Welsh visitor tax plans spark anger in local tourism industry: ‘We’ll be clobbered by it’
The rugged mountains, limestone caves and spectacular waterfalls of Bannau Brycheiniog – the Brecon Beacons – attract visitors from all over the world.
Tourism is a vital part of the local economy. But local attractions say the industry would be devastated by the Welsh government’s plans for a nightly visitor tax.
“In an area like this all we’ve got is tourism and farming – there is nothing else,” says Ashford Price from the National Showcaves Centre, a visitor complex of cathedral sized caverns, winding tunnels, a dry ski slope, shire horse centre, self-catering accommodation and campsite.
“If they go on like this the future for Welsh tourism is really, really bleak. It will be an absolute catastrophe.”
Ashford Price says the local area relies on tourism
The proposed fee would be £1.25 for those staying at hotels, bed and breakfasts and self-catering accommodation – and 75p for campsites, caravan sites, and hostels.
Ashford is secretary of the Welsh Association of Visitor Attractions. In protest against the plans, its more than one hundred members closed their attractions for a day.
“Even Welsh people who live in Wales will be clobbered by this tourism tax,” he said.
“It’s quite high, there’s no reduction for children. For a family that will add roughly £35, £40 a week. If you’re staying two weeks, as many people do, it’s £70 on top of your bill. At a time when everybody’s earnings are really struggling, it’s utter insanity to put Wales at such a disadvantage.
“There will be no more big developments. We already cancelled a development for £1.5m and I know other attractions are doing the same. I don’t think the Welsh government really understands how demoralised people feel.”
Anthony Christopher
‘It’s a disaster’
In the nearby village, Anthony Christopher, landlord of the Penycae Inn, is deeply frustrated.
“I just feel like calling this government a bunch of weasels,” he said.
“We’re a small family business and all these extra taxes are taking away the will to do anything else.
“We have national insurance already – contributions are very high. VAT is very high. Now this tax is coming – it’s a disaster. We have to put this extra charge on the customers – how much more can we put on the customers? It’s terrible.”
Anthony has just converted an old school building into a 14-bedroom hotel – due to open in January.
“If I knew this was going to happen I may not have built my hotel. It’s very worrying.”
Many areas in Wales have struggled with the impact of tourism in recent years, with complaints about overflowing car parks, traffic jams, litter and even human faeces on Mount Snowdon.
Rubbish on Yr Wyddfa (Mount Snowdon). Pic: British Mountaineering Council/Tom Carrick
The Welsh government argues giving councils the power to charge a tourism tax would help pay for better local services.
“During a period of sustained austerity of the sort we’ve seen over the last 14 years, local authorities inevitably end up focusing their spend on those things for which they’ve got statutory obligations – social care, education and so on,” said Finance Secretary Mark Drakeford.
“That has meant there’s been a reduction in the amount of money available for local authorities to invest in infrastructure that makes them successful places for tourists to visit. This is a way of collecting a very small contribution from every one of us who makes a visit to be reinvested in the conditions that make for that visit to be a success.
“It’s money that would be reinvested in the tourism industry, for example, clean beaches and safe footpaths and car parks and public toilets.”
Mark Drakeford. File pic: PA
‘People simply absorb it’
The tourism industry accounts for 11% of all jobs in Wales. But an impact assessment commissioned by the Welsh government predicted that in a worst case scenario, 730 jobs could be lost in the sector if a visitor tax was introduced across the country, with an economic cost of £47.5 million. It also predicted 340 local authority jobs would be created.
Mr Drakeford insists the tax will boost tourism – not damage it.
“For those who have fears that the very modest visitor levy will put visitors off, the experience of around the world is that simply isn’t the case. There is a great deal now of empirical evidence for many places that have introduced visitor levies of this sort, not just abroad, but in Manchester, for example,” he said.
“The evidence is not just from big places like Venice, but from rural France, where there’s a levy of this sort. People simply absorb it as part of the costs of their holiday.”
Tourism taxes in cities across Europe range from around 50p to £5 a night, although businesses generally benefit from lower rates of VAT than the 20% paid in the UK.
The idea is becoming increasingly popular across the UK.
The Scottish Parliament voted through similar legislation to that proposed for Wales in July, with Edinburgh set to become the first council to start charging visitors a tourist tax of 5%.
Manchester’s £1 a night tourism levy could raise £2.8m
While some regional mayors like Andy Burnham have been calling for equivalent powers to be introduced in England, the Westminster government has no plans to do so.
But local areas can work around this through businesses coming together to set up their own schemes. Manchester’s £1 a night charge raised £2.8m in its first year and hoteliers in Liverpool are about to vote on a similar idea.
Other cities, including York and London, are also considering the option – though a plan for Bournemouth, Christchurch and Poole has been put on hold after objections from hotel owners about the ballot held there.
Read more:
Cambridge considering tourist tax at hotels
Venice plans to double tourist tax after trial
Despite the backlash from local businesses, the Senedd are due to vote on the legislation in the summer.
If passed, councils will then consult with local people on whether to take up their new powers. Tourists could then start being charged in 2027.
Winter fuel payments will extend to everyone over the state pension age with an income of or below £35,000 a year, Chancellor Rachel Reeves has announced.
The Treasury said the change will cost around £1.25bn in England and Wales but still save £450m if the universal allowance had been kept.
Politics Live: Chancellor makes winter fuel announcement
Dropping the benefit for all pensioners was one of the first things Labour did in government, despite it not being in their manifesto.
The change meant only those on pension credit or other benefits were eligible – a deeply unpopular move that was widely blamed on the party’s poor performance in May’s local elections.
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Ms Reeves said: “Targeting winter fuel payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.
“It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone, including the wealthiest.
“But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.”
The government signalled its intention to widen eligibility last month, but no detail was given on what the new threshold might look like.
The lack of clarity threatened to overshadow Ms Reeves’ spending review on Wednesday, when she will set out what funding has been allocated to each government department over the next three years.
The chancellor repeatedly faced questions on winter fuel during a speech in Manchester last week to promote a £15.6bn funding settlement for local transport projects, when she said changes would be in place for this winter.
However ministers still could not give further detail, with Science Secretary Peter Kyle telling Sky News on Sunday that the new eligibility would be set out “in the run up to the autumn”.
It is still not clear how the new policy will be funded, with the costs to be accounted for in the autumn budget.
Asked by Sky News’ deputy political editor Sam Coates if the change is a signal to markets that she can’t say no to her MPs, Ms Reeves said after her spending review “markets and the public will be able to see public services living within their means”.
‘Humiliating U-turn’
Tory leader Kemi Badenoch said: “Keir Starmer has scrambled to clear up a mess of his own making. I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.
“This humiliating u-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The prime minister should now apologise for his terrible judgement.”
The Treasury said that by setting the threshold at an income of £35,000, over three-quarters of pensioners – around nine million people – will benefit.
The universal system meant some 11.4 million pensioners were in receipt of the benefit, which was slashed down to 1.5 million when the initial means-test was brought in.
The new threshold is above the income level of pensioners in poverty and broadly in line with average earnings, the Treasury said.
No pensioner will need to take any action as they will automatically receive the payment this winter.
“It’s a big deal for this government,” says Simon Case.
“It’s the clearest indication yet of what they plan to do between now and the general election, a translation of their manifesto.
“This is where you should expect the chancellor to say, on behalf of the government: ‘This is what we’re about’.”
As the former cabinet secretary, Mr Case was the man in charge of the civil service during the last spending review, in 2021.
On Wednesday, Rachel Reeves will unveil the Labour government’s priorities for the next three years. But it’s unclear whether it will provide all that much of an answer about what it’s really about.
Unlike the Autumn budget, when the chancellor announced her plans on where to tax and borrow to fund overall levels of spending, the spending review will set out exactly how that money is divided up between the different government departments.
Since the start of the process in December those departments have been bidding for their share of the cash – setting out their proposed budgets in a negotiation which looks set to continue right up to the wire.
This review is being conducted in an usual level of detail, with every single line of spending assessed, according to the chancellor, on whether it represents value for money and meets the government’s priorities. Budget proposals have been scrutinised by so called “challenge panels” of independent experts.
It’s clear that health and defence will be winners in this process given pre-existing commitments to prioritise the NHS – with a boost of up to £30bn expected – and to increase defence spending.
On Sunday morning, the government press release trumpeted an impressive-sounding “£86bn boost” to research and development (R&D), with the Science and Technology Secretary Peter Kyle sent out on the morning media round to celebrate as record levels of investment.
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What will be in spending review?
We’re told this increased spending on the life sciences, advanced manufacturing and defence will lead to jobs and growth across the country, with every £1 in investment set to lead to a £7 economic return.
But the headline figure is misleading. It’s not £86bn in new funding. That £86bn has been calculated by adding together all R&D investment across government for the next three years, which will reach an annual figure of £22.5bn by 2029-30. The figure for this year was already set to be £20.4bn; so while it’s a definite uplift, much of that money was already allocated.
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Peter Kyle also highlighted plans for “the most we’ve ever spent per pupil in our school system”.
I understand the schools budget is to be boosted by £4.5bn. Again, this is clearly an uplift – but over a three-year period, that equates to just £1.5bn a year (compared with an existing budget of £63.7bn). It also has to cover the cost of extending free school meals, and the promised uplift in teachers’ pay.
In any process of prioritisation there are losers as well as winners.
We already know about planned cuts to the Department of Work and Pensions – but other unprotected departments like the Home Office and the Department of Communities and Local Government are braced for a real spending squeeze.
We’ve heard dire warnings about austerity 2.0, and the impact that would have on the government’s crime and policing priorities, its promises around housing and immigration, and on the budgets for cash-strapped local councils.
The chancellor wants to make it clear to the markets she’s sticking to her fiscal rules on balancing the books for day-to-day spending.
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But the decision to loosen the rules around borrowing to fund capital investment have given her greater room to manoeuvre in funding long-term infrastructure projects.
That’s why we’ve seen her travelling around the country this week to promote the £15.6bn she’s spending on regional transport projects.
The Treasury team clearly wants to focus on promoting the generosity of these kind of investments, and we’ll hear more in the coming days.
But there’s a real risk the story of this spending review will be about the departments which have lost out – and the promises which could slip as a result.
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