Nigel Farage's proposed £3 billion support package for pubs, funded by reinstating the two-child benefit cap, has been criticised by experts as fiscally unsound. The Reform UK leader announced the plan earlier this week, which includes halving VAT for the hospitality sector from 20% to 10%, scrapping the employer national insurance increase for hospitality businesses, cutting beer duty by 10%, and abolishing business rates for all pubs.
Reform UK claimed the package would be paid for by reinstating the two-child limit on Universal Credit, saving approximately £3 billion by 2029/30. However, the IPPR think tank has disputed these figures, arguing that the actual cost of halving VAT alone would be around £5.6 billion, based on government statistics showing net VAT receipts from the hospitality sector were £11.7 billion last year.
Professor Ashwin Kumar, director of research and policy at IPPR and a former advisor to Gordon Brown, said: “The government was right to scrap the two-child limit, a policy which would have trapped half a million children in poverty by the end of the decade. Hospitality needs help, but this shouldn’t be paid for off the backs of some of the poorest in society.” He added that the plan is not fiscally neutral and represents an unfunded tax cut.
Mr Farage defended the package, stating: “What is happening to our pubs, what is happening to our hospitality sector, is little short of a disaster. They’re on the edge of falling off a cliff.” The announcement comes as Labour also unveiled measures to support pubs, including a 15% reduction in business rates and a two-year freeze, though critics argue these do not go far enough given rising costs and changing customer habits.
