The American practice of discretionary tipping, long resisted in Britain, is gaining ground in the hospitality sector, raising concerns at the Treasury about its potential to fuel inflation. Data from the Office for National Statistics shows that the average gratuity added to restaurant bills in London has risen to 15.5 per cent, up from 12.8 per cent two years ago. Chain restaurants and coffee shops have begun adding optional service charges of 10 to 12.5 per cent at the point of sale, with some establishments now suggesting tips of 20 per cent for larger parties.
This shift comes as Chancellor Jeremy Hunt prepares to meet with industry leaders next week to discuss measures to prevent the practice from becoming embedded. A Treasury spokesperson said: “We are monitoring the impact of discretionary charges on household spending and the broader economy. The government is committed to ensuring that prices remain transparent and that consumers are not subjected to hidden costs.”
Economists warn that the spread of tipping could add 0.3 to 0.5 percentage points to services inflation, which currently stands at 5.1 per cent. Andrew Goodwin, chief UK economist at Oxford Economics, said: “Tipping effectively acts as a stealth price increase. If it becomes widespread, it could complicate the Bank of England’s task of bringing inflation back to target.”
The phenomenon is most pronounced in central London, where 60 per cent of restaurants now include a service charge on the bill, compared with 35 per cent in 2019. The trend is also visible in takeaways and delivery apps, where prompts for tips have become routine. The British Hospitality Association reports that 40 per cent of its members have introduced or increased service charges in the past year.
Cultural resistance remains strong outside the capital. In Scotland and northern England, only 15 per cent of establishments add automatic gratuities, and the average tip is 8 per cent. However, the Treasury fears that national chains will standardise the practice, eroding the British tradition of voluntary, post-service tipping.
The spread of tipping has revived calls for the government to legislate on service charges. The Labour Party has proposed requiring that all tips go directly to staff, with no deductions by employers. LibDem Treasury spokesperson Sarah Olney said: “The government must act now to prevent the Americanisation of our service industry. Customers should not be expected to subsidise wages.”
The Treasury is expected to publish a consultation paper on tipping reform in the autumn. Options under consideration include a ban on compulsory service charges and a requirement that optional charges be clearly displayed before a meal is ordered. Meanwhile, the Bank of England has indicated it will factor tipping trends into its inflation forecasts.
For now, British consumers are left to navigate a confusing landscape. A recent survey by Which? found that 45 per cent of diners feel pressured to tip even when service is poor. The consumer group’s director, Sue Davies, said: “The tipping culture is creeping in without clear rules. Consumers need protection from opaque charges that inflate the cost of a meal.”
The outcome of this debate will have implications beyond the restaurant table. If tipping becomes entrenched, it could reshape wage structures in hospitality and alter the social contract between customers and businesses. The Treasury’s intervention suggests that ministers are alert to the risks, but whether they will act decisively remains to be seen.
