Burnham’s ‘stupid’ tourist tax trashed

Now we know, devolution means higher taxes. The Prime Minister is hitting the hospitality industry where it hurts. Welcome to The Daily Tea with me, Tim Stanley. And me, Camilla Tominey. Devolution sounds nice. And if you say to people, you can have an assembly in Coventry, people think, I've been empowered. No, you'll be fleeced. And they don't realise that what that means in practice is the bills going up and a new means of ruining your local economy. The Prime Minister's barking up the wrong tree, Tim. Tim, you've come back into the studio wagging your tail because you've had an interesting morning. I smell a dog. Well, not for the first time, may I say. But I say that as a cat woman. Thank you, really, you've noticed. No, I haven't. I went to the Westminster Dog of the Year contest. Wow. Which was held in Victoria Tower Gardens. A politician's really held in such contempt. Sorry. Very good. I was tempted to enter my own, but this was for MPs only. Bertie Band. Bertie was banned. They should do a separate one for the lobby, shouldn't they? Yes. I've tweeted some photos. People can see. There were about a dozen MPs there with a dozen or so dogs, some lovely retrievers who, when everyone's back was turned, were at it like knives. But then it is the summer of sex. It is. Samantha Niblet there with her oversexed dog. I polled everyone. No, she wasn't there. No. I polled everyone to ask, are dogs more left or right wing? Are they Labour or Tory? And I found, even among left-wing MPs, a slight majority for dogs are natural Tories. Yes. Is it because they bark a lot and make a lot of noise? Well, the best person I met, the strangest pair, if you like, was Carl Turner, Labour MP, friend of this programme. We love Carl. Our Carl, up north. And Carl had brought along a Bichon Frise mix. How unlikely. Which is a tiny little. Fluffy white dog. So there is Carl. He should have a Rottweiler. There is Carl, who is a big man with this small dog. Was it his dog or his wife's dog? His dog. And I said to Carl, do you think dogs, do you think your dog is a socialist or a Tory? And he says, a bloody Tory. Look at him, Tim. He thinks he's a bloody prince. I love that. It's got shades of Inspector Clueso. Does your dog bite? But the, yeah, very good. That is not my dog. But the green is. The green MP, Hannah. Spencer. Yes, Hannah Spencer. She brought an 11-year-old rescue along who was wearing a little trans flag bandana. I thought you were going to say a keffiyeh. That was a vote. Pro-Palestinian pooch. So that was a vote for dogs are progressives. But one person I felt cheated, which was Bernabece Jekty, who is a Tory MP, who showed up with a rescued Romanian dog. Sweet. Hard to vote against a rescued. That's like the X Factor of dogs. Yes, it is. A dog with a story. A dog that misses its nan. But to my surprise, the event was won. I didn't stay for the end. So I'm just seeing this on Twitter by a dog called Caddy, who is a cocker spaniel owned by Anna McMorrin. Who? Now, this is the thing. She is a Welsh Labour MP for Cardiff North. And I have to confess that I didn't know who half these MPs were. And that's because it just reminds you of the extraordinary churn. I was talking to someone from the Kennel Club about this. And I said, it's like Parliament went through the First World War. Yes. And 80% of the officer class were wiped out. Who was the most famous person there? Who was the. Probably Hannah, actually. Wow. That's saying something, isn't it? Kevin Hollenrake sent people with his dog. He is the chairman of the Tory party, but he didn't show up himself. Oh. Yeah. Dog show by proxy. Moving on to Snoopy. Sniffer dogs. The police are rounding on Nigel Farage, Tim. Yes. Who does like dogs. He does like dogs. Does he have dogs? Carl Turner said to me, I mean, he wouldn't like reform. I don't know about that. I think reform are very doggy, actually. What, the Bichon Frise? Yeah, the Bichon Frise wouldn't like reform. I don't agree with that. Kind of dog. I think they're like that. But yes, reform is going to be investigated by the Metropolitan Police over their, and we now have to start saying, alleged attempt to raise money, through allegedly illegal sources. I'll tell you what, our legal department will be absolutely delighted with your use of allegedly there. Just say the word, just every other word, say alleged, and you can usually get around these rules. Alleged. You can say whatever you like. Pretty much, yes. This is after the Liberal Democrats complained to the police about the Channel 4 stroke verbatim investigation, suggesting that there may be something allegedly dodgy in the way that the Reform Party paid for some polling via the fictitious son of a fictitious dog. The fictitious American donor who didn't actually exist. Let's not relitigate that. No. Do we think it's damaging to have the police sniffing around the reform leader? In a way, this helps reform. Because it's an active investigation, you can retreat behind, we don't comment on things that the police are looking into. It's an open and ongoing investigation, therefore, it's a sealed. So that gives them a breathing space in which to consult the lawyers. What they would say privately is, come on, no money changed hands. Here are two operatives within reform who were caught on camera using what Nigel Farage described as loose pub talk. Yes, that's Dan Dukes and James Orr. They were, if you like, flattering someone who was showing interest in the party. But ultimately, this person never gave money. And if they had attempted to, then the lawyers would have become involved at that point. All right. And they would have said, we're not accepting this money. And Nigel Farage. Intervention, my lord. Sorry. Right. Objection. Money did change hands between the fictitious American donor's son and the polling company. This is what's very complicated because reforms. The £32,000 changed hands, but reforms say, well, that was. We didn't commission that poll. We didn't commission it, but they were the middlemen in it. So let's just leave it there. We're not investigating this, Tim, much as we'd love to. Well, allegedly, these operatives are caught on camera saying it would be nice if someone paid for this poll that would be very helpful to us. Yes. Perhaps the politically most significant bit of the documentary was where Nigel Farage was filmed having oysters with the fake Americans and appeared to sign off on the whole project. His explanation is, I wasn't really paying attention. He was paying attention to the menu because he did say, I'm not having four oysters, I'm having half a dozen. And Nigel might be telling the truth, but I have to say, if I'm having oysters with someone in the garden and they mention they'd like to give me half a million pounds. Yes. That's the one bit of the conversation where I do pay attention. Depends how much tobacco. That's how much tobacco you've had on that oyster. And if you've just been knocked for six, you can barely see the wood for the trees. Anyway, allegedly, no, we don't need to say allegedly, the police are allegedly investigating the alleged allegations. It's allegedly rather good for the Tories and for Labour, of course. Allegedly, Kemi Baynock could allegedly benefit from this, but let's see, because we've got conference to come. And I tell you what, she needs to knock it out of the park when it comes to that speech. We want to see Thatcher fully channeled, twin set pearls with a side order of Pitt the Younger. Yes. Although we all. People like to point out that there is a ceiling on reform support. It's worth noting that there's also a floor. Despite all of this, they still haven't dropped below 20%. No. They're still in second place. Yes. And it seems from some polling that there is a cadre of people who are actually more likely to vote for reform because of this scandal. They are putting off moderate voters, the kind of people who it's a complex dance for Kemi. She wants to win back reformers, but she also wants to attract people who are. Repulsed by reform. Yes, and flirting with the Lib Dems. On one hand, she's saying, we don't have any Lib Dems in our midst, and if we do, we're going to purge them. But we wouldn't mind some of them voting for us, please, in the blue wall. Yes. It's difficult. And one has to ask, what is her positive pitch for those people besides we are not reform? If you went back 16 years, David Cameron's answer was, I'll be pro the environment. I'll be pro the NHS. Yes. I'll be pro remain. I will be hugging. I'll be hugging hoodies and these. And huskies. And huskies. And these things are just not on the Tory palette anymore. They just don't talk about them. It comes back to the old infographic, the word wheel. Yes. Sensible. Kemi is perceived as sensible. And that's good in the blue wall. They like good old-fashioned common sense, Tim, provided it's moderate, not too loony right, certainly not too loony left. Yes. And also don't forget that these very sensible people who need people running the country who can get the bins out think Ed Davey's a clown. That's true. She'd be all right. But voters also like to have their conscience flattered. At some point, she's going to have to say something nice about the poor and about the environment. We wait for that with bated breath. I tell you what, neither the Lib Dems nor the Tories are going to be at the races in Holborn and St Pancras, are they? This is going to be a two-horse race between Zach Polanski of the Greens, he's running and he looks like he could win Keir Starmer's old seat, and now Labour have selected somebody who's the leader of Camden. Camden Council, Sehgal Abdiwali has been chosen, who's got an interesting backstory because she came to the UK from Somalia as a child in the 1990s. But crucially, Tim, and this is funny, isn't it? This lady was advocating till the very last minute for Keir Starmer to remain Prime Minister. And now she's standing in the seat that he's just vacated, even though he once led a government of public service, don't you know, quite self-servingly, he's off to NATO or to a better job somewhere on the international stage. Well, one might argue. you that she's just a local loyalist. Yes. And so it makes perfect sense. sense that she should take that seat rather than someone parachuted in from the outside. Of course, Zia Youssef cast aspersions upon someone like this entering parliament. I'm not sure why, because. Of course, this is the Somalian that Youssef took offense to. Well, it was hard to work out what his objection was, actually. But I would say, of all the problems we have in this country with integration, if we get someone who is a child refugee from Somalia who ends up being a councillor and then being an MP, that's something we ought to welcome. Sure. I mean, this woman has made her life here and is the leader of Camden Council, so fully invested in the local government scene of North London. I mean, that's to be commended, isn't it? Yeah. And what are migrants supposed to make of the objections to her candidacy, that when we finally get someone who really wants to go all the way and represent their country and work for it, you say, oh, we doubt you in some way. Well, then many will conclude why bother? Why bother to integrate when even a success story isn't celebrated? We discussed Burnham bungling his way through his second PMQs yesterday. Now he seems to be scoring more own goals than a sort of, I don't know, a blind striker with two left feet. Because what's this tourist tax thing all about now? But has he got his advisors together and said, listen, listen, it's tough times right now. I've come from the north. Let's put together a compendium, a bingo sheet of really unpopular policies. What is he thinking, Tim? And I say this because we have got a hospitality industry that has been largely on its knees since COVID. We had him give that reprieve to pubs. He said that he would cut the AT for pubs, but that really angered hotels and other hospitality ventures saying, well, yeah, we love pubs and we want to keep pubs open, but hello, we're over here and we're really struggling. And if anyone's checked the cost of staycationing lately, and let's be honest, lots of people did because it was so hot over summer. It's not a cheap country to go on holiday in, the UK and England. In the public imagination, pub is small businessmen called Jeff, who has an Alsatian that eats crisps, right? Hotels, that's big conglomerate, that's Premier Inn. Evil entrepreneurs. But this is a tax which will also affect B&Bs and Airbnb. Oh, will it? So people who just want to allow people to stay in their home will have to pay this. Cheeky. It is uncapped. Uh-oh. And it stands as a percentage of the amount that you pay to stay in the hotel. And local leaders across England will be free to impose it. It's already been done in Scotland. And of course, it's something that you pay in Europe as well. Yes. Wales is doing it or is about to do it next April. So devolved administrations are already slapping this tourist tax. Yes. And Manchester and Liverpool have experimented with one as well, including when Andy Burnham was mayor. And there is just a couple of quid. And one argument for it is if hotels voluntarily choose to do it in order to pour money back into the hotel business through things like tourist advertising campaigns, well, so be it. But here we're probably talking a percentage of a stay. And as you know, it's not cheap, particularly in the southeast, to stay in a hotel. Well, before we discuss Burnham's latest brainwave, shall we to Kate Nicholls, who is the chair of UK Hospitality and can quantify the cost to the industry. Kate, what impact will this tax have upon the UK's tourist business? Well, this is a significant additional tax on our businesses, and it's one that will impact us all. So if we are staying in a hotel for business, for traveling, for seeing family and friends, or for going on a UK holiday, we will all pay an extra percentage. And at the moment, the government is looking at a percent of the room rate, and that's about 5%. We'll pay VAT on top of that. So on average, as consumers, we'll pay a sales tax of 27%. For our hotel stays. Secondly, that means that will also feed through into inflation, because prices will go up as a result of that. So it will impact all of us. And then thirdly, there's a cost to the business of administering this. So this isn't a sort of cost free option. Businesses will have administrative costs and overheads, they will be liable for the tax and reporting the tax. And so ultimately, what we've done is calculate the impact of this, the likely impact of this, it will see an additional 1.6 billion pounds of costs hitting the industry. And that will have an impact on jobs. So you will see jobs put at risk as a direct result of a holiday tax. So Kate, you're not thinking it's a great idea, then? It's the wrong tax at the wrong time. And if you've got a government that is serious about reducing the cost of living, and as the Chancellor rightly said this week, the best way of doing that is reducing the cost of doing business. This is just simply running in the opposite direction. All in favour of fiscal devolution, but this is not the right way to do it. Let me put to you some of the government's arguments. One is that this is a percentage tax. So it's not a flat rate. So if you're a budget traveller, you'll pay very little money. It's still a percentage and a proportion of your holiday costs. So whether you're paying £10 a night or £500 a night, 5% additional on top of your VAT, and VAT on top of the tourism tax is a triple taxation whammy that's going to hurt you. It means that as a consumer, even if you're staying in a budget accommodation and you are price sensitive, yes, you might only be paying a smaller fiscal amount, but you are still going to have less money in your pocket to go and spend in the shops, the restaurants, the cafes, buying a cup of coffee, buying an ice cream, taking that taxi. So there's a bigger impact on the wider tourism and visitor economy. And if you are staying in a top-end hotel, you may well be able to afford that additional cost. But that's a substantive figure if it's a 5% charge. Obviously, people will also be paying this tax on top of VAT, which is at 20%. So it's not by itself. Plus, I imagine that your industry is already under some pressure from the rising cost of living and particularly energy costs. What's the state of the business right now? Well, you're right. This is about the cumulative cost burden, not just for the consumer, VAT, tourism tax, VAT on the tourism tax, but also the cumulative tax burden that hospitality businesses pay. That's currently running at 75% of all of our profits goes back to the exchequer in some form of tax. That is twice the level that you see being paid by financial services and banks. So we are the most highly taxed sector of the economy. And that's been increasing in recent years, particularly business rates on our hotels, national insurance contributions on employment, which is already putting pressure on our ability to employ people. And as you rightly say, soaring energy costs as a result of the wars in Ukraine and the Gulf. So this is an industry that is under pressure. We cannot afford to pass any more on to our customers in the form of price. And so this is going to be a law of diminishing returns. And it's something that we are all going to pay for because the hospitality sector drives so much economic growth locally and nationally. And what about those people who say, Kate, well, other countries impose this tax. In fact, I remember myself being in Rome and being asked to sign a local tax or paid a local tax at the receptionist desk. We are an outlier in Europe and actually across the globe in having no lower rate of VAT. So I had a similar experience going to Rome and going to New York this year. My sales tax, my city tax, my state tax, my tourism tax in both of those destinations was still less than the rate of VAT that customers pay in the UK. Every other country in Europe has a 10% VAT rate. So I think if the government does want to make sure that they drive economic growth in every postcode, they regenerate the high street. They support hospitality, which is what the prime minister said he wanted to do at the dispatch box yesterday at prime minister's questions. They need to look at cutting some other tax if they're going to impose a tourism tax. I was really struck by that figure of 75% of your profits going in tax. This newspaper has done a lot of campaigning work on pubs who face a similar situation and also complain that they feel that politicians, particularly on the left, just don't understand their industry. Is there a prejudice against tourism? I mean, you see people protesting against it. In Europe, there's a bit of a myth that Tories turn up every year and, you know, just occupy parts of the country. Are politicians actually anti-tourism? I'm not so sure in the UK they're anti-tourism. I think they just take it for granted. It's a hidden industry. Tourism in the UK is worth £140 billion to the economy, but it's made up of many thousands, hundreds of thousands of small independent businesses. So it's bigger than automotive, aerospace and pharmaceuticals put together. It's our second largest business. It's the largest export earner if we're looking at inbound tourism, but it's sort of a hidden economic generator. So it doesn't have the same presence and power as a Jaguar Land Rover plant, but it is as impactful. And it's the closest thing, inbound tourism, it's the closest thing to free money that an economy can get because this is visitors coming over who would not otherwise spend, but they do have a choice of where they go. And we are 139th out of 141 countries in price competitiveness for our tourism marketing and our tourism business. So it's really important for us to see where we're going in terms of our tourism offer. And that's largely driven by price. And we're seen as an expensive destination. And accommodation, according to Visit Britain, accommodation is the second biggest factor in deterring visitors from coming to stay in the UK. So I think ministers need to wake up to the fact that this is a sector that represents 5% of GDP, employs 3.2 million people, and is the foundation upon which much of the other parts of the economy rest and rely. Who's more expensive than us to travel to then? Who's $140? to us? I think it's South American countries and South African countries just in terms of the taxes that they have. But of all our major competitors, Paris, New York, Milan, we are so much more expensive and we have double the rate of VAT. So if the government's serious, they need to cut VAT. Kate Nicholls, Chair of UK Hospitality, thank you for joining us on The Daily Tea. Thank you. We're starting to understand what Burnhamism is. It's bloody stupid. It's stupidism. First of all, it's an attitude towards business that sees them as a cow to be milked. Not there for the sake of their own thriving to provide a service and for people to enjoy and for individuals to make money and put that money back into the community voluntarily. And employ workers. And employ workers. Neighbour rights. But rather, it's. If you do well, goody, that's more money that we can spend because we know how to do that. But the other interesting thing is that the novelty around Burnhamism was supposed to be devolution. And as these plans have been rolling out, Parliament for Cornwall, etc., Independence for Gosport, we've all been scratching our heads and thinking, well, what does devolution really mean in practice? And of course, we had this debate when Scotland gained its parliament and gained devolution. The second, the second question back then was, should it have tax-raising powers? There's no point in self-government unless you have real control over the purse strings. So again, we've all been bracing ourselves to ask, well, what will that look like in practice? And now we know. Devolution is a means by which taxes can go up. Yes, basically. And also, it means layering tax upon tax in a stealthy way. As Kate just pointed out there, she was talking, hospitality is that classic case, isn't it, of triple or quadruple taxation. We see this and we have seen this for years on a local level, being a driver. You have to get your car taxed and MOT'd. You then have to pay tax on the fuel. Then often, if you're living in that kind of commuter area, you need to pay for your own parking permit. Then you need to go to the station and pay parking on top of that. You're being taxed everywhere you move. And this is just classic labour. But the trouble is, it's wrongheaded, isn't it? Because the ultimate sort of situation is that you're being taxed everywhere you move. But the success story of this policy, and let's be honest, it won't be successful because Arthur Laffer and others can tell you the more you tax people, the less you're there likely to do these things. So Arthur Laffer was in this studio. It went viral. Do catch the clip again. He makes the point. If you tax cigarettes, it's intended to make people smoke less. If you tax driving, it's meant to disincentivise people from getting in their cars. If you tax staycationing, people will not stay in UK hotels as much. If they don't, UK hotels will have to cut staff because they can't afford to run. And therefore, you disincentivise people from employing people in that industry. It's madness. I hadn't realised. Kate says it's the second biggest industry that this country has. Nobody seems to recognise that in government because none of them have ever had proper jobs. Yes. I'm going to go with Friedman, Milton Friedman here. Go for it. And say, the thing about a free market is it responds to need. I want to stay in this hotel. OK, I'll provide this hotel space and I will charge the price that you both, are willing and can pay. And that's a very simple transaction. It operates almost like a force of nature. And then government watches this and says, how can I be involved? And I'm going to tax you a little bit, maybe with good intentions so that I can build a road to make it easier to get to. But then I've done that and that's actually raised the cost of it. So I'm going to have to introduce a subsidy for you using that road to get there. Now, if you think about it, over the summer, this government has given some freebies away when it comes to holidaying. You've had your visit to the museum has been made cheaper. Yeah, your bus fare. Your use of the buses has been made cheaper. And again, you might think there's government making my life better, but this costs money. So government then has to look for the money elsewhere. So where does it take it from? It takes it from the business end who in its head can afford to do it. So the price of a giveaway here is an extra tax there. And this process of the government meddling in what should just be a free market where people pay, where people charge what they wish and people pay what they can because the government becomes involved. It becomes this spiral of the government's actions causing costs to rise, which means that businesses make things more expensive, which means the government then has to become involved. At some point in the future, there will be bursaries for people to stay in British hotels because they've become so expensive. I know. But also, isn't it just devolution of blame? Yes. Whenever you decentralize anything, and we saw this just a moment ago, during COVID, oh, let's give Public Health England responsibility so that the Department for Health doesn't get blamed along with the Prime Minister and everyone else. Devolution is often, let's kick the can down the road to the local authority. And if they've slapped a tax on people, at least John Healy doesn't get blamed when it comes to the next budget. And also, I think it's quite conniving because they know they've got an albatross around their neck in the shape of the 2024 manifesto. They've got no money. Borrowing is at an all-time high. They can't cross those red lines on taxing us more. They can't cross those more income VAT or NICs. So here's a great idea. If we want to generate more money, let's go and do it at council level. The other problem with that is, by the way, that people know in their local area, because they're literally closer to it, how badly councils have the capacity to spend money. So if you're going to take my money as a tourist tax, and by the way, plough it into 20 mile an hour zones or low traffic neighborhoods, where we've got massive great bollards in the middle of the street, just making congestion worse, then I'm sorry, that's not. City of Oxford, it's just become impossible for drivers to visit. So it's going to make people's minds blow. And also, by the way, all of that local cash, you know where it always gets sucked up? It gets sucked up into adult social care and looking after kids and transport for school and stuff. So we're just going around in endless circles. The big problem in this country, which is what the next election will be about, is the cost of living. And the fact is that governments don't create wealth. They don't generate the extra supply that causes. Costs to go down. Business people do that. And small government, devolved government, your local parish council is no more capable of creating that wealth than Westminster ever was. So we don't need devolution. We don't need government closer to us. We need less government so that the free market can get on with doing what it wants to get on with doing, which is providing to you a service at the highest level. The highest possible quality at the lowest possible price. And Burnhamism is just going to be one more means of screwing up that equation, which will have to be unpicked by the next government. But it'll be very hard to do because devolution sounds nice. No, you haven't. No, you've been fleeced. You've been fleeced. Yeah. But it'll be very hard to argue against it. Because everyone's on board with people having more power. What a way to finish. Very clever. Thank you so much. We'll be back with more of this genius tomorrow, 5pm. Thanks for watching. See you next time. Bye.