Tourism is incredibly important for London, but to keep London important for tourism, we have to make it more attractive for foreign visitors to shop here, writes Chris Hayward.
With June just a couple of days away and warmer temperatures now here, there is a distinct sense that summer is coming. The better weather tempts both City workers to stay and socialise and overseas tourists to visit our historic attractions.
By attracting more people to the Square Mile, spending more money in our shops, staying in our hotels, eating in our restaurants, we all feel the benefit. Greater revenue brings employment and investment, helping boost our reputation as one of the world’s great global cities.
But London’s recovery is not being maximised.
The Treasury’s decision to scrap the VAT exemption for foreign tourists is an anchor on London in the race for global visitors and we risk losing out to Paris, Madrid, and Milan.
Global Blue, an international tax refund company, has found that spending by American and Gulf visitors to France and Italy are both comfortably above pre-2019 levels. In the UK, we’re struggling to reach parity. Collectively, the retail and hospitality sector – from VisitBritain to Harvey Nichols – have implored the government to rethink the policy.
Research from Oxford Economics suggests that cutting the tourist tax could prompt an additional 1.8 million extra visitors by 2025/26, generating £2.8 billion of extra spending, and sustaining 78,000 jobs.
With national economic growth low and inflation running high, scrapping the tourism tax is an absolute no-brainer. Now is the time to give the tourism and leisure sector a much-needed boost after the pandemic, a vote of confidence that government and business alike are optimistic about the future.
Furthermore, in keeping with the recent warming of relations with Europe, typified by the Windsor Framework and the imminent signing of the memorandum of understanding on financial services – which will be hugely beneficial to the City – we could extend the VAT-free shopping to our European neighbours.
Such a move would make us more competitive within Europe, strengthening our appeal to a huge market of potential customers. Now is the time to show our commitment to the leisure sector that was decimated by the pandemic.We must shift the paradigm; tourism is important for London, but we are at serious risk of London no longer being important for tourism.
Whether it is our world-famous skyline, museums and galleries, parks and open spaces, or rich diversity of cuisine, London has something for everyone.
Here in the City, we have over 2,000 years of experience in welcoming the world to our streets. We are one of the most historic, yet innovative destinations, welcoming business and leisure visitors from across the globe.
Today, the City has an immense leisure offer that we want everyone to enjoy. We are working hard to make it not just a place for workers, but a seven-day-a-week destination. This is part of our flagship Destination City programme, designed to reach new and existing audiences and encourage footfall and spend.
Now is the time to boost our international competitiveness as a destination. Government must take the handbrake off London’s recovery and scrap the tourism tax.