Burnham told to deliver 10 per cent hospitality VAT after backing tax cut
More than 800 hospitality businesses have called on Andy Burnham to make good on his support for lower VAT, piling pressure on the prime minister ahead of next month’s Budget.
Pub giants, restaurant chains, hotels and some of Britain’s best-known chefs have signed an open letter demanding the government cut hospitality VAT from 20 per cent to 10 per cent.
Signatories include JD Wetherspoon, Greene King, Fuller’s, Pizza Express, Wagamama, Marriott and Center Parcs, alongside chefs Tom Kerridge, Heston Blumenthal, Angela Hartnett and Jason Atherton.
The intervention puts Burnham’s own words back in front of him after he said in February, while mayor of Greater Manchester, that he would “argue for a VAT rate more consistent with what you find in Europe”.
“We don’t need another promise. We need action,” Kerridge said. “The campaign lands at an awkward moment for the government after Burnham acknowledged last week that the “cost of doing business is too high”, while also warning that limited public finances left him with little room for manoeuvre
It also comes days after ministers confirmed plans to allow regional authorities to impose an uncapped levy on overnight stays, triggering a fresh backlash from hotels and tourism businesses.
Hospitality sector piles pressure on Burnham
Britain charges hospitality businesses VAT at 20 per cent, compared with 10 per cent in France, Italy and Spain and seven per cent in Germany.
More than 370,000 people have now signed the #VATsTheProblem petition calling for the UK rate to be cut to 10 per cent.
“It’s time for a fairer tax burden for hospitality,” the businesses wrote. “Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.”
Kerridge argued the tax hits hospitality particularly hard because labour represents such a large share of costs.
“You can reclaim VAT on a product, but you can’t reclaim VAT on a person,” he said.
Businesses are also absorbing higher wages, energy and food bills, while the sector has lost around 100,000 jobs over the past two years.
Greene King, Hilton and Wahaca backed the campaign earlier this year, while Fuller’s chief executive Simon Emeny previously told Morning Wire that cutting VAT to 10 per cent was “critical” to returning the industry to growth.
Burnham has already offered the sector an olive branch since entering Downing Street, announcing a 20 per cent business rates cut for pubs, clubs and live music venues during his first week in office.
He indicated last week that the government could go further at the 28 October Budget, saying ministers would look at business rates more broadly for high street firms.
But the prime minister stopped short of promising further tax cuts. “I wouldn’t want to promise the earth,” Burnham said, adding that he was facing a “difficult financial outlook”.
Hospitality bosses now want him to add the VAT pledge he made before entering Downing Street to that Budget package.
“A lower rate of VAT for hospitality can turn closures into openings, lost jobs into new jobs, and boarded up high streets into thriving centres of community,” the letter said.