VAT on tourism businesses should be cut to 5% to boost the economy post-COVID-19, says the Country Land and Business Association (CLA). The call comes as the business group, which represents 30,000 rural businesses in Wales and England, releases a raft of new suggestions to get the rural economy moving.

CLA Cymru Director, Nigel Hollett said:

“The Welsh rural tourism, amenities and hospitality sector has been crippled by the Covid 19 restrictions this year. The year will see rural tourism businesses in the UK experience a catastrophic fall in revenue by up to £17.6bn. In Wales the sector is seeing some welcome support from Business Wales’ Emergency Resilience Fund, but this – and other parts of the rural economy – will need further, longer-term support in a Welsh economic recovery plan stemming from the Welsh Government’s Prosperity for All strategy.

“It is right that, for the moment, people stay away and continue to follow government guidelines.  When the restrictions are lifted we are encouraging everyone to book their family holiday in the beauty and safety of the Welsh landscape.

“In the UK VAT on tourism businesses, at 20%, is far higher than in many other countries, including France (10%), Spain (10%) and Greece (13%). This is a responsibility of the UK Government despite some devolution of tax-raising powers to the Welsh Government – but which can still make representations to HM Treasury representing Welsh interests.

“A reduction in VAT to levels seen in other countries will ensure that domestic tourism is competitive and affordable. Competitive pricing will significantly boost the economy and keep our carbon footprint down by encouraging more holidays taken within the UK.

The CLA published its paper ‘COVID-19: Restarting the economy in rural areas’ this week arguing that rural areas have an in-built advantage to implement social distancing thanks to lower population density, more space and less reliance on public transport.

Mr. Hollett added,

“We have already called for consistency and cooperation from the governments in Cardiff and Westminster. We’re also calling for the governments to allow time for businesses to stock-up, staff-up and prepare to trade.

Other measures should include:

• The tapering of furloughing schemes and other business support measures slowly to avoid a cliff edge
• Taking measures to create a more robust food supply chain, including efforts to ensure consumers buy British and buy local
• Simplifying the planning system to encourage business start-ups in the rural economy greater flexibility to the use of buildings (e.g. converting into homes).
• The rural economy is 16% less productive than the national average, closing the gap could be worth an additional £43bn to the national economy in England alone.

Mr. Hollett added,

“Although the current situation is very difficult for rural businesses there is also an opportunity to reflect and then to build a better rural economy on a sounder competitive basis.  The rural economy has a huge amount to offer the country – economically, socially and environmentally.  Government in Wales and Westminster can show some real ambition in unleashing its potential.”