Four prominent UK chefs and restaurateurs have issued a strong appeal to the government, advocating for a reduction in Value Added Tax (VAT) for the hospitality sector from the current 20% to 10%. The group, including Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan, expressed grave concerns about the viability of businesses in the industry, describing the current operating environment as the "hardest it has ever been."
Speaking to BBC Newsnight, the chefs argued that a lower VAT rate would alleviate significant financial pressure on pubs and restaurants, bringing the UK's tax levels more in line with those seen across continental Europe. Rogan warned that many businesses are "not making any money whatsoever, and we're just keeping our heads above water," while Kerridge criticized the government's approach to business taxation as "very, very wrong."
Cabinet minister Pat McFadden acknowledged that the government has "asked business to contribute more" but assured that support is provided "where we can." He explained that the chancellor faces numerous demands on public funds, balancing requests for increased spending with the need for taxation. "The chancellor has to make these decisions in the round, netting off all of these demands against the increasing expenditure demands that government also faces by people every day saying 'why can't you spend more on this or this'," McFadden stated.
However, Ottolenghi, who owns 11 restaurants, cafes, and delis, characterized the situation as "crippling," not only for his own establishments but for a wide array of businesses including bakeries and pubs. He lamented that a substantial portion of every pound earned by these businesses is directed towards government taxation. "Every pound that we take, a substantial amount of it just goes to the government for a different taxation," he said.
The chefs' plea comes after a particularly challenging period for the hospitality industry. The COVID-19 pandemic severely disrupted trade, followed by a surge in energy prices exacerbated by the conflict in Ukraine, which has driven up operational costs across the board with minimal relief since. The ongoing cost of living crisis has also led consumers to curtail discretionary spending, particularly on dining out.
Despite temporary boosts from support schemes like the pandemic-era "Eat Out to Help Out" and previous VAT relief measures, the industry continues to struggle. According to the industry body UK Hospitality, an average of three hospitality businesses have ceased operations daily since the beginning of 2026. Value Added Tax (VAT) is a consumption tax levied on goods and services.
The standard VAT rate in the UK stands at 20%. For the hospitality sector, this rate is notably high, ranking as the second highest in Europe, surpassed only by Denmark. UK Hospitality has consistently advocated for a reduction in VAT for the sector, citing rates in countries like Germany (7%), Ireland (9%), France (10%), Italy (10%), and Spain (10%) as more sustainable benchmarks.
Kerridge, proprietor of five restaurants and pubs, highlighted a confluence of factors contributing to rising costs and diminishing profit margins. These include government policy decisions such as increased National Insurance contributions for employers, business rates, and the mandated minimum wage. He asserted that the industry has reached a critical point where businesses can no longer pass on price increases to consumers without deterring patronage. "It just doesn't work because it will stop people coming out."
Ravneet Gill, a pastry chef and author who launched her first restaurant a year ago, expressed her surprise at the intense difficulties, particularly the high cost of employment. Simon Rogan, whose restaurant group boasts nine Michelin stars across the UK, Malta, and Hong Kong, concurred that staffing costs are significant but identified VAT as a primary "killer" for businesses.
The chefs indicated their support for increases in the minimum wage but argued that a reduction in VAT from 20% to 10% would provide much-needed breathing room for operators, enabling them to reinvest in their businesses. Kerridge emphasized that the goal is "survival" for the industry, rather than simply passing savings onto customers through lower prices. Gill added that the pursuit of profit is not about personal enrichment but about enabling regeneration and job creation. "Don't look at us as having profit is a dirty thing… We are doing it so we can regenerate our areas that we're in, employ more people."
In a recent development, Chancellor Rachel Reeves announced a temporary VAT reduction to 5% on various attractions during the summer holidays, which included children's meals in restaurants and cafes. However, Gill expressed skepticism about this measure, deeming it "a very poor attempt at trying to offer something to hospitality" that could potentially lead to loopholes, fraud, and misuse without providing genuine benefit.
Impact on Youth Employment
Hospitality businesses, including restaurants, cafes, and pubs, are crucial entry points for young people entering the workforce, providing the first work experience for many. The sector employs approximately 28% of all individuals aged 18 to 20, according to the Institute of Fiscal Studies. However, these employment opportunities are diminishing.
A recent report revealed a decline in job prospects for young people, with its author, former Labour minister Alan Milburn, warning that the UK risks creating "a lost generation." This assessment coincided with official figures showing that over one million young people are not engaged in education, employment, or training, the highest figure in more than 12 years.
In response to Milburn's report, the government announced plans to create 300,000 work experience and training placements across various sectors, including hospitality. Treasury minister Torsten Bell stated that employment tax rates for individuals aged 18 to 25 have remained unchanged since 2024, but acknowledged that higher taxes do have an impact. "The figures add to growing concerns over the number of young people not being able to secure a job in the UK," Bell noted.
Allen Simpson, CEO of UK Hospitality, suggested that reducing employment costs for businesses is key to addressing the issue. "The government needs to make it economically beneficial to employ young people once again," Simpson urged.
Simon Rogan highlighted that when restaurants face financial pressure, investments in youth development and sustainability are often the first to be cut. Food author Yotam Ottolenghi called for a public discourse on the societal losses incurred as restaurants close, expressing concern that a decline in dining establishments could lead to a more isolated society reliant on screens. "The risk for me is if those go… we're just going to kind of become a society where people sit around at home, look at screens and never interact with each other. We end up as an industry taking so much of the burden and government lays on more taxes. Those could come down quite easily for us because we employ all these young people and we give them skills."
