Carmichael calls for hospitality industry to be exempt from NICs hike as businesses face £4.5bn “jobs tax”

Orkney and Shetland MP, Alistair Carmichael, has today backed Liberal Democrat calls for the hospitality industry to be made exempt from the government’s hike in National Insurance Contributions, following revelations that the industry faces a £4.5 billion tax bombshell over the next five years.

Research by the Liberal Democrats revealed that next year the additional tax bill for hospitality businesses is estimated at around £870 million, rising to more than £940 million per year by the end of the decade. 

The Liberal Democrats are also calling on the Government to negotiate a Youth Mobility Visa scheme with the EU so that British businesses can recruit the workers they need to fill vacancies. The Institute of Directors has said it “would be particularly beneficial for sectors like hospitality… which typically employ large numbers of young people and have struggled to find workers following the loss of movement of potential recruits between the EU”.

Mr Carmichael also reiterated calls for a 5% rate on VAT for tourism and hospitality to boost the sector.

Mr Carmichael said:

“Restaurants, pubs and hotels in the isles and across the country are warning that the Government’s national insurance hike risks many of them going to the wall. The Chancellor needs to listen before we do irreversible harm to the visitor economy.

“Local businesses like these are at the heart of our communities, and have been extraordinarily resilient over years of disruption from Covid, the war in Ukraine and the cost-of-living crisis. This tax hike would hammer them again, hitting growth and putting vital local jobs at risk.

“If they want the economy and local businesses to grow, the Government should be helping our tourism and hospitality sector, not harming it. They should reconsider positive steps like a reintroduction of the 5% VAT rate on tourism, which could help make our visitor economy more competitive, instead of ploughing ahead with this misguided tax hike.”