Ministers face backlash from hospitality industry over ‘tourist tax’ plans

Ministers have announced that mayors across England will be granted sweeping authority to levy a “tourist tax” on holiday accommodation, including hotels and short‑term rentals such as Airbnbs. The proposal, unveiled by Local Government Secretary Angela Rayner, allows mayors to set a levy as a percentage of the overnight price with no statutory cap on the amount they can charge and limited restrictions on how the revenue may be spent. While regional leaders welcomed the new power as a vital source of income for cash‑strapped local authorities, the hospitality sector reacted with anger, warning that a 5 % levy could wipe out 33,000 jobs and cost the economy £2 billion, particularly in tourism‑dependent areas like the Lake District. Industry representatives, including the owner of Premier Inn and Choice Hotels co‑owner Eddie Nelder, described the measure as “hugely damaging” and “irreparable” for a sector already struggling with inflation, higher national‑insurance contributions and recent minimum‑wage hikes.

The plan follows a broader government consultation and aligns England with many European cities and U.S. jurisdictions that already impose visitor levies. Under the draft legislation, mayors must submit detailed spending plans by early 2028, and the levy will be applied as a percentage rather than a flat fee, with exemptions for properties rented only occasionally and the option for mayors to exclude sites such as festival campsites. While most Labour metro mayors have agreed to cap the rate at 5 % for major cities, several east‑coast mayors—two from Reform UK and one Conservative—have pledged not to introduce the tax. Similar schemes exist elsewhere in the UK: Scotland’s Edinburgh introduced a 5 % levy in July, and Wales will allow councils to charge £1.30 per person per night from April 2027, though Welsh levies will be capped.

Proponents argue the tax will fund local services, public spaces and attractions, keeping money within communities and supporting events such as the Great North Run, which mayor Kim McGuinness says could benefit from the extra revenue. The move represents one of the most significant transfers of fiscal power from the Treasury to local leaders in years, arriving ahead of the first budget of Prime Minister Andy Burnham’s administration, which promises further devolution of tax powers. However, the hospitality industry’s backlash highlights a tension between the need for local revenue and the risk of harming a sector already under pressure, raising questions about how the levy will be calibrated and whether safeguards will be introduced to prevent the projected job losses and economic hit.

⚡ Effects Interpreter