Lib Dems call for cut to hospitality VAT to make ‘small joys’ more affordable

The Liberal Democrats are calling for a 5% cut to VAT for hospitality businesses in the upcoming budget to make going out to the pub and restaurants more affordable.

The party is also proposing the main renewable levy be removed from energy bills under the £12 billion support package it is putting forward ahead of the Chancellor’s statement on November 26.

Deputy leader Daisy Cooper said the plan aims to return “small joys” like a restaurant meal or family day out to those for whom they have become an “unaffordable luxury” with measures that the party says will save the average family around £270 over the next 18 months.

She 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.

“In years gone by people knew they could look forward to fish and chips with their family on a Friday night or a weekend trip to the cinema.

“Now those small joys – the ones that make life worth living – are becoming an unaffordable luxury for too many.”

The plan would be an “emergency” package to come into immediate effect in November this year and expire at the end of the next financial year in April 2027.

It would cut VAT from 20% to 15% for hospitality, accommodation, and attractions in a bid to boost high streets and slash prices for families.

They estimate that around half of the VAT cut would be passed on to consumers – giving each household around £135 during that time period.

And it would remove the “renewables obligation” levy from people’s bills, which the party said would slash the typical energy bill by £90 annually.

Cuts to VAT would cost some £7.5 billion, while funding the levy would be around £4.5 billion, the party estimates.

Both would be funded by a temporary windfall tax on big banks.

The Lib Dems said this could raise around £30 billion between now and 2030, pointing to research from the Institute for Public Policy Research (IPPR).

The influential think tank said earlier this year that hiking a levy on profits from major firms such as Barclays, Lloyds, HSBC and NatWest could raise up to £8 billion a year for public services.

Ms Cooper said: “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.”

Chancellor Rachel Reeves is expected to ditch Labour’s pledge not to hike income tax in her Budget and has signalled she could scrap the two-child benefit cap.

Published: 12/11/2025 by Radio NewsHub