Hospitality VAT cut: can it help the sector and at what cost to UK taxpayer?

Drop to 10% for pubs and eateries would be in line with most of Europe, but critics say it favours multinationals Nearly a quarter of hospitality businesses are losing money, new data has shown, reigniting calls among chefs, pub owners and restaurateurs for their sector to be handed a reduced rate of VAT. It may seem like a no-brainer because the measure would ease pressure on the ailing sector and put the UK in line with most European countries. But critics say the measure would be extremely costly and reward big multinational businesses, without necessarily helping to spur growth. Pubs, bars, restaurants, nightclubs and hotels were among the hardest-hit businesses during the Covid-19 pandemic, when thousands of venues were forced to close. Energy prices have soared, first as a result of Russia’s invasion of Ukraine and more recently owing to the closure of the strait of Hormuz. Policy decisions, chiefly the increase in employers’ national insurance contributions and the national minimum wage, have added £5bn a year to the sectors’ costs since Labour took office. Nearly a quarter of businesses in the sector are losing money, according to fresh data commissioned by industry trade b