Mayors across England will soon have the power to raise a visitor levy, the government announced this week. The move has quickly been presented as a tax raid. But it may be remembered in retrospect as Prime Minister Andy Burnham’s first significant attempt to redistribute power from Whitehall, which he promised to do throughout his journey to No 10.
The powers, due to come in by spring of 2028, will allow metro mayors to charge a fee on overnight stays in their jurisdiction and spend the revenue raised as they please. It seems the scale of these levies will not be capped by central government, though in practice they will probably be no higher than the 5 per cent voluntary cap pledged by England’s Labour metro mayors this week (Conservative and Reform mayors have indicated they will not use the powers, though we wait to see how long this line will hold once the power comes into force).
While metro mayors welcomed the move as a way to solve funding gaps and promote investment at a time when local budgets are stretched, the reaction from hospitality industry bodies was broadly negative. UKHospitality, a major lobby group, has already projected thousands of job losses because of the levy. Meanwhile, the Federation of Small Businesses described it as “the opposite to breathing space”, referring to the Prime Minister’s promise to provide “breathing space” to households and small businesses when he took office in July.
On the political front, Reform UK’s leader Nigel Farage derided the policy as a “holiday tax” and said the party’s regional mayors would refuse to use the new powers. The Conservative Party was similarly hostile. One Labour backbencher, Emma Lewell, described the move as “anti-growth”. The Lib Dems were slightly equivocal, with a spokesperson saying, “Powers to introduce tourist taxes must come hand in hand with relief for the hospitality sector.”
The backlash has been almost entirely focused on the supposed costs of the measures and how these are likely to be passed on to consumers. In short, the announcement has become another “tax raid” story.
But the key point about this move may have been lost in all the furore: it is the first step on the road to major fiscal devolution in the United Kingdom that would represent perhaps the biggest shift of power away from the Treasury ever.
Andy Burnham and his Merseyside ally Steve Rotheram have been pushing for these mayoral powers for years, including under Keir Starmer’s government, when the consultation that led to this week’s announcement was first launched. Their motivation was to force a breakthrough on the idea of local mayors becoming responsible for raising taxes as well as spending revenue, instead of simply allocating money doled out to them from Whitehall or raising piddling sums for specific obligations through a precept on council tax. Broader tax raising powers, they have argued, is what real local power looks like – and with greater power comes greater responsibility.
If this experiment is a success, the reasoning goes, then more tax-raising powers and more responsibility will follow. Both men have excitedly imagined a future in which mayors can run their own budgets with a broad degree of independence. If that future materialises, this week will be remembered as the week when it was made possible.
[Further reading: Zack Polanski selected as Green Party candidate in Holborn and St Pancras]
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