Examination of Witnesses (Questions 320
- 339)
TUESDAY 8 JANUARY 2008
MR BOB
COTTON, MR
ROB HAYWARD
AND MR
BRIAN WISDOM
Q320 Mr Evans: But the network of
pubs throughout the UK is not in crisis?
Mr Hayward: It is not in crisis,
but in a number of places it is in serious difficulty, there is
no question about that.
Q321 Mr Evans: Let us look at the
smoking ban. What sort of impact has that had and how many pubs
has it closed?
Mr Hayward: As I say, when we
first had discussions with Caroline Flint, the Minister, myself
and my then Chairman gave an indication to the Department of Health
that we thought that about 10%, ie, 5,000 pubs, would probably
go out of business partly as a result of the smoking ban. We are
realistic about that and we supported the introduction of the
smoking ban because we believed that it was important that we
should have a level playing field across the whole field, but
we said that that was the stark position. We were looking at the
impact on Ireland and we were already conscious because we were
closer in Scotland to the position that those businesses were
not going to go out of business solely because of the smoking
ban, but they were already marginal because of other elements
of economics.
Q322 Mr Evans: So, in your experience
since the smoking ban has come in, you have seen marginal pubs
going out of business. What have pubs been able to do about any
problems they have had in trying to cater for the smokers?
Mr Hayward: I think what overwhelmingly
the industry has done is moved more aggressively towards food
and other offerings in terms of attracting families, females,
et cetera, so they have made changes. There have been difficulties
and clearly some areas have had more difficulty than others, but
in general I think it is fair to say that we have overcome the
difficulties and in some places it has been more of a challenge
than in others.
Q323 Mr Evans: The difficulties that
you have looked at right at the beginning when the smoking ban
came in, the planned difficulties, with people erecting umbrellas
and little lean-tos and goodness knows what, have local authorities
in the main been a fairly soft touch, would you say, and sympathetic
towards the pub industry or have they been quite Neanderthal in
certain parts of the country?
Mr Hayward: I think there are
370 local authorities and there are probably 370 different approaches
to it. I think, if anything, and it is historical now because
it has passed, but, if I am critical of any particular element
of the process, the Department that we got least assistance from
was DCLG. We asked, as did the Department of Health and DCMS,
that DCLG should encourage local authorities to prepare for a
large workload and they did not prepare, they did not through
DCLG, but we had to go to the local authorities and make sure
that they were geared up for all the applications for the different
elements of external provision. There have been some difficulties
and clearly noise is important, but our experience in Scotland
has been that noise is initially a big issue and then it diminishes
as time goes on and you are left with a few venues where it is
a particular problem, but you work that through with the local
establishment if you have got good management and with the local
authority and the other agencies, but overall, if I was critical
of one particular element in the whole process of the smoking
ban, it has to be DCLG.
Q324 Mr Evans: Leaving that to one
side, do you think that as far as tourism generally is concerned,
both domestic and international therefore, that perhaps we could
have had the same impact as far as the smoking ban was concerned,
but been perhaps more conciliatory towards smokers in some way,
shape or form, and I am looking at the French experience here
that has just come in on 1 January? If any country, I would have
thought, might be pushing jelly up a hill in trying to introduce
a smoking ban in cafes and bars, it would be France. Do you think
there is going to be any sort of difference in experience there?
Indeed the general attitude here is that the French introduce
a rule and then go on to ignore it. Is that going to happen? They
have not quite brought it in in France in the same way that we
have here.
Mr Hayward: I think Bob and I
went through the whole process of the smoking ban and we have
to deal with what we have in our society which is a British society.
We might wish that there was a French approach in terms of regulation
on a number of issues, but there is not and overall, as I say,
whilst there are things we were tearing our hair out with at the
time, we have overcome them and I think that is true of hotels
and restaurants and it is also whether you are dealing with large
visitor attractions or holidays and home parks from whom you have
had evidence previously. It was quite clear that there was going
to be a smoking ban at some stage. We would have preferred managed
change and we made that clear, but, if we were not going to get
managed change, then, as far as we were concerned, it was important
that there was a level playing field for all sectors of the hospitality
industry.
Q325 Mr Evans: Is the vibrant future
of the pub industry in the UK more threatened by cheap alcohol
from supermarkets than it is from any other regulation, including
the smoking ban?
Mr Hayward: I think I would hesitate
to say that it is more threatened. It is clearly a factor and
there is a marked shift amongst younger people to do what we call
in the trade "pre-load", in other words, drink substantially
before they go out to the night-time economy, and that is not
only happening in effect in our sectors, but it is also having
an impact obviously on other sectors as well. What we are also
seeing now, we reckon that amongst youngsters, by which I mean
18-30-year-olds, about 85% of all that age group actually pre-load,
but what we are now also seeing is probably more post-loading
and that is people who go elsewhere afterwards and it is the sheer
cost of providing the service where you have got lighting, labour
and all the rest of it.
Q326 Mr Sanders: What about the Gambling
Act? Does that have an impact in terms of income from pub slot
machines?
Mr Hayward: Yes.
Q327 Mr Sanders: A negative impact?
Mr Hayward: Yes, it has, and there
are regulatory burdens, there are taxation elements, and fixed-odds
betting machines, so, therefore, there are attractions in other
venues where they can offer something very much more substantial.
Q328 Mr Sanders: To whom are you
losing that trade? Is it the betting shop?
Mr Hayward: Primarily, yes. Betting
shops and pubs fall into the same kind of general social medium
which I think you would all recognise, and that is a serious effect.
Q329 Mr Evans: The 24-hour availability
of certain pubs, has that been a benefit, do you think, to tourism
being attracted to the UK?
Mr Hayward: Yes, we do take the
view that there are very few pubs that have 24-hour licences and
there are even fewer, and we have only found two in the whole
of the United Kingdom, that actually open 24 hours and they are
both in Blandford Forum, though why we do not know, and 80% of
all pubs that have 24-hour licences that do not use them are in
North Dorset, West Dorset and North Norfolk, so it is a slightly
odd distribution, but it has overwhelmingly been an advantage
because people can see that we are now providing a service without
the rigidity that there was previously.
Q330 Mr Evans: And, as far as London
is concerned, what is your view on the availability of extended
licensing in London?
Mr Hayward: Westminster has been
incredibly restrictive and, associated with that, that has not
helped one of the big changes which I think all MPs and the police
would have liked to have seen which was what we call a "demographic
shift" in that, if you are a theatre-goer, for example, and
you have come out of Les Mis, that finishes at ten to 11,
you cannot, therefore, get into a pub. Westminster is not allowing
extensions and the only extensions are those that exist already
and they are those that are youth-oriented. If you are going to
see less aggressive town centres, you have to ensure that the
people who are older, the over 30-year-olds, are attracted into
those pubs. One of the big changes that we have not yet seen is
that demographic shift of older people, in particular, in London
staying longer in pubs; they do not go there because they cannot
get into them after they come out of the likes of the theatre
or a restaurant.
Q331 Alan Keen: It is encouraging
older people to spend more time in pubs then! It is a very entrepreneurial
industry right across pubs, restaurants and hotels, but, if you
are lobbying the Government, you are lobbying them to reduce tax
and regulation, but do you get enough help on a positive basis?
Do the RDAs help and can the Government help in any other way
to co-ordinate and help the industry when it has got difficulties?
Is it a lack of co-ordination?
Mr Hayward: I would make two observations
in relation to it. One is, and I say this having sat on your side
of the fence, that I do not think you can ever appreciate it unless
you have run a small business, the sheer impact of ever-growing
regulation on small businesses, and I would just say that every
Bill introduces more and more regulation and that is an enormous
impact. The other thing for small businesses, which is particularly
important for the tourism sector given the amount of small businesses,
is the sheer proliferation of bodies. I actually checked with
a friend of mine. I am a native from Torquay and a friend of mine
lives in Torquay who currently runs a bed-and-breakfast. I checked
with him yesterday, he set up in business four years ago, and
I asked him where would he go in terms of looking for business
assistance, and he had not got a clue. His first thought was the
local council, but, beyond that, he had no idea, and there is
a sheer proliferation. If you say skills, if you say business
advice, whatever, there are just so many bodies that even somebody
like ourselves, as head of trade associations or sector skills
councils, would be hard-pushed to identify the total number of
different places you can go and, therefore, they are all trying
to provide advice to a small businessman who has got very little
time because he is trying to keep his business going.
Q332 Alan Keen: So there is not any
co-ordination?
Mr Hayward: There is no co-ordination,
no consistency whatsoever.
Q333 Alan Keen: So there is a proliferation
of people who get paid for offering that advice, yet you cannot
find anyone for the industry as a whole who can really help?
Mr Cotton: I would just add to
that that I deal with all the RDAs and, first of all, I see a
difference in different RDAs. Those that are having some impact
at the macro-level, and there has been some really good work done
on regeneration in the same way that maybe the National Lottery
has had a major impact in major visitor attractions or sites,
at the macro-level some RDAs have done some really good work for
the tourism industry, but, when it comes to individual entrepreneurs
and small businessmen in terms of whether he relates to it, whether
he understands what it is doing and whether he can get advice
from it, there is no connection whatsoever. I would reiterate
Rob's point that, for a small hotelier or restaurateur, if you
want advice, help or you have a problem, if you belong to a trade
association or you belong to the chambers of commerce or whatever,
you have a point of contact and, if you are outside of that link,
and, quite frankly, in this sector probably 70% of all small businesses
are, it is almost impossible to know where to go to get sensible
advice on anything. That would be my experience.
Mr Sanders: It is not just tourism, but
any business and industry.
Q334 Alan Keen: Can you tell us something
about the trends? We have got these boutique hotels now and we
have—
Mr Hayward: Not many in Feltham
and Heston, I would have thought!
Q335 Alan Keen: We have not got a
boutique hotel.
Mr Cotton: We are seeing quite
significant changes in what you might term "the hotel sector".
If we think back maybe 20/30 years ago, at the very lowest end,
there might be what you might term "the youth hostel"
or a small hotel, low standard, through to a two-star, right through
to the three-, four- or five-star luxury hotel that you would
see on Park Lane. What we have seen probably in the last five
years and in the last two years accelerate quite dramatically
is essentially the very bottom end beginning to disappear altogether
and, where there is a bottom end, it is being replaced by modern
youth hostel types where it is a modern minimum-service hotel
at a very low rate. Then there is an extraordinary explosion of
growth in the budget sector and budget hotels now probably account
for 140,000 bedrooms and, if I say ten years ago there were only
5,000 or 10,000, I can tell you that some 30 budget hotels were
opened in the three months leading up to Christmas and they are
essentially replacing the bottom end of the market. It is not
new demand, but they are replacing that bottom end of the market
and they are moving into newer areas, seaside resorts, they are
good for regeneration, and the three-star market is disappearing
altogether because there is no mid-market price point. The four-star
market is now segmenting down between a corporate four-star, a
boutique four-star, a leisure lifestyle four-star and then there
is the five-star luxury, so there are different price points and
different experiences that, as it were, the customer wants.
Q336 Alan Keen: When I talk about
a lack of co-ordination or when I questioned you on whether there
was a lack of co-ordination, in the budget hotels you can rely
on getting a modern, clean hotel and what is lacking is any atmosphere.
Is there no way that those groups, and I know it is simpler to
run if you do not have any involvement in it, but there must be
some potential for those hotels having links with local companies
who can provide that slight difference in the restaurant aspect
of it?
Mr Cotton: Well, essentially a
budget hotel is a room for the night in the same way that a budget
airline gets you from A to B at the cheapest price, end of story.
What we have found particularly in tourism, hospitality and leisure
is that, if one looks at the customer of 20 years ago, if you
were a sort of luxury customer, you were almost always a luxury
customer whether it was at work, at home or when you went on holiday;
you always stayed in the same grade hotel. What you find with
modern customers and modern consumers is that that same person,
sometimes he is happy to use a budget hotel because it meets his
need, on another occasion he will want to stay in a boutique-type
hotel because he is having two or three days away with family,
his girlfriend or boyfriend and wants that sort of experience,
another time he is happy to stay in a corporate-style hotel because
that meets his requirements—
Q337 Mr Evans: And someone else is
paying!
Mr Cotton: Someone else is paying.
Finally, it may be his golden wedding anniversary and he may stay
in a five-star hotel, but the same customer is happy to go through
all those different experiences. That would not have been the
case 20 years ago.
Q338 Chairman: This problem of complying
with regulation and a difficulty in finding advice as to how to
deal with administrative burdens, is this something that People
1st can assist with at all?
Mr Wisdom: Clearly there is an
issue with both. First of all, in the last few years the Government
has been reducing the amount of assisted training done on regulatory
burdens, so things like basic food hygiene and health and safety
training that at one time were subsidised within the system are
no longer which means that actually industry is footing the bill
for that now. The impact of that is that actually some of the
added value training around customer service and management and
business skills that industry may have taken before is potentially
suffering as a result. Clearly the other issue is about finding
and accessing support where it is available. In fact, we surveyed
5,000 businesses in the sector just 18 months ago and our findings
show that 98.5% of small businesses have never accessed any funding
support on skills. Actually, when you consider that something
like £600 million is being expended by learning and skills
councils, regional development agencies and other government agencies
on tourism and hospitality skills in the UK, that is, I think,
an extremely worrying trend and actually it is something that
industry clearly needs help on in terms of understanding where
it can access those things. People 1st has actually developed
a communication tool called "UK Skills Passport", UKSP,
which is actually available that does actually help industry find
where that funding support can be found and actually does point
industry to what are the sort of best qualifications too that
fit various job levels within the industry. The issue for us,
as always, is how you reach those businesses and actually, without
the support of trade associations, for example, the chances are
we never will. Indeed, the regional development agencies have
a very important role to play in terms of reaching the small and
medium enterprises which comprise 80% of tourism businesses. The
way the workforce falls, 45% of the workforce in what we would
classify as tourism is in the biggest 280 businesses UK-wide and
45% sits in effectively small and micro businesses, and the small
and micro businesses are the ones that are the most difficult
to reach.
Q339 Mr Sanders: Turning to London
2012, what estimates have you made regarding the impact of the
Games on the hospitality industry both during the Games and in
the legacy?
Mr Cotton: As far as 2012 is concerned,
I got involved some several years ago about whether we should
support a bid for 2012 or not in the first instance, and we had
a fairly lengthy discussion in the hotel sector as to whether
we would support this bid or not. When I say that, my principal
members have catered for every Olympic Games since 1948 and are
currently hosting all the main hotels in Beijing for 2008, so
my major members have a lot of experience of what it takes. If
you are a major hotel group with 15 empty hotels in Paris and
seven full hotels in London, you might take a view as to whom
you want to win the bid. We took a collective view that we actually
wanted London and Britain to succeed in this bid, so I got the
hotel industry together and we put together one contract in support
of the bid for 38,000 bedrooms, one contract, the same conditions
to every hotelier in London, so we took a collective view that
we were very keen on London winning, and we took the view for
two or three reasons. One is that we felt that, for the long-term
growth and success of tourism for London and Britain, we needed
a major investment in our transport infrastructure and our airport
access. That was absolutely critical if we wanted tourism to continue
to flourish into the long term and we felt that, if we had the
Olympic Games in London, there was a fair chance that we might
start to get some real investment in our airport infrastructure,
transport infrastructure, rail access, et cetera, so that
was one point. Secondly, we took the view that, whilst London
has been successful and is successful and the success of London
impacts on the whole country in tourism terms, we were looking
to the future and we could see that, if we could get the whole
of the east side of London regenerated and thriving, that would
add to London being a successful place to do business down the
track. Thirdly, we did recognise that with the Olympics comes
enormous exposure. The fact that there are going to be 20,000
journalists here during the Olympics is an enormous opportunity
to put your best foot forward and show what we have to offer.
Those were the three driving reasons for supporting that, bearing
in mind we do have real knowledge and experience that 2012 itself
will not be a busy year, so let us get this in context. London
has something like 135,000 bedrooms, whereas, if you look at Barcelona,
if you look at Sydney, if you look at Athens, they have between
18,000-25,000 bedrooms, so it is a totally different order. If
you look at visitors to London, London in July/August of any year
will be catering for 2-2.5 million visitors. The Olympics at best
perhaps will bring 600,000. 350,000 visitors go to Wimbledon in
the ten days/two weeks. We are well used to dealing with big events.
The year itself? No big deal. It is the potential of raising the
profile of London and Britain and of getting this investment in
transport infrastructure and the east side of London. I would
add one or two other things, and I am sure Brian will comment:
yes, of course it gives us an opportunity to focus on raising
skills and those key things we want to do in improving customer
service. I personally want to use the opportunity—and I
have ensured it is in the Olympic strategy for the Government—to
promote British food, the probity of British food and of supplying
it locally grown. We have a great opportunity to show that we
can showcase British food, at its best, right across the country,
sourced from Britain. We have a great variety of ethnic restaurants.
Most of their supplies can be sourced locally. That is why I am
strongly in support. I think there will be benefits. Whether there
will be a net £2 billion legacy, I would question, but I
do see the upside and strongly support it.
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