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UKH launches campaign urging Chancellor to ‘lock in’ low VAT permanently

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

Doing so will enable sector businesses to create 125,000 jobs, rebuild their balance sheets, boost investment, avoid damaging price increases and accelerate the UK’s post-pandemic economic recovery.

The #VATsEnough campaign comes in the wake of the VAT rate for hospitality and tourism businesses rising to 12.5%, on 1 October. While the Treasury’s landmark decision last year to reduce VAT for these sectors helped many venues survive the crisis, under current plans VAT will return to its pre-pandemic level of 20% come April 2022, just as next year’s peak season begins.

Trade association UKHospitality is now urging customers, suppliers, hospitality venues and employees to lobby their MPs on the need to lock in the 12.5% VAT rate for local pubs, bars, restaurants, hotels and other sector businesses.

Its calls are bolstered by exclusive YouGov polling for UKHospitality shows that six in 10 adults (57%)[1] 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 say they will eat out less frequently if prices were increased in restaurants, pubs and cafes, according to the survey.

Industry experts claim that while businesses will pass on savings where possible, an increase in the rate of VAT from current levels will inevitably lead to rises in some prices in a vulnerable market. Taken together, this suggests a higher VAT rate will dent costumer visits to hospitality venues.

Kate Nicholls, Chief Executive of UKHospitality, said, “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.

“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.

“We need the whole hospitality sector, its suppliers, employees and customers to come together and demonstrate to Government how critical the lower rate of VAT is for our sector’s recovery.”

Other key findings from the survey include:
• 81% of respondents say 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.

Commenting on the campaign, Nick Varney, CEO of Merlin Entertainments, which runs theme parks across the UK such as Alton Towers and Thorpe Park, said, “We urge the Government to consider a permanent move to 12.5% VAT as the Treasury has already seen the genuine benefit in terms of driving demand.

'If the UK, and London in particular, are to recover, we need to be able to ensure Britain can compete with cheaper European holiday destinations and is attractive for both domestic and international visitors.

'Keeping domestic days out and short breaks affordable for hard working families in the UK should be our number one priority. Long-term, and post-Brexit, it is crucial that Britain competes internationally, and VAT is a key lever for Government to drive growth.”

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.”

#VATsEnough is an integrated multi-channel campaign 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%.

Across the course of the pandemic, hospitality and tourism were the hardest hit sectors, with 660,000 jobs lost, spend down £100bn and 12,000 licensed venues permanently closed.