A coalition of more than 800 hospitality businesses has issued an open letter to Prime Minister Andy Burnham, demanding he address the sector’s mounting financial pressures. The signatories, part of the #VATsTheProblem campaign, argue that without a transition to a fairer tax burden, the industry will face ongoing closures and reduced employment opportunities for young people.
The push for reform is backed by high-profile figures, including chefs Angela Hartnett, Heston Blumenthal, Andi Oliver, Clare Smyth, Jason Atherton, Nathan Outlaw, Paul Ainsworth, and Tom Kerridge. The diverse group of signatories ranges from small, independent pubs and local hotels to major corporations like Marriott International, Center Parcs, Pizza Express, Wagamama, and brewers such as Greene King and Wetherspoons.
This campaign follows a significant petition signed by over 370,000 people, which advocates for a 10% VAT rate to align the UK with European averages. In February, Burnham—then the mayor of Greater Manchester—publicly supported such a measure, highlighting the social value that hospitality venues contribute to their communities. While the government did announce a 20% cut to business rates for pubs, clubs, and live music venues as part of a £100 million aid package during its first week, industry leaders maintain that further intervention is necessary to prevent widespread failure.
Chef Tom Kerridge emphasized that the current 20% VAT rate disproportionately impacts the industry because labor remains one of its highest costs. He noted that unlike products, companies cannot reclaim VAT on human labor, making the high rate particularly damaging amid soaring energy costs, food inflation, and rising wages. The letter explicitly states that lowering the VAT rate could transform shuttered high streets back into thriving hubs of community activity.
Simultaneously, the government has signaled intentions to improve conditions for pub tenants by reviewing the 2016 pubs code. Officials plan to work with publicans to secure fairer lease agreements and competitive beer pricing. Current regulations allow tenants to opt for a “free of tie” status to purchase products independently, yet data shows that fewer than 400 tenants pursued this route between April 2022 and March 2025, largely due to concerns over the cost and complexity of the process.
The sector remains under extreme duress, with businesses shuttering weekly. Campaigners are now looking to the Prime Minister to honor his earlier pledges to ensure the industry’s long-term viability against an increasingly difficult economic landscape. The report also notes that but you can’t reclaim VAT on a person, you can reclaim VAT on a product. The report also notes that hospitality is different from many other businesses because so much of what we spend our money on is our teams. The report also notes that that makes a 20% rate particularly tough for a sector where labour is one of our biggest costs. The report also notes that with businesses closing their doors every single week.”, we’re seeing the consequences. The report also notes that so they get fairer lease agreements and a better price on beer, following a review into the 2016 pubs code, the letter came as the government said it would work closely with publicans to give more options for pub tenants who want greater freedom in running their pubs.
