Leading trade associations representing the hospitality and tourism sectors in the UK have joined forces to call on the chancellor, Rishi Sunak, to introduce a permanent lower rate of VAT for these fragile markets.
The bodies argue such a move would help to safeguard their future, protect jobs and to accelerate the economic recovery.
Under treasury plans, hospitality and tourism VAT rises to 12.5 per cent from today and will return to its pre-pandemic level of 20 per cent come April next year.
Now the trade bodies – UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping, Tourism Alliance and the Association of Leading Visitor Attractions – are warning that unless VAT remains permanently low at 12.5 per cent, the government risks derailing the recovery at a time when businesses are still in survival mode.
Across the course of the pandemic, hospitality and tourism were the hardest hit sectors, with spend down £100 billion, 12,000 businesses permanently closed, and 660,000 jobs lost.
However, the reduction in VAT helped protect hundreds of thousands of jobs and allowed many businesses to stay open and serving customers when permitted to trade.
In a joint statement, the trade bodies said: “Businesses are at a perilous stage of their recovery after what’s been a devastating 18 months.
“Costs are increasing and there are numerous operational challenges for them to deal with, specifically around labour and product supply.
“A reduction in VAT has helped many of our businesses survive to this point and was most welcome.
“However, the return of VAT to its pre-pandemic level next year would curtail investment, restrict growth, set back our tourism recovery and risk yet more painful job losses.
“We’re now calling on the chancellor to commit to introducing a permanent 12.5 per cent rate of VAT in his upcoming Budget, later this month.
“This will help protect jobs and continue the support for our hospitality and tourism businesses which contribute hugely to the nation’s economic and social wellbeing.”
Image: Louis Hansel