00:00Thank you, Mr Butler, and I draw members' attention to my entry in the register of members' interests.
00:10I would also like to add that I've also received hospitality from UK Hospitality and from British Beer and Pub Association that is underneath the registrable threshold.
00:20But I'm pleased to rise to open this debate on a subject of national and local importance, the future of our hospitality sector.
00:27From pubs and restaurants to hotels and leisure centres, hospitality is more than just a convenience.
00:34It's the beating heart of our communities. It provides first jobs, second chances, career ladders and gathering places.
00:41It employs 3.5 million people, contributes £140 billion in economic activity and £54 billion in tax receipts to the Exchequer each year.
00:52And yet, today, the sector faces a really existential threat, not from lack of demand, but from deliberate political choices made in last autumn's budget and this spring statement.
01:06Choices that have hit hospitality harder than any other part of the economy.
01:11The Government's 2024 budget, far from being fair or progressive, has dealt a brutal blow to our high streets and local economies.
01:20The cumulative effect of increased employer national insurance contributions, cuts to business rate relief, alongside the increases in national living wage, has added £3.4 billion to the sector's annual cost base.
01:34And let's be clear, these are shifts that businesses feel every single week and are taking action in response to.
01:45Early Government figures show that 100,000 jobs were lost in just one month.
01:50That's not a warning sign, that's a siren.
01:53Part-time and entry-level workers have been the hardest hit.
01:57Not highly paid city graduates, but bar staff, kitchen porters, hotel receptionists in every village, town and city across our country.
02:06And what makes this even more damaging is that it really flies in the face of the Government's own stated missions.
02:15This Government claims 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 the regeneration the most.
02:27The hospitality sector has outgrown the wider economy in recent years, and yet it barely even features in the Government's new industrial strategy.
02:38Just three mentions to hospitality in the whole strategy, and one of those was because the Government had misspelled hospitals.
02:46It is a proven route to social mobility and opportunity, accessible to everyone, not just a privileged view.
02:53And yet the Government's actions directly contradict its levelling-up agenda.
02:59They talk about growth, but strangle the sectors that deliver it.
03:03They talk about fairness, but it's penalising the poorest workers.
03:07They talk about opportunity, but they're crushing the businesses that provide it.
03:12They've forgotten that enterprise isn't just about spreadsheets, it's about people, purpose and pride.
03:18Even before the Budget, hospitality businesses were paying twice as much tax as financial services relative to their profits.
03:27That's an astonishing imbalance.
03:29And of course, this is a sector that was particularly hard-hit by the pandemic and by lockdowns.
03:35Many hospitality businesses are still carrying the burden of Covid deaths,
03:41with repayments that take them from being thriving businesses to ones that barely strike even.
03:47Can my Honourable Friend give way?
03:48Of course.
03:49I thank my Honourable Friend for giving way.
03:52When I held a pub and hospitality roundtable in my Farnham and Borden constituencies,
03:57publicans there stated, and this is a direct quote,
04:00that actually the changes in the Budget were worse than Covid on their balance books and their viability of their business,
04:06because at least in Covid, the then Conservative Government gave relief and help to them.
04:12This time, they've got absolutely nothing.
04:14Michael Wood.
04:14The Honourable Friend is absolutely right.
04:16Those employer national insurance contribution changes mean that 774,000 workers,
04:22and many of them are on lower incomes or part-time,
04:26are now caught in a net that punishes job creation.
04:29The cut in business rates, really, from 75% to 40%,
04:33has driven otherwise viable businesses into the red.
04:36It's hit pubs like the green man in my constituency,
04:40which has seen its business rate bills rise from about £140 a month to nearly £350 a month,
04:48and that's before a single customer's being served a single pint being pulled.
04:52A third of hospitality businesses are now operating at a loss.
04:57This is not sustainable, and it's not fair.
04:59According to UK hospitality, these measures will cost the sector at least £3.4 billion,
05:06including £1 billion from the national insurance contribution increases alone.
05:11And, of course, those tax rises did come in at exactly the same time as the increases in national living wage,
05:21adding even more pressure for small business employers like the tea room at Ashwood Nurseries and my constituency
05:29who already operate on tight margins.
05:33Now, let me be clear.
05:34No-one opposes fair pay.
05:36I'm proud that the previous government introduced the national living wage
05:40and that we increased it to give workers' incomes a boost.
05:44But if you want sustainable wage increases, you can't also pile on the non-wage costs at the same time.
05:52And this is before the impact of the government's employment rights package comes into force next year.
05:59But already the data shows the consequences starkly.
06:03The Office of National Statistics confirms since the budget in October,
06:08the hospitality sector had already shed 69,000 jobs even before the latest figures from HMRC.
06:17That's 3.2% of all hospitality jobs.
06:20To put that in context, the overall economy had lost 1.2% of jobs in the same period.
06:27So hospitality's job losses were 266% higher relative to the national average.
06:34Would you want to mention a lot?
06:36Of course.
06:36I'm able to the other gentleman, and I also remind the House of my entry in the Register of Members' Interests.
06:42In Orkney and Shetland, the food and drink offering is an integral part of our local visitor economy
06:49and hospitality sector, but neither of them actually are part of the government's industrial strategy.
06:54Does he agree with me that if we were to bring food and drink and hospitality into the industrial strategy,
07:00then we wouldn't suffer the sort of ceramic slicing of over-regulation that we're seeing,
07:04especially in Scotland, because the self-catering industry, for example,
07:08is now being hit with another round of regulatory burdens.
07:12The right, gentlemen, is clearly right that one of the dangers of trying to pick winners
07:18is that those that don't make the priority list are almost by definition being left behind.
07:25And so for major sectors like hospitality and food and drink,
07:30employ so many people in every single constituency and right across the age groups,
07:34every demographic possible, for them to be left out sends a very unfortunate signal at the very least
07:43and can be very damaging if it's not corrected quickly.
07:48Because a third of hospitality businesses report that they're operating at a loss with jobs lost,
07:53hours cut, investment cancelled, and sadly, many businesses closing.
07:59So the Office for Budget Responsibility warns that 60% of the national insurance contributions burden
08:04will be passed on through lower wages, hitting workers despite the Chancellor's promises.
