Addressing the House of Commons today (28 October), Healey said the Budget would provide businesses “big and small” with some “breathing space”.
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However, the Chancellor made no mention of hospitality VAT, despite mounting pressure from industry leaders and growing support for the #VATsTheProblem campaign.
The #VATsTheProblem campaign attracted more than 400,000 signatures before its petition was delivered to Downing Street on 14 October, with supporters arguing a VAT cut would support investment, protect jobs and create a fairer tax environment for hospitality.
Top priority
A reduction in VAT was identified as the sector’s top Budget priority in a recent Morning Advertiser (MA) poll.
Industry leaders have also pointed to lower VAT rates in a number of European countries, arguing the UK is at a competitive disadvantage.
Last week, UKHospitality chief executive Allen Simpson told The MA a VAT reduction was “highly likely” in the near term, though he warned it might not feature in the Autumn Budget.
He described the measure as the “single biggest and simplest lever” available to Government to support the sector.
The omission from today’s Budget will undoubtedly disappoint operators already grappling with rising costs and squeezed margins.
Further measures
Healey also confirmed the national living wage and national minimum wage will increase by 3.9% to £13.20 an hour from April 2027, adding to payroll costs for many businesses.
However, the Chancellor did introduce some measures to support the sector.
These included an expansion of small business rates relief for retail, hospitality and leisure firms, raising the threshold from £12,000 to £18,000, alongside a two-year real-terms freeze in business rates for other businesses in the sector.
He also announced £10m in alcohol duty relief for around 2,000 small brewers and cider makers, as well as a 25% electricity bill discount for around 10,000 businesses from April 2027, although it remains unclear whether hospitality will be eligible.
