Britain’s travel and hospitality businesses will be looking for more than short-term relief as Prime Minister Andy Burnham begins work on his promised 10-year plan for the country.  His first measures have centred on the cost of living, including plans to remove VAT from domestic electricity bills and cap single bus fares at £2. Those interventions may offer households some breathing room, but the tourism economy needs consumers to feel confident enough to spend again — on holidays, hotel stays, meals out and domestic breaks.

For an industry built around discretionary spending, household finances are not a side issue. They shape booking curves, average transaction values and the willingness of travellers to commit months in advance. Burnham has pledged to set out a broader economic programme later this year while maintaining fiscal discipline. The travel sector will be watching closely to see whether tourism is treated as a productive industry capable of driving growth, exports and employment, or once again viewed mainly as a source of tax revenue.

Soaring energy bills cap travel spend as inflation cools to 2.6%

The immediate priority is demand as consumer confidence is shaken. Although UK inflation eased to 2.6% in June, the respite may prove temporary. Energy and fuel costs remain vulnerable to renewed geopolitical disruption, while services inflation continues to run above the Bank of England’s target. That leaves households cautious and businesses uncertain about the strength of the coming autumn and winter trading periods.

Travel tends to hold up better than many discretionary categories, particularly among consumers who protect an annual holiday. But resilience has limits. Families faced with higher food, housing, transport and energy bills may travel less frequently, shorten their trips or trade down on accommodation. The same pressures are visible in domestic hospitality. Pubs, restaurants and hotels face customers who are scrutinising prices just as operators struggle to absorb rising payroll, food, energy and property costs.

Burnham’s cost-of-living programme could therefore have a wider commercial effect than the measures suggest at first glance. Money saved on essential bills does not automatically flow into travel, but it can help rebuild the confidence on which advance bookings depend.

Tour operators press for stable tax rules as treasury faces deficit

ABTA’s message to successive governments has been consistent: travel needs a stable policy environment, competitive taxation and regulation that reflects the industry’s economic value. In June, before Burnham entered Downing Street, the association published its priorities for a new prime minister. Those positions should not be read as a response to his appointment, but they provide a clear indication of what the organised travel sector expects from the government.

ABTA has argued that outbound travel could expand significantly by 2030 under the right conditions. Growth would support tour operators, travel agencies, airlines, airports and the large supply chain serving British travellers. Achieving it, however, will require ministers to avoid policies that add cost without delivering a proportionate economic or consumer benefit.

The association has also repeatedly presented tourism as an employer and generator of economic activity rather than a luxury to be taxed whenever the Treasury needs additional revenue. That distinction will matter as Burnham’s government confronts strained public finances. The new prime minister has acknowledged that some taxpayers may be asked to contribute more, even as the overall UK tax burden approaches its highest level in decades.

For travel businesses, the concern is not simply whether taxes rise, but where they fall and how quickly companies can pass them on.

Pubs cut hours and freeze hiring as payroll taxes surge

Few sectors have been more vocal about taxation than hospitality. UKHospitality has warned that higher wages, employer costs and increases in rateable values are eroding the benefits of existing business-rates discounts. Its position is that further cost increases will reduce investment, restrict recruitment and push prices higher for customers.

Business rates remain a particular source of frustration. Hospitality venues are property-intensive, tied to high streets and communities in a way that many digital businesses are not. UKHospitality has previously estimated that the sector pays a disproportionately large share of the national rates bill compared with its share of turnover.

Burnham has spoken frequently about reviving town centres and supporting local economies. Hospitality leaders will expect that ambition to translate into a permanent, sector-wide rates settlement rather than another temporary relief package.

The employment argument is equally pressing. Hotels, restaurants, pubs and visitor attractions provide large numbers of entry-level jobs, flexible roles and career pathways for younger workers. When payroll taxes rise sharply, businesses do not simply accept lower margins indefinitely. They reduce hours, delay recruitment, automate where possible or raise prices.

For a government seeking growth and wider participation in the labour market, weakening one of the country’s most accessible employment sectors would be a costly contradiction.

Airlines warn of rising ticket prices amid strict green fuel targets

Fuel prices remain exposed to events beyond the industry’s control. Airlines must also fund fleet renewal, airport charges, decarbonisation commitments and the transition to sustainable aviation fuel, while competing against carriers based in countries with lower taxes and operating costs.

Airlines UK has warned that Britain risks losing aviation competitiveness as government-imposed costs account for a larger share of ticket prices. Its 2026 competitiveness work identified passenger taxes and sustainable aviation fuel costs among the fastest-growing pressures facing UK-based airlines through the end of the decade.

The association supports the sustainable aviation fuel mandate, but has cautioned that airlines should not be penalised for failing to purchase fuel that is not available in sufficient quantities. Such penalties, it argues, would raise fares without accelerating production or reducing emissions.

Air Passenger Duty will remain another point of contention. Airlines have long argued that the tax suppresses demand and weakens UK connectivity, particularly for regional airports and long-haul routes.

Burnham’s background in Greater Manchester gives the debate an added dimension. He has governed a region whose economy depends heavily on international air links and Manchester Airport. The industry will expect him to understand that aviation policy affects far more than airlines: it influences inward investment, conferences, exports, universities and the ability of destinations outside London to compete for international visitors.

Tourism belongs in the 10-year plan

The sector’s larger request is straightforward. Put tourism inside the government’s economic strategy, not in an appendix to it. Travel and hospitality spread expenditure across aviation, rail, retail, food supply, entertainment, accommodation and cultural attractions. They also direct spending towards coastal towns, rural communities and regional cities where alternative sources of growth may be limited.

Burnham has promised a substantial rebalancing of power away from London, drawing on his experience in Greater Manchester. Tourism offers an established route for delivering that regional agenda, provided transport, destination marketing, skills and infrastructure are treated as connected investments rather than separate departmental responsibilities.

There is also a productivity question. Persistent vacancies and skills shortages have left many businesses operating below capacity. The industry wants stronger vocational education, more flexible apprenticeships and an immigration system responsive to genuine shortages, alongside measures that make hospitality careers more attractive and sustainable.

Successive governments have praised tourism’s contribution while continuing to increase the costs attached to employing people, occupying premises and moving passengers through UK airports. Burnham now has an opportunity to break that pattern.

His early cost-of-living measures may help stabilise consumer sentiment. The more consequential decisions will come when his government sets out its tax policy, business-rates reforms, aviation strategy and long-term investment programme.

That is when Britain’s travel and hospitality leaders will learn whether the new prime minister sees their industry as a problem to be taxed — or an engine to be used.