Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made with Cabinet colleagues of the impact of energy price increases on the hospitality sector; and if he will make an assessment of the potential merits of reducing VAT on that sector.

The new Energy Bills Discount Scheme (EBDS) provides all eligible businesses and other non-domestic energy users including hospitality, with a discount on high energy bills for 12 months from 1 April 2023 until 31 March 2024.

Wholesale gas prices have now fallen to levels before Putin’s invasion. The new EBDS therefore strikes a balance between supporting businesses for a further 12 months, from April 2023 to March 2024, and limiting taxpayer’s exposure to volatile energy markets. This provides long-term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

Businesses in the retail, hospitality and leisure sectors will also receive a tax cut worth over £2 billion in 2023-2024. Eligible properties will receive 75 per cent off their business rates bill, up to a cap of £110,000 per business with 80 per cent of retail, hospitality and leisure properties seeing their bills falling or staying the same from April 2023.

The Government has been clear that the reduced rate of VAT for tourism and hospitality was a temporary measure designed to support the cash flow and viability of sectors that were severely affected by COVID-19.

The previous VAT relief cost over £8 billion. Reintroducing it would come at a significant further cost, reducing the money available to help fund key spending priorities, including important public services, such as the NHS, education and defence.