§ Mr. PendryTo ask the Secretary of State for National Heritage what plans he has to press for a reduction in value added tax rates in the accommodation sector, following the report by McKinsey Inc.
§ Mr. DorrellThe McKinsey study concluded that the effect of a reduction in VAT on our tourism revenues would be uncertain. It is not clear that taxation places our operators at a competitive disadvantage without comparing the total tax burden on them with that carried by their European competitors, who have to bear the costs of the social chapter; and it is not clear that the benefits of a VAT reduction would be passed on to customers. I intend to help the accommodation sector improve value for money by means of the measures I announced on 1 March.