Tourism Industry and VAT
Debate between Shabana Mahmood and Albert Owen(9 years, 1 month ago)
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Shabana Mahmood (Birmingham, Ladywood) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Ceredigion (Mr Williams) on securing this debate and on his work to highlight the issue. We have heard some excellent and important contributions that have reminded us of the importance of tourism to UK plc, and the case has been passionately made for reducing VAT below the standard rate of 20% on services supplied to tourists, in order to improve the sector’s international competitiveness.
As we have heard, member states’ discretion to set lower rates on goods and services is limited by European VAT law, but there is a special dispensation for a lower rate on certain supplies associated with tourism, specifically including hotel accommodation, certain restaurant services and some types of admission charge, including charges for entry to amusement parks. Some member states have made use of that dispensation to charge lower rates, including the Republic of Ireland, which introduced a lower rate of 9% in July 2011. We heard a bit more about that from some hon. Members in their contributions.
The campaign is long-running. This is the second debate on the topic in which I have taken part; the previous one took place almost exactly a year ago, ahead of last year’s Budget, and was secured by the hon. Member for South Down (Ms Ritchie), the hon. Member for Brighton, Pavilion (Caroline Lucas) and the hon. Member for Strangford (Jim Shannon), from whom we have just heard.
The hon. Member for Ceredigion made a powerful opening speech focused partly on his constituency and the impact that a VAT reduction could have on the Welsh economy. He also made the point about a potential link between a VAT cut and economic growth. I take slight issue with his assertion that the Labour Opposition have not been robust in our approach to this matter; we have been robust, but unfortunately the answer that we have arrived at is similar to the Government’s rather than being the answer that he and others hoped for. Those hoping for a different answer from us and the Government include members of our own party; I acknowledge the role of Labour Back-Bench Members in the campaign, including that of my hon. Friend the Member for—is it Ynys Môn?
Shabana Mahmood
I thank my hon. Friend. I hate to get people’s constituency names wrong, so I am glad to have got it right on this occasion. He made the point that it is Welsh tourism week, and Welsh Members of Parliament from various parties have been well represented in this debate. I recognise his long history of campaigning on this issue, and particularly his focus on the number of jobs and the amount of economic growth that such a change could create in his constituency and the Welsh economy as a whole. I fully expect him to continue lobbying Labour colleagues and a future Labour Treasury on the issue, as he has done alongside others throughout this Parliament, but I am afraid that I will disappoint him and other hon. Members throughout the House once again by not making a commitment that the next Labour Government will reduce VAT for the tourism sector in the way that they envisage.