Government has ‘no plans’ to extend VAT cut for hospitality and tourism sectors

The Government has “no plans” to extend the VAT cut for the hospitality and tourism sectors, a Treasury minister has said.

In July, the Government announced that it would introduce a temporary 5% reduced rate of VAT for “certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions”.

During Treasury questions, responding to Conservative MP James Sunderland (Bracknell), John Glen said: “The temporary reduced rate of VAT was introduced on July 15 to support the cash flow and viability of over 150,000 businesses and protect 2.4 million jobs in the hospitality and tourism sectors and it will run now until March 31 next year.

“This obviously comes at a considerable cost to the Exchequer and while we keep all taxes under review, there are no plans to extend it further.”

Coronavirus – Fri Nov 13, 2020
Closed pubs and restaurants in Shoreditch, east London, at the end of the first full week of the four week national lockdown in England (Dominic Lipinski/PA)

Later, Chief Secretary to the Treasury Steve Barclay said it is “right that we wait for more clarity” on the UK’s economic health before deciding on the future of the Universal Credit uplift.

Stephen Timms, Labour chairman of the Commons Work and Pensions Select Committee, urged the Government to raise legacy benefits in line with the £20 per week Universal Credit uplift and to make this permanent.

Mr Barclay replied: “This uplift continues until the end of March… The Government is not ruling anything out for the future but it is right that we wait for more clarity on the national

Mel Stride, Conservative chairman of the Commons Treasury Select Committee, asked why an economic impact analysis of Covid-19 on different economic sectors has not been published.

He said: “There are reports that the Treasury has created an economic impact analysis providing significant detail on the effect of coronavirus across the various sectors of the economy.

“For each sector this analysis allocates red, amber and green ratings for revenue, jobs and financial stability.

“Given the vote tonight, could I ask (Rishi Sunak) why this analysis has not been published?”

Spending Review
Chancellor of the Exchequer Rishi Sunak said MPs requests for an impact assessment “is all provided in the report” (Yui Mok/PA)

Mr Sunak responded: “Obviously the analysis we did publish it did talk specifically about sectoral impact, and in the document there was specific links to the various places that people can find a GVA and employment by sector, and indeed financial resilience of local businesses at some stages by sector, by region.

“It’s that analysis, as we said, that will determine the particular economic impact in an area.

“That information is all provided in the report for people to look at.”

Labour’s shadow chancellor Anneliese Dodds asked Mr Sunak to confirm low-paid public sector workers will receive a “real-terms pay cut” under his spending proposals.

She noted the Chancellor had said public sector workers on less than £24,000 would be guaranteed a pay rise, before adding they would receive a fixed increase of £250.

Ms Dodds asked: “Will he correct the record to confirm he’s delivering a real-terms pay cut for many teaching assistants, prison officers and police constables?”

Mr Sunak replied: “I stand by what I said.

“Those earning less than £24,000 in the public sector, 2.1 million people or 38% of all people working in the public sector, will receive a guaranteed fixed increase of at least £250.”

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