Tourism — Debate

Part of the debate – in the House of Lords at 3:16 pm on 22 January 2009.

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Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson for Culture, Media and Sport 3:16, 22 January 2009

My Lords, I am delighted that my noble friend Lord Glasgow took the opportunity to raise the future of tourism in his well informed and elegant speech opening this debate. He raised some important points about the nature and potential of British tourism and the huge benefit it brings. Many other well informed noble Lords, including many of my noble friends, made important and powerful contributions, including some on leisure and recreation. I hope those reading Hansard after this debate will have their appetite whetted for some of our beauty spots. They may even hope to catch sight of my noble friend Lord Greaves in his cycling gear as he goes swiftly up Pendle hill.

I join my noble friend Lord Lee in welcoming the Minister to his first tourism debate. It is a subject that many of us feel passionate about, despite its somewhat Cinderella status within government. I am pleased to debate with the Minister for the first time. My noble friend alluded to the achievement of my noble friend Lord Rodgers, who pushed through the Bill in 1969 that set up the original national tourist boards. That is a significant 40th anniversary that we should be celebrating. We should be building on that achievement with our debate today and government action, which I certainly hope is in the offing.

In the debate on the Queen's Speech in December, I argued that the Government urgently need in their policies to better reflect the value of tourism and travel to the British economy. In particular, I argued strongly against the drastic government cuts to the budget of VisitBritain and for tourism promotion, which have led to a reduction in staff numbers by VisitBritain of 120 over the past few years and will lead to the loss of a further 90 posts in future. Since then, I am glad to say that the executive summary of the framework review was published in January, as mentioned by my noble friend Lord Lee. It relies on an important piece of work by Deloitte's on the economic case for the visitor economy.

The Deloitte's report confirms that tourism as an industry is more important than even advocates such as me had thought. As mentioned by other noble Lords, measured by conventional accounting, tourism is the UK's fifth-largest industry and is currently worth almost £52 billion to the economy. 1.3 million jobs are sustained by tourism activity in the UK and it employs more people than are employed by construction or transport. Deloitte's, using what is called tourism satellite accounting, which has been developed over recent years by the World Travel & Tourism Council and Oxford Economics, makes the argument that the tourism economy has an even greater significance. This takes into account the impact on other sectors, such as suppliers, retailers and manufacturers.

On that basis, with direct and indirect economic impact, it represents about 8.2 per cent of the UK economy. Deloitte's points out that tourism is a very important source of enterprise and business formation. It makes a great contribution to sustainable development in coastal and rural areas and to regeneration in urban areas.

However, there are some very worrying indicators, some of which have been mentioned by noble Lords. The UK's share of world tourism has declined in recent years, and the country has slipped from being the fifth-highest earner in the world from tourism in 2005 to sixth now. The tourism deficit now stands at £20 billion. Domestic tourism is also declining. Spending by UK residents has fallen by almost £5 billion since 2000. The latest figures, issued last September, show that inbound tourism has dropped heavily, particularly from North America. My noble friend Lord Glasgow mentioned that the forecasts by the World Travel & Tourism Council for UK tourism are also very gloomy.

Deloitte's says that as a result of the impending recession, growth in expenditure could slow by between 3.4 per cent and 4.7 per cent, equivalent to £11 billion, and that 114,000 jobs could be at risk. The Deloitte's report demonstrated some worrying longer-term barriers to development: transport difficulties; poor information for customers; lack of marketing; a skills gap; visa costs and availability. Yet, even in the face of those barriers, Deloitte's still stated that it believes that the tourism economy could, over the next few years, grow to £188 billion-worth of GDP.

The framework review—as yet published only as an executive summary—as well as arguing for a full agency to promote English tourism, makes a powerful case for more government support to take the opportunity of a falling pound and to guard against a severe recession that could affect 114,000 jobs and to take full opportunity of the 2012 London Olympic Games.

The Government seem to hope that the tourism industry will be worth £100 billion by 2012, and anticipate that the London Olympics will provide a major boost to the sector. This target will be much harder to achieve given the global economic crisis. The framework review makes the case that we cannot successfully promote the UK as a tourist destination in the run-up to the 2012 Olympics without addition to VisitBritain's promotional budget.

Small and medium-sized companies, which the Government claim to be keen to help through this recession, make up to more than 90 per cent of the tourism sector. They are, in the main, dynamic and entrepreneurial but, as the Deloitte's report makes clear, government support is needed. The industry is fragmented and the free rider effect means that there is little incentive for smaller businesses to contribute to promotional costs. As was pointed out by my noble friends and the noble Lord, Lord Inglewood, there is also a credit crunch in the sector.

Will the Government at last acknowledge that the budget for VisitBritain's activities must be increased if this vital sector of the economy and small businesses within it is to survive and prosper? Will they heed the warnings from those such as the noble Lord, Lord Inglewood, about access to credit? The framework review has demonstrated that there are few further economies to be made through structural changes to tourism promotion. What is the Government's response to the review? Do they acknowledge the importance of the industry? At the very least, it is the fifth-largest UK industry and, as the Deloitte's report shows, it contributes directly and indirectly to 8 per cent of GDP. Do they even understand the multiplier effect on other parts of the economy mentioned in the review? The noble Baroness, Lady Valentine, was eloquent about London and the multiplier effect. The recent national tourism summit was held in Liverpool, the site of the fantastic 2008 city of culture year, which has now become a real tourism magnet in the north-west. Liverpool is also an example of the multiplier effect. From the minimal VisitBritain promotional budget of £45,000, it managed to generate some 3.5 million first-time visitors and £176 million in additional local economy spend.

The estimate in the tourism industry is that the multiplier effect is even greater than 15:1; it is that there is a 40:1—yes, 40:1—return on promotional expenditure on tourism. That has now been endorsed by the Treasury. What possible excuse can there be for hanging back?

Do the Government understand that the fragmentation of the industry and the free-rider effect mean that they need to play an active enabling role? Do they understand the case that the review is making for much better co-ordination of action between national tourist boards, the anomalous position of England and much better policy co-ordination on tourism matters between the nations? I hope that the Minister will make the Government's view crystal clear.

My noble friends have asked a number of questions and I hope that the Minister will answer them. Specifically, in this context, will the Government support, first, a stand-alone national tourist board for England that is separate from VisitBritain, with a separate corporate body? Secondly, will they create a cross-national ministerial working group of UK Tourism Ministers to address reserved matters affecting tourism—for example, visas, taxes and immigration policy? Thirdly, will they create, at the very least, a cross-Whitehall policy working group on tourism? What are the Government's intentions towards a tourism advisory council? We on these Benches would prefer something more powerful than a Whitehall policy working group; we would like a powerful Cabinet committee, which the noble Lord, Lord Pendry, mentioned. Fourthly, will they reappraise the budget needed by VisitBritain in light of the review, particularly for tourism promotion, especially when compared with others, such as Turkey, Spain and Greece? The Government have put more money through the recent Comprehensive Spending Review into heritage, museums and the arts, but the one thing that could ensure greater audiences and visitors in all these areas—tourism promotion—has been cut back. Where is the logic in that?

Fifthly, will the Government agree the very sensible and reasonable suggestion that they join in the public-private promotional "value Britain" campaign, which is designed to ensure the growth and development of the UK tourism industry and take advantage of the lower pound? Sixthly, will they heed the warnings about the need to fund fully the 2012 tourism strategy to promote Britain as a destination and ensure that the legacy tourism opportunities are taken?

In addition to greater marketing and promotion, we need to examine other measures to encourage visitors to the UK, such as the competitive disadvantage suffered by the industry because of VAT on visitor accommodation. The cost and availability of visas is another matter that needs examination. The Home Office seems to have absolutely no concept of the knock-on effects of the cost of visas on tourism.

It was disappointing that the heritage protection Bill was not included in the Queen's Speech, for the very reason that it is so important to our tourism industry. There is no room for complacency in the British tourism industry, as my noble friends Lord Bradshaw and Lord Addington made clear. We do not need to copy the last Tourism Minister, Margaret Hodge, who went out of her way to criticise the tourism industry, but there is no doubt that many aspects of what the British offer need improving. The delays experienced by delegates, including foreign government Tourism Ministers, when travelling to the World Travel Market at ExCeL were inexcusable. We also need all hotels to take part in a national classification system.

This Government have taken the British tourism industry for granted for far too long, but there is huge potential. Britain has the fourth-strongest tourism brand in the world. The Government need to recognise its current contribution, its greater future potential contribution to the economy and the dangers of government inaction as we head into recession. We need a real change of heart from the Government towards tourism. I look forward to the Minister's reply.