Calls are being made to permanently lower the VAT rate for tourism businesses ahead of the Chancellor’s Autumn Budget later this month.
Cumbria Tourism is urging the Government to permanently lower the 12.5 per cent VAT rate to help protect jobs and safeguard the long-term future of the county’s visitor economy.
The VAT rate was reduced to support tourism and hospitality operators during the pandemic, but is currently set to return to its previous level of 20 per cent in April 2022.
Cumbria Tourism is now leading calls to keep VAT at the lower rate, following powerful new evidence which suggests that it could be fundamental to safeguarding jobs in the visitor economy and enabling operators to invest in their workforce.
Cumbria Tourism helped collate feedback directly from local businesses to make the county’s voice heard in a new national survey monitoring the impact of the reduction in VAT across the tourism industry.
The overall results overwhelmingly show that the VAT reduction has been a lifeline to many tourism and hospitality businesses; not only keeping them afloat but also allowing them to comply with COVID safety requirements and pay staff and suppliers.
Looking ahead, 77 per cent of respondents believe that maintaining the 12.5 per cent VAT rate will be ‘highly important’ to businesses, with six in 10 saying the planned return to 20 per cent VAT in April could lead to serious cutbacks and job losses.
This backs up Cumbria Tourism’s own research which shows that the extension of VAT relief is one of their key asks from the Government.
With Chancellor Rishi Sunak due to unveil his Autumn Budget and three-year Comprehensive Spending Review (CSR) in less than two weeks, Cumbria Tourism’s managing director Gill Haigh, says now is the time for action.
She said: “Maintaining the 12.5 per cent VAT rate would create longer-term stability for tourism and hospitality businesses.
“Overall it’s been a positive summer following the devastating impact of £1.5billion losses for Cumbria’s visitor economy during the pandemic, but the visitor economy is highly seasonal and many operators are still in survival mode as we head into the crucial winter period.
“A commitment from the Government on VAT would protect local jobs and communities and help businesses to invest in their staff and longer-term sustainability.
“It is vital that the industry’s voice is heard and we are working closely with a range of regional and national trade partners to get this message across at the highest level.”
Joe Cobb is hotel group executive manager at Lake District Country House Hotels.
He said: “The hospitality sector is the largest employer within our local community and the reduced VAT rate has helped businesses to build back following the challenges that the pandemic has produced.
“With the ever-changing world of staff shortages, supply chain struggles and increased costs, the prolonged support would allow businesses to continue to operate and support local communities. We very much welcome the calls for this extension and hope that the Government consider this further.”