Demands growing for cut in VAT as hospitality sector reels

Demands are growing for a cut in VAT at pubs, clubs and restaurants as the hospitality sector reels from the devastating impact of train strikes.

Last week’s walkouts alone cost the battered industry £360 million, according to the trade body UKHospitality.

And the series of stoppages has hit London’s economy to the tune of £571 million in the past year, figures from the Centre for Economics and Business Research think-tank show.

Now the Labour Party, which is way ahead in the opinion polls, is being urged to give the sector a big tax break by one of its leading business supporters.

Sacha Lord, a night-time economy adviser for Greater Manchester mayor Andy Burnham, wants Labour to commit to cutting VAT for the hospitality and tourism sectors.

Reeling: Demands are growing for a cut in VAT at pubs, clubs and restaurants

The rate was slashed during the Covid lockdowns but went back up to 20 per cent after the economy reopened.

‘The 12.5 per cent VAT rate was a lifeline during the pandemic and must be reinstated,’ Lord said.

He added that this would allow the UK to compete with many European countries where the average rate is lower.

‘Ultimately 12.5 per cent of revenue for the Exchequer is better than 20 per cent of nothing, which will increasingly be the result if businesses go under,’ he said.

Lord, an entrepreneur who runs the Parklife music festival, was speaking as delegates gathered for this week’s Labour Party conference in Liverpool.