Hospitality and retail sectors: Impact of government policy

Approximate read time: 35 minutes

On 22 January 2026, the House of Lords is scheduled to debate the following motion:

Baroness Monckton of Dallington Forest (Conservative) to move that this House takes note of the impact of government policy on the retail and hospitality sector.

1. Sector overview: Hospitality

The hospitality sector primarily refers to the accommodation and food services sector. This includes restaurants, cafes, pubs, bars, catering, hotels, campsites and other accommodation. It can also be used to refer to leisure attractions and events services.

1.1 Number of hospitality businesses

There were 176,685 businesses in the hospitality sector in the UK in 2025.^[1] The number of such businesses has increased from around 130,000 in 2010 to 175,000 in 2022. Since then, the number has remained fairly stable. Hospitality is the seventh largest of the main sectors in terms of number of businesses: 6.5% of businesses registered for VAT and/or PAYE (tax collected through payrolls) are hospitality businesses.^[2] Almost all hospitality businesses (99.6%) are small or medium-sized enterprises and 97.7% are small businesses.^[3]

Focusing on pubs, the British Beer and Pub Association has stated that the number of pubs has been declining for the past 25 years: there were 60,800 in 2000, 55,400 in 2010, 46,850 in 2020, and 45,000 in 2024.^[4]

1.2 Hospitality jobs and pay

There were 2.6mn jobs in the hospitality industry in the UK in September 2025, 7% of all jobs.^[5] This placed hospitality as the sixth largest of the main sectors in the UK by number of jobs. There were approximately 2.1 million payrolled employees in the sector in the UK in November 2025, a decrease of approximately 59,000 from November 2024.^[6] Local data on the number of hospitality businesses and jobs is available on the House of Commons Library’s dashboard: ‘Constituency data: Businesses and industries’ (28 October 2025).

Between September and November 2025, there were 77,000 vacancies in the food and accommodation industry in the UK, or three vacancies per 100 workers.^[7] The average across all industries was 2.3.

Median hourly pay is lower in hospitality compared with other sectors.^[8] In April 2025, full-time workers in the sector had a median hourly pay, excluding overtime, of £14.04, compared with £19.67 for all full-time workers in the UK.

1.3 Economic contribution

The economic output of the hospitality sector in the UK was £69.5bn in 2023, around 2.8% of total UK economic output.^[9] This figure is based on the gross value added (GVA) of the sector. Hospitality is similarly important to the economic output of each country and region in the UK. It makes up 2% to 4% of the total economic output for each country and region.

1.4 Challenges for the hospitality sector

In recent years, the hospitality sector has faced a number of challenges, particularly around staffing and costs.

1.4.1 Staffing costs

The government increased the national minimum wage in both April 2024 and April 2025. According to the Low Pay Commission, 21.6% of people who worked in the hospitality sector in 2023/24 were paid the minimum wage.^[10] Various industry stakeholders have raised concerns about the impact of these measures, as set out in section 3.1.3 of this briefing.

In the 2024 budget, the government increased the rate of employer national insurance contributions (NICS) from 13.8% to 15%.^[11] It also reduced the level at which employers start paying NICs from £9,000 to £5,000. However, the employment allowance, which reduces an employer’s total NICs liability, was increased from £5,000 to £10,500.

1.4.2 Other costs

Table 1 shows the responses of hospitality businesses to the question “which of the following, if any, will be the main concern for your business in January 2026?”, asked in a survey conducted by the Office for National Statistics (ONS) in December 2025.

Table 1. Main concern for hospitality businesses in January 2026, compared with all businesses

(Office for National Statistics, ‘Business insights and impact on the UK economy: Wave 146’, 18 December 2025)

UK Hospitality, a trade body for the hospitality sector, has argued that hospitality businesses pay proportionately more in business rates compared to other types of business.^[12] Many hospitality businesses are also expecting an increase in business rates later this year, with the first revaluation since the Covid-19 pandemic due to take place in April 2026. This issue is discussed further in section 3.1.1.

Another issue that has impacted hospitality businesses in recent years has been the rate of inflation. In October 2022, annual inflation, as measured by the consumer price index, was 11.1%, the highest it had been for multiple decades.^[13] Inflation on food and non-alcoholic beverages peaked higher at 19.1% in March 2023.^[14] As of November 2025, annual inflation was 3.2% and inflation on food and non-alcoholic beverages was 4.2%.

In June 2025, the ONS reported that inflation of goods and services was the main concern for 11% of hospitality businesses, compared to 6% of all businesses.^[15] However by December 2025, the ONS said inflation of goods and services had fallen as the main concern for hospitality businesses to 7% compared to 8% of all businesses.^[16]

The ONS has also highlighted the impact of rising energy prices on the hospitality industry.^[17] In 2022, the ONS found that food and drink service businesses were more likely than any other industry to say they planned to cut trading to reduce energy costs. More recently, in December 2025, 16% of hospitality businesses reported that energy prices were their top concern compared to 4% of all businesses.^[18]

During the Covid-19 pandemic, the government introduced loans of between £2,000 and £50,000 at a low interest rate which were available to small and medium-sized businesses and guaranteed by the government.^[19] Under the scheme, the money lent must be paid back over six or 10 years, with payments starting 12 months after the company received the loan. Press reports suggested that some businesses have been struggling to back pay these loans because of “the economic downturn and higher inflation” which have reduced sales and pushed up costs.^[20] UK Hospitality has said that the repayment of bounce back loans has been an issue for the sector and has urged the government to allow for refinancing while the Federation for Small Businesses has called for more flexibility for businesses.^[21]

There has been a long-running campaign by the tourism and hospitality sectors which has argued for a lower rate of VAT to be set on services supplied to tourists.^[22] Proponents have argued that this would allow hotels, restaurants, pubs and visitor attractions to reduce prices, thereby boosting sales and employment, which in turn would generate growth in the wider economy. During the pandemic, the then Conservative government introduced a temporary VAT rate of 5% on most tourist and hospitality-related activities. This was extended until 30 September 2021 and replaced with a 12.5% rate until 31 March 2022. It then rose to the full rate of 20%. There have since been calls for the lower rate to be made permanent.^[23] However, this has been consistently opposed both by the previous Conservative government and the current Labour government.^[24]

1.4.3 Customer demand

In August 2024, the Resolution Foundation think tank estimated that real non-pensioner median incomes fell by a total of 3% between 2019/20 and 2023/24.^[25] It argued this has meant that people have less disposable income to spend on hospitality services. Hospitality businesses have also expressed concerns about demand for their goods and services. In December 2025, the ONS reported that falling demand for goods and services was the main concern for 18% of hospitality businesses, although this was compared to 19% of all businesses.^[26]

2. Sector overview: Retail

The retail sector includes any business or individual involved with selling products directly to consumers. The sector includes shops, department stores, supermarkets, market stalls, door-to-door salespeople and internet retailers.

2.1 Number of retail businesses

As of 1 January 2025, there were 304,560 retail businesses in the UK, representing 5.2% of all businesses.^[27] As with most other sectors in the economy, small and medium-sized businesses made up over 99% of retail businesses.

2.2 Employment in the retail sector

Employment in the retail sector in Great Britain was around 2.6 million in 2024, 8.2% of the UK total.^[28] This was a fall of 0.4% compared to 2023. Over the same period, total employment in Great Britain grew by 0.5%.

Employment in the retail sector is fairly evenly distributed across most regions and countries in Great Britain. In 2024, London had the lowest proportion of retail employment (7.1% of jobs in London were in retail) and the North East had the highest (9.3%).^[29]

2.3 Economic output

The economic output of the retail sector in 2024 was £114.7bn: 4.4% of the UK’s total economic output and a 1.4% increase on 2023.^[30] The retail sector saw a fall in economic output following the 2008 financial crisis and then weak growth until late 2012. In 2013, the sector began to recover and grew strongly from 2014 until late 2016. More recently, the sector, like the economy as a whole, suffered a severe downturn as a result of the Covid-19 pandemic and output in the sector has generally remained below pre-pandemic levels since March 2020.

2.4 Trends in retail since the 2008 financial crisis

Since 2008, a number of factors including the financial crisis, the Covid-19 pandemic and the cost of living crisis, as well as resulting changes to customer habits and demand, have impacted the retail sector.

The Centre for Retail Research has argued the retail sector has been facing a “permacrisis” since the 2008 financial crisis.^[31] It argued that several factors have put pressure on the sector and led to store closures. These include the rapid debt-fuelled expansion of shops in the 2000s, which pushed city centre rents to “astronomical levels” and the growth of online retailing. The centre has claimed the pandemic and cost of living crisis exacerbated these longer-term trends. It argued that post-pandemic, consumers got out of the habit of high-street shopping to the extent that in early 2023, customer footfall was 10% lower across the UK than in 2019 and even lower in major cities. It has also said the cost of living crisis has led consumers to “seek out cheaper retailers” and increased competition. In addition, the centre has highlighted that retailers have been losing their share of consumer spending to leisure and tourism, for example meals out, gym memberships, TV subscriptions, foreign holidays and spa, health and wellbeing treatments.

Retail sales have also been impacted in recent years. The Covid-19 pandemic saw the closure of non-essential retail stores and a fall in sales.^[32] Although sales initially returned to pre-pandemic levels, since August 2022 they have fallen back below these levels, with the exception of sales in household goods stores. In November 2025, volumes of sales were down by 3% compared with February 2020.^[33]

However, since 2008 and more recently the Covid-19 pandemic, online shopping has become more popular. Online retail sales have increased from around 5% of sales in 2008 to around 20% in 2019, with further increases in 2020 (28%) and 2021 (31%), before a fall to 27% in 2022.^[34] Data has also shown that internet shopping is more popular in the UK than in other European countries and the US.^[35]

While some have argued that the growth of online retailers has led to the decline of the high street and physical shops, the think tank Centre for Cities has argued that this is not the case.^[36] The think tank contends that the fortunes of the high street are more closely correlated with other local factors, such as levels of disposable income and strength of the local labour market.

Stagnating wages and a lack of disposable income are also issues that have impacted the retail sector in recent years. In the decade following the 2008 financial crisis, earnings growth was below inflation, leading to a period of stagnating wages in real terms.^[37] During this period, the growth of disposable income (income after tax) also slowed, with these factors impacting confidence in the retail sector. Consumer confidence fell at the onset of the pandemic in March 2020 following earlier issues after the 2008 financial crisis. Although it began to recover in early 2021, consumer confidence fell again in 2022, reaching the lowest level since equivalent records began in 1974. This has been attributed to the pressure of the UK’s cost of living crisis which has been driven by “rapidly rising food prices, domestic fuel bills and mortgage payments”. Although consumer confidence has grown since 2022, it remains below pre-pandemic levels.

2.5 Recent policy announcements

Following the 2024 budget, a number of retailers, including Tesco, Boots, Marks and Spencer and Next, raised concerns about the impact of increases to national minimum wage and employer national insurance contributions.^[38] They argued that:

For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale. The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level.^[39]

The British Retail Consortium has also raised concerns about increases in business rates for retail and had urged the government to cut such rates by 20% in April 2025.^[40] It argued the retail sector paid a disproportionate amount of business tax compared with its overall share of the economy.

3. Government policy

3.1 November 2025 budget

The chancellor delivered the government’s second budget on 26 November 2025.^[41] It contained measures relating to the hospitality and retail sectors, including changes to business rates, regulatory reforms and increases to national living and minimum wage.

3.1.1 Business rates

Non-domestic rating, also known as business rates, is a tax that applies to all non-domestic properties unless they are specifically exempt.^[42] Business rates are intended to reflect the rental value of a property. This is termed a property’s rateable value. This value is multiplied by the tax rate (‘the multiplier’), which is set by central government. Any relevant reliefs are then deducted to calculate the final charge. Retail, hospitality and leisure (RHL) businesses are eligible for relief of 40% of their business rates bills for 2025/26, capped at £110,000.^[43]

Properties get revalued in business rates every three years.^[44] The next revaluation is due to take place in April 2026 and will be based on property values in 2024, as independently assessed by the Valuation Office Agency. The Treasury has said that because the previous valuation took place during the Covid-19 pandemic, many businesses would see “big increases” in their rateable values to reflect the post-Covid recovery.

In the 2025 budget, the chancellor said she would rebalance the business rates system in England.^[45] The Treasury has explained that due to the increase in property values, it would reduce the multiplier for every business and go further for RHL businesses. It said that as a result of this, the tax rate for small RHL properties would be the lowest since 1990/91 and would fall by nearly 12% next year. It also said that the tax rate for all other RHL properties below £500,000 would be the lowest since 2010/11, representing a 12.5% tax rate cut next year.

The Treasury argued that these changes were “a big deal” and that the tax cut was worth nearly £900mn per year and would benefit over 750,000 RHL properties.^[46] It also explained that unlike current RHL relief, the new rates would be permanent, “giving businesses certainty and stability”. The Treasury said it would pay for this tax cut through higher rates on the top 1% of the most valuable properties. For example, it said that large distribution warehouses, such as those used by online “giants”, would pay around £100mn in 2026/27.

However, the Treasury acknowledged that the fall in rates would not be big enough to offset the impact of the new post-Covid valuations along with the ending of the temporary relief that many pubs and other RHL businesses had benefitted from.^[47] It said it was therefore implementing some “big protections” for such businesses. Firstly, it said it would implement transitional relief to cap the amount that bills increase by. These transitional relief caps would vary dependent on the rateable value of the property, with higher thresholds in London. Secondly, it said that for any business whose value has increased so that they were no longer eligible for small business rates relief, it would cap their increase at the higher of £800 or the relevant transitional relief percentage cap for a property of their value. Both of these measures would be applied before changes in other reliefs and local supplements. Thirdly, the Treasury said it would also cap the bill increases of properties losing RHL relief at the higher of £800 or the transitional relief cap for a property of their value to support RHL properties as they “transition to permanently lower tax rates”. It said this cap applies to their current bill including the 40% relief they are currently receiving, before changes in other reliefs and local supplements. The Treasury said this measure represented a further £1.3bn of support for over 200,000 RHL properties, including independent pubs and family-owned grocers.

The Treasury said that overall it was spending £4.3bn of taxpayer money on a support package.^[48] It explained that due to post-Covid recovery in market values, the increase in rateable values for the pubs sector would be 30%, which, combined with the loss of the temporary RHL relief, would lead to an increase in total bills, paid by the sector of 45%. However, it argued that due to its interventions, the sector’s total bill would only increase by 4% next year.

However, since the budget the government has received criticism from industry stakeholders and politicians about the impact of the changes (see section 4.1.1 of this briefing). In response to these concerns, the government has suggested that it would announce a support package which would include reductions to business rates for pubs.^[49] It has also been reported that any changes to the policy could also help wider hospitality businesses, but would not extend to retail businesses.^[50] At time of publishing, the government had not yet announced the details of any policy change.

3.1.2 Regulatory action

In its budget factsheet for retail, hospitality and leisure, the Treasury also set out several possible changes to regulations.^[51] For example, it said that licensing authorities in England and Wales were being encouraged to ease licensing conditions on hospitality businesses, as set out in the first ‘National licensing policy framework for the hospitality and leisure sectors’. Some of these changes had previously been announced in July 2025.^[52] The government has said that this framework would modernise the outdated planning and licensing rules and cut the cost, complexity and time it takes to open and operate hospitality venues.^[53] It has also said that these reforms would make it easier to convert disused shops into hospitality venues, and protect long-standing pubs, clubs and music venues from noise complaints by new developments. In addition, it said it would introduce new dedicated ‘hospitality zones’ where permissions for outdoor dining, street parties and extended opening hours would be fast-tracked. In the budget, the government said it would also explore further planning reforms to make it easier for these businesses to expand.^[54]

In addition, the Treasury stated it would look to ease the regulatory burden on retailers, including on food and product standards, and make improvements to the extended producer responsibility for packaging.^[55] To ensure these reforms are delivered, the Treasury said that a new retail and hospitality envoy would be appointed to champion these businesses within government.

3.1.3 Minimum wage and employer’s national insurance

An increase to both the national living wage and the national minimum wage as announced in the budget will have an impact on the wage bills of many hospitality and retail businesses.^[56] From 1 April 2026:

• The national living wage will increase by 4.1% to £12.71 per hour.
• The national minimum wage for 18- to 20-year-olds will increase by 8.5% to £10.85 per hour and for 16- to 17-year-olds and apprentices by 6% to £8 per hour.
• The accommodation offset (which ensures rent paid to an employer does not cause an employee’s wage to fall below the minimum) will increase by 4.1% to £11.10 per day.

There were no changes to the headline rates of national insurance in the budget.^[57] These changes followed those made in the 2024 budget which saw an increase in the rate of employer national insurance contributions (NICs) from 13.8% to 15% and the level at which employers start paying NICs falling from £9,100 to £5,000.^[58]

Also in the 2025 budget, the chancellor froze personal tax thresholds for both income tax and NICs for employees and self-employed individuals for a further three years—from April 2028 until April 2031.^[59] She also maintained the threshold for employer NICs over the same period.

3.1.4 Further announcements

The chancellor said that alcohol duty would be uprated with the retail price index (RPI) on 1 February 2026 to “maintain its current real-terms value”.^[60] The government explained it had heard representations from stakeholders ranging from a duty cut or freeze to an above inflation increase. It said its decision “balances the important contribution of alcohol producers and the hospitality sector to the UK’s culture and economy, with the duty’s role in reducing alcohol harm”.

Some retailers have argued that they face unfair competition from sellers in China benefitting from a customs waiver on parcels worth less than £135.^[61] To address this, the government said that it would remove the customs duty relief for goods valued at £135 or less and reform the way such goods are declared into the UK.^[62] From March 2029 at the latest, the government said low value imports would be charged customs duty just as goods imported in bulk already are. It also said it would consult on the technical detail of the new import arrangements.

The chancellor also announced several measures focused on supporting the labour markets.^[63] The government said it would make available more than £1.5bn for additional employment and skills support, and the growth and skills levy, over the spending review period. It said this would ensure young people have access to high-quality training opportunities and the “support they need to earn or learn”, alongside measures to simplify the apprenticeship system and make it more efficient. The government also announced a youth guarantee, a jobs guarantee scheme that would offer a six-month paid work placement for every eligible 18- to 21-year-old who has been on universal credit and looking for work for 18 months. The scheme would cover 100% of the employment costs for 25 hours a week at the relevant minimum wage, and additional wraparound support.

3.2 Other measures

Further government policies which have impacted the retail and hospitality sectors have included the following.

3.2.1 Employment Rights Act 2025

The Employment Rights Act 2025 reformed employment law in a wide range of areas. It included provisions to end zero hours contracts, end ‘fire and rehire’ and ‘fire and replace’ practices, strengthen statutory sick pay and tipping law and make paternity leave and unpaid parental leave available from day one of employment.^[64]

3.2.2 Tourist tax

Ahead of the budget, the government announced that mayors would get a new power to introduce a levy on overnight stays.^[65] This would apply to visitors at accommodation providers including hotels, holiday lets, bed and breakfasts and guesthouses. The government has said that mayors could use revenue raised from this levy to invest in transport, infrastructure and the visitor economy. It also highlighted that research had shown that reasonable fees have minimal impact on visitor numbers and said that many cities around the world charge such a fee. The government is currently consulting on the design of the power.^[66]

3.2.3 Hospitality support scheme

The government has introduced a £1.5mn hospitality support scheme to “co-fund projects aligned with Department for Business and Trade and Hospitality Sector Council priorities”, such as supporting initiatives like ‘Pub is the Hub’ to encourage local investment.^[67] The government explained that the scheme had been launched to “help get existing projects over the line and fill job vacancies in the sector”.^[68] It said that it would include the delivery of hospitality training facilities in prisons.

3.2.4 Zero carbon hospitality scheme

In June 2025, the government announced a new scheme to help Britain’s hospitality sector cut emissions and save money.^[69] Under the scheme, pubs, cafes, restaurants and hotels would receive free energy and carbon cutting advice with the aim of reducing 2,700 tonnes of carbon emissions and saving £3mn on bills. The government said over 600 small and medium-sized businesses would receive free energy and carbon reduction assessments funded by the government and delivered by Zero Carbon Services.

3.2.5 English Devolution Bill

The English Devolution and Community Empowerment Bill, which is currently awaiting committee stage in the House of Lords, contains provisions including:

• a community right to buy assets of community value, including pubs, which would replace the current right introduced under the Localism Act 2011
• a ban on upwards-only rent reviews in new and renewal commercial leases in England and Wales

Further information on these provisions can be found in the House of Lords Library’s briefing on the bill, ‘English Devolution and Community Empowerment Bill’ (3 December 2025), and a government press release.

3.2.6 Plan for small and medium-sized businesses

The government has said that its policy paper ‘Backing your business: Our plan for small and medium-sized businesses’ sets out the long-term direction for the government’s support for smaller businesses. It includes measures aimed at the hospitality and retail sectors, for example, committing to permanently lower business rates for retail, hospitality and leisure.

4. Reaction to the government’s policies

4.1 November 2025 budget

4.1.1 Business rates

Since the budget, various stakeholders have raised concerns about the impact the changes to business rates would have on hospitality businesses and pubs in particular. For example, UK Hospitality has argued that because of the change, the average pub’s business rates would increase by £12,900 over the next three years, with the average hotel’s bill increasing by £205,200.^[70] This means that by 2028/29, an average pub’s business rates would have increased by 76% and an average hotel’s by 115%. In comparison, UK Hospitality said that rates for a distribution warehouse would have increased by 16%, an office building by 7% and a large supermarket by 4%.

Commenting on the measure, Emma McClarkin, CEO of the British Beer and Pub Association, said that “despite the government’s clear intention to support pubs with permanent business rates reform”, the budget had missed “a clear opportunity to meaningfully reduce the disproportionate burden on pubs”.^[71] Other stakeholders, such as the Society of Independent Brewers and Associates and the Campaign for Real Ale (CAMRA), also welcomed the government’s commitment to permanently lower business rates, but said that the measures fell short of addressing the costs many pubs and breweries are facing.^[72]

Politicians have also raised concerns about the change. Leader of the Conservative Party Kemi Badenoch has accused the government of treating pubs like “cash cows to milk, instead of as places to protect”.^[73] In addition, several Labour MPs have called on the government to review the proposals and to provide support for both pubs and the hospitality sector as a whole.^[74]

However, reports that the government would change the policy, as discussed in section 3.1.1 of this briefing, have been welcomed by the sector. For example, Ms McClarkin said that the news was “potentially a huge win for pubs across the country and showed government have not only listened to our concerns but acted”.^[75] UK Hospitality has said it was encouraged that support for non-pub businesses was also being considered.^[76]

The British Retail Consortium gave a mixed reaction to the impact of business rates changes on the retail sector.^[77] Helen Dickinson, the consortium’s chief executive, said that:

The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.^[78]

4.1.2 Staffing costs

The British Retail Consortium noted that retail employment costs had risen “significantly over the last year”, citing the changes made to national minimum wage and employer NICs in the 2024 budget.^[79] It said these changes had added £5bn to retail costs and argued that “with food inflation nearing 5% and 100,000 jobs lost in retail over the last year, further cost rises are challenging for retailers to absorb”. The consortium also argued that the wage increases for under-21s along with the implications of some provisions in the Employment Rights Act would “do little to encourage the employment prospects of younger people”. However, the consortium acknowledged that the uplift to the national minimum wage was in line with the core expectations announced by the Low Pay Commission, which provided stability for retailers’ financial planning.

UK Hospitality has also argued that the wage rises contained in the budget would put pressure on businesses and reduce job opportunities, particularly for young people.^[80] In addition, it warned that the costs would be passed on to customers via price increases.^[81] Other stakeholders have also expressed concerns about the policies, including the British Beer and Pub Association, the Night-Time Industries Association and the British Institute of Innkeeping.^[82]

4.1.3 Regulatory reform

The chairman of CAMRA, Ash Corbett-Collins, argued that pubgoers and licensees would be “shocked that the only mention of supporting pubs in the chancellor’s statement on the budget was re-announcing some tinkering around the edges of the licensing system”.^[83] UK Hospitality had previously supported the proposed reforms.^[84] However, it also argued that the changes were not “a silver bullet to solve the existential cost challenges hospitality businesses are facing” and called for action in the budget to help with costs.

In October 2025, the government published its preliminary analysis of the call for evidence which sought views on the proposed licensing reforms.^[85] It said a subsequent document would be published once a comprehensive analysis of all qualitative responses had been undertaken.

4.1.4 Other measures

Industry bodies have been critical of the government’s decision to increase alcohol duty rates. For example, Ms McClarkin has argued that the decision would be damaging to the sector, while the Wine and Spirit Trade Association said that it would lead to higher prices and lower sales, and therefore reduce Treasury revenue.^[86] The Scotch Whisky Association also argued that spirit revenue had been reduced by the previous increase in alcohol duty.^[87]

However, alcohol harm research and campaign groups have welcomed the measure. For example, the Alcohol Health Alliance argued it was not a significant increase or a punitive measure, but rather a return to a long-established principle that duty should rise in line with inflation like it does for other goods and services.^[88] The Institute of Alcohol Studies also noted that due to several freezes in previous years, “duty rates remain far lower than they were in 2012/13.^[89]

The British Retail Consortium welcomed the government’s plans on low value imports; however, it argued that the timeframe for the change was “simply too long”.^[90] It said that there are 1.6mn parcels arriving in the UK every day and that businesses “cannot afford any delay on scrapping the existing rules”. Companies such as Debenhams Group and Sainsbury’s have also called for the measure to be implemented earlier.^[91]

UK Hospitality had previously welcomed the government’s growth and skills levy and reforms to apprenticeships.^[92] However, it has also warned that the sector’s ability to deliver on its goals relating to apprenticeships would be “stymied by soaring costs”, and business rate increases in particular.^[93]

4.2 Wider policies

4.2.1 Employment Rights Act 2025

Kate Nicholls, chair of UK Hospitality, has raised concerns about the cost and complexity of the changes contained in the legislation, saying that the sector had no more capacity to absorb costs.^[94] The Cooperative has said that retailers would need to navigate the employment changes found in the bill carefully, “balancing the need to comply with new laws and managing operational costs”.^[95] The British Retail Consortium has called on the government to push back implementation dates for certain measures in the act because its parliamentary stages had been delayed.^[96] It said that if implementation was rushed, “there will be severe consequences for people and jobs all over the country”.

4.2.2 Tourist tax

There has been a mixed reaction to the announcement that mayors would receive the power to introduce an overnight visitor levy in their area. For example, several mayors have welcomed the announcement, including Liverpool City Region Mayor Steve Rotheram and London Mayor Sir Sadiq Khan.^[97] Sir Sadiq said the levy would be used to get more tourists and improve their experience, while also preventing overtourism. However, Tees Valley Mayor Ben Houchen said he would not be implementing the policy.^[98]

The Tourism Alliance, an umbrella trade association for the UK’s tourism industry, has written to the chancellor setting out its opposition to the measure.^[99] It argued that the tax would “raise costs for domestic holidaymakers and overseas visitors, weaken the UK’s competitiveness and undermine the government’s target of reaching 50mn inbound visits”. UK Hospitality has also criticised the policy, saying that the cost would be passed on to consumers and fuel inflation.^[100] However, some in the cultural sector have welcomed the measure and argued that funds raised should be used to support the cultural sector.^[101]

4.2.3 Other measures

Industry stakeholders have welcomed the government’s zero carbon hospitality scheme. For example, representatives of UK Hospitality, the British Beer and Pub Association and the British Institute of Innkeeping have given their support.^[102]

Focusing on the English Devolution and Community Empowerment Bill, UK Hospitality has welcomed the provision to ban upward-only rent reviews in commercial leases.^[103] It said it had been calling for such a ban “since the turn of the century”. CAMRA has also said the provision relating to a community right to buy was a “positive development”.^[104]

The Association of Convenience Stores welcomed the government’s new small business plan, stating that it identified many of the issues that mattered most to its members.^[105] UK Hospitality also welcomed the measures contained in the plan.^[106]

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