Hospitality Sector VAT: Local Economies, Employment and Growth

Gregory Stafford Excerpts

Thursday 12th November 2026 Westminster Hall

[Tonia Antoniazzi (Gower) (Lab)]

I beg to move,

That this House has considered the impact of VAT policy for the hospitality sector on local economies, employment and growth.

It is an honour to serve under you chairship, Dr Huq; I am moving the motion on behalf of my hon. Friend the Member for Blackpool South (Chris Webb). Hospitality and tourism are not just industries; they are major employers, anchors of local economies and a vital part of the social fabric of communities right across the United Kingdom. Yet in my roles as Chair of the Northern Ireland Affairs Committee and chair of the all-party parliamentary beer group, we have seen that current VAT policy, combined with a range of other tax pressures, is placing hospitality businesses under significant strain and undermining their ability to compete.

Our inquiry heard from hotels, pubs, restaurants, caterers and tourism operators across Northern Ireland. We travelled to Derry/Londonderry and met businesses on the ground. Their message was consistent and clear: the current tax environment is holding back growth, limiting investment and threatening the long-term viability of businesses that are already operating on tight margins. Hospitality businesses are contending with a perfect storm of rising costs. Increased employer national insurance contributions have also hit the sector, which relies heavily on part-time and lower-paid workers. We heard evidence that it is around 8% more expensive to employ someone on the minimum wage in Derry/Londonderry than it is just a short distance away from the border in the Republic of Ireland.

Businesses also face high business rates and rising energy costs. Hospitality is an energy-intensive sector with little flexibility to move consumption away from peak trading hours. At the same time, consumer spending remains under pressure, particularly in Northern Ireland, where average wages remain lower than the UK average.

[Gregory Stafford (Farnham and Bordon) (Con)]

The hon. Lady is giving an excellent description of the problems happening in Northern Ireland, but they are happening in England, Wales and Scotland as well. I hold a regular quarterly meeting with my local publicans and hospitality businesses. They say repeatedly that the situation they face at the moment is worse than it was under covid, because at least under covid the Government stepped in to support them. The Government are now penalising them through all the things the hon. Lady just mentioned, such as the business rates increases—for one pub in my area they are going up by £32,000. That is just not sustainable, and there are the national insurance rises, too. Does she agree that although VAT is part of the picture, the Government really need to deal with all sorts of other parts of the tax system?

[Dr Rupa Huq (in the Chair)]

Order. The hon. Member’s remarks are a bit long for an intervention.