Chef Tommy Banks Calls for 13% VAT Rate for Smaller Hospitality Businesses
Chef-patron Tommy Banks has proposed a reduced 13% VAT rate for hospitality businesses with annual turnover under £50m, arguing that a targeted cut would give the Chancellor a more defensible way to support the sector.
Banks, who runs The Black Swan at Oldstead in North Yorkshire, said the plan is based on research from Bournemouth University Business School and Hospitality Voices. The study puts the net cost to the Treasury at between £3.2bn and £3.6bn a year.
A different approach to the VAT debate
The proposal departs from the #VATsTheProblem campaign led by chef Tom Kerridge. That campaign has the backing of major trade bodies and has gathered close to 400,000 signatures. It seeks a permanent cut in hospitality VAT from 20% to 10% for all operators, whatever their size.
Banks is a leading supporter of that campaign, but says the turnover cap responds to one of its most common criticisms: that large multinational operators have no need of a tax break. He described it as a fair challenge.
With the Budget approaching, Banks said his aim is to protect jobs and keep smaller businesses that anchor their local communities trading.
Cost versus closures
Banks accepted that the policy would be expensive, but said the figure should be set against the cost of more closures, lost jobs and a narrower tax base. In his view, the change could help viable businesses survive and encourage new operators to open.
He also stressed the sector’s role as an employer of young people. He said almost 40% of its workforce is aged 16 to 24, and that hospitality gives many their first job and a route into a career. Supporting those employers, he argued, is essential if the government is serious about youth opportunity.
Alongside The Black Swan, Banks operates Roots in York, The Abbey Inn at Byland and The General Tarleton near Knaresborough.
He said the loss of pubs, restaurants and cafés reaches beyond economics, particularly in rural areas, where pubs often serve as the social centre of village life. Once such venues close, he warned, they are hard to bring back.
Appeal to the Prime Minister
Banks also urged Prime Minister Andy Burnham to honour his earlier backing for a lower hospitality VAT rate. He said Burnham had been notably silent on the issue since entering office, and described the Budget as the moment that will show whether he follows through.