuine tourism businesses that are going to be impacted by these regulations. I've been contacted by many genuine businesses that will be affected by this, with the increase in the days that they need to be let from 140 to 252. A lot of those businesses that genuinely set up their company so that people can come to Wales to enjoy our scenery, to spend money in our local areas, are very concerned that, if they do not meet the threshold for the amount of days let, their businesses will be forced to close, when those properties, which I'm sure you hope will go back on the open market, many of those are subject to planning restrictions, some of them are too big, they'll be too expensive and local people will not be able to afford them. And what I don't want to see is many businesses going bust, many businesses that can't afford to pay 300 per cent council tax, because that is what's going to happen.

When visitors come here, they are not going to have anywhere to stay. As my colleague Janet Finch-Saunders has said, this second home rhetoric has got to stop. The problem here is not second home owners, it's not people running genuine businesses, it's the Government here that have failed for years to build the houses that we need for our young people. This Government could abolish land transaction tax for young people. You could get on and build more houses. You could get rid of the phosphate regulations. But you haven't got a plan to address it. This is a typical socialist Government. The only way—[Interruption.] The only way you find of addressing problems is through tax, tax, tax. This is a tax on aspiration, it's a tax on tourism, and it's a tax against people visiting Wales. So, I suggest the Government gets on, builds more houses and puts policies in place that actually support young people to buy homes and not tax people off the face of this earth.

Well, on a similar theme, to justify its announcement that any self-catering business unable—[Interruption.]

Can we just hear Mark Isherwood now, please? Can we have some silence?

To justify its announcement that any self-catering business unable to meet its increase to 182 days let annually will be removed from the business rate register and may have to pay a council tax premium of up to 300 per cent, your Government stated that respondents to the consultation, respondents representing the wider tourism industry, clearly support a change to the criteria and self-catering accommodation to be classified as non-domestic, and even more surprisingly, were of the view that the majority of genuine holiday accommodation businesses would be able to satisfy increased letting thresholds. Of course, since then, we've heard outcry from the sector across Wales.

Concerns have been raised with me by actual legitimate holiday-let businesses, and include, 'I have two holiday lets in the garden of our Gwynedd home. We're open all year, are fully booked during peak season, but usually only have weekend short-break bookings during the quieter months. I fear we will end up bankrupt.'

'The six holiday cottages that we have adjacent to our home have been our business for 25 years, and for businesses such as ours that do not meet the 182 days letting, how could council tax be charged on cottages that have planning permission that states that they can never be residential?'

'Our holiday cottage is 6m from our front door, so, clearly, it's not a second home and it actually specifies this on the title deed.'

'We've been trading for the past seven years, have exceeded 182 days let in four out of the seven years.'

So, we need to know what impact assessments the Welsh Government has therefore carried out of the consequences for legitimate holiday-let businesses, businesses that were established, in many cases, in response to calls by Welsh Governments since devolution for them to diversify within the rural economy—businesses that have properties that have never and will never be used as second homes. Diolch yn fawr.

 The Minister to reply to the debate. Rebecca Evans.

Diolch, Llywydd, and I'm grateful to those Members who have participated in today's debate. I'll just begin by responding to the points made on behalf of the LJC committee, and it is of course the case that the report identified two merits scrutiny points under Standing Order 21.3, and namely that is of political or legal importance, or gives rise to issues of public policy likely to be of interest to the Senedd. And, of course, in our response, we did state that we were satisfied the regulations are compatible with convention rights, and provided an explanation as to why option 2 of the RIA was pursued rather than option 1, and the committee did then go on to accept the Welsh Government's response, following advice from the Senedd lawyer, and confirmed that they were satisfied with the response. But I will give some reflection to the points raised on behalf of the LJC committee, both by Rhys ab Owen and also by Peter Fox this afternoon.

These regulations will give more flexibility to local authorities, and they can provide more support to local communities in addressing what are genuine negative impacts that second homes and long-term equity properties can have, and this is one of the levers that we have available to us to create a fairer system. And, as Llyr Gruffydd was saying, this is one tool amongst many. And, of course, it's imperative that we do use the tools that are available to us, and I think that Llyr Gruffydd and Mabon ap Gwynfor really set out why this is important that we do address this issue.

One of the other tools that we will have available to us is the matter of the thresholds for holiday lets. However, that's not what we are debating this afternoon. So, James Evans and Mark Isherwood will have their opportunity to contribute on those regulations in due course. There's currently a technical consultation open for response, so I'm sure that they'll take the opportunity to respond to that technical consultation, which is ongoing currently.

We will obviously continue to make every effort to increase the supply and the affordability of homes, and we've shown that commitment in the £1 billion of funding to build 20,000 low-carbon social homes, which was included in our final budget, approved on 8 March. And we're also taking important action to address the issue of empty homes, because we do recognise, of course, that empty dwellings, and particularly those that have been empty for long periods, can present real problems for local communities. We've taken a whole-system approach, backed by significant investment, to tackle these issues. In this financial year alone, we've made £11 million available to local authorities whose communities are affected by second home ownership and holiday lets, so that they can buy and renovate those empty homes for social housing. That's a really important intervention. And, in addition, we're recently received funding applications from Carmarthenshire and Pembrokeshire local authorities, seeking assistance with empty home purchases and renovations, and those applications are totalling more than £13.5 million.

Of course, local authorities can use the revenues raised from premiums to tackle issues affecting the local supply of affordable housing, including bringing empty homes back into use. A number of local authorities have already used the premium—to date, 11 of them have—to address the issues of long-term empty homes or second homes or both. Gwynedd and Swansea have set the premium at the current maximum, which is 100 per cent on homes, and that was from 1 April 2021. Pembrokeshire will do so from 1 April 2022, and the Isle of Anglesey, Gwynedd, Pembrokeshire and Swansea have also set a 100 per cent premium on long-term empty dwellings. So, there's clearly an appetite here on the part of local authorities to engage with the new tool that we're providing them with, and they'll do so having consulted locally and having taken that decision within their councils at the time that is right for them, and set the level at the point that is right for them, and that's what these regulations today will enable them to do.

So, finally, as I outlined in my statement on council tax reform in December, it is our ambition that reforms to council tax are designed to ensure contributions from households are made as fairly as possible—dare I say, Llywydd, the socialist way—whilst also maintaining its role as a significant revenue stream, which, of course, helps to fund vital public services across Wales. Of course, I will continue to keep Members informed of developments. Diolch.

The proposal is to agree the motion. Does any Member object? [Objection.] There is objection, therefore we will defer voting under this item until voting time. 

Voting deferred until voting time.

And we've reached voting time, and we'll take a short break now before we hold this vote. So, a short break.

Plenary was suspended at 16:52.

The Senedd reconvened at 16:56, with the Llywydd in the Chair.