Sadiq Khan tourist tax row erupts as Cabinet minister says it could fund London public transport

Millions of pounds raised from the “tourist tax” being introduced in London could be used to fund public transport, says a Cabinet minister.

Tourists pose for a selfie on Westminster Bridge during a summer heatwave

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The tax would also apply to Airbnb-style accommodation.

Ms Alexander told Times Radio: "If you think about somewhere like London, for example, that has millions of international visitors every year.

“They'll be using the public transport network.

“If the Mayor of London wishes to introduce a levy so that he can use some of that money to, for example, continue to improve the public transport system in our capital city, I think that's a reasonable thing for the Government to do."

However, after more details of the tax were announced on Thursday, bosses warned that it would be a “blow” to many firms in the capital’s hospitality sector.

Lord Sadiq Khan backs a ‘tourist tax’

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John Dickie, chief executive of BusinessLDN said: “If it is to be introduced, it’s vital that the Mayor sets out a compelling vision for how this tax will be used to promote and grow tourism in the capital.

“There must be meaningful engagement with the industry so that the money raised delivers tangible results and supports the sector.”

Allen Simpson, chief executive of UKHospitality, said: "Giving Mayors uncapped powers to raise even more money will simply increase the cost of holidaying in the UK, during a cost of living crisis.”

He said: “A well-designed, modest levy has the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive.

“It would allow us to reinvest in the places, infrastructure, culture and experiences that make London one of the world’s greatest cities to visit, while helping manage the pressures that come with welcoming tens of millions of visitors every year.”

He has stressed that he would “work closely with London’s boroughs, accommodation providers, hospitality and tourism businesses” before final decisions are made on the tax.

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But former Home Secretary and ex-London Assembly member Sir James said: “I think Londoners are going to end up paying the price for this tax because there is no guarantee that the money raised by this tax won't be offset by reductions in central government funding.

He stressed that 40% of overnight stayers in London come from the UK.