Viable businesses 'face ruin', hospitality bosses warn

06-Sep-2022 - Last updated on 06-Sep-2022 at 09:26 GMT

The bosses of KFC, Itsu, Just Eat, Pret a Manger, Pizza Hut and the Kebab Alliance have demanded a rapid VAT cut to protect businesses facing unprecedented short-term headwinds.

In an open letter in The Telegraph, the sector leaders said that recent reports suggesting a cut to VAT is one of the measures under consideration by incoming Prime Minister Liz Truss is encouraging for high street hospitality businesses facing soaring energy bills and cost price inflation.

"Reports suggest that a cut could come in the imminent economic package or later, as part of a longer-term review," the leaders wrote.

"Either would be welcome – but our experience suggests that decisive, urgent action on VAT is both possible and exceptionally beneficial for businesses facing unprecedented short-term headwinds."

The Government previously cut VAT for hospitality to 5% in July 2020 to support the sector through the pandemic, by the rate returned to its usual level of 20% earlier this year.

"We must all adapt, to adjust to cost increases in supply chains and to seek new ways to reduce energy usage," the leaders said.

"Government intervention is only justified in the most severe situations. Unfortunately, we are in such a situation. Some businesses in our sector face energy price rises of up to 400%. Viable businesses face ruin.

"A rapid VAT cut would allow businesses the flexibility to divert funds into energy bills or inflated supply costs, cut prices, soften price increases, or maintain essential investment in areas like decarbonisation.

"Delay, however, can only diminish the impact of this proposal."

The letter was signed by Ganan Kanagathurai, UK CEO, Itsu; Collette Bird, head of UK external relations, Just Eat Takeaway.com; Neil Piper, acting managing director, KFC UK and Ireland; Neil Manhas, managing director, Pizza Hut UK; and Guy Meakin, interim UK and Ireland managing director, Pret a Manger.

Truss was elected as the next leader of the Conservative Party yesterday (5 September) and will become Prime Minister today.

Responding to her appointment, hospitality trade bodies have warned the new Government 'must act quickly and decisively' to address soaring energy bills.