Harrogate and Knaresborough Conservative MP Andrew Jones has said a bid to extend the reduction on VAT for the hospitality and tourist sector would help a “huge number” of companies in his constituency.
Chancellor Rishi Sunak announced in this year’s Budget the 5% reduction on VAT for the sector would be extended until September.
Now a clause in the Finance Bill proposes further extending it until March next year.
Speaking in a Commons debate yesterday, Mr Jones said the move would cost £5 billion a year but would help organisations that were “running on empty”.
He said the sector employed 9,464 people in Harrogate and Knaresborough before the pandemic, which “puts us in the top 10% of constituencies across the country”.
He added:
“The industry needs a period of stability where it can rebuild.
“One challenge will be when businesses have been through the summer and they face the standard seasonal reduction but may not have built up the cash flow in reserve to see them through the leaner months.
“This initiative recognises that risk, so the continuity of support through the winter is welcome.”
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Mr Jones said the sector’s supply chain had been particularly badly affected, adding:
“I know that, in my own constituency, some businesses in the supply sector will not be reopening, and businesses that have served the industry well for many years are at a crisis point.”
Extending the 12.5% rate of VAT would, he said, stimulate demand, especially in the quieter winter season, and that demand would generate the cash flow that businesses need.
He quoted Ian Fozard, who runs Roosters brewery in Knaresborough, saying “most businesses like ours need a sustained period of good trading to build back some reserves”.
Peter Banks, managing director of Rudding Park Hotel and Spa, told the Stray Ferret in March the reduction in VAT meant “that my team will still be able to pay their mortgages”. He added:
“We are lucky that we as a business have more fat on our back, but there are lots who live hand to mouth.”
