Labour calls for VAT cut

26-Jul-2011 - Last updated on 12-Mar-2024 at 15:15 GMT

Related tags High street Streets Retailing

Chuka Umunna MP says a temporary cut in VAT would help both businesses and consumers

The Labour Party has called for a temporary cut in VAT to 17.5 per cent as it embarks on a campaign to rejuvenate Britain’s high streets.

Launched this week, the Save our High Streets campaign calls for urgent action to help retailers, protect jobs, and empower communities to determine the future of their high streets.

The campaign comes amidst calls across the hospitality and tourism sectors to temporarily lower VAT to help stimulate economic growth.

Empty premises

Labour highlighted findings from the Local Data Company, which show that 14.6 per cent of retail premises in the UK are now vacant, indicating that approximately 50,000 high street units are empty, with vacancy rates rising.

In addition, the Javelin Group has predicted that if current trends continue, a quarter of all non-food retail outlets in the UK could be vacant by 2020.

“We need to put the heart back into Britain’s high streets,” said Jack Dromey MP, Labour's Shadow Local Government Minister. “Labour wants to give communities a real say over the future of their high street and the power to make the changes they want.

“One of the things I hear from my constituents is how the character of the local high street has changed. The high street is not what it once was, they say. And I know many other MPs hear the same – we want to put that right.

“Healthy and diverse high streets are the heart of local communities. The Tories have opposed Labour’s plan to give local people a real say over the future of their high street. The Tory-led Government should change course – they need to support growth and jobs by backing Labour’s four point action plan to revive the high street.”

Labour’s rejuvenation plan

Labour’s four-point plan includes:

Enacting a temporary cut in VAT from 20 per cent to 17.5 per cent.
Introducing a retail diversity planning clause, putting communities in charge of the future of their local high streets.
Creating a ‘competition test’ in the planning system, leading to greater choice and lower prices for shoppers.
Repeating Labour’s empty shops initiative, enabling councils to pursue innovative uses for empty shops and reinvigorate high-streets.

Business for recovery

“The Tory-led Government is bystanding while businesses suffer and our high streets stagnate,” said Chuka Umunna MP, Labour's Shadow Small Business and Enterprise Minister.

“Consumer confidence has been badly hit by the government’s VAT hike and the squeeze on family incomes. It is no surprise that retail sales have remained sluggish.

“We are looking to businesses to provide the growth and jobs we need to power the recovery. The government has failed to get banks lending to businesses, and has hit retailers with this year’s hike in VAT. The recent wave of high street business failures should send a signal to ministers on the real pressures which firms are under.

“A temporary cut in VAT would help consumers and businesses now and would help us get the deficit down.”