§ 1.34 p.m.
§ Mr. John Hannam (Exeter)
May I first of all, Mr. Deputy Speaker, thank you for giving me this opportunity of raising the matter of Government policy for tourism. This is a very important subject, which affects most hon. Members' constituencies in one way or another. I personally represent a constituency which is the centre of the largest domestic holiday area in this country, the South-West, but in this debate I should like to speak on a national basis, as someone who has spent over 15 years working in the industry, and several years on the Council of the British Travel Association, now defunct, and as Chairman of the British Hotels Federation.
Tourism represents our leading major growth industry, earning more dollars than any other, and it is certain to become, by 1975, the largest single industry in this country. It is already earning over £500 million a year, and by 1975 it will be bringing in from overseas £1,000 million a year and earning another £1,000 million from home demand.
However, it is not just a question of money. Tourism also represents a major environmental factor in the preservation and creation of amenities for the way of life of our people—weekend holidays, holidays such as the one we are about to embark upon, camping parks, wild life parks, National Trust parks, business trips 716 and conferences; they are all part of the structure of tourism.
As a service industry the hotels and tourist sector has suffered greatly over recent years through not being treated as an industry proper. There have been years of tax increases, loss of investment allowances, S.E.T., purchase tax on equipment, corporation tax. By the 1960s the industry was reeling under the cumulative effects of these impositions. Investment was dropping away sharply, and, despite the tremendous annual growth in the numbers of visitors, largely due to the sustained efforts of the old British Travel Association, our facilities here at home were lagging behind—far behind those of our rivals overseas.
In 1969 we had the Development of Tourism Act, which set out, belatedly, to change all that, firstly by introducing grants and loans for new developments started before 31st March of this year and completed before 31st March, 1973, and secondly by establishing a new structure of four tourist boards to supervise the tourism activities of Britain.
This Act stimulated a feverish burst of hotel construction, with everyone trying to jump on the bandwagon, planning permission or no planning permission, the result being that instead of an estimated £8½ million a year in grants being spent on new hotels and motels throughout the regions we have had well over £52 million in grants applied for in England alone to date, while there are still many projects to be accounted for. Pro-party speculators have seized on the opportunity of developing in London, and the result is, as Lord Crowther pointed out quite recently, that nearly 50 per cent, some £23 million, of grants has gone to London projects, producing a severe over-saturation of expensive luxury accommodation, when what was in fact required was a supply of medium and lower priced bedrooms for the lower-tariff holidaymakers. One can forsee a price-cutting war developing at some time in the near future when under-occupancy in London becomes more apparent.
However, we now see the termination of the grants and loans scheme and the reintroduction of investment allowances on the equipment and tools of the trade of the hotel industry. This, with the reduction in selective employment tax 717 and corporation tax, is very much welcomed by the industry. However, I believe there is yet a lot more to do.
A clear definition of Government policies for tourism in the 'seventies is necessary if investment and modernisation are to continue effectively after the end of the present grants and loans assistance. My intention in this debate is to focus attention on the main requirements of the tourist industry.
These requirements do not constitute outrageous or impossible demands on the Departments concerned but rather a demand that a framework should be established wherein tourism can develop in a natural manner, providing the facilities and the amenities which the leisure-seeking and business traveller requires.
Since December of last year I, in conjunction with my hon. Friend the Member for Bristol, North-East (Mr. Adley), have been carrying out a survey of the attitudes to Government policy of the major companies and organisations in this country. We shall be producing a full report in due course, but in the meantime, because of the unanimity of view expressed by all those we have interviewed, I wish to state the leading priorities of those feelings towards Government policy in the hope that the Minister will take account of the points raised, although some of them, I know, fall outside the scope of his own Department.
The first priority in all cases, and one which has been repeated over many years, is the need for the industry to be recognised as an industry and to be allowed depreciation allowances on buildings and structures. There can be no strong reason, in the opinion of all those concerned with the hotel industry, why these purpose-built buildings, used as they are seven days and seven nights a week, unusable for any other commercial function, yet contributing so much to employment and to the income of local authorities, should not be allowed a normal allowance for amortisation on fabric. It has been somewhat disappointing to myself and to other hon. Members who have discussed this matter with Ministry officials to find that there is still a tendency to hide behind the out-dated smokescreen laid down by the Treasury—that it is impossible to define a hotel building. This is nonsense, and it was exploded by 718 the 1969 Act, which defined a hotel and laid down the grants and loans qualifications. It stated that a hotel had to have ten bedrooms, 25 in London, and had to be of a permanent nature, supplying breakfast and an evening meal and must be open during the main part of the season.
It is also argued that investment allowances on plant and equipment constitute 40 or 50 per cent. of the total expenditure. This is an exaggeration. My experience indicates a figure nearer 30 per cent., and we must remember that purchase tax is still levied on most of the working tools of trade of the industry. Certainly in 1973, when value-added tax will replace purchase tax and S.E.T., this situation will change, but it has been shown in the Common Market countries that in such a labour-intensive operation as hotels V.A.T. will prove to be a considerable tax burden.
If the Government are to create the right climate for investment on a long-term basis for new hotels, extensions and modernisation it is important that depreciation should be allowed from 1973 on capital invested in buildings, particularly having regard to the importance of tourism as a foreign currency earner. This type of incentive is particularly important in seasonal tourist areas, where it is essential, to make projects viable, that buildings are erected with a relatively short life-span, say, 20 to 25 years, so as to keep capital costs to a reasonable level. Depreciation allowances would also help to halt the deterioration in our older, more traditional holiday resorts, where obsolescence in older buildings has meant a general air of seediness and depression amongst what were once fine period buildings. If I mention party conference venues, hon. Members will understand my meaning.
Holiday areas, for example, along the South and East Coasts do not fall within the development areas. The development areas which are receiving aid are industrial and not tourist. Holiday areas desperately require assistance if we are to maintain the standard of our domestic holiday trade which will otherwise go abroad to places with more modern facilities, with balconies and bathrooms, even if sometimes no water appears. We still rely on the age-old attraction of the aspidistra, and creaking corridors, and 719 even the use of the Hoffnung attraction of a "French widow in every room" no longer makes up for the other disadvantages.
The first priority desperately sought by the industry is a tax allowance on buildings. If this policy were implemented, the technique of introducing "shot in the arm" hotel grant schemes would not be necessary or desirable. Tax reliefs would provide funds for hotel development that would in turn promote tourism. In the meantime, an extension of the loans scheme would help to tide the industry over.
The other priorities are related to Government strategy and simplification. We have inherited four major boards to administer tourism. As the intricate grants and loans supervisory work begins to come to an end, I suggest that we shall need possibly only two such boards. First, we should need the British Tourist Authority which, under the chairmanship of Sir Alexander Glen, has performed such a brilliant operation in selling Britain as a major attraction to the foreigner. This organisation would be responsible for marketing and political representation. Secondly, I suggest a combined England-Scotland-Wales Tourist Board to deal with our home tourist market and the regional structures and facilities. Again, I pay tribute to the work done by the teams in the existing boards in the short time they have been in operation.
We need not go on much longer with a four-part structure, with each board having equal status and able to make decisions different from the others, and each looking for specific technical direction from the Department of Trade and Industry which, with all respect to my hon. Friend on the Front Bench, is perhaps best equipped to exert this specialist control. Here is an opportunity to reduce the size of the Government machine and to end the "who does what" confusion in the public's mind.
The second most important priority in the eyes of the industry is the abolition of the training board, and its replacement by a small training advisory unit. The arguments against the Hotel Catering Industrial Training Board are overwhelming. It is cumbersome, slow-moving and top-heavy in administration. Incident- 720 ally, it appears that over 40 per cent. of the Board's income is currently devoted to administrative and direct services to the industry, at a cost of £1.3 million, which is not acceptable to an over-taxed industry.
The future rôle of the Board must he in consultancy and advice, possibly on a fee-paying basis. What is required is a small establishment able to co-ordinate the expertise within the industry so as to frame recommendations which can be adapted to a firm's individual needs, with a small staff of qualified people commanding respect in the industry.
Finally, a general strategy for planning and infrastructure is needed. I should like to see tourist development areas rather than the present limited industrial development areas. The present system of channelling assistance into what are often non-tourist areas can only lead to a wastage of our valuable resources. We also need a general direction on planning attitudes, as many anomalies exist. On the one hand, the Minister for Transport Industries insists that advance warning signs can be allowed for establishments which provide a 24-hour service with petrol. On the other hand, a hotel or motel on a main route applying to the Minister for Local Government and Development for planning permission, is allowed to build if petrol facilities are not provided with the accommodation. The motorist needs clear advance warning signs of services ahead—accommodation, meals, petrol and rest areas. Let us design and plan a standard advance warning sign for use on our main roads and motorways. Surely the time has come for us also to consider whether overnight accommodation should not be provided on our motorways.
There are many aspects of tourist policy which need to be stated but, as several hon. Members wish to speak I will conclude by summarising the needs of the industry. The first priority is for the industry to be treated as an industry and to be allowed depreciation on buildings. The second priority is the abolition of the Hotel and Catering Industry Training Board and its replacement by an advisory service. The third priority is a close examination of the structure of the four-headed tourist body with a view to possible simplification. The fourth priority is a redefinition of tourism 721 development areas to replace or encompass the existing industrial development areas.
Given this strategy for the 1970s, backed by the enthusiasm and efforts of the Tourist Authority and Boards, with such keen dynamos as Sir Mark Henig of the English Tourist Board, and fully supported by the hard-working seven-day-a-week industry, the Government could produce a self-sufficient, modern tourist industry closely concerned about the needs of the home holiday demand and care for the environment and at the same time attracting more overseas visitors and enticing them away from our overcrowded capital into the beautiful and historic regions of this country of ours. The reform of the licensing laws, the creation of a major conference centre in London, better communications with the regions—all these are before us. I hope that we shall soon hear a clear statement of Government tourism policy for the 1970s, which will allow this great industry to produce the amenities and facilities needed by the ever-growing numbers of tourists and travellers.
§ 1.48 p.m.
§ Mr. W. R. Rees-Davies (Isle of Thanet)
We have listened to an able and wide-ranging speech setting out the needs of the tourist industry. I had always understood that Government policy was for the tourist industry to be treated as an industry. I agree that this is the first priority. I regard the grant system, which is to be phased out in 1973, as unnecessary when we have adopted the policy of treating the hotel industry as an industry. I hope that we shall have an opportunity to discuss the matter on the Finance Bill and that the Government, bearing in mind the new forward-looking measures in the Budget, will be able to say that when the grants are phased out in 1973 newly built hotels and extensions to hotels which are purpose-built will be entitled to the grant. I hope that we shall no longer hear the argument that it is difficult to define hotels, because the Development of Tourism Act lays down a clear demarcation between hotels, restaurants and other establishments associated with the catering industry.
Information from the Department of Trade for February shows an increase of nearly a quarter in the number of visitors 722 coming here—a figure of 182,000, which means an increase of 35,000. If spending continues at that rate the estimate that we shall earn over £660 million from tourism in 1971 will clearly be substantially exceeded.
That being the case, we have to face the problem that at the rate we are going London will be literally flooded with tourists within the next two years. The diffusion of tourism is vital to its future success. It is largely for that reason that the policy advocated by my hon. Friend the Member for Exeter (Mr. John Hannam), of having carefully selected development tourist areas, is essential. We must ensure that we have the necessary facilities in areas outside London—in coastal resorts, such as my constituency, and places like Eastbourne, and away in the West of England and even in the North, so that those coming here can be diffused out of the London area
The great need is medium-priced and low-priced accommodation, not only in London but outside, in cities and resorts where modern hotels, providing cheap accommodation, are required. To attract tourists to these areas it is necessary not merely to diffuse them but to secure attractive amenities. One of the really new upsurges of modern travel depends upon the convention, particularly the convention that comes here from abroad. We must create convention centres both in London and outside.
I ask the Government and the Department of Trade to make representation to ensure that the new Covent Garden site becomes the convention centre for London. It is the perfect site for that purpose. Such a site is badly needed, just as we need convention sites in other parts of the country for smaller conventions of agencies. The convention business in this country is still in its infancy. I agree with my hon. Friend about the general need to review the work of the Hotel and Catering Industry Training Board. It is top heavy, and too costly. An urgent review is required of that board and other boards, and I invite my hon. Friend to commend to the attention of his right hon. Friend the need to reconsider the position.
It is necessary to correlate the efforts of all the parties concerned in tourism. There are the B.T.A., the British Hotels 723 and Restaurants Association, the brewers, caterers' associations, and others. The Minister may be able to appeal to them to join together to provide one organisation, so that they may make the training boards truly effective. At present a lot of effort is being expended, but it is not concentrated. We must ensure that the regional boards are strong and truly representative, and that under their chairman they pursue a policy of promoting tourism in the regions. That will help to create the diffusion that is essential and, at the same time, ensure that the amenities and attractions of those areas are forcibly brought to the notice of travel agents, both at home and overseas.
§ 1.54 p.m.
§ Mr. Kenneth Lewis (Rutland and Stamford)
I congratulate my hon. Friend the Member for Exeter (Mr. John Hannam) on raising this very important subject. It is important both at his constituency level and over the country as a whole. No one who studies the subject can do other than recognise that we need, if not a Minister of Tourism then at least a Minister for Tourism.
The tourist industry is important to the national effort. It is a massive earner of currency. I should have thought that in the next two years we could go for an income from tourism of £1,000 million a year. The interesting thing is that for every person coming here from overseas and spending money in this country we are at least getting from him in currency the value of our export of Ford motor cars. If we lose the export value of some Ford motor cars because of strikes, or disruptions of any kind, we can regain it by persuading people to come here from abroad and spend their money.
Promotion is important. Nothing that is spent overseas on promoting Britain is wasted provided it is spent effectively. The national travel organisations both new and old have provided for Britain a good concept in the world. They nave put across a good picture of this country by amalgamating the old with the new in Britain. That is the right way to sell this country.
Once we have promoted the country we must provide the necessary facilities. I agree with my hon. Friends the Members for Exeter and the Isle of Thanet 724 (Mr. Rees-Davies) who have stated that we are short of hotels in the medium-price and low-price range. We are sending large numbers of people abroad on package tours, and equally large numbers of people in Europe and elsewhere want to come here on cheap package tours. These people do not have large amounts of money to spend but they have sufficient to enable them to stay here at moderately-priced hotels. It is no use our providing hotels only in the high-price range.
One difficulty that arises in winter, particularly in London is the black market in hotel prices. People go round and engage in a kind of Dutch auction. I should have thought that it would be of value to the hotel industry if the prices of hotels were heavily reduced in the winter, so that many more people from abroad would be attracted to come to London. If hotel prices were reduced the rooms would be full. It is vital that the prices should be reduced openly and not under the counter.
I also agree with my hon. Friend that we need a convention centre. The number of conventions is increasing. Many business associations have yearly conventions, some of which are held abroad when they could well be held in this country. The Association of British Travel Agencies has held its last two conventions abroad and is likely to hold its next one abroad also, because no centre in this country can take it. Whether we create a convention centre in Covent Garden or on the south bank of the Thames, I do not care, but it should be in London. If we had a proper convention centre it would attract conventions from abroad and also persuade conventions from this country not to go abroad. It would mean people coming from overseas getting together so that we had a share of international business and industrial meetings. People coming from abroad would be able to see what this country can produce, and that would create a stimulus to trade.
Last summer we had the deplorable situation of many students coming here and being unable to find accommodation. The Minister should try to co-ordinate the work of various bodies to try to ensure that that does not happen this summer. Schools, university buildings and similar places should be made available. I am surprised that some of our 725 public schools do not make their houses available for the purpose. A bad image is created for this country if students who come here cannot obtain reasonably-priced accommodation and have to sleep in the parks.
It has been of great value to raise this subject today. The capacity of this country to earn through entertaining foreign visitors is still not fully realised. It is growing, and will continue to grow. It has massive potential, and I hope that the Minister and the Government will put their weight behind that potential.
§ 2.0 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)
I am grateful to my hon. Friend the Member for Exeter (Mr. John Hannam) for raising this subject and also for the contributions made by my hon. Friends the Members for Isle of Thanet (Mr. Rees-Davies) and Rutland and Stamford (Mr. Kenneth Lewis). All of them have expert and specialised knowledge of the subject. I have listened to their contributions with great interest. Tourism is an important element in our national economy and its importance is growing year by year. In 1966 earnings accruing from visits to the United Kingdom by overseas residents amounted to £219 million. For 1970 the figure was £433 million, nearly double. During the same period the number of visitors grew from just under 4 million to 6¾ million and we expect the increase to continue. The British Tourist Authority estimates that we shall have 10 million visitors by 1975.
This is a success story and results from the efforts of many inviduals and organisations both public and private. The Government have given and will continue to give assistance. A major contribution continues to be made by the Tourist Boards set up under the Development of Tourism Act, 1969. These Boards are financed mainly by Government grants. The British Tourist Authority has been notably successful in attracting visitors to our shores and the English, Scottish and Wales Tourist Boards are making a splendid contribution towards the task of encouraging the provision and improvement of facilities and amenities needed, not only for visitors from overseas, but also for the home holidaymaker.
726 The country boards have shown that they appreciate the importance of working in consultation and in close co-operation with local interests. Growth of tourism can help bring prosperity to a region and I am sure that, encouraged by the activities of the Tourist Boards, local interests will be ready to support, both financially and in other ways, the formation of strong and effective regional tourist organisations. I recognise that defining regions for this purpose can give rise to difficult problems but I am confident that satisfactory solutions will be found. I have no doubt at all that local initiative and enterprise is of crucial importance to the success of a policy of encouragement of tourism.
My hon. Friend the Member for Exeter in his interesting and well-informed speech made certain comments on the tourist organisation as such. He made the suggestion that perhaps the National Tourist Boards should be amalgamated into a single body. This raises the whole question of the machinery of government which we cannot discuss today. It should be borne in mind when considering co-ordination between the Boards that the National Board Chairmen also sit upon the British Tourist Authority Board. This helps co-ordination. The development of tourism in Scotland and Wales is the responsibility of the respective Secretaries of State to whom the Scottish and Wales Tourist Boards are responsible.
Very careful thought was given to the question of the right sort of organisation for tourism by the House during the consideration of the 1969 Act. It was concluded by my right hon. Friend the Secretary of State for Social Services, who was particularly active at that time, that a separate Tourist Board for England was needed. It was for this reason, when in opposition, that we pressed our Amendment providing for the setting up of the English Tourist Board. I have been impressed by the excellent co-operation that has developed between the three National Boards. At the same time, however, this is not inhibiting the development of distinct characteristics which will, I believe, lead to interesting variety in the sort of holiday facilities we have to offer. For my part I think that the new tourist organisation is doing a very good job and shaping up well.
727 My hon. Friend the Member for Isle of Thanet rightly drew attention to the problem of London and the necessity to spread tourism into other parts of the country. Over-concentration in London and a few other centres of attraction is one of the problems. Regional tourist organisations can play a part in the task of demonstrating to the tourist that we have much more to offer for their enjoyment and entertainment in other parts of the country.
My hon. Friend also referred to Covent Garden. The G.L.C. plan is to use part of the Covent Garden site for a comprehensive development which would include conference halls, restaurants, etc. The cost is estimated at £5 million and it is proposed that the development should be undertaken in conjunction with private enterprise. The scheme will be considered during the summer as part of the overall plan for the development of the area so that if approval is given construction could begin as soon as the market is moved to its new site in 1973. I understand that the G.L.C. is considering proposals for the use of part of the Covent Garden site for a centre of this kind but that no decision has yet been taken. I am sure that it will take note of the point made by my hon. Friend.
The hotel industry has responded very well to the incentive scheme introduced in the 1969 Act. Indeed, the additional amount of accommodation which will become available will far exceed the original estimate. This was intended to be a short-term scheme and as has been made clear, while we shall honour commitments made in accordance with it, we shall not extend it.
We think that reduction of the tax burden is a better way to help the hotel industry than a general system of grants and loans. The reduction of selective employment tax announced by the Chancellor will be particularly beneficial to this industry. Modernisation of hotels must be a continuing process and it is here that the industry will benefit particularly from the new system of depreciation allowances on plant and machinery introduced in October.
My hon. Friend the Member for Exeter and others drew attention to the need for a depreciation allowance for buildings as well. I have noted what my hon. 728 Friend has said about a depreciation allowance for hotel buildings and I understand the arguments put forward. I am sure that they will appreciate this is a matter primarily for the Chancellor and I know that he is aware of the arguments. He will no doubt take note of what has been said in the debate. My hon. Friends will have an opportunity to pursue this matter further during the Finance Bill proceedings.
Along with the rest of industry the relief accorded by the reduction in corporation tax also announced in the Budget will help to make finance available for further improvements and developments.
Perhaps I could refer to the interesting point put forward by my hon. Friend on the question of tourist development areas. I know that this is a subject in which he takes a great interest and has studied carefully. I entirely agree that the present development areas are not necessarily areas of special tourist potential, although I would be the first to admit that the development areas include some wonderful country for holidays. Our decision to provide funds to assist the tourist projects in the development areas was taken in the interests of helping the economies of those areas which have special problems rather than in the narrower interests of tourism.
I am sure that my hon. Friend is right in thinking that it will be necessary to identify those parts of the country which have real potential for development. This is not an easy problem. It will involve careful and long-term research to find out what sort of things the tourists of the future will want to do and where we can provide these facilities. Our National Tourist Boards are conscious of this need and I am sure that they will be interested in what has been said today.
I am confident that, assisted by the measures which the Government have taken generally, the many interests concerned will be able to provide accommodation, amenities and facilities for visitors from overseas and for those of us who spend our holidays in Britain. I agree about the need to provide lower-priced accommodation. I was intrigued by the suggestion made by my hon. Friend the Member for Rutland and Stamford that universities, and perhaps, schools, might be used to provide student 729 accommodation. I have noticed that this is done abroad a great deal, and further thought will be given to this interesting suggestion.
I have referred to the many interests concerned with this activity, because tourism is a matter of much more than hotels. The Tourist Boards are fully aware of the importance of the provision of other facilities and amenities, such as motels, youth hostels, camping and caravan sites, historic houses and stately homes, and festivals of music and drama, all of which have before them exciting possibilities of development.
Consistently with our general economic policies and relying on self-help and private initiative rather than subsidies we shall continue to encourage the expansion of tourism, and I have no doubt that from this source we can expect a growing contribution towards our overseas earnings. My hon. Friends may rest assured that we have noted with great care their many interesting suggestions, which we shall study carefully as, no doubt, will the Tourist Boards; and will do everything we can to encourage what is a vitally important sector of British industry as a whole.