Economy: Growth

Baroness Liddell of Coatdyke Excerpts

Thursday 21st June 2012 Lords Chamber

[Baroness Liddell of Coatdyke]

My Lords, I too, congratulate the noble Baroness, Lady Kramer, on obtaining this debate. It comes at an opportune time to allow us to explore a number of issues connected with Britain’s economic growth. She was right to draw attention to how many of us have spent most of this afternoon listening to Aung San Suu Kyi. That brings home to us, at the fag end of the parliamentary week, as we are back into humdrum work here in your Lordships’ Chamber, how much she would have valued the opportunity to have the democratic exchanges that take place within this Chamber.

I do not share the noble Baroness’s analysis of the global financial crisis. She seems to have forgotten that in 2010, the coalition Government inherited a situation where we were beginning to move into growth. Two years in, we are into a double-dip recession. However, I will not be hijacked down that route, because I want to take up a number of the issues raised by the noble Lords, Lord Clement-Jones and Lord Bates, in their excellent speeches.

I want to talk about an industry that employs 2.6 million people directly in 200,000 SMEs and contributes £115 billion a year to the UK, almost 9% of our GDP: the tourism industry. As the noble Lord, Lord Clement-Jones, pointed out, it is the third highest earner of foreign currency. It comes just behind chemicals and the financial services industry. One reason why I am interested in tourism—I should point out that I have a registered interest as a non-executive director of VisitBritain—is that I have had a lifelong interest in the regeneration of remote communities.

Tourism can get into the parts of the country that the rest of economic policy cannot reach. The impact of growth in tourism in turning round those economies is considerable. One benefit of tourism is that it can move fast. I saw it very dramatically a decade ago, at the height of foot and mouth disease, when, as the Secretary of State for Scotland, I saw that the rural areas of Scotland, particularly around the borders, were dramatically affected but the rest of Scotland was open for business. The tourism industry, under the excellent leadership at the time of Prince Philip, the Duke of Edinburgh, took the initiative to bring tourism to Britain. As a consequence, a catastrophe for the industry was averted. No other industry can move at that pace. I cannot think of any other industry that can address an economic crisis as rapidly. Too often, government policy has marginalised tourism. I welcome the references to it in the Government’s growth strategy; I just regret that the growth strategy came rather late in the day and has ignored 100 years of economic theory on how to grow yourself out of recession.

DCMS does a very good job of championing tourism, and I pay tribute to this Government, who have seized it more aggressively than other Governments—perhaps out of necessity—but I make my remarks more specifically to the Treasury and, in particular, the Home Office, because I want to take up some of the visa points raised by the noble Lords, Lord Clement-Jones and Lord Bates. We have an industry which is extremely competitive internationally; we remain seventh in the world for visitor numbers and visitor spend. Overseas visitors spend £18 billion a year and contribute £3 billion to the Exchequer. Given the sluggish growth that we have in this country, we should highlight those industries that can bring in spend and Exchequer revenue quickly.

UK net GDP growth has been extremely poor since January 2010, at 1.2%, but international tourism is more than twice that: 3% growth in visits and 8% of growth in spend, according to the ONS. If we are able to continue at that rate of growth up to 2020, tourism’s contribution to GDP is forecast to grow at 3.5%. That means 250,000 new jobs. If an entrepreneur knocked on David Cameron’s door and said, “I can bring you an industry that will create 250,000 new jobs”, David Cameron would snatch his hand off, yet there is a continual process of growth and development in tourism that, if helped, could create 250,000 new jobs, but we put significant barriers to growth in the way. I am tempted to go down the route of air passenger duty and the appalling situation with aviation policy, not least in relation to the slots that are available at Heathrow and the barriers to inbound travel from places like China—but I am not going to go there. Instead, I am going to take up something that the noble Lord, Lord Bates, said about the situation with China.

China is the fastest-growing market for inbound tourism for all of the major tourism economies in the world. In the past decade, we have seen a dramatic increase in the number of inbound tourists who have come from China. Chinese residents spent £72.6 billion on outward travel in 2011 alone. That puts China third in the UNWTO league for expenditure on foreign travel, and it is a 400% increase in a decade. France and Germany are in the top 10 for that spend. Where is Britain? We are down in the 20s. Some of that is down to the issue of slots at Heathrow, but some of it is down to the visa policy that this Government have adopted.

VisitBritain conducted a market research survey of 1,000 Chinese potential tourists. Two-thirds of them said that the visa process was the inhibiting factor in them coming to Britain. Sebastian Wood is not the kind of ambassador who throws his toys out of the pram at regular intervals—I should know; he was my boss at one point. However, he has allegedly drawn attention to this problem. We put obstacle after obstacle in their way. If you want a visa in China, for a start you have to fill in a form in English. Of course, many of us could do that in Mandarin and Cantonese. Secondly, you have to produce original documents such as your marriage certificate, proving your immigration status as well as your financial status and your travel plans, and you do not get them back until the visa is granted. These are important documents; think how twitchy we all feel when such documents are missing. I ask the Government to look imaginatively at how we can deal with this visa problem—America did it.

One of the reasons why France and Germany do so well is that they are Schengen countries. Why can we not give a visa to someone who has complied under the Schengen criteria and allow them to come to Britain when they come to Europe on the Schengen visa? This is common sense, not rocket science. If we can concentrate on making China see Britain as a welcoming place, there is an opportunity for much greater trade and investment.

The noble Lord, Lord Clement-Jones, and indeed the noble Lord, Lord Popat, referred to the fact that we want more investment in Britain and we want to see things tightened up between all the agencies that promote investment in this country. One of our most successful ventures at the moment is that, at long last, the Foreign Office, VisitBritain, UKTI and the British Council are working together. It is about the quality of life here in Britain and what an exciting place it is.

In conclusion, the Olympics are a fantastic showcase opportunity for Britain. We saw the extent of international interest in the Diamond Jubilee. Tourism this year may dip because, ironically, people may think that Britain is full, but this is a chance in a generation to sell British tourism around the world. Let us seize it. It will not cost a lot of money and it will not be complex but keep in mind those jobs, those 200,000 SMEs and the potential of 250,000 new jobs by 2020.