VAT Club approach will not work, industry veteran suggests

By Emily Sutherland

- Last updated on GMT

Borg-Neal: "The way forward is to find a way to fund a tax cut, rather than just asking for it."
Borg-Neal: "The way forward is to find a way to fund a tax cut, rather than just asking for it."

Related tags: Chancellor george osborne, Public house, Government

Leading pub sector entrepreneur Peter Borg-Neal has urged the industry to come together and find a new way of tackling the VAT burden placed on pubs.

Oakman Inns founder and CEO Borg-Neal discussed the issue with Chancellor George Osborne at a business briefing held following last week’s Autumn Statement.

He told the PMA that previous industry attempts to tackle the problem, including a campaign from Jacques Borel’s VAT Club to cut the rate from 20% to 5%, would not work and that he would like to see the Government deliver tax parity with supermarkets by adding VAT to processed food. 

“The way forward is to find a way to fund a tax cut, rather than just asking for it. The Government is working hard to balance stimulating business and cutting the deficit, so they haven’t got the money to hand out tax cuts,” said Borg-Neal, who runs 13 sites.

Cuts passed on

If the Government refuses to level the playing field between pubs and supermarkets, Borg-Neal suggested that VAT cuts could be more useful for the trade than reductions in beer duty. 

“For me, one way would be to stop reducing duty on beer unless the breweries pass it on. Brewers decide the wholesale prices in February or March and then we get an announcement about duty being cut. But unless it is passed down we can’t cut prices. We actually need price inflation in the business right now, especially with the new national living wage coming in, but beer duty cuts stop prices going up because the public think they ought to be cheaper. There needs to be a different way of helping the industry.

“I’d rather money was put back on beer duty and taken off VAT at selling price, particularly on food, which would also be socially responsible as it would encourage people to eat when they’re drinking.”

 He added: “The Government is doing a lot of listening right now but I’m just one voice. We need some way of getting all the various trade bodies behind a single policy.”

According to Treasury minister David Gauke, cutting VAT to 5% for hospitality businesses could cost the Exchequer £10bn a year and would not generate enough economic growth to outweigh the shortfall.

Related topics: Legislation

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