Written evidence submitted by Value Retail Plc

 

 

DCMS Select Committee inquiry: Promoting Britain Abroad
Submission by Value Retail

 

 

Executive summary

 

        As the owner of one of the UK’s premier tourist destinations, Bicester Village, as well as ten other luxury villages in Europe and China, Value Retail is uniquely positioned to compare the UK’s approach to encouraging international tourism to that of other countries.
 

        It is clear to us that the UK undervalues the lure of luxury retail for those visiting from abroad - and this is no more evident than through the Government’s recent decision to abolish tax-free shopping for foreign visitors (the VAT Retail Export Scheme).

 

        Tax-free shopping in the UK has traditionally been a huge draw for high-spend tourists from around the world, and the reimposition of the VAT Retail Export Scheme, and the acknowledgement of the impact of its abolition, should be a top priority for the Government in ensuring the UK remains a globally competitive tourist destination.

 

        The UK’s visitor visa offer is inferior to that of the EU, which is reducing the attractiveness of the UK to retail tourists. Restoring parity with the EU’s visitor visa offer is essential, but further reforms to the UK’s visa system, including extending the Electronic Visa Waiver to visitors from East and South East Asia, could be considered to enhance the UK’s attractiveness as a destination for retail tourists.
 

        Other means of supporting shopping tourism should also be considered, including supporting apprenticeships in the retail sector and extending Sunday trading hours.

 

 

Background to Value Retail

 

Value Retail is the owner of 11 luxury shopping destinations in Europe and China, which attracted a combined 45 million visitors in 2019.

 

Our first destination, Bicester Village, in Oxfordshire, was opened in 1995 and is a leading British shopping destination and tourist attraction. It is a hub for luxury goods and designer clothes outlets, platforming the very best of British talent. Bicester Village has extensive global appeal, and was the second most visited destination in the UK in 2018 by Chinese tourists after Buckingham Palace.

Welcoming the Promoting Britain Abroad inquiry

 

As the owner of one of the UK’s premier tourist destinations, Bicester Village, as well as ten other luxury villages in Europe and China, Value Retail is uniquely positioned to compare the UK’s approach to encouraging international tourism to that of other countries.

 

It is clear to us that the UK undervalues the lure of luxury retail for those visiting from abroad - and this is no more evident than through the Government’s recent decision to abolish tax-free shopping for foreign visitors (the VAT Retail Export Scheme).

 

Tax-free shopping in the UK has traditionally been a huge draw for high-spend tourists from around the world. For example, Edinburgh, Manchester, Liverpool and Leeds saw a combined £202m in direct retail sales using the VAT Retail Export Scheme in 2019. At Bicester Village, tax-free shopping has also provided excellent exposure for young and emerging fashion designers to an audience of international tourists.

 

We believe that VAT RES was a vital lynchpin to maintaining the UK’s competitiveness as a global tourism destination and that its reinstatement will be key to the UK’s tourism industry’s recovery.

 

We therefore welcome this inquiry and look forward to working with the Department for Digital, Culture, Media and Sport Select Committee to explore what is needed to re-establish the UK as an attractive destination for international tourists. 

 

Value Retail’s response

 

  1. What needs to be done to re-establish the UK as a holiday destination for international travellers?

 

The re-establishment of the VAT Retail Export Scheme: In September 2020, Chancellor of the Exchequer Rishi Sunak MP proposed changes to the VAT Retail Export Scheme, which would mean that the initiative would not be extended to EU visitors and withdrawn for non-EU visitors. Since the changes came into effect on January 1, 2021, overseas visitors have no longer been eligible for VAT refunds on items bought in Britain.

 

The abolition of tax-free shopping came at a time when both the retail and tourism industries were struggling with the impact of the COVID-19. It was met with strong opposition, including from organisations like the British Fashion Council, the Association of International Retail, and Heathrow Airport.

 

Since the abolition of the VAT Retail Export Scheme we are tracking trends in the value of international tourist spending at Bicester Village and across our European villages. Though the imposition of restrictions on international travel have clearly influenced this measure, we have established that the adverse impact on international sales levels in the UK has been greater than in our European villages, where similar tax rebate schemes remain in place.

 

While we cannot draw definitive conclusions from data gathered during the pandemic, it is hard to escape the fact that our European villages were also subject to COVID-19 restrictions yet were able to attract more international spending than Bicester Village.

 

There is exceptional value in inbound shopping tourism, and tax-free shopping in particular. As one of the UK’s premier tourist destinations, Bicester Village attracted over 7 million visitors in 2019, a high proportion of whom were from emerging economies such as China and the Middle East. This not only brings high spending to the UK, but serves as excellent exposure for young and emerging British fashion designers.

 

Reforming the visitor visas offer: The UK’s visitor visa offer does not offer as much flexibility as that of the EU, which is reducing the attractiveness of the UK to retail tourists.

 

For instance, the UK’s Electronic Visa Waiver, which permits nationals of Kuwait, Oman, Qatar or the United Arab Emirates to visit for up to six months, only allows tourists to enter the country on one occasion. In contrast, an equivalent EU scheme planned to launch in 2022 will give tourists the flexibility to enter the Schengen area multiple times over a three year period. This makes it easier for retail tourists to visit European shopping destinations instead of those in the UK.

 

Restoring parity with the EU’s visitor visa offer is essential, but further reforms to the UK’s visa system could also be considered to enhance the UK’s attractiveness as a destination for retail tourists. These could include extending the Electronic Visa Waiver to visitors from East and South East Asia, or following the USA’s lead to introduce a 10 year visitor visa for Chinese tourists, a high proportion of whom are high spenders.

 

Working with the retail industry on reforming apprenticeships in the UK: The Government should work closely with our industry on how best to support emerging British fashion talent through supporting apprenticeships.

 

This will be vital to ensuring young people can break through into the fashion industry, and that the UK has a pipeline of talent to further raise the profile of our fashion industry internationally, and make the most of apprenticeship opportunities.

 

Extending Sunday trading hours: Our international visitors often remark at their surprise that certain larger stores at Bicester Village can only open for six consecutive hours between 10:00am and 6:00pm. England’s outdated Sunday trading regulations currently serve to make shopping destinations and tourist attractions less competitive than international counterparts, including places like New York and Dubai where such restrictions do not exist.

 

The Government should therefore consult on extending the list of exemptions in the 1994 Sunday Trading Act, or make the law less burdensome for retailers.

 

 

 

 

  1. Does the Tourism Recovery Plan go far enough to support the industry’s recovery from the Covid-19 pandemic?

 

Value Retail and Bicester Village warmly welcome the Tourism Recovery Plan. It is good that the Government has acknowledged the need for a concerted effort to boost the sector’s recovery. There are, however, some additions that can be made:

 

Acknowledge the impact of the VAT Retail Export Scheme changes on the recovery: It was good to see the VAT cut for tourism and hospitality, and a continuation of business rates relief, mentioned within the Tourism Recovery Plan. However, the omission of last year’s changes to the VAT Retail Export Scheme is notable when considering our initial findings on the impact of the Government policy. Acknowledgement that the industry’s recovery has been harmed by the abolition of VAT RES, along with a plan for its re-establishment, will be essential for the Plan’s success.

 

Ensure transport infrastructure is supported everywhere: The Levelling Up agenda is a welcome policy initiative from this Government, and needed to ensure a level playing field for businesses across the country. Enhancing transport links across the UK is integral for ensuring tourists are able to access everything the UK has to offer.

 

 

  1. What should the UK be doing to maintain its status as a ‘soft power superpower’ and further promote its culture and heritage on the global stage?

 

The UK is a soft power superpower as a result of its talent, recognised the world over. Bicester Village is one of many platforms for showcasing British talent.

 

Each year, Bicester Village hosts pop-up stores to give up and coming British designers and fashion businesses the chance to showcase their work. We also invest a significant amount in training and apprenticeships for young people across the country, alongside cross-disciplinary mentoring provided by specialists across our business. We recognise a number of steps that can be taken to secure British soft power:

 

Ensure that high-value tourists are provided with incentives to visit the UK: As with the above, a review of the VAT Retail Export Scheme would be welcome to ensure we keep up with our European neighbours and maintain the UK as a go-to shopping destination. This should include either a re-entrenchment of the extension to non-EU visitors, or a new scheme.
 

Work with the retail sector as part of the GREAT campaign: The retail sector is integral to the UK’s soft power. We are proud that the UK has produced remarkable fashion talent, and this should be centre stage when promoting the UK abroad as part of the GREAT campaign.