Hospitality Sector VAT: Local Economies, Employment and Growth

Monica Harding Excerpts

Thursday 12th November 2026 Westminster Hall

[James Murray]

The hon. Lady is shaking her head, implying that no pubs in her constituency benefit from that. I will happily check and get back to her to confirm that the 20% cut does apply in her constituency. Also, more widely, we are having a real-terms freeze for all business rates for retail, hospitality and leisure. I think it is clear that retail, hospitality and leisure properties of all sizes benefit from a real-terms freeze, a cut or being taken out altogether.

Businesses in the sector have had to contend with a number of challenges in recent years, including higher operating costs. Members have spoken about the impact that that has had. The Government take those concerns seriously. We continue to engage with the sector about what support we can give.

A number of Members have made the case for reducing the current rate of VAT to 10%, and we have considered that case carefully. Let me be clear that we recognise that reducing the rate of VAT would provide a benefit to affected hospitality businesses. Businesses would make their own decisions about how to use that benefit: whether to strengthen their finances, support employment and investment, or reduce prices for customers. As the Minister responsible for the tax system, I have to consider the significant fiscal implications that such a change would have.

[Monica Harding (Esher and Walton) (LD)]

The Minister talks about reducing prices for customers, yet a Michelin-starred restaurant in my constituency, Starling, cannot pass those costs on to customers because they cannot pay it, and it cannot keep up with the rising costs. The Good Earth, which I think many people will be familiar with, have seven sites throughout London and the south-east; they have lost the opportunity to expand, they are reviewing locations and looking at their employment practices. That is without mentioning the pubs that are struggling to survive, which is completely heartbreaking. Does the Minister agree that not enough is being done to save these restaurants that are so much part of our high streets?

[James Murray]

I am sorry to hear from the hon. Member about the challenges that the business in her constituency is facing. Let me be clear on the point I made so that there is no misunderstanding: if there were a reduction in the rate of VAT, it would be for businesses to decide how to use that benefit. Were the rate of VAT to be cut, how that was used—whether to strengthen finances, support employment or be passed on to customers—would be a decision for businesses to take.