In a heartfelt plea, prominent UK chefs are urging the government to reduce the value-added tax (VAT) on pubs and restaurants to 10%, citing escalating pressures that have made operating in the hospitality industry more challenging than ever. This call comes as the sector grapples with the lingering aftereffects of the pandemic, soaring energy costs, and a cost-of-living crisis that has left many consumers hesitant to dine out.
A Call to Action from Culinary Leaders
Renowned chefs Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan voiced their concerns during an interview with BBC Newsnight. They highlighted the financial strain on their businesses, with Rogan lamenting, “We’re not making any money whatsoever, and we’re just keeping our heads above water.” Kerridge added that the government’s tax policies are fundamentally misaligned with the realities faced by hospitality businesses.
The chefs argue that lowering VAT would not only relieve some of the financial burden but also align the UK’s tax rates more closely with those in other European countries, where VAT for the hospitality sector is significantly lower. For instance, Germany levies just 7%, while Ireland, France, Italy, and Spain all apply rates of around 10%.
The Struggles of the Hospitality Sector
The hospitality industry has endured a tumultuous period, marked by the Covid-19 pandemic, which brought operations to a standstill, followed by an energy crisis exacerbated by geopolitical tensions. According to UK Hospitality, three establishments are closing their doors every day, underscoring the severe challenges businesses are facing.
As consumer spending continues to wane, particularly in dining, many establishments are struggling to stay afloat. While government initiatives like the Eat Out to Help Out scheme offered temporary relief, long-term support is now deemed essential. “Every pound that we take, a substantial amount of it just goes to the government for a different taxation,” Ottolenghi explained, highlighting the unsustainable nature of current tax burdens.
The Bigger Picture: Employment and Economic Sustainability
The call for a VAT cut is not just about immediate financial relief; it also touches on broader economic implications. Hospitality is a critical sector for youth employment, with the Institute of Fiscal Studies noting that it employs around 28% of all 18 to 20-year-olds. However, a recent report warns of a shrinking job market for young people, with over one million not engaged in education, employment, or training — the highest rate in over a decade.
In response to these concerns, the government has pledged to create 300,000 work experience and training placements across various sectors, including hospitality. Nonetheless, industry leaders like Allen Simpson, chief executive of UK Hospitality, argue that reducing employment costs through tax cuts is vital for encouraging businesses to hire young workers again.
Kerridge emphasised that the situation is dire, stating, “It’s about survival for the industry rather than passing on the cut to customers through cheaper prices.” He, along with his fellow chefs, sees the potential for a VAT reduction to enable operators to reinvest in their businesses and communities, rather than merely surviving.
Why it Matters
The hospitality sector is a cornerstone of the UK economy and a vital source of employment, particularly for younger generations. As the industry grapples with unprecedented challenges, a VAT reduction could provide the much-needed support to stabilise businesses, retain jobs, and foster economic growth. Without such intervention, the risk of permanent closures and a lost generation of workers looms large, threatening not just the future of dining in the UK, but the social fabric that vibrant restaurants and pubs help to create.
