A VAT Relief That’s Long Overdue

The hospitality industry is known for its outspoken nature, but when hundreds of UK businesses, including iconic names like Fuller’s and Wetherspoons, come together to plead their case, it’s clear they’re serious. They’ve made a simple yet compelling argument in a letter to Prime Minister Andy Burnham: the current 20% VAT rate is crippling them.

It’s not just big players that are struggling; small, independent pubs and hotels, which make up the backbone of British high streets, are also affected. These businesses aren’t asking for handouts or special treatment – they’re requesting a fairer tax burden to reflect their unique industry.

VAT is charged on most goods and services in the UK, but it’s not levied equally across all sectors. The hospitality industry, which employs hundreds of thousands of people and generates billions of pounds in revenue each year, is hit disproportionately hard by the 20% rate that includes labour costs. Celebrity chef Tom Kerridge noted that this makes a “20% VAT particularly tough for a sector where labour is one of our biggest costs.”

The problem runs deeper than just VAT rates. The industry faces a perfect storm of rising wages, energy bills, food costs, and business rates – all putting unsustainable pressure on already-strained budgets. As Kerridge warned, “We’re seeing the consequences, with businesses closing their doors every single week.” Jobs are at risk, as well as entire communities that will be left to pick up the pieces.

The government’s response has been half-hearted and piecemeal. A 20% cut in business rates for pubs, clubs, and live music venues is welcome but a drop in the ocean compared to what these businesses need. The announcement of a review into the 2016 pubs code is long overdue – but previous reviews have shown that the devil is often in the detail.

For decades, the hospitality industry has been calling for relief from this burdensome tax regime. They’ve tried every trick in the book, from lobbying politicians to mounting high-profile campaigns like #VATsTheProblem. But so far, they’ve had little to show for it. It’s time for the government to take a long, hard look at the evidence and make some real changes.

A VAT rate that brings the UK in line with Europe is not just fair – it’s also a sound economic strategy. As we emerge from the pandemic, industries like hospitality need to thrive if we’re going to create jobs, stimulate growth, and rebuild our communities. The time for excuses is over; it’s time for action.

The hospitality industry may be in the headlines again, but this isn’t just about them – it’s about every community that will be affected by their closure or success. It’s about people who rely on these businesses for employment, families who visit them for social events, and local economies that benefit from their presence.

For Andy Burnham, taking a clear stance on VAT relief is crucial. This means not just paying lip service to the industry but actually committing to making real changes. He should work with business leaders like Kerridge and Oliver to find solutions that work for everyone, not just the big players. Showing some much-needed leadership in a sector where it’s often easier to point fingers than take responsibility is essential.

The #VATsTheProblem campaign won’t be going away anytime soon – and neither should our demands for real reform.