6 Regulation and competition
Reducing regulatory burdens on
business
90. Regulation can sometimes be the bane of business,
particularly the small businesses that characterise much of the
tourism industry. However, regulations are not necessarily bad
in themselves: it is clearly important to maintain high standards
of food hygiene and fire safety, for example. During our discussions
with Cornish tourism interests at the Eden Project we even heard
a suggestion that regulation was sometimes used as a scapegoat
by less successful businesses. At the same time, the tourism businesses
we talked to in Exeter cited a number of examples of regulations
that seemed to serve little purpose other than to hinder the industry:
small bed and breakfast businesses being unable to serve wine
to their guests was mentioned in this context.
91. UKinbound provided us with the following broad
context for the regulatory issues facing tourism businesses:
For our SME members, compliance with the raft
of legislation imposed by Government can be a considerable challenge.
Whilst many attempts have been made by Government to address this,
either through individual initiatives for small businesses or
the wider red-tape challenge, the delivery of real change has
been disappointing. The regulatory demands and the variety of
business support schemes are bewildering to many of our members
and Government should do more to make it as easy as possible for
businesses to be compliant- in order for them to flourish.[132]
92. The chief executive of VisitEngland, James Berresford,
described red tape and regulation as a "constant bugbear
of small businesses". He added: "I am sure that 70%
of all tourism in this country is made up of micro-business, not
even SME. Therefore, the array of legislation, much of which comes
from Europe, can be bewildering. My view is that small businesses
in particular need a degree of hand-holding. With the demise of
groups such as Business Link and the fact that local authorities
have to cut back, there are fewer people to advise businesses
through this very tricky and delicate issue."[133]
He also referred to work on business advice which is being undertaken
by the Tourism Industry Council, launched by Helen Grant, Minister
for Sport and Tourism; the Minister chairs the Council with Nick
Boles, Minister for Skills and Equalities and Simon Vincent, President
of EMEA for Hilton Worldwide. This Council will be focusing on
improving skills, training and qualifications within the domestic
tourism sector.[134]
93. James Berresford also acknowledged the role of
online business advice: "I am a firm believer in providing
good online services. We are working with BIS at the moment to
try to ensure that the information supplied by them is relevant
to micro-businesses."[135]
VisitEngland should ensure
that comprehensible and relevant information is provided to tourism
businesses, not only online but in public libraries too.
94. In its submission to our inquiry, the Tourism
Alliance referred to a Ministerial Taskforce on Deregulation established
by John Penrose MP in 2011, and chaired by Alan Parker, until
recently the President and Chairman of the British Hospitality
Association. The Taskforce's 44 page report was published in January
2012 and highlighted over 60 amendments that would help tourism
businesses. The Alliance commented: "However, the outcome
has been disappointing with only a few regulations being amended
to date. One of the main reasons for the slow progress is that
the vast majority of the legislation that impacts on the industry
is outside DCMS's responsibility, which reduces the ability of
their officials to deliver 'tourism-friendly' outcomes."[136]
95. One of the Penrose Taskforce members, Brigid
Simmonds of the British Beer and Pub Association, described progress
in some cases as "glacial".[137]
In oral evidence, she provided several examples, one of which
is a direct responsibility of DCMS: "One that is specifically
for DCMS is around gaming machines. You have to pay £50 for
something that is a natural entitlement, which is to have two
machines in your pub. You have to pay another £50 every time
the licensee changes. DCMS asked us about a year ago whether that
regulation should go. I can see absolutely no reason why that
regulation should still be there. Nothing has happened."[138]
96. ABTA's submission to our inquiry also referred
to another area of regulation identified in the Penrose report:
"ABTA is calling for a review of the 2007 decision to regulate
the sale of simple, low risk travel insurance products."[139]
Mark Tanzer of ABTA gave us the following background:
We would like to see the regulation of travel
insurance sales removed. It was brought in by the last Government
and it was regulated as a financial service product, which meant
that travel agents were no longer able to sell it unless they
went through an appointed representative route. The result is
fewer people are travelling with travel insurance. We did our
own research that said that 25% of people under 25 are travelling
without any insurance at all. We are currently doing a campaign
with the Foreign Office to alert people and encourage people to
take out travel insurance for skiing, given the costs of injuries
and so forth.
There is an example there of how the Foreign
Office is saying one thing and then Treasury is saying, "You
need to do it through regulated means". We have not ever
had any sign of consumer detriment through the sale of travel
insurance and the travel agent is often the best person to give
the right advice because they know who is travelling and exactly
what the details are at the time of purchase."[140]
97. Kurt Janson of the Tourism Alliance gave as an
example the Package Travel Directive which he told us prevented
small businesses working together; for example, he said that a
small bed and breakfast business could not offer a package deal
with a nearby pub: "if you had a B&B you could not say,
'£100 for staying at my place and a meal at the local pub'."[141]
UKinbound is clearly sympathetic to points such as this: "Developing
new and innovative itineraries and packages is a key concern for
our members and an important opportunity in developing the tourism
offer … The Government should continue to lobby to ensure
that the Package Travel Directive should only cover those activities
which include an international travel element."[142]
98. The Package Travel Directive also featured in
ABTA's submission:
Although improvements have been delivered through
recent reforms to the Air Travel Organiser's Licensing (ATOL)
scheme of consumer protection, ONS and Civil Aviation Authority
(CAA) statistics show an estimated 40% of UK holidaymakers still
travel outside the scope of the existing regulation. ABTA believes
that all consumers booking a holiday are entitled to be protected
in the event of insolvency. We urge the Government to ensure that
the revision of the Package Travel Directive (PTD), and subsequent
regulatory changes in the UK, deliver a consumer protection regime
providing clarity and consistency for consumers and businesses
alike."[143]
99. One further example of regulatory burden brought
to our intention also relates to VAT. UKinbound told us: "As
with so many businesses the impact of EU legislation is felt keenly
by our members. In particular, the potential impact of the ECJ
ruling on the Tour Operators Margin Scheme (TOMS) is of considerable
concern. We welcome the HMRC's position that no change to the
UK regime will take place until there has been an EU-wide review
of TOMS and we will work proactively with HMRC to ensure that
any changes to a future scheme will be in the interest of UK tour
operators."[144]
TOMS is a special scheme for businesses that buy-in and re-sell
travel, accommodation and certain other services as a principal
or undisclosed agent (that is, acting in their own name). The
TOMS is a simplification measure. In many cases it enables VAT
to be accounted for on travel supplies without businesses having
to register and account for tax in each Member State where the
services and goods are enjoyed.[145]
Kurt Janson of the Tourism Alliance explained: "The problem
at the moment is that the European Court of Justice has decided
that business-to-business or wholesaling of tourism products should
be included in the TOMS scheme, which would make them totally
uncompetitive and see our wholesale tourism industry relocate
overseas".[146]
100. We asked the Tourism and Sport Minister, Helen
Grant, about the pace of progress in implementing the deregulation
agenda contained in the Penrose report. In reply, she acknowledged
that the taskforce had done a very good job:
I know that half the recommendations have been
looked at and implemented, particularly in relation to planning
and visas and also entertainment licences. That is positive, but
not every one of the remaining recommendations could be implemented
or acted on, usually either because it was not in our remit or
there was no longer a need for it.
However, I would like to have a look at this
again. I would like to think that there is more that I can do.
I have therefore agreed to write to Alan Parker and other taskforce
members to ask them to have another look at this and at what more
we can do. I will take that forward.[147]
101. Too many
regulations are ill-fitted to the world of small businesses that
characterise much of the tourism industry. The Government should
take forward with greater speed the recommendations of the Penrose
report, updated as necessary.
102. Furthermore,
the Government needs to remain vigilant in relation to European
legislation that could impact on the tourism industry, and to
fully factor in the industry's needs during negotiations with
our European partners.
Daylight saving
103. The Daylight Saving Bill 2010-12 was presented
by Rebecca Harris MP on 30 June 2010. It would have required the
Government to conduct a cross-departmental analysis of the potential
costs and benefits of advancing time by one hour for all, or part
of, the year. If this analysis found that a clock change would
benefit the UK, the Bill would have required that the Government
initiate a trial clock change to determine the full implications.
Despite very substantial cross-party support, the Bill failed
to complete its passage through Parliament before the end of the
Session, and did not progress beyond its Commons Report Stage.
An indication of the Government's current position has been given
by Jo Swinson, the Parliamentary Under-Secretary, Department for
Business, Innovation and Skills, in a written answer to a parliamentary
question in September 2013: "The Government have no plans
to change the current arrangement and retain British Summer Time
throughout the year. Currently, the UK is on Greenwich mean time
in the winter and is one hour ahead of Greenwich mean time in
the summer (British summer time)."[148]
104. Giving evidence to us, Kurt Janson alluded to
the Tourism Alliance's campaigning activities for daylight saving,
"going to double summer time, which would have basically
no cost."[149]
He went on to add that such a measure would generate between £2.5
billion and £3.5 billion in additional revenue, annually,
to the tourism industry—equating to between 60,000 and 80,000
new jobs.[150] In over
80 written submissions to our inquiry we found only two—brief—references
to daylight saving time. Whether this reflects the view of the
Minister for Communities and Local Government that daylight saving
is not a "silver bullet",[151]
whether it reflects more pressing priorities in the industry,
or whether it represents widespread resignation over government
inactivity we cannot unequivocally say.
105. In summer 2012, a report prepared for the Department
for Business, Innovation and Skills examined "the scope,
quality and robustness of available evidence that could be used
to assess or monitor the potential effects of a policy to move
the clock forward the year round in the United Kingdom."
The overall conclusion was that more research was needed to inform
a formal forecast of the costs and benefits of moving to single/double
summer time.[152]
106. In view
of the potential benefits, not least to the tourism industry,
of daylight saving time, we recommend that the Government commissions
a rigorous cost-benefit analysis, including the research needed
to properly inform this.
Competitive hotel accommodation
VAT
107. We have already discussed some of the arguments
in favour of reducing VAT on accommodation. From the evidence
we received this represents a resounding solution supported by
the industry as a means of making hotel accommodation more competitive.
Bourne Leisure told us:
Every European country with a significant tourist
sector chooses to apply a lower rate of VAT to tourist services
(as they are allowed to do under EU law) except the UK. So, whereas
an hotelier in Spain, Italy, Greece, France or Germany can charge
from 7% to 10% VAT, the UK hotelier must charge 20%.
We simply can't compete at that rate of differential,
except perhaps in the London bubble, and that has led to the missed
opportunity that exists today. With a competitive VAT rate, more
of our seaside and other tourist destinations could be powerful
drivers of job creation and economic growth.[153]
108. If VAT on major hotel chains is an impediment
to competitiveness, this is surely even more the case for smaller
businesses. Graham Wason of the Cut Tourism VAT Campaign said:
"Bear in mind accommodation includes camping sites and self-catering
like my business as well as hotels. The average VAT rate on visitor
accommodation in Europe is 10.8%, so it is half what it is in
the United Kingdom."[154]
ACCOMMODATION RATING
109. Evidence from VisitEngland at least suggests
a further way in which the competitiveness of accommodation could
be improved: by modernising the existing accommodation grading
scheme.[155] Unlike
many overseas competitors, England maintains a voluntary, unsubsidised,
accommodation grading scheme. VisitEngland told us they are seeking
to modernise the delivery and management of the accommodation
grading scheme and to extend the value of the advice and support
given to businesses in the course of assessments. James Berresford
of VisitEngland told us: "The current scheme has its roots
in the early 1970s, when accommodation needed to be improved wholesale
across this country and across Scotland and Wales. The scheme
was brought in to encourage business improvement at the time.
We have moved on since then: with the likes of Twitter and social
media and so on, people are making their decisions about where
they go through other means. My view is that we need to work with
the 24,000 businesses … We are losing members from that scheme
for obvious reasons: they feel that there are other routes to
market. However, those 24,000 businesses still want access to
the sort of business advice and business support that an inspection
can bring."[156]
110. The benefits
of the accommodation grading scheme will be maximised if it is
used, at least in part, as a vehicle for providing business advice
to tourist accommodation.
132 UKinbound (TOU0022), para 3.4 Back
133
Q 397 Back
134
Department for Culture, Media and Sport (TOU0061) Back
135
Q 397 Back
136
Tourism Alliance (TOU0031), para 4.4 Back
137
Q 246 Back
138
Q 246 Back
139
ABTA (TOU0011), para 26 Back
140
Q 246 Back
141
Q 55 Back
142
UKinbound (TOU0022), para 3.4 Back
143
ABTA (TOU0011), paras 24-25 Back
144
UKinbound (TOU0022), para 3.4 Back
145 https://www.gov.uk/government/publications/vat-notice-7095-tour-operators-margin-scheme/vat-notice-7095-tour-operators-margin-scheme
Back
146
Q 49 Back
147
Q 435 Back
148
HC Deb 13 September 2013 cc 876-877W Back
149
Q 46 Back
150
Qq 53-54 Back
151
Q 441 Back
152
David Simmonds Consultancy, Review of the scope, quality and
robustness of available evidence regarding putting the clocks
forward by one hour, the year round, in the UK, July 2012 Back
153
Bourne Leisure Limited (TOU0012), paras 5.2-5.3 Back
154
Q 149 Back
155
VisitEngland (TOU0057), para 3.7.1 Back
156
Q 399 Back
|
