Cruise Ship Levy: consultation analysis

11. Impact assessments

Respondents were asked to consider the possible positive and negative impacts a cruise ship levy may have on different stakeholder groups. A Partial Business and Regulatory Impact Assessment was published alongside the consultation paper.

Q16. What impact do you think a cruise ship levy would have on the following? Please select very positive impact, somewhat positive impact, neither positive nor negative impact, somewhat negative impact, very negative impact, or don’t know.

Please provide the reasons for your answer(s). This helps with developing a robust BRIA which considers as wide a range of impacts as possible. If there are any other groups that would be impacted by a cruise ship levy please also list them below, together with the extent to which you believe they would be impacted.

The closed question element of Q16 consisted of a series of questions, each about a specific group, and respondents were asked what the potential impact of a cruise ship levy would be on each group. The table below shows the response to each iteration of Q16 among those answering (n=). A full table for each iteration, including sub-group analysis, is appended. For ease of comparison, the table has been ordered from highest to lowest potential positive impact on each group.

While respondents anticipated impacts from any cruise ship levy, the extent of the impact, and whether it was positive or negative, varied by group. Overall, 63% anticipated a positive impact on local communities, with 34% anticipating a very positive impact. The same proportion (63%) felt local authorities would be positively impacted (30% very positive impact). On balance, it was also felt that Scotland as a whole would be affected more positively than negatively (51% compared to 33%).

Views were more polarised about the potential impact on ports. Just over one third (37%) felt ports could be positively impacted, while 40% felt they could be negatively impacted, including 27% who anticipated a very negative impact.

Businesses linked to the cruise ship industry and cruise ship operators were thought to be more negatively impacted by any levy. Two fifths (42%) anticipated related businesses could be negatively impacted (30% very negative impact), while over half (54%) felt that cruise ship operators could experience a negative impact (29% very negative impact). Only 6% thought a levy would be beneficial for cruise ship operators.

A similar pattern of response was evident by sub-group in all iterations of Q16, with:

• Individuals more likely to anticipate positive impacts than organisations, though few individuals anticipated any positive impacts for cruise ship operators.
• Local authorities being the most likely to anticipate positive impacts.
• Harbours and ports and cruise industry respondents most likely to anticipate very negative impacts.

Just under two thirds of respondents left an open comment at Q16. The following section presents the analysis of comments about each group at Q16 in order of the number of comments made about each; the most common themes related to impacts on local communities, Scotland, and cruise ship operators. Possible positive and negative impacts detailed by respondents are noted under each group.

Local communities

Several respondents highlighted positive impacts for local communities that could arise from any cruise ship levy. In particular, it was suggested that a levy could provide additional local income, offset the environmental impacts of cruise ships, and improve local infrastructure. Respondents noted that fewer tourists could reduce the strain on local infrastructure, transport, services, and tourist sites. It was also suggested that a reduction in tourists from the proposed levy could improve the locals' quality of life due to less disruption and overcrowding.

Many respondents detailed a range of negative impacts on local communities from a cruise ship levy. These included the levy reducing tourism and negatively impacting local economies and jobs. Respondents also highlighted a potentially disproportionate negative impact of any cruise ship levy on island and rural communities, noting that cruise ships are a key form of income relied upon by these communities.

Scotland

Concerns that a potential cruise ship levy could damage Scottish tourism beyond local communities, with the levy acting as a deterrent for cruise ship tourists and operators visiting Scotland, were raised by many respondents. These respondents commented that Scotland could be seen as an unwelcoming tourist destination and that countries without additional costs may be visited instead, reducing Scotland’s competitiveness and the economic benefits of cruise tourism. A few noted it could make the United Kingdom as a whole less attractive as a destination.

“Whilst the UK cruise market is currently stable, the rise of other markets is evident, which adds a layer of uncertainty to any destination. A levy could create additional disparity across the marketplace and uncertainty across the port landscape, leading to the displacement of the industry away from Scotland and the wider United Kingdom. There is strong competition from Norwegian and Baltic ports as alternative destinations, and the industry will migrate to these instead.” – Ambassador Cruise Line

Several respondents described positive impacts for Scotland resulting from the proposed cruise ship levy, such as improving the visitor experience through increased investment in visitor services and the environment, which may support tourism. Respondents suggested the levy could bring Scotland in line with levies imposed by other coastal countries.

Cruise ship operators

Several respondents stated the proposed levy would have minimal or no impact on cruise ship passengers or operators. These respondents suggested that demand would not be impacted if the levy only slightly increased cruise costs. Singular comments were made that using the levy to mitigate environmental impacts is in the interest of the cruise ship industry, and that operators could change destinations if Scotland became too expensive.

However, several respondents highlighted potential negative impacts of the proposed levy on cruise ship operators. This included additional administrative requirements for cruise ship operators and reduced demand for cruises from potential passengers due to increased costs. Respondents also highlighted the need for cruise ship operators to plan itineraries well in advance, and that uncertainty over introducing a levy poses an additional challenge. Singular comments noted that negative impacts may be greater for small Scottish cruise ship operators than large operators, and that there could be added complexity for operators if each local authority decides on its own levy rate.

"Cruise lines are already operating under tight cost margins and long-term planning cycles, often selling itineraries years in advance. Any additional administrative burden or uncertainty, such as around who collects the levy and how it is calculated, risks discouraging operators from including Scottish ports on their routes" - UKinbound

Local businesses

Many respondents highlighted concerns about negative economic consequences for local businesses reliant on cruise tourism, resulting from any cruise ship levy reducing cruise tourism. Disproportionate impacts were anticipated to arise for small businesses and remote locations that are particularly reliant on cruises for tourism.

“Our region’s economy is seasonal, small-scale, and deeply reliant on word-of-mouth, repeat tourism, and positive cruise passenger experiences. Unlike urban centres with robust year-round tourism, we cannot afford to lose this trade. A cruise ship levy risks pushing operators to more commercially attractive destinations, bypassing places like Scrabster entirely. This would have knock-on effects for jobs, local supply chains, and the wider perception of Scotland as a welcoming, open destination.” - 8 Doors Distillery

“A cruise levy, if it leads to a decline in calls, could therefore result in a significant loss of income, jeopardising our ability to repay investment, support the local economy, and continue reinvesting in essential port services and development. This would undermine years of strategic planning and coordinated investment supported by both local and national partners to grow the cruise sector in the Outer Hebrides.” - Stornoway Port Authority.

“The cruise industry is a major contributor to the Scottish economy and a key part of regional growth, supporting businesses across the country, as well as thousands of jobs. This includes the industry’s extensive supply chain, supporting local hospitality and tourism businesses at cruise destinations.” - UKHospitality Scotland

Some respondents detailed positive impacts for businesses that could result from any cruise ship levy. This included using the levy to improve visitor facilities, which could make destinations more attractive and, therefore, support local businesses.

Ports and harbours

Several respondents described negative impacts on ports and harbours that could result from the proposed cruise ship levy, namely a reduction in cruises and revenue to ports and a limited return on some port infrastructure investments. It was also suggested that some environment-related investments may also be delayed as a result. Some respondents suggested that the potential reduction in port revenue could lead to job losses within ports, negatively impacting employees and the wider job market in local communities.

“Many Scottish ports with cruise terminals have recently made significant, million-pound investments to continue to grow their cruise business. However, if there is a reduction in cruise calls, the ports will be left with limited return on their investments and potential debts to pay.” – Portland Port Ltd.

Some respondents emphasised that the proposed levy could introduce an administrative burden on ports and harbours, such as amending contracts and systems and setting up any processes or systems needed to collect the levy.

A few respondents highlighted positives that could result from the proposed cruise ship levy, particularly the potential for improved port facilities, services, and revenue.

Local authorities

A range of positive impacts for local authorities from the proposed cruise ship levy were detailed by several respondents. This included improved local infrastructure, visitor services, money for tourist-related upkeep, support for long-term investment by local authorities, and money to invest in local projects.

“A levy could foster greater partnership working across regional local authorities, spreading the economic value more fairly.” The City of Edinburgh Council

Some respondents detailed concerns that the proposed levy could reduce cruise ship calls in certain areas and consequently have negative economic impacts on local authorities if the revenue from any levy is lower than anticipated. Some respondents noted the potential for an increased administrative burden for local authorities from the proposed levy, including levy collection and reporting requirements. As noted previously, respondents questioned whether the costs associated with managing the levy would outweigh any benefits that may arise from introducing it.

Dependent on implementation and the need for impact assessments

Several respondents found it challenging to respond to this question and determine impacts, noting that potential impacts would depend on multiple factors related to how the levy is implemented. This included questions of how the cost is determined and applied, how the levy is communicated to those who need to pay it, how it is administered, how the revenue raised will be used, and whether the levy could result in a decline in cruise ship calls to ports.

Several respondents called for robust impact assessments and research to be undertaken. This included general comments on the need for a substantive impact assessment and a request for an Island Communities Impact Assessment. A few respondents requested more information, such as a more explicit rationale for the levy and an understanding of potential unintended consequences.

Other comments

While the focus of this question was to explore the possible impacts of any cruise ship levy on different stakeholder groups, some respondents considered broader impacts. In particular, some respondents detailed environmental-related impacts, in particular highlighting the negative environmental impacts of cruise ships, such as pollution and destruction to biodiversity, and the need for income to offset these impacts and/or the need to reduce the number of cruise ships.

A few respondents commented that the proposed cruise ship levy would negatively impact all of the stakeholder groups cited in the consultation paper.