Labour’s war on hospitality is about to land on your holiday bill
If the government genuinely wants 'growth in every postcode', it should stop giving politicians new ways to tax the very businesses capable of delivering it, writes tax analyst Benjamin Elks
When John Healey stood at the despatch box this week for his first outing at Treasury Oral Questions, you would have been forgiven for laughing when he attempted to present himself as a champion of Britain’s pubs and hospitality businesses.
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Yes, the chancellor may have promised some relief through a cut in business rates. But that barely touches the sides after ministers hammered employers with higher National Insurance, pushed up the minimum wage and imposed a raft of new costs and obligations through the Employment Rights Act.
Labour’s war on hospitality has been relentless since it first took office and now the sector faces yet another blow.
Under the government’s latest plans, mayors across England will be handed powers to impose overnight visitor levies on hotels, B&Bs and holiday lets - a holiday tax in all but name. Even worse, the levy will be uncapped, leaving local politicians free to decide just how deeply they want to reach into holidaymakers’ pockets.
This will inevitably be sold as a harmless little charge to help fund local services, but small charges have a habit of growing and they have real-life consequences. Make holidays more expensive, and people respond by staying fewer nights, spending less while they are visiting, choosing somewhere else or simply not bothering to travel at all.
Our analysis found that, had an overnight visitor levy been in place between 2022 and 2024, English businesses could have lost £5.6 billion in domestic holiday spending. The South West, one of the parts of the country most dependent on tourism, could have taken a hit of almost £1.4 billion over those three years.
Using VisitBritain data alongside survey evidence on how holidaymakers could respond, the TPA also estimated that introducing any visitor tax could lead to almost 20 million fewer domestic overnight visits and around £6 billion in lost spending.
Set the charge at £5, and the potential damage rises to around £9 billion and 30 million fewer visits. At £10, it could mean more than £13 billion lost to the economy and 42 million fewer overnight trips. These figures are estimates, but the economics is hardly complicated. If something is made more expensive, people tend to buy less of it.
That is why Healey’s attempts to pose as hospitality’s new best friend ring so hollow. Hotels, pubs and restaurants are already trying to absorb higher employment taxes, wage costs, business rates and regulation. Industry leaders are warning that yet another levy will simply pile on more pressure.
If the government genuinely wants “growth in every postcode”, it should stop giving politicians new ways to tax the very businesses capable of delivering it and leave holidaymakers and hospitality alone.
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Benjamin Elks is grassroots development manager at The Taxpayers' Alliance.
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