UK Hospitality has called on members of the public to join hotels, restaurants, pubs and cafés in lobbying their MPs to put pressure on the chancellor, Rishi Sunak, to lock VAT at 12.5% for the tourism and hospitality sector in the autumn budget on October 27.

VAT was slashed from 20% to 5% in July last year in order to help the hospitality industry weather the losses brought about by the Covid lockdowns. It was a short-term measure, with VAT rising back to 12.5% this month as a first step towards returning to 20% next April. But the industry is still fragile, having shrunk by two-thirds with the loss of 660,000 jobs, £100billion income and 12,000 licensed venues in the past 18 months – meaning it fared worse than any other sector in the economy. 

UK Hospitality, the trade body headed by chief executive Kate Nicholls, is concerned that a return to the old 20% VAT rate – combined with other problems including supply and staffing – could lead to further losses and closures. And it argues that sticking at the 12.5% rate could help the industry create more than 125,000 new jobs, making a real contribution to the national recovery.

Nicholls said: “We’re launching the #VATsEnough campaign because a failure to act risks the future of hotels, cafés, pubs, restaurants and myriad other venues and attractions across the country. Our businesses bring light, life and heart to communities across the country but are battling huge challenges in terms of labour shortages and the food supply chain after 18 months of desperate struggle due to the pandemic. 

“By introducing a permanent 12.5% rate of VAT in his autumn Budget, the Chancellor can help us bounce back strongly, keep prices affordable for customers and level up UK jobs. Lower VAT will foster investment in businesses and high streets, accelerating our recovery from the pandemic. Let’s lock in VAT at 12.5% permanently.

“We need the whole hospitality sector, its suppliers, employees and customers to come together and demonstrate to Government how critical the lower rate of VAT is for our sector’s recovery.”