Birmingham Commonwealth Games Bill [HL]

Debate between Lord Hunt of Kings Heath and Baroness Neville-Rolfe

Wednesday 24th July 2019 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, in moving Amendment 2, I will also speak to Amendment 7, to which I have added my name. I must apologise for not being able to be here in Committee. I am indebted to my noble friend Lord Rooker for raising a number of very important matters, to which I now wish to return.

Like every other noble Lord who has spoken, I am right behind these Games and feel that they will give huge advantage and impetus to the city of Birmingham and the West Midlands in many ways. However, a financial commitment is clearly involved. The Minister confirmed in Committee an investment of £778 million. This was to be split 75:25 between the Government and Birmingham City Council and a number of its key partners. It is clearly important that the city council pulls off agreements with key partners to defray much of the expenditure. The finances of the city council are, shall we say, fragile, and it would be disappointing if any resource had to be found from existing services to find the money that the city council needs to contribute.

That is why I have considerable interest in the idea of a hotel levy tax to help fund some aspects of the Games. I understand that Edinburgh is likely to be allowed to go ahead with such a tax, and the Core Cities Group is absolutely behind it. The noble Lord may be aware that we had a very good debate last week in Grand Committee on the report of the noble Lord, Lord Heseltine, on the role of cities in investing and allowing the economy to grow. In his report Empowering English Cities, he makes the point that the Government should allow local authorities, or “mayoral authorities”, as he describes them, to,

“raise local taxes and charges. These … include vehicle excise duty, airport passenger duty, tourist tax and local cultural admission charges. With appropriate local exclusions, it is ludicrous for British tourists to pay to visit historic collections and buildings abroad while millions of visitors to this country enjoy free access”.

I will not go into the whole of his argument. The point is that there is some support for allowing local authorities to raise local taxes in the way he describes. Hotel taxes are quite accepted in many parts of the world. As the right reverend Prelate the Bishop of Birmingham said in Committee, a £1 a night tax for a three-year period could be expected to bring in £4.5 million to £5 million a year.

In Committee, the Minister did not exactly embrace this as enthusiastically, as I would have wished, but he referred us to a report on tourism tariffs by the all-party parliamentary group, which has expressed some reservations about the likely impact of a long-term tax having a positive impact on tourism infrastructure. That report concluded:

“Further studies need to be commissioned on the economic impact and viability of a tourist tax”.


I fully accept that. We are at the beginning of exploring such a concept. The argument I put to the Minister is that we have a heaven-sent opportunity to try a pilot in Birmingham to see how it works. We hope it would raise resources towards the Games. We would see what impact it had on the hotel market and the economy of the city as a whole. I cannot see what there is to lose in allowing the city council to be a pilot in those circumstances. It does not commit the Government to the principle for all local authorities in the future, but says that they are prepared to see whether a hotel tax is feasible, does not produce negative impacts and would be of immense help to Birmingham. There are two versions, if you like, of this idea: my amendment, which is a requirement on the Secretary of State to essentially bring forward a scheme, and my noble friend’s amendment, which asks the Government to look at the feasibility and come forward with a report.

In the end, it is important for future Commonwealth Games that the financial viability of these Games works out effectively for the host city. One reason why Birmingham had to take this on at short notice was the financial difficulties in the original host city. I know that the Commonwealth Games Federation is very interested in the concept of low-cost Games; indeed, the organisation of these Games is consistent with the federation’s desire to keep costs at the lowest level possible commensurate with a quality Games. All that needs to be supported. All I ask is, to ensure that that undue burden does not fall on the city of Birmingham and local services, the council is given an opportunity, as it wants, to try out a hotel tax and make a contribution to the cost. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to express some concerns about the amendments tabled by the noble Lords, Lord Hunt of Kings Heath and Lord Griffiths of Burry Port. I am sorry that I was not able to speak at Second Reading, as I am a great supporter of Birmingham, which is a brilliant, vibrant and enterprising city, and a great supporter of the Commonwealth Games. I remember the opening ceremony of the Glasgow Games, which I was lucky enough to attend as a Business Minister, with great nostalgia. We all remember those Scottie dogs. On a more serious point, I remember the benefit the Games brought to Glasgow, and indeed to UK plc. As your Lordships can imagine, I am therefore a huge supporter of the Birmingham Commonwealth Games. We are right to take the plunge, even though we have had less time than usual to prepare, because, as the noble Lord, Lord Rooker, kindly explained in Committee, we are taking over the Games planned for Durban.

Clearly, hosting the Games is a financial challenge, but I believe the Government have gone about this in a sensible way, and that the 75:25 split between central government on the one hand and Birmingham City Council and its partners on the other is fair. The Games will be a huge boost for the local economy and the worldwide reputation of the Midlands, and of Birmingham in particular. I should mention my interest as a director of Secure Trust Bank, which is headquartered in Solihull.

However—this is my concern—I am not a supporter of a hotel occupancy levy, even on an experimental basis, at a low rate, and for a good purpose. It would be a new form of taxation, and new taxes should not be introduced or even mooted without great care and consideration of the financial and administrative costs, any perverse effects and, equally important, the way such attacks can morph into a new piggy bank for the Chancellor or set an unwelcome precedent. I say the same to those looking at the hotel tax in Edinburgh.

The hospitality and hotel sector is already challenged by the changes it will have to deal with post Brexit. Moreover, in the main, it is taxed highly compared with other countries that impose hotel occupancy levies. We have VAT at 20%, employment taxes, costly business rates—which we debate often—together with the joys of vigorous HMRC-style enforcement, which competing European hoteliers often avoid. There is also a level playing field issue: digital operators such as Airbnb take trade from hotels and ironically, they would appear to benefit relatively from the proposed hotel charge. Our hotel businesses, in Birmingham and elsewhere, are in many cases small businesses, and we should be reducing burdens on them, not increasing them.

Even bigger businesses, such as IHG, which is listed in the UK and, I understand, has 350 hotels, pose a problem. By chance, I met somebody from IHG today and asked them about the Bill. I understand that the vast majority of its hotels are franchised, often to small business people and family enterprises.

So there is a problem. My noble friend has rightly promised more information on the Games budget, which I look forward to studying. However, I ask him to live up to the principles of fiscal rectitude and resist this new tax, however well argued in the context of the Bill.