Public sector support for tourism:
a history of under-investment
22. It has long been recognisedin principlethat
the special characteristics of tourism and its revenue-generating
potential justified specific public sector support. Ultimate responsibility
for such public sector support has been the responsibility of
a succession of Government Departments, including the Department
of Trade and Industry, the Department of Employment (from 1985
to 1992), the Department of National Heritage (from 1992 to 1997)
and the Department for Culture, Media and Sport (since 1997).
23. Governments have claimed to recognise as a particular
priority the support of overseas marketing and promotion for tourism,
recognising that a private sector dominated by so many small businesses
cannot be expected to promote its business overseas alone. The
British Tourist Authority (BTA) was established under the Development
of Tourism Act 1969 to encourage people living overseas to visit
The Scottish and Wales Tourist Boards were subsequently granted
powers to undertake separate promotional activities overseas,
which are coordinated with the work of the BTA.
The Authority's remit formally only extends to Great Britain,
but it also undertakes work on behalf of the Northern Ireland
Tourist Board by agreement.
24. In the decade to 1996, the budget of the BTA
was subject to incremental increases broadly in line with inflation.
In 1996, this Committee's predecessor, the National Heritage Committee,
argued that the level of return on expenditure on the BTA in the
form of increased expenditure in the United Kingdom (and thus
increased VAT receipts) justified a large increase in the BTA's
budget. That Committee recommended that the Government's financial
support for the Authority should be quadrupled over five years
to £100 million per year.
Ms Anderson claimed that there had been a "year-on-year increase"
in the Authority's funding under the present Government.
The BTA's grant-in-aid was indeed increased by £1 million
in 1999-2000 and in 2000-01, but, prior to the outbreak of foot
and mouth disease, the Government had planned to freeze the BTA's
grant-in-aid in cash termsand thus reduce it in real termsin
the current financial year and in 2002-03 and 2003-04.
Ms Anderson justified this planned freeze on the grounds that
"we felt at the time that that was sufficient for the BTA
to do the job they were doing".
The grant-in-aid provided to the British Tourist Authority has
in fact fallen between 2000-01 and 2001-02 by £1.5 million,
but we were assured by the Department for Culture, Media and Sport
that this reduction was wholly due to a change in an accounting
convention, whereby funding for the London Tourist Board was now
channelled to that body through the Greater London Authority rather
than through the British Tourist Authority.
The case for ending the freeze on the BTA's grant-in-aid remains
very strong, especially since the BTA retains responsibility for
promotion abroad of London as a tourist destination, regardless
of the fact that it is no longer engaged in funding the London
Tourist Board. In any case, this Committee endorses the view put
forward by the National Heritage Committee in the last Parliament
that the BTA was and remains seriously under-funded.
25. Although the BTA was facing a standstill budget
before the outbreak of foot and mouth disease, the BTA had fared
better in terms of public funding for several years than the public
body charged with the promotion of English tourism. From the time
that the Department of National Heritage assumed responsibility
for the English Tourist Boardestablished, like the BTA,
as a statutory public body under the Development of Tourism Act
1969the grant-in-aid for the English Tourist Board declined
from a level of £16.2 million in 1992-93 to £10 million
The then Government stated in 1993 that the case for supporting
the English Tourist Board's work "to promote tourism at home
is less clear" than the case for supporting the BTA and that
resources ought to be directed primarily through Regional Tourist
26. In 1998, we questioned whether the fundamental
economic importance of tourism was fully reflected in the priorities
and objectives of the re-named Department for Culture, Media and
In response, the Government affirmed that tourism was "at
the heart of the work of the Department" and the Department
subsequently launched a new Tourism Strategyentitled Tomorrow's
Tourismin February 1999.
In consequence of this Strategy, two Tourism Summits have been
held, on 1 March 2000 and 6 March 2001 respectively, to bring
together Ministers from eight Government Departments whose activities
27. Since 1999, a new body, the English Tourism Council
(ETC), has been charged with responsibility for driving forward
the quality, competitiveness and growth of England's tourist industry.
The ETC was established with the aim of being a leaner and more
strategic body than its predecessor, the English Tourist Board.
The new ETC was relieved of the direct marketing and promotional
roles of its predecessor, with the aim of enabling it to concentrate
more effectively on its research and policy formulation functions.
In 1999, the Tourism Society expressed concern to this Committee
that the new body had been designed more by reference to the needs
of the Government than with a focus on the customer.
We remarked then that "it remains to be seen whether the
strategic gains within Government [from the creation of the ETC]
will off-set the loss of a clearly identified national marketing
arm for English tourism".
28. In the same Report we recommended that the Department
for Culture, Media and Sport undertake "a thorough analysis
of the benefits which could arise from additional investment in
The Government subsequently announced plans to allocate an additional
£2 million to the Council in 2002-03 and an additional £2.5
million in 2003-04 "to assist it to deliver its strategic
29. Despite these small planned increases in support
for the ETC, its grant-in-aid before the current crisis was below
that for the Wales Tourist Board and the Scottish Tourist Board.
The expenditure funded by the Government for the respective
tourist boards in 1999-2000 was as follows: £19.4 million
for the Scottish Tourist Board; £15.4 million for the Wales
Tourist Board; and £11.7 million for the English Tourism
Council. Furthermore, the allocation to the English Tourism Council
includes all allocations to the Regional Tourist Boards from public
The levels of spending by tourists (excluding day trips) for
the respective nations is as follows: £2.5 billion in Scotland;
£1.4 billion in Wales; and £24 billion in England.
The grant-in-aid for the Scottish Tourist Board was the equivalent
of £3.77 per head; the grant-in-aid for the Wales Tourist
Board was the equivalent of £4.03 per head. The equivalent
figure for English domestic tourism was 20 pence per head of population.
These figures and the planned freeze of expenditure on the
BTA leave no doubt that there has been a sustained problem of
under-investment by the public sector in tourism that has affected
English tourism in particular.
30. This Committee does not believe that the constituent
countries of the United Kingdom other than England are in any
way over-funded for the promotion of tourism. Indeed, the tourist
boards of those countries might well make the case for more funding
for this purpose. However, the long-term disparity of funding
for the promotion of tourism for these countries compared with
that for the promotion of England is almost grotesque. That Scotland
and Wales should be receiving grant-in-aid per capita some twenty
times greater than that available to the ETC is clearly unacceptable.
Nor are we convinced by the argument that a good deal of responsibility
for promotion of England resides with regional organisations since
England as a country has as much right to be promoted as a tourist
destination as other countries of the Kingdom.
31. The transition from the English Tourist Board
to the ETC was designed in part to release additional public funds
for the regions.
A key component of the new strategy launched in 1999 was to place
greater reliance on the role of the ten Regional Tourist Boards.
The Boards are financially independent membership organisations
that receive about 25 per cent of their funding from the Exchequer.
The Boards generate about 50 per cent of their income from commercial
activities and the remainder comes from "regional stakeholders"
including local authorities.
The Boards are responsible for a range of activities to develop
and promote sustainable tourism in their region and they work
with local authorities and other agencies to coordinate their
marketing and promotion work.
The marketing effort of Regional Tourist Boards is necessary because
of the extremely fragmented nature of the industry.
32. Although the Regional Tourist Boards receive
direct support from the ETC, that support is overwhelmingly in
the form of funding for specified projects, and the Boards do
not have discretion over how the majority of ETC funding is spent.
Moreover, Regional Tourist Boards are normally expressly prohibited
from spending the money they receive from central Government,
through the ETC, on marketing or public relations.
That prohibition limits the scale and scope of tourism promotion
undertaken by the Boards because such activity is funded only
from funds generated by the Boards themselves.
33. The ETC recognises that the role of the Regional
Tourist Boards will change and stated that "there is a need
[in the] longer term to look at the actual positioning and tasks
and roles of the Regional Tourist Boards", particularly in
relation to marketing budgets.
The ETC has provided strategic information to the Regional Tourist
Boards "so that they can make better use of the promotional
funds they have".
The majority of the promotional work undertaken by the boards
is for domestic markets, but they also coordinate and fund overseas
marketing of their respective regions, which is limited by the
extremely small funds available for those activities.
34. The ETC's strategic role relies to some extent
upon the information collection and analysis role of the Regional
Tourist Boards. The ETC and its predecessor progressively decentralised
information collection and management so that Regional Tourist
Boards and local authorities are now responsible for much of that
work. That role has become particularly important during the foot
and mouth outbreak, during which the ETC's information about the
situation on the ground "came primarily from the Regional
Tourist Boards who were telling us how serious things were".
However, the low level of information technology provision
in the tourism industry has been a hindrance to that activity.
The ETC confirmed that, prior to the current foot and mouth
outbreak, only six out of the ten Regional Tourist Boards provided
web sites, and the Council recognised the importance of encouraging
and supporting information technology development in tourism,
referring to the "critical importance of new media to the
success of the industry".
35. The Regional Tourist Boards rely in turn on the
network of Tourist Information Centres to provide front-line marketing
of local tourist attractions and facilities. Tourist Information
Centres are provided by local authorities and offer face-to-face
contact for visitors seeking information. The Centres not only
market and provide information about the local tourism industry,
but also have an important role in collecting information from
visitors and feeding that information back through the regional
and national networks.
However, Tourist Information Centres are hampered in their role
as gatherers and disseminators of information by the relatively
low proportion of such centres that are equipped with information
The North West Tourist Board stated that, although the network
of Tourist Information Centres had responded well to the demands
from consumers, "the level of information and communication
technology infrastructure is varied and thus [makes] comprehensive
data provision very difficult".
The East of England Tourist Board stated that only 60 per cent
of Tourist Information Centres in its region had e-mail facilities
and said that that limitation had "made information gathering
and dissemination quite cumbersome and labour-intensive".