News that Jeremy Hunt has asked the Office for Budget Responsibility (OBR) to run the rule over the abolition of VAT-free shopping for foreign tourists should not come as a great surprise.
It did not get much attention at the time, but in the Commons debate that followed the Autumn Statement in November the Chancellor promised Tory MP Sir Geoffrey Clifton-Brown, leader of the Scrap the Tourism Tax campaign, that “we are looking again at the numbers”.
Things have now moved on. The “we” — that is, the Government that took the decision in the first place — is now the “they” of the independent OBR.
The political choreography of all this is obvious. Neither the current Prime Minister, nor the present Chancellor can easily take the decision to restore VAT-free shopping as they were both, at different times, responsible for scrapping it.
Rishi Sunak when it was originally binned at the start of 2021, and Jeremy Hunt when he reversed Kwasi Kwarteng’s short-lived decision to restore it in the mini Budget of 2022.
The ending of the perk always had a strong anti-London flavour to it at a time when shoring up the northern red wall after Boris Johnson’s 2019 election victory was the only game in town.
By handing responsibility from the Treasury to the OBR Hunt can take the tricky politics out of the decision.
It remains to be seen what the OBR comes up with but the anecdotal evidence suggests a massive shift in tourist spending from London to Paris and Milan over the past three years.
There seems little doubt that pragmatic Hunt is preparing a tourist tax off-ramp that will allow him to please backbench Tory and Fleet Street critics while presenting the U-turn as in the interests of UK plc as a whole, not just the capital.
