Backing a Winner – Investing in the Growth Industry of Tourism

Brigid Simmonds, Chairman of the Tourism Alliance

The problem about taking over the role of Minister for Tourism for the day is that very little of the legislation that affects tourism is under the control of the Department for Culture, Media and Sport. The major task would therefore be to get Government colleagues to recognise and understand both the scale of the tourism industry and how investing in tourism will benefit their portfolios. To demonstrate the “sleeping giant” nature of the tourism industry, here’s a few facts and figures showing just how central tourism is to Government policy.

  • Tourism is the UK’s third largest export earner after oil and vehicles and accounts for over 4% of total exports.
  • Tourism is the sixth largest industry in terms of employment. The 2.2m people employed in tourism make it far bigger than agriculture, financial services and transport.
  • Tourism a key driver for social change and inclusion by being the greatest employer of disabled people, school leavers and recent immigrants.
  • Tourism, by its very nature, redistributes wealth from urban areas to rural and coastal areas.

The good news is that there is an acknowledgement across Government of the social and economic benefits afforded by a vibrant tourism industry, with the Government setting itself the ambitious target of increasing the revenue generated by tourism from £74bn per annum to £100bn per annum by 2010.

However, the bad news is that, for all the good words and intentions that have come with this goal, there has been little in the way of new initiatives to help turn it into a reality. As Tourism Minister I would be pressing my colleagues to resolve the following issues.

1.VisitBritain, the NDPB charged with promoting Britain in overseas markets, receives £35.5m in Grant in Aid. Despite demonstrating to Treasury each year that this investment generates over £1.0bn in incremental export earnings, funding for its activities has not been increased for eight years. This is the equivalent to a 20% cut in funding in real terms.

2.An independent review of tourism statistics undertaken last year showed that the statistics used to support this £75bn industry were woefully inadequate for future planning and investment. Although a series of recommendations, totalling £7m, was made to Government for improvements to national data gathering, no new money has been found to undertake these improvements.

3World Travel and Tourism Council research shows that the UK imposes one of the highest levels of taxation on visitors of any country in the world. This is supported by a VisitBritain study that shows that tourists to the UK pay 50% more tax in the UK than they do purchasing the same products and services in continental Europe. The main reasons for this are that many European destinations apply a reduced rate of VAT on accommodation whereas, in the UK, VAT is applied at the standard rate. Further, the UK is the only country in Europe to levy a departure tax on visitors (Air Passenger Duty) where the proceeds go directly to general revenue. These two taxes account for some 80% of the differential.

4.The UK’s “tourism deficit” has ballooned from £2bn in 1990 to around £17bn last year as a result of factors such as increased prosperity and budget airlines allowing people to travel overseas more easily. Yet, only £10.4m is dedicated to convincing people to holiday at home by promoting England as a destination to UK residents.

While these are examples of initiatives that require additional investment, there is one fundamental change that I would undertake as the Minister of Tourism and that is a review of the Development of Tourism Act 1969. This Act defines the structure and function of Government’s support for the industry but, as it is now over 35 years old, is ill-equipped to deal with the modern environment in which the tourism industry operates.

When the Act was developed, there was a clear and logical structure to tourism and the relationship between VisitBritain, as the international marketing agency, the National Tourist Boards for England, Scotland and Wales (as the domestic marketing agencies) and the Regional Tourist Boards (as the regional marketing agencies). This enabled coherent tourism funding, planning and policy development.

However, since the Act was passed, a number of significant changes have occurred that have overtaken the provisions of the Act.

  1. The responsibility for tourism funding and development in Scotland and Wales has been devolved to the Scottish Parliament and the Welsh Assembly.
  2. The National Tourist Board for England has been merged with the British Tourist Authority to form VisitBritain.
  3. The Scottish and Welsh National Tourist Boards have been granted the ability to market overseas independently of VisitBritain.
  4. Responsibility for regional tourism development in England has been devolved to the RDAs, which are increasingly undertaking overseas marketing.

The net impact of these changes has been a considerable lack of clarity within the industry and, indeed, within the National Tourist Boards, as to function and relationship between the various tourism agencies. The new structures have resulted in duplication of activity and expenditure and, increasingly, the industry has become confused as to which agency(s) to approach in order to undertake initiatives that span international and domestic markets. This is leading to a reluctance by the industry to provide funding for tourism promotion and development which, in turn, does not allow for the maximisation of public expenditure.

An urgent review of the Act is, therefore, required to resolve the structural and funding problems relating to tourism marketing, organisational cohesion and support, especially within England. By doing so, the industry will regain the co-ordination required to ensure that it is competitive in the international market.

Resolving this issue alone would be enough for day one. My plans for days two and three are in the Tourism Alliance’s new Manifesto, “Backing a Winner” launched by TA President, Sir Digby Jones, at the 2005 National Tourism Conference in March.

The Tourism Alliance

  • The Tourism Alliance is the Voice of the Tourism Industry. It was established in 2001 with the support of the Secretary of State for Culture, Media and Sport and comprises over 40 Tourism Industry Associations that together represent almost 200,000 businesses of all sizes throughout the UK.
  • The purpose of the Tourism Alliance is to identify and develop policies and strategies that raise standards and promote quality within the industry and work with Government on key issues relevant to the growth and development of tourism.
  • For further details on the Tourism Alliance and its policy objectives, contact Kurt Janson, Tourism Alliance Policy Director, on 020 7395-8246 or visit the website,