Merlin Entertainments’ London attractions are calling on the Government to permanently keep the reduced rate of VAT for tourism at 12.5 per cent.
They have warned any rise will have a significant adverse impact on the tourism sector and millions of businesses and jobs that support the industry across the UK just as it is beginning to recover from the pandemic.
The Government originally cut the VAT rate to 5 per cent in July 2020 to help the tourism and hospitality industries but it rose to 12.5 per cent in September and is due to revert to the standard rate of 20 per cent in April.
If this happens it could threaten the survival of 10 per cent of hospitality businesses across the UK.
Tourism and hospitality have been the hardest hit sectors through the pandemic – across the UK hospitality industry December saw sales fall by approximately 40 per cent on average, a reduction of £3bn.
It is estimated the original VAT cut saved 310,000 jobs across the sector – and by extending the 12.5 per cent rate beyond April an additional 125,000 jobs nationwide could be created.
General Manager of The lastminute.com London Eye Sunny Jouhal said: “As we continue to recover from the pandemic, our focus remains on making up for the significant losses incurred over the past two years.
“Although UK visitor attractions benefitted from domestic tourism during 2021, there continues to be a dearth of overseas visitors which continues to have a significant adverse impact on overall numbers and revenue for the sector as a whole.
“In addition, the recovery was significantly slowed over the winter period due to the rise of the Omicron variant and the Plan B restrictions. In light of this, we continue to support the collective view of our industry that a lower rate of VAT needs to remain in place for tourism.”
General Manager of Merlin’s South Bank attractions Catherine Pritchard said: “Now more than ever we recognise the need to give memorable and uplifting experiences to families who have been impacted over the past two years.
“We are very much of the view that if the VAT rate reverts to 20 per cent in April it will have a significant adverse impact on the tourism sector at a time when it is finally starting to turn a corner.”
General Manager of Madame Tussauds London Tim Waters said: “We firmly believe that keeping the current lower rate of VAT in place will help drive demand, create jobs and give the tourism sector a strong boost on the road to a long-term, sustainable recovery.”
Across the UK, the tourism sector employs 3.2m people directly and 1.5m in the supply chain, accounting for 11 per cent of UK employment and 6 per cent of GDP. It is a vital part of the UK’s economy, with revenues bigger than that of the pharmaceuticals, automotive and aeronautics industries combined.
In the UK alone, Merlin employs more than 10,000 people directly.
