French hospitality veteran and lobbyist Jacques Borel has turned his attention to a VAT cut in the UK, having helped secure reductions in many other countries. He tells Neil Gerrard why the time is right for a cut here
Despite his 84 years, it is clear that Jacques Borel likes nothing more than a good scrap. For evidence of that fighting spirit, look no further than the fact that the Frenchman joined the resistance during the Second World War, aged just 13. He was there for the liberation of Paris in 1945, still aged only 17.
He is perhaps best-known in this country as a campaigner and lobbyist who claims to have helped secure tax reductions in 58 countries, most notably in his native France, where restaurants and cafés were granted a VAT reduction from 19.6% to 5.5% in 2009.
He is also a giant of the European hospitality scene. His achievements are too many to list, but highlights include the creation in 1960 of the Compagnie des Restaurants Jacques Borel (which later became Accor) and introducing fast food to an unsuspecting French nation by launching the Wimpy brand there in 1961.
Now he spends several days a week over here, fighting for a VAT cut in the UK and staying in the Waterloo Place Sofitel (Borel's firm once owned the Sofitel brand) while he does so.
the vat race
Borel's involvement with VAT first started in the early 1960s when he campaigned for hospitality in France to enter the VAT system (at the time it was subject to a US-style sales tax which did not allow him or other entrepreneurs to reclaim VAT on their investments). He got his wish in 1963 and celebrated by campaigning for a reduction in that VAT from 15% to 6%. He partially got that too, when the rate was reduced for hotels and staff canteens in 1967.
It took Borel until 2009 to achieve the reduction he craved for restaurants and cafés, which is why he believes that as the UK campaigns for a cut, it must get a cut for all hospitality businesses in one go:
"The finance minister Monsieur Debré told me: ‘You can have your decrease of VAT but only for hotels and for canteens. For restaurants we don't have the money but I guarantee you that within five years you will obtain the decrease.' It took me 42 years. You must fight for everything at the same time," he says.
The time is right for the UK to obtain similar decreases, he thinks, despite strong indications from Government that it does not plan to change course as it pares down public expenditure. In fact, he believes a reduction can be achieved in April 2014, having been flagged up in the 2013 Pre-Budget Report.
Why is he so confident on the matter? "Because the Government needs to have results before the election of spring 2015," he explains. "A politician is an elected person. And they are not going to be judged by their electorate on the reduction of costs. They are going to be judged on unemployment."
the bigger picture
He believes that a reduction of VAT from 20% to 5% in the UK would create 140,000-320,000 jobs, based on research he conducted in 2010 (see page 26 for more details) and expects that figure to be even higher once his findings are updated in his next report, scheduled for 2012, which takes account of the effect cuts have had in Germany, Belgium, Sweden and France. That makes a compelling case for the UK to act, even if there is an initial cost to the Treasury of setting the reduction up.
Before the cut can be achieved though, serious persistence is required. Borel, who acts as a paid lobbyist on behalf of several major firms, says that in his experience it takes 1,000 visits a year to a host of civil servants, government aides and MPs to achieve anything - equating to several visits per person.
"For three or four visits, they don't trust you," he explains. "They believe you are a crook. They believe you are trying to obtain something you should not obtain. So in your first few visits you are not selling a reduction in VAT; you are selling confidence."
Borel believes a VAT rate cut is essential for the UK economy, and that hospitality is ideally placed to help kickstart it because jobs can be created relatively quickly and at relatively low cost.
"In low price restaurants, you can train an employee within three weeks. You cannot afford in Britain or in France to have 25% of young people unemployed," he says.
"In their first week these people will have pay. Low pay, OK, but they will be proud of themselves. The current situation cannot continue, otherwise it will end in disaster."
jacques Borel career and campaigns
1957 Created Auberge Express, a self-service restaurant
1959 Created Générale de Restauration (now Avenance)
1960 Assisted French finance ministry in applying VAT to hotels and catering in France
1960 Created the Compagnie des Restaurants Jacques Borel (now Accor)
1961 Set up Wimpy in France
1967 Helped reduce VAT from 15% to 6% for one-, two- and three-star hotels and institutional food services in France
1969 Opened France's first motorway restaurant
1972 Flotation of Jacques Borel shares on Paris stock market
1975 Bought Sofitel chain of hotels
May 2009 Instrumental in bringing 27 ministers of finance to vote in Brussels for the possibility for every European member state to decrease VAT for restaurant services
July 2009 France decreases VAT from 19.6% to 5.5% for restaurant services
Nov 2009 Belgian Parliament votes for decrease of VAT for restaurants
December 2009 German Parliament votes for decrease of VAT for hotel accommodation; Finnish Parliament votes for decrease of VAT for restaurants