What a 5% VAT rate would mean for me

As the PMA's campaign to reduce VAT to 5% for the hospitality sector continues, four multiple operators tell Ewan Turney that a cut would help create jobs, improve quality, transfer volume from the supermarkets and create more tax revenue for the Government.

Brian Whiting, managing director, Whiting & Hammond​

A cut in VAT would certainly help with maintaining prices in the current economic climate. It is no secret that food prices are going through the roof and we are hearing horror stories from suppliers regarding costs of day-to-day goods.

We would certainly look at dropping prices, but clearly a VAT cut would be a fantastic help in maintaining current pricing, helping us to avoid passing on rises from our suppliers.

Last year we would have saved more than £500,000 if the 5% VAT had been introduced.

We are an ambitious company and looking to grow as quickly as possible — this clearly would have had an impact on us taking on more sites.

Banks certainly do not have any appetite for lending to our industry, even if you are looking to progress the company.

We were fortunate to open a new site, the Cricketers Inn, in Meopham, Kent, through cash flow.

When we took the site on last August, the pub had a total of five members of staff.

Following a £500,000 refurbishment, which also threw a lot of money into the local economy, the pub now employs more than 35 people in this hard-hit area.

Phil Thorley, operations director, Thorley Taverns​

A VAT cut would definitely bring more people back into pubs. We would drop prices — you are paying about £3 for a pint of lager in a pub and just 45p in the supermarkets at the moment. If we could drop that price to £2.50, it would be a more attractive proposition for customers.

With food, you are talking about taking pounds off. A £10 meal becomes £8.50 and that increases value and footfall.

We would re-invest almost all of the money. We celebrate our 40th birthday this year and pride ourselves on re-investing in our people and our units.

Returning profit has become increasingly difficult in the current economic situation and the off-trade differential. It would help shift some volume back to the on-trade. Beck's is 31p in the off-trade and £3.10 in pubs — that is a 10 times differential.

I think that, by giving customers a better deal, it would create more volume for pubs and so more VAT and more duty for the Government.

Just look what was achieved in France.

Steve Haslam, founder, TLC Inns​

A VAT cut would allow operators to invest in their premises — better training, better-quality service and more staff would be key objectives.

A knock-on effect of this would be higher footfall, increased profits, more jobs — and, ultimately, more tax for the Government.

A VAT reduction seems a viable option for the Government to stimulate — and save — many pubs. I would, however, advocate that this rate applies to pubs or small pubcos.

This has the double effect of allowing smaller operators to compete with the branded pubcos who are able to command lower prices through massive buying power.

In addition, why not raise VAT on supermarket sales? Again, this is a win-win idea to stimulate and save many pubs.

In our case, we would marginally lower prices and any further savings would be invested in new sites, new jobs or the development of existing venues. The difference to us and the industry would be enormous — reversing many a financial burden bestowed on the trade since beer became the new petrol for a route to taxation.

Nick Griffin, managing director, Pleisure Pub Company​

A pint that currently costs £3.60 VAT inclusive will drop to £3.15 and this will be a major revenue loss to the Exchequer.

But the purpose of this cut is to help address some of the inequalities the pub industry faces and put a smile on our customers' faces.

No publican worth his pork scratchings would be so daft as to avoid passing back to customers some, if not all of the cut.

In passing the cut on, one would hope that customers will be more inclined to visit the pub and not spend so much money on cheap supermarket booze, which is being purchased at pocket-money prices.

The cynics will say: "This is just a handout, possibly needed by the industry, but the country simply can't afford it." But we know, from the example of France, that 9% more people used French restaurants as a result of a VAT cut to 5.5%.

We must not forget employment here — all of this extra business is going to require staff. In France, 21,700 jobs were created following its VAT reduction.

With one of the greatest tourist attractions the country has had in generations just around the corner — the 2012 Olympics — we are expecting our hospitality industry to go into bat for the country with one arm tied behind its back, unable to compete with its European neighbour.