Tourism Minister Helen Grant allegedly sent a letter to the Cut Tourism VAT campaign last month, saying the council would not discuss VAT because of the cost of a reduction to the Exchequer.
When asked to confirm, a government spokesperson told BigHospitality: “Our strategy to make the UK a GREAT place to visit led to record visitor numbers earlier this year and tourism jobs are growing at double the rate of the average of other industries.
“To ensure we have the right people to take exciting careers in tourism, the government agreed with industry that the Tourism Council should focus on jobs and skills. While we keep all taxes under review, we do not have any plans to introduce a VAT cut for the tourism sector.”
Disappointment
The decision came under fire from campaigners, including over 90 MPs, who pointed to the potential benefits of a VAT reduction, such as “a £4bn hike in GDP and more than 120,000 new jobs, according to research conducted using the Treasury’s own economic model”.
The campaign has been pushing for a cut of the tax, currently standing at 20 per cent, to level the playing field between the UK and other European countries, most of which have reduced VAT for accommodation and attractions.
Dermot King, managing director of Butlins, said: “The Tourism Council is meant to be supporting the sector, so it looks rather ridiculous to have an industry talking shop ignoring the central issue of VAT rates. How can anyone take the Tourism Council seriously when it’s a whitewash before it has even begun?”
But according to the government, comparisons with other Member States do not take into account the VAT reliefs that the UK provides for cultural attractions and public transport, or the fact that the country’s VAT registration threshold is the highest in the EU, meaning many small businesses do not have to charge VAT.
BHA comment
The British Hospitality Association (BHA), which helped with the creation of the Tourism Council ahead of its launch during the association’s summit last June, also believes the group’s first priority should be to focus on jobs and skills.
Ufi Ibrahim, BHA chief executive, said: "The Tourism Council is groundbreaking, allowing government to listen and respond to leaders of tourism and hospitality businesses of all sizes. For the Tourism Council to deliver real progress in the run-up to the next election, it was agreed at the outset by all parties that the focus would be on jobs and skills. This is important because we urgently need to attract more talent into our industry and demonstrate the fantastic range of career opportunities available.”