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Referendum result reignites VAT cut calls

27 June 2016 by
Referendum result reignites VAT cut calls

Cut Tourism VAT will continue to campaign for a reduction in tourism VAT following the UK's vote to leave the European Union (EU) last week.

Speaking at the BHA's Hospitality and Tourism Summit 2016 today (27 June) Dermot King, the managing director of Butlins and chairman of the Cut Tourism VAT campaign said the hospitality industry could help rebalance the economy and reduce the UK's debt.

He said the industry should work hard to persuade the Government about the benefits of a reduction in VAT in line with the rest of Europe.

King argued competitive issues are still hugely important in light of the Brexit decision. He said: "Politicians cannot see the need for reducing VAT when they look outside their Westminster offices and see tourism doing well in the capital."

But he said more needed to be done to reinvent seaside towns to ensure the future of the Great British holidays.

He said a reduction in VAT could be the key to making the industry more exciting to young people particularly in seaside towns.

Hospitality professionals also argued that the fall in the pound could prove a competitive advantage, making the UK more attractive to foreign visitors.

Nick Varney, chief executive of Merlin Entertainments and chairman of the BHA said Britons may also be encouraged to spend more time in their own country.

He advised delegates to "seize the moment and lock in the competitive advantage".

"The industry needs to argue with new vigour for a cut in VAT," he added.

He also discussed the hospitality's reliance on foreign labour and said the industry should have a seat at the table for discussions concerning immigration.

"Members need a voice louder than ever," he said. "The Government needs to listen to us and talk to us, which it hasn't been doing so far.

"It needs to take the industry much more seriously."

Dr Andrew Sentance CBE, senior economic adviser for PwC, said if he were to look into a crystal ball about the UK economy post the EU Referendum, it would look "murky".

He said: "It's an uncertain period and I can't give definitive answers as to what will happen. There is a divided view in the country with those who voted to remain feeling they are involuntarily being taken out of the EU.

"We've also experienced an adverse reaction from our European neighbours. The comments have varied in tone but many are saying ‘get on with it'."

Sentance said: "A lot could happen politically and economically in the interim period before Article 50 is triggered."

He said the economy is likely to be weaker following the leave vote with growth predictions being reduced slightly from the anticipated 2% this year and in the coming years to between 1 and 1.5%.

"I can't buy into the argument the decision to leave will be a boost for the economy," he said.

He said the negative impact of the current uncertainty and lack of confidence from businesses could potentially be offset by the weaker pound.

Ufi Ibrahim, chief executive of the BHA, said the association would continue to work hard to champion and represent 44,000 businesses.

She said: "The BHA will have a heightened role and is committed to working in collaboration with the Government post the EU Referendum.

"Our industry, economy and every individual here values certainty. It is critical to us all."

The Cut Tourism VAT campaign has support from more than 1,000 hospitality and tourism operators and 160 MPs from all political parties.

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