Item 15 is next, which is the debate on Stage 4 of the Welsh Tax Acts etc. (Power to Modify) Bill. I call on the Minister for finance to move the motion. Rebecca Evans.

Motion NDM8067 Rebecca Evans

To propose that the Senedd in accordance with Standing Order 26.47:

Approves the Welsh Tax Acts etc. (Power to Modify) Bill.

Motion moved.

Diolch, Llywydd. Today, I'm pleased to present the Welsh Tax Acts etc. (Power to Modify) Bill to the Senedd for approval. I'd like to begin by putting on record my thanks to all the officials who've worked so diligently over many years on this Bill. As we know, tax is an important and growing area of the devolution settlement. As a Welsh Government, we need, like every executive, a proportionate and effective suite of tools to manage those tax powers strategically and, crucially, to effectively protect taxpayers and the public finances. This Senedd, like every parliament, needs strong and robust oversight of those tools. The Bill ensures this because the changes can only be made or have permanent effect with the Senedd's consent after due consideration is given. This legislation is an important first step along the road to the coherent and transparent system we need to support tax devolution in Wales.

I'd like to thank all of those within the Senedd and beyond who have helped to shape and improve the Bill before Members today. We have listened and amended the Bill substantially to respond to the feedback that there's been to the Bill. At all times, I have tried to understand and reflect on the points made by opposition Members and particularly what our scrutiny committees have said when they have looked at the Bill. The results of those discussions have tangibly changed the Bill in a positive way.

The Bill seeks to ensure Welsh Ministers can respond at pace to changes that need to be made to our tax legislation as a result of external circumstances that we cannot control, such as responding to UK Government tax policy changes in order to ensure that we protect our Welsh revenues. The amendments made to this Bill have been substantial, including the provision of a sunset clause and review process, in addition to further restrictions on the use of retrospective legislation. The changes made mean this Bill is now very different to the one that was first introduced into the Senedd and a better one for that scrutiny.

It's also worth reflecting that I have moved considerably since setting out the original proposal for this legislation. I responded to the outcome of the consultation by restricting the scope of the regulation-making power to include the four purpose tests, a significant reduction in the circumstances where the Welsh Ministers could use the power. Importantly, I've also heard the points made by Members of this Senedd and committed to taking steps, together with the Senedd and its committees, towards finding an appropriate, longer term legislative solution to the issues that Members have raised, but, crucially, ensuring that taxpayers and our budget are protected in the meantime.

It's simply not possible, and nor would it be right, to bring in these arrangements overnight without undertaking the thorough policy development and engagement needed. Passing this Bill will help protect taxpayers and the Welsh budget. It will mean for the next few years the Welsh budget and our taxpayers will not be left exposed because we will be able to respond effectively to external circumstances that impact on our Welsh taxes. To provide an example, if the UK Government introduces a new charging regime similar to the stamp duty land tax higher rates for additional dwellings, then, with this Bill, we can protect the important policy positions that we have developed on second homes. Or, if the UK Government, for example, introduced a change that particularly benefited those seeking to establish new farming businesses, then we could bring in a similar type of change at pace to ensure that our taxpayers are not disadvantaged.

We all know that the current UK Government is no friend of devolution. It's clear from recent days that significant changes to our tax system are on the way, and we know from past experience that the UK Government will not allow us any special favours or special consideration if we do not have the powers to protect ourselves. This Bill will afford us another essential protection for Welsh taxpayers and Welsh public services in such a context, so I cannot accept the argument that there is anything progressive in choosing to vote against this legislation today.

I hope that you can see the good faith with which we have developed this Bill. If passed, I want to work in that same spirit with Senedd Members to establish the long-term architecture for making changes to the Welsh tax Acts, and I ask Members to vote for this motion today. Diolch.

First of all, I want to thank everyone who gave evidence as part of the Finance Committee's scrutiny of the Bill and to place on record my gratitude for the support and advice offered by the clerking and legal team throughout this process. I'd also like to thank you, Minister, for the way you and your officials have constructively engaged with me and colleagues during the amending process. I thank you for that.

It's in this regard that I do believe that the Bill before us today is somewhat stronger than the original Bill that was laid to the Senedd last year. Both the LJC and finance committees made clear that the original Bill needed strengthening to limit the powers of the Welsh Ministers with regard to legislation on taxation policy, so I welcome some of the amendments that we've seen, such as restricting the scope of the regulation-making power within section 1 of the Bill in relation to criminal investigations, changes to the use of retrospective powers and the introduction of a sunset clause. However, it is unfortunate that the Minister did not accept any of my amendments, most of which were in line with a number of the committee recommendations, both from the finance and LJC committees. I believe that these would have strengthened the Bill further and ensured sufficient Senedd scrutiny over the operation of the Act.

As it stands, I'm still not fully convinced that the Bill as drafted provides sufficient safeguards over the use of potentially wide-ranging powers within it. The Minister's amendments didn't go quite as far as I would have liked. However, Llywydd, my main issue with this Bill is one that I stated right at the start of the process: that it's not appropriate for secondary legislation to be used as a vehicle to make changes to primary taxation legislation. It raises fundamental questions about the Senedd as a legislature and its relationship with the Executive. As the LJC committee argued, the Welsh Government should have developed a more strategic, coherent and long-term package of legislative measures to deliver its proposals and objectives in relation to tax. It is important that the Senedd continues to closely monitor the Bill as it's enacted to ensure that the powers within it are used as outlined by the Minister during scrutiny and do not overstep on the Senedd remit. As such, Llywydd, I am unfortunately not able to support this Bill today, and so the Welsh Conservative group will be voting against the motion. Thank you.

I started this process being open-minded on this legislation, as I always do, recognising there are times when one needs to respond to circumstances when such issues arise, but I have to say that evidence provided to the relevant committees scrutinising the Bill, particularly in Stage 1, from some of the most notable legal figures in Wales outlined a number of elements that caused me concern as regards this Bill.

Sir Paul Silk gave us quite compelling evidence when he said that the Bill, and I quote,

'is an example for me', he says,

'of a more general concern that I have about the way in which the Executive is taking over functions that I think properly belong to the legislature', reflecting some of the comments that we've already heard. The LJC itself in its report reflected on that, and I quote again,

'It is...profoundly disappointing that the second piece of primary legislation introduced by the Welsh Government is an enabling Bill which inherently leaves all significant policy development and implementation to be determined by subordinate legislation. This means that the Senedd and its elected Members will face voting on such matters on an "all or nothing" basis, because subordinate legislation is not subject to line-by-line scrutiny and is not amendable.'

Concluding eventually that,

'this approach proposed by the Welsh Government is contrary to established parliamentary practice and principles associated with good law-making.'

Llyr, will you take an intervention?

Yes I will, if the Llywydd will allow me more time.

Diolch yn fawr iawn. He raises an important point that the LJC committee raised, but, actually, we looked to the Minister to make amendments to this piece of legislation now in order to be able to deal with issues that have already been taken forward in the UK Parliament and so on in terms of tax issues, but we also said, 'Look at the future about what can be done.' And just to commend the Minister, she has acknowledged those and said she will work on that for future iterations of when we bring this back in front of the Senedd. I think we'd all want to see that. So, I simply want to commend the approach taken by the Minister. She hasn't said 'no'; she's said, 'We just can't do it now—we're going to have to do it in future.'

And I'll come to that in a moment, because I do acknowledge that fact, but I have to say that the weight of evidence given during that stage, for me, made me take a step back and look at this through a different lens, and I do hope—. I'm sure many Members will have read the reports, but you as the committee Chair in Stage 1 debate said that the committee had come to the conclusion that the Bill is not an appropriate legislative vehicle to make these changes, and the committee was of the view that the level of delegated power in the Bill was inappropriate and so on and so forth.

Now, the positive element is that I do recognise that the Government has responded positively to some aspects of this Bill during the scrutiny stages, and I thank the Minister and her officials for their willingness to do that, particularly by introducing the sunset clause, which makes this legislation, to all intents and purposes, temporary legislation, but legislation that could be with us until 2031. So, I'm not sure how temporary that is. But the Minister did respond to Plaid Cymru amendments at Stage 2 by bringing forward her own amendments. She also accepted my amendments at Stage 3, which did two things, namely ensure that the review of the legislation included the broader work of looking at alternative legislative arrangements, and also that Senedd Members will be a more meaningful part of that review and that we all, if we're here at that time, will have an opportunity to have our say.

But there is a more fundamental issue, as we've heard, and that is too much of a slant in power in terms of primary legislation away from the legislature, namely the Senedd, to the Executive, namely the Government. Although there have been improvements, on the basis we cannot allow this legislation to be passed, so we will be voting against it this afternoon.

The Minister for finance to reply to the debate—Rebecca Evans.

Thank you very much, and thank you to colleagues for their contributions this afternoon. I'm glad it's been recognised that the Bill is the result of a considerable body of work by many people, and I would like to put my thanks on record to all of them, and I'm sure that the collaborative way of working that I've tried to adopt has helped to strengthen the existing relationships, which I hope will put us in good stead for the future.

I do want to address the particular point around primary versus secondary legislation and, of course, in ordinary circumstances of law making, where law is made as a result of considered policy development rather than required urgently or in response to external events, it's of course right that the Senedd should determine who is taxed and how they're taxed, in accordance with the constitutional principles set out in the Government of Wales Act 2006. However, this Bill and the power within the Bill are intended to deal with extraordinary circumstances and ones that are absolutely distinctive to tax legislation. To provide an example, there've been many instances where new tax elements of stamp duty land tax have been introduced by the UK Government immediately or very shortly after an announcement is made, and that's generally, of course, to prevent taxpayers from forestalling. But I think that the UK Parliament recognised the distinctive nature of tax legislation when it provided UK Ministers with the power in section 109 of the Finance Act 2003 to be able to make any changes to stamp duty land tax legislation that are expedient in the public interest. The Scottish Parliament provided the Scottish Government with many regulation-making powers in its devolved taxes Act, including the setting of rates and bands by made affirmative procedure regulations. Of course, the Senedd, following the precedent set by the Scottish Parliament, provided Welsh Ministers with a similar suite of regulation-making powers, including the setting of rates by made affirmative procedure regulations. So, this Bill is seeking to build on those precedents, developing that flexible and agile mechanism to respond to external circumstances that are outside of our control, to protect Welsh taxpayers and protect the Welsh budget.

Will the Minister give way on that point?

Yes.

Thank you, Minister, for giving way. One of the reassurances the Minister could give to the Senedd today, in the collaborative way that she has taken forward these changes to the existing legislation and proposals for what comes forward—. In those proposals of what comes next, will she give the reassurance to the Senedd today that she will work with the relevant committees and with Senedd Members here, but also with those outside stakeholders? We don't have to actually replicate exactly what goes on in other Parliaments. We can provide, perhaps, a better way of doing it that suits Wales. Will she give that commitment to do that work in collaboration with others with expertise here in Wales?

I absolutely give that commitment to collaborate with the experts in the field. If colleagues don't want to listen to me today, let's listen to the experts in the field, because when my colleague Rhianon Passmore was asking the Chartered Institute of Taxation in committee if it would be an appropriate mechanism to use secondary legislation, they responded, I think, in the circumstances—particularly in the circumstances of a devolved administration, with the way the devolved settlement works—that it is reasonable, yes. And the Finance Committee Chair asked the Institute of Chartered Accountants England and Wales if the legislation was necessary, and they said, 

'I would say, certainly in terms of the ability to react to changes at the UK level, and possibly tax avoidance, particularly given some of the changes that we're seeing, or some of the particular difficulties in the UK SDLT, for those triggers, it's important that the Welsh Government has the necessary powers to make changes, if need be, at fairly short notice. So, a guarded "yes"'.

And we've heard reference to Professor Emyr Lewis and Sir Paul Silk, and when, again, asked by the Chair of the Finance Committee if the Bill was absolutely necessary, Professor Emyr Lewis said,

'I think that legislation is needed to enable swift changes to be made. I think that the idea of giving the power to amend to coincide with international duties is a good one, because it is similar to other powers to amend primary legislation, to make that legislation lawful. I think there is a need for action to deal with the problem that stems from the way that Wales is funded and how the formula in the inter-governmental agreement draws funding away from Wales if there are tax changes made in England, in order to keep up with anything that happens in England', and Sir Paul Silk agreed.

But if you don't want to listen to me, and you don't want to listen these experts, listen to our colleague Llyr Gruffydd. When I did introduce the Bill, he said here in the Senedd—and he's been consistent on this all along—that his preference would be for a finance Bill or an annual budget Bill. But then he also went on to say that he agrees

'with the Minister, whether that happens or not, we still need the powers that the Government are seeking in the Bill before us today.

'I've said in the past that I have no problem in principle with these kinds of powers being given to Welsh Ministers.'

Seeing that you are quoting me directly, I hope you'll take a brief intervention. I did explain in my opening contribution—

I was coming on to that. 

All right, okay. Well, the weight of the evidence from the people that we heard from changed my mind. I change my mind; it would be good sometimes if others did as well. 

I've clearly changed my mind, when you look at the ways in which the Bill has been dramatically amended. And the idea behind the Bill has been amended from a very wide-ranging power when we first consulted to something that is very narrow and targeted now. But the point I was going on to make is that I do recognise what you said about the way in which you responded to the evidence you've heard, but, even so, with all the amendments and changes that have been made, I do think that we've probably moved closer together on this journey, and I hope that we can move on together on the journey with what comes next.

I will just conclude, Llywydd, because I do realise I'm over time, by thanking you and your staff for all of your support in this process. And I ask Senedd Members, when considering their vote today and how they vote, just to take this moment and take this chance to protect Welsh taxpayers and to protect the Welsh budget. And I'd ask Members to support the Bill today.

In accordance with Standing Order 26.50C, a recorded vote must be taken on Stage 4 motions, so I defer voting on this motion to voting time. 

Voting deferred until voting time.