Debate contribution: Hospitality VAT Harmonisation

Debate contribution by Mr Eóin Tennyson on 10 February 2025.

MLA

Mr Eóin Tennyson

Party at the time

Alliance Party

Date

10 February 2025

Type

Debate contribution

Business

Private Members' Business

Heading

Hospitality VAT Harmonisation

Assembly identifier

Official Report component 4790940

Read the official Assembly record

Text

Like other Members, I welcome the opportunity to return to this important issue following the debate on 13 May last year. As the motion sets out, hospitality plays a key role in the success of Northern Ireland's tourism industry, with food and drink accounting for a significant portion of visitor spend. With 70% of tourism-related jobs situated outside Belfast, hospitality plays a key role in building a more vibrant, dynamic and regionally balanced economy. It also means that so many of those businesses are the heart and fabric of communities, particularly in rural areas. When we discussed the matter on a previous occasion, we referenced the conglomeration of challenges facing hospitality businesses, including the scarring impact of the COVID-19 pandemic; Brexit-related labour shortages; concurrent cost-of-living and cost-of-doing-business crises; and the differential in VAT rates on the island, with the UK Government levying VAT at a rate of 20% on hospitality compared with the 13·5% rate in the Republic of Ireland. Regrettably, nine months on, the situation has got worse rather than better, despite our previous debate. The UK Government's planned changes to employers' National Insurance contributions will expand the cost base for hospitality businesses in Northern Ireland. Proposals from the Irish Government to cut VAT for food-led hospitality to 9% could open a further and starker disparity, with, as has been mentioned, particular consequences for hospitality businesses in border counties, which will be put at a disadvantage compared with their counterparts in the South. There is an obvious case to be made on the need for closer harmonisation of VAT rates across these islands, given the particular challenges posed for businesses in Northern Ireland. However, with the Labour Government boxing themselves into a strategy that has resulted in sluggish economic growth and little headroom in public finances, I am not entirely confident that the Government would be in a position to make a move on the issue, even if they wanted to. Whilst we often focus on the steps that the UK Government should take, there are also important steps that we, as an Assembly and an Executive, need to reflect on and that could be taken locally. The Economy Minister will be aware, given her previous role, of my view that the initiation of sectoral research into the cost of doing business is welcome and will assist in making the case to Treasury about the impact of its approach on businesses in Northern Ireland. I am less convinced that the strategic review cycle of our rating reliefs meets what is required in terms of urgency and independence. A 10-year review cycle, in which the Department of Finance will effectively mark its own homework, will hardly instil confidence among businesses that face a cliff edge today. At the very least, we need to revisit the approach that Departments and the Executive are taking to the issue and look to establish interim support through the rating system for those in retail and hospitality. They are, understandably, looking at the significant business rates support that is available across the water, as Phillip Brett mentioned, where, in 2025-26, up to 40% of relief, up to a limit of £110,000, can be claimed by retail hospitality and leisure businesses. As a Member of the Finance Committee, I am acutely aware of the constraints on public services and on the competing demands facing every single Minister. I am also of the view, however, that failing to intervene now and seeing otherwise viable and sustainable businesses go to the wall, because of the disadvantage that they are placed at in Northern Ireland and the worst-of-all-worlds scenario — I agree with Mr Brett on this — that they face, will be more costly to the Executive in lost rating income in the long term. Although there has been an understandable reluctance, given the constrained nature of our public finances, to look at a serious package of interim support whilst that strategic review cycle is ongoing, I urge the Economy Minister in her new role and the new Finance Minister to look at the issue again. If we do not act now, those businesses simply will not be there to avail themselves of support following the outcome of any review.

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

Assessment

Not flagged

Jev’s structured answers

Assessed 21 October 2026 at 11:56 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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