THE Easter holidays seem to have brought it home to the north’s hospitality trade that they face serious difficulties competing with their counterparts across the border. It’s the different VAT rates that do it.

At present VAT on food, drink, hotel rooms etc is 20%. In the south it’s 13.5%, but in the summer will drop to 9% for food.

To say that gives the hospitality business in the south a competitive advantage is a gross understatement.

Traders have been complaining in the past week about the fact they just can’t compete.

David Adams: I’m a former loyalist who supports a ‘New Ireland’, but why won’t anyone tell me what it will be like?

Derry, as usual, is one of the worst hit. As one business woman said, tour buses come in from Donegal, a tour guide walks people round the city’s walls, they have a look at the Guildhall, then climb back on the bus and return to Donegal for lunch or dinner and stay in a hotel there.

What’s the point in Caoimhe Archibald, the Economy Minister, pressing Fáilte Ireland to let Tourism NI link up with the money-spinning Wild Atlantic Way if no visitors to the Causeway Coast are going to spend any money there?

The same goes for a €2.7 million investment under the Shared Island Brand Collaboration Project she announced in February with the Republic’s Tourism Minister.

That links Fáilte Ireland, Tourism Ireland and Tourism NI. It invests in 13 projects in the north and west, and includes Fermanagh in the south’s ‘Hidden Heartlands’ brand.

Now, you can see how all this joint development work benefits the south, but the north will be left on the starting blocks carrying the extra weight of 11% more VAT.

Cutting VAT on hospitality in the north is a no-brainer, but the British government just says no.

The tenacious and indefatigable Colin Neill from Hospitality Ulster has been campaigning for a reduction in VAT to compete with the Republic’s for ages but the drop to 9% is a killer blow.

He points out that visitors from the Republic are the biggest tourism market for Northern Ireland.

Many hotels, bars and restaurants rely on trade from across the border for weddings and functions.

However, he adds: “If your wedding is going to be 11% cheaper, where are you going to go?”

The Treasury’s response to Claire Hanna’s House of Commons question on reducing VAT was as nonsensical as it was dismissive.

“Reducing VAT rates, or applying different VAT rates within the UK, would add complexity and come at a significant cost to the Exchequer.”

Add complexity, indeed? Like as complex as the Windsor Framework maybe?

Furthermore, there would not be a “significant cost to the Exchequer”. Colin Neill has challenged the British government to set up a pilot scheme to show that the increased trade from dramatically reducing VAT would quickly recompense the Treasury.

However, there’s more going on than a blank refusal to rescue the north’s hospitality business.

Starmer’s government is continuing the trend the Conservatives began of rolling back devolution.

In March, Plaid Cymru leader Rhun ap Iorwerth produced a leaked Cabinet memo from December 2025 in which Starmer warned ministers against taking “an overly deferential or laissez-faire engagement” with devolved administrations, which would “almost inevitably create political challenges or missed positive opportunities… We should be confident in our ability to deliver directly in those nations (sic), including through direct spending, even when devolved governments may oppose this.” Hmm.

The memo is dated 10 days after a letter signed by a third of the Labour members of the Welsh Senedd accused him of rolling back devolution and blocking funding for Wales, in what they said was “at best deeply insensitive, at worst a constitutional outrage”.

Ap Iorwerth said it was Starmer’s version of Boris Johnson’s “muscular unionism”.

Given this resistance to devolution, there is no way Starmer will agree to different VAT rates even though the present arrangement is deeply damaging to the north.

There will be no recognition of the north’s unique position with an EU state on the other side of the British border in Ireland.

Yet cutting VAT couldn’t be argued as creating a precedent, since there is no international border within Britain.

No matter: the centralised government revenue system in Britain – the tightest in the G7 – prevails in all decisions.

Nevertheless, the north’s trade with Britain is governed by the Irish Protocol, which the British call the Windsor Framework, and the EU customs code applies to all goods entering from Britain, many of which carry the label ‘Not for EU’.

So there is precedent for treating the north differently in customs and VAT.

Unfortunately, Colin Neill and Hospitality Ulster don’t carry the clout of the EU so Britain will ignore them.

Notice the dog that didn’t bark while hospitality business here goes to the wall? Our silent, useless, superfluous proconsul.

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