Retail and Hospitality Sector

Baroness Neville-Rolfe Excerpts

Thursday 22nd January 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I start by welcoming today’s maiden speeches. One of the most civilised aspects of life in the Lords is the Long Table. I had the pleasure this week of dining with the triumvirate of the noble Baroness, Lady Dacres of Lewisham, and the noble Lords, Lord Forbes of Newcastle and Lord John of Southwark. I know that they and the noble Baroness, Lady Shah, will make an energetic and positive contribution, such as we have already heard from the noble Baroness, Lady Dacres.

My noble friend Lady Monckton of Dallington Forest started off with a stirring speech. She explained clearly how pubs are struggling and waiting desperately for the extra help that the Government have promised. The uncertainty of their position, as the Government dither, is deafening. One minute, Rachel Reeves is imposing a huge increase in their costs, notably on rates, through a botched revaluation. Then we have a series of briefings suggesting that not only pubs but hotels and others might benefit, only for their hopes to be dashed by the Chancellor yesterday in Davos—hardly a democratic gathering. I hope that the Minister will have the grace to share the Treasury’s thinking with us. Parliament is paramount, however much the leadership might like to think differently.

I am speaking today because my neighbour, who owns a London pub, thinks that he will become bankrupt and have to move abroad unless substantial changes are made on rates. He has a pub with a hostel—not a smart hotel but a lodge, in the bureaucratic vernacular. He is in the category where rateable values alone will rise by 70% rather than 30%. Can the Minister look into this unfairness? Add to this the quadruple whammy of: first, the increase in NICs; secondly, the steep rises in the national minimum wage, particularly for young people; thirdly, IHT on family businesses that will still kill many of them; and, fourthly, the new cost of the Employment Rights Act. Multiply that across the economy and you have a crisis, so it is no surprise that thousands of pubs are closing.

The position will erode further with the introduction of a lower drink-drive limit. It will strike a hammer blow to pubs in rural areas—look at Scotland. Like so much modern regulation, it is not necessary. Those who, like me, take care to stay below the limit will stop going to the pub and the reckless will continue to drink and drive. The Government are right to say that they will act on rates, but it is complex. I am not convinced that Treasury Ministers have ever taken the time to understand what they have done.

What is clear is that growth is going backwards, which brings me on to hospitality more broadly. It is a huge industry suffering from that quadruple whammy and from tourist uncertainty, not helped by the failure to tackle street crime. Magnets for tourism such as music venues and stately homes are also in peril. The visitor levy on hotels is a threat to a slowing sector that is already facing a high tax burden and mushrooming construction costs. There is also another long-term hit: the impact of slimming drugs, reducing demand in restaurants and for alcoholic drinks. I have a relative who manages a vodka start-up. Assailed by national insurance, rates and a tougher economic backdrop, he is now working with a partner in the US, which they see as a more business-friendly country, even with today’s rolling Trump news.

Finally, I turn to retail. This is a highly productive sector. But it already shoulders a disproportionate tax burden: 7.4% of all business taxes, or £33 billion a year, according to the BRC. As well as rates, there are more costs in the pipeline on packaging and recycling. Employment is falling in retail, as it is in hospitality. The Government should be wary of increasing the burden there. The sector saw the promised rates reform as a possible driver of growth, only to be gravely disappointed.

The truth is that this Government have so far made a mess of the economy. Taxes, spending and now inflation are up, while growth, productivity and employment are sluggish. I believe that this partly reflects the Government’s ignorance of business, particularly less elite businesses such as retail and hospitality, as was highlighted by my noble friend. The noble Lord, Lord Timpson, is an honourable exception, as is the noble Lord, Lord Leong, who is winding today. A useful new year’s resolution would be for the Prime Minister to seek their counsel as he frames his overdue U-turn on rates.