Hospitality Sector VAT: Local Economies, Employment and Growth

Chris Webb Excerpts

Thursday 12th November 2026 Westminster Hall

[Chris Webb (Blackpool South) (Lab)]

I apologise for my slight delay in being here, Dr Huq; I had a personal incident back home and I was just on the phone about it.

As the chair of the all-party parliamentary group on hospitality and tourism, and the MP for a proud seaside town, I welcome this opportunity to talk about the important and timely issue of the role that VAT policy can play in supporting hospitality, tourism, employment and economic growth.

Hospitality is an important industry for communities across the country, employing around 3.5 million people nationally. On average, it provides work for 5,000 people in each constituency, but for constituencies such as Blackpool South that average figure is more than doubled. Our visitor economy supports local jobs, attracts investment and drives regeneration. Hospitality is central to our economic success and our identity. Hospitality jobs matter to local people and to the town.

For many people in Blackpool, including myself, hospitality gave us our first pay packet, our first reference and our first introduction to the world of work, and for many people that first job in hospitality turns into a career. I welcome the Government’s recent business rates freeze package for retail, hospitality and leisure. That freeze will benefit thousands of businesses in Blackpool. The changes to thresholds will mean that 68% of retail, hospitality and leisure properties in our town will now pay no business rates at all. That is a significant intervention, demonstrating that Ministers recognise the importance of these sectors.

However, we need to go further. Alongside Kate Shane, CEO of Blackpool Tourism Ltd, I continue to make the case for a Blackpool tourism enterprise zone, building on the existing enterprise zone model and extending it to our hospitality and tourism economy to unlock further growth, investment and job creation.

[Priti Patel (Witham) (Con)]

It is very nice to hear about Blackpool and everything in the hon. Gentleman’s constituency; I declare that I have visited Blackpool on many occasions. Hospitality businesses in the Witham constituency have been hit just as hard by VAT on the sector, as well as by employment taxes and the cumulative burden of increased taxation. Would he consider working with all of us in this debate to get the Government to recognise that at the next fiscal event—which will be next year, or even in the Finance Bill, when it arrives—by making changes to the VAT regime for hospitality, which is such an important sector?

[Chris Webb]

I thank the right hon. Lady for her intervention. I hope that my actions as the chair of the APPG on hospitality and tourism for the last two and a half years have shown that I will work with anyone across this House to support hospitality. The APPG has been quite vocal, including in our inquiries, about why there is a need to lower VAT, and we will continue to make that case.

Thousands of residents in my constituency have backed my idea to build a state-of-the-art arena at the Blackpool Central site, and we also have Government support for this proposal. However, by going further to support our tourism businesses at a policy level, we can give large investors the confidence to come to Blackpool, and ensure its future as a modern and leading entertainment destination, especially as we are in the final of the city of culture contest, which I know we will win.

Blackpool was built as a place of rest, relaxation and entertainment for the working classes, and our visitors today continue to be highly price-sensitive. Blackpool prides itself on being able to offer a good family trip for the price of car parking, an ice cream and a fistful of 2p coins to feed the arcade machines. Thanks to the work of Blackpool council and Blackpool Tourism Ltd, we offer large-scale free events, ranging from our brilliant airshow to the Blackpool Illuminations, which bring hordes of tourists to our coast in search of a family budget-friendly trip.

However, we also rely on families spending much more money than they do already. When offered value for money, they will do so, but small increases in the cost of accommodation, meals, attractions and entertainment influence how long a family chooses to stay.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

The hon. Gentleman is making a powerful speech about the importance of the hospitality sector and the impact of even relatively small increases in costs for families. Does he agree that the Government ought to drop their proposals for an overnight visitor levy, which will only make accommodation more expensive for the families visiting his constituency?

[Chris Webb]

The hon. Gentleman has clearly had a quick glance at what I am coming to next in my speech. I welcome the fact that visitor levy receipts will stay local and will support tourism-related priorities, but businesses in places like mine have understandably raised concerns about the cumulative impact of rising costs. The levy is just one more addition to a growing list. What might work in the centre of Manchester does not work in coastal communities like Blackpool.

[George Freeman (Mid Norfolk) (Con)]

The hon. Gentleman is making a powerful point about Blackpool. I have many happy memoires of large party conferences there back in the day. He is talking about urban hospitality, but I want to make a plea for rural hospitality. My Mid Norfork constituency has 135 villages and 50 pubs, which are the heartbeat of the community; many businesses meet in them, and they are warm places in the winter. They are being hammered by high energy costs and the jobs tax, the tourism tax and the other taxes the Government have introduced. Rather than a £10 billion VAT cut for everyone, can we have targeted relief to rural hospitality venues, which are dying, along with the rural economy?

[Chris Webb]

The APPG has raised similar issues in our inquiries. We have said to the Government, at not just this Budget but the previous one, that we need to look at support packages, rather than sector-wide schemes. If the money is not available, we need to look at where the need is greatest right now.

The World Economic Forum’s travel and tourism development index places the UK 113th out of 119 countries for price competitiveness. Blackpool faces growing competition from domestic destinations and international markets, where hospitality VAT rates are often significantly lower.

Every £1 spent by a visitor in Blackpool moves through the wider economy to local suppliers, taxi drivers, independent retailers and cleaning businesses. When a family has a good weekend away, the benefit is felt far from the till.

If the Government want to invest in places such as Blackpool to deliver maximum value, they must also consider the tax environment in which our businesses operate. Our town continues to face significant challenges with economic inactivity and young people who are not in education, employment or training.

It is not just the lack of jobs: our young people are navigating entrenched multi-generational poverty, housing insecurity, caring responsibilities and poor health. They deserve the opportunity to get their lives on track. As I have said many times, hospitality is the sector best placed to give them their first step. I therefore welcome the partnership between the Government and major hospitality employers, facilitated by UKHospitality, which will deliver 100,000 opportunities for young people. But if we want businesses to create more jobs, take on more apprentices and invest in training, we must ensure that they have the confidence and capacity to grow.

[Several hon. Members rose—]

[Chris Webb]

It is busy! We will work our way round.

[Mims Davies (East Grinstead and Uckfield) (Con)]

The hon. Gentleman mentioned the wider economic impact. East Grinstead has the headquarters of the Caravan and Motorhome Club, which provides access to more than 2,200 campsites, glamping and all sorts of wonderful places. It will be affected by the overnight visitor levy, which means that a meal out and other things families want to do on those holidays just will not happen. Does the hon. Gentleman agree that that is what this means for families?

[Dr Rupa Huq (in the Chair)]

Order. We have half an hour to get everyone in. I hope Chris Webb will conclude so that other people can get in.

[Chris Webb]

I understand the point the hon. Member for East Grinstead and Uckfield (Mims Davies) makes, and I have heard it from caravan businesses and parks in my constituency. That has to be part of the discussions after the Second Reading of the Visitor Levy (England) Bill.

[Jessica Toale (Bournemouth West) (Lab)]

rose—

[Chris Webb]

I give way to my hon. Friend.

[Dr Rupa Huq (in the Chair)]

Order. No, you are not taking any more interventions. There is a hard stop at 4 pm, and we need to hear from the Front Benchers.

--- Later in debate ---

[Chris Webb]

The Great British summer savings scheme, which temporarily reduced VAT on attractions this summer, is a good case study of the potential impact of policy changes on local economies, employment and tourism. The scheme recognised that targeted VAT reductions can support both consumers and businesses, as can free bus travel.

Take the award-winning Blackpool pleasure beach in my constituency. During the pandemic, when VAT was cut to 5%, the park’s turnover rose, and it recorded an exceptional profit of £10.5 million—the biggest in years. As a consequence, it paid £1.9 million more in tax to His Majesty’s Revenue and Customs. Over the summer, businesses in my constituency were saved because of the summer savings scheme.

What assessments has the Minister’s Department made of the impact of rising costs on hospitality businesses, business investment, employment and opportunities for young people? What assessment has been made of the potential impact on local economic growth of reducing hospitality VAT? I look forward to hearing more from colleagues and to the Minister’s response.

[Dr Rupa Huq (in the Chair)]

I am setting a hard time limit of three minutes for everyone from now on.