VAT cut 'would create 425,000 new jobs in hospitality industry'

Waitress serving businessman cup of coffee in hotel lounge

Hundreds of thousands of jobs would be created if the Government cut VAT on food and drink from 20% to 10%, according to a new report.

A campaign group said 425,000 new jobs would be created, with a further 150,000 if VAT was reduced to 5%.

Jacques Borel said research by his VAT Club found that cuts in other EU countries led to price reductions and increased customer demand.

He said: "The high rates of VAT applying to pubs, restaurants, hotels and catering businesses in the UK is restraining the growth of the UK hospitality industry.

"Also the increase in the minimum wage will result in increased costs for businesses in the leisure and hospitality industries and a VAT cut would offer a viable solution to this.

"By lowering the rate of VAT in the sector, the Government will reduce the unfair competition from supermarkets which benefit from the zero VAT rates that apply to the food it sells and which is used to subsidise the sale of alcoholic drinks."

The group, backed by dozens of food and drink companies, will submit a report to the Government, claiming that reducing VAT to 10% will lead to a surplus for the Treasury of £111 million after three years.

Supermarket shopping mistakes
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VAT cut 'would create 425,000 new jobs in hospitality industry'

The supermarkets invest in enormous shopping trolleys, and then put bulky special offers by the door - like packs of beer or enormous cereal boxes.

The idea is to tempt you into taking a big trolley, because tests have shown that it’s likely to make us buy more. Martin Lindstrom, author of Brandwashed, found that by doubling the size of trolleys, customers would buy 19% more.

This is a disaster for a couple of reasons. The first is that you’ll end up buying things you don’t need - because you already have plenty in the fridge or the cupboard. You’d be surprised how many people come home with tomatoes every week, then throw out the ones that have gone rotten in the fridge. They'll do this every single week without ever spotting that they don’t eat as many tomatoes as they think they do.

The other problem is that you’ll end up forgetting things, and have to go back to the store, which will leave you susceptible to the next common mistake.

Apparently we’re giving up the weekly grocery shop in favour of a number of trips to different stores to pick up bargains.

If you do this right, it can be a great way to save. However, if you don’t plan it properly, you’re just giving yourself more opportunities to buy on impulse.

In the book ‘America’s Cheapest Family’ the authors claim that more than 50% of what we buy in store is on impulse. The authors actually only go to the supermarket once a month to cut back on impulse purchases.

If you browse at eye-level using your peripheral vision, that’s where you’ll find the expensive brands.

Look around at the top and bottom of the shelves for the own-brand versions or the cheaper brands - and try out the cheaper versions of your usual shopping.

Aside from Christmas, stores will play quiet and relaxing music, with a slow tempo. This is designed to make you shop more slowly, and take the time to spot the impulse buys.

If you put headphones on and play something with a faster tempo (it doesn't have to be any particular type of music), then you’ll pick up the tempo, and studies have shown you’ll buy around 29% less.

On the one hand, if you do the maths, you might find that buying a larger pack means that each packet of crisps or can of coke costs less. However, Vestcom, a retail services company, has found that when we buy bigger packets, we consume more.

It means that when you’re buying things like toilet rolls and washing powder, straightforward maths will tell you the cheapest size to buy. When it comes to crisps and drinks, consider carefully whether you will just end up eating and drinking more.

Sometimes that big red sticker is a great discount on something you need: usually its not.

Don’t let special offers tempt you into buying things you don’t need, and don't assume that anything with a big red sticker is a bargain. It’s worth taking your receipt from your previous shop with you when you go shopping, so you can easily compare whether the new price is a good discount or not.

The end of the aisle gets more of our attention, because it's where we need to turn the trolley, so we’re going slower.

However, this isn’t always where the stores put the incredible bargains. They often sell these positions to companies trying to promote a particular product. When the company has the budget to spend on this sort of promotion, it means they may not necessarily be the cheapest option.

If your cheese has been grated, your salad washed, or your carrots chopped, then you’ll pay the price for it.

Not only will you pay significantly more for your shopping, but in many cases you'll get an inferior product too. Grated cheese has additives to stop it sticking, for example, while bagged salad will go brown significantly faster than a head of lettuce.

Frozen food is often far cheaper, so people assume it’s likely to be inferior. However, the fresh fish at the counter has often been frozen, so you’re gaining nothing for paying more here - in fact you're losing out because you have to use it up more quickly.

The other things that are well worth considering are frozen vegetables. These are much cheaper than fresh vegetables, and are often frozen at the peak of their freshness, so are better for you too.


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