Northern Ireland’s hospitality sector is in genuine difficulty. But between a political class performing concern over taxes it doesn’t control and an industry body lobbying against the very reforms that would help, accountability seems to be in short supply.
A BBC report by Maria McCann on the VAT gap between Northern Ireland and the Republic makes points that are difficult to dismiss; until you stop and consider the powers Stormont already has and consistently fails to use. It brings to mind a paraphrase of Shakespeare’s Hamlet: “the politicians doth protest too much, methinks”
Hospitality: NI businesses losing out to ‘significantly cheaper’ bills across the border – BBC News
This is a pattern I have come to expect, a hospitality business closes, a headline appears, and within hours a politician is in front of a camera expressing deep concern about VAT; a tax set entirely by Westminster, over which Stormont has precisely zero control. It is a masterclass in the appearance of action without any of the inconvenience of actually doing anything. The cameras roll, the soundbites land, nothing changes, and the public is left believing their politicians are fighting for them when they are doing anything but.
The underlying grievance is legitimate, the UK does charge 20% VAT and the Irish Republic 13.5%, a gap set to widen further when the South’s rate for food-led hospitality falls to 9% this summer. Westminster should act. It won’t. But while Stormont politicians perform outrage over a solution they know will never come to pass, the powers they already possess to address high overheads and rectify weak trading conditions in the hospitality sector remain untouched.
BUSINESS RATES
Business rates are an entirely devolved matter. The NI Executive sets mandatory reliefs without requiring a single nod from Westminster. Yet for decades, manufacturing and industrial properties have benefited from reliefs and incentives that reflect an unmistakable political preference for factories over hotels, cafes, pubs and restaurants. Both sectors create jobs; both contribute to the economy, hospitality supports over 70,000 jobs in Northern Ireland but it receives next to nothing in support. Manufacturing, which has been outperforming every other sector of the economy in recent years, receives everything. To a neutral observer, that is difficult one to explain and perhaps if the general public also know what was going on, they would react differently too, all that is needed is a rebalance to reflect current economic conditions, hardly rocket science.
PUB LICENSING
Northern Ireland’s licensing system is a relic. No new pub licences have been created for over a century, and surrendered licences are routinely snapped up by supermarkets rather than new operators. The micro-pubs, wine bars, and brewery tap rooms and even new pubs that have been quietly revitalising town centres across Britain cannot exist here. The kind of destination hospitality that makes a town worth visiting; that creates an evening economy, fills hotels, and supports the surrounding high street; depends on clusters of venues. Stormont controls licensing entirely and independent advisors to the Department of Communities have even recommended reforms to stimulate economic growth across NI, yet all the recommendations for reform of the sector were rejected by the Department of Communities.
TRANSPORT
Across Europe, ride-hailing apps have transformed night-time economies by giving people the freedom to go out without worrying about how they will get home. Studies suggest services like Uber generate over €650 million in additional annual revenue for the European night-time economy. Northern Ireland remains one of the few places on in the UK / Ireland where that option does not exist; Stormont has simply not modernised the taxi regulations it has full control over, but don’t take my word for it, just ask any pub or restaurant owner what most threatens their night-time trade, and the answer is rarely the dream of reduced VAT in the future, it is the reality of the now as the lack of availability of taxis stops customers from going out and getting home.
THE INDUSTRY BODY’S ROLE
Hospitality Ulster, which the BBC interviewed for its report, deserves scrutiny here too. This organisation has been among the most vocal opponents of the very licensing reforms that would allow new venues to open, encourage more competition, and bring town centres back to life. You cannot spend years blocking the liberalisation of your own industry and then demand public sympathy because that industry is shrinking.
The argument that VAT is killing hospitality sits awkwardly alongside a decades-long campaign to ensure that anyone wanting to open a new venue must pay up to £200,000 for a licence; a barrier that has protected incumbents while strangling the sector’s growth. Hospitality Ulster cannot have it both ways, and it should be called out for taking both sides of the argument.
THE REAL COST OF THE VAT GAP
None of this is to say the VAT disparity is trivial. An eleven-percentage-point gap with the Republic is the difference between a wedding booked in Fermanagh or Donegal; between a tour bus stopping in Derry or driving straight through. It deserves to be fixed. But accountability cuts in every direction.
Politicians who perform concern for the cameras while sitting on unused devolved powers are taking the public for fools and industry bodies who lobby against reform while crying crisis are doing exactly the same.
The problems facing Northern Ireland’s hospitality sector are real, however as I have just outlined, there are solutions that Stormont can implement now, if the politicians had the honesty to be straight with the public and the will to implement reforms.
Patrick Murdock is a dual qualified Chartered Surveyor and qualified Tax Advisor original from and currently in based Newry. An independent free thinking liberal at heart, prior to establishing his own specialist consultancy, Patrick has built a twenty year career working for a number of global advisory firms and continues to work across markets in the construction, property and final services industries and has considerable experience and practical knowledge of working day today in the UK, Northern Ireland and ROI markets.
He is also Cofounder and operator – The Hub, Newry.
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