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

Oxford

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’SaisonsBicester 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 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.