In Conversation with… Cllr Adam McVey

LGiU Scotland’s Kim Fellows speaks with Cllr Adam McVey, leader of the City of Edinburgh Council, about all things Edinburgh including new tax raising powers, the importance of the tram extension, and a whole lot more.

It would be interesting to hear what’s next for tourist tax policy or transient visitor levy (TVL) in Edinburgh:

I’ll recap where we’ve got to in the process. When I became council leader almost two years ago, we decided we were going to change tack. A tourist levy has been council policy for seven years, at a minimum, it’s been pretty much a decade since the idea was first mooted. I was part of the last administration that spent five years asking for this power without actually evidencing why, which seemed like banging your head against a brick wall. When I formed a new administration, I decided we were going to do it differently, by building an evidence base. We consulted, we engaged, we got industry and stakeholders around tables, we engaged with residents. And what we found broadly is that residents were overwhelmingly supportive. 91% of residents out of [2500 who responded to the consultation] came back and said, more or less, “hurry up and do this”. I think people saw the fairness of it, people saw the purpose of it, to create a circular economy where you capture the benefit of people coming to your city. Investing the money raised into the reasons they come in the first place and linking that investment into skills and creating the fundamentals that keep the hospitality sector going. There’s also a big synergy between that and the rest of the city’s economy. So I think TVL resonated with people.

We evidenced not only the support for TVL, but the impact on the industry (or lack of impact on the industry) in other places, citing cities like Florence that had implemented a similar levy in 2011. They’ve got 2 million more visitors now than they did when they implemented it, so the idea that people were coming or not to a destination like Edinburgh or Florence or Paris or any of these great cities because of a couple of quid per night charge was ridiculous. Blatantly so. We have now built an evidence base,  engaged with the Scottish Government, and as part of a budget deal in Parliament it was accepted that national government would bring forward legislation to enable councils to have this power, which was a huge change in government policy at the start of my council just under two years ago. The government’s line was to be fair to them, legitimate and consistent, they had no plans to implement the Transient Visitor Levy. It was only because of the work we did, not only doing the work in Edinburgh but also working with people across the country.  One of the things I was able to do was get support, thankfully because the COSLA leadership team were right behind this as a policy and were able to help bring all 32 local authorities behind this idea, which helped quite significantly.

Now that government have accepted there’s going to be legislation, it’s time for us to engage with them as they are writing that bill. So we have, as a result of all that work over the last 18-24 months, we have a finalised (pretty much) plan of what an Edinburgh Transient Visitor Levy would look like. That has been through council, that was accepted by four out of five parties in the chamber, so a huge majority, and that is our council position. We will now engage with national government to make sure that that’s all shared because we expect there will be a national consultation on new legislation. We also want to make sure that the core principles and key mechanisms, charges, everything that we’ve come to as a conclusion, are able to be held true at the end of the day in the legislation that the government pass. I’m quite confident that the government will be looking to the work that Edinburgh’s done, as the leading authority on this policy, to create legislation that enables us to drive that forward in the way that we’ve set out. So from now, it’ll be a case of engaging, trying to get legislation that gives us that enabling power, and then going back to council with a finalised version compliant with legislation to deliver our aspirations.

You talked about the implementation for the next steps – any reflections, learning from that process?

I don’t want to make our council sound arrogant, but I think there’s a lot of positive learning that we did a lot right. I think that’s evidenced by the fact that it took us months of really hard work, and we achieved a massive change in national policy as a result. We did a lot right in terms of who we engaged with, when we engaged, and people we were willing to get around the table – my door was always open. We started the process getting stakeholders, mainly from the industry, around the table and discussing their issues. And while some representative bodies were, it’s fair to say a little hostile to the idea, most were still willing to come to those discussions and flag specific issues. Not always – sometimes they wanted to explain over and over again why they were against the policy, which was probably on the less helpful side, but the impact and the input was still valuable, as it gave them the ability at an early stage to shape thinking about what would and would not be significant issues.

Quite quickly in these relatively informal roundtable discussions (which I chaired), we got to the specific mechanics of: well what if someone books a room that’s three years in advance, what happens with that? You book it when the tourist tax doesn’t exist, then the tourist tax exists, how do you get around that? Now there are relatively simple solutions to all these issues, and it requires, and again in a lot of cases, the council to go in with their eyes open and be reasonable. Which we have been – the things that came out of these discussions include introductory administrative charges. We acknowledged that hotels and B&Bs would have to create some kind of capturing system, to capture how many stays they would have over a month, or a year, to be able to just extract the data they would need to work out how much they were going to pay every year. Or put a £2 charge on a room every night, they would have to do something with the technology that they’re using to do that. So, for the first two years after implementation, our policy says 1.5% of that revenue will be captured by the hotels themselves to try and help them mitigate that extra work. Then once you get past year 2, at that stage it’s embedded in the technology that the companies will be running and the practice that front-of-house staff that are applying the charges to guests have. So we envisage that at that point it would end. But actually that kind of plan, building from our relatively small position of an idea, we started initial thinking about what TVL would look like, to conversations with industry stakeholders about whether we’re going in the right direction or any areas we should be concerned about, other things to be considered.  We then built towards our crescendo if you like, which was a consultation in the city, which for a council consultation, 2500 people getting in touch is a good response rate.

Showing such overwhelming support in the city for the policy was a very strong bit of validation for what we’re doing. All of that helped evidence our position, which changed the government’s stance on TVL, or at least helped do that. We’re still one of very few local authorities interested in this policy, and we’re the only ones that have done the work and passed something in our council saying “this is what our plan would look like”. So we are way ahead of the game, and it’s not taken us that long to pull that all together. It is quite difficult to get everyone around the table early on. For instance, one of the things that came up in the roundtable discussions from the industry was the idea of how the charge would be applied. Would it be applied as a monthly bill? Would it be applied as a self-regulated charge? Would hotels just send a cheque every month, and what are the actual mechanics of that? How is it captured in the actual tax code? And so our response to that was I think reasonable.

We held a roundtable with the industry to look at this specific problem and to find the most optimal solution that brings to an absolute bare minimum the cost burden on business, while while ensuring that the collection rate is as near 100% as it possibly can be. That didn’t go down well with some in the industry at that point because there wasn’t agreement from government and because we hadn’t passed a final version. The industry was not quite ready to have that conversation as they were still in lobbying mode. So the idea of coming to a roundtable to discuss the mechanics of a policy that they were against was one they were not really ready to engage with. I still don’t see how we would’ve managed to square that circle at that stage, but we tried and we provided plenty of opportunity to have those discussions to try and iron it out. But there’s no getting away from the fact that we couldn’t have ironed it out, because we didn’t have that level of engagement. I was sent a letter, before the government’s decision and before our council’s decision, from two industry bodies describing our consultation at the time as biased and lots of accusations about it.  I asked both industry reps when I met them if they had read through the consultation. One person had read through the consultation but hadn’t submitted a response, and the other person hadn’t read the consultation, despite sending me a letter calling it biased. He was willing to put his name to it with no experience of how we were actually running it.

I think that there was plenty of opportunity all the way throughout to capture as much information, specifically from the industry. We wanted to hear from people in the consultation who’d worked in the industry, owned bits of the industry in terms of hotels etc. and get feedback about what that policy would mean for them and how they could see ways to improve proposals, or the issues that they would see in the proposals. I don’t think there’s a way around that, I think that’s just people being people, and especially with some of the industry bodies who take a stance against the policy and then that’s the policy that they have to run, it’s perfectly legitimate for them to do so, but it makes it slightly harder for us to engage. We have relatively few negatives to draw from hindsight in terms of how we’ve ran our process, because we’ve got good engagement from our citizens, we’ve got good engagement from the industry, despite some of the challenges about getting them to engage in the specifics, and crucially we’ve managed to change, or at least we’ve got a commitment to change the national policy that gives us the ability to implement the powers. So it’s difficult to be down on ourselves and draw out negatives of how we could do things differently. I actually think the process has worked pretty well.

It’s good to hear the detail and your reflections. I think our will be really interested to hear your views. So, moving on, we would be interested in what you think are the next opportunities are for tax-raising powers in Edinburgh:

There’s a wider discussion going on in Scotland about local tax reform, whether council tax is still the most appropriate way to raise funds. We’ve just passed, as COSLA leaders, a paper from Professor James Mitchell which was our response to the Local Governance Review, and it had a section on finance which set out four key principles for what local finance should look like. There are inevitable tensions in some of that work in sustainability and certainty of what your revenue is going to be. For me, there’s a conflict between that certainty concept, which current council tax is good at – you have certainty of what you’re going to get each year, to accountability and flexibility. Because ultimately, when you start having much more skin on the game as the local authority in your economy, it’s a great thing if you’re Edinburgh and your economy’s growing by 3% every year and you’re benefitting from that additional revenue without having to touch tax rates at all, but it’s more difficult for some of the other local authorities in Scotland. And there’s that tension that I don’t think we’ve resolved yet. I’m sure there will be hours and hours and hours of discussions about how that goes and whether it’s just going to be going round in circles or actually coming to a conclusion, I’m not entirely sure.

There’s obviously a much more specific conversation around workplace parking levy in the city. We’re only really one of two authorities that are looking seriously at it in Scotland. Others are considering a workplace parking levy but it was certainly in our manifesto to look at, and it was in our coalition partner Labour’s manifesto to explore it as well. That’s what we’re doing. It’s different, but the same, as TVL. TVL for me is an additional revenue base that should be used to sustain success across the tourist economy, improve the experience for residents, and mitigate some of the effects of the tourist economy in the city. It’s similar, but I suppose with a city that is growing at the rate that Edinburgh is growing at in a region that’s growing at the rate that Lothian is growing at, cars put far more pressure on infrastructure in a way that provides an obvious investment route. I still won’t be able to say to a resident exactly what every pound and pence of the tourist tax would be spent on, because although we’ve agreed the concept, we’ve agreed the key principles, we’ve agreed the governance process – you can imagine to support your tourist economy those priorities will change every year, or every three years.

Some things become issues that need to be overcome, needing investment, and revenue would have to be shifted towards that, or away from it, if it became less of an issue and something else that was much more about growing another part of the economy came up. The workplace parking levy (WPL) I think has to be clearer from the outset about what it is spent on as a first principle, because unless we can demonstrate what infrastructure it is going to support and what capacity it’s going to build, it’s going to be quite difficult for people to say “why are you putting this charge on, when the money is just disappearing up the chimney flue”. Whereas, if we put it towards improving public transport alternatives, I think people will understand why Edinburgh needs it.

While we’ve managed to recently vote on a tram system that broadly pays for itself in terms of being contained and not affecting our council budgets, not every project is like that, whether you’re trying to do high capacity light rail, or park and ride, or even additional rail links, or high capacity active travel corridors like cycling highways. When you’re trying to do these things, you can’t really contain it and just say it’ll be done on its own terms and people who use that mode of transport will be able to pay for it and pay for the infrastructure with the fares. This approach often needs investment, particularly capital investment. While we can prioritise quite a bit towards capital and investment in transport and other sort of infrastructure, and our policy in the city is that 10 per cent of our transport budget goes on cycling infrastructure, that’s leveraged in millions of pounds of national funding, to be able to invest in key high-capacity public active travel transport corridors. We can’t yet do it on the scale that is going to match the growth in population.

The example of park and ride is a good one in that there are three things that can pay for that. You either put it in and capitalise it on revenue from additional bus trips, then you’re putting additional pressure on the bus company to pay for their own infrastructure, or you just pay for it out of public funds and you find the money to capitalise revenue and that will mean money is taken away from areas like social care and schools and a whole host of other things we would want to protect, or you find additional revenue like the Workplace Parking Levy to try and create that model shift. Not necessarily by putting a very small charge on people who go and park in an RBS or wherever in the city, but far more about giving an alternative to someone driving and parking in RBS or other big companies in the city, in much stronger terms, so that someone actually sees the benefit and sees it fitting in to their life how they could get their kids to school and then the bus to work, or their kids to school and then a tram to work, or cycle with their kids to school ideally and then cycle from there to work. It’s about creating those alternatives in the decision making process, so that people can genuinely focus on making the right kind of choices.

I get the bus most days into the City Chambers from Leith if I’m not walking or cycling. When you’re sitting on a double decker bus going down and you see the traffic of private cars, the vast majority of them are single occupancy. When you think of 100 people in maybe 95 cars, and the space that takes up, the congestion that causes, the travel times that increases because there’s so many people trying to get through such a small space like Edinburgh, versus those same 100 people on a bus. Or those same 100 people on a mixture of bus, and cycling, and some walking. We’ve already got quite a high watermark of people cycling, I think we’ve got more people cycling to work in Edinburgh than any other place in Scotland, we’ve got more people walking – it’s something like 25% of people in Edinburgh walk to and from work as their primary mode of transport, so we’re already at quite a high watermark.

It’s very visual how much road space cars take up and we need to find ways of saying to that minority of people who are driving as their primary mode of getting around that we will try and find a better alternative for them to make sure they can make better choices. Our city will get an additional 100,000 people in the next 20 years – that’s what, two Falkirks? Two and a half Falkirks additional population within our city boundary. That’s not including people who’ll be living in Midlothian, East Lothian, West Lothian, all trying to get into the city to work, or go to the cinema, or go shopping or whatever. That’s a lot of people in a region trying to get about, and unless we [make] quite fundamental choices, that’s just not going to be feasible, let alone comfortable, for anyone. So the workplace parking levy gives us the opportunity to identify things that we need to do, and then not just have it as part of some fancy transport strategy that sits on a shelf, but actually extract the action points and fund them.

Finally, what’s your personal number one ambition for the city this year?

Ooh, number one ambition. I think it is getting the tram approved, while we’ve got a decision from committee we’ll need a decision from council. There’s then a process of engagement with the contractor. So even once it’s through our council, there’s then a lot of work to actually nail down the works required and get it on a firm footing as a project. It’s not an answer to everything, but it’s a key strand of how the city is going to look in twenty, thirty years. If we don’t extend the tram to Newhaven through Leith now, we’re never going to extend it to Granton, we’re never going to extend it to the Bio Quarter in the south of the city, we’re never going to extend further west and north west or give people the alternative to rail or road. So we need to find a way of articulating that vision. In the next year that will come to a head, so that’s going to be quite a focus for us as an administration to get that right, because there’s so much resting on it for our City’s future. If we don’t get that right, no-one else will do a transport project anywhere, and we feel, or I think we should probably feel, guilty as a city that more places have not looked at this kind of transport infrastructure and I think a big part of that is they saw what happened with the first tram. We have increasingly urbanised populations, our cities are growing, Edinburgh’s growing enormously. For any modern country, city, society to look at these problems and think that investment in modern transport infrastructure is not part of the solution, to me makes no sense whatsoever.

Thank you very much!

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