Rural Pubs: Fiscal Support

Jim Shannon Excerpts

Wednesday 17th June 2026 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Mrs Hobhouse. I give big thanks to the hon. Member for Meriden and Solihull East (Saqib Bhatti) for raising this issue. As always, I will give a Northern Ireland perspective on the issues.

I speak for the small villages, the crossroads and the tight-knit rural communities where the pub is not merely a commercial business but a vital community hub. It is the village town hall, the local meeting place and the frontline defence against rural isolation; it is a cornerstone of our £2 billion tourism economy. However, those historical institutions are hanging by a thread, suffocating under a mountain of unsustainable operational costs.

We have heard the warnings loud and clear from the industry’s frontline. I pay special tribute to Colin Neill MBE, the chief executive of Hospitality Ulster, who I have met on numerous occasions. All Members in the Chamber have probably met him—I know that the Minister has. Colin has been a tireless champion for our publicans, masterfully making the case both at Stormont and here in Westminster. He has warned the Government in no uncertain terms—forgive me for being graphic, Minister, but we must be factual in presenting this case—that our local hospitality sector is in deep distress as a result of the cumulative impact of soaring energy bills, skyrocketing national insurance contributions and upcoming business rates revaluations. Colin has rightly pointed out that the current tax burden is squeezing the very life out of local employment. Hospitality Ulster data shows that nearly half our operators have been forced to reduce staff numbers. We are looking for economic growth and job creation, but we have lost them—this is a full-blown crisis.

Our rural pubs face a unique structural disadvantage compared with the rest of the United Kingdom. In Great Britain, pubs have benefited from various configurations of business rates relief, but publicans in Northern Ireland face the terrifying prospect of massive hikes in their rates bill—a move that Colin Neill has warned would be the “ruination” of our hospitality industry and, by extension, a severe blow to the Northern Ireland economy. Furthermore, our traders are forced to compete on an uneven playing field with the Irish Republic right across the border, where the Government have previously used targeted VAT reductions to protect their hospitality trade, to our disadvantage in Northern Ireland.

We cannot stand idly by and watch our rural heritage be wiped out by fiscal inertia. The sector accounts for four of every five tourism jobs in Northern Ireland, so we cannot deny or ignore that it is critical. If the Department for the Economy is to meet its growth targets—the Minister will want to encourage Northern Ireland to grow and meet them—it needs a thriving hospitality sector to anchor it, so, alongside my DUP colleagues and the Minister back home, I call on the Chancellor and the UK Government to co-ordinate directly with the Stormont Executive on delivering a targeted and ringfenced package of fiscal interventions.

We need three things: a reduction in the hospitality VAT rate to lower the structural burden on food and drink operators, energy cost reform to protect rural businesses that do not have the footfall of Belfast establishments, and a reformed, reality-based rates system that treats hospitality as an economic driver to be supported, not as a cash cow to be milked until it is dead, which is what I see happening.

The hospitality sector is asking for the chance to survive and grow, and I echo that sentiment. I ask the Government to give our publicans the breathing room that they deserve—especially for rural pubs that cannot work on economies of scale—and to deliver the fiscal support that rural economies desperately need, before the lights go out for good in rural pubs. I thank the hon. Member for Meriden and Solihull East for bringing this issue to the Chamber. I hope that the Minister can give us the answers that we desperately need.

--- Later in debate ---

[Dan Tomlinson]

I thank the hon. Member for raising that issue; it is one that publicans in my constituency have raised with me as their MP. Of course, there are benefits to having a link with a major supplier, and I understand why many publicans choose that route, but it is clear that there are significant challenges, too. DBT has looked at this, and I am sure that conversations are ongoing with the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Halifax (Kate Dearden), about what reforms could be made. This is not my policy brief, so I do not want to speak too far out of turn, but I totally understand the issue. I will raise it personally with my hon. Friend. I have done so in the past, after being asked to by my constituents.

On a related point, guest beers and access to the bar for guest beers in tied pubs was mentioned. DBT has met the parties involved in the beer market access review to hear their evidence directly, and it is giving due consideration to all the evidence, along with input from competition policy experts. This is under active review by the Government, and we are committed to making sure that we can have a diverse and competitive beer market. On a personal level, I hope that the Government can look really closely at this so that we can improve competition and choice, but it is being led by my hon. Friend the Member for Halifax.

As has been mentioned, in January this year we went further to support pubs, with a further 15% off their business rates bills and a real-terms freeze in business rates for pubs in the next two years of this revaluation period. That support is worth £1,650 for the average pub this year. It means that three quarters of pubs are seeing their bills either fall or stay flat this year and, as a sector, pubs will pay 8% less in business rates in 2029 than before the revaluation took effect.

Moving on from business rates, the Government recognise that pubs often serve as crucial community assets, particularly in rural communities, as the hon. Member for Meriden and Solihull East and many others have mentioned. They support local economies and communities, provide spaces for gatherings, support those in need and foster a great sense of local pride.

[Jim Shannon]

The circumstances around VAT in Northern Ireland, and reduced VAT across the border, are peculiar and particular to us compared with other parts of the United Kingdom. Has the Minister had chance to speak to Colin Neill, the chief executive of Hospitality Ulster, to ascertain some of the things that he feels might be a way forward? If so, have there been discussions not only with him but with the relevant Minister in the Northern Ireland Executive?

[Dan Tomlinson]

I have not managed to have that conversation, but the hon. Member is very welcome to write to me, and I am happy to consider those representations. Of course, I have heard calls from Members to cut VAT for hospitality, and I am aware that there is a campaign on that matter. I just say that cutting VAT for hospitality from 20% to 10% would cost £11 billion. A range of policy ideas have been raised, all of which involve cutting tax. The right hon. Member for Salisbury (John Glen) was right to acknowledge that there are important fiscal considerations for the Government. It is important that we manage the public finances and bring down Government borrowing, and we are forecast to have the fastest reduction in Government borrowing of any G7 economy, with our deficit falling below the G7 average for the first time in a very long time. Of course, I will listen to the representations made and the asks from campaigners, but I caution that we have to ensure that we have sufficient revenue to fund our public services in a sustainable way.