Proposed Visitor Levy

Damian Hinds Excerpts

Wednesday 25th March 2026 Westminster Hall

[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?

[Damian Hinds]

The hon. Gentleman knows the answer!

[Joe Powell]

I wanted to add one important category that he did not list, which is short-term lets and Airbnbs.

[Damian Hinds]

That was my next sentence!

[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.

--- Later in debate ---

[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.

[Damian Hinds]

They are focus articles.

[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.

--- Later in debate ---

[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.