UKHospitality: VAT’s enough

Kate Nicholls, chief executive of UKHospitality, urges the government to keep VAT at 12.5%...

Reasons to be optimistic, one, two, three: no more masks, no requirement for Covid passes and, crucially for contract caterers supplying town and city centre food outlets, no more work from home (WFH) guidance.

Yes, the lifting of plan B restrictions in England has been a huge shot in the arm for the hospitality sector generally, and the return of office workers to our urban centres could not have come sooner for the operators in them, or for those who supply them. Add the more recent lifting of travel restrictions and high streets may have their hustle and bustle back quicker than expected.

Civil servants, some of whom are reportedly reluctant to get back behind their desks, would do well to set a good example to other workers by returning to their offices. The government must also continue to encourage a wholesale back-to-the-office trend.

Hospitality is the industry that will lead the UK’s post-pandemic economic recovery, so support for it from working people is essential – but they can’t buy lunch, go for a meal, visit the workplace canteen or enjoy a post-work drink while WFH. And then you get to all of the lost sales to commuters at railway, service and filling stations, all of them supplied by contract caterers.

With our towns and cities starting to buzz once more, the wider hospitality sector can begin to look forward to a year of celebration; one that our industry can use to leverage a full post-Covid recovery. Remember, 2022 brings us, among other opportunities, HM The Queen’s Platinum Jubilee four-day Bank Holiday weekend, the Commonwealth Games in Birmingham, the football World Cup in Qatar, and the Unboxed: Creativity in the UK festival.

Please don’t imagine that it will all be plain sailing, though. It won’t, and huge challenges remain for our sector, which is low on cash reserves, deep in debt and under immense pressure. Costs are rising across the board, and will continue upwards with the increase in employment costs and this spring’s business rates hike. This is all before we even mention the biggest threat to a proper recovery for contract catering businesses: the proposed return in April to 20% VAT for hospitality and tourism.

UKHospitality is ramping-up its #VATsEnough campaign, urging the government to maintain VAT for the sector at 12.5%, and not raise it to 20% ahead of Easter, just as many businesses enter their peak spring and summer trading periods. By keeping VAT at 12.5%, the government will be helping us keep costs down and not pass on huge price rises to consumers, thus helping us remain competitive versus our international market rivals.

Many people will no doubt remain nervous about going back to their favourite venues for some time to come, so we must reassure them by continuing to demonstrate how hospitality has invested and innovated throughout the pandemic in order to make its products, services and venues safe for people to eat, drink, use and visit. Similarly, government and employer reassurance that a continued return to work is safe will provide an enormous boost to those businesses that rely on city centre office staff, whether they’re at work or on their way to and from it.

We’ve reasons to be optimistic, then, but we’ve still a way to go.

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