The former mayor of Greater Manchester, Andy Burnham, unveiled a 20% reduction in business rates for pubs, clubs and live music venues in his first week in office, framing the measure as a £100 million boost for the sector. Yet a coalition of more than 800 hospitality businesses – ranging from multinational chains to single‑site pubs – has now written an open letter to the prime minister, warning that the relief does not go far enough and urging a parallel cut in VAT. The signatories, which include household names such as Wetherspoons, Pizza Express and Marriott, as well as celebrated chefs like Tom Kerridge and Heston Blumenthal, argue that without a “fairer tax burden” the industry will continue to shed jobs and close its doors.
The 20% Business Rates Relief
Burnham’s announcement came just days after he took office, positioning the rate cut as the cornerstone of a broader aid package intended to stabilise a sector under pressure from rising costs. The policy applies specifically to premises classified as pubs, clubs and venues that host live music, exempting them from the full business rates levy for a defined period. While the Treasury has not disclosed the exact fiscal impact, the move was presented as a direct response to the sector’s outcry over unaffordable overheads.
Industry observers note that the relief, though welcome, addresses only one facet of the tax burden. Business rates remain a significant cost for many operators, particularly those with large premises or high footfall. By targeting only the rates charge, the government has left Value‑Added Tax – which currently stands at 20% on most goods and services – untouched, a gap that campaigners say continues to squeeze profit margins.
The VAT Campaign Gains Momentum
In February, while still serving as mayor of Greater Manchester, Burnham publicly pledged to advocate for a hospitality‑specific VAT rate that would mirror the European average of 10%. His remarks preceded a coordinated campaign, #VATsTheProblem, which has amassed more than 370,000 signatures on an online petition. The petition calls on the government to lower the sector’s VAT from 20% to 10%, arguing that the current rate “holds hospitality back” because labour costs – a major expense for the industry – are not VAT‑reclaimable.
The open letter, signed by over 800 entities, echoes this sentiment. It warns that without a reduced VAT rate, “closures will only continue to accelerate, jobs will be lost and opportunities for young people reduced.” Among the signatories are major pub groups such as Fuller’s, Greene King and Mitchell’s & Butlers, restaurant chains including Franco Manca, Pizza Express and Wagamama, hotel operators Best Western and Marriott, and leisure brands Center Parcs and Parkdean Resorts. The letter also highlights the contribution of independent, single‑site establishments, underscoring the breadth of the sector’s plea.
Celebrity chefs who have appended their names – Andi Oliver, Clare Smyth, Jason Atherton, Nathan Outlaw, Paul Ainsworth and Tom Kerridge – lend cultural weight to the argument. Kerridge’s comment that “the reality is that 20% VAT is holding hospitality back” encapsulates the industry’s view that the tax structure is fundamentally at odds with its labour‑intensive nature.
Government Response and Tenant Reforms
While the VAT campaign presses for a macro‑level tax adjustment, the government has signalled a willingness to explore more granular reforms for pub tenancies. Following a review of the 2016 “pubs code,” ministers have promised to work closely with publicans to provide greater flexibility for tenants seeking more favourable lease terms. Proposals include the ability to negotiate longer‑term relationships with pub companies and the introduction of a “free of tie” option, allowing tenants to pay market rent and source beer and other supplies from any vendor.
Data from the review reveal that, between April 2022 and March 2025, fewer than 400 tenants applied for a free‑of‑tie arrangement, citing the cost and administrative complexity as deterrents. Critics argue that without clearer guidance and reduced financial risk, the newfound freedom may not translate into meaningful relief for struggling premises.
The Human Cost of Inaction
The sector’s plea is not merely a financial appeal; it is a call to safeguard community hubs that employ thousands of young people and anchor local economies. The letter’s assertion that “a lower rate of VAT for hospitality can turn closures into openings, lost jobs into new jobs, and boarded‑up high streets into thriving centres of community” underscores the social stakes. With wages, energy bills, food prices and business rates all climbing, the industry warns that continued inaction will erode the viability of countless establishments, jeopardising the livelihoods of workers and the vibrancy of town centres.
Why It Matters
If the government fails to act on the VAT demand, the hospitality sector faces a cascade of closures that could devastate employment prospects for young workers and diminish the cultural fabric of British towns. A fairer tax regime would not only alleviate immediate financial pressure but also reinvigorate high streets, supporting local jobs, encouraging entrepreneurship and preserving the social spaces that communities rely upon. The outcome of this dispute will signal whether the new administration is prepared to back its rhetoric with the fiscal policies needed to sustain the nation’s vital hospitality ecosystem.