At the start of the month, Michelin chef Tom Kerridge decided that he has had enough. He was talking about the UK’s hospitality VAT rate.
Currently, it’s the second highest in Europe at 20 per cent. And it is considered to be a key factor behind a raft of closures – from beloved bars and restaurants to pubs.
With that in mind, Kerridge, who is behind the likes of The Hand & Flowers and The Coach in Buckingham, has launched a petition – called VAT’s The Problem – that is urging the government to lower the rate to 10%. Since being unveiled last month, it’s had over 230,000 signatures.
“Our pubs, restaurants, cafes, hotels, nightclubs and many more, are at the heart of our communities,” he said as he launched the campaign. “They bring people together and bring life to our cities, towns and villages, but they’re under huge pressure from rising costs.”
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The owners of bars, restaurants and other hospitality venues say they feel like they are now at a breaking point where their calls need to be heard and taken seriously before even more venues close the doors for good.
“A reduction on hospitality VAT is something that the industry has been urging for such a long time,” Luke Payne, who is the owner of the Pack Horse pub in Hayfield and the Almanac in Glossop, tells the Manchester Evening News.
“We’re so far out of line with our European neighbours. There’s only so much that we can take, we’re being pushed to the very limit.
“The sad reality is that I’ve been running the Pack Horse for ten years and the Almanac for a year, and I haven’t been able to take a salary from either business for six years. That’s because of the financial pressure I’m under, it’s not that the businesses are suddenly not doing well.”
Charlotte Heyes, who is the co-founder of popular Manchester pizza brand Nell’s says it is difficult for businesses right now following National Insurance increases, statutory sick pay changes, higher utility, rent and wages, and the cost of ingredients.
“The pressures are just mounting up and they have been since Covid really,” she explains. “Consumer’s tolerances are kind of at the limit now – eating out is more of a luxury than it’s ever been. People used to do it once a week, but they can’t go out anywhere near as much as that anymore.”
Many of those in favour of Kerridge’s petition have said that they hope that Andy Burnham’s potential leadership of the government could help swing more support towards hospitality – with his backing of the sector during his tenure as Greater Manchester Mayor. Kerridge himself has said he thinks Burnham would “one hundred per cent” support the campaign.
In 2021, whilst calling for a better living wage, Burnham acknowledged that those in the hospitality industry were amongst ‘some of the hardest hit sectors of our economy’. Three years later, he outright called for a 10 per cent VAT cut for the sector – which is what the petition is now asking for. At the time, he said: “As a principle, and as soon possible, VAT should be reduced on this industry. We will fight for you off this stage.”
More recently, the Makerfield MP has pledged that he would cut business rates for pubs and music venues by 20 per cent should he become Prime Minister, which he claims would feed an extra £100m back into the sector. He also said he would abolish business rates for single site shops, cafes and restaurants in an attempt to protect family-owned businesses.
In his support for the sector, he said he will cut employers’ National Insurance contributions and increase the threshold for business rates to £18,000 from £12,000. He also intends on and would also extend the threshold for small business rate relief from £15,000 to £21,000 – all funded by increasing taxes on online tech giants and their warehouses.
“I would hope that Andy Burnham is in a position where he will listen to us,” Payne says when asked if he thinks Burnham would back hospitality if made PM. “He has certainly made some good noise towards the hospitality industry and I think that, as Greater Manchester Mayor, he has played a massive part in helping the sector boom. There are so many fantastic restaurants and bars in Greater Manchester now and a lot of them opened whilst he was Mayor.
“He certainly understands the value of the industry. He’s made some noise about business rates and national insurance, and said he wants to stick to the fiscal rules which have already been set out by the government, but that only goes so far to release the pressure. He will need to allow for some wiggle room otherwise nothing’s going to change.
“I think his heart is in the right place, he’s an excellent communicator and I think he will stand up for what he believes in much better than anyone in the government currently does. I can only hope that the message gets through to him quickly and clearly. It’s only a matter of time before we lose a limitless amount of good places that are run by hardworking and honest people.
“I have hope that Burnham could change things and throw us a lifeline – but I’m not getting too excited because I had hope when this government took over and things only got worse. Is Burnham going to be the messiah? I don’t know.
“There’s only so much you can take, but we’re being pushed to the limit. But if a business closes then the government gets no tax from them whatsoever, so surely there is a case for protecting the businesses that are here and claiming a little bit of tax from us?”
It’s something Nells’ co-founder Heyes agrees with. “I would think that he understands the sector better than lots of other people in power,” she stresses. “He’s worked closely with the sector in Manchester, especially during Covid when he was a real advocate for us, and I think that he would try and do something to help us whether that’s regarding NIC’s, business rates or VAT.
“Because of this, I would expect Burnham to understand the sector better than lots of other people in power. I do have some hope that he will come in and remember that when it comes to making any big decisions.”
The petition, which will officially launch on July 1, potentially then comes at an ideal opportunity to potentially spark some change. But could it be effective in helping spur on these much needed changes?
“Hospitality plays a vital role in every community across the UK,” Kate Nicholls, who is the Chair of the UKHospitality trade body, told the MEN. “It supports local people, driving economic growth and creating jobs and opportunities, particularly for those millions of young people currently not in employment, education or training.
“However, many hospitality businesses continue to face immense cost pressures and operational challenges, all of which is resulting in a slowdown in investment, recruitment and, sadly for some, even permanent closures. It is therefore important that whoever becomes Prime Minister takes action to support the sector by reducing the cost burden it carries.
“Critically, this includes a 10% hospitality VAT rate, for which we have a growing support from all corners, including more than 230,000 consumers, as part of the #VATsTheProblem campaign. Other levers to pull include meaningful reform of business rates, addressing the rising cost of employment, and supporting the development of skills and the workforce.
“We look forward to engaging with the next Prime Minister on such issues to ensure the sector’s voice is heard and that hospitality businesses have the backing they need to thrive.”
“Lowering the VAT would make such a difference to so many,” Hayes adds. “It would not only help support venues like ours and give us a chance to survive, but it would help ensure people have places to go out and socialise. If we carry on like we are, it’s just going to be one extra closure after another.”
