Debate contribution: Hospitality VAT Harmonisation

Debate contribution by Dr Caoimhe Archibald on 10 February 2025.

MLA

Dr Caoimhe Archibald

Party at the time

Sinn Féin

Date

10 February 2025

Type

Debate contribution (made as a minister)

Business

Private Members' Business

Heading

Hospitality VAT Harmonisation

Assembly identifier

Official Report component 4790991

Read the official Assembly record

Text

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.

I thank the Members who tabled the motion, and I am grateful for the opportunity to speak on this important issue. I agree with Mr Brett about the importance of hospitality and tourism to our local economy. The figures have been quoted already this evening. Together, our tourism and hospitality sectors employ over 75,000 people. Some 70% of those jobs are outside Belfast, so, clearly, they contribute significantly to regional balance. Tourism and hospitality have grown significantly, and an action plan, co-designed with the industry, has been developed to further support the sectors. Actions will include investment in marketing, skills, events and connectivity. However, policy decisions taken by the British Government are damaging the industry and creating a significant disparity across the island. The increase in the minimum wage is positive for workers, but, given the low margins in the industry and the fact that many of the businesses are small, it would have made more sense for higher wages to have been offset by lower taxes for employers. Instead, the British Government have increased employers' National Insurance contributions and, at the same time, introduced the electronic travel authorisation scheme. Tourists are an important market for our hospitality businesses, but the ETA creates another barrier in the North for international tourists. Tourists who fly into the North already pay air passenger duty, which has been abolished in the South. With the introduction of the ETA, tourists arriving in the South will now also have to pay fees if they want to enjoy all that the North has to offer. Another differential across the island is VAT, which is currently 13·5% and likely to return to 9% for hospitality businesses in the South, compared with 20% here. My Executive colleagues and I are working together to lobby the British Government on those issues. When I was Finance Minister and Conor Murphy was Economy Minister, we engaged regularly with the hospitality sector and made continual representations to Treasury. Later this month, Minister O'Dowd will press the Chief Secretary to the Treasury again on those issues. I will bring clarity to some points that were made. Contrary to Ms Armstrong's comments, we are losing £58 million from our baseline due to the reduction in rates support for hospitality and tourism in Britain this financial year. As for the Barnett consequentials for employers' National Insurance contributions, the Executive will in fact face a shortfall of approximately £100 million just for the public sector. Partly in response to those particular issues, the Department of Finance is undertaking research on the cost of doing business. Phillip asked about the issues that will be considered as part of that. The differentials will be considered, but there will also be opportunities for businesses and business representatives to engage with the Economic Policy Centre, which will help to give coverage to some of those issues. That research, which will be completed next month, will help to build an evidence base to press the British Treasury to act on some of those issues, but it will also potentially inform any interventions or support that the Executive are able to give, whether through policy or otherwise.

I thank the Member for his intervention. I know that he frequently raises the issue of air passenger duty. That fiscal power was in fact devolved to here, and, unfortunately, the intended benefits have not been reaped. Representations need to be made specifically on the issues that were highlighted today. Of course, Executive Ministers will continue to do that. This is not my responsibility any more, but I will pick up on the point about rate relief. It is, of course, not possible to amend rate relief at short notice, given the importance of rates for our public finances. The one that we have chosen to look at in the incoming financial year is the small business rate relief scheme, and that is because of the representations that were made by businesses. There will be an opportunity for businesses to engage with that. Members of the Assembly recognise the value of the hospitality and tourism industries to our local economy. My Department clearly does so as well. We have taken a number of actions to support both sectors, including skills development and capacity building. However, we all must collectively continue to press the British Government to do likewise by recognising the value of those sectors to our economy.

740 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.

Disagree with this assessment?

Classifications can be challenged. A person reads every challenge, and any change is recorded publicly above with its reason.

Challenge this classification