Tax-free Shopping for International Visitors

Tanmanjeet Singh Dhesi Excerpts

Thursday 7th September 2023 Westminster Hall

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

It is a pleasure to serve under your chairship, Dr Huq.

I begin by congratulating the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on securing this debate on tax-free shopping for international visitors. On behalf of His Majesty’s official Opposition and as a shadow Treasury Minister, I am absolutely thrilled to respond to the debate. I do so for the very first time in my new role as shadow Exchequer Secretary to the Treasury, so no doubt hon. Members will be very kind to me today, Dr Huq.

As hon. Members, including the hon. Member for Cities of London and Westminster (Nickie Aiken), eloquently made clear, the publication of official independent statistics on this issue commissioned by the Government is long overdue. Manifestly, businesses across our country—although there is a special need for those concentrated close to our airports and in visitor hotspots—need a supportive and stable Government able to provide certainty for the future. Stability and certainty are crucial to enable businesses to plan, invest and grow, but when it comes to tax-free shopping—the arrangement whereby products that are bought here but not consumed here are ultimately VAT-free—the uncomfortable truth for the Government is that Ministers changed course on this policy twice in the space of two months last autumn.

The Prime Minister, when he was the Chancellor, ended VAT-free shopping for tourists in 2021. The right hon. Member for Spelthorne (Kwasi Kwarteng), who became Chancellor, promised in September 2022 to reinstate it, as part of his disastrous mini-Budget. Weeks later, as the musical chairs to become Chancellor continued, the right hon. Member for South West Surrey (Jeremy Hunt) came in as Chancellor and performed another U-turn: tax-free shopping was again off the table. No sooner had one Conservative Chancellor marched businesses all the way to the top of the hill than the next one marched them all the way back down again. The country will not forget the worry and pain that began nearly one year ago with a Tory mini-Budget that crashed our economy, led to interest rates rising, and caused lasting damage for households and businesses. The reversal of the disastrous mini-Budget was necessary, of course, but businesses affected by the U-turn have been left understandably frustrated by changes and decisions made in haste.

We in the Opposition have been listening carefully to the concerns of those calling for VAT-free shopping to be reinstated, but at a time when the nation is having to navigate its way through multiple Tory Government-induced crises, we do not believe that reinstating tax-free shopping for international visitors should be a priority for the use of the billions of pounds of public money. Nevertheless, although we are not calling for VAT-free shopping to be reinstated, we firmly believe that retail and hospitality businesses, particularly those concentrated on our high streets, need support from the Government.

That is why, as my right hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, has set out, Labour is committed to reviving Britain’s high streets by replacing the current system of business rates with a new and reformed system that is fit for the modern day. Businesses on our high street provide essential services to people across the country and make a significant contribution to the Exchequer. They are not just places to buy things we need, but an important part of where we live, work and go about our daily lives. Their success is a key part of our mission to secure for the UK the highest sustained economic growth in the G7.

[Sir Geoffrey Clifton-Brown]

I thank the shadow Exchequer Secretary for giving way. I did not realise he had just been promoted, so I congratulate him on his new post. For understandable reasons, he is not committing to restore tourist tax-free shopping, but would he support my plea to the Minister that we should have a proper independent examination of all the figures to prove whether it would be a tax benefit, neutral or negative for this country, so that we can make informed decisions?

[Mr Dhesi]

As I mentioned earlier, it is imperative that those official, independent and highly regarded statistics commissioned by the Government are there for all to see, for the sake of transparency. However, we feel that at a time when we have the highest recorded waiting lists for the NHS, the biggest tax burden and drop in disposable income since the second world war, and many other crises besides, this cannot be a priority for what I hope will be the incoming Labour Government—touch wood.

We will support businesses, create jobs and increase productivity across every part of our country. A Labour Government will keep listening to and working with businesses as we set about making the tax system fairer and providing the stability and certainty that businesses so desperately need.