Reeves's tax cut on children's meals a 'soundbite', say restaurateurs

The Chancellor's Tax Cut

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.

Restaurateurs' Skepticism

Restaurateurs have questioned the impact of the tax cut, with Will Murray, the owner of London restaurant Fallow, saying it's a 'small soundbite that won't make any difference.' Murray noted that most kids' food is already discounted at the cost of the restaurant anyway, and the VAT cut wouldn’t even make up that shortfall.

The Data Analysis

The UK's VAT rate for restaurants is 20%, one of the highest in Europe, with the European average being around 12%. In Italy, for example, VAT on food sold in restaurants is set at 10%. Some restaurateurs, like Tim Martin, the founder and chair of the Wetherspoons pub chain, plan to cut the cost of kids' meals during the summer, while others see the measure as merely 'symbolic.'

The Impact Analysis

The hospitality sector has long called for VAT rates on food and drink to be cut in line with other European countries. 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.'

The Prediction

Kate Nicholls, the chair of UKHospitality, urged the government to be bold and cut VAT for the entire hospitality sector, stating that VAT is the single biggest lever it can pull to lower prices, tackle inflation, drive demand, boost spending, generate growth, and create new jobs.