Hospitality Sector

Mike Wood Excerpts

Tuesday 1st July 2025 Westminster Hall

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

I beg to move,

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

I draw Members’ attention to my entry in the Register of Members’ Financial Interests; I have also received hospitality from UKHospitality and from the British Beer and Pub Association that falls below the registrable threshold.

I am pleased to open this debate on a subject of national and local importance: the future of our hospitality sector. From pubs and restaurants to hotels and leisure centres, hospitality is more than just a convenience; it is the beating heart of our communities. It provides first jobs, second chances, career ladders and gathering places. It employs 3.5 million people and contributes £140 billion in economic activity and £54 billion in tax receipts to the Exchequer each year. Yet the sector faces an existential threat—not from a lack of demand, but from deliberate political choices made in last autumn’s Budget and the spring statement.

Those choices have hit hospitality harder than any other part of the economy. The Government’s 2024 Budget, far from being fair or progressive, has dealt a brutal blow to our high streets and local economies. The cumulative effect of increased employer national insurance contributions and cuts to business rate relief, alongside the increases in the national living wage, has added £3.4 billion to the sector’s annual cost base. Let us be clear: those numbers are not abstract. They represent shifts that businesses feel every single week and to which they are taking action in response.

Early Government figures show that 100,000 jobs were lost in just one month. That is not a warning sign —that is a siren. Part-time and entry-level workers have been the hardest hit; not highly paid City graduates, but bar staff, kitchen porters and hotel receptionists in every village, town and city across our country. The problem is even more damaging because it flies in the face of the Government’s own stated missions. The Government claim to want regional growth and better living standards across the UK, but the Budget has cancelled investment, reduced hours and led to closures in exactly the communities that need regeneration the most. The hospitality sector has outgrown the wider economy in recent years, yet it barely even features in the Government’s new industrial strategy. There are just three mentions of hospitality in the whole strategy, and one of those was because the Government had mis-spelled “hospitals”.

Hospitality is a proven route to social mobility and opportunity, accessible to everyone, not just a privileged few. Yet the Government’s actions directly contradict their levelling-up agenda. They talk about growth, but strangle the sectors that deliver it. They talk about fairness, but penalise the poorest workers. They talk about opportunity, but crush the businesses that provide it. They have forgotten that enterprise is not just about spreadsheets—it is about people, purpose and pride.

Even before the Budget, hospitality businesses were paying twice as much tax as financial services relative to their profits. That is an astonishing imbalance. Of course, hospitality was particularly hard hit by the pandemic and by lockdowns. Many hospitality businesses are still carrying the burden of covid debts, with repayments that have taken them from being thriving businesses to ones that barely break even.

[Gregory Stafford (Farnham and Bordon) (Con)]

I held a pub and hospitality roundtable in my constituency, where publicans stated that the changes in the Budget had been worse than covid for their balance books and the viability of their businesses, because at least during covid the then Conservative Government gave relief and help to them; this time, they have received nothing.

[Mike Wood]

My hon. Friend is absolutely right. The changes to employer national insurance contributions have meant that 774,000 workers, many of them on lower incomes or working part time, are caught in a net that punishes job creation. The cut in business rate relief from 75% to 40% has driven otherwise viable businesses into the red, hitting pubs such as the Green Man in my constituency, which has seen its business rates bills rise from about £140 a month to nearly £350 a month—before a single customer has been served or a single pint pulled. A third of hospitality businesses now operate at a loss. That is not sustainable, and it is not fair.

According to UKHospitality, the Government’s measures will cost the sector at least £3.4 billion, including a £1 billion cost from the national insurance contribution increases alone. Of course, those tax rises came in at exactly the same time as the increase in the national living wage, adding even more pressure to small business employers such as the tea room at Ashwood Nurseries, in my constituency, which already operate on tight margins.

Let me be clear: no one opposes fair pay. I am proud that the previous Government introduced the national living wage, and increased it to give workers’ incomes a boost. However, if the Government want sustainable wage increases, they cannot also pile on non-wage costs at the same time—and that is before the impact of their employment rights package, which comes into force next year. The data already shows the consequences starkly. The Office for National Statistics confirms that since the October Budget, the hospitality sector has shed 69,000 jobs, even before the latest figures from His Majesty’s Revenue and Customs. That is 3.2% of all hospitality jobs. To put that in context, the overall economy lost 1.2% of jobs in the same period, so hospitality’s job losses were 266% higher than the national average.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I too remind the House of my entry in the Register of Members’ Financial Interests. In Orkney and Shetland, the food and drink sector is an integral part of our local visitor economy, as is the hospitality sector, but neither is part of the Government’s industrial strategy. Does the hon. Gentleman agree that, if we were to bring food and drink and hospitality into the industrial strategy, we would not suffer the salami slicing of over-regulation that we are seeing, especially in Scotland, where the self-catering industry is now being hit with another round of regulatory burdens?

[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.

[Dawn Butler (in the Chair)]

I remind Members that they should bob if they would like to contribute to the debate. Informally, speech times should be around four minutes.

--- Later in debate ---

[Mike Wood]

I thank the Minister for his response, even if there was little in it that will bring much comfort to the hospitality businesses that are struggling as a result of the Chancellor’s choices. I thank all hon. and right hon. Members from across the Chamber who have made such effective contributions, underlining the importance of hospitality in all our constituencies.

This is more than an economic issue. Hospitality offers the first rung on the ladder for millions of young people, and second chances to those rebuilding their lives. It brings people together across classes, backgrounds and regions. It is the ultimate vehicle for social mobility. It gives people a chance to run their own million-pound turnover business, even if they do not have the start-up capital or the right connections. For example, the Streets Ahead programme run by McCain, one of the largest employers in my constituency, supports dozens of hospitality start-ups and trains hundreds from disadvantaged backgrounds in the hospitality sector, and the charity Only A Pavement Away helps people who are facing homelessness by offering opportunities in hospitality. That is what real social mobility looks like—not a press release, but a purpose.

Hospitality can do so much in return for so little, but it can do so only if it is given the right framework and a tax system that does not hit labour-intensive businesses disproportionately hard. Hospitality can drive the growth that we all want to see. It can create high-quality jobs and offer good opportunities in every one of our constituencies, but it needs and deserves our support. I thank hon. Members for supporting this debate, and for their continuing work to push the Government to increase their support and understanding towards this important sector.

Question put and agreed to.

Resolved,

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