PARLIAMENTARY DEBATE
Coastal Tourism and Hospitality: Fiscal Support - 22 February 2024 (Commons/Westminster Hall)

I beg to move,

That this House has considered fiscal support for tourism and hospitality in coastal areas.

It is a pleasure to serve under your chairmanship, Mrs Cummins. Today I wish to highlight the vital role of hospitality in our coastal communities, such as my North Devon constituency, and the support that the sector needs and deserves. I thank UKHospitality for its ongoing work and support on this matter. I had the opportunity to bring Kate Nicholls, its chief executive officer, to North Devon last year to meet some of the fabulous hospitality businesses and hear their frustrations as well as their plans for the future. We visited businesses such as the Saunton Sands Hotel, the Carlton Hotel and the George & Dragon in Ilfracombe, and SQ Bar and Restaurant in Braunton.

Some of the challenges facing the sector are not always obvious, particularly in remote coastal locations. Hospitality venues extend far beyond just pubs, hotels and restaurants, and include holiday parks, music venues, bowling, children’s play centres, bars and clubs, which contribute so much to all our enjoyment of coastal areas and resorts as well as to the economy.

I have been lobbying Ministers for quite some time to continue to find solutions to ensure that this vital part of the economy of North Devon and so many other coastal areas continues to thrive. I thank this Minister—the Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston)—who I know is a champion for the sector, for his ongoing patience and engagement in listening to my concerns and those of my constituents.

My hon. Friend visited Ilfracombe back in 2021 in his previous role as Minister for tourism. We met several business owners and discussed business rates, VAT thresholds and Ilfracombe’s ambitions in hospitality. I am sure that he recalls the unanimous voice of Ilfracombe’s tourism sector calling for the Government to raise the £85,000 VAT threshold, which currently sees much of Ilfracombe, like so many coastal communities, close its doors when the businesses reach the threshold. When first elected, I naively thought that that was just seasonality, but as staycations came back into vogue post pandemic, we saw some businesses close in mid-August as the threshold was reached. Indeed, a local accountant told me just last weekend that he advises all his hospitality businesses to remain below the threshold. At a time when we are looking for our economy to grow, why do we have a threshold that creates a cliff edge that does the exact opposite for the hospitality sector?

North Devon alone is home to nearly 2,500 hospitality venues, employing more than 8,000 people and contributing more than £400 million to our local economy. The hospitality sector’s success is vital for economic prosperity and plays a crucial role in shaping the very essence of our community. Yet despite the resilience inherent in the sector, recent years have presented unprecedented challenges, particularly in our coastal towns. The impacts of the covid-19 pandemic, coupled with the energy crisis and a labour market grappling with record vacancy levels, have stifled growth and posed significant threats to the sustainability of hospitality businesses—but I also want to draw on the positives that have happened. With all the challenges presented, the Government supported the sector substantially during the pandemic, not least with the furlough scheme, which continued even if hospitality venues were shut.

I thank my hon. Friend for securing today’s debate. She is making a barnstorming speech about Devon, which may even make me traipse slightly further north in Devon to her constituency to help out her industry. As we know, the hospitality and tourism industry in Devon supports thousands of jobs. As chair of the all-party parliamentary group for hospitality and tourism, I want the Government to build on the record that she has been describing of support for the industry in Devon and the UK. The trade association UKHospitality—whose CEO, Kate Nicholls, my hon. Friend has already mentioned—has three asks of the Chancellor of the Exchequer for the upcoming Budget: first, implementing a 3% cap on the increase in the large property business rates multiplier; secondly, introducing a cut in the lower rate of employers’ national insurance contributions to 10%; and thirdly—this is a big one—permanently reducing the VAT rate for hospitality businesses to 12.5%. Does my hon. Friend agree that those measures would really help and provide a big boost for jobs and investment in her part of Devon and my part of Devon?

I thank my hon. Friend and neighbour for his contribution; it is as if we both speak to the same group! I agree entirely with his contribution, as I so often do. I am very keen that Devon hospitality businesses, right the way across and down the peninsula, can benefit, and that the Minister will hear our asks.

We cannot underestimate the pandemic’s impact on businesses. The hospitality sector came out of covid-19 heavily indebted. I hope that the financial sector can look at what more can be done to support hospitality businesses to repay their debts, which currently stand at £8 billion in bank debt and £2 billion in landlord debt. The pandemic harmed hospitality businesses and made their recovery much more difficult.

Although I warmly welcome the small business rate relief that was introduced in the autumn statement, which provided some support, up to two thirds of hospitality businesses find themselves excluded—not due to generating immense profits, but because they operate in larger premises in high-footfall areas. Consequently, the impending 6.7% rise in business rates and skyrocketing wage costs present a daunting prospect for the survival of many businesses.

While I applaud the Government’s commitment to creating a higher-wage economy, it is crucial to acknowledge the unique challenges faced by hospitality businesses, especially those based in coastal areas like my North Devon constituency, which are often small in scale, seasonal and working to tight margins. These businesses anticipate a 17% increase in staffing costs from April, with 98% of them expressing concern about how to manage the impact of the upcoming national living wage hike. Many of the businesses that should have benefited the most from the small business rate relief actually face wage rises in the hospitality sector that far exceed the business rate relief itself.

We are already seeing hospitality businesses contracting their hours and reducing the number of staff they employ or the hours that they work. Far too many of our pubs are now open at weekends only or cannot find chefs, so have some nights without food service, which reduces their profitability even further.

Although the national living wage hike was warmly welcomed by the hard-working teams who work across our hospitality businesses, it is a headache for business owners, who themselves frequently earn significantly less than the national living wage, due to the extensive hours they work and a reliance on their businesses’ ever- declining profitability to pay their wage. Far too many of our hospitality businesses face a crunch this April. Too many of the sums that we do up here rely on a 35-hour working week. Hospitality is a 24/7 business, and in remote coastal areas with low unemployment, such as my North Devon constituency, many members of staff are also much younger. The increase in the national living wage will hit those businesses particularly hard.

One key ask today is for a cut in the lower rate of employer national insurance contributions to 10% and consideration of increasing the threshold in order to share the burden of this policy between business and Government, but the biggest ask from my hospitality businesses across North Devon—I had the pleasure of chatting to many landlords in some of the fabulous pubs back home during the recess—is because their VAT burden is too high. In the hospitality sector, VAT is significantly higher than it is elsewhere in Europe, putting us at a competitive disadvantage. During covid, we saw huge success from the reduction in VAT for the hospitality sector. In that time, 70% of hospitality businesses benefiting from the VAT cut passed it on to consumers, in order to keep prices low. A hugely successful local pub shared its figures with me. With a turnover of just over £1 million, it is paying 25% in tax just in VAT and employment taxes. That is a quarter of a million pounds going to the Exchequer before payment of bills and wages, and payments to suppliers, are even considered.

Last year, we lost 3,000 hospitality venues in the UK, and I am concerned that if the Government do not take further action to share the burden of this tax cost, we may lose even more this year. Unfortunately, there is one recent case in my North Devon constituency; Broomhill Estate is closing due to VAT costs. I thank Alex Kleiner for all his work and for letting me know how much of an impact a reduction in VAT from 20% to 15% would have made to his business. I heard directly from Alex, a business owner, that there would have been three benefits: a reduction in absolute VAT; an impact on cashflow; and an uplift in footfall because of more attractive pricing, although that is harder to quantify. He said in

“4 out of the past 7 quarters 5% VAT reduction would have completely offset my electricity bill.”

Unfortunately, in this instance any changes to VAT will come too late for such an important landmark in North Devon.

Although I know that it is a big ask, I hope that the Treasury might again consider a reduction in the VAT rate for the hospitality and tourism sectors—to 12.5%—as that would help them to overcome the above inflation increases in tax and the national living wage, avoid further inflationary price spikes and unlock investment. The measure aligns with international standards, stimulating tourism and offering domestic tourists a more affordable alternative to travelling abroad. I am confident that not every publican and hotelier is wrong in telling me that this is the one measure that would help them the most. A cut—even a temporary one—would be a boost.

For so many coastal communities, their tourism industry has changed since the hotels were built in the Victorian era. Many have large properties that may not benefit from all-year-round occupation, particularly in those communities where swathes of the tourist attractions, shops and restaurants have closed for the winter because of the VAT threshold issue. Hospitality businesses rely on space to host people and therefore have larger premises in high-footfall areas. Businesses in the industry will often hit the upper rateable value band at a far lower turnover or profitability than others. The hospitality sector pays 2.5% of turnover on business rates, which is 10 times that of banks and insurers. I hope the Treasury is looking at the introduction of a cap on the increase in the large property business rates multiplier at 3% in England, aligning with the expected inflation rate in April. Additionally, I hope the devolved Administrations in Scotland and Wales pass on the benefits of that relief in full.

I could not agree more with my right hon. Friend that there are many asks for our coastal communities; I have spared the Minister the rest of mine this afternoon. While I am here, however, it would be remiss of me not to mention alcohol duty. The freeze on that duty at the autumn statement was welcome, but it does not directly help our much-loved pubs, which have reported significant price increases from brewers and other producers despite the freeze. A reduction in VAT would leave the choice to pass on and/or reinvest in the hands of the retailer and not with the multinational brewery in the case of alcohol. I have continuously supported the Campaign for Real Ale’s campaign, as it would play a crucial role in stopping our many vibrant pubs and hospitality businesses going under. Whatever the scheme, a reduction bringing us in line with the clear majority of our European neighbours—permanently or even temporarily—would be a lifeline for our hospitality venues.

While talking about great pubs, I will take the opportunity to highlight The Bell Inn at Chittlehampton, as well as Chittlehampton Village Shop, which serves excellent tea and cake; both are finalists in the Countryside Alliance awards, and voting is now open for anyone who would like to help them along.

The potential of the hospitality sector to contribute to economic growth cannot be overstated. UKHospitality’s economic evidence submitted to the Treasury outlines the conditions required for growth, estimating the creation of 500,000 new jobs by 2029 and an annual growth rate of up to 6%. I hope the Treasury will carefully examine the evidence and arguments presented, recognising the immense potential that the hospitality and tourism sector holds for the UK. By supporting the sector, we not only ensure the prosperity of businesses but contribute to increased tax revenues that fund essential public services.

I am hugely reassured to see the Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire here today, as he has been to see us and understands so much more about our tourism and hospitality sector, particularly in remote coastal locations such as my beautiful North Devon constituency. I hope that may influence some of those critical Budget decisions.

It is a pleasure to serve under your chairship, Mrs Cummins. I thank the hon. Member for North Devon (Selaine Saxby) for leading the debate. She is always very enthusiastic and zealous about her constituency. I always like to hear what other right hon. and hon. Members say about their constituencies, because I find it mirrors what I have to say about mine.

I am going to take a wee step down Strangford way, and talk about some of the good things we have back home. I also want to support the hon. Lady in what she put forward, because this issue is so important. She represents and clearly understands a coastal constituency, which she is so passionate about. It is fantastic to be here and support her, as all our constituencies have those similarities. In another debate, she mentioned the impact that the recent storms and weather have had on businesses in her constituency. I was there for that one as well, and that is certainly something that needs to be addressed.

We are here to discuss many things. We look to the Minister, as we always do. He is always receptive to our comments and has an ability to respond in such a way that we all feel encouraged. We will feel better encouraged, of course, if there is some help financially or some ideas at the end. I am sure the Minister will have those ideas; I have no doubt about that. I am also pleased to see the shadow Ministers for the SNP and the Labour party, the hon. Members for Coatbridge, Chryston and Bellshill (Steven Bonnar) and for Ealing North (James Murray), in their places. They are both committed to making lives better and to ensuring that help for tourism and hospitality in coastal areas becomes a reality.

Why do I enjoy these debates? I enjoy them because, right away, there is a subject matter that I can relate to. The hon. Member for North Devon spoke very well about her constituency. These debates give me an opportunity to understand other areas, but also to show off the beauty of my constituency of Strangford. What is known as the Ards peninsula consists of numerous villages such as Ballywalter, Portavogie and Portaferry, which have stunning scenery. Strangford lough is an area of outstanding natural beauty and a Ramsar-designated area as well, so it is really important. I am privileged to live on the edge of that area.

There are many tourism attractions and hospitality businesses that are pivotal to the local economy and play a huge role for local visitors. I will try to do as the hon. Member for North Devon did. The businesses in my constituency are often family run, so when I speak about the individual businesses, I speak with the knowledge of having known them for many years. There is such a variety on offer. What makes Strangford so special is all those businesses that come together in the tourism and hospitality sector along the coastal areas.

We have numerous tourist attractions, such as the National Trust grounds at Mount Stewart, between Carrowdore, Greyabbey and Newtownards. Mount Stewart really is the jewel of the crown for Strangford, with well in excess of six-figure sums of people coming to visit at all times of year. During covid, those numbers did not drop very much. It has fabulous walks and hosts events such as jazz nights in the summer, not to mention the fact that it is a much-used location for weddings.

Another example of what we are doing is the land in Ballywalter that was transformed into a minigolf course as part of the farm diversification scheme. Jim Davidson, the guy I sat beside in primary school—that was not yesterday—is in farm diversification, and that is one of the things he has come up with. It is much loved and visited by families and couples from all over. It is has become a fun day for families whenever they are about. The sheer volume of hospitality that is offered is just incredible. You can probably guess, Mrs Cummins, that I am very enthusiastic and proud to tell others about it. I have told some Ministers here. The Minister in his place will no doubt be booking his trip to Strangford before the day is out, as a former Minister did. She came to visit my constituency and she enjoyed her time across the water.

Glastry Farm ice cream is another example of farm diversification. One of the dairy farmers in that area realised that there was potential for his ice cream. He has been developing that over the years and has done exceptionally well. Echlinville gin distillery is one of many gin and whiskey distilleries that we have across the constituency. The owners of Harrisons of Greyabbey are family friends and my next-door neighbours. It came out of nowhere and they have built it up into a restaurant, a café and a garden centre. The hospitality costs are part of the problem for them. They have a lovely, visual venue that looks right over Strangford lough, which is quite an attraction.

Local DUP councillor, David Kerr, started his own fruit and veg shop from his farm in Kircubbin; fantastic B&Bs in the village of Ballywalter, and a hotel in Portaferry, provide warm and homely accommodation for tourists; and the window of the very much sought after Orange Tree wedding venue—where I attended my niece’s wedding just last year—has a view of Strangford lough, so is coastal in every sense of the word. All the businesses I have mentioned, like those in the hon. Lady’s constituency, create jobs, wage packets in people’s pockets and opportunities for young people who want to have a part-time job or to start off somewhere. It is vital that the tourism and hospitality issue in coastal areas is addressed so that those jobs and opportunities can be retained. The list of what is on offer is truly endless.

As the hon. Member for North Devon said, exceptional circumstances, such as weather conditions, ultimately play a massive role in footfall at coastal areas. Especially after covid, we have witnessed many places shutting down as they cannot sustain the lack of business; it is just impossible for them to carry on. Furthermore, the rise in the cost of living has had a significant impact on businesses’ ability to pay their bills. I know that is true of the retail trade and those involved in hospitality.

Colin Neill is one of those guys who represents the industry; he is always vocal, factual and evidence-based, and he tells us about the pressures these businesses are under. Some smaller and medium businesses were being charged thousands of pounds for electricity and severely struggling to pay their gas and oil bills. This is ultimately not sustainable—it was not for some of them, and unfortunately they had to close or sell on to new management.

I replicate what the hon. Member for North Devon has said, and other Members will do likewise. Although we represent different parts of this great United Kingdom of Great Britain and Northern Ireland, we are probably seeing the same issue. When we look to the Minister for a response, we do so from the basis of facts on the ground and what people are telling us. There is certainly a call for Government to better support local businesses, especially in the coastal constituencies that we all represent.

Government incentives for more local businesses that want to choose to open are crucial to sustain the livelihoods of these areas. Over the last few years—the last two in particular—I have seen quite a few smaller hospitality businesses, shops and venues in my area close; it is important that we keep what we have and that those opportunities are in place. The Government must do more to support local businesses, especially through the Barnett consequentials and the block grant. That is my request to the Minister.

The Northern Ireland Affairs Committee heard from the Secretary of State this week. To be fair, I think he clearly understands that the Barnett consequential for Northern Ireland has not been okay for the last few years, and because of that the Government are committed to a change in the Barnett formula to something more along the lines of the Welsh model. That is where we think we should be, because it would reflect better our population growth—which has jumped up to 1.95 million, whereas it was approximately 1.75 million about 10 years ago—and the peculiarities of costs for Northern Ireland. I am very encouraged by the Secretary of State for Northern Ireland and by the Government’s dedication to making those changes. Although the Secretary of State had outlined a timescale, he did say in answer to my question in the Select Committee that the Government were looking very much at how they could make the process quicker. That would bring substantial moneys in and give equality to the Barnett consequential.

I would greatly appreciate it if the Minister would look at the matter and discuss it with the Secretary of State for Northern Ireland—there is a commitment and I think an agreement can be reached—to see whether any more can be done to support local businesses in coastal areas, including in my constituency, because they need help. I am very pleased, as I think most people are, to have the Northern Ireland Assembly back, because it ultimately ensures accountability in the process, but for us to do well and deliver for our constituents—as a very much integral part of the United Kingdom of Great Britain and Northern Ireland—we need to have that Barnett consequential change, which will enable us to support our businesses across the whole of Northern Ireland.

It is a pleasure to serve under your chairship, Mrs Cummins. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing today’s debate.

It is important to acknowledge the Government’s work following covid-19 to support and rebuild our tourism and hospitality sector, with reductions in VAT and business rates, the job retention scheme, business grants, and support for coastal communities with the recent news that holiday lets will be controlled this summer through a registration scheme and a planning permission requirement. I am delighted that the Government have taken that step, which is something I have raised directly with Ministers, think-tanks and through the APPG for coastal communities.

Despite all that support, coastal communities have significant underfunding challenges. My beautiful constituency of Hastings and Rye is a tourist hub, in 1066 Country. Based on the most recent figures for 1066 Country, tourism supports more than 12,600 jobs locally, with an estimated turnover of £550 million per year. However, like many other coastal communities, there is a lack of specific and targeted fiscal support.

Tourism has long been overlooked as an industry. I am delighted that the Minister was previously a tourism Minister, so has a great understanding of the industry. It is often described as a Cinderella industry, but is vital to the UK’s economic growth. UK-wide, tourism is recognised as an important part of rural and coastal economies and has huge potential for growth, particularly in the more deprived rural areas and coastal towns and villages, where there is untapped potential to generate tourism-related economic growth and employment.

Essential infrastructure, such as roads, public spaces and facilities catering to tourists, often suffers from neglect due to insufficient financial support. It is imperative that the Government prioritise strategic investment. It is great to see levelling-up funding going into many coastal areas, with Hastings and Rother receiving in total £80 million over the next few years. The tourism sector cannot thrive in this country without sufficient fiscal support. By investing in the upkeep and promotion of coastal areas, often by providing seed funding to leverage in private-sector investment, the Government can ensure the long-term sustainability of both the tourism sector and the unique identity of these areas.

Many businesses have felt the effect of the national minimum wage increases. That could be mitigated by temporary cuts to the lower rate of employment national insurance contributions to 10%, and/or an increase to the lower threshold. Additionally, permanently reducing the rate of VAT to 12.5% for hospitality businesses, as my hon. Friend the Member for North Devon said, would help them to recover and thrive without having to reduce employment or increase prices.

The Pragmatix report, “Communities on the Edge”, into which the APPG for coastal communities that I chair had significant input, made a number of recommendations to support the visitor economy, such as improving seasonal workers visa schemes for temporary hospitality workers and supporting the initiation of business mentorships for small coastal enterprises to share best practice and help with the digital transition. I encourage relevant Ministers to look at that report.

The hospitality and service industries sustained by the tourism sector are particularly crucial for the livelihoods of coastal residents. I thank all the hospitality and service workers and businesses in Hastings and Rye for their dedication and amazing hard work. Supporting tourism in coastal communities is not just an investment in the local economy: it is an investment in our residents. We have amazing hospitality businesses—I cannot go through them all because they are all so incredible. There are cafes, restaurants, pubs—so many things. I invite Members to come and see for themselves: Hastings and Rye is a fantastic place to visit.

Due to the seasonality of tourism in the UK, it is vital that the hospitality and tourism sector is properly supported through a replacement for the coastal communities fund for projects that specially tackled that issue. I emphasise that point: we need specific policy funding and a strategic plan for our coastal communities. Coastal communities need increased fiscal support, especially in the summer months, to combat the impact of seasonality, manage waste issues and over-congestion and provide a larger police presence due to antisocial behaviour in tourist hotspots such as Camber Sands, which on hot summer days might get 25,000 visitors coming at once. We therefore need a fairer funding formula for local authorities, the police and other public sector services. It is essential that we do not leave any of our coastal communities behind due to poor fiscal investment: we must prioritise them.

It is a pleasure to serve with you in the Chair, Ms Cummins. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this debate. By accident or design, Members have spoken about a range of communities although there have been a number of common threads.

I first remind the House of my entry in the Register of Members’ Financial Interests: I am a partner in the firm that runs my family farm, which also includes holiday let accommodation. In many ways, that is a living example of the changes and opportunities that the visitor economy brings to communities such as mine in Orkney and Shetland, and doubtless to those in other coastal and island communities around the country.

Tourism is of enormous importance to communities such as ours. I listened with interest, as always, to the hon. Member for Strangford (Jim Shannon), who described the ripple effect of dropping a stone in the water. The stone in this case is the visitor economy. The benefits come very obviously to those who operate the hotels, the bed and breakfasts and the self-catering accommodation, and they go out to those who are able to work part time as self-employed tour guides, for example, and those who have jobs servicing that accommodation—they go out and out. Tourism may be a useful add-on to a conventional business. The hon. Gentleman said that a number of farm businesses in rural and coastal communities have some sort of tourism add-on—perhaps seasonal. At the end of the day, it is what they can show to their accountant at the end of the year that matters.

The way in which our rural and island coastal communities have got up and done things for themselves is an inspiring story. The real beauty of it is that, by and large, these are the self-employed or small businesses—medium-sized enterprises at most—and the money they earn and pay out stays in the communities. It goes into local shops and post offices. It allows families to live in those areas, because their children can go to local schools. We can keep local doctors, services and banks; the story continues. There is no single silver bullet for these economies, but tourism is an important part that makes the whole thing more feasible.

There are a number of significant challenges. They are not, strictly speaking, fiscal, but they are significant, given the way that they hold back island communities. In Scotland, we have an ageing ferry fleet. For island communities, that has been problematic for the past few years, and sadly it is only getting worse. The availability of labour in the local community causes real difficulty, especially in a seasonal economy. People moving into work in island communities need accommodation at a time when people are coming to stay in the same accommodation, so housing availability in our island and coastal communities is a significant issue, and Government-led—public sector —provision could make a real difference to businesses’ ability to grow.

The regulatory burden unfortunately seems to get greater every year. In Scotland, we now have the short-term let licensing scheme. It will be interesting to contrast how that works with the way in which things are now being done south of the border through a planning mechanism. I have not yet seen figures for it, but my sense is that we may see, especially in the smaller outer isles in Orkney and Shetland, a lot of people walking away from the provision of bed and breakfasts or self- catering accommodation as a consequence of the licensing regime. It is expensive for people to comply with, especially if they are away from the centre of the population. Goodness knows it is difficult enough for someone operating a business in Kirkwall and Lerwick to get work done, but if they are operating in one of the outer isles—in Sanday, Stronsay or North Ronaldsay, or perhaps in Unst, Yell or Fetlar in Shetland—that becomes yet another extra burden and cost. The farther the accommodation is from the centre, inevitably the fewer weeks in the year it can be let and the fewer people coming to stay in the community. Again, at the end of the day, is it worth it? The balance is sadly tipping in the opposite direction, towards saying no.

Those are some of the challenges, but at the end of the day, these people are self-starting and entrepreneurial and do a lot to bring economic growth to their communities, and there are certain levers that the Treasury could use to help them grow their businesses. The difference between the fiscal levers we can pull and the other grant-aided incentives and opportunities is that fiscal levers give people more opportunity to decide what is best for them and their business, rather than having to design their business to conform with the various requirements of a grant application or discount scheme.

There is a real opportunity for the Government to add value and opportunity to tourism and visitor-economy businesses in our island and coastal communities. The single most important change I hear advocated by those businesses, time and again, is the one touched on by the hon. Member for North Devon (Selaine Saxby)—the reduction in value added tax. It is rare in any sector that we hear such consistency in message. We have seen a small example of that already with the reduction to 5% during the covid pandemic. It would be interesting to know what analysis the Treasury has done of the tax take in that time—albeit everybody was operating in a much-reduced market.

I come back to my experience from my time in government, when we reduced the duty on spirits. We did so—for only the second time in history, I think—in the expectation of a significant cut in revenue. In fact it produced a significant increase in revenue to the Treasury. I cannot remember the exact figures of the tax take, but I think we expected a £600 million decrease and actually got a £800 million increase. That shows what is possible sometimes when we reduce the burden on industry and business and allow them the opportunity to use that extra cash to grow their business. I strongly suspect—indeed, significant research has been done on this by some of the big consultancies; Ernst and Young springs most readily to mind—that the same would be possible for the visitor economy in our island and coastal communities. That being the case, at a time when we want to grow the economy and are relying on that to spread the benefits of growth throughout the country instead of hoarding them here in London, surely that is something that must commend itself to the Government.

It is a pleasure to serve with you in the Chair, Mrs Cummins. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing the debate and thank the Backbench Business Committee for granting it. Tourism around the British coast remains a vital component part of the UK economy. That is perhaps overlooked at times, and it is right that we are holding this debate in advance of the spring Budget statement at the beginning of March. At the end of March we have the start of the season, with the Easter weekend.

I shall start as other colleagues have, by providing an advertorial for the tourism and hospitality industry in the Lowestoft and Waveney area. Some might find that a bit of a joke or tedious, but it serves a very important purpose. We are showcasing the enormous range of leisure and tourism opportunities available on the coast of all four nations, as well as the beauty and diversity of the coastline. There is something for everyone to savour, as well as many job opportunities.

I return to Lowestoft and Waveney. In Lowestoft, to the north at Corton and to the south at Pakefield and Kessingland, there are a wide variety of beaches, including the gloriously sandy South beach in Lowestoft. We have two piers—the Claremont pier, which the Llewellyn family are restoring to its former glory, and the South pier, which is let for a peppercorn by Associated British Ports to a community interest company, which I chair. To the north and south of Lowestoft we have two of the biggest visitor attractions in East Anglia, the Pleasurewood Hills theme park and Africa Alive, which is run by the Zoological Society of East Anglia.

All along the coast are a variety of holiday parks run by family businesses and larger national companies. We are also the gateway, at Oulton broad and Beccles, to the—often overlooked by our noisy neighbours in Norfolk—Suffolk broads, which are surrounded by a stunning landscape that the Suffolk Wildlife Trust plays an increasingly important role in restoring at Carlton marshes, Oulton marshes and, as announced last week, Worlingham marshes. Finally, Hoseasons, which takes the strain for many of us out of organising and arranging our holidays, has been based in Oulton broad and Lowestoft for nearly 80 years. I hope that I have painted a picture highlighting the importance of coastal tourism in the Waveney area.

Covid hit local businesses hard, although the support that the Government provided was a lifeline for many. The pandemic, as we are hearing, unfortunately has a long, bitter tail, and for many the 2023 summer season was worse than that of 2022. Looking forward to the forthcoming season, many businesses’ confidence is low. High energy costs continue to have an impact. The response to those challenges by many businesses and operators is to cut their opening hours, delay investment and reduce staff.

One business has highlighted to me the negative impact—described by hon. Members around the Chamber —of the national minimum wage. That business does not begrudge paying the increase to its staff, but that presents challenges that cascade right through the business and ultimately leads to higher charges to customers, at a time when their wallets are under enormous strain.

A holiday park operator has brought to my attention the delays in obtaining planning permission for an upgrade and extension to its facilities, not in the Waveney area but elsewhere on the East Anglia coast. An application that should have taken eight weeks took one and a half years.

Leisure businesses in coastal areas including those of Suffolk are not asking for handouts, but they rightly seek a level playing field. To achieve that, I should be grateful if my hon. Friend the Minister would consider the following fiscal measures—I am largely repeating others’ words, but in this place repetition plays a very important role indeed. First, as UKHospitality seeks, we must cap the increase to business rates for larger premises at 3%. Ultimately, we must have annual revaluations and drive the rate in the pound back down to the 30p to 35p level, which is what we had when business rates were introduced in the early ’90s. That said, in the short term, hospitality and leisure businesses, many of which are what I would describe as property-hungry but relatively low income-generating, should not have to pay onerously high business rates.

Secondly, to address the challenge of funding the increase in the national minimum wage, in his forthcoming Budget the Chancellor should cut to 10% the lower rate of employer national insurance contributions and increase the thresholds. The benefit of this policy, which in many ways is welcome, would thereby be shared not only with businesses, but with the Government. That is only equitable.

Thirdly, to ensure that planning applications of the type that I have mentioned are promptly dealt with and are not a brake on investment, the fair funding review of the local government funding settlement needs to be carried out as quickly as possible. That funding settlement is skewed against county and coastal councils.

I ask the Minister to act as a messenger—not Cupid, perhaps—to other Departments about other things that coastal businesses in coastal communities need not only to survive, but ultimately to thrive.

The first message is to the Department for Environment, Food and Rural Affairs. Along the Suffolk and Norfolk coast, we need urgent investment in coastal defences. Our glorious beaches are increasingly unsafe, and holiday park operators and other businesses will not invest in facilities if they are at increased risk of disappearing over a cliff or being washed away. There should also be national investment in the co-ordination and promotion of the King Charles III England coast path national trail.

The message to the Department for Culture, Media and Sport is that VisitBritain and VisitEngland should provide parity of support for coastal and rural economies with what is given to London and other core cities.

The message to the Department for Levelling Up, Housing and Communities is that we need to revive the coastal communities fund and separate the funding provided by the Crown Estate from the granting of licences for offshore wind farms. That money derives from our coastal waters. It should be used to address the many challenges that coastal communities face, rather than thinly dispersed across the whole country.

The final message goes back to DEFRA. Although progress is being made on improving the quality of bathing water around the coast, further pressure must be applied to the water companies to completely eliminate storm overflows as quickly as possible.

Coastal Britain is utterly unique. We must cherish it and ensure that the tourism and hospitality businesses operating there have every opportunity, first to survive and then to flourish and bring significant benefits to the people who live all around our coast.

It is a pleasure to see you in the Chair, Mrs Cummins. I thank the hon. Member for North Devon (Selaine Saxby) for securing this debate. It is always a pleasure to come to Westminster Hall and give the Scottish National party perspective.

The hospital sector across coastal and rural communities has weathered relentless storms of financial hardship over the past few years. Surely the UK Government must now extend a helping hand via Barnett to businesses across the hospitality sector, because it is so important to the long-term success of our rural communities and remote areas, and to halting the continued closure of hospitality venues to which we have all become accustomed throughout our constituencies.

From the economic fallout of Brexit to the devastating impact of the pandemic, compounded by energy price shocks and inflationary spikes, our pubs, restaurants and cafés have been fighting an uphill battle for their very survival. The multifaceted challenges that they are confronting have been unprecedented. As a result, between March 2020 and the end of 2022, a staggering 10% of UK hospitality businesses closed their doors permanently. In Scotland alone, more than 500 pubs and breweries closed in 2023, and the struggle persists for many more. Many of them cite rising energy costs: nine out of 10 hospitality businesses now face far higher energy and supplier costs.

The negative impacts of Brexit on rural and coastal communities are never hard to find these days. The compounding effects of border controls on fresh food and flowers to and from the European Union further exacerbate the situation, burdening Scottish hospitality with over £500 million in increased costs and delays annually. Inflation is undoubtedly a key factor in consumer choices. With the increased energy costs, the picture is bleak for many in the industry.

As representatives in this Chamber of many diverse and different communities, we all recognise the part that venues play in local areas. Pubs and cafés are essential social hubs that foster community cohesion and combat loneliness. They are places that connect our communities and bring people together to share life’s highs and lows. The Scottish hospitality sector is also a massive employer, accounting for 8% of all workforce jobs, employing more than 220,000 individuals and contributing £140 billion to the economy and £54 billion in tax receipts.

Another issue of great concern, particularly in Scotland, is depopulation in our rural and coastal communities. Experts tell us that it threatens their very existence. We know that the UK Government’s legal migration policy does nothing to draw people into our coastal or rural communities, because the median wage in a place like the Western Isles in Scotland is £24,000, but anybody looking to come into the UK will have to earn a lot more than that, which basically means that huge parts of Scotland will have no inward migration. That is a real concern for us, which the Scottish rural visa pilot scheme championed by the Scottish Government aims to address by attracting workers to key sectors such as hospitality.

Brexit-induced labour shortages persist, with 72% of hospitality businesses struggling to fill their vacancies. Across Scotland, the vast majority of people in the hospitality sector came from among our friends in the European Union. The UK Government’s reluctance to heed the calls for special visa arrangements exacerbates the issue and is imperilling the Scottish economy further. The SNP has consistently advocated for fiscal measures to be enacted to alleviate the strain on the sector. As we have heard today, VAT reductions, particularly for hospitality and tourism, could provide much-needed relief; I hope the Minister has heard that from all sides today. Additionally, slashing beer duties could stimulate job creation, benefiting businesses and individuals.

The Scottish Government have implemented measures such as the 100% relief for island hospitality businesses, but broader support is still very necessary. The small business bonus scheme and the generous rates relief exemplify the commitment to support businesses and communities across Scotland. The Conservatives’ proposed tax cuts for the wealthy diverge wildly from the public’s preference for prioritising public services, as a recent YouGov poll evidences.

We must ensure that the upcoming spring Budget allocates resources where they are needed most, supporting this vital sector and safeguarding our rural and coastal communities across Scotland. If the Government here in Westminster do not want to stand up for and stand with our hospitality industry, ensuring its resilience and longevity for generations to come, the very least they can do is give Scotland full fiscal powers so we can do the job that they are not doing.

It is a pleasure to see you in the Chair, Mrs Cummins. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this debate on fiscal support for the tourism and hospitality industries in coastal areas. I put it on the record that, like her, I have benefited greatly from my conversations with Kate Nicholls at UK Hospitality.

I am pleased to respond to the debate on behalf of the Opposition. Hon. Members have spoken passionately about the importance of hospitality and tourism, the jobs they bring to local economies, the vitality they bring to our local areas and the enjoyment they bring to all our lives. As we have heard, the tourism and hospitality industries have been hit by a series of challenges, from covid to the cost of living crisis. The Opposition are clear that hospitality and tourism are vital to the UK economy and need a Government who are ready and able to help them thrive.

In 2019, the economic output of tourism-related industries was estimated at £134 billion, of which £74 billion was estimated to be generated directly by tourism. Those figures are respectively equivalent to 6.6% and 3.6% of the whole economy. Additionally, as I mentioned in a Westminster Hall debate a few weeks ago, on fiscal support for the hospitality sector hospitality provides 3% of the UK’s economic output, and billions in tax revenues for the Treasury.

Hospitality and tourism are important industries for communities across the country. As we have heard from the hon. Member for North Devon and others, they are especially critical to coastal areas. Coastal communities are particularly reliant on tourism and hospitality for employment and income. When the economy is not working as it should, those communities are more likely to suffer deprivation and unemployment. VisitBritain data shows that 10% of inbound tourists in 2019 visited England’s coasts and beaches, and those most likely to journey to the coast were on visits lasting a week or longer. That figure is higher in Wales, Scotland and the south-west of England. Such trips are vital to people’s livelihoods right across the UK.

In my west London constituency, we have no coasts that I can praise in this debate. But may I put it on record that when I occasionally leave Ealing North, I enjoy visiting coastal areas across the country, including Oban on the west coast of Scotland and Saltburn, Whitby and Staithes in North Yorkshire, and visiting my family on the south coast of England from Brighton to Fareham and Littlehampton?

Many hospitality and tourism businesses in coastal communities are finding it harder and harder to succeed, with high inflation, rising rents and the burden of business rates. At the same time, their customers find that they have less money to spend on enjoying what seaside hotels, pubs, cafés, restaurants and so on have to offer, as people have seen their wages flatlining while taxes and the cost of living climb relentlessly. Today’s debate is rightly an opportunity to recognise the central role of hospitality and tourism in British life, but it is also an opportunity to make it clear that those industries need a Government who will support them to thrive.

Labour will revitalise the hospitality and tourism industries. We will help coastal communities to get back on their feet after 14 years under the Conservatives. It is clear that the antiquated system of business rates is doing the industries no favours. As I set out in the debate on fiscal support for the hospitality sector a few weeks ago, hospitality and tourism businesses in coastal areas may have had hope when they heard the Government’s promise of a fundamental review of the business rates system in their 2019 manifesto. However, that review never materialised, and trade groups representing consumer-facing businesses have expressed their dismay at the Government’s inaction on that promise. In March last year, the Federation of Small Businesses responded to what the Government were doing on business rates by saying that

“the 2019 Manifesto commitment to hold a fundamental downward review of business rates has not happened…these changes do not amount to the fundamental overhaul the system needs, to reduce the chilling impact of a regressive tax that you pay before even earning a penny in turnover, let alone profit.”

We will not stand by while businesses struggle from year to year, facing uncertainty. As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), has set out, if Labour were in Government we would scrap and replace business rates, shifting the burden away from hospitality and retail businesses, which continue to shoulder a heavy burden compared with those operating primarily in the digital economy.

Our new system would incentivise investment, promote entrepreneurship and reward businesses that move into empty premises. It would help the hospitality and tourism industries once again to thrive. Our plan to revitalise Britain’s tourism and hospitality industries is clear, so in advance of the spring Budget, I would be grateful if the Minister explained what representations he or the Government have taken from businesses in coastal communities, and what measures they are considering offering to address the points that hon. Members have set out today.

I am sure that many people across coastal towns will be interested to hear the Minister’s response, but whatever he says, we know that last week’s news about the economy being in recession will further have added to the sense of gloom facing hospitality and tourism in coastal areas, and indeed businesses in every sector in every region and nation of the UK. That is why our plan to get the economy growing is so important, to make sure that the tourism and hospitality industries in our coastal communities can thrive once again.

Let me join others in thanking the Backbench Business Committee for granting this debate, and congratulating my hon. Friend the Member for North Devon (Selaine Saxby) on securing it. As she referred to in her speech, she is indeed a persistent and persuasive advocate not only for her own constituents and constituency, but for the vital tourism, hospitality and leisure sector. I thank everybody for their contributions today; we have heard many good arguments, showing right across all four nations the passion, enthusiasm, empathy, love and support for this vital sector that employs so many of our constituents directly, and even more indirectly.

The Government are committed to promoting economic growth in all parts of the UK, and in order to do so we recognise the unique challenges faced by coastal communities, as raised by many Members today. We have supported coastal communities to level up through the dedicated funding under the coastal communities fund, while the levelling-up fund has provided more than £1 billion to projects in coastal areas. That was raised by my right hon. Friend the Member for Witham (Priti Patel), my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart) and others. More than £400 million has been provided from the UK shared prosperity fund, which will go to lead local authorities within or serving coastal areas.

The long-term plan for towns also targets more than £1 billion of support for towns up and down the country, including coastal towns, each of which will get about £20 million over the next decade. This is built on the support offered through successful bids into town deals and the future high streets fund. It is important to mention that of the 101 towns receiving a town deal, 22 are coastal and are set to receive more than half a billion pounds alongside almost £150 million from the future high streets fund. Therefore, directly or indirectly, the tourism, hospitality and leisure sectors will rightly benefit from some of this additional investment. Every Member has outlined today how the sector makes such a significant contribution to the UK economy as a whole, and to coastal areas in particular.

Let us not forget that the sector particularly suffered from the pandemic and is still recovering. Since the start of the pandemic, we have provided more than £37 billion for the tourism, hospitality and leisure sectors in the form of grants, loans and tax breaks. I think the hon. Member for North Devon mentioned some of those loans that are still being repaid. She was right to point out that they are still a burden on many businesses, but she will be aware that we have introduced considerable flexibility in those loans, extending the time to pay some of them from six to 10 years, and other measures. We are aware of the challenges. There is still a lot of debt to be paid off by individual companies, but also by the nation as a whole, because about £350 billion of support in total was provided to support individuals and the economy during the pandemic. That needs to be paid off, and everybody is sensible and aware that that will not be easy. It is why tax levels are as they are at the moment.

Of course, over the 2021 spending review period, the Government also allocated over £100 million to support the British Tourist Authority, which of course supports VisitBritain and VisitEngland, whose important work was mentioned by my hon. Friend the Member for Waveney (Peter Aldous); he also raised the point about where they spend their money, which is something that my colleagues at the Department of Culture, Media and Sport maintain a focus on. I applaud the work done by those bodies and by VisitScotland, Visit Wales, and the equivalents for Ireland and Northern Ireland. They do incredibly valuable work and attract not only domestic visitors but visitors in their millions from around the world, who come and enjoy everything that we have to offer.

Many Members have mentioned business rates. I have been lobbied by the ever-busy Kate Nicholls from UKHospitality; it sounds like she has been around quite a lot recently—and rightly so, because she represents such an important sector and so many people across the country. We have heard what those people have had to say and many Members have today re-emphasised the points that the industry bodies are making; UKHospitality is one of many industry bodies that are incredibly powerful and persuasive.

In the autumn statement, we announced tax cuts for the sector worth about £4.3 billion over five years. As has been mentioned by several Members, we also extended the retail and hospitality leisure relief scheme on business rates to 75%, creating a tax cut worth almost £2.4 billion for about 230,000 retail hospitality and leisure properties, which of course helps our high streets and protects small shops, many of which are in our coastal communities.

Of course, that relief was not extended by our colleagues in Scotland, nor fully extended in Wales. I assure hon. Members that we keep an eye on what is happening in other parts of the country and we share ideas. The sector is not particularly party political, as I know from my tourism role; tourism Ministers and others meet regularly across the nations, and work together and share ideas. In these difficult financial times there is not always the money to go around to do all the things that we would like to do, but we prioritised retail, hospitality and leisure for that specific additional relief in England.

The UK Government also decided to freeze the small business multiplier for the fourth consecutive year in 2024-25. That will protect over 1 million ratepayers and, combined with small business rates relief, will protect 90% of properties from inflationary bill increases. It will have a significant impact. For example, the typical pub will receive £11,800 of RHL relief off their final business rates bill in 2024-25; and, combined with the frozen small business multiplier, will benefit from about £12,800 of support.

Many Members also mentioned the registration threshold, which we have also received quite a lot of lobbying on. Of course, the Government recognise that accounting for that threshold can be burdensome on small businesses. That is why the UK has the second highest VAT threshold, at £85,000, within the OECD—keeping the majority of UK businesses out of VAT all together. I recognise that views on the VAT registration threshold are divided and the case for change has been reviewed regularly over the years. There was a review just a few years ago. No clear option for reform emerged from that review, but, as with all tax policy, we will continue to keep this policy under review. I am afraid that that might be a point I make several times in my concluding comments.

Quite importantly, several Members also raised the issue of cutting national insurance. As part of our long-term plan for growth and to ensure that work pays, we have cut taxes for 29 million working people. From last month, 27 million employees have had their national insurance contributions, or NICs, cut from 12% to 10%. That means that the average worker on £35,400 will receive an annual tax cut of more than £450 a year. Of course, the self-employed will have a tax cut and that benefit will come in from April. That comes on top of the existing £5,000 employment allowance, which means that about 40% of all businesses—around 675,000 in total—have been taken out of paying employer NICs entirely. My hon. Friend the Member for North Devon and I have spoken about that on many occasions. I heard the many calls for further reform of and further movement on national insurance contributions, but in advance of a fiscal statement, I am afraid that the Chancellor would not be impressed if I announced policy today. Nevertheless, all these issues are being looked at.

Hon. Members mentioned a few other issues. The hon. Member for Strangford (Jim Shannon) always makes important contributions, but from my multiple roles over many years, I know that the tourism, hospitality and leisure sector is a particular passion of his. I will finally take him up on his invitation to visit his constituency; my goal is to sort that out, so let’s talk dates very soon. As usual, he brought up something that other people do not. He reminded us that, although we can control certain things and pull certain levers, the all-important thing for the tourism, hospitality and leisure sector is the weather, which plays a vital role—sometimes boom or bust.

My hon. Friend the Member for Waveney pointed out the incredible diversity of offerings in the United Kingdom, so it is important to remember that at all times of year, in all weathers, there is something compelling to visit. We need to get that message across domestically and internationally through marketing.

The hon. Member for Strangford mentioned our heritage and the role played by the National Trust and many others in the ecosystem. I am more than happy to have conversations with other colleagues about his points about Barnett consequentials and the block grant, and I know he is having those conversations too. I will make sure they hear what he said today and his contributions in other areas.

My hon. Friend the Member for Hastings and Rye mentioned the importance of seasonality, which is related to the weather, and what we can do to reduce it. That is a particularly acute issue for the UK tourism industry, and it of course impacts productivity over the course of the year. She also mentioned planning policy and the important changes recently announced by DLUHC in response to its consultation with DCMS. The sector has been calling for a registration scheme for some time, and we hope it will have the desired impact.

The right hon. Member for Orkney and Shetland (Mr Carmichael) also talked about planning policy in different parts of the UK and about different regimes. He is an extremely knowledgeable advocate for the sector, and rightly pointed out that the multiplier impact is key. There is obviously a direct impact, but sometimes the indirect impacts are difficult to assess. He mentioned the VAT cut during the pandemic. We estimate that that cost the Treasury about £8 billion, but of course that was needed; it was a very difficult time. It was always intended to be temporary, although we are hearing many calls for a further reduction in VAT. That figure alone shows that it would not come without considerable cost, which needs to be factored in, but we recognise that there is a multiplier impact.

If we were to repeat that reduction, the cost would probably be £10 billion or £12 billion. Some are lobbying for a smaller rate cut to about 12.5%, which would have a smaller cost, but we are still talking about a loss of billions of pounds of revenue to the Treasury. As with all requests for a VAT cut, we need to know what the purpose is, what the impact will be and whether we can be confident that the lower prices will be passed on to the end consumer. That is usually the purpose of VAT cuts, in contrast with help with cash flow through other mechanisms such as business rates relief. The right hon. Gentleman was absolutely right to point out that, in this sector, pulling one lever can have a positive impact across a very wide area indeed.

My hon. Friend the Member for Waveney was right to showcase his constituency and others, because we have so much to offer. He unsurprisingly had a very broad range of asks and requests, which I will pass on to the relevant Departments. I assure him that we do talk across Departments, so I have had conversations with colleagues about many of the points he raised and other issues, because no one Department has oversight or control over the sector. As we have found in this broad-ranging debate, many Ministers and many Departments have some control over certain levers, but we talk to each other.

My hon. Friend also mentioned Hoseasons in his constituency. I should declare that I have visited on many occasions, because it was a client of mine many years ago. As some may know, I worked in the sector before coming into Parliament. I always enjoyed my visits to Lowestoft and the area—it was always sunny.

I am coming to an end, Mrs Cummins; I know that the debate could go on for three hours, but I will ensure that we do not. I am in agreement with many of the points made by my SNP and Labour opposite numbers—the hon. Members for Coatbridge, Chryston and Bellshill (Steven Bonnar) and for Ealing North (James Murray) respectively—because of the nature of the sector. In some other areas, I am in slight, respectful disagreement with them, but that should not detract from the fact that this sector has all-party support.

We may have differences of view on what levers to pull, but the sector has support across the whole House, so I conclude by saying that I very much appreciate all the contributions made today by right hon. and hon. Members—many substantial contributions, some compelling arguments and some very good ideas. In advance of a fiscal event, I cannot make any announcements or commitments, but I want to make it clear that we are always listening.

Thank you, Mrs Cummins, for your chairmanship. I thank all right hon. and hon. Members for their contributions and the Minister for his response.

It is always my pleasure to be the one-woman tourist board for North Devon for the afternoon. On a slightly more serious note, part of the reason for the debate has been highlighted by so many other colleagues: coastal communities often hide severe deprivation behind the phenomenal tourist businesses that we are all talking about today. Unfortunately, Ilfracombe in my constituency is no exception to that rule. I take this opportunity to put in one final pitch to the Minister. Yes, we have levelled up across the country at large, but small coastal communities such as Ilfracombe, with a population of just 12,000, have missed out on multiple pots of money, and yet it is the third most deprived town in the country. There is more that we could do for these small areas, which is why this debate was so vital—tourism and hospitality is the No. 1 part of their economies. It is vital that we get that right for those communities. Meanwhile, I will continue to fight for more funding for coastal communities from other pots of money.

Again, I thank hon. Members. The draw of the sea and of the pub is now upon us.

Question put and agreed to.

Resolved,

That this House has considered fiscal support for tourism and hospitality in coastal areas.