Hospitality Sector: Eastleigh

Jim Shannon Excerpts

Wednesday 4th December 2024 Westminster Hall

[Liz Jarvis (Eastleigh) (LD)]

I beg to move,

That this House has considered Government support for the hospitality sector in Eastleigh.

It is a pleasure to serve under your chairship, Dame Siobhain. I am grateful to have the opportunity today to discuss the urgent challenges facing the hospitality sector in my constituency of Eastleigh and across the UK.

Hospitality is not only a significant economic driver, but the beating heart of our high streets and communities. From the pubs that act as social hubs to the restaurants and cafés that bring people together, the sector is central to our economy and way of life. My constituent, Lorraine, is the landlady of the Master Builder in West End in my constituency. Her heating costs are around £3,000 a week, placing an unsustainable strain on her business. Although December bookings provide some hope, she worries that the quieter months of January and February could push her pub to the brink. Despite the pressures, Lorraine’s commitment to her community is unwavering. Her pub hosts local care home residents for darts and meals and welcomes charities, including Southampton Sight, for Christmas dinners and Sunday carveries. As she says,

“it’s not just for coming in on a weekend and letting off some steam, it’s about friendship, kindness and community.”

Yet with rising costs Lorraine is questioning how much longer she can keep her doors open while working over 90 hours a week to make her business work.

In Eastleigh the hospitality industry contributes £114 million annually. It employs 1,805 people and encompasses 84 venues, including some fantastic cafés such as the Coffee Cabin, which recently celebrated its third birthday, many superb restaurants and 32 local pubs. Eastleigh is also home to Steam Town Brew Co., an independent brewery, and The Steel Tank Alehouse, an independent micropub in Chandler’s Ford, both of which embody the entrepreneurial spirit that drives our local hospitality sector. Our football club and world-class cricket ground attract visitors from across the UK and beyond, many of whom stay in our local hotels and enjoy local hospitality.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady on securing this debate. I spoke to her beforehand and we share a similar concern in relation to national insurance contributions. The pressure on hospitality businesses is leaving the industry at breaking point. If the Government and the Minister do not provide some form of relief, we will face a lot of empty cafés and restaurants in the coming year. Does the hon. Lady share my concerns?

[Liz Jarvis]

Yes, I do share the hon. Gentleman’s concerns. Despite the remarkable community contribution that our hospitality generates, the sector is under immense pressure. Nationally, hospitality employs 3.5 million people. It generates £140 billion in economic activity and pays £54 billion in taxation. The Government’s Budget, however, introduced £3.4 billion of cost increases, including rises in employer national insurance contributions. Those measures disproportionately impact lower-paid and part-time workers, who form the backbone of the industry. The Office for Budget Responsibility has said that next year 60% of the employer national insurance contribution’s increase will be paid for by staff in reduced real wages.

According to UKHospitality, employer national insurance contributions for a part-time worker on 15 hours will increase by 73%. Combined with reductions in business rates relief from 75% to 40%, these policies are creating unsustainable pressures on businesses already operating on razor-thin margins.

The Steam Town Brew Co. is a local success story. David from Steam Town raised the issues of residual inflation in food and drink, the prices of raw ingredients for brewing and high interest rates. He wants to grow the business, but the current economic conditions and existing market restrictions, such as the lack of access to tied pubs for smaller breweries, have made it challenging. The situation is made worse by the surging costs of energy. Hospitality businesses are among the most energy-intensive sectors, with pubs and restaurants relying heavily on refrigeration, heating and cooking equipment. High energy costs have led to dramatic increases in operating expenses that are becoming too hard to bear.

For smaller businesses the increases are not sustainable and many businesses are at risk of closure. Will the Minister share the steps the Government are taking to help hospitality businesses to manage their energy costs in the coming months? Post-covid recovery remains a significant challenge for hospitality businesses. Many are grappling with debt, reduced footfall and the shift of consumers to online food shopping. Last year alone, 2,704 hospitality businesses went into insolvency, highlighting the fragility of the sector and the urgency for Government support.

The cost of living crisis has created a perfect storm for the hospitality sector, as households across the UK tighten their belts, reducing discretionary spending on dining out, hotel stays and social experiences. That squeeze on disposable income directly impacts the vibrancy of our high streets. Individual prosperity and high street prosperity are intrinsically linked. When families feel they cannot afford to participate in social activities, it is not just their individual wellbeing, but the fabric of our communities that suffers.