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New campaign calls for Chancellor to keep VAT at 12.5% to support hospitality recovery

Published:  07 October, 2021

A major new campaign – #VATsEnough – is calling on the Chancellor Rishi Sunak to make the 12.5% VAT rate permanent for hospitality and tourism.

The multi-channel campaign, spearheaded by trade association UKHospitality, is encouraging everyone who works in, visits and enjoys hospitality and tourism venues to lobby their local MP, urging them back the campaign to lock in VAT at 12.5%.

While the Government supported businesses during the Covid pandemic by dropping VAT to 5%, under current plans VAT will return to its pre-pandemic level of 20% come April 2022.

The campaign has said that supporting 12.5% would enable the sector to create 125,000 jobs, rebuild its balance sheets, boost investment, avoid damaging price increases and accelerate the UK’s post-pandemic economic recovery.

These calls are bolstered by an exclusive YouGov poll of 1,716 adults for UKHospitality, which showed that six in 10 adults (57%) who have a view believe that the hospitality sector VAT rate should not return to 20% next year and seven in 10 (70%) think the Government has a responsibility to support the sector’s recovery.

Critically, half (49%) of the adult population said they would eat out less frequently if prices were increased in restaurants, pubs and cafes, according to the survey.

“We’re launching the #VATsEnough campaign because a failure to act risks the future of hotels, cafés, pubs, restaurants and myriad other venues and attractions across the country. Our businesses bring light, life and heart to communities across the country but are battling huge challenges in terms of labour shortages and the food supply chain after 18 months of desperate struggle due to the pandemic,” said Kate Nicholls, chief executive of UKHospitality.

“By introducing a permanent 12.5% rate of VAT in his autumn Budget, the Chancellor can help us bounce back strongly, keep prices affordable for customers and level up UK jobs. Lower VAT will foster investment in businesses and high streets, accelerating our recovery from the pandemic. Let’s lock in VAT at 12.5% permanently.”

Nick Mackenzie, CEO of pub company Greene King, added: “The VAT reduction has helped the hospitality sector stay afloat during the last 18 months, but we are facing continued long-term challenges. At Greene King, we have around 2,800 pubs in communities of all sizes and types, and making 12.5% VAT permanent will allow us to plan, invest, as well as create jobs across the country and support the government’s levelling up agenda.”

Other key findings from the survey include:

• 81% of respondents said hospitality and tourism is important for providing local jobs, while 78% believe the sectors are vital to their local communities

• 55% are concerned about the closure of eating out venues as a result of the coronavirus pandemic, and 46% are worried that more accommodation venues and attractions will close

• 56% believe that keeping a reduced rate of VAT would directly benefit their local high streets, with almost two thirds (63%) saying it would have a positive impact on hospitality

• 53% of respondents say the hospitality sector is important to their social life