Agenda item

To consider the impact of the visitor levy on Gwynedd.

DECISION

 

1.     To accept the report and note the observations.

2.     Recommend that the Cabinet Member for Economy and Community:

·       Ensures that full consideration is given to all the complexities involved with the introduction of this new levy.

·       If the Council decides to introduce a Visitor Levy:

Ø  There is a specific commitment on how the money raised would be spent, giving priority to areas relating to tourism and the community.

Ø  Thorough consultation takes place across the county and with relevant partners to identify community priorities.

Ø  There should be transparency with those who pay the levy regarding how the money will be spent.

Ø  That communication about exceptions is effective and sensitive as necessary.

 

The Cabinet Member for Economy and Community presented the report noting that tourism and the visitor economy was a very important industry in Gwynedd. It was explained, for context, that several models and presumptions were used to measure the visitor economy, but that ensuring reliable data at the Gwynedd level had been extremely challenging as data did not exist in the way they would have desired.

It was noted that the frequently used STEAM model, the Scarborough Tourism Economic Activity Monitor, highlighted the following recent statistics for Gwynedd: economic impact of £1.78 billion; 7.75 million visitors; 24.9 million visit days; total employment of 17,600; nearly 4 million overnight visitors; and nearly 20-million-day stays. It was emphasised that this was a very significant contribution to the economy, but it was also recognised that visitors create challenges in some parts of the county, resulting in additional pressures on Council services, the environment, language and culture, and communities.

It was explained that this was the reason for adopting the 2035 Gwynedd and Eryri Sustainable Visitor Economy Plan, to ensure that the visitor economy was sustainable in the area. It was noted that data from the International Passenger Survey and the Great Britain Tourism Survey, which were based on a smaller sample of people than STEAM, showed a much lower value to the visitor sector than that shown by STEAM.

It was noted that the Council had been considering the possibility of introducing a levy for several years, with research on the benefits of tourism completed in 2018 highlighting the levy as a source that could generate significant income for reinvestment in the visitor economy. It was noted that the Cabinet had in the past expressed support for introducing legislation to establish a visitor levy in Wales. It was clearly emphasised, however, that no decision had been made to date regarding the introduction of a levy in Gwynedd, and that the discussion before them only represented the first step in the process.

It was noted that the Council was working closely with Conwy and Anglesey on the research into the impact assessments and in considering the introduction of a levy. It was explained that the economic impact assessment highlighted that the impact on jobs could, in the worst-case scenario, mean the loss of 50 jobs, or, in the best-case scenario, the creation of 21 jobs. It was further noted that the introduction of a levy could generate between £2.4 million and £2.8 million of annual revenue for Gwynedd. It was elaborated that if STEAM data was used instead, the figures would be around four times higher, with a greater impact on jobs and the potential to raise up to £12 million through the levy. It was expressed that the amount raised was likely to be higher than the conservative figure of £2.5 million noted.

It was explained that if there was support from the Full Council to proceed with a consultation, the procedure set out in the Act would be clear, and that the principles of public consultation would have to be followed. It was noted that the evidence gathered would inform the final impact assessments submitted to the Full Council.

It was noted that the Act clearly outlined the areas in which the levy income could be invested, together with the arrangements for leading thereon. It was explained that a Levy Partnership Forum would need to be established at local authority level, and that the draft proposal suggested that the income should be invested in projects and activities that would be consistent with the principles of the Gwynedd and Eryri Sustainable Visitor Economy. Reference was made to possible examples of investments, including cultural use, the Welsh language, environmental protection and promotion, local infrastructure and facilities, support for businesses and communities, marketing and communication campaigns. It was noted that these areas were examples of the type of investment that could result from the levy, but it would be the Levy Partnership Forum that would recommend priorities for subsequent consideration by the Cabinet.

It was emphasised that the current discussion regarding the visitor levy was the start of the journey. Given the economic climate, the endless cuts, and the importance of ensuring a sustainable visitor economy, it was noted that this needed to be considered as one possible future option.

During the discussion, the following observations were made: -

Concern was expressed that the term 'visitor levy' was not entirely appropriate, as Gwynedd residents would be likely to be affected if they chose to go on holiday or camp within the county. The need to avoid sending a negative message to visitors that could encourage them to go to other areas was highlighted. They questioned how the scheme would be managed in practice, who would be responsible for ensuring full compliance by businesses, and how the true cost and hidden loss of imposing an additional tax on the tourism sector could be measured. Specific reference was made to the possibility that more people could turn to wild camping or stay in campervans rather than using registered accommodation. There was concern that the levy could lead to an increase in the number of visitors deciding to stay for the day rather than staying overnight, and therefore this would have a negative impact on the sector. The administrative costs of the arrangements for small businesses were further questioned. In response, it was noted: -

-        That the national administrative arrangements were the responsibility of the Welsh Revenue Authority, and that it would administer the statutory registration system for accommodation providers across Wales.

-        That all accommodation businesses must register from September onwards, whether there was a levy or not, with fines for those who did not register.

-        That the Welsh Revenue Authority had already commenced communication and engagement work across Wales to raise awareness among businesses about the new register.

-        That some businesses in Gwynedd were already trialling the registration system on behalf of the Welsh Revenue Authority, with the aim of refining the system before it was formally implemented.

-        There was a real risk that some visitors might turn to wild camping, choose to stay in neighbouring areas or opt for day visits rather than staying overnight, and there was a need to be open to monitoring that situation should the levy be introduced.

-        Schemes such as Arosfan were already part of the response to the pressures of motorhomes in some locations.

-        That the regulatory and enforcement system in relation to wild camping already took place through the Environment Department.

-        That the Welsh Revenue Authority sought to make the procedure as simple as possible for businesses, including working with platforms such as Airbnb and Booking.com to integrate the system and reduce the administrative burden.

-        Businesses could report to the Welsh Revenue Authority either quarterly or annually.

-        That Gwynedd was working with Conwy and Anglesey to try to ensure a consistent procedure for businesses in the three counties.

The practicality of policing camping sites and caravans was questioned. Uncertainty was expressed as to how full compliance could be achieved in a more dispersed market.

It was questioned what safeguards were in place to ensure that the same procedural difficulties that arose in relation to Article 4, would not arise again. It was questioned which other counties in Wales were already ahead of the game or were planning to proceed with the levy. It was further questioned whether categories of businesses could be excluded or show the differences between categories of businesses, raising particular concern about very small businesses that could face a disproportionate administrative burden compared to large premises. The principle and objective of the levy was emphasised to ensure that any income was used to address the side effects of tourism rather than using it to expand the problem. In response, it was noted: -

-        That the Council was working closely with Conwy and Anglesey and followed Welsh Government guidance in detail in the preparation of this work.

-        That economic impact assessment work had already been commissioned to ensure that the evidence base was as robust as possible before moving forward.

-        That Cardiff Council had already decided to proceed to the consultation phase and was therefore the first county in Wales to do so.

-        That Gwynedd was in the second phase with Conwy and Ynys Môn and hoped to submit reports to their full councils to seek permission to consult.

-        Some other counties had indicated that they did not intend to proceed for the time being, while others were waiting to learn lessons from what would happen in the first counties.

-        Regular discussions were taking place with other county officers in Wales who were considering the matter.

-        That the Act itself clearly defined what types of accommodation and stays fall within the scope of the levy, and that there was little room to create additional local exemptions based on the size of the business.

-        All paid stays in visitor accommodation fall within the system unless it was one of the specific exceptions set out in the legislation.

-        That the Welsh Revenue Authority had been consulting with large and small businesses to try to ensure a system that was as simple as possible.

-        Workshops had already taken place, including a session in Llandudno before Christmas, to provide further clarification for businesses.

-        That a toolkit and further guidance were about to be issued to support businesses.

-        That any change of this kind created additional work for businesses in the transition period and the Council, if it wishes to move forward in the future, needed to consider how local businesses could be supported to understand the arrangements and make the best use of the new systems.

It was questioned when and in what way a clear policy on the use of the income would be formulated. It was questioned whether further details on spending priorities would be available before or after the implementation of any levy. In response, it was noted: -

-        That Welsh Government guidance required that a report be produced before going out to consultation, and that the report would have to outline an initial proposal for the use of the income.

-        That an initial draft of that proposal had already been prepared and shared as a basis for the discussion.

-        That draft was likely to change and evolve over time because of further engagement and the results of the consultation.

-        That a Levy Partnership Forum would need to be established if the levy was to be introduced, and that it would be responsible for recommending spending priorities to the Cabinet.

-        That the income must be allocated to the areas permitted by the Act, namely the management and improvement of destinations, including mitigating the impact of visitors, promoting the Welsh language, supporting sustainable economic growth, and providing or improving relevant infrastructure and services.

-        Further work to set the more specific priorities was part of the consultation and the next steps.

It was questioned whether Council Members would be adequately informed about legislation and its implications before the matter reached the Full Council, highlighting the fact that Value Added Tax (VAT) applied to the levy and that the legislation had powers for the Welsh Government to change the rates of the levy and allow local authorities to charge a premium on the levy. In response, it was noted:-

-        That it was intended to arrange a briefing for Members prior to the meeting of the Full Council to clarify the background and implications of the Act.

-        That discussions had taken place between the Welsh Government and the UK Government Treasury regarding VAT, with a clear argument from the Welsh Government that the levy should not be subject to VAT.

-        That the Treasury's current position was clear, namely that the payment was subject to VAT.

-        That further discussions were still ongoing between the Welsh Government, the Scottish Government and the Treasury on this matter.

-        That the legislation allowed the imposition of a local premium, but that the system had now changed so that this cannot be implemented without consultation with the Welsh Government.

Concerns were raised about motorhomes waiting in inappropriate places, with specific reference to local situations where vehicles had been staying in front of houses and on beaches such as Morfa Bychan. It was asked whether these implications had been considered, and whether any work was underway to strengthen the powers or management arrangements in this field. In response, it was noted that this was a clear example of the kind of local pressure that could be prioritised and financed through levy income. It was emphasised that many of these problems cannot be adequately addressed within the Council's existing resources, and that having a specific source of income would provide an opportunity to target the tensions that arise in communities and areas where tourism creates additional pressure. It was further noted that the coast would be likely to be among the main areas that would need attention if the levy was to be introduced.

The need to have the facts clear before proceeding to a public consultation was emphasised, specifically how much income the levy would generate, who exactly would have to pay, and how clarity about the impact of the scheme could be achieved. A particular concern was raised about Airbnb accommodation, asking who would keep an eye on them and how compliance could be checked. Wild camping and motorhomes were highlighted, noting that these problems were particularly pronounced in some places, especially near lakes. Concern was expressed about vans waiting overnight in lay-bys, and who would be responsible for control and enforcement in these situations was questioned. It was asked how much the levy administration cost would be to businesses, and how much of the income would then be returned for the benefit of the tourism sector. The view was expressed that any income should be earmarked for tourism only, to improve facilities for visitors and to advertise tourism in the area. Objection was expressed to the need to pay VAT on the levy. Concerns were raised about the possibility that Powys would not charge a levy, and that visitors could choose to stay there and then visit south Meirionnydd as day visitors, leaving Gwynedd facing the same pressure but without the corresponding income. In response, it was noted: -

-        That the economic impact assessment represented the best data currently available, although it was recognised that it was very difficult to obtain robust data at a Gwynedd level.

-        That the consultation process was likely to help further strengthen the evidence, as a survey would be carried out among residents, businesses and visitors to Gwynedd.

-        That the Act was clear about who had to pay and who was exempt, and that the number of exemptions was relatively small.

-        That the national proposal was to make the procedure as simple as possible so that businesses would not have to challenge individuals or ask for evidence as people arrive to stay.

-        That children under the age of 18 were exempt if they stay in hostels or in a camping sites but would have to pay at hotels.

-        That the national registration system would make it mandatory for all visitor accommodation providers to register, which included Airbnb's.

-        That this arrangement was an attempt to address the current lack of information regarding the location and number of Airbnbs in Gwynedd and Wales.

-        It was therefore expected that it would be easier to know where the Airbnbs were and if they had registered, and that they would then administer the levy through the Airbnb app or website if the levy came into effect.

-        There was a risk that some visitors may choose to stay in Powys rather than in Gwynedd to avoid the levy, but personally the levy was not a factor to discourage people from staying in an area. It was noted that the situation would need to be monitored very carefully.

It was noted that the point about wild camping and the use of lay-bys was fair, and that this area would need to be carefully monitored if the levy were to be introduced in Gwynedd. Reference was made to the Arosfan pilot scheme which was already managing to help tackle this problem. It was suggested that further discussions could be held with the Environment Department to obtain more figures on the use of lay-bys and the number of enforcement cases within the county's lay-bys.

It was questioned, from the perspective of the Eryri National Park, who would receive the levy if someone stayed within the Park area, and how it would be possible to ensure that the Park received a fair share of the income. It was emphasised that the National Park was the area where a great deal of the pressure from tourism was taking place, and it was asked how it could be ensured that it would receive what was appropriate. In response, it was stated that Cyngor Gwynedd would be the responsible authority in this case, and therefore the Council would receive the income. It was clarified that prioritising the use of the income would be a matter for the Levy Partnership Forum, which would include representation from the National Park. It was therefore confirmed that it would have a voice around the table, and that the Levy Partnership Forum would seek to identify the main challenges for Gwynedd and Eryri and seek to work to prioritise those areas. It was noted that it was likely that a significant proportion of the income would have to be spent in areas within the National Park and along the coast.

Support was expressed for the principle of the levy, noting that it was common in other parts of Europe and did not seem excessive given the cost of a holiday in general. It was noted that loopholes exist within all schemes and there was a need to focus on the levy principle. Attention was drawn to the possibility of using the income to improve the lives of Gwynedd residents, strengthen the Welsh language, and better manage the effects of tourism. It was emphasised that the levy was a positive step forward in ensuring that the tourism industry benefits Gwynedd and its residents. It was asked whether the timetable for the public consultation could be moved as the summer season was the hospitality industry's busiest period.

In response, it was noted that the Welsh Government's statutory guidance in terms of the duration and principles of the consultation must be followed. It was explained that the intention was to hold as many face-to-face sessions as possible before the start of the summer holidays, to reduce the burden on businesses in their busiest period. It was noted that an online questionnaire and a range of other methods of engagement would be part of the process, but that the Council was keenly aware of the importance of timing the work sensitively.

Questions were asked about commissioning Quod, an external company from outside Wales, to carry out equality and language assessments. Disappointment was expressed that a local or Welsh company was not used instead. It asked what evidence was available of the impact of similar schemes elsewhere. In response, it was noted: -

-        That the work was commissioned through a partnership arrangement with Conwy and Anglesey and that the Anglesey procurement process was used in this case to progress in a timely manner with the assessments.

-        That the Quod company had been used as a basis for that arrangement, but that they were not carrying out the specific assessment on the Welsh language.

-        That the Welsh language elements had been drawn up in collaboration with Cyngor Gwynedd's language officers, drawing on the Welsh Government's internal work and language impact work.

-        A resident survey was conducted online last October, with nearly 1,000 responses.

-        That survey included questions about the impact of tourism locally, schemes such as Arosfan, and views on the levy.

-        A business survey had also been conducted recently.

-        That prioritisation workshops with the Gwynedd and Eryri partners had contributed to shaping the local picture.

-        All this information would add to the data obtained through any future formal consultation.

-        Research by Bangor University looked at the implementation of levies in seven international areas, including the Balearics, Catalonia, Gunnison, Iceland, Jackson Hole, Orange County and Italy.

-        That the research looked at how income was raised, what was spent, and its impact.

-        There was no formal levy yet in any other part of the UK, but that Edinburgh would introduce one this year, which would be an important experience to monitor.

-        That the arrangements in Manchester and Liverpool were similar in principle but based on business improvement districts fee rather than on a formal levy.

The need to prioritise local companies in the procurement process, whether it was a partnership with another county or not, was emphasised.

Questions were asked about how the exemptions and refunds would operate in practice, particularly in relation to disabled people or individuals fleeing domestic violence. Specific concern was expressed about the sensitive information that would have to be shared in some cases, and it was questioned whether there was confidence that the safeguarding systems and communication mechanisms were robust enough. In response, it was noted that the criteria for exemption and refund have been set nationally through the Act by the Welsh Government and the Welsh Revenue Authority. It was explained that the repayment arrangements would be administered by the Welsh Revenue Authority, and the specific question would have to be raised regarding individuals fleeing domestic violence but not being accommodated through a charity or local authority. It was clearly recognised that the information in such situations was extremely sensitive, and it was emphasised that very secure arrangements would be required if the levy were to be introduced. It was noted that the Council would have to work closely with the Welsh Revenue Authority on communication and on ensuring that the messages about exemptions and refunds reached the relevant groups.

It was suggested that Members should be given regular updates to keep them informed of developments. It was questioned whether the costs of running and administering the scheme had already been included in the financial estimates. In response, it was noted:-

-        That it was possible to share regular updates through a members’ bulletin.

-        A dedicated page had already been created on the Council's website under the business section to provide information about the levy.

-        Businesses were already receiving updates through the business bulletin.

-        The Welsh Government provided a budget for the establishment of systems, communications, marketing and administration.

-        That the Welsh Government was committed to ensuring that the costs of administering the system did not exceed 10% of the income collected in any area.

It was asked whether the levy could only be raised during certain seasons, referring to overseas examples where there was a difference between the peak season and the quiet season. In response, it was noted that the current legislation did not allow seasonal differences. It was explained that if a local authority adopted the levy, it would have to be implemented throughout the year. It was confirmed that 12 months' notice could be given to revoke the levy if a local authority wished to do so in the future.

RESOLVED

 

1.     To accept the report and note the observations.

2.     Recommend to the Cabinet Member for Economy and Community:

·       To ensure that full consideration is given to all the complexities involved in introducing this new levy.

·       If the Council decides to introduce a Visitor Levy:

Ø  That there is a specific commitment on how the money raised would be spent, giving priority to areas relating to tourism and the community.

Ø  That thorough consultation takes place across the county and with relevant partners to identify community priorities.

Ø  There needs to be transparency with those who pay the levy regarding how the money will be spent.

Ø  That communication about exceptions is effective and sensitive as necessary.