Hospitality wants permanent VAT cut, 'not gimmick'

Hospitality businesses in Cornwall are advocating for a permanent, rather than temporary, reduction in VAT, dismissing short-term cuts as mere "gimmicks." This comes after the government's £300 million Great British Summer Savings scheme, which offered a temporary VAT reduction from 20% to 5% on family attraction tickets, children's dine-in meals, and cinema tickets for just under ten weeks. Notably, this VAT cut on children's meals did not extend to takeaway options.

Keith Southwell, managing director of Lappa Valley Railway and chair of the Cornwall Association of Tourist Attractions, stated the scheme "hadn't made any difference whatsoever" to his business, with many customers unaware of the benefit despite on-site posters. He initially considered it "a great idea" but observed that some attractions used the savings to avoid price increases rather than reducing customer costs. Southwell believes a permanent 0% or 5% VAT rate for attractions would enable long-term investment. Matt Bunt, Lappa Valley's head of marketing, acknowledged the benefit of families keeping more money but criticized the policy as "put out in a bit of a rush and not very well publicised."

In contrast, Tara Stapley, general manager of the Big Sheep Farm and Theme Park in Bideford, north Devon, reported a "slight" increase in visitor numbers, partly attributing it to the scheme. Her business reduced ticket prices and expanded its children's meal offerings. Stapley noted "lots of people calling and asking about it" and that visitors were "pleasantly surprised" by ticket prices, expressing gratitude for the savings. She strongly supports an extension, stating, "100%, if that happened we'd be dancing on the ceiling," believing it would aid families and businesses during the October half-term and Halloween. Stapley also suggested the scheme needed more publicity, as "a lot of people didn't know about it."

Pete Fraser, from Harbour Lights fish and chip restaurant in Falmouth, noted that dine-in children's meals were £2 cheaper, potentially encouraging families to spend more on items like pudding or extra drinks. However, he described the temporary nature as a "gimmick," emphasizing the need for ongoing support during the challenging winter months.

Allen Simpson, CEO of UK Hospitality, suggested the policy allowed families "one more day out in the summer holidays" and encouraged "spending money that they wouldn't otherwise have spent," hoping the government would learn from this for future months.

Sally Everton, director of Visit Devon, argued the scheme should have run until November 1st to encompass the autumn half-term and families with pre-schoolers. She mentioned some Devon venues found the scheme a "logistical nightmare" and opted for "kids eat free on some meals" as an easier and more appealing alternative. Everton welcomed the initiative but advocated for "broader and permanent" VAT cuts, calling VAT "a killer to so many businesses." She concluded that a reduced and permanent VAT across the broader hospitality sector would be "the ideal situation."

A Treasury spokesperson defended the scheme, stating, "Our Great British Summer Savings has benefitted businesses and families from across the South West," increasing "footfall for businesses over the summer... and boosting local economies." They also highlighted the Chancellor's 20% cut in business rates for pubs, social clubs, and live music venues, saving thousands of local businesses over £1,000 annually.