Chamber and committees

The review is important. It will give us the opportunity to consider whether more needs to be done and examine the operation of the licensing system. As I said, I am happy to involve the committee in that.

I will respond to a couple of the points that members made.

As a Lothian member, Miles Briggs will be well aware of his constituents’ concerns about short-term lets. Through Andrew Mitchell’s evidence, the City of Edinburgh Council was supportive of the measures to help to deal with some of those concerns.

Elena Whitham talked about balancing the concerns of stakeholders and communities. That is absolutely right. We have tried to do that through the proposals. We have made a lot of changes to them in response to many of those concerns.

Mark Griffin talked about Police Scotland’s evidence. It was important. I also recognise his point about the review in 2023.

Paul McLennan mentioned cost recovery and the fact that responsible operators have nothing to fear from the licensing scheme. That is absolutely the case.

I will not respond to all the points that Fergus Ewing made because it would take too long but I will respond to a couple of them. I will not repeat all that I have said but, as he knows, when the Government introduces legislation, it has gone through a series of legal tests.

Some of the points that Fergus Ewing made do not recognise the fact that much of the scheme is based on the 1982 act, under which applications are approved unless there are good reasons for refusal. Some of those reasons are set out in paragraph 5 of schedule 1 of the act. The legal position is that the scheme is compliant with the ECHR provisions on the right to possessions.

It is important to introduce regulation in a proportionate way that has been the subject of careful scrutiny. The scheme is being introduced by way of an existing well-used statutory framework that is well understood by local authorities.

Local authorities will not set out to try to close local businesses down. What possible motivation would they have to do so? They will use the legislation proportionately to deal with the real issues that local communities are raising, support the good providers, who abide by the rules and the law, and create a level playing field to ensure that the behaviour of providers who do not abide by the law and the rules can be addressed through the licensing scheme.

I think that this is the right balance. The response from local authorities is, in the main, supportive. Also, beyond the core measures in the licensing scheme, it is about devolving power to local authorities to decide whether to take forward those additional powers on antisocial behaviour, littering or noise to meet concerns in their local area. They should obviously do that in a proportionate way.

There is no requirement for local authorities to use the powers to create short-term letting control areas, but authorities that want to do so and that see those as a way of addressing issues in their areas will do so. As I said, two local authorities have proposed control areas. I think that we have struck the right balance. We want basic safety standards to apply everywhere, as they should. Beyond that, local authorities have a lot of discretion about whether to use the additional powers.

First, the evidence that is set out in our business and regulatory impact assessment suggests that the market appears to be recovering towards pre-Covid-19 levels of activity, although we will have to keep an eye on that.

We used the 2019 data, which was established in the Scottish Government’s 2019 research, as a baseline for our BRIA. The BRIA also sets out trends in existing data sources, which include the non-domestic rates roll and data provided from Airbnb. Both those sources show a period of rapid growth in the short-term lets sector over the past decade.

Baseline activity, however, is challenging, not least because properties can appear multiple times on the same platform or on different platforms. The licensing scheme will help to clarify the levels of activity locally and nationally, thereby allowing us to map a more comprehensive picture of short-term let activity across Scotland for the first time, which will be helpful.

Clearly, the number of short-term lets varies from area to area. There is quite a concentration in some areas—particularly in Edinburgh and some rural parts of Scotland, such as the Highlands, where rates can be well above 10 per cent. As I have said, more comprehensive data will be gathered through the licensing scheme.

I recognise what Fergus Ewing has said. However, in looking at the issues in detail earlier, I spoke about local authorities’ ability proactively to put in place requirements for preventing antisocial behaviour. The proposal is about bringing all that together so that, in looking at short-term lets, local authorities can look at issues through the lens of the licensing scheme as well as using existing powers, if they so wish. I gave the example of people drinking for hours. If a holiday let becomes a place where that causes significant concern to neighbours, local authorities could proactively put in place requirements and conditions.

Fergus Ewing spoke about the concern that is felt. I absolutely recognise that the pandemic has had an impact on the tourism sector, but there have certainly been signals over the past few months that the self-catering and short-term let sector in Scotland has been recovering pretty well, with burgeoning numbers of staycations. We will, obviously, have to keep an eye on that.

The Government has recognised the impact of the pandemic on the tourism sector, not least through the 100 per cent non-domestic rates relief for hospitality premises. That relief will continue at 50 per cent next year, as was announced in the budget. There are also all the supports that are given to businesses to consider, including the small business bonus, so it is not a fair accusation to say that the Government has not supported businesses, including in the hospitality sector.

The proposed set of requirements is not onerous. I think that the sector will see that, once the scheme is up and running. A lot has been said that might cause concern: people might think that they will have to pay thousands of pounds for a licence, but they will not. The scheme will be proportionate. Small operators will pay less than big operators and local authorities will be given strong guidance to make sure that the scheme is based on a risk-based inspection regime that is not onerous and should not drive up costs. I reassure the sector of those things and will continue to try to reassure the sector over the next few months, as we introduce the measures.

No. As I set out earlier, the licensing scheme gives the additional protections. It makes sure, or example, that the fit and proper person test is there. As the committee heard at its previous evidence session, there is a lot of support among local authorities for the scheme, which would allow them to use the additional powers that have been given to them, if they so wish. There would be no requirement on them beyond the core element of the licensing scheme, but I think that local authorities welcome the fact that they would have additional powers to deal with things such as noise, antisocial behaviour and littering, as appropriate to their areas. The licensing scheme does that in a way that I am not convinced a registration scheme would have done.

I think that the point that Miles Briggs is getting at is about facilitating home sharing and bed and breakfasts. We want to facilitate responsible home sharing, and licensing authorities will have wide discretion to grant temporary exemptions or temporary licences under the Civic Government (Scotland) Act 1982 and the licensing order. We will develop guidance on granting temporary exemptions and temporary licensing with licensing authorities. That will cover things such as short-term temporary periods of letting during the festival and so on.

Andrew Mott might want to say a little more about those short periods of letting.

I do not accept that the scheme is draconian, irrational or arbitrary. It is proportionate, and the guidance will require local authorities to act proportionately. As a former minister, Fergus Ewing will know that when the Government brings in change, there is often opposition to it, and that concerns about impacts do not always equate to the reality.

I have tried to set out that reality today. The regulations are not intended to pose a threat to businesses other than those that operate outwith the law and do not operate safe premises. I have set out that we want to ensure that the costs are kept proportionate to the size of the business.

Fergus Ewing mentioned the Highland Council; it was supportive of the measures when it responded to the consultation. I cannot speak for it with regard to the vote that it then took, but its response to the consultation was supportive, so that is something for the Highland Council to deal with.

I recognise that stakeholders left the working group. They perhaps felt, at that point, that they did not support a licensing scheme. That was their direction of travel and their decision.

However, I have had productive discussions with the key organisations to which Fergus Ewing referred. No meeting of minds will take place on the issue of a licensing scheme, but most organisations have said that they want to get back in a working-group environment to talk about implementation of the detail, which is a responsible attitude to take. I look forward to working with them to discuss the detail, and the issues that Fergus has raised, and to ensuring that the guidance is clear. Local authorities do not want to make a disproportionate response either, so let us ensure that the guidance is strong in order to give further assurance to the sector.

We have talked about a registration scheme versus a licensing scheme. I come back to the fundamental point that in circumstances in which an operator is potentially putting people at risk—because a business is not operating as they should, or criminality is happening, or antisocial behaviour that makes the lives of people around the place a misery—a local authority would surely be correct to consider refusal or removal of a licence.

Such circumstances would arise in a very small number of cases. We are not talking about the law-abiding good providers, who will go about their business with the licensing scheme in place as they did prior to that, and whom we will continue to support because we know that they are an important part of the Scottish economy. I will continue to reassure the sector that it has nothing to fear from the licensing scheme.

I will begin with the issue of local authority resources. A total of 23 local authorities responded to our consultation in 2020. Only three of those responses expressed the opinion that the Scottish Government should provide any grant or loan funding to support the establishment of the licensing scheme. Eleven local authorities responded to the 2021 consultation. Two of those authorities highlighted concerns about resourcing.

Outside of the consultations, no formal requests for additional funding have been received so far. We have engaged extensively with local authorities and other stakeholders to finalise the legislation, which we think is efficient and effective.

You asked about fee calculation. An updated BRIA was published on 23 November. That was informed by consultation responses and other information that was provided to us, including concerns raised by stakeholders. As part of the process of updating the BRIA, Scottish Government officials and economists worked through all the information that was made available to us by stakeholders.

We engaged with Airbnb, the ASSC, the Scottish Bed and Breakfast Association and local authorities in particular about their concerns on the level of fees and the impact on the tourism sector. That all informed the final version of the BRIA.

The costs that are set out in our BRIA reflect the Scottish Government’s best estimates of average costs and fees across Scotland and a range of scenarios. The actual fees to be charged will, of course, be determined by local authorities following Scottish Government guidance. The average cost will depend on local conditions. The assumptions in our fee model have been informed by discussions with local authority licensing officials.

The guidance will say that fees should only recover costs, so local authorities should not go beyond that. It will also set out that there should be a proportionate, risk-based inspection regime. That is where there has been some disagreement. There have been worries that every property will be inspected numerous times in the course of the licensing scheme but we have said that inspection should be proportionate and risk based. That could be based on a number of factors but, in itself, it should keep the costs down because the inspection level would drive any fee costs.

I hope that that reassures the sector. The guidance will set out very clearly the level of inspection that we will expect local authorities to carry out. It should be risk based and not onerous.

Many do comply. Therefore, making sure that all comply creates a level playing field. That is important.

I have set out the reasons why there have perhaps been differing approaches to the level of fees, so the guidance on that will be important. I should also say that the fee should be proportionate to the size of the business. The large operators with large party houses should pay more than those with one room in a host’s house. The fee should be proportionate to the ability to pay and the size of business, which will be set out in the guidance. All that will mean that the fees should not be onerous. As I said earlier, it is about cost recovery. All that taken together means that the fees should be manageable, and proportionate to the size of the business.

No, there will not be a cap. It will be down to the local authorities to decide that, as they know their areas better than we do. For example, the City of Edinburgh Council will know the requirements during the festival period, and it will be for it to decide the appropriate response, which I am sure that it will do in a sensible way. The council wants to ensure that there is enough accommodation for people coming to the festival and the fringe, so I am sure that it will operate the system in a way that enables demand to be met.