Debate contribution: VAT for Hospitality

Debate contribution by Mr Eóin Tennyson on 13 May 2024.

MLA

Mr Eóin Tennyson

Party at the time

Alliance Party

Date

13 May 2024

Type

Debate contribution

Business

Opposition Business

Heading

VAT for Hospitality

Assembly identifier

Official Report component 4489420

Read the official Assembly record

Text

The hospitality sector is a vital part of our economy. Hospitality UK estimates that our local hospitality sector employs 74,000 people and contributes in the region of £1·9 billion to our local economy, yet those businesses are at the thin edge of an economic wedge that is not of their making. Having weathered the COVID-19 pandemic, they now face labour shortages as a result of Brexit, and they are contending with the double-edged cost-of-living and cost-of-doing-business crisis, with customers cutting back on discretionary spend whilst high energy costs simultaneously eat away at their bottom line. The pandemic, however, proved not only the resilience and agility of our pubs, restaurants and accommodation businesses but the ability of government to act quickly in the face of crisis through temporary cuts to VAT and the roll-out of Eat Out to Help Out. Internationally, it is important to note that VAT on accommodation is lower in countries such as Austria and Belgium than it is in the UK, and, for restaurants, it is lower in places like Croatia and Italy. Therefore, there is an argument that, in many instances, the UK is taxing those sectors more than is the case in comparable European countries. As a member of the Finance Committee, I am acutely aware of the constraints that are on budgets right across the public sector. I am, however, in favour of additional support, because I recognise that the cost to the public purse of losing otherwise sustainable and viable businesses will far outweigh the cost of upfront intervention. It is important, however, to note that there is a live debate about what that support looks like and what the best approach is. I note that the motion calls for "the devolution of VAT" powers to the Executive in order to achieve its aim. As someone who is in favour of greater fiscal devolution and fiscal autonomy for this place, I have no principled objection to that aspiration. Practically, however, we may need to be cognisant of a number of factors. The Fiscal Commission highlighted the potential complexity of the devolution of VAT, meaning that any process of devolution would likely be time-consuming.

That is time that these businesses do not have. As such, it would be preferable for the UK Government to take action in the first instance; indeed, the Alliance Party has called on them to do so. Making the case for increased fiscal devolution will require the reform of these institutions to ensure that they are stable, but it will also require evidence that the Executive are using the powers already at their disposal well. In that context, we cannot ignore the other policy levers available to us, including the vital role of rates, over which the Executive already have direct control. That is what our amendment seeks to achieve in calling for an independent and holistic review of the non-domestic rate relief system. An independent review is a crucial first step in ensuring that our rating system is progressive and fair and supports economic growth, as well as being aligned with the Executive's economic priorities. It is key to examining inequalities in the rating system, such as the situation in which relatively small businesses, like the No. 7 cafe in my constituency, face enormous bills. No. 7 faced an eye-watering £70,000 rates bill whilst larger online businesses pay proportionally less. The Finance Minister has said in the Chamber that the rating system has been reviewed numerous times, but such examples are evidence that those reviews have clearly not been adequate. I remain entirely unconvinced that previous reviews enjoyed the levels of independence or breadth of scope necessary to bring about much-needed change. Many of the reviews also predate the pandemic, which has fundamentally reshaped the economic environment, and the reformation of the Executive, when the Economy Minister set out a renewed economic vision. Ultimately, a comprehensive, holistic and independent review of rates — a review that is inclusive of businesses, trade unions, trade bodies, professionals, ratepayers and councils — is essential if we are to support our hospitality sector and move the economic climate in Northern Ireland forward. Therefore, I ask Members to support the amendment and the motion.

700 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

Jev’s structured answers

Assessed 21 October 2026 at 10:28 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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