The government is handing over new tax powers
The government is handing mayors across England new powers. Controversial powers. They will be able to tax tourists. Officials are expected to outline proposals today that will enable local leaders to introduce a levy on people staying overnight in their regions. Housing secretary Angela Rayner is meeting the nation's mayors. The meeting is happening on 10 September 2026. It is at this summit that Rayner will formally detail the plan to empower leaders of city regions with the ability to charge visitors a fee for their accommodation, a policy shift that has been discussed for years but is now moving towards legislation.
This is a significant moment. It grants financial autonomy. The core of the announcement is this new tax. The levy will be applied to overnight stays, meaning anyone booking a hotel or similar accommodation for a night will be subject to the new charge decided by the local authority. This is a direct tax. It will be implemented at a local level. The power to do so is coming from the central government. It is a major devolution of fiscal responsibility from the centre to the regions.
The plan will be laid out. Angela Rayner will do it. She will speak directly to the mayors who will soon wield this power, a group that includes some of the policy's most vocal long term advocates. The government's proposal confirms that it will be up to each individual mayor to decide the specifics of the levy. They will have control. They will set the percentage rate for the tax. They will also decide how the revenue raised from it is invested back into the local area. There is no central direction on spending. The money is for them to use. This gives mayors a tool to raise funds for local projects without needing to apply to Whitehall for the money. The decision making is local. The revenue is local. The responsibility is local. The government is simply providing the legislative key. It will unlock a new source of funds. A source some have wanted for a long time.
This is not a new idea
This is not a new idea. It is an old one. The proposal for a tourist tax has been a consistent feature of local government lobbying for years, a long running campaign that has finally borne fruit. The government was pushed. The push came from the north. Two figures were central. One was Andy Burnham. The other was Steve Rotheram. Burnham, as mayor of Greater Manchester, and Rotheram, his close friend and the mayor of the Liverpool city region, together formed a powerful voice for greater regional autonomy. They were allies. They had one goal. They consistently urged the government to grant English mayors the specific power to introduce what they carefully branded a 'visitor levy'.
The terminology mattered. A conscious choice. By calling it a visitor levy, they sought to frame the charge as a reasonable contribution made by tourists, not as a punitive tax on the hospitality sector that serves them. The campaign was sustained. It was focused. And it was successful. The government was already listening. Reports suggest Burnham and Rotheram were pushing at an open door, finding a receptive audience in Whitehall for their arguments about local fiscal power. The ground was fertile. The idea took root.
That change became formal government policy this year. May was the moment. That was when Keir Starmer’s new administration publicly committed to the plan, elevating it from a mayoral wish list to a key part of its legislative programme for the country. The commitment was made in the most formal way possible. The king’s speech, which outlines the government's agenda for parliament, contained specific plans to introduce an overnight visitor levy bill. It was no longer an ambition. It was now a stated intention of the government, backed by the promise of parliamentary time. Today’s announcement by Angela Rayner is the direct consequence of that pledge. It is action after words. Lobbying became law.
Mayors will decide the rate and the spending
The mechanism is simple. Mayors get two new powers. They will decide the rate. They will decide where the money goes. The levy will be charged as a percentage of the cost of an overnight stay, giving local leaders a new and independent revenue stream which they can control entirely from its collection to its final allocation. This local control is the central pillar of the entire policy, designed to allow each mayoralty to tailor the tax to its own distinct economic circumstances and specific political priorities. The power is theirs. Complete and unshared. It represents a significant transfer of fiscal responsibility from Whitehall directly to England’s city regions. A mayor in Greater Manchester could, in theory, set a different rate from the mayor in the West Midlands, reacting to local conditions.
The charge will be a percentage. A fee added to the bill. But what percentage? That is for the mayors to decide. Alone. The government's proposals, as outlined so far, contain a significant omission. There is no national cap. There is no upper limit on the levy that a mayor can choose to impose on hotels, guesthouses, and other accommodation providers within their region. This gives local leaders complete discretion over the scale of the tax. That financial freedom is the source of profound anxiety for the businesses that will have to collect the tax and pass on the cost to their customers. A rate could be set at one per cent. It could be set at five. Without a cap, the power is unlimited.
The second power is just as important. It is control over the proceeds. All of it. Every pound raised by the levy will stay within the region that collected it, with the mayor alone deciding how the new funds should be invested. This is a fundamental aspect of the devolutionary push. The revenue does not return to the Treasury in London for reallocation, it becomes a direct tool of local government to address local needs. The expectation, based on the branding of the policy, is that the funds will be used to manage the effects of tourism or to improve the visitor experience, reinforcing the 'visitor levy' name and justifying the charge to the public and the industry. The money is raised locally. It is spent locally.
The hospitality industry fears the cost
Hospitality bosses are sounding the alarm. They believe jobs will be lost. This is their immediate and loud reaction to the government's plan, a policy that puts the sector on high alert. They see a direct threat. A threat to their survival. The industry’s anxiety is not about the principle of a visitor levy, a policy long demanded by mayors like Andy Burnham in Greater Manchester and Steve Rotheram in the Liverpool city region. The anxiety is about the implementation. It is about the lack of a ceiling. No cap exists.
There is no proposed limit. Businesses face the prospect of a mayor imposing a levy of one percent, or five percent, or a figure far higher, with no national backstop to prevent extreme rates that could make a city uncompetitive overnight. This absolute financial discretion, a key victory for the mayors, is a source of profound dread for hotel owners and their investors. They cannot plan. They cannot build budgets. They cannot hire with confidence.
Predictability is essential for business. The government's plan, as it is understood, removes it completely. A hotel finance director in Manchester cannot confidently sign off on a ten year refurbishment plan when an unknown and potentially large tax could be added to their cost base next year by mayoral decree. This is the practical reality they describe. They argue that capital will be cautious. Investment will stall. Lenders will scrutinise the political risk attached to a hotel in a region with an activist mayor and may simply decline to offer finance or offer it only at a prohibitive cost. The fear extends beyond individual hotels to the entire regional visitor economy. Jobs are at risk in restaurants, theatres, and transport firms that all rely on a thriving accommodation sector. The damage could be widespread.
The industry is a national one. It is also an international one. Bosses warn that a patchwork of different tax rates across England will create chaos and distort competition. Why would a conference organiser choose Liverpool for a major event if a similar venue in a neighbouring region, one without a visitor levy, offers a significantly cheaper option for delegates? They ask this question. It is a real fear. Hotels in one city will be put at a direct disadvantage against those just a few miles away, not because of service or quality, but because of a political decision. This creates winners and losers. It is a recipe for market confusion and could ultimately make England a less attractive destination compared to European cities where tourist taxes are often set and capped at a national level, providing clarity for operators and visitors. Their intervention is timed. It is urgent. With Housing Secretary Angela Rayner scheduled to meet the mayors on 10 September to discuss the powers, the industry's warnings are a direct appeal for a change of course. They are not fighting the tax. They are fighting for a limit.
Local leaders are the clear winners
The mayors have won. They get the power. For Andy Burnham in Greater Manchester and Steve Rotheram in the Liverpool city region, this is the result of a long campaign for a local visitor levy. They pushed for it. The policy appeared in the king's speech in May. Now it is happening. The government's decision grants them a new, independent source of income, one that is completely detached from the usual grants and funding settlements negotiated with Whitehall.
This is fiscal devolution. It is the power to tax. Mayors will be able to set the percentage rate for the levy themselves. They will decide how every pound raised is spent. The revenue does not go to the Treasury for redistribution. It stays local. This changes the dynamic entirely. A mayor can now fund specific projects, perhaps supporting cultural institutions or improving public spaces, using money raised directly from the region's visitor economy without first seeking permission or funding from the government. It provides a level of autonomy that English local government has not seen for a long time. It is a fundamental shift.
The change strengthens the role of the metro mayor considerably. They are no longer just administrators of central government policy or bidders for competitive funding pots. They are becoming leaders with genuine financial independence. A mayor with the ability to raise their own funds can create a long term investment plan with a degree of certainty. This authority makes them more accountable to their local population, who will see a direct link between the levy, the revenue it generates, and the improvements it funds in their area. It also makes them less dependent on the political priorities of the government of the day. They have money.
This victory for Burnham and Rotheram creates a template. Other mayors will watch closely. They may follow suit. The move transforms the office from a position of strategic influence to one of direct financial power, altering the political balance between the cities and the state. The debate is no longer about whether mayors should have more power. They are getting it. The coming debate is about how they will choose to use it. This is a major win for devolution.
What happens next is a debate over limits
The next steps begin today. They begin in a meeting room. Housing Secretary Angela Rayner is meeting England’s mayors to formally outline the government's proposals for the new tourist tax. This is the moment the policy moves from a promise made in the king's speech last May into a concrete legislative plan. It is a plan which will eventually be contained in the overnight visitor levy bill. The bill itself is the next major stage. It represents the official start of a process that will almost certainly be accompanied by intense lobbying and political debate from all sides of the argument. The principle has been won. The details have not.
That bill must pass through parliament. It is a long road. The legislation will need to go through readings and committee stages in the House of Commons, where members of parliament can propose amendments and scrutinise every clause. It must then repeat the entire process in the House of Lords before it can be sent for royal assent and finally become law. This gives opponents of the measure, particularly those in the hospitality industry, a significant window of opportunity to influence the final shape of the legislation. They have time to act. They will use it. The debate is just starting.
The central conflict is already clear. It is about a cap. The government's current proposal contains no upper limit on the percentage levy that a mayor can choose to impose on an overnight stay. Hospitality bosses view this omission with alarm, warning that an uncapped tax could make English cities uncompetitive and put thousands of jobs at risk. Their argument is simple. They want a national cap. A firm limit, set in law by the government, would provide certainty for businesses and prevent what they fear could become a race to the top among mayors seeking to maximise revenue.
This debate over limits will define the bill's passage. Mayors will resist a cap. They will fight for flexibility. Andy Burnham and Steve Rotheram have spent years campaigning for what they call a 'visitor levy', and a core part of their argument has always been that local leaders are best placed to make local decisions. They will argue that local accountability provides its own check, and that any mayor who sets a tax too high will face the consequences at the ballot box. The government agrees for now. The question is whether it will hold that line under sustained pressure from business groups. The meeting today is just the beginning.
Sources. BBC News UK: England's mayors to be given power to introduce tourist tax. Guardian Politics: Hospitality industry fears jobs at risk from plan to give mayors powers to impose ‘tourist tax’. Independent UK: Andy Burnham to hand mayors unlimited powers to impose tourist tax. Evening Standard: Mayors to be given power to impose tourist tax. City AM: Burnham and Rayner to hand Mayors new powers to tax tourists.
Analysis. Drafted with AI assistance from the sources listed above and reviewed by an editor before publication. Jnews links to the organisations it writes about.
