Coastal Tourism and Hospitality: Fiscal Support

(Limited Text - Ministerial Extracts only)

Thursday 22nd February 2024 Westminster Hall

[The Financial Secretary to the Treasury (Nigel Huddleston)]

Let me join others in thanking the Backbench Business Committee for granting this debate, and congratulating my hon. Friend the Member for North Devon (Selaine Saxby) on securing it. As she referred to in her speech, she is indeed a persistent and persuasive advocate not only for her own constituents and constituency, but for the vital tourism, hospitality and leisure sector. I thank everybody for their contributions today; we have heard many good arguments, showing right across all four nations the passion, enthusiasm, empathy, love and support for this vital sector that employs so many of our constituents directly, and even more indirectly.

The Government are committed to promoting economic growth in all parts of the UK, and in order to do so we recognise the unique challenges faced by coastal communities, as raised by many Members today. We have supported coastal communities to level up through the dedicated funding under the coastal communities fund, while the levelling-up fund has provided more than £1 billion to projects in coastal areas. That was raised by my right hon. Friend the Member for Witham (Priti Patel), my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart) and others. More than £400 million has been provided from the UK shared prosperity fund, which will go to lead local authorities within or serving coastal areas.

The long-term plan for towns also targets more than £1 billion of support for towns up and down the country, including coastal towns, each of which will get about £20 million over the next decade. This is built on the support offered through successful bids into town deals and the future high streets fund. It is important to mention that of the 101 towns receiving a town deal, 22 are coastal and are set to receive more than half a billion pounds alongside almost £150 million from the future high streets fund. Therefore, directly or indirectly, the tourism, hospitality and leisure sectors will rightly benefit from some of this additional investment. Every Member has outlined today how the sector makes such a significant contribution to the UK economy as a whole, and to coastal areas in particular.

Let us not forget that the sector particularly suffered from the pandemic and is still recovering. Since the start of the pandemic, we have provided more than £37 billion for the tourism, hospitality and leisure sectors in the form of grants, loans and tax breaks. I think the hon. Member for North Devon mentioned some of those loans that are still being repaid. She was right to point out that they are still a burden on many businesses, but she will be aware that we have introduced considerable flexibility in those loans, extending the time to pay some of them from six to 10 years, and other measures. We are aware of the challenges. There is still a lot of debt to be paid off by individual companies, but also by the nation as a whole, because about £350 billion of support in total was provided to support individuals and the economy during the pandemic. That needs to be paid off, and everybody is sensible and aware that that will not be easy. It is why tax levels are as they are at the moment.

Of course, over the 2021 spending review period, the Government also allocated over £100 million to support the British Tourist Authority, which of course supports VisitBritain and VisitEngland, whose important work was mentioned by my hon. Friend the Member for Waveney (Peter Aldous); he also raised the point about where they spend their money, which is something that my colleagues at the Department of Culture, Media and Sport maintain a focus on. I applaud the work done by those bodies and by VisitScotland, Visit Wales, and the equivalents for Ireland and Northern Ireland. They do incredibly valuable work and attract not only domestic visitors but visitors in their millions from around the world, who come and enjoy everything that we have to offer.

Many Members have mentioned business rates. I have been lobbied by the ever-busy Kate Nicholls from UKHospitality; it sounds like she has been around quite a lot recently—and rightly so, because she represents such an important sector and so many people across the country. We have heard what those people have had to say and many Members have today re-emphasised the points that the industry bodies are making; UKHospitality is one of many industry bodies that are incredibly powerful and persuasive.

In the autumn statement, we announced tax cuts for the sector worth about £4.3 billion over five years. As has been mentioned by several Members, we also extended the retail and hospitality leisure relief scheme on business rates to 75%, creating a tax cut worth almost £2.4 billion for about 230,000 retail hospitality and leisure properties, which of course helps our high streets and protects small shops, many of which are in our coastal communities.

Of course, that relief was not extended by our colleagues in Scotland, nor fully extended in Wales. I assure hon. Members that we keep an eye on what is happening in other parts of the country and we share ideas. The sector is not particularly party political, as I know from my tourism role; tourism Ministers and others meet regularly across the nations, and work together and share ideas. In these difficult financial times there is not always the money to go around to do all the things that we would like to do, but we prioritised retail, hospitality and leisure for that specific additional relief in England.

The UK Government also decided to freeze the small business multiplier for the fourth consecutive year in 2024-25. That will protect over 1 million ratepayers and, combined with small business rates relief, will protect 90% of properties from inflationary bill increases. It will have a significant impact. For example, the typical pub will receive £11,800 of RHL relief off their final business rates bill in 2024-25; and, combined with the frozen small business multiplier, will benefit from about £12,800 of support.

Many Members also mentioned the registration threshold, which we have also received quite a lot of lobbying on. Of course, the Government recognise that accounting for that threshold can be burdensome on small businesses. That is why the UK has the second highest VAT threshold, at £85,000, within the OECD—keeping the majority of UK businesses out of VAT all together. I recognise that views on the VAT registration threshold are divided and the case for change has been reviewed regularly over the years. There was a review just a few years ago. No clear option for reform emerged from that review, but, as with all tax policy, we will continue to keep this policy under review. I am afraid that that might be a point I make several times in my concluding comments.

Quite importantly, several Members also raised the issue of cutting national insurance. As part of our long-term plan for growth and to ensure that work pays, we have cut taxes for 29 million working people. From last month, 27 million employees have had their national insurance contributions, or NICs, cut from 12% to 10%. That means that the average worker on £35,400 will receive an annual tax cut of more than £450 a year. Of course, the self-employed will have a tax cut and that benefit will come in from April. That comes on top of the existing £5,000 employment allowance, which means that about 40% of all businesses—around 675,000 in total—have been taken out of paying employer NICs entirely. My hon. Friend the Member for North Devon and I have spoken about that on many occasions. I heard the many calls for further reform of and further movement on national insurance contributions, but in advance of a fiscal statement, I am afraid that the Chancellor would not be impressed if I announced policy today. Nevertheless, all these issues are being looked at.

Hon. Members mentioned a few other issues. The hon. Member for Strangford (Jim Shannon) always makes important contributions, but from my multiple roles over many years, I know that the tourism, hospitality and leisure sector is a particular passion of his. I will finally take him up on his invitation to visit his constituency; my goal is to sort that out, so let’s talk dates very soon. As usual, he brought up something that other people do not. He reminded us that, although we can control certain things and pull certain levers, the all-important thing for the tourism, hospitality and leisure sector is the weather, which plays a vital role—sometimes boom or bust.

My hon. Friend the Member for Waveney pointed out the incredible diversity of offerings in the United Kingdom, so it is important to remember that at all times of year, in all weathers, there is something compelling to visit. We need to get that message across domestically and internationally through marketing.

The hon. Member for Strangford mentioned our heritage and the role played by the National Trust and many others in the ecosystem. I am more than happy to have conversations with other colleagues about his points about Barnett consequentials and the block grant, and I know he is having those conversations too. I will make sure they hear what he said today and his contributions in other areas.

My hon. Friend the Member for Hastings and Rye mentioned the importance of seasonality, which is related to the weather, and what we can do to reduce it. That is a particularly acute issue for the UK tourism industry, and it of course impacts productivity over the course of the year. She also mentioned planning policy and the important changes recently announced by DLUHC in response to its consultation with DCMS. The sector has been calling for a registration scheme for some time, and we hope it will have the desired impact.

The right hon. Member for Orkney and Shetland (Mr Carmichael) also talked about planning policy in different parts of the UK and about different regimes. He is an extremely knowledgeable advocate for the sector, and rightly pointed out that the multiplier impact is key. There is obviously a direct impact, but sometimes the indirect impacts are difficult to assess. He mentioned the VAT cut during the pandemic. We estimate that that cost the Treasury about £8 billion, but of course that was needed; it was a very difficult time. It was always intended to be temporary, although we are hearing many calls for a further reduction in VAT. That figure alone shows that it would not come without considerable cost, which needs to be factored in, but we recognise that there is a multiplier impact.

If we were to repeat that reduction, the cost would probably be £10 billion or £12 billion. Some are lobbying for a smaller rate cut to about 12.5%, which would have a smaller cost, but we are still talking about a loss of billions of pounds of revenue to the Treasury. As with all requests for a VAT cut, we need to know what the purpose is, what the impact will be and whether we can be confident that the lower prices will be passed on to the end consumer. That is usually the purpose of VAT cuts, in contrast with help with cash flow through other mechanisms such as business rates relief. The right hon. Gentleman was absolutely right to point out that, in this sector, pulling one lever can have a positive impact across a very wide area indeed.

My hon. Friend the Member for Waveney was right to showcase his constituency and others, because we have so much to offer. He unsurprisingly had a very broad range of asks and requests, which I will pass on to the relevant Departments. I assure him that we do talk across Departments, so I have had conversations with colleagues about many of the points he raised and other issues, because no one Department has oversight or control over the sector. As we have found in this broad-ranging debate, many Ministers and many Departments have some control over certain levers, but we talk to each other.

My hon. Friend also mentioned Hoseasons in his constituency. I should declare that I have visited on many occasions, because it was a client of mine many years ago. As some may know, I worked in the sector before coming into Parliament. I always enjoyed my visits to Lowestoft and the area—it was always sunny.

I am coming to an end, Mrs Cummins; I know that the debate could go on for three hours, but I will ensure that we do not. I am in agreement with many of the points made by my SNP and Labour opposite numbers—the hon. Members for Coatbridge, Chryston and Bellshill (Steven Bonnar) and for Ealing North (James Murray) respectively—because of the nature of the sector. In some other areas, I am in slight, respectful disagreement with them, but that should not detract from the fact that this sector has all-party support.

We may have differences of view on what levers to pull, but the sector has support across the whole House, so I conclude by saying that I very much appreciate all the contributions made today by right hon. and hon. Members—many substantial contributions, some compelling arguments and some very good ideas. In advance of a fiscal event, I cannot make any announcements or commitments, but I want to make it clear that we are always listening.