Chamber and committees

Separate legislation would be needed if we chose to take those forward.

We have been through a consultation process on the cruise ship levy that is being considered and analysed as we speak. Clearly, with an election coming up, that would fall into the post-election period. Any future Government will look at the consultation and its results and decide how it wants to proceed.

I would be happy to take evidence on that and consider it. However, to go back to the point that we made earlier about proportionality in the scheme, if some people are paying £300 or £400 a night for a hotel room—or even more—where would that national cap be set? We need to be cognisant of the fact that a national cap could, to some extent, militate against proportionality on very expensive accommodation. We are interested to hear views on a cap, but it is more complicated than the assumption that that would keep prices down for those in lower-priced accommodation.

Fiona, do you want to say anything?

At the core of the bill is the ability for local authorities to operate a tiered flat-rate system instead of, or alongside, a percentage-based system. That has the benefit of increasing flexibility and simplicity. Businesses were calling out for local authorities to have the ability to implement a flat-rate system where they felt it was the right thing to do. As I say, that is the core change that we are making. It gives local authorities more scope in designing the levy, but it also allows businesses to engage with local authorities through the consultation and make the case for a fixed-rate system where they feel it is more appropriate.

Sorry, are you asking about the three sets of regulations?

Absolutely. It will depend on local circumstances, because the visitor economy is different throughout the country. If you are a business, you are typically operating in one part of the country—you are a chain hotel, a campsite, a bed and breakfast or whatever. From your perspective, the system is simple in the sense that what affects you is within certain bounds and is typically likely to be either one flat rate or a percentage, regardless of what is happening in other parts of the visitor economy locally.

From a visitor’s perspective, anyone who has travelled in Europe or further afield will be used to paying a levy. I do not think that I have ever got exercised about the fact that, when I go to Paris, the levy is different from what it is in Amsterdam. Frankly, it is not something that most visitors would even think about, never mind get confused about. From that perspective, the bill offers changes, such as more flexibility for local authorities. It also allows simpler systems to be operated for businesses in certain tiers of the economy, where appropriate.

You make an important point. There is a common misunderstanding about the nature of a percentage system as compared with a flat-rate, or tiered flat-rate, system. It is important to recognise that a tiered flat-rate system can be designed in such a way that it is more progressive than a percentage system. A percentage system involves the visitor being charged a percentage of what they pay for the accommodation, but it is perfectly possible to design a tiered system that, in effect, charges a higher percentage on more expensive stays and a lower percentage on cheaper stays. Therefore, the idea that a percentage system is inherently more progressive is a misunderstanding.

With a percentage system, an operator who runs a small bed and breakfast might have different rates for different rooms at different times of the week and at different times of the season, on each of which they will have to calculate a percentage. They will also have to take out the non-accommodation parts of that. With the best will in the world, it is hard to see how that would not be subjective, given the cost structures, charging mechanisms and so on. There is also the issue of third-party sales. That takes us into a complicated world of multiple variables.

A small operator who has two, three or four rooms will have a million other things to worry about without having to get their head round all those calculations. Having a fixed rate for any given type of accommodation involves the operator multiplying how many rooms were filled by the rate to get the number. A fixed-rate system involves a much easier process.

We are trying to change as little as possible, because the more we touch, the more we risk breaking something or creating unintended consequences. It would potentially become a bit complicated to put in place a scenario where we referred to inflation rates and said, “Based on this scenario, you can do this, and based on that scenario, you can do that.” We want to avoid a situation where automatic uprating leads us into a world where we get some strange and non-rounded numbers being used, because that would not be helpful. We are giving some thought to what that should look like.

I imagine that, in the real world, local authorities will look at the matter and uprate their charges every three or four years, as they do with other charges in their control. We are open to a simple mechanism that allows that to be a straightforward process that they can implement. We need to allow some running time for businesses to be able to change systems and understand what is coming down the track, but it absolutely would not make sense for that to be an 18-month period, which would take us from one financial year into the next one and the one after that.

I am delving into the technicalities here, but officials will keep me right. The bill will allow a local authority to have different charging approaches in different parts of the local authority area or for different types of accommodation, but it would not allow a situation in which the same accommodation unit was charged on both bases at the same time.