Speaking to the BBC Newsnight on Thursday 28 May, Kerridge was asked by host Katie Razzall if he felt “let down” by Labour after backing them in their election campaign as rising costs continue to hammer the hospitality sector.
“Yes, across the board”, he replied. “But my fundamental basis of what the Labour party stands for, I am still wholeheartedly behind.”
Kerridge said the Government was getting taxation for businesses “very, very wrong”, adding some of his sites were operating at 115% costs.
The discussion formed part of a wider panel session on the cost pressures faced by hospitality firms and the impact a VAT reduction would have.
Kerridge was joined by restaurateur Yotam Ottolenghi, pastry chef and author Ravneet Gill and Michelin-starred chef Simon Rogan.
The expert line-up explained a VAT reduction from 20% to 10% would ease pressure on the sector and bring rates closer to levels across Europe.
Kerridge told viewers working in hospitality was currently the “hardest it has ever been”.
Meanwhile, Rogan warned many businesses were not “making any money whatsoever”.
Also appearing on Newsnight, Secretary of State for Work and Pensions Pat McFadden recognised the Government had “asked business to contribute more”.
‘Crippling’ situation
McFadden added Labour was helping firms where it could, but that higher contributions from businesses had benefited the wider economy and the NHS.
He also told viewers the Government was lobbied about tax cuts “all the time” but cautioned there was a cost attached to this.
However, multiple operator Ottolenghi described the situation faced by hospitality businesses as “crippling”.
“Every pound we take, a substantial amount of it just goes to the Government for a different taxation,” he said.
“It’s a very difficult situation; it’s never been as hard.
“This doesn’t apply just to me, it applies to every business; bakeries, cafes, pubs hotels, etc., we are really struggling and counting pennies and making sure we can actually operate.”
Meanwhile, Rogan warned “there’s people up and down the country closing their doors” as cost pressures continue to erode margins.
Kerridge pointed to myriad factors driving up costs, including employer’s national insurance contributions, food inflation, utility costs, business rates and the minimum wage, adding costs can no longer be passed onto customers.
“It just doesn’t work because it will stop people coming out,” he continued.
“Operators that have been doing it for 20, 30 years are closing, they just can’t do it.”
Kerridge explained one of his sites in Marlow had seen its business rates jump by £75,000, which he described as “reflective of so many operators up and down the country”.
“If that has gone up £75,000, that operator earning £30,000 is now making a loss of £45k, and is going ‘why am I doing this?’, he continued.
Killer costs
Echoing this, Gill said a year after opening her first restaurant, she “never imagined it would be this tough”.
“[My husband and I] have always dreamed of doing this together... we put all our money into this space on the high street and into regenerating it and now are coming to realise we have to pinch in so many ways”, she said.
“We don’t have room to grow and we have had to make really tough decisions recently.”
Gill added this has made it difficult to employ staff, particularly young people looking for their first job.
Rogan, who has restaurants in the UK, Malta and Hong Kong, agreed staffing costs were adding pressure, but asserted VAT was “a killer”.
All four chefs were clear they supported the rise in the minimum wage but argued a VAT cut for the sector would “allow operators to breathe” and reinvest.
“Don’t look at us as having profit is a dirty thing,” Gill said.
“We’re not going on fancy yachts and driving expensive cars. We are doing it so we can regenerate the areas we’re in.”
This comes after Chancellor Rachel Reeves announced a VAT reduction from 20% to 5% on children’s meals in restaurants, pubs and cafes over the summer holidays.
Though Gill described the policy as a “poor attempt at trying to offer something to hospitality”, warning it would lead to “loopholes, fraud, misuse and no genuine good”.
