- Removal of tax-free shopping for tourists ‘short-sighted and
incredibly damaging’
- Short-lived revival before U-turn highlights inadequacy of
Treasury’s analysis
- Reduction in marketing spend and new barriers to visitors
demonstrates failure to recognise industry’s value
The removal of tax-free shopping for visitors from abroad
was ‘both short-sighted and incredibly damaging’ to UK tourism,
MPs say today, with the decision to reinstate it then remove it
again illustrative of the lack of thought given to the industry
by the Government.
In a Report on how tourism can recover from the Covid pandemic,
the DCMS Committee concludes that Government policies have made
the industry’s job harder rather than easier, by making it more
difficult for visitors to visit and less likely to spend.
The Report also warns that the inbound tourist sector is too
reliant on London and that there is a ‘worrying’ lack of money
for marketing. Overall, the Committee believes that the
Government fails to recognise the value of the inbound tourism
industry - the UK’s third largest service export, worth 9% of
GDP, and on which 3.2 million jobs and more than 200,000 SMEs
depend.
The initial decision to abolish VAT-free shopping for all
tourists following Brexit was reversed in then Chancellor Kwasi
Kwarteng’s fiscal event on 23 September with the announcement of
a new digital, VAT-free shopping scheme. This was then scrapped
by new Chancellor last week.
The Committee is critical of the lack of analysis at each stage
of decision making, agreeing with the industry that better
analysis of the indirect benefits would show that its costs would
be far outweighed by the revenue it would generate and increased
visitor numbers.
Chair of the DCMS Committee said: “The
scrapping of tax-free shopping for overseas visitors has been a
spectacular own goal from the Government, with the subsequent
on-again off-again flip-flopping symptomatic of an approach that
lacks thought and recognition of the huge importance of retail to
inbound tourism. Taking such decisions without the full facts is
no way to make policy and has already harmed the industry on
which so much of our economy depends.
In an increasingly competitive global market, Britain cannot
just rely on its reputation alone to attract visitors. It must
make it easier for people to travel and access the full range of
outstanding attractions all over the country. But right across
the board - from abolishing tax-free shopping and banning the use
of ID cards for young visitors to its complacency on marketing
budgets- the Government have hindered rather than helped tourism
recover from the pandemic. Ministers must now wake up to the
voice of the industry and finally recognise its value.”
Main findings and recommendations
Government policy
- The decision to withdraw from the VAT Retail Export Scheme
has been a ‘spectacular own goal’ and signals that the Government
does not recognise the significance of retail to the sector.
After committing once again in the fiscal event to introducing
tax-free shopping for inbound visitors, the decision was then
reversed by the Government less than a month later. That no new
analysis was provide demonstrates the ‘paucity of thought’
associated with the policy changes. The Government should publish
an assessment of the direct and indirect impact of withdrawing
from the scheme.
- The decision to ban children and young people from using ID
cards to visit Britain is having a ‘crippling effect’ on
businesses who rely on such visits. The Government should allow
under 18s, travelling as part of a supervised educational and/or
cultural group visit, to enter the UK on a single group ID card.
- The Government’s strategy of agreeing bilateral arrangements
with EU member states for performers touring the EU is failing to
address the industry’s needs. The Government should negotiate an
agreement with the EU to provide a single-entry document for
performers to submit to any EU country they wish to visit.
Strategy
- The Government should work with the creative industries at a
strategic level to establish a creative industries export office,
bringing together officials from across government.
- The Committee heard how many visitors are unaware of
attractions outside of London or believe that other destinations
are too far or too difficult to travel to. VisitBritain should
continue its work with the industry to showcase all regions of
the UK, focusing on addressing perceived and actual travel
barriers.
Resources
- Though staffing shortages in the industry have been
exacerbated by the pandemic, there is a long-term problem. The
Government should introduce a temporary recovery visa for
industries where there are labour and skills shortages.
- The Government should increase VisitBritain’s marketing
budget, with ringfenced funding for promoting regional
destinations.
Leadership
- It is unacceptable that the Government took 11 months to
respond to the de Bois review of Destination Management
Organisations and in such a half-hearted fashion. The Government
must commit to implementing the recommendations in full.
- The Government should make the post of Tourism Minister a
full-time position.
