Prime Minister Stops Short of Backing Hospitality VAT Reduction Campaign

Prime Minister Sir Keir Starmer has declined to endorse calls for a permanent reduction in VAT for the hospitality sector, despite growing industry support for a campaign seeking lower tax rates for pubs, restaurants and other hospitality businesses.

The issue was raised during Prime Minister’s Questions (PMQs), when Green Party MP Hannah Spencer asked whether the Government would support the VAT’s the Problem campaign, which is calling for reduced VAT rates across the hospitality industry.

Highlighting the challenges facing operators, Spencer asked the Prime Minister whether he would join campaigners in backing a cut to hospitality VAT.

In response, Starmer pointed to the Government’s recently announced Summer Savings Programme, stating that VAT on children’s menu meals will be reduced from 20% to 5% for a limited period between 25 June and 1 September.

While the temporary measure offers targeted support for families dining out during the summer holidays, it falls short of the broader VAT reduction being sought by hospitality leaders.

The VAT’s the Problem campaign, led by chef and restaurateur Tom Kerridge, has attracted support from a wide range of industry organisations, including UKHospitality and the British Institute of Innkeeping (BII), alongside numerous operators and chefs from across the sector.

Campaigners argue that the UK’s hospitality VAT rate places businesses at a competitive disadvantage compared with counterparts in several European countries, where lower rates are commonly applied to foodservice and hospitality businesses.

The initiative has gained significant public backing, with more than 198,000 people signing a petition supporting the campaign since its launch in July.

Speaking previously about the proposal, Kerridge said he believes a reduction in VAT could stimulate long-term growth across the sector while helping to stem the number of hospitality business closures. He has argued that although such a move would represent a short-term reduction in Treasury revenues, the economic benefits generated through increased trading activity and business sustainability could outweigh the initial cost.

Lat week Independent MP Rosy Duffy Earlier brought together leading voices from across the hospitality sector and Parliamentarians to confront the growing crisis facing the UK hospitality industry.

Taking to social media she said, “I held this event because the sector’s voice must be heard. What I heard was an industry on its knees asking for fairness and a lifeline, following so many economic hurdles having been thrown at them all at once. They simply want their businesses to survive at this point.”

“I raised this in Prime Minsters Question, and the PM provided a deeply unsatisfactory answer that failed to even mention VAT. I will be writing to the Chancellor again to push for her to”:

* Cut VAT from 20% – Reduce hospitality VAT to 10%.

* Support viable employment – Ensure back to work ambitions are matched by workable employment policies.

* Tackle energy costs – Address high and unstable energy prices.

“It’s time to give hospitality the fair deal it deserves so it can thrive again” she added.