Plaid Cymru calls for hospitality VAT cut ahead of Autumn Budget

Nation.Cymru staff

Plaid Cymru has called on the UK Government to cut VAT for pubs, restaurants and other hospitality businesses in the Autumn Budget.

The party’s Westminster leader Liz Saville Roberts said the current 20% rate was putting additional pressure on businesses in rural and coastal communities and restricting their ability to contribute to local economies.

Speaking during Prime Minister’s Questions on Wednesday, the Dwyfor Meirionnydd MP highlighted Yr Heliwr, a community-owned pub in Nefyn which reinvests its profits locally.

She said: “Yr Heliwr in Nefyn is a community-owned pub and it’s buzzing with events, fuelled by local beers and food. I have to declare an interest – I have shares in Yr Heliwr, and it makes my husband very happy indeed.

“Supporting businesses like Yr Heliwr is of course key for economic growth in coastal areas – but they’re held back by 20% VAT, while hospitality in France, Spain and Italy pays just 10%.

“Will he have a word please with the Chancellor before the Autumn Budget and cut VAT for hospitality to prove that the postcodes furthest from London and Manchester will not be forgotten in his drive for growth?”

Prime Minister Andy Burnham stopped short of committing to a VAT reduction but indicated that further support for the hospitality sector could be announced in the Budget.

He said: “As the Honourable Lady might know I am something of a pub person myself. In my first week in office I made a decision to cut business rates for pubs.

“I think we need to go further to support hospitality. I can’t commit to what she is saying today at this despatch box but I would say that she should wait for the Budget.

“We are keen to support high streets and hospitality up and down the country in England, Scotland, Northern Ireland and in Wales too.”

Hospitality businesses currently generally pay the standard 20% rate of VAT, while lower rates apply to the sector in a number of European countries.

Industry body UKHospitality has called for the rate to be reduced to 10%, describing it as the “single most important thing” the UK Government could do to support the sector.

It says the average hospitality VAT rate across Europe is 12.8%, compared with 20% in the UK.

A YouGov poll commissioned by UKHospitality found 79% of respondents supported a reduced VAT rate for hospitality and tourism, while 17% backed retaining the current rate.

Rising costs

Lois Povey, Community Officer at Yr Heliwr, said the pub was also facing pressure from other rising costs.

She said: “Running a business is difficult enough with high VAT costs, but as a community pub where every penny goes back into the community, even a reduction in VAT which might look small on paper would make a significant difference to enterprises like ours.

“High VAT creates major challenges and puts additional pressure on us. It means less of our money can go back into the community, which goes against our whole purpose as a community pub.

“We face many other pressures too, including increases in the National Minimum Wage, so every penny matters. This doesn’t just affect the business – it has a real impact on the community here in Nefyn and the surrounding area.”

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