The bosses of the UK’s five largest managed pub companies, who employ around 120,000 people collectively, have given their backing to efforts to reduce VAT in the hospitality industry to 5%. The move has also received support from the Federation of Small Businesses. M&C Report’s sister title Publican’s Morning Advertiser is calling for the VAT cut through its Thrive on Five campaign. Here is what the pub company chiefs had to say: Mike Tye, deputy chief executive, Spirit Pub Company “This is a key issue that the industry can, and should, unite around. In common with other major industry players, Spirit Pub Company believes a VAT cut in the hospitality sector by 2014 will have a hugely positive impact on the pub sector and the economy as a whole. “The industry should be lobbying with one voice for positive incentives for the pub sector, which will boost trade and stimulate job creation. If a VAT reduction was pushed through, conservative estimates put the job creation alone at 140,000 to 320,000 jobs. “Ireland has already cut VAT for the tourism industries, including pubs and hotels, from 13% to 9% to boost jobs and it’s not alone. Ireland is the 22nd country in the EU to have a lower VAT rate for the hotel sector and 14th for the hospitality sector overall. “We would urge the Government to follow suit and investigate the potential of reducing VAT across the sector. “This is a positive issue to campaign on that brings benefits, not only for the pub sector, but to our employees and the wider economy as a whole. It would benefit hospitality firms to lobby ministers on the positive effect a cut would have.” Rooney Anand, chief executive, Greene King “We would be supportive of moves by the pub industry to encourage the Government to cut VAT to 10% or below for the hospitality industry. “Early indications from other European countries suggest that a cut can generate significant investment and employment, which is something the Government would like to see. “In particular, a cut would very likely have a positive impact on jobs across the UK, not just in the south-east — and, with around half of our employees under the age of 25, it would potentially make real inroads into rising youth unemployment, setting up thousands of young people on a career path in the hospitality sector.” Ralph Findlay, chief executive, Marston’s “We have seen the difficulties caused by rising taxes — alcohol duty, VAT, employment — on the pub sector in recent years. Reducing tax on business and consumers is the single most helpful strategy that the Government can follow to support pubs and recognise the positive contribution pubs make to communities. “If the Government is serious about the ‘Big Society’, reducing tax (beer duty, VAT) would be the clearest evidence it is prepared to back that vision with meaningful investment. Is it realistic to expect the Government to consider such a bold move given its finances? “To get serious consideration by the Government we must demonstrate that increased employment and higher consumer expenditure will more than offset any loss of VAT to the Chancellor. “The industry has been making this case in respect of alcohol duty for years, and has not made any measurable progress to date — instead, taxes have continued to rise. This tells you the Government is more interested in short-term cashflow than longer-term consequences. “The economic case needs to be combined with a change of attitude. The fact that this is a difficult road has not prevented the pub industry from making a strong case for lower alcohol duty, and it should not put us off making the clearest of cases for lower VAT for the leisure sector. “The logic of the case needs to be accompanied by very hard evidence, compelling reasons as to why the leisure sector merits special consideration. The issue is not what we think, but what the Chancellor thinks. We need him to recognise the great contribution this sector makes to tax revenues, employment, culture and society.” Jeremy Blood, interim chief executive, Mitchells & Butlers “While the hospitality industry is both a substantial employer in the UK and sizeable contributor to the Exchequer, any proposal for reform of VAT must recognise the reality of the very tough fiscal environment in which the Government is currently operating. “Any case for reform, therefore, must be built on a rock-solid evidential base to demonstrate that not only will a VAT reduction benefit the sector, but more importantly would benefit the Exchequer by stimulating consumer demand, driving up overall tax take and increasing employment levels. “One thing we can be certain about is that other major business sectors will similarly be beating a well-worn path to the Chancellor’s door with a case for taxation reform to the benefit of their constituent companies. “As a sector we must make sure that any case we present for VAT reform is more robust, more compelling and proved to be more beneficial to the public finances than any other industry.” John Hutson, chief executive, JD Wetherspoon “Our industry is trying to compete with supermarkets, sandwich shops and coffee shops with one hand tied behind its back. It’s illogical that food and drink bought in supermarkets attracts no VAT when the same food, bought in a pub, or consumed on the premises if you’re a sandwich shop, costs 20% more. “The emotional response of politicians is to assume a cut in VAT is a cut in revenues. They are wrong. “The Publican’s Morning Advertiser campaign, Thrive on 5, is where it’s at — 5% VAT on food and drink sold in pubs, restaurants and hotels will help generate more revenue for the Government, as a result of more people eating out of the home, leading to more employment in the industry, generating, in turn, more employment and corporation tax revenues. “The jobs created are mostly for 16 to 25-year-olds, the age of the majority of people in our industry, and the sector of the workforce finding it the toughest to find jobs. “And this isn’t theory. It’s happening now across Europe, most recently in France where, 18 months after a reduction in VAT in pubs, restaurants and hotels, revenues generated for the Government from the industry have increased. “Legendary campaigner, Jacques Borel, doggedly campaigned for the cut in France. He’s been successful throughout Europe in persuading Governments to reduce VAT over the past 50 years. He spoke at the MA250 conference and, I believe, can be pivotal to our success in the UK. ”In addition, we must unify our industry representative bodies behind an across-the-board 5% cut and, vitally, the various chief executives of companies operating in our sector have to get off the fence and support the campaign. A VAT cut to 5% for our industry is not unrealistic. It’s good economics for the Government and it’s good business for us.”