Proposed Visitor Levy

Peter Fortune Excerpts

Wednesday 25th March 2026 Westminster Hall

[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.