The England tourist tax levy unveiled by the Government has drawn fierce criticism from across the hospitality sector, with hotel chains, holiday resort operators and small business groups warning it could cost tens of thousands of jobs and make family holidays significantly more expensive.
The policy would give England’s regional mayors the power to charge a levy on overnight accommodation. Unlike similar schemes already operating in Scotland, Wales and across much of Europe, the English version would have no nationally set upper limit on the rate mayors could apply.
What the England tourist tax levy would mean in practice
According to BBC News, Allen Simpson, chief executive of industry group UKHospitality, said the levy would add about £100 to £120 on average to the cost of a family holiday in England. UKHospitality has also warned that 33,000 people could lose their jobs as a result of the tax.
While the Government has not set a cap, AOL reports that Labour’s regional mayors in England have pledged to keep the rate at no more than 5% of the cost of an overnight stay. Government sources have said mayors are unlikely to set it too high, with most indicating it would be a few per cent. Local leaders would decide how any revenue raised is spent.
Hospitality businesses are not reassured by those assurances. Without a statutory cap written into legislation, they argue there is nothing to prevent rates rising well beyond what mayors are currently indicating.
Industry voices on the uncapped England tourist tax levy
Jon Hendry Pickup, chief executive of Butlin’s, said coastal and resort destinations would be hit hardest. ‘Big cities may welcome these mayoral powers, but treating every destination and hospitality business the same will leave resorts like ours to shoulder the burden,’ he said. ‘Giving mayors the power to impose a levy without a national upper limit takes those concerns to another level and risks making family holidays less affordable, damaging demand and making it harder for businesses to hire young people.’
A spokesman for Premier Inn owner Whitbread said the policy was ‘hugely damaging for hospitality, which is a key pillar of the UK economy and where many of our young people get their first job,’ adding that ‘measures like this risk undermining the industry’s ability to invest, create jobs and support economic growth.’
Stephen Cassidy, senior vice president at Hilton UK & Ireland, called it ‘a catastrophic blow for the UK hotel sector that is already under significant pressure.’ He said the uncapped levy, on top of what he described as ‘already high VAT, business rates and energy costs, will further stifle job creation and investment.’ Cassidy added: ‘Business needs the confidence to invest, expand and hire. We need policies that unlock growth and opportunity, not continue to hold the sector back.’
The Federation of Small Businesses (FSB) described the policy as ‘a kick in the teeth’ for the industry. Tim McKenzie, national chairman of the FSB, pointed to the wider pressure on smaller operators: ‘Running costs have already increased for 91% of small hospitality firms over the last year. These businesses employ thousands and are key to keeping their local economies going, yet the levy risks pushing many to the brink.’
Plans for the tax were first announced under Sir Keir Starmer, following similar schemes introduced by the devolved administrations in Scotland and Wales. Tourist levies are also common across Europe, where revenue is typically used to fund local services and infrastructure.
Hospitality businesses have urged the Government to rethink the proposal before it is legislated, with the uncapped nature of the levy the central concern. Industry estimates put the total potential cost to UK hospitality and tourism at as much as £1.6 billion. Whether the Government will introduce a statutory ceiling on the rate remains the question the sector is now pressing ministers to answer.
