Tourism

Viscount Younger of Leckie Excerpts

Thursday 27th January 2011 Lords Chamber

Moved By

[The Viscount Younger of Leckie]

To call attention to the value of tourism to the United Kingdom economy; and to move for papers.

[Viscount Younger of Leckie]

My Lords, I am pleased to have the opportunity to open this debate on the subject of tourism in the UK and its value and importance to the UK economy. The debate has attracted no fewer than six maiden speakers and I look forward in anticipation to hearing the contributions from the noble Lord, Lord Wigley, my noble friend Lady Wheatcroft, my noble friend Lord Palmer of Childs Hill, the noble Lord, Lord Stoneham of Droxford, and my noble friends Lord Marks of Henley-on-Thames and Lord Risby. I am delighted also to note the names of several distinguished Members of your Lordships’ House down to speak. It is clearly a good day for Palmers and I look forward with interest to hearing from the other noble Lord, Lord Palmer, and from my noble friend Lord Lee of Trafford, a former Minister for Tourism.

Why do I think that this debate on tourism is important at this time? First, we in the United Kingdom are entering a busy and exciting period over the next two years when we will be welcoming many foreign visitors to our shores as a result of the Queen’s Diamond Jubilee, the royal wedding and, of course, the Olympics in 2012. It is essential that we maximise this opportunity and make it an exceptionally fruitful period for the country, both in increasing our invisible earnings and in ensuring that visitors enjoy the best possible experience with us. We must ensure that they return as so-called repeat business. This is particularly important for capturing a greater share of the Far East business.

Secondly, we must always remember that many UK nationals choose to holiday in this country. It is vital that people are encouraged to stay in the UK and made more aware of the benefits and pleasures of holidaying in England, Northern Ireland, Scotland and Wales. Of the total UK average household expenditure on holidays, only 36 per cent is spent in the UK. Yet the amount is not insignificant in monetary terms; in 2009, UK nationals spent 126 million nights away from home, which represented some £22 billion to the economy, primarily to the hotel and restaurant trade. There is clearly an opportunity to increase on this percentage expenditure.

Tourism is important at this time for a further reason. Your Lordships will hardly need reminding that we are enduring an unprecedented period of severe public sector cuts, as a result of having the largest deficit in the G20. This week’s economic figures of near-zero growth for the final three months of last year confirm that our recovery is precarious, while the prospects for growth in early 2011 look less than encouraging. There are the added concerns of increasing energy costs and rising inflation.

Tourism provides an excellent opportunity to boost the economy. It is the third highest export earner for the UK, behind only the pharmaceuticals industry and the financial services sector. It generates £115 billion per year for the UK economy, which is equivalent to 8.9 per cent of UK gross domestic product, according to a recent Deloitte study. That breaks down between the UK’s four countries as follows: England generates £96.7 billion, 8.6 per cent of GDP; Scotland £11.1 billion, 10.4 per cent; Wales £6.2 billion, 13.3 per cent; and Northern Ireland £1.5 billion, 4.9 per cent. Inbound tourists spend about £16 billion per year, thereby contributing £3 billion to the Exchequer.

Looking ahead, over the period 2010-20, the increased growth rate of visitors to the UK is expected to rise by 3.5 per cent per annum, which is ahead of the 2.9 per cent per annum on average forecast for the economy as a whole. Most importantly, there are some encouraging forecasts for employment. More than 250,000 jobs are expected to be created during this same period, to rise from 2.64 million to 2.89 million. Currently, one in 12 jobs in the UK is directly or indirectly supported by tourism. We can begin to see how tourism can play a vital role in rebalancing the economy. We cannot afford to miss that opportunity.

The tourism industry is often described in terms of the services and attractions offered to visitors—the product side. We know that there is great variety and that there are many exceptional, high-quality destinations in the UK, of which more later. However, are we doing enough as a kingdom to ask what the customer wants? The customer is, of course, the tourist—a generic term that describes anyone of any age, gender or nationality who is away from home or his native country, at leisure and willing to spend money. For example, I heard recently of an Asian delegation booked into a UK hotel. Nobody had thought to check whether there was internet access there—an essential requirement for Asians—and there was a hasty rebooking. It is perhaps rather archaic, prosaic or both that many Asians perceive the UK as being the country of the high tea. Should we be encouraging a high tea start-up programme? Those are small examples but they matter at the coal face in understanding our customer.

The tourist always has a choice. Competition is fierce, notably for those travelling to Europe, with a rich choice of countries. According to the latest figures, from 2009, the UK is the sixth most-visited destination by international tourists, with 28 million staying visits. France is number two with 74.2 million and Germany number eight with 24.2 million. Between 2000 and 2010, the UK’s international visitors increased by 37.4 per cent but France and Germany are still ahead of us, at 49.7 per cent and 85.6 per cent respectively. Crucially, we are falling behind in attracting visitors from the key emerging markets. France attracted eight times more visitors from China last year than did the UK, and Germany six times more. Nearly four times more visitors from Brazil went to France than to the UK and about 30 per cent more Brazilians visited Germany than the UK. France attracted visitors from India at a factor of more than 50 per cent more than the UK.

In briefly outlining an audit of UK competitiveness, let me start with the challenges. Britain ranks 133rd out of 133 nations on the specific issue of the cost of travel to a holiday destination. For example, a UK short stay visa costs £70. If you are a visitor travelling to other European countries at the same time, where you can obtain a multi-country Schengen visa at £50, the bill rises to £120. Add on to that the increase in the air passenger duty and the costs are considerable before you have even booked your flight, accommodation and transport. On the ease of booking flights, although airline seat capacity for internationals visiting this country has increased by 2.9 per cent, it increased more for France at 6.3 per cent and Germany at 5.5 per cent. A comparative reduction of our inbound route capacity pushes up prices for the tourist choosing to come to the UK.

There are other challenges. The VAT increase to 20 per cent is a necessary move by this coalition Government, but it inevitably decreases the spending power of all tourists in the UK. By contrast, Germany and France have reduced VAT rates for the hotel and restaurant sector. Although the exchange rate remains in our favour for encouraging foreign visitors, excessive volatility means instability. At present, that is providing a brake for those UK nationals seeking holidays abroad, which is in our favour. Overall, it remains expensive to holiday in Britain in comparative terms.

A further challenge is to encourage tourists to go further than their single-destination city. I accept London’s primacy as one of the key holiday destinations in the world, but as many as 48 per cent of all UK visitors spend time in London and do not go further afield, whereas only 12 per cent visit Paris without enjoying thereafter the pleasures of France. The same applies to 14 per cent of visitors to New York and 10 per cent of those to Berlin. London enjoyed 11 times more visitors than Edinburgh, 18 times more than Manchester and 23 times more than Glasgow. I will be interested to hear the thoughts of my noble friend Lord Gardiner of Kimble on encouraging more visitors to the countryside.

Finally, I feel sure that the Government are reviewing our so-called welcome pack. For example, the average queue time for exiting customs at Heathrow remains at 45 minutes for foreign visitors.

On the positive side, what does the UK have to offer? Putting aside the small question of our weather, we are best placed, above all other countries, to offer a unique, varied and exciting opportunity that can be tailored for all visitors, with all vacation tastes, coming to the UK. There are quintessentially British festivals and events, from the highland games and county shows to cheese rolling and river dragon racing. There are theme parks and music festivals for the young. There is outstanding architecture, steeped in history, stretching back many centuries, from cathedrals to country churches. All these are accessible and appreciated over a particularly fertile landscape, from the north-west of Scotland—perhaps the last great wilderness in Europe—to Cornwall with its coves and beaches, Norfolk with its fascinating network of broads, the canals of Shropshire and Warwickshire, so enjoyed by American tourists, and, of course, Liverpool and Tyneside.

There are also many unseen treasures in the UK that can be exploited. For example, because of our geophysical make-up and our presence in the Gulf Stream, we have come to do gardens rather well, from Kent to Inverewe in Scotland and Cornwall. Even before the Eden Project, gardens in Cornwall alone generated more than a million visitors per year. I recently met a gentleman who had set up the Welsh Historic Gardens Trust. From initially identifying six gardens for development, within the first year of research he had identified a further 306, all for eventual public viewing.

We have our priceless museums, notably in London but also in such places as Portsmouth, which represents our colourful maritime history with the “Mary Rose” and HMS “Victory”. There is also the Burrell Collection in Glasgow. It is, above all, through culture that the UK is perceived particularly to draw visitors and this gives us a competitive edge. The Nation Brands Index has indicated that Britain is ranked fourth out of 50 nations for having a vibrant and exciting contemporary culture; seventh as a nation with a rich cultural heritage; and eighth as a nation excelling in sport, with many foreign visitors coming to the UK for football alone. VisitBritain concludes that inbound tourist spending on our culture and heritage subsector is £4.5 billion. This alone supports more than 100,000 jobs in the UK. Overall, Britain is ranked fifth in terms of tourism. It must be perfectly possible to rise further in these rankings.

No stall for Britain can be set out without confidence in and scrutiny of the structure of tourism management in the UK, including Scotland, Wales and Northern Ireland. In the Department for Culture, Media and Sport there is a Tourism Minister. VisitBritain, which was the British Tourist Authority, is now responsible for marketing Britain abroad, with a fund-matched £100 million partnership marketing fund earmarked specifically for the emerging markets. The quid pro quo is that cost reductions in administration of 50 per cent over four years must be made. The question that we must ask is whether the funding and the structure in place are correct.

It is as well to remember that the engine room of tourism works as a result of more than 125,000 privately owned businesses, 80 per cent of which have a turnover of less than £250,000 per year. The question that we have to ask is how best to help these local businesses, starting with more bank lending and greater tax incentives. I am sure that the Minister will refer to the imminent release of the Government’s tourism strategy document. In the mean time, I trust that there is enough stimulus for debate.

Finally, I leave your Lordships with a creative idea, which is that if we were to switch to SDST—for the uninitiated, that is the single/double summer time, with its lighter evenings—it is estimated that we could create tourism growth of between £2.5 billion and £3.5 billion and between 60,000 and 80,000 extra jobs. I beg to move.

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[Viscount Younger of Leckie]

My Lords, I also thank all those who contributed to today's debate. I am particularly pleased that it struck a chord as being an important debate for the tourism sector and the country as a whole at this particular time.

I pay tribute to the six outstanding, different and thought-provoking maiden speeches. The other contributions were wide ranging and in some cases rather direct, which is no bad thing. I particularly point out the views that came from my noble friends Lord Caithness and Lord Palmer who highlighted the cost of travel within the UK. To conclude, I want to pick out three key themes that the debate brought out. I hope not to take too much of your Lordships’ time.

The first theme, which may not surprise noble Lords, is funding. There is no doubt that there is a shortage and that funding is fragmented. I will pick up on a minor point made by the noble Lord, Lord Christopher, when he spoke about his project in Cornwall, which is that Europe is certainly not always forthcoming in producing funds. More importantly, my noble friend Lady Wheatcroft correctly pointed out that there was far too much short-termism in investment. That was echoed by my noble friend Lord Stoneham of Droxford who said that there should be much more long-term investment in tourism and from the private sector.

Secondly, it is important that tourism is pushed up the political agenda. In the past, all Governments have not promoted tourism enough. That was pointed out eloquently by my noble friends Lord Lee of Trafford and Lord Caithness. Tourism needs to be in the manifestos of Governments. That is particularly important as there is such a strong link between tourism and job creation, especially at this time.

Thirdly, it is clear that there is a great need to market tourism within all areas of the UK. That was highlighted initially by the noble Lord, Lord Wigley, when he spoke about Welsh castles. I think I am right in saying that Asian visitors like them the best. Also, my noble friend Lord Palmer of Childs Hill created an interesting and different angle to the debate when he focused on urban tourism speaking about Barnet and industrial Manchester, and it is right that we should focus on that.

I conclude by highlighting a degree of caution when we look at tourism statistics, because in undertaking research I discovered that there was certainly a need for a degree of consistency and simplification. That is a point for the industry and Government to note for the future. With that, I beg leave to withdraw the Motion.

Motion withdrawn.