British Hospitality Association (BHA) chief executive Ufi Ibrahim has reported a "positive" meeting with the Treasury about the call to reduce VAT for the industry.
In a note to BHA members, Ibrahim said she had begun discussions with Treasury ministers and officials. "The outcome was positive. Further sessions have been agreed for Treasury and BHA experts," she said.
The BHA argues Britain's 20% VAT rate makes UK tourism "uncompetitive" compared to almost all key European competitors. In France the rate is 5.5% on hotel accommodation; in Italy, 10%; in Spain, 8% and in Germany 7%. Ireland is reducing VAT for the sector from 13% to 9% on 1 July.
Shadow Chancellor Ed Balls also urged the Government to make an emergency temporary cut in VAT across the board to help "jump-start" the economy.
"By putting more money directly into people's pockets, it would boost consumers feeling the squeeze from rising prices and rising taxes — especially pensioners and those on low and fixed incomes," said Balls.
"Slowing deficit reduction with a temporary VAT cut would give the flat-lining economy the jump-start it needs, boost jobs and be a better way to reduce the deficit for the long-term."
It's good news for hosts and the Publican's Morning Advertiser's campaign, Thrive on Five, to cut VAT in the sector to 5%, which has over 900 supporters as it moves to the next stage, with French leisure entrepreneur and lobbyist Jacques Borel urging hosts to speak to their MPs.