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Damian Hinds (East Hampshire) (Con)
I beg to move,
That this House has considered the proposed visitor levy in England.
It is a great pleasure to see you in the Chair, Mr Efford. It is also great to see the Minister in her place; we have a very highly regarded Minister to respond to the debate. She is a Ministry of Housing, Communities and Local Government Minister, but she will be responding on behalf of the entire Government, as Ministers always are when responding to debates in Parliament.
This subject touches on a number of Departments: the Department for Culture, Media and Sport is the sponsoring Department for tourism, but the debate is also relevant to the Department for Business and Trade, because of the trade considerations and export earnings; the Department for Transport, for obvious reasons; the Department for Work and Pensions, as tourism is one of the biggest employers in the country; the Home Office, which issues the visas; the Foreign Office, which is responsible for our international relations and soft power; the Cabinet Office, which owns the GREAT campaign; and, of course, the Treasury, which takes an overall view of taxation and is responsible for ensuring economic growth.
The proposed visitor levy is another measure that was not in the Labour manifesto—indeed, up until very recently, Ministers were actively saying that they would not introduce it. There has been limited debate on it and, although there has been a consultation, it was on how, not whether, the levy should be implemented. There are many different aspects to think about. There are the effects on the cost of living—it would push more people to take holidays abroad rather than staying at home—and the effects on youth unemployment and local economies. I am sure colleagues across the Chamber will make a number of those points; they are relatively straightforward points to land. I will focus on one that is not quite as easy to land, but that I think is just as important: the role of inbound international tourism into our country, the contribution that makes to the economy and the necessity not to hamper that.
There is a natural inclination among humankind to want to see more of the world. As societies, and the world as a whole, get richer, one thing we can guarantee is that travel and tourism will grow—in fact, they grow faster. For every 1% of world GDP growth, we see between 1.5% and 2% of growth in world tourism. Travel and tourism become an ever-enlarging part of the world economy, and—this is relevant at a time when we often worry about structural changes coming to labour markets—they are largely, although not entirely, AI-proof. Travel is also just a good thing. It brings people together for everything from family reunions to forging new business relationships and partnerships. Travel is good for the soul: people can discover new places, people and experiences, and there is opportunity to unwind and to see the world differently—literally—and as a result are able to think differently.
Domestic tourism is good for all those reasons. Of course, it is also very important for individual colleagues’ constituencies and their local economies.
Mr Jonathan Brash (Hartlepool) (Lab)
Is the issue not also about the way the economy is balanced? The truth is that some areas of the country, including Hartlepool, will struggle to bring people in with their tourism offer compared with others. A tax such as this actually drives money and investment away from areas that need it most. Is that not why such a holiday tax is bad for constituencies such as Hartlepool?
Damian Hinds
That is one of a number of worries I have about this proposal; I am grateful to the hon. Member for putting it in such a rational and straightforward way.
I was coming on to say that international inbound tourism scores even more highly because, counterintuitively, tourism into this country is an export. In classical Keynesian economics—if I may appeal to the Government side of the House in that way—it is an injection into the circular flow of the economy. It is not spend that is displaced from some other activity; it is a net increase in economic activity in our country, which means that it is a net creator of jobs.
For the Exchequer, tourism is particularly attractive because tourists are on average very low users of public services. However, while they are here, they spend money not just on their travel and accommodation, but on their food and beverages, their purchases and activities, and on all those things they are paying tax and contributing to the Exchequer.
Steve Darling (Torbay) (LD)
It is important to reflect that in the United Kingdom tourists face a VAT rate of 20% on their spend, whereas in Germany it is only 7% and in Spain, France and Italy it is 10%. Does the right hon. Gentleman agree that the Labour Government need to reverse their job-killing national insurance contribution hikes, which have had a massive impact on our hospitality industry up and down the country, including in my constituency?
Damian Hinds
I do agree; the hon. Member makes some very good points about national insurance contributions, which I will go on to talk about further. He also makes some very good points about looking at the set of taxes as a whole—we cannot just look at a bed tax or a tourism tax without thinking about all the other taxes. However, if I may, I promise him that I will come on to those matters later.
Inbound tourism is something that we are rather good at as a country. How could we not be, when we have great cities such as London, Manchester, Edinburgh, York, Bath and Brighton, as well as the lakes, the Peaks, the moors, the dales and the beautiful South Downs, part of which I have the privilege of representing? There is also our literary heritage, not least Alton and the village of Chawton in East Hampshire, the home of Jane Austen. Britain is also the birthplace of more sports than most of us could name if we were prompted to do so in 60 seconds. There is also the draw of screen “on location” sites, as we have recently seen in the “Starring Great Britain” campaign, west end theatre, live music and much more.
There is also the small matter of the English language—and believe it or not, even the weather actually acts in our favour. The fact that so much more of our inbound tourist infrastructure is indoor means that our tourist season is much longer, and we have considerably less seasonality in our tourist numbers, than many of our competitor nations.
All those things help to explain our success. We are the seventh or eighth biggest country in the world by tourist arrivals, but we are even higher—third in the world, in fact—for tourist receipts. Of course, that is particularly driven by London, which is a very high-value market, but overall, tourism is our third largest services sector by export earnings, and comparable to goods sectors such as automotive and pharmaceutical.
We do inbound tourism well, then; but tourism is also a competitive market and the reality is that we are not doing as well as we used to. We are doing well, but worse. Over the last 30 years, the UK’s market share of world tourism has tumbled. It has come down by something like half.
Danny Beales (Uxbridge and South Ruislip) (Lab)
I will just pick up on that point about competitiveness and competitive advantage. Is it not the case that those much-visited cities—Paris, Rome, many cities in Spain and others throughout Europe—have measures such as this proposed levy, yet they have not seen decreases in tourism? How is that a competitive advantage point for us? Is it not actually the case that tourists want the culture, events, activities and even investments in policing that this sort of measure could fund?
Damian Hinds
I do not know if the hon. Gentleman heard the earlier intervention by the hon. Member for Torbay (Steve Darling), who made the point—quite rightly—that we cannot look at a single tax in isolation. I will come on to discuss that point, and I will invite the hon. Member for Uxbridge and South Ruislip (Danny Beales) to look at the maths on what happens when we add up all the taxes together and compare the cities that he has just mentioned with cities in this country.
We have lost market share, and it turns out that reaching the big target that the Government now have, to reach 50 million arrivals in the next few years, will involve—believe it or not—us losing more market share. Therefore, the great big ambition is for us to lose share of the global market for tourism. We should be much more ambitious than that.
Governments of all sorts and all flavours have acknowledged the importance of tourism, verbally and in writing. I will not go through all the sector deals and so on that there have been through the years. We now have, or at least anticipate, the visitor economy growth strategy from the current Government. However, I do not think—and I am not making a party political point here, because this applies to multiple Governments—that any Government in this country in my lifetime have ever given attention to this sector commensurate with its importance and potential.
Douglas McAllister (West Dunbartonshire) (Lab)
The visitor levy became law in Scotland in September 2024, allowing Scottish local authorities to apply a 5% charge on overnight stays. It is due to be implemented next year in my constituency and is estimated to bring in £1.7 million annually. Last month, I met Loch Lomond and The Trossachs National Park Destination Group to hear their concerns about the tourist trade. While I suspect the right hon. Member disagrees with a levy, does he agree that, if a levy is to be introduced, it should clearly be invested in a manner that benefits and strengthens the local tourist economy, in consultation with trade—not just to fill a black hole in council budgets?
Damian Hinds
The hon. Gentleman is a wise man, and he anticipates a point I will come to very shortly.
Under the previous Government, candidly, there were increases to air passenger duty, rises in visa charges, the introduction of the electronic travel authorisation at a price of £10, and of course the loss of VAT-free shopping for tourists. The new Government are not just carrying on with those things, but adding cumulatively to those costs at a significantly greater rate. They are doubling the price of the ETA, which will now be £80 for a family of four. In fact, ETAs and visas are now both considerably above European price levels—considerably so, in the case of visas. On ETAs, unlike others, we do not give even a discount, let alone an exemption, for children or for people over 70. The Government have also cut the marketing budget for VisitBritain by 41%.
On top of all that, they now propose to bring in a bed tax. What is that bed tax? We do not know. It could be many things. It could be per room or per person. It could be a fixed percentage of the room rate, a fixed amount or tiered fixed amount. If it is a tiered or fixed amount, what amount? In truth, however, whatever amount is set initially is probably pretty irrelevant. Let us not forget that air passenger duty started at a rate of £5 and £10 and now ranges between £15 and well over £200. Will children be discounted or exempt?
The consultation talks about giving powers to a mayor; what about places that do not have a mayor? What will the scope be? Will it include sleeping in a tent? Will it include holiday camps, static caravans, scout camps, school trips, pilgrimages, hostels, homestays or sleeper trains? We do not know the answers to any of these questions right now.
Joe Powell (Kensington and Bayswater) (Lab)
Will the right hon. Gentleman give way?
Joe Powell
I wanted to add one important category that he did not list, which is short-term lets and Airbnbs.
Joe Powell
He will know that in my constituency there is a very high concentration of Airbnbs—I have not read his speech in advance—which have contributed to antisocial behaviour, rubbish put out on the wrong day, and even breaches of leases, which can cause fire safety and insurance issues. I welcome the introduction of this levy, partly because it will help to collect a contribution from the short-term lets in my constituency.
Damian Hinds
Mr Efford, that really was my next sentence, because there are questions about short-term lets, and about second homes in Cornwall and so on. On the short lets issue—whether rents are being pushed up is sometimes another concern with short lets—this levy is not going to solve that problem. The Government will need to do something structurally different if they want to address those short lets questions.
Sir Julian Smith (Skipton and Ripon) (Con)
UKHospitality talks about this tax being
“the wrong policy at the worst time”.
One of my worries is that entrepreneurs in the tourist industry in North Yorkshire and elsewhere are on their knees due to post-covid issues, national insurance, rates and a whole range of factors. Would my right hon. Friend agree that, whatever the merits of this policy, the levy must be paused until those businesses are back on their feet and start investing again?
Damian Hinds
I do agree. My right hon. Friend and I have been in multiple debates in the main Chamber talking about exactly those issues, both for tourism and for the wider hospitality sector.
There are some arguments in favour of an overnight visitor levy, some of which have come up already. The main one is summed up in the sentence,
“Visitor levies provide local government with a financial incentive to grow the visitor economy.”
That has truth to it, and there is definitely an argument for making hospitality more hospitable through more investment in the visitor economy—in facilities, events, policing and so on. The sector needs more money going into sales and marketing if we are to realise our potential, so there might be an argument for this measure if the money were truly ringfenced—if it were only being spent on truly incremental items. Even then, we would still get the problem where hotels over quite a wide area pay it but the events, attractions, extra policing and so on all take place somewhere else. That might apply in Hartlepool, for example, as has been mentioned. It will certainly be the case in London—a hotel in Brent Cross is not going to feel the benefit of some extra things being put on in theatreland in the west end.
Of course, though, the money will not be ringfenced. Even if it is nominally ringfenced in year one, do we honestly believe that in year five it will still be ringfenced? Of course it will not.
Peter Fortune (Bromley and Biggin Hill) (Con)
As ever, my right hon. Friend is making an excellent speech. One of the concerns that businesses have is that this policy was not in the Government’s manifesto, so they are now trying to prepare for something that has come as a surprise. There has been no consultation on this levy, so by introducing it now the Government are making a very difficult situation even worse. Does my right hon. Friend agree that this is not the best way to help businesses thrive?
Damian Hinds
I certainly do. On the issue of incrementality—I suspect other colleagues will make this point during the debate—there is only one way to guarantee that the money will truly be ringfenced and used for incremental activity, sales and marketing spend, which is to write it into primary legislation. In these debates, people often have a list of five or six questions to put to the Minister. I do not have five or six questions; my one question is whether she will write into primary legislation that the money must be ringfenced.
For the avoidance of doubt, I am arguing against this levy in principle. I think we should be making it more attractive to come to this country. However, if it is to happen, will the Government write into primary legislation the thing that I am sure they will say verbally to a lot of colleagues, including Labour MPs in seaside towns and parts of the country that need inward investment? I am sure they will say, “This will all be for extra stuff.” Let us see that in a piece of legislation before this Parliament. In the absence of that, I am sure that what will happen—maybe not in year one, but in year three or five—is that central Government allocations of funding to local authorities will be made on the basis that they could have implemented an overnight visitor levy. In practice, it will become impossible for a mayor in any one area to say, “I’m not going to impose that levy,” because the budget will assume it.
I now turn to the arguments against the levy, some of which we have heard already from colleagues from multiple parties. This is a sector already dealing with big cost increases from national insurance contributions. For businesses that rely heavily on flexible labour, dealing with the Employment Rights Act 2025 is genuinely difficult—and then there are business rates, which we have not yet talked about. Yes, there has been a reprieve for pubs, but there are two things we need to know about that: first, it is only for pubs, and secondly, it is only a temporary reprieve. It does not help cafés, restaurants or many other parts of the hospitality sector; in particular, it does not help hotels.
As you know, Mr Efford, there has been a change in the structure of business rates with the higher multiplier level. The Government keep describing this higher multiplier as a way of ensuring that online retailers are helping to pay for lower rates bills for other businesses. To keep us within the bounds of parliamentary language, let us call that “creative framing”. According to my calculation—by the way, it is very difficult to get an answer out of the Treasury—some 91% of the businesses and buildings that are subject to that higher multiplier for business rates are not to do with online retailing. Many hotels are among them; again by my own estimation, 1,100 hotels will be paying that higher multiplier for business rates.
The levy applies to everybody but, turning to the additional costs of international travel, air passenger duty is already the world’s highest departure tax. ETAs are a new cost for tourism in this country. In fact, after—strangely—Bhutan, the UK is in the highest category for total cost when we look at all the taxes, charges and policy costs imposed on tourists. That means that although we score very highly on international comparisons of attractiveness, we score 113th out of 119 for price competitiveness for tourists. Some will say—some have said already—“All these other countries have a bed tax.” Yes, they do, but they do not have a VAT rate of 20%, which is the crucial point. Typically, VAT rates are about 10% across European countries. Amsterdam is the exception: it has just put up its VAT rate on hotels to 21%, but it seems that it is trying to reduce the number of tourists coming in, so that is not an example we want to follow. The one thing that has kept us just about competitive is not having a bed tax on top of all those other taxes.
To conclude—as you will be pleased to hear, Mr Efford—the levy is a bad idea from the point of view of the cost of living; it would add over £100 to a typical holiday for a family of four. It hits a sector that has already been hammered by national insurance contributions and business rates—a sector that is absolutely vital for employment, particularly for tackling youth unemployment, that is all about small business and that is important for seaside communities. I ask the Minister, and the Government, to think of the growth opportunity and about what international tourism can do for us. It is a growing global market that is largely AI-proof and plays to our strengths.
The Government say that they want economic growth, and this is a sector that can deliver it. I estimate that keeping on the path of the world growth rate for tourism rather than being below it would be worth between 0.2 and 0.3 percentage points extra in our economic growth every year. We have the capacity: it is true that some places, and certainly some individual attractions, are very busy, but it is not true for the country as a whole. Even in London, our biggest market, hotel penetration—the ratio of hotel rooms to the resident population—is still below that of Rome, Amsterdam or Madrid, for example. We score highly on cultural aspects, but low on value, which means that we are losing share to countries that take tourism very seriously and are actively trying to grow it. We can reverse that position—but not if we price ourselves out of contention.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to see you in the Chair, Mr Efford. I thank the right hon. Member for East Hampshire (Damian Hinds) for bringing forward this debate.
I have long campaigned for a visitor levy. York itself sees 1.7 million overnight stays—6.2 million visitors to our city—and as a result we recognise the cost of tourism to our local authority. Whether it is about tidying our streets, putting infrastructure in place, cleaning our city or making additional provisions, the pressure of tourism on our public services is being paid for by local residents. There is an equation where local residents feel that they pay into the system and tourism gains, but that tourists are not making their contribution. I listened carefully to the right hon. Member; he talked about the money, the taxation and the benefit that goes into the national funding pot from the taxation system but is not being invested in local communities.
Sir Julian Smith
I am a big supporter of the hon. Lady, and I do not want to attack her personally, but we have a big issue in York and North Yorkshire. The Mayor is proposing this tax, which will clobber my constituents’ businesses in North Yorkshire. It may be a benefit for York, but it will cause a massive problem for rural North Yorkshire.
Clive Efford (in the Chair)
Order. Before you respond to that intervention, there are 10 Members on their feet and we have only just over half an hour for Back-Bench speeches, so that is roughly three and a half minutes each. Please bear in mind when you are speaking that the people behind you will have a three and a half minute limit—or less, if you speak for too long.
Rachael Maskell
I was coming to the point the right hon. Member for Skipton and Ripon (Sir Julian Smith) raises, because I believe that the levy should be collected by local authorities. If the mayor collects it, it should be hypothecated to local areas so that they can determine the spend of that resource. Certainly I would propose that half the money be spent directly on tourism, through work with the industry, but there is also the opportunity to invest back into our communities and in local projects.
I would put in place exemptions for children; I think that would be appropriate. I would exempt certain forms of accommodation, camping and hostel accommodation, because we know that those are used for budget holidays. Of course we need to respect the cultural need of Gypsy, Roma and Traveller people for overnight stays in different areas, but I certainly would include in a levy scheme short-term holiday lets. I just met the Minister to raise again the issue of short-term holiday lets, and the proper licensing system that we need in that respect.
I believe that this should be a flat-rate levy. I have always said that the price of a cup of coffee could be the benchmark—people would not think twice about going and getting an extra coffee. If it were something like £4, we would bring £6.8 million into our city and that would help our local economy. We will struggle to support our tourism industry otherwise, so I would encourage that factor.
We could use the money to promote the local tourism offer, from which the industry would gain, and could gain substantially. I am talking about putting on events, ensuring that we have better facilities and better infrastructure in our city, and supporting our bid to become a UNESCO world heritage site. All that would benefit not just York, but North Yorkshire and the wider region. It could include putting on projects such as Wild in Art and so on, to draw in even more tourism. I believe that a measure such as that could be seen as an investment in our future.
Robbie Moore (Keighley and Ilkley) (Con)
It is a pleasure to serve under your chairmanship, Mr Efford. I thank my right hon. Friend the Member for East Hampshire (Damian Hinds) for securing this incredibly important debate. Numerous constituents have contacted me about the proposals, which are causing great concern for the hospitality sector and tourist and charity groups across Keighley and Ilkley.
In February I met Toby Hammond, the lead volunteer for West Yorkshire Scouts. He first got in touch with me following comments made by Chief Scout Dwayne Fields about the impacts that the proposed tourist tax would have on youth groups such as the Scouts, Brownies and Girl Guides. For months, Toby has been campaigning tirelessly to seek an exemption from the proposed tourist tax for under-18s and volunteer groups. He has written to four metro mayors, 14 Members of Parliament and 159 local councillors, and amassed 64,000 views on social media posts to do with this campaign. I have no doubt that it was because of his efforts and others’ that West Yorkshire has now secured a full exemption from any future visitor levy for Scouts, Girl Guides and Brownies, as confirmed last night via a tweet by the Mayor of West Yorkshire on X.
Given those efforts, how must it have felt for Toby and other Scout, Brownie and Girl Guide leaders across West Yorkshire to be dismissed merely as scaremongers by Mayor of West Yorkshire Tracy Brabin? They have been raising these issues for months, but the mayor’s office refused to publicly back an exemption for Scouts and Girl Guides until late last night via a tweet on X. It seems that the West Yorkshire mayoralty jumped before it was pushed. I sincerely hope that the Minister will join me in encouraging all metro mayors across the country to guarantee an exemption for under-18s and charity groups from any additional levy on overnight stays, to avoid a postcode lottery scenario for volunteer-led groups.
On postcode lotteries, I have definitely won the lottery in representing Keighley and Ilkley, because it is a wonderful place with incredible attractions such as Cliffe Castle, East Riddlesden Hall, the moorlands and Brontë country—Ilkley and Haworth—which attract thousands of visitors a year. However, it is not London, Paris or Milan and therefore does not need to keep up with its so-called international counterparts, which is how one West Yorkshire Labour MP has tried to justify proposals for this levy to her constituents. The vast majority of people staying overnight in our area are British workers, families and young people, which means that it is not really a tourist tax at all. It is another tax on British people, which could cost an average family going on holiday in England an extra £100, meaning fewer nights spent overnight in accommodation in constituencies such as mine—in Keighley and Ilkley. I fear that once these funds are collected, there will be no ringfencing associated with the tax coming from places such as Ilkley and Haworth; it will simply go into the West Yorkshire pot to be spent elsewhere.
Quite frankly, there are no winners with this tax: our young people, businesses and constituents will see increased costs, and some businesses may never recover. Does the Minister agree that the businesses, Scout leaders and tourist groups that have shared their concerns about this tax with me are not scaremongers but good, hard-working people with genuine concerns about what a visitor levy could mean for them and their livelihoods?
Several hon. Members rose—
Clive Efford (in the Chair)
I am applying an informal three and a half minute time limit. If Members can keep to that, it would help me; otherwise, I will have to impose the limit rigidly.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Efford. I am incredibly proud to represent the centre of the capital; Ronnie Scott’s, Abbey Road, Tate Britain and all the best museums are right here in the centre of London. Every year, 25 million tourists visit Westminster, spending £1.7 billion to support businesses and residents across London.
This debate has not focused enough on the essential principles of devolution and the role that different organisations play in supporting the tourism industry. We need to hear, again, that nine out of 10 of the most visited tourist destinations in Europe implement a tourist tax. I have listened to the right hon. Member for East Hampshire (Damian Hinds) and the hon. Member for Keighley and Ilkley (Robbie Moore)—although I have to disagree with the hon. Member, because I do think that Brontë country is an international destination, as I am sure many of his constituents will agree—but Hampshire, Hartlepool, Hillingdon and Haworth will not have the same needs as Hyde Park. That is the fundamental principle that we need to focus on today.
I firmly support introducing an overnight visitor levy. It is the right thing to do to enable localities to accurately reflect the particular needs of their neighbourhoods. Taking a local and regional approach means that we have to look carefully at what London might need specifically. Unlike in combined authorities outside London, London borough leaders do not have a formal say in decision making about budgets at the Greater London Authority, so it would be the only major city in the country where local authorities would not have joint decision making over the levy mechanisms. I therefore support the mandation of a 50:50 split, allowing local authorities to keep part of the receipts and enabling boroughs such as Westminster to invest in the vital services that keep the heart of London a world-leading tourist destination. That could include investment in the public realm as well as investment in growth measures—
Clive Efford (in the Chair)
Order. There is a Division. I am told to expect six votes, so I must suspend the sitting for about an hour and 15 minutes. If there are fewer, we can come back more quickly. Please come back as soon as the votes are finished.
Rachel Blake
As I was saying, what is right for Hampshire, Hartlepool, Hillingdon and Howarth is not necessarily right for Hyde Park. That is why devolving the power to implement this overnight visitor levy is the right way to go.
I ask the Minister to consider the arguments in favour of mandating a 50:50 split in London; unlike combined authorities outside London, we are the only major city in the country where local authorities do not have a joint decision-making mechanism. In 2023-24, Westminster city council spent £31 million on street cleaning—more than four times the amount per head of the average London borough—demonstrating the significance that inner-London boroughs place on keeping our streets clean and ready for tourists. Other visitor and commuter services total £18.3 million a year, so allowing local authorities to keep half of these receipts would be right for all the London boroughs that provide tourist attractions for our world-leading tourism destination. It is already standard practice for revenues to be ringfenced locally, including in Paris, New York and Amsterdam.
I also ask the Minister to think through the implications for the registration system introduced for short-term lets. In some parts of Westminster, up to 30% of homes are now used as short-term lets. Doubling the density of short-term lets is associated with an 8% growth in per-bedroom rental prices—or £4,500 per year. Short-term lets should be paying this levy, and the levy should be implemented in a way that makes sure we can gather data on who is letting out their home on a short-term basis. That should be factored into the design of any scheme. I am grateful for the chance to discuss these topics in this setting.
Steff Aquarone (North Norfolk) (LD)
It is a pleasure to serve under your chairship, Mr Efford. North Norfolk has many things to be proud of, and our half-a-billion-pound tourism industry is high on that list. However, that can bring its challenges: a seasonal economy leads to insecure employment and makes it hard for businesses to plan for the future. We also know that an oversaturation of second homes and holiday lets in some areas has carved the soul out of communities. We have to take steps to balance that out.
That is why I remain firmly open to seeing how a visitor contribution levy could bring more money to North Norfolk. If levied at a similar rate to Wales, it could raise more than £2 million a year for my area. That could make a huge difference if it was invested into the towns and villages that are the tourism hotspots, by supporting our tourism businesses and by investing in skills and apprenticeships for our young people.
Much of the devil of such a policy will, however, be in the detail, so I am pleased that it is devolved to local areas to decide for themselves. I am keen to see the evidence from the policy in Wales to understand, for example, whether this can work and how it could be applied to Norfolk.
It will be vital for any income to be fully reinvested in the communities where it is gathered. Local Lib Dems fought similar battles with the Conservatives over the second home levy, to prevent them from taking the vast majority of that tax increase to plaster over their financial mismanagement of Norfolk county council and leaving us with less than 10p in the pound. The strong leadership of the Lib Dem district council ensured that North Norfolk got its fair share. Getting local investment is a red line for me in supporting any future visitor levy in our area.
I am also quite shocked by the posturing of local Conservatives, who have said that this would be the death of the tourism industry. They seem to be struggling with the fundamentals of geography and human behaviour: the Norfolk broads cannot be picked up and moved somewhere else with a different tax bracket; Blakeney’s grey seals—which make up 90% of England’s population—will not swim up the coast to somewhere cheaper; and Cromer pier is not going to be sawn off and reattached to a different coastal town.
It is frankly quite offensive to North Norfolk to suggest that a mere £1 a day extra is the difference that would make tourists think, “Well, Norfolk’s really not all that; we’ll go somewhere else instead.” Have those opposing this measure thought that a €7 fee in Barcelona makes the Sagrada Família a bit too pricey? Maybe Gaudí was not that good after all. The broads, the pier, the seals, the shops, the museums, the historic houses and our natural environment: that is our Sagrada Família, our wonder of the world. If people think so little of our area that they want to stand here today and tell tourists that it is not worth £1 a night, they do North Norfolk down.
There are many discussions still to have about this policy, and I look forward to engaging with residents and stakeholders. If we do this, we must get it right, co-designed with our tourism industry. If the proposal is not right for North Norfolk, I will not support it—it is as simple as that. I draw Members’ attention to my entry in the Register of Members’ Financial Interests as a serving Norfolk county councillor.
Chris Webb (Blackpool South) (Lab)
It is a pleasure to serve under your leadership, Mr Efford. As chair of the all-party parliamentary group for hospitality and tourism, and as an MP for Blackpool—a town built on tourism—it is important that I share my insight on the proposed visitor levies or tourist taxes, formed by the close work I have done with the industry at both local and national level.
The tourism pound has an impact far beyond accommodation providers. It supports our local pubs, restaurants, cafés, attractions, cultural venues, the high street and transport networks. However, businesses across the country tell us that rising costs and an unfair tax system are holding them back. Granted, the UK cannot compete with the weather in other European countries—although it is always sunny in Blackpool—but even when we can compete, we are barely placing in the race.
The UK currently ranks 113th in the world for tourism price competitiveness. We apply 20% VAT on accommodation, compared with just 7% in Germany and 10% in France, Italy and Spain. A couple staying one night in a three-star UK hotel already pay around £26 in direct tax, compared with an EU average of just over £16. Even a modest levy of £2 a night would widen that gap further.
While many of those countries have visitor levies, they are paired with lower VAT rates, making their overall offer more competitive. If the Government consider introducing such levies, I urge them to review the case for reducing VAT in hospitality and tourism, in line with our European partners.
Fears about the impact of visitor levies are proliferating within the tourism and hospitality sector. If this policy is to be implemented, it must be done in the right way and take businesses’ concerns into consideration. For example, a levy would introduce new administrative requirements, such as updating booking systems and collecting charges—a burden that will hit small, independent businesses, especially guest houses in Blackpool, particularly hard.
Levies would need to be implemented consistently and with clear reassurances that the revenue would cover administrative costs and stay local to benefit the areas generating it. Levies must also benefit local areas more broadly. The squeeze on local government funding, in particular, has had a significant impact on tourism, as councils such as my own are less able to invest in infrastructure to support the visitor economy.
By introducing a visitor levy, the Government have said they aim to give local leaders greater control over funding, particularly in high-traffic tourist areas such as my constituency. That is a welcome principle: the Government are right to recognise the importance of local decision making, ensuring that those with the best understanding of their region can tailor investment and develop their tourism economy as they see fit. However, a visitor levy must not be used to justify the withdrawal of existing Government support, a reassurance I ask Ministers to provide to me, the industry and local authorities. Revenue from any potential levy should be retained locally and kept outside core spending power to provide additional support for activities that directly benefit tourism, such as major events, cultural and heritage assets, and transport services.
From our brilliant airshow to the illuminations, Blackpool prides itself on large-scale, free events that bring hordes of tourists to our coast in search of a family and budget-friendly trip. Yet the value of overnight stays, along with average visitor spend, is falling against a backdrop of enhanced competition, a tourism offer in need of refreshing, and the ongoing challenge of identifying a sustainable funding model.
Local leaders are best placed to identify the infrastructure, cultural assets and improvements that spur growth, and the Government must consult meaningfully with them on their proposals. Equally, it is critical that local leaders engage with businesses and their communities throughout the process. Alongside that, we cannot ignore the wider pressures facing the sector. I and colleagues have called for reforms of business rates, a fairer approach to employer national insurance contributions, and a reduction in VAT for hospitality and tourism. Those issues remain central to the sector’s long-term viability.
In Blackpool, there is an ambition to expand the current enterprise zone along the promenade for hospitality and tourism businesses. I am grateful to Ministers for meeting me to discuss this idea, which has the potential to create jobs and unlock growth and investment along the golden mile in my constituency. Like local leaders, I recognise that a tourist tax has some potential to support the industry and our local economies, but only if it is designed with fairness, consistency and meaningful engagement. If it is not, it risks placing further strain on a sector that is already under pressure.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Mr Efford. I thank the right hon. Member for East Hampshire (Damian Hinds) for leading the debate.
Tourist infrastructure is an incredibly important issue in my constituency; I know the motion is about the visitor levy in England, but I want to reflect my constituency and the concerns there. I think the right hon. Gentleman and other hon. Members have set the scene incredibly well. I may have a slightly different opinion from others in the Chamber—I apologise for not always thinking alike—but I have to reflect the opinions of my constituents.
I hear the concerns in relation to tourism levies, which could harm areas that rely on tourism and burden them with additional charges. For context, I represent a beautiful constituency, which is as equally coastal as it is rural. I am aware of numerous Airbnbs along our peninsula, which hundreds of people come to stay in each year. I agree with the right hon. Gentleman that to keep our tourism sites alive we must keep the price down. What is being proposed will have a clear impact on the tourism opportunities on the mainland. For us back home, it sends a cloud over tourism that a levy may, at some point, come our way.
I, like everybody else, understand that the value of money in my hand is important. I am, after all, an Ulster Scot and for us, every pound is a prisoner. That is a fact of life, and I always want to see value for money. I am also inclined to go for what I would refer to as affordable options. I believe that, in today’s age, many people are like me and the price of staycations and holidays is already, in some cases, extortionate. It may be a small fee, but people do not want to be asked to pay more just to stay in a certain area.
There is an even bigger issue back home when we look at the comparison between Northern Ireland and the Republic of Ireland, because any levies would have an impact on both sides of the border. Adding a levy back home would make Northern Ireland relatively more expensive and push visitors to stay in the south. The potential impact of a levy on us in Northern Ireland would be the same as what the right hon. Gentleman has referred to here.
If something of this nature were ever to be introduced, clarity would be needed about where the money would be used. That question has been raised in almost every contribution. Local councils and authorities must provide clear road maps, and if people staying are asked to pay an additional fee, it should go towards the tourism sector in that specific area, not to other council services that do not benefit the industry.
The levy would not impact large chain hotels, but I worry about the family B&Bs. The right hon. Gentleman, when he set the scene, specifically pushed that issue hard. Nobody can deny that the levy would have a detrimental effect. Those B&Bs might not want to pass the additional fee on to their consumer, but they might find that they cannot sustain their business because people do not want to stay somewhere where they have to pay more.
I recognise the potential benefits that a visitor levy could bring in supporting local services and infrastructure, but we must proceed with caution. We need caution, we need a review and we need understanding before we go anywhere.
Emma Lewell (South Shields) (Lab)
It is a pleasure to see you in the Chair, Mr Efford. I thank the right hon. Member for East Hampshire (Damian Hinds) for securing the debate.
South Shields is a beautiful coastal town that really comes alive in the summer months. The overall borough of South Tyneside has nearly 6 million visitors each year, adding millions to our local economy. Sandhaven beach in South Shields is a Sunday Times beach of the year and the famous Great North Run has its finishing line on our Leas. When tourists visit us, they get the best hospitality that the UK has to offer, the cosiest of places to stay, and a welcome like no other. We are naturally a friendly bunch who love our little part of the north-east and are proud to call it our home.
Given the context of rising energy costs, high business rates, employer national insurance contributions, minimum wage increases and high VAT, a tourist tax is the wrong tax at the wrong time. I understand that some of those issues are beyond the Government’s control. I know all too well that the decline in communities like mine, which suffered under the last Tory Government, will not be reversed overnight. I understand that national insurance contributions were necessary to fund key public services and I absolutely support the national minimum wage; its introduction under the previous Labour Government transformed my life.
I have been vocal, however—and I continue to be, along with colleagues—about working with the Government on a business rates reduction across all hospitality and a VAT cut. As a sector, hospitality is being hit hardest by the accumulation of those costs. Despite those ongoing discussions, the new, unexpected development of a tourism tax has felt like a kick in the guts for me and my local businesses. It is one burden too many for us, and it will result in job losses and more boarded-up businesses in the centre of my town.
That extra burden is very likely to tip hotels, B&Bs and small providers over the edge, and will be felt most acutely by low-income visitors. It feels as though the tax is simply a quick win to divert more money into regional coffers, but with drastic long-term consequences and adverse impacts locally. It feels like short-termism at its worst and does not feel very strategic. UKHospitality modelling estimates that the tax will lead to 33,000 job losses, just short of £2 million in lost tourism spending and a reduction in tax receipts to the Treasury of £688 million.
Hospitality is the largest employer in South Shields. We also have high levels of unemployment, which is rising for those aged between 18 and 24. The tax seems at odds with the Government’s aims for growth, youth employment and reviving local economies such as mine. That is why it was never in our manifesto. Just last year, the Government were continuing to rule the tax out. I believe that the legislation that will enable the tax is currently going through the House of Lords in the English Devolution and Community Empowerment Bill. I implore my hon. Friend the Minister to revert to last year’s sensible position, because I have yet to meet a single business, trade body, operator or member of the wider public, especially in South Shields, who supports the proposal.
Rachel Gilmour (Tiverton and Minehead) (LD)
It is a pleasure to serve under your chairmanship, Mr Efford. As everyone knows, Tiverton and Minehead is the most beautiful constituency in the country, and I am privileged to represent a part of the country that sits firmly in the tourist belt and has such rich heritage. In my constituency, tourism is not an abstract construct—it is the lifeblood of our local economy. On Exmoor alone, the visitor economy supports around two thirds of all employment. We have 8.4 million visitor days a year, generating economic activity of £682 million.
In principle, I am a firm believer in localising power and placing decisions as close as possible to the communities affected. Therefore, the idea of giving local authorities the ability to introduce a visitor levy is not something I instinctively oppose. However, we must be honest about the context. Hospitality businesses are operating in the most extraordinarily challenging climate. Many are already swamped by red tape and administrative burdens, and introducing a new levy now risks imposing yet another layer of cost and complexity. Businesses will have to update systems, retrain staff and absorb the administrative load. For many small operators, that is not a trivial undertaking.
There have been references to European countries, but the fact remains that visitor levies across Europe typically sit alongside much lower VAT rates. If we want to maintain our competitive edge, the Government must think long and hard about this issue and get the balance right. If they wedded the tax to a VAT slash, as proposed by my party, they would have my ear, but only on the basis that it was a hypothecated tax for the sole benefit of my constituents.
If the Government are determined to press ahead, I seek very clear assurances on behalf of the people I represent. Any revenues raised must be ringfenced, without condition, for reinvestment in the local visitor economy—and, crucially, within the immediate geography in which they are generated. They must not be absorbed into broader local authority budgets unless clearly aligned to defined visitor economy strategy. Otherwise, any levy becomes an additional tax, not a growth tool.
There are further concerns; the removal of rurality from funding formulae has already disadvantaged large, sparsely populated constituencies such as mine, which spans two counties. The rural premium is real and it is significant. Areas without mayoral structures could be left at a disadvantage. Unless that is addressed before implementation, the gap will only widen.
Crucially, we must ask whether any levy would genuinely support the local economy, or whether the risks to the hospitality sector would outweigh the benefits. Visitor spending does not stop at the hotel door. It sustains pubs, shops, attractions and transport. Any reduction in visitor numbers could ripple across the entire local economy.
I place on record my positive recognition of the Somerset & Exmoor local visitor economy partnership, which is already doing vital work to strengthen and co-ordinate our tourism offer. Any levy must complement, not undermine, such efforts.
Tom Gordon (Harrogate and Knaresborough) (LD)
It is an honour to serve under your chairmanship, Mr Efford. I congratulate the right hon. Member for East Hampshire (Damian Hinds) on securing the debate.
As Liberals, we strongly believe that power should be handed down to the lowest level and that we should give local areas the tools and ability to shape their own future. In principle, I would therefore support giving combined authorities the powers to introduce an overnight visitor levy—but, in this economic climate, that does not mean that we necessarily should. Let us be clear: hamstringing regional mayors with inadequate funding and then handing them the power to tax is not devolution—it is simply passing the buck.
Across North Yorkshire, from Whitby to Harrogate, from the dales to the moors, tourism is not a luxury, but a lifeline for many communities. Hotel owners in my constituency tell me that if the money comes back into the local visitor economy, they can make it work. That is a reasonable position—but they also say they have been promised investment before, and that is where the scepticism lies.
Tourism is a vital part of the economy of many local areas, supporting jobs, local businesses and community services. One topic that has not been talked about much today is the support from town and parish councils with the hard graft of organising events, supporting culture and bringing people into our communities. That is why I am supporting both Harrogate’s and Knaresborough’s bids to be towns of culture. The problem is that there is no requirement to involve them in that tourism strategy, or even necessarily on what a visitor levy may look like. That is a glaring omission.
My hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) cannot be here today, but she has told me about the work that her town council is doing in organising such events as the world-renowned Shakespeare birthday parade, which attracts visitors from across the UK and beyond. Under these proposals, the council could be expected to deliver the footfall to the town and the economy, but denied a say on the charge. That simply cannot be right.
If we are serious about devolution, local must mean local—not just mayors in their ivory towers, feathering their own pet projects and their nests. We should be including voices from town halls, parish councils and the communities they represent. That principle must extend to how any money raised from a visitor levy is spent. I have heard clearly from my own town councillors in Harrogate, Josie Caven and Graham Dixon, that if the mayoral tourist tax is introduced, people expect to see the basics done properly. Some of that revenue should go to funding services that tourists use—for instance, the cleaning, fixing, painting and refurbishing of parks and public toilets. If people are asked to pay more, they will expect to see where the money goes. If people cannot see where it goes, they will not believe a word about why it has been raised in the first place.
Crucially, people want to have an input and a proper say. That is why, in communities across the country, local Liberal Democrats are on the ground, working hard for their communities. They know much better than some of these regional mayors how any levy should be spent. For instance, across the other side of the Pennines in Stockport, local Lib Dem champion Niki Meerman is campaigning to bring a pavilion back into use at Bredbury rec. The local Lib Dem team in Offerton, led by Councillor Will Dawson and Councillor Dan Oliver, along with other local champions such as Jamie Hirst, wants to make sure the community gets the leisure facilities that have long been promised. Jason Jones is working to bring back Woodbank Hall into use. Those are not vanity projects. These are the things that make communities work.
Tom Gordon
They may well be focus articles too. The local community champions that we have on the ground are making the point that if money is raised locally, it should be shaped locally, spent locally and seen locally. That applies across England.
Councillor Hannah Kitching in Barnsley put it to me very clearly: if South Yorkshire ends up with a tourist tax, people will expect to see real investment in public transport—connecting the whole region, not just parts of it. That means expanding such things as the Supertram network beyond Sheffield and Rotherham, so that growth is shared from the visitor economy and not concentrated.
In my constituency, I have heard real concerns from businesses that a tourist tax has the potential to suck up money and take away from Harrogate and Knaresborough, rather than adding value to our community. If we are going to end up with yet another tax imposed by another Labour politician, it should at least fund the issues that will drive tourism and growth in our local area, for instance my long-standing campaign to dual the line between Knaresborough and York or the community campaign to get a restoration package for Knaresborough castle. Those things would bring people to the area and add, rather than taking away. They would not just be cases of tax and spend for the sake of it; they would deliver visible, tangible improvements that local residents and tourists alike would actually use.
Let us be honest about the context we are in. Hospitality businesses are already under pressure from every direction. Costs are up, business rates are rising and the Government are making it harder to employ the very people the sector depends on. A sector cannot be taxed into growth, especially when it is already struggling to stay afloat. When Ministers or mayors say, “It’s only a pound or two a night,” that might sound small to us, but it does not feel small to a family booking a week away or a small hotel running on tight margins. In a domestic tourism market such as ours, price sensitivity is not a detail; it is everything.
As it stands, the proposal’s fundamental flaw is that we would not necessarily end up taxing tourists; we would tax staying. Day-trippers, who often add strain to local infrastructure pay nothing, but those who stay overnight, supporting local jobs and businesses, pay more. We risk sending the signal, “Come for the day, but don’t stay the night.”
North Yorkshire is the size of a small country, so who are we really taxing? More often than not, it will not be international tourists, but people from our own region: a family from Harrogate staying in Whitby or a couple from York spending a weekend in the dales. That leads to the concerns that this would not be a tourist tax in North Yorkshire, but a tax on our own communities enjoying their own county.
The issues of fairness extend even further. Scout leaders have raised real concerns about whether they would be impacted. Are we seriously considering a policy that would put a price on a Scout camp, a school trip or young carers receiving residential respite weekends? We should be removing barriers for young people, who have already had a rough deal from this Government, not adding to them.
Perhaps the biggest question is: why now? The reality is that this has not been driven by a tourism strategy; it has been driven by funding gaps. The Mayor of York and North Yorkshire, David Skaith, is operating with far less funding than many other devolved mayoralties, despite covering a vast rural geography. Instead of fixing that, we are handing over a simple new power to tax. When the Government will not fund regions properly, they give them a new tax and call it empowerment. Let us call it what it is: a workaround for underfunding, not a plan for growth.
If Ministers are serious about this policy, three things must be clear. First, every penny must be reinvested into the local community it was raised in, and towns such as Harrogate and Knaresborough should not be used as cash cows for other places. Secondly, businesses should have a genuine say—not just a consultation exercise, but a seat at the table. Thirdly, there must be clear exemptions for young people, charities and community groups. Without those safeguards, this is not a visitor levy; it is simply another pressure on an already stretched sector.
Tourism in North Yorkshire is not just about places; it is about people and the welcome that they offer. That is what brings people back time and again. Yes, let us empower local areas and give them the tools, but let us not pretend that this policy is fully thought through, or that it would deliver the fair deal that our communities deserve.
Before I finish, I have questions for the Minister, some of which we have heard already. Will this levy apply to short-term lets, such as Airbnbs? If not, how is that fair? What exemptions will there be for Scouts, charities, young people and unpaid carers? What formal role, if any, will town and parish councils have in this scheme? How can we ensure that their voices are heard by these mayors? How will the Government guarantee that the money raised is not just spent locally, but spent with genuine input from local communities? If we get this wrong, we risk pushing our tourism and hospitality sector over the edge, and cutting off our own nose to spite our face.
Nigel Huddleston (Droitwich and Evesham) (Con)
I refer hon. Members to my entry in the Register of Members’ Financial Interests. As always, it is a pleasure to serve under your chairmanship, Mr Efford. I congratulate my right hon. Friend the Member for East Hampshire (Damian Hinds) on securing the debate and speaking so wisely, enthusiastically and knowledgeably about the sector in his opening remarks; to the relief of everybody, that means that I will not speak as long as I originally thought I would.
I have to start with a basic question to the Minister: what do the Labour Government have against the tourism industry? I mean that in all seriousness because, since the Chancellor’s first Budget, we have seen more than 200,000 job losses, and more than half of them have been in the tourism and hospitality sector. Why does that sector seem to be singled out for additional taxes on top of the burdensome ones already imposed across the breadth of the private sector?
Why does the tourism sector seem to be particularly paying the price, especially given how important it is to the UK economy? It brings joy to millions of people—both domestic and overseas visitors—every year, generates more than £147 billion in economic activity and employs well over 2 million people—about 3.5 million, if we include the broader tourism and hospitality sector. Of course, as my right hon. Friend the Member for East Hampshire pointed out, it is also a major generator of export revenue, adding more than £30 billion a year. That is greater than the car industry and greater than the defence industry, but it is being singled out for yet more taxes. Why? How often do we have to say that we cannot generate economic growth by whacking up taxes, and we cannot create jobs by making it more expensive to employ people? That is why we are seeing unemployment.
Before I go on to further details and probably more negative comments, I want to take the opportunity, as many colleagues have, to praise the sector. Our tourism industry is a British success story, and we are very proud of it. Everyone who has contributed has spoken proudly about the amazing things in their constituencies that attract people domestically and from around the world. It is not just the overt tourism things, but our beautiful landscape, incredible heritage, specific tourist offerings and beautiful beaches. We have a lot to offer the world, so we should be proud of this sector, but that raises the question of why it is being hit so hard. It is a major employer in every one of our constituencies.
This is already a highly taxed sector. Those are not just my words; the former Tourism Minister, the hon. Member for Rhondda and Ogmore (Chris Bryant), said that a few months ago. He also said the Government had no intention of bringing in a tourism tax, but a few weeks later the Government are doing just that.
It has been pointed out that this was not a manifesto commitment, just as the national insurance increases were not. The credibility of this policy is therefore already in question, especially when it comes on top of those national insurance increases and the changes to the thresholds, as well as business rates changes that have undermined the retail, hospitality and leisure sectors, and significant above-inflation increases in the minimum wage. We support and have supported increases in the minimum wage, but the increase so far above inflation for younger people has had a disproportionately negative impact on their employment prospects. The tourism sector is primarily an avenue for young people, so we have had increased unemployment and huge amounts of missed opportunity for people to have what could have been their first job in an amazing sector.
It has been said frequently today that this is not just a tourism tax, but a tax on overnight stays—I agree with my Liberal Democrat colleague, the hon. Member for Harrogate and Knaresborough (Tom Gordon), who made that point a few moments ago. It is an overnight accommodation tax, and it is therefore unclear who exactly would be within the remit. Yes, obviously hotels and hostels, but is it caravans, tents and B&Bs? Will the private rented sector and other sectors be included? Who would be included? Would there be exceptions for groups such as Guides and others, who rely heavily on and get great joy out of overnight stays?
As has been said, even if it is proposed at an early stage that the level should be £2 per person per night, that is an additional £56 on a family holiday for four over a seven-day period. That might not sound like a lot to a lot of people, but in the shoulder seasons in a caravan park, for example, it could add a quarter or more to the cost of a holiday. That would make the decision about whether to go very real, and could do immense damage to the shoulder season. One of the most important things we need to do, particularly for our coastal resorts, is extend the shoulder season to increase the sector’s productivity.
I am sure the Minister will comment about how this tax fits into the overall finances of local government and could help local authorities, but there are many practical concerns about how it could be implemented. My right hon. Friend the Member for East Hampshire asked whether we could get a guarantee that the money would be ringfenced. There is a suspicion that the tourism industry would be subsidising and paying towards broader local government finance. Would the tourism tax end up paying for adult and children’s social care? Unless the Minister can guarantee that that will not be the case, that will always be the suspicion.
Tourism taxes are often brought in around the world and then spent on additional tourism and marketing, tourist centres or supporting local tourism offerings. If there is a suspicion that this tourism tax will be spent on other things, it will be doomed to fail from the beginning. The history of all these taxes also shows that, although they may be brought in at a very low level, they always go in just one direction: up and up. So the £56 a week I mentioned could quickly become a much bigger amount. Is the Minister therefore considering putting a cap in the legislation on the maximum amount that could be achieved? Other hon. Members have mentioned that sometimes when these taxes are brought in, there is the quid pro quo of a lower VAT rate; very rarely is there both a high VAT rate and a tourism tax.
There are other points to consider. The hon. Member for Strangford (Jim Shannon) raised the point about the challenges if one area raises a tax and another does not, and he has experience of that on the border between Northern Ireland and the Republic of Ireland. What if Cornwall brought in a tax but Devon did not? Businesses right on the border would face stark issues because of perfectly reasonable decisions made by holidaymakers. That would be through no fault of their own, but because of a decision made by local government.
The hon. Member for Cities of London and Westminster (Rachel Blake) spoke of the peculiarities of local government in London, where we have the boroughs and the mayor, and that point has been raised by Conservative councillors as well. She made the reasonable argument that if the tax is brought in, it maybe needs to be split; otherwise, all the benefit goes to one and some of the costs go to others.
The hon. Member for South Shields (Emma Lewell) raised the fear that if this tax is brought in, there could be 33,000 or more job losses in a sector that is already suffering—I mentioned the over 100,000 jobs that have already been lost in hospitality and leisure. There are real concerns here.
I have further questions for the Minister. The key one is about ringfencing: can we please make sure that we can include in the English Devolution and Community Empowerment Bill—if it comes in—that the money will be ringfenced for tourism? Has an assessment been made of the impact of this tax? Can the Minister confirm whether she has had discussions about VisitBritain and VisitEngland spending, which has also been cut? That is the argument I am making: why are the Government constantly attacking this sector, reducing its funding and increasing taxes on it, when it used to be a great success story? Could the Minister confirm whether she will support Conservative party proposals for 100% business rates relief for retail, hospitality and leisure? There is an alternative to constant increases in taxes.
Whatever the problems may be with local government finances—and there are challenges—we all recognise that they should not and cannot be resolved off the back of an already struggling tourism industry. This is the wrong tax at the wrong time. But if it is coming in, can the Minister assure us that the money raised from tourism will absolutely, 100% be spent on tourism?
The Minister for Local Government and Homelessness (Alison McGovern)
As ever, it is a pleasure to serve under your chairship, Mr Efford. I am grateful to the right hon. Member for East Hampshire (Damian Hinds) for securing today’s debate on the proposed visitor levy in England. It has been an absolute pleasure to hear from—I think—nine Members on the Back Benches about their constituencies, all of which, I am certain, are equally lovable and great places to visit.
As Members have set out, this is an extremely important issue across the country. I respect the hon. Member for Droitwich and Evesham (Nigel Huddleston), who speaks for the Opposition. He has a passion for the tourism and visitor economy, and he is right to say—as other Members, including the right hon. Member for East Hampshire, set out—what an important part of our economy the tourism industry is. I agree with the hon. Member for Droitwich and Evesham on that.
I will focus some of my remarks on devolution, because the approach we are taking is based in the strengthening of devolution. We now know that mayoral devolution works in terms of economic growth. From the construction of the Elizabeth line here in our great capital to Greater Manchester’s integrated transport, devolution has delivered results in getting the infrastructure that we need for growth.
I just say to hon. Members that I am not immune to the arguments they have made about the challenges to economies in different parts of the country; those points have been well made. If somebody had told 13-year-old me that one day people would go for a mini-break on Merseyside, I would have thought they were barking up the wrong tree. But, believe it or not, tourists and visitors of all kinds have saved the city I love, so I am not remotely immune to the arguments Members are making. It is extremely important that we consider carefully how to grow those parts of our economy that really need it, and particularly coastal areas. I take what Members have said very seriously, and I will consider it as part of the Government’s consultation.
When I was listening to the right hon. Member for East Hampshire describe very effectively the effect of tourism on our economy, I wrote down the word “Brexit”, given the effect it has had. It is too late in the day for me to become grumpy now, so I will just crack on, because this is a serious subject. The truth is that our country’s economy needs to grow at a faster rate than it has over the past decade and a half or so. The question is how we make that happen. The truth about our country is that power is extremely centralised, which means we have historically taken decisions for those places with the most power—largely the south-east.
However, recent decades of devolution—under both parties that have been in power—have begun to show a different story: when we give local leaders real powers, they can take better decisions, invest for the long term and change their fortunes. That is what devolution is all about. Mayors already hold levers for growth, from transport to planning, skills and housing.
Alison McGovern
I will give way to the hon. Gentleman if he first allows me to give a little shout-out to my local mayor, Steve Rotheram. The Centre for Cities recently found that over the past decade under his leadership the employment rate in Liverpool has gone from 61% to 71%—a 10-point increase. That is a miracle, and I pay tribute to Steve Rotheram for his work on that.
Tom Gordon
I completely agree, and as Liberal Democrats we want to see devolution and the handing-down of powers. But, again, I come back to the question whether it is really meaningful devolution if, when I ask the Labour Mayor of York and North Yorkshire about removing the 9 o’clock time limit on disabled bus passes, his answer is that he does not have the funding to do it. These are not real choices if the funding settlements are not there in the first place.
Alison McGovern
I thank the Liberal Democrat spokesperson for his intervention, because it gives me the opportunity to respond to a point that a number of Members raised. We have just concluded the local Government funding settlement for the next three years, so we have set the path for local Government funding. This question before us is a separate conversation; it is about whether, in theory, as part of devolution, we should enable mayors—if they choose to, and they do not have to—to use this power to invest in and grow their economies. That is a completely separate question from local government funding, which I could bore this Chamber for England on, but I am not going to.
In her speech last week, the Chancellor set out that if we are serious about growth across the country and not just in a few places, we must go further. Giving towns and cities more say over their revenue is essential. Our international counterparts give city leaders real fiscal powers, and we want to begin to make progress in closing that gap for English mayors. That is the context for the proposed visitor levy we have been discussing. Its purpose is to address the gap between the responsibilities we place on mayors and the funding they have in order to meet them. A modest levy can provide a reliable income stream that mayors can reinvest in local infrastructure, transport and the visitor economy itself.
The right hon. Member for East Hampshire asked me to spell out what will be in primary legislation, which I am obviously not able to do at this point. However, I have heard what Members have said and I understand where they are coming from, and we will take that on board as we move forward. My hon. Friend the Member for South Shields (Emma Lewell) also asked about that issue, and we will set out the legislative process as we move ahead.
Emma Lewell
When I was looking through the guidance, it seemed to indicate that mayors will have to consult local authorities and local industry before they come to any decision, but there is no requirement to hold discussions with local MPs, who arguably know their constituencies far better than any mayor ever could. Could the Minister look at that for me, please?
Alison McGovern
If mayors are not talking to their local Members of Parliament, they are missing an opportunity and an important part of their role. I will certainly take what my hon. Friend says into consideration as we move forward with this.
We have seen internationally how well-designed visitor levies can support growth, making places better to live, work in and visit, while also strengthening tourism and local businesses. Visitor levies have been used internationally for tourism, promotion and marketing, sustainable tourism projects, public transport, parks, public facilities, cultural heritage, restoration and so on.
The principle is very straightforward: visitors who benefit from local services and amenities make a fair contribution to maintaining and improving them. That is fiscal devolution. Mayors will be best placed to judge whether a levy is right for their area, reflecting different priorities, their own economies and local democratic accountability. That is the point I want to emphasise. Hon. Members have mentioned different parts of England and different economies, a point I accept entirely. That is the whole point of devolution. If decisions about the economy are taken only in this postcode, they will not be right, because England’s economy is extremely diverse.
I want to turn briefly to questions about exemptions, specifically scouts and guides. The hon. Member for Keighley and Ilkley (Robbie Moore) who spoke passionately about the campaign run by his constituents is sadly not here, but I hope he might find out that I applaud the civic responsibility shown by those young people.
The consultation proposed that the levy would apply to commercially let short-term accommodation, not a main residence, as queried by a couple of hon. Members. This is obviously a consultation, and we will say more when we bring forward proposals.
Several national exemptions were also proposed, such as stays on registered Gypsy and Traveller sites where it is a primary residence, which a couple of hon. Members mentioned; charitable or non-profit accommodation for shelter, respite or refuge; and certain types of temporary accommodation. I take the point about scouts and guides very seriously. Final decisions will be set out in the Government’s consultation response.
A number of Members mentioned the cost of family holidays, and I want to flag that that issue is worth bearing in mind, particularly as we did not do all that work on the child poverty strategy to improve family incomes if they cannot afford a break, which many families up and down the country truly need right now.
The devolved Governments in Scotland and Wales have already legislated to introduce visitor levies and we are learning carefully from their experience. We also want to learn from those who would be affected by a levy in England, which is why we have taken a thorough and open approach to consultation. We received more than 1,000 responses from mayors, local authorities, hospitality representatives, independent accommodation providers and many others. Those responses covered a wide range of views, and they will continue to inform our thinking about the design of this power.
On the use of revenues, any money raised through a visitor levy should be reinvested in those places where it is generated. That is why we propose that the decision on how those revenues are spent should sit with local leaders, who can best understand local needs, pressures and opportunities. The levy must be fair and proportionate, which is why we consulted on the different types of accommodation to which it should apply. We asked whether there should be a threshold below which providers are not liable, and proposed a small number of national exemptions, which I have spelled out.
We also sought views on how the levy should be charged. In the consultation, we asked about a percentage-based rate, which would scale with the cost of a stay, but we also recognise the potential benefits of alternative approaches, such as a flat-rate model. Recognising that local leaders know their area best, we asked whether mayors should have the flexibility to set levy rates locally, reflecting local priorities. Those questions, alongside many others, are being considered carefully by my Department and the Treasury as part of the next stage of policy development. I will ensure that other Ministers involved receive a copy of Hansard that covers this debate.
The Government will set out their legislative priorities for the second Session of this Parliament in the King’s Speech, which we expect to provide the framework for local leaders to introduce a visitor levy before the end of this Parliament. Between now and then, we will continue to engage closely with all those who may be affected to ensure that this policy is well designed and locally led and that it delivers for communities as well as for visitors. I take it as read that Members who have contributed know that my door is always open to them if they want to discuss this issue.
The proposals we have discussed reflect a clear direction of travel for this Government. We want to give leaders the powers and tools they need to support growth, to introduce policies that can help shape their communities and to give their place the strongest possible future. By strengthening devolution and giving communities a greater say over their own revenues, we can build a system that is simpler, more accountable and better able to deliver for the people of this country.
Again, I thank the right hon. Member for East Hampshire for securing this debate. I look forward to continuing to work with Members from right across the House and with local partners as we move forward in developing this policy.
Damian Hinds
Thank you very much, Mr Efford, for presiding over proceedings. I thank everybody who has taken part in what I think has been a very good discussion in this two-part debate, and I thank the Minister for her considered response.
Broadly, there are three main objections to this new tax. The first concerns the cost of living, the second concerns adding costs to a sector that has already withstood a lot of costs, and the third concerns international competitiveness. I say gently to a couple of colleagues who spoke that they cannot just wish away the law of the elasticity of demand. Yes, it is true that the Norfolk broads are unique, but on the international market, there is also the Loire valley and the Black Forest. Yes, London is unique, but for people who want to come and do high-end shopping and go to cultural things, there is also Paris and Milan.
I have only two asks. First, I ask the Minister to talk to colleagues and other Ministers, as she said she would, to consider the growth opportunity from this sector, and to calculate how many people would have to be deterred from visiting for the new tax to be value destructive, just in terms of the tax take from the VAT on hotel stays, food and beverages, attractions and everything else, quite apart from the overall effect on the wider economy and job creation.
My second ask is to everybody else, especially Labour MPs. We will all be told repeatedly that this tax will be ringfenced, earmarked and reinvested into the visitor economy, so that it will bring more people in and create more jobs. Just hold the Government to that. To the Minister, for whom I have the highest regard, I also say this: the only way she can guarantee that is to see it in black and white on a Bill that becomes an Act of Parliament.
Question put and agreed to.
Resolved,
That this House has considered the proposed visitor levy in England.