Temporary VAT cuts don’t go far enough – Chamber

A series of temporary “consumer-focused” VAT reductions do not go far enough to alleviate pressure on businesses, Greater Birmingham business leaders said today.

The Chancellor announced yesterday a temporary reduction in VAT from 20 per cent to 5 per cent on a series of family attractions throughout the school holidays.

It means ticket prices for families at attractions such as theme parks, zoos and museums will be cheaper the summer break.

The reduction will apply from when schools break up in Scotland at the end of June until children return to classrooms in England, Wales and Northern Ireland on 1 September.

The discount, which will be up to businesses to pass on to customers, will also apply to children's entry to cinemas, soft play and theatres, as well as children's meals in restaurants and cafes.

As well as the cut in VAT on tickets for family days out, Rachel Reeves announced free bus journeys for under-16s in England in August and cuts to import taxes on some basic foods.

A 12-month HGV road tax holiday and a reduction of over a third to red diesel duty until the end of 2026 are also among the temporary measures.

But business leaders said the measures do not go far enough to help businesses.

Ruth Fleet (pictured), senior policy advisor at Greater Birmingham Chambers of Commerce, said: “The Chancellor’s announcement was largely consumer-focused, without recognising fully the huge stress that many hospitality businesses are currently under.

“A temporary and partial cut to VAT will not bring rates in line with other European countries and will not address other challenges businesses are facing such as the high cost of employment and energy costs.

“While the 12-month HGV road tax holiday and one-third cut to red diesel until the end of the year will undoubtedly offer some relief to agricultural and logistics businesses, the Government needs to look closely at how it can reduce the cost of business in the long term to stimulate economic growth.”

Meanwhile, a Birmingham restaurant owner has called on Government to extend the VAT reduction to all meals to give the “beleaguered” industry a much-needed boost.  

Ann Tonks, co-owner of Edgbaston restaurant Chapter, said: “The Chancellor’s announcement today regarding VAT reductions over the summer holidays for family attractions and children’s meals is, of course, welcome news for families.

“But we can’t frame this as positive news for the hospitality industry. The VAT reduction from 20 per cent to 5 per cent should be extended to all meals in order to generate demand and help our beleaguered industry.

“We are on our knees and her continued lack of support for our industry is mind boggling.”