Lobbying for a VAT cut? Time for a reality check

13-Jun-2013 - Last updated on 14-Jun-2013 at 08:00 GMT

Griffiths: "We have embarked on a lobbying exercise that seems destined not only to fail, but to undermine the industry I love"

Say it ‘ain’t so Andrew?” wrote the Publican’s Morning Advertiser’s esteemed editor when I expressed doubts about the prospects of the campaign to cut VAT to 5% for the hospitality sector. “Oh, why have you forsaken us Andrew? What do you know that I don’t,” he pleaded.

I thought I would use my latest contribution to the PMA to gently explain to Rob why his wish list for the VAT cut has about the same prospects as his beloved Crystal Palace have of lifting the Champions League trophy.

First, it’s the size of the ask. Putting aside claims that cutting VAT will lead to more jobs (I’ve never seen a submission to the Treasury from any industry asking for a tax cut that hasn’t made equally ferocious claims to create employment), the scale of the cut is huge.

The combined forces of brewers, publicans, beer lovers and politicians united this year to scrap the beer-duty escalator. Right up until the day, industry experts were saying we had no chance of axing the escalator, which the Treasury estimated would cost the Government £75m over two years.

Yet the 5% VAT rate would cost £8bn or more. Why do those doubters over the escalator feel emboldened to back a campaign 100 times bigger?

Second is the content — the 5% campaign includes alcohol in its demands for a reduction in duty. Can experts in the drinks industry look me in the eye and say hand on heart they believe a Chancellor will stand at the despatch box and announce a huge cut in duty on booze?

Can you imagine the reaction of the health lobby? The doctors queuing up to decry the Government for encouraging dangerous drinking? Is that really a credible ask? I think not.

And finally, let’s look at the types of businesses to benefit from the cut to 5%. Nobody is a stronger advocate on behalf of the industry than me, but cutting taxes for KFC, McDonald’s and Starbucks is not a prospect likely to get Mr Osborne reaching for his cheque book to write an £8bn cheque. That is not to say those aren’t legitimate and important businesses worthy of support, just that given the political climate, such a request is a much harder sell.

My frustration is that, after the success of the duty-escalator campaign, delivered by a united industry, with a sensible, well-argued ask, we have embarked on a lobbying exercise that seems destined not only to fail, but to undermine the industry I love.

So Rob, let’s get real and focus on campaigns we can deliver for the good of all those working so hard in the drinks and hospitality sector. Leave the dreaming for Selhurst Park. You never know, this could be the season!

Andrew Griffiths MP chairs the All-Party Parliamentary Beer Group