Andy Burnham has sought to justify the new uncapped "tourist tax" to business leaders, suggesting it will allow mayors to increase borrowing. At Labour's Business Day, ministers informed business groups that the overnight stay levy could enable mayors to take on more debt to invest in infrastructure and other public assets.
This argument represents a new approach from ministers to address concerns about the economic impact of new costs for tourists. However, hospitality industry leaders are reportedly preparing to warn banks against providing loans to mayors based on this tax revenue.
Allen Simpson, Chief Executive of UKHospitality, stated that lending against a holiday tax would be a "bad credit decision." He added that no loan or bond issued against it could be considered safe, citing the possibility that tax revenues could disappear, potentially leading to default. Both the Tories and Reform UK have pledged to scrap the levy.
A government spokesperson said the new power is part of a devolution drive, with all funds raised from the levy to be invested in the local economy, benefiting visitors, businesses, and local people.