Tourism (VAT)

Debate between Mike Weir and Philip Hollobone

Tuesday 11th February 2014 Westminster Hall

[Mr Mike Weir (Angus) (SNP)]

I am pleased to contribute to this important debate under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing it.

I have pursued this issue over the years. In fact, I first asked a question about it in 2004. To my last question on the subject, in October, the Exchequer Secretary, who will respond to this debate, replied:

“I have written to the Chairman of the Campaign for Reduced Tourism VAT explaining that while there is no prospect of a VAT cut for tourism, the Government is committed to a wide range of measures to support tourism.”—[Official Report, 8 October 2013; Vol. 568, c. 161W.]

That does not give me a great deal of confidence that he will change his mind today, but, never being one to give up, I will give it a try.

In 24 of the current 28 European Union states, including Germany, France and Spain, there is a lower rate of VAT for tourist accommodation. In fact, the UK has the second highest rate of VAT on hotel accommodation, exceeded only by Denmark and Lithuania. The rate in Luxembourg is 3%, and in Portugal, which is, of course, a major tourist destination, it is only 6%. At a time when tourist businesses are fighting hard to retain their business against cheaper destinations, these lower rates give many continental destinations a considerable advantage over businesses within the UK. This is an important issue for Scotland, where tourism contributes 4.9% to our GDP. Indeed, almost 10% of my constituents work in tourism or tourism-related businesses.

Even the UK Government have not been averse to cutting VAT on selected tourism-related operations. In the 2012 Budget, they cut the VAT chargeable on small cable-suspended transport systems—ski lifts, to you and me, Mr Hollobone—which was a welcome change, especially for ski-lift businesses. I am sure that it is entirely coincidental that most of those businesses are in the constituency of the Chief Secretary to the Treasury. However, that illustrates what can be done and that the UK Government have done it in other areas.

The Irish 9% rate specifically applies to facilities used by those taking part in sporting activities and extends to green fees charged for golf and subscriptions charged by non-member-owned golf clubs. Again, that puts them at an advantage in a competitive market against the wonderful golf clubs in Scotland and other parts of the UK. In addition to the 9% rate, Ireland has for some time had a 13.5% rate on other services, including short-term car hire and tour guide services.

When the present UK Government published their tourism strategy in 2011, they stated that they aimed to generate 4 million extra visitors up to 2015 and that,

“The increase in overseas visitors would bring an extra £2 billion worth of visitor spend and help to create 50,000 new jobs across the country over that period, securing tourism’s place as one of Britain’s”

greatest

“industries.”

I struggle to see how the GREAT campaign and simplifying visa applications for Chinese visitors, as mentioned in documents, could do that. A VAT cut would go a long way to helping hard-pressed tourism operators.

Hon. Members have talked about Professor Blake’s research and the amount of jobs and income that would be created. I will not go over that again, but whatever research says, a cut of VAT to tourism-related businesses would lead to increased employment and give a significant boost to the rural economy in all parts of the UK.

We need to give our tourism industries a boost and a chance to fight back, rather than asking them to fight with one hand tied behind their backs because we refuse to match the change in VAT in the EU.

[Mr Philip Hollobone (in the Chair)]

Order.