National Assembly for Wales

Diolch, Chair. I declare that I'm a member of the Caravan and Motorhome Club.

Diolch yn fawr. And Rhianon.

Thank you. Just to declare that, formerly, in the past, my parents had a property with West Wales Cottages. Thank you.

Lovely. Diolch yn fawr for that.

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?

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

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 land 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 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, 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 this 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.

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.

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—

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. 

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

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.

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; 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 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. 

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.  

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.

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.

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

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—?

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.

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—? 

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? 

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. 

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.  

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 spares 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 is an example, but not Dutch hotels. Again, you come to specific reasons why you might want to do something.