Northern Ireland Hospitality Sector

Debate between Alex Easton and Dan Tomlinson

Wednesday 15th July 2026 Westminster Hall

[Dan Tomlinson]

It is important that we return to the topic at hand, but I am very glad that my hon. Friend is happily married to, I am sure, a fantastic partner.

The Government recognise the important contribution that hospitality businesses make to jobs, growth and local communities across Northern Ireland and the United Kingdom as a whole. Cafés, pubs, restaurants and hotels support local economies and, as the hon. Member for South Antrim set out, are important for employment, particularly of young people who are trying to find their way in the jobs market, get experience, get a foot in the door and ready themselves for a career of productive work. They also play a vital role in our high streets and town centres.

I hear the concerns that have been raised about pressures facing the sector in Northern Ireland and across the wider country in terms of operating costs. I also understand the particular challenge in Northern Ireland from the comparisons with the hospitality VAT rate in the Republic of Ireland and cross-border competition. I recognise that the fact that consumers have that much more readily available choice is, as the hon. Gentleman said, a unique challenge facing businesses in Northern Ireland. I fully understand why he is raising the issue and campaigning on it on behalf of his constituents, and I commend him for his sterling work as a constituency MP.

[Alex Easton]

Will the Minister also acknowledge and comment on the added pressures of the Northern Ireland protocol and the Windsor framework, which add extra burdens to businesses in Northern Ireland?

[Dan Tomlinson]

There are a whole range of challenges and also benefits from the protocol and the Windsor framework. I agree with the hon. Member that they do not provide constraints on the policy choice on VAT. I always find it frustrating when Ministers hide behind legal constraints that perhaps are not always there, and I want to be up front with him: if a Government chose to do this, the protocol would not be a barrier.

Members have focused on the potential merits of a Northern Ireland VAT reduction pilot for hospitality, but VAT is a broad-based tax on consumption that applies to a range of sectors, and it also applies on a UK-wide basis. The Government’s view is that different VAT rates would create divergence between Great Britain and Northern Ireland, and impact the competitiveness of businesses between the two regions. I understand that Members are specifically talking about Northern Ireland, but across the country as a whole—some hon. Members did mention the broader campaign around reductions in VAT across the UK—a reduction to 10% in VAT for hospitality would cost around £11 billion a year, which is equivalent to the total expenditure on the Royal Navy or the annual child benefit bill.

There would be significant practical challenges associated with introducing a pilot for a different VAT treatment for hospitality in Northern Ireland only. Businesses, His Majesty’s Revenue and Customs, and consumers would then need to operate in a system that created different treatments for otherwise similar transactions. There would be boundary issues and administrative complexity to work through.

The fact that I am not announcing this change today does not mean that the Government do not take this issue seriously and understand the representations being made. We are also not standing aside. The Chancellor has introduced the Great British summer savings scheme, which is a temporary reduction in VAT on eligible family attractions and children’s meals over this summer, helping families with costs and encouraging footfall during the summer holidays. In England, the Government have also introduced new business rates multipliers for eligible retail, hospitality and leisure properties, a package of transitional reliefs, and the supporting small business scheme, which together amount to £4.3 billion of additional spending. The Barnett formula is applied in the normal way to those changes, so the Northern Ireland Executive received £185 million in consequentials as a result of those decisions.

The Government—and I personally, if I have the honour of staying in this role—will continue to listen carefully to representations from the hospitality sector, from the Northern Ireland Executive and, of course, from hon. Members. We will meet after the summer recess; I am as good as my word. However, we do not believe that a Northern Ireland-specific hospitality pilot is the right approach. As tempting as it is to burnish my devolution credentials ahead of an impending reshuffle, I will not make that commitment today.

I thank the hon. Member for South Antrim for securing this debate and for strongly representing his community. This is an important issue, and I am happy to continue discussing it.

Oral Answers to Questions

Debate between Alex Easton and Dan Tomlinson

Tuesday 23rd June 2026 Commons Chamber

[Alex Easton (North Down) (Ind)]

4. What assessment she has made of the adequacy of the temporary reduction in the rate of VAT in supporting the hospitality sector in Northern Ireland.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank the hon. Member for giving me another chance to talk about the great British summer savings scheme, which the Chancellor has just talked us through. It is fantastic that it is coming into place in just a couple of days’ time and will run until the end of the summer holidays. It extends across all four nations of the United Kingdon, benefiting businesses in Northern Ireland as well as in Great Britain.

[Alex Easton]

Given Northern Ireland’s unique position in the United Kingdom, sharing an open border with the Republic of Ireland where the VAT rate is 13.5% for the hospitality industry, will the Chancellor look to reduce the rate of VAT for the hospitality sector in Northern Ireland—at minimum for a trial, if not permanently—to maintain price competitiveness, safeguard UK jobs and businesses, and make us more competitive with the Republic of Ireland?

[Dan Tomlinson]

I understand that the VAT rate in Northern Ireland is different from the rate in Ireland—there are different rates of VAT across Europe. It is important to remember that VAT is a national tax in the UK, at 20% across the country. It is important to have consistency for businesses operating across the UK. Significant cuts to VAT come with significant fiscal costs. For example, halving the rate of VAT on hospitality would cost the Exchequer about £11 billion.