The report, which was published today (Friday 4 February 2022), showed keeping VAT at 12.5% could also create 286,850 jobs and £4.6bn generated in net present value of fiscal gains to the Treasury in 10 years, while the Government could see a positive return on its investment in the sector in less than five years.
A spokesperson for the coalition of industry bodies said: “We must now reignite our industry with a long-term approach and vision to our sector recovery.
Engine for recovery
“The report we’ve published today sets out the undeniable case for making permanent the 12.5% rate of VAT.
“Tourism and hospitality sectors can truly act as an engine for the UK’s recovery as we look beyond the pandemic.”
The report also showed a permanent rate of 12.5% VAT would bring UK hospitality and attractions in line with the European average (20% is nearly double) and set off a cycle of industry investment and growth, helping ‘level up’ UK regions.
Industry bodies described the report as a compelling case for making the reduced rate permanent and a demonstration of the benefits a long-term investment in UK PLC could bring.
Change of course
This comes at a time when the hospitality and tourism sectors face increased levels of debt and costs across the board, from energy through to raw materials, supply chain difficulties and rising inflation.
The spokesperson added: “As we approach the point in April where the reduced rate comes to an end, we are united in calling on the Government to change course and cancel the planned increase.
“The economic and societal benefits of making this change would be enormous.”