Election 2020: Shaun Bailey wants a tourism levy to fund more police. How would that work?

Election 2020: Shaun Bailey wants a tourism levy to fund more police. How would that work?

Conservative London Mayor candidate Shaun Bailey has continued to place crime and policing very much at the forefront of his campaign, lately augmenting his #MakeLondonSafe message with a pledge to increase the number of Metropolitan Police officers from its present 31,320 to a record high of 40,000,

The “crime-fighting youth worker”, as he is being billed, says he would pay for the increase with a combination of extra money from central government – just over half the sum required – cuts to other City Hall budgets, savings secured by using new technology and bringing in a “tourist tax” raised from people who stay in London hotels. ITV has reported that Bailey calculates that a one per cent levy on hotel bills would bring in about £48 million a year and pay for 734 additional Met officers.

Bailey has been advocating such a levy for some time. What are the practicalities of introducing one? The idea has been around for quite a while. Different versions of it already exist in Berlin, Barcelona and Paris. The 2007 Lyons Inquiry into local government looked into it. The Liberal Democrat Brian Paddick proposed a voluntary levy of £1 on three-to-five star hotels to fund youth clubs when he ran for Mayor in 2012.

In 2013, the first report of the London Finance Commission (LFC), set up under Boris Johnson, spotted the potential for such a levy in London to help the city become more financially autonomous. And in 2017, as the Commission refreshed its proposals for fiscal devolution under Sadiq Khan, a more detailed consideration of a “tourism levy” was published by GLA Economics.

This provided range of estimates of the revenue that might be generated in London under different systems. It found that if London imitated Barcelona by taxing mainly four and five star hotel guests, it would bring in about £77 million a year. If London adopted a system similar to that of Paris, where a sliding scale applies based on a hotel’s star rating, about £140 million a year could be brought in. And if London followed Berlin and imposed a five percent flat rate per room per night, the yield could be a much bigger £240 million a year.

By those measures, then, Bailey’s estimated £48 million does not look unrealistic. However, the GLA Economics study says that in most other countries the “tourism tax” take is spent specifically on activities that support the tourism sector, of which hotels are, of course, a part (this is also how Sir Michael Lyons envisaged its use). Were this principle followed in London, the money could in theory support cultural attractions that provide free entry, help boroughs to maintain their streets and parks, or assist with training and education in the tourism industry.

GLA Economics has nothing to say, however, about a tourism levy being used for anything different, including funding the Metropolitan Police. The City of London expressed concerns to the LFC that a levy on hotel guests would damage the business, echoing objections from hoteliers themselves, even when it is assumed that the money would be invested in their sector. Bailey himself has accepted there would be resistance from hoteliers.

Also, as things stand, introducing such a levy would require the sanction of national government. Edinburgh Council has voted in favour of a £2 a day tourist tax, but can’t get started until the Scottish Parliament passes the necessary law. The LFC asks that the power be devolved from UK to London government, but maybe we shouldn’t hold our breath for a such a reform being made in the immediate future.

Shaun Bailey is also promising to re-open “police stations” that have been closed under Sadiq Khan’s mayoralty. Those closures – Bailey puts the number at 38 – have been part of an ongoing programme begun under Johnson mayoralty to help the Met make up for budget cuts imposed by previous Conservative and Conservative-led governments since 2010.

Bailey has had less to say about those that were closed under the Tory Mayor. Johnson announced in 2013 that 63 out of 136 “front counters” would go and more than 80 went between 2010 and 2014 according to a spreadsheet the Met compiled in response to a Freedom of Information request. Khan announced in 2017 that around half of a remaining 73 were for the chop. And all of that is a matter for another day.

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Categories: Analysis

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