Highland hospitality businesses are at the forefront of a growing campaign to reduce VAT from 20 per cent to 10 per cent, with a local MP warning that rising taxes are putting the future of hotels, restaurants, pubs and cafés under pressure.

Graham Leadbitter, MP for Moray West, Nairn and Strathspey, challenged the UK Government during a Westminster debate on Thursday 12 November, urging Treasury ministers to listen to businesses struggling with increasing costs.

His constituency recorded 616 signatures on a parliamentary petition calling for hospitality VAT to be reduced to 10 per cent, the highest number of any UK constituency.

The petition attracted more than 16,000 signatures nationally before closing in September, reflecting concerns about the financial pressures facing the industry.

Leadbitter has been visiting hospitality businesses throughout his constituency, hearing directly from owners about the difficulties they face.

Among those supporting his campaign are Scribbles Restaurant in Elgin, Harbour Lights Café & Restaurant in Lossiemouth, The Aberlour Hotel, The Apiary Café in Dalwhinnie and Antlers Café in Newtonmore.

The businesses operate in communities where hospitality contributes to employment, tourism and the everyday life of local residents.

Leadbitter argues that the combination of VAT, rising operating costs and increased employer National Insurance contributions is making it increasingly difficult for businesses to remain profitable.

He believes a reduction to 10 per cent would provide immediate financial relief while allowing operators to invest in their premises, retain employees and create jobs.

Graham Leadbitter MP said:

“The UK government must finally listen to the hundreds of thousands of hospitality businesses who are crying out for support by slashing their VAT.

“Pubs, cafes, restaurants and hotels are often the beating heart of our communities and yet have been cast aside by a Westminster tax regime that fails to recognise their importance and has sought to treat them like a cash cow.

“But when these businesses are paying 82p in business taxes for every £1 of profit they take in, it’s impossible for them to grow, recruit staff, and for some even stay open.

“Local businesses in particular, who rely heavily on seasonal trade, are suffering as a result of the ridiculous rate of VAT and employer’s national insurance burdens they’re forced to pay.

“I’ve met with a number of popular local businesses recently including Scribbles Restaurant in Elgin, Harbour Lights Café & Restaurant in Lossiemouth, The Aberlour Hotel, The Apiary Café in Dalwhinnie, and Antlers Café in Newtonmore, all of which we’re lucky to have, but who are struggling.

“If popularity and the support of local people was all it took for them to thrive they’d have no issues, instead they need to contend with a Westminster government that has so far refused to pay them any mind.

“That urgently needs to change, and if the Prime Minister is serious about supporting businesses and growth, he’ll listen and act.”

The campaign highlights differences between the UK’s standard hospitality VAT rate and reduced rates applied to some hospitality services elsewhere in Europe.

France and Italy apply reduced rates of 10 per cent to many hospitality services, while Germany and Ireland also operate lower rates for qualifying supplies.

However, the UK Government argues that reducing hospitality VAT would come at a substantial cost to public finances.

In its formal response to the parliamentary petition, the Treasury estimated that cutting VAT to 10 per cent on accommodation and food and beverage services would cost approximately £11 billion annually.

Ministers maintain that tax reductions must be considered alongside wider spending commitments and the Government’s existing measures to support businesses.

The disagreement centres on whether the immediate loss of VAT revenue would be offset over time by stronger businesses, greater investment and additional employment.

For Highland communities, where many hospitality businesses depend heavily on seasonal visitors, that question has particular importance.

Leadbitter maintains that the Treasury must recognise those pressures and reconsider the current VAT arrangements before more businesses struggle to survive.