Expect a VAT reduction by 2014, says expert
The man behind the 5.5 per cent VAT reduction in French pubs and restaurants spoke at a recent MA250 conference for multi-site pub operators and claimed the UK could see a cut in the pre-Budget report in October 2013, with the move implemented by 7 April 2014.
The move, he told delegates at the conference held by BigHospitality's sister publication The Publican's Morning Advertiser, would create between 140,000 and 320,000 jobs for the hospitality industry.
However he stressed the VAT cut, which would come as a welcome relief for many hospitality operators, would only happen if the industry pulled together to lobby the government before the next general election is called.
“If you’re going to start working on lobbying in two years (when the next general election is held), that’s too late. To succeed you must have three conditions: Time, money and expertise.”
Borel has erected a roundtable of leading hospitality figures and associations, including the British Hospitality Association (BHA), British Beer and Pub Association (BBPA) and Visit Britain, which will provide guidance, support and funding for him to lobby ministers.
He estimates the entire cost of lobbying the government will cost £3m.
Lobbying
While the Publican's Morning Advertiser editor The PMA Team urged other restaurant, hotel and pub operators to begin making the case for a targeted lower VAT rate to their local MPs, Borel added that those lobbying for their own cause alone are making “a big mistake”.
“You must fight for everything,” Borel said. “There are people who say you must not fight for beer because beer is very bad. That’s a mistake. You must fight for everything. You must fight for hotel accommodation, beer, and restaurants. After one or two years then we shall see what’s sellable, but when you start a negotiation you should never give up anything.
“If you want to win you should not visit ministers - it is a waste of time. You have to visit the assistants to the ministers, you have to visit 10 people for each one, and convince those 10 people.”
His remarks were supported by Tim Martin, chief executive of JD Wetherspoon, who has also spoken out against the high levels of tax for the hospitality industry.
He said those industry members who have been lobbying for minimum alcohol pricing in the off-trade should turn their attention to Borel’s argument instead.
“A lot of people in the pub industry have been preoccupied with the role of supermarkets in the fact that they sell cheap beer, and they feel frustrated by that,” he said. “But I feel the main thing is that supermarkets pay no VAT on food. If we’re going to attract people into pubs where we pay 20 per cent on our fish and chips compared to nothing in the supermarkets, that’s the thing to target. We’ve been shooting the wrong fox.
“Back Jacques. Don’t think that we know better; this is a guy who’s done it in lots of other countries and it makes sense to follow his lead. Back the winner.”
Irish example
Borel’s speech came just as Ireland announced a 4.5 per cent VAT cut from 13.5 per cent to 9 per cent for good and services related to the tourism sector, including accommodation, restaurants and catering services.
At the time Michael Noonan, Irish minister for finance, said: “The purpose of this targeted VAT relief is to boost tourism and stimulate employment.”
A spokesperson for the BHA added: “We are concerned about the level of VAT for hotel accommodation and meals out of home as almost every other EU country has a lower rate of tax for these items than Britain, which makes us very uncompetitive. We are currently gathering evidence and marshalling our arguments for a lobbying campaign which we shall launch shortly and which is likely to take several years.”
BigHospitality has a briefing pack on the beneficial effects of lower VAT in France, introduced in July 2009. Email Ewan.Turney@wrbm.com to obtain a copy.
BigHospitality questioned several pub industry members attending the MA250 conference on whether they intend to do something about the high VAT rate for UK hospitality businesses. You can watch their responses on video here.
