The Albany Gazette - Hospitality leaders ask Burnham to halve VAT amid rising costs

More than 800 hospitality leaders have signed an open letter asking Prime Minister Andy Burnham to reduce the sector’s VAT rate from 20% to 10%, citing venue closures and increasing business costs.

Signatories include pub operators Greene King, Fuller’s and Wetherspoons, hotel businesses Marriott and Center Parcs, and chefs Tom Kerridge, Angela Hartnett and Heston Blumenthal. They argue that a lower tax rate would support businesses, employment and town centres.

The appeal follows Burnham’s decision to give councils powers to introduce unlimited tourist taxes. Hospitality companies say the policy adds uncertainty to an industry already facing higher wages, employer National Insurance contributions, energy bills, food costs and business rates.

The letter claims the industry faces the highest tax burden in the economy and that three hospitality venues close daily. It warns of more closures, job losses and fewer opportunities for young people without action. Those figures and forecasts were advanced by the campaign’s supporters.

UKHospitality says Labour’s first two Budgets added £6.8 billion in costs to the industry and estimates that the new visitor levies could add another £1.6 billion. The trade association argues that reducing VAT could help reverse closures and support new openings on high streets.

Kerridge, who supported Labour at the previous general election, said the existing VAT rate was constraining businesses. He cited wages, energy, food and rates pressures and called for action rather than further ministerial promises.

The proposed tourist charge would apply to hotels, holiday lets and bed-and-breakfast accommodation as a percentage of prices. Critics say families visiting during school holidays could pay more because room prices already rise with seasonal demand. They also argue that popular destinations could face an additional burden.

Shadow Chancellor Andrew Griffith criticised the visitor tax, connecting it with employer taxes, business rates, energy costs and regulatory requirements. Hotel groups Hilton, The Pig and PPHE said the levy would affect families, business travellers and overseas visitors.

Hilton UK and Ireland senior vice president Stephen Cassidy described it as a severe additional setback for a sector already under pressure.

A government spokesperson rejected UKHospitality’s cost calculations as speculative and said official analysis indicated a smaller impact on businesses. The spokesperson said local authorities would be able to raise and reinvest funds where needed and would consult businesses before deciding whether to introduce a levy.

The government also cited its £4.3 billion business-rates support package for hospitality and retail. Its response presented the visitor levy as a means of funding local priorities, rather than accepting the industry’s estimate of the additional cost.

South Yorkshire’s Labour mayor, Oliver Coppard, said he was surprised by the intensity of some industry objections, pointing to the substantial variation in hotel prices as demand changes.

The letter’s signatories maintain that cutting VAT would help retain pubs, restaurants and hotels in local communities. Their call brings together large operators and individual chefs in a national appeal focused on the sector’s tax burden and the future of town-centre businesses.

(K.Jones--TAG)