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Rayner demands tourist tax in clash with Reeves

Rayner demands tourist tax in clash with Reeves

Telegraph2 days ago
Angela Rayner is pushing for councils to be given new powers to tax tourists, despite opposition from Rachel Reeves.
The Deputy Prime Minister has argued that councils should be given the power to tax visitors' hotel stays, amid a scramble by cash-strapped local authorities to cash in on booming demand.
It comes as a record 43 million foreign visits to the UK are expected this year, on top of British families travelling within the country.
Treasury officials are opposed to a tourism tax amid fears it would be a fresh blow for hospitality businesses already hit by Labour's tax raids in last year's Budget, as well as snuffing out a post-Covid revival in visits.
The row aligns Ms Rayner with powerful regional mayors including Sir Sadiq Khan and Andy Burnham. It marks her latest clash with the Chancellor after previous disagreements over how to plug a multi-billion-pound fiscal black hole.
A senior government source said devolving more power to local mayors was central to Ms Rayner's plan for economic growth, but Ms Reeves was looking for 'quick wins' and did not want to force through constitutional changes that would take time and could backfire.
Councils are lobbying the Treasury to be allowed to charge their own taxes, a power that is currently reserved by Westminster.
Ms Rayner is understood to have pushed for the power to charge tourist taxes to be included in the Government's Devolution Bill, which was published earlier this month.
But the Chancellor has ruled out further fiscal devolution, believing that Ms Rayner's workers' rights law and the increase in employers' National Insurance contributions last year have already driven up costs on businesses.
Many European cities, including Barcelona, Lisbon, Venice and Amsterdam, charge tourists a tax on the cost of hotel rooms and private rentals, either as a flat rate or percentage of the room charge.
Cities in Wales and Scotland have their own tax-raising powers. Visitors to Edinburgh and Glasgow will pay five per cent on hotel stays from 2026 and 2027 respectively, while hotels in Wales will soon charge tourists £1.30 per night.
Liverpool and Manchester charge tourists a fee per night, but the current powers are limited to small 'business improvement districts' and cannot be levied across large areas.
However, other councils in England have halted plans for limited tourist taxe s after opposition from hotel owners.
In Dorset, some businesses said the tax could cost them £600,000 a year, amid other pressures on profitability. Hoteliers have warned that holidaymakers will choose to stay elsewhere because of the charge.
Kate Nicholls, the chief executive of the industry group UK Hospitality, has said England already ranks poorly compared to its European neighbours for 'tourism competitiveness' because of the comparatively high rate of VAT.
Any tax raid would also put a recovery in visitor numbers at risk. VisitBritain, the country's tourism agency, expects a record 43.4 million overseas visits this year, up 5 per cent on 2024. Foreign tourists are expected to boost the economy by £33.7 billion.
Andy Burnham, the Labour Mayor of Greater Manchester, is among the local leaders pushing to be allowed to charge more in England, while Sir Sadiq, the London Mayor, has suggested he would be open to a tourist tax in the capital that would provide more revenue for local projects.
Last month, both mayors signed a joint letter with their counterparts in Liverpool, the North East, West Yorkshire and the West Midlands, demanding a 'Barcelona-style' tourist tax.
Tourists don't mind paying, says Khan
Sir Sadiq then told the Jimmy's Jobs podcast that tourists 'don't mind' paying a 'small levy' in European cities.
He said: 'We could spend more money improving the public realm, which would encourage more tourists to come but also improve the quality of life for residents in London.'
Sir Sadiq's team is understood to be privately making a case for the tax to Whitehall departments.
Council bosses in Britain say they could raise an extra £209m across the country by charging visitors £2 a night, and are hoping Ms Rayner will make the case more forcefully to the Treasury.
A report commissioned by the County Councils Network, published last week, found that new taxes could be 'transformational' for councils, and argued that local leaders should also be able to retain a portion of stamp duty revenue and income tax.
The group said the policy would be a 'win-win for both central and local government', but would likely create a further black hole for Ms Reeves at her autumn Budget.
Ahead of the publication of the Devolution Bill, Ms Rayner told MPs she wanted to see 'more push' for councils to have their own tax-raising powers, and that it was 'deeply disrespectful' for Whitehall to tell local government leaders how to spend their budgets.
'I like to think if you actually empower local leaders [...] my style of leadership is that you get the best outcomes from that,' she said.
However, The Telegraph understands that her argument has been poorly received by Ms Reeves, who is sceptical of fiscal devolution.
The two women have repeatedly clashed on tax policy this year, including when a memo by Ms Rayner containing a series of tax-raising suggestions was leaked to The Telegraph.
The Chancellor has been warned by hospitality groups that further taxes would risk making their businesses unprofitable, after a year of higher taxes under Labour.
A source close to the discussions said Ms Rayner had 'lost, short term' on local taxes, but that she could return to the issue later in this parliament.
As Secretary of State for Housing, Communities and Local Government, Ms Rayner is responsible for the Government's policy on councils, but cannot make decisions on tax.
Government sources played down the idea that Ms Reeves and Ms Rayner were in conflict over the issue, but did not deny that they disagreed about tourist taxes.
Mel Stride, the shadow chancellor, told The Telegraph: 'Labour can't help themselves – it's always tax, tax, tax.
'Whether it's Angela Rayner or Rachel Reeves, the instinct is always the same – more taxes.
'First a £25 billion jobs tax, now threats of a tourist tax that would hit hospitality hard.'
Pressure on Starmer to cut tax
It comes as Sir Keir Starmer was on Monday urged by a senior Labour MP to deliver a 'big, bold, working class tax cut' after a year in Downing Street.
Liam Byrne suggested to the Prime Minister during a session of Parliament's liaison committee that he could 'tweak up' capital gains tax to allow for tax cuts for workers.
Sir Keir declined to commit to any tax changes, saying: 'I'm not going to be tempted to start speculating on what might or might not be in the Budget. It's going to come in the autumn.'
The Labour Government has opened the door to increasing the state pension age by formally launching a review into the level at which it is set.
The state pension age is currently 66 and is already poised to rise to 67 between 2026 and 2028. The Government is legally required to carry out a review by 2029.
Whitehall insiders played down the prospect of changes being announced imminently, suggesting it was 'highly unlikely' one would be unveiled before the 2029 general election.
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UK-wide strategy needed to tackle pensioner poverty, says committee
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UK-wide strategy needed to tackle pensioner poverty, says committee

The Government should also decide on – and ensure – a minimum level of retirement income, the Work and Pensions Committee urged. Once set, a plan should be created for everyone to reach that level, it added. Given that the state pension is the core of the Government's offer to pensioners, a guiding principle should be that it provides the amount needed for a 'minimum, dignified, socially acceptable standard of living', the committee said. It urged the Government to commit to a UK-wide, cross-government strategy for an ageing society, that it said would help target support to tackle pensioner poverty. If it does not effectively tackle poverty as one of the causes of ill-health, 'the Government will not be able to achieve its goal of building a health and social care service that is sustainable', the Pensioner Poverty report warned. The report also highlighted longer-term trends that 'threaten to undermine pension adequacy', such as people renting into later life. The committee also called for a pension credit take-up strategy for England by the end of 2025. Despite being worth up to £4,000 a year, the take-up of pension credit has hovered between 61% and 66% for a decade, with an estimated 700,000 households being eligible but not claiming, the committee said. A taper to pension credit should also be considered to 'mitigate the cliff-edge effect' for those who currently miss out, the report said. Under current rules, some pensioners just above income thresholds could end up worse off than those with slightly lower incomes, it added. Pension credit can 'passport' recipients to other benefits such as housing benefit, council tax support, the warm homes discount, a free TV licence, help with dental treatment and, in winter 2024/25, the winter fuel payment. The committee argued that reliance on top-ups such as pension credit and housing benefit is not sufficient to ensure people do not fall below the poverty line. The report said: 'After a decline in pensioner poverty in the 2000s, the number of pensioners in relative low income started to rise again from 2010. This has been exacerbated by increases in the cost of living since 2021.' It continued: 'The number of people of pension age living in relative poverty (below 60% of median income) is 1.9 million or 16% of pensioners. 'Measures which factor in the cost of living show that between 2008/09 and 2022/23, the number of pensioners in households below the Minimum Income Standard (MIS)—the amount needed for a minimum dignified socially acceptable standard of living—rose from 1.5 to 2.8 million. 'The proportion of pensioners below 75% of MIS (where the risk of material deprivation increases substantially) rose from 5.9% in 2021/22 to 9.5% in 2022/23. 'In practice, this means cutting back on essentials, like food, energy use and seeing friends, in an attempt to manage costs. Health experts explained the implications for health. Financial hardship can accelerate the ageing process, making it more likely that an older person will enter hospital or need care.' The committee said that in some places, organisations are working together towards shared objectives. The report continued: 'However, not all areas do this. We heard that it would help to have a national cross-government strategy for our ageing society and older people. 'This could provide a framework to hold the different partners to account for their role in delivering the agreed outcomes. It could also ensure that central government departments developed policy with shared objectives in mind.' Committee chairwoman Debbie Abrahams said: 'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support. 'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at. 'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level. 'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a DWP (Department for Work and Pensions) issue. So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.' On Tuesday, Chancellor Rachel Reeves said that a review into raising the state pension age is needed to ensure the system is 'sustainable and affordable'. The Government review is due to report in March 2029 and Ms Reeves said it was 'right' to look at the age at which people can receive the state pension as life expectancy increases. The state pension age is currently 66, rising to 67 by 2028 and the Government is legally required to periodically review the age. A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by up to £1,900 by the end of this parliament. 'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year. 'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pension Commission, to tackle the barriers that stop too many people from saving.' Emma Douglas, wealth policy director at Aviva, said: 'The pensions industry – alongside a revitalised Pensions Commission – has a critical role to play in helping people save for retirement and then turn their hard-earned pension pots into lasting financial security. 'With many people likely to manage their money well into their 90s, we must ensure those savings work harder and stretch further – especially as later life can bring complex challenges like cognitive decline.' She said that Aviva and Age UK were exploring a 'mid-retirement MOT' to help give people tools, guidance, and confidence to stay financially resilient throughout retirement. Caroline Abrahams, charity director at Age UK, said: 'We warmly welcome this thoughtful and wide-ranging select committee report, which comes closer to providing a thorough and progressive strategic overview of the issues facing older people on low incomes and proposing workable solutions than anything successive governments have produced in recent years. 'When the Government announced the launch of the Pensions Commission earlier this week, ministers made it clear that its task is to think about the creation of a better system for future pensioners. 'This is necessary and important, but this committee report reinforces the point that there's work to do to improve the situation of today's pensioners on low incomes as well.'

UK-wide strategy needed to tackle pensioner poverty, says committee
UK-wide strategy needed to tackle pensioner poverty, says committee

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UK-wide strategy needed to tackle pensioner poverty, says committee

The Government should also decide on – and ensure – a minimum level of retirement income, the Work and Pensions Committee urged. Once set, a plan should be created for everyone to reach that level, it added. Given that the state pension is the core of the Government's offer to pensioners, a guiding principle should be that it provides the amount needed for a 'minimum, dignified, socially acceptable standard of living', the committee said. It urged the Government to commit to a UK-wide, cross-government strategy for an ageing society, that it said would help target support to tackle pensioner poverty. If it does not effectively tackle poverty as one of the causes of ill-health, 'the Government will not be able to achieve its goal of building a health and social care service that is sustainable', the Pensioner Poverty report warned. The report also highlighted longer-term trends that 'threaten to undermine pension adequacy', such as people renting into later life. The committee also called for a pension credit take-up strategy for England by the end of 2025. Despite being worth up to £4,000 a year, the take-up of pension credit has hovered between 61% and 66% for a decade, with an estimated 700,000 households being eligible but not claiming, the committee said. A taper to pension credit should also be considered to 'mitigate the cliff-edge effect' for those who currently miss out, the report said. Under current rules, some pensioners just above income thresholds could end up worse off than those with slightly lower incomes, it added. Pension credit can 'passport' recipients to other benefits such as housing benefit, council tax support, the warm homes discount, a free TV licence, help with dental treatment and, in winter 2024/25, the winter fuel payment. The committee argued that reliance on top-ups such as pension credit and housing benefit is not sufficient to ensure people do not fall below the poverty line. The report said: 'After a decline in pensioner poverty in the 2000s, the number of pensioners in relative low income started to rise again from 2010. This has been exacerbated by increases in the cost of living since 2021.' It continued: 'The number of people of pension age living in relative poverty (below 60% of median income) is 1.9 million or 16% of pensioners. 'Measures which factor in the cost of living show that between 2008/09 and 2022/23, the number of pensioners in households below the Minimum Income Standard (MIS)—the amount needed for a minimum dignified socially acceptable standard of living—rose from 1.5 to 2.8 million. 'The proportion of pensioners below 75% of MIS (where the risk of material deprivation increases substantially) rose from 5.9% in 2021/22 to 9.5% in 2022/23. 'In practice, this means cutting back on essentials, like food, energy use and seeing friends, in an attempt to manage costs. Health experts explained the implications for health. Financial hardship can accelerate the ageing process, making it more likely that an older person will enter hospital or need care.' The committee said that in some places, organisations are working together towards shared objectives. The report continued: 'However, not all areas do this. We heard that it would help to have a national cross-government strategy for our ageing society and older people. 'This could provide a framework to hold the different partners to account for their role in delivering the agreed outcomes. It could also ensure that central government departments developed policy with shared objectives in mind.' Committee chairwoman Debbie Abrahams said: 'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support. 'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at. 'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level. 'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a DWP (Department for Work and Pensions) issue. So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.' On Tuesday, Chancellor Rachel Reeves said that a review into raising the state pension age is needed to ensure the system is 'sustainable and affordable'. The Government review is due to report in March 2029 and Ms Reeves said it was 'right' to look at the age at which people can receive the state pension as life expectancy increases. The state pension age is currently 66, rising to 67 by 2028 and the Government is legally required to periodically review the age. A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by up to £1,900 by the end of this parliament. 'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year. 'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pension Commission, to tackle the barriers that stop too many people from saving.' Emma Douglas, wealth policy director at Aviva, said: 'The pensions industry – alongside a revitalised Pensions Commission – has a critical role to play in helping people save for retirement and then turn their hard-earned pension pots into lasting financial security. 'With many people likely to manage their money well into their 90s, we must ensure those savings work harder and stretch further – especially as later life can bring complex challenges like cognitive decline.' She said that Aviva and Age UK were exploring a 'mid-retirement MOT' to help give people tools, guidance, and confidence to stay financially resilient throughout retirement. Caroline Abrahams, charity director at Age UK, said: 'We warmly welcome this thoughtful and wide-ranging select committee report, which comes closer to providing a thorough and progressive strategic overview of the issues facing older people on low incomes and proposing workable solutions than anything successive governments have produced in recent years. 'When the Government announced the launch of the Pensions Commission earlier this week, ministers made it clear that its task is to think about the creation of a better system for future pensioners. 'This is necessary and important, but this committee report reinforces the point that there's work to do to improve the situation of today's pensioners on low incomes as well.'

UK-wide strategy needed to tackle pensioner poverty, says committee
UK-wide strategy needed to tackle pensioner poverty, says committee

Leader Live

time20 minutes ago

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UK-wide strategy needed to tackle pensioner poverty, says committee

The Government should also decide on – and ensure – a minimum level of retirement income, the Work and Pensions Committee urged. Once set, a plan should be created for everyone to reach that level, it added. Given that the state pension is the core of the Government's offer to pensioners, a guiding principle should be that it provides the amount needed for a 'minimum, dignified, socially acceptable standard of living', the committee said. It urged the Government to commit to a UK-wide, cross-government strategy for an ageing society, that it said would help target support to tackle pensioner poverty. If it does not effectively tackle poverty as one of the causes of ill-health, 'the Government will not be able to achieve its goal of building a health and social care service that is sustainable', the Pensioner Poverty report warned. The report also highlighted longer-term trends that 'threaten to undermine pension adequacy', such as people renting into later life. The committee also called for a pension credit take-up strategy for England by the end of 2025. Despite being worth up to £4,000 a year, the take-up of pension credit has hovered between 61% and 66% for a decade, with an estimated 700,000 households being eligible but not claiming, the committee said. A taper to pension credit should also be considered to 'mitigate the cliff-edge effect' for those who currently miss out, the report said. Under current rules, some pensioners just above income thresholds could end up worse off than those with slightly lower incomes, it added. Pension credit can 'passport' recipients to other benefits such as housing benefit, council tax support, the warm homes discount, a free TV licence, help with dental treatment and, in winter 2024/25, the winter fuel payment. The committee argued that reliance on top-ups such as pension credit and housing benefit is not sufficient to ensure people do not fall below the poverty line. The report said: 'After a decline in pensioner poverty in the 2000s, the number of pensioners in relative low income started to rise again from 2010. This has been exacerbated by increases in the cost of living since 2021.' It continued: 'The number of people of pension age living in relative poverty (below 60% of median income) is 1.9 million or 16% of pensioners. 'Measures which factor in the cost of living show that between 2008/09 and 2022/23, the number of pensioners in households below the Minimum Income Standard (MIS)—the amount needed for a minimum dignified socially acceptable standard of living—rose from 1.5 to 2.8 million. 'The proportion of pensioners below 75% of MIS (where the risk of material deprivation increases substantially) rose from 5.9% in 2021/22 to 9.5% in 2022/23. 'In practice, this means cutting back on essentials, like food, energy use and seeing friends, in an attempt to manage costs. Health experts explained the implications for health. Financial hardship can accelerate the ageing process, making it more likely that an older person will enter hospital or need care.' The committee said that in some places, organisations are working together towards shared objectives. The report continued: 'However, not all areas do this. We heard that it would help to have a national cross-government strategy for our ageing society and older people. 'This could provide a framework to hold the different partners to account for their role in delivering the agreed outcomes. It could also ensure that central government departments developed policy with shared objectives in mind.' Committee chairwoman Debbie Abrahams said: 'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support. 'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at. 'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level. 'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a DWP (Department for Work and Pensions) issue. So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.' On Tuesday, Chancellor Rachel Reeves said that a review into raising the state pension age is needed to ensure the system is 'sustainable and affordable'. The Government review is due to report in March 2029 and Ms Reeves said it was 'right' to look at the age at which people can receive the state pension as life expectancy increases. The state pension age is currently 66, rising to 67 by 2028 and the Government is legally required to periodically review the age. A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by up to £1,900 by the end of this parliament. 'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year. 'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pension Commission, to tackle the barriers that stop too many people from saving.' Emma Douglas, wealth policy director at Aviva, said: 'The pensions industry – alongside a revitalised Pensions Commission – has a critical role to play in helping people save for retirement and then turn their hard-earned pension pots into lasting financial security. 'With many people likely to manage their money well into their 90s, we must ensure those savings work harder and stretch further – especially as later life can bring complex challenges like cognitive decline.' She said that Aviva and Age UK were exploring a 'mid-retirement MOT' to help give people tools, guidance, and confidence to stay financially resilient throughout retirement. Caroline Abrahams, charity director at Age UK, said: 'We warmly welcome this thoughtful and wide-ranging select committee report, which comes closer to providing a thorough and progressive strategic overview of the issues facing older people on low incomes and proposing workable solutions than anything successive governments have produced in recent years. 'When the Government announced the launch of the Pensions Commission earlier this week, ministers made it clear that its task is to think about the creation of a better system for future pensioners. 'This is necessary and important, but this committee report reinforces the point that there's work to do to improve the situation of today's pensioners on low incomes as well.'

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