More Than 800 Hospitality Businesses Urge Burnham to Cut VAT to 10%

More than 800 hospitality businesses have backed an open letter calling on Prime Minister Burnham to cut VAT for the sector to 10%, arguing that the current 20% rate is worsening closures, job losses and pressure on town centers across the UK.

The letter was organized under the #VATsTheProblem campaign and published Monday. It asks the prime minister to act on comments he made earlier this year, when he publicly supported a lower VAT rate for hospitality while serving as Mayor of Greater Manchester. Campaign organizers said the signatories include pubs, bars, brewers, restaurants, hotels, tourism businesses and leisure operators, and that most are small and medium-sized companies.

Among the pub, bar and brewing businesses backing the letter are Fuller’s, Greene King, Loungers, Marston’s, Mitchells & Butlers, Punch Pubs & Co, Robinsons Brewery, St Austell Brewery, Stonegate Group, Timothy Taylor’s and JD Wetherspoon. Celebrity chefs including Tom Kerridge, Angela Hartnett, Heston Blumenthal, Jason Atherton, Nathan Outlaw, Paul Ainsworth, Clare Smyth and Andi Oliver also signed, along with restaurant and accommodation groups such as Wagamama, Wahaca, PizzaExpress, Franco Manca, Best Western Hotels, Butlin’s, Center Parcs, Haven and Marriott International.

The campaign said its petition for a 10% VAT rate for hospitality had reached 372,096 signatures at the time of publication. In the letter, supporters said the UK should move closer to the European average for hospitality VAT and argued that a lower rate would create a fairer tax burden for a labor-heavy industry.

“It’s time for a fairer tax burden for hospitality,” the letter said. “Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.”

The signatories also pointed to Burnham’s earlier remarks in favor of a VAT rate “more consistent with what you find in Europe,” citing the social and economic role that hospitality businesses play in local communities. The letter said a lower rate could help turn “closures into openings” and “boarded up high streets into thriving centres of community.”

The push comes as operators across the sector say they are facing higher wage bills, energy costs, food prices and business rates. Supporters of the campaign argue that hospitality is especially exposed because labor is a large share of operating costs and VAT cannot be reclaimed on wages in the way it can on some products and services.

Kerridge said the industry had united behind what he called “one simple ask” of the prime minister. He said Burnham appeared to understand the sector’s importance, but that businesses now wanted action rather than further statements of support.

“The reality is that 20% VAT is holding hospitality back,” Kerridge said. He added that the tax burden was particularly hard on hospitality because teams are one of the sector’s biggest costs.

The Treasury has signaled caution. Last month, Financial Secretary to the Treasury James Murray said a VAT cut would come at a significant fiscal cost and would have to be fully funded. He did not rule out further support at the Budget, but his comments suggested ministers remain concerned about the effect on public finances.

The campaign is also unfolding alongside a separate debate over local visitor levies. UKHospitality has urged Labour mayors to support a 10% VAT rate for hospitality before backing any overnight tourism tax. The trade body’s chief executive, Allen Simpson, wrote to Labour mayors arguing that while visitor levies are common in major tourist destinations abroad, those countries often apply lower VAT rates to hospitality businesses.

In that letter, Simpson called on mayors to support the 10% VAT proposal and to avoid introducing a holiday tax until the VAT change had been secured. He also urged them to support a legal cap on any visitor levy of no more than 5%.

The tax debate matters directly to the drinks trade because pubs and bars are central to the on-trade market for beer, wine and spirits. Any VAT change could affect menu pricing, demand and margins at venues that depend heavily on beverage sales, and it could influence how much operators are able to invest in staff, refurbishments and product ranges. A lower rate would not guarantee those outcomes, but it could ease cost pressure for businesses that say they are struggling to absorb rising expenses while keeping prices competitive.

The letter’s backers say that without tax relief, more venues will close and more jobs will disappear. Ministers, however, face the question of how to support a large employer and a high-street industry while balancing the cost of any nationwide VAT reduction against wider Budget pressures.