Rachel Reeves has announced a cut in the rate of VAT on tickets for theme parks, zoos and museums from 20 per cent to 5 per cent over the summer holidays as part of a package of measures to tackle the spiralling cost of living caused by the Iran war.
Sir Keir Starmer said the support would give families concerned about the months ahead “a bit of breathing room” to “enjoy moments that matter without the same level of financial strain”.
The chancellor’s “Great British Summer Savings” scheme, which the Treasury estimated would cost around £300m, also includes free bus travel for children aged between five and 15 in England during the school summer holidays, a 10p per mile increase in tax-free mileage rates backdated to April, and support for industries hit particularly hard by rising energy costs, with £350m set aside for a “critical chemicals resilience fund” to support “strategically important producers”, and £120m for the ceramics sector. The chancellor also cut import tariffs on more than 100 types of food products.
The full package of measures comes at an estimated cost of £1.8bn over six years, while the Treasury expects to raise hundreds of millions in revenue by changing the way oil and gas companies with overseas operations are taxed.
This would put an end to the practice of some firms structuring their tax affairs “in a way which ensures they pay little or no corporation tax on their UK energy trading profits” and “raise hundreds of millions of pounds a year”, Ms Reeves said.
However, the chancellor avoided announcing any immediate help with energy bills, despite soaring oil prices triggered by the Iran war, with charities urging ministers to take bolder action.
Sir Keir, who was seeking to regain control of the political agenda with the announcements after his premiership came under pressure, said it was “not right” that “for too many families those things – a trip to the seaside, a visit to the zoo, a bus ride into town for a day out, even a simple treat at the end of the week – are starting to feel out of reach”.
The government was providing “a serious response” to the “concerns people have about the months ahead” due to global instability, the prime minister wrote on Substack.
“This summer, we are making it easier and more affordable for families to get out, spend time together, and make memories they will cherish for life.”
Meanwhile, a Downing Street spokesperson was forced to deny that the measures were a response to Wes Streeting’s decision to resign last week, instead saying the swathe of announcements were evidence of the “government’s approach bearing fruit”.
Speaking about the VAT cut in the Commons on Thursday, Ms Reeves said: “This will apply to ticket prices for both adults and children, covering attractions such as fairs, theme parks, zoos and museums.
“It will include children’s tickets for cinemas, concerts, soft play, and the theatre, and it will cut the cost of children’s meals in restaurants and cafes from 20 per cent VAT to 5 per cent as well.”
She said the changes will apply across England, Wales, Scotland and Northern Ireland from 25 June until 1 September, and that the government expects businesses to pass on VAT savings to customers.
Justifying her decision not to take immediate action on energy bills, Ms Reeves told MPs: “Because of the decision that I made at the Budget last year to cut £150 from energy bills, we have lessened the impact of rising prices and current external forecasts suggest that the cap from July will be at a similar level to the cap in April last year.
“We stand ready to act if market conditions worsen significantly later this year and I have been leading cross-government contingency work on design of potential future targeted and temporary support for businesses.”
With the household energy price cap predicted to rise by £209 a year from July, charities and experts have called on the chancellor to introduce the much-delayed Energy Debit Relief Scheme, and to tackle housing costs.
Dame Clare Moriarty, chief executive of Citizens Advice, welcomed the package of measures but said it fails to address “the urgent need for a plan to tackle record energy debt, or the huge uncertainties people face with their finances”.
“The government must deliver the much-delayed Energy Debt Relief Scheme now and ensure any targeted support reaches those who need it most, such as families with children and disabled people.
“To truly get a grip on cost of living pressures, it must also look at the biggest challenges for household budgets, including housing costs and record debt levels. Summer savings are welcome, but the government needs to help people now and make a serious plan for winter,” she said.
Meanwhile, Hannah Peaker, deputy executive of the New Economics Foundation, called on the government to “go much further”, calling on the government to take “tougher action on rents, energy and transport costs”.
She said this would “help tackle inflation and prevent the Bank of England having to intervene with rate rises”.
Final costings for all the measures will be detailed at the next Budget following scoring from the Office for Budget Responsibility, according to the Treasury.
Theme parks and cinemas welcomed the slashing of VAT, with British Association of Leisure Parks, Piers and Attractions chief executive Paul Kelly saying it was “a very welcome and timely boost for the UK’s visitor attraction sector”.
“Our members stand ready to pass on this benefit and deliver brilliant, memorable experiences for visitors of all ages.”
UK Hospitality chair Kate Nicholls said a lower rate of VAT for hospitality was “the quickest and simplest way to lower prices and boost consumer confidence”.