Seòmar agus comataidhean

We welcome the opportunities that the agreement will afford. The analysis that has been provided suggests that, overall, the impact on UK economic growth over the next couple of decades will be relatively minor, but any opportunities that are afforded for key Scottish industries, such as the Scotch whisky industry, are, of course, welcomed.

I am conscious that my colleagues the Cabinet Secretary for Rural Affairs, Land Reform and Islands and the Minister for Small Business, Innovation, Tourism and Trade have written to committees setting out in some detail the work that they have undertaken in engagement with the UK Government on the broader policy intent of the agreement.

As, I am sure, the committee appreciates, the changes in Wales were relatively recent. As you would expect, we continue to have dialogue at official level with the Welsh Government and, indeed, with our colleagues in the UK Government. We will, of course, monitor with interest developments in Wales as more evidence becomes available. As you highlighted, in our consultation we posed the question whether there should be the option to go beyond a 100 per cent premium, and we are reflecting further on that in the on-going work of the joint working group.

In a broader sense, we will continue to monitor that and keep it under review. I appreciate that I am coming back to this point, but it will be for local authorities to consider what monitoring of any behavioural response takes place and, in doing so, to reassess whether any policy decision that they take in utilising the power has had the desired effect.

More broadly, we considered the existing thresholds for non-domestic rates in the consultation, but we recognise that the existing thresholds are relatively new. Therefore, we propose not to make any changes at this stage; rather, we will allow those to bed in further.

The consultation focused specifically on the provisions that we are considering today, the other matters to which I have referred and potential ancillary issues around non-domestic rates, of which you will be aware. That is the overall package of proposals that was considered in the consultation.

Clearly, a range of work is under way across local and national Government to increase the supply of housing. I recognise that no single policy will act as a solution to all the challenges that we currently face, but this is one tool that will become available, should Parliament agree to it, as a discretionary power for local authorities. It will be for local authorities to consider the utilisation of this discretionary power in the broader context of the policy tools that they have at their disposal.

The joint working group is considering that as part of its broader programme of work. Moving beyond what is in the regulations would require primary legislation. At this point, the joint working group is carefully reflecting on what emerged through the consultation and its analysis.

We continue to engage with local authorities. Should Parliament agree to pass the regulations, local authorities will have the option to introduce the measure from 1 April next year. I recognise that some local authorities are actively considering it. A period of time would need to pass before we would be in a position to assess the impact of such a policy intervention on a particular local authority and to consider the impact in the various geographies of a local authority and on different local authorities. We would consider those impacts over time.

Local authorities would, of course, monitor the efficacy of the policy. Our continued engagement in dialogue, as per the Verity house agreement and, for that matter, the joint working group, would provide a forum for that. We all recognise that, if any local authority were to introduce the measure in April next year, we would need to allow it some time before making any initial assessments. Of course, there will be on-going engagement and dialogue throughout that process.

On the latter point, through the joint working group, we are engaging with COSLA to produce joint guidance in that space. More broadly, the relative number of second homes in different local authorities will be a factor in the disparity that exists between councils. It will also come down to whether a local authority chooses to utilise this power, and a number of different factors will bear upon that decision for a local authority. As I touched on in my previous answer, we will continue to engage with local authorities to monitor and understand any impacts of the policy that are observed and how they relate to the revenue that individual local authorities raise.

Again, it goes back to the point about seeing the power being utilised in a broader context of policy interventions. Tax can play a role. We set out the various functions of the tax system in the framework for tax that we published two years ago. Those functions can include, for example, revenue raising, promoting behavioural change, providing economic stimulus and carrying out redistribution.

Clearly, revenue raising will always be taken into consideration in any tax policy, but behavioural change is also an aspect of tax policy consideration. Again, the particular circumstances will be for local authorities to determine. It is a completely discretionary power, and it will be for local authorities to decide, on the basis of their local understanding of the priorities in their area, whether to use it.

The questions that you raise get to the heart of why this is a discretionary power for local government. Local authorities are best placed to determine whether tax measures can be utilised in a way to support their policy objectives, recognising, as I pointed out in my introductory remarks, that second homes in some areas might be making a positive contribution.

Equally, in other areas, it might be the view of local authorities that they are causing pressures and that a way of helping to address that, in tandem with other policy levers at the disposal of a local authority, would be to use these discretionary powers. We very much recognise that this is a decision for local authorities, to be informed by their expertise with regard to their local priorities and the best way to address them.

Again, those matters will be determined by the local authority. This power provides for something that is discretionary, and local authorities have existing powers to apply a discount. It would really be a question for an individual local authority in recognition of the fact that the decision is ultimately taken by elected members who are democratically accountable to the people who live in that local authority area. We recognise that there may well be a range of views in a particular area, but I note the broad support for the proposals in the consultation and the evidence that the committee has taken from some local authorities, which recognised—at this stage, at least—an intention to explore the utilisation of these powers.