Labour mayors across England are preparing to introduce a new tourist tax despite warnings from the hospitality industry that the levy could trigger a “jobs bloodbath” and undermine the government’s growth ambitions.
Every Labour-run mayoral authority is expected to consider using new powers to impose an overnight visitor levy on hotels, bed and breakfasts and holiday lets. London Mayor Lord Khan, Liverpool mayor Steve Rotheram and North East mayor Kim McGuinness are among those expected to make use of the tax-raising powers.
Labour metro mayors have indicated that a levy capped at 5 per cent would be “reasonable”, while providing additional revenue for regional investment.
But UKHospitality estimates that a 5 per cent charge could add £99 to the cost of a one-week hotel stay in London and £198 to a fortnight-long break. Replicated across England, the trade body estimates the levy could cost the hospitality sector £1.6bn.
“There will be a jobs bloodbath at a time when they’re trying to get young people into work,” the chief executive of a major hospitality company told The Telegraph.
The industry is already under pressure. More than 100,000 hospitality jobs have been lost since Labour came to power in 2024, while employers have faced higher employment costs, increases in the minimum wage and rising business rates.
Sir Rocco Forte, chairman of the luxury hotel group behind Brown’s Hotel in London and The Balmoral in Edinburgh, said: “It’s really a disgrace. They talk about growth, and all they do is attack business.”
Sir Tim Martin, founder of JD Wetherspoon, which operates hotels alongside its pub estate, said the additional costs would ultimately be borne by consumers.
“It’s really more of the same increased costs which will inevitably be passed on to customers,” he said.
Butlin’s boss Jon Hendry Pickup said the policy would hit “the very working people this Government claims to represent”.
Angela Rayner, who announced the new powers, said the levy would give local authorities “the choice to raise and reinvest funding where it’s needed most”.
The charge would be calculated as a percentage of the nightly accommodation cost, meaning it would apply to domestic holidaymakers and business travellers as well as international visitors.
Conservative and Reform UK mayors have rejected the policy. Tees Valley mayor Lord Houchen said: “You can’t tax your way to growth, and we shouldn’t be using devolution as an excuse to take even more of people’s hard earned money.”
Greater Lincolnshire mayor Dame Andrea Jenkyns has also pledged to reject the levy, telling businesses: “I’ve got your back.”
Opposition has emerged within Labour, too. South Shields MP Emma Lewell described the policy as “anti-growth”.
“I am really sad about this it’s anti-growth and comes at the worst time for hospitality,” she said.
Khan has “strongly” welcomed the new powers but said the hospitality industry would be consulted, adding that progress was needed “sooner rather than later”.
Conservative leader Kemi Badenoch said: “Labour’s answer to everything? Tax more. Hotels already face 20 per cent VAT. Now, they’ll face VAT on Labour’s new tourism tax too.”
Craig Beaumont of the Federation of Small Businesses warned: “The political reality here is that visitors do not have votes, and now have a fund-raising target on their backs.”
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