Tourism and Hospitality

Earl of Caithness Excerpts

Thursday 12th June 2014 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, we are all grateful to the noble Lord, Lord Harrison, for introducing this debate on tourism. I thank him in particular for the way in which he has worded its title because it deals with tourism in the UK and the EU. For those of us who have interests in Scotland, to have a debate in this House where we can include Scotland is getting increasingly rare, and this is a good opportunity to do so.

The noble Lord spent the first part of his speech in what I call a heavyweight approach to tourism. I will conclude mine with such an approach, but I shall start on a more lightweight and parochial note and declare my interests. I am a trustee of the Queen Elizabeth Castle of Mey Trust; I am chief executive and trustee of the Clan Sinclair Trust, which is a heritage charity in the north of Scotland; and I have been and still am heavily involved in ancestral tourism.

I start with the Castle of Mey. The noble Lord said that tourism is all about employment, and of course it is. At the castle we employ 50 staff during the summer months and we have six full-time staff who are employed all year. We have had 250,000 visitors through our doors since we opened in 2002. One has only to think of the knock-on effects that were not there before on B&Bs, hotels and campsites from those visitors to realise their importance. In our shop we use local produce whenever we can, and by employing local people, even part-time, we are keeping money in the local area—in the local pot—which is one of the huge advantages of tourism.

Like other tourist attractions, we are seeking to diversify. We are introducing high-quality expensive stays at the Castle of Mey. This is an area that is hugely important in Britain. We are in an international competitive market and unless we can produce high-quality products that people want to come to, they will go to the rest of the world. We have no divine right that means they will automatically come here.

We are also having an annual exhibition at Mey. This year we, like many others, are commemorating the First World War. That is highly appropriate at Mey. Queen Elizabeth the Queen Mother’s brother was killed at Loos in 1915, and she lost two of her cousins. Part of the exhibition is devoted to her family connections with the war.

The Castle of Mey is a five-star visitor attraction. In order to attain that, a mystery visitor comes to the castle unannounced, does his or her report and the stars are awarded. It is nothing to do with the Castle of Mey, but a friend of mine did a mystery visit to Historic Scotland in Inverness. VisitScotland has done very well under the Scottish Government, but it is very much oriented towards the central belt. My friend went into the tourist office in Inverness and asked for visitor attractions north of Inverness. There are two five-star visitor actions in Caithness: the Castle of Mey and Caithness Horizons, but the member of staff could not think of any visitor attraction north of Inverness. There is a two-and-a-half-hour drive up to the north coast, and there are lots of visitor attractions on the way, but the member of staff failed miserably. Historic Scotland has kindly given us five stars at Mey, but I would give VisitScotland no stars at all on a local basis. It makes life very much more difficult.

Part of the problem is that tourist attractions and hospitality tend to be on the small scale: 80% of tourism and hospitality businesses employ fewer than 10 people. That makes it very hard to get recognised. It also means that one tends to have poor cash flows. One tends to rely on volunteers and, in an increasingly digital age, that makes it harder to keep up to date. It also makes it hard to fill in the endless funding application forms, which are increasingly difficult to fill in, and puts smaller businesses at a disadvantage.

My research in Northumberland backed my view of that experience in Caithness: we do not have the right infrastructure for tourism on the ground. There is no overall group enthusing and co-ordinating these small businesses and making them fulfil their potential. We have VisitScotland, VisitEngland and local authorities but, as the noble Lord, Lord Harrison, said, politicians do not get tourism. They are not working together, and the present structure is not as good as it should be.

Let me give another example from Scotland. In the Year of Homecoming in 2009 I was involved with the Gathering in Edinburgh. It is true that the company was a private enterprise and lost money and some businesses in Scotland lost a little money. That was very sad, but when you think of the overall effect, the Gathering brought more than £10 million to the Scottish economy. The ROI on public funding was more than 20 to one. It was a tragedy that there was not a way between the private sector, the Scottish Government and Edinburgh City Council to make certain that local people who lost money were reimbursed because with another homecoming this year, we could have had a bigger and better gathering. The 2009 homecoming brought thousands of the diaspora to Scotland for the first time. We could have done more in a bigger and better way, but we could not get central and local government in Scotland to work together properly with the private sector in a manner that could be trusted and would work well.

My research in Northumberland reveals exactly the same problem. Why is this? Northumberland has a huge amount to offer, with lots of opportunities for future tourism. In 2016, Kirkhale is commemorating the 300th anniversary of the birth of Capability Brown. If Northumberland got its act together, that could be a wonderful way to bring more tourism, which has declined since the financial crash of 2008 and has not recovered to its previous levels. There is still a lot to be done.

I therefore ask my noble friend the Minister whether the Government think that the present system is working well. If it is not, what can they do to improve it? Or does the Minister think that the Government ought to step back from tourism and say, “Okay, we have one foot in tourism, but the other foot is hanging around outside. Would it not be a good idea to get rid of the Minister for Tourism and pass the whole thing over to the private sector with a little bit of funding? Yes, we will pump-prime certain organisations, which will be the umbrella organisations that you are all demanding. This will be the new system, which works, and we, as the Government, will get out of it and let you, the private sector, which knows about business, get on with it rather than being half in and half out”?

I now turn to a more heavyweight and less parochial view of tourism, and follow the lead given by the noble Lord, Lord Harrison. It is important that tourism is based on stability and safety. There is little tourism in Crimea and Iraq—but there is a lot of tourism in Europe. We are extremely fortunate that we are part of a union that has been relatively stable, except for the odd occasion, since 1945. That is the basis of a successful tourism industry. We must not jeopardise that.

The noble Lord, Lord Harrison, rightly mentioned the question of visas. If a visitor gets a visa for the Schengen area, they have the right to go to 25 different countries. However, there is a barrier in coming to the UK and we must not forget that that barrier could become much worse on 18 September if the Scots vote for independence. Barriers and borders are completely anathema to tourism. Tourists do not like borders. If we are to have a border across the middle of the mainland of the United Kingdom, it will jeopardise tourism both north and south of that line. Everybody in the north of England should be aware of the consequences of having a border. I saw an extremely good television programme recently about the “middle land” of Britain, and how this community was divided by Hadrian’s Wall once upon a time, and could now be divided again. That would not be good for tourism.

Does my noble friend consider that PricewaterhouseCoopers’s thoughts and recent research on air passenger duty are correct? If air passenger duty produces £2.8 billion per annum for the Government, is that a better way of getting money than getting rid of APD, which PWC says would boost the economy by £16 billion in the first three years? Not only that, it would create 60,000 new jobs in the UK and an additional £500 million in increased revenue from other taxation. Talking about taxation in the round—as a former Treasury Minister I understand that that is hugely important for central government—why have one tax that seems to raise a bit of money, whereas abolishing it could raise a whole lot more? It is less obvious, but that is surely to the benefit of the country, which is what we are talking about.

I also support the noble Lord, Lord Harrison, on the question of VAT. It is strange that France and Germany have VAT on tourism at 7%, while ours is at 20%. If you run a small tourist business, that 20% will be very damaging to the cash flow. Fortunately, the trust of which I am a member is a charity, but if it was a pure business—if it was a hotel—that would make a huge difference to its profitability, and to the future of tourism.

Surely we need more people to come to this country, so we need to make it as competitive as possible. Will my noble friend say what the Government’s thoughts are on getting rid of those barriers that both the noble Lord, Lord Harrison, and I have raised? I am sure that other noble Lords will raise it, too. How will we make the country more attractive, particularly for the high-end visitor? That kind of person will spend a vast amount of money, and he or she needs to be attracted. If that person has to pay more for a visa here, they will not come. Tourism is growth and the economy—let us back it.