Hospitality industry steps up calls for VAT cut to boost business and jobs

The industry is currently campaigning for a cut of VAT to just five per cent from the current level of 20 per cent and new BHA figures out today shows its members believe the continued Government support of the higher level is stopping business growth and giving the UK a reputation for poor value for money. 

Create jobs​

A massive amount of members - nearly 98 per cent - say that the current rate hinders the competitiveness of the industry while 85 per cent say a cut to five per cent would significantly boost staff numbers and create new jobs. 

Ufi Ibrahim, the BHA chief executive, said the results showed operators believe a VAT cut would boost customer demand and they plan to use the saving achieved to develop lower prices, greater investment and more training and higher wages.

"This will lead to the creation of more and more jobs – our research indicates that 78,000 jobs will be created following a reduction of VAT to five per cent. Of course, this will lead to greater revenues to the Treasury through higher tax returns," she said.

Last month VAT Club JB, the campaign set-up by Jacques Borel to lobby for a cut in VAT to 5 per cent, redesigned its logo to represent a refocus for the campaign on the employment benefits of a VAT cut​. At the time the organisation said up to 320,000 jobs could be created if the UK was to follow the lead of nations such as France, Germany and Sweden among others.

Competitiveness hindered​

The survey also shows BHA members see a range of industry benefits from a cut in VAT and would take active steps to reinvest the saving back into their businesses. Among other statistics revealed in the BHA survey:

• 90 per cent see business development opportunities following a cut in VAT 
• 74 per cent believe a cut will lead to more domestic visitors 
• 55 per cent say a reduction to five per cent would lead to more overseas visitors
• 76 per cent say a cut in VAT will boost turnover
• Over 95 per cent will pass on all or some of any VAT reduction
• Of those 82 per cent will invest more in their product or facilities, 67 per cent will employ more people, 57 per cent will invest more in training and 48 per cent will increase staff wages

Last week Borel said plans to cut VAT on Scottish ski lift passes to 5 per cent could show the Government wants to put hospitality industries back on a level playing field with their European counterparts​ and keep the UK leisure and hospitality sector competitive.

Ibrahim added that the argument of international competitiveness was one the organisation would be reiterating to Government following a new Facebook campaign and information pages on its website.

"This country is only one of four out of the 27 EU member states which does not impose a lower rate of VAT on hospitality services. This makes the UK uncompetitive with the rest of Europe. We are effectively fighting the competition with one hand tied behind our back," she said.