Oral Answers to Questions

Steve Double Excerpts

Tuesday 27th April 2021 Commons Chamber

[Jesse Norman]

I thank the hon. Gentleman for his question. Of course, there was no admission of any kind. He asked me a question, and I responded comprehensively and fully to the question he put. The fact of the matter is that many of the people we are talking about have other forms of income. They may have pension income. They may have dividend income. They may have property income. What we have tried to do is use all the sources of information that we have that are properly assessed and certified in order to get schemes up and running—as fast as anywhere in the world, and that is an astonishing achievement. We continue to use those schemes, and we continue to work with groups to see whether others can be included.

[Steve Double (St Austell and Newquay) (Con)]

What assessment his Department has made of the effect of the temporary reduction in VAT for businesses on the recovery of the (a) tourism and (b) hospitality sectors from the covid-19 outbreak.

[The Financial Secretary to the Treasury (Jesse Norman)]

The temporary reduced rate of VAT aims to support the cash flow and viability of around 150,000 businesses and to protect more than 2.4 million jobs. As was announced at the Budget, the Government extended the temporary reduced rate of VAT to 31 March 2022, with a phased return to the standard rate. This relief alone is estimated to be worth more than £7 billion to the tourism and hospitality sectors. Applying it permanently would come at a very significant cost to the Exchequer, and that would have to be balanced by increased taxes elsewhere or reductions in Government spending.

[Steve Double]

The past year has clearly illustrated just how important the hospitality and tourism sectors are not only to our economy, with the jobs and businesses they support in the supply chain, but to our overall wellbeing and the contribution they make to social mobility. As the chair of the all-party parliamentary group for hospitality and tourism, I know just how important this cut in VAT has been in supporting those businesses, but will the Treasury take another look at the merits of making this reduction permanent to further support the sector and the growth in jobs that it can create?

[Jesse Norman]

My hon. Friend is absolutely right that this has been an incredibly challenging period for the tourism and hospitality sectors, and it is also right to recognise that many organisations within these sectors have benefited from the measures that I have described, including the extensions to the employment schemes, business rates holidays and the VAT reduction, as well as the very important wider restart grants and the additional restrictions grant. As these restrictions are lifted and demand for goods and services in these sectors resumes, temporary reliefs are being phased out and in time will be removed. Bridging that transition to a standard rate by applying a temporary 12.5% rate will help businesses to manage the change. We should want them to get back to normal trading and the support that they offer through that to their communities and the economy.