Hospitality Sector

Jamie Stone Excerpts

Tuesday 1st July 2025 Westminster Hall

[Mike Wood]

The right hon. Gentleman is clearly correct. One of the dangers of trying to pick winners is that those that do not make the priority list are, almost by definition, left behind. Major sectors such as hospitality and food and drink employ so many people, in every constituency, right across the age groups and in every demographic possible; leaving them out sends a very unfortunate signal, at the very least, and could be very damaging, if not corrected quickly.

A third of hospitality businesses report that they operate at a loss, with jobs lost, hours cut, investment cancelled and, sadly, many businesses closing. The Office for Budget Responsibility warns that 60% of the national insurance contributions burden will be passed on through lower wages, hitting workers despite the Chancellor’s promises. These are not abstract statistics; they are real people’s lives. Overwhelmingly, young, part-time, ethnic minority and lower-income workers are disproportionately represented among those hit, despite those being the very groups that the Government claim they want to support. The Government’s policies are deeply regressive.

It does not have to be this way. Hospitality is not asking for handouts, but for a level playing field. The sector is resilient. After the 2008 crash and during covid, it helped to revive communities and restore confidence and, within the right framework, it can do so again. It has the potential to grow six times faster than the wider economy, to create half a million jobs by 2030, and to breathe life into areas across the country, not just in the overheating south-east.

In order for the sector to do that, however, the brakes must be taken off, and there are simple, targeted steps that the Government could take now. They could protect the high streets by quickly introducing a proper reform of business rates, with a maximum discount for venues under £500,000 rateable value. They could scrap the proposed additional levy on larger hospitality businesses, which are so important to many of our communities and provide so many jobs. They could create a new lower rate of national insurance contributions for those earning between £5,000 and £9,100, to reverse April’s job losses and make it easier to hire again.

The Government could also extend the differential duty rate introduced by my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), to help to put pubs, bars and clubs on a level playing field with supermarkets by charging lower duty on draft beer in cask and kegs than is charged on bottles and cans. They could look at ways to reschedule those covid-19 loans, to give firms some breathing space to increase the chance of them actually being able to repay those debts as successful businesses. Each of those measures would stimulate growth, protect jobs, and help every region of the UK to thrive.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is perhaps a pity that one particular political party in Scotland is not represented in this debate today, because this summer, in the village of Achiltibuie in north-west Ross and Cromarty, I spoke to a barman who could not stay for the rest of the year because he had nowhere to live. Accommodation is a critical problem in the remote parts of the highlands. The SNP Government should address that; I dearly hope that this debate will be looked at, read up and acted upon, because this is a critical issue.

[Mike Wood]

Hospitality, as I have said, is so important in every part of the United Kingdom. We need Governments in every part of the United Kingdom to recognise that and to take the appropriate action, although I hope the hon. Gentleman will excuse me if my focus is primarily on those decisions that can be taken in Westminster and by the Government at a national level.

My challenge to the Minister today is simple: will he listen, if not to me, then to representatives from across the hospitality sector who are clear that the Government are getting this wrong? Will he support a sector that contributes £54 billion in tax receipts— far more than it gets back? Will he stand by his Government’s own missions of fairness, opportunity and growth, or will he continue policies that undermine them at every turn?

Hospitality is being taxed out of existence, and that is a political choice. We need a change of course not just for the sector, but for every community that depends on it. We need policies that reflect the value that hospitality brings—economically, socially and culturally—and we need action now.

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[Tim Farron]

I totally agree that we need to be really careful about piling extra costs, including the apprenticeship levy, on to businesses. I understand why the Government felt that they needed to make the national insurance rise, to increase the tax take to plug the hole that they inherited, whatever size it may be. But if economic activity is reduced, that reduces the tax yield. It is basic economics. Not only have the Government harmed our businesses in the lakes and the dales, and I am sure in Northern Ireland as well, but they have harmed the Exchequer’s take and damaged the economy in the process. The increased costs on our businesses are undoubtedly a major issue, as is the impact of a workforce that is too small for the job it needs to do in the lakes and the dales. Some 34% of Cumbrian tourism businesses say that their inability to recruit staff is undermining their viability.

[Jamie Stone]

My hon. Friend has an honourable and proud record of talking about affordable housing in his part of the United Kingdom. Without housing for workers, hospitality businesses are in real trouble. That must be taken very seriously indeed, and not just in the rural parts of the highlands. It is extremely difficult in many parts of the UK, including perhaps in the west country. Without housing, people will not come or, like the barman I spoke about in Achiltibuie, they will leave and not come back.

[Tim Farron]

I completely agree. Given that time is running out, I will restrict my remaining remarks to the topic that my hon. Friend referred to. I have one last stat: 66% of hospitality tourism businesses in the Lake district are operating below capacity because they cannot find enough staff. The demand is there, but they are not meeting it. What a waste of potential growth.

The staff are not available for a number of reasons. The first is that it is just not a very populated part of the world: 80% of the working-age population who live in the Lake district are already working in hospitality and tourism, so there is no great reservoir of staff. A lot of that is down to the collapse of the long-term private rented sector into Airbnbs and the absolute scourge of excessive second home ownership that runs through our communities. The Government have failed to tackle that issue. They had the opportunity to bring in a change of use for short-term lets and for second homes; they failed to do either, and that is shameful. They should do that right now. They should provide more affordable housing backed with more housing grant in communities such as ours and provide socially rented homes for local people, helping them to work in all the parts of our local industries, including hospitality and tourism.

The other thing that the Government ought to do is to recognise that communities such as mine need migrant labour. They should get on with agreeing and delivering the youth mobility scheme visa, to help our young people to travel and to bring in the people who underpin our tourism economy. My final ask is simply this: the Minister should listen to the British tourism and hospitality industry. It has so much to contribute, yet it seems so rarely to be listened to.

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[The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)]

It is a pleasure to serve under your chairmanship, Ms Butler, for I think the first time, and I hope it is the first of many. I congratulate the hon. Member for Kingswinford and South Staffordshire (Mike Wood) on securing this important debate. I recognise that he has long been an enthusiast for hospitality businesses in his constituency, and I welcome the opportunity to consider the important contribution that all hospitality businesses make to our communities up and down the country. Indeed, I think of some of the great hospitality businesses in Harrow, in my constituency, such as the great Trinity pub or the wonderful Battels café.

As well as the hon. Member for Kingswinford and South Staffordshire, we heard from the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald), the right hon. Member for East Hampshire (Damian Hinds), and the hon. Members for Ynys Môn (Llinos Medi), for Strangford (Jim Shannon), for South Northamptonshire (Sarah Bool), for West Dorset (Edward Morello) and for Westmorland and Lonsdale (Tim Farron).

We also heard particularly important and strong contributions from my hon. Friends the Members for Truro and Falmouth (Jayne Kirkham) and for South East Cornwall (Anna Gelderd). They referenced the significance of the visitor economy for hospitality businesses, and I am sure that they will welcome the fact that, this autumn, the Department for Culture, Media and Sport will publish a new visitor economy strategy. That has been co-designed with the new Visitor Economy Advisory Council, which includes UKHospitality. They referenced the dynamic and creative hospitality sector in Cornwall, and I was grateful to have the chance to personally sample some of those opportunities recently. My hon. Friends also referenced the case for fair funding for Cornwall, and the significance of a partnership between Cornwall and Homes England. I will make sure that their points are heard by colleagues in the Ministry of Housing, Communities and Local Government.

The hospitality sector contributes over £50 billion to the UK economy, spread across all corners of the UK, and employs millions of people. The sector makes not just a significant economic contribution, but an important social one because, as one or two hon. Members referenced, hospitality is also an opportunity for people. Working in pubs, restaurants and bars is often a key entry point, particularly for young people who need to gain essential skills and experience to progress in life. It is also often an entry point for those being given a second chance in life. For example, the excellent Greene King is working with 65 prisons across the UK to provide inmates with hospitality training. The company aims to hire 400 prison leavers by the end of this year. The Pret Foundation does fantastic work with homeless people, and has an ambition to get 500 people who face homelessness into jobs in their stores by 2028. The hospitality sector’s unique ability to employ and train people from all walks of life makes its economic contribution so much more than just that.

Hospitality is also crucial to our communities and personal lives. Hospitality businesses such as pubs support community cohesion. They provide welcoming spaces for those who feel isolated and alone to enjoy the company of others. In short, hospitality is the backbone of our high streets, towns and villages; it is the lifeblood of all our communities.

I fully understand the significant challenges that the sector faces, many of which are a hangover from the pandemic lockdown restrictions and the cost of living crisis. Depleted cash reserves and increased debt levels have hampered the ability of many hospitality businesses to invest and grow. These challenges are sometimes not helped by a regulatory landscape that does not always function as effectively as it could, holding back growth from many hospitality operators, which simply want to grow and invest in their local communities.

Let us not forget that this Government inherited a very challenging fiscal situation, which meant the Chancellor had to take difficult decisions in relation to tax and spending. Schools, police and local hospitals in all our constituencies are set to be better funded because of the difficult decisions she had to take in the Budget last year. The investment in infrastructure, or in social and affordable housing, that all our constituents need would not be happening without the decisions the Chancellor made last October. I know that many hospitality businesses have been impacted by those tough choices, but they are important for delivering the long-term stability and growth that our country needs and that our hospitality businesses, as well as the rest of the economy, will benefit from in the long run.

We will deliver on our manifesto commitment to create a fairer business rate system that protects the high street, supports investment and is fit for the 21st century. The Chancellor has committed to reforming business rates from 2026-27, with a permanently lower multiplier for retail, leisure and hospitality businesses. For many years the hospitality sector has asked for that, and we will deliver it.

I recognise the contributions from a number of hon. Members about the situation in Scotland, where—despite having had their biggest ever increase in funding as a result of the decisions the Chancellor took last October—the Scottish Government have not chosen to extend hospitality relief in the fullest way to all hospitality businesses.

[Jamie Stone]

I am a fair-minded person, and I would not dream of laying responsibility for the lack of affordable housing at the Minister’s feet. But does he agree that a message should be sent to the Scottish Government to get going on this one? I have just seen some terrifying statistics for north-west Sutherland about young people leaving. The old monster of highland depopulation is staring us in the face in that part of the highlands.

[Gareth Thomas]

The hon. Gentleman is right to make his point. One would hope that the Scottish Government would be as committed to taking action as the Government here in the UK. I hope he and other Scottish colleagues will see a change of heart and approach from the Scottish Government.

I understand the sector’s concerns about employers’ national insurance contributions. We are protecting the smallest businesses by increasing the employment allowance to £10,500. That means 865,000 employers will pay no national insurance contributions at all, and more than half of employers will see no change or gain from the package. The majority of hospitality businesses are micro-sized, so many will benefit from the increase.

We are also committed to reducing the regulatory burdens facing the hospitality sector. We recently launched a licensing taskforce to come up with recommendations for cutting red tape and removing barriers to business growth. We have received a report from the licensing taskforce containing many extremely interesting and thoughtful proposals, and we will make an announcement on our response to the taskforce work shortly.

We have also introduced a hospitality support scheme to co-fund projects, aligned with the priorities of the Department for Business and Trade and the Hospitality Sector Council. That includes support initiatives such as Pub is the Hub, to encourage local investment in rural communities—the hon. Member for South Northamptonshire made a point about that. In addition, we are extending the growth guarantee scheme, where Government will help smaller businesses to access loans and other kinds of finance up to £2 million, by covering 70% of the potential losses for lenders.

Later this summer, we will publish our strategy to support SMEs over the long term. The paper will focus on boosting scale-ups across key policy areas, such as creating thriving high streets, making it easier to access finance, opening up overseas and domestic markets, building business capabilities and providing a strong business environment.

The SME strategy will complement the industrial strategy in helping to create the conditions for further economic growth. The industrial strategy will support the whole economy by creating an improved operating environment to create long-term stability and generate greater dynamism for new start-ups to emerge. Supporting industrial strategy sectors will have spillover benefits for the rest of the economy—from innovation pull-through to technology diffusion. As an example, growth in the creative industries will create spillover opportunities for hospitality businesses.

As we look ahead, we will continue to work closely with the hospitality industry to co-create solutions to ensure that we generate growth together. In particular, we will work with the sector to iron out the issues that are of most concern. For example, we understand the current challenges relating to dual-use packaging under the extended producer responsibility scheme. We are therefore working with hospitality businesses to develop exemptions for waste disposed of commercially through the use of agreed evidence to show that that would be highly unlikely to end up in household waste streams.

Also, as we set out our ambitious plan to raise the minimum floor of employment rights, we will strike the right balance between fairness for workers and business investment and growth. Improving employment conditions benefits economic growth. It helps to put more money in employees’ pockets, which will help all businesses, including hospitality businesses, in the long term. We will do this by working in partnership with business, including the hospitality industry, to deliver our plan to make work pay, and we will consult on key proposals such as zero-hours contract reform in the autumn.

We will of course continue to work closely with the Hospitality Sector Council to co-create solutions and achieve growth in collaboration with the industry. That includes identifying regulatory barriers to investment and growth, and addressing skills shortages. We have established Skills England. We are reforming the existing apprenticeship offer into a growth and skills levy that allows more flexibility for both employers and learners wanting to pursue the apprenticeship route. The Department for Education has said that it will explore one of the key asks of the hospitality sector—the idea of foundation apprenticeships for hospitality. We are determined to help the hospitality sector to continue to unlock innovations and improve sustainability, and in that way bring down its costs. We will also look at how the Hospitality Sector Council can help us to deliver on our priorities for wider investment and growth, and support work to reinvigorate our high streets.

We all know that hospitality businesses are fundamental. They are crucial to our economy, crucial to our communities and fundamental to our high streets. And they matter to all of us individually, to our friends and to our families. The Government recognise the role of hospitality in creating places that people want to live, to work and to invest in, and we will continue to work in partnership with the industry to deliver growth and to break down barriers to opportunity.