MPs call on Government to ‘listen to the hospitality sector’ and back VAT cut

By James McAllister

- Last updated on GMT

MPs call on Government to ‘listen to the hospitality sector’ and back VAT cut

Related tags Vat Government Legislation ukhospitality Vat cut

MPs from across the political divide including the Conservative’s Tobias Ellwood and former Liberal Democrat leader Tim Farron have voiced their support for measures to support the hospitality sector.

In a Westminster Hall debate yesterday (31 January) on ‘fiscal support for the hospitality sector’, secured by Alyn Smith, MP for Stirling (Scottish National Party), there was broad agreement from MPs that the sector was in need of further backing by the Government.

Speaking during the debate, Smith said: “Am I looking for special treatment for the hospitality sector? Yes. I think they need it and I think they deserve it.

“I think they need it because of unprecedented economics times we’re living through, and they deserve it because these businesses are not just part of our economy. They’re a part of our society, they’re community hubs, they contribute to our sense of place, they keep our high streets busy.”

Many MPs echoed trade body UKHospitality’s key asks ahead of the Budget​, which include a lower rate of VAT, addressing business rates increases due in April and wider reform of business rates.

Ellwood said: “My simple, but critical, call to action today is please listen to the hospitality sector, who are screaming out that VAT is too high.

“Please reconsider the decision to raise VAT to 20%, otherwise you will face ever more business closures and subsequently raise less tax for the Exchequer.”

Farron, who led the Liberal Democrats between 2015 and 2017, added: “I really hope the Minister will listen and bring in the actions we need.

“All we’re asking you to do, Minister, is back a sector that will boost our economy to the tune of billions more.”

Rachael Maskell, Labour MP for York Central, noted that the hospitality sector is ‘at the sharp end of all markets sensitivities’.

“It feels every economic challenge acutely,” she continued.

“The sector needs support.”

Yesterday’s debate comes after MasterChef winner Simon Wood and Sacha Lord, Night Time Economy Adviser for Greater Manchester, joined a host of Manchester chefs and operators earlier this week in calling for a cut in VAT to 10% for the hospitality sector as part of a new video campaign​.

The Government temporarily reduced VAT to 12.5% between 1 October 2021 and 31 March 2022, as part of its assistance to the hospitality industry during the pandemic, but it now stands at 20%.

The UK has one of the highest rates of VAT in the world. The US has no VAT just local sales taxes of 2-7%, Canada and UAE have a 5% rate, France is 5.5% and much of Europe is no more than 10%.

UKHospitality is urging people to contact their MPs to urge them to support a lower rate of VAT for hospitality, tourism and leisure. It also backs the petition at​ created by Bournemouth-based hospitality owner Andy Lennox.

Commenting on yesterday’s debate, UKHospitality chief executive Kate Nicholls said: “It was excellent to see so many MPs attend the debate, responding to our calls and those of hundreds of hospitality businesses that urged them to do so.

“It’s evident from the debate that MPs recognise the challenges facing the sector and back our calls for urgent action. There was particular cross-party support to lower the rate of VAT and reform business rates – all priority asks of ours.

“I hope the strength of feeling shown is heard loud and clear by the Government and that they take the necessary action in the Budget to help this strategically important sector.”

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