Reeves’s tax cut on children’s meals a political ‘soundbite’, say restaurateurs

Cutting tax on children’s meals is a political “soundbite” that will make little difference to families or businesses, restaurateurs have said.This week, Rachel Reeves, the chancellor, announced a temporary reduction in VAT on the children’s menu in restaurants from 20% to 5% between June and September, in order to help families with the cost of living crisis and offer a boost to the hospitality sector.It is part of a package including free bus journeys for under-16s in England in August and cuts to import taxes on some basic foods under a “Great British summer savings” campaign.But there are questions over how much of the savings will be passed on to consumers, with many restaurateurs claiming children’s food is often already sold at a loss.Will Murray, the owner of London restaurant Fallow, serves up a children’s menu featuring pizza, cheeseburgers and grilled fish from between £5 and £10. “It’s such a small soundbite that won’t make any difference,” he said. “Most kids’ food is already discounted at the cost of the restaurant anyway: the VAT cut wouldn’t even make up that shortfall.”Murray said there were many other measures the government could take to reduce costs for families and restaurants. “Childcare costs is the main thing they could help with – and 5% on food doesn’t help families or restaurants in any meaningful way at all.”But Tim Martin, the founder and chair of the Wetherspoons pub chain, does now plan to cut the cost of the kids’ menu throughout summer. The chain serves children’s food including chicken nuggets and sausage and mash from £4.99 to £5.75.“We will reduce prices for children’s meals during this time and it will be appreciated by parents and families,” he said.The hospitality sector has long called for VAT rates on food and drink to be cut in line with other European countries. VAT, a consumption tax added to most goods and services, is at 20% for restaurants in the UK – one of the highest rates in Europe. The European average for restaurants is about 12%. In Italy, for example, this is set at 10% for food sold in restaurants.Martin said: “We would like the government to consider VAT equality with supermarkets, which will mean a permanent VAT reduction – a point that we have made many times, of course.”Restaurateur Daniel Crump, who owns the Greyhound and the Old Town Bistro in Beaconsfield, serves children’s meals for between £5 and £10. He said the new measure on children’s food was merely “symbolic”.“It would be good for the government to go further to bring the UK in line with rates in Europe,” he said.“Restaurants are continuing to deal with rising food, energy and staffing costs, and many across hospitality have been calling for a broader VAT reduction that would deliver more meaningful, long-term support across the sector.”UKHospitality, the lobbying group for the industry, said it was likely that restaurants would cut costs on the menu for children after direction from government but that it was “up to individual operators”.Kate Nicholls, the group’s chair, said: “This should now be viewed by government as a downpayment on a wider shift to a lower VAT rate for the entire hospitality sector, to bring us in line with Europe. Our biggest competitors benefit from VAT rates that average about 10%, and can be as low as 7%, and the UK is a clear outlier.“As the government has recognised today, VAT is the single biggest lever it can pull to lower prices, tackle inflation, drive demand, boost spending, generate growth and create new jobs. I would urge it to be bold and cut VAT for the entire hospitality sector.”