Chancellor Urged To Extend VAT Cut To Help Pubs When They Can Trade Again

Beer champion Campaign for Real Ale (CAMRA) has hit out following a treasury minister’s comments in the House of Commons yesterday when he said there are “no current plans” to further extend the reduction in VAT for the tourism, hospitality and leisure sectors.

Responding to a question from Blackpool South MP Scott Benton, Jesse Norman, financial secretary to the treasury and MP for Hereford and South Herefordshire, said: “The temporary reduced rate of VAT was introduced to support the cash flow and the viability of over 150,000 businesses and to protect 2.4 million jobs in the hospitality and tourism sector.

“It was extended in September and extended again and will now run until 31 March of this year. But the relief comes at as significant cost, and while the government keeps taxes under review, it has no current plans to extend it further.”

It was hoped that the chancellor would extend the VAT reduction in his upcoming Budget on 3 March, although hospitality trade bodies had lobbied for the measure to be confirmed sooner.

CAMRA Chairman Nik Antona said: “As ministers plan for what re-opening might look like once lockdown begins to be lifted, they must now commit to extending the cut in VAT for as long as pubs are operating at a reduced trade under restrictions like the curfew.

“Pubs have been closed for months so they haven’t been able to benefit from the reduced rate of VAT. Pubs that don’t serve food deserve help too which is why CAMRA wants this VAT cut extended from food to also include alcoholic drinks so those community locals can benefit once they’re allowed to trade again.

“In addition to help with VAT and extending the business rates holiday for another year, the Chancellor should also cut duty on beer served on tap in pubs and social clubs, helping them to get back on their feet, compete with supermarket booze and thrive in the months and years to come.”

The news that there are no plans to extend VAT relief follows the announcement by the office of National statistics that the hospitality sector has been the hardest hit with job losses following the pandemic outbreak in March 2020 . UKHospitality Chief Executive Kate Nicholls said: “This is a reminder, not that it is needed, that we have been hit hardest by this. Unless we want to see unemployment in our sector rise even further, we need more support to keep businesses alive and these jobs secure. The VAT cut and business rates holiday must be extended to give employers some breathing room to keep jobs safe.

“It is vital that we have a clear exit strategy and a route map to recovery as soon as possible. Hospitality can be the key to jobs and skills for young people and we can plug the gaps left by retail and help revitalise the economy. We can only do this with the right support to see us through the crisis, though.”