Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by the English Tourism Council


  1.1  The English Tourism Council (ETC) was created in 1999 to replace the English Tourist Board (ETB) established by Parliament under the Development of Tourism Act 1969. ETC exists to provide strategic advice to Government on tourism policy, to conduct research, to promote best practice, to improve standards of quality and to support the development and promotion of tourism throughout England. The ETC received £11.6 million grant-in-aid in 2002-03, through the Department for Culture, Media and Sport (DCMS). In 2002-03 £5.5 million of this was disbursed to nine of England's Regional Tourist Boards[1].

  1.2  The ETC welcomes the inquiry by the Culture Media and Sport Select Committee and in particular the opportunity to update Committee members on the current state of UK tourism with particular reference to England. This submission follows on from the ETC memorandum of evidence to the 2001 Select Committee Inquiry "Tourism—The Hidden Giant" in which we outlined ETC's work to assist the industry during the outbreak of Foot and Mouth Disease.


  2.1  Research undertaken by the ETC into the impact of tourism demonstrates that it contributed £75 billion to the UK economy in 2000, employed over 2 million people and contributed some five per cent of GDP. These earnings came from three main sources, UK residents taking day trips; UK residents taking overnight trips; and overseas visitors. Earnings from UK residents contributed a total of £59 billion in 2000 accounting for £4 out of every £5 earned (see Figure 1).

  2.2  Further research into the way tourism earnings are currently distributed around the UK indicates that, with the exception of a number of historic cities, overseas visitors spend the majority of their time and money in London (see Figure 2).

  Consequently the impact of the September 11 terrorist attack had a disproportionate effect on London and the historic cities, while the outbreak of Foot and Mouth Disease principally affected domestic rural tourism.

  2.3  The combination of both of these factors created a direct loss of £5 billion to UK tourism and a further loss of £3 billion in terms of the opportunity cost or around 10 per cent of earnings. The opportunity cost is calculated by looking at the growth trends, which were evident before the crises of 2001 (See Figure 3).

  2.4  At the start of 2002 the domestic tourism industry was reasonably optimistic. There was a feeling that UK residents might be discouraged from flying (and therefore take their holidays within the UK) and that there was an opportunity to win back customers who had not been able to visit the countryside in the early part of 2001. However research by ETC in September 2002 demonstrated that few UK residents changed their plans. Eighty-eight per cent of people continued to fly and indeed overseas trips by UK residents were up by one per cent from January to May 2002.

  2.5  In order to stimulate the tourism recovery many businesses and commercial companies, including Visit Scotland and Wales Tourist Board, switched their marketing budgets from overseas promotion to focus on domestic promotion. This tactic was unavailable in England due to the lack of a marketing function at the national level with Regional Tourist Board funding for such activity relatively limited. This was not possible at the national level in England, because there is no national body funded to perform the national marketing function.

  2.6  The latest position for the domestic industry shows a "fragile" recovery. An ETC survey of businesses (July 2002) indicates that although most businesses are well up on 2001, 25 per cent of businesses are not yet back to 2000 levels and business confidence remains weak. Figures to the end of June 2002 show that domestic business is still three per cent down compared to 2000 (see Annex 3). In the international market place there is similar caution. Annex 3 shows that although business is starting to come back. The mix of business has changed, with most of the recovery coming from Europe. This means that the numbers of visitors is up but earnings are not yet back to 2000 levels (The US and other long-haul markets spend more than European visitors).

  2.7  In the short term ETC is expecting that domestic business in 2002 will be back to the levels experienced in 2000. However strong consumer confidence and expenditure would have led the industry to considerably expect higher levels of trade and profit. Business costs have risen in the last two years and many businesses have postponed investment and/or reduced employment as a result of a fall in profits. Much of this loss goes largely "unseen" in official figures. For 2002, ETC forecasts that the number of trips will rise over 2001 by 6.4 per cent, the number of overnight stays will rise by 4.8 per cent and expenditure will rise by 9.1 per cent. ETC is working with the other national tourism organisations to produce forecasts for the period 2003 to 2005.

  2.8  Perhaps the key economic measure of how well UK tourism is doing, is the tourism balance of payments. Over the last five years, the position has deteriorated to the point that in 2001, the tourism deficit for England had reached minus £13.6 billion (see figure 4 below). Until 1995 it had been consistently positive except for the Gulf War year. £45 billion is now spent by British residents overseas.


Spending by UK and overseas tourists in England, less the spending by English tourists overseas

  2.9  Clearly there were challenges for tourism before the crises of 2001. To reduce the deficit requires further action both to encourage overseas visitors to return (the job of the British Tourist Authority) and to encourage UK residents to take more holidays in the UK. The dramatic rise in low cost carriers, the advent of the euro and high UK exchange rates clearly contribute to current trends. A central aim should be to encourage more English people to explore their own country. Short breaks offer England a good opportunity to change attitudes in a competitive environment. If just one in a hundred UK residents took a short break in England rather than overseas, the balance of payments deficit would be reduced by around £1 billion.

  2.10  In conclusion, tourism is a growth industry, the events of 2001 led to losses in the short term and have harmed growth in the medium term. The industry has worked hard to recover and has demonstrated imagination and resilience. Visitors are returning but clearly more can still be done to speed that return and to ameliorate the tourism balance of payments deficit. Government commitment and investment would provide an important boost to recovery.


  3.1  Tourism is ideally placed to help deliver much of the Government's agenda, particularly in boosting employment and economic prosperity. Tourism is already England's fifth largest industry. It is a labour intensive, growth industry providing some 10 per cent of all new jobs—and creates sizeable tax revenues of £12.6 billion per year (see Annex 2). With the right government support, it offers very real potential for further growth.

  3.2  Tourism is a fragmented sector made up of many small and micro-businesses that require support to ensure that they remain competitive and who find it difficult to work together collectively for the wider good. They are so varied and diffuse that there is no trade association that can speak for them all, although the ETC welcomes the formation of the Tourism Alliance as a response to this. They therefore do not have one voice in the same way which, for example, farmers have through the NFU. This inability to speak should not mean that their problems go unheard. Their combined efforts are too valuable to the economy.

  3.3  Tourism can be the catalyst that drives regeneration projects in urban, rural and peripheral regions. The Eden Project for example in Cornwall has attracted well over two million visitors over the last year, injected more that £113 million into Cornwall's economy in the first six months of 2002 and has created 680 full time jobs. The relationship between tourism and regeneration activity has already been recognised in many instances but more could be done to harness tourism's regenerative power—in market towns for example.

  3.4  The ETC believes that Government should now:

  3.4.1  Draw up a small number of clear and focused tourism objectives and realign the delivery structures to enable them to meet these objectives. ETC welcomes the proposed realignment of tourism delivery structures in England to recognise the regional economic role of the RDAs and the emerging sub-regional policies of RTBs. Tourist Boards need adequate funding to deliver change of this kind, and in England resources have previously been at a woeful level. The current Ministerial review is an encouraging start but needs to be radical to maximise value for public investment in the longer term;

  3.4.2  Create the right cross-Whitehall framework to allow the industry to flourish. This includes a supportive legislative environment in relation, for example, to planning and enterprise policy. The Ministerial Summit is a good starting point and needs further focus on specific issues, such as transport, with lead Government Departments pursuing key areas of tourism related work with budget and resources attached;

  3.4.3  Give parliamentary time to legislation (such as reformed licencing laws) which will make a rapid difference to tourism and bring us in line with our continental competitors.

  3.4.4  Stimulate others to recognise the potential of tourism by encouraging "tourism proofing" in related agencies, such as the SBS, so that tourism businesses are supported in key areas of weakness, such as ITC and skills, and can compete against international competition. This will take ministerial commitment as well as active delivery by the national tourism body and the various agencies concerned;

  3.4.5  Build on the already favourable climate of investment in new products through new channels of lottery funding, regeneration schemes and investment to support the business of tourism.

  3.4.6  Support the re-introduction of domestic marketing at a national level in England. Resource the national tourist body so that it can maximise value for money by leveraging private sector investment in jointly funding campaigns that convert the home market potential.


  4.1  It is widely accepted that current arrangements are not sufficient to serve the best interests of tourism and the wider UK economy. Current tourism structures are rooted in the past when the political and administrative landscape were significantly different. There are threats and opportunities brought about by both emerging national and regional policies. Tourism needs to be properly considered within this evolving context.


  5.1  Devolution has accelerated the disparity of public funding levels for tourism between each country. In 2001-02 England received a core grant of £11.6 million, while Scotland received around £40 million and Wales received £20 million. This equates to Scotland and Wales receiving £7.93 and £6.84 per head respectively and England only £0.19.

  5.2  The establishment of Regional Development Agencies (RDAs)—and the prospect of Regional Assemblies—will significantly affect the delivery of regional tourism in the regions of England. This regional focus is to be welcomed but successful decentralisation requires a degree of central or national co-ordination. There is, for example, a significant danger of duplication and uncoordinated activity in consumer research, data collection and tourism promotion.


  6.1  In general terms current arrangements strive to tackle the issues of quality and productivity but structural limitations, a lack of primary investment in tourism and few co-ordinating mechanisms all serve to constrain the activities and effectiveness of the agencies concerned. For example a key strategic role for ETC is quality improvement. It oversees a national star-rating scheme, (harmonised with AA and RAC ratings) which has over 22,000 participating businesses all focused on providing high standards of quality. These schemes however need promotion to customers if full benefits are to be achieved in terms of driving up quality standards.

  6.2  Accommodation however is but one part of a wide ranging tourism "experience" which incorporates many other services offered by both private and public sectors, ranging from transport provision through retailing, tourism attractions, the management of destinations and the provision of information. All these areas are best planned for with a strategic oversight and often best co-ordinated via a national framework.

  6.3  Equally as part of the Government's social policies, national bodies like the ETC, guided by Departments, play a major strategic role in supporting work concerned with accessibility, sustainability, social inclusion, training etc. with associated delivery by others closer to the customer. Other areas, such as rural policy, are recognised as being strategically important and have national agencies looking after their interests.

  6.4  Tourism is usually best delivered at a regional and sub-regional level but there is a strong case for national and strategic intervention to set and collectively agree frameworks which can then be delivered at the required level. The current EnglandNet Project, funded by Government and run by ETC is a good example. The project will join up a vast array of tourism suppliers and products via the Internet.Without a national and strategic perspective this project would not be possible. [2]

  6.5  Other examples of this type of national strategic leadership intervention have been successfully developed over ETC's short lifetime. In the field of accessibility for example the UK wide National Accessible Scheme has been developed to assist businesses to comply with new legislation. Activity across the country on Sustainable tourism has been underpinned by ETC's national strategy "Time for Action" which fits wider DEFRA policy and is measured against a set of groundbreaking indicators. In the rural context ETC has produced a rural tourism strategy with the Countryside Agency to provide a clear focus for national, regional and local action.

  6.6  The ETC firmly believes that the current ministerial review threatens this important strategic role which cannot always be successfully delivered regionally. Some issues can be undertaken regionally but duplication is likely to be inevitable and other areas, such as the provision of a quality grading system, have to be developed within a national framework. of domestic marketing. However a focus on marketing without national action on other key issues will not well serve the interests of the industry in the longer term.

  6.7  Reform of the English Tourism Council is a welcome chance to address the current weaknesses in the provision of tourism support. Any reform however must be clear about the overall objectives, redesign the structure to deliver those objectives and provide the resources to implement the actions required.

  6.8  The role of the Department for Culture, Media and Sport (DCMS) in co-ordinating the Government's role in tourism cannot be underestimated. With almost every Department sharing an interest in tourism, the role of DCMS in ensuring the success of the Tourism Summit and brokering strong cross-Whitehall partnerships is vital. Various interests have questioned the position of tourism within government. While DTI is a favoured home for some commentators it is ETC's view that tourism is too cross-cutting to fit comfortably in any Department. Rather it is more important to have a high level of senior ministerial commitment, engagement and action to drive the modernisation agenda forward. Without this commitment, and the related resources, the industry will not contribute to the economy in the way that it could. Committee members may like to examine recent policy development in Ireland to see an example of such commitment.


  7.1  There is a clear consensus from across industry that the current marketing arrangements in England are not adequate. Serious flaws were revealed during the crises of 2001, in particular the lack of a national marketing role within England. Future arrangements need to ensure that the marketing remit is sufficiently broad to include a logical array of marketing functions including consumer research, product development, branding, consumer promotion and trade support.

  7.2  Any England marketing must be adequately resourced[3], and Government should be realistic about the nature and extent of private sector support available. The aim should be to fill the following gaps:

    —  Crisis—when a fast national response is needed, such as the Foot and Mouth outbreak and September 11;

    —  Opportunity—when there is an event or development that affects the whole country, such as the Jubilee or Commonwealth Games;

    —  Themes—where a customer wants a type of holiday, such as a health break, walking holiday, cathedral tour, or country house hotel short break;

    —  Common interest—where there are product providers that want to work together to maximise their spend—such as historic cities, visitor attraction or farm holidays.


  8.1  To summarise, the key points that the English Tourism Council would like Committee members to bear in mind are as follows:

    —  Tourism was worth £74 billion to the UK economy in 2001; and

    —  £4 out of every £5 spent on tourism is generated by domestic tourists;

    —  The deficit in the tourism balance of payments has deteriorated each year since 1995—currently standing at minus £13.6 billion;

    —  £45 billion per annum is spent overseas by British tourists;

    —  Recapturing one per cent of the money currently spent abroad would improve the balance of payment by almost £1 billion per year;

    —  Tourism plays a major role in social as well as economic policy. Accessibility, sustainability and the rural agenda require national co-ordination;

    —  Tourism is a labour intensive growth industry. One in ten new jobs is created by tourism.

Annex 1


  Although Tourism and Leisure firms are still on balance more optimistic than pessimistic about the general business situation in their respective sectors, there has been a sharp decline in confidence since last quarter. There has also been a drop, but less severe, in optimism for their own business outlook.

Table 1

In Your Sector  
For Your Company
More Optimistic66% 49%65%59%
Less optimistic  5% 18%  6%11%
Balance*61%31% 59%48%
*The proportion of firms reporting that they are more optimistic minus those reporting that they are less optimistic.

  The loss in confidence is across all sectors, but particularly Food & Beverages and Sports & Entertainment:

Table 2

In Your Sector  
For Your Company
All Firms61% 31% 59%48%
Accommodation69%62% 63%57%
Food & Beverage47% -10%58%39%
Sports & Entertainment44% -5%50%37 %
Travel & Tourism88% 27%63%47%
Visitor Attractions48% 31%48%43%
Event Venues51%44% 69%53%
*The proportion of firms reporting that they are more minus those reporting that they are less optimistic.

Tourism recovery

  The proportion saying their business has already recovered from both this and foot and mouth has risen a little from 59 per cent in Q1 to 68 per cent in Q2, but the number who do not expect to recover until 2003 has also increased from 10 per cent to 23 per cent.

    —  Private sector tourism enterprises are willing to support national marketing initiatives, given the lead by public money.

    —  To grow tourism and to reach its full potential action is required from Government. This includes clear focused objectives, a review of structures and adequate resources for marketing and other strategic functions.

4 October 2002

Annex 2


In 2000, tourism-related tax contributions to the Exchequer amounted to £12.6 billion:
Business Taxes within tourism-related businesses:
£2.0 billion VAT
£2.3 billion Employers' social contributions
£1.3 billion Corporation Tax
£1.8bn Business Rates
Personal Taxes on those that work in tourism:
£3.4 billion Income Tax
£1.8 billion Employees' social contributions
Total Contribution to the Exchequer
£12.6 billion

Annex 3

1   The nine Regional Tourist Boards are Cumbria, East of England, Heart of England, Northumbria, North West, South East England, Southern, South West, and Yorkshire. London is now funded separately by DCMS via the Greater London Authority. Back

2   England will enable the latest local tourism information to be made available anywhere-helping people to access quality-assured information on the full range of tourism products and experiences available across England. Access can be from home or in public places using devices such as touch screen kiosks or mobile phones. Linking with the Government's broader UK Online initiative, and delivered by regional tourist boards and other partners EnglandNet will transform the distribution and sale of tourism in England. Back

3   Adequate seed funding should be provided by the public sector, to lever contributions from the larger tourism businesses. As the domestic tourism sector is primarily made up of small businesses the scope for raising funding is significantly less than with the in-bound sector. Back

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