Celebrity chef Tom Kerridge has urged the UK government to implement a permanent Value Added Tax (VAT) cut for the hospitality sector, highlighting the financial pressures faced by businesses.
Kerridge's plea comes as a temporary VAT reduction, which lowered the rate from 20% to 5% for children's meals in restaurants and tickets for family attractions, concludes. This summer scheme, active from June 25 to September 1, was intended by the government to assist families with summer activities.
"This isn't about hospitality wanting a special favour," Kerridge wrote in The Mail. "It's about survival." He argued that the temporary tax break, while a "important recognition," was "time-limited and narrow in scope." According to Kerridge, the "next logical step is a lower rate for the entire hospitality sector."
The chef advocates for a reduction in VAT for hospitality from the current 20% to 10%, aligning with rates in several European countries. He noted that Ireland recently reduced its hospitality VAT to 9%, while France, Italy, and Spain all have a 10% rate. Germany has also reduced its rate to 7% from 19%.
Kerridge pointed out that rising costs for food, energy, and employment, coupled with business rates, are significantly impacting the industry. He stated that the UK government is making it more challenging to operate a hospitality business compared to its European competitors.
"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 asserted. He emphasized that the closure of pubs and restaurants results in job losses, reduced footfall in town centers, and the erosion of important community social hubs. The hospitality industry also plays a crucial role in providing first jobs for young people, a sector currently facing high youth unemployment.
Since the pandemic, over 16,000 hospitality venues have closed in the UK, with a net loss of 305 establishments in the first quarter of the current year, averaging three closures per day. Kerridge is leading the "VAT's the Problem" campaign, advocating for a 10% VAT rate for the sector.
He acknowledged the Treasury's potential financial concerns but questioned the long-term economic cost of continued business closures and job losses. Kerridge stressed that a lower VAT rate would provide the industry with the necessary "breathing space to survive, invest and grow."