In the run-up to the Chancellor of the Exchequer’s April Budget speech, our UK partner organisation UKHospitality has been campaigning hard for an extension of the 12.5% VAT rate for the sector. To support their views, they conducted a poll with the research institute YouGov. 92% of respondents say their cost of living has risen colossally since before the pandemic, and 67% say they need to cut their food costs. 49% of respondents think that the reduced VAT rate should be maintained in the long term to reduce costs, while 30% would like to see at least the expiry date of the VAT reduction postponed. According to UKHospitality, their sector is the strongest in job creation, as confirmed by the latest figures from the Office for National Statistics, which show an increase of 252,000 in employment in the sector. The association also cites a survey by the CGA research institute, which found that 85% of respondents believe that restaurants and pubs could face severe price rises, which, if increased by VAT rises, will almost certainly be followed by a fall in customer numbers, with disastrous consequences for those working in the sector.
This increase comes at a time when British consumers are facing their own rising bills. The report shows that 70% of people are worried about their long-term finances, and more than half (55%) are more worried than a year ago. A large majority (85%) expect pub and restaurant prices to rise this year. The chief executive of UKHospitality said: ‘Our analysis shows that the sector is likely to contribute 1.7 percentage points to the national CPI rate, and that the biggest contributor will be the increase in VAT from 12.5% to 20%, scheduled for April this year. This will compound all other cost increases and squeeze businesses further. However, positive action by the government, such as keeping VAT at 12.5%, will enable the sector to play its part in solving the cost of living crisis.”