Retail and Hospitality Sector

Thursday 22nd January 2026 Lords Chamber

Motion to Take Note

16:14

Moved by

[Baroness Monckton of Dallington Forest]

That this House takes note of the impact of Government policy on the retail and hospitality sector.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I am grateful for the opportunity to lead this important debate. I declare my interest as a non-executive director of the Watches of Switzerland Group plc, a FTSE 250 company, and as founder of Team Domenica, a charity based in Brighton which owns and operates a pub—the North Star.

I see that the Deputy Speaker is sitting on the Woolsack. As my noble friend Lord Borwick pointed out to me, the Woolsack symbolises the economic foundation of the nation from the days when the wool trade was of huge importance to England. The fact that the Lord Speaker presides on this wool-stuffed cushion demonstrates that government is supported by business. But this Government are the most anti-business that I can remember. Perhaps because no one in the Cabinet has any experience of running a business, they simply have no empathy or understanding of its risks and challenges.

I do not understand how the Government can claim to be helping hospitality, small businesses and retail. Admittedly, in her most recent Budget, the Chancellor added a new lower rate multiplier but, at the same time, removed previous relief and massively revalued all the rates upwards, leaving pubs facing eye-watering increases. She also announced that business rate discounts would fall from 75% to 40% and that, from April, there would be no further discounts.

As Mark Wrigley, a publican in Manchester, wrote:

“Two years ago, we paid £9,000 in rates, which rose to £13,000 in 2025. But this year, it has more than doubled to £31,000. Within three years, it is expected to reach £42,000”.


He said that these figures are based on the so-called rateable value—a calculation that often seems plucked from thin air. He wrote that the pub’s rateable value

“is a scarcely believable £97,000”;

his annual rent is £70,000.

“So the RV is 40 per cent higher than the rent … And the madness gets worse. When we compare our RV to other pubs and bars on our street, some of them pay much less, while one of them has seen its RV soar from £50,000 to a frankly ludicrous £165,000”.


And this is being replicated across the country.

Pubs are facing an average tax rise of 76%, while hotels’ tax bills are going up by 115%. Utility costs have risen by 57% in the last five years. Ed Miliband’s energy policies have not helped, although perhaps he might feel that, with every pub that closes, we are getting closer to net zero.

One pub a day closed last year. Just think for a moment what this means for rural communities, for employment and for the social fabric of our country. When a pub shuts, a small part of England dies. Particularly in rural England, local pubs are vital to combat loneliness and social isolation. They are places that welcome everybody: places where you belong as soon as you walk in the door; places where you do not need to be invited to visit; places which are, literally, home from home for many.

If the Prime Minister’s local pub, the Pineapple, in north London closed, he could easily find somewhere else to slake his thirst, drown his sorrows and contemplate his U-turns. In rural villages, which have already seen shops and post offices close, there would be nowhere else to go. The Government’s proposed intensification of the drink-driving laws is clearly designed to stop these locals getting into the car and going to the next village—if, indeed, the pub there remains open.

The Chancellor is effectively destroying pubs, as much as if it were her very purpose. An estimated 89,000 jobs were lost in the hospitality sector after her first Budget. UKHospitality predicts that a further 100,000 jobs are at risk after the November Budget. This week, we learned that, in the month after that Budget, the number of staff on payrolls fell by more than 42,000—the biggest fall in the number of workers since the pandemic. The lowering of the NI employer threshold seems to have been designed to kill off starter jobs which are at the heart of the hospitality and retail industries.

Flexible working is key in both hospitality and retail. As Sam Carlisle, a rural restaurateur, eloquently put it:

“These are jobs that fit around lives”.


If zero-hours contracts are abolished under the Employment Rights Act, as planned, hospitality businesses might as well close altogether. I know from my own experience at the North Star that you must monitor rotas minutely.

Retail and hospitality are significant and huge players in the economy. These sectors are less impacted by AI and should therefore be stimulated to grow and expand. This is where the human jobs of the future will be, and fiscal policy should be supporting them, not increasing the burden. When people work, their well-being tends to get better; getting them into work will reduce the burden of benefits and reduce the strain on our healthcare system in treating people for depression. When Team Domenica advertised for jobs for our pub, for every job we advertised, we got over 200 applications. What does that tell you?

The Government’s proposal for extending licensing hours is tokenistic: many pubs already close two days a week and are closing earlier in the evenings as they can no longer afford the staff costs. Hospitality employs people from every socioeconomic background, in towns and villages all over the country. The impact of so many policies all at once is confusing and devastating. Put simply, it means that pubs will simply not be able to afford to employ the people who need the job most.

Tom Kerridge, the chef and restaurateur, has gone on record about the 148% surge in costs on one of his establishments. I imagine he now has buyer’s remorse, having been vocal about voting for the Labour Party in the last election—or indeed anyone else who took Keir Starmer at his word when, as leader of the Opposition, he declared:

“my Labour Party is determined … to breathe life back into our high streets”.

He said:

“Small businesses are the beating heart of our economy”.

Instead, they are now on life support.

The are rumours of a U-turn on pubs, but nothing for hotels and restaurants. The hospitality sector must be looked at as a whole. A friend of mine who owns and runs three successful hotels and was planning to start a fourth has changed her mind. Instead, she is having to make redundancies in her existing portfolio and curtail all capital investment. Without such investment, there is no growth. The employer national insurance changes alone cost her £0.5 million on her bottom line.

Hotels are facing a dual tax hike. On top of business rates, there is now going to be an overnight visitor levy, which Labour is allowing mayors to impose. The steep rise in wage costs, national insurance and other regulatory costs means that the 5p discount to the business rates multiplier announced in the Budget is not sufficient to ease these pressures. What is needed is the full 20p discount permitted in legislation.

A new surcharge is being applied to higher-value premises with rateable values above £0.5 million. This is hitting high street shops, supermarkets, hotels and sports clubs. Twice as many retail premises are being hit compared to the online warehouses, which this was supposedly meant for. In its 2024 election manifesto, Labour promised it would

“level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.

I think that should now win the Booker Prize for fiction.

Our local town of Heathfield in East Sussex has a charming café, the Pink Cabbage Co, which is run by an energetic, inspirational, entrepreneurial lady called Lucy Howlett. She employs 16 people, all local. The café is always full, the food is delicious and it is an important part of the community. She told me that, after last November’s Budget, having spent months mitigating as much as she could from the previous Budget, she lay on the floor and cried. At the end of that month, having paid all her bills, she had £23. She decided to do tapas nights. Why tapas? Because the food can go on one platter and you can prepare it beforehand, so you need to employ fewer staff. I remember the days when being an entrepreneur meant that you grew your business, you employed more people and you were an important contributor to the economy, not that you had to think of creative ways to lose your employees.

I have spoken previously about Heathfield Ironmongers, which closed after 100 years of trading. Since then, several other businesses in our two-street town have closed their doors. We now have seven charity shops, and there have also suddenly sprung up a Turkish barber and two Vietnamese nail salons—cash only. How can they afford to operate when the traditional English shops have had to close? I wonder.

The Government claim to want more young people in work, but their policies have made it harder for them to find jobs. It is often said that one needs to be cruel to be kind, but the Government’s policies on the minimum wage are kind to be cruel. Subsidising job opportunities and creating state-funded work placements, as the Government are suggesting, is not the answer. Enabling the private sector to employ more people by removing a punitive tax burden is the sustainable way forward.

This Government have said they want long-term growth, but instead, because of the last two Budgets, retailers and hospitality owners are facing harsh financial choices, forcing them to pull back on investment when they should be focusing on growing their businesses and creating job opportunities.

Napoleon, in an ill-judged sneer, described England as a nation of shopkeepers, implying that the English were too materialistic to be focused on profit. The Woolsack signifies a nation driven by trade and commerce, but where are we now? We are a nation of charity shops, boarded-up high streets and a plethora of fake and illegal Harry Potter shops and so-called British tourist shops, which are creeping from Trafalgar Square down Whitehall, as I am sure many noble Lords will have noticed. It is desperately sad that Nelson, on his column after his great victories over Napoleon, should have to witness the state-promoted decline of our nation’s proud history as shopkeepers. I beg to move.

16:26

[Baroness Dacres of Lewisham (Lab) (Maiden Speech)]

My Lords, it is a great honour to rise in this House for the first time. I would like to thank noble Lords across the House for their warm welcome.

I speak today as the noble Baroness, Lady Dacres of Lewisham, a title I hold with enormous pride. Lewisham is where I serve as the directly elected mayor, and I have proudly called it home for over 40 years. It is where community, resilience and ambition are part of everyday life—an area proud of its history of inclusion and as a borough of sanctuary. It is a place where you can eat your way around the world.

My journey here has been shaped by a strong work ethic, a belief in fairness and opportunity and a commitment to public service. I bring with me a background in science, computing and law, alongside lived experiences rooted in place, community leadership and local government.

It was a grant from Lewisham Council that allowed me to attend university and be the first in my family to do so, completing a degree in physical sciences with computing. I worked at the UK Atomic Energy Authority.

In later years I undertook a degree in law and was called to the Bar in 2006 while maintaining my IT career within investment banks and bringing up my son, the honourable Darnell Dacres, as a single parent. Together, these experiences have shaped who I am today.

I am deeply conscious that none of us arrives in this House alone. My paternal grandfather served in the RAF here, coming from Jamaica, during the Second World War. My parents came to this country as part of the Windrush generation, seeking opportunity and determined to build a better future. They raised me and my siblings with a deep respect for education, a strong sense of responsibility and the belief that leadership is shown through example. Those values continue to guide how I serve, and I know that they are values shared by noble Lords across this House.

Before turning to the substance of today’s debate, I would like to place on record my sincere thanks to Black Rod and the Garter Principal King of Arms. I am also grateful to my noble friends Lord Kennedy of Southwark and Lady Kennedy of Cradley for their support and friendship. I thank my noble friends Lady Smith of Basildon, Lord Collins of Highbury and Lady Wheeler for their support as I join this House. I also thank the staff of the House of Lords and the doorkeepers for their professionalism, guidance and—yes—directions.

I would also like to thank my noble friends for their care and support of my guests on the day of my introduction. My family spanned four generations and my guests included people who have played a significant role in my life, including my former primary school teacher, Tom Deveson, and my law degree lecturer, Professor Vick Krishnan. Their presence was a powerful reminder of the lasting impact of education, encouragement and daring to dream.

These experiences bring me to the subject of today’s debate and the positive impact that the Government’s policies are having on retail and hospitality, when shaped with local communities in mind.

In Lewisham and across the country, I know that retail and hospitality are central to the vitality of our high streets. Independent cafés, restaurants, market traders and shops provide jobs, support local supply chains and create welcoming social spaces. They are often the first step into employment for young people and an important source of flexible work.

I have seen how targeted support, town centre investment and measures that boost footfall can make a real difference. In Lewisham, regeneration, improved public spaces and new housing have already brought, and will continue to bring, more people into our high streets, helping local businesses to grow, employ local people and invest with confidence.

When policy is well designed, with local communities empowered to make decisions, our retailers and hospitality businesses do not just survive; they thrive.

Positive interventions strengthen local economies, sustain livelihoods and help to ensure that high streets remain vibrant and resilient.

Retail and hospitality succeed when policy recognises their role, not only as economic drivers but as anchors of community life. My experience in Lewisham shows what is possible when government works in partnership with local leadership and local enterprise, and when the voices of communities are heard.

As I take my place and my duties in this House, I do so with a deep sense of responsibility, determination and hope. I look forward to contributing constructively to our work, informed by lived experience, grounded in community and guided by the desire to improve lives.

My Lords, I thank you.

16:33

[Lord Hannett of Everton (Lab)]

My Lords, it is an absolute privilege to congratulate my noble friend Lady Dacres of Lewisham on an excellent maiden speech. I am sure all noble Lords will agree with me that she is going to be a real asset to this House. My noble friend was born in south London, her parents coming from the Windrush generation. She represents the best of our country. My noble friend brings to this House a wealth of experience in local government, serving first as a local councillor and then as a cabinet member, as Deputy Mayor of Lewisham and finally as the elected Mayor of Lewisham—a proud record. She is hugely respected and liked both in London and across the wider local government sector, as demonstrated by how, the day after taking her seat in the House of Lords, she was at Windsor Castle with her parents and son receiving an OBE from Her Royal Highness the Princess Royal. I know that my noble friend is already making friends across the House and that all noble Lords are looking forward to hearing more thoughtful contributions like the one she just made. We welcome her.

This is an important debate on an important sector—in fact, as a former general secretary of the trade union USDAW I am particularly well versed in the retail sector. I often try to avoid tribal politics in these discussions, because the issue is the most important thing. I have to say to the noble Baroness that she nearly pulled me into a debate of comparing records, but of course time does not allow me to forensically examine previous legislation from the other side, maybe during the 14 years that they were in office.

I look at the time we have been in office and I see a determination—a Government with values, of trying to do the right thing, not just for employees but for employers and growth, and with a vision for good. Therefore, when people criticise the legislation of a Government who have been in office for a relatively short time, I say, “There should be some humility about the trends started on your watch”. I say that not to be adversarial but to say that when you criticise a Government who have been in office for a short time, you have to be honest and self-reflective with regard to your own performance.

More positively, I said that I know the retail sector, and I know that any legislation that comes in takes time to bed in and that the full impact of legislation is seen over time. I want to draw attention to two issues that make a difference and which apply to these two sectors.

The Employment Rights Act, which was rightly scrutinised in this House, has gone through, and history will judge its impact over a period of time. The other one that I draw attention to, although there are many over the lifespan of many Labour Governments, is the introduction of the national minimum wage in 1998. I was a member of the Low Pay Commission for 11 years and took evidence from employers, employees, economists and a whole range of interested groups. I remember at its introduction how the critics—by the way, some of them in the trade union movement—and many employers declared that this was the end of the world, that to lift people out of a low wage with a minimum floor was risky. That was 1998; it is now 2026, and no Government would even think about replacing that. So my cautious note to the critics on any period of legislation is: give it time but also have a period of self-reflection.

The reason why coming into the House is important to me is that I want to be a part of a Government who have values at the core and who want to do the right thing by those at the bottom and not just those who can look after themselves at the top. I have seen this in evidence. Will we get things wrong? Of course we will, but who does not? For me it is about how the passion and the values of this party will sustain it going forward.

I just want to make reference to the Low Pay Commission again for this reason. I represented USDAW members in many of the large supermarkets, and we had good relationships with most of the big companies. But not all employers are equal. The invention of good legislation is a crucial part of our responsibility. If we are about anything, it has to be about supporting those who are the most disadvantaged, the most vulnerable and the most insecure. I have to say that in these two sectors, many people fall into that category. It succeeded because we were prepared to take a few risks and to compromise.

I do not want to just throw it back to the other side, but if it going to lead with its chin, let it be accepted that pubs were in decline under the watch of the previous Government. It is not something that this party was responsible for when we started.

16:39

[Baroness Neville-Rolfe (Con)]

I start by welcoming today’s maiden speeches. One of the most civilised aspects of life in the Lords is the Long Table. I had the pleasure this week of dining with the triumvirate of the noble Baroness, Lady Dacres of Lewisham, and the noble Lords, Lord Forbes of Newcastle and Lord John of Southwark. I know that they and the noble Baroness, Lady Shah, will make an energetic and positive contribution, such as we have already heard from the noble Baroness, Lady Dacres.

My noble friend Lady Monckton of Dallington Forest started off with a stirring speech. She explained clearly how pubs are struggling and waiting desperately for the extra help that the Government have promised. The uncertainty of their position, as the Government dither, is deafening. One minute, Rachel Reeves is imposing a huge increase in their costs, notably on rates, through a botched revaluation. Then we have a series of briefings suggesting that not only pubs but hotels and others might benefit, only for their hopes to be dashed by the Chancellor yesterday in Davos—hardly a democratic gathering. I hope that the Minister will have the grace to share the Treasury’s thinking with us. Parliament is paramount, however much the leadership might like to think differently.

I am speaking today because my neighbour, who owns a London pub, thinks that he will become bankrupt and have to move abroad unless substantial changes are made on rates. He has a pub with a hostel—not a smart hotel but a lodge, in the bureaucratic vernacular. He is in the category where rateable values alone will rise by 70% rather than 30%. Can the Minister look into this unfairness? Add to this the quadruple whammy of: first, the increase in NICs; secondly, the steep rises in the national minimum wage, particularly for young people; thirdly, IHT on family businesses that will still kill many of them; and, fourthly, the new cost of the Employment Rights Act. Multiply that across the economy and you have a crisis, so it is no surprise that thousands of pubs are closing.

The position will erode further with the introduction of a lower drink-drive limit. It will strike a hammer blow to pubs in rural areas—look at Scotland. Like so much modern regulation, it is not necessary. Those who, like me, take care to stay below the limit will stop going to the pub and the reckless will continue to drink and drive. The Government are right to say that they will act on rates, but it is complex. I am not convinced that Treasury Ministers have ever taken the time to understand what they have done.

What is clear is that growth is going backwards, which brings me on to hospitality more broadly. It is a huge industry suffering from that quadruple whammy and from tourist uncertainty, not helped by the failure to tackle street crime. Magnets for tourism such as music venues and stately homes are also in peril. The visitor levy on hotels is a threat to a slowing sector that is already facing a high tax burden and mushrooming construction costs. There is also another long-term hit: the impact of slimming drugs, reducing demand in restaurants and for alcoholic drinks. I have a relative who manages a vodka start-up. Assailed by national insurance, rates and a tougher economic backdrop, he is now working with a partner in the US, which they see as a more business-friendly country, even with today’s rolling Trump news.

Finally, I turn to retail. This is a highly productive sector. But it already shoulders a disproportionate tax burden: 7.4% of all business taxes, or £33 billion a year, according to the BRC. As well as rates, there are more costs in the pipeline on packaging and recycling. Employment is falling in retail, as it is in hospitality. The Government should be wary of increasing the burden there. The sector saw the promised rates reform as a possible driver of growth, only to be gravely disappointed.

The truth is that this Government have so far made a mess of the economy. Taxes, spending and now inflation are up, while growth, productivity and employment are sluggish. I believe that this partly reflects the Government’s ignorance of business, particularly less elite businesses such as retail and hospitality, as was highlighted by my noble friend. The noble Lord, Lord Timpson, is an honourable exception, as is the noble Lord, Lord Leong, who is winding today. A useful new year’s resolution would be for the Prime Minister to seek their counsel as he frames his overdue U-turn on rates.

16:45

[Lord Smith of Hindhead (Con)]

My Lords, I thank my noble friend Lady Monckton for securing this important and timely debate today and wish her every success and good luck with her pub venture. She, like others, will need some luck when being involved with the hospitality industry.

I declare my interests as set out in the register, in particular my financial interest as the chairman of the Association of Conservative Clubs—a role that I have undertaken since I stepped down as the CEO last year. For the record, I have worked for the association my entire working life, having joined the team some 39 years ago. I congratulate the four new Members of your Lordships’ House who are making their maiden speeches in this debate. I sincerely wish them well and look forward to hearing their future contributions.

We are all well aware that the hospitality industry is facing a crisis worse than it has ever seen—astonishingly, even worse than it experienced during the Covid pandemic and lockdown. We know this as there are daily articles in the press and coverage in the media about the plight of pubs and, in particular, the unfair rating increases that are set to cripple many establishments, with eye-watering multipliers which, for many, will be unsustainable over the next three years. Putting to one side the increase in wages, which affects all employers, and food inflation and other costs, the proposed increases to business rates have been seen as the final nail in the coffin. I am therefore pleased that noises from His Majesty’s Treasury indicate that there may be some re-examination of this issue, with the prospect of some sensible arithmetic being applied.

My concern, however, is that this appears to be directed towards the plight of pubs alone, and I would like to make a case for the circa 3,000 private members’ social clubs. I do not mean just the Conservative clubs that I know so well, but the working men’s clubs, the Royal British Legions, miners’ welfare institutes, naval and Air Force clubs, railway clubs, Liberal and Labour clubs—indeed, all the social clubs that make up such a significant part of so many people’s lives. These clubs are not run for profit or underwritten by a hedge fund or private equity firm, as so many pub companies are, but managed by volunteer officers and committees. Some 12,000 people are employed within the clubs.

So often, we hear how important pubs are to their communities, which is true, but every one of the members’ social clubs that I have mentioned is a community in itself. They are part of the fabric of many people’s lives, and essential to the social well-being of members, as well as to the furtherance of the objects for which the clubs were formed. As such, I ask the Minister to feed back to the Treasury team that any help or assistance that may be on the way to help pubs should be extended to help clubs in the same way, for the same reasons, and for the same outcome—in other words, a level playing field.

The society which socialises together is a stronger society, and our pubs, clubs, bars, restaurants and hotels put that into practice every day. As I said in my maiden speech, 10 years ago, virtual friends can never be the same as actual friends. Let us do everything we can to ensure that our clubs, pubs and all the places where we socialise remain, so that we can continue to meet friends and make friends in the years ahead.

16:49

[Lord Forbes of Newcastle (Lab) (Maiden Speech)]

My Lords, it is the tradition in your Lordships’ House that maiden speeches are heard in silence, originally as a mark of respect for the recently deceased father of the hereditary Peer being introduced. This does not apply in my circumstances today, obviously, but I did lose my father six months ago, and I am profoundly sorry that he is not here to witness my first contribution in this place.

I first wish to express my thanks and gratitude to all Members across the House for the warmth of their welcome, and extend this to the staff, particularly Black Rod, the Clerk of the Parliaments, the doorkeepers, security guards, clerks, catering staff and all those who sustain the life of this remarkable institution. Your support has made these first few days far less daunting than they might otherwise have been.

I would like to thank my sponsors, who represent important milestones in my life. I first met the noble Baroness, Lady Armstrong of Hill Top, at the age of 15, when, as my constituency MP, she came to speak in an assembly at Wolsingham comprehensive school. It was she who sparked my interest in politics generally and Labour values specifically, and she has been a steadfast mentor and friend for the past 35 years. The noble Baroness, Lady Blake, and I were contemporaries as leaders of our respective great northern cities, Leeds and Newcastle, building the case together for investment in the north through our collaboration in the northern powerhouse partnership, as co-founders of Transport for the North, and participating actively—in fact, both chairing—Core Cities UK.

Growing up in rural County Durham, my post-school employment options were limited. I, like many others, found my first job in the hospitality sector. In 1992, I was paid £3 an hour to work in a fast food restaurant. I had a zero-hours contract, no minimum wage, no predictable income, no sick leave or holiday pay entitlement, and no trade union or pension rights. Thankfully, for retail and hospitality workers these days, successive Labour Governments, including this one, have made progressive changes to employment legislation, bringing in more protections. But I still have my name badge from those days, as a reminder that I am older than many of my rights.

I welcome this Government’s recognition of the hospitality sector’s importance and the steps already taken to stabilise and support it. Expansion of the small business support scheme, and transitional business rates relief, are not abstract economic interventions; they are lifelines for the pubs, cafes, restaurants, hotels and other venues that give our communities their heartbeat. But hospitality also offers us a wider metaphor for the kind of economy we want to build. No Government can create a good society through policy or programme alone. By supporting businesses to grow, and by encouraging them in turn to create more and better jobs, we can offer opportunity, hope and a sense of belonging for future generations.

I belong to Newcastle. I am immensely proud to include the name of my home city in my title. At the time of my retirement from local politics, I was the second-longest serving leader of the council, second only to Lord Beecham—I imagine that being second to Lord Beecham is something that many Members of this House have experienced in previous years. I was also its first LGBT leader. I worked hard to create a culture of no outsiders, a place where everyone is valued for who they are and the talents they offer. But I am concerned about the trend towards exclusion, rather than inclusion, that I witnessed during my 22 years in elected politics.

At various times in our history, some people have been othered and blamed for the perceived ills of all. Jews, Muslims, LGBT people, asylum seekers, single parents and many others have been, and continue to be, denigrated and dehumanised. We must be staunch in our opposition to the politics of grievance: they are divisive, corrosive and diminishing of all of us. There is much hatred in this world, but the answer to this is not more hate; it is the opposite. It is love; love for our families, our friends, our neighbours, our communities and our country. Beautiful and gloriously imperfect though we may be, we always have so much more in common that unites us rather than divides us.

I believe that the mark of future success of this nation is not the riches of a few but the fortunes of the many. I believe that opportunity should be universal and hard work rewarded, and that the purpose of economic growth is to spread wealth, as well as generate it. It is therefore with the spirit of ambitious and generous collaboration, with curiousness about how we can change things for the better, and with a fundamental belief in the dignity and equal value of all, regardless of the circumstances of their birth, that I approach my service to your Lordships’ House.

16:55

[The Lord Bishop of Newcastle]

My Lords, it is a great honour to follow the noble Lord, Lord Forbes of Newcastle, and to welcome him to your Lordships’ House. I also extend a welcome to other noble Lords making their maiden speeches today.

I thank my friend, the noble Lord, Lord Forbes, for his excellent maiden speech. He made some immensely wise comments that superbly illustrate his capacity for, and commitment to, the work that he will undertake in this place. His mention of the values that have shaped his life are those that we should all aspire to and live out in our collective endeavours in this House. His calling our attention to the importance of inclusion is particularly vital.

The noble Lord’s years of dedicated service to local government and his commitment to creating thriving communities will greatly benefit this House. His lived experience, coupled with his kind heart, fierce mind and strong spirit, underpins his integrity, determination and resolve to seek the welfare of people and communities, especially those in deprivation. A keen listener and one who is ready to learn, he is well equipped for his new role in your Lordships’ House. I wish him well and look forward to working with him.

I turn to the subject of this debate. I thank the noble Baroness, Lady Monckton of Dallington Forest, for bringing it to your Lordships’ House. I am aware that, with the noble Lord’s contribution, noble Lords are getting a double dip of north-east input, but I hope this adds value.

Just yesterday, two chefs from Michelin-starred restaurants in Newcastle and Northumberland warned of major hospitality job losses caused by higher tax bills. Cal Byerley and Kenny Atkinson said that many businesses were on their last legs. For some hospitality venues in Newcastle, it is too late, with popular and long-standing venues having closed their doors permanently even in recent weeks. The North East Chamber of Commerce reports that many businesses used the temporary reliefs during Covid and subsequent energy crisis support to cover fixed costs rather than to invest, meaning that resilience remains thin.

On the upside, in Newcastle city centre, bus reform and subsidised young person fares have increased evening and weekend footfall, helping the night-time economy, which in Newcastle is rather lively. Regeneration investments make the city a more attractive visitor destination, which supports hospitality and retail spending. Information given to me by the North East Chamber of Commerce reports that the visitor economy supports around 63,000 jobs and contributes over £6.6 billion to the regional economy, representing 8% to 11% of regional GDP.

The Government’s announcement today of the investment in cultural organisations is therefore welcome in its potential to boost the broader economic landscape. Similarly, the overnight visitor levy could be a tool to invest in communities and support better jobs. Time will tell. Will the Minister monitor its impact?

In Northumberland, co-ordinated tourism strategies promote heritage assets such as Alnwick Castle and the coastal trail. This draws millions of visitors annually, boosting accommodation, cafés and retailers in towns such as Bamburgh and Berwick-upon-Tweed. However, these gains are strongly seasonal. A café might thrive in August but struggle in January, even as fixed costs remain year round. Government policies, through business rates, labour regulation and demand-side investment, exert powerful and concrete effects on retail and hospitality in Newcastle and Northumberland.

An underlying theme is what policy does at a granular level to communities and their ability to thrive in the short, medium and longer term—a point that the noble Baroness made so eloquently in her opening speech. The noble Lord, Lord Forbes, and I have in common that we both grew up in the north-east, as well as the year of our birth, 1973—the year Sunderland won the FA Cup. In that regard, we will both have similar memories of the impact of the decline of industry on communities, and the knock-on effect of that on the economic prosperity of the region and on people, the effects of which are long-standing and intergenerational.

The challenge now, which is also an opportunity, is not only to craft a policy environment that balances cost pressures with sustainable demand and opportunity for growth but to truly set forth a long-term vision that enables the welfare and flourishing of people and communities—not driven by fear and anxiety, but drawn by confidence, hope and economic sustainability.

17:00

[Baroness Verma (Con)]

My Lords, I join all noble Lords in thanking my noble friend for this debate. I look forward to the remaining maiden speeches and congratulate the noble Baroness, Lady Dacres of Lewisham, and the noble Lord, Lord Forbes, on their excellent contributions to today’s debate. I also refer noble Lords to my interest in the register as a businesswoman for over four decades.

I suspect that, like me, many noble Lords over the past 14 to 15 months have met and spoken with many businesses, a proportionately large number of them from the retail and hospitality sector. According to the House of Lords Library, the number of businesses in hospitality in 2025 was around 176,685. What does the Minister believe the number will be this time next year? Hospitality is the seventh largest of the main sectors and almost all of hospitality—99.6%—is made up of SMEs. Some 7% of all jobs in the UK in 2025 were in this sector. What does the Minister think that number will be this time next year?

Most businesses are started by local people to serve local communities, creating economic wealth and job creation in those communities. Hospitality usually sits in the centre of those communities. They do not just have economic impacts; as other noble Lords have said, their presences brings people together. Hotels help bring in tourism, along with pubs, cafés, restaurants, et cetera. Social interactions bring an abundance of good health and well-being benefits. But we have seen a decline over the past 25 years in the number of pubs, going from 60,800 in 2000 to 45,000 in 2024, as stated by the British Beer & Pub Association.

Sadly, we have seen many of our industries leave our shores; that surely cannot be good for our long-term desire to be a resilient country that can withstand the sort of global shocks that are increasingly impacting on our everyday cost of living. Instead of helping to support these incredibly important sectors, the attack on small and medium-sized businesses has been blood-curdling. I remind noble Lords that most businesses are SMEs—local people investing their hard-earned money into enterprises that very often will take quite a few years to show a return on their investment.

There was a time when we prided ourselves on being world leaders in enterprise. My grandfather started his manufacturing business in 1952 and my father in 1967. They illustrated to us how this great country enabled anybody and everybody to be socially and economically upwardly mobile, part of the economic growth of the nation and to give back to the community. I started my first business in 1980. A brilliant example is the Ugandan-Asian community, who came as refugees from Uganda. They contributed so much to my city, Leicester, even though the then Labour council had advertised for them not to come.

Given the impact of the national insurance hike from 13.8% to 15%, the increase in the minimum wage in April, the level at which employers will have to pay NI going from £9,000 to £5,000, the fact that many businesses in retail and hospitality are facing revaluations, which will see huge increases in their business rates, and the levels of crime and attacks on these sectors, meaning an increase to the costs of insurance, property protection and other added costs, how will the Government provide support to businesses that are already reeling from sluggish growth? Can the Minister tell the House how many job vacancies have been filled with the Pub is the Hub initiative? Does he seriously believe that £1.5 million of support for hospitality is sufficient? What has the response been from the hospitality sector?

Finally, if the Government are serious about helping hospitality, what can they do to help reduce its energy costs? To help the Minister, if the Government are serious about climate change, reducing carbon emissions and, above all, supporting the continued existence of the hospitality sector, maybe, instead of providing advice on how to get to net-zero carbon emissions, the Government could provide products at zero cost, or at hugely subsidised costs.

17:06

[Lord Borwick (Con)]

First, I must declare my interest, in that my wife, Victoria, is chairman of VisitEngland—what older Peers might call the English Tourist Board.

I congratulate all noble Lords who have made their maiden speeches. I congratulate the noble Baroness, Lady Monckton of Dallington Forest, on securing this debate on such an important subject. It has allowed me to open up an unimportant interest in my personal history: the fact that I was born in a hotel. I can claim to be one of the few people to have arrived at a hotel stark naked. Noble Lords may have left a hotel stark naked, in circumstances that I would rather not know, but very few will have arrived at one in that state.

Retail and hospitality are industries with much in common, but they have at least one important difference. In hospitality, problems, like babies, tend to arrive at strange hours of the day and night. An innkeeper must have someone who is responsible for solving problems available 24 hours a day, and someone who can solve problems at minimum cost is likely to be paid above minimum wage. Retail has a much more predictable time cycle of problems, but they are no less urgent. Shoplifting is a growing problem for all retail businesses, and government policy could be more helpful. Science could be used, in the form of permitting the more widespread use by shopkeepers of facial recognition systems in stores. I have little doubt that this will be considered on these Benches in due course.

The more interesting subject is the problems that the two sectors have in common. The most clear-cut is that both sectors have a relatively high use of minimum wage labour, because they use a lot of young people. For many people, a job in retail or hospitality is their first interaction with that wonderful, valuable and rare creature: the customer. They learn something in their first job that will be invaluable and exciting—that customers can and must be satisfied. Some young people learn lessons in self-reliance from retail and hospitality that they have not achieved in years of schooling. With a bit of luck, they might have been at a school that has a scheme run by a fabulous charity called Young Enterprise, which teaches 15 year-olds to run a small business. It is hoped that the kids pick up entrepreneurialism through this route. Last year, that great charity, founded by an old friend of mine, the late Sir Walter Salomon, taught more than 566,000 young people how to manage money and start a business.

However, no amount of entrepreneurial skill teaches you to cope with the biggest problem that retail and hospitality have in common: the cost of taxation in the form of national insurance and business rates. No doubt other noble Lords will talk of the difficulties caused by a tax on jobs—as national insurance is sometimes called by those not calling it a disguised income tax—but business rates have a peculiarity of rising fast and unpredictably. The recent rise in business rates has caused a lot of stress to shopkeepers, uncertain if their customers will be prepared to pay the increase in retail prices needed to finance it. Of all the problems caused by government to business, the most intractable and dispiriting will always be taxation.

What is the solution? It is entrepreneurs. Behind every retail shop and every hospitality pub is an entrepreneur. They need to be encouraged. If we are lucky, she or he will be a driven individual, determined to do well despite problems. These entrepreneurs feel unappreciated —so many of them are leaving for places such as Dubai because of government policy. This happened in the 1960s and was called the brain drain. Their children, the entrepreneurs of the future, may easily never come back. That is one of the tragedies of socialism.

17:11

[Lord Empey (UUP)]

My Lords, I congratulate the noble Baroness, Lady Monckton, on securing this debate. I also congratulate our new colleagues on their maiden speeches, which were both entertaining and informative. I am sure we will hear more from the other maiden speakers as the debate goes on.

I do not have personal experience of the hospitality sector, other than that, as a Minister, I had responsibility for tourism. However, I was engaged for a large part of my life, as was my family, in retail, and I think there are a couple of areas that we have not touched on today. One of them is the fact that customers’ habits are changing and have been for many decades. The traditional shops on the high street, with produce spilling out on to the pavement, have passed—probably because somebody with a clipboard wants to ensure that the pavement is not cluttered up. The other big thing is online retail, which has had a huge impact.

We need to focus on the fact that we do not have, and have never really had, a proper system for dealing with town centre and city centre retail. First of all, we make life as difficult as possible for people to get into it. That comes back to parking—inadequate or expensive parking, with wardens running around issuing tickets. How is anybody going to buy anything of substance if they are forced on to public transport in the pouring rain? People are not going to do it; they are just going to go somewhere where they can stop at the door. That was the lesson of America over many decades. The other factor is that the smaller units in town centres have rates that are much higher per square foot than out-of-town shopping centres—the supermarkets and big stores are a classic example of that.

We all want to support tackling climate change, but we have to be realistic. If going into the town or city centre becomes more and more expensive and difficult, people will go somewhere else, because they have options. We need to re-engineer our town centres. We have talked about it—it has been around for years—but nobody has actually done it. It seems that all I hear of, even at home in the last couple of days, is significant retailers packing in because a Marks & Spencer, say, has moved out of a town centre to a shopping centre on the edge of town. Footfall drops and the local retailer is left high and dry.

Whatever way you look at it, rates are an enormous cost. When you add the cost of employing people, you get to the “Why bother?” stage. I have been in local government for 25 years, and local councils depend heavily on business rates for their revenue. There is a temptation to say, “Oh, big business can cope with it”. That is true to some extent, but it is not true in town centres by and large because the big battalions—the Sainsbury’s and the Tescos—apart from their express units, go outside. We have changed habits, and we have not managed to mix residential, retail and hospitality in our town centres in a sensible way. All we get is vape shops, charity shops and so on, proliferating in these places and making the town centres completely unpleasant environments.

Looking at the totality of the challenges that our retail sector is facing, I have to say to the Government and the Minister that he needs to take this back to his colleagues because it needs to be rethought. What we are doing is taking the existing problems and simply making them worse. Some local authorities, for a perfectly legitimate reason of trying to improve climate change, are actually forcing people out and making life so difficult that people are not prepared to go into retail. I hope that this debate will stimulate the Minister to bring it back to his colleagues, because I think there is a widespread feeling on all sides of the House that much more needs to be done.

17:16

[Lord Hannan of Kingsclere (Con)]

My Lords, I congratulate my noble friend Lady Monckton on securing this debate and will take us back to how she started—with the Woolsack, which is currently sustaining the graceful and delicate form of the noble Baroness, Lady Bull. The people who designed this Chamber knew what they were doing. England medievally was a one-sector economy, as dependent on the wool trade and as associated with that one sector as today Qatar is with natural gas or the Maldives is with holidays. They were reminding us that everything we do as politicians and people in government is literally supported by the surplus of the private sector. They knew that they needed to remind us of that, and they need to remind us still.

I have been struck ever since I arrived here by how readily people spend money that is not theirs and how easily we expect warmth and approval when we demand that more be spent on something, but we never—or almost never—talk about where it is coming from. I think that happens because of a bit of faulty wiring in our neural networks. When a politician talks about public spending, it is received as though he is talking about his own money. So when he proposes spending more, he is thought to be generous—as though it was his own—and when he proposes spending less, he is thought to be mean. In fact, of course, he is standing up for people who will never thank him—what the poet calls

“Your children yet unborn and unbegot”.


These are the people who are not there yet, whom he is sparing from our extraordinary debt levels.

I think a similar dynamic happens with the very unpopular thing that I am about to talk about now. It is specifically hitting the hospitality sector, as opposed to business more widely: the huge and unprecedented rises in the minimum wage. People always personalise this. Whenever anyone criticises the levels of minimum wage, the reaction is the rhetorically powerful but logically utterly irrelevant question: how would you like to live on £12.21, or whatever the current rate is?

For what it is worth, my first job, like that of the noble Lord, Lord Forbes of Newcastle—to whom I say welcome and thank you for speaking so well—was also in that sector. I worked as a waiter in a golf club. It taught me lots of things, some of which were really useful. For example, since then I have always been able to tell the difference between when a waiter has genuinely not seen you and when he is just busy—not for me a lifetime of making little squiggling gestures in the air ineffectively, because I learned that. It also taught me punctuality. It taught me how to deal with customers. It taught me how to deal with employers, and how they are different from your parents or your teachers; the relationship is an altogether more transactional one. For me, as for millions of others including my children and, I am sure, others in this Chamber, that sector was the beginning of how I got into the world of work.

The measure we should be applying is: are we making it easier for that sector to hire people, or are we, as we keep pushing up that wage level, privileging one section of low-paid workers over everyone else, particularly people who are looking for work, who are becoming more and more numerous? It is difficult to have this argument without emotion, but I invite noble Lords to ask a couple of questions about the mechanics of those rises.

When I joined your Lordships’ House the minimum wage stood at £8.72. Now it is £12.21—an extraordinary rise. It has gone from being so low that it did not make much difference, in the period that the noble Lord, Lord Forbes, talked about, to being, I think, the highest in the OECD after France and New Zealand. What has been the impact of that rise? We can see it in the unemployment figures. We can also see it in the skewed incentives.

Lots of things happen when the minimum wage increases. First, some employers will simply claw it back in other ways. They will be less forthcoming with offers of subsidised purchasing, help with travel or other perks. If it gets high enough they will go elsewhere, either to automation or, let us be honest, to the large pool of illegal workers in this country—perhaps more than 1 million people. It is almost never noted that the people most affected as low-paid workers are also consumers of the industries most affected. If the minimum wage is passed on to customers in the fast food sector, let us say, or indeed in hospitality generally, it is not so much Members of your Lordships’ House who are affected by the rising prices.

Prior to these rises we had 30 years of structurally low unemployment in this country. We had waves of people coming here from southern Europe because they had regulated employment sectors and high minimum wages, and therefore structurally high unemployment. All the way through previous Governments of both parties, we managed to stay away from that and to remain a magnet for young people. By heaven, we are going to miss that when it goes.

17:22

[Baroness Shah (Lab) (Maiden Speech)]

My Lords, it is a great honour to rise for the first time here in your Lordships’ House, and I do so with a profound sense of humility. To sit among Members whose experience, wisdom and dedication to public service I have long admired is both a privilege and a responsibility I do not take lightly.

I begin by thanking the staff of this House—the clerks, Black Rod’s team and particularly the doorkeepers, whose professionalism, warmth, patience and, today, hydration have been extraordinary as I have found my way, mainly slowly, around its procedures and corridors. I am also deeply grateful to my two sponsors, my noble friends Lord Evans of Sealand and Lord Katz, for their generosity, encouragement and guidance. Their support has meant a great deal to me, and I thank them sincerely for welcoming me so warmly to your Lordships’ House. I would also like to thank my noble friends Lady Smith and Lord Kennedy of Southwark for helping me through this very surreal process.

It is a great honour to be the first Jain in Parliament, and swearing my Oath of Allegiance on Jain scripture was a moment of great significance for my community and family in London, Kenya, India and beyond.

My journey to this place has been shaped by family, by education and by public service. My grandmother and my mother both lived lives of unshakable commitment to their families, whose lives are marked by challenges and community expectations, but also by determination. They believed deeply in education, not as an abstract good but as a practical route to dignity, independence and opportunity. My father, a small business owner, worked hard to ensure that my brother and I could stand on firmer ground than he had himself.

I learned that progress is rarely sudden and never accidental. It is built patiently through work, service and a sense of responsibility to others. Those values have guided me through every stage of my life.

They also sustained me through profound personal loss. My husband Richard died in 2016 at the age of 36. Living with bipolar, he was a man of great kindness and creativity and an exceptional singer, whose life was cut short by cancer. His experience deepened my understanding of mental health, grief and the fragile line many people walk while still contributing richly to their families, workplaces and communities. Ten years ago, my life was very different. I was a back-bench councillor, a mum to a six year-old, a carer to my husband and a history teacher. Had life been different, I would probably be talking about being a head teacher rather than my elevation to this place.

I mention this not for sympathy but because it strengthened my conviction that public policy must be grounded in compassion, and that our systems, whether in health, housing or employment, must be designed for real lives, not idealised ones.

As I said earlier, my professional life began in education. Teaching is an act of hope. Every day, you stand before young people and make a quiet promise that their background need not determine their future. I taught students of extraordinary talent and ambition, many navigating overcrowded housing, economic insecurity and uncertainty about what lay ahead. They taught me that aspiration exists everywhere but opportunity does not.

It was those experiences that led me into local government, where I sought to turn principle into practice. As a Labour councillor in the London Borough of Brent, home of Wembley Stadium, I had the privilege of working in one of the most diverse and dynamic boroughs in the country.

I led work on regeneration and planning, and my work was driven by a simple belief that growth must be inclusive and development should strengthen communities. I encountered daily the reality of families living in temporary accommodation and young people being priced out of housing, often due to wage stagnation. These challenges demand long-term thinking and political courage, and I am proud of our work to deliver housing of all tenures and to play our part in tackling the housing crisis.

Alongside this, I led work in economic development, with a particular focus on supporting local businesses and high streets—the subject of this debate. High streets are not merely commercial spaces but social infrastructure. When they thrive, communities thrive. When they decline, the effects ripple far beyond empty shopfronts.

Working in partnership with the Mayor of London, I helped to deliver programmes to support small businesses in Wembley to get online, recognising that digital access is no longer optional but essential. I championed affordable workspace policies, ensuring that start-ups and growing businesses could access space they could genuinely afford and remain rooted in their communities, and supporting businesses to adapt and grow—the power of local, regional and national government working together.

I come to this House shaped by education, local government and lived experience. I do not claim expertise in all fields, but I hope to contribute particularly to debates on education, housing and regeneration—areas where long-term thinking is essential. I look forward to joining your Lordships’ House in scrutinising, revising and improving legislation. In that spirit, I bring with me the voices of the students I taught, the residents I served, the businesses I worked alongside and the families whose values brought me here.

I will endeavour to listen carefully, to speak thoughtfully and to serve with integrity.

I thank all noble Lords all for the warmth of their welcome, and I look forward to contributing to the vital work of this House.

17:28

[Lord Rook (Lab)]

My Lords, it is a great honour to welcome my new and noble friend Lady Shah to her place in your Lordships’ House, and it is a joy to congratulate her on a beautiful maiden speech. Tomorrow marks the first anniversary of my own introduction, and over the past year I have sometimes wondered exactly what I contribute to this place. Reflecting on my noble friend’s life and leadership, it is abundantly clear that she offers a huge amount to this Chamber and this community.

My noble friend’s experience in education will greatly enrich our work in helping to shape legislation that helps children to flourish and thrive in the future. Her contribution to grass-roots politics and community life in Brent will deepen our understanding of what it takes to build stronger and more united communities at a time of growing division. Her distinguished service in local government will offer invaluable insight into how central and local government can collaborate more effectively and creatively. Her vision for the arts and creative industries will challenge us all to forge a future for our country as a creative superpower.

Last but by no means least, as someone who spends a great deal of his time welcoming people of faith to this House, I am delighted to welcome my noble friend Lady Shah as the first parliamentarian from the Jain community in this country. Her presence here is a source of great pride to that community and an answer to its prayers.

As I reflect on my own first year, it is the moments of humanity and humility displayed by your Lordships that have made the greatest impression on me: when adversity is met with honesty, when courage meets crisis, and when sometimes the harder aspects of human experience have shaped the terms and tone of our deliberations. It is clear from my noble friend’s speech that she brings all those qualities in abundance. She spoke movingly and bravely about her late husband, Richard, and her presence here honours his legacy. To her daughter, Emily, we say: “You should be very proud of your mum—and also don’t worry, we don’t sit at weekends, so the newly ennobled Baroness Shah will continue to act as your chauffeur and personal assistant, getting you to all your dance lessons on Saturdays”.

In commending my noble friend Lady Shah to me this week, a noble Minister said simply, “She is so lovely. She has so many friends”. In this House, it is our convention to use the term “friend” to describe those in our own party. Despite this, I have no doubt that my noble friend Lady Shah will make many great friends across this House in the years to come. To that end, I welcome her as our new and noble friend.

To turn to today’s debate, I commend the Government’s recent support for pubs. This may be somewhat surprising, as I speak as a lifelong teetotaller. I was brought up in the Salvation Army and my only taste of alcohol so far has been the occasional sip of communion wine, the occasional cheeky portion of sherry trifle, and an occasion when my drink was spiked with ouzo on holiday in Greece. Despite remaining abstemious, which is even more surprising as I am now an Anglican, I recognise the importance of what the Government have done, economically and socially, to support pubs.

In the Budget, the Chancellor took decisive action to support pubs. She recognised the contribution that they make to our economy and our community. Treasury analysis suggested that pubs might face 45% increases in costs in the next year. As a result of the action by the Chancellor, that increase is probably reduced to around 5%. That is not marginal; that is the difference between survival and the ability to plan and invest.

Pubs are good not just for business and our economy but for our community and society, as has been picked up in this debate already. Research by Pub is The Hub, a non-profit organisation, demonstrated the critical role that pubs play, fostering community cohesion, social interaction and resilience. Research outlines additional services, both economic and social, provided by our public houses. Measuring social return on investment shows that every £1 invested in services and activities delivered through a local pub generates more than £8 of social value to the community in return. Our pubs provide places where people gather—they belong, they are known—and they reduce loneliness and isolation. In many rural and deprived areas, they provide a hub for services that may otherwise have disappeared. They contribute to individual well-being and community resilience in ways that are hard to replicate elsewhere.

For these reasons, it is possible for this lifelong teetotal noble Lord to raise a glass to our public houses, even if it contains only lemonade and lime. What is more, I say cheers to the Government for the support provided to the hospitality sector for the good of our economy and the good of our community.

17:33

[Lord Harlech (Con)]

My Lords, it is a pleasure to hear the very personal stories of today’s maiden speakers, and we look forward very much to the fourth one coming. I too congratulate my noble friend Lady Monckton of Dallington Forest on securing this crucial and timely debate. I declare my interest as a board member of Historic Houses and the owner-operator of hospitality assets in Wales.

As others have done, I will address the growing crisis facing our hospitality and retail sectors—a crisis significantly exacerbated by recent government policies. These are not abstract statistics but the livelihoods of 3.8 million people working in tourism-related businesses.

The hospitality sector faces a perfect storm. Inflation is driving up costs, while the cost of living crisis erodes consumer spending. Yet, rather than providing relief, government policy has compounded these challenges at every turn. To be specific about the financial burden, the 2024 Autumn Budget imposed £1.4 billion in additional costs through national living wage increases, on top of £1.9 billion in increased employer national insurance contributions and £500 million in business rates. This is a cumulative £3.8 billion burden on a sector that is still recovering from the pandemic.

As my noble friend so eloquently outlined in her introduction, the human cost is already evident. By July 2025, more than 100,000 jobs had been lost, driven primarily by the rise in employer NICs. UKHospitality warns that current policies could see another 100,000 jobs disappear. These are not just numbers; they represent families, communities and their local economies.

This comes at a particularly unfortunate time. The Social Mobility Policy Committee of your Lordships’ House, of which I was a member, drew attention to the fact that there are almost 1 million young people not in education, employment or training. The hospitality sector has historically been a crucial entry point for young people seeking their first employment. We have heard personal examples from noble Lords today. My first job, during that hazy summer after GCSEs, was at a local go-kart track where I learned the value of a hard day’s work. Yet, just when we most need these businesses to provide opportunities for young people, government policy is forcing them to cut jobs, rather than create them.

Heritage businesses face particularly acute challenges. Changes to business property relief and agricultural property relief mean that 54% of Historic Houses members cannot develop or diversify their businesses, while 41% are making redundancies or putting a freeze on hiring. We are forcing custodians of our national heritage to choose between their workforce and their heritage obligations.

The tourism sector contributed £145.8 billion to UK GDP in 2023. Yet, we have allowed the UK to plummet to 113th out of 119 countries for price competitiveness. Visitors to the UK pay on average 43% more tax than they do when visiting other destinations. We are pricing ourselves out of the international market.

The proposed visitor levy would add a further burden. While Manchester’s and Liverpool’s business improvement districts succeeded through genuine sector involvement and transparent revenue ring-fencing, without these safeguards we risk creating another tax that discourages visitors and burdens the micro-businesses which comprise 76% of tourism enterprises.

The Digital Markets, Competition and Consumers Act presents another challenge. The 14-day cooling-off period for subscriptions creates perverse incentives. Members can sign up, visit multiple attractions and cancel for a refund, bearing no relation to the costs incurred. This affects Historic Houses, the National Trust, English Heritage, our museums, zoos and countless other attractions. We must allow traders to set deduction calculations based on the proportion of service actually provided.

The evidence mounts. More than 17,000 shops, offices and warehouses in rural areas sit empty, and 37% of Historic Houses members have not seen visitor numbers return to pre-pandemic levels. We are witnessing the slow constriction of a vital sector through accumulated policy decisions made without considering their cumulative impact.

We on these Benches urge immediate action and look forward to the Minister’s response as to how he is going to address these sector challenges.

17:39

[Lord John of Southwark (Lab) (Maiden)]

My Lords, it is the greatest pleasure to rise in this debate and to give my maiden speech—the last in a quartet from the Labour local government family. I did wonder whether we look like a 1990s pop group announcing our reunion tour.

I first thank Black Rod, the Clerk of the Parliaments, the doorkeepers, the police and all of the House staff who made my introduction such an awe-inspiring and memorable experience, and to all noble Lords for giving me such a warm welcome. I of course give my very real thanks to my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark who supported me at my introduction. Not only are they the real A-team of the Labour Benches, but they have been very real friends and champions of mine over many years. Both have strong connections with Southwark, the borough I led and which I am so proud to have in my title, which is now very widely and objectively regarded as the best borough in London.

I understand that it is customary in a maiden speech to a go a little bit “Strictly Come Dancing” contestant and to talk about my journey to this place. In my case, my journey began in Weston-super-Mare. My parents were not political, but my Labour Party education came from my great-aunt, Peggy England-Jones, who was the party agent and secretary in Swansea for many years, and among whose charges was a young MP, my noble friend Lord Anderson of Swansea, who I am terrified to note has known me since I was aged seven.

My journey moved from Worle comprehensive school in Weston to university at Queen Mary College here in London; a career at the Bar, practising for the last 25 years in contentious probate; election as a local councillor in Southwark for 20 years, with 10 of those as council leader; and two and a half years as chair of London Councils. In the last few years, I have returned to practice at the Bar, have become involved in business and am proudly a member of the board at the Old Vic Theatre, one of our very real national cultural gems.

That journey has informed my political priorities and interests, from delivering high-quality social and private housing across Southwark to promoting the regeneration of a borough which not so long ago was seen as somewhere no taxi driver would take you, because it was “sarf of the river”. Today, you can look from the Shard and London Bridge to the Elephant and Castle, from Blackfriars Road to Peckham, and from Bermondsey to Canada Water, and see the demonstrable benefits of growth in new homes, new businesses and new jobs, and from ensuring that every young person has the best start in life and vastly increased skills and training opportunities, to ensuring that the arts and culture are something which are accessible to all and valued by many. Those are the priorities which will inform my work in this House and why it feels appropriate for me to be speaking on this subject today—for I believe that local government has a critical role to play in creating the best circumstances for the retail and hospitality industries to flourish.

When Southwark embarked on the regeneration of the Elephant and Castle, few would have believed that it could so quickly develop such a vibrant new hospitality offer, so that people of all ages now choose to meet and spend their leisure time there. I am pleased to report that the aim of recreating the Elephant’s historic heyday as the Piccadilly of south London is well on the way to being achieved. But it did not happen by accident, and that together with other examples, such as Borough Yards and Peckham Levels in the borough, demonstrate the critical role that local authorities can play in creating and curating the environments in which restaurants, bars and shops can prosper. It requires vision and it requires confidence.

I am not blind to the fact that the nature of retail and hospitality on our high streets is fundamentally changing; it has been for at least the last decade. The complaints from the sector today are, sadly, not new. I am sure that it can sometimes feel that government gets in the way or adds unnecessary burdens, but we will all have also seen a café, bar, restaurant or shop which does succeed—apparently against the odds.

Let us recognise the challenges the sector faces, encourage local governments to be the leaders in place-making—which we know they can be—support our local businesses and reject any counsels of despair. Let us be the optimists.

17:45

[Baroness Jones of Whitchurch (Lab)]

My Lords, it gives me great pleasure to welcome my noble friend Lord John and thank him for his excellent maiden speech, which was both entertaining and wise, as befits a barrister of over 25 years’ standing. I am sure we were all impressed by his knowledge and insight into how best to develop commercial and residential spaces where communities can thrive. These challenges are faced by so many local councils up and down the country, and we have so much to learn about how to do this successfully.

The transformation of the Elephant and Castle site from a run-down housing estate and shopping centre to a highly desirable residential, commercial and retail centre is just one example of my noble friend’s skill as a hugely respected council leader in London. In fact, my noble friend Lord Spellar, who lives in the development at Elephant and Castle, described it as rather like one of the better parts of Manhattan. That is indeed praise for the work that my noble friend Lord John has succeeded in doing.

My noble friend Lord John has also been applying his expertise to work with other councils across London, helping to make London the thriving, attractive city it is becoming today. I know that his commitment to the arts, in particular his work with the Old Vic and the Central School of Ballet, will also be welcome across this House. He has a huge contribution to make to the work of this House, and I am sure he will continue to make that impact in the months and years to come. We will watch his progress with great interest.

There has been much criticism from the party opposite about the passing of the Employment Rights Act and its impact on the retail and hospitality sectors, but I am proud of the fact that the Government delivered their manifesto commitment to bring the UK’s outdated employment laws into the 21st century by passing the legislation in December. It will turn the page on an economy blighted by insecurity, poor productivity and low pay, which the previous Government were happy to see continue.

Instead, hundreds of thousands of the lowest-paid workers will be protected from exploitative zero-hours contracts for the first time, allowing them to manage their work and income and to plan for the future. Families will benefit from day-one rights for paternity, parental and bereavement leave. Workers will benefit from improved sick pay and will no longer have to choose between their health and financial hardship. The new Fair Work Agency will ensure that good businesses are not undercut by bad employers.

We are raising employment standards to those already enjoyed by the better employers in the retail and hospitality sectors. We are confident that these measures will be beneficial for employers, will help to keep people in work and will reduce employment costs for employers by increasing staff retention and creating a more loyal and motivated workforce.

The government report on the legal and economic implications of the Employment Rights Act supports our expectation that the Act will have a beneficial impact. For example, it shows that, far from being an outrider, the measures will simply bring the UK closer to the OECD average for employment law protections.

It also shows that in areas of new policy, such as zero-hours protections, the adoption of similar laws in other OECD countries has led to productivity and employment improvements. Its econometric analysis shows the Act as having a small positive effect on employment.

As the Bill was nearing its conclusion, representatives from the main business organisations wrote to the Secretary of State welcoming the outcome of the dialogue on the Bill, which they said

“represented a significant step forward which will have a positive impact on growth and opportunities”.

They went on to say that

“now is the time for Parliament to pass the Bill”.

This support from the business community was crucial to the passing of the Bill and set the way forward as to how we should work with businesses in the future. Underpinning these new rights will be a partnership between trade unions, employers and government, which will create a new spirit of co-operation. This partnership will be crucial as we move forward with the next phase of implementing the Act.

We have made it clear to businesses that these new rights will not be implemented overnight. We have always said that we would engage and consult comprehensively on the implementation of the measures in the Act to make sure that they work for everyone. This period of consultation has now begun, and it is important that all voices are heard and understood. The implementation road map sets out a timetable for the phased introduction of the new rights, ensuring that all stakeholders have time to adapt to the change so that it works for everyone. The consultation process will be supplemented by guidance and codes of practice, with ACAS and other delivery partners providing time and resources to support the process.

All this should mean that employers—particularly small and micro-businesses—have the time and the space needed to prepare, with tailored support where necessary. Does my noble friend the Minister agree that the business representatives in the hospitality and retail sectors should, crucially, play an active and positive role in shaping the detailed implementation of the legislation going forward so that their voices are properly heard? Does he agree that the Employment Rights Act, when fully implemented, should have a positive impact on the economy and on our vital growth agenda? I look forward to his response.

17:51

[Lord Northbrook (Con)]

My Lords, I will start my speech with the special crisis that pubs face, outlined with figures from the British Beer & Pub Association. In addition to the business rates problem to which I will refer later, pubs face multiple policy changes that will affect sector costs. First, there is the issue of wage increases, putting pressure on pubs’ margins. The national living wage rose by 7% in 2025 and is going up by 4.1% in April 2026. The national minimum wage rose by up to 18% in April 2025 and is forecast to rise between 6% and 8.5% for 16 to 20 year-olds in 2026.

Then there has been the effect of increased national insurance. The threshold for employer NI decreased from £9,100 to £5,000 and the rate of employer NI increased in April 2025 from 13.8% to 15%. In addition, there are the problems of the change of rules for packaging recovery notes, shifting the full cost burden on to brewers; the regulatory burdens and uncertainty from the newly introduced extended producer responsibility; the deposit return scheme, which I will discuss later; and, of course, the reduction of the legal alcohol limit, especially affecting rural pubs.

The trade body UKHospitality’s key message is that the 2025 Budget did not deliver needed changes, such as a rebalancing of the business rates system, easement of employment costs or a reduction in VAT. Rather, there was minimal rates relief, steep hikes in rateable values—wiping out the 5p business rate discounts for hospitality—as well as wage increases and holiday tax proposals. Rising costs and taxes add further pressures on business, resulting in job losses and closures. Sector job losses since the 2024 Budget have reached 100,000, and without immediate action this will continue leading to reduced investment, further hollowing out of high streets and fewer opportunities for young people, the group most dependent on hospitality for employment.

Let us look at the business rates problem in more detail. The 5p discount for retail, hospitality and leisure businesses is far below the 20p relief allowed under legislation, and the benefit is outweighed by steep rateable value increases. Hospitality faces far steeper multiyear increases in rates bills than supermarkets, warehouses, offices or banks, directly contradicting the Government’s manifesto commitment to levelling the playing field between high street businesses and online giants.

UKHospitality estimates that business rate rises will cost small hospitality business £318 million. An average pub’s rates bill will rise 15% in year 1, reaching 76% over three years. A four-star hotel’s rates bill will rise 30% in year 1, reaching 115% over three years. In comparison, online companies’ warehouse rates will rise by only 9% in year 1 and 16% over three years. In contrast, large supermarkets will see rates fall by 2% in year 1 and rise by only 4% by year 3.

According to the Association of Convenience Stores, local shops are facing significant increases in business rates as a result of the 2026 revaluation and withdrawal of reliefs. While the ACS states that the introduction of lower multipliers for retail businesses was welcome, these changes do not go far enough. The multiplier needs to be set at a materially lower level to properly offset these increases and protect local shops. Transitional relief will only delay the impact of higher bills; it does not remove it. Even when increases are capped, many retailers are facing rises of several thousand pounds in April, with full effect pushed further into the parliamentary term rather than resolved.

Independent retailers, particularly those operating on petrol forecourts, are set to be hardest hit. These businesses benefited proportionately more from reliefs that are now being withdrawn and face sharp increases, despite the new retail, hospitality and leisure multiplier and transitional release package. These higher business rates costs directly affect the retailers’ ability to invest in stores, retain staff and continue to provide essential community services. Without further support, higher business rates risk undermining jobs, investment and the long-term viability of local shops that communities rely on every day.

Listening to the Minister’s response to the repeat of the Commons Urgent Question on Tuesday, I got no indication of a rapid response to the business rates problems for these businesses. I emphasise to the Minister here today the urgency of the situation. With his rare business experience among the Labour Front Bench, he must realise that remedial action is needed as soon as possible.

17:57

[Lord Kempsell (Con)]

My Lords, how perspicacious it was of my noble friend Lady Monckton to secure this vital business today. I join others in expressing my appreciation for her opening speech, which set the scene for this debate, replete as it was with illustrations and examples from her own experience. I congratulate newly minted noble Lords and Ladies on the Benches opposite on their maiden speeches. If they are to be treated as a pop group, they sang, if I may say so, a beautiful song in this Chamber. I hope that they continue to feel very welcome in your Lordships’ House.

George Orwell imagined his favourite public house. He called it the Moon Under Water, and stipulated, in post-war style, that it should have,

“draught stout, open fires, cheap meals, a garden, motherly barmaids and no radio”.

The prices have gone up since 1946, and I think you are more likely to hear music nowadays in hospitality establishments, but even George Orwell, that master of English dystopia, could not, even in his worst nightmares, have imagined the fate that awaits British pubs today under this Government. Indeed, his vision of the Moon Under Water has given way to the grim reality of the pub under Starmer.

There is one fact in this debate which sums up all other points—this indictment alone: that under Labour, one pub permanently closes every day in this country, and that is before all the measures from last year’s Budget are fully implemented. Noble Lords opposite spoke with high mind about public services in this country. I have to inform them that, in many places in Britain, especially in rural Britain, the pub is the only real public service that remains. Hospitality venues are safe and hospitable places, one of the few on the high street where people can meet without breaking the bank. British landlords are de facto social workers, changing lives as well as changing barrels, whether, as we have heard in this debate, by giving young people their first job and income or by healing the epidemic of loneliness that is faced by the old. How much more vividly the humblest member of hospitality establishment staff understands the daily reality of life in this country than those who sit in the Cabinet—not one of whom has run so much as a small business between them, let alone faced the scale of challenges that now confront the hospitality sector.

From April, when the minimum wage increases and the new rateable values take effect, pubs, cafes, restaurants and other venues will face what for many of them will be impossible bills. Business rates for the average hospitality business will rise by 94% over the next three years. Labour is driving publicans and hospitality entrepreneurs, like farmers, to the brink of despair. The Government already moved in the Budget last year to destroy their profits, and now they are targeting their revenues, meaning that many of them will not even be able to open. I hope that the right honourable Chancellor in the other place enjoyed a drink in Davos. How much more she could have learned had she travelled instead to the Dog and Duck.

I am old enough to remember—it was only a few weeks ago—when the Government promised not to increase taxes on working people. There are no harder-working people in this country today than those in the hospitality trades. Can the Minister, who speaks with experience and gravity on these topics, please answer the questions that have been raised in this debate? Until those questions are answered by the Government, it will be no surprise if every Labour MP continues to be routinely barred from public houses in Britain. I hope that the Prime Minister likes to use vending machines, because if he carries on with his policy he may never be served in a public house in Britain again.

18:01

[Lord Young of Acton (Con)]

My Lords, I declare my interest as the director of the Free Speech Union. I congratulate the four new Members on their excellent speeches.

I draw the attention of your Lordships’ House to Section 21 of the Employment Rights Act, which extends the liability of employers for the harassment of their employees to third parties, and its impact on the hospitality sector. From October this year, employers will have a duty to protect their workers from third parties. I should make it clear that we are not talking about third-party sexual harassment, which they were already liable for, but third-party non-sexual harassment.

What does that mean for the hospitality sector? Employers will have to take “all reasonable steps”—those are the words in the Act—to protect their employees from harassment by customers. That might not sound too onerous, until you factor in that harassment includes indirect harassment, which has been defined by the employment tribunal as including overheard conversations, remarks, comments or jokes that an employee may find offensive or upsetting by virtue of their protected characteristics. It is for that reason that the Free Speech Union has been referring to Section 21 as the “banter ban”.

A couple of weeks ago, the Government quietly released a 40-page impact assessment about Section 21. It says that it is likely to cost the owners of small businesses £23.7 million to familiarise themselves with their new legal obligations, with ongoing costs of £124,000 a year for 10 years. The total cost during that period, it says, could be as high as £59 million. That is a woeful underestimate.

One of the assumptions in the impact assessment is that it will take business owners no more than half an hour to master their new duties under Section 21 of the Act. That is not the view of the Equality and Human Rights Commission, as set out in a briefing that it produced for your Lordships’ House when we were debating the Bill. The EHRC drew attention to the conflict between Clause 21, as it then was, and existing anti-discrimination provisions. It said that a third party may themselves be protected from discrimination while their conduct could simultaneously be considered harassment by an employee. That makes the legal balancing of rights and obligations difficult for employers to manage in practice.

I will give just one example of the kind of conflict that the EHRC has in mind and which hospitality businesses will now have to navigate. Should they prevent trans women customers from using the ladies’ lavatories? On the one hand, a female employee may have a claim for third-party harassment in the tribunal if she finds herself having to share the facilities with a biological male. On the other, a trans woman customer may have a claim for discrimination if the business owner, as a service provider, fails to discharge its duty under Section 29 of the Equality Act, which makes it unlawful for a service provider to discriminate against a person who is using, or seeking to use, its services.

This is precisely the issue that the Women and Equalities Minister has been wrestling with since the EHRC submitted its advice last October about how to revise the code of practice on services, public functions and associations covering, among other things, access to single-sex women’s spaces. We were told in this House only this week that the reason there has been such a delay in issuing this code of practice is that this is such a fiendishly complex area of law and it is essential that the Government get it right. Yet, if a Government Minister cannot master this area of the law in three months, with all the legal resources at her disposal, what hope do publicans have to get their heads around it in half an hour?

Section 21 of the Employment Rights Act imposes a new duty on small businesses in the hospitality sector that touches on an incredibly complicated area of law, with real financial risks if they get it wrong. For many publicans, the cost of the legal advice alone, let alone the compliance costs, will be the final straw. Remember that we are talking about just one section of the Employment Rights Act. Could the Minister, at the very least, give retail and hospitality businesses a 12-month reprieve before strangling them with this new profoundly unwelcome bit of red tape?

18:07

[Lord Fox (LD)]

My Lords, it was a delight to hear the four maiden speeches from the noble Baronesses, Lady Dacres and Lady Shah, and the noble Lords, Lord Forbes and Lord John, who bring really meaningful experience to your Lordships’ House. I want to empathise with the noble Lord, Lord Forbes: I was in exactly the same position with my father 10 years ago.

This has been an interesting but somewhat predictable debate. I expected all the issues that came out, and mostly from the people who I expected to give them, but it has been an important debate because it was an opportunity to air the pressures facing Britain’s high streets. Some of those pressures are historical—Covid, Brexit and things like that—and some are general and local, such as those brought up by the noble Lord, Lord Empey, such as parking, the overall environment, the variety on the high street and the presence of anchor stores. But some of the pressures can be laid at the door of the current Government.

Noble Lords talked about raising employers’ NICs, which has undoubtedly had a catastrophic effect on employment in businesses. Retail and hospitality are very people-centred and are among the businesses worst hit by this rise. Lib Dems oppose this and we would scrap it. Energy costs have hit some sectors of the high street particularly hard, and hospitality is very much hit by the increase. We do not think that the Government have demonstrated the necessary practical understanding of what that has done to those businesses.

SMEs—which, of course, many pubs are—in particular are exposed to a deregulated energy market with little support after the previous Conservative Government’s decision to slash the energy bill support for businesses by an average of 85% when they replaced the energy bill relief scheme with the energy bills discount scheme, which itself ended in March 2024. We estimate that 3.1 million SMEs saw a total bill increase of £7.6 billion when the initial energy bill relief scheme ended. That is a huge benefit.

A couple of Peers decided to relitigate elements of the Employment Rights Act, and I am delighted that they did. Since the noble Lord, Lord Young, trooped out his greatest hit, I am afraid I will have to bring mine out. During the debate, I felt the phrase “banter ban” to be entirely revealing. Since time immemorial, the phrase, “It was only a piece of banter”, has been used to justify homophobia, racism and misogyny, and I think it is a very revealing choice of words.

The noble Baroness, Lady Jones, was more subtle in her relitigation. I take issue with some of the points that she made, and the noble Lord, Lord Sharpe, will no doubt fail to resist that temptation. However, I note that she is correct in that there is still an awful lot of consultation and, of course, of secondary legislation to come. I reiterate another of my greatest hits: when the noble Lord, Lord Sharpe, stands up and brings this issue to the fore, I hope that he can persuade his Front Bench to engage in meaningful debate on secondary legislation—which means jeopardy that that secondary legislation will be voted down. Until His Majesty’s loyal Opposition meaningfully make that threat, the Government are on a pass. That is done for the day.

For retail, the competition from online sales has continued to mount. Over the past 15 years, we have seen internet shopping increase its market share by five times to around a quarter of all sales. It is clear that although some high street businesses also practice online trading, they cannot compete with the global concerns supplied from out-of-town fulfilment centres. There have been government claims of levelling the playing field between their two retail models, but there is no such levelling.

Here, we come to the bit about non-domestic rates. I know that the Treasury has been busy, but I find completely incredible the recent claims that the Chancellor was surprised by the effect of the changes she is making to business rates on retail and hospitality. This time last year, some of us were debating the then Non-Domestic Rating (Multipliers and Private Schools) Bill, which is now an Act. During the stages of that Bill, my noble friend Lady Pinnock, the noble Earl, Lord Lytton, on the Cross Benches, and I spoke at length of the twin effects of the scaling back of the Covid relief and the future valuation, which was, at that time, not available. We noted that the phasing would not eliminate the sharp jump in rates. We launched a wider critique of the structure and effect of business rates, arguing that the Government’s proposals on multipliers were poorly targeted and risked damaging public services and regional fairness, rather than delivering a genuinely fairer system for high streets.

My noble friend Lady Pinnock repeatedly criticised the lack of an impact assessment, saying that the Committee on the Bill was “debating in the dark” about a combined effect of the new higher multipliers and the withdrawal of the Covid-era reliefs. She argued that the Government’s claim to be creating a fairer system was not being met because the Act relies solely on rateable value rather than genuinely targeting online distribution warehouses, despite all that rhetoric about an Amazon tax. She was able to cite an Amazon warehouse near her home which is levied at about £25 per square metre, versus a local shop in the town just nearby which is at 10 times that, at £250 per square metre.

That said, without a root-and-branch change in the way that valuations are done, business rates will continue to penalise high streets and advantage large out-of-town operators. The noble Earl, Lord Lytton, with all his expertise, added further valuation data to that argument, which the Government and the Minister simply ignored.

Above all, we criticised the absence of a meaningful impact assessment and the absence of new valuations. It is clear that, without these, the ministerial comments at the time were plain nonsense; the Minister was reading out wild guesses and wishful thinking from the Dispatch Box. However, by the time the Chancellor stood up this autumn, that information was available, so either her comments at the time of the Budget were seeking to deceive us or she had allowed herself to be deceived. Either way, the new business rates will be a hammer blow for many high street businesses, where rates are often more than rent, as we heard, and the Chancellor should and could have been aware of that when she made her announcement.

There is, of course, a need for holistic reform of business rates. The Liberal Democrats have proposed a commercial landowner levy, but in the short term we also propose to lower the retail, hospitality and leisure multiplier by the full 20 pence permitted under the legislation recently passed by the Government, as opposed to the 5 pence reduction that the Government have implemented. Also in the short term, to further stem the haemorrhaging of businesses, we would cut VAT from 20% to 15% for hospitality, accommodation and attractions, and we set out details of that before the Budget.

Meanwhile, Parliament needs full details of the Government’s proposed U-turn on what exactly the rates will be and who will be paying what. Businesses need to know what they are facing; they need to be aware of the kinds of changes that are coming down the track. I have to say that the responses on Tuesday to the Question before your Lordships’ House were completely inadequate.

If there is to be a recovery in our economy, it will come from a turnaround in consumer confidence. For that confidence to materialise, we need vibrant and successful high streets where people go to buy things and enjoy flourishing hospitality. There is a big danger that that will not be available and that we are moving in the wrong direction. There is much to be done, and I look forward to the Minister’s response to this debate.

18:17

[Lord Sharpe of Epsom (Con)]

My Lords, I join in the general congratulations and welcome to the four maiden speakers. I enjoyed all their speeches very much and I wish them all the very best. I also thank my noble friend Lady Monckton of Dallington Forest for bringing this debate to the House and for her most eloquent introduction. I also wish her well with her new pub venture.

The Government have been in power now for almost two years and, frankly, it has been nothing short of a disaster for our retail and hospitality sectors. I applaud the efforts of noble Lords opposite to tease out some of the illusory positives, but the facts speak for themselves. I shall start with the £40 billion tax rate in this Government’s first budget, which included the disastrous jobs tax. This measure has frozen hiring across the sector and has led to unemployment going up every single month under their watch. UKHospitality has reported that 90,000 jobs have been lost in hospitality since the jobs tax was introduced—90,000 jobs that would exist if the Government had listened to His Majesty’s Official Opposition about the costs of their policies.

The House will be pleased to know that I am going to disappoint the noble Lord, Lord Fox, and not relitigate the entire Employment Rights Act, but I say gently to the noble Baroness, Lady Jones, that there are hundreds of thousands of lower-paid workers who lack all security because they have lost their jobs. That is a consequence of the Government’s policies.

The scale of the damage extends far beyond hospitality. Overall, official figures from HMRC show that the 2024 Budget has led to more than 250,000 jobs lost, and unemployment is now reaching pre-pandemic levels. That is a catastrophic failure of economic policy that was entirely predictable and preventable.

On retail specifically, the numbers are equally alarming. According to analysis by the British Retail Consortium, the changes to national insurance rates and thresholds have added close to £2.5 billion in employment costs to retailers. In retail, they say it is now 10% more expensive to hire a full-time worker and 13% for a part-time worker. As has been observed across the House, many of us got our first start in the world of work in part-time retail work. I certainly did when I worked for Sainsbury’s while I was still at school. Think about what those numbers mean for young people seeking their first position, for students looking for part-time work and for those trying to get back into employment. The ladder of opportunity that was offered to all of us is being denied to them.

If our small businesses thought that the November 2025 Budget would offer some respite, they were sorely mistaken because instead of relief, they received yet another hammer blow. Britain’s high streets now risk being crushed by what the Federation of Small Businesses rightly called a “tax timebomb”.

I turn to the business rates that are affecting shops, cafés, pubs and hospitality across the board. Specifically on pubs, I too worked in a pub, it was one of my first jobs, and I say to my noble friend Lord Hannan of Kingsclere that I very quickly learned lessons there, including which regulars to serve and which to swerve. Analysis from UKHospitality shows that the average pub faces a 15% rise in business rates next year. That will increase to £7,000 more by 2028-2029 and £12,900 over the next three years. These are average numbers. Hotels, as has been noted by a number of speakers, are hit even harder, with bills rising by £28,900 next year and £111,300 by 2028-29, totalling £205,200 extra over the next three years. It is estimated that, without urgent action, 540 pubs will close this year.

It is inevitable that not only our pubs but our breweries are struggling. In 2025, there were around 100 fewer breweries operating in the UK than the year before, which is a stark sign of the pressures that the sector faces. The Society of Independent Brewers has warned that some independent breweries have seen their rateable values rise by as much as 300%, alongside new and rising costs that many simply cannot absorb.

During a Question yesterday, a noble Lord and union baron opposite suggested that brewers were making record profits. Where are they? This sort of attack on bosses is so 20th century, it is, frankly, embarrassing. I say again to noble Lords opposite: please look at the facts.

These pressures are being felt by heritage and rural businesses as well. Data from Historic Houses, as my noble friend Lord Harlech explained, shows that changes to business property relief and agricultural property relief are having a severe impact. Some 54% of heritage business owners say they will be unable to develop or diversify, while 41% report that they will have to make redundancies or freeze hiring altogether.

The FSB has urged Ministers to make full use of the relief available for small businesses and allow a 20 pence reduction in the multiplier used to calculate bills—rather than reducing it by just 5 pence—which would bring the discount back into line with the previous level. Following on from what the noble Lord, Lord Fox, said, I will ask the same question of the Minister: will the Government commit to do this?

No doubt the Minister will talk a little about the £4.3 billion of relief measures and tapers that were aired on Tuesday during that Question that I have already referred to. But that is the economic equivalent, surely, of giving with one hand but taking with the other, but just not quite yet. Are the Government really saying that these businesses will be in a better place to play in a couple of years’ time? If they are, they need to explain why they think that, especially after the implementation of further legislation such as the Employment Rights Act.

For weeks, we have watched the familiar post-Budget ritual unfold: a series of Treasury leaks on business rates, first relief for everyone and then relief only for pubs. As my noble friend Lady Neville-Rolfe rightly observed, one might have hoped that after the chaos ahead of the 2025 Budget, the Treasury and Chancellor would have learned that governing by leak creates uncertainty and undermines confidence. But, sadly, it appears that old habits die hard. Businesses need decisions, not briefings. They need certainty, not speculation.

In addition to all these costs, businesses across the UK face electricity prices that are among the highest in Europe and around four times higher than in the United States. These costs are undermining competitiveness, stifling investment and, ultimately, suppressing economic growth. The reason for these persistently high prices lies in the ideological approach to our energy policy, particularly the ever-growing subsidies layered across the system to support renewables, with the burden passed directly on to businesses. As an aside, it is worth noting that, in December 2025, 16% of hospitality businesses reported that energy prices were their top concern. This is very real, and these high prices are a direct consequence of government choices.

As my noble friend Lord Borwick noted, beyond economic pressures, retail crime is now a daily reality for too many small businesses. The Association of Convenience Stores reported over 57,000 incidents of violence against convenience store workers last year, forcing retailers to spend more than £250 million on security just to keep staff safe. Shop theft and violence persist because enforcement has failed and repeat offenders face too few consequences. That is why it is so disappointing that the Government rejected a Conservative amendment to the Sentencing Bill that would have ensured that repeat offenders usually go to prison rather than receive suspended sentences. Why did the Government reject this amendment? The Official Opposition, industry groups, the Federation of Small Businesses and UKHospitality have warned the Government, but they have so far refused to listen.

Our high streets are having a very hard time; some might say that they are dying. Our pubs are closing at an accelerating rate, jobs are disappearing, unemployment is rising every single month and small business owners, who took the risk to start their ventures, are being forced to scale back or shut down entirely. That is not just poor policy; it is a comprehensive assault on the very fabric of our communities and the livelihoods of millions of hard-working people. The Government must act, and they must act now.

To conclude, I will ask the Minister a few more questions. First, when will the Government publish the details of their turn on business rates, and will they ensure that pubs, retail and the wider hospitality sector all receive business rates relief? That would go some way towards answering my noble friend Lord Smith of Hindhead’s question on clubs. A recent report from Sky News suggested that the Government have warned the hospitality sector that publicly criticising government policy could affect the availability of concessions or support. Is that true? Can the Minister shed some light on this report? Representatives from the Valuation Office Agency told the Treasury Select Committee that policy teams across the Treasury and the Ministry of Housing, Communities and Local Government had access to data enabling judgments to be made about business rate multipliers and reliefs. Given this evidence, can the Government confirm that Ministers had the relevant information on the impact of business rates when these decisions were taken? If so, why has the Treasury suggested otherwise?

I remind the Minister of a couple of other questions that were asked, to which I would particularly like answers. My noble friend Lady Verma asked a very good question on how many hospitality businesses the Minister thinks will still be operating this time next year. My noble friend Lord Young of Acton asked a very important question about Section 21 of the Employment Rights Act, and I would be grateful if the Minister can give us his thoughts on that. With that, I close my remarks.

18:28

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, it is my privilege to respond on behalf of His Majesty’s Government. I am grateful to the noble Baroness, Lady Monckton of Dallington Forest, for securing this debate. I thank all noble Lords for their thoughtful, informed and passionate contributions on a subject of real importance to our economy and to communities across the United Kingdom. I will endeavour to answer all questions. If I do not, I will go through Hansard and write to all noble Lords, and I will place a copy of the letter in the Library.

I congratulate my noble friends Lady Dacres of Lewisham, Lord Forbes of Newcastle, Lord John of Southwark and Lady Shah on their excellent maiden speeches. They bring a vast amount of knowledge and insight in local government, regeneration, science, computing, law, education, arts and culture. I look forward to working with them and listening to their contributions in this House going forward.

I should also declare an interest. When I was much younger, I harboured ambitions of opening a nightclub —we called them discotheques in those days. In truth, however, I spent far more time boogying on the dance floor than on any serious business planning, and that, I fear, was the end of my nightclub venture. It might have been a brilliant idea, because it gave me the opportunity to set up various businesses, and I became a sort of serial entrepreneur before I joined the Front Bench.

More seriously, I have many friends and relatives working in hospitality, tourism and retail, owning restaurants, wine bars and shops. Through them, I see at first hand the pressures these sectors face every single day: rising costs, staffing challenges and the constant need to adapt. That personal experience informs my appreciation of just how demanding, and how important, these businesses are.

This debate resonates particularly with the noble Baroness, Lady Monckton, and I pay tribute to her remarkable charity, Team Domenica, and to its inspiring new establishment, the North Star in Brighton. This pub is a powerful testimony—an example of social enterprise in action. It supports young adults with learning disabilities and autism through vocational training in hospitality, while fostering inclusion, confidence and opportunity within the community. That it was delivered despite some well-publicised cautionary advice from one Jeremy Clarkson speaks volumes about the noble Baroness’s determination and vision.

Retail and hospitality are far more than economic sectors. They are part of what might be called the everyday economy. They are woven into daily life, shaping how people work, shop, meet and socialise. They anchor our high streets and town centres, provided first jobs and flexible work to many noble Lords—including me —and offer routes into long-term employment and management for those who wish to build a career within them. They also play a vital role in the character and vitality of our towns, cities, seaside communities and villages.

I note here the contribution made by the noble Lord, Lord Young, on Section 21. I do not need to say any more. The noble Lord, Lord Fox, has said everything I needed to say. I was a victim of a bit of banter, but it was nothing more than racist comments; I will just park it there.

A successful high street is rarely just about shops. It is about cafés, pubs, services, culture and places where people feel welcome and connected. Retail and hospitality sit at the heart of that mix. To summarise their impact briefly, in 2024 the retail sector produced something like £115 billion in gross value added, representing 4.4% of UK output, and by September 2025 it supported about 2.8 million jobs. The hospitality sector generated £51.3 billion, about 2% of total economic output, and supported approximately 2.1 million jobs.

While these figures are significant, they tell only part of the story. The true importance of these industries is in their functions as local employers, community centres and catalysts for footfall, investment and civic pride. The Government are clear-eyed about the pressures that retail and hospitality face. In recent years these sectors have weathered an extraordinary series of shocks: the pandemic, supply chain disruption, rising energy costs, inflation, labour shortages and profound changes in consumer behaviour. Government policy cannot remove all these challenges, but it can provide stability, reduce unnecessary burdens and help businesses plan, invest and adapt for the long term.

Several noble Lords mentioned business rates, which rightfully featured prominently in this debate. We recognise that the current system places a disproportionate burden on many high-street businesses, which is why we are continuing its reform in line with our manifesto commitment to protect the high street. From April 2026, we will introduce permanently lower tax rates for eligible retail, hospitality and leisure properties, benefiting more than 750,000 ratepayers. A higher multiplier will apply to the most valuable properties, affecting around 1% of premises, helping to fund this relief in a fair and sustainable way. In addition, we have announced a £4.3 billion support package over the next three years to protect ratepayers facing bill increases following revaluation. These measures are designed to ease pressure where it is felt most acutely, while ensuring local services remain properly funded.

On top of the support package announced at the Budget, the Chancellor also commissioned work to look at what more can be done to support pubs. Further details will be announced in the coming days. Treasury Ministers have met with a range of stakeholders to discuss business rates before and since the Budget, including the British Beer & Pub Association and UKHospitality. Many noble Lords have spoken with real feeling about the future of pubs.

[Lord Fox (LD)]

I thank the Minister. In outlining the changes in the rate system, the Minister is talking about the process. Could he perhaps talk about the outcome, which, when conjoined with the reduction and removal of Covid relief, leaves many businesses—indeed, most businesses—paying more, not less, business rates? Will he at least acknowledge that from the Dispatch Box?

[Lord Leong (Lab)]

I thank the noble Lord. I am coming to the part of my speech that addresses some of the noble Lord’s concerns.

Many noble Lords have obviously spoken with real passion about the future of pubs, including me, and understandably so. Pub closures are always painful, and each one represents the loss of a place where people meet, talk and feel part of something local. Around 2,000 pubs in England and Wales have closed permanently over the last five years. That is a matter of genuine concern, although it reflects a long-term trend that pre-dates recent changes to national insurance, the minimum wage or business rates. Much of this reflects changes in how people live and socialise. People are drinking less often, particularly young adults, including my 19 year-old daughter, with a growing interest in low and no-alcohol options. The pandemic accelerated shifts towards home-based socialising, remote working and more food and experience-led venues.

Costs do matter, and the Government continue to provide targeted support, including specific help for community pubs. The future of pubs depends not only on managing costs but on being supported to adapt to changing habits and expectations. Our approach reflects that reality. Following the establishment of the Licensing Taskforce last April, we published the National Licensing Policy Framework in November. This was co-created with industry councils and various trade associations.

The Government work closely with the Hospitality Sector Council to improve the productivity and reliance of hospitality businesses by co-creating solutions to issues impacting business performance. Likewise, the Retail Sector Council is also undertaking to support growth, working very closely with government on sustainability and the circular economy. High streets, international trading and cybercrime are the main areas of focus. It sets out a vision for a simpler, more consistent and pro-growth regime that reduces bureaucracy, supports investment and promotes cultural and community life. We will build on this work through further planning reforms to help hospitality and high-street businesses grow and adapt.

Alongside regulatory reform, we are also providing targeted support. The Government have introduced a £1.5 million hospitality support scheme, including £440,000 to help rural pubs diversify as community hubs delivered with Pub is The Hub. This initiative is only the start. The Government are committed to supporting pubs and further announcements will be made very soon. This has already unlocked more than 40 previously stalled projects, generating jobs and new services. Industry research suggests that every £1 invested generates more than £8 in social value, as my noble friend Lord Rook said.

The noble Baroness, Lady Neville-Rolfe, made a point about drink-driving. One in six road safety casualties involves drink-driving. I can share with the noble Baroness that the Government are consulting on lowering the limit, which is currently the highest in Europe. In 2014 an academic study showed no impact from the reduction of the limit in Scotland.

It is also right to recall the scale of support provided to hospitality and leisure during the pandemic. These sectors were, rightfully, among the largest beneficiaries of emergency intervention, including furlough, business rates relief, grants, VAT reductions, government-backed loans and measures such as Eat Out to Help Out. That support helped many businesses survive an unprecedented shock.

Since then many parts of the sector have seen a recovery in output and revenues, though I readily accept that this experience is not uniform and that pressures remain acute for some businesses. Emergency support was, by its nature, time-limited and designed to help businesses through an extraordinary period rather than to replace the need for long-term sustainability. The Government will continue to engage constructively and to support growth through skills, investment and proportionate regulation, as businesses move forward on a sustainable footing.

Labour and skills are central to the success of these sectors. I recognise the concerns expressed about changes to the national minimum wage and the national living wage—but I can say to the noble Lord, Lord Hannan, that we are not the highest. Countries with higher minimum wages include Luxembourg, Australia and the Netherlands. Working people have borne the brunt of the cost of living crisis, and it is right that pay reflects living costs, productivity and wider economic conditions. In setting wage rates, the Government rely on the independent expertise of the Low Pay Commission, which my noble friend Lord Hannett mentioned, balancing fairness for workers with the need for businesses to grow and employ.

Concerns have also been raised about the Employment Rights Act. I take this opportunity to thank my noble friend Lady Jones of Whitchurch, who was the Minister who took that Act through this House. My department consults daily with businesses in all sectors and trade associations on implementing the Act. There will be further consultation on parts of the Act, and further announcements will be made in due course.

Economic growth is our foremost priority, but growth cannot be built on insecure or unpredictable work. By strengthening employment protections we are improving stability for workers and employers alike, and supporting a modern, productive economy. These reforms sit alongside our wider commitments to skills development, tackling economic inactivity, accelerating construction and delivering a modern industrial strategy. Together they form part of our long-term plan for national renewal.

I want to address directly the concerns raised in this debate, including by noble Lords who take a different view from that of the Government. I recognise that the pressures that many businesses face, particularly smaller operators, are immediate and personal. Policy choices, even when carefully designed, can feel very different on the ground, and that is why the scrutiny of this House matters. I welcome that scrutiny. Where noble Lords have raised concerns about costs, regulation or the cumulative impact of change, I want to be clear that the Government are listening.

We do not claim that the system is perfect, nor that there are no difficult trade-offs. Our task is to strike a balance between supporting growth, protecting workers, maintaining public finances and enabling businesses to plan with confidence. Retail and hospitality succeed when high streets succeed. Through the Pride in Place programme we are investing £5 billion across 339 communities to renew high streets and centres.

The noble Lord, Lord Borwick, who is elegantly suited this afternoon, talked about retail crime, as did the noble Lord, Lord Sharpe. The Government are committed to restoring visible and responsive neighbourhood policing, with 3,000 additional officers in neighbourhood policing roles by the spring of 2026 and 13,000 by the end of this Parliament. We are also ensuring that the right powers are in place. In the Crime and Policing Bill, we have brought forward a new offence of assaulting a retail worker, to protect the hard-working and dedicated staff who work in stores. We are removing the legislation that makes shop theft of and below £200 a summary-only offence, sending a clear message that any level of theft is illegal and will be taken seriously. But funding alone is not enough, which is why we remain committed to ongoing engagement with local authorities, trade bodies, businesses and workers, so that policy remains grounded in lived experience.

The noble Baronesses, Lady Monckton and Lady Neville-Rolfe, asked about the visitor levy. The precise design and scope of the power for the levy is still under development. The Government have published a consultation, which will run until 18 February 2026, to ensure that the public and businesses can shape the design of this power.

Retail and hospitality are not just engines of economic activity but places of connection, opportunity and shared experience. They matter deeply to communities across the country, and they matter to this Government. Through targeted support, community investment and proportionate reform, we are determined to work with these sectors as they adapt to a changing world. We may not agree on every point, but I hope all noble Lords will recognise our commitment to engagement, stability and long-term renewal. I thank all noble Lords once again for contributing to this important debate. I owe the noble Lord, Lord Fox, an explanation about business rates, so I will write to him.

[Lord Sharpe of Epsom (Con)]

My Lords, can I make a request to the Minister? In the letter that he plans to write to us, can he explain how many consultations across the whole of government are currently being run? It is a huge number, and I would like to know what it is.

[Lord Leong (Lab)]

Is the noble Lord referring to on employment rights or does he mean across everything?

[Lord Sharpe of Epsom (Con)]

I mean everything across government.

[Lord Leong (Lab)]

I obviously do not have the figures here, but I will endeavour to find out and will write to the noble Lord accordingly.

18:47

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I thank all noble Lords for their contributions to this debate, particularly the quartet of maiden speakers.

Briefly, I will run through a few comments. The noble Lord, Lord Hannett, is right, and I agree that history will judge the impact of raising the minimum wage. I thank my noble friend Lady Neville-Rolfe for talking about drink-driving in rural communities. One of our local pubs repurposed an ambulance—they called it the “paralytic unit”—and drove people home, so perhaps there is a business opportunity there for some people. I thank my noble friend Lord Smith of Hindhead for his passionate support of members’ clubs. I congratulate the noble Lord, Lord Forbes of Newcastle, on his maiden speech. I thank the right reverend Prelate the Bishop of Newcastle for telling us about what is happening in Newcastle—I think one of the establishments that closed was called the Pickled Toad, and it is such a shame to lose something with that name.

I also thank my noble friend Lord Borwick for giving us such a vivid description of his birth and for recognising the importance of entrepreneurs. To the noble Lord, Lord Empey, I say that all those issues on town centres and retail are so important. I thank my noble friend Lord Hannan for talking about public spending and the importance of taking ownership of that money.

I particularly single out as a maiden speech that of the noble Baroness, Lady Shah, for expressing what we all think in this House—it is a surreal experience when you join, and I still have not quite got over it myself—and for so bravely sharing her own personal journey and that of her family, with all its sadnesses and challenges.

I thank the noble Lord, Lord Rook, who, despite being teetotal, still raised his glass of lemonade in celebration of pubs, and my noble friend Lord Harlech for raising the issue of historic houses and the challenges that they face, which are so often forgotten.

The noble Lord, Lord John of Southwark, took us on a journey from Weston-super-Mare to the House of Lords, and recognised the challenges that this sector faces. I appreciated that.

If, as the noble Baroness, Lady Jones, says, the Labour employment laws increase employment in the hospitality sector, I shall apologise. If she is not right, it will not be people in this House who suffer.

I thank my noble friend Lord Kempsell for recognising that publicans are very often social workers. I have seen that already in our pub. I thank my noble friend Lord Young for raising indirect harassment. That worries me about my cohort of people with learning disabilities who work in pubs; they have absolutely no social filter whatever—I can imagine we will have some very interesting conversations.

I thank the noble Lord, Lord Fox, for recognising the effect of the national insurance changes and the rates, and for his suggestion of reducing VAT from 20p to 15p, which would make a huge difference to pubs.

I thank the Minister for recognising what needs to happen and giving a shout out to the North Star. I end by saying that you are all welcome to come to Brighton and have a drink.

Motion agreed.

House adjourned at 6.52 pm.