Kurt Geiger CEO warns of job cuts following government's tax-free shopping 'own goal'
12 Oct 2020
Kurt Geiger CEO Neil Clifford has said the company is planning another 500 job cuts - equating to over a quarter of its workforce - early next year following the government’s announcement in September it would be scrapping tax-free shopping on 31 December.
In a letter to chancellor Rishi Sunak, seen by Drapers, Clifford described the government’s proposed end of the VAT Retail Export Scheme (RES) as “a staggering own goal which completely undermines the government’s stated aim to build a ‘global Britain’ post-Brexit”.
“The damage will be significantly wider than the Treasury envisages, our luxury goods manufacturing based will be badly wounded and all global brands will halt any investment in the UK due to dramatic drop in demand,” Clifford said.
“While stores have now reopened and were slowly recovering, the second wave of Covid-19 is sadly here, and this combined with the new understandable lockdown measures being introduced, means it is becoming ever-clearer that British business is going to be living with the consequences of the pandemic for not months but for years to come.”
It comes after the Association of International Retail (AIR) in September warned that the scrapping of tax-free shopping could result in a huge drop in spending from tourists and 70,000 retail jobs put at risk.
Job losses loom at Kurt Geiger
The government’s decision would make the UK the only country in Europe to not offer tax-free shopping, with many concerned that shoppers would then prefer other retail hotspots like Paris, Rome and Berlin.
“Businesses like Kurt Geiger rely heavily on the tax-free shopping scheme. High-spending travellers fly in from places such as China, the US and the Middle East specifically to take advantage of the best of British retail and our incredible home grown brands,” Clifford said. “But if we suddenly start charging 20 percent more than other countries for the same goods, international visitors will immediately go elsewhere, taking their vital spending with them.”
Clifford added that instead of closing the VAT Retail Export Scheme, the government should be extending it. “70 percent of all international visitors to the UK are from the EU, but they are not eligible for VAT rebates on their purchases because we are members of the Customs Union within the UK. When the Brexit transition period comes to an end, and we leave the Customs Union, under World Trade Organisation Rules the UK must treat all international visitors the same,” he said.
“Even if as rumoured that this decision is temporary, to withdraw tax-free shopping entirely rather than extending it to the EU as we leave will have deeply damaging consequences to employment and the UK economy as a whole. I urge you please to reconsider this decision.”
Photo credit: Kurt Geiger