London’s boroughs must keep half of all revenue raised from the incoming overnight tourist levy raised in their area, the Mayor of London has been told.
By Kumail Jaffer, Local Democracy Reporter
Credit: London Councils
London’s boroughs must keep half of all revenue raised from the incoming overnight tourist levy raised in their area, the Mayor of London has been told.
Claire Holland, the Chair of London Councils, which represents the 32 boroughs, has said that local authorities who bear the costs of tourism must also reap the benefits.
Chancellor Rachel Reeves is set to give Sir Sadiq Khan and other civic chiefs the authority to impose a ‘tourist tax’ on overnight visitors through the English Devolution and Community Empowerment Bill, which is heading through its final stages in Parliament.
Ministers and City Hall are yet to announce how the money brought in by such a levy, which could raise up to £352million annually, will be divided between the Greater London Authority (GLA) and London’s boroughs.
In an interview with the Local Democracy Reporting Service (LDRS), Cllr Holland said local authorities which oversee popular tourist destinations “have to provide a huge amount of additional services in order to meet the expectations, rightfully, of tourists”.
“We have to draft in additional street cleaning, we work with businesses to deploy more community safety teams,” she added, referring to her own experience as leader of Lambeth Council, which contains iconic sites such as the London Eye.
“We have invested a huge amount of council money on the road behind the South Bank in order to improve the public realm there to make it more attractive and safer for visitors and for people going to the National Theatre. We need to be able to retain and recoup funding for the the additional costs of those services.”
Over 20 million overnight visits were made to London in 2024, accounting for 49 per cent of all visits to the UK.
London Councils estimates that services impacted by tourism, including waste management, parks and licensing, cost London boroughs, as a whole, more than £1.5billion every year.
She said the rest of the levy revenue should be invested across London to support pan-London services and growth opportunities, such as transport and policing, with priorities jointly decided by City Hall and local authorities.
Cllr Holland said “informal discussions” have already taken place over the revenue split from the overnight visitor levy and that she was confident that they would strike a fair deal with Sir Sadiq Khan.
“He’s a Mayor that is a man of his word and he works very closely with us as London boroughs,” she added. “We don’t have a combined authority in London [like Manchester], we don’t have a formal codified decision-making system – so we rely on good willing collaboration and good working relationships.
“We also don’t know what the future looks like [after Sir Sadiq] – that’s why it’s even more important in London than anywhere else that the government backs our plan to keep the levy local and ensure that, by default, 50 per cent is retained by boroughs, so that it’s baked in.
“We’re very optimistic. We’re really keen and have pledged to work very closely with both the government and the Mayor on this.”
A spokesperson for the Mayor of London told the LDRS: “The Mayor welcomes the Government providing London with new powers to charge a tourist levy. This extra funding will directly support the capital’s economy and help cement our reputation as a global tourism and business destination.
“The Government are currently consulting on the design of the levy. Once they have responded, we will outline our plans for developing the levy in London, including how we will engage with London’s local authorities and hospitality and tourism sectors, to ensure it delivers the maximum benefits for London.
“London is the gateway to the UK – accounting for over half of all international visits. Providing London with the powers to collect and retain a tourist levy would generate sustainable revenue to reinvest back into London’s economy, driving growth, creating new jobs and boosting the UK’s global standing and competitiveness.”
The Ministry for Housing, Communities and Local Government (MHCLG) was contacted for comment.
