Hospitality Sector

Angus MacDonald Excerpts

Tuesday 1st July 2025 Westminster Hall

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for leading today’s debate on a subject that is important for all regions in the UK, but particularly for mine. For Cornwall, the visitor sector is still an important core industry. Cornwall is a top UK tourist destination, with tourism providing 15% of Cornwall’s economy. Tourism and hospitality account for one in five jobs in the Duchy and well over 90% of our visitors come from within the UK.

In my constituency alone, there are 1,761 hospitality businesses—placing us 21st out of all UK constituencies—with a turnover of more than £4.5 million. Cornwall is a national landscape. People come from far and wide to visit our beautiful beaches and dramatic coastline. They stay in our hotels, B&Bs and holiday lets, drink in our pubs and eat in our array of brilliant cafes and restaurants. The hospitality sector in Cornwall is dynamic, creative, and one of the mainstays of our economy. However, our reliance on what is often still a seasonal sector can make us vulnerable. After the post-covid boom, Cornwall really suffered and by summer 2024 Tim Jones, chairman of South West Business Council, argued that tourism in the south-west as a whole was at its lowest for 10 years.

During the peak season, the Cornish population grows fivefold, putting strain on local NHS, water, roads and policing. To give an example, around 700 people turned up to A&E in Cornwall on August bank holiday Monday. Fair Funding for Cornwall is a campaign that Cornish politicians of all stripes have been pushing for years. I am very pleased that this Government have recognised visitor numbers, coastal areas and sparsity in the recent local government funding review and in the review of the Carr-Hill formula for NHS GP funding. I hope that follows through into more support for our services and infrastructure.

I have spoken to many businesses since I was elected a year ago, and I know that some of them have been struggling. Rising costs, high energy bills, staff shortages and pandemic debts have forced some to close up, or to consider doing so. That will have a knock-on effect on the number of employment and apprenticeship opportunities available to our young people, who have already suffered from years of broken education and isolation during covid, and a lack of special educational needs and disabilities support in schools over the last decade. The businesses themselves are often family-run, close-knit and the centres of their communities, so their loss is felt greatly.

The Government have taken some steps to support hospitality. I served on the Bill Committee for the Non-Domestic Rating (Multipliers and Private Schools) Act 2025 last year, and I welcome the provisions it contained to introduce permanently lower rates for retail, hospitality and leisure businesses with rateable values below £500,000 from 2026-27.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

When the hon. Lady was on that Bill Committee, did she consider the fact that a large part of the hospitality sector in Scotland would have no business rate relief, even though businesses in the south could get it? It was a favour done for England and Wales, but did not help Scotland.

[Jayne Kirkham]

As I recall it, we did not specifically consider Scotland—or I certainly did not. The Government did prevent a business rates cliff edge in April 2025 in England by extending business rate relief at a rate of 40% for 2025-26. I would welcome the Minister’s confirmation that those permanently lower rates will compare to current rates, rather than the pre-pandemic ones.

I look forward to the launch of the Government’s holiday let registration scheme later this year. If that includes registration of safety check documents and, potentially, inspection, it will ensure safety and quality standards, levelling the playing field between hotels, B&Bs and short-term lets. There are more holiday lets and second homes in Cornwall than there are people on the housing waiting list, which stands at more than 25,000. The industry in Cornwall is supportive of a scheme where safety checks are required for holiday lets, as the good providers are doing those anyway. Registration would also show us where the gluts of holiday let properties are.

For people working in the hospitality sector to live in the communities in which they work, we need investment in public transport and to tackle the housing crisis. Measures on second homes and the Government’s pledge to build more council and affordable homes on stuck sites, such as the Pydar development in Truro in my constituency, are welcome. I look forward to a strategic place partnership with Homes England to make that happen for Cornwall.

Cornwall’s chamber of commerce has said that better transport connectivity is the No. 1 priority for the businesses it represents, so I welcome the Government’s transport funding announcements. Recent upgrades to the A30 were helpful, but protection of our airport public service obligations and upgrades to our rail service —upgrading to electric power or batteries, and providing better wi-fi to make the journey of more than five hours from London to Falmouth more bearable—would be very welcome. Improved bus services are obviously very important. I welcome the commitment to the £3 fare cap, but in rural areas, getting to work and back home is often difficult, particularly after 6 pm, and that needs tackling.

There are many opportunities and challenges facing Cornwall and its tourism industry. The challenges include wages and secure working hours, as many jobs in hospitality are insecure. The Government’s new commitment to end zero-hours contracts if—crucially—the employee does not want them, and to provide average-hours contracts, will help. Cornwall has been awarded accreditation as a living wage place, and many firms are very proud of that. The rises in the minimum wage over the years, along with the increase in training needs after the pandemic, have made life difficult for hospitality businesses, but they recognise that paying good wages is crucial for the retention of staff.

The potential of a tourism tax—how it could be levied and collected in a way that was not detrimental to our hotels, B&Bs and holiday parks, and that would encompass direct booking websites—has been discussed for a long time in Cornwall. The continuation of funding for local visitor economy partnership programmes, such as Visit Cornwall and the Tourism Industry Council, is important to enable our hospitality sector to market itself at home and abroad. Our hospitality sector in Cornwall has the potential to thrive, but it needs the right conditions and support to do so.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

At the start, I declare an interest, as my children and I own a cinema, restaurant and big visitor centre in Fort William, employing more than 100 people. I was brought up in a rural inn and my brother has a brewery. I am steeped in the hospitality sector.

At the autumn Budget, the Government increased the rate of NIC by 8.7%, which, added to other measures, resulted in an increase of 12.4% in payroll for hospitality businesses like mine. That is four times the rate of inflation. The hospitality sector in my constituency and other remote areas faces additional challenges, particularly the cost of energy. Businesses that cannot access mains gas often have to use electricity, which is four times the price of mains gas. A hotel in rural Britain, whether it be in Cornwall or the highlands, would need to pay £100,000 to heat itself using electricity; using mains gas, the cost would be £25,000, and if it were in America, heating would cost £10,000.

Environmental tariffs are on the wrong energy source. They are on renewable energy and not on imported carbon fuel mains gas. That is just so wrong. The Government declared that they are a growth Government; we now know that they meant growth in costs rather than growth in revenue. The impact of the autumn Budget was a 2% increase in the cost of the public sector and a 2% reduction in the private sector. It seems that the hospitality sector is bearing the brunt of that.

I would say that the hospitality sector in rural Britain has not struggled more in my lifetime. Both the last two Governments have plucked the golden goose of hospitality so often that it no longer has any feathers.