Retail and Hospitality Sector

Lord Harlech Excerpts

Thursday 22nd January 2026 Lords Chamber

[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.