How Andy Burnham becoming prime minister could help hospitality
With Keir Starmer stepping down and Andy Burnham emerging as the frontrunner to become the next Labour leader and prime minister, hospitality leaders will be watching closely to see whether a change at the top could shift government thinking on VAT.
The industry has spent months calling for urgent support, with VAT’s The Problem, the campaign fronted by chef and restaurateur Tom Kerridge, asking for hospitality VAT to be cut from 20% to 10%.
At the time of writing, the campaign has reached 231,000 signatures, with a target of one million.
>>> CLICK HERE TO SIGN THE PETITION <<<
While VAT is far from the only issue hospitality is grappling with – food cost inflation, National Insurance contributions, business rates and energy bills to name four – VAT is seen as the one lever government could pull quickly to give businesses breathing space.
Andy, who served as mayor of Greater Manchester from 2017 until earlier this year, has previously spoken in support of reducing VAT for hospitality.
His record in Manchester, where food, drink, culture and city-centre regeneration have been central to growth, is one reason some in the sector believe his leadership could mark a more positive moment for the industry.
Last week he was voted MP for Makerfield, allowing him the opportunity to stand to become the UK’s next PM, something he has declared his intention to do.
Tom, chef owner of multiple operations including two-Michelin-starred The Hand and Flowers, said he had seen Andy’s approach to hospitality first-hand through operating in Manchester.
Tom previously opened The Bull & Bear at the Stock Exchange Hotel in Manchester, giving him direct experience of the city’s food scene during Andy’s time as mayor.
Speaking to The Staff Canteen, Tom said: “Manchester is a progressive, forward-thinking city that has growth and investment that's gone into it.
“So much of it has been built around hospitality. Since we've been there, there's been two restaurants who have achieved Michelin stars.
“The food scene has grown as a culturally rich, diverse and exciting city that has investment gone into it through property, through building, finance, banking and media.
“Andy Burnham, as mayor, has been a part of that.
“He's also said many times that hospitality VAT is an area of big concern and needs to be reduced."
A VAT cut as a hospitality growth measure
VAT’s The Problem has been gathering momentum at a time when restaurants, pubs, hotels and cafes are arguing that the current tax burden is making already tight business models increasingly unworkable.
The campaign is calling for VAT on hospitality to be reduced from 20% to 10%, bringing the UK more closely in line with many European countries.
For Tom, the importance of the campaign is that VAT affects every part of the sector, regardless of whether the business is a pub, restaurant, hotel, cafe or seaside guesthouse.
He 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.”
The campaign is now moving into its next stage, with hospitality businesses encouraged to download toolkits, display posters and QR codes, and push the petition directly to customers.
Tom said: “The way that the campaign has gone is everything that we've hoped for. It's actually more.”
Tom Kerridge responds to criticism of VAT campaign
Whenever anybody sets up a campaign, there will always be some pushback. By and large, VAT’s The Problem has been strongly welcomed, particularly throughout hospitality, as noted by the fact it was a major talking point throughout the recent UKHospitality Summer Conference.
Recent scrutiny has come through Dan Neidle, founder of Tax Policy Associates, whose report was also picked up for a feature by The Times.
He questioned who would benefit from a hospitality VAT cut, arguing that the proposal would be expensive, poorly targeted and would mainly deliver significant gains to larger businesses.
The article also argued that many very small hospitality businesses would not benefit.
Responding to criticism of the campaign, Tom said: “The issue is that's somebody who sits there on spreadsheets and is a tax expert and looks at numbers and they're not an operator.
“Whilst you can write anything in numbers, they're not frontline. They're not the things that are going to make the difference.
“That may well look like you can put it on a spreadsheet and say this is what's happening. But we all know in hospitality that isn't the truth. That isn't what's happening.
“Places are shutting - 21 spaces, if not more, are closing every single week. Revenues that come back into it, that allow breathing space, allow it to survive and operate, VAT is the only way to do it.
“So it may well come from a viewpoint of an accountant, but we all know as operators that you don't run your business from that.”
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Asked for his thoughts on one of the leading claims from the article that 45% of hospitality businesses would not benefit from a VAT reduction which could cost £12bn to implement, Tom said: “It’s just not true.
“Some of those numbers are also exaggerated because what they've done is counted into that food trucks and really small businesses that don't meet the VAT threshold.
“So it won't help those businesses. Well, no, because they don't pay VAT because they're very, very small.
“But what it does do is it stifles growth because those businesses are not going to grow any further because they know if the business starts turning over £100,000 plus a year, then they've now got to start paying VAT.
“I don't think any operator or anybody really with their feet on the ground that know how businesses work actually agree with the article.
“Hospitality is about people. We all know that reduction in VAT will allow us to survive. It's a very easy article to rebuff.”
Why hospitality is watching Andy Burnham
Andy’s potential move into Downing Street would not guarantee a VAT cut.
But for hospitality, his past comments and his record in Greater Manchester offer at least the prospect of a prime minister who has shown an understanding of the sector’s role in economic and social growth.
Tom said: “I'm not a political activist. I am a supporter of the Labour Party, but I'm a supporter of hospitality first and foremost.
“And whoever steps into the position that represents our industry and understands it in the right way, then I am fully behind.
“At the minute, it looks like Andy Burnham has a clear vision and understanding where hospitality should be and what it provides and what it brings to the greater communities and greater business.
“If that's his position, then I am fully behind him.”
Tom Aikens: ‘Hospitality has been left to dangle’
Tom Aikens, chef patron of Michelin-starred Muse in London, said the pressures facing hospitality had been building since Covid, with Brexit and rising costs adding further strain.
Tom Aikens told The Staff Canteen: “The industry has been through a certain amount of turmoil.
“Since the Labour government have come in, nothing has really improved. Hospitality has been left to dangle by a single thread to try and survive.
“The biggest issue that we have is the VAT, which as we know is 20%, but all over Europe the average is 10%.
“It’s a bigger picture that would really help us in the industry, in terms of making sure businesses actually stay open, because of the increase in everything - bills, minimum wage, cost of food, cost of product, running this whole thing.
“We’ve had enough extra extensive costs added to the business and a lot of businesses just can’t survive any more.
“It would be the quickest and easiest thing to do which would really resolve a lot of issues.”
A test of whether government is pro-hospitality
Tom Kerridge has acknowledged previously it is a lot easier for politicians to advocate big changes when in opposition.
The question now is whether a new prime minister would be prepared to make hospitality VAT a priority.
If Keir Starmer’s replacement is indeed Andy Burnham, hospitality will expect the conversation to move quickly from support in principle to action in government.
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