Unsurprisingly, English Tourism Week has a different air to it than last year. Gone is the uncertainty, and a new sense of resilience, determination and, perhaps most importantly, hope have ingrained themselves into our local businesses.
Of course, a busy summer will help replenish the coffers and allow businesses to recover after what has been a dreadful time. However, now is the time to turn our attention beyond the short term, and focus on what long term measures we must take to create the landscape of opportunity and prosperity to help support our local businesses.
Last year, as a relative newbie MP I led the campaign to reduce VAT to 5% for the tourism and hospitality sectors. Through much cajoling, lobbying and persuading, I managed to persuade a third of the Conservative Party MP’s to support my suggestion. The Chancellor, Rishi Sunak MP, listened carefully to our call and dropped VAT to our requested level. Despite a terrible Easter in 2020 for obvious reasons, hundreds of thousands of businesses across the country were able to take advantage of this reduction. It lowered tax bills, increased profit margins and saved countless businesses.
Now that we can envisage the post-pandemic United Kingdom, it is right we consider what the level of VAT should be for tourism and hospitality sector businesses for the long term. The Chancellor has announced the 5% will be increased to 12.5% in September 2021, before returning to its pre-pandemic levels of 20% post-March 2022.
While this was always a temporary cut, I believe there is ample room to demonstrate that lower VAT on tourism and hospitality businesses raises great tax revenues in the long run. Retention of 12.5% would not only show the Government’s understanding of this point, but bring us closer to the international level of VAT on tourism and hospitality.
Months of Government messaging asking us to ‘stay home’ must now be reversed, encouraging people to come together. Retaining the VAT level at 12.5% would help to enhance that message, as would ensuring parity between alcohol duty in pubs versus supermarkets.
The shadow of mental health will hang over our population for a very long time to come. Early indications are insufficient in determining the scale of the crisis; but by using our pubs, bars, restaurants and social spaces to bring people together, we can begin to alleviate the problem.
The tourism and hospitality sectors are not on their own a sole solution to our woes, but they can provide a speedy revival of our local economy. Bringing people together, helping businesses flourish and developing an economy that provides jobs, opportunities and increases wages, are essential ingredients to the recovery of both the individual and the state.
Governments are rarely known for moving quickly, however, these past months have revealed that at both a local and national level it can do so. If we can maintain that speed of action, then we can build on our strengths and address our weaknesses. A low tax landscape will be the first of many steps on our road to recovery.