Following the Chancellor’s Spring Budget announcements on 15 March, UKInbound has collated a list of key takeaways for the tourism industry:
Extension of free childcare
The provision of 30 hours of free childcare per week (over 38 weeks per year) has been extended to children aged 9 months and up for eligible working parents. The scheme was previously eligible for children aged 3 and up, so it is hoped that the extension will encourage people back into the labour market after maternity leave. This could go some way to ease the labour pressures felt in the industry, however the scheme will be rolled out in phases from April 2024 so we won’t see the full effect for some time. Other measures to support people back to work were announced in regards to benefits changes and a new pathfinder scheme to stimulate the supply of wrap-around childcare.
Air Passenger Duty
APD rates for international short-haul flights will remain frozen in 2024–25. Domestic flights will go up by 50p and long-haul rates by £1.
Levelling Up Partnerships
Funding of £400m was announced for regeneration through ‘levelling up partnerships.' A third levelling up round will proceed later this year, with £1 billion in funding promised.
Alcohol Duty
Duty rate of all alcoholic products produced in, or imported into, the UK will increase in line with RPI. Draught Relief will increase from 5% to 9.2% for beer and cider draught products, and from 20% to 23% for wine, spirits-based and other fermented draught products. These changes will take effect from 1 August 2023. The Government say the draught relief will ensure that a typical pint of beer in the pub will always be lower than in the supermarket.
DCMS Funding
DCMS departmental funding will fall from £2 billion in 2022-23 to £1.5 billion in 2023-24, and £1.4 billion in 2024-25.
Industry asks
Many of the industry’s key asks were sadly lacking from the Budget. The lack of any additional specific energy support for businesses could prove fatal to some businesses in the sector.
There was also no movement on VAT-free shopping for international visitors – a key policy to ensure that the UK remains competitive against other countries.
UKInbound maintains its call for the Treasury to commission a full analysis from the Office of Budget Responsibility to see how much a VAT-free shopping policy would in fact be a net contributor to the Treasury.
UKInbound Response
UKInbound CEO Joss Croft commented: “We welcome changes announced by the Chancellor on new provisions to help with the cost of childcare and to get the economically inactive back to work in addition to pension reforms – all of these measures should go some way to addressing the significant recruitment challenges that inbound tourism continues to face."
"However, I think that the Chancellor has missed some key opportunities to boost the recovery of the inbound tourism industry in the UK, such as the failure to re-introduce VAT free shopping for international visitors alongside maintaining sky-high levels of air passenger duty which reinforces the UK’s uncompetitive position against our European neighbours."
“We need urgent action from the Government to help inbound tourism continue to recover from the pandemic, a recovery that will grow the economy, creating better-paid jobs and opportunities right across the country. We urge the Government therefore to review the competitiveness of the UK as a visitor market, from taxation, visas to international marketing and come back with a package of measures that will allow tourism to play its vital role in our economy throughout the UK.”
Visit West would like to thank UKInbound for their kind permission to re-publish this update.
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