In the recent Budget Debate, the Shadow Tourism Minister Alex Sobel raised the issue of the lack of announcements on initiatives to support and rebuild the UK tourism industry including:

• Extending the VAT reduction
• Changing the eligibility criteria for RHL business rates support

His contribution can be read in Hansard and starts at Column 844.

A number of other MPs have separately raised this issue, including Barry Sheerman Labour MP for Huddersfield who asked the Chancellor of the Exchequer “what plans he has to increase the rate of VAT once the rate of 12.5 per cent expires on 31 March 2022; and what assessment he has made of the impact on small and medium sized businesses in the hospitality sector of returning to a 20 per cent rate.”

This question was answered by Lucy Fraser, Conservative MP for S E Cambridgeshire, on 5 November 2021 as follows:  “The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses, and to protect over 2.4 million jobs in the hospitality and tourism sectors. As announced at Spring Budget 2021, the Government extended the 5 per cent temporary reduced rate of VAT for the tourism and hospitality sectors until the end of September. On 1 October 2021, a new reduced rate of 12.5 per cent was introduced for these goods and services to help ease affected businesses back to the standard rate. This new rate will end on 31 March 2022.

“All taxes are kept under review, but there are no plans to extend the 12.5 per cent reduced rate of VAT. This relief has previously been costed at over £7 billion, but the latest forecast means it may now cost over £8 billion. The Government has been clear that this relief is a temporary measure designed to support the sectors that have been severely affected by COVID-19. It is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced, and then removed, to rebuild and strengthen the public finances.”

See also the Vat’s Enough campaign.