Northern Ireland Hospitality Sector

Robin Swann Excerpts

Wednesday 15th July 2026 Westminster Hall

[Robin Swann (South Antrim) (UUP)]

I beg to move,

That this House has considered the potential merits of a VAT reduction pilot for hospitality businesses in Northern Ireland.

It is a pleasure to serve under your chairmanship, Dr Murrison. I welcome the opportunity to speak in support of a pilot scheme to reduce VAT for the hospitality and food sectors in Northern Ireland. This proposal enjoys support from across the political spectrum and the commercial sector. It has the backing of businesses, Hospitality Ulster, the Northern Ireland Food To Go Association, Ministers of the Northern Ireland Executive, Members of the Northern Ireland Assembly, and the Assembly’s all-party group on food to go, of which my party colleagues John Stewart and Diana Armstrong are both officers.

This is a request not for special treatment but for fairness, economic common sense and the opportunity to test a policy that could strengthen businesses, protect jobs and support communities across every part of Northern Ireland while providing valuable evidence for policymakers across the United Kingdom. Hospitality is one of our most important industries in Northern Ireland. It contributes approximately £1.4 billion to our economy in gross value added, accounts for 2.5% of our economic activity and supports roughly 50,000 jobs.

Those are not simply statistics; they represent family businesses, local employers, tourism operators, cafés, restaurants, hotels, pubs and food-to-go outlets. They are the very lifeblood of our towns, villages and cities, yet the sector is under immense pressure. Businesses have faced a perfect storm of rising energy costs, inflation, increased national insurance contributions, increases in the minimum wage and a continuing cost of living crisis that is reducing the disposable income of their customers.

Many businesses that I have met in my South Antrim constituency, from the Stone Hound in Antrim town to Brown’s Coffee in Ballyclare, the McKeever group of seven hotels and many more businesses that I do not have time to mention are being forced to make difficult decisions.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

I am grateful to my hon. Friend—he knows he is my friend—for giving way. I am enjoying his introductory remarks. Although I will not comment on the specifics of the pilot, I was married at the Dunadry hotel in his constituency, so I will take any opportunity to celebrate the hospitality sector in Northern Ireland. It is world-renowned, and it is loved by all those who get to enjoy it. It is second only to Staffordshire.

[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.

[Alex Easton (North Down) (Ind)]

I thank the hon. Member for securing this debate on an important issue. Does he agree that in my constituency and right across Northern Ireland, many pubs, cafés, hotels, B&Bs and local attractions are operating on extremely narrow margins? Targeted VAT relief would improve cash flows and strengthen their resilience, particularly amid rising wage, energy, food and insurance costs.

[Robin Swann]

I agree with the hon. Member. That is why many representative organisations think that VAT reduction would be a key enabler. It would not solve all those problems, but it would definitely help.

With regard to the cross-border imbalance, a family deciding where to spend their money, a couple booking a wedding reception, an organisation booking an event or a visitor choosing accommodation is increasingly influenced by price. Businesses on the other side of the border enjoy a tax advantage that can amount to tens or even hundreds of thousands of pounds each year, depending on their size. The result is obvious. Northern Ireland businesses are competing with one hand tied behind their back, and the problem is about to get worse unless action is taken.

It is especially striking that the United Kingdom’s 20% VAT rate for hospitality is increasingly an outlier across Europe. France applies 10%, Italy 10%, Croatia 13% and Germany is moving towards a reduced hospitality rate. Across Europe, Governments recognise hospitality as a strategically important sector deserving of support because of its role in employment, tourism and local economic development.

The question we are asking the Government is simple: if other countries are using VAT policy to support growth, jobs and investment, why are they unwilling to even test whether such an approach could work in Northern Ireland? That is why the proposal for a Northern Ireland VAT pilot is so compelling. A pilot is not a permanent commitment or a leap in the dark; it is evidence-driven policymaking. It would allow the Treasury to assess whether a reduced rate increases economic activity, protects employment, boosts tourism and stimulates wider tax revenues through income tax, national insurance contributions and corporation tax.

The advantages could be substantial. First, it would help businesses remain viable. For many hospitality operators, a VAT reduction would improve margins at a time when costs are rising dramatically. Some businesses would pass savings directly to customers through lower prices, while others may reinvest those savings into staffing, wages, training or expansion. Either way, the money would remain within the real economy. Secondly, it would support jobs. Hospitality is one of the largest employers of our young people, and it provides opportunities for people entering the workforce, developing skills or returning to employment. Protecting hospitality means protecting livelihoods in every constituency across our country.

Thirdly, it would strengthen tourism. Visitors do not separate hotels, restaurants, cafés and attractions from their overall experience of Northern Ireland, so a more competitive hospitality sector would help to create a stronger visitor economy. Recent successes in attracting major international events have demonstrated Northern Ireland’s potential to attract visitors and generate significant economic returns, and a more competitive VAT regime would build on that success. Fourthly, it would support our high streets and local communities. Hospitality businesses create footfall, bring people into town centres and occupy premises that might otherwise stand vacant. Every restaurant, café or takeaway that survives and prospers contributes to the wider vitality of our communities.

However, there is another important question: can this be done legally? The answer is yes. Too often, discussions about Northern Ireland are dominated by what cannot be done because of the protocol or Windsor framework. On this occasion, the legal advice is clear that neither the VAT provisions that apply to Northern Ireland nor state aid considerations would prevent the UK Government from introducing a reduced VAT pilot for the hospitality sector in Northern Ireland. Indeed, article 8 of the Northern Ireland protocol specifically envisages a situation where VAT arrangements may diverge to address competitive imbalances with the Republic of Ireland, which is the case here. The legal route, the economic case and the practical mechanism exist. What is required now is the political will to act.

Of course, we have to be honest about the challenges. A reduction of VAT would have an up-front fiscal cost. The purpose of such a pilot is to measure whether increased economic activity could offset some or all of that additional revenue loss over time through growth, investment and employment. The question before us is not whether there is a cost, but whether the cost of doing nothing is greater. What is the cost of businesses closing? What is the cost of jobs being lost? What is the cost of investment leaving Northern Ireland? What is the cost of allowing a widening competitive gap between businesses north and south of the border? Those questions deserve answers, and a Northern Ireland pilot would provide them.

Northern Ireland has often been described as unique. In this case, our unique circumstances provide a unique opportunity. We have a clearly defined geographical market, face a distinct cross-border competitive challenge and have an obvious comparator in the Republic of Ireland. That makes Northern Ireland the ideal test bed for a hospitality VAT pilot. If successful, the lessons learned could inform policy across the wider United Kingdom. This proposal is pro-business, pro-worker, pro-tourism and pro-growth. More importantly, it is practical and evidence-based and deserves to be tested rather than dismissed.

The incoming Prime Minister talks of more devolution. Here is an opportunity for the Minister to put such a case in front of him. The Northern Ireland Affairs Committee has opened an evidence call for an inquiry on this subject, so it will not go away at the close of this debate. I therefore urge the Government and the Treasury to work with the Northern Ireland Executive, industry representatives and local businesses to establish a reduced VAT pilot for hospitality businesses in Northern Ireland. Let us give this vital sector a fair chance to compete, protect jobs and investment, strengthen our tourism offering and demonstrate that creative economic policy can help to unlock Northern Ireland’s full economic potential.