Leaving the EU: UK Tourism

Nigel Huddleston Excerpts

Wednesday 12th October 2016 Westminster Hall

[Nigel Huddleston (Mid Worcestershire) (Con)]

I beg to move,

That this House has considered the potential effect of the UK leaving the EU on tourism.

It is a pleasure to serve under your chairmanship, Mr Howarth, and I am grateful for the opportunity to introduce this debate today. I thank all those individuals and bodies who have sent information relating to the debate to me and others.

Tourism is the UK’s fourth largest industry and our fifth biggest export earner. It contributes £127 billion to the UK economy and sustains more than 3 million jobs—about 10% of the workforce. It is growing fast. The industry incorporates more than 200,000 small and medium-sized enterprises and more than a quarter of all new jobs created since 2010 have been in the hospitality and tourism space. Yet the contribution of the tourism industry is not always reflected in the attention it receives in this place.

It is important to differentiate three key sectors when discussing the industry: domestic, which is Brits holidaying in Britain; inbound, which is overseas visitors coming to Britain; and outbound, which is Brits travelling overseas. There is also aviation, which traverses all three sectors. The three sectors are impacted by Brexit in different ways by labour market implications, regulations and, in particular, the recent weakness of the pound. It may be argued that, overall, the implications of Brexit for the domestic and inbound tourism market are generally good, while they are generally bad for the outbound and aviation sectors—but it is not quite as simple as that.

I turn first to the good news, on the inbound sector. Last year, a record 36.1 million overseas visitors came to the UK. They spent a record £22.1 billion. The 2016 figures show a continuation of that trend, with 21.1 million overseas visitors between January and July, which is 2% up on last year. Visitors from Europe play a key role in our inbound travel industry. More than 60% of overseas holiday visitors and more than 70% of business visitors to the UK were from the EU, including 0.9 million from Italy, 1.4 million from Germany and 1.9 million from France. Clearly, any additional burdens or restrictions on travel to the UK from Europe will have an immediate and negative impact on visitor numbers. Visa-free access from Europe for short leisure and business trips is certainly the desired long-term aim from a tourism perspective. One of the plus points of Brexit and the weak pound is that it makes visits to the UK comparatively more affordable, yet even with the weaker pound the UK remains a very expensive place to visit by global standards and we continue to lose market share of the global tourism market.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I congratulate the hon. Gentleman on securing this important debate. In the tourism industry in Brighton, people are deeply concerned about leaving the EU. In terms of their businesses, does he agree that it makes even more sense now for the Government to commit to cutting VAT on tourism services in order to create more of a level playing field? So many of our European competitors have much lower VAT on their tourism businesses. Now is the time for the UK to commit to the same.

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[Nigel Huddleston]

I agree that that is definitely worthy of consideration, as are alternatives such as looking at the VAT threshold. There are various campaigns along those lines and I will come on to that subject later.

Our decision to leave the EU was a shock to many of our friends in Europe and it could be misinterpreted as meaning we are less welcoming of foreigners. Nothing could be further from the truth and we must continue to show that we are a welcoming country. Research from VisitBritain has shown that we can be very effective at marketing our country overseas and the recent, highly successful GREAT campaign had an incredible return on investment.

[Mr Alan Mak (Havant) (Con)]

I congratulate my hon. Friend on securing the debate. He is a strong voice for tourism in his own constituency and in this House. During the summer, I visited Hong Kong to promote Havant-based businesses. I met the British consul general, who is charged with deploying the GREAT campaign in that region. Will my hon. Friend join me in urging the Minister to continue the deployment of that campaign to promote Britain as a visitor attraction?

[Nigel Huddleston]

I could not agree more. The return on investment for the campaign was £23 for every £1 spent, which is compelling. There is a good argument for increasing spending on VisitBritain, the GREAT campaign and also on VisitEngland. The Government’s introduction last year of the Discover England fund—a £40 million, three-year programme that successfully attracted a large number of high-quality bids—was also welcome, and we should consider expanding that.

The UK tourism sector is highly dependent on overseas workers, not least in London, where 70% of those working in the hospitality sector are EU migrants. Those employees actively contribute to the UK economy and provide a high-quality experience to our visitors. The Government need to provide reassurances to those people that they are welcome and valued, and that it is the Government’s intention that their right to stay will be unaffected by the referendum decision.

On the domestic tourism market, in 2015, domestic visitors spent more in Britain than ever before. Some £19.6 billion was spent by British residents on overnight trips in England alone, and more was spent in Scotland, Wales and Northern Ireland—I must make sure I get them all in. The number of domestic trips exceeded 100 million, which is 11% higher than in 2014. I am proud to say that my own region, the west midlands, saw the biggest growth, with overnight trips up 22% and spending up 26%. A weak pound will make a UK staycation an even more attractive proposition, but that may be temporary. As the hon. Member for Brighton, Pavilion (Caroline Lucas) suggested, cutting VAT on tourism and other options should be carefully considered to sustain that growth in the long term.

I am sure many colleagues will extol the virtues of their own patches in their speeches. I will turn my attention to the outbound and aviation sectors, where the outlook is perhaps a little more challenging.

Outbound tourism is an often overlooked part of our tourism economy, but it employs more than 215,000 people in businesses, including tour operators such as Thomas Cook and TUI, travel agents and airlines such as Easyjet and Monarch. UK residents made an astonishing 65.7 million visits abroad in 2015, 9.5% more than in 2014. Again, our links with the European Union are very strong. Some 76% of holidays abroad and 68% of business trips were to the EU. In 2015, 3.5 million Brits visited Italy, 8.8 million visited France and an incredible 13 million visited Spain. The weakness of the pound means that holidays overseas are inevitably going to cost more next year than this year and last year, and Brexit brings some additional uncertainties for the outbound sector. Some of the concerns for consumers include what will happen to roaming fees and the European health insurance card, passenger rights, as well as the issue of the EU package travel directive, which offers consumers protection in case of insolvency or where there is a failure to provide contracted services. I would welcome the Minister’s comments on how the Government intend to deal with those matters as we exit the EU. The unfortunate collapse of Low Cost Holidays this summer has made clearer than ever the importance of protections such as the Civil Aviation Authority’s air travel organisers’ licence protection scheme.

The UK has the largest aviation market in Europe and the third largest network of routes in the world, behind only the United States and China. It is vital that the UK aviation sector retains its place as a global leader and that we maintain the lower prices, better service and greater choice that aviation liberalisation has provided to British consumers. We need to aim for new aviation agreements as quickly as possible and to maintain the current market access that gives our airlines the right to operate air services both within and beyond Europe. We should be aiming to convince the 27 remaining members of the EU that it is in their interests, as much as ours, to maintain the aviation links that play such a key role in the prosperity of all our nations.

There is no getting away from the fact that the access the UK currently enjoys comes from our membership of the EU. That includes access not only to the EU market, but to that outside Europe, as the UK benefits from being part of the EU’s aviation agreements with other countries, including, crucially, the EU-US open skies agreement. Unless the Government reach new agreements on maintaining market access, our airlines will have no legal right to operate services, and there are no World Trade Organisation minimal alternatives to fall back on in this sector. The UK might also be able to review air passenger duty on flights. Our APD is already one of the highest in the world, and it significantly adds to the cost of flights.

Clearly, there are both challenges and opportunities for the tourism industry as the UK exits the European Union. Given the overall economic contribution of the tourism sector, it is vital that the Government pull what levers they can to protect jobs and to take advantage of the window of opportunity that the weak pound brings to attract even more visitors to the UK.

The Minister will be familiar with many of my policy asks. I believe that we must make a decision about airport expansion in the south-east quickly and start negotiations on aviation deals, access and landing slots as a matter of urgency. We should carefully review air passenger duty and the cost and processing of multiple-entry visas. We should review all EU regulations, such as the package travel directive. We should revisit and reconsider reducing VAT on tourism, and we should consider increasing the budgets of VisitEngland, VisitBritain and the Discover England fund. We must continue to find ways to attract visitors outside London, where 50% of all inbound tourism money is spent, and get more tourists into our beautiful countryside and the regions.

Those are lots of asks. To be fair, the Government are taking tourism seriously. I was very pleased indeed that one of the first publications of the new Government under the new Prime Minister was the “Tourism Action Plan”, which updated the five-point plan that David Cameron announced within weeks of the 2015 election. I also welcome the fact that cross-departmental efforts are being made to grow tourism. I hope that, through this debate and further such discussions in this place and with industry, we will be able to formulate a positive future for tourism outside the EU, but remain very much open to Europe and, indeed, the world.

[Several hon. Members rose—]

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[Nigel Huddleston]

I thank the Minister for her response and am somewhat reassured by her comments. I look forward, along with all colleagues in the room—who are from all corners of the UK, which is very reassuring—to continuing the dialogue. This is a complicated issue. The fragmented nature of the industry means it is challenging to engage with, and I appreciate all the efforts being made. I look forward to continuing the dialogue through the APPG, the Culture, Media and Sport Committee and all sorts of other vehicles. I appreciate the Minister’s response.

[Mr George Howarth (in the Chair)]

May I thank those who have taken part in the debate for their co-operation? We managed to get everybody in who had applied to speak, although I am mildly disappointed that nobody thought to mention Knowsley safari park.

Question put and agreed to.

Resolved,

That this House has considered the potential effect of the UK leaving the EU on tourism.