Backing Business to Create Economic Growth

Monica Harding Excerpts

Monday 18th May 2026 Commons Chamber

[Monica Harding (Esher and Walton) (LD)]

My constituency is the single biggest contributor to the Exchequer of any constituency outside London. It is home to almost 5,500 businesses, and their opinion matters. As their representative in this place, I want to convey the message from the small businesses, entrepreneurs and major employers that this King’s Speech and this Government are failing to protect them, failing to promote them, failing to get growth, and failing them. Businesses are struggling with everything, everywhere, all at once, with pressure from rising national insurance costs, business rates, wage increases and energy bills, and Government policies are exacerbating the pain, rather than alleviating it. Retailers are trying to keep the high streets alive, while footfall drops and costs rise. Employers want to recruit, invest and grow, but they increasingly feel that they are being punished for taking on staff and building businesses in the UK. One said to me:

“It’s just too hard. I’m out. Instead of carrying on and creating wealth and jobs, I’m retiring.”

At least they are still here. Some are eyeing up getting out of this country altogether and offshoring.

Hospitality businesses are under enormous strain. Across much of Europe, hospitality is recognised as a strategic sector that is worth supporting through reduced VAT rates. In Britain, cafés and restaurants are still largely paying the full 20% VAT rate, while also absorbing soaring energy costs, higher staffing bills and rising business rates. The VAT rate for hospitality in this country is one of the highest in Europe, second only to that in Denmark.

The high street is hurting. Laurent Trenga, who owns Thames Ditton Bakery, has described just how unsustainable things have become for many small high-street businesses. His monthly energy bill is now nearly as high as the rent for the shop. He pays around £1,250 for energy, compared with £1,000 for rent. He says it feels like he is paying “two rents”, simply to keep the ovens on. On top of that come corporation tax, VAT and rising staff costs—all in a small village, where footfall is down because of the cost of living. Business owners are working harder than ever, while being rewarded less and less for taking the risk of running a business.

Daytona outdoor go-karting in Sandown Park has told me about the combined impact of rising wage costs, high VAT and soaring business rates. Its business rates have risen by £100,000 in two years, and when the minimum wage rises, every wage band goes up, so that the grades can be differentiated. That creates huge pressure on employers across the hospitality and leisure sectors. That business’s concern, which has been echoed by others, is that money will simply stop moving through the economy. Many business owners are now seriously thinking about scaling back, relocating or closing altogether.

None of this has been confronted in the King’s Speech. Surely, after the local elections, the Government have woken up and smelled the coffee. They must act with urgency to tackle both the cost of living crisis and the cost of doing business crisis. This means cutting hospitality VAT to 15%, as we recommend, until April 2027, bringing energy bills down, and finally getting serious about economic growth by negotiating a new UK-EU customs union. These measures would help save jobs, support struggling high streets, grow the economy and put around £270 back into each person’s pockets by next year, giving businesses and families alike a much-needed boost in confidence and stability.

I have mentioned a customs union, and it is good to see that the Government’s inertia on Brexit has finally been broken by both candidates for the Labour leadership, although it is interesting to see that the one who is not in this place has U-turned already, within 48 hours. The economic damage from Brexit is becoming harder to ignore, so why do the Government still not move to fix it more wholeheartedly? Last November, the National Bureau of Economic Research estimated that Brexit had reduced UK GDP by between 6% and 8%, with investment significantly lower and business confidence badly weakened by years of uncertainty and instability, but the King’s Speech is yet another wasted opportunity for British businesses and ambition. Of course, the biggest gift a Government can give to business is stability. Instead, business leaders are warning that investment decisions, as well as the country’s reputation, are at risk, with more infighting, more scandals and more jostling for power.

It is such a shame that this Government are following the chaos of Tory Governments. It is such a shame that this Prime Minister has wasted his mandate to reform welfare, properly reset our relationship with the EU and create a business friendly environment. He promised that this would be an Attlee Government. The only characteristic they share with the Attlee Government may be having one term.