Burnham's holiday tax to hammer families on staycations: PM is accused of launching fresh raid on struggling Brits with unlimited visitor levy

Andy Burnham was accused of launching another raid on struggling families last night after he approved a new holiday tax.

The Prime Minister gave his favoured regional mayors the power to impose an unlimited 'overnight visitor levy' on stays in hotels, B&Bs and holiday lets in England.

And despite objections, Mr Burnham ruled that the tax would be a percentage of accommodation charges rather than a flat fee and would not be capped, with Labour-run areas likely to set it at 5 per cent.

Business groups described the move as a 'kick in the teeth' that would put tens of thousands of jobs at risk while costing holidaymakers an estimated £1.6billion by the end of the decade.

Shadow Chancellor Andrew Griffith told the Daily Mail: 'Just days ago, Andy Burnham said his was a "cost of living Government". Now he is launching another tax raid on hardworking families.

'His tourism tax will hammer the hospitality industry – which has already taken a beating from Labour's business rates hikes, jobs tax and employment red tape – driving up the cost of the family holiday and discouraging people from holidaying in the UK. The Government's own consultation shows people don't want this tax. But Labour want more money to pay for more benefits.'

According to Oxford Economics figures cited by UK Hospitality, assuming the impact of a 5 per cent levy is fully realised by 2030, the impact on the economy and consumers would be stark.

Despite Labour's mayors raking in millions to fill town-hall coffers, Oxford Economics believe the move would see a reduction in tax receipts for the Treasury of around £688million, a loss of £101million in direct investment from hospitality and tourism businesses, 11.9million fewer nights spent in accommodation and 33,000 jobs lost thanks to an overall £1.8billion cut in tourism spending.

Andy Burnham, pictured on Thursday, was accused of launching another raid on struggling families last night after he approved a new holiday tax

Counties like Cornwall attract huge numbers of tourists who could potentially face charges 

If a family paid £2,000 to stay in a hotel room or rented cottage, a 5 per cent tax would add £100 to the cost of their break.

Tina McKenzie, national chairman of the Federation of Small Businesses, said: 'Imposing an uncapped visitor levy in England is a kick in the teeth for the hospitality industry, at a time when small businesses are dealing with a deluge of cost rises.

'Allowing levies to be brought in as an uncapped percentage rather than flat fee is hugely disappointing.'

Allen Simpson, chief executive of the UK Hospitality trade body, said: 'If you only devolve one tax-raising power, local mayors are going to pull that lever till it snaps.'

He told BBC Radio 4 that holidays in the UK were already more expensive than in other countries because of Britain's 20 per cent VAT rate, and that tourism taxes in the likes of Paris, Rome and Berlin are capped. Travel association ABTA said the move would 'further damage the competitiveness' of local tourism, while Whitbread, which owns Premier Inn, called it 'hugely damaging'.

Mr Burnham introduced the UK's first holiday tax when he was Greater Manchester mayor, imposing a £1-plus-VAT city visitor charge per room, per night in 2023 while his close ally Steve Rotherham set a £2 rate in Liverpool last year. A 5 per cent charge took effect in Edinburgh at the start of the summer, for stays of up to five nights, while a visitor levy of £1.30 a night is coming to Cardiff in April.

But the plans announced by the Government yesterday go further, giving England's 14 regional mayors the power to introduce an uncapped levy from 2028.

Popular areas such as the Cotswolds, which do not have a mayor, will be given the powers to charge after a future reorganisation of local authorities.

A No 10 spokesman said: 'The fundamental principle behind this is that we trust local leaders to make decisions for their areas. That's why we're shifting power out of Whitehall and giving communities more control.'

Asked if she accepted the move would hit low-income families, Communities Secretary Angela Rayner said: 'This is an opportunity for those areas to celebrate the tourism that comes to their areas, but then redirect that into their local area.'

The charge will be set as a percentage of the accommodation cost in hotels and guesthouses, not including food or drink.

A summary of responses to last year's consultation found that 60 per cent of respondents opposed the percentage rate model, with only 21 per cent in favour.

Angela Rayner, pictured this week, said: 'This is an opportunity for those areas to celebrate the tourism that comes to their areas, but then redirect that into their local area'

Mayor of London Sadiq Khan, pictured in January, claimed yesterday that high taxes will not have an effect on tourism

Most (47 per cent to 33) also opposed letting mayors set the level and more than half (58 per cent) wanted a maximum rate – but ministers overruled the objections.

Labour's London mayor Lord Khan, who will be in for a particularly large windfall given the number of hotel rooms in the capital, claimed that high taxes did not deter tourists. 

But Reform's Dame Andrea Jenkyns, mayor of Greater Lincolnshire, vowed: 'I vehemently oppose the visitor levy/tourist tax. And as a regional mayor I will never implement this.'

The party's Hull and East Yorkshire mayor Luke Campbell has also ruled out imposing the tax, as has Lord Houchen, the Conservative Tees Valley mayor.

Tory mayor for Cambridgeshire and Peterborough Paul Bristow said: 'The UK economy is struggling – hospitality is being impacted by NI rises, tax hikes and other costs. This is not the time to put extra costs on staying overnight.'