Cross party MPs call on Chancellor to throw hospitality a VAT lifeline

Chancellor Jeremy Hunt (Pic: Stefan Rousseau/PA)

CHANCELLOR Jeremy Hunt must use his imminent Budget to cut the VAT rate for UK hospitality businesses down to 5%.

Following on from a Westminster Hall debate chaired by Stirling MP Alyn Smith, a cross party group of MPs this week signed a letter to Hunt strongly supporting an immediate VAT cut to help local businesses survive these ‘strained economic times’.

The cross party call came as the UK officially tipped into recession, with the Office for National Statistics announcing that UK GDP fell 0.3% in the three months to December, undercut by a collapse in retail sales in the run-up to Christmas.

Against that background, Smith said that Hunt must ‘rise to the occasion, and act now’ to cut VAT for hospitality from 20% to 5%.

“We all have businesses in our constituencies who tell us this initiative could be a lifeline,” said Smith. “I would urge colleagues from across the House to back this sensible measure, and get behind our much loved and under threat hospitality businesses.

Alyn Smith MP, in The City Walls pub, Stirling

“Our pubs, restaurants, hotels and cafes all play a huge role in our communities – they keep our high streets busy, they’re community hubs, they give us a sense of place and purpose. Times are especially tough for them at the moment, and with economic woes mounting it is imperative the Chancellor acts swiftly to stem the loss of otherwise viable businesses.”

The MPs’ letter points out that ‘a VAT cut would be proportionate, clean, easy to administer and an effective way to directly boost the bottom line’ of under threat hospitality businesses’.

“It would not require any complex bureaucracy and administration as a new grant scheme would, it would simply tax less, relative to the turnover of the business,” noted the MPs.

“As has been expressed to you on previous occasions, the hospitality trade is in big trouble – inflation, scarcity and cost of labour, skills shortages, energy and other input costs are all creating a uniquely challenging trading environment.

“They need help now and a cut in their VAT rate would work wonders as well as bring the UK’s VAT rate in line with other European countries.”

The cross party letter added that the cut’s political supporters were open to the idea of ‘a threshold, perhaps by turnover or employee headcount’ to target the support still further to smaller local businesses, if the Chancellor could or would not apply the measure across the board.

“We keenly appreciate that the economic situation is challenging, and that every pound is a prisoner. But the consequences, social as well as economic, of losing as many hospitality businesses as we fear are at grave risk, represent nothing less than a death knell for many rural communities, as well as empty streets in our towns and cities.

“Although we come from different political parties, we will work with anyone to support these businesses, and hope that you will consider afresh our proposal.”

The politicians who signed the VAT cut letter were: Alyn Smith MP, Richard Thomson MP, Tobias Ellwood MP, John Nicolson MP, Angela Crawley MP, Pete Wishart MP, Philippa Whitford MP, Gavin Newlands MP, Stuart McDonald MP, Amy Callaghan MP, Stewart Hosie MP, Alan Brown MP, Anne McLaughlin MP, Ian Blackford MP, Stewart McDonald MP, Allan Dorans MP, Martyn Day MP, Douglas Chapman MP, Tommy Sheppard MP, Deidre Brock MP, and Patricia Gibson MP.