Oxfordshire business leaders urge Chancellor to review decision to end Tax Free Shopping

Nov 05 2020

Experience Oxfordshire Press Release

Oxfordshire business leaders urge Chancellor to review decision to end Tax Free Shopping

Experience Oxfordshire, the Destination Management Organisation (DMO), for the county are urging the Government to review the decision to end tax free shopping for visitors to the UK as it will deliver a fatal blow to the local economy just as it faces a second national lockdown.

Scores of Oxfordshire businesses fear the local economy could suffer “catastrophic” consequences as a result of the Treasury’s recent decision to scrap VAT refunds for visitors to the UK. In a letter sent to the Chancellor Rishi Sunak, 16 Oxfordshire business leaders highlighted the importance of international tourists to the region, before describing the planned decision to remove tax-free shopping for these visitors as a “fatal blow” to struggling businesses.

The existing refund scheme, which allows tourists to reclaim the cost of VAT on their shopping, is a key driver behind the 32% increase in visitor numbers to Oxfordshire over the past decade as a result of the retail sector.

Oxfordshire attracts 30 million tourists a year who contribute £2.5 billion to the local economy, which makes up 10% of the region’s annual GDP and supports 12% of all jobs across the county. Recent figures announced by Experience Oxfordshire, as part of their Economic Impact Research, show that Oxfordshire’s retail, hospitality and other tourism sectors employ 42,000 people, with the retail industry alone directly employing 6000 and accounting for half a billion pound of expenditure.

The letter, signed by Blenheim Palace, Belmond Le Manoir aux Quat’Saisons, Bicester Village and Heythrop Park Resort amongst others, also pointed out the likelihood of European rivals like France, Germany and Italy benefiting from tourists deciding not to visit the UK after what would be in effect a 20% price increase on their purchases.

Hayley Beer-Gamage, CEO of Experience Oxfordshire, says: “This decision by the Treasury is coming at a time when Oxfordshire’s retail, hospitality and tourism industries are already reeling from the pandemic and now a second lockdown. The sector has made substantial losses during lockdown and is a long way off recovering to pre-pandemic levels. Inbound tourism accounts for 46% of visitor expenditure across Oxfordshire – we want to welcome these visitors back as soon as we possibly can, and this government measure means we cannot compete with other European destinations. We should be doing everything we can right now to plan for future businesses and not put barriers in the way of recovery. We urge our local politicians to take this back to Westminster and the treasury to review the decision.”

One of the main drivers for inbound tourism is retail which makes any potential losses here not just for retail but for the whole sector as this will impact a large proportion of inbound visitors choosing to not come and stay in Oxfordshire – which will have a significant impact across the sector on hotels and hospitality and all associated secondary spend. Experience Oxfordshire represents over 200 partners from across the county who would suffer from a loss of this retail incentive.

Dominic Hare, CEO of Blenheim Palace, says: “International tourism is crucial to Oxfordshire and to Blenheim Palace – it accounts for a significant part of the £126m economic contribution Blenheim makes to the area and the £2.5bn tourism is worth to Oxfordshire. These are the big spending visitors. Removing the VAT recovery mechanism simply makes the UK less attractive as an international destination – they will go to France instead. Some people think that this is a West End problem or a Bicester Village problem. It isn’t. It’s an everywhere problem. The value at stake across the nation is vastly more than the future cost of the VAT scheme. As a nation, we must play to our strengths in international tourism….not seek to destroy one of our crucial competitive advantages. At a stroke, this removes more value from the culture and heritage sectors than the rightly praised Culture and Heritage Recovery Scheme. It is truly staggering that it looks to anyone like a good idea.”

James Lambert, Deputy Chairman of Value Retail – owners of Bicester Village, says: “Our 25 years of experience operating Bicester Village tells us that the VAT rebate is a strong incentive for international visitors and imposing a 20% tax would encourage them to choose France or Italy over the UK .We are handing a competitive advantage to our European neighbours at the very time we should be supporting businesses which have been hardest hit by the pandemic and two lockdowns. This will have a significant impact, costing jobs in Oxfordshire’s hospitality and tourism sectors, with whom we work closely, as well as hurting businesses throughout the country.”

If you are a local business that wants to add your name to our letter of concern to the chancellor then please do get in touch at partnership@experienceoxfordshire.org It is important that the sector comes together on important issues so we can plan for recovery.

***ENDS***

For more information contact:

Email: press@experienceoxfordshire.org

NOTES TO THE EDITOR:

Copy of Letter to Chancellor

For the Urgent Attention of Rt Hon Rishi Sunak MP

Dear Chancellor,

I am writing to you as the Destination Management Organisation (DMO) for Oxfordshire and on behalf of business leaders representing firms that are wholly dependent on tourism for our business. Collectively we support thousands of jobs across Oxfordshire.

We are writing to express our alarm and concern at HM Treasury’s decision to scrap duty free shopping for international tourists from the beginning of next year. You understand more than most just how challenging trading conditions have been for our businesses in 2020, so we hope that you will also understand that any measures that will severely reduce the number of tourists coming to Oxfordshire next year and beyond could be a potentially fatal blow to many businesses who are struggling to stay afloat.

The changes to the VAT regime will drive away a number of very price sensitive international tourists who come to the UK to shop and to enjoy our fantastic cultural venues at the same time. Many of these tourists begin their holidays in London and then head across the country to famous sites in Oxfordshire, Stratford upon Avon, York, Edinburgh and many more. This measure will hit destinations across the UK hard at a time it can ill afford it and it will also devastate many local economies.

There has been some scepticism raised by your officials about whether charging tourists VAT on the goods they purchase will reduce the number of visitors to the UK, but we only need to look at recent examples to see that these tourists are extremely price sensitive.

After the June 2016 Brexit referendum and the subsequent devaluation of the pound against the dollar by 18%, the amount spent by visitors using the VAT incentive nationwide went up year on year by 28% in August 2016 and 43% in September. Just imagine this being reversed and the damage that will happen when a 20% rise in cost comes in. A corresponding reduction of visitors to Oxfordshire as a result of this decision would have a catastrophic effect on businesses who are already struggling to stay afloat, potentially costing thousands of jobs.

The Government has argued that one of the key benefits of Brexit was intended to be that British businesses would gain an international competitive advantage. But these changes have the opposite effect: they remove an incentive for tourists to visit the UK and leave business across the UK at a disadvantage relative to the rest of the continent. Already, other European countries are making moves to get a competitive edge for foreign visitors – for instance, France has just lowered its threshold for tourists to reclaim VAT.

The time is ripe for ambitious proposals that will stimulate the economy. But we fear this measure will have the opposite effect, costing billions in revenue and cutting jobs throughout the country. As you rightly look at introducing further help for sectors struggling with the impact of the pandemic, all we are asking is that you do not introduce a change that will make the most difficult year in the tourism industry’s history even more difficult.

We hope that you will review this decision and we would welcome the opportunity to discuss this with you.

We look forward to hearing from you.

Kind Regards

Hayley Beer-Gamage
Chief Executive
Experience Oxfordshire

This letter has officially been signed and supported by representatives of the following businesses;

  • Experience Oxfordshire (representing over 200 local visitor economy businesses) – Hayley Beer-Gamage (CEO)
  • Waddesdon Manor –Simon Wales (CEO)
  • Blenheim Palace – Dominic Hare (CEO)
  • Silverstone – Stuart Pringle (Managing Director)
  • Bicester Village – Clive Doble (Tourism Director)
  • The Manor Weston on the Green  – Andrew MacLachlan (General Manager)
  • Bicester Hotel Golf & Spa – Paul Morgan (General Manager)
  • Belmond Le Manoir aux Quat’Saisons  – Julia Sutcliffe (Director of Marketing)
  • Handpicked Hotels –Mark Clayton (Regional General Manager)
  • Chesterton Bicester – Kaven Gill (Owner/Director)
  • Heythrop Park Resort – Kathy Nakra (Director of Sales & Marketing)
  • Fawsley Hall – Karl Wood (General Manager)
  • Courtyard by Marriott Oxford City Centre – Kaushik Subramanian (General Manager)
  • Holiday Inn Express, Bicester – Louise Welson (Head of Sales & Marketing Atlas Hotels)
  • Vanbrugh House – Jon Went (Cluster Sales Manager Splendid Hospitality)
  • The Artist Residence – Charlotte Salisbury (Co-Founder)
    _______________________
    Experience Oxfordshire is the official Destination Management Organisation (DMO) for Oxfordshire. We are the trading arm of the parent charity, Experience Oxfordshire Charitable Trust, and are a not-for-profit partnership organisation that is committed to the promotion, management and development of Oxfordshire as a great destination to live, work, visit and do business and improving growth and productivity across the visitor economy. The DMO provides essential business advice and support to visitor economy businesses across Oxfordshire.
    www.experienceoxfordshire.org/partner