The Government is being urged to reverse the increased 20% level of VAT for hotels and other hospitality businesses.

The call comes from the British Hospitality Association amid fears that the industry is operating under a disadvantage to its European rivals. 

The BHA believes 236,000 new jobs can be created given the right regulatory framework. The claim came following yesterday’s job summit at Downing Street hosted by Prime Minister David Cameron.

Those invited included major BHA members InterContinental Hotels Group and McDonald’s. Both are already producing a large number of entry-level jobs which will allow young people to develop their career in hospitality.
BHA chief executive Ufi Ibrahim warned that, with the rate of VAT now at 20%, the British hospitality industry is operating at an even greater disadvantage to its European competitors than before, most of which have reduced rates of VAT for hospitality services.

“We are very anxious to collaborate with government on a joint study on the economic impact of the rate of VAT on hotel accommodation, visitor attractions and restaurant meals,” she said. 

“We believe that the evidence gathered from this study will show that lowering the rate of VAT will stimulate greater demand from both the home and overseas markets, boost growth in the industry generally and help generate those 236,000 new jobs.”

Ibrahim added that reducing the regulations that affect businesses and encouraging banks to take a more understanding approach to lending were critical to the creation of new jobs.

“In our report which we published in October – Creating Jobs in Britain – A Hospitality Economy Proposition – we said that hospitality could create 236,000 jobs by 2015 providing the right supportive framework was in place,” she said.

“It’s critically important that government realises that this cannot be achieved alone. We need a positive partnership with government that recognises that policy and regulations can make or break this objective. Past governments have just not recognised the industry’s job-creating potential.”

Ibrahim added: “Needless regulations are costly and time-consuming to implement while lack of funding holds back growth. The BHA has called for a cross-cabinet committee for hospitality and tourism to co-ordinate policy across Whitehall.

“We’ve got to get government to provide the right framework for industry to be able to create the jobs and skills that the country so urgently needs.”