GEORGE Osborne last night vowed to tear up Labour's tax raid on holiday cottages as part of a major package for tourism which he claimed could be worth £1.1 billion to South West tourism.

The Shadow Chancellor said an incoming Conservative government would reverse the impact of Alistair Darling's decision to abolish tax breaks for furnished holiday homes.

"This will make life easier for thousands of tourism businesses in the South West and across the country," Mr Osborne told the Western Morning News.

He said the Tories would "take action" to encourage more tourists to spend their time and money in the region while freeing the industry from red tape.

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In April last year, Mr Darling announced he was scrapping tax breaks for people who rented out accommodation to tourists. It included valuable reliefs on income tax, capital gains tax, inheritance tax, and pension contributions.

But the holiday cottage industry reacted angrily to the plans, which would mean people letting out properties to holidaymakers were treated as amateurs and not businesses.

According to South West accountancy firm Bishop Fleming, there are 22,700 self-catering units, static caravans and second homes in Cornwall which could be affected and a further 21,700 in Devon, jointly attracting an estimated 2.8 million visitors each year.

The changes are due to come in on April 1, with the Treasury blaming European law which blocks giving favourable treatment to owners of holiday homes in Britain but not Britons who rent out properties overseas.

In a speech setting out the Conservative approach to tourism, Mr Osborne claimed his ambition to increase the amount that Britons spent holidaying at home from 38 to 50 per cent would be worth an extra £6.5 billion to the UK economy – equivalent to a £1.1 billion boost for the South West. The Tory Treasury team is taking expert tax and legal advice which it claims shows it can reverse Labour's abolition of the furnished holiday lettings (FHL) tax reliefs in a way that is "fiscally neutral". It could include changing the thresholds for FHL relief and amending interest deductibility criteria.

Mr Osborne said: "As a regular visitor myself to Devon and Cornwall, I am often struck by how much the region has to offer, and a Conservative government will take action to encourage more tourists to spend their time and money in the region.

"A Conservative government will protect 4,500 tourism jobs by undoing the effects of Labour's stealth tax raid on furnished holiday lets. This will make life easier for thousands of tourism businesses in the South West and across the country.

"This is the choice for voters in the South West: five more years of Gordon Brown, who has failed to promote the tourism industry, or a Conservative government with the fresh ideas and energy we need to support British tourism."

Simon Nicholson, of Westcountry Cottages, said it would be a "a good thing" if the Tories were able to introduce measures to support the industry. "As things stand, I think people will leave the industry," he said.

Simon Tregoning, of Classic Cottages, urged the Tories to consult with the industry on their plans, adding: "We have been hitting a brick wall with Labour and the Treasury."

John Wright, national chairman of the Federation of Small Businesses, said the Tory plans would "ensure that commercial self-catering properties continue to benefit from the tax breaks, and also mean costs to Government are kept low".