In a passionate plea for relief, four esteemed chefs and restaurateurs have called on the UK government to reduce the VAT rate for restaurants and pubs to 10%. They warn that the hospitality industry is facing unprecedented challenges, with many businesses struggling to survive amid rising costs and changing consumer behaviour.
The Call for Action
Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan expressed their concerns during an appearance on BBC Newsnight. According to them, the current VAT rate of 20% is unsustainable, especially when compared to lower rates across Europe. “We’re not making any money whatsoever, and we’re just keeping our heads above water,” Rogan stated, indicating the urgent need for tax reform to help the sector recover. Kerridge echoed this sentiment, suggesting that the government’s tax policies are misguided and detrimental to business viability.
Cabinet minister Pat McFadden acknowledged that the government has asked businesses to contribute more but also highlighted the balancing act required in fiscal decision-making. “The Chancellor has to make these decisions in the round, netting off all of these demands against the increasing expenditure demands that government also faces,” McFadden noted, indicating that tax cuts are frequently requested but come with costs.
The Hospitality Crisis
The hospitality industry has endured a tumultuous couple of years, with the COVID-19 pandemic leading to significant disruptions. As if this were not enough, surging energy prices linked to geopolitical tensions have compounded the struggles faced by restaurants and pubs. Consumer spending has also been impacted by the rising cost of living, with many choosing to dine out less frequently.
According to UK Hospitality, three hospitality businesses have ceased trading every day since the beginning of 2026, underscoring the dire state of the sector. The current VAT rate is not only the highest in the UK but also ranks among the highest in Europe, only surpassed by Denmark. The organisation has long campaigned for a reduction in VAT to levels seen in Germany (7%), Ireland (9%), France (10%), Italy (10%), and Spain (10%).
Rising Costs and Falling Margins
Kerridge, who oversees five restaurants and pubs, pointed out the multiple factors driving up operating costs. Increased rates of National Insurance, business rates, and the minimum wage have all contributed to shrinking profit margins. He suggested that the industry has reached a critical point where passing on costs to consumers is no longer feasible. “It just doesn’t work because it will stop people coming out,” he warned.
Ravneet Gill, who opened her first restaurant just a year ago, lamented the unexpected difficulties in hiring and retaining staff. “I never imagined it would be this tough,” she said, highlighting how high employment costs are hampering growth. Rogan, with an impressive nine Michelin stars to his name, echoed these concerns about VAT, describing it as a “killer” for businesses.
While the chefs support the increase in the minimum wage, they believe that a VAT reduction would provide the necessary breathing room for hospitality operators to reinvest in their businesses. “It’s about survival rather than passing on the cut to customers through cheaper prices,” Kerridge explained.
A Glimmer of Hope
Last week, Chancellor Rachel Reeves announced a temporary VAT reduction from 20% to 5% for various attractions, including children’s meals in restaurants. However, Gill dismissed this move as inadequate, labelling it a “very poor attempt” that could lead to loopholes and misuse without delivering genuine benefits to the hospitality sector.
The hospitality industry is a vital source of employment, particularly for young people. According to the Institute of Fiscal Studies, nearly 28% of 18 to 20-year-olds work in this sector. However, a recent report highlighted a worrying trend, indicating that job opportunities for young individuals are dwindling. With over one million young people currently not in education, employment, or training— the highest figure in over a decade—the sector’s struggles could have long-lasting repercussions.
In response, the government has proposed creating 300,000 work experience and training placements across various sectors, including hospitality. Yet, Treasury minister Torsten Bell admitted that high taxes continue to impact job creation in this area. Allen Simpson, chief executive of UK Hospitality, urged the government to make it more financially viable for businesses to employ young people again.
Why it Matters
The ongoing discourse surrounding VAT reduction is not merely an economic issue; it speaks to the very fabric of community life in the UK. Restaurants, cafes, and pubs are not just places to eat and drink; they are social hubs that foster connections and create jobs, particularly for young people. Without immediate action to alleviate the burdens on this sector, the UK risks losing a critical support system for its workforce and its cultural identity. As the call for a VAT reduction gains traction, the future of the hospitality industry hangs in the balance, and its fate could shape the economic landscape for years to come.
