Heathrow has joined up with World Duty Free and Global Blue to Judicially Review the Government's intention to both abolish the VAT Retail Export Scheme (RES) from the UK and withdraw airside tax free shopping in all UK airports.
In an open letter to the Chancellor, below, the businesses make clear the case for further consultation on this policy to ensure the UK remains competitive.
We continue to work with Treasury Ministers and officials regarding this matter. We believe there are solutions available that can address concerns, whilst protecting the UK's competitiveness as a shopping destination and airport retail in a year that will be so critical as it recovers from the worst year in history.
Dear Chancellor,
This week, Heathrow, Global Blue, and World Duty Free have made the difficult decision to Judicially Review the Government’s intention to both abolish the VAT Retail Export Scheme (RES) from the UK and withdraw airside tax free shopping in all UK airports. This course of action against the Government is the first in all our collective business histories.
Whilst we continue to provide data and evidence around the Government’s decision, regrettably, we needed to take this option as the impacts of this policy made by Her Majesty’s Treasury have been grossly underestimated.
The UK is a well-renowned destination for retail which is now a proud pillar and economic driver in this country. Research shows that shopping is a key driver in the choice to visit the UK and tourists’ part with money in our shops, restaurants, hotels and theatres. Once we leave the European Union there is an opportunity to build on this success story and lever our existing competitive advantage. But only if Government policy allows us to take advantage of the opportunities afforded to us.
Industry and Government have worked together successfully in the past to improve tax-free shopping to ensure it works for passengers, the economy, and the Treasury. Indeed, in this consultation period the Government stated in March that “following the transition period, the UK is minded to extend airside tax-free sales to those travelling to the EU.”
We were therefore deeply shocked and concerned to learn that the Government will instead withdraw tax-free shopping all together, making the UK the only country in Europe not to offer such a benefit to international visitors. These changes had not been a material part of the consultation that went before, and the Government is still yet to publish a comprehensive economic impact assessment of its decision. As a result, there is no evidence to suggest the consequences on the UK’s job market, competitive advantage or recovery from COVID have been considered.
Furthermore, events since this decision was made have not been considered which must play a fundamental part in the planned course of action. The Treasury has failed to take in to account a second wave which has plummeted millions more into lockdown and unable to work as hotels, “nonessential” retail and tourism numbers remain decimated. Coupled with slow progress behind a testing regime that will facilitate safe tourism into the UK, and no meaningful recovery plan for struggling sectors, this decision will put us on the back foot as the world looks on post-Brexit.
If enacted as planned on the 1st January 2021, this Government policy will lead to irreparable and unnecessary damage to high streets and airports across the UK. Visitors and shopping tourists will now look elsewhere to other more attractive European countries, depriving the UK of billions in retail spend every year. This is before putting a further 25,000 UK jobs at risk that are reliant on tourism spend that props up theatres, restaurants and hotels. Overnight, what draws many to our shores and has taken decades to build will be lost.
The extent of this damage will be felt across key sectors and in every region and nation of our great country, not just London as the Government has argued, and will completely undermine the significant support that you as the Chancellor have given to retail, hospitality and tourism throughout the pandemic.
Her Majesty’s Government has been ill advised in the belief that this needs to be implemented on 1st January 2021. It does not. In coming months, for us to avert untold damage to UK competitiveness and our attractiveness as an island chosen for our retail excellence, we all need to work together on solutions that can address concerns whilst protecting our future.
It is not too late for the Government to review this decision and fully take into account updated and independent impact assessments. We are confident that in turn, this will better demonstrate the opportunity for the UK which could unlock £1.1bn of economic growth and create jobs, rather than sacrificing them.
All businesses in the UK stand ready to make a success of Brexit. The opportunities that this presents will see us connecting the best of British brands to global markets and audiences. But failure to consult properly on the consequences of this decision will put us on the back-foot handing control, dominance and benefits to our EU competitors.
We urge the Government to further engage with industry as a matter of urgency, whilst reviewing current timelines. It is a collective responsibility for us all to work together to ensure the vision of a Global Britain stands a fighting chance and this is the right place to start.
Your Sincerely,
John Holland-Kaye, CEO, Heathrow Airport
Derrick Hardman, MC UK&I, Global Blue
Fred Creighton, CEO UK & Germany, World Duty Free
