Hospitality Sector

Sarah Olney Excerpts

Tuesday 1st July 2025 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Ms Butler. I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for his work in securing this important debate. It has been a real pleasure to hear from so many of my Liberal Democrat colleagues about their constituencies. That underlines the fact that Liberal Democrats represent all the best places in the UK, and that is why tourism and hospitality is a very important sector for us.

I was lucky enough last summer to do a little tour through the constituencies of Inverness, Skye and West Ross-shire; Caithness, Sutherland and Easter Ross; and Orkney and Shetland, so I can very much confirm that all three constituencies have excellent hospitality businesses that are very welcoming to visitors. This Easter, I was lucky enough to spend a few days in West Dorset in the wonderful town of Lyme Regis, and I have spent many happy family holidays in Westmorland and Lonsdale.

There are also many hospitality businesses in my constituency of Richmond Park. Just last Friday, I hosted a representative of VisitBritain, who came to see me because Kew Gardens in my constituency is second only to the Tower of London in this year’s list of the most-visited paid attractions in the UK. We had a long conversation about the issues affecting the tourism sector, and I was very interested to find that the Government have recently cut funding for efforts to promote domestic tourism. Those who are not as lucky as I am in having many colleagues who represent constituencies in such wonderful parts of the UK do not know enough about domestic tourism. I would like the Minister to comment on that.

As my many wonderful colleagues have already alluded to, the current economic landscape is really challenging for many businesses and industries. Years of dire economic mismanagement by the last Conservative Government have led to businesses facing huge challenges, ranging from recruiting and retaining good staff to soaring energy costs and the increase of trading obstacles following their botched trade agreement with the EU. However, many of those challenges are now being compounded by decisions taken by this Government.

Last autumn’s Budget hit the hospitality sector with an extra £3.4 billion of annual costs through the cumulative impact of changes to employer NICs, increases in the national living wage, and the near halving of business rates relief for retail, hospitality and leisure businesses. A recent survey conducted by UKHospitality of its members found that, since the autumn Budget, a third of hospitality businesses are now operating at a loss, with 75% having increased prices, two thirds reducing hours available to staff and six in 10 cutting jobs. Those cuts are a last-ditch attempt by many businesses to stay afloat, as they are crying out for support.

The Liberal Democrats welcomed many aspects of last week’s industrial strategy, but very little in it will alleviate the heavy burdens imposed on the hospitality sector by Labour’s tax reforms. The Liberal Democrats have called for the hospitality industry to be exempt from the hikes in NICs announced in the Budget, as we recognise the difficult position that many business owners have been in since the pandemic.

Small businesses are the beating heart of our economy and at the centre of our communities, and they create the jobs that we all rely on. We are glad that raising the employment allowance will shield the very smallest employers, but thousands of local businesses, including many in the hospitality sector, will still feel the damaging impact of many of the changes. That is why my Liberal Democrat colleagues and I have voted against the changes to employer NICs at every opportunity, and I once again urge the Government to scrap these measures.

More broadly, we will continue to call on the Government to introduce vital reform to the business rates system. In 2019, the previous Conservative Government promised a fundamental review of the business rates system, but failed to deliver it. Meanwhile, the current Government pledged in their manifesto to replace the system, but still no action has been taken. The Liberal Democrats have called for a complete overhaul of the unfair business rates system, replacing it with a commercial landowner levy, which would shift the burden of taxation from tenants to landowners.

The current system penalises manufacturers when they invest to become more productive and energy efficient. It leaves pubs and restaurants with disproportionately high tax bills and puts our high street businesses at an unfair disadvantage compared with online retail giants. In too many places, pubs, restaurants and shops are being forced to close, taking with them jobs, opportunities and treasured community spaces.

More broadly, this outdated system inhibits business investment, job creation and economic growth, holding back our national economy. It has existed for too long, and it is time that the Government took action. Our proposals for fair reform would cut tax bills, breathe new life into local economies and spur growth. Equally, they would provide long-term certainty for businesses, which is what the economy across the UK needs.

With regard to long-term planning, I am glad that the Government introduced the industrial strategy last week. I welcome this commitment to stability, and I am pleased that it will allow businesses to look and plan for the future with more certainty. As the Government unveil their strategies to bring together skills development plans and a long-term industrial strategy to ease the pressures that so many employers face, we have reservations about the cohesion between these schemes. What steps are the Government taking to ensure effective collaboration and transparency across different strategies and public bodies?

We welcome last week’s announcement in the industrial strategy that we will see a funding boost for skills and training. However, the announcement stops well short of the fundamental reform that we need to address the workforce shortages that many industries are facing. British businesses must be able to hire the people they need with the skills they need.

A key cause of workforce shortages is ill health, and to tackle the problem, the Government must invest in our NHS and social care so that people can get the healthcare they need to rejoin the workforce more quickly. We have called on the Government to fix NHS backlogs, cut ambulance waiting times and raise the minimum wage for care workers by £2 an hour to boost our social care system and get people out of hospital quicker.

Any business will tell us that the apprenticeship levy does not work. They cannot get the funding they need to train staff, and hundreds of millions of pounds go unspent. The Liberal Democrats have been calling for the apprenticeship levy to be replaced with a wider skills and training levy that will give businesses more flexibility over how they spend money to train their staff. Will the Minister accelerate the reform of apprenticeships and empower Skills England to act as a properly independent body, with employers at its heart?

Finally, as we look more broadly at factors impacting workforce shortages, I once again urge the Government to act with much more urgency in introducing their youth mobility scheme. The changes to the immigration system implemented in April 2024, increasing the minimum salary threshold for skilled worker visas, shrank the talent pool from which hospitality businesses can recruit, contributing to greater staff shortages. Around three quarters of the hospitality workforce is filled by UK citizens, but international talent has always been attracted to work in the UK due to our pedigree for hospitality and developing careers.

A 2024 survey of 1,650 employers from across a range of sectors, including hospitality, adult social care and manufacturing, found that 49% of employers with hard-to-fill vacancies said that a reduction in the availability of migrant workers was one of the main causes. At a time when recent Government decisions in the Budget have added to the overall tax burden on hospitality businesses, with many considering whether their business remains viable, we must provide the tools that hospitality needs to help businesses grow so that it can boost the wider economy, including ensuring access to global talent.

I have heard from stakeholders in the hospitality sector, including business owners and supply chain managers, who have said that they would welcome proposals that would bring more stability to the sector, allowing them to make longer-term plans as part of a more predictable and robust regulatory framework. Again, will the Minister set out a timeline for the introduction of a youth mobility experience, which would be good for our economy, easing some of the burdens that the hospitality sector is facing?