Tourism VAT cut will need national surplus

Minister for Government Policy, Oliver Letwin, regarded by some as the number three in the Conservative Party, visited Blackpool North Golf Club to meet business leaders.

He was invited by Blackpool North MP Paul Maynard who told him about issues affecting business in the area and about social deprivation.

Mr Letwin discussed balancing the budget, problems affecting our high streets, business rates, the NHS and the issue of the VAT rate on tourism being higher in Britain than most of its competitors.

He told the meeting that in 2010 when they were in talks to establish the coalition they were told by the Bank Of England that they needed to act quickly because further uncertainty would increase the problems associated with the national debt, as no one from outside would invest in the country.

He said the same credibility issues surrounded the level of debt now and it was crucial to balance the books with further austerity measures to keep investment coming into the country.

He said: “We have made £20bn of efficiency savings and public sector has had to bear quite a load but it has maintained levels of service in spite of this.”

County Coun Jim Lawrenson, leader for tourism at Lancashire County Council, asked about cutting VAT on tourism businesses which he said would allow the country to compete against the likes of France and Germany in attracting more visitors.

Mr Letwin said: “We would all like to be able to pay less VAT, but would a cut really attract so many more tourists that the increased revenues would pay for that cut?

“The Chancellor has to balance his books and reduce the deficit and VAT is a part of that.

“Maybe the industry, if it is confident enough that it would bring in more tourists, would like to underwrite the reduction, then it could happen.

“If we are re-elected and we get to the point in the next Parliament of running a surplus, then that might be the time for taking a risk like that.”

Speaking after the meeting Claire Smith of Stay Blackpool said she was disappointed over the VAT issue.

She said: “Putting us on a level playing field with competitors abroad would be the right thing to do.

“There have been numerous reports done recently that show cutting tourism VAT means better prices for visitors and leads to more.”

Hotelier Mick Grewcock agreed and added that a crackdown on VAT dodgers who abuse the threshold system was also needed to let resort companies operate on a fair competition basis: “There are so many of these online companies taking bookings that are based offshore and don’t pay VAT. It is not fair competition.

“Also you can have two identical B&Bs next door to each other one pays VAT and the other doesn’t because they fiddle the figures to come in under the threshold for starting to pay VAT and that can’t be right.”