Perhaps the VAT campaign needs to look longer-term

10-Sep-2013 - Last updated on 11-Sep-2013 at 12:30 GMT

Willock: "If the current Government really wants to pass up this VAT opportunity, perhaps the next one can take full advantage of it"

At a recent industry dinner reception, Andrew Griffiths MP introduced me to the Chancellor George Osborne. It was a bit like a wedding party receiving line, so there was very little time for me to influence him with my thoughts on how the Government could further help the pub industry. I needed my comments to be succinct and memorable.

When it was my turn to shake his hand, I blurted out a heart-felt thank you for his historic decision to cut VAT.

My Freudian slip was quickly glossed over by a disappointed-looking Griffiths, who pointed out very matter of factly that it was beer duty, and not value added tax that the Chancellor had trimmed.

As Osborne was manoeuvred away from me, I attempted to recover my position and composure by saying that I was in fact thanking him in advance for cutting VAT to 5% for hospitality businesses, but I think by then he had moved out of earshot and on to the next glad-handing reception guest.

Sadly, my own 20-second failure to impress upon the Chancellor the economic benefits of a cut in VAT for pubs, restaurants and hotels seems to have been no less successful than the million-pound-plus industry-funded campaign headed by French lobbyist Jacques Borel.

He has raised hundreds of thousands of pounds from brewers, pubs and restaurant operators to fund a programme of high-level meetings with opinion formers and policy makers with a view to securing the reduction in next year’s Budget.

Transparency

But this week Griffiths, who has previously cast doubt on the prospects of the campaign’s success, poured further scorn on its achievements and ambitions, saying: “I think the fact that in three years the campaign hasn’t achieved the backing of a single, MP nor one ministerial meeting speaks for itself,” and has demanded more transparency on the use of its funds.

The campaign’s cabal certainly appears to have made an enemy of Griffiths — the hero of the beer duty campaign, no less — thanks in part to the decision by JD Wetherspoon’s chairman Tim Martin to attack him in his local constituency newspaper.

Whether Griffiths’ own view that the campaign doesn’t stand a “snowball’s chance in hell” is a just personal opinion, or one shared by the Government, is as yet unknown, but there are whispers in corridors that the industry’s efforts might now be better concentrated on a refocused VAT campaign with a longer-term target beyond the current Con-Lib Dem administration.

Benefits

Labour has already publicly considered reducing the general rate of VAT from 20% to 17.5%, so it might not be a huge political leap for it to consider a deeper, more targeted VAT cut. Both would cost around £12bn, but the latter would surely achieve more specific and desirable economic benefits and deliver a quicker return.

An 11-figure investment is certainly a lot of money in these straitened times. But it is opportune to consider that it would be only a fraction of the estimated £50bn cost of the HS2 high-speed railway — a vanity project that the Government continues to back despite increasing doubts about its benefits.

If the current Government really wants to pass up this VAT opportunity, perhaps the next one can take full advantage of it.