Andy Burnham signals support for hospitality tax reform

Andy Burnham has offered one of the clearest signs yet that hospitality tax reform could become a serious political issue if he becomes prime minister.

Speaking to Andrew Marr on LBC, the former mayor of Greater Manchester and newly elected MP for Makerfield said there was “room” within Labour’s manifesto for movement on tax, including a major reform of business rates.

Andy has not yet become prime minister and would not be drawn on who he would appoint as chancellor, should he take the top job.

But his comments will be watched closely by hospitality operators, particularly after weeks of campaigning around VAT, business rates and the wider cost burden facing pubs, restaurants, bars, cafes and hotels.

• Read more: How Andy Burnham becoming prime minister could help hospitality

In his LBC interview, Andy said he would look at higher business rates on major warehouse developments on the outskirts of towns and cities, while using that money to cut business rates for pubs and lift some high street businesses out of rates altogether.

He said: “I stick by the promises and manifesto, but there is some room within that manifesto for movement on tax.

“If you take business rates, for instance, I believe there is a case for higher business rates on warehouses and the major developments we see on the outskirts of our cities, so that we can cut business rates for pubs, and I've proposed a 20 per cent cut, and lift some high street businesses out of business rates altogether.

“I think it's important to, if you like, prioritise and reward the businesses that bring social benefit, the businesses that bring people together, the bars, the restaurants, the coffee shops, the hairdressers, because the high street really needs to get more of our attention.

“We need to bring life back to the high street.”

The comments follow Andy’s previous pledge to cut business rates for pubs and music venues by 20%, funded through higher rates on online giants and large warehouse-style developments.

Hospitality tax reform moves up the agenda

The fact that pubs, restaurants, bars and coffee shops are being discussed as businesses that bring wider social value, rather than simply as commercial units to be taxed, is hugely significant for hospitality and shows some understanding of the current situation.

That has been a recurring theme in The Staff Canteen’s recent coverage of VAT’s The Problem, the campaign fronted by Tom Kerridge calling for hospitality VAT to be cut from 20% to 10%.

The campaign has argued that hospitality businesses are being squeezed by a combination of rising food costs, energy bills, business rates, National Insurance contributions and wage increases.

VAT’s The Problem has now passed 250,000 signatures, with a target of one million.

>>> SIGN THE PETITION HERE <<<

In a previous interview with The Staff Canteen, Tom said VAT was the one lever government could pull quickly to give operators breathing space.

• Read more: Hospitality leaders explain why VAT is the problem

Tom said: “Hospitality is so rich and diverse. So many businesses are different, with lots of their own individual idiosyncrasies in how each space operates and works.

“But the biggest factor is that those five major costs that drop into it, from food inflation, utility bill inflation, business rates, National Insurance and minimum wage, those are the biggest things that affect all of those business irrespective of how different they might be.

“Those are the ones making the numbers not work. So a return of some form of top line revenue that comes back into the business is the thing that will allow each of those individual businesses to work out which bills to pay to survive.”