Debate contribution: Hospitality VAT Harmonisation

Debate contribution by Ms Diane Forsythe on 10 February 2025.

MLA

Ms Diane Forsythe

Party at the time

Democratic Unionist Party

Date

10 February 2025

Type

Debate contribution

Business

Private Members' Business

Heading

Hospitality VAT Harmonisation

Assembly identifier

Official Report component 4790955

Read the official Assembly record

Text

I thank the Members who tabled the motion for giving us the opportunity to discuss what is a really important issue. Representing South Down, a border constituency, I encounter it week in and week out, with a number of businesses coming to me to say that they are seeing the very real effect of customers voting with their feet, especially when booking larger corporate events and weddings. The DUP recognises the importance of our hospitality sector and the significant challenges that it faces, as my colleague Phillip Brett outlined, with the pressure of increased employers' National Insurance, the failure of the sector to receive an equitable reduction in rates and the disparity in VAT rates. As a party, we are committed to ensuring that businesses and employers have the tools and the right support in place to grow and thrive in what are challenging economic times. In particular, we believe that cutting tourism and hospitality VAT is crucial. We have said consistently that the difference in hospitality VAT rates between Northern Ireland and the Irish Republic in particular is an impediment to creating a more competitive environment locally and to building on the sector's standing as an engine for growth and job creation. Local businesses in Northern Ireland face a comparative disadvantage as a result of the reduced rate in the Irish Republic. Department of Finance data in the Irish Republic, published last year, stated that cutting the VAT rate to 9% for the entire hospitality sector would cost €764 million annually. That would fall to €545 million if it were applied only to food and catering services. The corresponding figure in Northern Ireland would also be deeply significant. Whilst we recognise the spirit of and support the UUP's call for interim support, there needs to be a recognition of the practicality that such a proposal would cost the Executive, at a minimum, tens of millions of pounds. Prior to the rate of VAT returning to 20% after March 2022, the all-party parliamentary group (APPG) on hospitality and tourism endorsed calls for a lower rate of VAT that would be applicable across the United Kingdom. It suggested that that would support the viability of businesses; improve the rate of employment; have a positive impact on Treasury revenue; support regional growth; improve international competitiveness; and ease cost-of-living pressures. It is therefore not a question of whether we should act but how we should act to support this vital industry. We do not believe that the necessary capacity exists to devolve those additional fiscal powers. Our view is based on a number of pragmatic considerations, and we question whether devolving those powers would bring timely benefits to affected firms. There are other actions that Ministers can collectively take to ease pressures and promote a more resilient and competitive landscape for our hotels, restaurants, pubs, breweries and others with a keen stake in the sector. There is also the question of who foots the bill. Devolution of VAT is presumably viewed by the Members who tabled the motion as a means to an end, with the end being the ability to vary and reduce the hospitality VAT rate relative to other UK regions. How would that impact on the Executive's ability to fund, deliver and improve vital public services? How would the shortfall impact on our block grant? Where is the evidence or plan that shows that medium- or long-term growth would outweigh the short-term cost of devolving those powers? A UK-wide approach to reducing VAT rates would provide a level of assurance about unintended fiscal consequences for Northern Ireland. We appreciate, however, that high VAT is not the only issue of concern to the sector. There is huge potential for our Ministers to work together to find solutions in order to provide the necessary support for our hospitality sector.

637 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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