VAT CONVERSATION HAS STARTED BUT BUDGET IS ANOTHER MISSED OPPORTUNITY

06 June 2024

With a debate in the Assembly highlighting the need for a cut in hospitality and tourism VAT, reform of business rates and the current financial challenges faced by the sector, one might think that the agreed budget would include something to help our struggling pubs and restaurants.

Sadly, another opportunity has been missed and our mainly small, independent hospitality businesses have been left to face the challenges alone. I know some will say that I am always crying and that other businesses are struggling, and that may be so, but the UK government has recognised that small business in the hospitality sector, particularly restaurants and pubs, are in trouble and need extra help. English pubs and restaurants receive a blanket 75% rates relief to a maximum of £110,000 per business and rural pubs qualifying for 100% rate relief while the pubs and restaurants of Northern Ireland, subject to the same VAT rates, get no such relief.

The rates relief in England generated additional money that was sent to the Assembly through the Barnett formulation, which has been spent on filling the budget deficit, rather than passing it on the much-needed support to our local pubs and restaurants. Whilst I can see the competing arguments, the fact remains that this money would not have come to Northern Ireland had the UKG not recognised that hospitality businesses need help to survive and acted.

I welcome the recent debate in the Assembly, which showed a general openness to VAT and business rate reform, but action is needed now if we are to retain our existing pubs and restaurants. It has taken generations of hard work, financial risk, and sacrifice by individuals to create and build these businesses, which provide employment and are the backbone of the tourism offer. The pubs and restaurants that these sacrifices have built are culturally and historically significant, but they are in danger if help is not forthcoming.

The potential to growth of tourism can deliver huge economic benefits and create jobs across all the regions of Northern Ireland, but to quote a friend who is distinguished professor in hospitality and tourism: “You can have hospitality without tourism, but you can’t have tourism without hospitality.”

If lost, these businesses cannot simply be replaced when the financial climate gets better and with their loss, we may also lose the huge opportunity to grow our tourism industry.