UK Parliamentary Debate Summarised: Challenges Facing the UK's Hospitality Sector
This is a summary of the Westminster Hall parliamentary debate on challenges facing the UK’s hospitality sector which was held on Tuesday, 22nd October 2024.
The debate covers the significant challenges facing the UK's hospitality sector, particularly pubs, breweries, and grassroots music venues, which are vital to both local economies and social well-being. Pubs are closing at an alarming rate of 50 per month, and grassroots music venues are shutting down at a rate of two per week, threatening the social fabric of communities and the development of the UK's globally successful music industry.
Several MPs emphasised the role of hospitality venues in job creation and their contribution to the economy. Nationally, the UK hospitality sector employs 2.4 million people, and pubs and breweries alone contribute £26.2 billion to the economy while generating £15.1 billion in tax revenues. In Gosport, for example, 146 venues employ 2,000 people, and in Stockport, 65 pubs and five breweries support 1,590 jobs, contributing £57 million to the local economy and £29 million in taxes.
The cost pressures faced by these venues are immense, with rising wage costs, energy bills, and business rates. Business rates, in particular, are unfairly burdening smaller breweries. Unlike multinational firms, which pay significantly lower rates, small breweries can pay up to 40 times more per pint in business rates. Nationally, there are 1,721 small independent breweries employing 10,000 full-time workers and contributing £270 million to GDP each year, making the need for reform urgent.
MPs also highlighted the critical issue of staff shortages, particularly in regions like the Highlands, where depopulation has exacerbated the problem. The Northern Ireland hospitality sector, which is the fourth largest private sector employer, with a turnover of £2 billion, also struggles with recruitment, underlining the need for immigration pathways to support the sector.
Some MPs, such as those representing Tatton, where 89 pubs and three breweries support 2,350 jobs and contribute £60 million to the local economy, called for extended reliefs, including maintaining the 75% business rates relief and supporting small independent venues through targeted measures such as VAT cuts. The VAT threshold was raised to £90,000, benefiting 28,000 businesses, but more comprehensive changes are needed to safeguard small operators.
In the south-west, which has the highest number of pubs per capita - 75 pubs per 100,000 people - pubs are crucial community hubs and major contributors to the local economy. However, many publicans report operating on razor-thin margins, burning through savings just to stay afloat.
MPs called for reforms to the Localism Act to enhance powers over community assets and prevent pub closures caused by speculative property investors. In one case, a community in Chardstock rallied to reopen the George Inn, but the process highlighted the limitations of current legislation.
Stakeholders proposed a range of solutions to tackle the challenges faced by the hospitality sector. Many MPs argued for targeted VAT cuts for small independent venues and time-limited support to help them recover from the pandemic and cost increases. The Culture, Media and Sport Select Committee recommended a levy from large arenas to support small independent venues, given their role in fostering the UK’s music industry.
Business rates reform was another major focus, with calls for the government to address the disproportionate burden on small breweries. MPs suggested a full review of business rates, ensuring fairness between small independent breweries and large multinational firms, which currently benefit from specialised tax treatment.
To combat staff shortages, particularly in rural areas like the Highlands, stakeholders urged the government to facilitate immigration pathways and make it easier for foreign workers to contribute to the hospitality sector. This would help alleviate labour shortages in vital roles like kitchen staff and housekeeping.
For pubs facing closure due to speculative property investors, MPs called for enhanced powers in the Localism Act, allowing communities more time and leverage to purchase local pubs and prevent closures. There were also calls to extend the right to buy for communities and revisit pubs that narrowly missed the chance due to delays in the current system.
On a broader scale, stakeholders emphasized the need for continued support, such as extending the business rates relief and rethinking policies like the proposed outdoor smoking ban, which could further damage pubs that rely on wet sales (drinks sales).
By taking these steps - reforming VAT and business rates, improving immigration pathways, and enhancing community buy-out powers - the government can help safeguard pubs and hospitality venues, which are vital not just to the economy but to the social and cultural life of communities across the UK.
References
(1) UK Parliament Hansard - Pub and Hospitality Sector - Debated Tuesday, 22nd October 2024
SUMMARISED BY CHATGPT & NARRATED BY ELEVENLABS
