Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will make an assessment of the potential impact of (a) reducing VAT rates on hospitality businesses during the covid-19 pandemic on that sector and (b) reducing VAT to 12.5% on the hospitality sector on the economy.

VAT is the UK’s third largest tax. It is forecast to raise £180 billion in 2025/26, which funds public services. VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

The exceptional VAT relief for tourism and hospitality during the Covid-19 pandemic cost over £8 billion. The Covid Inquiry is investigating the UK’s response to and impact of the Covid-19 pandemic. The Government is cooperating fully with the Inquiry in its extensive and detailed work.