Campaign for tourist tax U-turn ‘not just about rich shoppers’, fashion designer Sir Paul Smith argues
The fashion designer Sir Paul Smith has told Sky News that a campaign to overturn the so-called tourist tax is not just about “helping rich shoppers coming to buy cheap handbags”, but boosting the wider economy.
In an interview with Business Live, he explained why he added his name to a letter to the chancellor – signed by 400 business leaders – demanding the decision to scrap VAT-free shopping for international visitors is overturned.
It was reported over the weekend that Jeremy Hunt had asked the Office for Budget Responsibility to review the tax which, according to estimates, rakes in about £2bn for UK public coffers.
Shoppers walk along Oxford Street in central London during the Boxing Day sales. Pic: PA
The tax break ended when the UK left the European Union in 2020.
It had previously allowed foreign visitors from outside the EU to reclaim VAT on purchases in Britain, in the same way they do when shopping across the bloc.
It was abolished by then chancellor Rishi Sunak on the grounds that the benefits were almost entirely enjoyed by a handful of businesses in central London.
Luxury brands, hotel and restaurant chains and tourism chiefs have lobbied strongly since that their recoveries from the COVID pandemic have been severely dented by overseas visitors choosing to spend their money in destinations like Paris and Milan instead.
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Can the govt afford to cut taxes?
Sir Paul told Ian King: “It’s not always necessarily about rich shoppers coming to buy cheap handbags, it’s the fact that when they’re here, they do spend money in our great cities.”
He made the case for an economic boost from tourism while revealing that a third of his business relies on the tourism market.
“My passion is that the Royal Academy, the National Gallery, the lovely hotels… all the European hotels we’ve seen come back after the pandemic and we haven’t so… it’s about bringing people to the country and seeing all the fantastic things we’ve got.”
Shares in luxury retailers were up on Monday in response to the story of the OBR’s review in The Sunday Times.
Burberry climbed 2.3% and Watches Of Switzerland Group rose 3.6% at the open.
Hotel stocks were also up, though not by as much.
The hospitality sector argues that the tourist tax has been a factor behind its need for additional support since the pandemic.
The recently released hospitality market monitor from CGA by NIQ and AlixPartners showed that 6,180 licensed premises had closed between December 2023 and the same month a year earlier.
It meant that almost 23,000 venues had closed in total over the past three years, with the cost of living crisis and impact of interest rate rises to control inflation taking an additional toll.
Russell Nathan, senior partner at the accountancy firm HW Fisher, suggested he would be surprised to see no action on the issue at the budget.
“The chancellor can no longer ignore the significant damage that has been done,” he wrote.
The UK economy and its reputation amongst tourists has suffered dramatically… beyond increased sales and the number of tourist visitors, the reversal will also entice overseas retailers to invest more in the UK, which in turn will create new job opportunities across the entire supply chain.”
Business
Ex-Post Office head of IT says Paula Vennells ‘hoped to avoid’ inquiry – and reveals she blocked her number
A former Post Office executive has said she was forced to block ex-boss Paula Vennells’ phone number after the ex-CEO called multiple times asking for help to avoid an independent inquiry into the Horizon IT scandal.
Lesley Sewell, previously the company’s head of IT, told the Post Office inquiry on Thursday that former CEO Ms Vennells had reached out to her four times between 2020 and 2021.
Ms Sewell said that she blocked Ms Vennells’ number due to discomfort with the contact.
In her witness statement to the probe, Ms Sewell said that one of Ms Vennells’ emails referenced the need to fill in memory gaps regarding Horizon and “Project Sparrow”, a committee addressing issues with forensic accountants who identified flaws in the accounting system.
“Paula contacted me on four occasions in total. I recall blocking her number after the last call as I did not feel comfortable with her contacting me,” Ms Sewell said.
“I had not spoken to Paula since I had left POL [Post Office Limited] in 2015.”
Lesley Sewell giving evidence to the Post Office inquiry. Pic: PA
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According to Ms Sewell’s testimony, former chief executive Ms Vennells said that she had “been asked at short notice” to appear before a parliamentary select committee on “all things Horizon/Sparrow and need to plug some memory gaps”.
Ms Sewell says Ms Vennells added: “My hope is this might help avoid an independent inquiry but to do so, I need to be well prepared.”
Ms Sewell, who struggled to contain her emotions and broke down in tears while giving her oath at the start of her inquiry evidence, was offered support and breaks as needed by chairman Sir Wyn Williams.
Sir Wyn told the former executive: “Ms Sewell, I appreciate this may be upsetting for you, Ms Price will ask you a number of questions in a proper and sensible manner, but if at any time you feel you need a break, just let me know, all right?”
Lesley Sewell taking the oath at the Post Office inquiry. Pic: PA
The Post Office has faced significant scrutiny following the ITV drama Mr Bates Vs The Post Office which highlighted the Horizon IT scandal.
The faulty system led to the prosecution of more than 700 sub-postmasters between 1999 and 2015, with many still awaiting full compensation despite government announcements regarding payouts for those with quashed convictions.
London City Airport will on Thursday name its first permanent female chief executive as it targets approval of an expansion plan that would create nearly 1,500 jobs.
Sky News understands that the Docklands airport has told staff that Alison FitzGerald, who has been co-CEO since January alongside finance chief Wilma Allan, has landed the role.
A woman wearing a face mask walks by London City Airport, which suspended its operations during the pandemic
She replaces Robert Sinclair, who left in January after six years to become boss of the High Speed 1 rail link.
The airport is owned by a consortium of Canadian pension funds and Kuwait’s sovereign wealth fund, which have backed a plan to increase its annual passenger traffic from about 6.5m to 9m.
It is appealing against Newham Council’s rejection of a planning application that would see it extend operating hours at the site, which is popular with City commuters.
The airport’s proposals include no increase in the annual number of flights and, in what it claims is a first for a UK airport, a commitment that only cleaner, quieter, new generation aircraft will be allowed to fly in any extended periods.
The runway at London City Airport
The appeal is being reviewed by the Independent Planning Inspector.
Its change of leadership makes London City the second of the capital’s airports to name a new CEO in quick succession, following the arrival at Heathrow of Thomas Woldbye last year.
“London City delivers one of the best passenger experiences in the UK and I’m committed to building on this success even further,” Ms FitzGerald said.
Representatives of Thames Water’s multinational syndicate of shareholders are poised to quit as directors of its corporate entities after refusing to inject the billions of pounds of funding required to bail it out.
Sky News has learnt that a number of board members at companies connected to Kemble Water Finance, Thames’s parent, are expected to resign in the coming days.
City sources described the move as “the logical next step” after the owners of Britain’s biggest water utility said they would not commit more than £3bn to help upgrade its ageing infrastructure and shore up its debt-laden balance sheet.
A default on part of Thames Water‘s holding company debts last month has raised the prospect that the company is heading towards special administration, a form of insolvency that would effectively leave the government liable for managing a utility firm which serves nearly a quarter of Britain’s population.
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Thames Water under threat
Thames Water is owned by a group of sovereign wealth funds and pension funds from countries including Abu Dhabi, Australia, Britain, Canada and China.
A number of the investors are represented on boards which sit at various points in the group’s labyrinthine capital structure.
It was unclear on Wednesday whether Michael McNicholas, a representative of the giant Canadian pension fund Omers and who sits on the board of Thames Water Utilities Limited, was among those in the process of stepping down.
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Along with the rest of the privately owned water industry, Thames Water faces a crucial moment next month when Ofwat, the industry regulator, publishes its draft determination on companies’ five-year business plans.
The draft rulings will be subject to negotiation before final versions are published in December.
Thames Water and a spokesman for Kemble declined to comment.
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