This summer, UK families could benefit from cheaper days out as part of Rachel Reeves’ “Great British summer savings” scheme. The UK Chancellor told MPs on Thursday, May 21, that she will cut VAT from 20% to 5% on selected summer attractions, including theme parks and museums, during this year’s school holidays. The aim of the scheme is to ease the impact on households’ budgets from the cost increases stemming from the Iran war.
“Anything that helps get families out spending this summer is good news for the restaurants, pubs, soft plays and attractions that have spent years fighting rising costs and shrinking margins,” says Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), the UK’s membership organization for small businesses and the self-employed. “With 44 per cent of small hospitality firms based on or near the high street, a VAT cut should help put bums on seats and bring life into our town centers this summer.”
Some light relief
The scheme aims to help families enjoy more affordable days out and experiences while also boosting the hospitality and leisure sectors in Britain, which continue to struggle as pandemic relief comes to an end.
“With families switching from international travel to domestic travel this summer, there’ll be more people out and about on our local high streets,” said McKenzie. “For many small firms, these next few months matter enormously after a bruising period of rising costs and squeezed consumer spending. Families will make extra purchases, such as drinks and merchandise, which is likely to be the biggest help to small businesses’ bottom lines.”
The temporary VAT reductions will benefit theme parks, museums, zoos and soft play venues, and will also apply to children’s theatre and cinema tickets, as well as children’s meals in restaurants, between June and September.
“It’s encouraging to see the Chancellor’s commitment to a summer of savings with the VAT cut on children’s meals, providing an important boost for small businesses during the summer period, helping to drive footfall and ease pressure on margins at a crucial time of year,” said Michelle Ovens, CBE, CEO & founder of Small Business Britain, which aims to support and champion the UK’s small businesses.
“As many businesses prepare to enter the most important trading quarter of the year, measures that support both families and local high streets are incredibly welcome.”
A boost for the sector
Reeves also told MPs they would raise taxes from global oil firms operating in the UK to help meet the costs of her plans, another action that forms part of the scheme, which will also include free bus rides for under-16s in England throughout August.
“The support is essential in combating the ongoing cost of living crisis, particularly during the summer holidays when financial pressures and childcare commitments can intensify without the support schools often provide,” said Ovens.
With efforts helping families to plan summer days out, there is hope that local hospitality venues and small businesses will see a boost from the scheme, as they continue to absorb costs amid a challenging economic landscape.
With 94% of small businesses in the sector seeing cost increases over the past three months, ‘of which tax is one of the biggest drivers (61%)’, says McKenzie, such a boost could make the difference in enabling some such businesses to keep the lights on.
Lauren Hurrell
