Helping you prosper
For anyone working in hospitality, the challenges facing the sector are hardly new. Operators have spent years navigating one obstacle after another. The pandemic was followed by soaring energy prices, food inflation, labour shortages and rising borrowing costs. More recently, increases to employers' National Insurance contributions and the National Minimum Wage have added further pressure at a time when many businesses were already operating on increasingly tight margins.
Despite all of this, hospitality has continued to adapt. Businesses have reviewed menus, invested in technology, streamlined operations and found innovative ways to protect customer experience while absorbing ever-increasing costs. There comes a point, however, where efficiency alone is no longer enough.
That is why the recent debate surrounding Andy Burnham's proposals for hospitality has attracted so much attention across the industry.
The detail of every proposal can, of course, be debated. What has resonated across the industry is the recognition that hospitality is not simply another sector asking for support. It is one of the UK's largest employers, a vital contributor to local economies and an industry that helps define the character of our towns and cities.
Recognising hospitality as a driver of growth
Having spent years as Mayor of Greater Manchester, Burnham has seen first-hand the role hospitality plays in creating vibrant places where people want to live, work and visit. His close working relationship with Sacha Lord and his support for Manchester's night-time economy demonstrated an understanding that successful hospitality businesses generate far more than tax receipts. They create employment, attract visitors, support neighbouring businesses and help communities prosper.
That broader perspective is something many across the sector have long been calling for. Hospitality has often found itself viewed through the lens of taxation rather than economic growth. Yet every restaurant, hotel, pub and café supports an extensive supply chain, creates opportunities for young people entering the workforce and contributes significantly to the attractiveness of our high streets. When businesses close, the impact stretches well beyond the individual operator.
Hospitality is not simply part of the economy. In many towns and cities, it is what brings the economy to life. Thriving restaurants, pubs, cafés and hotels encourage footfall, support tourism and create places where people want to spend their time. When hospitality thrives, neighbouring retailers, local suppliers, transport providers and tourism businesses often thrive alongside it.
Why VAT remains at the heart of the debate
This is why the renewed calls to reduce hospitality VAT from 20% to 10% have gained such momentum. The campaign, supported by industry bodies and high-profile figures including Tom Kerridge, is not simply about reducing tax. It is about creating the conditions that allow businesses to invest, recruit and grow. Recent figures suggesting that almost one in four hospitality businesses are operating at a loss underline the scale of the challenge facing the sector.
The UK also remains an outlier when compared with many European countries, where reduced VAT rates for hospitality have long been recognised as a way of supporting tourism, employment and investment. While a lower VAT rate is unlikely to solve every problem facing operators, it would provide meaningful breathing space for businesses that continue to absorb significant cost increases.
Reducing VAT would not simply improve profitability. It would give many operators the confidence to reinvest in their businesses, create jobs, refurbish venues and continue contributing to the communities they serve. For many operators, that additional headroom would be invested in improving customer experience, adopting new technology, training employees and strengthening long-term resilience. These are often the investments that are postponed when margins become too tight.
Rethinking business rates
Business rates remain another area where reform is desperately needed. For many operators, the current system simply no longer reflects the realities of modern trading. Burnham's proposal to reduce business rates for pubs while reviewing how larger warehouse developments are taxed has once again reopened an important conversation about fairness and how we value businesses that invest in our town and city centres.
Whether these proposals ultimately become government policy remains to be seen. Any changes would, of course, need to be carefully considered alongside wider public finances. However, the fact these conversations are now taking place at the highest political level is encouraging. For high street businesses competing with online operators and changing consumer behaviour, many believe the current system no longer reflects the way businesses trade today.
The hospitality industry has shown remarkable resilience over recent years. What it needs now is a tax system that supports long-term investment rather than one that continually asks businesses to do more with less.
A level playing field, not special treatment
Hospitality has never asked for special treatment. What the sector has consistently called for is a level playing field that recognises both the economic contribution it makes and the unique pressures under which it operates. Operators understand the need to pay tax and contribute to public services. They simply want a system that allows viable businesses to remain viable.
Perhaps that is why this latest debate has resonated so strongly across the sector. More than anything, it has highlighted that hospitality is not simply somewhere people choose to spend their disposable income. It is an industry that creates careers, supports communities, drives tourism and plays a central role in the success of our high streets.
As the debate around VAT, business rates and wider tax reform continues, the sector has an opportunity to ensure its voice continues to be heard. Whatever the political landscape looks like in the months ahead, one thing is certain: hospitality should be recognised not simply for the tax it generates today, but for the long-term economic and social value it creates.
Now that Andy Burnham has taken office as Prime Minister, businesses across the industry will be looking for early signs that supporting businesses is high on the Government's agenda. Whether through meaningful reform of VAT, business rates or wider business taxation, there is an opportunity to demonstrate that hospitality is recognised not simply as a source of tax revenue, but as a vital driver of economic growth, employment and thriving communities.
Hospitality has spent years proving its resilience. The challenge now is creating an environment in which resilience is no longer the industry's greatest strength, because businesses are finally being given the confidence and stability they need to invest, grow and prosper.
The next step
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