The text message landed on my phone at 9.47pm. It was from a senior Treasury official.
Four words: ‘They’re tipping here now.’ They are the Americans. And the message was clear.
The US tipping culture is crossing the Atlantic. And it is no longer confined to upscale London restaurants. Over the past six months, I have seen payment terminals in coffee shops, taxis, and even a barber in Birmingham.
All asking for a tip. The default option is now 10%, 15% or 20%. The Treasury is watching.
With alarm. A source in the fiscal team told me that if this becomes widespread, it could add 0.3% to service sector inflation.
That is a lot. It may not sound much. But the Bank of England is wrestling with sticky inflation.
Every basis point counts. The Treasury is not planning legislation. Yet.
They are hoping peer pressure will stop it. But that is naive. The payment terminal companies are making money.
The businesses are passing on the social awkwardness. The consumer pays. The political calculation is delicate.
Sir Keir Starmer cannot be seen as anti-worker. But the Treasury knows that tipping is a de facto wage subsidy. It allows employers to pay less.
And that hits the low-paid hardest. One Labour backbencher told me: ‘We won the election promising to make work pay. Not make tipping mandatory.
’ The real fear is a two-tier service economy. In London, you tip. In Sunderland, you do not.
That is a geographic and class divide. And it is exactly the kind of thing that fuels populism. I checked the polling.
There is no data yet. But focus groups are starting to notice. A voter in Swindon said: ‘I already pay £4 for a flat white.
Now I have to tip for the privilege of getting it?’ The backlash has not started. But contactless tipping is the new battleground.
The Treasury is right to be worried. This is not just about inflation. It is about the social contract.
And the political fallout has only just begun.
