Tourism Industry and VAT

Debate between Caroline Lucas and Mark Williams

Tuesday 17th March 2015 Westminster Hall

[Mr Williams]

The hon. Gentleman is right. It is also about sustaining and building on the quality of jobs in the industry. That is important. Traditionally, the level of wages in the tourism sector has been low. However, I am confident that any VAT cut would feed its way through to wage increases as well.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Will the hon. Gentleman give way on that point?

[Mr Williams]

Yes, and then I really am going to proceed.

[Caroline Lucas]

I am grateful to the hon. Gentleman for giving way and congratulate him on the debate. When it comes to jobs, does he agree that lots of young people find jobs in tourism, so the benefits of increasing tourism will go disproportionately to them, which would be good from a social perspective?

[Mr Williams]

The hon. Lady is right that it is about developing for a social perspective and building a skills base for the future. Many parts of the tourism sector are ideal way for doing just that.

I will proceed and not take any more interventions. The Cut Tourism VAT campaign commissioned a report by Nevin Associates Ltd, which suggests that a change in VAT would give the UK a £4 billion economic boost, with £166.5 million coming to Wales. There would be 6,000 more jobs in Wales and 120,000 across the UK. In my constituency, with its vibrant local tourism sector, that could amount to a £5 million injection into our economy.

My hon. Friend the Member for Torbay (Mr Sanders) talked about a £10.5 million impact in his constituency, but £5 million would be very important to Ceredigion’s economy. That could create 166 jobs directly and many more indirectly.

Let us look at the arguments borne out of the research a little more closely. First, we need to talk about the increased tax revenue for HM Treasury. Research indicates that, yes, there would be a net revenue loss to the Treasury for the first two years, but after five years such a move would generate a positive net value of £668 million and over 10 years that value could reach £4 billion. Those are significant figures.

Where does that money come from? The research indicates six key areas. First, there will be lower prices, which will create greater demand and much higher turnover in the sector. Secondly, the Treasury will receive increased income tax and national insurance payments generated by the new jobs that we have talked about and, critically, by higher wages in the sector. Thirdly, there will be savings in social security payments as a consequence of lower unemployment, with some of the new jobs created in the sector taken up by those who were previously unemployed. Fourthly, there will be increased corporation tax payments as a result of the higher turnover and growth in those businesses that we all aspire to. Fifthly, there will be an increase in income taxes paid on dividends to shareholders, which would be generated by the accommodation and attraction sectors. Sixthly, there will be the multiplier effect of the additional taxes generated down the supply chain from the accommodation and attraction industries.

I think back to debates and the petitions presented at the time of the VAT measure on static caravans, which stemmed from an unfortunate Budget. I am sure that tomorrow’s Budget will be vastly more successful than that. I remember talking to operatives in my constituency about that very narrow thing, the sale of static caravans in west Wales, and the knock-on effect of the reduction on VAT was immense. The highly integrated nature of the tourist economy was clear in that debate, so the knock-on effects of this change could be hugely significant for the rest of the economy. As I said to my hon. Friend the Member for Newton Abbot (Anne Marie Morris), it would be a real boost for regional economies and tourism-dependent areas such as mine. In my local economy, if we take out the big employers, such as the national health service, the local authority and two universities, a cross-section of small businesses is left, largely involved in farming and tourism, and we need to grow those businesses.

I move on to the impact that this change would have on the UK’s balance of trade. New research published in this area has provided information that was not considered before; the research shows that a significant boost would be provided to the UK’s exports. That is important, given the internationally competitive nature of the sector and concerns about the UK balance of trade deficit. In 2013, tourism expenditure by overseas visitors to the UK was £21 billion, which accounted for 3.8% of the UK’s total exports of £550 billion. Over a 10-year period, the research by Nevin Associates Ltd indicates that the total improvement in the UK’s balance of trade in response to a VAT cut would be £20 billion, which is a huge potential contribution.

The other area of growth is the number of businesses paying VAT. We all know that the UK tourism industry is populated by a very large number of very small firms that may or may not choose to expand or invest in order to keep below the VAT threshold. If my hon. Friend the Member for Aberconwy (Guto Bebb) is called to speak, he may want to talk specifically about the issue of VAT thresholds. Lower VAT would encourage these companies to register for VAT and develop their businesses.

Parliamentary Reform

Debate between Caroline Lucas and Mark Williams

Thursday 3rd February 2011 Westminster Hall

[Caroline Lucas]

I thank the hon. Gentleman for making that point. The Scottish Parliament, the Welsh Assembly, the French Assembly and the US Congress all vote using elements of electronic voting, and I see no reason why we should not as well.

[Mr Mark Williams (Ceredigion) (LD)]

Does the hon. Lady agree that one of the good practices in the Welsh Assembly is having a block voting period at the end of the day? Rather than the constant disruption of meetings and all the rest of it, we could designate a part of the day specifically for voting.

[Caroline Lucas]

I absolutely agree. It would allow us to organise our business and our timetables much more effectively. I do not know what happened in days gone by. Perhaps MPs did not have so many meetings with outside bodies but I know that it is embarrassing, in the middle of a meeting with quite important people, suddenly to have to say, “I’m really sorry, I’m going to have to go. I have no idea how long I will be. I hope to get back to you some time soon.” That is not a good way to do business.

--- Later in debate ---

[Caroline Lucas]

I thank the hon. Lady for that intervention. What she says reiterates the fact that we need a formal way of registering an abstention instead of not voting; if we do not vote, those helpful websites that record how often we are in the Chamber will make it seem that we were not there.

[Mr Mark Williams]

I plead guilty; I was one of the four who did precisely that—to go through both Lobbies. We were unable to support a Labour motion referring to the record of the previous Labour Government and we were concerned about the Government’s policy, but there was no third way. Sitting on our hands could have been construed as our being absent from the House. The case needed to be made that we were there, but that we were concerned about both the Opposition’s line and the Government’s. For a third party that has sometimes not been in government, that is most important.

[Caroline Lucas]

I completely agree with the hon. Gentleman.