Questions now from party spokespeople. The Conservative spokesperson, Sam Rowlands. 

Diolch, Llywydd, and good afternoon, Minister. As I'm sure you'll gladly recall, earlier this month I wrote a letter to you regarding council tax exemptions, in particular relating to the 182-day regulations for self-catering businesses in Wales. In this letter, I asked for an update on what exemptions will be made in relation to those regulations, and I was grateful to receive your response following the explanatory memorandum published on 6 March. Minister, you will know that these new regulations, with such limited exemptions, will mean that many genuine, well-established businesses in Wales will now pay thousands of pounds in tax that they previously had not done, or had not had to plan for, some of that being retrospective, therefore making some of these businesses unviable. So, Minister, what is your assessment of this? 

The Welsh Government has tried to set out a position where we recognise the pressures on businesses, but also believe that the owners of properties should be making a reasonable contribution to the communities in which those properties are situated. We have recognised that some self-catering properties are restricted by planning conditions, preventing permanent occupation as somebody's main residence, and, in the regulations, which we laid on 6 March and which come into force on 1 April 2023, we recognise that in terms of the letting criteria and the maximum council tax premium. It is important, though, that where statutory exemptions are clearly definable in legislation and would be appropriate in all circumstances where they apply, that we use that as the format and the basis for taking our decisions, because planning conditions, I think, do satisfy those requirements as being clear and permanent and having their own legislative basis, and, where they apply, they apply in a consistent way. So that, I think, is an appropriate basis upon which to take decisions. I know that colleagues have provided a long list of other potential areas for exemptions, and we have looked at all of those in detail, but the regulations as laid, I think, set out a reasonable approach to move forward. 

Thank you for that answer, Minister. As you've outlined, the main exemption put in place in relation to planning conditions specifies properties may only be used for holiday lets et cetera. But you also noted in your response just then the other exemptions that were sought by these businesses in Wales, and, in particular, this included an exemption for registered charities that provide respite for carers and properties that cater for those people with special needs. So, in light of this, Minister, will you reassess your council tax premiums and look at introducing an exemption for those who provide respite care in Wales? 

We have looked at the case made by you and by others in respect of where a property is run by a charity, and I think that the circumstances will depend on the particular situation relating to that property. Some will already be covered by an existing exemption or by the new exemption, and, in cases where that's not so, authorities do have discretionary powers that they can use. The nature of charitable lettings can vary, and it would be difficult to define a specific category for this, but I think that there are cases where local authorities will be looking to the revised and refreshed guidance, which the Welsh Government is providing to help them take those decisions, when they believe that there is a real case for a individual property or a group of properties or a category of properties locally to be exempted. 

I thank you, again, for that response, Minister. I'm sure you would be the first to acknowledge the importance of these self-catering businesses in supporting our communities, both in the jobs that they create and sustain and the difference that they make to their communities, and I'm sure you'd also acknowledge and accept some of their anxiety and worry due to these 182-day regulations that they're facing at the moment, and many hoped that there would be some sensible exemptions to the premiums, but, clearly, this hasn't been delivered, and I think this needs to be reiterated here today. But, in light of this, Minister, will you today commit to working closely with this really important sector to ensure that we don't see these legitimate, hard-working businesses close, which would consequently result in loss of jobs and, therefore, an impact on our communities here in Wales? 

The Welsh Government does work very, very closely with the tourism sector, and we do listen very carefully to the representations that they make on behalf of their members. I think that Sam Rowlands will recognise that we are trying to strike a balance here between supporting the tourism industry and allowing that to thrive and supporting that to thrive, but at the same time recognising that there is an important issue in terms of underused properties, particularly in some of our more rural and coastal communities, where there's a great deal of tourism but not opportunities for local individuals to rent or buy a home. So, I do think that we are trying to strike a balance in what is quite a challenging situation. 

The Plaid Cymru spokesperson, Llyr Gruffydd. 

Diolch yn fawr iawn, Llywydd. Minister, the Barnett formula all too often ends up being a rather convenient reason, some would say, for the Welsh Government to delay implementing transformative policies. The most recent case in point, maybe, relates to public sector pay here in Wales. Because we do know that, very often, the lack of action in England leaves Welsh Ministers sitting on their hands—you would say, 'having to sit on our hands', I'd imagine. Do you agree that the recent UK Government budget and the continued fiasco around HS2 funding, and now the even more absurd decision on no consequential funding to Wales from the Northern Powerhouse Rail work, has again underlined what Plaid Cymru has long advocated—that we need to move away from the current arrangement to a needs-based funding formula, delivered through an independent office of fair funding, which would have a legal obligation to deliver a fairer economic balance across the nations and regions of the UK, legally bound to ensure that public money delivers equality of outcomes right across the United Kingdom?

I would say that the Barnett formula and the fiscal framework that was agreed by the First Minister when he was in this role with the UK Government actually does provide some advantages to Wales in terms of the fact that the Barnett formula does recognise relative need. I think that's important and that's certainly something that we wouldn't want to move away from. I think that, where there are challenges—as the First Minister, I think, set out in First Minister's questions yesterday—is where the UK Government is the judge and jury in terms of the application of the Barnett formula. I think that that is where some of those real challenges arise, for example the classification of HS2 as an England-and-Wales project when it self-evidently isn't. HM Treasury's own analysis suggests that it will have a disbenefit to south-west Wales. I think that all of those things do lead us to the point where I think a more independent look at the Barnett formula and how it's applied is important. I think that the work that we've done in terms of inter-governmental relations is important as well. When we get to the point of testing some of this through the disputes mechanism, I think it will be an important moment for us to make those arguments quite clearly to the UK Government, using the process that we've agreed.

I'm not sure any of us would relish having to run through those processes, to be honest, because I fear that we maybe know what the outcome might be. But there we are; we won't go there.

Really, it sounded a little bit as if you were making excuses for Barnett earlier on in your answer, but we know that by placing relative need first and foremost within the arrangement, we'd then be able to direct more public finances to address some of the socioeconomic and environmental challenges that we face here in Wales. Needs arising from our ageing demographics, for example, would then translate into increased funding for health and social care. Low employment would incentivise increased spending on education and training. Climate adaptation would necessitate funding then for more green energy investment. Without such reform, Wales is just going to be locked into the current cycle where we depend on a UK Chancellor making spending commitments for England before we can then subsequently act here in Wales.

What commitment can you give, Minister, as a Labour Minister here in Wales, that any incoming UK Labour Government would actually overhaul Wales's funding settlement to achieve that fairer, economic balance across the regions and nations of the UK—something, of course, that would fiscally empower you as a Welsh finance Minister to deliver on our priorities here in Wales, rather, of course, than having to wait, as we do currently, for England to act before we can make the investment that we so desperately need here in Wales?

I'm really keen to impress upon UK Labour the same argument that we've been making to HM Treasury in terms of the fiscal flexibilities that Wales needs. Our borrowing powers are not fit for purpose, really, in the sense that we have such a limited annual ability to borrow. I think that that obviously needs to be addressed. The year-end issues really need to be addressed in the sense that our budget often changes very late on in the year and there are some real limitations on carry-over, so it does potentially lead you to taking spending decisions at the end of the year that might not be the decisions that you would make if you had the ability to carry that funding over into the next financial year. Again, that's just a simple thing I think that the UK Government could do, which would be a common-sense approach to the issues that we're facing. Obviously, we're having the opportunities to make representations to the UK Government. I don't think it's going to be making piecemeal announcements. As the First Minister said yesterday, they will obviously be considering the production of the manifesto for the next election. Certainly, I don't think that this would be the appropriate place for me to be making announcements on behalf of UK Labour in terms of what they would intend to do for a future UK Government.