Debate contribution: Hospitality VAT Harmonisation

Debate contribution by Ms Sinéad McLaughlin on 10 February 2025.

MLA

Ms Sinéad McLaughlin

Party at the time

Social Democratic and Labour Party

Date

10 February 2025

Type

Debate contribution

Business

Private Members' Business

Heading

Hospitality VAT Harmonisation

Assembly identifier

Official Report component 4790942

Read the official Assembly record

Text

I thank the Member from Fermanagh and South Tyrone for proposing the motion. The reality is that our hospitality sector is the cornerstone of our local economy, accounting for four out of five tourism-related jobs. As a representative from the Foyle constituency, I know at first-hand how essential a strong hospitality industry is to our tourism offering and economic infrastructure, given how central the hospitality offering is to Derry city and the wider north-west city region. With a strong hospitality sector, footfall in our town centres will rise, economic activity will be boosted and local suppliers, such as farmers, brewers and entertainment providers, will be better off.

Unfortunately, that is not the reality that the sector is experiencing. The hospitality sector is currently and clearly suffering, and many are hard-pressed to keep their doors open. In fact, many have been forced to close or reduce the length of their working week. Many restaurants in my city do not open their doors on Mondays, Tuesdays and Wednesdays. The city centre can be a desert when it comes to finding a food offering in the early part of the week, and that is not good for business or the tourism industry.

The vibrancy of our town centres is paramount, and we need to work collectively with many Departments to find out how we can support our town centres through the whole working week. Rising costs, including energy, wages and supply chain pressures, often make it impossible or difficult to compete. The cost-of-living crisis, which has reduced consumer spending, has left many people simply unable to take advantage of the hospitality sector and has worsened the crisis. In my city, the level of disposable income is often a key factor when people are deciding whether they can go out and enjoy themselves in the city centre. It would be remiss of me not to mention the damage that Brexit has done to the ability of the sector to recruit staff and deal with supply costs. The introduction of the ETA and the lack of an exemption are also set to worsen an already difficult situation, yet business rates and VAT levels remain high compared with other regions. As the motion points out, the Government in the South are set to reduce the VAT rate for food-led hospitality to 9%, thereby widening the gap between the North and the South to 11%. The damage that that difference will do in border areas such as mine cannot be overstated. Businesses in those areas, which were already vulnerable, will now be left in an even worse situation as customers choose cheaper options a few miles across the border. The reality is that a hotel in Derry will be charged 20% VAT, while a hotel two miles away in Bridgend, for example, will be charged 9% VAT. Unfortunately, we are used to the border creating economic disruptions. If the Minister wants tourism growth, it must be done through introducing measures to support the sector, rather than making it harder for those businesses to compete. Solving the problems that our tourism industry faces is not limited to the Economy and Finance Departments, as has been said across the House today. Business rates, tax policy, skills shortages, licensing laws and town centre regeneration all play a pivotal role in the survival of the sector. Action must be delivered as a collective government. The case for a lower VAT rate for the sector is clear. It would create a level playing field with the South and provide breathing space for businesses, allowing them to remain competitive and retain jobs. Other European countries have permanently lower VAT rates for hospitality, which recognises the sector's importance for economic growth. I agree that the Finance Minister should work with Hospitality Ulster, other business organisations and the Treasury to ensure that Northern Ireland is treated as a special case when it comes to VAT rates. However, we cannot afford to wait for Westminster to agree to a VAT reduction; we need action now. The action could include any of the following: business rate relief targeted at the hospitality sector; a temporary grant to offset VAT disparities; and a review of licensing and planning law to encourage growth in the sector. The motion asserts that the Department for the Economy and the Department of Finance cannot plan for tourism growth, but such planning is essential for our tourism and hospitality sectors. Hospitality is more than just a business sector, it is part of the social and economic fabric of our communities. It is part of our culture. A thriving hospitality sector means jobs, investment, tourism and economic growth right across Northern Ireland. It is also about regional balance, and the hospitality sector has a significant part to play in that. We may be a small island, but we have so much to offer. We cannot let our businesses down and have them lose out because of government inaction.

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

Assessment

Not flagged

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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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