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VAT Retail Export Scheme

Volume 688: debated on Tuesday 26 January 2021

What discussions he has had with representatives of the (a) retail and (b) aviation industries on the VAT retail export scheme and airside extra statutory concessions. (911349)

During the consultation on duty free and tax-free goods carried by passengers in 2020, the Government engaged extensively with various stakeholders and carefully considered 73 consultation responses. I have continued to meet stakeholders, including retail and aviation representatives, following our announcement.

Given the deep trouble within retail and aviation, with Debenhams one of many chains disappearing from high streets with the loss of tens of thousands of jobs and, as the Minister will be aware with Stansted and its importance for employment in her constituency, aviation by and large grounded, does she not accept it was a mistake to scrap the VAT retail export scheme and the extra-statutory concessions, both of which brought much needed revenue to the retail sector at airports, which is now lost from the economy, possibly for good?

We do not accept that. The independent Office for Budget Responsibility set out its assessment of the fiscal impact of the withdrawal of the VAT RES scheme, factoring in a higher than usual elasticity to account for spending on luxury goods. Its estimate is that this will result in a significant Exchequer saving of about £400 million per year. On airports, we recognise the challenges the aviation sector is facing as it recovers from the impacts of covid-19. We have supported the sector throughout the pandemic and continue to do so. This includes the recently announced airport and ground operator support scheme, which will provide eligible firms with support of up to £8 million per claimant.