#VATsEnough: New Campaign Calls for Chancellor to ‘Lock In’ Low VAT Permanently (...CONTINUED FROM FRONT COVER) Critically, half (49%) of the adult population say they will eat out less frequently if prices were increased in restaurants, pubs and cafes, according to the survey. Industry experts claim that while businesses will pass on savings where possible, an increase in the rate of VAT from current levels will inevitably lead to rises in some prices in a vulnerable market. Taken together, this suggests a higher VAT rate will dent costumer visits to hospitality venues. Kate Nicholls, Chief Executive of UKHospitality, said: “We’re launching the #VATsEnough campaign because a failure to act risks the future of hotels, cafés, pubs, restaurants and myriad other venues and attractions across the country. Our businesses bring light, life and heart to communities across the country but are battling huge challenges in terms of labour shortages and the food supply chain after 18 months of desperate struggle due to the pandemic. “By introducing a permanent 12.5% rate of VAT in his autumn Budget, the Chancellor can help us bounce back strongly, keep prices affordable for customers and level up UK jobs. Lower VAT will foster investment in businesses and high streets, accelerating our recovery from the pandemic. Let’s lock in VAT at 12.5% permanently. “We need the whole hospitality sector, its suppliers, employees and customers to come together and demonstrate to Government how critical the lower rate of VAT is for our sector’s recovery.” Other key findings from the survey include: • 81% of respondents say hospitality and tourism is important for providing local jobs, while 78 % believe the sectors are vital to their local communities • 55% are concerned about the closure of eating out venues as a result of the coronavirus pandemic, and 46% are worried that more accommodation venues and attractions will close • 56% believe that keeping a reduced rate of VAT would directly benefit their local high streets, with almost two thirds (63%) saying it would have a positive impact on hospitality • 53% of respondents say the hospitality sector is important to their social life.
COMPETING WITH EUROPE Commenting on the campaign, Nick Varney, CEO of Merlin Entertainments, which runs theme parks across the UK such as Alton Towers and Thorpe Park, said: “We urge the Government to consider a permanent move to 12.5% VAT as the Treasury has already seen the genuine benefit in terms of driving demand. If the UK, and London in particular, are to recover, we need to be able to ensure Britain can compete with cheaper European holiday destinations and is attractive for both domestic and international visitors. Keeping domestic days out and short breaks affordable for hard working families in the UK should be our number one priority. Long-term, and postBrexit, it is crucial that Britain competes internationally, and VAT is a key lever for Government to drive growth.” Nick Mackenzie, CEO of pub company Greene King, added: “The VAT reduction has helped the hospitality sector stay afloat during the last 18 months, but we are facing continued long-term challenges. At Greene King, we have around 2,800 pubs in commu-
nities of all sizes and types, and making 12.5% VAT permanent will allow us to plan, invest, as well as create jobs across the country and support the government’s levelling up agenda.”
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Sue Rathmell, partner at MHA said: “The UK tourism and hospitality sector is screaming for help and the Chancellor needs to not only listen, but more importantly act to support businesses recover from the pandemic. This has become urgent as the lower 5% VAT rate, which the sector had been benefitting from since mid-July 2020, increased to 12.5% from 1 October and will return to 20% from April 2022. What Rishi Sunak should do is call off this increase and instead implement a permanent VAT rate reduction – something which the sector has been pleading for for years. “Lower VAT costs encourage people to holiday in their own country instead of going abroad, boosting income in the whole country. This is why retaining a lower VAT rate is vital to the industry. If the government were to maintain the 12.5% VAT rate indefinitely after 1 April 2022 instead of returning to the standard rate, the reinvigoration of the UK’s tourist centres, beach towns, tourist attractions, hotels and restaurants could continue. It would be a massive boost for the UK economy if we can encourage British people to continue to holiday at home. Retaining the 12.5% VAT rate can help to achieve just that. What’s more, many European countries already have a permanent reduced VAT rate for hotel accommodation, so this would further put the UK in line with peers.
SECTOR ON A “RAZORS EDGE” “The recovery in the hospitality and tourism sector is on a razor’s edge. Restaurants and pubs have already indicated that they will have to increase prices in order to pay for the VAT rise. The increased cost of importing food into the UK post-Brexit and the shortage of staff also means that firms have had to pay more to attract new employees and retain existing ones. In addition, many businesses have recently started to make repayments on government backed loans that were taken out during the early stages of the pandemic and the recent increase in VAT rates, coupled with the reduction in rates relief, will put increased pressure on cashflow over the challenging winter months. “Some commitment from government to help solve the staffing shortages in the sector would also be very welcome, for example in the form of incentives to encourage businesses to recruit and train young people alongside a temporary amendment to immigration policy to help address shortages while the new workforce is developed. “With so much at stake, the time has come for a bold move to help the industry not only as it finds its feet post-Covid-19, but for its long-term future.” #VATsEnough is an integrated multi-channel campaign encouraging everyone who works in, visits and enjoys hospitality and tourism venues to lobby their local MP, urging them back the campaign to lock in VAT at 12.5%. Across the course of the pandemic, hospitality and tourism were the hardest hit sectors, with 660,000 jobs lost, spend down £100bn and 12,000 licensed venues permanently closed. More details can be found via the #VATsEnough campaign website at www.ukhospitality.org.uk/page/vatsenough
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