Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, if he will hold discussions with Ofgem on the potential merits of allowing businesses to renegotiate their energy contracts with suppliers; and if he will make a statement.

Answered by Graham Stuart

Contract negotiations are a matter for businesses and their energy suppliers. Businesses should contact their supplier to discuss renegotiations. The Government is providing support to businesses through the Energy Bill Discount Scheme until April 2024. Ministers from the Department for Energy Security and Net Zero and the Department for Business and Trade met recently with non-domestic suppliers, Ofgem and industry representatives to discuss what more could be done to support customers who may have fixed in at higher prices in Autumn 2022. The Government is working with Ofgem on this matter and the on-going non-domestic market review.

Question to the Department for Business and Trade:

To ask the Secretary of State for Business and Trade, what recent assessment she has made of the viability of businesses in the hospitality sector, in the context of (a) the rates of VAT applicable to them and (b) increases in the cost of (i) living and (ii) energy; and if she will make a statement.

Answered by Kevin Hollinrake - Shadow Secretary of State for Levelling Up, Housing and Communities

My Department regularly engages with businesses in the hospitality sector and is actively working with Hospitality Sector Council to support businesses with the costs they face.

The Government introduced a temporary reduced rate of VAT for hospitality on 15 July 2020 to support businesses that were severely affected by COVID-19. This relief ended on 31 March 2022. At the Autumn Statement 2022 the Chancellor brought forward a package of changes to business rates worth £13.6bn to businesses over the next 5 years.

This is in addition to the Energy Bills Relief Scheme, which discounted businesses’ energy bills until 31 March 2023, and the new Energy Bills Discount Scheme.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make it his policy to reduce the level of VAT applying to the hospitality sector; and if he will make a statement.

Answered by Victoria Atkins - Shadow Secretary of State for Environment, Food and Rural Affairs

The previous VAT relief for tourism and hospitality cost over £8 billion.

The Government has been clear that this was a temporary measure designed to support the cash flow and viability of sectors that have been severely affected by COVID-19.

We have continued to support and encourage the hospitality sector through other measures since then. At Autumn Statement 2022, the Government announced a package of changes and cuts to business rates worth £13.6 billion over the next five years, including an increased 75 per cent relief for retail, hospitality and leisure properties, up to a cash cap of £110,000 per business for 2023-2024. This is a tax cut worth over £2 billion for around 230,000 RHL businesses, to support the high street and protect small shops.

The introduction of a small profits rate of Corporation Tax, from April, keeps the rate at 19 per cent for companies with profits of £50,000 or less. This means around 70 per cent of actively trading companies will not see an increase in their Corporation Tax rate. The availability of marginal relief for companies with profits of between £50,000 and £250,000 means only around 10 per cent of actively trading companies will pay the full 25 per cent.

While there are no plans to reduce the rate of VAT paid by hospitality businesses, the Government keeps all taxes under review.

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