Tax rises are hammering Lakes hospitality businesses, MP tells Minister

During a debate in Parliament this week, Westmorland and Lonsdale MP Tim Farron warned government ministers that hospitality businesses in Cumbria were struggling to cope with tax rises.

According to a recent study by Cumbria Tourism, changes to business rates, a rise in Employer National Insurance contributions and other measures in last Autumn’s budget have led to many businesses being local forced to make tough choices.

Their survey of Cumbrian hospitality businesses found that:

• 38% will try to absorb the costs
• 37% will cut staff
• 34% will freeze or reduce planned pay rises
• 33% will halt recruitment
• 17% plan to reduce opening hours
• 14% are thinking about selling up

Speaking during a Westminster Hall debate on the Hospitality Sector, Tim said: “National Insurance rises have negatively impacted 73% of Cumbrian tourism businesses. 

“We have already heard about the impact of the business rates changes. In reality, we have seen businesses going from paying 25% of the business rate to 60% - more than a doubling in real terms. 

“It is a reminder that this Government need to get their act together on business rates - and quickly - and rightly shift the burden on to the big online retailers, which pay next to nothing despite taking advantage of Britain’s public services.

“We need to be really careful about piling extra costs on to businesses. I understand why the Government felt that they needed to make the National Insurance rise, to increase the tax take to plug the hole that they inherited, whatever size it may be. But if economic activity is reduced, that reduces the tax yield. It is basic economics.

“Not only have the Government harmed our businesses in the Lakes and the Dales, but they have harmed the Exchequer’s take and damaged the economy in the process.”

The Minister for Services, Small Business and Exports, Gareth Thomas replied: “We will deliver on our manifesto commitment to create a fairer business rate system that protects the high street, supports investment and is fit for the 21st century. The Chancellor has committed to reforming business rates from 2026-27, with a permanently lower multiplier for retail, leisure and hospitality businesses. For many years the hospitality sector has asked for that, and we will deliver it.

“I understand the sector’s concerns about employers’ National Insurance contributions. We are protecting the smallest businesses by increasing the employment allowance to £10,500. That means 865,000 employers will pay no National Insurance contributions at all, and more than half of employers will see no change or gain from the package. The majority of hospitality businesses are micro-sized, so many will benefit from the increase.”