Hospitality sector demands 10 per cent VAT cut from Burnham ahead of Budget

More than 800 hospitality businesses have formally requested that Prime Minister Andy Burnham implement a reduction in value added tax, intensifying pressure on the government ahead of the Budget scheduled for next month. The open letter, signed by major pub operators, restaurant chains, hotel groups and prominent chefs, demands that the standard rate of VAT on hospitality services be lowered from 20 per cent to 10 per cent. This collective intervention seeks to hold the Prime Minister accountable for statements made in February, during his tenure as mayor of Greater Manchester, in which he indicated he would argue for a VAT rate more consistent with those found in other European nations.

The campaign has attracted support from significant industry players including JD Wetherspoon, Greene King, Fuller’s, Pizza Express, Wagamama, Marriott and Center Parcs. High-profile culinary figures such as Tom Kerridge, Heston Blumenthal, Angela Hartnett and Jason Atherton have also lent their names to the cause. Kerridge emphasised that the sector requires concrete action rather than further assurances, noting the awkward timing of the request. This follows Burnham’s recent admission that the cost of doing business remains too high, while simultaneously warning that constrained public finances limit the government’s ability to manoeuvre. The demand also arrives shortly after ministers confirmed plans to permit regional authorities to impose uncapped levies on overnight stays, a move that has already provoked backlash from the hotel and tourism sectors.

The letter highlights the disparity in tax rates across Europe, noting that Britain charges 20 per cent compared with 10 per cent in France, Italy and Spain, and seven per cent in Germany. Over 370,000 individuals have signed a related petition calling for the UK rate to be cut. Signatories argue that without intervention, business closures will accelerate, leading to further job losses and reduced opportunities for young people. Kerridge pointed out that the tax burden is particularly severe for hospitality because labour costs constitute a large share of expenses, and unlike product costs, VAT on personnel cannot be reclaimed. The sector has reportedly lost around 100,000 jobs in the past two years while absorbing higher wages, energy and food bills.

Burnham has previously offered concessions to the industry, including a 20 per cent business rates cut for pubs, clubs and live music venues during his first week in office. He indicated last week that ministers would review business rates more broadly for high street firms at the 28 October Budget. However, the Prime Minister stopped short of promising additional tax cuts, citing a difficult financial outlook. The hospitality industry now urges him to include the VAT reduction in the upcoming Budget package, arguing that a lower rate could transform closures into openings and restore vitality to high streets.