VAT slashed to 5% on summer attractions in Chancellor’s cost of living plan

Rachel Reeves has announced that the VAT rate on tickets for theme parks, zoos and museums has been reduced from 20 per cent to 5 per cent for the summer holidays, as part of a package of measures to combat the rising cost of living caused by the Iran war.

Sir Keir Starmer said the support would give families worried about the coming months “some breathing space” to “enjoy the moments that matter without the same level of financial strain”.

The Chancellor’s “Great British Summer Savings” plan, which the Treasury estimates will cost around £300 million, also includes free bus travel for children aged five to 15 in England during the August school holidays, a 10p per mile increase in tax-free mileage rates dating back to April, and a critical £350 million chemicals resilience fund.

As well as this, the chancellor announced a £120 million fund to help the ceramics industry, as well as cutting import tariffs on more than 100 food products.

The full package of measures will cost an estimated £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 offshore operations are taxed.

Ms Reeves said this would end the practice of some firms to structure their tax affairs “in a way that ensures they pay little or no corporation tax on their energy trading profits in the UK” and “collect hundreds of millions of pounds a year”.

But the chancellor has refrained from announcing any immediate aid on energy bills despite rising oil prices triggered by the Iran war, and charities have called on ministers to take bolder action.

Sir Keir, who has tried to regain control of the political agenda with announcements after his premiership came under pressure, said it was “not right” that things like going to the seaside, visiting the zoo, taking a bus into the city for a day, or even a simple treat at the weekend were starting to feel out of reach for many families.

The Prime Minister wrote on Substack that the government was giving a “serious response” to “people’s concerns about the coming months” due to global instability.

“We’re making it easier and more affordable for families to get out, spend time together, and create memories that will last a lifetime this summer.”

Meanwhile, a Downing Street spokesman was forced to deny that the measures were in response to Wes Streeting’s decision to resign last week; Instead, he said the announcements were evidence of “the government’s approach bearing fruit.”

Speaking about the VAT cut in the House of 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.

“This will include children’s tickets for cinemas, concerts, soft plays and theatre, and the cost of children’s meals in restaurants and cafes will also drop from 20 per cent VAT to 5 per cent.”

He said the changes will apply in England, Wales, Scotland and Northern Ireland from June 25 to September 1, and 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: “Due to the decision I took in last year’s budget to cut £150 from energy bills, we have reduced the impact of rising prices and current external forecasts show that the cap in July will be at a similar level to the cap in April last year.

“We are ready to act if market conditions deteriorate significantly later this year, and I am leading emergency intergovernmental work on designing potential future 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 Debt Reduction Plan and tackle housing costs.

Dame Clare Moriarty, chief executive of Citizens Advice, welcomed the package of measures but said it did not meet “the urgent need for a plan to tackle record energy debt or the huge uncertainties people face about their finances”.

“The government must now implement the long-overdue Energy Debt Reduction Plan and ensure that any targeted support reaches those who need it most, such as families with children and people with disabilities.

“To really get cost of living pressures under control, it also needs to look at the biggest challenges to household budgets, including housing costs and record debt levels. Summer savings are welcome, but the government needs to help people now and seriously plan for winter,” he said.

Meanwhile, Hannah Peaker, deputy director of the New Economics Foundation, called on the government to “go much further”, urging the government to “take tougher action on rents, energy and transport costs”.

He said this would “help combat inflation and prevent the Bank of England from having to intervene with interest rate rises”.

According to the Undersecretariat of Treasury, the final costs of all measures will be announced in detail in the next budget, following the score given by the Budget Responsibility Office.

Theme parks and cinemas welcomed the cut in VAT, while Paul Kelly, chief executive of the British Association of Theme Parks, Piers and Attractions, said it was “a very welcome and timely boost for the UK’s visitor attraction sector”.

“Our members are ready to pass on this advantage and deliver wonderful, unforgettable experiences to visitors of all ages.”

UK Hospitality Chairman Kate Nicholls said a lower VAT rate for accommodation was “the quickest and simplest way to reduce prices and increase consumer confidence”.