Hospitality Sector: Fiscal Support

Debate between Steve Double and Robin Millar

Wednesday 31st January 2024 Westminster Hall

[Steve Double]

I absolutely agree. We need to get international tourists who come to this country out of London. Too many never venture past London. I know that the Department for Culture, Media and Sport has worked on that, and we have certainly seen some benefits of more international visitors coming to Cornwall and enjoying all that we have to offer.

I will never forget the moment, shortly after the lockdown was announced, that I read a report that said that my constituency of Newquay was predicted to be the hardest hit by the lockdown. Those days were deeply worrying for me. I had business owner after business owner on the phone asking, “What am I going to do? This will literally devastate my business.”

There was a sense of relief a few days later when the then Chancellor—the now Prime Minister—announced the package of support that would be put in place, particularly the furlough scheme but also the targeted support for the hospitality sector. My phone lit up with the people who had rung me in the preceding days; they were so relieved that the Government were stepping in. That demonstrates that this Government understand the importance of the hospitality sector. They provided more support to the hospitality sector than to any other part of our economy during the pandemic, and I know hundreds of businesses in my constituency who are so grateful for it. It is sometimes very easy to forget that support, but it shows the importance that the Government place on the sector.

However, as we have heard, many of those businesses are finding times equally challenging right now. The challenges are different; they are mainly to do with rising costs rather than with demand being taken away. Those could be energy costs, costs in the supply chain or rising wages. I absolutely support the increase in the national living wage, but we need to appreciate that there is pressure on businesses to meet that increased wage. There is therefore a need for the Government to look at what further support they can provide to this sector, not just to get it through the current challenges, but for the long term.

I would ask two things in closing—both of which have already been said, but I will add my voice. There is a case to be made for cutting VAT. I would go for a 10% cut in the VAT rate for hospitality. We have shown that that works. I know there were concerns about how much the cut that was put in place during the pandemic was passed on; I think about 70% of businesses passed on at least some of that cut, but we need to work with the sector to ensure that if VAT is cut, all of the cut is passed on to the customer.

Business rates also need to be looked at. The rise of 6.7% is out of step. I urge the Government to look to the October rate for inflation when increasing business rates. We need more fundamental reform of business rates for the hospitality sector in order to reduce the burden of that tax.

[Robin Millar (Aberconwy) (Con)]

I recognise much of what my hon. Friend says about his constituency in the description of my constituency as the largest resort area of Wales. The difference in Wales, of course, is that the Welsh Government have not passed on the full business rates cut that has been enjoyed in England. Does my hon. Friend agree that that would be the first and most sensible measure that could be put in place to help tourism and hospitality businesses in Wales?

[Steve Double]

My hon. Friend makes a sensible and important point; I agree.

I hope the Minister senses the cross-party support for this important sector and takes away a clear message to the Treasury to look at what more can be done to support the sector in the upcoming Budget.