Ed Vaizey: Ending tax-free shopping for international visitors would be disastrous for the British economy

19 Oct

Lord Vaizey of Didcot is a Conservative Life peer who has sat under this title in the Lords since 10 September 2020. Prior to joining the Lords, he sat in the Commons as an MP, and was first elected in 2005.

I bow to no one in my admiration for Rishi Sunak.  Taking up the toughest of jobs at the toughest of times, he has played a blinder. Job Support Scheme, Bounce Back Loans, Eat Out to Help Out. Even though I’m not an MP any more, I know from talking to my former constituents how much this help has been needed and welcomed.

But with the Government having to make so many decisions so quickly, it’s unlikely everyone will be bang on the money. Even in normal times (remember those?) we occasionally saw unintended consequences.

I’m afraid to say that the Treasury decision to end tax-free shopping for international visitors at the end of December is one of those decisions. At the moment, visitors can reclaim the VAT on stuff they buy here. From January, this will be stopped.

I can see why the Treasury thought it was a clever wheeze. They think it will only affect a small group of very wealthy people. If it hits anywhere, it will hit Bond Street and Bicester village – not exactly marginal vote territory.

But there’s a problem. These wealthy visitors don’t just shop – they eat out, they go to museums and the theatre, stay in hotels. They also travel outside London, visiting places like York and the Lake District.

Also, the posh stuff they buy is often actually made here. Yes folks, those Burberry suits are made in Yorkshire. And those French Chanel jumpers are actually made in Scotland. Which is why we are now in the weird position of the SNP Finance Minister calling out a Tory Chancellor for not backing British business.

The Treasury assumptions, which I have seen, act as if the vast majority of visitors will still come, so the Treasury will make a net gain from them paying VAT. But why should they when we will be the only country in Europe not offering VAT-free shopping?

As a result of this decision, they are likely to go to Paris, Milan or any other European city instead of London. In fact, a recent poll of these visitors showed that if the UK ends tax-free shopping 93 per cent would not buy goods here and 60 per cent wouldn’t even bother visiting post the pandemic. Maybe that’s why the French are giving them a nudge by lowering their VAT free threshold the day after the Treasury took the decision.

It doesn’t take many visitors to change their plans. 13 per cent of all-tax free shoppers account for 44 per cent of all tax-free sales. All it takes is for a small proportion of high-spending international tourists to go elsewhere before the impact is felt. The end result is an increase in job losses.

Retailers, hoteliers and airport chiefs from all over the country have warned that scrapping tax-free shopping for international tourists has put 70,000 jobs in jeopardy. The decision is a big blow to the regions. Tax-free shopping supports 1,800 jobs in Edinburgh and 1,200 jobs in Manchester alone, and the money spent in London stores helps high streets throughout the UK.

Most flights from the UK’s regional airports are to and from Europe. Stores in Birmingham and Manchester had hoped to double sales to EU visitors on the understanding that tax-free shopping would be extended to EU countries once we’d left the bloc. Now the likes of Selfridges and Marks & Spencer are warning the impact it will have on jobs across the country instead. This is not what those workers voted for.

If allowed to go ahead, the decision to end tax-free shopping for international visitors will put Global Britain at a competitive disadvantage and result in thousands of jobs losses. I hope our pragmatic Chancellor will think again.

Tom Harris: Scottish Labour’s continuing capitulation to nationalism reeks of political desperation

20 Aug

Tom Harris was a Labour MP from 2001 to 2015. He resigned his party membership in 2018.

The Scottish Labour Party is not proving to be as reliable an ally in the fight against nationalism as many of its current and former supporters might have hoped. And that is being generous.

The latest capitulation came yesterday in the chamber of the Scottish parliament, when a motion tabled by the Scottish government on the proposed new UK single market was debated. There is so much dishonesty and hypocrisy involved here that to cover every aspect would demand too much space. So I will try to summarise.

SNP ministers, for perfectly understandable reasons, don’t like the idea of a single market in the UK, despite our having enjoyed the benefits of one since 1707. About 60 per cent of all Scotland’s exports are destined for markets in the rest of the UK, far outweighing the importance of the EU single market.

Yet the nationalists have consistently prioritised, in a political sense, the EU single market over the UK because… well, because it suits them. Scottish nationalism has thrived by emphasising Scotland’s links with Europe and diminishing its historical, economic and social ties to the rest of the country.

The strategy seems to be working, so who can blame them?

Not Scottish Labour, that’s for sure, which lent its wholehearted support yesterday to the nationalist narrative. The SNP’s ostensible opposition to a UK single market is (it is claimed) based on fears that a UK-US trade deal will flood the country with sub-standard food which would then be sold in every part of the UK, denying devolved governments the right to impose tougher food standards in their neck of the woods.

Labour then piled in with its own grievance about how a post-EU single UK market would somehow prevent state aid being offered to parts of the economy. This is the same Scottish Labour Party that, virtually unanimously, campaigned against leaving the EU, despite the commission’s well-known restrictions on state aid in member countries. Brussels preventing member states bailing out companies is fine, but we can’t have Westminster doing that, can we? (Ironically, it’s far more likely that a post-EU Conservative government will look more kindly on state aid than the EU ever did, as we have seen in recent months).

When we were still in the EU, the devolved administrations had no power to restrict the sale of any item that was on sale anywhere else in the EU single market, nor did they ask for such powers. Anything manufactured in the EU, or even imported into it and deemed an acceptable standard, was A-OK by nationalists. But now that we’re outside the EU, trade barriers within our own island are the only thing standing between us and a lorry load of chlorinated chicken.

Let’s cast our minds back to the negotiations on the Transatlantic Trade and Investment Partnership (TTIP), the embryonic trade agreement between the EU and the US that hit the rocks in 2018 after President Trump called a halt to the talks.

It is quite possible that if Hillary Clinton – that figure so beloved of the left and, we must assume, the nationalists also – had become president in 2017 instead of Trump, the TTIP process would have continued and might by now have been enacted.

Yet where was the opposition in Labour and SNP ranks to a deal that was negotiated in the strictest privacy and whose terms could only be speculated upon even as talks were on-going?

In the 1990s, Scottish Labour cynically and dishonestly painted the Conservatives as anti-Scottish because of its then opposition to devolution. The tactic proved profitable in terms of electoral gains. But then – and who could have predicted this? – the SNP learned that lesson and turned it on Labour itself, decrying Scottish Labour as anti-Scottish because it opposed independence. Again, the electoral dividends were considerable.

And now Scottish Labour is returning the compliment by taking a leaf out of the nationalists’ playbook and obediently repeating the mantra, “London bad, Brussels good”. The SNP is so opposed to the British state that it would rather have Scottish fishing policy decided in Brussels than in Edinburgh. Labour follows this line.

Likewise, nationalists would prefer Scotland’s trade policy to be decided in Brussels than in London, the former being trusted to produce a marvellous and, no doubt, progressive, deal while one negotiated by those evil Tories in London would necessitate customs checks at Gretna. Again, Labour is happy to parrot this propaganda too.

Perhaps Labour’s continuing capitulation to nationalism is an inevitable response to a succession of increasingly humiliating electoral defeats; its members and elected representatives must gaze upon the SNP’s seemingly unstoppable rise and conclude that Nicola Sturgeon’s party is doing and saying something right.

To paraphrase an old (and funny) anti-French joke, how many Scottish Labour MSPs does it take to defend the Union? Answer: no one knows because it’s never been tried.

Tom Harris: Scottish Labour’s continuing capitulation to nationalism reeks of political desperation

20 Aug

Tom Harris was a Labour MP from 2001 to 2015. He resigned his party membership in 2018.

The Scottish Labour Party is not proving to be as reliable an ally in the fight against nationalism as many of its current and former supporters might have hoped. And that is being generous.

The latest capitulation came yesterday in the chamber of the Scottish parliament, when a motion tabled by the Scottish government on the proposed new UK single market was debated. There is so much dishonesty and hypocrisy involved here that to cover every aspect would demand too much space. So I will try to summarise.

SNP ministers, for perfectly understandable reasons, don’t like the idea of a single market in the UK, despite our having enjoyed the benefits of one since 1707. About 60 per cent of all Scotland’s exports are destined for markets in the rest of the UK, far outweighing the importance of the EU single market.

Yet the nationalists have consistently prioritised, in a political sense, the EU single market over the UK because… well, because it suits them. Scottish nationalism has thrived by emphasising Scotland’s links with Europe and diminishing its historical, economic and social ties to the rest of the country.

The strategy seems to be working, so who can blame them?

Not Scottish Labour, that’s for sure, which lent its wholehearted support yesterday to the nationalist narrative. The SNP’s ostensible opposition to a UK single market is (it is claimed) based on fears that a UK-US trade deal will flood the country with sub-standard food which would then be sold in every part of the UK, denying devolved governments the right to impose tougher food standards in their neck of the woods.

Labour then piled in with its own grievance about how a post-EU single UK market would somehow prevent state aid being offered to parts of the economy. This is the same Scottish Labour Party that, virtually unanimously, campaigned against leaving the EU, despite the commission’s well-known restrictions on state aid in member countries. Brussels preventing member states bailing out companies is fine, but we can’t have Westminster doing that, can we? (Ironically, it’s far more likely that a post-EU Conservative government will look more kindly on state aid than the EU ever did, as we have seen in recent months).

When we were still in the EU, the devolved administrations had no power to restrict the sale of any item that was on sale anywhere else in the EU single market, nor did they ask for such powers. Anything manufactured in the EU, or even imported into it and deemed an acceptable standard, was A-OK by nationalists. But now that we’re outside the EU, trade barriers within our own island are the only thing standing between us and a lorry load of chlorinated chicken.

Let’s cast our minds back to the negotiations on the Transatlantic Trade and Investment Partnership (TTIP), the embryonic trade agreement between the EU and the US that hit the rocks in 2018 after President Trump called a halt to the talks.

It is quite possible that if Hillary Clinton – that figure so beloved of the left and, we must assume, the nationalists also – had become president in 2017 instead of Trump, the TTIP process would have continued and might by now have been enacted.

Yet where was the opposition in Labour and SNP ranks to a deal that was negotiated in the strictest privacy and whose terms could only be speculated upon even as talks were on-going?

In the 1990s, Scottish Labour cynically and dishonestly painted the Conservatives as anti-Scottish because of its then opposition to devolution. The tactic proved profitable in terms of electoral gains. But then – and who could have predicted this? – the SNP learned that lesson and turned it on Labour itself, decrying Scottish Labour as anti-Scottish because it opposed independence. Again, the electoral dividends were considerable.

And now Scottish Labour is returning the compliment by taking a leaf out of the nationalists’ playbook and obediently repeating the mantra, “London bad, Brussels good”. The SNP is so opposed to the British state that it would rather have Scottish fishing policy decided in Brussels than in Edinburgh. Labour follows this line.

Likewise, nationalists would prefer Scotland’s trade policy to be decided in Brussels than in London, the former being trusted to produce a marvellous and, no doubt, progressive, deal while one negotiated by those evil Tories in London would necessitate customs checks at Gretna. Again, Labour is happy to parrot this propaganda too.

Perhaps Labour’s continuing capitulation to nationalism is an inevitable response to a succession of increasingly humiliating electoral defeats; its members and elected representatives must gaze upon the SNP’s seemingly unstoppable rise and conclude that Nicola Sturgeon’s party is doing and saying something right.

To paraphrase an old (and funny) anti-French joke, how many Scottish Labour MSPs does it take to defend the Union? Answer: no one knows because it’s never been tried.