We want half of the cash from London’s tourist levy, boroughs tell the mayor

London’s boroughs must keep half of all revenue raised from the incoming overnight tourist levy raised in their area, the mayor has been told.

Claire Holland, the chair of London Councils, which represents the 32 boroughs, said that the local authorities who bear the costs of tourism must also reap the benefits.

Rachel Reeves, the chancellor, is set to give Sir Sadiq Khan and other leaders the power 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.

The charges are common on hotel and serviced apartment bills in other European countries.

Ministers and City Hall are yet to announce how the money brought in by such a levy, which could raise up to £350 million each year, will be divided between the Greater London Authority and the boroughs.

Greenwich Council backs the proposed charge. In January it went further than the London Councils position, by backing a motion calling for a “majority share” of revenue raised in the borough to go to Woolwich Town Hall, rather than half. 

Holland, who is also leader of Lambeth Council, told the Local Democracy Reporting Service that boroughs 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 in Lambeth, which contains sites such as the London Eye. 

“We have invested a huge amount of council money on the road behind the South Bank  to make it more attractive and safer for visitors and for people going to the National Theatre,” she said. “We need to be able to retain and recoup funding for 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 affected by tourism, including waste management, parks and licensing, cost London boroughs, as a whole, more than £1.5 billion every year.

She said the rest of the levy revenue should be invested into pan-London services and growth opportunities, such as transport and policing, with priorities jointly decided by City Hall and local authorities.

Holland said “informal discussions” had already taken place over the revenue split from the overnight visitor levy and that she was confident that the boroughs would strike a fair deal with Khan.

“He’s a mayor that is a man of his word and he works very closely with us as London boroughs,” she added. 

Holland pointed out that London boroughs do not have a formal role in the Greater London Authority, as their counterparts in Greater Manchester do with Andy Burnham.

“We rely on good willing collaboration and good working relationships,” she said. “We also don’t know what the future looks like [after Khan stops being mayor] – 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 said: “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 was contacted for comment.

Kumail Jaffer is the Local Democracy Reporter covering London’s mayor and assembly. The Greenwich Wire is a partner in the Local Democracy Reporting Service, which is a BBC-funded initiative to ensure councils are covered properly in local media.

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