How should the National Infrastructure Commission for Wales work?

14 March 2017

Article by Gareth Thomas, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

On 15 March the Assembly will debate the Economy, Infrastructure and Skills Committee’s report on the National Infrastructure Commission for Wales (NICfW).  The Committee found much to agree with when scrutinising the Welsh Government’s proposals, but made 10 recommendations to help ensure that Wales’s current and future infrastructure needs are met.

What is the National Infrastructure Commission for Wales, and why did the Committee choose to look at it?

Construction of Pont y Werin, Cardiff

Image from Flickr by Ben Salter. Licensed under Creative Commons.

The compact between Welsh Labour and Plaid Cymru in May 2016 included a commitment to establish a National Infrastructure Commission in Wales.  The Welsh Government’s proposals for the NICfW are that it will be a non-statutory body that provides independent and expert technical and strategic advice to the Welsh Government on Wales’ long-term infrastructure needs over a 5-30 year period.  This will involve making regular reports to the Welsh Government on economic and environmental infrastructure.  Decision making and infrastructure policy will remain the responsibility of the Welsh Government.

The Cabinet Secretary for Economy and Infrastructure has said that his ambitions for the NICfW are to depoliticise contentious infrastructure decisions, and to speed up delivery of key projects.  While in October 2016 the Cabinet Secretary said that he would aim to set the NICfW up by summer 2017, in a written statement on 8 March he said that he now aims for it to be established by the end of 2017.

Scrutiny of the plans to establish NICfW was a key priority of a number of stakeholders who responded to the Committee’s consultation on its priorities held last summer.  Some of the main issues raised by stakeholders included the need for a long-term vision for infrastructure, the role and remit of the NICfW, how it will impact on key projects, learning from international best practice and how it can improve current arrangements for delivering infrastructure.

How did the Committee’s work add to the Welsh Government’s proposals?

The Welsh Government accepted 6 of the Committee’s recommendations, accepted 3 in principle and rejected 1 recommendation.  So the Committee has influenced the model for the NICfW in the following ways:

  • The preferred candidate for Chair of the NICfW will be scrutinised by an Assembly Committee in a pre-appointment hearing, as was recently done by the Finance Committee for the preferred Chair of the Welsh Revenue Authority.
  • The NICfW will produce a ‘State of the Nation’ report on future Welsh infrastructure needs every three years to detach its work from the political cycle, and will produce an annual report focussing on governance, past and upcoming work. The Welsh Government will respond to all recommendations within 6 months.
  • Its annual remit letter will provide information on how much the Welsh Government expects to be able to spend on infrastructure funding over the longest possible timescale, to give important context to its recommendations.
  • The remit letter will also encourage NICfW to build strong relationships with the UK National Infrastructure Commission and Scottish Futures Trust to maximise effectiveness.
  • Appointments to the NICfW will need to take account of the diversity of communities across Wales, and engagement at regional levels will be set out in its terms of reference.
  • The Welsh Government will explore mechanisms such as the Development Bank to focus on how more private funding can be used to support infrastructure developments.

And what’s still up for debate?

One of the Committee’s key recommendations was that, following its initial establishment, legislation would follow to make the NICfW a statutory body. 

This was influenced by evidence from federal and state level infrastructure advisory bodies in Australia which told the Committee that their status as an authoritative voice on infrastructure had been enhanced by their independent statutory status, and that the benefits of this approach would apply more widely than Australia.

The Chief Executive of the UK National Infrastructure Commission told the Committee that although being a non-statutory body had allowed it to be established more     quickly, there was also a downside since stakeholders perceive it to be less permanent.

The Welsh Government rejected this recommendation, as it does not consider that the role or remit of the NICfW would be enhanced by being on a statutory footing.  However it will consider this as part of a formal review taking place before the end of the Fifth Assembly.

There were also three recommendations which the Welsh Government accepted in principle.  The Committee recommended that the remit of NICfW be extended to include supply of land for strategically significant housing developments and related supporting infrastructure.  While the initial remit of the NICfW will remain as economic and environmental infrastructure, this will be reviewed by the end of the Fifth Assembly.

The Committee also wanted NICfW to be located outside Cardiff, and to share accommodation with another public body to lower costs.  The Welsh Government has said it will consider this, given the need for independence from a range of bodies NICfW will need to work with.

Finally, the Committee considered that NICfW should be considered a public body under the Wellbeing of Future Generations (Wales) Act 2015 to promote collaboration, engagement with the public and independence.  The Welsh Government will ensure that its terms of reference will make sure that NICfW is required to keep to the principles and goals of the Act.  However it will not seek to amend the Act at present.

The business rates revaluation and transitional relief: An update

01 March 2017

Article by Gareth Thomas,  National Assembly for Wales Research Service

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

Business rates revaluations have been a subject of interest across Britain over recent weeks and months, with concerns raised about the impact on businesses who will see their business rates rise from April 2017. Different approaches have been taken to address this across Wales, England and Scotland (Northern Ireland’s revaluation came into force in 2015).

This blog article updates our previous one, published in December 2016, which provided details of the revaluation and its impacts.  The revaluation in Wales has been independently undertaken by the Valuation Office Agency (VOA), and the Welsh Government does not apply policy or guidance to the revaluation.

What impact has the revaluation had on different parts of Wales?

As the previous article explains, changes to rateable values are one component of the overall business rates bill, which is also affected by the business rates multiplier set by the Welsh Government every financial year, as well as any reliefs that businesses may be entitled to.

The areas that have seen the largest rises in rateable values between the 2010 valuation and the draft 2017 revaluation figures are predominantly rural areas, such as Conwy (9.2% average increase), Gwynedd (8.9% average increase) and Monmouthshire (7.0% average increase). These figures are different from the estimated impacts on bills in England that have been discussed in the media in recent days, as stated above rateable values are only one component of the calculation of business rates bills.

The VOA have published maps of the average percentage change in rateable value in each local authority, and these are set out below. When looking at these figures, it is important to note that this is an average across the area and sectors, so the impact on particular sectors and areas within local authority areas may be different.  Some businesses in all local authority areas will have seen increases, while others will have seen decreases in their rateable value.

Map showing changes in rateable value of businesses in each local authority

What measures has the Welsh Government put in place to help businesses whose bills will rise due to the revaluation?

The Welsh Government has introduced two measures that will provide transitional relief from April 2017 to businesses negatively affected by the revaluation.

The first scheme, announced in September 2016, is targeted at small businesses, and the Welsh Government will provide £10 million funding which will benefit 7,000 ratepayers.  Businesses who currently have premises with a rateable value of up to £12,000 and are eligible for small business rate relief in 2016-17, but will receive either less or no relief in 2017-18 due to the rateable value of their property increasing will benefit from this scheme.  The proposed transitional relief will spread increases in business rates liability over a three-year period, so businesses will pay 25% of their increased liability in 2017-18, 50% in 2018-19 and 75% in 2019-20.  By the start of the 2020-21 ratepayers will pay their full bill based on the 2017 revaluation.  Regulations introducing this scheme were discussed and passed through a vote in Plenary on 13 December 2016.

On 17 February, the Welsh Government set out details of a further transitional relief scheme, the High Street Rates Relief scheme.  This is targeted at high street businesses such as shops, restaurants, cafes, pubs and wine bars. This scheme will also cost the Welsh Government £10 million, and will be introduced from April 2017, benefitting 15,000 businesses.   The Cabinet Secretary’s written statement sets out the qualifying criteria for the scheme. Retailers can find out whether they are eligible for the scheme by contacting their local authority.

There are two tiers of relief under this scheme. Under the first tier, high street retailers with a rateable value of between £6,001 and £12,000 who are already receiving either small business rates relief (SBRR) or transitional rates relief will receive a reduction in their rates bill of £500 or, if their bill is less than £500, it will be reduced to nil.  Under the second tier, eligible high street retailers with a rateable value of between £12,001 and £50,000 which are experiencing a rates increase from April 1 will receive a reduction in their bill of £1,500.

How does this differ from what is being proposed elsewhere in Britain?

Both England and Scotland have stated that they will implement different approaches to mitigating the negative impact of the revaluation on some businesses.

Under the UK Government’s scheme for England, it is proposed that all businesses who see an increase in their business rates bill as a result of the revaluation will receive some transitional relief.  A key difference to the scheme in Wales is that this is a self-financing scheme, which is paid for by capping the reductions that businesses who see a decrease in their bills will receive.  Small and medium businesses receive greater support than larger businesses.  The UK Government Secretary of State for Communities and Local Government announced on 22 February that he is working closely with the Chancellor of the Exchequer to provide further support to businesses in England facing the largest bill increases, with an announcement expected at the UK Government budget on 8 March.

In Scotland, the Scottish Government has capped bill increases at 12.5% for hospitality businesses such as hotels and pubs, and also offices in Aberdeen and Aberdeenshire.  The hospitality and pub sectors have raised concerns about the scale of increases they will face, and also the different valuation methodology used in these sectors.  The cap on offices in Aberdeen and Aberdeenshire is due to the impact of the fall in oil prices on the local economy.

The National Development Framework for Wales: what is it and when is it due?

24 February 2017

Article by Elfyn Henderson, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

Photograph of the Britannia Bridge across the Menai strait

The approach to strategic land use planning in Wales is changing. The Planning (Wales) Act 2015 introduces two new levels of development plan, which will sit above the existing local development plans (LDPs):

  • A National Development Framework (NDF) covering the whole of Wales. The NDF will set out the Welsh Government’s policies on development and land use in a spatial context, and replace the Wales Spatial Plan; and
  • Strategic Development Plans (SDPs) – these are regional plans that will sit between the NDF and LDPs in certain parts of Wales, and will deal with issues that cut across a number of local planning authority areas (but are not of national significance).

This post focuses on the NDF; further reading on SDPs and LDPs can be found in our local planning policy briefing (PDF 1MB) and in the Welsh Government’s Development Plan Prospectus.

The National Development Framework

The NDF will set out a 20 year land use framework and be reviewed at least every five years. Unlike the Wales Spatial Plan, the NDF will have development plan status, meaning that all SDPs and LDPs must be in conformity with it. The Welsh Government summarises the purpose of the NDF as follows;

  • sets out where nationally important growth and infrastructure is needed and how the planning system can deliver it;
  • provides direction for SDPs and LDPs;
  • supports the determination of applications under the Developments of National Significance (DNS) regime. Further reading on DNS can be found in our DNS briefing (PDF 498KB);
  • sits alongside Planning Policy Wales, which sets out the Welsh Government’s national planning policies and will continue to provide the context for land use planning; and
  • supports national economic, transport, environmental, housing, energy and cultural strategies and ensure they can be delivered through the planning system.

The Planning (Wales) Act 2015 requires the draft NDF to be considered by the National Assembly before the final NDF is published.

The Assembly will have 60 days (excluding recess) to consider the draft NDF. The Welsh Government must take account of any resolution or recommendations made by the Assembly, or any of its committees, in deciding whether or not the draft NDF should be amended.

The Welsh Government must publish a statement alongside the final NDF outlining how it has had regard to the Assembly’s resolutions or recommendations.

The current timetable (below) shows the draft NDF being considered by the Assembly in October – December 2019. The final NDF is due to be published in March 2020.

Call for evidence and projects

The Welsh Government is currently undertaking a call for evidence and projects (7 December 2016 to 7 March 2017) to help inform the development of the NDF.

The consultation is asking for national level evidence and projects that will help Wales meet its various national objectives. It gives the following as examples that could be relevant to the NDF:

  • all-Wales studies looking at the potential for renewable energy generation, connectivity issues between different parts of Wales, environmental issues covering multiple regions; and
  • issues which relate to a geographically smaller area but which are of national significance, such as power stations or nationally important habitats.

Evidence and projects submitted will be considered in the context of the development planning system and against the seven Well-being goals, as set out in the Well-being of Future Generations (Wales) Act 2015.

The consultation document says the Welsh Government will publish details of the evidence and projects that are submitted, and also publish a summary of its assessment of them. However, no timescale is given for when this is intended to be done.

Statement of Public Participation

The Planning (Wales) Act 2015 requires the Welsh Government to publish a Statement of Public Participation setting out how it will consult with the public during the development of the NDF. This document was published in November 2016 following consultation in early 2016.

The Statement of Public Participation shows there will be two further 12 week stages of public consultation, prior to the draft NDF being considered by the Assembly.

The full NDF timetable is as follows:

ndf-table

Steelworkers vote to accept Tata deal – what are the next steps for the industry?

17 February 2017

Article by Gareth Thomas,  National Assembly for Wales Research Service

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

Picture showing Port Talbot Steelworks

Image from Flickr by Ben Salter. Licensed under Creative Commons.

On 15 February 2017, trade union members from Community, UNITE and GMB all voted to accept the deal offered by Tata Steel relating to pensions, future investment and job security.  The three trade unions had recommended that workers accept the deal, while recognising the difficult decision workers would have to make on their pensions.  Tata have said that work continues with the unions and others to build a secure future for the industry.

What is in the deal?

The UNITE trade union has set out details of the proposal that union members were balloted on, which included:

  • Closing the British Steel Pension Scheme to future accrual on 31 March 2017 and introducing a Defined Contributions Pension Scheme. Additional one-off payments to pension scheme employee members aged 50+ who retire between 60 and 64 will also be available in some circumstances.
  • Commitment to run 2 blast furnaces at Port Talbot until at least 2021, and proposed investment in Blast Furnace 5 to extend its lifespan beyond 2021.
  • Commitment to an investment plan which proposes £1 billion of investment over 10 years, conditional on Tata Steel UK making at least £200 million in earnings before tax, interest, debt and amortisation (EBITDA) per year.
  • Protection against compulsory redundancies until 2021, equivalent to the commitment given to the workforce at Tata’s IJmuiden plant in the Netherlands.

Tata will also seek to restructure its UK Profit Bonus, and introduce new rates and conditions for new employees. It also aims to make £13 million of employment cost savings across the UK.

How have the Welsh and UK Governments invested in the steel industry and steelmaking communities?

The previous Welsh Government offered Tata a package of over £60 million, with conditions attached, prior to the announcement on the sale of its UK assets in March 2016, including investment in environmental improvements and developing the galvanising line at Port Talbot. Following the vote, the Cabinet Secretary for Economy and Infrastructure said that he hopes to be able to bring forward announcements shortly on these projects.

The Welsh Government also established the Port Talbot Waterfront Enterprise Zone in response to the job losses announced in January 2016. The UK Government also agreed to fund Enhanced Capital Allowances for three sites within the Enterprise Zone, which enable businesses to claim a 100% first year allowance for the capital cost of new investment in plant and equipment.

In December 2016, the Welsh Government agreed to contribute £8 million towards a total investment of £18 million in improvements to the Port Talbot power plant and setting up a R&D base in Swansea. In February 2017, it contributed funding of £1.6 million towards environmental improvements at Celsa Steel in Cardiff, and £1.2 million for investment in three other companies in the industry.

In December 2016 the Welsh Government agreed to provide £4 million to Tata to match its investment in training staff and managers across Wales. The Welsh Government’s ReAct redundancy support scheme has assisted workers from Tata and supply-chain companies.

The UK Government has provided assistance to mitigate high electricity prices and the impact of climate change policy. Over the two compensation schemes that have been introduced, the UK Government has provided over £100 million in compensation to the steel industry.

Has this support addressed the key challenges the industry faces, and what further action is needed?

In October 2015, the steel industry identified five areas where action could be taken to address the challenges it faces in the longer term. UK Steel says that of these, one has been actioned fully, three partially and one not at all. In contrast, the UK Government considers it has addressed four of these actions.

On energy prices, while the steel industry welcomed the UK Government’s package of support, electricity prices for UK producers remain considerably higher than those for European competitors. UK Steel highlight a differential of £17 per Mega Watt Hour between UK and German producers, impacting on investment decisions between steelworks in different countries.

Action around the ‘dumping’ of steel will be a key area where the UK Government will need to make decisions after the UK leaves the EU, as it will need to establish trade defence measures. There has been concern that previous EU anti-dumping tariffs have not been high enough, and that the UK Government has not supported the lifting of the ‘lesser duty’ rule by the EU. The sector is concerned about the potential for tariffs being imposed after the UK leaves the EU.  While WTO tariffs on steel products are 2%, tariffs such as the 10% on the automotive industry are of greater concern.

On business rates, the steel industry has called for plant and machinery to be exempt from business rates bills.  UK Steel found that UK companies pay five to ten times more business rates than producers in France and Germany. The Welsh Government has not taken this forward, as they consider it complicated to operate and have preferred to support the industry in other ways.  However, the recent business rates revaluation has seen a fall in the average rateable values of steelworks in Wales.  UK Steel have noted that under the Welsh Government’s transitional relief scheme steelworks will not have business rates bills reductions capped as will happen in England.

Both governments have also taken action on procurement.  The Welsh and UK Governments have published infrastructure pipelines of which projects will require steel. Additionally, the Welsh Government has changed its transport contracts to require that ‘dumped’ steel is not used.  The UK Government has also introduced procurement measures, including requiring central government departments to consider economic and social impacts of the steel they source. Key areas of future action for the steel industry include monitoring compliance with guidance, and developing transparent reporting mechanisms.

In May 2016, Swansea University called for backing for a new proposal for a national innovation and technology centre for steel.  The IPPR have argued that foundation industries such as steel should be better integrated into the Catapult networks, which are designed to boost innovation in key sectors across the UK.

Looking forward, while the UK Government’s proposals for an industrial strategy have been seen by some as not sufficiently considering steel, the UK Government and the steel industry are discussing the potential for a ‘sector deal’ for the industry, which is supported by the Welsh Government.  Sectors will develop plans to boost productivity.  The UK Government could then assist in a number of ways, including skills and training policy, changes to regulation, helping address barriers to trade and supporting the creation of new sectoral institutions.