England’s regional mayors will soon have the power to introduce a levy on overnight stays in hotels, B&Bs, guesthouses and holiday lets, Chancellor Rachel Reeves has confirmed.

Under the plans, areas with directly elected mayors could choose to add an overnight-stay charge. Fees would be managed locally and spent on improving public transport, funding culture and events, and upgrading visitor services.

‘The Government has announced a historic commitment to fiscal devolution, giving mayors and potentially other local leaders, subject to consultation, the option to introduce a visitor levy on overnight visitor accommodation in their area,’ reads the Budget 2025 document.

‘This will fund further investment in growth locally, including the visitor economy. The Government is consulting on the design of the levy.’

Announcing the policy yesterday, officials said it brings English cities into line with global tourist hubs like Paris, Milan and New York — many of which already harness overnight levies to fund growth.

Secretary of State for Housing, Communities and Local Government Steve Reed said: ‘Tourists travel from near and far to visit England’s brilliant cities and regions. We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.’

Cllr Claire Holland, chair of London Councils, said: ‘We welcome the news that London will be able to introduce an overnight accommodation levy – this has been a long-standing ask from boroughs.’

Mayor of the Liverpool City Region, Steve Rotheram, said the levy could raise up to £17m annually, adding: ‘It’s only fair that those who enjoy everything our region has to offer play a small part in helping to sustain it.’

Commenting on the announcement, Localis chief executive, Jonathan Werran, said: ‘News that we can finally move towards a tourism tax can only be seen as helpful for champions of fiscal devolution, who have felt they have been banging their heads in vain against the brick walls of Horseguards Avenue.’

Cautioning that a tourism tax is ‘not going to touch the sides of the social care funding gap’, he added that it was important for establishing the principle that locally raised tourism revenue should be spent locally.