Birmingham Commonwealth Games Bill [HL]

Lord Snape Excerpts

Wednesday 24th July 2019 Lords Chamber

[Lord Addington]

My Lords, I do not object to the idea of a hotel room tax, providing it is done correctly, but I do not think that the Bill is the right place to do it. The bid was won on certain terms and references, and this was not in there. Also, I would not complain too loudly, because an Answer from the Government that somebody found for me states:

“The government’s other commitments to the Games, including the underwrite of the organisation and delivery of the Games and a number of guarantees, will remain in place until the end of the 2022/23 financial year”.


That is a pretty good deal. Changing the deal you have at the last minute will be a danger. We should discuss the idea further at another time; I do not think that this is the right time.

Also, the Birmingham city plan—let us face it, we are talking about Birmingham City Council—does not mention this at all. I suggest that there will be another time when we can go into this properly, but making sure that this tax stays local is important, if we are going to do it at all. Now is not the time or place. We have a pretty good deal that has been agreed by the people involved. We should stick to it.

[Lord Snape (Lab)]

My Lords, I support my noble friend in these two amendments. I shall try not to repeat anything that I said in Committee, but I want to express my disappointment with the ministerial reply on that occasion, which I thought, for the Minister, was unusually unhelpful on this proposal. I remind noble Lords on both sides that this is not the imposition of a new tax; it is merely a look at whether such a tax is feasible—no more, no less.

I listened to the noble Baroness opposite, who is a former Business Minister, I recollect, plead on behalf of business that there should not be another imposition. I remind her—having said that I would not repeat anything that I said in Committee, I will break what I said pretty early on, but I know that she was not present in Committee—that, coincidentally, I used the example of the Crowne Plaza hotel in Birmingham and how its nightly rate varied in the course of a week. If I recollect rightly— she will correct me if I am wrong—the Crowne Plaza hotel is part of the International Hotel Group to which she referred.

Again, I must say gently to her that if the price of one of its hotel rooms can vary by £130 in the course of a week, those small businessmen, the franchisees on behalf of whom she was making her plaintive cry, will not really go bust if we put another pound or two on our hotel rooms, as do many other cities throughout the world.

I express particular disappointment at the contribution from the Liberal Benches. I understand through the usual channels that this amendment would have been pressed to a Division had the Liberal Democrats indicated any support. They are always telling us how radical they are: here is a chance not to be particularly radical but merely to support a proposal for an inquiry into a tax that would assist something as worthy as the Commonwealth Games in Birmingham—yet without even hearing the sound of guns, before the guns had been loaded, they have fled the battlefield and said that they do not wish to be involved.

[Lord Addington]

When you have an underwriting from government in a deal like this, do you want to change the rules after it comes out? I actually think that the Government have done well on this. That is why I first joined these Benches: I am not afraid to agree with people who I normally disagree with. If the noble Lord cannot handle that, well, there we go.

[Lord Snape]

I think that I can handle most things that the noble Baroness throws at me in this place. Of course, it is not the first time that the noble Lord has defended the Government; indeed, the Liberal Democrats spent some years in alliance with them from 2010—and much good it did them, I might add on the subject of elections. Neither the noble Lord nor the noble Baroness mentioned the fact—I hope that the Minister will—that there is, it is said, a £40 million gap, which must be closed before the Commonwealth Games go ahead. If the gap cannot be closed in this way, how will it be closed?

Perhaps the noble Lord who speaks on behalf of the Liberal party should not knock an idea that seems enormously attractive to me. I fought three elections as a local councillor, only one of which was successful. If I were still a member of my local authority—that would be difficult because it was abolished some years ago—the thought of a tax that did not penalise my voters would be enormously appealing. That is the sort of self-interest that one normally hears from Liberal councillors—although it normally depends, of course, on which end of the village they are and the group of people that they are addressing at the time.

I go back to the question of yield management, as I think it is called—as a former Business Minister, the noble Baroness, Lady Neville-Rolfe, will know that. If it is good enough for hotel chains to vary the prices of their rooms on a nightly basis, surely it is permissible to look at the possibility—no more, no less—of a tax with which, I repeat, we are familiar with across the world and which, to give the city credit, Edinburgh hopes to introduce in the near future.

I will repeat one more phrase from my speech in Committee: we all know that the objections are based on the Treasury, because it hates the word “hypothecation” and hates the idea of anybody else applying taxes because that takes away some of its power. Again, I remind the Minister that the Conservative Mayor of the West Midlands—I did not vote for him; I accept that he won against the odds and will have to fight for re-election in 2020—has publicly announced his support for the scheme. Looking at his former partners on the Liberal Benches, it comes to something when a Conservative mayor is more radical in his views on taxation than his former colleagues in the Liberal Democrat party.

So I hope to get a more sympathetic hearing from the Minister on this occasion. Surely we could look at something like this; it is not revolutionary or Marxist or anything like that. Surely it would benefit the city, the region and, most importantly, the funding of the Commonwealth Games.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to have an opportunity to follow the noble Lord, Lord Snape, who made an interesting contribution. This is my first opportunity to contribute to the Bill. I ought to declare my interests at the outset: I chair the board of PASSCo, the proof of age scheme.

I echo the comments of my noble friend Lady Neville-Rolfe and the noble Lord, Lord Addington. I wonder whether the noble Lord, Lord Snape, has read closely the terms of Amendment 2, moved by his noble friend, the noble Lord, Lord Hunt. It puts enormous obligations on local authorities to raise this levy and,

“provide financial assistance equivalent to the proceeds of the levy, after costs of administration, to the Organising Committee for the purpose of delivering the Games”.

The real reason I counsel my noble friend the Minister against accepting this first-ever imposition of a hotel tax in England is that it would be the thin of the wedge. It would put down a marker for others, as we have seen in Edinburgh, who may wish to go down the same path.

At Question Time, the Liberal Democrat Benches in particular—I think it is the noble Lord, Lord Lee—often raise the spectre of the concerns that the tourism sector currently faces. One of these—I imagine that both hotel rooms and dinner tables face it; this has been one of the tourism sector’s persistent, as-yet-unsuccessful campaigns—is that we impose a 20% VAT rate, which already makes us uncompetitive in the face of our nearest competitors in the European Union and beyond. The States would not dream of putting such a high tax on their own business, particularly as they want to put America first, as we keep hearing.

We know that hotels and restaurants will face particular challenges as we leave the European Union at the end of October, in the sense that these businesses and the tourism sector generally—are heavily dependent on non-British EU citizens. We do not yet know what the supply of labour from EU countries will be, as we do not know whether there will be a transition phase or whether there will be the complete frictionless trade and free movement that we currently enjoy.

I do not wish to rehearse all the arguments that others have made, other than to say that I am convinced that a tourism tax—even on the level of a pilot scheme, as proposed here—could have a huge negative impact on businesses that rely on the tourism economy by potentially reducing visitor spending right across the industry. We are talking about hotel rooms today, but it could be restaurants and other businesses tomorrow. I urge my noble friend to look carefully at Amendment 2 and Amendment 7, particularly subsection (2), and advise him against accepting these measures.

[Lord Rooker (Lab)]

My Lords, without repeating anything I have said previously, I support my noble friend. We are in a pretty unique situation at the moment, at 5.30 pm today: the country does not have a Chancellor of the Exchequer, so we can actually crack along. I realise that that is impractical, but the thought did occur to me.

[Lord Snape]

I point out to my noble friend that not only is there no Chancellor but we have an old Etonian Prime Minister taking office shortly—I think he has taken office. We also have—on his own account; he is frank enough to say it—an old Etonian Minister present, replying. Surely some deal could be done early on to demonstrate how effective this new order is.

[Lord Rooker]

Notwithstanding my support for the principle, which I have promoted, I fully accept the points made by the noble Baroness, Lady Neville-Rolfe. I see the force of the argument. It looks late in the day and, it is true, I see it as the thin end of the wedge—as I said to the noble Baroness. I made the point that the broader the tax base, the less you have to raise the particular taxes. It has to be a good thing in principle to broaden the tax base. It is not something we have total control over, because it is a devolved issue; it may happen in Edinburgh. It is not as though it does not happen and work elsewhere—that is the point.

My noble friend used the example of that incredible debate last week on the report by the noble Lord, Lord Heseltine. It was packed out; there were twice as many people in the Moses Room as there are here. I got the message that the Lib Dems were far more iffy about the report and recommendations from the noble Lord, Lord Heseltine, than the general thrust in the meeting. I am not picking out any particular points, and I do not single out this one, but a lot of caveats came from Lib Dems. Nevertheless, there is the genesis there of something to take forward for our cities. I fully accept that the timing is probably wrong; there is always an excuse for doing nothing, but I do not accept that. There is an argument here for a pilot scheme. It might fail. We do not use pilots enough and this is a classic example where we could use one. If it fails, we will see the defects in it.

--- Later in debate ---

[Lord Redesdale (LD)]

My Lords, it was not my intention to speak today but obviously there has been a great deal of speculation about Lib Dem policy, to which I am not going to add. My view is that localised taxation would be a good idea if we devolved decision-making a great deal further down the chain.

I like the idea of taxation for certain areas of development. However, we have to be careful because this could be a blunt tool. As the owner of a hotel—a particularly fine hotel on the A68, the Redesdale Arms, a pub with great food and beer if you are heading to Scotland—I declare a personal interest.

[Lord Snape]

Do we get a discount?

[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.