Fri 4th Feb 2022 - Keeping VAT at 12.5% would save £4.6bn over ten years and create almost 300,000 jobs, say trade bodies Keeping VAT at 12.5% would save £4.6bn over ten years and create almost 300,000 jobs in ‘once of a lifetime opportunity’: Keeping VAT at 12.5% for hospitality and tourism rather than returning to 20% in April would save £4.6bn and help “level up” the country, a coalition of industry bodies have told the government. The British Beer and Pub Association, UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions have published a study that highlights the huge benefits such a move would grant the government over a decade. The report found a permanent rate of 12.5% will bring VAT on hospitality and attractions in line with the European average and set off a virtuous cycle of industry investment and growth. It went on to say that, over a decade, the reduced level of VAT would create 286,850 jobs, generate £7.7bn of additional turnover, deliver £4.6bn in net present value of fiscal gains and return a positive gain on the government’s investment in less than five years. UKHospitality is also in the process of putting together an “open letter” it plans to send to chancellor Rishi Sunak highlighting the “once in a lifetime” opportunity the retention of the current lower rate of VAT would bring. It states: “The reduced rate of VAT that you introduced as part of the Plan for Jobs has been an incredible success, helping us to sustain jobs and businesses despite the ravages of the pandemic’s various waves. It has been critical in keeping prices affordable for our customers. The policy has been a resounding success and is central to our sector and the nation’s economic recovery. We therefore implore you to maintain VAT at 12.5% and witness the hospitality sector rebound strongly and deliver jobs and growth around the country.” The trade body has also engaged Deloitte to gather data on the impact of the reduced rate of VAT. This data will be presented to HM Treasury to assist in the understanding of how the reduced rate has impacted the hospitality sector, as well as gauging the current levels of confidence and sentiment in the industry as a whole. A spokesman for the coalition of industry bodies said: “We must now reignite our industry with a long-term approach and vision to our sector recovery. The report sets out the undeniable case for making permanent the 12.5% rate of VAT. The tourism and hospitality sectors can truly act as an engine for the UK’s recovery as we look beyond the pandemic. As we approach the point where the reduced rate comes to an end, we are united in calling on the government to change course and cancel the planned increase. The economic and societal benefits of making this change would be enormous.”