Hospitality Sector VAT: Local Economies, Employment and Growth

Leigh Ingham Excerpts

Thursday 12th November 2026 Westminster Hall

[Mr Paul Kohler (Wimbledon) (LD)]

It is an honour to serve under your chairship, Dr Huq. I refer Members to my entry in the Register of Members’ Financial Interests. I own CellarDoor, a small bar in Covent Garden, so I do not speak about hospitality in the abstract. I know what it means to have to find the money to make payroll in a bad month, to cut a shift I would rather keep and to wonder whether the doors will open next year.

We converted CellarDoor from a disused underground gentlemen’s toilet 20 years ago. We have weathered the financial crash, Brexit and covid, but I have never known it as hard as it is now. The new Prime Minister promised much, but his Chancellor delivered little. The Night Time Industries Association called the Government’s latest Budget “deeply disappointing” and said that it failed

“to deliver the meaningful support”

the sector “desperately needs”.

Raising the business rates relief threshold is welcome, but in Wimbledon just 1% of my local businesses will benefit. The hospitality industry is not a nice-to-have; it is an essential part of the economy, the largest employer of young people and school leavers, and the backbone of communities up and down the country. It invests £7 billion in high streets annually and supports 3.5 million jobs.

Across Wimbledon, the hospitality sector provides more than 4,200 jobs and brings £150 million into the local economy, but our pubs, bars, hotels, restaurants and cafés are feeling the strain. Craig Hurring of Love Wimbledon told me that businesses are facing “a perfect storm” of increased employer national insurance contributions, above-inflation uplifts to the minimum wage and continuing weak consumer confidence.

Nationally, the toll is stark. We are losing the equivalent of 13 night-time venues a week, while 100,000 jobs in the hospitality sector were lost in two years. Something must be done. The simplest lever is VAT. Our current rate of 20% is double that of some of our European neighbours.

[Leigh Ingham (Stafford) (Lab)]

Does the hon. Gentleman know when the rate was raised to 20%, and which parties were in government when that happened?

[Mr Kohler]

The issue is absolutely now, not the past. In Spain, hospitality pays a reduced rate of 10%, while across our one land border the Republic of Ireland has reduced VAT on hospitality to as low as 9%. We know that VAT cuts do work because we have done it before, during the pandemic. This summer, we learned that lower VAT brings more people through the door and helps struggling businesses.

Minister, will the Treasury commission a full cost-benefit analysis of reducing VAT on hospitality—not just the headline cost, but also the return in jobs, growth and lower welfare spending? The Night Time Industries Association has produced an analysis suggesting that it would have a net positive effect on the Government’s fiscal position—I think that is what we call a win-win.

In short, hospitality is in crisis. There is no point in the Government giving a little with one hand while continuing to take far more with the other. The time has come for real action, not warm words.

--- Later in debate ---

[Leigh Ingham (Stafford) (Lab)]

It is a pleasure to serve under your chairship, Dr Huq. I commend my hon. Friends the Members for Blackpool South (Chris Webb) and for Gower (Tonia Antoniazzi) on this debate on an important topic that comes up a lot locally for me.

Like other Members, I have many businesses in my constituency concerned about rising costs and calling for greater stability. I recently had a lengthy discussion with Adam, the landlord of The Royal Oak—I think that is the third Royal Oak to be mentioned today—an award-winning independent pub in Church Eaton in my constituency. He was candid with me about the reality of running an independent pub.

Before I go into detail on the challenges he faces, I want to take a moment to note what an incredible steward he is of this wonderful community asset. The Royal Oak was acquired back in 2020, when members of the village clubbed together and put their mortgages on the line to save it. The period since then has been turbulent, including the pressures of the pandemic, but they have persevered because The Royal Oak is central to village life. Adam has personally committed to giving back to youngsters from the area the same opportunities he got as a young man. Right now he employs two local young lads, but the reality is that he and his family are working many unpaid hours because of spiralling costs.

Another award-winning business in Stafford, Jojo’s Fish & Chips, also shared with me their very real concerns. I will quote the owner, John, directly:

“It’s not a handout we are looking for; it is about creating a fairer system that enables small businesses to not only survive but also to thrive.”

I totally agree with him.

We should be encouraging growth in our communities. I welcome the business rates review currently under way and look forward to its outcome, which will be essential for pubs. However, we must ensure that any cuts to VAT are targeted effectively so that support reaches those who need it most, rather than simply boosting the profits of large corporations that do not face the same pressures as our independents. I would welcome hearing more from the Minister on whether we are considering different rates and targeted approaches so that support can be focused on the independent businesses at the heart of our communities.