Are we asking the Government for too much?

By Tim Bird, owner of Cheshire Cat Pubs & Inns

- Last updated on GMT

Single focus: Tim Bird wants a VAT reduction on food and soft drinks
Single focus: Tim Bird wants a VAT reduction on food and soft drinks

Related tags Cheshire cat pubs Tim Bird Finance Government

The new year is now well under way in the hospitality business and with it I always feel an air of optimism.

A new year, new opportunities, out with the old and in with the new, a fresh start. We will face new challenges, of course, and we will continue to struggle with some of the challenges that never seem to go away but an optimistic approach must remain.

I liken the past few years to the longest ‘steeplechase’ we have ever ‘ridden’ together as an industry in modern times. Just when you think the fences are becoming easier to jump and the finishing line is in sight, somehow we end up with more fences that seem to be even higher and a diminishing finish line that is out of sight once more. The key is to stay on the horse and keep riding until the race is won.

This has been, and will continue to be, a long and challenging race for us all but we must come through it positively and as winners. Our continued positivity, enthusiasm and pride in our industry will ripple out and help to attract people to join us in the race.

So the year has started in earnest with the industry chasing three ‘holy grails’ or those old chestnuts we seem to have chased for many a year. Only a worldwide pandemic allowed us to hold the ‘holy grails’ momentarily as Government set about helping us survive. We saw business rates disappear periodically, we saw huge reductions in VAT on food, soft drinks and accommodation sales. Furlough ensured we could pay our people and we saw no duty increases during the period. We even experienced ‘Eat Out to Help Out’. Amid the trauma of more than 35 weeks of closures, the Government did their bit to help an industry that was looking at the abyss. Of course, they didn’t get everything right – but they did help.

Highest food VAT percentage in Europe

Looking back, the most disappointing thing after all the challenges we faced during the pandemic was allowing Government, when the proverbial dust settled, to return the VAT on food sales to 20%. As many of you know, here in the UK we pay the highest VAT percentage on food sales than any other country in Europe’s other hospitality industries. Why is this? I have no words other than it simply isn’t fair.

I recently raised our concerns about all the burning issues we faced in hospitality with my local MP and it was stated that the ‘problem’ for Government was the hospitality industry always asked for too many things in one go, rather than focusing on the one single thing that was most important to the industry’s long-term future survival and growth.

Which brings me on to the latest trio of requests recently put to Government.

First up is “to extend the freeze on beer duty and re-commit to alcohol duty reforms that support British pubs and beer as a lower-strength product”​. How on earth have we led with this? I would ask every pub and restaurant in the land if their number one priority is the freezing of beer duty? The freezing of beer duty suits only the big brewers because they benefit most based on their volumes. 3p on a pint is a drop in the beer glass to pub and restaurant owners compared to the need to lower VAT. Let’s face it, the big brewers put their prices up every year irrespective.

The Government think they are helping the pub and restaurant industry by not putting 3p on a pint but it is OK to put almost £1 on a bottle of wine? I agree we need duty reform but I have been banging on about the price hikes by the big brewers for years. When fuel prices were at their lowest and raw materials were at their lowest, did prices from the big brewers go down? Of course not. They went up again. So please freeze duty on wine and spirits and don’t worry about beer because it suits brewers and not pubs and restaurants.

Success tax

Next up “Lower business rates for pubs so they are equitable to other similar businesses”​. We all agree with this but, at this stage, the Government are already helping the industry in this area. Long-term reform is certainly needed so that a restaurant, hotel and a pub of any style are treated the same. Business rates are, in my opinion, a ‘success tax’. The better your pub performs, the more the Government takes off you in business rates. Clearly not an incentive to entrepreneurs wanting to enter the business or indeed existing successful operators.

Finally “The reinstatement of the lower rate of VAT for food and beverages sold in pubs to make this permanent”. ​Let’s face it… no Government will lower VAT on alcohol. So why not simply ask for a specific VAT level for food and soft drinks, such as 10%. The Republic of Ireland operates on 23% VAT on drink and a 13.5% VAT on food. Maybe we have to give a little to gain more? We need to be thinking about the entire hospitality business here, not just pubs. The hospitality industry is the third biggest employer in the UK (employing 3.5m people in 2022). Reducing VAT to 10% on food alone would prevent further businesses closing and save countless jobs.

Our pub company, Cheshire Cat Pubs & Bars is based in the north-west and I have to say the work of Sasha Lord and Thom Hetherington in particular, in helping hospitality businesses survive here over the past 4-plus years has been exemplary.

We simply need to all come together and demand the lowering of VAT. It will give so many benefits to the industry and it is the most effective way to help our businesses grow and fend off increased costs, whether it be brewers increases or indeed rising rents and energy costs.

So please can we simply go for what is most important to all our people, our customers, our suppliers and, of course, our long-term survival: a reduction in VAT. Remember the ‘steeplechase’, we need to be running the race together as we all strive to finally win it, together.

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