Domestic Travel and Holidays: Visitor Levy

Question

Asked by

To ask His Majesty’s Government what assessment they have made of the impact of introducing a visitor levy on the cost of domestic travel and holidays within the United Kingdom.

This Government believe in empowering mayors. Mayors will decide whether introducing a levy is the right choice, as is common for local leaders in countries all around the world. Mayors will need to consider the appropriate balance between supporting local economic priorities, including tourism, ensuring a levy is affordable and providing stability and certainty for business.

My Lords, the Government’s treatment of the hospitality sector over the last two years has been marked by neglect, indifference and deeply damaging policies. This summer, many families would have been looking forward to enjoying their summer holidays, but the Government have planned to introduce a tax on their holidays. This tax will disproportionately harm lower income families in Britain and the smaller hospitality businesses that provide cheaper holidays. That exposes the hollowness of the new Prime Minister’s own stated mission to bring down the cost of living. Does the Minister agree that the new Prime Minister should change course, put small businesses and British families first and abandon the family holiday tax?

The visitor levy was announced on 25 November 2025 and a consultation on the design of the levy powers was launched in the Budget. The consultation has now closed, and the response will be published—perhaps the noble Lord will not be surprised to hear me say this—in due course. We expect that local leaders will be able to introduce the levy before the end of this Parliament. I am afraid I do not accept the wider characterisation from the noble Lord. As he knows, we have done a great deal to support the hospitality industry, including pubs and live music venues, through business rates support and through our Great British Summer Savings scheme, which is now well advanced.

My Lords, I am a former chair of Core Cities UK, the group of the 10 largest cities outside of London. Core Cities campaigned long and hard for the power to introduce a discretionary visitor levy to fund the additional costs of tourism-related expenditure, maintaining historic sites, promoting marketing campaigns, and the cost of major events—which in my time as leader of Newcastle City Council the hospitality sector told me was the single biggest thing that brought additional business in through their doors—ultimately reducing the burden on council tax payers of the overall visitor economy. Can my noble friend the Minister indicate whether His Majesty’s Government have plans to press ahead with this financial flexibility for areas in England that wish to introduce it?

As I have said, the discretion will be with local mayors, and I pay tribute to the campaign of my noble friend and others. Perhaps I can quote one regional mayor:

“I am proud that nearly two million people from all over the world choose to visit Greater Manchester every year. The money they spend contributes about £9 billion annually to our economy”—

Oh!

I am doing my job—

“supporting over 100,000 jobs. The levy will allow us to invest in the infrastructure these visitors need”.

I agree with this comment by my right honourable friend. If mayors choose to introduce this levy, it will help investment in the tourist economy.

My Lords, when it comes to visitor levies, surely one size does not fit all. Applying them to small, family-run operators in our struggling coastal towns will inflict further damage on already weak competitor positions. Where is the evidence that applying Manchesterism to places such as Blackpool, Skegness and, indeed, Burnham-on-Sea will not damage growth in these postcodes and drive visitor numbers down?

That is precisely why we are leaving it to local mayors to decide. Of course we will not impose a levy from the centre. I have already said that the consultation has been completed, and we will announce the response in due course. Of course we are not going to impose the same thing everywhere.

My Lords, we support devolving more economic power to local areas, but any visitor tax must come alongside vital relief for a sector that is already struggling under the Government’s NIC hikes, which happened not so very long ago. So, will the Government enact an emergency 5p cut on VAT on hospitality, accommodation and entertainment until April 2027 to provide some ongoing relief? Will they also give us a cast-iron guarantee that a tourist tax will not be an excuse to further cut already insufficient local government funding?

The Government have taken a number of fair and necessary decisions on tax, welfare and spending to fix the public the finances. In honour of my noble friend Lord Livermore, I should of course mention the £22 billion black hole.

Oh!

I am sorry—I am on spirited form today. [Interruption.] This is a very serious matter.

One of those decisions was to make changes to employer national insurance contributions, and the Government have protected, as the noble Baroness knows, the smallest businesses from these changes by more than doubling the employment allowance, which allows eligible employers to reduce their employer NIC bills by up to £10,500 per year. As the noble Baroness knows, our commitment to supporting greater fiscal devolution to local authorities has been redoubled.

My Lords, I noticed very carefully the Minister’s well-crafted job application. I hope the Prime Minister notices it as well and that the Minister is successful. He has done it with a smile on his face and with the right attitude, so I wish him good luck. I noticed that, in his Answer, he referred to mayors three times. Can he confirm that the only places in the country that will face this family holiday tax will be those where there is a directly elected mayor—and nowhere else?

I thank the noble Lord for his kind remarks. I do not normally apply for jobs, but there we are. On the central point about mayors, it is our intention to announce the results of the consultation, and as he knows, there are a lot of details to be worked out, but those plans relate to places where they are.