Item 6 is next, a debate on the Economy, Trade, and Rural Affairs Committee report, 'Raising the Bar: Securing the future of Hospitality, Tourism and Retail'. I call on the Chair of the committee, Paul Davies, to move the motion.

Motion NDM8120 Paul Davies

To propose that the Senedd:

Notes the report of the Economy, Trade and Rural Affairs Committee: 'Raising the Bar: Securing the future of Hospitality, Tourism and Retail' which was laid in the Table Office on 6 July 2022.

Motion moved.

Diolch, Dirprwy Lywydd, and I move the motion tabled in my name.

Dirprwy Lywydd, the hospitality, tourism and retail sectors are really at the heart of our nation. Their importance to supporting and enhancing life in Wales will be clear to everyone in this Chamber. Whether it's in the form of a bustling high street, a nice country pub, or a restaurant selling locally produced food cooked by expert chefs, the retail and hospitality industries are at the core of our communities across Wales.

As well as making use of and often enhancing our retail and hospitality offer, tourism allows us to show off the best of Wales to the rest of the world and provides 12 per cent of jobs in the Welsh workforce. In short, these industries are absolutely vital to foster, support and promote culture and the good life we all want to pursue.

The hospitality, tourism and retail industries were one of the first areas we identified to explore when we met to plan the new committee's priorities. Initially, we identified these sectors as we knew that they were facing big challenges as a result of the pandemic. Retail and hospitality were facing the huge challenge of recovery and adapting to the new post-pandemic world. Tourism was facing a slightly different challenge. The industry had also been hit hard by the pandemic, but was facing a situation of feast or famine. During the lockdown restrictions, tourism businesses, as with most retail and hospitality, had to close, but then as the UK started to reopen but international travel was still off the table, the industry found itself overwhelmed by demand.

We decided to look at these industries from two sides. One was the economic viability and sustainability of the sectors, particularly looking at COVID recovery and long-term viability. The second element we wanted to investigate was the workforce. This included improving the quality of jobs in the sector, addressing labour shortages, and looking generally at skills in the workforce. The committee is very grateful to those who gave evidence to our inquiry, in particular the anonymous individuals from across the country who completed our survey and gave us a real insight into what it's like working in these sectors.

Those participants told us about the long hours, low pay, job insecurity, lack of worker voice, and a lack of respect from customers and employers. However, they also told us that they enjoyed working in the hospitality, tourism and retail sectors as it allowed them to work in their local community, gave them flexibility in their lives, and provided them with a social environment. One participant told us that, and I quote,

'Working in retail means that I don’t have to move out of my community for work. I can live in the area I grew up in where my language is used.'

Another told us that, and I quote,

'The flexibility generally allows me to work around other aspects of my life. It also allows me to work in my local community. So many jobs require you to commute or move, but I can stay and work in the community that I grew up in.'

And I think I speak for all on the committee when I say that it was quite moving to hear the participants speak so passionately about working in their local communities and where they grew up. Clearly, there is a great sense of pride in working in Wales's vibrant visitor economy, and that is why action is needed now to ensure that working in these sectors can offer secure and fulfilling careers for the future. 

Our report contains 18 recommendations across four broad areas: business support, the retail strategy, the visitor economy and labour market challenges. I'm pleased that all recommendations have been accepted either in full or in principle by the Welsh Government, and so I welcome the Minister's commitment to better supporting these sectors.

The report first considers business support and how the sector can be better supported post pandemic. Representatives from all three sectors made it clear that they believed the Welsh Government provided a comprehensive package of financial support measures to businesses over the course of the pandemic, and they recognise that some of that support was specifically targeted at the hospitality, tourism and retail industries. However, a number of areas for continued support and attention from Welsh Government were identified by witnesses, including business rate relief and reform, support to tackle cost-of-living increases, and better supply chain support and local procurement.

The next non-domestic rates revaluation will take effect on 1 April 2023, based on property values as at 1 April 2021. This should mean that the rateable values will reflect the impact of the coronavirus pandemic, and I'm pleased that in response to the committee's report the Welsh Government has committed to reviewing this and whether transitional support is needed or appropriate, going forward. Businesses in hospitality, tourism and retail made it clear that business rates are an increasingly unjust system, and so I hope the Minister will reflect on their message and use the levers he has to help ensure that any reform of the system results in a much more level playing field for businesses, going forward.

We also know that businesses are feeling pressured by the rising cost of living. The impact of the war in Ukraine, supply-chain issues, rising inflation and the soaring cost of energy, fuel and food have all contributed to the rising cost of living, and that's having a real impact on Welsh businesses. As our report makes clear, sectors that rely on households' discretionary spending on non-essential goods and services are being increasingly squeezed, and workers and businesses owners already badly affected by the pandemic face increased mental health strain. Indeed, businesses operating in more rural areas in particular are disproportionately affected by increased energy and fuel costs to run their business and access services, as well as facing greater skills shortages.

In light of this, the committee has recommended that the Minister should set out whether hospitality, tourism and retail businesses can be given additional flexibility in repaying loans to Welsh Government or the Development Bank of Wales in light of the continuing financial pressures they face. In addition to that, the committee has also recommended that the Minister for Economy should consider what additional support for capital investment can be provided to the hospitality, tourism and retail sectors.

Dirprwy Lywydd, I'm particularly pleased that these two recommendations have been accepted by the Minister, because in accepting them, the Welsh Government shows us that it's listening to these sectors and that it's committed to reviewing the support it can offer to businesses as part of in-year capital budget monitoring and the annual budget-setting process. 

The committee's report also considered the long-awaited strategy for the Welsh retail sector. The strategy was published in June and the committee now looks forward to seeing the promised delivery plan, which the Minister says will take account of evidence to this committee inquiry. It's vital that we all better understand how any measures and activity will be resourced to meet needs identified by the retail forum, and the extent to which these will be met from existing or new funding. And the committee will certainly be monitoring this area further in due course. 

The committee also considered the Welsh Government's approach to the visitor economy, and Members will be aware that the Welsh Government is currently consulting on the introduction of a visitor levy. This comes alongside recent regulations that have been set in place to increase the number of days that self-catering accommodation must be let each year in order to qualify for business rates rather than paying council tax, rising from 70 days to 182 days. I'd like to thank the Minister for his detailed explanation of the reasoning behind the changes in the Welsh Government's response to our report. The response sets out that these initiatives are being implemented to increase vibrancy, encourage more usage of properties and to ensure that tourism pays its way.

The committee heard a lot of concern, however, about these changes and in particular the introduction of the levy. We heard evidence that where tourism taxes work, there tends to be a lower VAT rate for tourism and hospitality than we have in Wales and that a visitor levy was the wrong tax at the wrong time. Therefore, I’m pleased to see the Welsh Government has accepted the committee’s recommendations in this area, as it’s clear that more work needs to be done to take the industry along with Government on this specific issue.

Finally, I want to briefly touch on workers in these three industries. The Wales TUC told us that 70 per cent to 75 per cent of workers in tourism and hospitality earned below the real living wage, and that was supported in the feedback the committee received from our interviews. As I said at the start of my remarks, the committee heard that many people loved working in hospitality, retail and tourism, but we also heard that workers were worried about low wages, job security and poor terms and conditions. With tourism and hospitality employing so many Welsh workers, it is vital that the Government works hard to improve the quality of jobs in the sector via support for businesses to improve their offer and workers to improve their skills.

The Minister made it clear that the economic contract was important for encapsulating the Welsh Government’s approach to raising the bar for these sectors. However, the committee heard worrying evidence from unions, the Federation of Small Businesses and the Bevan Foundation that the economic contract was poorly understood and having—at best—limited impact. Therefore, it’s vital that the Welsh Government provides assurances that the economic contract is being better promoted and that there is sufficient monitoring and enforcement of the contract to ensure it’s having more of an impact on workers in these sectors. The Welsh Government must really do more to place value on workers in these sectors. These are workers embedded and serving in our local communities, and the Government must be proactive in ensuring that these sectors are better supported in the future.

On that note, I’d quickly like to repeat my thanks to everyone who engaged with the committee during our work on this important issue, and also thank the team who supported the committee to carry out this inquiry. I look forward to hearing Members’ views on this key issue of supporting our hospitality, tourism and retail industries and the people who work hard in them to make Wales a fantastic country to live in and visit. Thank you.

I want to thank the Chair and clerks for their work on this report, and I also want to give thanks for the work that happened through the engagement team, which was a great help as we gathered evidence from workers in the sectors of tourism, retail and hospitality, a workforce that often has difficulty in ensuring that its voice is heard outside of the workplace. I know that many are very grateful for the opportunity to contribute to the committee’s work.

I’m going to focus on hospitality in particular. It’s a significant sector in itself, employing at its height 200,000 people in Wales, and it’s a sector that I have a good amount of experience in. However, much of this will be applicable to retail and tourism.

When we first undertook our inquiry into the sector, much of it focused on the effects the pandemic had on it as a sector, and the struggles the sector was having in dealing with the aftermath. I think it’s fair to say that much of that has been completely overtaken by the cost-of-living crisis. All of us get on a daily basis correspondence from businesses in our constituencies and regions who are struggling to stay open. VAT and business rates were highlighted in evidence to us. The Chair has referred to business rates already; VAT was also a particular sticking point of interest, given the desire by the sector not to revert back to the 20 per cent rate. I think the economy Minister was right in what he said: going back to the 20 per cent rate could damage the economy more than help it; more so now, given the cost-of-living crisis.

Thanks to the cost of living, we can now also add to that list of worries high inflation and energy costs. One hospitality business in my region, for example, saw their annual energy bill go from £15,000 to just shy of £70,000. Another more public one, Ristorante Vecchio in Bridgend, shared how their energy bill was now at £8,000 a month. The reality is we need serious intervention from Government now if many hospitality businesses are to survive beyond the winter.

Staffing was also an issue raised with us as a committee, and the real struggle the sector is having with recruitment. We heard from the sector, who were ready to admit that there were long-standing issues that needed to be addressed—such as wages, job security and work-life balance—as a starting point. But there was also a very keen desire to professionalise the sector as well, to show new entrants that there is a progression pathway, as well as training, something highlighted consistently as a desire from the evidence collected from workers. Fundamentally, this is needed, because I would hope it would lead to a change in culture and in how people treat hospitality workers as a whole. The amount of times customers thought it was okay to talk down and patronise me and my colleagues are uncountable; it was an hourly occurrence, if not a by-the-minute one.

I'll always remember one interaction I had. A couple came up to the bar that I was working on at the time. They ordered two espresso martinis. I could tell almost straight away that they were a specific type of people. It wasn't because of the drinks they ordered, because I do actually quite like an espresso martini, but I could tell it by the way they ordered the drinks. I started making the order. They went on about a holiday that they'd been on recently, holidaying on their friend's £1 million yacht, and they turned to me and said, 'I bet that's a bit of a culture shock for you, isn't it?' I think Members know me well enough to know what my reaction to that would have been, but that's an example I have. I have many more examples, but there are also millions more examples out there.

But that's why the culture needs to change, and that's why I was encouraged by the recognition of the sector that there was a need for that change as well. I've given one negative story about hospitality, but I will finish on a positive one, because it is a great sector to work in, again recognised in the evidence from workers. The experiences I had were great, and the friends I made are lifetime friends. As a sector, it's taught me so much about people, how to deal with people, especially how to deal with people with friends who have £1 million yachts. It certainly gave me the confidence and skills to be able to do what I'm doing now. It also taught me how to make a pretty good cocktail, which I'm sure we can agree is a very valuable life skill. But, in all seriousness, I'm glad to see the Welsh Government have accepted fully or at least in principle many of our recommendations, but action needs to follow. Much like the sector, I also see the Welsh Government as a vital partner in the sector's recovery and development.

I'd like to start my contribution today by echoing the remarks of colleagues thanking the clerking team and everyone who gave evidence that helped inform this inquiry. I think it's a really important piece of work. Around a third of the Welsh workforce is employed in the hospitality, tourism and retail sectors. The latter alone, Wales's largest private sector employer, accounts for just over 6 per cent of our national gross value added. As such, these are incredibly important parts of our economy.

When we normally conduct an inquiry of this nature, I approach the piece of work with a spirit of optimism. We investigate a problem, get some really robust data and evidence, put forward non-partisan solutions, and these, hopefully, lead to remediation of the challenges identified. However, in this case, with this inquiry, the challenges have become much more severe, even in the five months since the publication of our report. I know that this will not be a surprise to colleagues in the Siambr, to those who gave evidence, or to businesses and people employed in the sectors.

The Caterer, which covers hospitality, conducted a survey of the sector in September. Eighty per cent of respondents said rising energy prices had wiped out their profits. Three out of five feared their business would not be there in a year's time. The majority of respondents had noted energy bills had risen by more than 100 per cent, with 22 per cent saying their costs had increased by a staggering 400 per cent. The chief executive of UKHospitality, at the start of this week, issued a stark warning about the sector's extreme vulnerability to energy price fluctuations, and accused energy company bosses of profiteering. Of course, hospitality and tourism are both sectors gravely affected by people having less money in their pockets due to the cost-of-living crisis.

Similarly, these pressures are also having a tremendous impact on workers in the sectors. USDAW trade union represents shop workers. I'm a member of USDAW, and in their recent survey of retail workers, it was revealed that half are struggling to get to work due to increased travel costs, one in four workers are missing meals every month to pay bills, and three in four report that their mental health is affected as a result of financial worries. There is a clear need for this committee to undertake further work in this area, examining the impact of the crisis and scrutinising the interventions of both the Welsh and UK Governments. I hope this is a topic to which we can return and, moreover, one where future inquiries can leave me feeling a little more optimistic for the future. 

Turning to the report's specific recommendations, I just want to comment on a few key ideas. Firstly, recommendation 5 is calling for additional support from the Welsh Government for capital investment. I'm pleased that the Welsh Government has accepted this recommendation. It's something I support. However, we must realise the impact of spending pressures on Welsh Government budgets since our report was written and since Welsh Government replied to our recommendations. That's not just the cost of living and rising prices, but the economic inadequacy of successive Tory Prime Ministers and their cliques. As the finance Minister reminded us just last month, over the current three-year spending period, the Welsh Government's budget will be worth up to £4 billion less in real terms than when it was set the year prior—£4 billion less. The challenge is stark.

Reading recommendations 9 through to 12, I'm pleased by the Welsh Government's engagement with our comments. A visitor levy is, in my opinion, a common-sense approach to generate the investment to enhance the tourism offer in an area. There's nothing new about the idea, and it's standard practice in many countries and territories. Recently, Edinburgh council became set to bring in a visitor levy, which will be used to support waste and cleansing services, and to deliver improvements to public areas and green spaces. A small charge won't deter visitors, and I don't agree with the naysayers who just want to run down all that Wales has to offer. 

Finally, the recommendations relating to fair work. I note the Welsh Government's response that it is, again, a matter of fact that the interventions we called for are largely a matter for UK Ministers. However, I look forward to Welsh Ministers using the tools that are at their disposal to make sure that workers in all these sectors are valued, appreciated and receive the fair day's pay they should be able to expect. Diolch.

I would like to begin this afternoon's contribution by echoing the comments of all my fellow committee members by thanking everyone who contributed and the clerking team in compiling this report. It comes at an incredibly pivotal time for the hospitality and tourism industry, especially within the context of incoming Welsh Government legislation, so I'm pleased we are given the opportunity to review the Welsh visitor economy and lay out a concrete set of proportionate recommendations.

The hospitality, tourism and retail industries are key employers in Carmarthen West and South Pembrokeshire. Our natural beauty is world renowned and enjoyed by both domestic and international tourists. And when they visit, they're welcomed by a whole range of small and medium-sized businesses, all of whom contribute economic opportunities to my constituents. With that, my intention this afternoon is to focus on two specific aspects of this report: the impact of the Welsh Government's tourism tax, and the fair work levers available to the Welsh Government to ensure that the barriers to work within the hospitality, tourism and retail sectors are minimised.

Recommendations 9 to 11 of this report place a specific requirement for the Welsh Government to provide concrete evidence, information and reasoning for the introduction of their tourism tax. We are not just requesting the thought process behind the decision to pursue this policy, but we wish to better understand the output of three individual research projects that investigated the prospect of a Wales tourism tax. The committee rightly highlighted the tourism and hospitality industries' view that any form of tourism tax or levy was neither wanted nor needed. The Welsh tourism association suggested that the Welsh Government's policy would be a form of double taxation, and UKHospitality Cymru stated that a levy was the wrong tax at the wrong time. Indeed, other organisation described this policy as a hugely regressive step and a knee-jerk reaction. It's not really a ringing endorsement of your plans, Minister, and I would go so far as saying it is the direct opposite of what the industry wants and needs—not 'naysayers', as the previous speaker would say, but the industry themselves. 

I am glad to see that the Welsh Government has accepted all three of these recommendations, but, in reference to recommendations 9 and 10, I am disappointed that the committee had to nudge the Welsh Government towards transparency. I am disappointed that the requested information was shared with the committee less than two hours ago, but, hey, at least we got it.

One such way to support business growth is by ensuring that businesses can grow. In doing so, we're not just investing back in the local economy, but we're using existing levers to address employment shortfalls within the industry. As recommendation 18 sets out, there are significant barriers to fair work, specifically in relation to topics of employment, wages and conditions. Over the last several years, difficulties have arisen as a consequence of local employment gaps, and in no better way was this illustrated than last summer, when businesses in Carmarthen West and South Pembrokeshire had to shut during the peak season due to low staffing levels. 

We have a real opportunity to ensure that your legislation is transparent and accountable, and whilst these benches and the industry itself may disagree with your tourist tax policy, you certainly owe it to the hospitality and tourism industry, and the many thousands who are employed within it, to demonstrate your grounds for its introduction. It is with this sentiment that I would urge the Welsh Government to implement and deliver upon the recommendations made within this report at its earliest opportunity. Diolch, Dirprwy Lywydd.

I want to start, again, like everybody else, by thanking my colleagues and the clerks for their work on this report. As our Chair, Paul Davies, said, this is one of the first things that we said that we wanted to look into, and it seems like a very long time ago now. As you set out in your foreword, the staycation, at the time that we were looking at it, wasn't it—the bounce back from the COVID-19 pandemic. And it reignited that sense of pride in our local hospitality, tourism and retail sectors across Wales. Now, almost 18 months later, in conjunction with this, these very sectors that often saw the brunt of those COVID restrictions on businesses, especially the small and local economies in our towns and communities, they are now facing this cost-of-living crisis and we can expect, for businesses, if they're not already suffering, it could get an awful lot worse.

So, I am very, very pleased that this has come out now and that we've managed to really incorporate both aspects of what's happening for our businesses, and I'm really pleased that the Welsh Government has accepted, or accepted in principle, all of the recommendations set out in the report. There is an overwhelming sense of need to insulate these sectors, but, also, it would be nice to see whether they can also continue to thrive and not just have to survive through these really tough economic times.

As our Chair, Paul Davies MS, highlighted, recommendation 13 is really crucial, because it really sets out the opportunities for career pathways within the hospitality and tourism sector, including the degree apprenticeships. During the evidence sessions, we heard from workers from a range of backgrounds who wanted to work in the places that they grew up in. The Government and these sectors must work collaboratively to ensure that there are opportunities for career progression locally to support this. I am pleased to see that this work on the foundation economy is being carried out by the Welsh Government, and I hope to see further opportunities in the future.

I also wanted to highlight recommendation 18 about the vitality of fair work, because it is no secret that there are many workers in these sectors who continue to face insecurity. Wales Trades Union Congress; Unite Wales; the Union of Shop, Distributive and Allied Workers and others contributed to evidence sessions detailing the realities of insecure contracts that really just made them feel like they're disposable, and that workers are facing poor pay and then lack of staff. One contributor said that she had no idea of her rights at work, and I would stress that we must do more to empower workers to understand their rights, through the role of trade unions and social partnership. No worker should be facing abuse for simply doing their job, or, as my colleague, Luke Fletcher, highlighted, just being treated as if you're beneath other people because of the profession that you have. Workers should be empowered to speak up on these issues, and I hope that the Welsh Government will take these into consideration when it comes to social partnership in these sectors.

Lastly, I'd just like to draw attention to the number of recommendations around the tourism levy. Porthcawl in my constituency relies heavily on the tourism sector; obviously, we have Coney Beach, we have the Elvis festival and we have surfing at Rest bay. I have been speaking with my community for some time about this proposal. I feel that, whenever we get into the conversation about it, there are a lot of misconceptions, and some of those did come through in our committee report. Because there are a number of examples of countries across Europe and the world that have a tourism levy, and this includes tourist destinations such as France, Belgium, Spain, Thailand and New Zealand, to name a few. The basis for these levies varies from country to country, with some setting a rate per person; others by room, location or star rating of the accommodation. In Bulgaria, the levy is set locally and ranges from 10 cents to €1.53 for the first night's stay. The money raised from this levy is then reinvested back into the tourism sector. In Romania, the money raised by its levy is used for tourism promotion; in Spain, it is used for sustainable tourism projects. And whilst there are many possibilities for how a tourism levy could be set out, it is imperative that communities have a say in how it is spent. I am not bringing my own bias to this; I am truly just saying what I have spoken to when I have talked to people in my community. Because the fact is that people in Kenfig Hill and Nantymoel, through their council tax, are paying for those beaches and those public toilets in the summer, and when we have the Elvis festival and that street is closed down, that costs about £35,000 to the council budget, and people in those communities are paying for that. So I don't think that tourists would mind being able to pay so that we were able to keep the beautiful town of Porthcawl that they want to come and visit clean and well kept.

The Welsh Government has accepted the recommendation for an evidence-based approach when proposing the tourism levy, and their intention is to engage with the stakeholders during the consultation process on this, and that is all that I'm asking for—I just want a consultation where people are stakeholders are really given the facts on this, given an international perspective on this, the possibility of this, and also, ideally, a trial on this. So, thank you, everybody, for the hard work that’s gone into this report. It is constantly ever changing and moving, but I welcome the Welsh Government's response. Thank you.

As the first Member to speak in this debate who is not on the committee, can I thank the members of the committee who have spoken so far, especially Paul Davies as the Chair, as well as his research and clerking team and all those who gave their evidence for the report on this important sector, for the recommendations to Welsh Government and for bringing this debate to the Chamber today? What the committee has brought us today is a very interesting report with lots for us as Members, but also for the Welsh Government, to consider as to how they can support the industry, not just financially, but as a friend who listens to concerns in the industry as well. So, I was glad to see that one of the very first lines in the report notes the 'colossal hit' that the tourism hospitality and retail sectors have been under over the past few years. It’s in that context that it is crucial that, now more than ever, we need to be that supportive friend to the sector.

With the interests of time in mind I’ve picked out just a few of the committee report’s recommendations to focus my contribution on today. In recommendation 8, it stated that:

‘The Welsh Government should outline in detail their reasoning for the increase in the number of days per annum that a self-catering property must be available to let to 252, and days actually let to 182’.

As the Minister will be aware, I’ve raised this issue on a number of occasions in this Chamber and had little explanation from Ministers as to the reasoning for that change. Self-catering accommodation forms an important part of the mix in the tourism economy, which is a key industry in many parts of Wales. Moreover, it provides accommodation in rural areas away from centres, allowing them to benefit from the tourist economy too, and in some parts of Wales, it’s the only viable way of turning a day trip in a remote but idyllic Welsh community into an overnight stay.

But what still hasn’t been set out is the rationale for the number of 182 days and how it’s been arrived at, and the jump from 70 to 182 qualifying days seems hugely significant, particularly in light of the consultation responses being overwhelmingly opposed to it. So, justification for changes from the Minister would be reasonable and welcome. What the industry would like to hear from Government is how this will be measured. Is the new threshold linked to seasonal activity, or how many days they expect in an average tourism season? What will that figure look like? In some localities where there is currently a lack of tourist activity and provision, but it would be beneficial for it to be developed, we may wish to spread tourist destinations far away from hotspots. So, there may be a good reason to incentivise lets to be available, and there may need to be wiggle room built in to allow for that locally. These thresholds appear to be very high in that context, therefore, would there be room to adapt to those local circumstances? And whilst we have a great tourism offer here in Wales, I’ve reiterated time and time again that, with the current post-COVID tourism sector visitor market in a very uncertain and unstable period, this impact, along with cost-of-living pressures and the cost-of-doing-business crisis debated here just a few weeks ago, should be taken into account in any new rationale for these new thresholds.

Recommendation 9 asks for the Welsh Government to,

‘set out the evidence base it considered in deciding to pursue the introduction of a local tourism levy at this time.’

I don’t have to repeat the arguments that have been made in opposition to this tax, but given the climate that these businesses are currently having to operate in, it surely should be apparent to Welsh Government that now is not the time to be burdening businesses with yet more taxes, when the sector is facing ever-increasing challenges. Sarah Murphy asked for an international perspective. Well, we know that Venice has introduced a tourism tax specifically to suppress the number of tourists entering Venice, rather than add to the numbers. So, it's unbelievable that a replication of the Venice model seems to be the Welsh Government's preferred option here. 

Finally, Llywydd, recommendation 11 says that,

'The Welsh Government should set out in detail the intended approach to consulting on the draft legislation for a proposed local tourism levy'.

While I appreciate that the consultation is still live—and I'll take this opportunity to encourage all those in the sector to have their say—what I would have liked to have seen from Welsh Government on this is more engagement with the sector as, again, I've repeatedly tried to bring the voice of the industry to this Chamber, and they tell me, time and time again, that they feel punished by this Welsh Government. Let's not forget that these are the businesses that already invest in their communities through the local supply chains, employing local people and reinvesting that money in their communities. An additional taxation jeopardises further investment in communities across Wales. Those within the tourism sector are clear, and they keep telling me that morale within the industry is at an all-time low, and it is as a direct result of the Welsh Government's actions in this area that specifically target their industry. And so, Vikki Howells's contribution earlier saying that they're all naysayers is really disappointing in that context as well. Therefore, I hope, in consideration of the report, the Welsh Government sees this as the time to get behind the tourism industry, back our local communities and safeguard the one in seven jobs that rely on it thriving. 

Could I also thank the Economy, Trade and Rural Affairs Committee, under, of course, the fantastic chairmanship of Paul Davies, for bringing forward today's important committee report, 'Raising the Bar: Securing the future of Hospitality, Tourism and Retail'. I quite like that title, actually—'Raising the Bar'. As I'm sure that Members from across the Chamber will know, and from contributions from myself in the Senedd over the last 18 months, and especially as the chairman of the Senedd's cross-party-group on tourism, I'm a huge advocate of the hospitality and tourism sector in Wales, and that's why I want to contribute to today's committee report debate—something which Alun Davies often comments to me on, about my advocacy of the sector, and I'm pleased that he's mentioning it again over there—because this report clearly highlights the sheer importance of the sector, but it also outlines many of the challenges it faces as well. 

I'd like to just focus my contribution on just a couple of important areas from the report, and firstly, just to again highlight the importance of the sector in our economy in Wales. As always, one to take note of output from the Federation of Small Businesses, I took a keen interest in their report over the summer on tourism that, again, showed that tourism accounts for over 17 per cent of Wales's gross domestic product, but it also accounts for over 12 per cent of employment here in Wales. As others have mentioned, if you include hospitality and retail within that, we're talking about a third of the economy here in Wales, clearly showing how important it is to our communities and to the residents we represent up and down Wales. This was also outlined in the Chair's foreword to the committee report, which I'll directly quote, saying that, 

'The hospitality, tourism and retail sectors are absolutely vital to our nation’s success. Alongside the large numbers of jobs they create they also provide the backbone of the entertainment and social life people in Wales, and our visitors, enjoy, and that make Wales an outstanding place to live or visit.'

But there are, of course, challenges facing the sector, and others have already highlighted some of those here this afternoon. As we know, the Welsh Government's proposed tourism tax is of huge concern to the tourism sector, and that's why I, like others, was glad to see the consideration of this as a part of a number of the committee's recommendations to the Welsh Government and, indeed, to the Minister. As outlined in recommendations 9, 10 and 11, it's crucial that Welsh Government sets out its evidence behind a tourism tax, but also shares their research projects behind this, and sets out their intended approach when it comes to this draft legislation.

If a tourism tax is to be introduced, it's vital that councils are able to spend this not only sustaining tourism in their local area, but also to see it being boosted. And I believe that it's also very important, in terms of making this as effective as possible, that there are mechanisms in place to include businesses and their voice in the decision-making process of how this new revenue spend will take place in their areas. 

Another concern that's been passed through to me as the chair of the tourism cross-party group is the ongoing worries that the tourism sector, and in particular, the self-catering sector, regarding the 182-day rule, which has already been referenced here today, and referenced in recommendation 8 of the report. And as has been mentioned by others, this is part of a long list of Government-enforced changes to the sector, which is causing a significant amount of anxiety for many business owners and tourism attractions across Wales. And this is why it's so important that if, on the one hand, more is expected of the sector in terms of legislation and compliance, then, on the other hand, more should be offered to the sector in terms of support and advocacy. And that is why I welcome recommendation 7 in the report, which is seeking to clearly show where this support is provided and focused so that the sector can have the assurance that it's treated with the level of respect and importance that it deserves. 

And this leads into my final comments relating to the need for support for the sector and clarity as to what the future may hold, which is extremely important, following difficulties faced during the COVID-19 pandemic and now with the pressures that global inflation is providing as well. And indeed, this support needs to be there in terms of the financial, but, in softer support, in terms of advocacy and highlighting the opportunities the sector holds for Wales and for our communities, I know the Minister will want to make sure that those opportunities are highlighted and will always want to speak well of the sector as well. 

Because, indeed, as outlined by UKHospitality Cymru, before COVID-19, the hospitality and tourism sector was growing around 10 per cent a year, creating hundreds of new jobs for local people up and down Wales. And it's clear from the committee's evidence from UKHospitality Cymru that both Welsh and UK Governments have provided some good support to the sector over the COVID-19 pandemic. So, the Minister's announcement of reassessment of the principles behind business rates is also welcomed in this continued spirit of support.

I'm conscious of time, Deputy Presiding Officer, so I just want to thank, again, the committee for bringing forward the report and the recommendations in it, and the Minister for listening to the committee and I'm looking forward to seeing how those pan out over the coming months.

There is much to welcome in this report and I'd like to thank the committee and its members, led by my colleague Paul Davies, for their work on producing this fantastic report.

As the report points out, there were fearful predictions of mass unemployment during the pandemic, but, thanks to the UK Government's furlough scheme, mass unemployment was avoided in Wales due to the UK Government. I am pleased also that the Minister has accepted recommendations in the report, yet there are still tough times ahead for our hospitality, tourism and retail sector, especially in Brecon and Radnorshire, which relies on this an awful lot.

We are in the midst of global difficulties and the long shadow of COVID is still upon us, but I do think there are two big things that the Welsh Government could do to help Welsh businesses. On reading the report, it was very clear that the tourism levy discussed by the Welsh Government was a big concern for industry bodies and professionals. So, one thing the Welsh Government could do is to ditch the tourism tax and any other anti-business measures aimed at the tourism sector. Our tourism businesses bring in huge amounts of money into Wales, with one in seven jobs that rely on that industry. So, I'd urge the Welsh Government to stop assaulting hard-working people up and down the country who seek to make Wales an attractive destination with their hotels, B&Bs and cottages. 

Business rates were also raised in the report. And a lot of people say that they are very regressive in Wales and that things could be done differently here to attract business and help business. So, you could lower business rates in Wales. Labour-run, here in Wales, has the highest business rates in the whole of Great Britain. This does make us less competitive. Tax burdens on businesses are too high and Welsh businesses should be able to keep more of their own money to spend on wages and business improvement. [Interruption.] I'm sure Alun Davies will like this point; he's chuntering away there. But I do understand and I do recognise that the Welsh Government do not have all the levers to help people in Wales. And I was very disappointed with the UK Government's reversal on freezing alcohol duty. That was going to save the hospitality and pub industry £300 million. And I think at a time when our pubs are closing—40 are closing a month in England and Wales—that the UK Government should do more to protect our pub industry. And I would like to hear what the Minister is doing in discussions with the UK Government to actually save our pubs, because they are the life blood of our community.

Hospitality and tourism businesses really do need a friend, and they do need a leg-up from this Welsh Labour Government and the UK Conservative Government. They don't need to be undermined at a time when they face the possibility of going out of business. So, I'd like to welcome the report and thank you for all the work the committee has done, and I'd be grateful to hear the Minister's response.

And I call on the Minister for Economy, Vaughan Gething.

Thank you, Dirprwy Lywydd, and I too would like to thank members of the Economy, Trade, and Rural Affairs Committee for their in-depth inquiry and report into the future of hospitality, tourism and retail, leading to this debate today.

As we all know, the experience of recent years has been a significant challenge for most businesses in most sectors here in Wales, including, of course, the hospitality, tourism and retail sectors. Now, I won't follow Luke Fletcher in recounting some of my own personal experiences working in the hospitality sector, but I do recognise that not everyone that I dealt with was kind or decent. And actually, we've seen that trend, unfortunately, increase; it's been mentioned by a number of Members, especially given the significant labour shortages that exist in lots of these sectors and, indeed, more broadly. And I'm regularly reminded that whilst, at the moment, most of the world is short-staffed, please be kind and decent to the people who've showed up, and that's really important for the kind of atmosphere we want to create for working people in this and every other sector.

Now, during and since the pandemic, this Government has worked relentlessly to try and support businesses impacted, not just the support that's been provided by the UK Government in furlough—and it was, I think, one of the better measures the UK Government introduced during the pandemic, and I certainly welcomed it—but also the Welsh Government then provided the economic resilience fund and, indeed, additional business rates relief, and that has made a difference in those businesses that have survived and actually managed to end the pandemic in relatively optimistic shape. But, of course, our economy faces significant short- and long-term challenges: the current cost-of-living crisis, increased energy costs, and, of course, skill and recruitment shortages that have not gone away. I do fully recognise the scale and the number of challenges facing businesses. I understand why people who lead, manage and work in those businesses are concerned, and the Welsh Government is in no doubt about the gravity of the situation. We need to recover both from the economic damage of the pandemic, the fact that many businesses are now cash-depleted in having survived; we need to address the realities of our new trading relationships post Brexit and the impact that has on many businesses in these sectors, and, of course, the cost-of-living and the cost-of-business crisis.

So, our renewed economic mission that I published last year sets out clearly the values and priorities that will shape the choices that I will make to support the future of our economy. But, Dirprwy Lywydd, we've already heard from a number of speakers the impact of the turmoil in Westminster and what that has done to the broader economic picture, and, frankly, the relationships we're able to have with the UK Government with so many ministerial changes. And I don't think I can open this debate today without acknowledging the extraordinary challenge that the last two months in particular has created for businesses and, indeed, as Vikki Howells recognised, the fact—and it's an undeniable fact—that the value of the Welsh Government budget, in this spending review period, has decreased by about £4 billion in real terms. And Vikki Howells also recognised that significant worsening in the economic picture since the report was completed, and that's an undeniable reality. It will change the focus of businesses; it will change the ability of this Government and others to support businesses not just to survive but to thrive in the future.

The challenges of customers having less disposable income are especially felt within these sectors. The challenges of working people coming in, and, again, the Union of Shop, Distributive and Allied Workers' report has been recognised—the impact on workers not just of having less money in their own pay packets, but the impact again on customers coming in. And I certainly would welcome a future inquiry from this committee on looking at the shifting economic picture, and, when the UK Government has finalised some more of its opportunities and the choices not just in the budget, but the future energy support scheme, what that will mean for sectors in the economy moving forwards in the future. And that certainly would help to inform choices that the Welsh Government needs to make here in Wales.

Now, I recognise that recent UK Government budget announcements have provided some support. The energy bill relief scheme that was announced in September provides some short-term relief for businesses, but there is a need, which I'm sure is recognised on a cross-party basis, for a longer term view for businesses to be able to plan. You can't plan to make choices over the next year if you're only certain of an element of support that will end in March, and also not just the clarity in what will happen after that, but when that clarity will be provided. And as I say, I'm sure there will be cross-party recognition of the need for not just clarity on what the future is, but actually for the discounts to be passed on swiftly to businesses to make sure they can survive to look forward to the new year. We also, of course, need to understand what will happen on 17 November. The reality of those choices won't just affect public services; they'll affect what we're able to do to support the economy, they'll affect customers, they'll affect workers, they'll affect businesses and jobs.

But, of course, when I look forward to our ability to support businesses, we regularly discuss these matters with businesses themselves. The visitor economy forum regularly meets; I'm due to meet them in the coming weeks. I'm due to meet more individual businesses not just with regard to the immediate challenges, but, immediately after 17 November, we'll be meeting again. We had a recent economic summit, again to listen to sectors across the economy and then to try to tailor our response and to have that honest conversation. What is different, of course, about Wales is that we do that in a spirit of social partnership, with our trade union representatives. In fact, yesterday, I met with the retail sector to take forward the vision that has been co-produced by the Government, businesses and trade unions, led by our colleagues in USDAW, and to look at the delivery plan to understand what, collectively, we can do together to maintain that sector and to see it have a decent future, with decent work as well as decent services that are valued in each of our communities. So, I continue to not just want to see a thriving group of businesses within the sectors we're discussing today, but how we can do that within the reality of the context. Our ambition remains, for example, in tourism, to grow the sector for the good of Wales. That means economic growth that delivers benefits for people and places, including environmental sustainability, social and cultural enrichment, and the health benefits that come from good work.

I think, turning to the committee's recommendations, it's pleasing to hear a broad welcome for the Government's response to the recommendations and how we will look to work alongside those and, of course, provide an update to the committee in due course of the progress we're making against those recommendations. 

In terms of some of our response on business rates, of course, with recommendations 1 and 2, we're providing that additional £116 million package. That will be available until the end of the financial year. However, we do need to see the realities of what is going to come in the budget on 17 November and whether there is a future fiscal event in the spring as well. But there is a consultation seeking views on reforming non-domestic rates, and that will be open until 14 December, and I'd encourage people to get involved in that consultation. 

On capital investment, Visit Wales, of course, provides capital investment to support businesses operating in tourism and hospitality, with three particular channels: that's the Wales tourism investment fund of £50 million; the £2.5 million strategic capital investment; and, of course, the annual Brilliant Basics programme.

On recommendation 8, we have recently made changes to self-catering thresholds. These are designed to incentivise the use of properties and help bring empty and under-used properties back into use. If a property is not operated as a business, it will be liable for council tax.

With regards to recommendations 9 and 10, we're consulting on giving local authorities the power to introduce a visitor levy, and a full consultation started on 20 September. It's pleasing to hear not just one side of this debate, but Sarah Murphy, obviously, outlining different views within her own constituency and international evidence of this. I appreciate some contributors would like to see this Government join others in having regular u-turns and avoiding commitments in their manifesto, but we're determined to do what we told the people of Wales we would do in designing, delivering and consulting on a levy.

I can see time is nearly against me, but I just want to finish—

The time has actually gone past the limit.

I just want to finish by making it clear to members of the committee that we have taken seriously the report that we've been provided, we will update on progress on the recommendations, and I look forward to further work with this committee through the rest of the term.

I call on the Chair of the committee, Paul Davies, to reply to the debate.

Diolch, Dirprwy Lywydd. Can I thank Members for taking part in this debate this afternoon? Members have all touched on how the retail, tourism and hospitality industries sit at the heart of all of our communities, and that's why it's so important that the Welsh Government really understands and responds to the challenges facing these sectors. 

Implementing the right policies at the right time cannot be understated; indeed, it's vital for Wales's economy and liveability. We all want our towns and cities to be thriving, vibrant, community places, and supporting these sectors is an enormous part of building those thriving community networks here in Wales. Now, as the Member for Carmarthen West and South Pembrokeshire said, and the Member for North Wales said, many of our businesses in our constituencies and regions are key employers in the hospitality, tourism and retail sectors.

Members, such as Luke Fletcher and Tom Giffard, the Members for South Wales West, the Member for Bridgend, the Member for Brecon and Radnorshire and indeed the Minister have all touched on the pandemic and the economic impacts of it on our retail, hospitality and tourism sectors. It was an economic shock for which no industry was prepared, and we should take a moment to reflect on the resilience and hard work of those working in hospitality, tourism and retail for what must have been an extremely difficult time. Of course, helping these sectors recover from the pandemic and evolve to new ways of working is a big challenge, but the Welsh Government also has a great opportunity, I think, to rethink how it works with these sectors going forward. These industries are facing challenges from all angles, whether it's taxation policies, shifts to online commerce, or even just the loss of confidence in young people to apply for roles. Arwyn Watkins from the National Training Federation Wales was right to say,

'If the number of jobs that have been lost in this sector over the last 24 months had been lost in any other sector, there would be absolute uproar, quite frankly, and nobody is saying anything about it whatsoever, apart from the employers trying to fill the vacancies.'

And, therefore, the message is pretty simple; the Welsh Government, of course, needs to raise the bar and better prioritise these industries and the people who work in them.

Members, such as the Member for Bridgend, have rightly talked about improving skills, which will help create better jobs and benefit these sectors and our economy more generally. And it's why the committee has specifically recommended that the Welsh Government should set out more detail as to where it sees scope within its planned expansion of the apprenticeships programme for higher level career pathways in tourism and hospitality, including for degree apprenticeships.

Members such as the Member for Cynon Valley have also highlighted the importance of fair work, and I think we all accept that there are real opportunities for fair work to be progressed through the new retail strategy and visitor economy action plan. The committee is also calling for greater clarity around the role of the Welsh Government's economic contract in driving fair work outcomes, and I look forward to hearing more from the Welsh Government about the progress being made in this area.

Dirprwy Lywydd, our report is called 'Raising the bar' because that's exactly what the Welsh Government needs to be doing. As Luke Fletcher said, the Government has accepted or accepted in principle the committee's recommendations, but what we want to see now is the implementation of those very recommendations. Raising the level of ambition for these sectors is vital and will help raise the quality of life of our citizens and visitors.

So, we've heard some really interesting contributions from Members today, and a constructive response from the Minister, and I want to make it clear this afternoon, as the Member for Cynon Valley said, that this will continue to be an area of priority for the Economy, Trade, and Rural Affairs Committee. I want to reassure the Minister that the committee will continue to focus on this area going forward, especially given that financial challenges have increased for these sectors since the publication of our report.

So, in closing, Dirprwy Lywydd, can I thank those who contributed to the debate this afternoon and say that the committee looks forward to being updated on the progress of the implementation of our recommendations in due course? Diolch yn fawr.

The proposal is to note the committee's report. Does any Member object? No. The motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.