Minister for London says government should restore VAT-free shopping

Minister for London says government should restore VAT-free shopping

The government should back down now on its refusal to reinstate VAT-free shopping for international tourists. That was the call from a perhaps unlikely opponent of the Chancellor, minister for London and Sutton & Cheam MP Paul Scully, speaking at yesterday’s BusinessLDN Business Improvement Districts summit.

In a combative speech, Scully (pictured) said the Treasury’s stance – that the tax concession would be a cost to the exchequer –  was misguided. He backed the business lobby group’s argument, set out in a letter to Number 11, that the retail retail, particularly in London, has been paying the price, with overseas tourists shunning the UK in favour of EU countries where shopping is now 20 per cent cheaper.

The minister, who was unexpectedly overlooked when his party selected its candidate for the London mayoralty in July, went on to give his backing to the Crossrail 2 scheme, the north-south counterpart to the Elizabeth line, which was put on hold in 2020 as a condition of the government’s financial support for Transport for London during the pandemic.

But “levelling up” did not mean the government had “forgotten London”, he said. “Each part of London is contributing to making London the cornerstone of the UK economy. None of the rest of levelling up can happen without London.” He added that London’s post-Covid recovery is well underway, with the business improvement districts (BIDs) playing a major role.

The first BID in the capital was launched in Kingston 20 years ago. Now, the conference heard, there were 75 of them across the city, generating £60 million in revenue from their levies on business ratepayers, and increasingly involved not only in supporting their local areas but also in attracting new investment and taking on larger improvement work.

The recent Strand Aldwych pedestrianisation project, spearheaded by the Northbank BID, was a flagship example, said BIDs pioneer Ruth Duston, managing director of the Primera consultancy. Other schemes in the pipeline include Oxford Street public realm improvements, getting underway in a partnership between Westminster Council and the New West End Company BID, and ambitious plans from the London Heritage Quarter coalition of BIDs to pedestrianise the Parliament Square area.

Challenges nevertheless remained, delegates heard, including pressure from inflation, tourism numbers and footfall on high streets still not fully recovered from the pandemic, and the continuing impact of  “hybrid” working, along with funding shortfalls.

London is still spending “far less” than its competitor cities on tourism promotion, according to Laura Citron, chief executive of City Hall’s tourism and inward investment agency London & Partners. “We need long-term sustainable funding on a scale befitting a global city,” she said.

Promoting the “right kind” of tourism goes hand in hand with promoting business investment, Citron added, while a warning about over-reliance on the visitor economy came from Westminster Council cabinet member for economic development Geoff Barraclough.

“Tourism brings huge amounts of disruption, noise and rubbish, family homes turned into short-term lets and poor-quality jobs,” he said, arguing for more funding to manage the impact of tourism on residents, perhaps through levies on night-time businesses and hotels.

Transport for London chief customer and strategy officer Alex Williams also had a warning about money. “The big issue is long-term funding,” he said. “We don’t yet know how much money we [TfL] will have next March. There needs to be a reality check about how much money we can bring to the table.”

There was better news, though, for advocates of TfL’s long-standing plan to extend the Dockland Light Railway to Thamesmead, he said, following communities secretary Michael Gove’s recent announcement of a “Docklands 2.0” plan for new housing in East London, including improved transport connections. Positive discussions had been held with the minister about TfL’s business case for the extension, which could “unlock” 20,000 new homes, Williams said.

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