Speaking at a Department for Culture, Media and Sport (DCMS) inquiry yesterday’s (8 March), UKHospitality chief executive Kate Nicholls stressed that retaining the 12.5% VAT for hospitality and tourism, rather than returning to the pre-pandemic rate of 20% in April as is currently planned, is vital if the UK is to remain competitive versus international rivals, attract visitors from abroad and encourage Britons to go out and spend.
“There is no other industry that will generate jobs, growth and investment at pace across the UK and deliver levelling up in practice,” she said
Nicholls was addressing a DCMS select committee inquiry called Promoting Britain Abroad, looking at how the tourism industry can be supported in its post-Covid recovery, how it can promote British ‘soft power’, and how effective the Government has been in its pandemic support for the sector.
Contributing to an answer about how uncompetitive Britain is when it comes to price, Nicholls suggested that retaining VAT at 12.5% is an effective way of improving the UK’s competitiveness.
She said lowering VAT for hospitality and tourism during the pandemic had prompted ‘an immediate uptick in demand’, warned that raising it ‘will significantly hurt the sector’, and said that ‘the more it costs people to go out the less they will do it, the less they have to spend, and the slower the economic recovery’.
Her select committee contribution comes as UKHospitality intensifies its #VATsEnough campaign ahead of the Chancellor’s Spring Statement on 23 March.
#VATs Enough, which has the backing of leading hospitality operators, urges the Government to maintain VAT at 12.5%, and warns that a return to 20% could be the final financial straw for many hospitality businesses already struggling to get back on their feet after two-years of devastating losses.