The UK’s hospitality sector won’t be getting its much-demanded VAT cut, the boss of UKHospitality has said. Kate Nicholls, CEO of the trade body, said during a panel discussion at the annual Northern Restaurant and Bar show at Manchester Central that she was ‘not confident at all’ that there would be any temporary relief for business owners in the pipeline.
“Firstly, it was temporary, so the government is pretty firm on the fact, and Rishi Sunak is quite stubborn with the way he works things through,” she said. “‘It was temporary, I reversed it, none of you said thank you, none of you said it was good enough’.
“If you were to go back to five percent, that’s eight billion pounds. It’s an eight billion pound bill. In the context of everything else that’s going on, I cannot see politically, given all the pressures that they’ve got, how they can justify doing that.
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“He was very adamant that it was temporary, it’s been reversed, if he did it again it would be open season and everybody would ask for it. Politically, I just don’t see how he can do it at this point in time.
“We will keep campaigning on it, and we do keep campaigning for duty free sales for overseas visitors. Our valuable overseas visitors are not coming back, they’re down about a third in terms of their spend, they’re going to Paris and Milan instead.
“But you’ve got to be politically pragmatic when you’ve got public sector finance in such a state. We’d look tin-eared and naïve to be asking for something like that, so I’d rather go in and work with the government to try and get something and then continue to talk with them, and talk to the opposition, because we’re 18 months from a general election.”
Many in the hospitality industry, including Manchester’s night time economy advisor to the mayor Sacha Lord, have been lobbying the government for a cut in VAT in the face of sky-rocketing energy bills and increases in costs across the board.
During the pandemic, businesses saw a reduction of VAT to 12.5%, and as of April the sector will also be faced with an increase in the national minimum wage.
He told the Manchester Evening News last month: “As an industry, we know what needs to be done. We’re only asking for what’s in line with practically every other European country, and that’s a reduction in VAT. It’s about damage limitation. I know people who are trading, but they know that when their energy goes up in April, or the next rates bill lands, they’re done. They’ll close.
“[The government] has pulled the rug. People say ‘well, it’s not an open cheque book’. We don’t want that, we want to trade. With reducing VAT, even if we got it down to 12.5% it would be a game changer. In the long term, 12.5% of something is far, far better than 20% of nothing.”
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