Tom Kerridge is spearheading an industry-wide campaign to lower VAT for hospitality venues, which he believes is the solution to the sector's mounting financial pressures. The #VATsTheProblem campaign, run alongside UKHospitality, has gained over 300,000 signatures in just over a month, calling for VAT to be slashed from 20% to 10%.
The UK's hospitality sector faces the second-highest VAT rate in Europe at 20%, trailing only Denmark at 25%. Surging energy and ingredient prices, increased national insurance contributions, rising wage costs, and high business and VAT rates mean many hospitality businesses are operating at a loss or closing their venues.
Kerridge's personal experience
Kerridge, who owns several venues including the two-Michelin-starred The Hand and Flowers in Marlow, knows the pain of closing a venue. In 2022, he parted ways with Gary Neville on their Manchester restaurant, The Bull and Bear, which opened in 2019 but could not survive the pandemic's impact.
“Sadly our restaurant didn’t quite work out, it was all to do with really poor timing, we opened up to great success and then Covid came along and like everyone knows here, Manchester was one of the hardest hit in terms of Covid, and sadly like many hospitality businesses our restaurant wasn't one that could survive or work,” reflects Tom.
Support from the new Prime Minister
Kerridge has been encouraged by Andy Burnham's early policy moves. On his fourth day as Prime Minister, Burnham announced a 20% cut in business rates for pubs and live music venues from April next year, following a 5p cut in Rachel Reeves' 2025 Budget and a 15% relief announced in January. The move, costing around £100m annually, will save a typical pub around £1,100 a year.
Kerridge said he was 'confident' in the government under Mr Burnham's leadership and that the door is now open to push for a VAT reduction. “This is the first Prime Minister in a long time that has an understanding and feels like his finger on pulse for what it takes for communities and spaces to work through hospitality,” he told the Manchester Evening News.
Business rates concerns remain
While the business rates cut is welcome, Kerridge noted that the rates system is not fit for purpose. He revealed his own pubs were facing a 100% rise in business rates, with one venue initially jumping from £50,000 to £124,000. He believes VAT reduction is the key measure that could help every business.
“VAT needs to be the main point of process because that is the one thing that affects the whole industry and the five issues that drop in are food inflation, utility bills, national insurance rises, business rates and minimum wage, and all of those things really do weigh heavy in hospitality and affects every single space,” he explained.
Industry survey highlights pressure
A recent survey by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster found that 23% of hospitality businesses are operating at a loss, up from 15% three months ago. 16% say their business is at risk of failure within the next 12 months, and 89% back a cut in hospitality VAT.
Kerridge believes a VAT cut would allow hospitality to stabilise, support the supply chain, and enable growth, including longer opening hours and more employment. He has not ruled out returning to Manchester, saying, “Absolutely, it’s a great food scene... if we were ever to expand, Manchester would of course be on the list, we loved our time here.”
