Pay to stay: can England’s mayors follow Manchester’s lead and turn a ‘tourist tax’ into growth?

The government has given the green light to overnight visitor levies in England, establishing a new way for local areas to raise and spend more money.

A bill will be introduced to establish the levy and the government expects leaders to set out spending plans by March 2028. Mayors and leaders of strategic authorities will have the ability to impose an uncapped levy, although Labour mayors have vowed to add no more than 5% to the cost of overnight accommodation.

National consultation on the Overnight Visitor Levy in England ran from November 2025 to February 2026 and framed the initiative as an example of devolution of revenue raising powers and budget responsibility. Local areas will get to choose how they raise the money and how it is spent, which doesn’t need to be on things that relate to an overnight stay.

Local authorities in Scotland and Wales already have such powers and Edinburgh was first out of the blocks in charging what has been described as a tourist tax.

In England, the closest equivalent to date has arguably been the establishment of Accommodation Business Improvement Districts (ABIDs) in Liverpool and Manchester. An ABID uses the established Business Improvement District framework: eligible accommodation businesses within a defined area vote on whether to pay a levy, which is then pooled and invested in agreed initiatives intended to strengthen the local visitor economy and benefit participating businesses.

The Manchester ABID appears to have been a great success, contributing towards significant reputational wins for the city. This includes its hosting of the BRIT Awards and the 2027 TV Festival, which, ironically, is relocating from Edinburgh.

The Manchester ABID offers a virtuous investment circle, spending its earnings from a City Visitor Charge (CVG) on enhancing the “overall guest experience” and helping “to expand the city’s visitor economy by amplifying marketing campaigns that drive overnight stays”.

The CVG amounts to a supplementary £1 (plus VAT, where applicable) charge per room/unit per night for guests, added to accommodation costs. 

It remains to be seen whether Manchester will be able to operate both its ABID and an overnight visitor levy, a question which was asked of government by Conservative MP James Cleverly, who recently quit the shadow cabinet to stand for election as Mayor of London.

There will be other questions too.

Manchester also has a longstanding Manchester City Centre Business Improvement District. Vaughan Allen, Chief Executive of CityCo Manchester, which runs the city-centre BID and co-delivers the Manchester Accommodation BID, used a LinkedIn post to caution areas considering an overnight visitor levy about the level of administration involved. The government has indicated that the detailed administrative arrangements will be addressed as the policy and legislation are developed.

Areas considering an overnight visitor levy will also be expected to consult and engage formally with residents, businesses and others directly affected before introducing a scheme.

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Support for greater devolution does not necessarily translate into universal support for an overnight visitor levy. There have been dissenting voices, or at least calls for clarity and assurances about the additional amount visitors might pay.

Research commissioned by the London Heritage Quarter BID suggests that 59% of tourists questioned would adapt their plans and even reconsider visiting if the additional charge was added to accommodation bills. 

More broadly, the Manchester ABID offers evidence for the potential of using tourism-generated revenue to support further growth in the visitor economy. The city-region says the value of its visitor economy increased from £9.4bn in 2023 to approximately £10bn in 2024, with a target of £15bn by the end of the decade.

Whether other city-regions have the same pulling power as Greater Manchester remains to be seen, but the opportunity to generate additional funding for local investment is bound to attract the interest of England’s elected mayors and strategic authorities.