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Tourism: UK Economy

Volume 722: debated on Tuesday 9 November 2010


Asked By

To ask Her Majesty’s Government what is their latest assessment of the contribution of the tourist industry to the United Kingdom’s economy.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Association of Leading Visitor Attractions.

Tourism has huge potential for growth. It supports 1.5 million jobs with visitor spend of nearly £90 billion each year. Deloitte estimates a direct and indirect value to the UK economy of £115 billion and suggests that tourism could be the fourth fastest growing sector over the next 10 years, indirectly and directly supporting a total of nearly 3 million jobs by 2020.

I thank my noble friend for her Answer and welcome her to her first tourism Question. In a speech recently the Prime Minister said:

“Tourism presents a huge economic opportunity. Not just bringing business to Britain but right across Britain driving growth in the regions and helping to deliver the rebalancing of our national economy that is so desperately needed”.

That is all very laudable, but does my noble friend realise that tourism faces a double whammy? First, there is a 34 per cent reduction in the funding to our national tourist board, VisitBritain, and then—this has been referred to earlier—the abolition of the regional development agencies, which significantly supported many tourism projects in the regions, often on a match funding basis, and also supported the destination management organisations? There is no way that local enterprise partnerships will have the coverage or the resource to replicate this.

My Lords, I thank my noble friend for his question and his kind words of welcome. I pay tribute to his expertise and to his support for the tourist industry. Some of the issues in this Question have been touched on already in the previous Question. The regional development agencies have made magnificent efforts to benefit the tourism industry, but they have been variable, with no two models alike. They are due to be wound up by March 2012 and we anticipate that, as their role recedes, the destination management organisations will be formed, to good effect, through existing local tourism support bodies. The future structure will be two-tiered, with Visit England providing public sector support in the transition period.

My Lords, does the Minister agree that the arts and culture contribute very significantly to the success of tourism in this country and that that is in no small measure due to the significant investment in the sector made by the previous Government? Does she also agree that the sector returns more to the Exchequer than it takes out and that the cuts being made in that area are likely to have a significant impact, not only on the arts and culture but also on the tourism industry that they support?

My Lords, we agree that the arts and heritage play a very significant part in national life and provide a great draw for tourists to our country. We hope that in the run-up to the Olympics, when the country will be getting widespread coverage internationally, more tourists will be coming into the country and will be adding their support and their financial help to some of the treasures that we have in this country.

My Lords, will the Minister consider setting up a committee to look into the ridiculous situation of air passenger duty, particularly bearing in mind the forthcoming Olympics? It really is grotesquely unfair in relation to other European countries. I declare an interest as my home tries to be a tourist attraction.

My Lords, the Treasury advises that aviation is relatively undertaxed, paying no fuel duty or VAT on tickets, so it considers that the reform of air passenger duty ensures that aviation contributes fairly to public services and strengthens the environmental signal of the tax. Of course, it falls more heavily on those who are not flying standard class.

My Lords, does the Minister think that a large amount of tourism at the moment is due to our weak currency and that those people who come for shopping particularly love to come because they think they are getting very good value? How will the Government ensure that when our currency strengthens, as we wish it to, we can still provide value for money?

My Lords, I hope that people are coming here to spend money not just because the currency is weak, although I acknowledge that that may be an added attraction. We hope that as the economy picks up so the attractions of coming to this country will be even greater, even if it costs people a little more when they come here.

My Lords, how does it help the competitiveness of the United Kingdom tourism industry when VAT has been raised to twice the level of that in the other EU competitor countries?

The noble Lord of course makes a very valid point on VAT. However, the UK applies a zero rate of VAT to most food and public transport and other parts of the spend of people in the tourist industry.

My Lords, does the Minister agree that if tourism has a beneficial effect on the national economy, the £14 billion to £15 billion a year brought into the rural economy by tourism has proportionately an even more beneficial effect on rural communities and therefore deserves the special attention of the Government?

My Lords, the rural economy is vitally important in this. There is a tourism strategy being developed by the tourism and heritage Minister—it is with the Prime Minister at the moment. We will be looking at all these particular aspects of tourism and hope to be consulting and reporting back very soon. Certainly, the rural economy will be one of the aspects that we would want to look at very carefully.

My Lords, at the moment it seems that red tape and language insensitivity are actually discouraging Chinese tourists from coming to this country. In fact, about eight times more Chinese tourists go to France than come to Britain. Have the Government any plans to try to rectify this situation?

My Lords, that is a very timely question given the deputation that is currently in China led by the Prime Minister. His current visit there will raise the profile of the UK as a tourist destination for the Chinese. We are looking very carefully at the barriers that may prevent Chinese tourists coming here. The visa system is one: the cost of £70 is a barrier and because we are not part of Schengen, if Chinese tourists go to other European countries they have to apply for a second visa to come to us. We are looking at a simpler online system and at accepting applications in local languages—currently all applications have to be made in English. We need to balance the security which the visa system gives the country with the attractions of trying to encourage more people from overseas to come here.