Hotel bosses criticise Burnham’s fresh assault on hospitality

Hotel bosses have lashed out at Labour’s fresh assault on hospitality after Andy Burnham handed local leaders the power to levy unlimited tourist taxes. The Government announced on Wednesday that English mayors will be able to impose uncapped “overnight visitor levies” on hotels, holiday lets and bed and breakfasts. The move has stunned the hospitality industry, which had expected limits to be imposed on the levy. Businesses warned that tens of thousands of jobs face the axe . Hospitality bosses had previously said that even a capped levy could lead to 33,000 job losses and wipe £2.2bn from GDP by undermining holidaymaking in Britain. Jon Hendry Pickup , the chief executive of Butlin’s, accused ministers of failing to listen to businesses and said the policy would hit the “very working people this government claims to represent”. Stephen Cassidy, who runs Hilton in the UK & Ireland, said the tourist tax would be “a catastrophic blow for the UK hotel sector that is already under significant pressure”. Tim Martin, the founder of JD Wetherspoon, said the policy would push up prices. Mr Martin, whose company runs 56 hotels, said: “Wetherspoon’s initial reaction to news of an uncapped tourist tax is that it’s really more of the same – increased costs which will inevitably be passed onto customers.” Whitbread, the owner of Premier Inn, said the tax was “yet another unhelpful burden” for an industry already facing higher employment costs and business rates. The Confederation of British Industry (CBI) warned that holidaymakers could face varied and potentially high rates depending on where they stay. Alice Jeffries, the CBI’s tax policy manager, said the plans were “disappointing ... given the potential negative impact on staycationers and the complexity and administrative burden it will add to hospitality groups – all for relatively little revenue”. It is the latest blow to the struggling hospitality industry, which is already reeling from increases in minimum wage, employment taxes and business rates. The Telegraph has called on the Government to come to the sector’s aid with the Save Our Pubs campaign. Bosses said they had been led to believe that the tourist levy would be capped, as is the case in Wales. However, England will now follow the Scottish model, where there is technically no upper limit on what can be charged. The tax will apply to all overnight visitors to towns and cities that decide to impose the levy, applying to each night of the stay. British families going on staycations and professionals travelling for work will have to pay the fee. Funds from the tax will help to prop up crumbling council finances. Industry sources expressed fury at the proposals, which were briefed to mayors last week, warning that they would undermine the Government’s efforts to get young people back to work. “There will be a jobs bloodbath at a time when they’re trying to get young people into work,” said the chief executive of one leading hospitality firm. Hospitality bosses are already grappling with the impact of Labour’s £26bn tax raid on employers’ National Insurance contributions and minimum wage increases. Business rates bills are also going up after relief was axed. UK Hospitality has said 100,000 jobs have been lost from the industry since Labour came to power. Mr Martin said the hospitality sector had experienced “a bigger increase in costs in recent years than in any time in my 47-year working experience”. Andrew Griffith, the shadow chancellor, said: “An unlimited tourist tax would be hugely limiting for the chances of the young people who might otherwise be employed in tourism and hospitality. “Propping up dodgy town hall finances on the back of even higher youth unemployment would be utterly wrong.” Lord Houchen, the Tees Valley Mayor , said: “The overnight visitor levy is just a back door created by the Labour Government to tax businesses even more than they already do. This will add cost to do business, cost jobs and make it more expensive for families to holiday in the UK.” Sir Keir Starmer first proposed introducing local tourist taxes in 2025. Ms Rayner was a key supporter of the proposal, as was Andy Burnham, when he was the mayor of Manchester, where such a levy is already in place . Lord Khan, the Mayor of London, has also welcomed new powers in the capital. In Scotland, Holyrood passed an act allowing overnight visitor levies in 2024. Edinburgh was the first to introduce the tax this summer, setting it at 5pc of the overnight rate. It is then capped at five nights. UK Hospitality has warned that copying Edinburgh’s tourist levy would amount to a £1.6bn tax raid on the sector. It would also add £100 to a family holiday and trigger tens of thousands of job losses. Mr Burnham’s plan to allow uncapped taxes on visitors will allow mayors to prop up crumbling local authority finances and invest cash back into the area. Local authority finances are in crisis, with a record 35 councils now relying on £1.5bn of emergency government financial support to balance their books. It will also open up a new revenue-raising stream for England’s 14 regional mayors, who do not have the power to raise council tax bills – a decision still made at local council level. The Telegraph understands that the tax will be levied at no more than 5pc in London, as is the case in Edinburgh, with Lord Khan “strongly” welcoming the new powers. Kim McGuinness, Mayor of the North East, has also suggested the levy should be raised at no more than 5pc in submissions to Government. She said the levy would allow her area to “invest in the future of our region rather than waiting for Whitehall to do it for us.” Mr Hendry Pickup said: “Big cities may welcome these mayoral powers but treating every destination and hospitality business the same will leave resorts like ours to shoulder the burden and ultimately impact the very working people this Government claims to represent.” Most mayors have said they intend to use the tax powers to give back to their communities. It is thought that the levy-raising powers will eventually be extended to all so-called strategic authorities under Labour’s regional devolution plans, which are temporarily on hold. The introduction of tourist tax powers represents one of the first concrete steps in the prime minister’s devolution drive. In its initial plans, the Government had said that it acknowledged “the importance of a levy being affordable, especially for family holidays and the need to provide stability and certainty for accommodation providers”. It said “as such, it may be appropriate for some limits to be placed on local decision-making”, suggesting a “cap on the maximum tax rate could help to support business” and prevent “excessive rates that could negatively impact visitor numbers”. Struggling to keep staff employed Hospitality chiefs are already struggling to keep staff employed following the sharp rise in taxes and minimum wage under Labour. Stephen Cassidy, the senior vice president at Hilton UK & Ireland, said: “There’s no doubt that employers faced with higher employment costs and higher costs of doing business are choosing to hire candidates with experience, and that has an impact on getting less people into work.” He added: “The cost of operating a hotel has risen considerably, and wage cost levels plus taxation clearly have weighed heavily on that cost structure, and of course, hiring is just more costly. Vacancies are down. As a consequence, young people are increasingly caught in the experience trap.” Allen Simpson, the UK Hospitality boss, said Labour’s £26bn National Insurance tax raid on employers was the “single biggest contribution to job losses” in the sector. Mr Burnham has said he is “on a mission” to reverse the near one million young people who are Neets – not in employment, education or training. Many young people traditionally had their first job in the hospitality industry, typically in pubs, bars or restaurants. A government source said: “We have always been clear that while central government will set the framework for this power, it will be up to local leaders and local voters to decide what is right for their area.”