286. Dan Neidle: Pubs don’t deserve a VAT cut
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Why is cutting VAT for pubs and restaurants considered a bad idea?
10 billion pounds.
That is an awful lot of money.
Sorry, 10 billion pounds just for restaurants and hospitality.
Good God. VAT is a really big tax. Hospitality is a pretty large, large part of the economy.
You know, people like Andy Burnham talking about what he would do if he came into power, cutting business rates for pubs. And those in the hospitality sector saying that they want a cut on VAT for pubs and restaurants to 10%.
It's a terrible idea. And out of all the things we could do with £10 billion, which is what it would cost, this is one of the worst.
So talk us through why the likes of Tom Kerridge are wrong that cutting VAT would be the right thing to do.
We're delighted to say that this year the rest is money is powered by Octopus Energy. So we're joined by its founder and CEO, Greg Jackson. Hiya, Greg. You travelled with Prime Minister Keir Starmer on his latest trip to China.
What are the implications of a flat VAT rate on all goods and services?
Why?
There's a lot of people who quite rightly think we're naive if we don't understand the threats we face from China. But it's equally naive not to understand that Chinese technologies... can now transform so many industries. And if we don't understand what they're doing and find ways to work with them, we're going to get left behind. Look, the reality is it used to be about China stealing our secrets, but now their own investment in technologies means that solar panels are 400 times cheaper than they were 40 years ago. Batteries for electric cars are 10 times cheaper than they were 12 years ago. If we can find ways to work with this, we can bring costs down for British people, and that's got to be a good thing.
Greg, thank you very much. Now on with today's episode.
Hello and welcome to The Rest Is Money with me, Robert Paston.
And me, Steph McGovern. And back with us is Dan Needle from Tax Policy Associates. Now, Dan, obviously a friend of the show. We love getting him on because he knows absolutely everything there is to know when it comes to tax.
How do business rates impact landlords versus small businesses?
And it is really in the news at the minute. We've got chefs calling for cutting VAT for pubs and restaurants to 10%. And we've got Andy Burnham out talking about tax, haven't we, Robert, too?
We have. Vandy Burnham in Makerfield trying to be their MP, also trying to be our next prime minister. And one of the policies that he hopes will make him more popular is he says he wants to help pubs by cutting the council tax they pay. So does that make any sense at all? How should we help struggling smaller businesses? So here's our conversation with a guy who knows everything about that kind of thing, Dan Needle.
Dan, good to have you back. We want to jump straight into talking about the kind of the noise around VAT at the moment and the pressure that's putting on businesses, along with, you know, obviously there's the national insurance contributions going up for employers. There's the In fact, minimum wage has gone up. There's lots of talk around business rates as well. So lots of businesses are really feeling the pressure and we're hearing chefs and those in the hospitality sector saying that they want a cut for VAT on VAT for pubs and restaurants to 10%.
What evidence exists against the effectiveness of VAT cuts in benefiting consumers?
So first of all, what do you think about this? Is that something that you think, Dan, would make a difference, this rate cut to the hospitality sector? And, you know, would it be fair, I guess?
It's a terrible idea. It's a really bad idea. And out of all the things we could do with £10 billion, which is what it would cost, this is one of the worst.
So talk us through why the likes of Tom Kerridge are wrong that cutting VAT would be the right thing to do.
There are so many reasons this is a bad idea. It's quite hard for me to get them out coherently, but I have a go. The first thing is the cost. £10 billion. That is an awful lot of money.
Hang on. Sorry, £10 billion just for restaurants and hospitality? That's the cost of that?
Why is maintaining inefficiencies in businesses a concern?
Yes, £10 billion. That's a lot of money. And if you were the Chancellor and a magic pixie appeared and gave you £10 billion, would you use it for this? I think you probably wouldn't.
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Chapters
8 chapters
1
Why is cutting VAT for pubs and restaurants considered a bad idea?
0:01–0:58
2
What are the implications of a flat VAT rate on all goods and services?
0:58–2:08
3
How do business rates impact landlords versus small businesses?
2:08–3:22
4
What evidence exists against the effectiveness of VAT cuts in benefiting consumers?
3:22–4:07
5
Why is maintaining inefficiencies in businesses a concern?
4:07–5:00
6
How do VAT and business rates affect the hospitality sector specifically?
5:00–6:25
7
What alternatives exist to support struggling small businesses?
6:25–7:51
8
How can we ensure a level playing field for all businesses?
7:51–29:49
Speakers
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