Labour’s job tax and a lack of support for SMEs is damaging our coastal communities

Small, independent businesses are the backbone of our economy. In my constituency of Isle of Wight East, a coastal community of 67,000 residents, the hospitality and tourism sector provides employment to a large proportion of the local population, second only to health and social care.

Visitors and tourism operators contribute over half a billion pounds a year to the Isle of Wight, equating to 38% of the Island’s overall economy the largest economic driver for the Island. With 1,541,550 people visiting the Island in the first three quarters of 2025, discovering the Island’s glorious beaches, exploring the beautiful countryside and visiting the wide range of tourist attractions, it is easy to understand why this sector is so important.

Employing 7,000 Islanders in 2024, the tourism sector is the first experience many Islanders have of the world of work. It offers young people a flexible route into employment, with the option of zero-hour contracts and flexible timings, giving those who are studying, have caring responsibilities or health conditions, a chance to earn a wage. The flexibility which hospitality offers is not on offer in many other lines of work.

However, opportunities for young people are becoming more and more limited, thanks in no small part to the challenges these businesses are facing. It is not difficult to see why jobs are in short supply with businesses facing hikes in National Insurance, sharp increases in energy bills and business rates; and now the additional burden of a proposed overnight visitor levy.

For an Island so reliant on tourism, the effects are devastating with businesses closing, reducing their opening hours and not recruiting staff in an effort to balance the books. This is a trend being seen across the UK.

Additionally, for hospitality, the cost of electric and gas – such as running a kitchen, heating a hotel – are non-negotiables and usage can be difficult to control. The cost of these energy bills continue to rise at an alarming rate – how are small businesses expected to cover these
increases?

The Government has recently announced plans to introduce the overnight visitor levy, an additional £1.6bn tax which is highly unpopular amongst many – understandably so – and puts 33,000 hospitality jobs at risk. At a time when businesses are struggling to stay afloat, additional costs being imposed is simply wrong.

The traditional British pub – once upon a time the one certainty in towns and villages across the country – is also being hit. A vital meeting point, the centre of a community, a way to prevent isolation and loneliness – but alarmingly, two are closing each day. The impact of pub closures will be felt widely and long-term.


The additional challenge for the Isle of Wight is the seasonality of the tourism market. Like other seaside areas, businesses on the Island have to maximise the opportunity when it arises. The bills still come in, even during the quieter months, when the tourists have left and the beaches are quiet. What support is in place to help these businesses stay afloat?

Under the last Government, the Coastal Communities Fund delivered £229m to 396 projects, creating nearly 2,700 direct jobs and supporting 6,700 businesses. That fund no longer exists, and there is no specific equivalent. The Government is investing in deprived communities, but coastal communities have particular, well-documented characteristics that generic funds don’t reach.

There are three more appropriate immediate actions which I believe could be taken. Firstly, scrap the overnight visitor levy, or at the very least pause it, until its economic impact on seasonal coastal businesses has been properly assessed. Secondly, deliver the business rates relief that is already on the statute book and introduce a National Insurance holiday for businesses employing young people and those who are NEET (Not in Education, Employment, or Training). Thirdly, scrap business rates for thousands of hospitality businesses up and down the country permanently.

Tourism and hospitality should be brought into the Industrial Strategy because excluding it was a mistake that the sector cannot afford. We need to take proactive steps now, to prevent the decline of our coastal resorts, that for so many are a vital part of the fabric of British life, whether that’s through enjoying a day at the beach, visiting a pub for lunch, or staying overnight in a hotel. The Government need to step up and support our local small businesses, in order for our coastal regions to thrive.