Latest news with #fiscaldevolution
Telegraph
22-07-2025
- Business
- Telegraph
No 10 quashes Rayner's demand for tourism tax
Downing Street has backed Rachel Reeves and rejected Angela Rayner's proposal for a tourist tax. After her dispute with the Chancellor over councils charging visitors to use hotel rooms, the Deputy Prime Minister has been lobbying the Treasury to allow councils and regional mayors to be given new powers to charge 'Barcelona-style' taxes. She has teamed up with Labour mayors, including Sir Sadiq Khan and Andy Burnham, in calling for more 'fiscal devolution' and called it 'deeply disrespectful' to councils that Westminster dictates their budgets. But Ms Reeves is opposed to the idea and has refused to grant any further tax-raising powers, The Telegraph reported on Monday. She strongly objected to the idea of local authorities raising their own money beyond the council tax already charged on properties. Labour sources said the difference in opinion was at the heart of their rift on tax policy, and that Ms Rayner had long called for more devolution from Westminster. Downing Street has now said that there are 'no plans' to introduce tourist taxes, in an apparent rebuke of Ms Rayner's position. 'Places can already choose to introduce a levy on overnight stays through working with their local tourism sector, using the accommodation business improvement district model,' Sir Keir Starmer's official spokesman said on Tuesday. 'Tourism obviously plays an important role in the UK's economy.' 'Transformative' impact Pressed on whether Ms Rayner had been lobbying in favour of the policy, and why her department had discussed it with some local authorities, the spokesman added: 'There are no plans to introduce it. 'Obviously, the Government regularly consults on a wide range of issues.' The issue is the latest in a series of disputes between Ms Rayner and Ms Reeves on tax policy. Earlier this year, The Telegraph revealed a leaked memo written by Ms Rayner suggesting a range of tax hikes to the Treasury. The ideas were rejected by Ms Reeves, who let it be known she is solely responsible for tax policy. Councils and mayoralties have been pushing for tourist levies for some time, believing that they could have a 'transformative' impact on their areas at a relatively low cost to visitors. Manchester and Liverpool have both introduced a flat rate charge of £2 per night on hotel stays within their 'business improvement districts', but are barred from making the tax city-wide by Westminster. Many European cities, including Barcelona, Lisbon and Amsterdam, charge a flat rate or percentage-based tax on hotel stays. The hospitality industry is opposed to a similar system being introduced in the UK, arguing that Britain's 'tourism competitiveness' has been eroded by higher rates of VAT than in many European countries. Ms Reeves is understood to agree with the sector that further taxes on their profits should be kept to a minimum after the hike in employer National Insurance rates in last year's Budget and new workers' rights rules that would be costly to implement. One hotelier in Dorset said a tourism levy would cost them £600,000 a year, and that travellers would go elsewhere to avoid it. But Sir Sadiq told a podcast last month 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.'
Daily Mail
22-07-2025
- Business
- Daily Mail
Now brace for the tourist tax! Angela Rayner 'backs mayors' demands for local levies on hotels' despite fears of hammer blow to hospitality industry
is aligning herself with Labour's regional mayors - and pitting herself against Rachel Reeves - by backing demands for a 'tourist tax', it is reported. The Deputy Prime Minister is said to be at odds with the Chancellor by arguing that local authorities should be given the power to tax visitors' hotel stays. Many cities across Europe charge tourists a tax on the cost of hotels rooms and private rooms. Both Sir Sadiq Khan, the London mayor, and Andy Burnham, the Greater Manchester mayor, have supported calls for a visitor levy. But, according to The Telegraph, Treasury officials are opposed to a tourism tax amid fears it would represent a fresh blow to the hospitality industry. The newspaper reported that Ms Reeves has ruled out further fiscal devolution. This is despite Ms Rayner having pushed for powers to charge tourist taxes to be included in the Government's new devolution bill, published earlier this month. Labour's workers' rights reforms and Ms Reeves' hiking of employers' National Insurance contributions have already burdened businesses with higher costs. Critics warned a tourism tax would cause further harm for the hospitality industry. Tory shadow chancellor Mel Stride said: '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 £25billion jobs tax, now threats of a tourist tax that would hit hospitality hard.' Kate Nicholls, of UK Hospitality, said England already ranked poorly against European rivals for 'tourism competitiveness' because of a comparatively high rate of VAT. Sir Sadiq and Mr Burnham recently joined other mayors to urge the Government to allow local authorities to bring in a Barcelona-style visitor levy to generate income from tourism. The group, led by Liverpool city region mayor Steve Rotherham, said provisions could be made in the devolution bill, or in a specific finance bill. 'The Liverpool city region is a global icon of creativity, culture and character - attracting more than 60million visitors every year and supporting a £6.25billion visitor economy,' Mr Rotheram said. 'That's something to be incredibly proud of - but it also comes with pressures on our infrastructure and services. 'A small charge on overnight stays - the kind most of us wouldn't think twice about when travelling abroad - would give us the power to reinvest directly into the things that make our area so special.' A Government spokesman said: 'There are currently no plans to introduce a tourism tax in England. 'Places can already choose to introduce a levy on overnight stays through the Accommodation Business Improvement District model. 'We are also already empowering local leaders by removing restrictions and allowing the existing Mayoral Council Tax Precept to be spent on areas that drive local growth, such as transport and adult skills.'
Yahoo
16-07-2025
- Business
- Yahoo
Analysis finds devolved tax powers could add £4 billion for local services
Allowing councils to administer and retain taxes generated locally would boost funding for services by more than £4 billion in many areas and 'supercharge' economic growth, a new analysis suggests. The report argues that new fiscal arrangements which enable authorities to a proportion of revenue from income tax, stamp duty and the apprenticeship levy alongside a new tourist tax could prove transformational and support the delivery of the Government's priorities. The County Councils Network, which commissioned the report, stressed the proposals do not advocate tax rises and acknowledged that a process of redistributing tax revenue would need to be established to address regional variations in the amounts generated. Deputy Prime Minister Angela Rayner recently said she wanted 'more push' towards fiscal devolution as part of the Government's pledge to transfer central decision making to local areas. The English Devolution White Paper published last year states that mayors could submit proposals for new powers, such as fiscal devolution, which the government is obliged to consider. The guidance recently published alongside the the Devolution and Community Empowerment Bill earlier this month stipulates that new strategic authorities can pilot devolved powers to make it 'easier to deepen devolution over time'. The 37 CCN councils, including top tier shire authorities and unitaries, serve about 45% of the population and contributed almost £390 billion in national tax receipts in 2022/23, the report said. This level of county revenues amounted to 44% of the revenue total for England of £891.3 billion, rising to 57% if London's contribution is not taken into account. This includes contributions of 62% in income tax and and 55% in VAT. The analysis found that expenditure in county areas totalled £273 billion, amounting to a net benefit to the exchequer of £113.6 billion a year. The report said allowing authorities to retain 'better than expected' income tax growth could raise £3.8 billion in county areas annually and would 'dramatically incentivise' local job creation. Retaining half of stamp duty on new homes could provide about £237 million and encourage councils to deliver more housing, the analysis showed, while a tourist tax set at £2 a night could generate about £209 million in extra annual revenue. If county and unitary councils were granted 10% of funds from the apprenticeship levy generated locally, councils could direct an estimated £120 million a year to skills and growth. The report concluded that these measures combined could raise about £4.4 billion in county areas, which equates to 10% of an average budget for these authorities, while nationally the figures are about £8.9 billion a year. Richard Roberts, CCN's economic growth spokesman, said the research 'warrants serious consideration from government and from existing mayors'. He added: 'There has never been a better time to consider empowering local areas with fiscal devolution and let's be clear: this is not about new taxes for local residents and businesses. It's about using existing taxes more effectively, allowing local areas who understand what's needed to drive growth to invest to that end. 'More pressingly, there is the shared local and central government need to increase growth, create jobs and build homes alongside the urgency to invest in local economic growth services and infrastructure. 'The potential revenue generated from the fiscal devolution options modelled in this report would be a game-changer for local areas, allowing them to invest in growth and incentivise areas to maintain productivity gains. 'Whilst there will still be a need for central government to a play a redistributive role to ensure equity across regions, we have long argued counties are the backbone of the economy. 'Now is the time for Government be bold and ambitious and think about unleashing the potential of counties.' London Councils, which represents the 32 boroughs in the capital, said authorities' current reliance on council tax and government grants perpetuates unsustainable financial stress. Claire Holland, chairwoman of London Councils, said: 'Devolving more fiscal powers to a local level is crucial for fixing this broken system and ending the crisis in council finances. 'With more autonomy and flexibility – such as powers to introduce an overnight accommodation levy – we would be in a much stronger position to respond to our communities' needs and encourage economic growth. 'London is the powerhouse of the UK economy, but still faces immense challenges around productivity, unemployment, and poverty, as well as an enormous £500 million funding gap in boroughs' budgets. 'Fiscal devolution could help us tackle these issues and maximise London's contribution to the country's future prosperity.'
Daily Mail
16-07-2025
- Business
- Daily Mail
Angela Rayner 'backing local stealth taxes drive': Deputy PM and mayors push for powers to raise huge new revenues from struggling Brits
is reportedly helping regional mayors push for greater power to use taxes to fund their activities. The Deputy Prime Minister is said to be encouraging local elected political leaders to put pressure on Chancellor Rachel Reeves to give them control over taxes collected locally. Ms Rayner recently said she wanted 'more push' towards fiscal devolution as part of the Government's pledge to transfer central decision making to local areas. The English Devolution White Paper published last year states that mayors could submit proposals for new powers, such as fiscal devolution, which the government is obliged to consider. Guidance recently published alongside the Devolution and Community Empowerment Bill earlier this month stipulates that new strategic authorities can pilot devolved powers to make it 'easier to deepen devolution over time'. The Times reported that one area being looked at is introducing widespread taxes on tourism, but a source told the paper that was 'the tip of the iceberg of what mayors want', with mayors looking at controlling income tax, stamp duty and business rates. The source added: 'There are far more fiscal levers to pull, and ministers understand this is the start and not the end.' Meanwhile councils are also straining at the bit to get more spending powers, with a new report claiming allowing them to administer and retain taxes generated locally would boost funding for services by more than £4 billion in many areas and 'supercharge' economic growth. The report argues that new fiscal arrangements which enable authorities to a proportion of revenue from income tax, stamp duty and the apprenticeship levy alongside a new tourist tax could prove transformational and support the delivery of the Government's priorities. The County Councils Network, which commissioned the report, stressed the proposals do not advocate tax rises and acknowledged that a process of redistributing tax revenue would need to be established to address regional variations in the amounts generated. The English Devolution and Community Empowerment Bill, which had its first reading in the House of Commons last week, includes what is described as 'radical reset of local government' and protections for local businesses, as well as measures to enable strategic collaboration across wider areas on issues such as transport. As part of boosting the powers available to regional mayors, they will be responsible for developing local economic plans and gain control over licensing for e-bikes and planning decisions to 'set the direction of growth'. Mayors will also be able to impose 'development orders' to speed up developments, while new 'mayoral development corporations' are intended to streamline implementation and attract investment. The Government has also set out plans to scrap the first-past-the-post voting system for mayoral elections, reversing a change made by the previous Conservative government. The legislation reinstates the 'preferential' voting system, which enables voters to indicate multiple candidates in order of preference, with these choices weighted or used as contingency votes.
Telegraph
08-07-2025
- Business
- Telegraph
Give councils more powers to raise taxes, suggests Rayner
Angela Rayner has suggested councils should be allowed greater powers to raise taxes. The Local Government Secretary signalled support for fiscal devolution, where local authorities and mayors can levy their own local taxes and handle their own budgets. It follows clamour from council leaders and councillors to be able to impose their levies, including a demand for a higher 'tourist tax' in Liverpool. At the end of last year, Rachel Reeves, the Chancellor, resisted calls from English mayors to extend their ability to raise money at a local level. But appearing before the housing, communities and local government select committee on Tuesday, Ms Rayner, who is also Deputy Prime Minister, appeared to be more supportive of the idea. Asked about local authorities 'crying out' for more tax-and-spend powers, Ms Rayner said: 'I think the challenge is that it's always a bit 'evolution and revolution' and I definitely want to see more push. 'We have had that, to be fair. There is some more fiscal devolution coming to some of our pathfinder mayors, they're getting more control over their budgets. 'We're un-ringfencing huge sums of money to local government at the moment, which has never been done before. Councils get a pot of money and they're told how to spend it – I think that's deeply disrespectful.' 'Councils have found themselves in hot water' Ms Rayner went on to declare she was 'challenging the system', adding: 'Everyone says about 'Westminster' but I like to think that actually if you empower local leaders [...] my style of leadership is that you get the best outcomes from that. 'The challenges are the same so I absolutely believe we should be pushing more. But equally the note of caution that comes our way as well is that sometimes where there have been the brakes taken off, for example in local government where audit was taken away, councils have found themselves in hot water. 'And therefore there has to be a balance, and some guardrails.' Liverpool introduced a £2 tourist tax on hotel stays for overnight visitors in June, although Labour councillors in the city are pushing the Government to go further and allow them to extend the fee across the whole city. Last year, The Telegraph revealed that individual ministers were in favour of introducing such a policy nationally. In a private meeting with mayors in December, Ms Reeves was reported to have said that people were already paying enough tax in the wake of her first Budget. She was also said to have expressed fears about the potential consequences of more fiscal devolution for the hospitality sector.
