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Moved by Lord Hunt of Kings Heath
2: Clause 1, page 1, line 11, at end insert—“(2A) The Secretary of State must provide by regulations for local authorities—(a) to raise a hotel occupancy levy for the duration of the Birmingham Commonwealth Games in the United Kingdom; and(b) to 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.(2B) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(2C) If a draft of an instrument containing regulations under this section would, apart from this subsection, be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
A long time ago, the late John Smith sent the Front Bench off to Templeton College, Oxford for four days as preparation. I remember the material there and I took two lessons from it: first, always pilot the things you can; and, secondly, it is never too late to avoid making a bad decision. I once said that to Gordon Brown when he was Prime Minister. He thumped the table and pointed out that the decision that was about to be made was not a bad decision. That was during 24 hours of drinking coffee and debating around the table. I had been sent along as the hapless Minister of State by one of my bosses.
It is an example of the Games providing the genesis for it. We know that there is a financial shortfall and that the finances of the city council have been under serious pressure in recent years—hence the commissioners sent in by the Secretary of State for the Environment. Obviously, we will not go to a Division on it but the issue will come back.
I am sure it is not the idea that it would apply to every bed—we are talking about the big chains, not B&Bs. I fully accept there are new forms of competition to the catering, hotel and hospitality industry, such as Airbnb, but those kinds of pressures have come from new technology. We have to be careful how we do this, which is why the opportunity for a pilot scheme should have been grabbed with both hands.
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.
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.
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.
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.
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?
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.
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
“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
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.
Amendment 7 in the name of the noble Lord, Lord Griffiths, also emphasises the value of the Government supporting Birmingham City Council to maximise the impact of legacy projects following the completion of the Games. Birmingham City Council is already doing that; for example, it has secured a number of commitments from the lead contractor, including on-site training, a training package and pre-employment training places. But maximising the legacy of the Games, as I mentioned in the last group of amendments, is not just for Birmingham City Council but for other Games partners, working together, to achieve. The legacy of the Games will be felt in the broader West Midlands region and, in some cases, the UK more widely, so support for legacy planning will come from a variety of organisations, not just central government.
Finally, the Government have already committed to providing Parliament with regular updates on expenditure against the budget throughout the life cycle of the project. These reports will cover the whole Games budget, as delivered by all Games partners, and will not be limited to the Government’s contribution. I therefore hope that noble Lords are reassured that the Government remain committed to working with the city council on its plans to deliver its required financial contribution to the Games.
To sum up, Birmingham City Council and its cosignatories have made a commitment that they can fund the Games. They have subsequently explained publicly how they will meet their obligations without impacting on local services. In spite of that, the Treasury has offered to consider any requests they make in terms of new powers and I am glad that Birmingham City Council is now undertaking that work.
Although I understand the attraction, I must reiterate the Government’s position that these powers are not necessary and—here I agree with the noble Lord, Lord Addington—not appropriate for this Bill. That position will not change, so I hope that noble Lords will feel able to withdraw or not move their amendments, rather than testing the opinion of the House. If they want to do that, they should do so now.
My Lords, I am grateful to all noble Lords who have taken part in what has proved to be a spirited debate. We have taken quite a tour around the issues. The right reverend Prelate the Bishop of Birmingham said in Committee that a £1 charge might raise £4 million to £5 million per year; I do not think that a £1 tax will impact hugely on the economics of the hotel trade in Birmingham and, indeed, the West Midlands. To take my noble friend’s example of the Crowne Plaza, every day brings a new rate according to how the market operates; hotels are quite used to flexing the prices they charge.
Regarding uncompetitiveness, I suppose that one should acknowledge the Government’s efforts on behalf of the tourist trade in allowing the pound to collapse in the wake of their disastrous policies on Brexit. There are many factors, but the point made by my noble friend Lord Griffiths is that we know there are arguments both for and against a hotel tax. I do not seek to run away from that; my idea was simply that we have a great opportunity to try this out, not so much as the thin end of the wedge but as a pilot, so that we get, for once, some evidence-based policy. It would have been a good opportunity. The finances of Birmingham City Council show clearly that it has a difficult balance to strike. It wanted to run the Games, so it has had to give guarantees around budgetary control and having enough money. But, frankly, given the state of its finances, I would be concerned if it had to take money from reserves; I am not sure whether by 2020 there will be many reserves left in the kitty. It would be wrong for money to be taken out of service provision in order to fund it.
I am grateful to the Minister for what he said about the Treasury and the Government being prepared to listen to any arguments that the city council puts. The city council is now undertaking some detailed work, and that takes us quite some steps forward.
We should end on a constructive note, whereby, as I hear it, if the city council comes up with a really good argument about this, it will be listened to sympathetically. That is probably as far as I can take this, so I beg leave to withdraw the amendment.
Amendment 2 withdrawn.