Majority of adults support VAT freeze for hospitality

A survey by trade body UKHospitality has found 79% of adults believe the rate of VAT should remain at 12.5%, while 72% believe the Government should aid the sector’s post-pandemic recovery.

“After two extremely challenging years and, with the unfolding cost-of-living crisis, there is now a very strong case for the Government to use the next Budget to deliver the vital support that these surviving and indebted businesses need, to protect jobs and defend the current fragile recovery,” says UKHospitality CEO Kate Nicholls.

“Holding VAT at 12.5% will provide vital support for thousands of small, local, community businesses. It will protect jobs at a pivotal moment for the recovery.

“This research shows that our guests are feeling the pinch and that is hugely concerning for an industry and its workforce that are reliant on discretionary spending. Extending the existing VAT rate of 12.5% will help hospitality operators to hold down their prices, secure jobs and will help keep a lid on inflation.”

Last month the hospitality and leisure sectors called on the Government​​ to keep VAT at 12.5% beyond March 2022. In a joint letter more than 250 leaders in hospitality and leisure businesses called on the Treasury to maintain the current level to enable businesses to continue their recovery, to protect jobs, and to help stave off higher inflation in the economy.

Signatories included leaders from Big Table Group, Caffe Nero, Côte, Fuller’s, Greene King, Loungers,  Pho, Pizza Express, and Pizza Hut.

A separate study, commissioned by ordering, payments and growth platform Mr Yum, has reported similar results, with 80% of respondents saying the Government should provide financial support for hospitality businesses.

The majority believe extending the reduced VAT rate of 12.5% is the best way to support the UK hospitality industry recover from the pandemic, with grants to cover lack of staff and rent relief also receiving broad community support.

More than 55% of people say the Government should offer grants to cover staffing issues, with 45% backing rent relief and 60% in favour of making the temporary 12.5% VAT rate for hospitality permanent, according to the research.

“It’s clear a permanent 12.5% VAT rate for hospitality has the public’s support and would go a long way to encouraging people to get back and enjoy their favourite local pub or restaurant as often as they did before COVID hit,” says Mr Yum CEO Kim Teo.

While the hospitality industry is facing rising labour, energy and food costs, the survey also found that 50% of respondents would be unlikely to visit the pub as often if the total cost of a meal for two increased by £5, which rises to 80% if the price increased by £10.

However, 65% say they will still go to the pub as often as theydo now if the price of a pint increased by 50p, and 40% would visit as often if it increased by £1.