The UK's hospitality sector is on tenterhooks as it awaits a long-promised VAT cut from incoming Prime Minister Andy Burnham, but his camp remains obstinately tight-lipped on the issue. Despite widespread support for the move, which has been backed by over 230,000 people and more than 50 cross-party MPs, Burnham's team is refusing to confirm whether they will proceed with slashing the tax rate from its current 20%.
Industry leaders are growing increasingly frustrated as the uncertainty drags on. The British Beer and Pub Association's Emma McClarkin pointed out that while recent business rates relief for pubs is welcome, the sector continues to pay a disproportionately high rate of VAT, which is grinding down their ability to keep the doors open. This sentiment was echoed by celebrity chef Tom Kerridge, who threw his weight behind Burnham in the Makerfield by-election on account of the latter's support for a VAT cut.
UK Hospitality chief executive Kate Nicholls stressed that it is essential for the next Prime Minister to take action to reduce the sector's cost burden, which includes cutting hospitality VAT to 10%. However, tax experts have raised concerns about the proposal, with Tax Policy Associates' Dan Neidle warning that a VAT cut could cost the Treasury up to £12bn.
Burnham has pledged to implement a 20% business rates cut for every pub in the country and hike taxes on out-of-town warehouses. However, his camp's silence on the VAT issue is sparking uncertainty among industry leaders about their businesses' future and the potential impact of any proposed tax change.