West End businesses have called on the Chancellor to reinstate tax free shopping ahead of tomorrow’s autumn fiscal statement.
Organisations representing the West End’s retail industry said a pledge from Jeremy Hunt to restore the measure would make a “huge difference” in supporting tourism and provide a much needed boost to the hospitality and leisure sectors.
VAT free shopping for foreign visitors was last floated by the Truss government as part of its “Growth Strategy”, but was quickly put on hold by Hunt along with almost all proposals in the September mini budget.
Marble Arch BID, which represents over 200 businesses in Edgware Road and Marble Arch, urged the Chancellor to restore the plan in order to prevent a “huge blow” caused by a drop in international tourism.
Kay Buxton, its chief executive, said: “It is critical that the Chancellor offers support to businesses in the hospitality and leisure industry, especially as they tackle the challenges posed by high inflation and soaring energy bills, as well as the threat of a fall in international tourism due to the global recession and the rising cost of living. “
Marble Arch is a visitor hotspot, welcoming around 1.1 million tourists annually, of which over 60% are from overseas.
Buxton added: “Any fall in international tourism would be a huge blow to our hospitality and leisure businesses.
“If the Chancellor does reintroduce tax-free shopping in his Autumn Statement it will encourage more international visitors back to the UK, and London in particular, which can only be a good thing for the capital’s retail and hospitality businesses who will benefit from the additional spending they are expected to bring.
“As a BID we will always continue to advocate on behalf of businesses for policies which support all our members and allow them to offer the excellent, world-class service and choice in this key London district.”
The calls are supported by research from the Association of International Retail and Oxford Economics, showing that tax free shopping could pull in an extra 1.6 million visitors in its first year, generating £2.1 billion in retail sales, in addition to a further £1 billion in other services such as hotels and restaurants.
This would more than offset costs in VAT refunds, which the study concluded had been overstated by the Treasury. It estimated that direct fiscal costs in 2025/26 would be 70% less than the £2 billion projected in the government’s September growth plans.
The New West End Company also backed the scheme’s reintroduction alongside other initiatives to promote growth including simplification of visitor visas and extension of Sunday trading hours, despite its latest figures predicting a sales spurt of £1.3 billion over the festive season.
But its interim chief executive, Dee Corsi, still warned that with the cost of living squeeze, families were more likely this year to “be more cautious about how they spend”, and that steps needed to be taken to ensure that London was not put at a “severe global disadvantage”.
She said: “Whilst I’m heartened to see the West End’s recovery continue to grow this winter, for us to succeed in the long-term we need to ensure that the nation’s high street and the wider country remains globally competitive.
“There are a number of simple routes to achieving this that the Government is overlooking, or simply ignoring.
“Without an independent assessment of tax-free shopping and a review of Sunday trading hours in London’s International Centres, we risk putting London and the UK at a severe global disadvantage.”
Main image: Flickr/Tony Webster.