Northern Ireland Hospitality Sector

Jim Shannon Excerpts

Wednesday 15th July 2026 Westminster Hall

[Robin Swann]

I agreed with the hon. Member until his last point. The McKeever group owns the hotel in which he was married. I had my wedding reception at the group’s Dunsilly hotel, and it is just celebrating the 40th anniversary—[Interruption.] Of the hotel, not my marriage, just to be clear to the hon. Member for Strangford (Jim Shannon). The group is being forced to make difficult decisions, looking at staff numbers, reducing opening hours and stalling or even cancelling investment plans. It is simply fighting to survive.

The Northern Ireland Food To Go Association has told me that over 200 of its businesses have closed in 2026 to date, but Northern Ireland faces an additional challenge that does not exist elsewhere in the United Kingdom, as we share a land border with another jurisdiction.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman, who is a friend and colleague, for securing this vital debate. I rise to support the UK-wide #VATsTheProblem campaign, alongside our local champions at Hospitality Ulster. The hospitality sector in Northern Ireland is an industry trapped in an impossible competitive vice. This month, the Republic of Ireland dropped its VAT on food and café catering to 9%, meaning that our border communities face a 120% tax disparity compared with neighbours just a short drive away. Does the hon. Gentleman agree that we are asking only for a fair fighting chance for our hospitality sector?

[Robin Swann]

I thank the hon. Member for raising that point, because we do share a land border with another jurisdiction. In the Republic of Ireland, hospitality businesses already benefit from a significantly lower VAT rate of 13.5%, but the Irish Government have gone further by moving towards a 9% rate for food-led hospitality, as he said. That creates a clear competitive imbalance.

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[Dan Tomlinson]

rose—

[Jim Shannon]

Will the Minister give way on that point?

[Dan Tomlinson]

I will.

[Jim Shannon]

It is no wonder that the hon. Member for Newcastle-under-Lyme (Adam Jogee) had to go all the way to Northern Ireland to get an Ulster girl to marry. That tells you what Ulster women are like. They are the best.

[Dan Tomlinson]

rose—

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[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.

[Jim Shannon]

The Minister is making a very good and clear speech. He referred to parts of Europe whose Governments are considering a VAT reduction because they recognise the importance of the hospitality sector. Are the Government considering that? If there is an evidential base for it, perhaps they and the Minister will at least consider it at some stage to see what can be used to our advantage.

[Dan Tomlinson]

Right now, we are engaging in what could be seen as a similar proposal to the one put forward today. We are doing a time-limited reduction in VAT, not for one sector and one part of the country, but for particular leisure and hospitality activities and consumption across the country as a whole. I am sure that His Majesty’s Revenue and Customs and others will conduct thorough evaluations of that, so that we can see the impact that it had.

We expect businesses to pass the reduction in VAT on to consumers. Some big organisations, such as Merlin Entertainments, have already done that by setting new ticketing prices for families this summer, and many small businesses have been changing the prices on their menus for children’s meals. I hope that once this Great British summer savings period ends on 1 September, we will review that and look at the impact.

Of course, the challenge with any VAT reduction is whether it will be passed on to consumers. To be clear, I do not begrudge businesses having more margin, but the objective of the hon. Member for South Antrim is to see prices fall. When VAT changes have been made in times gone by, the gains have not always flowed entirely to consumers. The Government have been working really hard to ensure that businesses pass on the reduction in the Great British summer savings scheme. As I say, we are really glad that many have done so. I look forward to continuing to discuss this important topic, and to seeing the impact of the temporary and targeted changes that we have made to VAT this summer.

Question put and agreed to.