Lord Smith calls for VAT cut for hospitality to be extended to March 2022

Lord Smith of Hindhead has called for an extension of reduced VAT for hospitality.

In a House of Lords debate, he stated: “The government’s quick thinking and implementation of schemes such as the 2020 lockdown grants, the subsequent tier grants for closure and the current reopening grants – not to mention the furlough and Eat Out to Help Out schemes – have all made this past year just about manageable for a significant part of the hospitality industry.

Together with business rates relief and the reduction of VAT to 5% as applied to goods and services in the hospitality, accommodation and attractions sector, the Chancellor has created a safety net that has been vital in supporting an industry which, pre covid, was the third-largest private sector employer.

Over three million jobs were directly supported through UKHospitality – some 9% of all UK employees.

However, in spite of this support, many establishments are in rent and loan debt, and are unable to contemplate the costs of reopening or bringing back staff post furlough.

While I very much welcome the announcement that the reduction of VAT to 5% will continue until September this year, and thereafter will be at a transitional rate of 12.5% until March 2022, the hospitality industry would benefit hugely from the 5% rate being extended to April 2023, where significant savings could be made for the industry and consumers.

This would be a lifeline to all sorts of businesses across the country, from pubs to restaurants and hotels to cinemas, providing breathing space for the sector to fully recover, saving businesses and jobs, and allowing the economy to bounce back faster.

A society which socialises together is a stronger and healthier society. The UK’s pubs, clubs, bars and restaurants put that into practice every day.

Hospitality has always provided social cohesion, but it is also an industry which brings so many people of different backgrounds and abilities together as a workforce, which benefits the UK on many different levels.

I hope my noble friend the Minister will consider this suggestion.”