In a heartfelt plea to the government, four prominent chefs have called for a significant reduction in VAT for restaurants and pubs, warning that the hospitality sector is facing unprecedented challenges. Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan have jointly advocated for lowering the tax rate from 20% to 10%, arguing that such a move would alleviate financial pressures on businesses and align the UK more closely with European rates.
Hospitality in Crisis
The chefs, speaking on BBC Newsnight, expressed grave concerns about the current state of the hospitality industry. “We’re not making any money whatsoever; we’re just keeping our heads above water,” Rogan lamented. Kerridge added that the government’s taxation policies are misguided, asserting that the industry is at a breaking point where further price increases could deter customers from dining out altogether.
The hospitality sector has faced a barrage of difficulties over the past few years, including the devastating effects of the COVID-19 pandemic, soaring energy costs exacerbated by geopolitical tensions, and a cost-of-living crisis that has led consumers to cut back on discretionary spending. Recent statistics indicate that three hospitality businesses are closing their doors every day, highlighting the urgent need for government intervention.
VAT: A Heavy Burden
Value Added Tax (VAT) is a tax levied on the sale of goods and services, and its standard rate in the UK stands at 20%, one of the highest in Europe. In contrast, neighbouring countries such as Germany (7%), Ireland (9%), France (10%), Italy (10%), and Spain (10%) benefit from significantly lower rates. UK Hospitality has been vocal in its calls for a reduction in VAT, arguing that such a move would help businesses thrive rather than merely survive.
Ottolenghi, who operates 11 venues across the UK, described the current situation as “crippling” for not only his businesses but for the entire hospitality landscape, including bakeries and cafes. “Every pound we earn is heavily taxed, leaving us with little to reinvest,” he stated, underscoring the urgency of the situation.
The Need for Change
The chefs are not alone in their concerns. Cabinet minister Pat McFadden acknowledged that while the government has asked businesses to contribute more, it also faces competing demands for increased public spending. He noted that the Chancellor must consider the broader economic landscape when making tax decisions, indicating that the government is aware of the pressures facing the hospitality sector.
Kerridge, who runs five establishments, highlighted that various factors, including rising National Insurance rates and minimum wage increases, are eroding profit margins. While he supports the minimum wage increase, he insists that reducing VAT from 20% to 10% would allow businesses to stabilise and reinvest in their operations. “It’s about survival,” he emphasised, rather than merely passing savings onto customers.
Pastry chef Ravneet Gill echoed these sentiments, stating that the financial burdens of running a restaurant were far greater than she had anticipated when she opened her first location. Rogan, who boasts nine Michelin stars, pointed to VAT as a particularly damaging obstacle to success.
Addressing Youth Employment
The hospitality sector plays a crucial role in providing job opportunities for young people, employing approximately 28% of all 18 to 20-year-olds, according to the Institute of Fiscal Studies. However, recent reports indicate that job openings for youth are dwindling, raising concerns about a potential “lost generation.” Over one million young people are currently not in education, employment, or training—the highest figure in over a decade.
In response to these challenges, the government announced the creation of 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 lowering employment costs is essential for encouraging businesses to hire young workers.
The chefs emphasised that when economic pressures mount, the first areas to suffer are investments in young talent and sustainability. Ottolenghi cautioned against the societal implications of losing restaurants and pubs, warning that we may risk becoming a community that disengages from social interaction.
Why it Matters
The call for a VAT reduction reflects a broader debate about the future of the hospitality sector in the UK. As businesses grapple with rising costs and dwindling consumer spending, the government’s response could either bolster a vital industry or lead to further closures and job losses. With the hospitality sector serving as a cornerstone of community life and youth employment, the consequences of inaction could be profound, impacting not only the economy but also the social fabric of society. Addressing the challenges faced by restaurants and pubs is not just about saving businesses; it’s about preserving the spaces that foster connection and community engagement.
