Thousands of jobs put at risk from VAT hikes, warn hospitality bosses

Hospitality leaders warn thousands of jobs could be lost after the Chancellor ‘missed an opportunity’ to halt VAT increases.

Bosses in the sector, and the retail industry, criticised Rishi Sunak for a lack of business rates support for firms hit by soaring costs. 

Kate Nicholls, chief executive of trade group UK Hospitality, said the decision to push forward with plans to increase VAT on food, soft drinks and event tickets from 12.5 per cent to 20 per cent next month ‘might prove fatal’ for some firms.

‘This is a real setback for thousands of UK hospitality businesses still suffering the devastating effects of Covid, and facing a tidal wave of rising costs,’ she said.

‘Locking in VAT at 12.5 per cent would have given hospitality businesses a major boost. 

Thousands of jobs could be lost, the UK will remain uncompetitive versus international rivals, and already hard-pressed consumers in the midst of a cost-of-living crisis will see price rises, further fuelling inflation.’

Emma McClarkin, at the British Beer and Pub Association, said: ‘The sector remains on a knife-edge. The coming months could be some of the hardest yet for our pubs and brewers.’

Wetherspoons chairman Tim Martin said: ‘It does not make economic sense for hospitality to be taxed at a higher rate.’

Hospitality, retail and supplier businesses expect cost pressures to be worsened by the rise in the national living wage next month.

Many will also be affected by rising business rates next month.

At the start of the pandemic, the Treasury introduced a business rates holiday for retail, hospitality and leisure firms which has been wound back as pandemic restrictions eased. Current relief, which has been scaled back significantly, is due to end this month.

Sunak reaffirmed plans to introduce a new relief – but capped at £110,000 for larger businesses.