Bob Cotton Chief Executive, British Hospitality Association

With the general election only a
few months away, questions are inevitably being raised about the measures that a new government could introduce that would improve the prospects of the hospitality industry. 

One of the most persistent is a reduction in VAT on either hotel accommodation or restaurant meals or (preferably in the mind of some) both. We need to approach this cautiously.

What would be the objective in the UK? At present – and for the foreseeable future – the low value of sterling against the Euro and dollar is a much greater factor in lowering prices than any realistic cut in VAT. If the industry is to argue for a cut in VAT it has to answer a number of questions: what are the overall benefits to the industry, how much of the cut would be passed onto the consumer, how much would demand increase, what is the cost to the Treasury, and what is the likely impact on jobs? So far, we have no precise answers.
  
One thing is certain: investment remains critical – which is why the recent government decision to cut back on capital allowances is so mystifying. Any taxation system should encourage all businesses to raise their game and should encourage the best businesses to be even better. This is certainly what the hospitality industry needs.

www.bha.org.uk 020 7404 7744