Trade groups call for PM to keep VAT at 12.5% to help economic recovery

By Michelle Perrett

Published: 12 October, 2021

A coalition of the country’s hospitality, tourism trade and membership bodies has called on the Prime Minister to keep VAT low for businesses to help them play their part in the Government’s levelling-up and job creation agenda.

The letter, co-ordinated by UKHospitality, argues that keeping VAT at its current rate of 12.5% for these sectors will help to accelerate the UK’s economic recovery from the pandemic, safeguard the future of businesses and millions of jobs and allow firms to invest in their workforce with higher wages and improved training opportunities.

There are 15 signatories to the letter, which include organisations UKHospitality, Sacha Lorde London First, New West End Company, Night Time Industries Association and the Scottish Tourism Alliance.

The letter highlights that businesses are already feeling the impact of a multitude of cost pressures and labour shortages. It said that keeping VAT at 12.5% on a permanent basis would help keep prices more affordable for customers and unlock investment in local communities and coastal areas across the UK.

“All of us in the hospitality and tourism sectors share that ambition and our businesses are present in all parts of the country, including, crucially, towns around the country that have been left behind, including coastal areas. We will be critical to your levelling-up agenda and we are eager to play our part. To facilitate our role there is one crucial lever that Government can pull – to keep VAT at 12.5%,” the letter states.

“The pressures on business at present are well-documented and are already creating inflationary pressures. Increasing VAT for our sectors back to 20% will push many to breaking point. Retaining it at 12.5% will relieve upwards pressure on prices and will leave people with more money in their pockets, while delivering on our shared goals.”

Signatories to the letter include:

Kate Nicholls OBE, CEO, UKHospitality

Sacha Lord, Night Time Economy Advisor for Greater Manchester

Association of International Retail

Association of Leading Visitor Attractions

British Holiday & Home Parks Association

London First

Manchester BID

New West End Company

Night Time Industries Association

Scottish Chambers of Commerce

Scottish Tourism Alliance