Birmingham Commonwealth Games Bill [HL]

Lord Griffiths of Burry Port Excerpts

Wednesday 24th July 2019 Lords Chamber

[Lord Redesdale]

The noble Lord will be first in the queue. I understand it is hard in the hospitality sector at the moment and we should not underestimate the problems that many hotels which have pubs are facing. A number of pubs are going out of business at the moment. It is a seasonal trade and you have to put prices up in the summer—especially in my pub because for two weeks the year before last it was cut off by snow and there was no income whatever.

While the idea of localised taxation is good in principle, we have to be careful that it is not seen as a blunt tool. Small providers who might find a few pounds the difference between making a profit, breaking even or making a loss should be considered carefully.

[Lord Griffiths of Burry Port (Lab)]

My Lords, it has been an interesting debate that has been not without its entertainment, as we have enjoyed over the past few minutes. I shall speak to Amendment 7.

In Michael Heseltine’s recent report Empowering English Cities, I say to the noble Lord, Lord Addington, reference was made to the West Midlands joint authority, and the Birmingham Games of 2022 figure as a part of what will generate economic activity in the next five years in that area. It is on the list of the authority and I am glad to refer to it.

[Lord Addington]

My Lords, I was merely referring to the fact that this tax was not mentioned in the report.

[Lord Griffiths of Burry Port]

I am glad to have that intervention, which does not affect what I want to say in the slightest.

The thin-end-of-the-wedge argument interests me. I was once an academic. I do not know who remembers Microcosmographia Academica by FM Cornford. In academic circles, the thin-end-of-the-wedge argument was one sure way that nothing would be done. Let us remind ourselves that the wedge is not always a bad thing. In my house it does considerable work with uneven floors. So, let us take things as we find them. I heard the proper arguments made by the noble Baroness, Lady Neville-Rolfe, and from the Liberal Benches, and I also heard the proper arguments from our Benches. We have been debating this for 31 minutes and 17 seconds. The report to the All-Party Parliamentary Group for Hospitality took its time—considerably more than 31 minutes and 17 seconds—and all the arguments that have been rehearsed on behalf of the business community were heard and are properly registered. All the arguments that were put for the possibility of such a tax have been rehearsed and are part of the argument. Having heard both sides in detail, we get to the recommendation that has already been mentioned—forgive the poor cataract-less ancient Peer putting his glasses on:

“The All-Party Parliamentary Group for Hospitality is calling for greater examination of the potential impact of a tourist tax on consumers, businesses and the economy before taking any decisions on the principle of introducing one”.


The question is open; evidence is needed. A project to find some evidence would not be a bad thing so that we can take 32 minutes and 24 seconds in a year’s time to say that the study has been done, the respective arguments have been seen and weighed and we can now with some confidence recommend either that this goes forward for a two-year period so that we can see what happens and evaluate it carefully, or that the evidence is conclusive and we had better drop it. That is where the APPG left things after a lot of consideration. I have listened to it very carefully. The arguments against and for are valid, and the conclusion is uncertain. Something is needed to give us more certainty when we look at the matter again. I suggest that Amendment 7, which I tabled, might do that. It is provisional, time-limited, place-limited and linked to the Commonwealth Games. Where is the wedge in that? It is specific. It has a shape. It is not pointed to be rammed in further later, but has a definite geometrical shape.

I have heard from the council in Birmingham. It tells me that it has had discussions with DCMS during the bidding process and since about alternative funding streams, including a hotel occupancy tax. It was given assurances by DCMS that it would assist the council in talking to the Government about those alternative funding streams. The council’s argument goes on to the points we have heard already. So, the DCMS Minister is facing me and DCMS has had some discussions and made a commitment to talk to the Government about the possibility of achieving an object rather like the one we are putting forward now. Perhaps the Minister can tell us what the substantive remarks and commitments referred to in the document were. I cannot see what we have to lose.

[Baroness McIntosh of Pickering]

I am following the noble Lord’s argument as carefully as I can, and I shall go away and read the book he recommended, with gusto, I am sure. Will he address the point I made about imposing a tax, even in the circumstances of Birmingham, making us less competitive and the fact that hotels are potentially facing staff shortages and 20% VAT, which they mention every time I see them?

[Lord Griffiths of Burry Port]

I am grateful for that intervention. It allows me simply to give the assurance that in the findings of the committee to which I have referred those specific points have been considered, with figures identical to those that have been mentioned. The business side of things needs to be heard. VAT at 20% in this country compares with 12%, 6% or 7% in other European countries, and it loads the tax base here much more than there. It puts this country’s hotels at a disadvantage compared with those overseas. I am not denying these important considerations at all; I am simply saying that, by approving this measure, we could have a specific, properly looked at piece of work that would allow us to take all these factors into consideration and come to a conclusion that would be justified evidentially rather than simply being based on a feeling at this particular moment—on the last day but one of a Session, when, as noble Lords can see, sartorially I am dressed for other occasions.

[Lord Ashton of Hyde]

My Lords, I did not expect to enjoy a debate on raising tax but it was very entertaining. I thought that the noble Lords, Lord Hunt and Lord Griffiths, put their case very persuasively. I was going to mention the thin edge of the wedge but it has already been mentioned several times. The noble Lord, Lord Rooker, made a new suggestion about taking advantage of the absence of a Chancellor of the Exchequer. There might not be a Minister soon, and it would guarantee that there would not be a Minister if I did that. I am also grateful for the support of my noble friends.

Perhaps I might say something about the state of Birmingham’s finances and what Birmingham City Council is doing. As I mentioned in Committee, Birmingham and the West Midlands region will benefit, as the noble Lord, Lord Hunt, said, from a £778 million investment to stage the 2022 Commonwealth Games, with Birmingham City Council and a number of its key partners providing funding of £184 million—25%—of the Games budget.

Birmingham City Council has publicly committed to meet its financial obligations for the Games, and approved a four-year council budget at a full council meeting on 26 February this year, stating that there are sufficient reserves to cover the city’s share of the costs. It has already explained how it will meet its obligations without impacting on existing services. I refer noble Lords to Birmingham City Council’s publicly available Financial Plan 2019-2023. This states that,

“resources have been identified for this purpose that will be sufficient to meet these funding liabilities as they fall due”.

It might interest noble Lords to know that the Government have already committed to working constructively with Birmingham City Council, to the extent that there was correspondence on 7 December 2017 from the Chief Secretary to the Treasury to Birmingham City Council on reviewing existing legislative powers and listening to requests for new powers, should the case for additional funding be made.

As the noble Lord, Lord Griffiths, said, we are in frequent dialogue with Birmingham City Council but, to date, no detailed case has been put forward to evidence the need for an additional power. However, I understand that Birmingham City Council is now undertaking detailed work, with expert advice, on various options for revenue-raising to offset the costs of the Games, including the use of existing powers or the introduction of a new tax, such as a hotel tax. We and Her Majesty’s Treasury await the conclusion of that analysis and stand ready to look at the details of any proposals put forward by the council.

My honourable friend the Minister for Sport and Civil Society—I have her full title right this time—has spoken to the Chief Secretary to the Treasury about this. As I stated previously, matters of taxation are for HM Treasury to consider, with appropriate evidence, consultation and assessment of impact—for example, on tourism—as my noble friends Lady McIntosh and Lady Neville-Rolfe mentioned. I am grateful to my noble friends for their support.

We consider that these amendments are not an appropriate measure for the Bill, which, I remind your Lordships, is focused on providing the temporary operational powers required to deliver a successful Games, and they would pre-empt the outcome of the work already being undertaken by Birmingham City Council.