Labour warned that hospitality ‘is being taxed out of existence’
The government faced serious warnings from MPs about the state of the hospitality sector during an afternoon debate in the Commons on July 1.
Representatives from across the UK warned the government that high taxes were suffocating the sector – particularly for small businesses – putting ‘insurmountable burdens’ on businesses.
“Hospitality is being taxed out of existence, and that is a political choice we need to change,” Alistair Carmichael, Liberal Democrat MP for Orkney and Shetland, said.
The rate of employer National Insurance Contributions (NICs) increased from 13.8 per cent to 15.0 per cent, and the threshold for payment was lowered to include most part-time workers.
Since the budget in October, the hospitality sector had already shed 69,000 jobs – triple the national average.
“These are not abstract statistics… they’re real people’s lives,” Carmichael said. “Hospitality is not asking for handouts. It is asking for level play.”
MPs called for the ‘brakes to be taken off’ hospitality, with business rates reform and a lower rate of national insurance as crucial concerns.
Angus MacDonald, MP for Inverness, said that the hospitality sector in rural Britain “has not struggled more in my lifetime”.
“The governments, both the last two governments, have plucked the golden goose of hospitality so often it no longer has any feathers,” he added.
Consvertaive MP Andrew Griffith said that hospitality plays a “disproportionate role” in providing the next generation with their first step on the career ladder and that the government’s approach to hospitality has been “hostile”.
“It’s heartbreaking that Britain’s proud record of innovation, flexibility and business success is being thrown away thanks to that all knee jerk Labour instinct of tax success,” Griffith said.
The government plans to implement a lower business rate multiplier for retail, hospitality and leisure properties from 2026/27, which it says will take the pressure off SMEs.
It has also introduced a ‘draught relief’ for pubs, which reduces alcohol duty by 9.2 per cent on beers and ciders, and by 23 per cent on spirits, wine.
Critics, however, say the measures do not go far enough, and that further steps will have to be taken to retain the UK’s SME hospitality sector.