Angela Rayner has thrown her weight behind calls from regional mayors for the introduction of a local ‘tourist tax’ on hotel stays — a move that risks deepening divisions within Labour’s top ranks and raising alarm among hospitality leaders.
The Deputy Prime Minister is reported to be at odds with Chancellor Rachel Reeves over the issue, supporting proposals to allow local authorities to impose visitor levies in a bid to raise additional funds for infrastructure and services.
Several Labour metro mayors — including London’s Sadiq Khan, Greater Manchester’s Andy Burnham and Liverpool City Region’s Steve Rotheram — have lobbied for the power to implement a small charge on overnight stays, similar to those already in place across European destinations such as Barcelona, Paris and Rome.
In contrast, the Treasury is understood to be resisting the move, amid fears it would pose a fresh blow to the UK’s already stretched hospitality sector. Reports suggest Reeves has ruled out including any such fiscal devolution in the current legislative programme.
Despite this, Rayner is said to have advocated for the inclusion of tourism tax powers in Labour’s new devolution bill, published earlier this month. The move comes at a time when the party is already under pressure for plans to increase employers’ National Insurance contributions — dubbed a “£25 billion jobs tax” by critics.
The prospect of a tourist tax has been met with strong resistance from hospitality leaders and Conservative figures. Kate Nicholls, chief executive of UK Hospitality, warned that England already ranks poorly in global tourism competitiveness, in part due to its higher VAT rate compared with continental rivals.
“A further levy would simply exacerbate the pressure on operators already facing a challenging trading environment,” she said.
Shadow Chancellor Mel Stride accused Labour of reverting to type. “Whether it’s Angela Rayner or Rachel Reeves, the instinct is always the same – more taxes. First a £25 billion jobs tax, now threats of a tourist tax that would hit hospitality hard.”
Despite the pushback, Labour mayors argue that a visitor levy would enable reinvestment in local infrastructure that supports the tourism economy.
Steve Rotheram, Mayor of the Liverpool City Region, said: “Our region attracts more than 60 million visitors annually and supports a £6.25 billion visitor economy. That’s something to be proud of – but it also comes with significant pressure on our public services.
“A small charge on overnight stays – the kind most people wouldn’t think twice about when travelling abroad – would allow us to reinvest directly into the things that make our area so special.”
While there is no national framework for a tourist tax in England, local authorities can already adopt a levy through the Accommodation Business Improvement District (ABID) model. However, adoption is limited and patchy, and mayors are calling for broader powers through national legislation.
A Government spokesman reaffirmed that “there are currently no plans to introduce a tourism tax in England,” but added that existing mechanisms — such as the mayoral council tax precept — are already being expanded to allow local leaders to invest in growth-driving initiatives.
With the UK’s tourism and hospitality sectors still recovering from the effects of the pandemic and labour shortages, the idea of a tourist tax is likely to remain contentious. For hotels, especially those in competitive urban markets like London, Manchester and Liverpool, any additional levy could deter price-sensitive domestic and international travellers.
At a time when political parties are looking for new ways to fund local services, the debate over a UK tourist tax looks set to intensify — with the hospitality sector caught in the crossfire.
