Tourism Industry and VAT

Nadine Dorries Excerpts

Tuesday 17th March 2015 Westminster Hall

[Nadine Dorries (in the Chair)]

No time limit has been allocated to speeches in this debate. I have seven Members down to speak, but there are a lot more than that in the Chamber, so if you wish to speak, you will have to catch my eye. With interventions considered, if Mr Williams takes only 10 minutes to introduce the debate, Members will have 10 minutes each, but there may be less time than that, so some brevity would be appreciated.

[Mr Mark Williams (Ceredigion) (LD)]

I am grateful for the opportunity to have this debate and it is a pleasure to serve under your chairmanship, Ms Dorries. In the midst of Wales tourism week and on the eve of the Budget, I would like to make the case for a reduction in the VAT rate for the tourism industry from 20% to 5% specifically, and importantly, for visitor attractions and accommodation, to bring our country into line with competitor destinations in the European Union.

The Minister has been well lobbied on this issue and perhaps he gets tired of hearing the arguments that some of us advance for that cause, but I would like to draw his attention to research published recently on behalf of the Cut Tourism VAT campaign. I am aware that the campaign recently met Treasury officials. The research further strengthens the case for making a change in our VAT regime. That case is borne out by the number of Members here for the debate representing constituencies across the United Kingdom.

--- Later in debate ---

[Albert Owen]

Before the break, I indicated that the campaign had been brilliantly led by the industry, but that we needed to focus on people and get the message across to the great British public. Cheaper and more fairly priced holidays for consumers in the UK would help those with low earnings considerably, because VAT disproportionately affects such people. I believe that VAT at 20% is simply too high. When a working-class family of four go out for a meal, they share a fifth of their bill with the Chancellor of the Exchequer. In a sense, everybody who goes out for a meal takes the Chancellor with them, because they have to pay 20% of the total to the Treasury. That is too much for many families, and it has reduced many people’s spending power.

A cut in the VAT rate would also have a positive impact on jobs. As has been indicated, most of the jobs that have been created in tourism are low skilled and for young people. I welcome any reduction in youth unemployment, which has been stubbornly high. Those who work in the industry have indicated that one of the first things that they would do if VAT were cut is employ more people, to provide a stimulus to their businesses and to the sector. In my constituency, an estimated 120 jobs would be created, which would boost the local economy by some £3.8 million. The measure could bring huge sums of money into local economies and the UK Treasury in the long term. I understand that it will be difficult to convince the Treasury when there would be, in the first instance, a hit on moneys that are coming into the Treasury—

[Nadine Dorries (in the Chair)]

Order. Mr Owen, you have had almost eight minutes, and I will have to restrict other speeches to six minutes. If you could draw your remarks to a close soon, that would be good.

[Albert Owen]

I misunderstood you, Ms Dorries. I thought that there was no time limit.

[Nadine Dorries (in the Chair)]

There is now.

[Albert Owen]

There is now, and I will abide by it. As someone who has consistently opposed increases in VAT, I believe that a reduction would help local economies, the tourism sector and the low paid in our society. It would be good for the country and good for jobs. I hope that the Treasury, on the eve of the Budget, will reconsider. If we are going to have a give-away Budget tomorrow, let the Chancellor give way on that important issue.