Tourism industry leaders, backed by MPs from all parties, have launched a concerted campaign for VAT on hotel accommodation and tourist attractions to be cut to five per cent.

Hundreds of companies – as well as Britain’s best-selling daily newspaper The Sun – are calling on chancellor George Osborne to make the change, to enable the many regions dependent on tourism to invest in jobs and compete with the cheaper holidays offered abroad.

Tourism chiefs say the VAT cut – which was debated in the Houses of Parliament in February – would make the UK tourism industry more competitive internationally – in the face of the strengthening pound pushing people to head abroad.

Britain is now one of only four European countries to not have cut holiday taxes – and one of them, Lithuania is cutting its VAT next year.

While the UK government insists on charging all holidaymakers 20 per cent VAT, countries like Portugal, Holland and Belgium levy just 6 per cent tax on all hotels, holiday camps and tourist attractions.

France and Spain charge 10 per cent tax on staying in hotels and holiday parks, while VAT in German hotels is just 7 per cent.

Advocates say the cut would lead to a gain of up to £5bn for the exchequer over 10 years.

Campaign supporters range from industry bodies such as the BHA and BALPA, to small B&Bs, family run attractions, zoos and major international brands.

“We have a fantastic tourism product in this country, with the most beautiful countryside, beaches, landscapes and premier league attractions,” Nick Varney, Merlin Entertainments CEO.

“There are also really good accommodation providers out there from superb hotels to brilliant B&Bs. Let’s try and give them a break and do something good for the economy.”