 I welcome to the 25th meeting of the committee in 2018. I'd like to remind members and the public to turn off their mobile phones so that any members using electronic devices to access committee papers should please ensure they are turned to silent. We have received apologies today from Jamie Greene MSP. Our first item of business today is an evidence session on the article 50 negotiations with Professor Anand Menon, director of the UN Security, Human Rights and Security Yes, RC UK in a changing Europe programme. Professor Menon has indicated that he would like to make a short opening statement. Thank you very much, madam chair. All that I'll do is briefly summarise what I put in the written submission that I gave to you. I mean, some of the questions that I was asked to answer are unanswerable. What is the current state of play in the article Y conceiwch aeth am hwn oedd roi'n bach, ac mae'n bach yn gwybod i dda i, so, rhai i ddweud, ond wedi bod'i gweithio bod gychegi'r issue o'r perlwnau y mynd yn rel i'r Dwi'n cael ei gael i'w chyfnodd y Ceychars, ond mae'n cael ei gael ei chyfnodd eich gweithio gyda'r rhaid o'r ddau'r adreumau fyddai ar y proses. Mewn gwirionedd, dylai'r ddechrau ynglyn â'r adreumau ddullus i chi'r ddau'r adreumau i'r ddau'r adreumau a'r ddullus i chi'r ddau'r adreumau i chi'r ddau'r adreumau a'r ddau'r the past and not the future. There is a long, long way to go. One of the most remarkable things about the article 50 process is that we are so deep into it and it is impossible to know where it is going to end up. You can trace a logical and relatively convincing path from where we are now to any conceivable outcome, whether that is no deal, whether that is another referendum or whether that is some sort of patched up vague deal at the end of the process. The key milestones for me are going to be, firstly, obviously, the October and potentially November summits. It is conceivable the process at EU level won't end there. It is perfectly conceivable we end up with another special summits after November in the event that we don't end up with a deal. It's worth bearing in mind that there are lots of different deadlines in the article 50 process. For some people, the deadline is Christmas because Christmas is when firms are going to trigger contingency plans if there's no certainty about the future. In political terms, we could sort out the deal with the European Union in January and still have time for the process to wind its way through until the end of March. Looking at the domestic level, the key milestones are not only the vote on the deal because Westminster gets to vote on the deal that comes back, but Westminster also has to vote on the bill that puts that deal into law. I would just point out that historical precedent suggests that members of Parliament will not always vote the same way in the first vote as they do in the second. If you go back to 1973, when we joined the European Communities, there was a big majority for the agreement to join and a majority of only nine for the European Communities Act, so when MPs see the detail of the legislation that puts in place the agreement that they've signed with the European Union, they might change their minds. They effectively have two bites at the cherry and two opportunities to veto the deal, and we're not entirely sure when that second deal will be held. In terms of impacts, clearly A, leaving the single market in the customs union will have a profound impact on our economy. There's no point in trying to deny that. B, those impacts are going to vary considerably regionally. Ironically, if you look simply in terms of trade interdependence, then the two parts of the United Kingdom that are least exposed to trade with the European Union are Scotland and London. I say ironically because of course there are two parts of the country that voted most strongly to remain. We have a research team that I'm happy to point you towards their website, who do a detailed tracking of what they expect regional impacts to be, and they're in a far better position to talk about the detailed economics than I. The final question that I tried to address was the issue of whether or not it is conceivable that we will remain in the single market or that Scotland will, and I'll just point you to two things that we say in the written evidence. Firstly, whilst the European Union is clearly willing to consider a unique deal for Northern Ireland, I think that absolutely does not mean that they will be willing to do the same for Scotland. The reason they are showing flexibility over Northern Ireland, despite I should say grave disquiet about that special deal on the part of some member states, is because the Republic of Ireland are insisting on it. That will not apply to the same extent to Scotland. The second thing that I would say is that whatever flexibility the current Government might show in negotiations with the European Union, I cannot conceive of that extending to anything remotely like single market membership, because that brings into play the fundamental three red lines. I'll leave it there, Madam Chair, if that's okay. Thank you very much for your written evidence, which was very useful. In that written evidence, you suggest that a compromise is possible on the backstop to facilitate the completion of the overall withdrawal agreement. However, statements that we have heard from key people in Europe such as Gever Hofstad, when his tweets this morning, and the convener of the European Parliament's constitution committee, have suggested that the proposed checkers deal, even if there was a Northern Ireland backstop, worked out. It would still not be acceptable because it violates the single market, violates the four principles of the single market. Even if a backstop was somehow agreed, is there any guarantee, given everything that's happened, given Salzburg, that the checkers plan could get through because it divides the single market in the sense that it wants to be in the single market for goods but not for services and, of course, it doesn't sign up to free movement of people? Firstly, on Gever Hofstad himself, it is worth bearing in mind that the Parliament does have the vote on this. There's some slight confusion over this because he also tweeted yesterday that we will not vote in favour of an extension to article 50 and the European Parliament doesn't get a vote on that, so that's slightly misleading. However, on the terms of the deal itself, the European Parliament does. However, I'd separate two things. There's the backstop and the checkers. Checkers, for me, is an attempt to ensure that implementation of a backstop doesn't lead to regulatory checks within the United Kingdom. You're absolutely right that the European Union has addressed all sorts of concerns about the backstop. My personal view is that the European Union has a tendency to address interest as principle in the sense that there are several instances where the European Union has waived its principles. If you could think about the association agreement with Ukraine, you could think about the deal with Switzerland or you could think about the deal on offer to Northern Ireland. In all those instances, the integrity of the four freedoms is somewhat mitigated. What they are saying, though, is that they will not do that for the United Kingdom as a whole, which is fair enough. There are good economic reasons not to do that. I don't think that checkers, as it is, will fly. I still remain cautiously optimistic that, between them, the British Government and the European Union will find a way of preventing the border in the island of Ireland, while reducing as far as possible the visibility and the impact of checks across the Irish Sea. That's ultimately where a solution is. There will have to be some sort of differentiation between Northern Ireland and the rest of the United Kingdom because of the European Union's insistence that either we all remain in the single market or there will have to be checks. You're at Neff's issue set up at a timeline to the end of March. When do you think the withdrawal agreement needs to be negotiated by so that it can ensure full implementation? I would say that, by about mid to late January, they need to sign it off in the European Council to go to the European Parliament to be safe, to be done by 29 March. There are two ultimate deadlines. There's the 29 March, which is a political deadline here. I find it very hard to see how this Government, under this Prime Minister, politically will be able to extend that deadline because I think that they've made great play of stressing that date. The ultimate practical deadline beyond which Brexit gets delayed quite significantly is the end of April, because that is the last plenary sitting of the European Parliament after which they break up for elections and then nothing is going to happen again until the autumn. Thank you very much. I'll move now to Kenneth Gibson in the MSP. Thank you very much, convener. The negotiated transition period is part of the withdrawal agreement scheduled to end in December 2020, but it will be extremely challenging to negotiate and finalise future relationship within those 21 months after the UK has left the EU. Is there a need to include provision in the withdrawal agreement for an extension to the transition period, as is argued by Fabian Jolique and Tobias Locke? Well, two things. Firstly, it won't be a 21-month negotiation, because if you think about it from the end of March until probably the start of autumn, there will be little in the way of negotiations because we'll be appointing a new European Commission and, therefore, a new trade commissioner and we'll have the European Parliament elections. And, of course, it takes anything from nine to 12 months to get these things ratified, because in the European Union trade deals have to be ratified by national parliaments and in cases like Belgium that we're all now all too familiar with by regional parliaments as well. So, actually, it is far, far less than 21 months. Now, all I can do here is report the views of my EU law colleagues and, of course, each of them has a different view. But the consensus opinion seems to be that it will be necessary to have something in the withdrawal agreement that makes reference to an ability to extend the transition period. The reasoning for that is that, for some people, even transition as it stands is a bit of a stretch of article 50, because article 50 is basically about the past, not the future, and the European Council is kind of overstepping its powers by agreeing a new third party relationship, albeit for only those 21 months with a third country. It looks like we're not going to have a legal challenge to that so far so good. Once we start transition, there are some EU law experts who would argue that even if the withdrawal agreement itself contains provisions for extending transition, that is not legally foolproof because it will look to some people like a usurpation of power by the European Council. That is to say, the European Council deciding on an ability to lengthen a third party agreement formally should go through another process involving the commission and the European Parliament. That we don't know yet, but it certainly seems to me wise to include provisions in the withdrawal agreement, which will make it safer than not. I understand that there's already been agreement to contribute to EU data systems up to 2026, so there's already effectively been agreements to go beyond the state of transition period of 21 months. Absolutely. Our untangling from EU institutions and policies and processes is going to be staggered and will take place at different points in different times. You're absolutely right that data is one of those areas, but that's slightly different from transition. Transition is a specific status that we will enjoy with regard to the European Union, where effectively in economic terms we continue as we are now just with no representation in the institution, so that's very different to the individual sectoral deals. With regard to the Irish Backstop issue, it remains unresolved at this stage. It's difficult to see how it will be resolved given the diametrically opposed views emerging. However, in terms of the unity or otherwise of the 27 on that issue and indeed more generally, what would your view be that it seems in terms of the public position that the 27 remain unified on their negotiating stance in terms of the EU? I wonder what your view on that was. On that, of course, there's all sorts of rumour and counter-rumour. There's a piece in the FT today that hints at the fact that the Irish might be softening towards British proposals more than other EU member states. I don't know whether that's true or not. The EU has certainly publicly kept its unity quite impressively. There are different shades of opinion among the member states about whether or not the EU should or should not be more flexible. Ultimately, all national capitals realise that it's simply not worth the hassle to engage in a full-scale fight amongst themselves, and it's far easier to leave this with the European Commission than to open up what could be a damaging fight between them. One other point of division is that there are some member states that are already rather twitchy about the Northern Ireland backstop as proposed in the December agreement. I've heard people close to the French Government say that this raises a profound danger that Northern Ireland becomes a sort of manufacturing hub that manufacturers from the rest of the UK will relocate to Northern Ireland to benefit from the fact that Northern Ireland will be in some of the single market, but not all of it, and therefore will gain a comparative advantage. There are already divisions, but they're not breaking through to the political level as yet. What happens in the future, we don't know. It seems clear to me that the British Government is still hoping that, as we reach the end point, the combination of the prospect of no deal plus the increased involvement of political principles in the process will lead to those divisions becoming more pronounced. The rationale is that at the moment Brexit in the national capitals across the EU is handled by essentially sectoral experts who had steeped in EU law, but perhaps not so steeped in geopolitics, and the more the heads of state and government get involved in this, the more they will recognise that there need to be trade-offs. That is why, for instance, the new foreign secretary, when he went to Berlin soon after his appointment, was talking about the dangers to the Western Alliance if we don't get this right. Appealing to the broader geopolitical issues at state rather than simply the technical issues of EU law, I don't know what will happen. It seems to me very unlikely that EU unity is going to break publicly into our benefit before the end of this process. You referred to a former lawyer practising EU law in the private sector. You speak of moving out of the realm of EU lawyers into the realm of those engaged in geopolitics. I wonder whether that applies to the DUP because there are statements this week. Do you suggest that the geopolitical situation on a wider scale is not really something that is forefront in their position? Absolutely not. What we have at the moment is several simultaneous games of chicken being played by different people against different people. The British Government is playing chicken with its own backbenchers. It is playing chicken with the European Union. It is playing chicken with the Irish Republic. The DUP is playing chicken with the British Government. There are people in the British Government who in private will say, ultimately—bless you—that ultimately the DUP would rather compromise than face the risk of a Corbyn Government. Everyone is assuming that everyone else is talking tough but will soften towards the deadline. What is very interesting to me is that both in the December agreement and repeated even in the heat of battle immediately after Salzburg by the Prime Minister is that phrase, that there will be no new checks between the Northern Ireland and the rest of the United Kingdom unless Stormont agrees to it. It is still conceivable that the Government behind the scenes is trying to talk to politicians in Northern Ireland saying, what will it take for you to sign this off? That remains to be seen. I am picking up on one last point that you mentioned when you suggested that in other examples of trade agreements the fundamental freedoms had been somewhat mitigated. I hear what you said, but I would put it to you nonetheless. Is it not the case that if you do not have the jurisdiction of the European Court of Justice as far as the four fundamental freedoms are concerned, you do not have the jurisdiction of the ECG, which means absolutely that you have a very loose form of co-operation and you do not have anything near the status quo in terms of freedom movement of goods, for example, because those are the rules of the club. If you are not subject to the empire, you do not have the same set of rules. Is that nonetheless still the position? Irrespective of what their motivation in terms of matter principle might be, the fact remains, as a matter of law, that they have very little leeway to go beyond the structures of the tenants of the single market. I would say that that is true with wrinkles in the sense that, for instance, if you look at the EEA agreement, it is a way—if you want to be cynical about it—of dressing up the direct authority of the European Court of Justice. Proponents of the EEA model will say, look, you are slightly freer of the European Court of Justice. Actually, I do not think that you are that much freer, because ultimately, if you look at the track record, the EEA law gets implemented and the European Court of Justice has oversight. I think that you are absolutely right, but there are two different issues, aren't there? There are the issues of whether or not you are within the whole of the single market or bits of it, and there is the issue of how those bits you are in are justiciable. I think that the negotiations over governance will be absolutely fundamental, and it is something that we have not spoken about yet enough. In the Government's white paper, of course, they put forward some very vague proposals on governance and how governance can be managed short of direct ECJ authority, but I think that you are absolutely right. From the EU side, that is non-negotiable. Either you are under it. That is one of the big cultural differences between the two sides, where you hear the British Government say things like, well, obviously, our laws will be equivalent to EU laws, so we don't need to bother them. From the EU side, it's like that's all very well, but ultimately, there has to be a court overseeing it, and as far as we're concerned, it's our court, so on that, you're right, yeah. Thank you very much, Stuart McMillan. Thank you, convener. Just following on from Annabel Ewing's questions, and notwithstanding your comment, if you want to go regarding the different players in this playing chicken with each other, have you seen or are you aware of any evidence at all of assemblates of common sense actually taking place from an economic perspective between the various political players in this to try to get to a successful outcome, particularly regarding the Northern Irish situation? Well, what is clear is that both sides are committed to not having a border on the island of Ireland. They differ in how you get there and they differ in how sacrosancts each other's principles are in terms of a final deal. What is curious to me about the Brexit process as a whole? Ultimately, at its simplest level, the Brexit decision was a decision to make trade with our biggest and nearest trading partner, slightly more difficult. One of the ways I interpret the Brexit vote is it's a triumph of politics over economics. Economics driving political decisions is no longer the case in this sort of post-Brexit world. Actually, that's very, very clear if you look at the Checkers agreement. For the Checkers, for me, it's a wonderful example of politics driving over economics. If you're an economist and you wanted to write Checkers to ensure the best economic deal for the United Kingdom in its relations with the European Union, you'd have turned it on its head. You'd have said, we don't have to worry about agriculture because it's such an insignificant proportion of our GDP. Manufacturing is relatively unimportant. We need to strike a deal on services because that ultimately is what our economy is about. Checkers, it seems to me, turns that logic on its head for political reasons, partly the political reason of the Northern Irish border. Checkers was written with a view to avoiding a border rather than with a view to anything else. Also, because of the political, rather than the economic salience of sectors like manufacturing. I don't think that economics is driving this process on either side. Do you remember, back in the referendum, several spokespeople of the leaf camp were expressing their confidence that the German car makers would go and see the German chancellor and say, look, this will be bad for business? Therefore, the German chancellor would cave. I think that on both sides, politics is running this show rather than economics. On the issue of Germany and other EU 27 nations, we have heard on more than one occasion in this committee that Brexit is not the burning issue within EU 27. They have many other domestic issues and Brexit is just number five or six or seven down the line. Do you still think that that's the case? I think that that probably is the case. Certainly in the short term, which is one of the reasons why the British Government is trying to say, well, look, if you look beyond the actual exit date, this is going to have all sorts of spillover effects on security cooperation and other things that you need to think about. But no, day to day in the European capitals, they're worrying about the migration crisis. They're worrying about the east west values division that it's rearing its head in the European Union and causing a lot of people sleepless nights. And they're worried, of course, about a resurgence of the eurozone crisis, particularly in Italy and the Italian budget situation. So this is not their most pressing issue, which I think is one of the reasons why, in answer to an earlier question, I said, I don't think EU disunity will happen for two reasons. One, because the stakes aren't quite high enough for people to put their heads over the parapet. And it means that, basically, if you're an EU member state, let's say you're a Scandinavian Government and you're slightly concerned about the way Britain's being treated and you'd like the EU to show more flexibility, you still have to make a decision as to whether you burn political capital in the European Union fighting that corner or whether you keep your powder dry to fight the wars over the eurozone that are bound to come. And I think that everyone's making the calculation that, actually, this isn't their first priority at the moment. Okay. Okay. Thank you very much, Alexander Stewart. Will the provisions of the future relationship form part of a formal withdrawal agreement or will there be another document to deal with all of that? Yes. They will be a separate document, but they will be voted on as a package by the British Parliament. And how will that impact going forward? In what way? In how the process will be managed and... The crucial thing going forward is that the European Union will not be binding itself. And the Government has made noises about making this legally binding in some way, but I find that very, very hard to see how they do that, not least because you'll have a new negotiating team in place next year. Governments might change in Europe and so preferences might change. My sense is that what we agree on the future relationship will be political. Now, that doesn't mean that it doesn't have weight, but it won't have the weight of a legally binding agreement, I don't think. And I'm yet to hear anything that convinces me that there's a way of making that legally binding. And, as you've indicated, the complexities of that really do become quite apparent depending on where we end up finding ourselves. And if that is the case, what is the next step if there's not that legally binding process that gives us the opportunities that are expected? And if there is some changes in some of the views and governments across Europe, then the whole idea then even becomes more problematic going forward. Well, this is where the idea, I think it was the First Minister who first coined the phrase of a blind Brexit comes into play. Now, for me, a blind Brexit or a blind exit is the necessary outcome of any decision to leave the European Union because of the European Union's own rules. They can't formally negotiate a trade deal with a member state. The article 50 process is backward rather than forward looking. So I don't see how you're not at least partially blind because by law you can't be anything but. And it is a real danger. And this is where David Davis was absolutely right that ultimately the problem for the United Kingdom is our maximum moment of leverage is the moment when, if at all, we can link the withdrawal process and in particular the withdrawal bill with concessions we'd like the European Union to make over the future relationship. The structure of the process, however, means that that's not going to happen. And the danger is that, of course, once we leave, going back to the earlier question, we become even less of a priority once the withdrawal agreement is signed than we are now, and that, therefore, moving the trade negotiations forward and getting concessions will be even harder. But I don't see any way around that. Okay, thank you. Okay, thanks. If I could just ask a supplementary to that. Obviously, as you said, the withdrawal agreement and the transition terms are legally binding, whereas the future relationship is a political statement. We've had a number of UK politicians such as Michael Gove, who have hinted that we should simply get out and then we can worry about the future after that or that we can make promises now, which we could renege on in the future. How do statements like that affect the negotiations? Well, it's very hard to say. I mean, I've just come here from the Conservative Party Conference and you've got to hope that statements like that don't affect them too badly because that was all we heard in Birmingham. What was remarkable about Michael Gove's statements was it managed to unite the Brexiters and the government in opposition to them. But there is absolutely no doubt that people on the continent listen to what we say here. And, for instance, one of the reasons why the French in particular are absolutely dead set against anything that looks like partial single market membership and are slightly nervous about it even for Northern Ireland is that they've listened to the rhetoric from London since the 1980s about deregulation and they take it seriously. I don't think that we've ever acted in the way we've spoken, but a succession of Prime Ministers from both the big parties have taken great pleasure in going to Brussels and talking about the need to get rid of regulations and having said this for so long, it's perhaps unsurprising that our European partners are taking it seriously and that is why one of the big fights to come will be the fight over the so-called level playing field is there's a degree of nervousness that whatever we sign up to now, we won't adhere to in the future and that therefore the European Union is very, very anxious that they get these assurances over a level playing field that we will not diverge from their policies even in areas that aren't directly covered under the ambit of the future relationship. So I think it's not necessarily what Michael Gove said, but I think it's years of rhetoric have made some of our partners a little bit wary about allowing us to go where we want. We've already heard in this committee that the European Parliament is not comfortable with the agreement that's already been agreed in principle on guaranteeing the rights of EU citizens. The European Parliament aren't convinced that the UK will stick by what is promised there? It was one of the great insights into our constitutional system that when we started negotiating withdrawal agreement, we realised that we can't give the kind of long-term guarantees to citizens that the European Union was after because we have sovereignty of Parliament and one Parliament can't buy the next, which is why, if you remember early on in the article 50 process, there was an enormous fight over the European Court of Justice having jurisdiction over the elements of the withdrawal agreement covering the rights of EU citizens, and they ended up with a compromise of, I think, nine years or something like that for that. So there is concern over it. I personally am not that concerned about the European Parliament trying to block the agreement, not least because one of the interesting things about the Brexit process has been the unprecedented levels of co-ordination between commission member states and Parliament. The European Parliament has been kept in the loop all the way through this process, and during the negotiations when we were talking about citizens' rights, their concerns were fed into the EU negotiating position. So yes, there are concerns about this. I don't think that the concerns will go so far as to seeing the European Parliament vote the agreement down, but I think that they've ended up with probably the only compromise they could between a legal system that is constitutionalised that is like the European Union and one that is far less so like ours. Thank you. Ross Greer. Continuing the theme around the withdrawal agreement in the future relationship agreement, some of the more rational Brexit years looking at the cock ticking down seem to be going back to where they were at least rhetorically a couple of years ago in stating that the withdrawal agreement can be managed as essentially a monumental fudge, shifting as much of this as possible into the negotiations on the future relationship. So what is currently causing difficulties for the withdrawal agreement? The argument is that you can fudge that by punting it into the next round of discussions for future relationship. I don't see how that works, but I've been interested in your thoughts on if, politically, that has any chance at all—there's a series of games of checking going on here—that seems to be based on the idea that Europe will blink first in that regard. Is there any political possibility of that? Well, I have to say that I think that you're right and they're wrong in the sense that, yes, this is what is happening. One of the calculations of Government whips about the vote to come in Parliament is that they will be able to peel off a sufficient number of Brexiters who just want Brexit to happen because of the threat of a second referendum if the agreement gets voted down. That is going on. There are some in the Brexit camp who just want us to be out and then we'll sort it out afterwards. However, you can't fudge the withdrawal agreement. You can fudge the future relationship, which we want to trade against the withdrawal agreement, so it puts us in a weaker position. However, the withdrawal agreement itself, as we've seen in the sections on the money on citizens' rights, has to be crystal clear. I think that, given what has happened over the Irish backstop, the European Union will make certain that there is no scope for ambiguity in the language around that in the version that is finally agreed. You've mentioned the idea of a second referendum, people's vote and a ratification vote. Beyond the domestic British political challenges of whether that is possible or not, how would the 27 react to that? There have been a number of statements from various European politicians who are open to it, but you've already mentioned the impressive unity of the blocs so far. If the UK political environment got to the point where there was a majority for a people's vote at Westminster, if that was the direction of travel, do you believe that the 27 would be open to that, a possibility of that being facilitated before the 29th of March? How long before the 29th of March would that have to take place? I would draw your attention to a recent report. I think that it's out or it's about to come out from the constitutional unit at UCL, which is about the procedure on legal steps that would need to be taken to get us to a second referendum. They very strongly intimate that actually doing it before the end of March would be just about possible but extremely difficult. There are two different EU issues there then. One is would they be open to us staying, to which I think the honest answer is in public they'd have to be in private, probably less so among some of them at least. Speculation upon speculation, were we to have a referendum? Were it to decide that we were to remain in? What would happen then? No one legally knows whether we could unilaterally revoke article 50 or whether we'd have to go back to the negotiating table with them. That's a point over which lawyers disagree so we don't know. I'm one of the pursiers in the case that's now going to the CJ on exactly that. There's a very good, Steve Pears has got a blog on EU law and one of the blogs in that is a debate between him and Steve Wetherill of the University of Oxford and they take opposing sides as to whether or not we can unilaterally revoke article 15. It's well worth reading to see some of the legal issues on that. The third issue of course then is whether they would grant us an extension in the event that we decided to have a referendum but we couldn't do it in time. That's by unanimity of course. I find it very hard to believe that they wouldn't partly because I find it quite hard to see us getting to that point under this prime minister in which case we've got a new negotiating team. So it would be very hard for the European Union to say, actually no, we've had enough of this. Let's just stop and you can fall out with no deal. Thank you. Thank you very much. Tavish Scott. Thank you. Can I ask a more practical question? I'm one of 20,000 Spaniards across the runway into Gibraltar every day. What's going to happen at the end of March next year? The honest answer I should give you is I'm not entirely certain. No indeed. I mean in the short term with the transition period very little will happen but beyond that I do not know the Spanish scene. I mean and Spain isn't the most stable of countries politically at the moment either which adds to the uncertainty over this. The danger is that a weak Spanish Government sees a chance to play the national card by playing hardball over Gibraltar. I mean it's one of the tragedies but one of the perhaps inevitable tragedies of the Brexit process is how given the stakes in what's going on places like Gibraltar and places like the Channel Islands have been overlooked and their special status has not taken into the future. I mean I don't blame the British Government for this because there's so much going on that it's very, very hard to have the bandwidth to do this but it's very noticeable if you go to Gibraltar or you go to the Channel Islands that sense of no one's talking about us. So I don't, the honest answer is I don't know what the future holds. I appreciate that, entirely fair. Do you think there are any implications for the Northern Ireland border discussion from Gibraltar at all? Is there any linkage because it's another border? In the abstract, yes. In the political world so far no. I think it's just worth stressing the degree to which the Northern Ireland border is being treated differently by the European Union because the Republic insists that it should be. I mean that's the key variable there. It's a nice example of one of the things that you, if you're a member state and you really need the support of the European Union and you get it, it makes a big difference. I'm sure the Gibraltar Government were in Birmingham like you and that kind of thing but they're just not getting through are they? No. I mean the Government of Gibraltar I mean I should say have been tireless. I mean barely a day goes by where you don't see them in Parliament or at the party conferences. I mean they have been working this as hard as they possibly can. I mean to the point where at least people are aware of the fact that there is a Gibraltar issue but how that sort of rises up in political salience, I just don't see, just because of the scale of the other issues that are involved in this. Yeah. Okay. The other question I was going to ask was, fishes is getting well and truly done over here because we're soon to be in a position where our Fishers Minister and indeed the UK Fishers Minister won't even be at the round table where they sort out quotas to the future. I mean that just sets, that's going to be what it's going to be like for lots of industries in the future, isn't it? That's an industry where already this experience is real now. Yeah. No, absolutely. I mean we won't be around the table. I don't know what the solution on fisheries is going to be. Again I can put you to one of our teams. There's a guy called Craig McAngus at the University of the West of Scotland who is doing a big research project on brexit and fisheries and what it means for Scottish fishing communities. I'd advise you to look at his website and even maybe talk to him at some point because he knows everything about fish there is to know, which is not something I can say of me, but yes, the broader point on regulation is absolutely true, which is why I have my, I mean even with something like checkers I don't think that solves the problem for manufacturing to the degree that people seem to seem to think it does in the sense that for manufacturers as important as customs and tariffs is the issue of regulation. I was talking to someone from one of the sort of high-end car manufacturers recently and they were saying, well look, we sell expensive cars if there's a 10% tariff, we just stick it on the price and no one will notice. But what we don't want is to know that Fiert and Co are sitting around a table setting the regulations that will determine what our cars look like in the future and we're not even in the room. So you're absolutely right, not being around that table when the regulations are negotiated is something that concerns a lot of manufacturing firms in this country. I agree and did, I mean last week the boss of PEA said Vauxhall would go on a short term if not close, Nissan and Jaguar Land Rover bosses have all said much the same in the last week in the run-up to the Tory party conference and I didn't notice the Prime Minister making any observations about the economy of the car industry. But yet Greg Clark signed some kind of deal with Nissan which we don't know what it is about a year and a half ago. Can you shed any light on what was, is there a deal for Nissan that's different from some of these other car companies? I have absolutely no idea what was done with Nissan. What I would say though, I mean I think it's worth clarifying that the car manufacturers I think were talking about a no deal scenario, not a deal scenario and I think the head of the Royal Bank of Scotland was on the Today programme today saying, also talking about that. I don't think anyone has said they're going to close in the event that we leave the European Union. It will be interesting to see what happens in the future. I mean talking to the big foreign car firms, what they will say is obviously this will make things harder and we'll have to reassess but equally they'll say we have a lot of sunk costs in the United Kingdom. We've paid an awful lot of money for plants and we're not just going to close that down and walk away. So for instance in the case of BMW, they have the plants and the infrastructure here and I think we're also their second biggest export market. So I don't think it'll be as extreme as people sort of walking away because of the previous investments they've made and because of the importance of this market but it certainly will give them cause to rethink how they do things. So actually perhaps the most interesting person to listen to on this who has become quite a character now is the Japanese ambassador who is sort of palpably upset about what is going on and the implications it has for the Japanese. But your main point Professor is the regulation is the bit that matters? No, not the regulation is the bit that matters but the regulation matters as well. I mean obviously you know Honda have gone on record to say how much a disruption at the ports will cost them because of their just-in-time supply chain. So I'm not for a moment saying the customs arrangements don't matter but I'm saying it's important not to forget the regulatory stuff because for some manufacturers at least that is absolutely fundamental as well. On that point that's been made to this committee is that it's increasingly difficult to separate manufacturing from services, from goods from services. You know if you buy an engine for example you still have a service agreement on that engine so you can't separate the two and to go back to my earlier points we seem to be accepting that we're talking as if you know how do we implement checkers when again so many people at the very top of the European Union have said that that division between goods and services is simply unacceptable? Well I'll say several things to that. One yes you're absolutely right that services and goods are often bundled and I think Rolls Royce reveals some figures about the proportion of his exports that are actually services that are service contracts and maintenance contracts tied to the goods that it exports so yes. Secondly though there is that separation that will be allowable for Northern Ireland in the event that the backstop is implemented so it is possible to do however messy it is. Thirdly as I recall about two or three weeks ago Michelle Barnier came out with some figures about the potential damage that British comparative advantage would be in the event that we were in some bits of the single market and not the others and I still haven't seen where those figures come from convincingly. So yes you're right it's difficult doesn't mean it's impossible and it is on the table in a manner. Just pressure you keep going back and saying well maybe this kind of fudges possible for Northern Ireland but it's absolutely impossible for the rest of the UK even if it was possible for Northern Ireland. Is the European Union never accept it? Well it might be politically impossible but my argument is in principle it is not impossible because if you're doing it for Northern Ireland it is in principle possible. I think then we get to a political and interest driven argument which is absolutely fine that they will not at the moment they're saying they will not accept it for the United Kingdom. I mean Donald Tusk said everybody shared the view that while there are positive elements in the checkers proposal the suggested framework for economic cooperation will not work, not least because it risks undermining the single market. Thanks convener. It's just that the Conservative conference this week announced that migrants would have to weigh in £50,000 a year before they came into the UK and obviously there's serious economic implications of that but what are the implications for the negotiations of that announcement? Well they're there for the future remember this isn't about people already here this is about people coming in in the future and the implications are that they will respond in kind to Brits who want to go and work in other EU member states. So it will cause a hardening of attitudes basically? It'll cause a hardening of attitudes and generally when people are talking about immigration policy the two sides involve responding kind so yeah it'll become harder for British people to go to other EU member states and bear in mind as well I mean it's worth stressing the point Brits living or working in other EU member states will have rights but they will lose the right of freedom of movement so there are interesting questions around the person who lives in Germany and works in Luxembourg the Brit for instance because they'll have the rights in the country they live but how portable those are is something we'll have to talk about in the future and that's what Brits living in the rest of the United States and it's the final point I would say because I think we don't talk enough about the situation and status of Brits living in other EU member states is they will perhaps be the group that is most badly and immediately affected in the event of no deal because of course we have legal provisions in place now for EU citizens who are already here or will be in place whereas in member states many member states nothing has been done legally to address the issue of what happens to British nationals in the event of no deal because they're all waiting for the sign off of the withdrawal agreement and so in in in in in other EU member states British nationals will fall into a weird kind of legal limbo because they won't be covered by the law they won't be covered by the provisions of what it says about the European Union because they won't be EU citizens anymore and yet there will be no immigration law about them because they wouldn't have drafted it yet. Thanks very much Claire Baker. Thank you convener. I apologize for arriving late this morning to the meeting. In the I understand where to discuss the Northern Ireland issue before I've arrived but in your evidence to the committee you also mentioned the geographical indicators the intellectual property rights and the protection of personal data has been other issues within the withdrawal agreement that are causing difficulty. Can you give us an update on where you think negotiations are with that and are we likely to get a consensus on these issues? The honest answer is I can't, I'm afraid. I haven't followed the I've spent two weeks at party conferences and not been paying much attention to what's been happening in Brussels. The geographic indicators was certainly a big issue two or three weeks ago whether they made any progress, I just don't know. It's interesting that you mentioned party conference because it does slightly go back to the Northern Ireland issue but my observations of the Conservative conference over the past week was that there was a very firm emphasis on the union and the idea of unionism and Arlene Foster had a fairly high profile presence at that conference. How do you feel that impacts on the difficulties that there are in trying to reach an agreement on the Ireland issue? I did have concerns about the message that gave to the rest of two Northern Ireland and to Ireland and to the European Union that there was such a strong emphasis. I think it's worth emphasising this point actually because I think it's often misunderstood. It is the Conservative and Unionist party. I think even if the current British government were not dependent for the votes of the DUP, this would be a massive political issue for the Conservatives, and it would be for parts of the Labour party as well. No one, I think it was Dominic Greve who said during the withdrawal agreement debates in July that he does not know a parliamentarian who would vote for the implementation of the backstop as it is currently drafted. There is a very strong feeling amongst many MPs that they cannot preside over what they see as the separation of one part of the United Kingdom from another, and there are two aspects of that if I may just quickly. First is the one that we're all talking about, which is checks. That is to say physical checks and the symbolic and political importance that they would have, but the other of which, which I think is going to be equally important, is that of legal jurisdiction. Mr Greve's point, as far as I understood it, is that what would be unacceptable for him would be the notion that part of the territory of the United Kingdom would fall under a legal system over which we have no say. It is absolutely a very, very serious political issue. The concern that I had, do you not think that that doesn't recognise the history of Northern Ireland, the conflict that has been in Northern Ireland, the solution that came with the Good Friday agreement, that membership of the European Union allowed a feeling within Northern Ireland that you could almost choose where you could feel that you were part of Ireland if you had a European membership and you were also part of the UK. That emphasis on unionism as an idea in relation to Northern Ireland, to me, seems problematic at a stage when we are trying to reach a solution that maintains the integrity of the Good Friday agreement. Absolutely. I would recommend the work of Katie Haywood at Queen's University in Belfast to understand that border like no one else, I think. The paradox here, I think, is that since the Good Friday agreement, essentially in the case of both Northern Ireland and actually, to a degree, Scotland, what we have done is work to make borders more ambiguous. That is to say, you can have national identities but the borders between them are fuzzy and the people can move quite freely. Brexit was a reassertion of a rather old-fashioned notion of borders. There is the border, we control it, it is clear. Tried to reconcile those two, particularly in the case of Northern Ireland, is proving massively difficult as it was always going to. I think that we have Stuart McMillan and Annabelle Ewing. We would both like to come back in. Sure. Thank you, convener. One question about something that was said at the recent Conservative conference, and it was Jeremy Hunt's comments regarding the EU and the Soviet prison camp. Now he has since always to backtracked on those comments. Nonetheless, he did state them at the conference floor. Do you think that this type of thing is actually going to help negotiations and how do you think that it will actually affect relationships, bearing in mind that we are still in a situation of no deal that has been agreed? I do not think that we should fall into a trap of thinking that this is in any way new. One EU ambassador put it to me at the conference, disappointed but not surprised. Our European partners are aware of the way our politicians act, particularly at party conferences. I do not think that it is particularly helpful to know. I think that it is particularly unhelpful in the sense that, insofar as you alienate some people more than others, you alienate those EU member states on whom we might otherwise have relied the most for support, either countries of central or eastern Europe. It is saying something that is going to offend the Baltic state, which strikes me as bad foreign policy. It is just a tenor of language that we have at party conferences. It is a different thing, and you are talking to a different audience. I know that the papers are full of these reports saying that conservaties act as if no one else can hear them outside the room. I do not think that it is that. I think that it is the fact that, once a year, they go with the party faith, full in a party that is very badly divided, and they all go lowest common denominator. Just one final question. After 29 March, at some point in the future, when the economy does turn and the economy starts to suffer, costs start going up, and it potentially could get harder to obtain food in the UK. There is now a new minister that the UK Government has introduced. How easy would it be for the UK to re-join the EU to change its mind when the UK economy is in a pretty bad way in the near future? We probably just need to dig into the idea a little bit about what happens to the British economy. There seems little doubt that Brexit is already having an impact on the British economy. John Springford at the Centre for European Reform is doing a monthly estimate of what Brexit has cost the UK economy to date, and his latest estimates came out last weekend, if I remember rightly. There is an impact. There is a danger. I see this among sort of remain campaigners now of exaggerating or over dramatising what that impact will be. Leaving the single market and the customs union will impact on the British economy. It won't impact straight away. There will be other impacts. We are almost certainly seeing a big slowdown in investments at the moment because common sense dictates that we are, that companies are waiting to see what happens before they invest. We won't, to all intents and purposes, leave the single market and the customs union till after transition. That's when those effects will start to hit, and depending on whatever trade deal we might get. What the estimates suggest is that that will lead to, in the area of a 5 per cent hit to the British economy, and by hit to the British economy it's worth being very specific. Five per cent smaller than it would otherwise have been over a period of years. This isn't the British economy shrinking by five per cent on exit day. The point that I'm trying to make here is that I think the economic impacts of Brexit while real will be far more subtle than a lot of people are making them out to be. Far more subtle, far more harder to discern, particularly if employment levels stay relatively high, and far more difficult to pin on the single issue of Brexit because it's happening over a period of years. We shouldn't necessarily assume that all of a sudden everyone turns round and says, oh my god, the economy is doing worse. It's because we've left. Essentially, the way you'll know our economy is feeling an impact of leaving the European Union is if you pick up the FT and you look at a graph of growth across Europe and see that ours is lower than everyone else in the Eurozone, and most people don't do that. That's the first cautionary note if you like, is that it's going to be relatively subtle this impact. As to the meat of your question, if we want to rejoin, we can apply to rejoin, but we apply to rejoin like everyone else. I think there are two things worth bearing in mind here. One, what will the political context in the United Kingdom be that would allow that? I think insofar as the impacts that you talk about are visible. It is perfectly conceivable that a majority or a large proportion of the British people, rather than thinking oh my god, that was a mistake, we should rejoin, will think we were absolutely right to leave because the reason our economy isn't doing very well is because they punished us on purpose. We might in the short to medium term see a hardening of anti-EU attitudes in this country if the economy doesn't do very well. Even assuming that a Government decides that it is right to attempt to rejoin, they will then face the problem that they will not get the special opt-outs that Britain enjoys as a member now. We're talking about the budget rebate, but potentially they're not necessarily talking about Schengen and the Eurozone as well. We will be almost certainly applying to rejoin on terms that are far more less favourable and far more politically contentious than our current membership was. Sorry, that was a very long sentence. Sorry, I have to get Miss Ewing and Annabelle Ewing. Thank you. Listen to the debate this morning and obviously there's so many unknowns at this stage, but surely one known is that checkers is dead. The EU has said that if you read what is proposed, it is incompatible with the rules of the club. You can't be half pregnant, you're in the club or you're not in the club. If checkers, if that is correct, what is plan B on the part of the UK Government? Do you think they have a plan B or C or D or E? In the next few weeks checkers is unworkable, checkers is unworkable, checkers says the EU. What does the UK do? Put its hands over its ears? I don't know what. You've just come from the horse's mouth in Birmingham. What is the feeling about a plan B? The only thing that I get from party conferences is not knowledge but flu as a general rule. The Government has said that it's going to come up with a new set of proposals on the Irish border. Unfortunately, it looks like those proposals might not be ready for the October Council that we don't know yet. That will be an element of plan B, the new proposals on the Irish border. Checkers was never an outcome, it was an opening gambit and it was a political signal. It was quite a powerful political signal in some ways, wasn't it? It was a political signal that said that the Prime Minister is willing to try and compromise to the point of causing political problems to herself by making ministers resign. It was also, if nothing else, a very powerful statement of the fact that the British Government cannot be accused of not taking the Irish border issue seriously because checkers was written with the Irish border and very little else in mind. It is a plan to prevent a border on the island of Ireland. So it was partly like everything in political negotiations about signalling. It was about signalling to the Irish and to the EU, we are going to do everything we can to avoid this. No one in the British Government expected that they would just tick checkers and say fine, but they expect there to be a negotiation and the Government is saying, okay, come back with the specific gripes you have and we will negotiate and that's what's going on. The one thing we haven't talked about, which I hope we don't talk about because I'm no expert on it, but I think it's fundamental, are the Government's customs plans. There, I think that the European Union is simply saying look, you're in the customs union, not in the customs union, but these sort of fancy down arrangements that you're suggesting at the moment just won't fly partly for the reason you said before because it's a question of legal authority. You can't have your tariffs and your border policed by something that is outside your legal jurisdiction is the EU's position and I don't see that changing. Just to finish off, I won't ask you about detailed arrangements about the customs plan, but I was struck where you were talking about the scenario of a free trade agreement if the Brexiteers went out and at the very end of the paper that you submitted to us, you said that modelling work by the UK in a changing Europe shows that livestock farmers in particular would be badly hit by the scenario of zero tariffs that would accompany a free trade deal. You said that the modelling also demonstrated that Scotland would be worst affected in the scenario of unilateral tariff removal, particularly if direct payments were moved as well. Obviously beef farmers in Scotland, who singled out, have been particularly vulnerable. Is there any more that you can tell us about that? Obviously, that is of great interest. I represent an area of Scotland where we have 28 per cent of the beef that is heard. It will be of great concern to people in my constituency. What I can certainly do is point the clock in the direction of that research and the people who do it at the University of Newcastle because I'm many things but not a macroeconomist and I'd rather they spoke for themselves. What I would say is that this is one area where the Tory party conference was absolutely fascinating because it seems to me that there is an ideological fight going on within the Conservative party and agriculture is one of the key things at stake here. There are some people in the Conservative party who are saying that Brexit is an opportunity to remove subsidies, to cut tariffs, to have cheap food. There are other people in the Conservative party, I am talking about the parliamentary party, whose response would be to paraphrase, are you mad? I live in a rural constituency, we'll never win it again. I remember that I was at a French event at the Tory party conference about agriculture and it was fascinating because person after person in the audience put their hand up and said, look, I voted Brexit, I'm a Brexiter but and the buts were in no particular order. We want to maintain a steady flow of seasonal labour or our business model is unsustainable. We want a continuation of subsidies or our business model becomes unsustainable. We need to maintain tariffs or our business model remains unsustainable. We need to keep EU regulations and therefore access to the EU market or our business model becomes unsustainable. So there is a big debate to be had about agriculture. We need to ditch Brexit or our business model is unsustainable. That is not what they are saying but of course you do have that paradox in the farming sector where the NFU was advising people to vote remain and the evidence suggests the majority of farmers voted to leave. Well thank you very much for that, it was very interesting and we'll have a short suspension to live with the change over his witnesses. Thank you Professor Mennon, thank you. Second agenda item this morning is an evidence session on the proposed transient visitor levy. This is the committee's second evidence session on this issue following on from an evidence session with local authority representatives on the 13th of September. Our witnesses today are Fiona Campbell, the chief executive of the Association of Scotland's self-caterers, Mark Rothall, chief executive of the Scottish Tourism Alliance, Peter Irvine, MBE, author and founder of Unique Events and William McLeod, the executive director for Scotland of UK hospitality. Welcome and thank you for coming to give evidence to us today. I've been indicated that no one wants to make any opening statement so if I could perhaps open by asking the panel what their view is on the announcement this week by the First Minister of a consultation on the transient visitor levy and secondly could I ask those members representing the industry what research they have done on the impact of any transient visitor levy should it be implemented? Who would like to start? Oh good morning and do we have to press a button to speak? No you don't, so you can just... No good morning and thank you on behalf of us all really for the opportunity of presenting to you this morning. I think I can speak for the three of us here from the industry side that we very much welcome the announcement from the First Minister. We wait to see the detail of what emerges from that but I think it responds really to a request we made to the culture secretary for the Scottish Government to really begin to take control of the debate that's been running for quite some time on the introduction of a tourist tax or a transient visitor levy. We felt that to a certain extent and my colleagues can speak for themselves but we felt that there was an assumption from COSLA and the local authority side that the principle of a tourist tax, a TVL coming into place had been established and the principle that it would be devolved and localised had also been established and certainly in my case if that's the case then that's passed me by. We feel that there's a whole range of issues that need to be discussed and debated before we reach that issue of the principle of attacks coming in. Certainly from a UKH perspective the reasons for our opposition are I hope clearly enough set out in the paper that we submitted but I think that we're somewhere away as yet. I think that we need to look at what existing research there is. I think that we need to look at what new research might need to be commissioned. I don't think that there's been any real assessment of why we need a tourist tax or a TVL and I think that we need to establish that first of all and if there's a need for it what are the options and there's been no real assessment made of the impacts on consumers or businesses. Turning to the latter part of your question, what research have we done? I personally for UKH we've done quite a bit of research looking at existing studies, we've looked at tourist taxes in Europe, we've looked at VAT rates in Europe which all perform part of our submission but more recently because nobody else had done it we took a bit of a punt and started looking at what the economic impact of a TVL or tourist tax might be at the Scotland level. We looked at what the accommodation industry turnover was in Scotland, we looked at average room rates, we looked at the percentage increase on accommodation spend that might be represented by a new tax and we also looked at applying to that academic research that looks at tourism price sensitivities and our view is that if there's a £2 per night per room tourist tax applied throughout Scotland that that could result in reduced turnover of £100 million for the accommodation industry and £75 million of reduced spend in other parts of the tourism economy so our preliminary figures would be reduced spend of £175 million. So that work, as I understand it, is work that's under way. We have concluded that preliminary work. Right, and when are you publishing the we have published it in that it was covered by the media last weekend and I'm sharing that information with anybody who's interested in hearing it. Right, but you're going to be doing more? Not at the moment, we're waiting I think to see what the what the Government's position is and how the Government intends to proceed with the consultation that was announced by the First Minister on Tuesday. Okay. Mr Crotwell. Yes, I mean I echo what Willie said. It was obviously at our national conference on Monday that the announcement was made and it was something as you know we welcomed in terms of the askers had been for exactly that from our member council group and I think what I'd like to stress obviously the Scottish tourism alliance has under its umbrella of membership around 75% of the total industry and our member council is made up of a broad range of trade bodies and they are not just accommodation providers so when we convened following the I suppose the the hotting up of the conversation in and around Edinburgh and from COSLA in particular in response to the COSLA paper the council member group convened and you know those members include the Scottish tour guides association the confederation of passenger transport green tourism and the Scottish country sports tourism group obviously the licensed trade sales Scotland a couple of destinations the visitor attraction sector and every one of us or every one of those bodies were unanimous in their decision in their view that this is not something that should just be rushed through without significant consideration and research as to the impact of a levy being applied if it were to be because it clearly it would be felt within the wider economy you know there would be less money to be spent in some of the smaller attractions on the high streets and the knock-on effect is considerable and I think significantly picking up on on what's been said is that one thing that maybe is being presumed by many is that we've enjoyed a significant rise in international visitors we've had a very as a result of the exchange rate obviously our tourism numbers in 17 were very well received by everybody but there is a marked decline and evidence to suggest that the domestic market of which 60 percent of Scotland's tourism market is domestic is actually slipping away and the ability to spend by that particular audience is declining I think everybody in this room if you're like me which I'm sure you are are feeling the squeeze on your own household outcome household expenditure and you know even the statistics that have been reported showing the 17 18 change whilst they're very healthy if you look back and compare the visitor spend and the behaviors of that domestic market our core market it's showing you know 13.6 per cent decline on 2016 and as we enter into what is an unchartered waters of Brexit in front of us and a lot of uncertainty the risk of actually getting to a tipping point where a tax is collected on from that particular audience could send many businesses over the cliff and you know without that analysis and that really in depth the economic modelling being done it would be very foolish to to rush through into taking forward what as well he has alluded to already certain authorities you know are far further down the track in assuming that it could be applied so I suppose we've also done just in other bits of evidence in terms of gathering information something that we had reported or gathered in in sight and and it was reported in the Glasgow in their peril on Sunday two weeks ago is the reality I suppose of cost to business and yes top line suggests that you know industry is doom or perceptions are that all the industry is doing well because numbers are numbers are strong well in every case of all the hotels large and small groups across across different parts of Scotland shows an erosion of margin and profit and therefore their ability to reinvest not in their asset to stay competitive but also their people is marginalised and if you then had to a further tax albeit it's being quoted as a visitor tax there is a cost to business to doing that and that's yet another another cost to be born which could again tip people over the edge. Miss Campbell do you want to add anything to that? Absolutely well I think as a sector the ASSE represents over 650 businesses which is approximately 7 000 properties in Scotland our sector alone represents 723 million pounds to the Scottish economy so I think on the whole we we absolutely welcome the First Minister's determination to have an industry-wide consultation I think it's absolutely essential to underpin any kind of policy decision with data and to make sure that there's an absolutely robust economic impact assessment of any kind of tourist levy on our sector and also on the other sectors that support our sector. Okay thank you very much Mr Irving you're in quite a unique position if you pardon the pun and that you have you have run a very successful business but you also have an overview as an author what's your view? Well I certainly welcome that this consultation is taking place and I think it may be that there are voices there that are not being heard and although I don't have studied stats and surveys at my fingertips at all I do have quite a lot of personal experience every as you said I'm an author and I have a guidebook to Scotland and every three years it's updated and I've just completed that process takes many months of course and I probably go to more hotels and accommodation providers than anybody else and I stay in them and I talk to them and I see what's going on and so I have sort of views about that which are you know from personal experience. I came into this debate as it were certainly in my head and among my colleagues because for many years I was on the board of festivals Edinburgh and of course I was the founder and director and running a private business to make Edinburgh's harmony happen for 25 years and as those years went by I began to feel quite strongly I used to say I wish the accommodation sector would put something into this because I knew in the beginning the hotels were empty and guest houses were closed and by the end of it rack rates were you know higher than any other city in Europe we discovered the rack rates over those few days at the end of December and I increased this is a festival that was funded by the city of Edinburgh Council of course so whatever they were putting in was what we had to use to create this amazing magnet for international visitors from over 80 countries but it was used truly who actually had to pick up the tab if it wasn't going well because the only other source of income was ticket sales and we could lose a fortune on our rainy night or on the cancellation or whatever so and as the years went by all the costs of programming that went up health and safety regulations etc went up and up but the council were increasingly loath to put more money in in fact they couldn't now the situation has changed I stopped doing at Hogmanay just over a year ago the company that ran it now ran it now it's a different business model they have bars in the city centre many of and as far as I'm aware they don't pay any rates or whatever so that's a very lucrative very very lucrative business and that allows the city of Edinburgh council to sort of decrease what they're putting in but I think this the principle still proteins that and as I understand it I may be wrong but this argument this debate stems from the fact perhaps right now that the city of Edinburgh council wish to consider introducing a levy and so I would argue perhaps we will talk a bit more about this the Edinburgh is not just a different case it's an exceptional an extraordinary case the city of Edinburgh from what I can see from when I travel around the world and travel around Scotland Edinburgh is an exceptional case and I think those of us that live here are aware that in the last few years this become an extraordinary tide of tourism that has landed on our shores here in the city more buses more tourist buses open top buses more people in the royal mile more people really everywhere more airbnb all those things now I think there's a holistic approach should be taken to all that this is just part of it but I would suggest that certain parts of Scotland the highlands particularly of course sky famously full and Edinburgh that we should we should use this debate to talk about that not on this table of course but generally that's very interesting I'm going to move on to other members of the committee if I could just say about these we're quite pushed for time and we have quite a large four member panel so you don't don't feel that you all have to answer every question and if you agree with the other panelist please say I'll move on to Claire Baker thank you convener I would just like to say I've already met with Fiona Campbell we met to discuss this issue among another of issues concerning her sector and what I'd like to ask this morning is obviously we heard the evidence a couple of weeks ago from causula and local authorities if the panel recognised the pressures that were identified by Edinburgh the case given by Aberdeen and Highland council Mr Irvine has already given an explanation of how he feels Edinburgh is under pressure but do the other panel members recognise issues around the ability to do street cleaning the state of the roads the general services that need to be need to be delivered by the council as we see an influx of visitors into that area and the strain that puts on what already tightened local authority budgets large start I mean I certainly I think if you work in tourism it's impossible not to be aware often recognise that there are certain parts of the country that come under pressure from time to time the more popular areas I think we have to think a little bit more about cause and effect and I think you have to begin to strip down the visitor market into different components if for example a visitor levy or a tourist tax is it becomes a reality it would be applied to people who stay in commercial accommodation yet these are the staying visitors who contribute most to the economy of the destination they spend more it's a matter of fact and I think we have to look at other sectors of the market I mean it would take Edinburgh for example if I'm correct five million staying visitors a year probably accounting for 15 or 16 million visitor nights yet the city attracts 18 and a half million day visitors and I think you have to look at where the where the pressures are coming from and it's the staying visitors that are enabling the businesses and our case accommodation businesses but also the other businesses they're spending money in that enables them to pay the non-domestic rates they're paying it enables them to remit the VAT they do to the Exchequer and I think we've got to put in perspective the amount of money that our our visitors are already paying in taxes through VAT their expenditure enables businesses to pay business rates and businesses expect to have a certain amount of infrastructure provided in in return for the contribution they're making I would obviously agree wholeheartedly with what Willie has said there and I think it comes back to the changing behaviour of the of the tourists as well particularly our again our domestic market there's a significant increase in the number of day trips now possibly driven by the fact that people can't afford to go and stay in accommodation anymore so you are seeing a bigger volume coming into destinations at peak times and I suppose picking up on on on Pete's comment about Sky one of the things that the Scottish tourism alliance are very involved with in terms of leading and shaping and I'm in the hot seat of chairing the future tourism strategy group for the strategy beyond 2020 is looking at what are the barriers to growth and a lot of that barrier is arguably about we need to get people moved around the country to different parts of the country spread the load invest into infrastructure to allow them to do that but you know success breeds success and clearly where you have hugely successful festivals and they continue to grow then understandably people will want to come and visit but the revenue streams that are now being derived from festivals as well are growing too so there is you know how do you how do you compensate or penalise you know individuals who perhaps aren't coming to the festival or you know visiting the city at a different time of year for a completely different purpose and I'd use an example I was in a meeting up in Inverness and like Pete I get around the country a fair bit and there are misperceptions of a number of people around the the impacts and the costs and the contributions that society pays particularly the the UK residents who I say are 60 percent of our market but the quote was well what's three pounds per person it's less than a pint of beer well a family of five if it's based on that three pounds per person to stay in Inverness in a small bnb nothing or even a premier in or whatever that's 105 pounds extra on my actually on my my my bill now first of all a would I afford to be able to do that but more importantly of course I want to go to Inverness and I want to spend that money in the community and in the small businesses that are actually there and take your children to the attractions so I think there is yes you know going back to the question of pressure on destinations absolutely the destinations are growing globally tourism is growing I've just come back from a conference in China the same issues were there the same discussions were had the same in Australia but on every one of the panels that I sat on every single person's view was tourism tax is not the way to go we should be finding alternative solutions to fund and source you know a better quality experience but not tax a visitor even more the world's a small place Scotland is a very small place we need to be competitive I mean the principle that's been proposed is that a local authority could set it on rates and what we heard from local authorities last week is that they would seek to do that in a way that wouldn't damage their local businesses and the figures that mark prottles suggested aren't on the table for many local authorities I think Edinburgh suggested and two pound a night per room it cost me £2.70 to buy a takeaway coffee this morning and I think the issues around affordability need to be more closely looked at and if you know one of the reasons I'd imagine driving our interest in overseas tourism is the weakness of the pound so at the moment visitors who are coming over to Scotland are benefiting from a week currency and that will be encouraging our visitors so the issue of affordability I mean you've said there's a lack of evidence around how it impacts some of the evidence I think we heard last week and I think in some of the papers we've received is that the difference might be a percentage of 1.5 percentage around the margins of what kind of impact it could have and will the panel consider any of the positive impacts that might give for their businesses if something like this was to be introduced? Do you think there's anything positive in it at all? Could I say further to that that as I understand it, any levy can be decided how it's levied and who receives it so that children you know the data that we see in the documents clearly cities set their own you know scheme so that children don't pay, long stay people don't pay, long stay would be disastrous in Edinburgh because the honeypot of August would be seriously affected if all those performers and all those tech people that come to city can't be put up in hotels or accommodation so anything over 10 days would have to be exempt as it were and children would be exempt and there would be other exemptions self-catering perhaps surely it's possible to work a sort of system whereby all these considerations are taken into account but there is still a revenue particularly in Edinburgh I agree south west Scotland and all those other places where you can get hotels really cheaply at the moment couldn't sustain probably any increases but I would suggest that Edinburgh could should seriously look at it and the revenues of it which is a whole lot of story what happens to them who gets them should improve not just the visitor experience but what it's like to live with an influx of tourists and it was often remarked to me as I went around that we should now think of sky as we think of Venice and we should think of Edinburgh as we think of Barcelona and these are extraordinary historic and landscape small ruvel places in the case of sky that we have to protect thank you very much um Alexander Stewart thank you community good morning you've already indicated that you know the small business federation chamber of commerce the alliance the license trade believe this is bad for business can I ask about what the involvement has been with the Scottish Government prior to the first minister making her announcement on on Monday because the the government had a quite a strong stance the stance that's now being perceived it's being portrayed is that there's a softening of that stance because they're now having this consultation do you think that is the case as they say and what kind of consultation have you had prior to the announcement on Monday well as I said earlier when the statement was produced by COSLA we convened as a member council and we made our position felt that rather than bury our head in the ground and say no that we we invited for the reasons that's been outlined by Willie earlier the government to now lead this because I it is not a local issue it is a national issue it's a global issue it's conversation that is being had everywhere so we've we've been very appreciative of the stance the government has taken up to now and I think that stance is absolutely correct that you know it's not the time to consider such a levy being imposed anywhere but there has to be or without the full consultation and the and the engagement of the industry in this in this conversation and up until well in fact we have had no direct communication or consultation with Edinburgh city council for example I they have never approached the Scottish tourism alliance once and the COSLA engagement at the early stages was was virtually nothing so we have we met with the cabinet secretary and the finance secretary I think it towards the end of June after we've published our our response and again we had another meeting with them back in September and have again requested that and recommended that the government take the lead and actually conduct a government led consultation conversation with the informed those invited into that conversation with information that is transparent and clear for all to see and understand but not just to consider the visitor levy as the or tvl as the option is to look to explore other options as well in that discussion so clearly with our conference having upwards from nearly 400 of the industry present it was obviously an appropriate moment for the First Minister to to make that announcement which we welcomed and as I said her announcement has been perceived in the community as softening do you believe that will be the case do you think that going out you you've got your reports and you've got your statistics the the council in Edinburgh and Aberdeen and Highlands came back very strongly what their views were do you think that by going out having this consultation you're going to win the argument I would like to think that it's not a softening I think it's you know we in other issues that we've we've brought forward evidence to the government and presented it in a very articulate way and a very factual basis it's been listened to and it's been considered and I would very much hope that the I suppose the commitment to doing and taking the lead as they have said the government have said they would in this process is one that is not a done deal in any way shape or form and that all of the evidence and the research will be looked at in a responsible way and protect what is you know one of Scotland's biggest economies economic drivers you know we employ 220000 people the food and drink sector is affected there's an enormous supply chain that sits behind us as well and you know the switch off or risk to any business seeing a decline in visitor numbers two pounds may not be a lot for some but when you multiply it and looking beyond the current exchange rates as well that all has to be done so it mustn't be a hasty decision it must be looked at and very and I think it needs to be measured and it needs to be examined and I think that what we're going to have is is definitely that but it's imperative that we get all sides of the story in this process and and other countries and other parts of the world and other cities around Europe etc have found this to be quite successful in a very different in a very different tax environment and I think that is something that needs to be brought into the sole process that it's not like for like a number of members that want to ask questions so i'm going to move on to mr Gibson thank you very much convener i'm struck by some of the evidence you've presented for example both the ASC and UK hospitality have stated that the world economic forum ranked the UK's already 135 at 136 in terms of tourism price competitiveness and that the UK has the second highest VAT in Europe at 20 per cent and that the UK is one of the few EU countries that doesn't have a reduced rate of VAT for tourism services and I think it's an iron rule of economics and of course my degree's economics that when prices go up sales go down and you further talk about research is it not in university talking about the impact on visitors from the UK, Italy and Spain of a reduction of one percent increase one percent of tax having a reduction of 2.2 1.75 1.8 respectively. Now my question to you is that councillor McVay has said that some elements of your sector are in fact in favour of this tax he quoted Airbnb and he said and I quote and I just want you to comment on this although some industry bodies are keen to pull up a consensus that doesn't exist there is not a consensus in industry their industry voices is split might be one in four fifty fifty two two-thirds or a third understand the impact the levy could make in supporting the sector and industry voices understand the long-time concern that the levy is needed if they're to sustain a level success I just wonder if you can comment on that and Mr Irvine specifically because I realise we're short of time I'm just wondering if your view of the issue in relation to excessive numbers of visitors coming to Edinburgh and going to Skye is a pricing policy that would reduce access to Edinburgh and Skye for all night visitors for people who perhaps not so well healed as others. Well on that point I think we should all remember I'm sure we are aware that nowadays we can't walk into we can't phone up a hotel and say how much is a room in May because every night it's a different price it's all dynamic pricing and it's you know some of the prices that you pay for rooms in hotels in Edinburgh and Skye particularly but elsewhere in north goes 500 enormously successful there's very you know a small amount of accommodation available prices are exceedingly high so high that I should I expect that Scottish people can't sort of staycation easily in Skye at all I know lots of people that don't go to Skye anymore because they can't afford it and they don't want to take a camper van or they haven't got one because that makes has its own negative impact so I think that the idea of £2 ahead with lots of exceptions with the revenue well spent would not you know I don't really buy this but this idea that if you if you put prices up by 1% then something else get you know the income goes down by 2% or whatever because you just need to see how many new hotels that have been in Edinburgh and there like this seems to be like one a month these are big players they're international players in the main these rooms are two 300 400 pounds a night this is not I looked yesterday what hotels are costing in October even in Skye Skye used to the argument was always Skye for example it's seasonal so you know but the season is now extended whereas in large parts of Scotland including I think Glasgow there isn't that demand there isn't there aren't really expensive rooms dynamic pricing is is is is a much more moderated kind of affair once again I would just say I think Edinburgh is a real exception and I I can't see the effect and actually if it was going to put people off then people might go outside of Edinburgh and stay which would have a positive effect on its hinterland and Prathshire for example but I think all indications are that tourism this is not a tap that's going to go off or get turned down it's going to increase Edinburgh will increase and I would just say that after the council and God I fought with the council long enough over the years but you know Edinburgh is building an arts centre sorry a new concert hall and it's building the centre of the moving image the film festival new venue which is still years off but there should be one and there will be one an opening a world-class amphitheater in princestry gardens leith theatre which would transform leith in many ways culturally certainly these things are paid for by the council and by by taxpayers who live here and these would be they would increase the tourist and cultural offering of Edinburgh because we are a cultural city that's why people come in the main because of the atmosphere and this history and etc so I can't speak on behalf of airbnb but I don't believe they've actually issued any kind of statement supporting a tvl or tourist tax what I do understand is that they can support it technologically they do it in any number of other destinations so it's fairly simple for them administratively to flick the switch and allow a tvl to be added to their their income and their administration however that's not the case for the majority of short-term rental or self-catering properties in scotland so there is there's a huge piece that needs to be looked at in terms of administration of such attacks thank you do you mr mcleod could i just to add an issue really in relation to to pete's comments on hotel rates I think it's important over the piece to look at the the hotel industry yes I agree entirely about dynamic pricing but the hotel industry one of the most important metrics looking at performance is the average daily rate achieved and in scotland over the piece the average daily rate achieved in all hotels in scotland is somewhere in the region of 70 75 78 pounds per day and yes we see extremes of pricing we see high rates of peak times we see lower rates that off peak times that is simple economics it's supply and demand and it's exactly the same if you go to buy a holiday you go to go to buy an airline ticket supply and demand rules and I think we've got to look at things like the the overall tax burden borne by our visitors yes we have made the case we've consistently made the case and in fact to respond a little bit to mr stewart's question this isn't the first Scottish government we've made the case to about a tourist tax this this issue goes way back to about 2007 2008 and when I first came into the job I'm in now in 2011 it was the first meeting I went to with the city of Edinburgh council as then was to discuss tourist tax we have consistently been making the point that we believe this is an uncompetitive approach given our rate of vat compared to the rate of vat in our competitors and I think the paper from COSLA in your bundle eloquently makes the case that the the cities and countries where they've looked at tourist tax as being in place are those with a much reduced rate of vat on ours people are building hotels in Edinburgh people are building hotels and historic buildings they're bringing life back into the city centre hotels built in a location like this are not cheap to build investors have to get a return on them and they're not cheap to run one of the single highest overheads we have is non-domestic rates which run at five six seven percent of turnover and to suggest that it is only local taxpayers who are paying for some of the infrastructure is wrong I mean what what is happening to the money that is coming into the the bundle of money collected by non-domestic rate pairs and where is that going where are those businesses getting the return for their investment and when if we had any other successful industry in Scotland and we have a very successful tourism industry are we seriously suggesting that in addition to taxes like air passenger duty and vat that we would start taxing the customers of other successful industries a venture to suggest we wouldn't okay thank you very much are you thank you Ross Greer there are three layers to this debate and we've often got them a little bit blurred there is the argument in principle of is this a power that council should have the option whether or not to exercise there's then the debate of should they exercise it and how would they do that and the third stage of it is what would they spend the revenue on coming from it but to go to the start of this debate Pete's very eloquently made the point around the unique situation at different areas of the country are in given that given the unique state of local economies the fact that councils are local elected bodies who know far more about what's in the best interest of their area than we do as a national parliament is this not a power that they should have the option of using and this debate can take place in 32 local contexts where the sector in that area the community in that area their elected representatives can decide what's best for them I think that it certainly should be discussed in local areas as well as on a national level but it has to be absolutely made clear that those local authorities ensure that there's an economic impact assessment robust independent data driven otherwise it could go horribly wrong and City of Edinburgh council despite their suggestions that they are consulting with industry I don't believe they have done on on a on a required level I invited myself to a meeting that I wasn't invited to and it wasn't a consultation it was then presenting what a feta comply what they intend to do and then there was another meeting to discuss the administration of a tourist tax and again they had basically made up their minds so I feel like unless there's a really robust consultation on a national level then we might make horrible decisions on a local level but just to clarify that that's useful but what you're not saying is that there's an objection in principle to councils having this as a potential tool at their disposal but the process needs to be robust it needs to be evident side it needs to be consultative absolutely and if the evidence is that it's a good idea then we have no objection to it but I think in the current tax environment it really has to be looked at very very closely thank you I think we have to be very careful that we don't end up with 32 different solutions to a problem that would be an administrative nightmare for businesses that operate in different parts of Scotland Fiona's already alluded to the the cost that would be borne by businesses in setting up systems training staff remitting an additional tax to a different source and then of course there's the cost of auditing all of this so introducing something like this is not going to be without a direct cash cost on businesses as well as potentially an economic cost to the country I would say you know it comes back to the sort of the three pound figure that was quoted by a councillor in Inverness you know the understanding of probably what the reality is and the facts and the basic ground rules and the information that's out there at local level I don't think it's it is that understood I mean the the survey that was conducted over the summer period suggests that they've you know surveyed visitors well those people were in Edinburgh when they were coming to the festival of course they're probably going to say yes they would come here they came to a great experience it's about how do we look at the wider picture and it is a national issue it's not just Edinburgh wanting to consider this and once it starts in one authority you know other authorities will be looking to do similar or explore similar things so hence the reason why we have as a member council or our member council has very much asked and recommended that it becomes a national conversation in the first instance it's led by government and it actually is a level playing field and it's inclusive it's not saying the local authorities are pushed to one side but everybody needs to be around the table together and understanding and reading and interpreting the same information that's produced to inform the outcomes. To go back to I think it was Willie made the point earlier of tourists do contribute to local government funding by contributing towards a business that in turn pays non domestic rates do you believe that the indirect contribution that goes through a couple steps makes it back to the council does that cover the cost to local services I think none of us disagree that massive benefit that tourism has to local economies what we're talking about is the impact it has on local services and the service provider do you believe that that indirect contribution made by tourists covers the cost of the increase in the need for refuse collection in the centre of Edinburgh and August for example well customers contributing to the the viability of the business the business pays rates for a certain amount of service that come back the business also pays to have its refuse taken away so the direct contribution from the customer enables the business to pay an independent contractor to come and take away business refuse but what we're talking about is the whole tourist experience so yeah while the tourist uses something and produces waste produces litter in the business that's true but when they're out on the street in Edinburgh they're using a public bin like everyone else but there's increased demand on that and the city of Edinburgh council have already talked about the considerable increased cost to them literally just on refuse collection during the festival period now but but that comes back to stripping away the layers of the different elements of the tourism market you have staying visitors you have Dave Davis it is your people staying with friends and relatives yes indeed everybody makes a demand on local services but introducing a tv l or tourist tax is putting a discriminatory tax on anyone who uses commercial accommodation so where where is the rest of the contribution coming from from those who are not enabling businesses to meet their contribution of cost and contribution to local services i think we have to look at cause and effect here absolutely if i could make one specific follow-up point around airbnb have already been mentioned that this quite substantially unregulated part of the market that a lot of in fact yourselves have made robust arguments about in the past is a model around a tourism tax of transit investor levit not an opportunity to ensure that those using airbnb and the hosts actually making a financial contribution that at the moment is not being made because they are in that unregulated part of the market i think we've looked at options i mean we're jumping we're assuming there's a problem here that needs to be addressed to my mind that yet to be proven but we if we have the principle of yes we we've got to resolve this issue and we need to raise more money to do it or we need to redirect existing money to do it there's been no examination of options i mean is i mean i could come up with several different options but i mean looking at the hypothecation of business rates from the beginning of the next financial year scottish government gets 50 percent of the vat raised in scotland well the accommodation sector in scotland according to the figures i've got in front of me contributes 465 million pounds a year in vat now surely some of that and that's the accommodation sector alone it's not the tourism sector entirely surely some of that money can find its way back into supporting local services i think we've got to look um freshly at how we do this um there's a conversation going on over on this side about uh the the potential reduction or abolition of air passenger duty um are we you know are we talking about uh abolishing potentially abolishing one tourist tax which raises in excess of 200 million a year for the scottish government and replacing it with another tax which is going to need a whole new administrative infrastructure to introduce and collect when i think we've this is why we want the the national conversation why we want some research why we want examination of options and yes we may not win this at the end of the day but uh in response again to mr stewart i don't think we've seen a softening of government stance maybe i'm naive uh maybe too old to be naive i don't know but uh i believe what i'm told and i think we've got the opportunity here uh to have an open debate about something that is becoming increasingly intractable and has been conducted through the pages of the admyr evening news thank you yeah thank you i'm picking up a couple of points discussed thus far um so you know i was struck with the example that mark gave about family in vernais and all the cost and then i was struck by what peter said which was well actually hang on a second because in many uh cities and countries that have a tourist tax there are exemptions for children at different age thresholds i actually have just had a look online so spain seems to be 16 fran seems to be 18 austria seems to be 15 just to name but three for example so i think it is important and picking up what willy said that we really get down to a factual debate here that we talk about the way it is as it is and because we would have if there's where to come to pass presumably like these other countries have done an option to configure a tourist tax in a way that is deemed by all concerned appropriate but but getting back to the fundamentals i mean i think and i had said it in the last evidence session we had on this subject about three weeks ago you know i think a lot of assumptions are being made about consumer behaviour here and that is why i would like to see more detailed analysis up to date analysis looking actually at the experience of some of these other cities and countries which have introduced a tax presumably at the introduction of such a tax and some of these places was controversial at the time and they've had a leading time to examine what impact if any this has had on on numbers because that i understand is your concern and should be the concern of everybody that wants to see a thriving tourism sector in scotland so that would be my ask now for example we had a a letter from adam mcvi at the Edinburgh City Council to the committee to October 2018 where he says that you know once when you look at the issue of that and very enough you know sadly we are subject to one of the highest fat rates in the whole of the EU thanks to the UK government but if you look at the fact that they have a reduced rate of that he goes on to say that once you combine the tv out in that city and the fat then Edinburgh would remain competitive so again i think it is really important that we have a factual analysis here to show what is actually happening in other places that have this i mean this is now the norm for individual tourists from scotland going elsewhere going in scotland and further a field and for other europeans in particular coming to scotland or traveling elsewhere in europe in particular this is the norm now you know times have moved on this is what many countries have done so i think it'd be really important to have the debate rooted in facts and you know in 2018 taking into account this international experience and i'd welcome just a few initial thoughts on that and what are your plans and i asked the same of Edinburgh City what are your plans to ensure that that research is is there and available to inform this debate i think what we also have to be very very wary of and again the the indicators that are coming through from the industry at the moment around consumer behaviour is our core market 60 percent of our core market are changing their spending patterns considerably because they are actually having to manage cost and you know they're moving much more into the camping into the camper van market they are bringing their own food and drink into hotels they are actually cutting their holiday time shorter so there is a squeeze and there is it's only going to get tighter we're all you know we whatever the news everybody we all watch we're all feeling it that everybody's budgets are being stretched a bit further so yes it's it's we are used to paying levies going further afield but in a very different tax regime as well so we mustn't compare apples and pears and i think we have to be quite careful with that but i do think that you know the longer term view of how much of where's the tipping point for a for a family to choose to go and spend and stay and you know that the spike in that day visit experience and that comes back to the pressures on the on some of these destinations where you do get a volume of people coming in an increased volume of people coming in where they wouldn't maybe not normally be there is because they're actually not holidaying elsewhere or spending a longer time so there are a number of facts that have to be explored and seriously considered without jumping straight in and as i say you know go back to the the interviews of the 600 people in the summer i don't think are a true reflection of the of the wider considerations that we need to take into account before reaching a decision of this magnitude and scotland can't afford to be in a position where it seemed to be uncompetitive but equally the word tax at the moment when we want to keep the door open and windows welcome is again in the media in the way it's being played out i don't think it's doing us any favors either i think if i'm not quite sure what arithmetic mr mc vay uses in his letter to to suggest that the combination of tourist tax and vat and other countries would exceed our current 20% vat i think you've got to be very careful in applying that arithmetic and a very quick perusal of the the analysis of tourist taxes and comparative vat rates which is something i've done myself cosla probably has a more up-to-date version in the paper in front of you but i couldn't readily see last night looking at these figures how a combination of tourist tax or tvl in some of the comparator countries there plus their much reduced rate of vat actually began to exceed our 20% rate of vat and certainly if you use the night united states as an example where in fact they have to that they're not obliged like we are to show their hotel rates inclusive of vat and all other charges when you go to the states you have a whole range of taxes added on to the rate the highest rate of combined tax i've seen from a report done by hvs hospitality valuation services into taxation on the lodging industry comes in at 18.75% which is still a smidgen below our 20% vat so i think we've got to be very careful and i think we have to look very carefully when we're making these comparisons the blunt comparison is we're not competitive in vat terms and most other countries that have a tourist tax have a reduced rate of vat we need to take a much more holistic view of how we're taxing our visitors and our tourism businesses i don't have all the figures it's very difficult to get them but in many european countries the property tax or the equivalent of our non-domestic rates on hospitality businesses is much lower than the non-domestic rates our sector is paying here. Well thank you very much and i hear what you say i do feel though that the and i hope that this industry consultation gives the opportunity for these issues to be indeed fleshed out in hard facts because that would allow all of us to have the best debate possible on this very very important issue so i hope that that's a point that is reflected on by your organisations because that would be a really helpful contribution to the debate to ensure that we we can take decisions based on the best evidence available. Thanks very much that wasn't a question so i shall move it swiftly on to Stuart McMillan. Thank you. Just for the record i also met with Fiona Campbell during the summer as a chair cross-party group on tourism and also recreational boating marine tourism so i do regularly meet with Mark and Willie as well. Just on the issue of the taxation and the issue of VAT has any of the panel undertaken any activity just regarding that the wider basket of taxation including corporation tax to actually help inform this debate? I've alluded to earlier and I've gotten the paper I submitted we looked at the we took a top line look at the contribution through various taxes made by the accommodation industry in Scotland and I think we're showing a figure if I remember correctly 719 million is the contribution I appreciate some of that finds its way to Westminster but one can only assume that some of that finds its way back in terms of the block grant so the the figure is there in terms of the the tax take coming from published sources that excludes things like contributions by tourism business to business improvement districts and it probably includes excludes a very significant contribution indirectly by our customers through excise duty on road fuel that they use when they're here and on alcoholic drinks they buy from our businesses that tax is collected indirectly certainly the the STA have campaigned for quite some time on the issue of VAT and the high level of VAT clearly also that's set at UK level have you has STA had any indication at all from the UK government that the VAT level will be reduced or amended going forward well I would say is that the cut tourism VAT campaign is actually being led by down south and it's being fun led by UK by UK hospitality and the STA are absolute supporters of that so we're aware that conversations have been on going across the developed states with the cabinet secretary's respective cabinet secretary's there is obviously the northern island issue at the moment where there is a challenge around tourism VAT which is being considered and that potentially then could open up pending the outcome of what that decision is to a challenge for VAT to be reduced into Scotland as well but at the moment the there's been a varied mixture of support within Westminster I think at one point we had about 135 MPs in favour of certainly alluring of VAT but it's with all the changes that are happening and continue to happen that argument probably isn't as robust as it could be but I think you know as we we've said before you know the VAT reduction for our sector is is arguably the game changer for us we've seen evidence in northern Ireland where you know the government took the decision to reduce their VAT state down from 13% to 9% they removed their passenger duty and this sorry sorry Republic of Ireland correct thank you Willie for correcting me and actually the growth that the revenues receipts have driven through tourism growth and employment has been significant so I think there's a good case study there to follow and you know VAT then alluring of that then there becomes a very different conversation around a tourism levy and one one would say that that's where we would like to get to and we would rather have more people focusing on getting a VAT reduction and considering that as the primary opportunity rather than actually looking into a window of a tourist tax on top of what is already a high the second highest level of that in Europe. There's a very sound economic argument we think using the Treasury's own model which supports the economic case for reducing tourism VAT and I'd happily share a fact sheet with the committee on that. I think that would be very helpful and just one final question because I'm conscious of the time if at the end of this consultation this national conversation that's taking place if a decision was taken to implement any type of tvl would the panellists want it to be done on a national perspective or for it to be done from a local regional perspective across the 32 and is enough based on the comment I made earlier about not wanting to have 32 different systems in place I think our preference would be for it to be national and if there were clear rules and if such attacks were present and I appreciate it's a hypothetical question so I'll give you a hypothetical answer. I think we'd prefer to see it at national level with clear rules about how it would be administered so it was common throughout the country. I think that would certainly very much diminish the Edinburgh view if it was around the country personally I don't think it would be a tall welcome around most of the country. I just reiterate again that Edinburgh is a very very particular exceptional situation and tourism is increasingly experiential that's where it is people come to Edinburgh because of the experience but there's also the experience of the people that live here and that's a balance that has to be made and that's where the discussion it may be conducted within the pages of the evening news at the moment but it should be obviously a much wider discussion and it's very difficult for people to know what it's really like being a tourist when you live here or what it's going to be like in the future but the future the future does look pretty good for particularly for Edinburgh and Edinburgh is the gateway to Scotland and you know increasing flights increasing cultural experiences that I talked about a moment ago more I think more and more people will come to Edinburgh hotels will be more full the season will be longer and this should really be considered as to how I mean it's very much part of the VAT picture I always think of Edinburgh a bit like Dublin Dublin is always expensive to stay in a hotel and perhaps they don't have enough hotels but people go to Dublin for the experience too and and I can't remember what the VAT regime there is either but Edinburgh has to consider itself in an international context I think is what I'm saying like Barcelona, like Venice, like Rome wherever there are increasing numbers of tourists coming in and in the city centres in old towns of city centres in all these cases and you know it would if there's a way that's worked out fairly so that the money that's gathered the revenues are a portion to benefit the experience of tourists and locals in this city I mean I don't know about Aberdeen to be honest or even Glasgow but in this city I think it should be probably consulted with everyone. Thank you very much, Tavish Scott. Thank you, can I assure Mr Evan that it's been mentioned in the Shetland Times as well it's not just at the radio news and they're not in favour of it and I think I think no and you've made the point I think I should take William McLeod's point but I actually think if it was imposed on a local level quite a lot of areas of Scotland just wouldn't impose it so I take your eye. I mean I Mr Evan's made a made an earlier remark about what the money would actually be spent on I actually think that's quite important. Is the concern of the three of us three panellists here today who are not in favour of that or not persuaded shall we be more gentle on language not persuaded of the merits of a of our tourist tax is your concern that the money that was raised by that would just disappear into the general local government pot we spent on schools and everything else and it actually wouldn't be spent on services that are directly attributable to the tourism product whether being in Edinburgh or anywhere else. I'll answer that part first and then differ to my colleagues. And therefore it's a way around that to have criteria. If there was a policy of a tourist tax and you have to remember there's a budget coming up in this place on the 12th of December so very acutelyriad. You're not my name Mr McLeod. If it is imposed would it not be better to have criteria set which said that money's raised if there is such a levy in such an area such as Edinburgh needs to be spent on the tourism product in Edinburgh? I think if there was such a tax then yes ring ffenced for tourism with considerable input from the industry itself about how that how that was spent. If I may just responding to Pete the VAT rating on a hotel room in Dublin is 9% and in Dublin there is no tourist tax. And yet the rooms are still incredibly expensive because running hotels is quite expensive. I think absolutely categorically there would need to be some very very strong sort of guidelines that that money is protected to and only used for tourism enhancement you know and actually making sure that the quality of the tourism experience is extended and it's used to promote I think what he referred to earlier around the contributions the industry already make in other ways to bids as well. You can't underestimate the amount of money that businesses actually make in marketing Scotland whether it be their own destination or their own premises and actually also considerably contribute to some of the the local marketing activity at destination level as well. So you know clearly we want to make things every every business would want to make themselves the best they can be. So when you read a headline as it was again a few weeks ago the teacher's union met and done Dundee and I think the headline was great Edinburgh tourist tax will pick up the shortfall of the teaching budget in Edinburgh you know that sort of sends alarm bells to industry as you would imagine it. I'd just like to finish up going back to our panel previously we talked about how you know the impact on infrastructure wasn't just caused by overnight visitors it was caused by day visitors as well and we've touched on that here too. Last time we talked about ocean liner passengers coming into ports like Inverclyde that Mr McMillan represents and we had quite a long discussion about the camper van issue in the highlands and the amount of pressure that puts on the roads toilets that kind of thing. Are the panel aware of any international examples of tourist taxes that successfully capture all visitors that's day visitors and overnight visitors? No. I'm not personally aware of any unless you were to look at some form of property based tax that applied to every business that in some way benefited from the visitor economy which would probably spread the load much more equitably. I'd say no on that but I would just like to draw again the attention I think which is really important in the future research as well or the research that gets done. We had one of our presentations at the conference on Monday from Euromonata and it's looking at the future trends and travel trends of tourism. It is experiential now of going increasingly more so as Pete alluded to hence the Airbnb culture that's been adopted. The camper van market is actually one that people like to increase so we mustn't penalise I think look to penalise what is the changing behaviour of the traveller and actually cities will become you know the destinations of the future and there is a lot of really really good intelligence and insights out there that we have to be looking further ahead in this conversation rather than it just being a knee-jerk reaction to what is a short-term or considered to be short-term solution and as we are very very unclear about what might happen in the next you know we will we shouldn't be putting any barriers in the way to prevent what is already a very successful industry and contributes a huge amount of value to the economy in other ways as well. I mean just to point on the Airbnb market which is a serious concern in this city. Maybe I'm not entirely sure about this but I don't think that most Airbnb revenues have any VAT added to them so they're not paying any of that already and if Airbnb were minded and could certainly more easily administer it than some organisations then perhaps you know that would be a substantial contribution and Airbnb is something that seriously does affect people that live here. Thank you very much to all our witnesses for coming along today to give evidence and we are now going to go into private session. Thank you very much.