Brits could end up forking out an extra £2bn for their takeaways unless VAT is frozen and vital support is given to the hospitality sector, the British Takeaway Campaign has warned today.

VAT on hospitality is set to increase to 12.5% in October, and then raise again to 20% in March next year. But as chronic labour shortages and post-Brexit challenges on imports continue, restaurants are worried that they’ll be forced to pass on those costs to the consumer, or risk closing their doors and axing jobs.

Total spending on takeaways in 2020 was £15.1bn, but if VAT increases and nothing is done to help the sector deal with its ongoing challenges, this could rise by more than £2bn, hitting hard-working families.

To ensure Britain’s smallest restaurants and takeaways survive the coming months and can remain competitive without having to increase prices, the British Takeaway Campaign has launched its Five Point Plan for the sector’s recovery.

In a letter to the Chancellor, Rishi Sunak, the British Takeaway Campaign has urged the Government to:

1. Scrap the VAT increase in March 2022 and freeze VAT at 12.5% permanently:
Businesses will already struggle to accommodate the 12.5% increase - a further increase in the new year could be the death knell for many.

Burdened by excessive pandemic debts and a lack of staff, to survive, many businesses may need to increase their prices, making them less competitive in an already challenging market.

2. Extend Business Rates relief until the end of 2022:
The business rates holiday has been one of the most effective support measures for the hospitality sector, with hundreds of thousands of businesses benefitting from the 100% relief during the last 18 month.

Extending the relief while the outcome of Business Rates Review is implemented would allow small businesses ample time to survive the turbulence of the coming months and properly prepare for a fresh start, without a cliff edge on the horizon.

3. Introduce a ‘Commonwealth Common Good’ visa:
The British Takeaway Campaign agrees with the Government that we should aim to upskill the domestic workforce and make the hospitality sector a more appealing career, however, this will take decades to achieve.

Restaurants need staff now, not in 2030, so the Government must introduce a visa for people from Commonwealth countries to come and work in the UK quickly and easily, plugging a gap in the labour market that desperately needs filling.

4. Grants Extension into 2022:
Many small businesses struggled to access the grants scheme introduced during the pandemic and found that councils were providing funding inconsistently and irregularly.

Those that managed to get a grant will have used it up by now as the roadmap to unlocking was extended, especially those in quieter areas, where footfall has failed to recover.

A new or revised grant scheme could be delivered through central government – much like Eat Out to Help Out - to ensure support is targeted to where it is most needed and delivered quickly, supporting businesses while they acclimatize to the post-pandemic economy.

5. Extend the Kickstart Scheme and make it easier for small businesses to take part:
The Kickstart scheme must be extended beyond December to allow the smallest, independent restaurants to make the most of the scheme as the sector recovers and jumpstart the development of new talent to plug the desperate labour shortage in the sector.

Commenting on the launch of the British Takeaway Campaign’s Five Point Plan for the recovery of the sector, Ibrahim Dogus, Chair of the British Takeaway Campaign said, “Takeaway restaurants added £7.2billion in value to the UK economy in 2020. Raising VAT while thousands of them struggle to get the ingredients they need and can barely find the staff to work in their kitchen is a real kick in the teeth.

“The Government must use the upcoming budget to protect our restaurants, not slap them down with costs they can’t afford. Without support, restaurants will be forced to pass the costs onto the consumer if they want to survive, meaning millions of families could end up paying more for their favourite curry, pizza or pho.”

(source: British Takeaway Campaign)