Dear Sirs,

Yet again I see The Caterer trying to set the political agenda for Hospitality, without giving it much thought.

So as I write this reply to Dermot King,  The Cut Tourism VAT campaign(CTV) & The Caterer, just ask yourselves who is using facts & who is using guesswork & assumptions?

The Campaign

The Cut Tourism VAT campaign has been running for years & has achieved what precisely?

The answer is not an awful lot, yes there the token gestures of approximately 150 MPs who say they’ll support it, but the stark reality is when they’re asked to sign an Early Day Motion they are nowhere to been seen.

The current offering, EDM 584 has 25 signatories out of a possible 650 MPs, or to quantify that in real terms, enough MPs to represent 3.5% of the population of the UK.

All the claims made by Cut Tourism VAT are assumptive – That’s a fact.

You can’t reduce something by 75% and have a nett result which is more, again that’s fact. So I’ll explain:

If Mr King & Co get their way to reduce VAT for Hospitality to 5% it will cost £10bn, not my estimate, but that of HMRC. CTV would have you believe that there would be a minor deficit in year one & from then on in HMRC will be quids in – Wrong on so many levels.

Firstly, for the industry to grow faster than it currently already does (ie a growth rate faster than the National economy as a whole), to fill the void of less VAT being paid we would need to staff it.

FACT: 1in4 Job vacancies for skilled workers in the UK is a chef position. Forget front of house staff, ancillary staff etc, just chefs.

Maybe Mr King should visit some of the grass roots of Bourne Leisure and ask if his company is fully staffed, just a thought.

Second, CTV assume that it will make the UK more competitive in the tourism marketplace & often cite France’s experience of reducing VAT to stimulate their economy.

FACT: France did indeed reduce TVA (VAT in France) for the Hospitality sector to help stimulate its economy. But less than 2 years later had to increase it as, broadly speaking, prices hadn’t changed & the sector was profiteering from the move.

Third, CTV claim it will create 121,000 new jobs. The assumption is that these extra staff will pay extra taxes etc to help fund the estimated £4.6bn extra revenue to HMRC

FACT: (See previous note on the chef shortage) There are less people entering the Hospitality sector now than there has ever been. College courses & attendences are dwindling, and that coupled with a reputation of being a hard industry to work in (long hours & poor pay) & bad press regarding tips over the past 3yrs doesn’t make it an appealing career. 19,000 chefs left the industry last year according to a recent survey, so yet again it begs the question:

We can’t fill current vacancies – why would we want to create more?

 

Fourth, Only Owners & Operators will largely benefit. With the assumption that businesses will be doing better, you think that the staff would be better paid – Wrong.

In a survey that the BHA conducted with its members 48% said they wouldn’t be giving their staff a pay rise should CTV happen. Why? Lots of reasons, but employer’s contributions on top of staff salaries are around 14% – Staff salary goes up, so does the employer’s contributions.

Fifth, Mr King claims:

“..our coastal communities, which have witnessed declining visitor numbers and stagnating economic growth due, in large part, to a lack of price competitiveness with rival destinations on the continent.

This is again wrong. According to Visit Britain inward bound tourism is growing remarkably well, they say:

Our forecast for 2018 is for 41.7 million visits, an increase of 4.4% on 2017; and £26.9 billion in visitor spending, an increase of 6.8% on 2017.

AND:

Our revised forecast for visits for the full year 2017 is 39.9 million visits, an increase of 6.2% on 2016. Our forecast for spending by visitors in 2017 is £25.1 billion, an 11.6% increase on 2016.

So maybe our coastal communities need to look at their offering to see why they are suffering from a decline in tourism.

Incidentally, France’s Tourism contribution to GDP has dropped every year from 2013, & Germany’s has grown at a slower rate than the UK

Concluding, Mr King says:

We urge all hospitality businesses to contact their local MP to detail the benefits of a reduction.

I actually did just what he suggests, & I contacted my MP, Dr Sarah Wollaston.

She supports CTV & I asked her why? And the simple answer was “because that’s what some constituents want” – But she didn’t tell them about the £10bn price tag to achieve it.

The reality of why so many MPs etc are claiming to support CTV is a simple one, the soundbites that CTV kick out relentlessly make an appealing sound. Let’s face it, who wouldn’t want to jump on a bandwagon which promises more jobs & more money for the Govt. to spend on things like the NHS?

There are no doubts that some areas of the Hospitality sector need help, the recent business rate debacle crucified some SME. But CTV isn’t the way forward & the taxpayer shouldn’t be funding a sector which has a healthy growth trajectory.

Maybe The Caterer should be doing some research before trying to set the agenda – Report the news, don’t be its subject.

Sources:

  • Statista
  • Visit Britain
  • Cut Tourism VAT
  • The Caterer
  • Dr Sarah Wollaston MP
  • HMRC
  • BHA