Leading Liverpool restaurateur Paul Askew is urging Chancellor Rishi Sunak to leave VAT at 12.5% in his spring statement today to boost the still struggling hospitality sector. Tony McDonough reports
Top Liverpool chef Paul Askew is today urging Chancellor Rishi Sunak to resist the temptation to put VAT back up to 20% in his spring statement.
To help the battered hospitality sector during the pandemic, Mr Sunak reduced VAT to 12.5%. However, the industry fears he will return the rate to the pre-pandemic level of 20% and damage its fragile recovery.
Paul, who is Chef Patron of The Art School restaurant in Liverpool, said March 20, 2020, is “forever seared into my memory”. That was the day the Government shut down the hospitality sector amid soaring cases of then novel COVID-19 virus.
He added: “The magnitude of what was about to happen, seeing the devastation and loss of life across other parts of the world getting closer to here – it was clearly the right decision.
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“But as everything fell silent, I remember having a moment and just thinking – how do we get through this? Can we get through this? And the hours, days and weeks that followed were absolutely the most challenging of my life.
“In Liverpool myself, Chris Brown (Marketing Liverpool), Bill Addy (Liverpool BID) and a wider team worked together on a plan to support the vast swathe of hospitality businesses across the Liverpool city region.
“It’s the engine of the economy here – the amount of business rates generated is huge in proportion to the city overall, and we knew we had to do something. So we campaigned hard to get support – grants especially and of course furlough helped.”
Support did come through in the form of grants, Government-backed loans and the VAT cut. Paul said the hospitality sector is only now getting back on its feet following two years of disruption. He explained: “Wednesday’s spring statement is a huge moment and it’s crunch time for the UK’s hospitality industry.
“In recent weeks, bookings are on the up and crucially customer confidence is also returning. This has certainly improved our outlook, both at The Art School and also across the country’s restaurants, bars, hotels and pubs; after two very difficult years, the sense of optimism is back.
“The chancellor has a unique opportunity to level up hospitality. But will he take it? Because putting hospitality VAT back up to 20% creates the very real issue that we all go backwards again.
“We are all already paying back CBILs and Bounce Back Loans, with insurance companies not paying out and many venues with crippling rent debt. Is this really the right moment to raise VAT?
“Margins remain very tight, with ongoing supply chain and staffing issues caused by Brexit and huge numbers of staff leaving the industry during the pandemic. We can’t conjure kitchen and front of house staff out of thin air. But that’s not the biggest challenge.
“With VAT, the raw ingredients we buy don’t have VAT – it can’t be claimed back. Then, when we turn those raw ingredients into a plate of food, it incurs VAT which we have to additionally pay – currently at 12.5%.
“This is already a difficult situation for tens of thousands of businesses, and if VAT goes back to 20% it’s only going to get worse again. We implore the chancellor to take heed of the many voices advising him to keep the rate as it is, or at an absolute maximum of 15%. The industry has been hit particularly hard by the pandemic and needs time to recover fully.
“The human cost of the pandemic has been absolutely horrific. The loss of lives is a true tragedy. That is always the main focus, because it’s been so awful for so many people, on top of the loss of livelihoods and the mental health crisis.”