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Local Commonwealth Games levy

Birmingham Commonwealth Games Bill [Lords] – in a Public Bill Committee at 9:25 am on 17th March 2020.

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“(1) The Secretary of State must make regulations to provide the powers necessary for the relevant local authorities to levy charges on hotel occupancy and short-term rentals in their respective areas for the duration of the Birmingham Commonwealth Games in the United Kingdom.

(2) The regulations must define ‘relevant local authorities’ to include the local authorities for each Games location.”—

This new clause would provide for money to be raised during the Games by the relevant local authorities charging a levy on hotel occupancy and short term rentals.

Brought up, and read the First time.

Photo of Catherine West Catherine West Labour, Hornsey and Wood Green

I beg to move, That the clause be read a Second time.

You do look splendid in your green today, Ms McDonagh. I wish all Committee members a happy St Patrick’s day. I want to speak to all four new clauses at the same time. Am I permitted to do that?

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

I am advised that they need to be taken individually.

Photo of Catherine West Catherine West Labour, Hornsey and Wood Green

Thank you for that clarification.

Given that we have sped through all the clauses in the Bill so quickly, it will come as no surprise that the Opposition are delighted to welcome the prospect of the Commonwealth games in 2022. With the big question mark over the Olympic games this morning, let us hope that, by 2022, we can all be enjoying the Commonwealth games. We are all thinking about Japan and the international organising committee in these tough times.

I welcome the fact that the Government have looked at the broad question of a carbon-neutral games, which was the subject of my first question to the Minister in departmental questions the week before last, but I want to highlight two issues on the environment.

The first is the question of the bus provider, National Express. On our visit to Birmingham last week, I was concerned to learn that it is considering keeping diesel. Given that we are being so accommodating on the Bill, can the Minister touch on the conversations the Department is having with the provider around the carbon-neutral games? That is not directly relevant to my new clause, but I wanted to introduce it, because while it would be easy to see this as a national project—indeed, it is—there are also many things that could come out of it for the region. I am concerned that the fleet will still be diesel, when it could be electric, given the two-year run-in to the games. The Minister may not be able to respond now, but if he would like to write to me later, I would be grateful for his views on what progress is being made towards a carbon-neutral games.

Secondly, there has been a lot of debate about the environment as it relates to the Perry Barr flyover, which my hon. Friend Preet Kaur Gill would be keen for us to mention in Committee. Even though that relates to the Lords element of proceedings, I know the Minister has listened carefully to the consideration of the issues involved. Although this is mainly a matter for local government because it pertains to highways, I still believe it is important to put it on record.

New clause 1 was spoken to on Second Reading by my hon. Friend the Member for Birmingham, Edgbaston, who of course has a massive interest in the Commonwealth games because there is going to be cricket there—we are all very pleased about that. She and others in the region have looked on a cross-party basis at the question of a hotel levy, and are encouraging the Government to seriously consider such a levy so that the region can have that little bit of extra funding. That is the question the new clause deals with, and I would be grateful if we could debate it now, so that we can hear what the Government’s prima facie view is.

We on the Opposition Benches accept that this is a new idea. A £1 a night per room levy was not, for example, applied to the Olympic games in Stratford, so the new clause seeks to introduce something new. However, we are also aware that. with a regional games such as this, there is an argument for a hotel levy to be spent exclusively in the region, in order to help tourism and to help the region in general pay for what is going to be quite an expensive project. I am sure that taxpayers in Birmingham and the midlands would want us to consider affordability at this stage of the Bill, so would the Minister enlighten us as to the Government’s thinking about a hotel levy?

Photo of Nigel Huddleston Nigel Huddleston Assistant Whip, The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I very much appreciate the comments made by the hon. Lady, and the tone that she and the Opposition parties have adopted towards the Bill to date. I completely agree with her earlier comment that, in these difficult times, the games are something we can all look forward to, and I appreciate the speed with which we have gone through the Bill in Committee so far. I will address some of her comments.

I am aware of the issues relating to the A34 highway scheme. I know there are strong views on it, both locally and in the House, and that local residents have petitioned the council and raised the prospect of a judicial review. Although this is indeed a decision for Birmingham City Council, as the authority responsible for the local road network and the wider regeneration of the Perry Barr area, those concerns need to be taken seriously, and I will be happy to continue my dialogue with the hon. Member for Birmingham, Perry Barr about that.

Regarding the Sprint routes, I understand that a decision has recently been taken to use zero-emission vehicles for the operation of Sprint, which in turn has increased the timescales for delivering the scheme because of the additional infrastructure requirements. The broader issue of climate change and sustainability is one that we all take seriously, as does the organising committee, and there is a real commitment to ensuring that sustainability is a key pillar of the planning and delivery of the games. The organising committee has signed up to the UN’s sports for climate action framework, which aims to combat climate change and raise global awareness and action. That is a first for the Commonwealth games, and represents a key commitment to work towards global climate change goals. The organising committee is also in the process of developing its sustainability strategy for the games, and has convened a local sustainability forum that is supported by many bodies, Government Departments and agencies, including the Department for Environment, Food and Rural Affairs and the Environment Agency.

I appreciate the hon. Lady’s comments relating to the proposals for a hotel tax, which is a hotly debated issue that has already been discussed in great detail during the Bill’s previous stages. There is constant dialogue between the Government and the council on all aspects of the games, including the budget. Birmingham City Council is absolutely committed to meeting its financial contribution to the games’ budget, and has published a plan for how it will do so without the need for a hotel tax. In any case, this Bill is not necessarily the appropriate vehicle, as it is not a money Bill and a statutory hotel tax is not necessary for the council to meet its share of the cost of the games, although I appreciate that the concept is much debated.

If such a tax were introduced for the duration of the games, which run from 27 July to 7 August 2022, the proceeds gained by participating local authorities are likely to be negligible, and considerably lower in value than Birmingham City Council’s own figures, which, albeit still small, suggest that a longer-term pilot could generate between £4.5 million and £5 million per annum.

Local authorities already have a range of revenue-raising and fundraising powers to support them in meeting the financial contributions associated with such events—for example, through taxes at a local level, such as precepts and business rates. Hon. Members will also know that decisions on taxation are ultimately for Her Majesty’s Treasury. Any case put forward to HMT for a hotel tax would need to be fully costed, including balancing additional burdens on businesses.

We should be careful to consider this in the round: while the UK is one of the few nations not to charge a tourism tax, full VAT is already charged on hotel stays, which is not the case in much of Europe. We would not want to discourage people from staying overnight in Birmingham and the west midlands at games time, when the region will surely want to capitalise on the large increases in visitor numbers.

All games partners are working together to ensure that we deliver a fantastic and memorable games. To that end, the Government will work closely with Birmingham City Council to ensure that it can deliver its financial contributions. I understand that this debate will go on—it is not something we can sort out in this Bill. Accordingly, for the reasons I have just set out, I ask the hon. Member for Hornsey and Wood Green to withdraw the new clause.

Photo of Catherine West Catherine West Labour, Hornsey and Wood Green 9:45 am, 17th March 2020

I am very pleased to respond to the Minister’s remarks. First, I welcome the fact that having a carbon-neutral games is a key value. I will push him later on by letter on the question of the provider and what efforts are being made to introduce the least polluting buses. To respond on the question of the Perry Barr flyover, the current cost is quite high for a local authority. I would seek a reassurance that, if the local authority is unable to cover that cost, the Government are able to step in. It does seem expensive, given residents feel they are getting back from the games, and there is a lot of opposition at the moment.

Moving on to the principle of new clause 1—the hotel levy—my hon. Friend the Member for Birmingham, Edgbaston and other local MPs in the west midlands and Birmingham city area make a valid point. While full VAT is charged on hotel stays, the Minister will agree that the Treasury is not famous for ensuring there is a trickle-down effect in regions. Will he have his officers look fully at whether there could be some kind of agreement whereby some of the VAT is more transparently redirected to the region, to offset the cost of putting the games on at a local level? Would he care to respond to those issues before we move on?

Photo of Nigel Huddleston Nigel Huddleston Assistant Whip, The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I am happy to continue the dialogue, and I commit to responding to the hon. Lady’s letter and the questions she raised.

Regarding any further location of taxes and VAT, I do not think we really have a mechanism for that in the UK. On the point about fundraising and ensuring that Birmingham and the west midlands receive adequate financial support to ensure that the games are successful—we are talking about more than £750 million of Government money going into the games—I will happily work with the hon. Lady to ensure she is comfortable that the west midlands are indeed getting a substantial proportion of Government expenditure for that.[Official Report, 19 March 2020, Vol. 673 c. 11MC.] I am happy to continue the dialogue with her.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Does the shadow Minister want to push the new clause to a vote or to withdraw it?

Photo of Catherine West Catherine West Labour, Hornsey and Wood Green

I am keen not to push it to a vote at this stage, but I hold on to the right to raise it later in the passage of the Bill. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.