Some operators have warned that the measure will offer only limited support unless it leads to wider VAT reform for hospitality.
The Treasury confirmed to The Morning Advertiser (MA) today (21 May) that pubs would be included in the reduction, which will see VAT cut to 5% on children’s menu meals from 25 June to 1 September.
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The measure applies to meals served from a children’s menu and marketed, presented and priced as children’s meals.
While trade bodies have welcomed the announcement, operators said the cut would provide only limited support for pubs where children’s meals account for a small proportion of sales.
‘Doesn’t help local pubs’
JW Lees managing director William Lees-Jones said: “Any help is always welcome and so we’re grateful for the support. It does not help local pubs though since they don’t really do much food or appeal to families.”
He said the cut would “help” drive family visits over the summer and added the business would look at its offer to ensure it delivers value for money for families.
However, Lees-Jones said a broader intervention would have been more effective. “Eat Out to Help Out was a better offer and benefitted more people rather than just children,” he said.
Cheshire Cat Pubs & Bars owner Tim Bird described the policy as a “token gesture”.
Despite not offering children’s menus, Bird said: “It’s a more significant benefit to children and family oriented pubs. Let’s hope it’s the Government’s way of testing the water.
“But this doesn’t help the majority at all. With overall pub and restaurant food VAT dropping by 4% in Ireland to 9%, it’s a bit of a kick in the teeth when we still sit at 20%.”
Other operators warned the policy risked excluding pubs that welcome families but do not operate traditional children’s menus.
Ayesha Kalaji, chef patron of Queen of Cups in Glastonbury and Estrella Damm Chef of the Year, also criticised the narrow scope of the measure.
She said: “I do not offer a separate kids menu so I’m immediately excluded from any aid. I wasn’t aware a plate of hummus had an age limit and I would hope that families who visit my gastropub will find food that appeals to adult and children alike.
As such I find these new Government measures to be inconsiderate and unhelpful. My business is not worthy of aid unless I’m serving kids portions of chips and beans? It’s insulting to pub owners and consumers alike.
Ayesha Kalaji
Broader VAT reform needed
London based operator Tim Skinner said the move was welcome, but should mark the start of a broader conversation around VAT reform.
He said: “This is a welcome and sensible move from this Government and recognition that both families and hospitality businesses are still under real financial pressure. Anything that helps make a family trip to the pub more affordable over the summer holidays is positive, and I do think it could encourage more people to visit their local pub’s cafes and restaurants.
But it also proves something bigger; Government can act on VAT when it chooses to.
Tim Skinner
Skinner added hospitality in the UK continued to operate at a disadvantage compared with many European countries where lower VAT rates were already the norm.
He said: “If Government truly wants to protect pubs, restaurants and cafés as employers, community hubs and drivers of the wider economy, then this should be the beginning of a broader conversation around meaningful long term VAT reform for the sector.
“Temporary support is welcome of course, but the sector now needs a sustainable framework that allows businesses to invest, employ, grow and remain affordable for people who use them.”
Emma Harrison, MD of The Three Hills Bartlow, said the announcement was “great news” for family friendly pubs.
She said: “We very much welcome any measure that helps make eating out more affordable over the summer holidays. We hope it will encourage more families to visit pubs and restaurants and continue to enjoy hospitality as an accessible treat during what remains a challenging economic period for many households.”
However, Harrison said not all operators would be able to pass on the full saving to customers.
Whilst I think some operators may pass part of the saving on to customers, the reality is that many pubs and restaurants are so close to the wire at the moment that this will simply provide some much needed breathing space.
Emma Harrison
“Costs across the board remain incredibly high, from wages and national insurance contributions to food and energy, and many hospitality businesses are working exceptionally hard just to remain viable.”
Harrison said there would be some practical challenges around implementation, particularly around systems and ensuring menus meet the qualifying criteria, but said these were manageable.
Dave Wall, chef patron and owner of The Unruly Pig, which is ranked number two on the Estrella Damm Top 50 Gastropubs list, said the measure was welcome but would deliver minimal benefit.
He said: “Of course this measure is welcomed, but in reality children’s meals are a very small percentage of our revenue and therefore the benefit of this measure is minimal. We actually ran a promotion last summer where children ate for free, so if we opt to run that again then we would see no benefit at all.
This will have very little tangible benefit to hospitality businesses and won’t slow down the alarming rate of closures.
Dave Wall
Wall said he did not expect the policy to drive family visits unless the saving was passed on to guests.
He added: “It’s a tricky one because presumably this move is designed to assist hospitality, but by making it specifically aimed at children there is an emotive driver and it might look greedy or scrupulous to not pass on the saving.”
On whether reduced VAT should be extended more widely across hospitality, Wall said: “Absolutely. 5% would be incredible, but even if it were say 10%, this might make it possible to actually turn a profit and I’m sure would make a huge difference to our industry.”
‘Something of nothing’
Martin Bull, head chef and general manager at The George at Burpham, said the policy would do little for destination pubs.
He said: “Personally, I think it’s something of nothing. It will help chain restaurants etc, but for pubs and especially ones like us that are a little out the way and are destination pubs, it won’t really affect us too much.
“We will adjust our children’s meals pricing accordingly, but I think a VAT cut across the whole hospitality sector is what’s needed.”
Dom Jacobs, managing director at Ardent Pubs, said the policy would have a “small and welcome impact”.
He added: “Overall, I’m pleased that the Government is looking at VAT as a tool to help growth and deliver the thriving hospitality industry we all want.”
The Night Time Industries Association also criticised the scope of the announcement, arguing it failed to address pressure across the wider leisure and cultural economy.
NTIA CEO Michael Kill said the policy “completely overlooks and effectively sidelines” the night time economy, including festivals, clubs, live music venues and late night cultural spaces.
He added: “For years, we have consistently lobbied for a fair and meaningful reduction in VAT across hospitality, live events and cultural experiences.
Instead, what we’ve been given is a narrow, temporary measure that cherry picks certain activities while leaving the rest of the sector to absorb rising costs, punitive tax burdens and ongoing instability.
Michael Kill
Kill said meaningful VAT reform, long term policy stability and support for the wider hospitality and leisure ecosystem were needed.
