Dear Constituent,

Thank you for contacting me about the reduced rate of VAT for hospitality and tourism businesses.

I appreciate your concerns. Hospitality has been hit extremely hard by the pandemic and another difficult Christmas due to the Omicron variant, and even now businesses continue to face difficulties and a long road to recovery. At the same time, the industry is vital to our revival and with the right support can help us bounce back from the crisis.

I note the calls from hospitality businesses for the current reduced rate of VAT to be maintained either permanently, or at least until the end of 2022. In response to questions on this, the Government has said it has no plans to extend the 12.5% rate of VAT. It says the reduced rate was designed as a temporary measure designed and that as restrictions are lifted it is right that temporary tax reliefs are removed.

However, given the tax increases and inflationary costs businesses are facing, I believe the Government needs to assess what impact ending the reduced rate of VAT for hospitality and tourism – at the same time as business support and rent protections – will have on jobs and businesses in the sector. I can therefore assure you that I will continue to keep in mind the concerns of hospitality and tourism and I hope the Government gives them proper consideration.

More widely, I am concerned that the Government is not listening to hospitality and other businesses about the support they need. On business rates, for example, I believe it has missed the opportunity for fundamental reform. In the final report of its business rates review, the Government said it was “not proposing changing the nature of the tax, or the basis of valuation”. I believe, though, that we need to scrap the current system and replace it with one that is fairer and provides a level playing field for the high street businesses that do so much to enrich our lives. Such an overhaul is long overdue and must be part of a real plan to help our hospitality industry thrive.

Thank you once again for contacting me. Over the course of the pandemic, businesses supported us when we needed them most. It is vital that our hospitality sector recovers strongly from the crisis and does not lose out because of the sacrifices it has made.

Yours Sincerely,

Peter Dowd MP