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

The government would need to cut VAT on food and drink from 20% to 10%

Updated: 

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.

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