Leading UK Chefs Advocate for VAT Reduction in Hospitality
Four prominent UK chefs and restaurant owners have called on the government to reduce the value added tax (VAT) for pubs and restaurants, warning that working conditions in the hospitality sector are currently the most challenging they have ever been.
Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan spoke to night, advocating for a VAT cut to 10% to alleviate financial pressure on businesses and align the UK’s rates more closely with those in other European countries.
"We're not making any money whatsoever, and we're just keeping our heads above water,"said Rogan, while Kerridge criticized the government’s approach, stating that taxation on businesses was handled "very, very wrong."
Cabinet minister Pat McFadden acknowledged that the government had "asked business to contribute more," but emphasized that support is provided where possible.
"We help them where we can,"McFadden said, noting that the government is frequently lobbied for tax cuts but must balance these requests against other expenditure demands.
"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',"he added.
Ottolenghi, who operates 11 restaurants, cafes, and delis, described the current situation as "crippling," affecting not only his own businesses but also others such as bakeries, cafes, and pubs.
"Every pound that we take, a substantial amount of it just goes to the government for a different taxation,"he explained.
Challenges Facing the Hospitality Industry
The call from these renowned chefs comes after several difficult years for the hospitality sector. The Covid-19 pandemic brought business to a standstill, followed by a surge in energy prices due to the conflict in Ukraine, which increased costs across the board with little relief.
Consumers, affected by the rising cost of living, have reduced discretionary spending, particularly on dining out.
Although temporary support measures such as the Eat Out to Help Out scheme and previous VAT relief provided some assistance, the industry continues to struggle. According to UK Hospitality, an industry body, three hospitality businesses have closed every day since the start of 2026.
VAT, a tax applied when purchasing goods or services, is currently set at a standard rate of 20% in the UK.
This rate, which applies to UK hospitality businesses, is the second highest in Europe after Denmark, according to UK Hospitality.
The organization has repeatedly advocated for VAT to be reduced to levels closer to those in Germany (7%), Ireland (9%), France (10%), Italy (10%), and Spain (10%).
Kerridge, who owns five restaurants and pubs, highlighted multiple factors driving up costs and reducing profit margins, including government policies such as increased National Insurance rates for employers, business rates, and the minimum wage.
"There are so many different factors,"Kerridge said, adding that the industry has reached a "peak point" where businesses can no longer pass on price increases to customers because it would deter them from dining out.
Pastry chef and author Ravneet Gill, who opened her first restaurant a year ago, expressed surprise at the severity of the challenges, particularly the high costs associated with employing staff.
Rogan, who holds nine Michelin stars across his restaurant group in the UK, Malta, and Hong Kong, agreed that staffing expenses are significant but emphasized that VAT is "a killer."
Kerridge and his colleagues indicated their support for the minimum wage increase but argued that reducing VAT from 20% to 10% would provide operators with much-needed relief and enable reinvestment.
"It's about survival for the industry rather than passing on the cut to customers through cheaper prices,"Kerridge said.
"Don't look at us as having profit is a dirty thing,"Gill added.
"We're not going on fancy yachts and driving expensive cars. We are doing it so we can regenerate our areas that we're in, employ more people."
Last week, Chancellor Rachel Reeves announced a VAT reduction from 20% to 5% on various attractions over the summer holidays, including children's meals in restaurants and cafes.
However, Gill criticized this policy as "a very poor attempt at trying to offer something to hospitality and quite frankly it will lead to loopholes, fraud, misuse and no genuine good."
Employment Costs and Youth Opportunities
Hospitality businesses such as restaurants, cafes, and pubs often provide many young people with their first work experience, employing 28% of all 18 to 20-year-olds, according to the Institute of Fiscal Studies.
However, these opportunities are diminishing. On Thursday, a critical report revealed that job prospects for young people are shrinking, with its author, former Labour minister Alan Milburn, warning that the UK is "at risk of a lost generation."
The review coincided with official statistics showing that more than one million young people are not in education, employment, or training—the highest level in over 12 years.
Following Milburn's report, the government announced plans to create 300,000 work experience and training placements across sectors including construction, health and social care, and hospitality.
Treasury minister Torsten Bell told the BBC's Today programme that employment rates for 18 to 25-year-olds were "exactly the same as when we took office in 2024," but acknowledged that higher taxes are impacting the sector.
The data adds to growing concerns about the difficulties young people face in securing employment in the UK.
Allen Simpson, chief executive of UK Hospitality, stated that reducing employment costs for businesses is key to addressing this issue.
"The government needs to make it economically beneficial to employ young people once again."
Rogan noted that when restaurants face financial pressure, investments in young people and sustainability are often the first to be cut.
Ottolenghi called for a public discussion about the cultural losses resulting from restaurant closures.
"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."
