Exiting the European Union (Excise)

Patricia Gibson Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Patricia Gibson (North Ayrshire and Arran) (SNP) [V]]

The decision to scrap tax-free shopping for overseas visitors to the UK is wrongheaded. It will cause significant damage, is completely unnecessary and should be reversed. The abolition of VAT RES has caused the Scottish Chambers of Commerce, the Scottish Retail Consortium and others to express alarm and concern. At a time when businesses are struggling to stay afloat and save jobs, and when airports face unprecedented challenges, to hit duty-free shopping is inexplicable. Duty-free shopping for visitors to the UK pays for wider operations in airports and helps sustain our city centre high streets, which are already under great pressure.

This move contradicts the findings of the Government’s own consultation and is truly bewildering. As the covid pandemic leaves our airports beleaguered, tax-free sales for overseas visitors gives them millions of pounds every year in revenue, allowing re-investment in their businesses, which supports the wider economy. Tax-free retail sales can account for as much as 40% of the revenue in some regional airports, and for Glasgow airport the risk here is a loss of revenue of £8.6 million and an estimated 170 retail jobs. How will that help our airports recover from the damage inflicted on them by covid-19? We already know that due to covid-19 we are expected to lose about 600 routes from airports across the UK, but the biggest impact will be felt by regional airports.

So this move is short-sighted and bewildering, but its consequences will be far reaching. The Scottish Government were not even consulted on this decision, despite the impact it will have on the wider Scottish economy. As we have heard, this change leaves the UK as the only European country not to provide tax-free shopping schemes to encourage tourism, putting Scotland and the rest of the UK at a distinct disadvantage, as we see the EU exploring even now how duty-free shopping can be developed to aid recovery. The Association of International Retail has described this measure as “devastating”, saying that it would lead to the loss of tens of thousands of tourism and retail jobs right across the UK, while the other EU capital cities would be

“rubbing their hands with glee at this self-inflicted wound”.

The chief executive of Mulberry has also warned that this move will have

“a material impact on jobs and manufacturing”.

Despite what we have heard today, the UK Government have already admitted that this move will lead to fewer tourists visiting the UK from overseas. These visitors do not just shop: they eat out; go to museums and the theatre; stay in hotels; and travel across Scotland and the rest of the UK. The risk is not just to retail businesses, although that is significant—the risk is also to major tourist destinations through the knock-on effects on the hospitality industry, suppliers and manufacturers of goods throughout the UK. Have these businesses not suffered enough during these times without the UK Government piling on greater pressure? This measure is economically illiterate at this time, and I urge the Minister to reverse it for the sake of our jobs and the wider economy.