Tonia Antoniazzi

The hon. Member may question why, as a Welsh MP, I am not calling for a UK-wide reduction. I am not calling for that per se, but I do want to lay out why Northern Ireland is a special case and why it could be useful for the Government to do a pilot. The more striking issue raised during our inquiry was the impact of VAT policy on competitiveness. Hospitality businesses in Northern Ireland operate in a unique environment, competing not only with businesses in other parts of the UK, but directly with establishments in the Republic of Ireland, and therefore Europe. The Republic of Ireland’s hospitality services benefit from significantly lower VAT rates, including a 9% rate on food and catering services and a 13.5% rate on accommodation, compared with the UK’s standard rate of 20%. That disparity has real-world consequences. We were told that tour operators organising itineraries across the island of Ireland are increasingly choosing accommodation south of the border because of lower costs. Conference organisers, wedding planners and major event operators are making similar decisions. In many cases, Northern Irish venues simply cannot compete, despite offering excellent facilities and service. The result is real: lost business, lost investment and lost opportunities for growth. I wish to be clear: witnesses did not argue that VAT is the only challenge facing the sector, but many viewed it as the most straightforward and effective lever available to Government. A reduction in VAT would provide businesses with breathing space. It would improve cash flow, strengthen margins, support investment in premises and staff, help to absorb rising operating costs and enhance competitiveness in an all-island market. Importantly, businesses told us that the primary benefit would not necessarily be cheaper prices for consumers. Rather, it would allow businesses to remain viable, invest for the future and create the conditions for sustainable growth. That is why the Committee has called for the Government to introduce a four-year pilot scheme in Northern Ireland, reducing VAT to 10% on food, excluding alcohol, and on accommodation. A pilot scheme would provide an opportunity to gather robust evidence. It would give businesses sufficient time to adapt, secure new contracts, influence customer behaviour and demonstrate whether a lower VAT rate can stimulate economic activity, increase employment and ultimately generate broader returns for the public finances. Such an approach would not only benefit Northern Ireland; it could also provide valuable lessons for hospitality policy across the UK. We have also called on His Majesty’s Treasury to engage with the Irish Government and Tourism Ireland to examine the impact of Ireland’s recent VAT reductions and previous temporary cuts. If there is evidence that lower VAT rates in Ireland have supported growth, jobs and tax revenues, we should be willing to learn from Ireland’s experience. Hospitality businesses do not want special treatment. They want a fair opportunity to compete, and a tax system that recognises the unique pressures they face and the immense contribution they make to local economies. If we are serious about supporting jobs, encouraging investment and strengthening our tourism offer, we must recognise the role that VAT policy plays in shaping competitiveness. The case for a targeted VAT pilot in Northern Ireland is strong, the evidence is compelling and the potential rewards for growth and prosperity are significant. I urge the Government to listen to the sector and act accordingly.