Seasonal Hospitality Businesses in Coastal Areas

I beg to move,

That this House has considered Government support for seasonal hospitality businesses in coastal areas.

It is a pleasure to serve under your chairmanship, Mr Stuart. This debate concerns a set of issues that affect about one third of UK constituencies directly—constituencies with a coastline, including estuaries. It is therefore not a niche set of issues that affect only my constituency on the Isle of Wight, although they are vital for my constituency. It is a set of issues that go to the heart of so many constituencies in our island nation and so many out-of-the-way communities with long-standing structural challenges. I am grateful to cross-party colleagues who are attending this debate.

My hon. Friend and constituency neighbour knows that the last Conservative Government created the coastal communities fund, which supported Hayling Island in my Havant constituency. Under the current Administration, there is not a specific equivalent fund to support employment, hospitality or the business community. Will he join me in calling on the Government to create a specific fund to make sure places like Hayling Island are properly supported?

I agree with my hon. Friend; I will join him in that call. Indeed, he has dealt with an element of my speech nice and early, so I thank him for doing so.

According to UKHospitality, the sector accounts for around 10% of all UK jobs nationally. In tourism-led coastal communities it provides as much as 50% of local employment. On the Isle of Wight, tourism accounts for 38% of economic activity and is the biggest employment sector locally. When the sector suffers, coastal communities suffer in a way that is greater than elsewhere.

Coastal areas have faced challenges for decades, with cheap competition from holidays abroad, changing holiday preferences, an increase in the relative cost of travel, older population demographics, fewer job opportunities, and a lack of investment in infrastructure. High streets have suffered from dereliction and neglect, with all the societal challenges that follow.

The hon. Gentleman is making a powerful point and an excellent speech. In west Cornwall and the Isles of Scilly in my constituency, the situation is just as troubling. Indeed, it is an existential crisis. Does he agree that unless we address the current rate of VAT and/or the business rates that burden our hospitality businesses, many of them, including in my constituency, will not see the end of this year?

I absolutely agree with the hon. Gentleman, who is ahead of me: I will address the issue of business rates and VAT presently.

There are plenty of green shoots, however, in many of the communities, and brilliant local leaders trying to drive change, such as Lawrence Bates at the Wildheart Animal Sanctuary in Sandown, and Ian Boyd, founder of the Common Space. Start-ups and small businesses in hospitality are a major driver of regeneration and innovation, for example the Point in Bembridge, Braai in Brading, and the Sandown Boulevard street food market. But the Government have a role in creating an environment for hospitality to thrive.

The hon. Member talks about the hospitality sector thriving. Does he share my concern that if the Government introduced a tourism tax, our areas could really suffer?

I agree with the hon. Gentleman, who is also ahead of me: I will address the tourism tax in my speech.

As I say, the Government have a role in creating an environment for seasonal hospitality to thrive, but in my view this Government have done the opposite. I do not accuse the Government of setting out to make life harder for tourism and hospitality in coastal areas, but I do hold them responsible for being careless about how their policies, in particular taxation, have fallen on communities such as mine. It is time for the Government to recognise that and make amends.

I have heard from countless hospitality business in my constituency, be it the Bullers Arms in Bude, which has seen astronomical business rates, or Stir café in Wadebridge, where VAT is a huge struggle. National insurance contributions, wage costs and energy costs are going up. Does the hon. Member agree that the sector needs long-term support from the Government, such as the 5% VAT cut that the Liberal Democrats have proposed?

I agree with the hon. Member that there needs to be long-term support, but also immediate relief. Again, he pre-empts some of the points I am going to make—I realise that my introduction was perhaps a bit longer than it should have been, considering that other Members are making all the excellent points that I am about to.

Since the 2024 Budget, the hospitality industry has lost more than 100,000 jobs. Between January and March of this year alone, the equivalent of three hospitality businesses closed every single day. The sector was hit with a £3.4 billion annual cost increase from that Budget. The 2025 Budget added more through business rate changes and wage increases. It is therefore hardly a surprise that we have seen job losses on this scale.

The Government are refusing to take responsibility. How can they do the right thing now if they do not recognise the harm that is being caused and felt from their own tax policies? Some of the most significant damage done by the Government is to the employment opportunities for young people. Youth unemployment is up; indeed, it is now higher than in the period coming out of covid. The Government’s hike in national insurance, extending it to more part-time work, and changes to the minimum wage that reduce the competitive advantage of employing young people are also major drivers of that unemployment. It is not just theory; we are seeing the real-world consequences in the data and in our communities.

I thank the hon. Member for securing this important debate. On support for young people, I will be talking to the Skills Minister soon about what the youth guarantee scheme could do in hospitality. Does the hon. Member agree that the two would be a perfect match?

I would urge the hon. Member to do all that she can to encourage her ministerial colleagues to improve the lot for young people. The fact remains that youth unemployment is going up and coastal communities are suffering. I would welcome any intervention that the hon. Member can bring about through her powers of persuasion.

In coastal communities, hospitality provides flexible, accessible, seasonal work that simply does not exist in the same volume anywhere else in the local economy. More than half the sector’s workforce is part time. For many young people—students, carers, people managing health conditions—that flexibility is what makes work possible. Job postings for temporary hospitality work were down by 25% in 2025, year on year. For many people, summer jobs are their first job. They are jobs that give a young person in Ryde, Shanklin or Ventnor their first pay slip and their first employer reference.

There are 67 pubs in Isle of Wight East, four breweries, and 1,200 jobs in the sector, generating £40 million for the local economy. Nationally, the pub and brewing sector contributes £34 billion and generates £17 billion in tax. Those are not small numbers. Of course, pubs are about more than just pints. A third of drinks sold in hospitality are spirits, such as Mermaid Gin on the Isle of Wight. When distillers suffer, pubs suffer and vice versa.

The visitor levy is the wrong policy at the wrong time, as the hon. Gentleman puts it, and I have discussed it with UKHospitality. Does he agree that we need to stop this tax, at the same time as cutting VAT? If we do not, we will end up with an effective VAT rate on hospitality and tourism businesses of 27%, which, compared with the rates in Ireland and Germany, for example, at 9% and 7% respectively, is just not competitive.

The hon. Gentleman is right, we need both. Our tourism and hospitality sector is one of the most highly taxed tourism and hospitality sectors, compared with our European neighbours, who already have a cost-competitive advantage.

The hon. Member is talking about holidays. Our Chancellor has just announced the great British summer savings, which will see VAT slashed from 20% to 5% on activities, children’s meals and attractions. Does he welcome that move?

I understand that the hon. Lady is trying to sell her own Chancellor’s policies, but this support is pretty thin—a short, indeed temporary, VAT tax giveaway, set against the severe damage done by two successive Budgets, which runs into the tens of billions of pounds.

On business rates, the hospitality sector pays 10% of all eligible business rates but accounts for only 2% of relevant economic activity. That equates to an overpayment of £1.8 billion. The Government legislated for a 20% discount; what they have delivered is a 5% discount. Without a sector-wide solution, 963 restaurants and 574 hotels could face closure this year, and we are already seeing closures.

I thank the hon. Member for giving way again; he is being very generous with his time. We are talking about the importance of hospitality in our coastal communities. Given that hospitality is such a cornerstone activity in our coastal communities, providing many young people with their first jobs and providing jobs for the entire supply chain throughout our coastal communities, does he agree that the Government should consider hospitality as a cornerstone profession in these areas? Instead of hammering it with national insurance contributions, high VAT and now a visitor levy, the Government should do everything they can to boost hospitality, to put a rocket underneath employment in these communities?

I agree with all those comments. The Government should do all they can to support this sector. I say again that coastal communities face some of the biggest structural challenges, in terms of both demographics and geography, of any of our communities. That is why the Government should have a particular focus on these areas.

I will finish by speaking briefly about transport. A House of Lords Select Committee identified in 2019 and again in 2023 that poor transport connectivity is holding coastal communities back. The Isle of Wight knows that better than most places. The Government have made no specific investment plans for transport in coastal communities. Instead, for the Isle of Wight, the Government have increased the already rip-off costs of crossing the Solent by car—of course, the Isle of Wight is completely reliant on ferries for transport to and from the island—and have done that by introducing a new emissions trading scheme tax, which they have not applied to Scottish islands with smaller populations and have not applied in full to Northern Ireland with a bigger population. It is insulting and inexcusable.

The Government say that they want coastal communities to succeed, but a whole string of policies and tax-and-spend decisions do not support that aim. Indeed, many directly undermine it. I therefore call on the Government to support seasonal hospitality in coastal areas by scrapping their plans for the overnight visitor levy, introducing a national insurance holiday for businesses employing young people and those not in employment, education or training, and scrapping business rates for thousands of hospitality businesses up and down the country permanently. The Government should stop trying to convince businesses, whose rates are going up, that they are going down—businesses know what their rates are. They should urgently publish the promised visitor economy growth strategy and disapply the ETS tax on car ferry travel to the Isle of Wight, bringing it in line with every other UK island that will pay nothing.