DORSET restaurateurs have described the latest VAT rate increase for hospitality as “the perfect storm” and fear more local businesses will “not survive”.

The government will increase the VAT rate for the hospitality and tourism industry from 12.5 to 20 per cent on April 1.

According to trade body UK Hospitality, the increase will jeopardise jobs and restrict the sector’s efforts to stifle price rises for consumers and lead the UK’s post-pandemic recovery.

The Daily Echo spoke with Dorset restauranteurs for their thoughts on how the move would impact local business.

Andy Lennox, founder of hospitality group The Wonky Table and former Koh Thai CEO, said: “As an industry we are facing massive pressures. It was hoped the VAT would stay at 12.5 per cent to ease the cost pressures ahead of summer and to continue our bounce back – that hasn’t happened.

“This means a lot of operators are in a real position now where they essentially don’t have the margins to swallow that and will get pushed into further losses. We’ve all been campaigning to keep VAT at 12.5 and I feel this is absolutely a missed opportunity by the government to continue this industry’s growth.

"Some will argue we have unrestricted trade, but we’re also in that position where there is all that accumulated debt.

“Lower VAT allows those trading to trade better, reinvest and keep prices keen for customers, so this has really come at the wrong time. That along with debt repayments kicking in from surviving the pandemic – it’s a perfect storm and some tough decisions are going to have to be made.”

Bournemouth Echo: Lakeside Fish and Chips in Lifeboat Quay, PooleLakeside Fish and Chips in Lifeboat Quay, Poole

Jason Leese, owner of Lakeside fish and chip restaurant in Poole, says the VAT rise will exacerbate other costs – and said his restaurant’s electricity bills have risen from £20,000 to £60,000 a year.

He said: “It’s another blow because it means we can’t invest in our businesses and in our staff. Most people are still reeling from the pandemic and I think we’re going to see an awful lot that will not survive.

“I would say just support your local fish and chip shops and other businesses otherwise they’ll disappear. A lot already are.”

Andy added: “We are looking forward to a good summer, but it’s just a shame there’s not going to be that relief going forward. At end of day the government need to raise money and recoup, but is that done through growth and better consumer spend, or taxation?”

Andy said he hoped for a “proper tax reform” ahead of the next autumn budget and that this would “form the basis of discussions going forward” for the local hospitality industry.