Restaurateurs have dismissed the chancellor's tax cut on children's meals as a political 'soundbite' that will make little difference to families or businesses. Rachel Reeves announced a temporary reduction in VAT on children's menu items in restaurants from 20% to 5% between June and September, aiming to help families amid the cost of living crisis and boost the hospitality sector.
The measure is part of a broader 'Great British summer savings' campaign that also includes free bus journeys for under-16s in England during August and cuts to import taxes on certain basic foods.
Restaurateurs Question Savings Passed to Consumers
Many restaurateurs have expressed skepticism about how much of the VAT savings will actually benefit consumers, noting that children's meals are often already sold at a loss. Will Murray, owner of London restaurant Fallow, which offers a children's menu with items like pizza, cheeseburgers, and grilled fish priced between £5 and £10, stated: 'It's such a small soundbite that won't make any difference. Most kids' food is already discounted at the cost of the restaurant anyway: the VAT cut wouldn't even make up that shortfall.'
Murray suggested that the government could take more effective measures to reduce costs for families and restaurants, such as addressing childcare costs. '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,' he added.
Wetherspoons Plans to Pass on Savings
However, Tim Martin, founder and chair of the Wetherspoons pub chain, intends to reduce prices on the kids' menu throughout the summer. The chain serves children's meals including chicken nuggets and sausage and mash, priced 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.
Calls for Broader VAT Reduction
The hospitality sector has long advocated for VAT rates on food and drink to be cut in line with other European countries. The UK's current VAT rate for restaurants is 20%, one of the highest in Europe, compared to the European average of about 12%. In Italy, for example, the rate is 10% for food sold in restaurants.
Martin commented: '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.'
Daniel Crump, owner of the Greyhound and the Old Town Bistro in Beaconsfield, described the new measure as 'symbolic.' He said: 'It would be good for the government to go further to bring the UK in line with rates in Europe. 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.'
Industry Response
UKHospitality, the industry's lobbying group, indicated that while restaurants are likely to cut costs on children's menus following government direction, it remains 'up to individual operators.' Kate Nicholls, the group's chair, urged the government to view this as a 'downpayment on a wider shift to a lower VAT rate for the entire hospitality sector, to bring us in line with Europe.' She noted: '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.'
