Summary
Tourism is the UK's fifth largest industry, employing over 1.4 million people and generating over £85 billion for the economy per annum. The Department for Culture, Media and Sport (DCMS) is the sponsor Government Department for tourism, while the promotion of UK destinations overseas is the responsibility of VisitBritain, a non-departmental public body. The English Regional Development Agencies (RDAs) have responsibility for regional tourism development, while some local authorities also choose to invest in and promote their destinations.
The UK tourism industry is experiencing a challenging period. In the past decade there has been little growth in the domestic tourism sector (i.e. tourism within the UK) which accounts for 80% of the value of the industry. The remaining 20% comes from inbound tourism (i.e. tourism into the UK from overseas). Inbound tourism grew significantly between 2004 and 2006, yet the UK has still under-performed in comparison to the world average. Tourism is becoming an increasingly competitive global industry as new destinations emerge. The growth in inbound tourism experienced in the UK up to 2006 has not continued and it is projected that the UK's global share of the market will continue to fall.
Despite VisitBritain exceeding its return on investment target of 30:1 set by DCMS, in the 2007 Comprehensive Spending Review (CSR), it was announced that the Grant-in-Aid funding for VisitBritain from DCMS will gradually be reduced, from £49.9 million in 2007-08, to £40.9 million in 2010-11. DCMS justified the cut by insisting that there are "efficiencies" VisitBritain could make, but we found no evidence to support this claim. We find DCMS's attempted explanation of its decision wholly unconvincing and we urge it to reconsider the funding settlement. VisitBritain is currently undertaking a strategic review of support for tourism in the UK, and this is expected to identify how it should operate under the reduced funding settlement. While we recognise that a certain amount of readjustment on the part of VisitBritain will be necessary, we urge it to prioritise the maintenance of its overseas offices, which play a vital role in promoting the UK.
The London 2012 Olympic Games and Paralympic Games represent a major opportunity for the UK's tourism industry. While the 2008-12 Olympiad, including the 2012 Games period itself, is not expected to lead to a massive influx of visitors to the UK, the legacy benefits that a successful Games could generate are far more significant. The Games present a chance to showcase London and the UK on the world stage, and in particular to emerging markets such as China, Russia and India. DCMS has published a tourism strategy for the Games, yet it is difficult to see how this can be delivered in light of the funding cut for VisitBritain. We find it regrettable that the Government is committed to a CSR settlement so close to London 2012 with a substantial funding reduction for the body responsible for marketing the UK overseas.
The English local authorities spend a total of £126 million per annum on tourism. However, support for the tourism sector is only a discretionary function of local government, which means that it is always susceptible to a reduction in funding when budgets become tight. We conclude that there are insufficient incentives for local authorities to invest in tourism. In local authorities where tourism represents a significant sector of the economy, investment in the industry should be seen as a necessity rather than a luxury.
The Committee is concerned by the lack of confidence that the tourism industry appears to have in DCMS, which has been widely criticised for not adequately representing the industry across government. We are also discouraged that responsibility for tourism has been so frequently transferred between departmental Ministers—seven Ministers since June 1997—creating an impression that tourism is viewed by the Government merely as an afterthought. We would like to see more consistent evidence that tourism is becoming a mainstream issue in government. We would also like to see DCMS provide a stronger strategic lead to the industry.
The Government has concerns that the quality of serviced accommodation in the UK too often falls short of the required standard. Raising the quality of accommodation is essential to improving the industry and the National Quality Accreditation Schemes (NQAS), a voluntary system of quality assurance in the accommodation sector, is an important tool in this regard. We support the Government's efforts to increase the number of accredited accommodation providers within a single recognised scheme. However, the scheme should become more flexible so as not to disadvantage smaller or unorthodox accommodation providers, while the cost of accreditation for smaller providers should be reduced in order to take account of their lower turnover.
The UK is perceived to offer poor levels of customer service and quality of "welcome". Heathrow airport is a classic example: the current reputation and passenger experience of Heathrow acts as a significant disincentive to many people considering visiting the UK. Over £500 million is spent by the public sector alone on skills development in the tourism industry, yet customer service, management and craft skills are too often lacking. While we are encouraged that initiatives to address the skills deficiencies that are constraining the industry are now in place, we call on the Government and its agencies to place greater emphasis on co-ordinating and promoting these opportunities. The tourism industry is also heavily reliant on migrant workers. We would like to see the Government make greater efforts to attract the locally unemployed to the industry.
The cost of a visit to the UK is more expensive than a visit to the majority of other countries. This is partly due to the charges payable by overseas visitors to the UK: an average of £207 per person in visa, taxes and other government charges. A UK visa costs £65. This compares unfavourably to the €60 cost of a Schengen area visa, which permits access to 21 European countries. There is evidence that high visa costs are a contributory factor towards the recent drop-off in inbound tourism revenues. We support plans for a "Schengen add-on visa", which would make visits to the UK for those already holding a Schengen visa a more affordable proposition. We also support moves to introduce a cheaper, short term, single entry visa. Finally, we recommend that the Government reviews options that would make obtaining a visa a simpler process for prospective visitors, without compromising the UK's national security.
Statistics on the tourism industry were widely criticised in our inquiry for their inaccuracy and inadequacy, disadvantaging tourism in comparison to other industries. In 2004, DCMS and the Office for National Statistics commissioned a review of tourism statistics. The findings of the review drew wide support from the industry. Yet it is clear that its recommendations have thus far been implemented only in a very limited and piecemeal fashion. There has therefore been very little benefit to the industry as a result. However, we are encouraged by the recent announcement of plans to develop a Tourism Intelligence Unit which will look again at the review's recommendations.
The profile of environmental issues is growing within the tourism sector, as the public demands that tourism businesses become "greener". However, waste recycling and transport are two areas in which there is clearly still scope for the industry to become more environmentally sustainable. The Government should take a lead in rewarding accommodation providers that operate in a sustainable manner, by making sound environmental practice a pre-requisite for the acquisition of accommodation contracts for the Government and its sponsored bodies.
The Committee recognises that the introduction of Double British Summer Time does not have universal support. However, there is a growing body of convincing evidence demonstrating the benefits of the proposal, not least in terms of energy savings, road safety and increased tourism revenue. On the other hand, there are objections that different time zones within the UK would not be feasible nor desirable. We call on the Government therefore to consult widely on this matter to see if a consensus could be reached.
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