Tommy Banks calls for VAT cut and help for young workers ahead of Budget
Tommy Banks has called for a VAT cut and incentives for employers to hire young people ahead of Wednesday's Budget, saying the cost of employing staff has made this "by far the most challenging" period of his 20 years in hospitality.
The chef-owner of Michelin-starred The Black Swan at Oldstead in North Yorkshire also described the employer National Insurance rise in Rachel Reeves' first Budget as "a crazy decision".
Speaking to The Staff Canteen about the challenges he has faced in 20 years at The Black Swan and the upcoming Budget, Tommy said the current climate was tougher than anything that had come before.
He said: "One of the frustrating things when we look back is that there have been more hard times than there haven't. 2008 was tough. Some of the early austerity years were tough. Brexit changed the way we employ people in a big way. COVID as well. But what I'd say is that this is by far the most challenging.
"I think you could ask anybody in a similar position of experience, and they'd say this is the hardest time it's ever been."
How has employer National Insurance affected hospitality?
Tommy said the cost of employing people is now the biggest pressure on hospitality businesses, which employ far more staff for their turnover than most other industries.
"I think the key driver now, that hasn't always been there in the same way before, is just the sheer cost of employing people," he said.
"That's what's really tough, because as a hospitality business you employ a lot of people, disproportionately compared with other industries. You just employ more people for the turnover you have, and the taxes that have been put on jobs are totally unsustainable.
"I speak to lots of hospitality owners and leaders all the time, and the issue everybody highlights is that they're busy, but they just can't get their wage bill under control. When you've got 15 per cent of everybody's wages going on employer's National Insurance, that's the reason we don't have as many people employed in the industry. It was a crazy decision."
Rachel Reeves' October 2024 Budget raised employer National Insurance contributions from 13.8 per cent to 15 per cent from April 2025, and cut the threshold at which employers start paying from £9,100 to £5,000 a year.
"It's not clever": Tommy Banks on Rachel Reeves' first Budget
Tommy said VAT was the lever that would make "a tangible difference", and that the model for taxing jobs needed reform after Rachel Reeves' first Budget.
He said: "The more I look back at that first Rachel Reeves budget, the more I think it was literally unintelligent. It's like whoever was putting that budget together had no idea what they were doing, and there's no other way I can put it. I can't be kind about it in any way, because the word in my head is just: it's thick. It's not clever.
"The industry is paying the price for that in such a big way. We have to see some reform of the model. VAT is obviously the lever that's constantly talked about, and that would make a tangible difference. I also think you can't tax jobs, and specifically we need to look at the model around young people."
The #VATsTheProblem petition, fronted by Tom Kerridge and calling for VAT on hospitality to be cut from 20 per cent to 10 per cent, gathered more than 400,000 signatures before it was delivered this month.
How are employment costs affecting young people in hospitality?
Tommy said the combination of higher youth wage rates and employer National Insurance now pushes operators to hire experienced staff over young people, and called for incentives to reverse that.
He said: "I think the biggest crime at the moment is the lack of opportunities for young people. Historically the minimum wage level was lower for young people, and National Insurance wasn't as high, so it was more attractive to take them on.
"Now it's not: you're going to employ the 30 or 40-year-old with a decade or more of experience over the young person, and that's frankly unfair and unsustainable. We campaign heavily for that, but I think we need to incentivise employers to employ young people."
The minimum wage for 18 to 20-year-olds rose to £10.85 an hour in April 2026, against £12.71 for those aged 21 and over. UKHospitality, which points out that hospitality is the UK's largest employer of young people, wants the employer National Insurance threshold raised to £10,000 by April 2029.
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Using his platform for the wider industry
Tommy said he campaigns for a VAT cut on behalf of the wider industry, because many operators do not have a platform to speak out.
He said: "I do wear a lot of hats, really. One is that I campaign for a VAT cut and I campaign for hospitality, because frankly I'm having conversations with people like yourself and I have a platform to do that. That isn't just coming from a place of my own business, it's coming from a place of trying to do what I think is right for the hospitality industry in general.
"I think it would be poor of me not to use my platform to try to effect some change in that respect, because there are lots of people out there who aren't lucky enough to have the ability to talk to journalists and get that out there."
At the same time, he said, his own businesses could not wait for policy to change.
He said: "On my own businesses and interests specifically, what I've learned over 20 years, especially with this government, is that as much as I can campaign and campaign, I can't actually directly choose what model we're working from.
"So what we've really tried to do, specifically in the last few years, is take control of everything ourselves and really scrutinise all of the business side of what we do, to make sure we're in as robust a position as possible for the future."
"There will be good times"
Tommy said he believes the industry's fortunes are cyclical and good times will return, but warned of the "collateral damage" along the way.
He said: "Trying to be positive, I look at this and think: we've had good years and bad years in the last 20 years. I'd love to have this conversation with you again in 20 years and say, all right, 2025, '26, '27, they were tough, but weren't the 2030s amazing. That's where I'd like to be.
"Everything is cyclical, and there will be good times, I do believe that. My great sadness is the collateral damage that has to happen before you get to that point."
What does hospitality want from the 2026 Autumn Budget?
Chancellor John Healey will deliver the Budget on Wednesday, October 28, 2026, his first since succeeding Rachel Reeves in July, when Andy Burnham became prime minister.
UKHospitality's Budget26 campaign has set out four asks: a VAT cut to 10 per cent for hospitality and paid visitor attractions, a bigger business rates discount for retail, hospitality and leisure, a higher employer National Insurance threshold, and devolved tourism funding in place of visitor levies.
The government has already announced a 20 per cent business rates cut for around 32,000 pubs, social clubs and live music venues in England from April 2027, but restaurants and hotels were left out.
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