Andy Burnham’s government is set to hand Mayors across England fresh powers to introduce a controversial tax on tourists.
Housing secretary Angela Rayner will meet the nation’s mayors today, where the government is expected to outline proposals for an overnight fee led by local leaders.
The levy will be charged as a percentage of the cost of accommodation, rather than as a flat fee, which the government has argued will protect budget holidays. In a similar vein to the model in Scotland, there is set to be no upper limit on what can be charged.
A government document in July laid out plans for the new proposal, seeking to formally hand the powers to regional authorities.
“We will also give all strategic authorities the ability to introduce an overnight visitor levy, with local leaders able to set out plans for how revenues will be invested by March 2028,” the policy paper titled “Rewiring the State” said.
Hospitality warns of jobs crisis
But the move is expected to face backlash from businesses, after trade body UK Hospitality warned earlier this year such a tax raise would raise the cost of holidays as households continue to struggle with cost-of-living challenges.
Analysis by Oxford Economics, commissioned by UK Hospitality, modelled the impact of three different holiday taxes earlier this year – all of which were found to negatively impact jobs and spending.
Should the government opt for a five per cent levy on accommodation, Oxford Economics forecast that by 2030 as much as 33,000 jobs would be lost amid a £1.8bn drop in tourism spending. It added the levy would also reduce tax receipts to the Treasury by £688m.
During his tenure as Manchester Mayor, Burnham introduced a City Visitor Charge in April 2023 that charged a £1 per room per night fee to pay for measures aimed at attracting more visitors.
The mayor of London Sadiq Khan has also previously threw support behind a new levy.
“I think the Government should be looking at giving us the powers to have an accommodation levy. But my promise to the hotels and AirBnbs and so forth is the money would be used to improve the environment around that, to encourage more tourists,” he said at a City Hall event last year.