Chamber and committees

Good morning, minister. I want to discuss the presentation of the budget figures and how we compare like with like, and how we compare the budget before us with budgets from previous years, so that the committee and Parliament can scrutinise the figures.

The Government has talked about a 5 per cent increase in this year’s budget compared with the previous year’s budget. COSLA and local authorities have said that a better interpretation would be to compare the entire amount of money that local authorities received for this financial year with the amount for the coming financial year. Their interpretation is that, under that analysis, there has been a 0.2 per cent reduction in real terms. Why does the Government choose to compare a budget with another budget, rather than considering the in-year additions that the Government has made to support teacher pay and core pay?

Does the Government have an analysis or an interpretation? Last week, I asked the directors of finance for an understanding of core local government services and how the financial settlements over the years since 2013-14 have contributed to the services that are not ring fenced or are not mandatory. How have financial settlements impacted the core budget? Does the Government have an analysis of core local government spend?

Okay. I will take that on board when it comes to the presentation of figures.

We had directors of finance before us last week, and the director of finance from Argyll and Bute Council talked about the presentation of figures almost being alternative realities. Has there been any discussion with the Parliament and the Finance and Public Administration Committee, and with COSLA, on the development of the fiscal framework so as to come to a figure that is universally and commonly accepted as being the reality that is facing local government, which would allow both sides to come to an agreed position when it comes to this annual fight over figures?

Thank you.

I draw members’ attention to my entry in the register of members’ interests, which shows that I was previously the owner of a private rented property in the North Lanarkshire area.

To ask the Scottish Government what action it is taking to bring more homes back into use, in light of reports that the stock of empty homes is valued at an estimated £3.4 billion. (S6T-01731)

Councils in England seem to be ahead of where we are in Scotland with the powers that they have. Salford, Cumbria and Bolsover councils are all using enforced sale powers, which we do not have, to get indebted empty properties on to the market and sold. The adjudication powers that we have here are archaic, complex and very rarely used.

Does the minister not see that empty homes with inconsiderate owners should be forced on to the market? Will he declare a housing emergency and agree to work with Labour members so that enforced sale and rental powers can be included in the housing bill, to get empty homes back into use by families who are desperate for them?

We welcome the debate and support the bill’s general principles. The power for councils to implement visitor levies that will help to pay for services that support tourism is long overdue. For the best part of a decade, we have called for that here and in council chambers across the country.

I thank the clerks to the Local Government, Housing and Planning Committee and all the organisations that gave evidence on the issues that the prospect of the new levy raises. The concept is simple, but the detail quickly becomes complex, and many competing arguments have been heard. The complexity of the debate has underlined how key tourism is to Scotland’s economy. It is right that we all understand that the bill must achieve a balance between supporting sustainable tourism, promoting economic growth and funding investment in local services.

As with the council tax surcharge on second homes and the licensing scheme for short-term lets, there will be far more rationale for a visitor levy in some parts of the country than in others. The benefits to Edinburgh or the Highlands are clear, but, as I have mentioned in previous debates, not all of Scotland is visited equally. In my region, Lanarkshire has just nine hotels for every 100,000 people, while Lothian has 29 hotels for that number. Whether a tourist tax is a useful tool for all councils will be for them to determine. As the bill team has said, only four councils have expressed interest so far.

Many issues need to be addressed at stage 2. Ensuring that implementation of the powers is not overly onerous or impractical for businesses or local authorities is important. The committee came to the view that a levy would be unlikely to deter visitors significantly.

Throughout our recommendations, we emphasised again and again that robust monitoring and reviews were needed to be sure that the powers were being used in a transparent and accountable way, which would address the concerns that were expressed about the impact on businesses and visitor numbers and about how the funds would be spent.

The bill requires funds to be spent on

“developing, supporting or sustaining facilities ... for leisure purposes.”

Such hypothecation runs counter to the Verity house agreement, and the Convention of Scottish Local Authorities and councils have argued against ring fencing or excessive regulation. However, the tourism sector prefers greater prescription. It says that, if its clients and customers are to face additional charges, investment in the facilities and amenities that visitors and residents use should be prioritised.

Labour members support the clear sentiment that the revenues cannot be used to undermine or further cut budgets. Campaigns for a levy have long identified culture and leisure budgets that need to be propped up, but the Scottish Government must not legislate to force councils to plug gaps by spending funds from the levy. Aberdeen City and Shire Hotels Association said that the funds

“cannot be used to replace core services.”—[Official Report, Local Government, Housing and Planning Committee, 24 October 2023; c 41.]

The Association of Scotland’s Self-Caterers made it clear that, if that happened, the sector’s support would be lost completely. The committee’s view was that funds should be kept in separate accounts and should be considered additional to existing funding streams.

When we go beyond the initial idea of creating a new tax or levy, the complexities start to become obvious. Concern about whether the measure will be a tourist tax or a visitor levy was raised frequently in the evidence that the committee heard.

Mr Hoy emphasises my point: the levy cannot be a substitute for a reduction in the general revenue grant to local authorities and it cannot be about plugging a gap. Any revenue that is raised must be used to improve the tourism offer and the services that tourists appreciate and visit Scotland for. It cannot be used for back-filling existing funding gaps, and the Scottish Government should commit to reversing those before we even look at the levy. Without that, we will lose the sector’s confidence in the levy.

Many witnesses have said that the levy, in its simplest form, is an accommodation levy, with the chargeable event being when someone enters overnight accommodation for a stay. We have heard from the likes of Outer Hebrides Tourism, Visit Arran, Argyll and Bute Council and Highland Council about how that definition would not levy day trippers or those who are on cruise ships, driving camper vans or wild camping. One of the unintended consequences could be the incentivisation of more day trippers, and we should keep an eye on that.

A remaining fundamental issue of disagreement is whether the bill should dictate the charging framework for the levy, and whether the charge should be a percentage or a flat rate. Glasgow City Council and East Lothian Council have said that they prefer a flat rate, while West Lothian Council, South Lanarkshire Council and City of Edinburgh Council prefer a percentage. Edinburgh’s preference is informed by the need to take account of price fluctuations throughout the season and to progressively levy the broad range of accommodation, from budget to luxury.

FSB Scotland has said that its members were split on the differences, and the Convention of Scottish Local Authorities has called for there to be a general power for councils rather than the levy and the levy mechanism being defined in primary legislation. A tiered flat rate is also proposed as a progressive but simplified option that could be prescribed in the legislation.

There was also extensive concern about the complexity of implementation and collection of the levy, because the accommodation owner would be the person who is liable for collecting levies and paying the sum to councils. That could be very complex for small and micro businesses. The committee agreed that the burden should be kept to a minimum, and—

The number of empty homes is now the second highest on record, having jumped by 3,500 in the past year. The numbers are going in the wrong direction.

In October, the Government published a consultation finding that backed Labour’s proposal for an empty homes council tax escalator, which would increase the charges on empty homes for every year that they are empty, potentially raising £30 million for councils. When does the Government plan to lay regulations so that councils can increase the charges on the most problematic empty homes and end the farce of billions of pounds’ worth of homes lying empty while kids are stuck in temporary accommodation?

—we look forward to getting feedback from the expert group at stage 2.

We have proposed a similar levy in previous manifestos. We have identified that it could be a key part of the fiscal framework and for the democratic accountability of local authorities. For those reasons, we support the principles of the bill at stage 1.