Select Committee on Culture, Media and Sport Fourth Report


9. Tourism is one of the largest industries in the UK (the fifth largest in England),[10] worth £74 billion to the UK economy in 2001, about 4.5% of the GDP.[11] It is a major employer in the UK: 2.1 million people have jobs in the sector, which is 7% of the UK workforce.[12] Some 10% of all new jobs created are in the tourism industry, which demonstrates the importance of this growing industry to the UK economy.[13]

10. Tourism forms a wider context for public policy. Numerous decisions made within central government have implications for the tourist industry in some way. Many witnesses from the industry, dependent on their specialist area, called for an integrated approach to tourism throughout Whitehall. For example, the Business Tourist Partnership wanted stronger links with the Department of Trade and Industry (DTI) and the National Trust called for coordination with planning and sustainable development within tourism.[14] The representative from the London Development Agency (LDA) recognised this and told the Committee: "We have got to have joined­up activity with an organisation which is much broader and wider than the existing tourist board".[15]

11. Tourism is a diffuse industry, consisting of approximately 127,800 VAT-based enterprises in tourism-related industries. Of these, 77% are small firms with a turnover of less than £250,000. The range of businesses involved is immense and the size of these can vary greatly.[16] Businesses within the sector are involved with moving, accommodating, feeding and entertaining visitors in a wide range of ways. Other businesses, particularly retail shops, also benefit from tourist spending.

12. Tourism spending comes from UK residents taking day trips and overnight trips domestically, and visitors travelling to the UK from overseas. The earnings from UK residents account for around 80% of the total tourism earnings; this shows the significance of the domestic market to the industry. Further breakdown of the spend is shown in the table below:[17]

Spending by
£ billion
Overseas residents: visits to the UK
Overseas residents: fares to UK carriers
Domestic tourists: trips of 1+ nights
Domestic tourists: day trips

13. The UK ranks seventh in the overseas tourism earnings league behind the USA, Spain, France, Italy, China and Germany.[18] This is down on the position in 2000 when the UK ranked fifth in terms of receipts, with a 4.1% market share. The world tourism market is becoming larger and competition stronger. The UK is losing its market position as competitors offer an increasing range of attractive products. The UK is seen as a comparatively high-cost destination by many of those travelling from abroad, which cannot help competitiveness.[19]

14. There was a balance of payments deficit in the sector of £13.6 billion in 2001 (ie the amount spent by overseas visitors in the UK was £31.4 billion and the amount spent by UK citizens overseas was £45 billion). The gap between these figures has increased on 2000 results and is a cause for concern, within the industry and across Whitehall. Until 1995 the balance had been constantly positive except for 1992, the year of the Gulf War.[20] The industry needs the support of the Government to consider ways of dealing with this deficit especially by encouraging more UK citizens to holiday domestically. In a letter to the Committee, the ETC stress "that the rapidly mounting tourism deficit requires urgent attention, and that the litmus test of success in tourism over the next few years must be reduction, or at least stabilisation, of that deficit".[21]

10   Ev 4. Tourism would be ranked fifth after: Letting of dwellings (7.6%); Retail (5.4%); Construction (5.3%); and Wholesale (4.8%). Source: National Statistics Input-Output Tables (GDP(O)) 2002. Back

11   BTA web site: 10/12/02 Back

12   Ibid Back

13   Ev 4 Back

14   Ev 13, Ev 142 Back

15   Q 354 Back

16   BTA web site: 10/12/02 Back

17   BTA Market Intelligence Key Tourism Facts on the web site: Back

18   Ibid Back

19   Q 124 Back

20   Ev 3 Back

21   Letter from Mr Britten and Ms Lynch, 13 October 2002 Back

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Prepared 4 February 2003