Hospitality Sector

Carla Lockhart Excerpts

Tuesday 1st July 2025 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Ms Butler. I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for applying for the debate and setting the scene so well. I also thank all those who have contributed.

The Northern Ireland perspective on the hospitality sector is coming up, as it always does from me and other colleagues from Northern Ireland. Hon. Members will have heard me speak repeatedly about the hospitality industry in Northern Ireland, which I am incredibly proud of. The reputation for hospitality ensures that as soon as someone comes to Northern Ireland, they feel they have come home from home. That is what we do in Northern Ireland; we make people welcome, wherever they come from, so that they want to come back again.

That is why many refer to hospitality as the backbone of our tourism industry. Hospitality Ulster outlined in recent communications that it is not widely known that in Northern Ireland, four out of five jobs in tourism-related industries are in the hospitality sector. The strategic value of the hospitality sector in Northern Ireland cannot be ignored. It supports 77,500 jobs and gives £1.9 billion to the economy. To understand that, information and communication brings in £1.6 billion, and agriculture and fisheries account for £1.3 billion. The hospitality sector makes up almost one in 10 regional jobs.

Although the increases in employer national insurance contributions and the living wage are solely under the control of Westminster, the Northern Ireland Assembly cannot escape the consequences of the refusal to pass on the Barnett consequential moneys that come to Northern Ireland, when English hospitality and retail businesses were given a rates reduction due to the cost of living crisis. That has left the Northern Ireland hospitality industry in an even worse position to deal with the fallout of the Budget.

I will explain what that means. The changes to employer NICs and the national living wage will add an additional £2,500 per person employed in the sector, based on a staff member earning the national living wage and working 38 hours a week. In Northern Ireland, 63% of jobs in accommodation and food are part time, the highest share across all sectors by a considerable margin. It is important to focus quickly on the fact that those are significant additional cost burdens on a sector that is already under huge pressure from costs, sales and profitability.

Staying in business is very challenging, as the fallout from covid continues for the sector, plus huge additional costs. Heaping on additional completely unexpected costs only fuels the journey towards crisis point for many in the hospitality sector. I say that with respect to the Minister, and reassure him that he is not responsible for all the ills of the world, but I want to outline this issue.

The UK Budget has made Northern Ireland a more expensive place than our neighbour the Republic of Ireland to employ staff. With a further reduction of VAT likely, the Republic of Ireland has a competitive advantage over Northern Ireland. That will not only drive investment from north to south but also consumers, as our hospitality businesses will not be able to compete with Republic of Ireland counterparts.

[Carla Lockhart (Upper Bann) (DUP)]

My hon. Friend is right that the hospitality sector is important to Northern Ireland. It is probably one of the most difficult sectors, with long hours, high costs and low margins. Does he agree that one of the most challenging things is the VAT disparity with the Republic of Ireland? Does he therefore agree that, if the UK Government were to do something about VAT for the hospitality sector, it would be a silver bullet?

[Jim Shannon]

My hon. Friend and colleague is right. I mentioned the clear VAT imbalance. To put it in simple equations, to explain the issue and understand it better: in the simplest example, a couple getting married in Enniskillen would find that a significantly cheaper wedding reception is just a few miles away across the border. I hope that explains the matter a wee bit better.

There is a vital need for the introduction of a reduced rate of VAT for the hospitality and tourism sector. Hospitality Ulster has flagged the creation of a new employer national insurance contribution band from £5,000 to £9,000, with a lower rate of 5%, or the implementation of an exception for lower-band taxpayers working fewer than 20 hours a week. The difference and the tight margin between viability and closure is right there for us in Northern Ireland. I look to the Minister for consideration of these proposals.

Businesses can and will thrive if supported to do so. Every pound of support sees a direct benefit for local economies. I know that support for the hospitality industry will help businesses in every corner of the UK. I know that that is the desire of every person who has contributed to this debate and of the Minister, who is an honourable person. However, we really need to take steps to ensure that all of this great United Kingdom of Great Britain and Northern Ireland can thrive. The Minister can make it happen, and I look forward to his contribution.