More than 800 leaders from Britain’s pubs, restaurants and hotels have put their names to a letter demanding that Prime Minister Andy Burnham make good on a promise he made earlier this year, to slash VAT on hospitality from 20 per cent to 10 per cent.
The intervention lands only days after Mr Burnham, without warning, gave town halls the power to impose tourist taxes with no upper limit, a move that has left an already-squeezed industry reeling.
Among the signatories are pub chains Greene King, Fuller’s and Wetherspoons, celebrated chefs including Tom Kerridge, Angela Hartnett and Heston Blumenthal, plus hotel giant Marriott and the family holiday operator Center Parcs. Their message is blunt, they want the Prime Minister held to his own word.
Back in February, when he was still mayor of Greater Manchester, Mr Burnham said he backed halving hospitality VAT, citing the social value pubs, restaurants and hotels bring to struggling towns. Seven months on, with him now in Downing Street, businesses are asking why that conviction has gone quiet.
A cut to 10 per cent would simply bring Britain into line with France, Spain and Italy, hardly a radical ask.
Labour’s Tax Raids Add Up
The figures paint a grim picture of what Labour’s time in office has cost the sector. According to UKHospitality, the trade body, the Government’s first two Budgets have piled an extra £6.8 billion of costs onto hospitality businesses. Layer on Mr Burnham’s unlimited tourist tax, and the bill grows by a further £1.6 billion, UKHospitality says.
The letter warns that the sector, already the most heavily taxed part of the economy, is losing three venues a day, and that continued inaction will only accelerate closures, destroy jobs and strip young people of opportunities.
The letter to Mr Burnham says: “Our businesses are penalised by the highest tax burden in the economy, which is causing three hospitality venues to close every day.
“Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.
“A lower rate of VAT for hospitality can turn closures into openings, lost jobs into new jobs and boarded-up high streets into thriving centres of community.”
Tom Kerridge, who was no critic of Labour at the last general election, did not mince his words, saying the 20 per cent VAT rate is holding the industry back and that operators are being battered by rising wages, energy costs, food prices and business rates on top of it. His verdict: enough promises, time for action.
Families to Foot the Bill for Tourist Tax
The unlimited tourist tax, which will apply to hotels, holiday lets and bed and breakfasts, is expected to make holidaying in Britain pricier than heading abroad. Because the charge is calculated as a percentage of accommodation costs rather than a flat rate, families travelling during school holidays, when prices peak, will be hit hardest of all. Britain’s most popular destinations risk being penalised simply for being popular.
Shadow Chancellor Andrew Griffith did not hold back, branding the tourist tax the latest blow to hospitality from a Government he says has already loaded the sector with a jobs tax, punishing business rates, soaring energy costs and mounting red tape.
Major hotel operators have piled in too. Hilton, The Pig and PPHE Hotel Group have all warned the levy will hurt families, business travellers and tourists from overseas alike, while Hilton UK & Ireland’s senior vice president, Stephen Cassidy, described the policy as a catastrophic blow to a sector already under severe strain.
Labour Ministers Dismiss the Alarm
Downing Street, however, has brushed aside the warnings, insisting the tourist tax simply hands local leaders a tool to raise money for their areas, and claiming industry cost estimates are overblown speculation. A Government spokesman pointed instead to a £4.3 billion package of business rates support as evidence ministers are on the industry’s side.
Not every Labour figure is unsympathetic to the sector’s anger, but Oliver Coppard, the party’s mayor of South Yorkshire, seemed more taken aback by the strength of feeling than by the substance of the complaints, telling broadcasters he was surprised and somewhat disappointed by the hospitality industry’s reaction.
For an industry that has watched Labour add billions in costs since taking office, promises of jam tomorrow are wearing thin. As UKHospitality chief executive Allen Simpson put it, a Government that claims to champion hospitality and the cost of living is pursuing a policy that undermines both.
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