The return of VAT-free shopping will boost Britain’s towns and cities
Britain has so much to offer. It is no surprise that more than forty million overseas visitors choose to visit our country every year.
Walk down Bond Street in London or Princes Street in Edinburgh and you will see visitors from around the world drawn to some of our most iconic retailers. Our high streets showcase the very best of British design and craftsmanship – from Barbour jackets and Savile Row suits to Mulberry handbags.
But too many tourists are choosing to shop in rival cities outside the UK. Whilst visitor numbers have recovered to near pre-Covid levels, spending remains 8 per cent lower in real terms than before the pandemic. For many high-spending US visitors, the UK is now either a ‘flyover state’ on their way to continental Europe or a cultural stop while the serious shopping takes place elsewhere.
Why would you come to Britain when you can visit Milan or Paris and shop for less? When the UK abolished tax-free shopping in 2021, it left us at a disadvantage compared with other major European destinations. According to VisitBritain, real-terms visitor spending is now lower than before its abolition.
Britain is competing with other countries
The next Conservative government is serious about growing the economy. That means being determined to compete and allowing our brilliant British retailers, hotels, restaurants and attractions to put their best foot forward.
That is why we have announced today that the next Conservative government will restore VAT refunds for eligible visitors. It would be a major boost to British business, so it is no surprise that leading figures are backing our plans, including hotel entrepreneur Sir Rocco Forte, Fortnum & Mason’s Tom Athron and top chef Angela Hartnett OBE.
Independent research conducted by Cebr has found that fully restoring tax-free shopping could attract up to 2.35 million additional visitors and generate £4.1 billion in extra spending. For every £1 of VAT refunded to tourists, an additional £1.56 could be generated in other taxes. We’ll start with the previous scheme, which covered visitors from outside the EU, and then extend it once the net economic benefit has been demonstrated through detailed, data-based evaluations conducted by the Treasury.
Hospitality and retail need a boost
This follows our announcement that we will scrap stamp duty on purchases of a primary home to get the housing market moving again, as well as our plan to relieve hundreds of thousands of high street shops of the burden of business rates. Because so many of us in the Shadow Cabinet have experience in business, we know that cutting taxes, reducing red tape and lower energy costs will help firms succeed and our economy grow, providing much-needed jobs for the next generation.
The contrast with this government couldn’t be clearer. Since Labour came to power, they have hammered our retail and hospitality sectors. They have raised employer National Insurance contributions, hiked business rates, and they now even plan to tax tourism.
Winning is about showing up with a determination to compete. We Conservatives understand that and are ready to support British businesses. That mindset for Britain is what today’s announcement is all about.
Andrew Griffith MP is the Conservative Shadow Chancellor