More than 800 hospitality businesses have written an open letter to prime minister Andy Burnham demanding a hospitality VAT cut, warning that without action the sector faces accelerating closures, job losses and diminishing opportunities for young people.
The letter, delivered as part of the UKHospitality #VATsTheProblem campaign, calls for the UK’s standard 20% VAT rate on hospitality to be reduced to 10%, bringing the country into line with the European average. The campaign is backed by four trade bodies: UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and CODE Hospitality.
The timing was pointed. Yahoo Finance reports that the letter landed on the same Monday that Burnham gathered business leaders in Downing Street to pledge support for entrepreneurs. According to Retail Systems, it was also sent ahead of the following month’s budget.
A pledge made, a commitment still outstanding
The hospitality VAT cut demand carries particular political weight because Burnham has already said publicly that he supports it. In February 2026, when he was still Mayor of Greater Manchester and Labour’s candidate for the Makerfield by-election, Burnham backed a VAT rate for hospitality in line with Europe, citing the social value the sector brings to communities, according to the Institute of Hospitality.
Since becoming prime minister, he has moved on business rates: his first week in office included a 20% cut in business rates for pubs, clubs and live music venues, packaged as part of a £100 million aid package. The industry’s response was to press harder, not to declare victory.
A parliamentary roundtable on 2 June, attended by hospitality leaders including Sacha Lord FIH, Burnham’s Night Time Economy Adviser, heard that the UK’s 20% VAT rate was placing businesses under what participants described as ‘intolerable pressure’. The Institute of Hospitality, quoting MP Rosie Duffield, noted that Burnham did not commit to considering a reduction at that meeting.
Why VAT bites harder in hospitality than elsewhere
Chef Tom Kerridge, who is spearheading the campaign, put the structural argument plainly in the letter: ‘The reality is that 20% VAT is holding hospitality back. Hospitality is different from many other businesses because so much of what we spend our money on is our teams. You can reclaim VAT on a product, but you can’t reclaim VAT on a person. That makes a 20% rate particularly tough for a sector where labour is one of our biggest costs.’
He continued: ‘And this is all happening at a time when businesses are already dealing with rising wages, energy bills, food costs and business rates. We’re seeing the consequences, with businesses closing their doors every single week.’
The signatories span the breadth of the sector: Fuller’s, Greene King, Mitchells & Butlers, and Wetherspoons among the pub groups; Franco Manca, Pizza Express and Wagamama from restaurants; Best Western Hotels and Marriott International on the hotel side; and leisure groups including Center Parcs and Parkdean Resorts. Celebrity chefs who signed include Angela Hartnett, Heston Blumenthal, Andi Oliver, Clare Smyth, Jason Atherton, Nathan Outlaw and Paul Ainsworth. Most signatories, however, are independent single-site businesses.
The UK Parliament petition attached to the campaign has gathered more than 370,000 signatures calling for the 10% rate. UKHospitality’s campaign launch sets the target at one million signatures.
The pubs code: a separate, smaller concession
Alongside the VAT debate, the government announced it would work with publicans to reform lease agreements and improve pricing on beer, following a review of the 2016 pubs code. The official statutory review, covering April 2022 to March 2025, recorded 391 Market Rent Only notices received, of which 332 were accepted according to the UK Government’s statutory review, a take-up rate above 80%. The sector has cited the cost and complexity of the process as deterrents to wider use.
The pubs code changes, welcome as they are to tied tenants, are peripheral to the main argument. VAT is a fixed overhead that applies to every transaction. A reform there would reshape the economics of the entire sector, not just for tied pub tenants.
Burnham told business leaders he was on their side on the day the letter arrived. The budget, now approaching, is where that claim will either be tested or quietly shelved.
