Tourism Industry and VAT

Mike Hancock Excerpts

Tuesday 17th March 2015 Westminster Hall

[Mr Williams]

My hon. Friend is right that the debate has a strong, important regional dimension. That is borne out by the representatives here today.

Such is the nature of the debate, with it being a few weeks before Dissolution, that it could be something of a damp squib. However, I would rather raise this matter with the Minister before the Budget than after it. In many ways this is an opportune moment to remind ourselves of the importance of the tourism sector. In Wales, we are celebrating Wales tourism week in which thousands of our local hoteliers and attraction owners will be showcasing what Wales has to offer. What better way is there not just to celebrate what is happening in the industry at the moment, but to promote its opportunities for growth? That is what the debate is all about.

The tourism sector currently contributes £3.1 billion to Wales’s GDP, which is 6% of its total. It also accounts for 8% of jobs in Wales—a huge number. When we add in those supporting businesses down the supply chain, we see that the sector contributes about £7 billion to Wales’s GDP, which accounts for 14% of the Welsh economy and 15% of jobs.

Quite rightly, the promotion of the Welsh tourism sector is a devolved responsibility. Visit Wales does a lot of excellent work in promoting the Principality, but on VAT it is the Treasury and this place that has primacy and that is why we are asking for action. The debate is about sustaining the tourism sector, but, critically, it is also about growing it. I believe that this could give the industry the financial jolt that it needs.

[Mr Mike Hancock (Portsmouth South) (Ind)]

The hon. Gentleman is coming on to sustainability. We are looking not only to make jobs, but to sustain those already there. Many people in the industry are finding it difficult to keep going, but if a VAT cut were to be implemented, that would go an enormous way towards retaining those jobs.

[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.

--- Later in debate ---

[Mr Mike Hancock (Portsmouth South) (Ind)]

It is nice to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Ceredigion (Mr Williams) on obtaining the debate.

For the past 10 years, until last year, I was responsible for tourism and economic development in Portsmouth, and I cannot remember a time when, on visiting a tourist attraction, the first thing I was asked was not whether there was a chance of a reduction in VAT on that activity. An important issue is that many of those tourist attractions are on the cusp of survival. Some are working against the clock, trying to keep footfall to a level that sustains the jobs they provide. In my city, tourism brought in 10.2 million visitors, and the local economy has an annual tourist spend of £600 million—an awful lot of money. A lot more could be achieved if VAT were reduced.

Ferries operate out of my city to seven destinations in France, Spain and the Channel Islands, mostly in the months of May to September, and probably part of November. They are crowded with people from this country going to other parts of Europe. I look enviously at the way in which those people are treated on the other side, with cheap accommodation in first-class hotels, and attractions that are not pestered by a 20% rate of VAT. It would be to our enormous benefit if we could convince just a third of those tourists to stay in this country, but when I speak to tourists at the ferry port in Portsmouth and ask them why they have not decided to enjoy what we have to offer in Portsmouth, they say that our hotel prices are too high for a family of four or six, which we have to understand. Those hotels would see an enormous benefit from a VAT reduction almost immediately.

The figures provided by the Cut Tourism VAT campaign for the south-east and south-west, excluding London, show that 29,000 jobs would be created over a period of time. Okay, the Government will take a hit from reducing VAT from 20% to 15%, but can we really calculate what having 29,000 more people working in the economy will do for those people’s self-esteem, for the attractions in which they work and for the Treasury, which will benefit from the income of those people in gainful employment? We should not ignore the campaign, and I am sure that the Minister will not. He will have listened carefully to Members from across the political spectrum on this issue’s importance.

Sir Ben Ainslie’s sailing centre was recently built in Portsmouth, and we are grateful for the Government’s support. When tickets were advertised for an event to be held at the centre later this year, the whole allocation of 10,000 seats, which were offered to the people of Portsmouth, went in 24 hours. We expect 100,000 people to come for that event, but our problem is that we would like them to stay longer, rather than just coming for the day to watch the sailing attractions on the Solent. We would like to see them enjoy the other facilities, to fill our hotels and to generate income.

Portsmouth is important in the national scheme of things because it is the home of the Royal Navy, and we appreciate that much Government expenditure has gone into, and will continue to go into, the naval base, but the Government must support the most critical industry of all, which is fragile in many ways. Well over 12,500 people work in the tourism industry in my city, and many of them are in fragile job positions because of the cost of taking families into the various attractions. We have to do something, otherwise in the next Parliament there will be debates about the jobs that we have lost. I do not want that to happen; I am sure that nobody in this room, including the Minister, wants that. Let us be positive, and send the message to our colleagues in the next Parliament, and to Ministers in the next Government, that the tourism industry and cities that flourish because of tourism need the support that only the Government can provide. The best step forward would be to reduce VAT.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship this afternoon, Ms Dorries, and to respond to this debate. This is not the first time that I have had the privilege to respond to such a debate. I start by congratulating the hon. Member for Ceredigion (Mr Williams) on securing this debate, and for giving hon. Members an opportunity to discuss this important issue. I also congratulate him on the manner in which he set out his case. His constituency is well-known for being one of the most beautiful in Wales, and indeed in the entire country. I make that point with a degree of concern because I appreciate that, having made it about his constituency, there is a very strong case to make it for many of the other constituencies that are represented here in Westminster Hall today.

Let me reassure the hon. Gentleman and indeed other hon. Members that the Government value the importance of the tourism sector, not only in the hon. Gentleman’s constituency but across the United Kingdom. I will say more about that later, but Ministers from both the Treasury and the Department for Culture, Media and Sport have been working closely with the industry to increase both in-bound and domestic tourism.

On the specific issue of VAT, I should briefly explain that VAT is, of course, governed by EU law and that reliefs from VAT are therefore strictly limited. However, EU VAT law allows member states to implement certain reduced rates of VAT, which are listed in annex 3 of the VAT directive, at the discretion of individual member states. Three of these reliefs are of particular interest today: first, accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites; secondly, restaurant and catering services, excluding alcoholic drinks; and, thirdly, admission to leisure attractions, including shows, theatres, amusement parks, concerts, museums, and similar cultural events and facilities.

I know that the hon. Gentleman is aware that a number of other member states have chosen to implement a reduced rate of VAT on tourism and related activity. However, this Government are yet to find any conclusive evidence of a causal link between VAT rates and tourism activity. Comparisons with other countries tend not to take into account the significant VAT reliefs that the UK already provides for cultural attractions and public transport, nor the other tourist taxes that other member states choose to levy.

[Mr Mike Hancock]

I am very interested in the statement the Minister has just made that there is no conclusive evidence to support the argument that a cut in VAT would generate more activity. So, what is the evidence that he is using to say that there would be no improvement, and who produced it?

[Mr Gauke]

I will say a little about that. For example, the case has been made that in the Republic of Ireland there has been an increase in the number of tourists in recent years, since there was a reduction of VAT on the tourism sector there. However, we have seen a very similar increase in the number of tourists in the United Kingdom. So, we should not jump to the conclusion that there is necessarily a causal link.

Equitable Life

Mike Hancock Excerpts

Thursday 26th February 2015 Commons Chamber

[Bob Blackman]

I have commended the Government for the action that they have taken to set up the scheme. At the time of the legislation, we tabled a cross-party amendment to ensure that the trapped pre-1992 annuitants would be compensated, but the Government resisted it. I am delighted that the Government saw sense after the lobbying that took place and provided a degree of compensation. The Government should be commended for ensuring that there is a compensation scheme. However, we have an independent assessment of the total amount of compensation that is due—it was not done by EMAG or by the Government, but is independent—and £2.8 billion is still due.

[Mr Mike Hancock (Portsmouth South) (Ind)]

The hon. Gentleman is being extraordinarily generous in giving way. There is a unanimous feeling in the House that justice needs to be done for these people. We know how much is outstanding and there is a big difference between what people are due under the existing compensation scheme and what they are actually due. Surely what we need is not a five-year plan to pay the money back, but a one-off payment that is made as soon as possible. Many of these people will die before they get their just reward.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I appreciate that the hon. Member for Harrow East (Bob Blackman) has taken a lot of interventions and I have allowed him a lot more time than is normally the case in this sort of debate. I also appreciate that there will be further interventions and I am not suggesting that he concludes his speech immediately. However, I make a plea for very short interventions, because people who say that they are not going to make a speech, but that they would like to intervene, take up the time of people who sit here all afternoon with patience and politeness, waiting to make a speech. I will not be tolerant of long interventions, but I am tolerant of the hon. Gentleman, who is being very generous in taking so many interventions.

Road Fuel Duties

Mike Hancock Excerpts

Tuesday 13th September 2011 Westminster Hall

[Mr Donohoe]

That is a matter for the Economic Secretary, not me, to address, but I am grateful to the hon. Gentleman for his intervention. A tax increase is being proposed for next January and August, but I would like an assurance from the Economic Secretary that it will not be implemented. The best way to help hard-pressed consumers would be for the Government not to adjust the tax on families, who are already feeling the squeeze as a consequence of the Government’s policy on pay freezes and pension hikes.

We also have to look at the big six energy providers, which recently announced large price rises and bigger profits. The Government must have scope to look at that in order to redress, via a windfall tax, the whole problem of taxation. There is also the issue of the Government’s policy—if it is a policy—to move people from the road to public transport. The Government have just increased the cost of rail travel by 10%, which seems to go against everything that is being argued. Is that policy supported and likely to continue to be supported by the Treasury?

A number of representatives from rural areas are present. More emphasis needs to be put on trying to allay the problems associated with living in the countryside, which are an enormous burden on businesses and the consumer in those areas. I have already mentioned the removal of the duty differential for biodiesel, but the position of that industry needs to be addressed by the Government. It is a growing industry and one that is useful in addressing both public and private transport in my constituency. I have already mentioned the prices set by supermarkets and oil providers, which have to be addressed.

I have two final points. The Government must reduce the tax on petrol. That would increase employment prospects, particularly those of the nurse whom I mentioned earlier, as well as those of people who rely on public transport to get to work. Finally, I am old enough to remember when fuel prices were fixed universally throughout the whole country. A lot of the commodities that were deemed at that time to be essential, such as bread and milk, were all the same price. Given the disparity between the highest and lowest price in this country, will the Government examine the issue so that the disparity is overcome and the price of petrol is not a commodity with which the supermarkets and some of the country’s suppliers play?

[Mr Mike Hancock (in the Chair)]

Thank you, Mr Donohoe. A lot of Members want to speak, but we do not have a great deal of time. Will those Members who speak be careful about the number of interventions they take? Perhaps that way everyone will get in.

Regulatory and Banking Reform

Mike Hancock Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

The hon. Gentleman raises an important point, and I am pleased that he gave prior notice during business questions. We all recognise, particularly those of us with strong roots in the north-east, the important work that the Northern Rock Foundation has done not only in the north-east, but in Cumbria. An agreement was reached that Northern Rock would continue to contribute 1% of its profits to the foundation between now and December 2012, but I am sure that any bidder looking for support from the north-east will think very clearly about the role that the foundation will play in future.

[Mr Mike Hancock (Portsmouth South) (LD)]

Will the Secretary of State give an assurance to the House and to the country that the sell-off of Northern Rock will not proceed unless there is absolute certainty that every penny of taxpayers’ money that was put into it will be recouped, plus interest, and that the proposed transformation of the banking system will begin to give people some trust in the system again?

[Mr Hoban]

My hon. Friend makes two important points. In the process of selling Northern Rock and returning it to the private sector, we are seeking to get the best possible deal for the taxpayer, given the investment we have put in so far. He is absolutely right that one of the challenges is to restore trust and confidence in the banking system, which has taken a blow in recent years for a range of reasons, including the mis-selling of payment protection insurance and the financial crisis itself. There is a big challenge for banks. The best way that they can establish trust and confidence is by demonstrating to the people of this country that they are doing what they should be doing, which is helping families and businesses realise their full potential by ensuring that credit is flowing to our businesses and that our constituents have opportunities to buy their own homes.

Proposed Public Expenditure Cuts

Mike Hancock Excerpts

Monday 13th September 2010 Commons Chamber

[Mr Osborne]

We have a dual task. We have a welfare bill that represents a third of all Government spending; and, given that at least half the Labour party—I think—still believes in trying to reduce the deficit, we have to find savings from the welfare bill. At the same time, we are seeking a fundamental reform of welfare to encourage people into work. Bringing those two objectives together is precisely what I am working on with the Secretary of State for Work and Pensions.

[Mr Mike Hancock (Portsmouth South) (LD)]

I am sure that the whole House will be pleased to hear the comment about going after those who deliberately avoid paying tax—it would be interesting to know when we will hear how that will be achieved—but more importantly, the Chancellor mentioned the phrase “protection of the vulnerable” several times in his statement today. I would be interested to know how that is going to be achieved, and when he will explain to the House how the vulnerable in our society—including the very poor—will get the protection that they deserve.

[Mr Osborne]

Let me give my hon. Friend a specific example: disability living allowance. We were faced with a number of options, but we decided that we wanted to keep it as a universal benefit, and instead look at the criteria that allowed people to get on it and ensure that they were entitled to stay on it. We are particularly conscious of benefits on which people in vulnerable positions are dependent, but with each benefit, we are proceeding with caution, seeking as wide a consensus as possible. However, my hon. Friend has my commitment that we are doing everything that we can to protect the vulnerable during this process. I would also make a general observation: the thing that really hurts the most vulnerable in our society is when a country loses control of its public finances.

Government Spending Cuts

Mike Hancock Excerpts

Wednesday 26th May 2010 Commons Chamber

[Mr Laws]

I agree with my hon. Friend on both those points, including his first comments about the shadow Chancellor. Yes, we are going to commit to increasing the real budget of the NHS each year, even in these tough economic times when we will have to deal with the consequences of the deficit that the previous Government racked up. We will also ensure that, even with that protection in its budget, the NHS delivers the savings that make sure that we can protect the front-line services that people want to be protected.

[Mr Mike Hancock (Portsmouth South) (LD)]

I congratulate my right hon. Friend on his appointment and his performance here today. Will he explain to the House some of the benefits that will accrue, particularly with regard to the amount of money being put into social housing? Will he also say whether he was as impressed as I was by the transition of the former Chancellor from Chancellor of the Exchequer to stand-up comedian in a very short space of time?

[Mr Laws]

My hon. Friend makes a very good point. I am pleased to have support from another Gladstonian Liberal on the Liberal Democrat Benches. I am grateful to him for drawing attention to the additional investment that we are making in social housing. That is a real priority for many Members across the House, including those in the Liberal Democrat party and the Conservative party, and, I suspect, for a lot of Members on the Labour Benches, who have been sad that the previous Government were unable to invest more in social housing. Among the many black holes that we are discovering in the public finances left to us by that Government, we have already found a very big black hole in the funding of the social housing programme. We are determined to do everything we can to ensure that the vulnerable people who depend on social housing—those who are on the waiting lists that built up under the previous Government—will have some hope under this Administration.