Seòmar agus comataidhean

That is one of the issues at the heart of this discussion, and we have to address people’s concerns in that regard. That is where strong transitional arrangements are important, and those could be available to everybody. For example, there could be no cliff edges for anyone. There are lots of ways that you could do revaluation. It could be implemented over a number of years, so that changes were incremental, and there could be referral schemes.

There could also be recognition of the fact that some people are asset rich but income poor. The reduction scheme already recognises that, to some degree, through the single person discount. Although that is not income related, it is a recognition of the central premise that we are trying to manage all the household costs. There are options.

We recognise that that is an issue, and whatever changes are made will have transitional support and relief at their heart, which might help to reduce people’s concerns. That will also be important in building a consensus as well as public buy-in.

The Welsh Government is adding additional bands in its next iteration. Adding additional bands would help with the progressivity, which is a bit different from the multiplier, which was quite a different proposition. That was about the relative payment of existing bands because of the fact that those in lower bands pay a higher proportion of their income towards council tax. That was the premise. I will leave aside the fact that, as we have said, because that got significant pushback, it is history.

Creating more bands in the council tax system is inherently progressive, because it is then more directly related to the value of properties, and there are not cut-off points like the current system has, so the bands would be smoother. I would hope, as part of the discussion about how to create political consensus—it is a pretty modest change, to be honest—that we could agree that creating more bands in the system would help to make the system more progressive. It would be part of a wider set of reforms.

That principle absolutely holds, and that principle was set out in numerous iterations of how we see tax. It should be based on an ability to pay.

The property element of council tax is important, and the commission in 2015 made a recommendation in that regard, but there are subtleties. For example, a property does not always tell the full story of the income of the people who live there, but there is a correlation. Council tax reduction schemes such as the single-person discount are in place to recognise some of those issues.

I am clear that, if we are to land in a positive space, we will have to provide substantial transition schemes. The technical work will also be important. Analysis from the Institute for Fiscal Studies says that a revaluation would result in 60 per cent of households staying with the same bill, 20 per cent of households being better off and 20 per cent of households being the losers. My strong view is that, if we are to build consensus—not just politically, in the Parliament, but with the public—there will have to be strong transitional arrangements that smooth out the position over, potentially, a number of years.

Other jurisdictions around the world have done things to provide a very soft landing. For example, in British Columbia, someone can defer the impact of the changes for 10 years, by which point their property might be sold. I think that there would be political consensus on changes being made at the point of sale. There are 101 ways of ensuring a soft landing, with transitional arrangements in place for people in that category—the figure might not be as high as 20 per cent, which comes from the IFS; it could be significantly lower. I would want to be up front in providing maximum reassurance that there would be no cliff edges for people in that situation. That would require us to work with local government to establish the cost of such arrangements, which would need to be recognised.

I am trying to anticipate where the tricky, sticky bits will be, because, if we do not resolve them, we will not be able to move forward. We need to find a way of providing reassurance not only that we are aware of the issue but that we would actively create substantial transitional arrangements.

My worry is that we could spend an eternity talking about a full replacement to the council tax and, because that would create more areas of difference, we would end up debating backwards and forwards—as we have done over a number of years. I have run out of patience for that, to be honest. I am a pragmatist by nature. Rather than make no progress, why do we not just see whether we can make some progress? Even if it is quite modest, that will be better that than nothing.

In the future, there might be a different landscape and different views, and there might end up being a consensus around a complete replacement of the council tax, which would be great. However, I do not think that that is on offer in the here and now. There is too much scope for division. Instead of debating that, let us look at possible areas of agreement and move forward with those. If we could do something about 1991 property values in a way that is pragmatic and practical and has consensus, that would be better—it would be progress rather than nothing.

Local government has made a lot of efforts in that direction. I see a lot of local authorities setting out in detail what their council tax payers, if you like, can expect to receive from the investment that is being made. Local government services are funded through a hybrid of funds, of which council tax is just one element, but I think that there is something to be said for being on the front foot in setting out what the council tax will contribute to delivery, and I have seen some really good examples from local authorities that are doing that sort of thing more and more.

There might be something in that, although people probably have quite a strong reaction to taxes in general. I think that Katie Hagmann’s point about the visibility of council tax and the fact that it is a tax that spans two spheres of government, as well as there being interaction with actions that the Scottish Parliament might take—of course, any major changes to council tax would require legislation—goes back to the point about consensus. There is something about the complexity of council tax. There might be a historical legacy aspect and, as Katie pointed out, there is a lot of media attention. It is tricky.

That is a fair challenge. My party has looked at various options for replacing council tax. For a time, we were focused on looking at whether there could be a local income tax alternative, but the problem was that that would not have raised enough money. Essentially, as the commission noted in 2015, we concluded that there needs to be a property element to local taxation.

We now have a Parliament of minorities, so the only way to move forward is to try to build consensus. However, with something as fundamental as council tax reform, even if we did not have to build consensus, I think that doing so would be the right thing to do. At the end of the day, we do not want to be seen to have developed something behind closed doors and to say, “Here it is—take it or leave it.” Even if we were able to do that, I do not think that that would land in the right way. The reform must stand the test of time, so we need to make sensible incremental changes that create a fairer system. That system might not be perfect, but people should feel that it is much better than the one that we have at the moment. I am keen to continue those discussions.

If there are recommendations from the committee’s work, we will be keen to embrace those as much as we can, as part of cross-party working.

There will be a cost; we absolutely need to recognise that. There may then be an on-going cost—is it a system that is going to be updated, and what would be the timeframe for those updates? An investment will need to be made. Basing that on the Welsh experience is not a bad starting point, but the change will require investment.

It is worth dusting down some of the work that was done rather than repeating it. The fact that there was a conclusion that local tax had to include some form of domestic property tax is not unhelpful. There is a lot in the commission’s work that could be drawn on, but we need to address the fundamental point that, by the nature of the issue, any change will progress only if it has enough political support. I keep coming back to that, but it is just a fact. Katie Hagmann and I, in our respective roles, are keen to see what is the art of the possible. Doing nothing and having a position of no change is not sustainable. If we all agree on that, we need to consider where we can move to.