Companies that depend on tourism, such as Travelodge and Merlin Entertainment, owner of Madame Tussauds and Alton Towers, are backing a campaign for a VAT cut that would bring the UK into line with its Continental rivals.

The British Association of Leisure Parks, Piers and Attractions is spearheading efforts to convince Chancellor Alistair Darling to cut the rate of VAT.

The association points to research in France where VAT on tourism businesses was cut in July from 19.6 per cent to 5.5 per cent.

According to the study, the French experiment boosted the tourism and leisure sector and cut VAT fraud by 74 per cent, increasing tax receipts from the black economy.

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