Andy Burnham faces mounting pressure from the hospitality industry to follow through on his pre-election support for a significant VAT reduction.
More than 800 pubs, restaurants, hotels and hospitality businesses have signed an open letter demanding the government cut VAT from 20 per cent to 10 per cent.
Signatories include JD Wetherspoon, Greene King, Fuller’s, Pizza Express, Wagamama, Marriott and Center Parcs, alongside chefs Tom Kerridge, Heston Blumenthal, Angela Hartnett and Jason Atherton.
The letter directly references Burnham’s own words from February, when he said as mayor of Greater Manchester that he would “argue for a VAT rate more consistent with what you find in Europe.”
Kerridge was blunt in his assessment of what the industry needs from the prime minister at this stage of the campaign.
“We don’t need another promise. We need action,” Kerridge said, reflecting the frustration building across a sector that has shed around 100,000 jobs over the past two years.
The campaign arrives at a politically sensitive moment after Burnham himself acknowledged last week that the “cost of doing business is too high,” while warning that tight public finances left him little room for manoeuvre.
Britain currently taxes hospitality businesses at 20 per cent VAT, compared with 10 per cent in France, Italy and Spain, and just seven per cent in Germany.
More than 370,000 people have now signed the #VATsTheProblem petition calling for the UK rate to be brought into line with European competitors.
“It’s time for a fairer tax burden for hospitality,” the businesses wrote, adding: “Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.”
Kerridge argued the tax hits hospitality harder than other sectors because labour makes up such a large proportion of total costs for operators.
“You can reclaim VAT on a product, but you can’t reclaim VAT on a person,” he said, highlighting a structural disadvantage that has long frustrated industry leaders.
The campaign also comes days after ministers confirmed plans to allow regional authorities to impose an uncapped levy on overnight stays, drawing a fresh backlash from hotels and tourism businesses.
Fuller’s chief executive Simon Emeny has previously said that cutting VAT to 10 per cent was “critical” to returning the industry to growth, a view now shared across hundreds of businesses.
Burnham did offer the sector a concession after entering Downing Street, announcing a 20 per cent business rates cut for pubs, clubs and live music venues during his first week in office.
He indicated last week that the government could extend further support at the 28 October Budget, with ministers set to look at business rates more broadly for high street firms.
However, the prime minister stopped short of making firm commitments, saying “I wouldn’t want to promise the earth” while citing a “difficult financial outlook” constraining his options.
Hospitality leaders now want the VAT pledge Burnham made before entering office formally included in the upcoming Budget package alongside any business rates measures.
“A lower rate of VAT for hospitality can turn closures into openings, lost jobs into new jobs, and boarded up high streets into thriving centres of community,” the open letter concluded.