Hospitality Sector: Fiscal Support

Debate between Tobias Ellwood and Nigel Huddleston

Wednesday 31st January 2024 Westminster Hall

[Nigel Huddleston]

I suspect I could spend the whole of this debate answering Members’ questions rather than going through my speech, much to the chagrin of my officials. Again, I understand the request. Many hon. Members pointed out that I was the one making these requests to the Treasury not so very long ago, for all the reasons they outlined, but we all recognise that we have to find the balance.

The point about dynamic modelling is really important. I will come on to VAT in a moment, but we must recognise that one of the biggest challenges of all requests for VAT relief is whether it will be passed on. There is not a 100% fantastic record of that happening in the hospitality and tourism sector or across the board, for understandable reasons. Cash flow was key during the pandemic, so not everybody was able to pass on the VAT reductions. When it comes to future requests for VAT reductions, we must be absolutely confident that they will be passed on, and that applies to multiple sectors.

[Mr Ellwood]

The Minister is being very generous in giving way. My right hon. Friend the Member for Witham (Priti Patel) mentioned the forthcoming Budget. Is there anything the Minister can tease us with? Can we look forward to anything in the Budget to support the hospitality industry?

[Nigel Huddleston]

I do love it when former Ministers try to tempt me in that way, knowing full well what the answer will be. What I can say is that we are listening.

I have gone off script for the past few minutes to try to respond to hon. Members, who have spoken eloquently and with real consideration of the challenges with their asks. There are no easy answers, given the challenging financial services. I and the other Treasury Ministers, and certainly the Chancellor and the Prime Minister, are always listening. We are always open to listening to evidence-based information. In that context, I cannot make any hints or promises about what may be in the upcoming Budget, but I can say that the view and opinion of the hospitality sector, especially as embodied by talented people such as Kate Nicholls at UKHospitality, and many others right across the UK, is valued. The sector used to be incredibly fragmented, and therefore did not have the voice it has now. Now, the sector comes in with credible, decent asks that need to be assessed with evidence. The voice of the hospitality sector has never been stronger in Government. I applaud all the lobbyists and groups for doing that.

--- Later in debate ---

[Nigel Huddleston]

Various pieces of internal and external analysis have been released. We all know anecdotally from experiences in our constituencies that it literally did save businesses around the country. As I said, the Treasury keep tax policy under review all the time—that is a mantra, but it is true. The message I want to get across to colleagues today is that this will not be an easy choice. I understand the asks and we understand the impact, and there are various points of modelling, but it would not be an easy option. I repeat the caution that pass-through is vital when it comes to VAT relief. That did not happen wholly last time, but I understand why, as some of it was cash flow.

[Mr Ellwood]

Everybody understands the passion with which the Minister is pushing this. I do hope, as I teased last time, that he is having private conversations with the Treasury and making the mathematical case very clear. A business that closes does not pay any VAT at all. A business that thrives because VAT has been reduced somewhat can then pay more corporation tax. That is the mathematical formula that we would like to see, which I think has been presented by UKHospitality, and which justifies reducing VAT to 10% in the hospitality sector.

[Nigel Huddleston]

My right hon. Friend makes a logical point. I assure him that I am listening, but I am not making any promises.

I will refer to a couple of other areas that hon. Members mentioned. I appreciate the tone adopted by the hon. Member for Stirling. He recognised that there are things that the sector is requesting and looking for that Scotland, Wales and other countries are not able to deliver. That does not mean that any of us are not sympathetic; it is about the balance of the support package that we need to deliver. Like many today, he commented on both business rates and VAT.

My hon. Friend the Member for St Austell and Newquay has one of the most beautiful constituencies in the country, but also, as he said, one of those that is most reliant on this sector. He raised a variety of points, and he and I have had ongoing conversations about this subject, because he is such a champion of it. His point about the ongoing efforts to make sure that we get more inbound tourists outside London is pivotal. There are various opportunities and measures: VisitEngland, VisitBritain, VisitScotland, VisitWales, Discover Ireland and Discover Northern Ireland all do a fantastic job of helping to support and enable that tourism, plus there is a key role for our transport system.

My hon. Friend is right, however, that about 50% of all inbound tourism spend is within the M25. That is great, and we are not saying that that should be less; we are saying that we want it to be “London plus”. That is a key part of the tourism strategy, and I assure my hon. Friend that we are talking about this on an ongoing basis with DCMS and the Tourism Minister.

The hon. Member for York Central (Rachael Maskell) highlighted issues in her fantastic constituency, which I have had the pleasure of visiting on multiple occasions. She highlighted the importance of heritage in the tourism and hospitality ecosystem, and also mentioned flooding. She may or may not be aware that there are opportunities for businesses that are severely impacted by flooding under what is called a “material change in circumstances”. Working with the valuation office, there are opportunities to see, on a case-by-case basis, whether some relief is available. She might want to see whether some of the businesses impacted could consider that, as well as other support measures that we have provided for those impacted by flooding.

My hon. Friend the Member for Totnes (Anthony Mangnall) raised multiple points. He highlighted the upside of some of the trade deals that we are doing, so his constituency is now probably going to be flooded by Australian barmen and barwomen over the next few years. That is not necessarily a bad thing; I wonder whether they are better cocktail waiters and waitresses than he was.

My hon. Friend also raised the important point that, although the headline rates of VAT in some of our European friends’ countries may be lower, there is often a sting in the tail of quite considerable—startlingly high, in some cases—tourism tax, sometimes at a very local level. There is not a huge amount of evidence to suggest that that works either. There is always a balance, and although something may look like a beneficial tax rate system, one only has to scratch beneath the surface to find that there is something a bit more to it.

Oral Answers to Questions

Debate between Tobias Ellwood and Nigel Huddleston

Thursday 10th February 2022 Commons Chamber

[Nigel Huddleston]

The hon. Lady makes very important points. As we discussed earlier, sport should be for all, on and off the pitch. We need to make sure that there are opportunities right across sport. I believe that progress is being made—diversity and inclusivity are at the top of the agenda for many sportspeople I talk to—but she is right that we need more action, not just warm words.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I welcome greater efforts by the Government to improve internet access, but I met the families federations of the Navy, Army and the RAF, and they are concerned about access to the internet across the military estate. May I invite the Department to do a study on internet access on bases for our armed forces, and to report back to Parliament?