Budget: Campaign wins concession over £20m threat

Budget at a glance

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The Give Tourism A Break campaign was launched after the previous Labour regime announced plans to end tax breaks for people who let out holiday homes.

Experts had warned that the measures could have left eight out of 10 small holiday businesses at risk of closing because they would no longer be financially viable and nationally it could have cost the tourism industry 200m a year and endangered 4,500 jobs.

During the General Election campaign both Tory leader David Cameron and the then Shadow Chancellor George Osborne pledged to reverse the decision that would have hit Yorkshire's 2,500 self-catering accommodation owners and in yesterday's Budget they made good on that promise.

Other Labour initiatives to be scrapped included the broadband tax.

Instead the Government will support private broadband investment with funding in part from the digital switchover under-spend within the TV licence fee.

The chairman of Welcome to Yorkshire, Gary Verity, said the new tourism tax could have hit Yorkshire harder than any other region.

He said: "This is great news for the tourism industry in Yorkshire.

"There are an estimated 2,500 letting companies in Yorkshire – more than any other region – and we are in no doubt this would have hit them hard.

"We are grateful to those tourism businesses and the Yorkshire Post who have worked with us in our campaign against this tax being brought in."

Tourism experts had warned that the changes, which Labour claimed would mainly hit well-off second home owners, would affect thousands of small holiday businesses.

A spokesman for the Federation of Small Businesses (FSB) said: "We welcome this reversal and it will certainly many business in Yorkshire will breath a sigh of relief, as will the whole tourism sector.

"This tax break means small tourism business can survive, retain their independence and provide that little bit of quality. If it had been ended, someone who owns two or three holiday lets would have been taxed to the hilt. This reversal will help them to survive and thrive."

The previous Government had predicted its changes to the furnished holiday lettings rules would cost the industry 20m nationwide but research undertaken by the Tourism Alliance revealed the proposals could create an overall reduction in tourism spending in Britain of 200m.

The research warned self-catering accommodation in Yorkshire would be particularly hard hit with nearly 500 jobs at risk.

The pressure group has made representations to the Government on the issue over the past year and highlighted the opportunities for economic growth and employment that the tourism sector can bring to the economy during the economic downturn.

Mr Osborne said: "There are many small businesses in the tourism industry today. To help them, I am reinstating the favourable tax rules for furnished holiday lettings, which our predecessors had planned to repeal."

He described the previous Government's broadband tax as an archaic way of investing in digital infrastructure, hitting 30 million households who happen to have a fixed telephone line. Instead they plan to use money left over from the digital switchover and will support private broadband investment, including to rural areas.