Tax-Free Shopping: Economic Impact

Debate between Lord Pitt-Watson and Baroness Royall of Blaisdon

Monday 26th October 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

Let me reassure the noble Baroness that the £540 million figure that I gave, which is a Treasury figure, fully includes all the knock-on effects of the introduction of the tax-free shopping scheme for non-EU citizens. The £2 billion quote was from Jeremy Hunt after Liz Truss’s disastrous mini-Budget. I cannot tell noble Lords how that number was calculated, because in the Liz Trust Budget the OBR was not consulted.

[Baroness Royall of Blaisdon (Lab)]

My Lords, I hear what my noble friend says and certainly do not have any answers. I remind noble Lords of my registered interests. However, I know that many visitors from far away overseas who used to come and spend five or six days in this country, visit lots of wonderful attractions, do a lot of shopping and then go home now come here for three days, visit some attractions and then go to Paris, Milan and other places to do their shopping. Therefore, can my noble friend perhaps look again at this at some stage?

[Lord Pitt-Watson (Lab)]

I can come back on that. I think we all understand that visitors can still reclaim VAT on purchases; they just need to have them shipped directly. If they are shipped directly, they are then caught by customs in the country to which they are shipped. The statistics are the 2019 to 2024 statistics. UK tourism receipts recovered to 111% of their 2019 levels after adjusting for inflation. In France, they recovered to 107%, in Italy to 103% and in Germany to 83%. We were beaten only by Spain with 117%. The notion that loads of people who were coming here who are now not coming here is difficult to stand up on the evidence.