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Conservative MPs Demand VAT Cut For Struggling Pubs And Restaurants

Rishi Sunak and Jeremy Hunt (Alamy)

3 min read

A letter signed by 45 Conservative MPs has called for Chancellor Jeremy Hunt to reform VAT and Business Rates for hospitality businesses in the Spring Budget.

Senior ministers have suggested Government plans to cut taxes in the 6 March Budget as it aims to win back disaffected voters. The Budget could be the last economic announcement from Government prior to the next general election, which must be called this year.

Simon Jupp, Conservative MP for East Devon, who met Hunt alongside a number of MPs who signed his letter, is hopeful the government will consider reducing taxes for pubs and restaurants which have been doubly hit by Covid and the cost of living crisis.  

The list of signatories includes former cabinet minister Priti Patel, Thérèse Coffey, Tim Loughton, Alicia Kearns, Tobias Ellwood, David Mundell and Stephen Crabb.

The letter, which was sent to the Chancellor on Tuesday, has asked the Treasury to address the “inequitable business rates regime” that means hospitality businesses pay £2.4billion more in tax than online outlets.

MPs who have signed the letter have backed the Hospitality Sector Council’s call for a temporary cut in hospitality & tourism VAT to unlock investment.

The letter said the hospitality industry had been hit by “sustained pressures” in recent years which included high energy bills, rising wage costs and a challenging recruitment environment.

Tory MPs argue that by using a revised tax framework, the hospitality industry could grow by an annual rate of six per cent over the next five years. 

Jupp, Chair of the All-Party Parliamentary Group for Hospitality and Tourism, told PoliticsHome reforming and reducing VAT and Business Rates for hospitality businesses will boost the industry.

“As Chair of the cross-party group in Parliament for hospitality and tourism, and MP for East Devon – home to many of brilliant hospitality and tourism businesses – I want the government to continue its record of industry support by taking the actions set out in my letter to the Chancellor,” he said

“Backed by over 40 colleagues, these steps would provide businesses with the certainty they deserve in the years to come.”

More than 40 Conservative MPs have signed Jupp's letter calling for cuts to VAT and Business Rates for pubs and restaurants 

VAT was temporarily reduced for hospitality business from 20 per cent to 5 per cent between July 2020 and January 2021 during the pandemic.

The government announced the reduced rate would be extended for six months from January 2021 and September 2021. A new reduced rate was permanently set from March 2022 at 12.5 per cent.

UK hospitality figures suggest almost 5,000 venues closed permanently in the last year. The House magazine reported almost three-quarters came in the last quarter of 2022. Its analysis suggested that, in the current economic crisis, bars and pubs would have had to increase their revenue by 120 per cent from 2019 just to break even. 

Data from Altus Group, a real estate company, found 383 pubs had closed within the last year – equating to two a day. This is compared to the 383 pubs which closed its doors in 2022.

A Treasury spokesperson said its “decisive” action to cut inflation by more than half has protected businesses from around the country from across the country.

“We’ve also recently extended measures to support pubs, including a 75 per cent discount on business rates and freezing alcohol duty until August 2024,” they added.

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