Hospitality Industry: VAT

Debate between Lord Mackinlay of Richborough and Lord Pitt-Watson

Monday 14th September 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

I absolutely am. Indeed, I was at one time a councillor in a Conservative borough in London that also championed a tourist tax. It is a good idea, but the decisions about the tourist tax should be local decisions for the local authority to make.

[Lord Mackinlay of Richborough (Con)]

My Lords, the Minister uses a European example: most countries abroad seem to have a holiday tax, so it must be a good idea here. I know this Government love most things EU-related, but many EU countries have a lower rate of VAT on hospitality, for a very good reason—because it is a good thing. The Government have already crossed their own Rubicon with a lower rate of VAT for this summer period for many families to enjoy things as a cost of living cut. Surely a lower VAT rate on hospitality follows the same example and thinking that the Government have already found.

[Lord Pitt-Watson (Lab)]

I think I am struggling to get across my main point here. If I could halve VAT for every industry in Britain and it had no knock-on consequences, that would be wonderful. But this has £11 billion of knock-on consequences. The thing that noble Lords need to think about is not whether it would be nice not to charge people money. Of course we would rather not charge people money. But if the Exchequer loses £11 billion, where is that funding going to come from?