Hotels and BnBs are set to be targeted with a new ‘bed tax’ under plans unveiled today – with Sadiq Khan in line for a £200million a year windfall.
Ministers are giving the go-ahead for mayors in England to impose the charges, heaping costs on stays for Britons as well as foreign tourists.
The level will be set locally, but is expected be around £2 a night.
It could raise hundreds of millions of pounds a year in total, with London by far the biggest beneficiary.
A slew of Labour mayors have reacted with jubilation at the prospect – although Tory Tees Valley Mayor Ben Houchen has made clear he will shun the ‘cash grab’.
The hospitality industry has accused the government of breaking a vow not to go ahead with the ‘damaging policy, warning it will ‘undermine investment’.
Supporters of the charge – being put for consultation until February 18 – point out that other major global cities such as Paris have already implemented a similar policy, while Manchester has a ‘business levy’.
Critics point out that British people spend hundreds of millions of nights at hotels and bed ‘n breakfasts in England every year – and will have to pick up a bigger tab.
Communities Secretary Steve Reed said: ‘Tourists travel from near and far to visit England’s brilliant cities and regions.
‘We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.’
The government said money raised could fund local projects that ‘improve communities and enhance the experience of tourists’.
Officials insisted research suggested ‘reasonable’ fees have little impact on visitor numbers.
Seven Labour mayors hailed the decision, with Mr Khan saying it was ‘great news for London’.
‘The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination. It also shows what can be done when ministers work closely with Mayors to devolve more powers to cities and regions,’ he said.
‘As part of developing our plans for the levy we will work closely with the hospitality and tourism sectors to ensure it delivers the maximum benefits for London and our brilliant businesses.’
Labour’s Liverpool Metro mayor Steve Rotheram said: ‘For too long, cities like ours have been expected to compete on a global stage without the basic tools that other places take for granted.
‘Cities like Barcelona and Paris raise tens of millions each year through similar schemes – money that goes straight back into improving the visitor experience and supporting the local people who keep those destinations thriving.
‘I’m pleased that the government has listened and acted – giving areas like ours the powers we need to support and grow our economies in a sustainable way.
‘Our visitor economy is worth more than £6billion a year and supports over 55,000 local jobs.
‘A modest levy is money that would stay local and be reinvested in the things that make our region stand out: our world-class culture, iconic events, vibrant public spaces and the infrastructure that ties it all together.’
Manchester Mayor Andy Burnham said: ‘It’s great news that the Government is committing to giving regional mayors the powers to introduce a visitor levy – a measure we have long called for. Greater Manchester already has a thriving visitor economy, and a visitor levy will help us sustain good growth over the next decade.
‘I’m proud that nearly two million people from all over the world choose to visit Greater Manchester every year…
‘The levy will allow us to invest in the infrastructure these visitors need, like keeping our streets clean and enhancing our public transport system through later running buses and trams, making sure every experience is a positive and memorable one.’
West Yorkshire Mayor Tracy Brabin said visitors would be asked ‘to pay a small fee to help drive growth’.
‘This will allow us to invest more into making our regions even better places to visit, unlocking opportunities and help our businesses thrive,’ she said.
‘This is a further vote of confidence in devolution and shows the government is backing mayors to achieve our ambitions.’
Kate Nicholls, Chair of UKHospitality, said: ‘The Government has gone back on its word and introduced a damaging holiday tax. This is the wrong way to make policy and the fastest way to undermine investment.
‘It has blatantly disregarded the commitments it gave to the House of Commons just two months ago that it ‘had no plans’ to introduce this tax.
‘This is a shocking U-turn that will only make life more expensive for working people. It could cost the public up to £518 million in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector.
‘It will effectively increase the rate of VAT to 27% for people who want to enjoy a holiday in the UK – making it one of the highest tax rates for consumers in Europe.
‘Make no mistake – this cost will be passed directly onto consumers, drive inflation and undermine the Government’s aim to reduce the cost of living.
‘It’s important that the Government has paused to consult. We will be working hard with the Chancellor’s team to highlight the damage this will do to the cost of living.’
