Proposed Visitor Levy

Steve Darling Excerpts

Wednesday 25th March 2026 Westminster Hall

[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.