Lib Dems call for a Budget to reduce the cost of living by an emergency hospitality VAT cut and reductions in household energy bills

• Lib Dems urge the Chancellor to slash VAT by 5% for restaurants, pubs, entertainment and accommodation venues as the party says too many people have been “priced out” of even “small joys” like a restaurant meal or a family day out.
• The party is also calling for the main levy on energy bills to be removed from people’s energy bills and paid for as part of the planned windfall tax on big banks. This would slash the typical bill by more than £90 a year, taking it to its second lowest level since the energy crisis began in 2022.
• The emergency £12bn support package would boost high street businesses and bring down energy bills, putting £270 back in people's pockets to spend on “occasional extras”

The Liberal Democrat proposals to immediately cut VAT from 20% to 15% for hospitality, accommodation, and attractions, would boost struggling high streets and slash prices for hard-pressed families.

This would form part of a two-pronged “cost of living and cost of doing business rescue plan,” with the party also calling on the Chancellor to reduce household energy bills by transferring a current  levy away from being paid by households. This combined support package, in place until April 2027, would save a typical family around £270 over the next eighteen months.

The proposals would be funded by a new windfall tax on big banks, originally proposed by the IPPR think tank, which could raise around £30bn in total between now and 2030. Less than half of this revenue would be needed to cover the cost of the VAT cut and that of replacing the current levy, which would cost around £7.5bn and £4.5bn respectively over the next eighteen months.

The Liberal Democrat plans would also boost footfall in Britain’s pubs, restaurants and entertainment venues, tackling the double whammy of higher taxes and lower spending currently hammering UK food and drink venues. Recent research by More in Common has shown that nearly two in three Brits (59%) think meals out at restaurants are unaffordable for most people. Over half (51%) said nights out at the pub are out of financial reach for the average person, while 45% said the same about a trip to the cinema.

Daisy Cooper, Liberal Democrat Treasury Spokesperson and Deputy Leader, said:

“People are working with their nose to the grindstone all month and have next to nothing left over after sky-high bills and spiralling food prices.

“High street businesses have been hammered by the jobs tax and higher business rates bills, so it’s no wonder that so many treasured pubs, restaurants and cafes are boarding up their shopfronts, taking with them vital jobs and local community spaces.

“Our plans to cut VAT on hospitality and energy bills for households would put £270 back into people’s pockets, making it more affordable to heat their home and allowing them to spend more on occasional extras.  This would help to drive economic growth, restore our high streets and give the country a much-needed morale boost.”