More than 800 UK hospitality businesses press Burnham to set out a VAT cut

Industry demands a timetable

More than 800 British hospitality businesses have asked Prime Minister Andy Burnham to explain whether and when his government will reduce value-added tax for their sector. The open-letter campaign brings together large pub and restaurant groups, hotel operators, leisure companies and hundreds of smaller independent businesses. Its central demand is a dedicated 10% hospitality rate, compared with the 20% standard rate that currently applies to most goods and services.

The intervention matters because it turns a longstanding industry request into an immediate test of the new government's economic programme. Operators argue that labour-intensive businesses cannot recover tax paid on wages in the way they can reclaim VAT on many purchased inputs. They also face higher food, energy and staffing costs. The campaign warns that leaving the rate unchanged could accelerate closures and reduce entry-level employment, although those projected effects remain the campaigners' assessment rather than an official forecast.

Relief already announced

Burnham's government has already chosen business rates as its first major channel of support. A July package promised a 20% reduction in bills for qualifying pubs, social clubs and live-music venues from April 2027. The government estimates that nearly 32,000 properties will benefit and that a typical pub will save about £1,100 in the next financial year. Officials value that package at approximately £100 million annually.

That measure sits on top of earlier relief and a wider review of how pubs and hotels are valued for business rates. It does not, however, change VAT charged on meals, drinks or accommodation. The official tax schedule retains a 20% standard rate through the 2026–27 tax year. Consequently, ministers can argue that targeted assistance is already moving, while campaigners can accurately say that their principal request remains unanswered.

The decision ahead

A sector-specific VAT cut would be a broader and potentially more expensive intervention than the property-tax relief already announced. Its cost would depend on the activities covered, the implementation period and whether ministers expected lower prices, stronger demand or improved business survival to offset some lost revenue. The government has not published a proposal, fiscal estimate or timetable, so the letter begins a policy contest rather than confirming a tax change.

The next meaningful evidence will come from the Budget and any Treasury consultation defining the government's promised business-rates reforms. Hospitality companies will watch for a direct response to the 10% request, while fiscal officials will weigh it against competing revenue needs. Until legislation or a formal Treasury plan appears, businesses must continue accounting for the existing VAT rate and cannot treat the campaign as an enacted concession.