To ask the Minister of Finance and Personnel what communication his Department has had with the Northern Ireland Hotels Federation regarding VAT rates; and whether he has plans to raise the issue of a separate VAT rate for the Northern Ireland tourism/hospitality sector with HM Treasury.

I understand AQW 40452/11-15 was posed to my predecessor, and I will now answer this question in my capacity as Finance Minister in conjunction with AQW 45655/11-15.

While I have not had any communication with the Northern Ireland Hotels Federation, they have raised the issue of a reduced VAT rate for tourism and hospitality products and services with me in my previous Ministerial role.

EU law largely prohibits a regional variation in VAT rates, and as such, any reduction would need to be applied across the UK. That said, I firmly believe that such a measure would be hugely beneficial, not only for the Northern Ireland tourism industry, but for that of the UK as a whole. This is a matter my predecessor raised as recently as February this year with the then Financial Secretary to the Treasury, David Gauke MP where he urged the Treasury to consider how a reduced rate of VAT could be used and targeted to improve the competitiveness of the UK tourism industry. In his response, the Financial Secretary rejected the call for such a reduction citing the cost to the Exchequer.

I will continue to press the case for such a VAT reduction and I intend writing again to Mr Gauke following his re-appointment as Financial Secretary in the new Government.