Farm groups have claimed the Chancellor’s pledge to reduce VAT by 15 per cent for the tourism sector will see agritourism ‘fight back’ post Covid-19.
Rishi Sunak has moved to placate industry fears after he today announced (July 8) VAT will be temporarily slashed from 20 per cent to 5 per cent for the hospitality and tourism sectors, between July 15 and January 12, 2021.
With rural tourism businesses expecting revenue losses of up to £17.7 billion this year, CLA president Mark Bridgeman said the cut was a vital step in ‘restarting’ the rural economy.
“After intense lobbying from the CLA, we are delighted the Government has cut VAT to help our tourism sector fight back from a devastating start to the year,” he said.
“Until now, VAT on tourism businesses has been much higher than in other comparable countries, putting domestic tourism businesses at a competitive disadvantage to holiday providers overseas.”
Mr Bridgeman added the ‘welcome change’ would, therefore, help to encourage a post-lockdown lift in British tourism, as the public seek to holiday in the UK.
Sarah Lee, head of policy at the Countryside Alliance also welcomed the Chancellor’s £30 billion support package and highlighted the Government had ‘listened to the concerns of the countryside’.
She said: “Measures announced today such as the VAT cut from 20 per cent to 5 per cent, as well as an ‘eat out to help out’ support scheme, will help the rural economy, in which tourism plays a central and core role.”
However, Mr Bridgeman warned the next challenge for the sector was to ensure demand could be stimulated not just in the short term ‘but through the less popular winter months too’.
Responding to this 50 per cent reduction, the Food and Drink Federation’s chief executive Ian Wright, said: “The UK’s food and drink manufacturers who supply into the hospitality and catering trade have been hard hit by the crisis, as their customers disappeared overnight.
“These ‘squeezed middle’ firms will enthusiastically welcome the Chancellor’s announcement today to cut VAT on food and hospitality and slash the cost of eating out.
“We hope these measures will lead to a significant boost in demand for the hundreds of manufacturers who supply into hospitality and the out of home sectors and help them to manage increased supply costs.”