Finance Committee

If we move on to item 4. Item 4 is papers to note, and are we okay to note the papers? Yes, I see agreement there.

So, we'll move on, therefore, to our first substantive item of the day. The focus for our day today is the Visitor Accommodation (Register and Levy) Etc. (Wales) Bill. This is evidence session 4, and it's with the Welsh Revenue Authority, and I'd like to welcome our witnesses. Would you like to introduce yourselves for the record, please?

Sure. Thank you very much for the invitation to have an opportunity to share some information with everyone this morning. I'm Dyfed Alsop, chief executive of the Welsh Revenue Authority.

Dyfed Alsop, chief exec of Welsh Revenue Authority. Rebecca.

I'm Rebecca Godfrey.

Rebecca Godfrey, chief operating officer, Welsh Revenue Authority.

Croeso.

Anthony Pritchard. I'm the chief digital officer for Welsh Revenue Authority.

Croeso cynnes. A warm welcome to you to this session. We've got a lot of ground to cover, so brevity is the word of the day today, I think. So, I wanted to start by exploring the WRA's functions outlined in the Bill, and I'll bring in Members on that. But I'd like to start with understanding what your engagement has been with Welsh Government during the development of the Bill, and how did you work together to ensure that the proposed responsibilities, as set out in the Bill, are achievable?

I think the simplest way of responding to that is to say that it's been a really close and healthy relationship. So, we, from the beginning, from the very inception of the idea of the Bill, have had conversations with Welsh Government and have continued to work with them to think through what the practical consequences are of the way the legislation is structured et cetera. So, it's been a very open partnership, basically.

And in those conversations, have you been able to influence changes to some of the things that would have been problematic for you, but have been changed?

Yes. It's such an intense, iterative process that sometimes you can't quite recall whose idea it was to change something or other. But I think suffice it to say that we are pleased with where the Bill has got to now in terms of the operability of it, and that is definitely enhanced by having that relationship and that ability to talk through the development stage, yes.

You're responsible for LTT and LDT—land transaction tax and landfill disposals tax—and you administer those taxes on behalf of the Welsh Government. What have you been able to learn from those experiences in developing the process to collect and manage the visitor levy, and where are the challenges, I suppose, in going from a fairly narrow body of people that you're dealing with to a potentially huge number of people that you're dealing with?

Yes. Thank you. So, I suppose the thing that we have most learned from our experience of seven years of collecting the devolved taxes is we feel that the approach that we have developed to working closely with taxpayers and what we call our approach, a Welsh way of doing things, has been really successful: so, an assumption of people wanting to do the right thing, working very closely with agents and taxpayers to ensure that they're educated as much as they can be upfront, using different means of contacting people, whether that be webinars or going out to local businesses, to understand exactly what their needs are. That kind of approach to the way we collect tax has been successful, and we've developed really good partnership relationships with taxpayers and representative bodies to date. So, my feeling of it is that a new tax—and you're right to say that it has a different tax base, if you like—. We feel confident in using that same basic understanding of that we start from a high-trust position, we will want to work closely with people, we'll not be emphasising catching people out after the fact, but we'll be emphasising making sure that we've helped people to get it right the first time, make it easy for people to do the right thing, make it difficult for them not to. Those sorts of things, those sorts of underlying principles, have served us really, really well, and I think there's no reason to believe that those underlying principles won't work as well with what we've got in front of us.

Clearly, there are things for us to think through in terms of designing the new systems; I suspect we'll get on to that a little bit further as well. And yes, we're very conscious of the fact that it's a set of taxpayers that perhaps we haven't encountered before, who haven't encountered us before, but there's quite a lot of uncertainty still at this stage to be precise in terms of exactly how we're going to go about doing that, but I think suffice it to say that we envisage working very closely, being available and designing a service that's designed from the perspective of what the user needs in order to be able to pay the right amount of tax at the right time, make it easy for them. That's the underlying principle. Is there anything I've missed from that?

No, I don't think so.

So, with having—. Your main clients currently—and correct me if I'm wrong—are, potentially, solicitors, accountants, that sort of professional body of people. Your clients could be very different and of a much broader scale, and potentially the way that you engage with them is going to have to be different, because you're going to have to potentially deal with somebody who has a very small aspect, up to, potentially, hotels that have got multiple chain hotels and that sort of thing. How will that work, and how—? Maybe from a digital aspect, will there be things—? Are you envisaging there being a paper-based option as well for people who aren't online in different parts of the country, that sort of aspect? Is this something you could elaborate on a little bit more, about some of the challenge with that?

Sure. I'll perhaps leave it to Anthony or Rebecca to cover that specific point, but, if I just draw on experience from what we've been doing on LTT, one of the things about that is that, yes, it's true that we work predominantly in terms of the initial payment with solicitors. But, actually, one of the things that we didn't know about when we started out was to what degree were the transactions we were getting higher rate transactions that were then going to want to be reclaimed. What we found over time is that, increasingly, the reclaim proportion, people don't have to use their solicitor to do that; they can just deal with us directly. So, this is just individuals dealing with sometimes relatively small amounts of money that they're claiming back, and, actually, increasingly, what we're finding is that agents themselves are saying to people, 'Just deal with the WRA direct, because it's really simple to do.' I think we feel we've already got quite a good reputation and a good handle on how to make it really straightforward for an individual who's not used to doing this. So, in that case, for example, of a refund, they've never dealt with us before and it's a one-off thing, so we are actually more perhaps aware of that sort of individual person just dealing with us for the first time than you might expect at first blush. But is there anything I've missed in terms of what we anticipate from the digital side, or—?

So, obviously, in developing the visitor levy registration service, user research is really at the heart of what we want to do, and we've already done that; we've already done quite a lot of user research, and it does actually bear out what you're saying about the really broad numbers of accommodation providers involved, from very small numbers of people maybe doing it for a few weekends a year to hotel chains. So, we have to consider that as part of the digital offering, and I think that we'll generally try to produce a very simple system so that it is free for all. I think there'll be probably exceptions for much larger organisations like hotel chains; they may want to operate in a certain way, and it's worth handling them slightly differently. But, certainly, for the low-volume users, the byword for us is to keep it very simple and easy, and combining registration and the visitor levy will do that for us. But, really, it's feedback from the users that we'll use to drive this forward.

The other big client in all of this will be local authorities, the ones that choose to implement the levy. So, how's your communication been with those local authorities regarding the proposals, and what preparations have you started to make with some of those who are looking at how this would look and what that would look like?

Anthony, do you want to come in on that one?

Yes, sure. So, we have been engaging extensively with the local authorities in collaboration with the Welsh Treasury, who've been doing that as part of the exercise for developing the policy. We are developing a service level agreement that will be in place, so that the local authorities understand what our obligations are in running the tax, and we’re working with them to develop that SLA, because, obviously, we don’t want to develop that in isolation. We’re also developing a stakeholder team, and their role is to go out and engage with local authorities, support them in the consultation and provide information about what the tax means for them, what it means for accommodation providers, what it means for visitors, so that we can provide a single point of clarity, really, as to what each local authority is sort of obliging themselves to if they opt in to the visitors levy.

So, we’re hopefully going to provide a lot of support during the consultation process, and then, obviously, during the administration of the levy, we’ll be sharing information about the accommodation providers in their area as well. Also, they’ll have access to the register as well, so they’ll have an understanding of what’s going on in their area.

And finally from me—I’ll bring Mike Hedges in after this—you touched on the fact that this is in two parts. So, you’ve got the levy itself, and then you’ve got the register. And, from the documentation, the indication is that it will be upon yourselves to manage that—compile it in the first place, and manage it. What challenges are there, and how do you foresee that happening? Because, regardless of whether the levy is going to be applied in any local authority, you’d have to register all the visitor accommodation providers. So, what’s the challenge there, and how are you gearing up to look at that challenge?

Do you mind if I say, ‘Actually, what’s the opportunity?’, to some degree, actually?

Of course, yes.

Just because I think it’s a really—. From our perspective—. And I’m sure Anthony knows because he’s been speaking more to the industry, but the idea that you go to one place to do the registration, and for the levy, you’re already there, kind of thing, I think that’s a positive thing. And I think it’s welcomed by the industry, from what I understand, in terms of being able to do it in one place. So, I think that’s a real opportunity for us.

From our perspective, actually having those data available of who’s here, registered already, in terms of then being able to make sure that the correct tax is being paid is really helpful. So, to some degree, it’s kind of work that we would need to make sure is happening anyway. So, getting us to do it is sort of like, ‘Well, we'd sort of want to make sure it was happening anyway’, if you see what I mean. So, just from that sort of perspective, we’re quite pleased, in a way, that those two things are coming together, because at least it means that we can make sure that it happens as effectively as possible.

In terms of the challenges of doing that, or the roll-out, perhaps, I don’t know whether you want to talk a bit about that, Anthony.

Yes. So, obviously, the roll-out of the register and this levy may be different. Initially, it’s going to be the same thing, which I think will be really helpful. I think one of the benefits of this is that we don’t know how large the community of accommodation providers is in Wales. It’s a bit of an unknown, and that creates variability for the registration service. But as we’ll have an opportunity to stagger the roll-out of registration, it will make the administration of that easy.

But having the visitor levy registration together should create a much, much simpler experience for accommodation providers, and it will make the visitor levy very simple, because all of the information required for the return is effectively within the registration. We’re only obliging them to look at that once rather than, potentially, twice a year, if you did it separately.

So, filling out the forms, it will be, effectively, prepopulated in very simple terms, because it’s already there.

Yes.

Thank you very much. I'll bring Mike Hedges in at this point. If you could unmute Mike for me. Thank you. There we are, Mike.

Diolch, Cadeirydd. What I’d start by saying is that a lot of what we’ve heard is as if we’re the first place in the world to do it. As seen from the Welsh Government consultation summary responses, there is the potential for legislation to place an administrative burden on smaller accommodation providers. What consideration are you giving to developing processes to support providers to register? And how does it work in the rest of the world, because I can’t remember the last time I went on holiday where I didn’t pay a holiday levy?

My apologies, I heard the last bit of it, but I missed your middle bit. Sorry, I couldn’t quite hear what you said. Would you mind just—

Maybe the sound wasn’t loud enough, or I’m not talking loudly enough. A theme from the Welsh Government’s consultation summary of responses is the potential for the legislation to place an administrative burden on smaller accommodation providers. Why would it do that here, when it doesn't do that in the rest of the world? But what consideration are you giving to developing processes to support providers to register?

Okay, yes, thank you. Sorry, apologies. So, I don't think I can comment on some of that in terms of—. I'm sure it's not the first in the world, because we went out, actually, to visit colleagues in the Catalan administration, which runs a visitor levy in Catalonia, so, they definitely do it, and they give the money from that to local authorities in part as well, so there's—

I think we had evidence that said that this might be the fiftieth visitor levy, or in that order anyway. Sorry.

Yes, yes, indeed. And in fact, from that experience of speaking to the Catalans, one of the things that we took away from that very strongly was that having two registers caused a lot of administrative burden for businesses, because they have two—they have a tourism register and then another one for paying tax. So, having one, they were very jealous of our legislation, which is about to go through, on the grounds that it will make life a lot easier.

In terms of making it simple for—. Anthony, is there anything you want to add in terms of making it simple for smaller businesses?

It's just about what I said earlier about using the user research so that we make it as simple as possible for them to apply, and also reusing other UK Government services, like One Login, so the same log-in that they'll use for HMRC, they can use for our service. So, it's those sorts of things. So, it's nice and simple for them to actually remember where their account is.

Once the account is set up, as in their business account and the properties that they use, then the maintenance of it is very simple: it's just notifying us of any changes, and so, they don't have to re-enter things year after year. It'll just be, 'Do it once and just notify us if there are any changes.' The simplicity of this is the key word. And obviously, as part of our approach, we'll do the user research to ensure that, for the smaller accommodation providers, we understand what information they have, we understand what their challenges are, and the system is designed around that.

I mean, you're experienced in collecting money, with land transaction tax and the landfill disposals tax, for example. Will the processes be very similar to that for collecting the levy?

Broadly speaking, I think there are things to learn from both of those taxes in a way, because there are similarities from an administrative perspective with regard to LDT and with regard to LTT. So, on the LDT side, obviously, there are fewer taxpayers than there will be with the visitor levy, clearly, but it's through an agent, if you like, so, the accommodation provider is collecting money from somebody else and then passing it on. So, that sort of thing is a bit similar to the way LDT operates. And in other respects, it's more like LTT, because it's more of a traditional larger number of transaction volumes and all that kind of thing. So, yes, I think we will learn from the experience we've got, but we're not—. I guess, we're not underplaying the fact that it's also new territory for us and it's a new thing that we need to learn.

Could I just perhaps offer something? I'm not sure if we'll get to this at some point, but a thought that has gone through our minds: clearly, we don't know yet which local authorities are going to choose to sign up to the visitor levy, but it seems that, if in the event that it's local authorities in areas that are more proportionally Welsh-speaking, let's say, that would mean that we're likely to have a higher proportion of Welsh-speaking taxpayers who want to speak to us than we do perhaps with our existing taxes. So, obviously, we don't know what that looks like yet, but we’re already starting to think those things through and say, 'Okay, so, hang on a second, what does that mean for the way that we make sure that we've got an adequate supply of people who speak Welsh to provide that service?'

For what it's worth, we just did a recruitment campaign in the last couple of weeks for a Welsh-essential role, which astonished me. Since I've been doing this role over the last seven years, I've never seen so many applicants for Welsh-essential roles. So, I think we feel really quite confident about the fact that we are at least trying to anticipate and think about what comes next, to make it as simple as possible, and we’re in a better position than we were when we started, when nobody knew who we were at all, to actually get the right sort of people in to cover user needs, basically.

Everybody I know who is working for you actually speaks Welsh fluently, so I'm sure you've got an awful lot of Welsh speakers there.

The final bit is: the Bill permits visitor accommodation providers to allow third parties to make returns and pay the levy on their behalf. We know a lot of holiday providers use online companies to do their bookings for them. Are you able to make arrangements for them to also pay you, as some of them collect the money upfront, where they could actually pay you at the same time? Would that be a problem?

I can answer that one, if you like. So, yes, from the user research we’ve done already, we know that many accommodation providers use friends, accountants, management organisations to do a lot of their administration on their behalf, and I don’t think that the visitor levy would be any different, so we have to build into the system to accommodate third parties submitting on behalf of people.

The question about whether we could get management companies or online travel agents to submit the return: I don’t think submitting the return is very practical. I think the nature of that is very much that accommodation providers have multiple platforms that they book with, so they might have bookings through Airbnb, bookings through Booking.com and West Wales Holiday Cottages, and, obviously, not all three can submit one return. So, there could be things where they send information to us that is held in draft, potentially, to do that, but, when we’ve talked initially with the online travel agents, they’re not really open to that at the moment. I think there are facilities within the legislation for us to do that. I think that’s probably something that we will certainly investigate over time and if there is an appetite for it, we’ll certainly look at doing that.

I’m just speaking from personal experience. I'm going to north Wales this weekend, and I’ve gone through Booking.com and they’ve taken my money now and I assume that if I’m paying a levy, they’ve taken the levy as part of that booking.

Yes, they would do, and that gets passed through to the management agency and then to the accommodation provider. I think one of the challenges is that because the amount you pay, not all of it goes to the accommodation provider, so it’s got to be really clear about who is actually paying this levy, whether it’s the online travel agent or whether it’s the actual accommodation provider and how that fee is passed on.

I won't say any more, I just think we’ve overcomplicated something that is really simple and it’s done in the rest of the world. I’ll end there, Chair.

Thank you very much. Based on that, before I bring Sam in after this—it’s probably your expertise here, Anthony; it’s more of the cybersecurity aspect—the more people you’ve got accessing data or inputting data, the greater the potential for some cybersecurity issues, and in the world that we live in, it’s getting more and more prevalent, and we’re seeing with other bodies that we speak to that they have concerns and are boosting up that side. What aspect of that are you working on to make sure that the system is going to be robust enough to be able to deal with some of those issues?

So, obviously, we work to all the Government standards for security, as we do with our existing taxes, to make sure that our perimeter of security is as secure as it can be, but it’s only as strong as the users. So, one of the things that we will be doing as part of that is that all of the accommodation providers will have to make sure that they have multifactor authentication, so that when they are logging in, there is another method for them to verify who they are, and that tends to make it as secure as possible.

Also, back when we designed the system, we designed it so that third parties and other people can use it, because what people tend to do is they tend to share passwords, so what we must do is create a system that allows them to easily create different users, so that they don’t share passwords, and therefore make it as secure as possible. Certainly, we can put in quite a lot of protection for them, as in this system will be secure, but as I said, if they share their passwords with other people, there’s very little we can do to stop that. I think that multifactor authentication stops that, and we’ve already implemented that with LTT; we’ve found that quite successful. So, that's our general approach and it seems to work quite well.

Okay, thank you. Sam.

Thanks, Chair. Good morning and thanks for taking the time to be with us today. Just going back to those previous questions about your role currently with LTT and LDT, and now with this visitor levy, just help me understand the difference in scale of the number of clients that you currently deal with versus the number of clients you may be dealing with, taking this on. What does that scale look like?

Chair, we can talk about—it's all caveated with we don't know how many local authorities are going to sign up, so it's a bit tricky to know that at the moment. It's about 60,000 transactions a year at the moment, is that right?

Yes. Within land transaction tax, there are around 60,000 transactions. There are around about 5,000 registered users, but there are probably between 500 and 1,000 active users, as in regular users. Those 5,000 are quite ad hoc. The visitor levy is going be different. Obviously, as Dyfed said, it depends on the number of local authorities that sign up, but it could be anything from 10,000 to 30,000, potentially—well, I say 'users', but there are differences between accommodation providers and the number of users each accommodation provider has, so there's that variable. Transaction-wise, we could be into the high ten thousands, maybe hundreds of thousands of transactions, but the difference with LTT is it's lots of low-value transactions, as opposed to high value.

The other variable here is the nature of the transactions are going to be different. So, LTT is very consistent throughout the year, there is very little seasonal peak, whereas visitor levy will be annual and quarterly returns, so we will have peak periods where—. The return periods will be April, after the end of the financial year, and then July, October and January will be the quarters that they will be submitted in. We still don't have a sense of how that's going to be split across the accommodation providers. There's a de minimis about when they will submit a return, whether it's quarterly or annually, and that will dictate it, hence why the numbers for registration and the cost as well are variable, because we don't know how that's going to impact us and the take-up of registration and visitor levy—how that quarterly and annual return cycle will work.

Are you confident, as an organisation, to be able to scale up in time to deal with that, because, as you say, currently, perhaps there are regularly between 500 and 1,000 clients. That could increase, as you say, with 16,500 accommodation providers in Wales, and there may not always be a complete correlation of issues between the number and volumes, because I guess scale helps with some of this, but your ability to scale up to handle this as an organisation—are you confident that you can do that?

In legislation, if a local authority is going to opt in, they have to give us 12 months' notice, so that will give us a lead-in time to make sure that we can scale up appropriately so that we neither have too many staff with local authorities not signing up, or not enough staff with more signing up. So, yes, I think we've got plenty of time.

Can I just come in on that scaling up? Was there any consideration given in your discussions with the Government to do a rolling monthly return for people, rather than quarterly or biannually, because that would try and smooth out those peaks and troughs? Just from an operational point of view, creating peaks creates pressure, whereas if you smooth it out, it might be easier to handle from an administration point of view.

I have a sense, I don't know for certain, that from the consultation the feedback was that some people didn't want to leave it annually. I don't think there was much of an appetite for monthly, but certainly quarterly seemed like—. I think it was the lining, it was things like value added tax returns.

Okay. It was just interesting to try and understand that. Thank you, Sam.

To the point about volume, to the extent that, as Anthony has been talking about, we're very focused on making the service as simple as possible. If we can make it simple, digital and they don't need to speak to us, that will help the issue that you're talking about. So, we're concerned, as much as accommodation providers are, to make it really easy for them to do this so that we don't create lots of traffic and lots of requirement for resource.

I guess also within that is understanding that a number of these types of clients may, as it were, be more ad hoc in terms of provision, may be less professional in terms of digital access and being used to the types of returns that may be required here. And I guess it's ensuring that there's capacity for the more hands-on support as well, I suppose, rather than just assume that people will be going for that digital access.

So, I know that you opened up, rightly, Dyfed, by talking about the foundation of this being one of trust and assuming that people will be doing the right thing, but, of course, there will be people who won't. I wonder how you anticipate dealing with non-compliance from both a registration and a payment-of-levy perspective.

Well, as you say, our approach is about supporting people to get it right first time. And, of course, it's going to be new for us, it's going to be new for everybody, so we will work with them to provide additional support as they need to register or file their returns. But as you say, of course, as in our existing taxes, as in any tax or registration system, there are times when people will get it wrong for a variety of reasons. So, we'll take a risk-based approach to managing that non-compliance where people make errors or seek to deliberately pay less than they should or avoid registration. We'll use data and intelligence from a wide range of sources, the same way as we do now, obviously different sources, to identify the most significant areas of non-compliance or tax risk, and we'll direct our resources towards those biggest risks.

One of the things specifically, I think, for registration that will help us with potential non-compliance is the fact that the register is going to be published, so it will be very clear who, in each local authority area, has signed up and potentially who hasn't. We also have good relationships with local authorities and we'll look to build on them and use their local knowledge and expertise to help us in that non-compliance.

Thanks for that. I suspect that you, perhaps, aren't going to be the ones on the ground with a clipboard, wandering around a campsite to count the number of tenants. So, who will be, at times—? I guess there may be requirements for actually being on the ground and physically seeing some of these things, whether it's an ad hoc audit or a way of gaining confidence that the returns you're seeing are at least within a fair parameter of what's happening in reality? So, who will practically be doing some of that work, do you think?

That is some of the finer detail that we haven't got to working through, yet. We're focusing at the moment on the registration system, and I think, from later this year—I think it's October—we're going to start to focus on some of that work, because that's kind of a later issue. So, we're doing the first things we need to do first. But, yes, absolutely, those are very much on our mind and things that we definitely need to work through.

Thanks. Perhaps another question around this non-compliance, then. Of course, the clients and transactions that you currently deal with will very, very rarely be cash based—they'll usually be digital, of some sort. There'll be significant, or at least a number of transactions with this client base, where it will be cash based. Have you got any particular ways of mitigating the risk of loss of revenue as a result of cash being part of the fact here versus what you currently have to handle?

It's the same.

Yes, it's kind of the same answer. We've done user research and actually, a lot of people have said, 'We don't actually deal with cash a lot', so we haven't a massive sway towards it being more cash than not, but our user research obviously has been—we've still got more to do. So, we will be looking at how we can deal with some of these problems; we've got a whole list of things that we need to work through as we get through the nitty-gritty, I suppose, of the actual compliance activity—what that needs to look like.

Yes, sure. Okay, Chair.

Just on that compliance aspect, within the legislation that set you up as an organisation, have you got the powers that you need to be able to, as Sam says, go around with a clipboard if you need to, or is there something that needs to be put into this legislation to be able to give you those powers in relation to this tax?

So, I think the things that we need to have to do that for this legislation are in the Bill as it stands. We would be able to do the things we need to do if the Bill gets passed as is.

Okay, thank you.

Thanks, Chair. And then coming to more specific points around particular sections of the Bill, so looking at paragraph 5 of the Schedule to the Bill, it inserts a new permitted disclosure of protected taxpayer information for the purposes of your functions. Can you explain the circumstances in which disclosure may need to occur in accordance with this provision?

So, I guess, the first thing I just want to point out is—it does say the words—it 'permits' us to disclose it when we need to, rather than 'requires' us to disclose it. So, we would only ever disclose PTI when there's a real need to do so and there's no other way. We take that protection of taxpayer information very seriously. So, I guess the way that—. When we had the legislation for our initial taxes, we didn't really know the circumstances when we'd be using some of these things and how we'd need to use protected taxpayer information. There was quite a specific list that was put into the original legislation, and it can be quite restrictive in allowing us to carry out our functions. So, some kind of broad examples—disclosures that we might need to make as part of our enforcement and compliance activities, disclosures to other bodies to assist us in carrying out our functions or disclosures to specific taxpayers for issues relating to their own tax affairs. So, some of those things are areas where we found the legislation, as is, quite restrictive. And I suppose, just like delivering a new service and developing as you go, iterating and learning, we've just found that if we could broaden out some of that it would make our ability to do our jobs much easier. Like I say, we wouldn't be using this ad hoc to share taxpayer information. We do take it very seriously and we would only disclose it when it's absolutely essential to do so to carry out our functions.

Thanks. Do you feel that you have enough guidance, clarity or, when necessary, regulation around that to ensure that you're not going to be unnecessarily sharing that information?

I do, and I think that one of the main things that we’ve got in the WRA is a really good culture around information security. And the seriousness with which the operational staff and all of our staff deal with protected taxpayer information is very, very strong and I feel that that is almost better than having rules or regulations in some way. But people, genuinely, are really careful around it, so yes.

Just on that point, is there a tension, then, between that principle and the way that you work and publishing the register, in that there will be details published on a register that is publicly available? We heard from universities and researchers saying how valuable some of that data will be in scoping some of those economic benefits and that sort of thing that just isn’t there at the moment. So, is there a tension between that and the data that you hold? And how do you resolve that? Is there enough guidance or, as Sam said, in what’s in the Bill to be able to deal with that tension?

So exactly what the information the register will contain, I’m not sure that we’ve finalised that yet. But there is a tension there, and we have to balance not putting protected taxpayer information on a publicly available register with providing enough information that the register is not just a useless document for people, so there is that that we are working through carefully.

Thank you.

Thank you, Chair. And another specific question in relation to the Bill—paragraph 17 of the Schedule removes the requirement for you to seek approval of the tribunal before issuing a notice to a taxpayer requiring them to provide information or produce documents. This changed rule will apply to both the visitor levy and devolved taxes. What impact do you expect this to have on your approach to requiring taxpayer information?

At the moment, and we will continue to do this even when that's in place, should it get passed, we always seek to work with taxpayers—collaborate and ask for information informally, and we normally get that. It's very rare that a taxpayer doesn't co-operate with us. However, a formal information notice gives you the power to request information, maybe when that co-operation has broken down or the taxpayer is not willing to provide information to you. Sometimes, they want a formal notice for different reasons—if they have got insurance, for any enquiries that might happen and they might require a formal notice to kick that into action.

The effect of removing us needing to go to the tribunal is, really, administrative efficiency. So, you remove that burden, it speeds up an enquiry and it allows us to move to a formal information notice, should the need arise. We hope it still wouldn't arise—we'd still try to work collaboratively and co-operatively to get information that we required. So, yes, it would just be administrative efficiency, basically; it wouldn't change our approach at all. Where there is a formal information notice, then there's a formal right of appeal against that information notice by the taxpayer, which would then be referred to the tribunal, if they felt that we were asking for information that we shouldn't be.

Thanks. Would you expect a disproportionate increase in the cases where you will have to be more formal in these approaches? Because currently, I suspect, you're often approaching the middleman, as it were, or the representative of clients—so, in land transaction tax, for example, it's usually the solicitor or whoever it might be, and they're not the one actually paying the tax themselves, they're the representative of—whereas in these cases, many of the clients you'll be dealing with in this instance, with this visitor levy, will be, directly, the bill payer themselves, as it were. Do you think that might create a different response or the risk of the need for more formal approaches, or am I just—? We're all guessing, I suppose, but what are your thoughts on that?

My gut feeling is no, it wouldn't, and I say that because I have a background in tax compliance and I haven't necessarily seen that kind of correlation to date. But also, when we ask for information from the third-party agents, they would often need to just get that from the taxpayer anyway, so although they're a middleman, they're still just in the middle. Then, when we've dealt with taxpayers directly for refund claims or other claims that they might make outside a return, we have been able to get information that we needed to check claims from them in that way. So, I'm not thinking that there would be a disproportionate increase.

All right, that's useful, thank you. Finally, Chair, the Cabinet Secretary told us that he intends to amend the Bill at Stage 2 to require you to be the keeper of the register of visitor accommodation providers. Could you tell us about your work in preparing for this role?

As we've stated previously, I think creating a register is a huge benefit to the visitor levy, because it is, essentially, the foundation for how you'd activate the return for accommodation providers. So, it's twofold here, really: from an administrative perspective it's really helpful, because the visitor levy return becomes very easy, because you know what properties are in which local authorities, so you know which accommodation providers need to pay tax and which don't, and that keeps things very simple. But then, also, from an accommodation provider point of view, it makes things an awful lot simpler for them as well; they only have to go and register once. We'll keep a single copy, and we won't be asking them to register in multiple places or provide us information multiple times.

Going back to our experience of talking to other devolved Governments that do taxation and a visitor levy, they have this constant problem of two registers. The difficulty, and I think you've already highlighted it, is that when you have protected taxpayer information, you can't then go and send that information to change the register, because it can only go one way. By us having the register, we can control what's in the register and make the information centralised, but still only go one way to the visitor levy. So, if someone wants to change the information on their return about their property, then we just change the register, and the register feeds it back to the return; it makes it very nice and simple for them. For us, it gives us a really great platform and certainty of data, and it makes it as simple as possible for the accommodation providers.

Okay. I think it's fine to move on, Chair.

Just taking that further, how often would you foresee checking the register and updating the register, or would that be at a time of—? I think I'm correct, but please correct me, would there be a nil return every year if you hadn't collected the tax, or would it be an opportunity to update the register at that point? I know it's minutiae of detail, but how burdensome is it on the individual? If you don't update the register for 10 years, it becomes obsolete. Not that you would do that. But what period of time would you need to maintain that register, because you'd be the keeper of it?

My understanding is that with the register, there's an obligation for the accommodation provider to keep that up to date. If they're submitting a return for the visitor levy, if they're in a visitor levy area, every time they come to do their return, the first thing we'd ask them is, 'Is the register up to date?' That would be part of the process. And then, as I said, they have a general obligation to keep us up to date on things, but there are other data sources that could help tell us that the register might have changed, and we could give them a hint to say, 'Can you go and check your register?' If there's been a change at Companies House, for example, or there's been a land transaction, for example, which we would know about, then we could go back to them and say, 'Has this changed your circumstances?' So, we'll have other data sources that will help—

You'll have prompts, I suppose.

—prompt them to change the register. And we want to work that way in that we want to say, 'We think it might have changed. Can you check, please?'

Thank you. I'll bring Rhianon in at this point, so if we could unmute Rhianon. Thank you very much.

Diolch, Cadeirydd. I don't think that I do share Sam Rowlands's view of John Cleese wandering around a campsite with a clipboard—I thought I'd just mention that. I have more faith. I'm going to move to exploring the WRA costs, as set out in the RIA, if I may. The regulatory impact assessment accompanying the Bill estimates the cost range for the collection and management of the visitor levy and operation and maintenance of the register to be between approximately £30 million and £40 million over a 10-year period. What impact would the level of take-up of the levy have on these costs, please?

Take-up is quite a key element to how expensive it will be. Obviously, we don't know what that take-up will be. Also, there's the element of, when we develop the system, how much we can automate and how much we can make this less of an administrative burden. There's also an element here of the relationship between registration and visitor levy. The more local authorities that opt in for the visitor levy, then the lower the cost for everything becomes, because you're sharing resources across registration and visitor levy. And going back to what we mentioned earlier about the peakiness of the registration and visitor levy compared to our current business, there's an opportunity to smooth that out with resources across the WRA to make it a lot cheaper. But without knowing how many local authorities are going to sign up to the visitor levy, we don't know how we can manage with that, certainly in the short term. We'll have plenty of notice to do it, but until we actually see what people's behaviours are in how they register and how they submit returns, and whether they all leave it until the last day, or whether they spread it over the month, that will affect how we have to resource what we do.

Thank you. The RIA mentions there are factors that could increase the cost of implementing a registration service, saying that

'whilst the legislation provides details on the requirements there are some unknown operational requirements, which will only become identifiable during implementation'.

Obviously, you've spoken to some of these unknowns thematically throughout today. Do you want to just briefly expand on that statement?

I think it's what I've already stated about the variability of take-up. It's also about the way we're predominantly employing internal staff to do a lot of the creating of the service. We're quite keen on developing our own in-house digital capabilities so we're not reliant on third parties or IT suppliers to build the systems. That builds a capability and resilience over time that will make this much more affordable than if we went out to a third party to deliver the service for us. But in doing so, there's a little bit of risk in that, in that we might not be able to recruit all the skills that we need because the digital market is very competitive. So the variability is how much of the service can be built and maintained with our own staff, and how much we have to bring in specialist contractors to help us with that. That's one of the variabilities of how expensive the service is going to be.

Also there are some parts of the services where we still don't know how they might operate. For example, debt collection—how much debt we might have and how manually intensive that might be longer term. That's an issue that we don't have. And things like refunds, for example—again, if we have a lot of those, then that might cause an administrative burden for us. Again, we don't know how that's going to pan out over time, but the ambition is that we automate as much of that as possible to reduce the cost. But until we actually try to do it we don't know how much we can mitigate this cost.

And that's understandable. Picking up on Mike Hedges’s point that a visitor levy is absolutely common throughout the world and throughout Europe, and especially around major centres, you've highlighted some of the ‘we don't know yet until we've tried it’ et cetera. On the issues around skills and in terms of recruitment that you've mentioned there, can you not anticipate that in terms of moving forward and put those mitigations in place now? Or do you feel that the most sensible and practical approach is to just start the process? I’m trying to understand that thought process.

A bit of both, I think, is probably true. We have experience over the last few years of recruiting people with different types of skills, but I think the point Anthony has made is significant: that what we're not doing here is managing the contract with a supplier who's going to build a system for us, which is often what's actually going on when you see a public organisation doing something. That's not what we're doing. We're using our existing apprentice programmes that we have for people in-house, we're developing people, we're recruiting people. We have been doing that for a period of time already in a precursor to that ramp-up, and testing the market.

As Anthony said, it's competitive, but we we've been successful. We're really pleased with that. We think that's the right way to go about doing this, because we think it's really important to build capability to deliver public services in Wales for people that work in the public service, rather than always relying on external suppliers. But at the same time we recognise we're a small organisation, so we're not going to be able to develop all of the skills you could possibly require. So there's a balance to be struck there. Some of it we know, and that's why we’ve given a range in the costs, I suppose. But some of it we don't, and you do have to just be able to respond to it as and when things come along. Does that answer your point?

I think so. I think it's clear enough. Finally from me, the Bill is going to allow deduction of costs from visitor levy revenues for the collation and management of the levy. I suppose this is the same sort of questioning line in terms of unknowns, but you will have, as you said, your range and your probability factor built in there. What impact would a low take-up by local authorities of the levy have on your ability to offset the costs for your administration?

We are absolutely aware and alive to the impact a low take-up might have, and of course nobody wants that to be a barrier to entry to choosing to adopt the visitor levy. Provision has already been made in the legislation to allow Ministers to make further regulations to limit the amount of cost that we can deduct. So, as and when we know more about which local authorities are opting in, the Welsh Government will work with Ministers and with us and have more detailed discussions about that, and make a decision on where to put those caps in place if they're needed. So, essentially, it will be transitional arrangements before we go on to the formula fully fledged in later years, hopefully.

So, in terms of it as an iterative process, say there were no local authorities that would pick this up, which I think is highly unlikely, you would then use that transitional process to work your way through this. Is that what you're saying?

Yes.

Okay. All right. Thank you, Chair.

Sam, did you want to come in on this?

Thanks, Chair. Just in consideration of the costs, there's clearly an important role for local authorities to play within this in terms of some of the practical support, whether it's providing intelligence or, I suspect, maybe, they'll be able to support with debt collection, perhaps—I don't know—and whatever services they may be able to provide. Have you considered within your costs that administrative support that local authorities may be providing you, or other support they may be providing you? Have you considered whether you'd be commissioning some services from local authorities to support you in your work within your costs or not?

I think the answer to that is, 'No, that's not been part of the calculations so far', but it's a really interesting point about—. I think, for me, the broader point here is that we absolutely do see this as an opportunity to work in partnership with local authorities, where there are things that, maybe, it's easier for them to do than us, whatever—we can work through that as and when we go. But the key feature is that we're here to help and support local authorities to make it, basically, easy for them to—. They don't have to worry about how you go about doing it; we're here to do it.

Okay. Thanks.

Just a couple of quick questions, maybe, at the end like this. HMRC won't have an equivalent to this. It's probably the first time you're going to be in that place where next door don't have the same thing, so you have something new and shiny, potentially, to develop. Does that cause any challenge when it comes to a taxpayer, in this instance, who might say, 'Oh, I need to pay this tax to HMRC', and they ring them up and they say 'Oh no, we don't have that'? So, I wonder what that communication is like with their awareness of what's going on, and whether or not there's any support or anything like that going on in the background to be able to develop those understandings.

Yes, that does happen with land transaction tax, in fact, so it's not new but, clearly, if you've got a bigger population, people will possibly do that. So, yes, we have a very good relationship with HMRC and we're in constant conversation with them at all sorts of levels about all sorts of things. And, in fact, just talking to them about their experience of introducing taxes where they're new to a community of people, and what their approach to that has been, and, 'How do you raise awareness when you haven't—?', that's an ongoing conversation we're having with HMRC for precisely those reasons. And I have no doubt—. I think it's highly unlikely that somebody won't make that mistake of contacting HMRC and saying that, so we will have systems in place, as we have with LTT, to make sure that that's dealt with as straightforwardly as possible.

And going back to what Anthony was saying earlier about some of those triggers for updating registers, for example, those might be things that are collected by HMRC—some of that data. Is there a data relationship between the two organisations to be able to actually monitor some of those triggers, potentially, on a self-assessment tax return from somebody who actually—? You're an accommodation provider but you're not on the Welsh register, but you have a property in Wales. Is there that sort of aspect going on as well to build that?

We do have existing relationships with HMRC to share information where appropriate, and, yes, we will look to build on those and see what else is appropriate for us to share with this new tax coming in.

And then, finally from me, we haven't talked much about refunds, and there are limited areas where refunds are applicable in the Bill. Also in the Bill, I think it forces—and you tell me if I'm wrong—a collection and then a refund rather than an exemption. Is that the best way of doing it, or would there be a way, in the return, to say, 'Well, actually, this is exempted', so that you don't pay it and refund it back? Is there a logic to why it's one way and not the other?

I think you can do it either way. I feel like our role here is to make whatever the law says work. So, we can do it in whatever way is required, basically.

And would there be a preference, or are you just—? From an administrative point of view—

I mean, I think it's probably—. Anything that makes it as straightforward as possible is our preference. Sorry, that's a bit vague, but that's the top and tail of it, I think, yes.

So, it's something that—. Yes. Thank you very much. That brings us to the end of our session. Thank you very much.

Thank you very much for your time this morning.

There will be a transcript available for you to check for accuracy. We appreciate the work that's gone into what you've developed so far and, obviously, the work that will come down the line, should this Bill pass, and the preparatory work. So, we'll take a short break now until 11:10. Thank you very much. Diolch yn fawr iawn.

Just as an offer, basically, and I'm pretty sure we did something like this when we were developing our systems for LTT and LDT, if committee members would find it of interest to come and see what we've got, once we've got the prototypes, you can have a go at it yourself. If you feel like you understand what it is that we're going to be presenting to accommodation providers, then we'd love to be able to extend that invite, or some sort of technical briefing, where we can explain a bit more, under the hood, how things work. I'm happy to do that.

I'm sure that would be appreciated by Members here, definitely. So, we'll be in touch with that. Thank you very much.

Diolch yn fawr iawn.

Diolch yn fawr.

Welcome back to this second session this morning—evidence session 5.

It's evidence session 5. We've reset the room and reset online. We've got new witnesses—colleagues from local government—and I'd like to ask them to introduce themselves for the record. So, if we start in the room—

—we'll start with you, Huw.

Good morning. I'm Councillor Huw Thomas. I'm the leader of Cardiff Council.

Welcome, and we'll go to Gwynedd.

Good morning. I'm Councillor Medwyn Hughes, cabinet member for economy and community.

A Roland Evans, pennaeth cynorthwyol economi a chymuned.

A warm welcome to you.

And then Rob—can you introduce yourself, Rob, please?

I'm Rob Stewart, leader of Swansea council. I'm also deputy leader of the Welsh Local Government Association, and I hold the economy spokesperson's portfolio for the WLGA.

Fantastic. Thank you very much.

Welcome to you all this morning.

There will be a transcript available for you, for accuracy, at the end.

You're welcome to contribute in Welsh or English—that's up to you.

I’d like to start by exploring the general principles of the Bill and the views on the public perception of the levy, and the register and the levy premiums, and the spending of the levy. So, do you think a visitor levy would support the Welsh Government’s tourism policy objectives to deliver sustainable tourism, and how would the ability to raise additional revenue for destination management and improvement impact on local authorities? We’ll start in the room, and then we’ll do the rounds. And if I could ask people to be brief because we’ve got four of you and not a lot of time.

And you've met local councillors before. [Laughter.]

I have, yes. [Laughter.]

So, broadly, the WLGA position is in support of introducing a levy, particularly because, within what is proposed, there is allowance for local discretion. We believe it has got the ability to deliver a substantial impact on sustainable tourism in terms of supporting that. Clearly, there needs to be financial sustainability within the sector, and ensuring that it's contributing in a fair way to the wider infrastructure within an area, but the infrastructure underpins and supports tourism. I think most members of the committee will be familiar with the pressures that local government financing has faced over the last decade and more, and how that has led to cutbacks in some of that tourism infrastructure that visitors would expect. And so, we would argue that there is an opportunity here to potentially enhance the visitor experience and make destinations in Wales more attractive.

We recognise the levy needs to be implemented with the tourism sector, and not something done to it, and we’ll get into how that might be done, I’m sure, in the line of questioning. But I think, for me—and this is a position the WLGA has consistently held—we currently operate within a highly centralised funding model, where tax revenues are collected centrally and then distributed. And this levy, albeit at the margins, is an example of a local tax where its raising and its spend could be controlled locally, and I think that’s something we support and would like to see more of.

And what sort of input have you had in the development of the legislation with the Welsh Government? Has there been a dialogue and a development opportunity for you to have your say in that development?

Yes, there’s been good engagement both on the political level and on the policy side. With my tourism WLGA hat on, I sit on the Welsh visitor economy forum, and that’s been discussed there repeatedly. Clearly, there are concerns from some parts of the sector, but that engagement certainly has taken place.

And, Rob, not to duplicate what Huw’s just said, but maybe your views from your neck of the woods, and your understanding of your engagement.

Yes, absolutely the same as Huw. I think we welcomed the opportunity to shape this and to input into it. Likewise, we have some sectors that, obviously, seeing a new tax potentially being implemented, have concerns. But, again, the flexibility in the way that implementation is being suggested is really welcomed, because it won't be right for all areas. The timing and nature of implementation will need to vary, so that flexibility is really important.

When we look across a number of destinations across Europe and the world, this has become a pretty regular occurrence. We've all probably paid a resort tax or a levy of some sort when we've travelled, without even knowing it. But I think the principle of saying that if you're travelling to a location as a tourist and you're placing pressure on the services or the infrastructure in that area then you should contribute something towards it is a fair principle.

To go up to Gwynedd, to another part of the country, it's possible that this levy will come in and have a negative reaction from some elements within the business community there, and in some other parts of the country too. Are you concerned about that and the effect that that could have? What do you think about that? We'll come to you up in Gwynedd first—and then we'll return to Huw and Rob afterwards—if possible to answer that first question, but also that supplementary question.

Thank you for the opportunity to give this evidence. Of course, the status quo isn't an option, is it? That's very clear. We have a population in Gwynedd of 118,000, and overnight visitors are 18 million, and that doesn't include day-trippers. So, the status quo is not an option at present in moving forward.

The tourism and visitor economy is a very important employer and a very important industry in Gwynedd and it makes a significant contribution to the local economy. There are a number of businesses in Gwynedd that have voiced concerns about the negative impact that could arise as a result of this levy in the tourism sector generally, particularly following the 182-day rule, article 4, COVID-19, and the cost-of-living crisis.

The council has undertaken a number of discussion sessions with local businesses last year to discuss the potential of adopting the levy locally. While voicing strong concerns, a number of people saw the levy as inevitable, and so were very eager to ensure that it would work for the benefit of everyone if it happened.

Communication will be vital, of course, in terms of this levy, and clear messaging about the purpose of the levy in terms of the intention to invest locally for the benefit of communities, which is crucial, and, of course, for businesses and the environment. Any registration and administration arrangements have to be as streamlined and proportionate as possible without creating a substantial additional administrative burden for the sector.

We'll go to Huw in terms of what the businesses have been telling you as a council leader—it's possible that you've been lobbied about that. What is your take on that?

I haven't recently met with businesses in Cardiff on this subject, but certainly, in the discussions that I've had with them previously, it's almost as though they see this levy as one that is going to be inevitable, so they're preparing to respond to that.

The main point that I would convey to the committee is that Cardiff is famous as a city where major events happen, particularly in the stadium, but in other areas as well. Very often, there is a direct cost to Cardiff Council for undertaking those events. For example, when we had the Champions League, there was a cost that we did contribute, with the Welsh Government and the UK Government, to hold that event. And then, there are indirect costs, such as maintaining the city, cleaning and so forth, and traffic arrangements, and they are paid by the council. But there is no financial return for the council in holding those events.

There is a higher profile for the city, of course, and our businesses benefit from that, but there is no return for the council. So, it's just a cost. Okay, companies pay back through their business rates, but that's distributed from the centre. So, through introducing this kind of levy, it gives the council the ability to respond to the demand from tourism and from holding these events, and in turn allows us to invest more in attracting these events. So, ultimately, businesses and the city do benefit further, because we have the revenue to invest further. And it's a fairer reflection of the costs associated with tourism, particularly major event tourism. So, it does give us those powers, and it acknowledges the costs associated with this kind of tourism.

Rob, maybe you want to touch on some of that aspect as well. But also, the intention with the legislation is to have a register of visitor accommodation providers, which would provide a data set that would support local authorities with policy making as well. What engagement have you had with the Welsh Government regarding information required for the register as set out in section 4 of the Bill, and is there any other information that you think would be useful to be collected at that national level? So, maybe commenting a little bit on what Huw and Medwyn said, but also moving on to the register as well.

Take my comments in terms of what Huw and others have said as being consistent. In terms of engagement, we’ve obviously had engagement with the Welsh Government and with the WRA in terms of how the systems would work. I think as my colleagues said, it’s important that when those systems are in place, they don’t become administratively burdensome for those businesses to make sure that they fill out their returns, and that they support the collection of that levy where it’s in place.

It is a very dynamic market. The tourism economy, for instance, in south-west Wales, and specifically in Swansea, is worth £0.5 billion a year to the local economy; businesses benefit from that currently. We want to make sure that we continue to do something that doesn’t add that additional administrative burden. So, it's about getting the processes right, getting the way in which this operates right, and also making sure that we demonstrate to the businesses in the area the benefits of any tax that may be in place. Because we’re not collecting it so that it displaces what we would otherwise have got from the Welsh Government, but it should remove a burden and a pressure from local taxpayers that will be paid by visitors. I think when you look at it from that perspective, it potentially becomes attractive.

Again, you break this down, if you think about what’s being proposed, if you’re going to one of the events Huw talked about, in a way, you’re spending hundreds of pounds on a ticket to a final of a sporting event or a concert, you’re spending hundreds of pounds on a hotel room and your travel costs, paying a small surcharge of a couple of pounds on top of that shouldn’t really affect whether you go or not, because you’re already invested in that. But it creates a fund that can be used to offset those local pressures, to invest in the infrastructure, to invest in the tourism experience for the people who are coming to this fantastic country that we live in.

Following that on, the Bill enables local authorities to apply a premium to the levy, but you’ve mentioned you’d like further clarity on what that would relate to and how the premium would work for councils who wish to consider using it. Could you elaborate on that? Huw is indicating he’d like to elaborate on that.

I think the general point—and maybe this is more of a Cardiff point than a WLGA point—is that the Welsh Government have argued reasonably convincingly that they’re after simplicity and introducing a modest charge. I think there are examples elsewhere now in the UK—and I’m thinking of Edinburgh in particular—where you could argue it’s more than a modest charge. So, I think in certain circumstances, and this may focus around major events, potentially, a premium may be appropriate.

Rob mentioned the types of cost we're talking about to attend some of these events. I almost spent several hundred pounds on Oasis tickets until I realised I was losing my mind and stopped myself. But then, even a 5 per cent levy pales in comparison. So, I think it's certainly a power that some councils may wish to exercise at some points. I appreciate it's still reasonably early in the process, but understanding the Welsh Government's thoughts about how that power could be applied and really just checking that that would be a permissive power, not one that the Welsh Government are likely to keep to themselves, would be important.

How do see it working? This is down the line now, once it's embedded. It wouldn't be on day one, it might not be for a good number of years, but would you like the flexibility within the legislation to be able to target it at a specific area or specific type of accommodation so that you're not putting the premium across the city but on a specific type of property or a more premium property? Do the flexibilities as drafted allow you to do that?

I think you've given lots of examples there of the types of flexibilities that would be useful, and I think you said it, critically, this is probably a further refinement, if a council does introduce a levy, that they would probably want to introduce downstream of that, having monitored what impact the levy was having. I guess what we are saying is, as currently drafted, we probably haven't got the clarity yet in terms of whether we would have the scale of flexibilities that you've just described there. But we would be arguing the case that that's what we need, as well as a permissive approach from the Government that the power to apply a premium or not apply a premium and the geography, et cetera, rests with the local council, rather than something that has to be gone to the Government for on a case-by-case basis.

Rob, you've indicated you want to come in, and then I may come up to Gwynedd as well to Medwyn to come in on that.

Just to emphasise that point, really. I think that is all contained within our request for flexibility within the levy so that councils, who are the local intelligence in this area, have the best knowledge of what is in their area and can make the right choices for their area, because what might be right for Cardiff may not be right for Gwynedd and may not be right for other locations across Wales. Having that flexibility is really important.

Again, we've looked at lots of examples around Europe and elsewhere. You can see various different models. In Paris, they are proposing to model on the type of hotel or the star of the hotel that you stay in, so if you stay in a more expensive hotel, a five star, a four star or a three star, different rates apply per person per night. Other cities have gone for different models, which, again, suit their locations. So, I think having the flexibility, giving councils the ability to levy something that's appropriate for their area, is really important, and that's why we're seeking more detail about what that permissive power would be.

To go up to Medwyn, just to follow on from that, is there a geographical element, then, to look in a particular ward, or, as Rob was saying there, in terms of type of place to stay? Could you just consider that very quickly?

We need that flexibility, don't we? Gwynedd geographically is huge, but I think that we need more information from the Welsh Government on this. The industry here in Gwynedd is worth £1 billion annually, and we have to be very sure about how we will interpret section 14. There is no reference there, as far as I can see, to the approach to charging the levy, as you heard earlier, nor a need for the Minister to consult with the local authorities on the scale of any premium. So, there is more work to be done here, but flexibility is the thing, and, of course, as you've heard already, we need to look at the premium very carefully and how we are going to manage that in moving forward; we need more conversations about that.

Diolch yn fawr. I'll bring Rhianon Passmore in at that point. Thank you.

Thank you very much, Cadeirydd. So, section 23 of the Bill provides a list of the types of spending by local authorities that will meet the requirement for spending on destination management improvement. Do the witnesses here feel that these are suitable areas for allocating revenue that's going to be raised by the levy—it's not a tax, it's a levy—and are there other areas that would be as effective in delivering sustainable tourism? I don't know who would like to take that first, Chair.

Huw.

I'm happy to open.

Thanks.

I think, broadly, our position would be that the broad hypothecation—if I can call it that—suggested in the Bill is probably appropriate. I think there's enough discretion within that for councils to be able to apply the funding in a way that is most appropriate to their own contexts. But, nevertheless, I think you would also allow councils and the Welsh Government to demonstrate to the tourism industry that this funding, this revenue source, is then being used to support the sustainability and the growth of that industry.

So, just to give a rough cut of how we might see the funding being spent within Cardiff, based on 2019 figures, we think this could raise around £4 million for the city. We would be looking at stuff around place promotion, marketing the city as a destination; we'd be looking at visitor infrastructure and services, so a tourist information centre et cetera; that support I mentioned previously around major events—road closures and street livery, place management, around cleansing—and then destination management, in particular support for the convention bureau, so that we're maximising business tourism as well as leisure tourism and that then, of course, evens out the peaks and troughs, more importantly, that you have in this area. And then, potentially, you could deploy the funding towards sector development as well, so upskilling within the workforce, small grants, investments, to do up shop fronts or what have you. So, we would argue—. That's what we believe, within the broader hypothecation, could be delivered and we think that it fits with the ethos of sustainable tourism.

And just to add to that in terms of the place, in Cardiff, of arts and culture, as a centre across Wales, I presume that there would be consideration around those elements as well, or do you see that as not fitting into the tourist destination box?

Do you mean direct support for arts and cultural organisations?

It's just a comment. I don’t know if you would see—if it would be deemed as part of the tourist destination ideology.

I think what I would say is that we would see arts and culture—and forgive me for speaking in a Cardiff context, but we would see arts and culture—as a key driver of visitors to the city. You will know about the Cardiff Music City festival, which had its inaugural run in October, with funding from the council and from Welsh Government. So, it's a key selling point for the city, and, yes, I think the subvention of events of that type, again, would be something that we could be looking to point the levy towards.

I know that Rob and Medwyn want to come in on this as well. So, I'll bring Rob in first.

Thank you, Chair. Look, from a Swansea perspective, we're the birthplace of Dylan Thomas, part of our offer as a city is that cultural experience for people, so there will be a read-across into that. But I think the key point to take away on this one is what we can't have is cultural venue funding being reduced and then this being expected to take its place. I think that's the safeguard we're looking for, from local government, is, 'This isn't replacement funding, it must be additionality.'

Yes, additionality. Okay, thank you—

I think Medwyn and Roland might want to come in on this as well, if we just—. There we are.

Thank you very much. Yes, I agree with what I've heard. Of course, in Gwynedd, our pillars are the arts, culture and our language. It's very important that we support them. People, of course, come here to see the beauty of Gwynedd but also to taste our culture and our language. That's why they come here, to get that experience. It's all the same thing, isn't it? This levy allows us perhaps to spend between £6 million and £9 million a year. It's going to make a big difference; there's no doubt about that. So, just to echo what I've heard from Rob and Huw, the arts and culture and the language here are vital to us. The sustainable tourism plan for Gwynedd and Eryri 2035 has acknowledged three key principles for supporting the visitor economy for the benefit of the people: the environment, language and culture of Gwynedd and Eryri. If the levy was adopted in the area, we would aim to use those principles in order to prioritise spending of that levy. Thank you.

Rhianon.

Diolch. I’m going to move on, then, to a line of questioning around costs of administering the levy, administrative burdens on accommodation providers and other associated questions. You’ve noted so far that you would all welcome further clarity regarding the support that the Welsh Revenue Authority expects from local authorities deciding to introduce the levy. Has there been any communication or have you had, within the WLGA family, had any communication with Welsh Government or the Welsh Revenue Authority regarding this process? I don’t know who would like to go first.

Rob. Yes, there we are, Rob.

Yes, happy to do so. Yes. The straight answer is 'yes'. There has been engagement with both the Welsh Treasury and the WRA on this via the WLGA officers and via local authorities and leaders, as Huw has already outlined. Again, whilst we’re having discussions and those are positive, I think what we’re looking for is that element of clarity now in terms of how that will work. Because I think the aim from all of us is to make sure the processes, should any authority seek to introduce this levy, aren’t going to be a large administrative burden on businesses out there then in terms of collection and administration. So, yes, the conversations have been positive and they are happening. So, yes, I’ve nothing more to add, really, on that.

Huw.

And in terms of that—

Sorry, Rhianon.

Just to say, from that comment, do you feel reassured in terms of that communication between the WRA and Welsh Government? You said that they were clear conversations.

Yes. The engagement has been good, but we need it to intensify now as we get closer to a point where this becomes an implementable process. So, there’s more still to do on it and that needs to happen.

Okay. Thanks.

And I think Huw wants to come in. Huw.

Yes, Rob is exactly right: good dialogue so far, but now it’s locking in ways of addressing some of the concerns that have been raised. So, for example, it’s not just the cost of administration for businesses, but what is the cost of the administration of the scheme for local authorities and, indeed, for the WRA? The WLGA would probably argue that the anticipated costs for councils as calculated by Welsh Government probably undercook it to some degree. And then we would have concerns, I guess, around a substantial chunk of the potential revenue from a levy being taken up in administrative costs, and I think we'd want to work closely with Welsh Government and the WRA to minimise those costs, particularly in a context where, because there is local discretion, only a handful of authorities take these proposals forward. So, it would make no sense, in our view, for those authorities then to have to shoulder a burden of the administration that otherwise would have fallen on 22 authorities, negating the upside revenue that they would otherwise have had. I think your last witnesses from the WRA gave some assurances around capping, but I think we'd make the point that that absolutely has to be embedded in the legislation.

Absolutely, I think—

I think Medwyn wants to come in on that point as well. There we are.

I'll bring Roland in here.

Like the other two authorities, we've been part of national discussions with the Government and the WRA, but, as Huw said, we need to go into detail now on the finer details in terms of how this would operate between local authorities and businesses. I agree with everything that has been said: any arrangements that are adopted have to be proportionate with the levy. There's no point, as Huw said, in us charging a levy and having no benefit, ultimately, for businesses and destinations and communities. We need sufficient local authorities to adopt the levy to make it worth implementing, or everyone will lose out—the business sector would lose out and would see us as targeting them, visitors would lose out then in not seeing any benefits, and communities would lose out as well. So, we have to evaluate, before we move ahead, how many people are going to adopt it.

Rhianon.

Diolch, and very, very important points you've made in terms of that particular line of questioning. Due to those comments, is there consideration that it should be produced on a smaller—that the levy should be produced on a much smaller—pilot basis to test it out, and a more cautious approach to introducing the levy in Wales? Would it be, also, more appropriate for the register to be established prior to the implementation of the levy? I don't know if you can tackle those two sides of that question.

Roland, do you want to come in on that, or Medwyn?

Yes, no problem. I think that the idea of having a critical mass of local authorities that are committed to it makes sense, or the costs are going to be beyond any logic. Having a pilot scheme supported through Welsh Government funds would make sense, so that geographically smaller areas can learn from the experience and share that learning with other authorities across Wales. So, to me, it makes sense to try and experiment, pilot and to learn from those experiences, and roll them out to other authorities that want to see it happening, and that that is underwritten by funding from the Welsh Government.

In terms of the register establishment prior to the levy implementation, who wants to pick that up?

I think that the register has to be in place before any levy is established, or there will be no way to monitor businesses that are registered, and how many beds and so forth that they have. So, that has to happen—a register has to be in place before the levy is established.

I think Huw wants to come in on that as well.

Does anybody disagree with the small-scale pilot?

Rhianon, sorry, I think Huw wants to come in as well on this.

Well, I'll pick that point up, because I think Roland and Medwyn make a fair point, in terms of a pilot. I guess a counterpoint view might be that some authorities will want to get on with this at pace, and, even so, I think we're looking at 2027 as the earliest point at which a levy could be raised. My sense of how this will play out is that there will be a coalition of the willing—some local authorities that want to move forward with this at pace—and there will be others who are more cautious. And, I think, whilst there's a good argument around a pilot, could that be taken forward with those authorities who would be the first adopters regardless? My sense is they will probably be based on the WRA's calculation—sufficient numbers of authorities wanting to take this forward in the first instance to carry the costs between them in a way that is sensible and sustainable. So, rather than delay unnecessarily, I would rather explore using early adopters as a way of working through any implementation challenges. But what I suspect will happen is, ultimately, you will have people seeing what's been delivered by the first adopters and realising, 'Actually, this is something that my council needs to do as well.'

And on the register—being in place before or during?

I haven't got a particularly strong view, but I would defer to Roland. I can't particularly see how it would work if it wasn't in place right at the beginning of a charging scheme.

Rob, did you want to come in? You indicated there.

Yes. Look, I think, if the Welsh Government were imposing this everywhere, you could have more of an argument to do a pilot prior to it going everywhere, but I think we're going to achieve that anyway, as has been said. Because there's the flexibility there for councils to make a decision whether they go forward or not, they can choose whether to participate early days or not. That is a decision with the flexibility in it. So, in essence, you create a pilot set of organisations, as Huw has said. I think, again, having the correct data available to you in order to run that appropriately, like the register, is important, absolutely, but I think mandating a pilot before we move forward is probably the wrong thing to do, because we've got the flexibility amongst us to decide whether we go forward or not.

And Medwyn, did you—?

Just to respond to what Huw was saying about the coalition of the willing, it’s likely that that would be the pilot, in a way. But I think that coalition of the willing has to have that support from Welsh Government financially to make it work as well. So, no, I agree. We don’t want to delay the process, and I think that that coalition of the willing would be a sort of pilot, but it would need support, I think, to move forward in a financial sense.

Okay. Thank you. So, in terms of the need for a no-delay approach, I think there is a consensus there. My final question, then. You've also mentioned that the anticipated costs for WRA over a 10-year period could be as much as £40 million, which could significantly affect the amount raised by the levy, obviously depending on its take-up. Do you think this could influence a local authority's decision to introduce the levy, and, if so, how could that be addressed?

Huw.

It certainly has the potential to, Rhianon, unless we have greater clarity and greater certainty on how any administration costs to an implementing council would be capped. You're not going to introduce a levy to raise £4 million if £3.5 million is retained centrally to cover the cost. So, yes, clarity around that, and I think WRA recognise this, that they would need to show value for money and demonstrate how they could manage down the costs of administration.

Okay. Thank you. I'll move on now to Mike Hedges, please.

Diolch, Cadeirydd. Your written evidence emphasised the importance of clear communication around the benefits of the levy, given concerns by some businesses. Would you envisage the need for local authorities to carry out preparation work with stakeholders to counter any negative sentiment, and what would that mean for costs incurred by local authorities? Or just generally ask businesses—everyone? I'm sure that those who have got a beach-based economy would be very keen on local toilets, for example, while those who have a city-centre based holiday business would be looking for something else.

Huw. Or Rob, do you want to come in on that?

Yes, you're absolutely right. We intend consulting with local businesses on the basis that, if you're going to implement this, is it the right thing to do, will it provide the right inputs and investment that businesses would be expecting? Because, as Mike has absolutely rightly pointed out, there's a variance between the types of local authorities that we have and the environments that they have. Some of the pressures and priorities in the Cardiff capital region and in Cardiff city itself will be different, as they will be in Swansea and the wider Gower area. So, again, making sure that you talk to your local businesses and you understand what their priorities would be for investment coming from a levy would be really, really important. That is what we intend to do in terms of any moves we would make to consult with businesses, to ensure that, if we made a decision, which we're not proposing to do at the moment, to implement a levy, then we have something that businesses can support, are aware of, and are clear about what benefits it's likely to bring.

And if I go to Gwynedd as well.

Yes, to answer the question directly, I think that public conveniences are important for people on the beaches and in our cities. But anyway, moving forward, as I said earlier, the council has held meetings with local businesses during 2024 to discuss the potential adoption of a levy. A number raised concerns about negative consequences that could arise as a result of establishing the levy, on the tourism sector generally, especially following the 182-day rule, article 4, COVID-19 and the cost-of-living crisis. Communication, of course, will be key in terms of the levy, and getting clear messages out about the purpose of the levy, and how we intend to invest locally for the benefit of communities, businesses and the environment, as I said earlier. But we have to get that message right.

Just before we carry on, could witnesses online not use the hand button and just raise a physical hand? It's causing a few issues with the broadcast. Thank you. Just wave at me frantically and I'll bring you in. That's fine. Back to Mike Hedges.

You said that

'registration and administration requirements for businesses need to be as simple...as possible',

but we know that most of western Europe already has this levy, and we are an outlier in Britain and Wales in not having it. Is there anything you've learned from what local authorities and regions do in places as diverse as the Lake Garda area, Verona and Catalonia?

Huw.

Not to particularly comment, Mike, on those destinations you've named, but I think those are areas that the Government has been in dialogue with in terms of how their schemes work there. But I would certainly comment on my experience of how Nantes, which is a sister city of Cardiff, operates. I was invited over there by the mayor when they hosted the Rugby World Cup, and it was clear that they had the funding in place, and they were making economic returns from hosting matches for the world cup that they were then, in turn, able to use to enhance the match-day experience. Now, to be clear, there are other local tax-raising powers within that context that aren't at the disposal of councils in the UK. But it was very clear that they were able to leverage events happening in their city and reinvest, then, the revenues that the city was enjoying into making the event even better.

If I can just touch briefly on Mike's previous question as well, in terms of the engagement and partnership, I think most councils would say that they've got the building blocks for engagement already. Certainly, in Cardiff, we've got a business improvement district and a hotel network. I think we should all be realistic that just because you engage with the sector doesn't mean that everybody will be happy on day one. In a rural context, if you engage with the sector and say, 'We will plan to invest in public toilets and the cleaning of beaches', if you're a cafe on the beach, you're probably going to be very happy with that; if you're an accommodation business inland, the direct gain is less obvious. But I think it is right to do that engagement. What I would say is let's not make the administration of that engagement going forward too burdensome. You can't decide how things are spent by committee; you can take input, but the implementation has to sit with the local authority.

Okay, thank you. Mike.

Finally from me, you noted that the principle of raising the levy on children and young people under 16 years of age was unreasonable—a view that others have expressed. Has the Welsh Government responded to you on that?

Huw.

So, they've not responded as far as I'm aware. Certainly, the conversations I've had with Ministers highlight the importance of simplicity, not least to make the administration of the scheme more cost-effective, and to make its principles more understandable. But I think the general principle from WLGA would be that it probably doesn't make sense, certainly in a school trip context, to charge children under 16. We've got across the road from us the Urdd. It would feel quite burdensome, I think, for children travelling down from Powys to pay to stay here.

We're talking about using this fund to put infrastructure in place to support tourism. Well, in most contexts I can think of, if you're on a school trip, that supporting infrastructure already exists in terms of the facilities that you will be using. So, whilst recognising the need for simplicity, I think that we, as the WLGA, would say that there's a good case to look again at the charging of under-16s, at least where they're involved in out-of-bounds activities or on school trips.

Okay, thank you. I'll bring Sam in at this point.

Diolch, Chair, and good morning, everybody, I appreciate you taking the time to be with us here today. I just want to pick up a point that I think you all probably touched on earlier in our discussion, in relation to the risk that Welsh Government could see this as a way of local authorities raising more money, and might therefore reduce the funding you receive through the revenue support grant. I'm just wondering if you could comment on that a little further and whether you think there may need to be some sort of formal arrangement in place to ensure that that doesn't happen, because I guess it's quite difficult to monitor directly because of the unhypothecated nature of the RSG. How are you going to monitor that and flag that up, if you think that may be happening?

So, I'll give the easy part of the answer first, which is to say that I think something like that certainly has to happen. This whole exercise, in my view, works or fails on the principle of additionality. If there's no additionality, why would a council take on the negative issues of implementing it? Likewise, if there was no additionality, then it's in the interests of somebody to sit back because you'll be compensated for not doing it. So, that principle is really important.

How would you capture that? I would imagine that would be through detailed work in the distribution formula sub-group, and we all have our opinions on that. I've heard it debated in the Senedd, and there are a few points I might disagree with, but that, surely, has got to be the mechanism to demonstrate to all the councils, whether they raise the levy or not, that the RSG continues to be distributed using the same formulas, and then any revenue raised from a levy is a top-up.

It'll be interesting to see, I think, with the funding that's going to come in next year from UK Government in terms of the extended producer responsibility charges for recycling—that sits outside the RSG. That, potentially, is an early test case, really, to see whether such an arrangement can work. But I think that capturing it very clearly within the regulations, the principle of additionality, would be really important.

Okay, thanks.

Medwyn, did you want to come in on this, or—?

Yes, I agree with what Huw has said. Of course, there is a risk, isn't there? There is a risk of Welsh Government not funding local authorities. Cyngor Gwynedd has called on the Welsh Government to continue to fund investments into destination and town-centre infrastructure, as well as marketing, for the future, and not to replace these budgets if a levy comes in in an area. Gwynedd's annual financial settlement is decreasing because of the Welsh Government's current formula. It is essential that our settlement does not reduce because of any levy, especially the element relating to an increased visitor population, which helps us to provide some services. So, the levy should not be seen as a way of replacing Welsh Government money to support the visitor economy sector in Wales. That's our view.

Huw, do you want to come in quickly on that? Then I'll bring Rob in.

Just one additional thing to add.

It's the risk of changes in settlement—this alludes to what Medwyn was just mentioning—but also changes to how, for example, the shared prosperity fund is administered and distributed. I guess that runs the risk of councils losing funding that they have been using thus far to support the visitor economy. Certainly, there are councils in Wales who've used the shared prosperity fund to that effect. So, that funding disappears. You could introduce a levy and compensate for that loss, but then it may not be experienced as additionality; it's just compensating for the loss of certain services. So, I would just put in the mix, really, a need to continue the dialogue on the shared prosperity fund with local authorities, because that has proven to be a really helpful part of our armoury in responding to austerity, and the need, as Medwyn was saying, to concentrate on—apart from the shared prosperity fund—statutory services.

I'll bring Rob in just to comment, if I may. Using the principle of additionality from central government to local government, is there also a principle for local government to do the same? If you're raising money from this levy, would you reduce your spending on tourism, and move that to education or to something else? Is there a core principle there that that shouldn't happen, so that extra on top of what you're already spending in those areas is not just a way of balancing the books?

I guess that's what I'm saying in relation to the shared prosperity fund—that there is money being spent currently on placemaking that could be lost, and if that revenue stream disappears, all you would be doing with the levy is replacing it. However, notwithstanding the shared prosperity fund, I think the reality for many councils is, over the last 14 years, those visitor economy-type services have already gone, because they've been forced to prioritise statutory services. So, really, this is an opportunity to rebuild.

Rob, I'll bring you in as well.

The shared prosperity fund issue was one I was going to raise as well. We've been very clear with the Welsh Government that we think it's been delivered really well, with low administrative costs of around 4 per cent by doing it regionally, and we want to make sure that we don't lose the benefits when the successor to the current arrangements are in place, and that point has been well made by Huw.

In direct response to Sam's question, of course, it's not just the Welsh Government and the RSG that we'd be looking at in terms of making sure that there weren't any attempts to have replacement; we want additionality at all levels, and that includes our commitment to make sure that anything raised would be spent in addition to what we're already doing.

But we know, when the previous European arrangements ended and we went to the shared prosperity arrangements, the then UK Government changed the rules around that and the formula, removing need, so places like Swansea lost £4 million overnight from their budgets, by the decision made at UK level.

So, again, for grants that come to local authorities or to institutions in our areas, as well as that core funding from the Welsh Government, we have to watch all of it, because otherwise, there is that potential for funds to be removed and then for us not to be any further forward, just replace one with the other.

Thanks for that, and thanks, Chair. Just another thought, and it's a point that Mike often raises in the Chamber here in the Senedd. Part of the way in which the RSG is distributed is based on local authorities' ability to raise council tax revenue on its council tax base. Just to play devil's advocate, why wouldn't the Welsh Government consider that with the visitor levy as well? Because obviously some parts of Wales will have the ability to raise higher amounts of visitor levy than other parts of Wales. So, it's fine for the RSG to be distributed on the basis of the ability to raise council tax revenue because of the type of council tax base there is. Why wouldn't the Welsh Government consider that with the base from the visitor levy, do you think?

I would probably say that there are ideological issues with the current approach that you've just described to the RSG, because that disincentivises growth in many aspects. I think, particularly given that we're talking about, in the scale of council budgets, very small sums, and we're talking about an area of spend that would have broad hypothecation, it certainly doesn't make sense to me to apply the model you've just described in this instance, because I think the real risk that would run is that those councils who would be well positioned to raise revenue from this, which could in turn support their local economy and the Welsh economy, choose not to do so because there is no incentive.

Thanks. Are there any comments from anybody else? No. Okay.

Just moving on then, in terms of the costs that have been estimated by the Welsh Government to introduce the levy, in your evidence as the WLGA, you suggested that their estimated costs seem too low and require—very polite wording here—'further thought and refinement.' I wonder if you could just elaborate on that a little bit. How significant could the additional costs be compared to what the Welsh Government have estimated?

We are very polite in local government, as you know, Sam. I think it's probably best if we reply to the committee in writing on that. I haven't got the detailed figures in front of me. We'll happily give some of our estimates on that, if that's okay, Chair.

The only thing with that is that we're on a very tight reporting line. Expediency would be appreciated in that.

Perhaps just to elaborate on that a little further, in a previous evidence session with the Welsh Revenue Authority, some of their expectations about how this levy may be enforced or monitored weren't clear for them at this stage, and perhaps that's fair because it's an early stage of this work. I guess there might be an expectation that local authority officers may be doing some of the enforcement activity, which could, at some points in parts of the holiday season in particular, be quite heavy in terms of resource. Do you know whether those conversations with the WRA on the potential costs have been in place, or, perhaps, is there more work to do, do you think, for the WRA to understand the costs of them performing their duties with the support and the intelligence of local authorities?

I certainly think there's more detail to be worked through, not least in the expectation that the enforcement duty falls on regulatory services within councils. The same people are responsible for food hygiene checks, noise pollution et cetera. It's a Cardiff-operated shared service with the Vale of Glamorgan and Bridgend. It's a very effective, well-run service, but also a very busy one, so there would certainly need to be capacity building done within that organisation, and that would come at a cost. So, I think you're correct to identify it as a point of detail that we'll need to be looking at over the next two years.

Thanks. Does anyone else want to comment?

I'm not aware of any detailed discussions that have happened on what role local authorities have in terms of implementing, monitoring and the regulatory element. So, detailed discussions would be needed on that, because that isn't in the scope in terms of the costs to local authorities at the moment, which are low in any case. If there was an expectation on local authorities to do that work on behalf of the WRA, then I agree with what Huw was saying—I don’t foresee that we would have the capacity there for that at the moment. There is so much work to do in terms of those departments at the moment. I think that would put significant pressure, and we would need additional capacity within those services.

In terms of the general costs for the local authority, I think there are some crucial costs that haven't been included. Obviously, we would need some way of regulating, managing and sharing out any resources that came from a levy into the council—that isn’t included here. We would also need to administrate a partnership to be responsible for prioritising the spending of any levy that came to the county, and we would also need to ensure that we had the capacity to communicate, to engage, and to work with the tourism sector, and also communities, in order to implement the levy locally. Those things haven’t been considered almost at all within the Bill as it stands at the moment.

So, those are two concerns that we have: capacity to regulate and monitor, and then how we would implement the levy in partnership in the area. Those things haven’t received enough attention.

Diolch. We’ve come to time, but there are a couple more questions that we would just like to ask, so if you’ve got five minutes just to finish those questions, then I’d appreciate it. Sam, you wanted to come in.

Thank you, Chair. I have quite specific questions, so I’ll just move on to these now. In your written evidence, you said that regulation-making powers for the Welsh Government to amend many aspects of the operation of the levy are substantial. I wonder how important it is for the Welsh Government to establish a channel to allow local authorities to feed back on the operation of the legislation, and consult on potential changes to subordinate legislation. So, I guess it’s the ongoing involvement of local authorities in feeding back on future legislation.

Briefly, I think we’d say that arrangements need to be in place for councils to be able to feed back on the operation of the levy, and to recommend any changes to that subordinate legislation. Principles of social partnership should apply in our view—genuinely so—in terms of this being a power that would sit with local government. So, there needs to be a partnership approach for that subordinate legislation.

Great, thank you. And then, finally, do you think the Bill should include a requirement for a post-implementation review?

I think monitoring and evaluation is important. A post-evaluation review that potentially removes the power I think we’d have more concerns about. That would be my view. I don’t know whether Rob or Medwyn feel any differently.

We'll achieve something similar anyway, because those local authorities that choose to implement this will be monitoring it. And, in a sense, we’ll have a dynamic review, I think, in place post that, because local authorities will want to know is it working in the area, is it having unintended consequences, is it doing what it intended to do, are the measures working in the way that we intended. So, I think, inevitably, at a local level, that’s going to happen as a dynamic review anyway.

And the last word to Medwyn, if he wants.

I agree with what Rob and Huw have said. We need some sort of response after making the decision to go one way or another. Thank you.

Diolch yn fawr. Thank you very much for your time this morning, which has turned into 'this afternoon'. But we appreciate that you’re all very busy, and we do appreciate your time to come and give evidence on this session—very enlightening and great to have your input into this Bill. There will be a transcript available for you to check for accuracy, and I appreciate the offer of further information to come in fairly short order as well. So, diolch yn fawr iawn. We’ll now break for lunch, and we’ll be back at 1 o’clock. Diolch yn fawr.

A warm welcome back to this session—session 6.

Welcome back to everybody after our break and it's good to see our witnesses here with us for this, the sixth evidence session on the Visitor Accommodation (Register and Levy) Etc. (Wales) Bill. I'd like to welcome you to the committee and thank you for making the time to come down. Some have travelled far, so, it's good to have you here with us. If we could start by you introducing yourselves for the record, if we start at one end and go across. So, if you could introduce yourselves, please. Thank you.

Thank you very much for having us. My name is Alistair Handyside. I'm the executive chair of the Professional Association of Self-Caterers UK, Welsh branch.

Diolch yn fawr. Lisa Stopher, managing director West Wales Holiday Cottages.

Hello. I'm Barbara Griffiths, managing director of North Wales Holiday Cottages, but also representing other agencies within Wales.

And I'm Carl Thomson. I'm the public policy manager for Airbnb.

Fantastic. Thank you very much for making the time to come to this. We have lots of witnesses and lots of ground to cover, so, brevity would be appreciated, please, and to my colleagues on the committee as well. I'd like to start with a general question to all of you and it's to look at how the Welsh Government has engaged on this Bill. The general question is: how effective has the engagement by the Welsh Government been with you in developing the thinking around this Bill? I don't know—I'm in your hands—who wants to start.

I'll start.

There we are. Fantastic.

We were not invited to be involved in the development of this Bill, so I will defer to my colleague, Alistair.

We were involved, along with many, from the very beginning. I have to suggest that it was a bit of a one-way, because the officials, who do a brilliant job—and I want to thank them for all the work and the regularity of the meetings—whenever we were asking or challenging, were unable to respond, because that talked about the policy rather than the detail of the delivery. So, we would have been saying, 'Please don't do a per person, per night', and that was the end of that conversation, and so the first time we knew it was per person, per night was when the Bill was published. The first time we knew that there was going to be the possibility of a premium was when the Bill was published. So, the team worked very hard, but within the constraints that the Government allows them to work in.

Okay.

Yes, I have also been involved from the very beginning. I felt that decisions had already been made even before they started to discuss things with us and that, really, they were talking more about details than the basic principle of a levy.

Okay. Carl.

Our experience of working with the Welsh Government has been positive. We found officials constructive and open to feedback. Obviously, the policy has gone through various iterations since it was consulted on in 2022, but we're happy with the engagement that we've had and we're happy to continue to be involved in these discussions.

Barbara and Alistair, when did they start with you—was it in 2022 or was it before?

At least 2022 from my point of view. I recall a Visit Wales meeting, as it happens, in Dolgarrog when there were quite a lot of us there discussing it.

Alistair.

Primarily 2023.

Right. Okay, just for us to get the context of how long you've been involved. That's great. And a question, then, to Alistair and to Carl: as you mentioned in your written evidence that the charging of the levy on overnight stays could potentially shift the balance of visitors away from staying overnight to taking day trips, what impact would this have on local businesses and the economy, and can you suggest how applying the levy to day visitors could be achieved? Sorry, not to Carl, to Lisa. Sorry.

Is that to—?

Yes, to both of you.

Okay. The economic impact assessment done by the Welsh Government themselves shows that 20.1 per cent of the people that they surveyed said the levy would put them off coming to Wales, and a further 21 per cent said it would reduce the time they would stay in Wales and that it would reduce the amount of money that they would spend. So, visitor levies generally do have that impact, and the Welsh Government impact assessment shows that. So, it will reduce the visitor economy in Wales.

Lisa.

We rely heavily on domestic tourism, especially in the out-of-season months, so this would have a real impact on our small businesses that we represent in our owner portfolio.

Okay, and then, to Carl and to Alistair, this one, actually: you noted that the levy would compound the impact of broader Government policies, like the 182-night occupancy rule and the forthcoming abolition of the furnished holiday lets relief. Could you talk us through a bit more about that and what led you to give that evidence?

I think the worry that we have most is the cumulative impact of 10 interventions that face these microbusinesses this year. You’ve mentioned some and I will put them so they’re on the record. There’s the 182 threshold; there are the council tax premiums; there are the fire regs—which we fully support, but it’s another expensive intervention; there’s the abolition of FHL allowances, which is having a huge impact; article 4; statutory registration, which isn’t going to create the level playing field that we were told by Rebecca Evans when she launched it; there are the national insurance increases; minimum wage increases, which we fully support, but you’ve got to look at this in the round, at the cumulative impact; EPCs coming from Westminster; and then the tourism levy. Those are 10 interventions coming at once. We desperately need a cumulative economic impact assessment on that, because we are on the phone every day and it’s causing huge, huge issues both economically and in mental health—I mean, it’s like dealing in COVID again. This is the worry that these small businesses have—they’re so small, and look at that as a pile on a small business. Thank you.

Carl.

I agree with Alistair. The concern that we have is that many of these changes are being brought in in quite close proximity to one another with no time really being taken to assess and understand the impact of each of them. The visitor levy’s a piece of this. On its own, it’s unlikely to make Wales uncompetitive, but it’s that cumulative impact point that Alistair made. It’s about the need to be cautious about how much more difficult and expensive all of this makes it to operate as an accommodation provider in Wales.

Thank you. Barbara and Lisa, have you got a view on that cumulative—? I know you haven’t given evidence as such, but it's just your opportunity to be part of that discussion.

The cumulative effect is the same. We act on behalf of our owners, and they are then coming to us and saying, ‘Look, this is affecting me, this is affecting me, this is affecting me.’ As an agency, and as all the agencies, we have to try and help our owners through that and it really is a massive effect.

I totally agree with what Barbara just said there. As an agency, we have to navigate this with our owners.

Rhianon, did you want to come in on this point? You're unmuted.

Thank you, Chair. Both unmuting at the same time.

Obviously, we’re here today to listen to your evidence as witnesses that we will, obviously, understand and comprehend. Just in terms of our purpose here today around a visitor levy—and you were talking to the wider accumulation of interventions that are occurring—this is, obviously, going to be limited or not limited to what your local authorities are going to do, and I would presume that you would be working with your local authorities and having those discussions on that level. So, as far as our mandate today in terms of talking about the visitor levy, how would you pinpoint difficulties in terms of what you call the ‘accumulation basket’, pertaining to the depth of how a visitor levy would impact you? And I hear that one of your witnesses today has said that, on its own, it wouldn’t necessarily impact across Wales. I don’t know who would like to comment on that, Chair.

Alistair.

We do want this to be considered in the round, with respect, because they're small businesses and it is an accumulative impact. If you look at the way that the levy is being done on a per-person, per-night basis, it's a regressive tax, so the lowest price accommodation ends up charging a disproportionately high percentage. I've got some simple figures here that I can share with you afterwards. That would be about a 17 per cent uplift in off-season and a 7.5 per cent uplift in peak season, so it's a very high uplift that will hit the lowest income families of all trying to have family accommodation in Wales. We have a most amazing range of very low-cost, very good quality, clean accommodation in Wales, and they will be having to charge a disproportionately high amount of tax. So, if you book a very expensive hotel in Cardiff as a businessman, you'll be paying about 1 per cent, but if you're a low-income family going to a lodge in mid Wales in the autumn half term, you'll be paying about 17 per cent, and that is why we find it really, really threatening to our small businesses that offer that kind of accommodation, and the impact on those families on low incomes.

If I could quickly respond to Rhianon's point, key to all of this will be the consultation that local authorities should undergo before they introduce a levy. So, we think it's important that this is part of that consultation with residents, businesses, visitor accommodation providers, destination marketing organisations—that all their views are sought. We also think it's important that the consultation should consider data from the registration scheme once it's up and running, because the registration scheme will be the only singular, authoritative source of evidence for the size of the visitor economy in Wales. That will be a crucial data set and source of evidence when it becomes the time to inform whether a visitor levy should be taken forward and what the impact of it might be.

Part of the evidence that we've received from the Cabinet Secretary, the WRA and others is to try and keep it as simple as possible, and that's the argument for a per-person, per-night figure, rather than a percentage. For those small business owners that the majority of you are representing, if not all of you are representing, how does that tension, I suppose, happen if it was a percentage fee as opposed to per person, per night? What would be the complexities of trying to administer that, and would it have caused more of an issue if they'd gone for that aspect? Just tease out some of that intricacy, I suppose.

Trying to reflect that, if you buy a £385 week in mid Wales in winter, and there are six of you staying, because it's four kids and two adults, and you're staying for seven nights, you're adding £65 onto the cost of a £385 holiday. That's the danger of it at per person, per night at 17 per cent. So, the argument there might be better that it was a percentage. There are arguments against percentage, but percentages tend to operate on a fairer basis, but you won't find many visitor levies worldwide that are charging 17 per cent in off-season because it's just—

And that's the cumulative of a family of four—

A family of six going to a lodge.

Have you run the numbers on your figures if you just charged adults?

Well, if it was 5 per cent on £380, it would be a lot less, wouldn't it? It would be £17, so—

But then, say it was a family of four or a family of six, in your example, and it didn't charge for children, just for the adults staying overnight, that would get closer to that lower figure.

We don't support the charging of school-age children. We think that is detrimental to both Welsh families and the Welsh language. Scouts—all these people won't be staying away as much in Wales, which is what—. Surely, the visitor economy in Wales should be working together to get more people staying in Wales and enjoying Wales and encouraged to engage with Welsh culture. This won't enable that.

Thank you for that. Just moving on, and I'll bring Sam in after this now, but to you all, to move away from the raising of the tax to the use of it, or the use of the levy, in section 23, the Bill requires local authorities to use the proceeds of the levy in the area of destination management and improvement. Have they got those stipulations right within the Bill, or what would you like to take away or add to it to give those assurances, I suppose, to the industry that the money is raised for the benefit of destination management and that aspect? Just your views, and we'll go down the line, because I think everybody will have a slightly different take on this, maybe. Carl.

Sure. The question of how local authorities use the revenue from the visitor levy is, of course, a decision for them. We think that the parameters that are set out in the Bill are sensible. It seems logical that the revenue that's raised should be used to promote tourism, to provide services or to manage the impact of tourism [correction: to promote tourism or to provide services to manage the impact of tourism]. One change that the committee might want to consider is around section 25 of the Bill, which relates to consultation before introducing a levy. It might be helpful to clarify that, as part of the consultation into whether to introduce a levy, and as part of its final report to the Welsh Revenue Authority, local authorities should seek views on how the visitor levy money should be spent.

So, having a greater voice from the industry, effectively, on how it's spent, rather than decisions being made by local authorities.

That's right. And we're seeing that in Scotland where, as part of the consultation process, Scottish local authorities are setting out quite detailed plans and proposals for how they would use the revenue.

Okay. Thank you. Barbara.

I agree with what Carl said, but I think public-private partnership is absolutely essential in this, similar, maybe, to the tourism business improvement district system that they have in Manchester, so that everybody is aware of what the funds are and how they're being spent, and, ideally, to show to both locals and to visitors, 'This is how the money has been spent'.

Right, yes. If you've got extra bits to add—. Otherwise, it's just concurring.

Yes. I completely agree with Barbara and Carl.

Any further—?

Yes. I think we would ask you, as the committee, going forward, to make sure that, embedded in this legislation is some kind of annual review that looks at how much money is being raised, how much it's costing to raise that money, what that money is being spent on and the economic impact assessments. And we'd ask you to do that because we're three years into 182, for example, and we still don't have that. So, we don't want to wait three years to find out if this is working and the money is being spent in the right place. This is a tax, this needs to be accountably spent and accountably measured and the impact on our sector measured.

Thank you. Sam, I'll bring you in.

Thank you, Chair. I'm really grateful to you for being with us this afternoon. I know that some of you have travelled a great distance to be with us and it's really appreciated.

I just want to pick up a point that the Chair raised about the impact on local businesses and the economy—the potential impact of this levy. Could you just give us a quick flavour of the types of supply chains that your businesses would interact with and support, as a result of the catering and accommodation businesses, of course, and the potential impact on the supply chain within Wales, not just on the accommodation providers themselves, if this type of business wasn't able to succeed in the future?

Small operators, obviously, of local accommodation use the local plumbers, they use all of the local tradesmen, local cafes and everything. That would damage the local economy. They support everything in the local economy—the shops and everything. So, yes, it would be very damaging.

Anything to add at all?

Yes. Cleaners, laundries, all those sorts of things.

I concur with that. In 2023, travel on Airbnb supported 5,336 jobs in Wales—that's all part of the broader tourism supply chain. So, anything that makes tourism in Wales less competitive or less attractive or reduces the demand for overnight stays is going to have a knock-on impact on that.

Thanks.

The summer wave report from Visit Wales said that visitor numbers were down—overnight visitor numbers were down—23 per cent in 2024 from 2023. That's having a massive impact not only on our sector, obviously, but it has a knock-on effect on the viability of pubs, visitor attractions, cafes, restaurants. So, the whole rural and coastal economies run differently to city economies, and that's why you see visitor levies in Amsterdam, but not Holland, in Barcelona, but not Spain, in Venice, but not Italy. So, we've got a one-size-fits-all again, which we think would be extremely damaging and will have a knock-on effect across the whole of the visitor economy in rural and coastal communities.

Thanks.

Rhianon.

Thank you, Chair. I’m just probing that comment, because the whole raison d’être behind this is that it is locally accountable, democratically. And if your coastal property is in a rural community of Wales, your local authority would absolutely understand if there were to be detriment in that regard and would be working alongside you and consulting with you. And it would be, therefore, that local autonomy that would, therefore, decide, 'No, you don’t want extra toilets in Cardigan bay; no, you don’t want extra parking; no, you don’t want extra marketing for the accommodation that you are providing'. So, I’m struggling to understand how you feel that would be of detriment, if your local authority is working alongside you and you were working alongside them. It would be a matter of individual choice.

There's nothing in the Bill currently that we're seeing that would ensure that that is being done in the way that we've talked about—a public-private partnership—and the way that the money is being spent. We've not seen that. And, again, I would say that any levy locally needs to massively consult with the local businesses that would be collecting it, to make sure that the money is being spent in a way that is beneficial, should you choose to introduce one. We don't see the protections in the way that the money is proposed to be spent in the Bill. If any local council is already spending that money, it would be very easy for them to substitute one budget for another, so there would be no increase in that area on money spent in the local visitor economy.

That's fundamental, isn't it? If you choose with your local authorities to go down this route and if you decide to introduce a visitor levy locally, autonomously, then that principle of additionality is absolutely key. And on that point, if it was decided to be the case that a visitor levy in your area would go ahead, then that additionality is absolutely key in terms of ring fencing. So, on that point, I would agree with you. I think, fundamentally, it's a matter for that local area, isn't it, to determine whether to go down a visitor levy approach or not. Thanks, Chair.

Thank you.

Sam.

Thanks, Chair. I guess the point you were raising earlier, Alistair, was that one-size-fits-all is not necessarily appropriate for a nation and much more for a destination, perhaps, rather than one rate across the whole of the country. I just want to touch on the registration process and some of the possible administrative burden on providers with the registration process. Carl, I know, through Airbnb, you said the Bill only gives minimal details about how the registration system would work and it grants Ministers wide powers to decide what additional information should be required from visitor accommodation providers in order to register. I wonder what sort of details you’d like to see regarding the registration process and if you feel the powers, as laid out in the Bill, are appropriate.

The Bill gives Ministers quite wide leeway to define the scope of the registration scheme and, in some ways, that’s understandable. There’s got to be flexibility in the design and not everything can be set out in legislation, but it does create some uncertainty about what the scheme looks like in practice. On the face of the Bill, what’s proposed is a simple, light-touch registration scheme. Our concern is that it doesn’t set out some of the key features of how that will work in practice. And it’s those features that determine whether it’s a success and whether it’s easy for accommodation providers to register, or whether it becomes overly complicated and an administrative burden. Our experience with registration schemes around the world is that user drop-off often directly correlates with the complexity of the scheme and any barriers or friction for registrants, and that’s particularly the case for casual or occasional operators—so, the kind of Airbnb host who, every now and then, shares a spare room in their home to make ends meet.

What we would like to see is the Welsh Government publish quite early on in this process guidance or a statement of intent as to how they see the registration process as a step-by-step framework working. Our views are that it should be hosted on gov.wales, it should be consistent in design with other Government portals or gateways, and there needs to be a single workflow so that the process can be completed in one sitting, or it can be saved and completed later. Operators should, of course, provide the information that's set out in the Bill about the property and about themselves as a visitor accommodation provider. As part of the registration process, applicants should be directed to a centralised resource, with up-to-date health and safety rules, and payment should be taken at the end of the process and, once payment is confirmed, the applicants should receive their registration number instantly. For us, that's the key factor for the registration scheme to work: applicants need to get their registration number straight away and know that they can carry on and continue operating. Once you move to a system that is less declarative and more around reviewing documents, or someone having to look at that process at the back end [correction: or someone having to look at and process them at the back end], it becomes very complex, it becomes very time consuming and it becomes very uncertain for those who are registering.

Just on that point, then, we heard from the WRA this morning, who are likely to be administering the registration process, that simplicity was something that they were keen on. Do you think that there's enough provision in the Bill to do that, bearing in mind that what you've asked for there is for it to be in guidance rather than on the face of the Bill, and therefore it allows flexibility? In a way, it's easier to change guidance than it is to change legislation, so have they got the balance right in the way that it's drafted?

Broadly, yes. The Bill gives Ministers power to implement the kind of system that I've just described, but, obviously, because that is up to ministerial discretion, it creates some uncertainty around how those decisions will be made and whether that will be the end outcome.

Okay. Thank you.

Thank you, Chair. I think you've all commented in your responses that additional information could be included within the register. I was just wondering, perhaps, whether you could just give examples of the types of information you think should be included and why that should be included. Barbara.

Yes, I've always supported statutory registration; I've been calling for it for a long time. But we need to have a level playing field between absolutely everybody, right down to those who just let their spare bedroom on occasion; they need to be as safe and as legal as all of the other businesses that are already existing. Therefore, I feel we need to have, for example, evidence of a fire risk assessment, electrical safety confirmation, gas safety confirmation and correct insurance. As an agency, we already require this of our owners. It's very simple—they literally log into our owner portal and upload the documents that prove what we're asking for. I think this is the minimum for registration—at the very initial level, that, I think, is the minimum level that we should have.

If I may just tease that out with what Carl's just said about simplicity and not checking documents, that doesn't quite compute, so—

I'm saying that there needs to be a level playing field and that every business, from the largest to the smallest, should prove that they're safe and legal.

Fine. Okay. Thank you.

You have to have these documents by law, so you just upload the document. You're not allowed to operate for a single night with a single room without having a fire risk assessment that is recorded. So, the uploading of that document is no more difficult than you having to upload a document for anything else that you may do. So, we don't think that that is, necessarily, a burden on the businesses. They have to have them and they should be able to provide them. That's a level playing field and that's what Rebecca Evans promised would be in the statutory registration scheme.

I'll just bring Lisa in on this, and then Rhianon, I think, wants to come in, unless you've got anything else—

I'm in complete agreement with Barbara, absolutely, as an agency—nothing else to add.

Rhianon. Hang on, let's just unmute. There we are. Go for it.

Thank you, Chair. It's just a simple clarification: I think there's no disagreement that there should be an absolute requirement to follow those basic requirements in a simplistic manner. I don't see how this system does anything other than create that level playing field, but on a more macro level, and I would presume that any responsible agency or management company is doing the legal requirements at the moment, but, equally, in terms of how we improve that across the piste, across Wales, I think is in everybody's benefit. I'm hoping that people would agree with that statement.

Sam.

Thanks. Just perhaps a side question in terms of information, including registration. I'm aware that, I think it was in Edinburgh, when some registration schemes were put in place, there was also a requirement around quality, not just basic health and safety requirements. Do you have any concerns that this could start to take place with this legislation, that Welsh Government could start dictating the types of accommodation, and the quality of the accommodation, not just the basic health and safety requirements? Do you have any concerns with that, or not at all?

That was brought up last year—that there was a thought that there would be three phases. So, there'd be basic registration, then there'd be the safe and legal, and then there'd be the quality. The quality aspect of that's never been consulted on, Sam. We think that it's up to an owner to decide what kind of market they are at. We want them to be safe, legal and clean, but if they want to aim at a low-price market, or a top-end five-star gold market, that's entirely a decision that should be left with the independent business, and not arbitrated by Government. Quality is very self-determining, through reviews and all of those kinds of things, in arguing you need to perform if you want to be successful, so there's a real commercial driver for getting it right, so we don't think there's any mandate at all for a compulsory quality aspect of this. We don't think it adds anything to the mix. They're very rare across the world, to mandate that people have to participate in them. Amsterdam hotels are an example, but not Dutch hotels. Again, you come to specific reasons why you might want to do something.

Okay. Thank you. Carl, did you want to say something?

Yes, Sam, if I could link this back to your original question, we think that the registration scheme should also capture details around a property, including the number of units, the number of bed spaces and any accessibility issues. That will provide a better and more detailed picture of the visitor economy for destination marketing organisations and for tourism planners, and it will also be helpful in giving a clearer picture of the sector when local authorities decide whether they wish to proceed with the visitor levy.

We also think there's another piece of information that the registration scheme should capture, and this is very important. With regard to short-term lets, we think that the registration scheme should capture whether the visitor accommodation is within the registrant's primary residence, or otherwise. Now, the reason for that is, without this information, local authorities may look at data from the register, they may see a list of addresses of short-term lets, and they may assume that every one of those is an entire home that's operational all year around, and thus assume that those are properties that could be brought back into long-term residential use, whereas the reality is that short-term letting activity is very varied. You need to be able to distinguish between dedicated professional holiday lets and those types of hosts that are perhaps only renting out their home for one or two weeks while they travel or while they go on holiday.

Okay. That's really helpful, thank you very much. Just coming back, Barbara, to your comments, clearly you feel very strongly about the need for appropriate registration. Do you think there's any risk of people not registering, and how should Welsh Government ensure that there is compliance with the requirement for accommodation providers to register? What could Welsh Government do to make sure that properties are being registered?

I think what Carl set out was that, in the process of registration, you end up with a number, which has to be displayed for all marketing—in other words, you can't do any marketing, you can't offer yourself, until you've got a registration number. I think that's the only way that you can get around it. But I also feel that registration of all accommodation providers throughout Wales needs to be complete before there's any chance of a levy being brought in, because if it's rolled out on an area basis, or on the basis of self-catering before serviced accommodation, I think there's going to be total confusion and it won't actually give the Welsh Government the information they need on the bed stock that exists within Wales.

Okay, thank you. I think Carl wants to—

Could I just quickly add to that? One thing that would be helpful would be to clarify how accommodation providers and especially smaller operators could meet the obligation in the Bill to advertise the levy. It's not clear at the moment whether that simply means ensuring that the final price paid by the guest is included in the price that's displayed to the customer at the time of booking, or whether it's a broader requirement on accommodation providers to raise awareness of the policy. So, the committee might want to look at whether that part of the Bill is necessary, and seek the details of the intention behind it, or it may be helpful for the Welsh Government to provide guidance on that point, maybe with a non-exhaustive list of ways in which that obligation could be met.

Just going back to your point there, Barbara, about it being rolled out across the country before doing it in local areas, does that mean that you would not want the autonomy for local authorities to be able to decide through consultation that they bring it in or not, so that it becomes more of a national scheme? Or is it more that the registration needs to be all done before then—say, you need to register everyone before you say Anglesey or Gwynedd or Ceredigion or Cardiff can bring it in?

I feel that the registration throughout the whole country needs to happen, partly because until that is complete, no local authority has got the information they're going to need to decide whether or not it's worth their while applying the levy.

But if the whole local authority had registered all those providers within their local authority, they'd have the information that they would need for that local authority.

Yes, but if, for example, Gwynedd is registered first and Merthyr is last, then it could be, all of a sudden, two years later, Merthyr are saying, 'Oh well, actually we would benefit from this', and they've missed out on two years. It just doesn't make sense to me that there should be anything other than a pan-Wales registration system before any local authority can make a decision as to whether or not it's to their benefit to apply a levy.

That's just for me to understand your thinking behind that. I don't necessarily agree, but—

That's fine.

But I'm just trying to understand your logic in that sense. Sorry.

The part of that that makes sense to me is that then it would be self-policing, because you would say any property or any site within Wales who wanted to market themselves would need that registration number, whether there's a levy applied by the local authority or not, so it becomes self-policing in terms of those needing to—. If you're providing overnight accommodation in Wales, no matter if there's a levy there or not, you'd need to have that registration in place—

And it would then prove, in the way I want it done, that the accommodation would be safe and legal.

Yes, rather than an ad hoc approach across Wales.

In a sense, the registration number is separate from the levy. You get the registration number to continue to advertise, but then you've given the details for the levy, should you choose to introduce one.

Okay. Just a real brief one. I'm sorry, time is going. Of course, you have concerns about the administrative burden that the levy would place on accommodation providers. Could you just briefly outline how you think the administrative burden could be mitigated, reduced and be as minimal as possible for you? Carl.

I can do that. In some ways, that links to the previous question. If you were to have a system where some local authorities had nothing, some local authorities had registration only, some local authorities had registration plus visitor levy, that's going to be very difficult to communicate to accommodation providers, and particularly for smaller operators, what the requirements are. The way to minimise burdens is really to have as consistent and as simple a design of a scheme as possible. One aspect of that is making sure that, where a visitor levy is introduced within local authorities, it's consistent throughout the local authority area. So, there should be no geographical or seasonal variation of the levy as well [correction: of the levy within local authorities as well].

We also think, for an administrative purpose, it may be helpful to change the point at which the liability for the levy arises. At the moment, it's tied to the time of entering the property rather than the time of payment. Now, tying it to the time of payment is generally easier for operators because it's easier to implement, it's easier to track any alterations to the booking, and it allows remittance of the tax in the same accounting period that it is collected from a guest.

Makes sense.

Talking about administrative burdens, we work with accommodation providers across three local authorities, so if one local authority brings in a levy and the others don't, that would be very confusing not only to our accommodation providers, but also to the guests and the visitors. So, that would be an additional administrative burden, and some owners have properties that are in more than one. So, that would be very complex.

Okay. Anything else? No.

Just don't do it. [Laughter.] Sorry.

That's one big admin burden. Thank you, Chair.

There we are. I'll bring Rhianon in on this now, so if we could unmute Rhianon. There we are. Thank you.

Thank you, Chair. What are the views then on the proposals in the Bill that would allow local authorities who decide to go down this route to introduce a premium on the levy in their particular area? Who would like to go first?

That's down to me. I'm totally against the introduction of a premium. This has not ever been mentioned in any of the consultations over the last three to four years. So, it would just add so many complications as well. I think the main reason is that it's not been consulted on; the only occasion that it's ever come up was literally when the Bill was published.

[Inaudible.]

Is there any other view on the table?

I'm sorry.

Yes, Alistair would like to say something.

In our submission, we pointed out that Wales is already, with the UK, one of the most expensive destinations; it's 113 out of 115, or whatever it is, in the world already. If you add this levy, you're going to make Wales the most expensive destination, along with Scotland, in the world. If you add a premium on top of that levy, the headlines are going to be horrendous and it will have a massive impact on visitor numbers. You do not want to be the most expensive destination. Don't forget that we are already taxing Welsh visitor economy businesses the highest tax on hospitality businesses in Europe, which is our nearest competitor. We have the highest rates of VAT on hospitality, the highest business rates on hospitality, and all of the taxes that we know are being added currently. Don't add a premium. Take the premium out of the legislation.

Okay, thank you, and is there anything from Airbnb?

Really, to agree with that. There are different models of visitor levy, each with their own positives and negatives. Having decided to go for the per person per night model, we feel the Welsh Government should lean into the advantages that that has, which is its consistency, its simplicity, and the ability for local authorities to track future revenue. Applying a premium seems to undermine the policy intent that the levy rate is set nationally and consistently. And adding on to the amount through a premium would also exacerbate some of the effects that Alistair has talked about, which is the fact that that particular design of levy is the most regressive.

Okay, thank you very much. I'm just going to move on then to the areas within the Bill around exemptions, whether children would be exempt, as has been touched upon previously, the role of third parties and the 30-day filing period. It was highlighted that the levy applying to children is notably different from tourist taxes in most of Europe. Do you feel children should be exempt—I know that we've touched upon this earlier—from paying the levy, and what do you think the minimum age should be for applying the visitor levy? Who would like to go first?

I would say that children of school age should absolutely be exempt from having to pay the levy.

Is that 16, then?

Are you talking under 18, or—

I think we're talking school ages up to 18.

Eighteen, okay.

And the software systems can manage that easily.

Yes, okay, great. Anything different from our witnesses?

No, just to reiterate that we've been a family-friendly destination and that children of school age, they also travel. We also travel. Schools travel. They go to important places like the Urdd. It's important that we don't charge them for travelling to the Urdd, where they get immersed in the Welsh language. It's very important for them that overnight stays in the Urdd, for example, or Scouts or whatever, are not charged.

Agree.

Thank you. And Airbnb, have you an opinion on this?

Yes, just one further point, which is that there is one issue from a platform perspective, which is that some booking intermediaries don't collect the age of the guests, or only collect whether they are over or under 18. So, that could be challenging if you were to use a different age to define a child.

So, on your platform, is it 16 or is it 18 or—?

It would be 18.

Eighteen on your platform, okay. But others you know of differentiate.

Sorry, I didn't catch that.

Other platforms could potentially have a—?

Yes. Other platforms may or may not capture it in that way, or may not capture the precise age of the guest.

Okay. Thank you.

But, in terms of simplicity, I think there's unanimity across your witness session in terms of under-18s; I think you've been very clear on that.

The final question that I have, then: the Bill places a duty on visitor accommodation providers to file a return one month after the end of the accounting period. Do you feel that's appropriate in terms of timescales, particularly for smaller accommodations, bearing in mind the vast array of differentials in terms of accommodation across Wales, given that they will be interacting with this new system?

No. Thirty days is not sufficient. We would strongly recommend 60 to 90 is considered. Thank you.

Okay.

I'd also point out that, in Scotland, the duty to file a return is two months after the accounting period, so there may be merit in aligning with that approach.

Yes. Makes sense. And anybody else?

No, I agree.

I agree.

Okay. Thank you so much. Thank you, Chair.

One thing the Cabinet Secretary did say, when we were asking about minimum age and the point about charging for children as opposed to exempting them, was that it would put a burden on you or your clients to check ages of children in your accommodations. Is that a valid concern, or do you do it—? You've all said that you capture if there are children, and you exempt them, and you're family friendly. So, is that a bit of a red herring, or is it—? What are your thoughts on—?

Most of the guests that book our accommodation are fundamentally pretty straightforward and honest. I think, once people understand what a system is, they follow it, and I don't distrust our guests.

This is a visitor levy; it's not an operator tax. It's called a visitor levy. We trust our visitors, as Alistair says, to give the correct information.

So, there wouldn't be an administrative burden, then, of exempting children?

No. We already ask.

No way should you ever consider making hospitality businesses check the ages of people as they walk in the door, so be very cautious on making this—

Unless you're selling them alcohol.

Yes. But we're not in 99 per cent of cases.

Of course. There we are. Thank you. I'll bring Mike Hedges in now for the last few questions.

Diolch, Cadeirydd. It's fairly common, isn't it, a visitor levy, across the world, certainly across western Europe. France brought one in at the beginning of the last century. Do you know anywhere, which, having had a visitor levy, has decided to end it?

No, I don't. I'll be honest, I don't. But I think, once people get used to a revenue stream, it's very hard to switch it off, which is where we're trying to assist this august panel with the scrutiny on it, to make sure, if you are going to consider one, it has the most positive outputs it possibly can, and not some of the negative ones that we've tried to point out to you. Because, once something gets on the statute books, it's almost impossible to get it off. So, our caution is: get it right, listen to the evidence that you're being submitted in these submissions, and, if you're going to do it, make it as good as you possibly can.

You talked about prices earlier, and I did want to come in at that stage, but I did a quick check again. If you were renting accommodation in Cornwall or renting it in Blackpool, Cornwall's roughly twice the price for almost every item of accommodation. Why doesn't everybody go to Blackpool, because it's cheaper?

I mean, that's a visitor choice. Wales is desperately trying to market itself and having a welcome to Wales campaign and goodness knows what to try and get the visitor numbers up, and there are a huge number of dynamics that drive visitors to go to destinations. This could be another barrier to them coming to Wales, rather than encouraging them to come to Wales. It's entirely the guest's choice about where they go. We compete worldwide—every single one of us competes worldwide now—and we need to make sure that the value and the quality of that offer compels people to come to Wales.

And you also know that prices vary, not only at different times of the year, but on demand. In a budget hotel, I paid £120 for a room for one night in north Wales, and, the same room in the same hotel, I paid under £50 at roughly the same time of the year, because there was high demand at one time, and low demand at the other. Don't you see demand as being the driver of prices, and the driver of people going somewhere, rather than what is, effectively, a very small levy?

It's not a small levy. We keep hearing that it's just £1 per person per night. I've just explained to you, if you've got a family of six, it's £7.50 a night on seven nights. It's a lot of money to low-income families. Please stop suggesting it's a small figure.

But, can I just say, as somebody who was born and brought up on a council estate, I find it difficult to be told by somebody who, I would assume, has had a very privileged background that I don't understand about low-income families? I'd like to put that on the record, Chair.

The other point is that I can understand why you don't want to collect any additional money, because it may come off the bottom line, because you charge what the market will take, don't you? You don't think, 'I'll only make £10 on this room'; you charge what the market will pay—is that correct?

Yes, that's correct, and that means that the operators are likely to be absorbing this as an additional cost at a time of a cost-of-living crisis, all the other 10 interventions that we've told you about. So, this is most likely to be absorbed by the businesses, which simply do not have the margins, sir.

I don't see the accounts of these businesses, but I'd be surprised if many of them were in such a situation that paying £1.75 per person per night would actually mean them closing. Do you know how I can get access to those accounts?

I can't hear the question.

I can give a very quick, brief indication on a property that I used to own, a small two-bedroomed apartment in north Wales. My gross income in one year was £15,000; expenditure was £11,000, giving me a profit of about £4,000. If I had not reached the 182-day requirement at the time, I would then have been liable to pay premium council tax, which would probably have been at about £3,000. So, that would have brought my profit down to £1,000. That would have been my total income for the year, which I might even have had to pay income tax on top of. And that's how—. The owners that I represent, many of them, have those sorts of figures of income.

What's the value of the property you're talking about?

I sold it recently for £200,000.

So, if I had something that was £200,000 and I was getting a rate of return of 0.5 per cent, I'd think I'm in the wrong business.

Yes, but there are lots of reasons why people go in for offering self-catering accommodation. Sometimes they're trying to hold on to a family home; others think that they can make a profit, and they can't. There are just loads of reasons.

I'm just conscious of time, Mike, and I'd just like to go on to—.

I've got no further questions.

Sorry?

I have no further questions I want to ask.

Okay, thank you. Just with regards to the subordinate legislation and the legislation, how it should be evaluated going forward, you've talked a little bit earlier about evaluating guidance and making it as good as it can be, if we're going to bring it in. When should you evaluate? So, say—. As written, it could be coming in in different parts of the country at different times. So, when would—? The post-legislative evaluation, when would you suggest would be a good time to do that: when the whole country has adopted it, or when everybody's declared that either they are or not? Do you have a sense of when would be a good time to see if it's working, if it needs changing, that aspect of it?

I have to say, I welcome that question, having had the experience over the last three years of trying to get an impact assessment done on 182. We would press the committee to look at this as being annual, with a proper examination of how much is collected, how much it costs to collect it, and the effectiveness of the spend, and the impact of actually introducing a levy, so that adjustments, as necessary, can be made quickly. You know, we're up to the third anniversary of the announcement of 182, and we still don't have that. We can't afford to go that long without impact assessments being done. And then we repeat. The cumulative impact assessment is what we most desperately need, because these are so many measures on such small business.

Yes, Carl.

I'd reiterate the view that the registration scheme should come into effect across all of Wales at once, because otherwise you're going to end up with a very fragmented patchwork of regulation and it's going to be extremely difficult to track what the impact of that is.

At the national level, at the Wales level, we would suggest that the Welsh Government commit to a business impact review of the legislation, probably a year to 18 months after the deadline to register as a visitor accommodation provider, and one year after at least one visitor levy has come into effect. We think that that should look at tracking progress of the number of visitor accommodation providers that have registered, whether there's been any negative impact on the tourism sector and on the health of the self-catering tourism sector. And if it's required, that could be the point at which a framework is established for updates to guidance or, potentially, changes to the legislation in a broadly similar manner to the implementation update framework that the Scottish Government introduced last summer.

And then the final point is that, at a local level as well, we also think it's important that, after a local authority has introduced a visitor levy, there should be a review period built into that where impact, local impacts, can be considered. So, we would recommend that, once a visitor levy is brought into effect, it should instead only come into force for an initial three-year period. And at the end of that period, the local authority should make a proactive decision, following a review, as to whether it would like to continue with it. That would ensure that the effectiveness and any negative impacts are formally assessed, and provide a point at which changes could be made, if they're necessary.

Okay, thank you for that. As agents, effectively, or as people who represent owners and operators—. There is provision, I think, within the Bill, for you to act as an agent and pay the levy, if you're collecting the money, and pay it on their behalf. Could you give a view on is that a good idea, that you're able to do it on behalf of your clients, or whether or not the onus should be on those individuals to do it themselves? And within your businesses, would it add—? I think Airbnb is slightly different, maybe, from some of the more—. Because you're an international firm as opposed to national companies. But could you give a view of your thoughts on whether or not that link with the WRA would—? You know, that aspect of it.

Certainly, from our point of view, although we would be physically collecting the levy on behalf of our owners, we would pass it on to them at the end of each month, and we would expect them to be completing the WRA forms, simply because many of our owners will take their own private bookings, through friends and family and that sort of thing. We can't account for that, and it's much simpler for the owner themselves. They are the responsible person, so we will give them all the information they need from our point of view, but it's then up to them to add any extra information before they put their return in.

And you'd capture that information that you would need to be able to report that.

Owners use more than one agency, as well as their own bookings.

Thank you very much. That brings us to time today—

Can I just say one thing? There's a horrible statistic in the economic impact assessment. It gives three measures of whether it goes well, not very well, or badly. And if it goes badly, it will cost 730 private sector jobs: 730 private sector jobs is what the Welsh economic impact assessment says on that. I'll just leave you with that fact. That is unbelievable, when the actual gain that's being proposed on this is so small. The Welsh Government should be looking to create 730 jobs, not get rid of 730 jobs. Having said that—and I want you to think about that—I would like to say that we are incredibly grateful as a sector because we have not had this kind of engagement before, this level of scrutiny, the kind of committee scrutiny that you're putting this through. We welcome it, and we thank you very much for it.

Thank you for making the time to come and speak to us today. It is appreciated. Thank you very much. We'll take a short break now to reset the room for our next set of witnesses. There will be a transcript available for you to be able to check for accuracy. Diolch yn fawr.

Welcome back. We have reset the room and we are now here for the next session.

This is the seventh evidence session for the Visitor Accommodation (Register and Levy) Etc. (Wales) Bill. We’ve got some witnesses online, and we’ve got a witness in the room as well. I’d like to ask them to introduce themselves for the record. If we start in the room with Mathew.

Thank you. I’m Mathew Teasdale. I work for the Youth Hostels Association. I’m the operations and partnerships manager for Wales.

Croeso. And on my screen, if we can go to David next, please.

Hello, I’m David Weston, I chair the UK Bed and Breakfast Association. We represent bed and breakfasts, guesthouses and small independent hotels.

I’m Dr Llŷr ap Gareth, head of policy, Federation of Small Businesses.

Good afternoon. My name is Andrew Green. I’m policy manager for pub operations at the British Beer and Pub Association and the Welsh Beer and Pub Association. We represent pubs and brewers across the UK.

Welcome, and thank you for making the time to come and speak to us today. We’ve got about an hour, and, as I said, brevity is the order of the day, if we can, to get through as much of your evidence as possible.

I’ll start with David, if I may. I just wanted to look at the current taxation in the UK and the impact of the levy on visitors staying overnight. In your written evidence, you noted that the tourism sector in the UK is subject to high taxation, leading to the UK ranking poorly in tourism price competitiveness compared to other countries. What impact would the implementation of a visitor levy have on the Welsh tourism sector in the current financial climate?

I think that there is high tax on our sector. If you add up all the taxes that apply to tourism in aggregate—things like alcohol taxes, fuel tax, port departure taxes, VAT—it makes the sector relatively highly taxed compared with our competitors that are competing for tourism custom—other places in Europe. As we mention in our submission, the World Economic Forum rates the UK as 113 out of 119 countries for tourism price competitiveness.

We’re also not long out of COVID, and financially, a lot of the small businesses are still not quite recovered from COVID. And we’re in a tough situation financially, with consumers having limited discretionary spend. So, in that background, we think that introducing another tax, regardless of all the possible reasons for a tax—and there are some valid reasons for tourist taxes—is going to hit spend and hit the economy.

People only have a limited budget, so if there's an extra amount of tax on their tourism, then they will spend less in the destination when they get there, and that will affect shops, restaurants, accommodation and everything else they would spend their money on in that destination. And it may also push people from staying overnight to day trips. All these are marginal things that will change, but if we increase the taxation on tourism, then in our view those things are bound to happen.

I'll open it up to anyone else who wants to add anything to that. What I'd ask is if you're going to say the same thing, don't say it just to agree. But if there are extra things that you'd like to add, then certainly we would be interested in hearing that. Llŷr.

I think I'd reiterate—. Sorry. But I'd reiterate the cumulative impact of it. Outside of the areas that David has mentioned, Wales is also the only UK nation to not recover visitor spending levels from 2019, according to the tourism barometer. There's also the cumulative impact that is impacting on tourism as well as other small businesses, such as the national insurance increase for employers, of course, and that will hit this sector more than many others, on the basis of the part-time workers and the number of workers needed. So, lowering the threshold for that will have had a disproportionate impact here. Similarly, there may be valid reasons around a visitor levy, but we do argue that this is not the time. I'd also make the point in terms of our response that since we've done a report in 2022 on this, 'Welcoming Communities' around tourism strategy in the round, we have taken the approach, guided by our members, that they are not in favour of a visitor levy. But we have also asked them, if it is to happen, how it should happen, so I hope we'll get on to some of those things and that we can have some learning as well.

Of course, we'll tease some of that out. Thank you. Andrew.

Despite being asked not to repeat what previous people said, I just want to reiterate this layering effect that was referred to. I think it's very easy to see the visitor levy as a small amount, potentially, if it's stood on its own. But you have to see it in the context of the other costs that businesses are struggling with, in reference to the tax changes that are coming in with employer NI, the national living wage going up, and other costs that will be coming in from all sorts of Government departments or Government regulation. It's just to be mindful of this layering effect, I think, of costs that are hitting business, squeezing their margins. From the point of view of our sector, we increasingly hear that these sorts of costs just can't be passed on very easily. Many of them will use the phrase, 'We've reached the end of the road in terms of cost increases.' Even if it's a transparent cost on a bill, you're looking at businesses that will be under pressure to try and reduce their own charges to accommodate a levy, to try and not deter people from staying.

Thank you. I'm going to come to Mathew with another question, but you're welcome to comment on that last one as well. We've heard from other witnesses about the educational, not-for-profit and social enterprise organisations, but particularly the educational and younger people. What are the implications of the Bill on educational and not-for-profit or social enterprises operating at a residential facility? Maybe you're best placed to start that discussion, I suppose.

Thank you. Just referring back to your previous point, I would add that there is that general picture within the tourism sector, but it's very important to remember that the tourism industry has a large number of subsectors. The economic impacts that are being felt across the board in hospitality and tourism are more keenly felt in some sectors than others, and the hostel sector generally would be one of those. And I can quote some statistics later if that's needed.

Coming back to the main point on the impact to an organisation like YHA, YHA operates in quite an unusual space. We are a charitable organisation and we offer a large number of educational residential stays for young people. We also operate broadly within the tourism sector, primarily around families with young children.

As a charity, we operate at extremely tight financial margins. Again, and with the previous meeting, we keep hearing about the pressure on operating margins in the tourism sector. A charitable organisation like ours—. I think the easiest way I can explain it is that we operate within the margins of the margins. We primarily exist to deliver the best-value residential experiences at the lowest possible cost. We don’t operate at a profit; we’re not commercial; we don’t pay money to shareholders. And therefore, the costs that we charge for residential stays are exceptionally low compared to the broader tourist sector, and the levy per person per night will have a far more significant economic impact than will be felt more broadly.

Thank you for that. On that aspect of that sort of educational type of accommodation, I don't know if anybody else just wants to come in on that, or I'll move on to the next question.

The next question that I have is more towards Llŷr and it's touching on what you were just talking about just now, really. You said in the written evidence that your members

'noted that the aim for ensuring that value for tourism is shared fairly is a principle that makes sense.'

However, they did not see a visitor levy as the only means to do that. Maybe you could unpack what you were talking about earlier with regards to, if you're going to do it, then these are the sorts of things that you need to do, but also how else could you do it?

Let's just—. There we are. Diolch.

Yes. So, I think there are a few layers to that, one of which is, when we’re looking at what the aims of the Bill are, and it’s discussed in the explanatory memorandum; it goes through some of the problems caused by tourism, if you like, some of which are things like congestion, erosion of paths and lots of people in the honey pot areas, in places like Snowdon, or wherever—yr Wyddfa, even—. So, I think there is a point here to be made that overnight visitors do bring value and there is no direct link between solving some of those issues with overnight tourists per se. Day-trippers also use those areas. They maybe cause more congestion if anything. So, there is an element of that targeting of who is paying the tax and what is it used for not being direct.

Now, I do understand that there is a pragmatic and practical reason why you would collect tax from people who are, if you like, a captive audience, I guess, who are there and quite easy to tax. But there are other ways here to look at perhaps. Maybe those paths require—. There could be a charge for using the paths; there could be a charge for going to national parks or parking. There are other ways to deal with congestion—there could be congestion charges. In areas like Yellowstone National Park, they use apps by which you try to move people to go to different parts of the national park, if you like, so that you direct traffic. So, there are different models by which you use taxes that are not directly for overnight tourists. I mention this because, in the explanatory memorandum, these are posited as some of the problems caused, but, in a way, the solution posited doesn’t directly link.

Now, in terms of value creation, there are a lot of examples that we had in our report, ‘Welcoming Communities’, of many businesses already providing services such as transport—community transport in particular—often providing services voluntarily. And there is a question—. And it’s been decided it’s not going to happen, but some of the things around accommodation business improvement districts would have been a voluntary version of that. Now, I accept that’s not going to happen, so think the main point is to take some of the learning of what it could do. So, a really good example around a camping company in west Wales, the Greener Camping Club, was that they had a membership fee that they imposed, which was £12 for a year, but, in practice, of course, people would be there for a week. That was used directly for things like transport services, for local green and sustainable projects. Now, that was a voluntary fund, but they found that this was okay, visitors were okay to pay it because of the messaging they did around it, that they had a list of projects that were paid for; it was shown to be around sustainable tourism. The danger with not having a clear line there between the payment and the projects, where the money goes, and who’s deciding, is that that link becomes less clear, and, moreover, if small businesses are providing some of these services voluntarily, would they bother to do that if there is a tax in place? Because you’re basically displacing it and you’re asking, ‘Well, surely the council should be doing that now, then.’

Diolch, Llŷr. A question now to—. I'll probably come to Andrew first with this one, just because of the nature of who you represent. How do you think the implementation of the visitor levy would impact on visitors staying overnight in Wales, as opposed to those doing day trips, and how might that affect accommodation providers? And obviously, in your pubs you would have a mix of both coming to those, so maybe if you could unpack that for us, and maybe some short comments then from others as well.

Indeed. So, yes, I think in our written evidence, we basically opposed a levy at this time on two grounds: as you say, the direct impact on the deterrent for people staying overnight in accommodation offered by pubs, and then the indirect and potentially larger effect is if you deter visitors coming into an area, you decrease footfall in pubs, and of course other hospitality and tourism businesses.

We tried to work out within Welsh pubs what proportion have accommodation. So, our best estimate is currently something around 15 to 20 per cent, but we think that’s possibly quite conservative. So, you’ve got the direct impact there that, if you’re, essentially, putting up your prices, people are going to give a second thought as to where they go for their holiday, and even indeed whether they stay overnight or become a day-tripper. So, that’s a very simple connection that we see in prices going up, and they have been going up for a number of reasons. It will be an important decision factor in people's choices as to where they go, how long they stay for and whether, like I say, they stay overnight. This is particularly true and going to be particularly important for pubs in seasonal areas, coastal pubs, rural pubs, pubs that rely overly on the tourist trade. They'll make the income during the tourist season that will see them through the rest of the year. So, if you reduce that, you actually undermine the viability of them as an ongoing business.

The knock-on effect, then, if you don't have people staying, is: will you see the expenditure in the pubs? Do you just see a straight flip between those that are staying and spending money and those that come as day-trippers? I suspect you probably wouldn't. I suspect that, if you are staying overnight in a pub, you will spend more money in that pub than if you were a day-tripper to that pub, and I think that's just a very simple, straightforward expectation from our partners in the pub sector.

Thank you for that. I suppose, David, then, with bed and breakfasts, it would have a—. What would be the impact on your association and your members? If we could unmute David, please. There we are.

Are you saying what would be the impacts of the—

Would the shift to day-trippers, as opposed to people staying overnight—? The impact would probably be felt, if that was the case, more by you that by the pub industry, because pubs would still have a revenue income from those day-trippers as opposed to people staying overnight.

Yes, exactly. Our members are small B&Bs, guest houses. They will obviously rely solely on people who stay overnight. If people switch from overnight stays to day trips, then our members will lose out completely on that. I echo what was just said by Andrew that, in that case, the spend overall in that location goes down and affects the whole economy in that location, in shops and restaurants, pubs and all the rest of it. I echo what was said earlier about the forum, by the way, the comments about the forum. I hesitate to say anything positive about Scotland's proposals, because I think they've gone down the wrong route in many cases, but, on having a forum to help decide spend and to give a voice to accommodation providers and tourism businesses on how the business levy revenue is spent, we are very much in favour of that, so I agree with that comment.

And just finally, on how you could tax day-trippers, there are all sorts of ways of doing it. You could put a tax on attractions and other things that day-trippers use that are not just used by overnight visitors. The wider you spread the base of the tax, obviously, the lower it needs to be, so you could have a very small amount of tax, but it would bring in some money overall with the number of day-trippers and it would be fairer, because it would spread the cost across all of the contributors to the impacts of tourism, and, as has been said by my colleagues, day-trippers produce just as much impact—more in some cases—but they contribute less in economic terms.

Mathew, do you want to come in on—?

Yes, just to back that point up. Welsh Assembly Government's own figures are that there are around 8.4 million overnight stays in Wales each year, with an average spend of about £240 per person per night. There are around 60 million day visitors, with an average spend of £42 a day. So, those figures are quite stark. If the levy has the impact of decreasing the number of overnight guests and potentially increasing the number of day visits, it has very obviously the impact of decreasing the overall spend in the economy.

And then, just again, representing the hostel sector, it really is important to understand the differentials. The Wales accommodation occupancy survey of 2023 has some interesting statistics. Hotels achieve, on average, a 14 per cent higher occupancy rate than the guest house and bed-and-breakfast sector; hostels would be even lower. There's a 24 per cent difference, on average, between the occupancy rate of what might be called a commercial operator or an independent or not-for-profit operator. The average, in the hostel sector, is to run below 50 per cent occupancy for seven months of the year and below 30 per cent occupancy for five months of the year. So, you're talking about, in hospitality terms, a sector that is already significantly challenged in operating a business in Wales. And YHA as an organisation ran at an annual occupancy rate of 58 per cent pre COVID; it currently sits at 48 per cent.

Thank you for that. I'll bring Mike Hedges in now with a series of questions. Diolch, Mike.

Diolch, Cadeirydd. This is to the FSB. Your evidence mentioned that the committee should consider whether the legislation should provide a power for Ministers to change where the revenue from the levy is channelled—rather than a local forum.

It's not 'rather than', and it could be a development of. I think the point of the power as we see it there is that, we agree, it's quite good to have a central pot, that it goes to the Welsh Revenue Authority, so that helps us monitor how much is raised. What we're looking at there is to look at whether there are things that might need to be adapted in future if things change, or if we find that things are not working, or if there are better ways to do things. You'll be aware that visitor levies across the world are in all shapes and sizes for all kinds of different areas. Now, the question here, and building from some of the ideas of having a forum, is that it could be that, rather than it going to local authorities, we might want it to go—by 'we', I mean we might decide as the Welsh Government or the Senedd—to put that money into a more localised version. There could be a destination management operator who is separate from that, who does a role similar to what we were discussing as a forum, but is actually quite independent. Another way would be, for example, if we were to think about the possibility that Gwynedd, Ynys Môn, Conwy all decide to go for a visitor levy, there might be a case that we might think that there might be a single destination management operator, who should be there to discuss, and a forum by which you decide what to do with the money spent at that level.

It's more to do with having that sort of flexibility in the system to change things if they're not working, or to decide that, actually, we'd rather have a bigger fund for this area, or, indeed, a smaller fund for, say, Pen Llŷn—you know, speaking from Gwynedd. I'm speaking from Bangor and the issues around tourism are not, probably, a big thing in Bangor; in Abersoch, Aberdaron, they are very, very different. So, there's a case here, maybe, that local authorities, in and of themselves—while the pragmatic choice here—may not always be the best level at which to implement these funds, or to implement where these funds are spent.

Thank you. I'll be a tourist up in Bangor and Caernarfon at the weekend. To everyone, section 23 of the Bill sets out the types of spending by the local authorities that would meet the requirement for spending on destination management and improvements. What are your views on this approach?

Who'd like to go first?

Llŷr, do you want to go first?

Yes. Happy to do so.

I think these duties—. There's nothing to be said against the principles of those duties, but they are very, very, very broad. And, coupled with the fact that these—. So, going back to the idea of a forum or an independent body that sort of decides what destination management means, they could help decide whether the money should be going into roads, whether it should go into skills, whatever it is, but that would be decided by a forum that includes the people affected by the tax. The danger with having such broad areas here is that it's very difficult to keep these budget lines separate from other pressures that are on local authorities. And you'll be aware, from our work, that the fear that always happens is that this is a revenue-raising mechanism that goes into a council black hole, as it were, in that you don't see where the money is going and it just displaces other funds. So, we would argue that the choices here are to either tighten these quite considerably, or, if we do have a decision-making forum, that that is then able to interpret for itself what destination management means and what the priorities are for the sector. That allows destination management to be decided by a representative body of the tourism sector itself and, also, the communities themselves.

It's important, therefore, to make sure that—. We would argue that the budget needs to be clearly linked to projects, and individual projects, so that when you then tell the visitor, 'This is what your money has paid for', the line between the visitor spend on the tax and the projects created is clear cut, and that it also brings in the tourism providers so that it is all a through line and almost a feedback loop, if you like, to come back to the visitors to say, 'Look, these are the projects on sustainable tourism that we've had', or whatever it is.

I see nods on the screen there. Andrew, did you want to come in?

Yes, it's very simple. I think we'd just distil it down to this: whatever mechanism you're using for allocating the expenditure of the levy monies, there needs to be accountability, representation and transparency. There are different models for how you might do that, I guess, but you want to have the right people in the room making the decision on where it gets spent, transparency about how it is spent, and accountability to the people who have provided the money. There are ways and means of doing that. I think, currently, our concern, we'd echo, is that it's too broad and not transparent enough, and the real risk is that this just becomes another fundraising exercise that doesn't necessarily benefit the businesses that are paying for it. So, it seems very simple from that point of view.

Thanks for that. Mathew or David—Mathew, did you want to come in?

Just to say that I wholly agree with all of the comments of the previous two gentlemen.

Okay. David, anything to add? You were nodding away, so I'm assuming you were in agreement there.

I very much agree with what they say, and I think that it would be ideal for it to be very clear in the legislation and the guidance that this is additional and an enhancing of tourism, not a substitution for existing spend and budgets, because that's the fear of the industry: that it won't enhance, it will just replace existing budgets. It would be good if it could be spent on capital projects—for instance, visitor centres and things—and there could be a plaque on those projects saying, 'This was funded by the Welsh visitor levy'. That sort of thing will help the policy to embed itself and become sustainable in the long term, and have people—consumers—realise, 'Yes, it was an extra cost, but, actually, there's some good coming out of it and I can see that.'

Thank you for that. Mike, did you have any further questions?

A last question. This has been happening around the world. France brought it in at the beginning of the last century. Are there any lessons that we can learn from what's happened in the rest of the world? Particularly, will we expect, if we have a tourism levy here, a movement of people into Chester, Shropshire and the Forest of Dean—an increase in people staying in those places, because they'll be saving £1.75 per person, per night?

Any comments? Llŷr.

I'll make sure I reply first.

David, yes. Lovely, thank you.

I was a tour operator to France for many years in the 1990s, and I was very aware of the taxe de sejour that, as you say, they've had for many, many years. There are quite a lot of differences to the UK situation, in that that was very much a separate charge that was paid at the desk on check-out, not included in the price at all. We've got legislation that is different here in the UK, which means you've got to include things in the prices, which makes quite a big difference; it can't be just kept as a totally separate thing, paid separately on departure.

You say about the £1.75—would it affect things? What we do know in travel is that it's extremely price sensitive, when people are booking, and it's mainly done online now, so there's a lot of data. Just to give you an illustration, online travel agencies find it worth while using £1 or £2 of their commission to undercut hotels or B&Bs and, if they have £100 price and £15 commission, they will advertise that accommodation often at £99, or £98, and that will make the booking go their way, so, therefore, it's commissionable, rather than a direct booking. So, if that happens, and that's on a £2 difference, then, yes, even small amounts can have an effect. So, there would be some substitution at the edges—it may not be huge, but there would be moving people out of Wales to nearby locations in England. The lesson is that, in France, you can have a successful levy if it's well managed, if it's small, if it's a flat fee, and if the mechanisms and everything are worked out so it's easy on the accommodation provider.

Sam, yes.

Can I just follow that up, then? David, you touched on it earlier, about the overall tax burden on accommodation in the UK versus places like France. So, are your comments there caveated by your comments earlier that, despite it perhaps seemingly working well in other places, the overall tax burden is significant here compared to what those competitors might be paying in France?

Yes, very much so. The other difference between anywhere in the UK and other countries where they have successful tourist taxes is that those other countries, in general, have very much lower value added tax than we do here. A lot of them are 5 per cent, many 10 per cent, and around that amount; we're 20 per cent. So, yes, if you're adding another tax onto 20 per cent VAT, plus the other taxes we've talked about, then that does begin to make a difference, and the amount of overall taxation is pushing the envelope a bit. In general terms, it's very simple: the more you tax something, the less you get of it.

Okay. Do either of you want to come in on that, or is it—? I think I'm seeing agreement there more than—

Can I just say on that that I believe the Government's own economic impact assessment agrees that there will be a reduction in tourist numbers or projects that there will be a decrease in tourist numbers as a result of the tax? So, in answer to the gentleman's question, yes, there will be an impact, and it's considered to be a known impact by the Government at this time.

Thank you. I'll—

That's why Dubai and Japan have so few tourists.

Thank you, Mike. I'll bring Rhianon in now, please.

I'm very tempted to get into the wider debate here, but I'm not going to. I would just add to Mike Hedges's point that this isn't a novel system to introduce, if we look at the rest of a world, and it's also not a no-win situation, because, obviously, the additionality will be invested into the local area. But I'm just going to move on to my questions. To the FSB, then, you've raised the possibility of strengthening the consultation duties on local authorities in the Bill. Can you tell us about the changes that you would like to see? Obviously, we've gone through a few, but that would be very useful for us as a committee.

Yes. In response to your point about additionality, that is exactly the point of a lot of what we are trying to put in place—to ensure that additionality is there, is felt and is easy to monitor. So, I think some of the consultation processes would involve things like ensuring that it's in the legislation that there is a need to consult or create a forum for the sector. As mentioned already, there are different ways of doing that. Part of that is in order to see and feel the additionality, as you mentioned. So, in many ways, that's the fear, and I think that's about building the trust, the relationship, and that's the same with all the other consultation duties we've discussed. I think that part of the problem here is that there is a need to regain that trust; there is a need to show the working and to show the institutional practice and processes. That will allow that trust to be felt again, and also for us to all feel that we are working towards tourism growth.

In terms of the other consultation exercise ahead of the levy being put in, I think there is a need for it to be quite clear what is expected of the local authority, whether it's helped by the WRA or another body, and it should involve quite clear independent market research. I think there is an issue that's a wider issue than for this: that we have very bad data in Wales in trying to find things out. I think we've mentioned some issues during this call. The problem with the lack of data is something that we see in some of the impact assessments. It's difficult, with £33 million as the estimate, which is probably a guesstimate as much as anything, but spread that across 22 local authorities, you then need to start thinking about, if the administration costs of this are this amount, is it worth doing the tax, what are the costs to the WRA, and thirdly, what are the costs to the small businesses themselves. Because there’s time and costs to the businesses, who are acting essentially as tax collectors on this.

It's important that we have an analysis that provides all those figures before we implement it, to see how it works. I think that it must include that estimate of the time and costs to small businesses. I'd note on that, by the way, that in the Edinburgh model, local authorities have more room to shape what it looks like in Scotland than in this version. They are looking at paying a percentage of the booking towards the costs to the business of administration of the tax. So I think that's something to consider, and certainly something that we need to think about: what is the cost to the business, rather than thinking, ‘Well, that's a displacement of something that could go elsewhere in that business.’ So I think there need to be things that make sure that we understand the market research, we understand what the impact is, and we need to understand the adequacy of the tax at the local level, how much will it raise versus how much the administration is.

Thank you for that. I'm going to move on. Perhaps others want to comment around this in terms of the registration element here, in terms of accommodation providers within the Bill. What information should be included within that? Who would like to take that first?

I would say that, ideally, what should be included when people register is some of the basic information that is already a legal requirement, so it's therefore not a new burden on anyone, but would allow an increase in the overall safety for consumers, and level the playing field between different types of providers. We feel as B&Bs that we comply, quite rightly, with very large numbers of legal requirements on safety and things, but we see accommodation on certain platforms that are not inspected or checked in any way, and are not complying in many cases with any of that. And so it's in the interests of Wales and of visitors to Wales to have the same protection. Therefore we'd say when you register you simply should have to upload the things that are a legal requirement, like your fire risk assessment, your insurance, a gas certificate if you have a gas boiler—those sorts of things. Just very simple, an easy upload. It's proved on things like the Visitor Ready system that the AA run, which is free of charge. It's an online thing, so no extra significant burden for providers, but it would level the playing field and increase safety.

Is there any other comment around registration requirement?

Only to echo David's point of view. It should be all about visitor protection, safeguarding them, making sure they're staying in safe places, and level playing fields.

Just to say the same—our members say the same thing around safe and legal and the level playing field, so we'd echo exactly what David said there.

Rhianon, if I may, just something for Mathew. I think Mathew wants to come in as well. Being in the charity sector, maybe you'll be able to comment, maybe not. What about not-for-profit charities? I'm thinking possibly churches, abbeys, that sort of accommodation. Should they be registered because they provide overnight accommodation, though don't necessarily charge, and might ask for a donation? Do you have any thoughts from your sector point of view, just from a charity point of view? How does that aspect work?

Thank you. I guess there are two elements there. One is that we know—. I say 'we'; I've had discussions with organisations like the Urdd, Gwerin y Coed, Scouts, the Girl Guides, so I speak with a general understanding. The legislation, as proposed, covers all of those organisations and many others at any point anybody sleeps away from home in one of those locations. It's surprising that it does, I think, the legislation, and that perhaps exemptions for those kinds of organisations haven't been considered. If the legislation was to include all of those organisations, then there is a challenge on reporting timescales, I think.

Large numbers of their reporting will be done by volunteers, and to be adhering to a 30-day deadline either as an individual accommodation unit or as an organisation that collates that data from volunteer leaders, or something like that, would be I think particularly onerous, quite apart from the question of fairness of the legislation applying in those circumstances. So, I think you need to think about the type of business or the type of visitor accommodation, the people that are managing or administering that, and whether they would have the organisational capability to meet the reporting timescales.

Thank you. Rhianon, back to you.

Thank you very much for that. Finally from me, we've had a number of comments from witnesses today on the record that suggest that children and young people, particularly under-18s, should be exempt from being charged the levy, obviously if the area decides to go ahead and introduce the levy. What are your thoughts on such an exemption, or perhaps a different age range? Who would like to respond?

Not surprisingly, there are quite a number of views here. It's certainly the case, if you want to reference the written submissions by Scouts Cymru, that they are arguing very strongly there should be an exemption for under-18s. In terms of determining who is and who isn't a young person, there are lots of different measures. I would suggest, broadly, under 18 is the most easy to define and the most likely to be accurately measured across a range of organisations. Some would consider under 26 to be a young person, as indeed we do as an organisation. But thinking more broadly within the tourist sector, under 18 would seem to make sense. I think your—

Just on that point, from your background it's under 26, so what would it mean if there was an exception at 18 from just an administrative point of view? How would that work? Do you collect that information anyway?

No, we collect under-26 data. That doesn't mean it's not possible; it's just an additional requirement in terms of our systems, I suppose.

But do you have a safeguarding bit that kicks in at up to 18 and then beyond so that—?

We do, yes.

So, there would be something there that would know if somebody was under 18, but it's whether or not you'd explicitly collect it, I suppose.

There would be ways of extracting the data to tell you. Because we're an organisation that works across different markets and different kinds of stays, in some senses, in a traditional family budget stay in a YHA, we measure under-18s. When we talk about young people having residential or educational experiences in our organisation, that would be anyone up to the age of under 26.

Okay. Sorry, I cut across you. You were going to say something else as well, then.

No, that's fine. If you take our organisation, around 30 to 34 per cent of our overnight stays are young person residential or educational experiences, and probably another 30 per cent are young people staying as part of a family on a budget break. For an organisation like ours, it would have a very significant impact. Based on our current modelling, we believe that the levy would've added an average of 4 per cent to a cost per person to stay in Wales this year. In reality, that would mean, out of main season, a cost well in excess of 10 and probably 15 per cent. So, if you are an organisation that specialises or is primarily engaged in young people's stays, then it would disproportionately affect such an organisation. By their nature, they are ones that will charge less and as low as they reasonably can to allow that experience to occur, and, therefore, the charge is disproportionately higher.

Thank you. So, should under-18s be exempt? 'Yes or 'no', I suppose, or a nod of the head or a shake. I just want to bring Sam in to—. I'm just conscious of time, that's all. Andrew, did you just want to mention something quickly?

From the point of view of pubs, they're obviously well versed in understanding under-18s as being minors; they're practised in checking that. I'm not saying they check that when people stay there, but, obviously, if they're in the pub eating and drinking, that's very important. But, yes, anything that is going to reduce the cost on a family staying overnight in a tourist location would be a good thing. Families need to eat and drink. Pubs are food and drink. Obviously, we would see that as a plus point, if they were paying less as a levy.

Okay. And I'm seeing nods there from David and Llŷr as well. I'm just going to bring Sam in now for the last few minutes of our session.

Diolch, Chair. I think, Mathew, you probably answered the questions I was going to ask around the particular impact on non-commercial bodies like yourselves, but I'm not sure if there's anything you wanted to add at all from your perspective on the potential impact on not-for-profit organisations of a levy, why there should be an exemption and what your rationale might be behind that. You have covered this a lot already, but just to double-check if there was something else you want to add on those points at all.

Thank you, Sam. I guess you might consider more broadly if a charitable organisation exists, what current exemptions it has in relation to financial burdens. For us as an organisation, we don't pay business rates. We have rate relief of about 99 per cent, I think, of business rates. For us, that's a cost of around £1,000 a year within Wales. The fact that that exemption in itself exists is an indicator of a couple of things. One is that our primary reason for existence is to bring social benefit. We're not a commercial operator. The other point, therefore, is that because we're not commercial and because we're charitable, we aim to operate at the lowest possible cost base and deliver the most cost-effective overnight experience for a guest. Now, I don't want to labour the point about the challenging economic circumstances, but if you take the fact that the hospitality sector in its broadest sense is significantly financially challenged, and has been since COVID and then the factors that followed that, and then you add to that that organisations like the YHA, like the Urdd, are by their very nature shared social experiences, then even post-COVID operating was more difficult because all of those spaces are shared. So, actually, we're operating at less than 50 per cent of our capacity pre COVID. Visitor numbers are down 10 per cent, even on the bed spaces that we now currently maintain. Our income levels are down 30 per cent pre COVID. We're employing 40 per cent fewer staff across Wales than we were pre COVID. So, any organisation like ours that's operating broadly in a visitor sense, but also in the financial climate that any charity is currently in, is close to experiencing an existential crisis. I don't want to overplay that, but that is where we are. The idea that there would be an additional tax on an organisation like ours, which exists to provide that social health and well-being benefit, is extremely uncomfortable for us.

Okay, thank you. It's really helpful, those additional points. I'm just going to move on, and Llŷr, just from your perspective, I think in your written evidence you commented that the 31-day threshold for stays chargeable to the levy was a very high threshold, and you proposed an ability to reclaim the levy for stays of 10 continual nights or more. Could you just expand on that point briefly, please?

Yes. I think, having seen the Cabinet Secretary's evidence also on this, he was referring to the need to make sure that people who are coming in as business workers, in a way, and living elsewhere, were not paying the tax, which is an understandable thing to discuss, probably particularly among Members of the Senedd, I suspect. But I think there's another side to this, which is that the value of overnight tourists is that much higher. The longer they stay, the higher the value.

It does seem to me that 31 days is a very high threshold, and we should be thinking, the longer people stay, the more the value is. So, in a way, you want to encourage people to stay for longer. This is also arbitrary, in a way. We haven't worked out that that's the sweet spot where this should happen. It could be five days. In some places, it's 14 days. In Edinburgh, they've discussed it as the tax stops operating after five days—five nights even, sorry. So, for us, it's important that we—. And, for Edinburgh, it makes sense, because what you're looking for is to make sure that for a long weekend break, there's encouragement to make it a week, for example. So, we thought it would be a good idea to take into account the value of those overnight tourists, and also for them to have a pretty good incentive to stay an extra night or two. So, given that we have a fund held by the WRA that is essentially a pot, if you could claim back from day one if you stayed over 10 nights, that would give you a good reason to stay an extra night or two. So, I think it is about that side of—. Part of the reasons why people stop taxing after a certain set amount of nights is to try to encourage people to stay for longer. So, I think it's a good idea for the legislation to reflect that fact, and 31 days, I don't think anybody would stay in one place for 31 days.

The question of whether it needs to be one place is also another question. Given that the WRA are collecting it, there's no reason why you shouldn't have receipts from different parts of the same area and be able to point to the fact that you are due a refund on some of this. It's an idea that we think should be considered by the committee. But, certainly, we think that the tax should not operate for that whole time.

Okay, that's really helpful. Thank you very much, Llŷr. And then, finally—I appreciate we are nearly running out of time, so I'd be grateful if people could stay on just a couple of minutes longer. I wonder if you could comment on how the effectiveness of the levy should be monitored and assessed. Perhaps a brief response from each, if possible, to understand, if the levy goes in place, how it should be monitored and assessed once it's in place.

Llŷr, do you want to go first?

Yes, absolutely.

Only just because your mike is open, that's all.

I think there are some key things, such as making sure that there isn't a displacement of overnight-trippers to day-trippers. I think that sort of thing needs to be monitored very carefully, quite quickly, to see if there is actually an effect that some of us—. Many anticipate it won't happen, but we need to be sure of that, and we need to be sure to pull back if need be.

I think, in terms of evaluation then, there are parts of our discussion around that through line from the visitor paying, right through, which makes it easier and more important that that's monitored, how that's spent, and its success. I think if we are looking at a project-based way of spending, that it's done on individual projects. It's easier then to actually monitor to say, 'This is what happened, this is what it's achieved', and that is also fed back to the marketing to visitors. So, I think that that side of evaluation and monitoring fits alongside, if you like, the way we're proposing that the system should be built across those different parts, from paying the tax, collecting the tax, through to spending the tax, and then, 'This is what we spent it on.' So, that side of things.

Anything to add, Mathew?

Thank you. Really, just to reiterate the point I think that's been made a couple of times: if there isn't any form of dedicated body or organisation involved in reviewing the effectiveness of the spend of the levy, then it's left solely to the local authority to assess the success of its own scheme. That isn't sensible and will probably not result in, or potentially not result in the benefit to tourism that is part of the stated aim of the very levy.

Thank you very much. Andrew, did you want to just—?

It's just to say that the idea of a forum or something similar was mentioned earlier. That seems like an obvious mechanism to have some external check on where the money is being spent and how it's being spent. To the point just made, if local authorities are left to mark their own homework, that doesn't sound very satisfactory.

David, you can have the final word. David. If you could just—. There we are.

Thank you. Yes, I agree with what's just been said, and just would add also part of the monitoring should be looking at the accommodation providers. Has there been a loss of accommodation providers? Have they been hit financially? Some sort of survey of them to see the overall impact.

Thank you very much. Thank you very much for your time. And we've gone over, slightly, but it's been well worth it to get your views on the record, and thank you very much for making the time to come down, and also for making time to be online with us this afternoon. There will be a transcript available for you to check for accuracy.

So, we'll now go into private for a few minutes to reset the room, and we'll be back shortly. Diolch.

I’ll just say welcome back to this session. And this session is now session number 8.

So, this is the eighth session, and the fifth one today. So, we’re taking a lot of evidence today, and are really looking forward to hearing what you have to say about this Bill. But, before that, I’d like you to introduce yourselves for the record. Shall we start there?

Thank you. My name is Katherine Squires. I’m director of policy and public affairs at the British Holiday & Home Parks Association. We’re a trade body, representing around 3,000 holiday and residential parks across the UK. And, in Wales, we have a membership of around 500 holiday parks.

Welcome. There we are. I don't think you need to press anything. It's okay, they'll do it for you.

Okay, sorry. Good afternoon. I’m Emma McQuillan, head of governance at the Caravan and Motorhome Club. Established in 1907, the club’s been in existence for over 100 years, and is the largest membership organisation in the UK. It currently represents the interests of 1 million caravan, motorhome, camper van, trailer tent and, more recently, roof tent owners. We have around 200 campsites, and, as you may know, 17 of these are in Wales. And we have 275 certificated locations within Wales. Thank you.

Thank you very much, Emma.

Good afternoon. My name is William McNamara from Pembrokeshire. I’m Pembrokeshire born and bred, born on a dairy farm, and decided, in my early 20s, to diversify. So, I built Oakwood Theme Park, and sold that in about the year 2000, to build Bluestone. I’m the founder and the owner of Bluestone. We’ve developed it against a lot of odds, and I think it’s now one of the biggest hospitality businesses in Wales, with about £50 million-worth of revenue a year, and 180,000 staying guests.

Thank you very much.

And we are open—.

Oh, sorry.

Sorry to interrupt.

No, no, that's fine.

We are open year round in a seasonal county. So, there are lots of challenges.

Fantastic. Thank you very much, and thanks for making the time to come here today and travelling down to Cardiff. We’re very pleased to have you here. We’ve been taking evidence from different stakeholders all day, and we’ll have an hour now with you to try and go through some of the evidence from yourselves, so brevity would be helpful, just for us to be able to get through some of the questions.

But I’d like to start, really, to investigate whether the Bill delivers the Welsh Government’s policy objectives, and the existing Government policies, the ring-fencing of levies, that sort of aspect of the Bill, and some other things. So, I suppose it’s a general question to start. Do you believe that the visitor levy would support the Welsh Government’s tourism policy objectives to deliver sustainable tourism? So, I’m in your hands. Who wants to go first? Shall we go—

I would say you don't need the levy to deliver sustainable tourism. If you do your research, you will see, in the case of Bluestone, we’re probably market leaders in the UK on sustainable tourism in our sector. Bearing in mind that this levy is not likely—according to the stats that I’ve read—to actually generate a lot of surplus cash to be reinvested in the industry, I don’t really see how that’s going to make any big difference, positively.

Okay, thank you very much. Emma or Katherine.

Our members’ primary concern is that any risk to consumer demand for holiday parks could jeopardise what is an already sustainable sector. So, if you look at the regulatory impact assessment, it categorises the negative externalities of tourism into social and environmental, and if you think about the social externalities around housing shortages in local areas, a holiday park, you cannot live on. So, by its very nature, it’s not impacting that local area in that way. And William’s mentioned the work that they’re doing, but many of our parks, as well, are leading the way in biodiversity and environmental schemes.

Okay. Anything to add, Emma?

I think that we have concerns about the implementation of a visitor levy, but obviously we're making assumptions about the impact that it's likely to have at the moment. There are positives around the collection of the levy in terms of delivering sustainable tourism, but it has to be—. It's essential for it to be used for the correct purposes in local communities, and we'd be concerned if the benefits of a levy intended to improve infrastructure and minimise environmental impacts were diminished and the levy was perceived as a solution for other funding difficulties.

If we follow that point, then, to start off with, you've got concerns regarding the ring-fencing of the levies for local authorities and how they would potentially spend those, and it is on the face of the Bill what those broad areas are. What are your thoughts around what is in the Bill? What would you like taken out or added to?

I think it's essential that tourism remains the main focus of the levy and the collection of the levy is used in the right circumstances to minimise the impact on the environment, so it has to be for infrastructure. It has to be about making sure local communities are robust and have facilities, and if there are particular pressures on areas, that the levy is used, essentially, to minimise those impacts.

In Edinburgh, for example, which we know were discussing the levy last week, the local authority sees it very much as fixing its housing emergency, so I think there needs to be some caution around how the levy is used for the right purposes, so that we can demonstrate back to our visitors that they are contributing, but it is going for the benefit of visitors to come to Wales.

We've heard today from quite a few about additionality, and making sure that it is additional and not instead of, and that's something that's become quite clear in some evidence, to say, 'Well, it shouldn't be to replace or to displace spending in that area', so it's something there that—.

That will need to be very carefully regulated, because there will be a natural inclination to pull in any revenue to the local authority and displace it or spend it, because all the local authorities are very short of money, and everybody is looking for every penny that they can get, and I have great concerns—. I didn't set out to be anti the levy, but I just do not think that it's going to yield anything worth while to Wales or to the local authorities.

So, just following from what you're saying, that it needs to be that additional bit, how would you do it? How would you have that confidence that that money would be spent on the additional bit? Is there anything extra you'd want in the Bill or in guidance? We've had some ideas today, but whether or not you've got any—.

The regulation of the collection, I think, is a very, very difficult area that I certainly don't think has been properly covered thus far. We're all here contributing and we're appreciative of that. But how you regulate our industry, I could sit here for 10 minutes and tell you why it isn't really going to work, but that's not what we're here to do. But the regulation of it is going to be very, very important. The collection, the compliance, the remittance, the refunds, the enforcement, is an enormous area, and I read somewhere that they were proposing that two and a half full-time equivalents were going to manage this in a year. Well, I mean, it's going to take an army of people, a mass of hardware, and an incredibly sophisticated software package to actually regulate this. And then we also read that, actually, it's not really going to generate a lot of money for Wales plc, so to speak, whether it's in the unitary or whether it's for the country.

Could I just follow that up—?

Yes, and I've got Rhianon who wants to come in as well, but, Sam, you go first.

I think it's an interesting point that William just made in terms of the yield as well. We heard earlier that the leader of Cardiff Council roughly calculated that, in Cardiff, it could create a yield of £4 million, which may sound like a lot of money, but I guess you'd understand that £4 million does not go a long way in a city the size of Cardiff, with the 350,000 people it's managing, let alone the tourists. I suppose that's the point you're making, that the level of bureaucracy that may be involved in this is not necessarily proportionate to the yield it may return.

Absolutely not. And by the time everybody sucks their pence in the pound out of every pound collected, what will actually be redistributed and reinvested in our local authority, I think, is going to be miniscule.

And I think one of our concerns is how that genuinely improves the tourism offer as well. So, we have an example of a member who has a park one side of the Welsh border, and five minutes down the road, another park. And he has a touring offer, so, what some of his customers tend to do is go to the park in England for a few nights, then go over to Wales. Now, if the Welsh park is substantially more expensive for them to stay at, if they've got a large family, for example, where does that levy money go to make the tourism offer of that particular part of that particular local authority more compelling for that customer, rather than just staying in England?

That's a very interesting point. I'll bring Rhianon in. I think she wants to come in on this point.

Yes, thank you, and I'll be picking up a bit on that line of questioning in terms of cross-border concerns within my questions later.

I just think picking up on—. We need to be very careful that we're not speaking in generalisms and that we're speaking led by data and the work that's being undertaken by the Welsh Revenue Authority at the moment. I think what we're looking at here is not a no-sum benefit. The whole idea of this is that you will get back into your area facilities that are improvements, so that we can get back to having decent public toilets in a touristic destination and things that will make that area sell better.

So, to answer your question: theoretically, it would be that your facilities in Wales would be of an improved nature. That is the whole purpose of additionality around this. So, I just think that we need to be cautious about speaking in generalisms when we're not in that zone. We need to be led by the data here, don't we? Thanks, Chair.

Thanks, Rhianon. So, you've mentioned in your evidence that the implementation of the levy would compound some of the effects of existing Government policies already impacting the tourist sector. Could you elaborate a little bit on that, and maybe give us a couple of examples, if you're able?

So, if I start off and then I'll hand over to Emma and William. So, our members are seeing, of course, the national insurance contribution increasing. Although we’re obviously supportive of minimum wages, those have risen drastically over the past few years. There's been an energy crisis, which we're still feeling the effects of, and also a requirement to upgrade energy infrastructure on the journey towards net zero. And the majority of our members are also family businesses and are heavily impacted by the change to business property relief that has recently been announced.

Yes, if I could add to that. Tourism is still in recovery mode and struggling to thrive in an environment that is being challenged by increasing pressures. The boom we saw during COVID has passed and tourism businesses are now faced with very price-sensitive consumers, and the need to incentivise stays.

The tourism picture is not as rosy as it was. Our occupancy across Wales last year was 2.2 per cent below 2023, but it was 14.9 per cent down on 2019, which was pre COVID. And there are a whole variety of factors that we know impact on this. We're concerned that the levy will impact this further.

As an example, we can see that our occupancy level tracks very closely to inflation rates. So, for an example, as the inflation rate rose to almost 11 per cent, that's the point we started to see our occupancy levels start to filter down. And whilst we know the inflation levels have now fallen to a more stable level, we haven't seen that same increase in our occupancy. It's kind of stagnated now and we're doing everything we can to incentivise bookings on our sites, but we're concerned that the addition of a levy on top of the cost of holidays is going to prevent occupancy levels from improving.

So, has that shifted from overnight to day-trippers? Is that where that's gone? Are people still coming, but they're not staying, or are they just not coming at all, or don't you know?

I don't know. I can only speak from occupancy where—. It's a difficult picture across the whole of the UK. We obviously have sites everywhere and so it's difficult to know where that's been displaced, or whether our members are choosing different locations.

Any thoughts on that particular aspect, William, or just—?

Yes. We're constantly trying to guard margins, and we've talked about the employers' national insurance: putting that in context, that will cost me £0.5 million in a year. The levy would cost about £800,000 a year [correction: £800,000 a year excluding VAT, based on 2024 visitor numbers], and these are all going to pinch our margins tighter and tighter and tighter. We have a lot of metrics as to how we run our business. Yes, we're a big business, but I owe Barclays Bank an enormous amount of money, and interest rates are about 4 per cent higher than we would like. Every 1 per cent increase costs me £400,000 a year. So, everything is compromising margins, and we have to maintain margins, otherwise I can't develop—I can't even run my business if we're not making money out of it.

We're not trying to be unreasonable. We're very supportive of the local authority and the local area. We bring an awful lot of people into Pembrokeshire, and about 65 per cent of them leave us during their stay and spend money in Narberth, at the seaside, and in paid attractions, free attractions. So, we actually generate an awful lot for the local economy all of the time, and yet we're seeing a reduction in visitors since 2019, which was the base year. We were about 15 per cent down last year. We're marginally ahead this year. But it's tough, it's a tough world out there. I employ over 900 people and I love them all to bits, and they do a great job, but it's not just the national living wage; we have bandings, so if the bottom band goes up, the ones sitting higher up are saying, 'Well, we've got to go up as well', so my payroll has gone up this year by £800,000.

So, that day-tripper or overnight-stay aspect, do you have a handle on that at all, or is it just that it doesn't—

No, to be fair, a bit like Emma, we can't talk on things that we don't really know about, but what I would say is that we, as the accommodation providers, are being expected to underwrite this levy, and yet there are 11 million overnight stays against 60 million day trips into Wales, and if you think about the day-trippers, they're the ones doing all the road miles, because they're all coming in from everywhere. At least with us, they come in, they park up; they might go off once. But we struggle with sustainable transport because, west of Swansea, it's a waste of time. So, 98 per cent of all my footfall drives, and we actually create 5 million road miles a year for all our guests arriving and leaving. We're trying to work with GWR to find ways that we can improve it, but it's the one area of sustainability where I have to put my hands up and say, 'We're not making a lot of progress.' But nor are the day-trippers either, because they're all coming in in the same way. You've only got to queue at the Brynglas tunnels on a Friday night, and that has a huge impact on us and Carmarthen roundabout and so on.

Of course. Thank you very much for that. I'll hand over to Sam Rowlands.

Diolch, Chair. Thank you for taking the time to be with us today; it is appreciated. I just want to pick up the point, William, that you mentioned there, in terms of the impact that you have and your business has locally in your area, and you said you employ around 900 people, and they'll be local people from—

Ninety-eight per cent are Pembrokeshire, west Carmarthenshire domiciled.

—your neck of the woods, which is huge, isn't it? I also read in your evidence that you support the local supply chain with around £5.5 million of goods and services from the locality as well. So, of course, the risk of the impact of this levy is not just on your business or on overnight accommodation businesses, it's on the supply chain more broadly and people in our communities. Could you describe that a little more, the potential impact on the local economy?

Thank you for that. I've always been very proud that I've insisted on a local supply chain. Without naming him, I have a butcher in Narberth that I spend £0.5 million a year with. We have 600 suppliers in Pembrokeshire alone. It's fair to say that they cost me more than if I was buying nationally. Because of the size of my business, I could buy from Avonmouth or somewhere, certainly on food and beverage, and I could improve my margins by doing that. I have to maintain margins, otherwise my businesses will eventually fold, because I pay millions of pounds to the bank every year, I owe the bank over £30 million, because I spent £30 million two years ago on growing the business and building more facilities, and I have to maintain margins. We have to look everywhere. I can't pay people less, but I could probably buy cheaper food supplies and some other things. We spend £5.5 million in Pembrokeshire, Carmarthenshire and Ceredigion, but we spend £8.5 million in Wales, and I spend £17 million a year on payroll, but we will be having to look at and remove some of the local supply chain, which will impact businesses in Pembrokeshire very detrimentally.

Thank you. Does anybody else want to comment on those points at all?

I don't know if you're familiar with 'Pitching the Value', a study that was undertaken by the industry to assess the economic impact of the holiday park and campsite sector. In Wales, the sector generates £1.66 billion in visitor expenditure. We're really conscious of not only the spend on staying on our sites, but, obviously, the secondary spend that happens in the local community. We have direct feedback from local communities when we've closed sites for refurbishment, for example. They feel it first-hand that our members are not going to the pub, they're not going to the shops. It's a real, direct impact on them, and they're desperate for us to reopen because we are bringing that spend to the local communities. So, we do have concerns that the levy, if it reduces stays on our sites, will have a knock-on effect on the local economies.

If I could reflect on that research as well, it showed that visitors to holiday parks and campsites usually actually stay about 107 per cent longer—in Wales, this is, specifically—than other types of accommodation. The industry supports around 30,000 full-time equivalent jobs, and visitors to holiday parks and campsites usually spend around 14 per cent more in the local area as well. As the others have said, a holiday park is almost like a little economic hub in a rural and coastal community, so it's not just the people coming to stay and the spend on the park, but it's the park that employs a local contractor, people going out to the local town to spend their money. If that hub is taken away, our concern is that there will be an impact on that local town, and it will also be less appealing for future visitors because the town could go into a downward spiral.

That's really helpful. Thank you very much. I want to move on to discuss more about the proposed registration process and the potential for an administrative burden from the levy on you and other providers. I just wonder what your views are on the proposal for all visitor accommodation providers to be registered, in the first instance.

I actually have no issue with that. I think it would be a good thing, as long as the registration isn't simply put there to try and decide whether the levy is going to be introduced. I think regulation is important. Health and safety issues and compliance are important, and I would be very happy to be part of that. I think it would very much inform this issue over the tourism levy, because it appears to me that we're all a little unsure of how big the industry is and how many suppliers there are, how many are going to be registered, who is going to try and not be registered, who is going to be sort of fly-by-night, and there will be those all the way through. I would've thought that a very good first step with this would be to set up registration and I'd be very happy to be part of it.

Thank you. Are there any more comments?

If I could just come in and say that we would support a comprehensive process to have a registration scheme to ensure that all businesses that fall within the scope of the legislation comply, but we would recommend using existing systems in the first place to produce that, rather than an additional administrative process that businesses that are already compliant would have to fulfil as a duplication. We would encourage a simple procedure. Ideally, that information already exists, so utilise that.

The park sector is really highly regulated. To set up a holiday park, you need planning permission and you need a site licence, both via the local authority. That negates the holiday park sector needing an additional registration, as it were, but we do support the registration of the variety of other accommodation providers that are out there that aren't going through those processes already.

Just on that, it would be piecemeal then, though, wouldn't it, rather than a national register?

If what already exists could go hand in hand with a registration of other providers, that would make sense.

What sort of information is collected at that level at the moment?

It's comprehensive. Planning permission, so that's a lot of information, you have to go through a lot of procedures through that. And again, site licensing is all around health and safety, the layout of a park, et cetera.

That might be a case of systems speaking to each other. So, not negating the fact that the registration system may be needed, but to make it as simple a process as possible, so everyone is on the same level playing field, perhaps.

I was going to say I think it's got to be a level playing field, because businesses like mine and these are regulated, we have to declare everything that comes through our businesses, but I don’t want to be competing within our industry with people who are not complying and would not, potentially, be paying the levy, because that's not fair. We need a level playing field.

Thank you. Just on that point, I note that both the British Holiday and Home Parks Association and the Caravan and Motorhome Club have noted concerns regarding the registration of temporary pop-up campsites and unlicensed providers. How prevalent do you think these could be across Wales and what could be done to capture these groups? Any thoughts?

At the moment, there's not really a clear picture. We get the sense that it is prevalent; we think it needs more research, essentially. There's an example of Pembrokeshire Coast National Park Authority. Last year, they consulted on removing the permitted development rights for temporary campsites, due to their perceived issues with them. So, we know that it's going on a lot, but there's not a clear picture across Wales.

Just to echo the level playing field argument that's just been commented on, all accommodation providers should be meeting the same guidelines to give the visitors the reassurance and confidence that they are staying on a legitimate facility, or in properly checked and registered accommodation, and that avoids any negative reputational damage to our sector for the people who are not following the regulations that proper organisations do.

Based on pop-up sites that you're aware of, and you have some—. You talked about 200-and-something registered sites that don't operate all year round, but are there—? How does that work with regard to the planning and the regulation that you've already got? Just for me to be aware.

It's slightly complicated. There are the certificated locations that I've spoken about—

That's the one, yes.

They actually do operate year round. They're independently run businesses that operate under an exemption certificate, which is issued to the club, and that allows a site to operate all year round, but has a maximum of five pitches. That's not temporary. It can be supplementary to a farm, for example. They're very often in rural locations, and it's additional income, usually to supplement something that already exists. But that is a permanent established site.

So, that would be—. In a registration process, they would need to be registered.

They would be registered with us at the club, because they have to have annual checks. There are very strict responsibilities, under the legislation, that they have to comply with to be able to receive their certificate to run each year.

And then, I'm just thinking out loud, with the National Eisteddfod of Wales, the Royal Welsh Show and the Urdd Eisteddfod, they pop up for a week a year in different parts of the country. Would there be a similar sort of situation there?

Similarly, under the exemptions certificate, we operate rallies, which are kind of impromptu, in a field, but they're properly organised and they are run by our volunteer sector of the club. And so we do have concerns about how they would meet the responsibilities of any levy that's put in place, because they're operated by volunteers, and so it is a burden on those volunteers to be responsible for the collection of that levy.

And would they pay for those?

Yes. But they're very much a low-cost option, because they're very low facility, very often off grid, and it is the low-cost accommodation option.

But they would fall within the remit of this legislation, in that case. Thank you for that clarification.

Sorry, it's slightly complicated.

No, it's good to have that clarification. Thank you.

It's really helpful, and it leads me on to the next question. As a member of the club, I'm very well aware of the certificated locations that exist, and, as you say, they're often a small enterprise—it's five pitches they're allowed to have. So, there's quite a range of scale here between a CL with five pitches versus Bluestone with 180,000 visitors coming through its park every year. So, I'm just wondering how you think the requirement for businesses to collect and pay the levy impact on businesses' processes and costs, considering that range of scale of business as well—one where it may be easier to put the administration systems and processes in place, versus perhaps an extremely small organisation, which may be voluntarily run, or just a small business on the side. Just your thoughts on that.

I think, whether you're a big organisation like ours, or a small one, it's going to be considerable. From my perspective, about 75 per cent of our guests are all pre-registered. We're now increasing the ability to almost virtual check-in. Eighty-five per cent book online, so we never talk to them. And because we process 1,800 people in, say, for example, on a Friday afternoon, but we've also processed 1,800 people out—. And, actually, in our accommodation, statistics are based on the sale of the lodge, not based on who's in the lodge, so you could actually rent a three-bedroom lodge in Bluestone, and one couple stay there. We then have to rely on our guests to fill in a form that says who's attending, the ages, and all that detail, but they're not paying to come individually, they're buying the lodge.

So, this is a big issue, because we're responsible, but we're going to be reliant on guests, and our guests are going to be really excited about filling all the extra names in if each of those names brings another tourism levy. It's very difficult. It's not possible for us to process each car load coming in, because we simply couldn't do it. It's no different in Center Parcs and other places like that. We're dealing with volumes of people. We would have to change our website and change a lot of the digital processes that we have.

The other thing is we can absorb the levy, which we're not going to. If it's imposed, we're going to have to say to the visitor, 'This is the cost of your holiday, and, on top of that, this is the cost of the levy.' All of that's got to be transmitted to them through our website, and through sending them text messages and all the things that we do, and social media. So, it's huge problem for us, and I'm sure it's a huge problem for small businesses as well.