VAT reduction 'number one thing' Gov could do
Cussens stated reducing VAT to 12.5% during the pandemic allowed operators to “rebuild their finances” and advised the Government would be better served having 10% of a “healthy hospitality sector”, as opposed to 20% of a “decimated” one.
He said: “The number one thing [the Government] could do is reduce the 20% VAT rate.
Viable sector
“Let's remember that was introduced post 2008 crash as a temporary measure.
“[The Government] are constantly asking us to increase wages, reduce hours, increase cost for compliance, whatever it might be, you can't just keep chucking more and more costs and expect the industry to be able to soak it up.”
Cussens added it was “frustrating” the UK hospitality sector “should be seen to be asking for a handout” in requesting a 10% VAT rate as many parts of Europe offer this “not as a post Covid recovery measure, because they recognise that is what you need for a hospitality sector to be viable.”
This follows last month’s Autumn Statement, in which Chancellor Jeremy Hunt announced the rate of VAT would remain at 20% until March 2026 despite repeated calls for a reduction.
However, Hunt did acknowledge the threshold was “twice as high as EU and OECD averages”.
Very frustrating
Moreover, Cussens claimed a reduction in VAT would give hospitality businesses a chance to tackle “some of the problems” currently faced by the sector, in particular with recruitment.
Though the operator also urged the Government to look at post-Brexit freedom of movement to help stem the ongoing crisis.
He said: “We've got a situation where every single part of the economy is crying out for people to do jobs.
“The economy is being held back by the lack of a willing workforce, [the Government] need to look at that and make it easier for people to come here and fill these positions, because this is nonsense.
“It's very frustrating, but if they reduced the VAT rate that, again, would give operators better margins to be able to try and solve some of these problems.”
