Celebrity chef Tom Kerridge has called on the government to implement a permanent Value Added Tax (VAT) reduction for the hospitality sector, warning that businesses are struggling under the current tax burden.
Kerridge’s plea comes as a temporary VAT cut, which reduced the tax rate to 5% for children's meals and family attraction tickets over the summer, concludes. The initiative, which ran from June 25 to September 1, was intended to help families with their expenses during the summer months.
While acknowledging the temporary scheme as a positive recognition of VAT's impact, Kerridge stated that it was "time-limited and narrow in scope." He advocates for a lower VAT rate for the entire hospitality industry, comparing the UK's current 20% rate unfavorably with other European countries. For instance, Ireland recently reduced its hospitality VAT to 9%, while France, Italy, and Spain maintain a 10% rate. Germany has also lowered its rate to 7% from 19%.
Kerridge argues that a VAT cut is not a "handout" but an "investment" in businesses that employ millions of people and contribute significantly to the UK economy. He highlighted that rising costs for food, energy, and employment, coupled with business rates, are creating significant challenges for pubs, hotels, and restaurants.
He emphasized the broader societal impact of hospitality closures, noting that they result in job losses, reduced footfall in town centers, and the loss of important community hubs. Kerridge also pointed out that the industry often provides young people with their first employment opportunities, which is particularly relevant given current youth unemployment levels.
"A VAT cut isn't a handout. It is an investment in businesses that employ millions of people and generate billions for our economy," Kerridge wrote. "The industry needs breathing space to survive, invest and grow."
He is leading the "VAT's the Problem" campaign, which advocates for a 10% VAT rate for hospitality. Kerridge expressed concern about the future of high streets, fearing a landscape dominated by betting shops and vape stores if the trend of closures continues. Since the pandemic, over 16,000 hospitality venues have closed, with an average of three venues disappearing daily in the first three months of the year.
Kerridge stated that the government's recognition of VAT as a tool to boost footfall and support businesses through the summer scheme was a step in the right direction, and that a permanent reduction would be the "next logical step."