The Overnight Visitor Levy

Cllr Paul Swaddle, Leader of Westminster Conservatives, has written to the Secretary of State Rt Hon Steven Reed OBE MP at the Ministry of Housing, Communities and Local Government, in response to the government's consultation on introducing an Overnight Visitor Levy. You can read his letter below.

Response to Overnight Levy Consultation, 17th February 2026

Dear Minister Reed,

On behalf of the Westminster City Council Conservative Opposition group, I am writing in response to the Government's consultation on the proposed Overnight Levy.

Concerns for Hospitality and Hotel sectors in Westminster

There are increasing pressures on our hospitality sector which has a huge presence in Westminster.

At present, in the Cities of London and Westminster constituency, 2,968 hospitality businesses generate turnover of almost £16 billion annually and employ around 223,000 people, making it one of the most fertile grounds for hospitality in the UK1.

However, these businesses are facing National Insurance increases, the 2026 Revaluation and business rates, new minimum salary visa requirements, rising food prices, the introduction of ETAs later this month, energy costs, the absence of tax-free shopping, and scrapping of the reduced VAT rate for hospitality – all contributing to ever-increasing costs and ever-shrinking margins.

Overall, while visitor levies can support destination management when well designed, we are concerned that there is a risk that introducing one in London now whilst the tax burden is being further increased would lead to reduced competitiveness, investment, and employment- particularly in the face of international competition2.

Any proposal must be evidence-based, internationally competitive, administratively workable, and governed transparently, with meaningful industry involvement.

I would therefore be happy to introduce you to and convene meetings with the relevant BID Business Leaders to that end.

If an Overnight Levy was introduced and implemented:

We would therefore agree with London Councils’ proposal that – by default – local authorities are able to retain at least 50% of revenues collected in their area.3

This would ensure councils receive a share of funding that reflects the additional resource required to support the tourist economy in their area and manage its impact on the local community through extra investment in services such as street cleansing, licensing, local business support and community safety.

It would provide assurance to hotels, businesses and the hospitality industry that the introduction of an overnight visitor levy would directly support and benefit them, knowing that a portion of the money raised would be invested back into the specific areas they operate in to fund services they rely on and support local economic growth.

There would also have to be a provision in legislation for the minimum share to be amended by mutual agreement between the Mayor and local authorities.

The statutory guidance should also ensure that boroughs are provided a formal role in the design, implementation and operation of an overnight levy in London.

Levy revenues retained by boroughs must also be additive – they should not be included in any resource equalisation or used to offset other funding.

A minimum revenue share for local authorities would also act as a pro-growth incentive for councils to support the growth of the tourist economy in their area.

Unique pressures for Westminster- an exemption is needed

Should an overnight levy be introduced, there must be special provisions for the likes of Westminster City Council that will see their funding reduced under this Government’s so-called ‘Fair Funding Review’ leaving a £75 million black-hole 4which we understand could rise to £90 million.

The consequence of this political decision is devastating 5and whilst it falls outside the scope of this consultation, as a result we request that Westminster City Council is allowed to keep 100% of all revenue generated by the overnight levy.

Westminster could raise more than £95m by itself through an overnight levy, according to visitor estimates6 which would mean that our vulnerable residents would not have to see their council tax potentially more than double to fill this black-hole in our budget.

There are 25 million visitors that come to Westminster each year 7, whilst that brings opportunities and growth locally it does result in unique costs for our Council such as having to pay for extensive cleaning services in highly-visited wards such as the West End for obvious reasons8, and much of the revenue generated goes towards central Government.

We do not resent these facts, however it is only fair and reasonable for Westminster City Council to be able to keep any money generated by an overnight levy rather than it being siphoned out to the Mayor of London.

Action needed on short-term lets

Finally, we note that in one of the questions (number 14) in the consultation it asks whether Mayors and other local leaders should have powers to vary the rate for different types of accommodation, including short term lets.

While hotels contribute enormously to the local and London economy by providing jobs and investing in local supply chains, there is little or no evidence that short term let accommodation contributes in the same way.

Illegal short-term lets9, and even some legal ones, damage and hollow out communities. They push up rents, reduce the number of long-term homes available and erode the sense of stability that makes a street feel like a place to live rather than pass through and Westminster has a particular proliferation of short-term lets with more than 16,000 short-lets based mainly in the West End, Bayswater and Lancaster Gate10.

The previous Conservative Government introduced clear rules on short-term lets however we are still waiting for this Labour Government to introduce a short-term let registration scheme, so we therefore urge your colleagues to accelerate this process as soon as possible as there cannot be a rate variation without one.

We look forward to hearing from you and your Department, and for a response to be provided in a form in which we can share with our residents and local businesses.

Yours sincerely,
Councillor Paul Swaddle
Conservative Opposition Group Leader