Finance (No. 2) Bill

Paul Kohler Excerpts

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[Mr Paul Kohler (Wimbledon) (LD)]

The line about alcohol duty in clause 86 may look technical, and even innocuous, but outside the Chamber, in places such as my constituency of Wimbledon, it lands with a thud. Before I go further, I should declare an interest: I am the chair of the all-party parliamentary group for the night time economy and the owner of a speakeasy, CellarDoor, in Covent Garden. I have owned CellarDoor for nearly two decades—through the financial crisis, Brexit and covid—yet nothing compares to the crisis that hospitality is now facing.

One constituent, a Campaign for Real Ale supporter, wrote to me asking why pubs have been hit yet again through changes to business rates. Another told me that the rateable value of his small unit off Haydons Road in Wimbledon has risen from just over £15,000 to more than £22,000. Another constituent, who runs venues in London and Birmingham, thought the Budget would bring relief. Instead, he is facing sharp increases in operating costs in the years ahead. Admittedly, the Chancellor has belatedly indicated that she will offer some form of business rate relief to pubs, but what about the rest of hospitality—the restaurants, cafés, bars and music venues?

[Adam Dance (Yeovil) (LD)]

Gareth, who runs the Cow & Apple in Yeovil, has told me that he feels that the assessments and consultations on how the proposals in the Finance (No. 2) Bill will impact the viability of the rural hospitality sector were not good enough. Does my hon. Friend agree that that is why we need to pass the Liberal Democrats’ new clause 9, which calls for a review of the impact on the hospitality sector of these alcohol measures and broader Budget policies within six months?

[Mr Kohler]

Indeed I do. It is death by a thousand cuts. Those who run hospitality businesses have been hit by cost after cost after cost. The Government must listen.

Alcohol duty brought in about £12.5 billion in 2024-25. Hospitality, by contrast, contributed over £60 billion to the economy in 2023 and supported over 2.5 million jobs—over 7% of the workforce. Yet UKHospitality estimates that 89,000 jobs—nearly 100,000—were lost in the nine months after the October 2024 Budget. Official figures show that 366 pubs closed in the year to December 2025. That is one pub every single day. The roots of this crisis lie in years of Conservative mismanagement, Brexit labour shortages, a broken business rates system, energy price shocks, commodity price increases and a cost of living crisis. Many in the sector hoped that the change of Government would bring a change of direction, yet things have only got worse with the rise in employer national insurance contributions.

The cumulative effect is undeniable: rising costs for shorter opening hours and fewer staff. Offering us easier or longer opening hours does not help if we do not have customers coming through the door. Investment is deferred, and too often doors close for good. When that happens, high streets lose more than businesses; they lose employment, footfall and the social infrastructure on which communities depend. That is why the Lib Dems are calling for an emergency cut in VAT for hospitality to 15% until April 2027, real reform of business rates and a proper review of the unworkable wine duty system. Such measures would protect jobs, support high streets and, in time, strengthen the public finances rather than weaken them.

The hon. Member for Edinburgh South West (Dr Arthur), who is no longer in the Chamber, asked where the money will come from. We keep telling Labour: get rid of the red lines and negotiate a customs union with the EU, which would raise £25 billion a year for the Exchequer. Businesses in Wimbledon and across the country are not asking for our pity; they are asking for a tax system that reflects the pressures they actually face. If Ministers are serious about protecting jobs, strengthening high streets and growing the economy, they should reverse this tax increase and introduce an emergency VAT reduction for hospitality.

[Steve Darling (Torbay) (LD)]

I will focus on Liberal Democrat new clause 9, which would require an assessment of the cumulative impact of the proposals on the hospitality industry.

One must bear in mind that, after a medley of challenges, our hospitality industry fears the future—it is in crisis mode—so it is not prepared to invest or take a chance by improving its offer, and it is hunkering down and hoping for the best. I reflect on the international pandemic, which had a massive impact; Torbay’s tourism and hospitality industry has still not recovered to pre-pandemic levels. The outrageous second invasion of Ukraine almost four years ago caused a shock in our energy costs. I am afraid that there have also been self-inflicted wounds, such as the national insurance hike and the ensuing employment challenges.

David from Rock Garden in Torquay told me that his utility bill has risen to £3,000 a month, which dwarfs his rental costs. Ofgem is asleep at the wheel; it must back local businesses and drive the changes that we need. Our hospitality industry is horrified by the proposals for business rates. The Government must apply the full 20% rate of relief to ensure that there are protections. I am afraid to say that many people in the hospitality industry scoff at proposals that simply deregulate around the edges, because if they do not have paying customers in their premises, they are set up to fail.