Andy Burnham is set to hand mayors the power to pile unlimited taxes on tourists, potentially adding hundreds of pounds to the cost of a family holiday in England.
The hospitality sector was blindsided last night when officials revealed that mayors and other local leaders across England would gain the ability to charge an uncapped “overnight visitor levy” on guests at hotels, bed and breakfasts and holiday lets.
Revenue raised through the tax is intended to shore up struggling council budgets.
Angela Rayner’s Ministry of Housing, Communities and Local Government (MHCLG) is expected to formally set out the policy details as early as Thursday.
The proposals, which were shared with mayors last week, sparked fury from the hospitality sector, with industry figures warning the move would directly undercut Labour’s efforts to tackle youth unemployment.
“There will be a jobs bloodbath at a time when they’re trying to get young people into work,” the chief executive of one major hospitality company told The Telegraph.
Meanwhile, Shadow Chancellor Andrew Griffith warned the unlimited tourist tax will be “hugely limiting for the chances of the young people who might otherwise be employed in tourism and hospitality”.
Tees Valley Mayor Lord Houchen said: “The overnight visitor levy is just a back door created by the Labour Government to tax businesses even more than they already do.
Mayors across England would gain the ability to charge an uncapped ‘overnight visitor levy’ on guests
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“This will add cost to do business, cost jobs and make it more expensive for families to holiday in the UK.”
Sir Keir Starmer originally put forward the idea of local tourist taxes in 2025, with both Ms Rayner and Andy Burnham, during his time as Manchester Mayor, also prominent advocates for the policy.
London Mayor Lord Khan has similarly expressed support for the new powers.
Holyrood brought in overnight visitor taxes in 2024, with Edinburgh becoming the first city to implement the tax this summer at a rate of five per cent of the nightly accommodation cost, capped at five nights.
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London Mayor Lord Khan has expressed support for the new powers to slap unlimited levies on tourists
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PAUK Hospitality has warned replicating Edinburgh’s approach across England would amount to a £1.6billion tax hit to the industry.
The trade body estimates the levy would increase the cost of a family break by £100 and lead to tens of thousands of redundancies in a sector already burdened by rising business rates and National Insurance contributions.
More than 100,000 hospitality jobs have been lost since Labour came to power in 2024.
Whether the number of nights subject to the levy will be capped, as in Edinburgh, remained unclear on Wednesday night.
Over 100,000 hospitality jobs have been lost since Labour came to power in 2024
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A record 35 local authorities are currently dependent on £1.5billion in emergency Government funding to keep their finances afloat.
The new revenue stream will also benefit England’s 14 regional mayors, who currently lack the authority to set council tax rates.
Stephen Cassidy, senior vice president at Hilton UK & Ireland, said: “There’s no doubt that employers faced with higher employment costs and higher costs of doing business are choosing to hire candidates with experience, and that has an impact on getting less people into work.”
UK Hospitality chief Allen Simpson described Labour’s £26billion National Insurance increase on employers as the “single biggest contribution to job losses” in the sector.
A Government source told The Telegraph: “We have always been clear that while central Government will set the framework for this power, it will be up to local leaders and local voters to decide what is right for their area.”