Statement by Tom Arthur, Minister for Community Wealth and Public Finance to the Scottish Parliament on 16 January 2024.
Thank you, Presiding Officer. Before I turn to the Bill itself, I firstly want to thank the Local Government, Housing and Planning Committee for the work they have carried out in examining the Bill.
I am pleased to see the majority of the Committee support the general principles of the Bill and I thank all of the Committee members for the careful and diligent way they have carried out their work and the useful report they have produced.
I would also like to be on record and record my thanks for all those who have engaged constructively with us to help us improve and refine the Bill. That includes members of this Parliament, businesses and the tourism industry, local government, and others with an interest. I have welcomed the positive way they have engaged with the Government and I will highlight some of the fruits of that engagement later in my speech.
Turning to the content of the Bill itself, this Bill is an important measure and if passed will give local authorities a significant new power.
21 out of 27 EU countries have some kind of visitor levy and they are commonplace in other locations throughout the world.
I strongly believe that a visitor levy can be a force for good, supporting the visitor economy and bringing benefits to visitors, residents, and businesses.
It offers councils this opportunity to use the proceeds to invest in their local economy, bringing benefits to residents and visitors alike.
Presiding Officer, international good practice, highlighted by the European Tourism Association, tells us that local consultation is crucial to a successful visitor levy. The Bill would require a local authority to consult local businesses, communities and tourism organisations. And good local engagement will be really important in making sure a visitor levy is well designed and the funds it raises will be used to best effect and I welcome the fact that the Committee’s report also emphasizes this point.
Presiding Office, the Committee’s report raises a number of issues relating to the provisions in the Bill. The Scottish Government has provided a written response to these but I will briefly address some of the main points just now.
Firstly, the report has raised the right basis of the charge for the levy. Under the Bill as introduced, a visitor levy will be a percentage rate of the cost of the accommodation, with the rate set by the local authority. We have chosen this model due to its simplicity and proportionality – it means any levy will reflect a visitor’s ability to pay, adjust automatically as prices change through the seasonsand mean the visitor levy reflects the type of accommodation from five start hotels to campsite pitches.
However, we are aware of the calls from the industry and some local authorities to change the basis of charge to a flat fee. A single flat fee model has its own merits such as ease of collection but sacrifices the fairness inherent in a percentage rate.
The Committee’s report has called on the Scottish Government to work with stakeholders to agree a way forward. Today I can confirm that we will engage with both our local government and industry partners to consider this issue further and we will confirm the Government’s position before Stage 2 takes place.
On the issue of monitoring, the Committee’s report notes that robust monitoring will be needed to understand the impact of any visitor levy introduced by a local authority. The Bill already requires a local authority to report annually on the performance of a visitor levy in relation to its objectives and to formally review a visitor levy scheme every three years.
We believe these local monitoring arrangements are appropriate to reflect the discretionary nature of the levy and in keeping with Verity House Agreement. However, in light of the Committee’s report we will explore with our local government partners the potential merits of a co‑ordinated approach to monitoring.
On the definition of overnight accommodation, I know there strong views on the inclusion of moorings and berthings. I have been engaging with the marine industry to understand their concerns further and their perspective. Following this helpful engagement, I can confirm the Scottish Government accepts the Committee’s recommendation to remove moorings and berthings from the scope of a visitor levy. I pay tribute to Stuart McMillan MSP who has convened meetings to enable me to discuss this issue and hear the views of industry, and I look forward to working with Mr McMillan and others to address this issue at Stage 2 of the Bill.
Another aspect of this Bill that has raised strong views, as Mr Fraser touched on, is the treatment of motorhomes and campervans. Under the Bill as introduced, a visitor levy can apply to motorhomes staying overnight on a campsite. Motorhomes or other vehicles which stay on others areas such as private land would not be captured.
The Scottish Government has considered carefully whether a levy or charge could be applied to include these activities. Discussions with council and land management stakeholders have highlighted significant issues with a levy on motorhomes with potential difficulties in application, administration and compliance and I welcome the Committee’s similar conclusions on this aspect.
I also recognise the Committee’s point that there may be further technological solutions that could allow a levy or charge on motorhomes to be developed in future. So we will continue to engage with our partners and stakeholders on this issue and will consider any developed proposals that will work to support the visitor economy.
I will now turn to the issue of exemptions from paying a visitor levy. Under the Bill as currently drafted the visitor levy will not apply to those who use overnight accommodation as their sole or usual place of residence. This means, for example, those who are homeless or at risk of homelessness, and those fleeing from domestic abuse, will not have to pay a visitor levy.
We recognise that there may be other instances where a local authority believes charging a levy would be inappropriate and that is why councils would be given the power to create their own exemptions when designing their levy schemes. I note the Committee has asked the Government to consider whether national exemptions should be created for children and young people and I am happy to confirm the Scottish Government will consider this suggestion further.
Presiding Officer, on the lead-in time required before a local authority can implement its levy, I note the comments from the Committee. I appreciate the desire from those councils who have already undertaken work on a visitor levy to use this new power as soon as possible. However, I am keenly aware of the strong support from the hospitality and tourism industry for the 18-month period as it gives businesses the necessary time to put in place measures to effectively collect the levy. This is an issue of real importance to the tourism industry and I have listened to their arguments carefully. The Scottish Government therefore considers the 18-month implementation period an appropriate length of time, giving businesses the time they will need to adapt to any visitor levy a local authority introduces.
I have also noted the Committee’s call to consider allowing funds raised by a visitor levy to be invested in services or facilities used by visitors travelling for business purposes. We have listened to local government and others on this point and will consider how the provisions in the Bill on the use of funds can be best refined at Stage 2 to include services or facilities used by those visiting the area for businesses purposes.
And the final point again, as I say, we have also recognised calls for a national cap on the levy rate and we will consider that ahead of Stage 2.
This is a new power that will enhance local government and can be an opportunity to create opportunities for significant revenue generation for investment in our local tourist economies.
It will be a discretionary power should the legislation be passed.
So Presiding Officer, I move the motion in my name.