Publican urges VAT changes to encourage 'café style culture'

17-Aug-2020 - Last updated on 17-Aug-2020 at 14:16 GMT

Petition: one multi-site operator hopes to garner support for his campaign to reduce VAT on out-of-home meals (image: Elliott Brown, Flickr)

Related tags Coronavirus Food

A Shropshire-based pub operator has started a campaign to cut VAT on café and restaurant food but increase it on alcohol sold in shops.

Publican Ross Ireland, who operates Odfellows Wine Bar in Shifnal and the Coach and Horses in Shrewsbury under Shropshire-based Odley Inns, has launched a campaign on Parliament’s petition site.

It reads: “The Licensing Act 2003 intended to create a café style culture with limited success. This proposal could help drive the change.

“Cafe and restaurant food service is more labour intensive than shop sales of alcohol so making eating out cheaper should drive economic growth.

“We want all food served in cafes, restaurants, pubs etc. to be cheaper to consumers as this should help hospitality businesses survive.

“Increasing VAT on the sale of alcohol in shops should encourage people to go to cafes and restaurants and also reduce heavy drinking at home. This should be better for tax revenues than minimum pricing and should be neutral or beneficial to tax revenues if implemented correctly.

“EU member states are regulated and cannot have multiple VAT rates. As the UK leaves the EU we can.”

Long term proposal

After 10,000 signatures, petitions on the website get a response from the Government. After 100,000 signatures, petitions are considered for debate in Parliament.

While the Government’s schemes - such as a temporary reduction in VAT, Eat Out to Help Out and the suspension of business rates - have helped his pubs a lot, Ireland said more needs to be done to prevent closures.

“Unfortunately all the measures are short term and we fear for the long term,” he said.

“We propose to solve several issues at once in a way that doesn’t cost the Government any loss of income. In the coming recession, the Government cannot simply continue free help, new ideas have to be innovative and not reduce HMRC income.”

Supports jobs

Ireland believes there are social benefits to the idea too. “Heavy drinking at home is bad for health and society, eating out is sociable and helps support jobs,” he said.

He also believes there should be a long term reform of VAT regulations for the hospitality sector and the business rates system must be reformed.

Chancellor of the Exchequer Rishi Sunak slashed the rate of VAT applied on "most tourism and hospitality-related activities" from 20% to 5% from last month until 12 January 2021. However, this cut did not apply to alcoholic drinks, which some wet-led, community operators said left them feeling neglected.