Ahead of the Chancellor’s Autumn Budget (on Wednesday 27 October), Cumbria Tourism is calling on the Government to permanently lower the 12.5% VAT rate for tourism businesses – 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% 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.
As the county’s official Destination Management Organisation, 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% of respondents believe that maintaining the 12.5% VAT rate will be ‘highly important’ to businesses, with 6 in 10 saying the planned return to 20% 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 3-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 comments, “Maintaining the 12.5% 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 adds, “‘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”.
*The research on the impact of keeping the 12.5% VAT rate has been carried out by a coalition of national trade bodies, including UKHospitality, the Tourism Alliance, the Association of Leading Visitor Attractions (ALVA), the British Beer & Pub Association and the British Institute of Innkeeping.