Retail and Hospitality Sector

Lord Hannan of Kingsclere Excerpts

Thursday 22nd January 2026 Lords Chamber

[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.