HC Deb 12 June 1996 vol 279 cc279-87

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Mrs. Margaret Ewing (Moray)

I welcome the opportunity to discuss Scottish tourism and its implications for our economy. Tourism is a vast and complex industry, and it merits great attention. It is my sincere hope that we shall debate the tourist industry again, but that we shall have more time to discuss the issues that are important, to analyse and to make recommendations.

Tourism is a key industry in Scotland. The latest figures available to me show that some 170,000 to 180,000 people are employed in the tourist industry, which is 8 per cent. of the Scottish work force. Therefore, the impact of the tourist industry on economic activity cannot be underestimated. It is projected that tourism will be the largest single industry in the world by the millennium. It is growing at a rate of 4 per cent. per annum and it accounts for 100 million jobs. In the north-east of Scotland, tourism is the fourth largest employer in the former Grampian region: it supports between 17,000 and 18,000 jobs, it generates some £240 million in income and it involves some 4,000 businesses.

It is my contention that that key industry deserves a strategic overview, to ensure that appropriate, democratic measures are taken to support, market and develop it. Scotland's tourist industry cannot depend on fortuitous events such as the success of the films "Braveheart", "Rob Roy" and others—even though we may have enjoyed them. Nor can Scotland rely on the nostalgia of the films "Granny's Heilan' Hame" and "Brigadoon". We should put forward the argument that tourism is a vibrant industry—that must be Scotland's approach to the late 20th century and to the beginning of the 21st century.

Hon. Members know of the delights that Scotland has to offer. My secretary, who works for me in London, had not visited Scotland until she came to work for me. I remember driving her to Dunoon and Inverness one day. Every time I turned a corner, she wanted me to stop so that she could take a photograph—I was almost a road hazard that day. We have great delights to offer people from all over the world. Therefore, we should have a strategy to ensure that we maximise on our economy, hospitality and friendliness.

In that context, I wish to make some key points to the Under-Secretary of State for Scotland. My points are tendered in a constructive manner and I hope that I receive constructive answers. I refer to funding. All Grampian Members of Parliament—including the Minister— received a substantial amount of faxed material from the Aberdeen and Grampian tourist board in preparation for the debate. Therefore, I shall not refer to all the details and arguments that are included in that material because of the time limits that are placed on us in these short debates. I draw the Minister's attention to what has been happening in the Irish Republic and the success that it has achieved.

Mr. Robert Hughes (Aberdeen, North)

As the hon. Lady is aware, last Friday the Aberdeen and Grampian tourist board finally managed to set its budget for the coming year. It is £900,000 down on a £2.8 million budget, which is severe. The trade members of the board, in particular, say that because it is a statutory body, there should be some way in which the core funding can be guaranteed. Ring-fencing probably is not feasible, but what does the hon. Lady think about the possibility of a three-year budget for the board, perhaps on a rolling programme, so that it can market tourism on a regular basis without having to worry about where the money is coming from?

Mrs. Ewing

I shall return to that issue later. The hon. Gentleman makes a valid point. The north-east of Scotland seems to have been particularly affected by the current round. Given that it did so much positive work in earlier days, we can draw from that example.

Mr. Alex Salmond (Banff and Buchan)

Is my hon. Friend aware of the splendid new tourist facilities at Duff house in the north of my constituency, the lighthouse museum in Fraserburgh and the Maritime Heritage Centre in Peterhead? The facilities have been opened recently, largely due to the work of the previous council. However, three out of five information centres in my constituency are closing. Is that not incredibly short-sighted? We have splendid new facilities, but we do not have the finance to guarantee that visitors will be given the information so that they visit them.

Mrs. Ewing

My hon. Friend makes a valid point, and there are similar problems in my constituency. Tourist information centres are often not open in Moray. The tourist information centre at Peterhead is often not open because of funding limitations—the same applies to the tourist centre at Aberlour. It is ridiculous for us to promote tourist attractions if we do not have the centres to make information available to tourists who are in the area.

I was referring to the Irish example. There is clearly strong public sector leadership, and it includes the skilful use of European funding. In promotion, marketing and training, no less than 57 per cent. of the 1994 to 1999 programme for the Republic will be funded by Europe. In my area—and in the area represented by the Minister— traditional industries, such as farming and fishing, are being disastrously undermined for a variety of reasons.

Funding should be available to Scotland from Europe. That is particularly true when tourism is being considered in the context of the intergovernmental conference as a policy that could be included in the revised treaties. That emerged originally from Council decision 92/421/EEC OJL 231. It was agreed that there should be a Community-level policy to strengthen tourism. The first report relating to that was published in April 1994. The Economic and Social Committee has also argued for a legal basis in the treaties. Europe has much to offer in the context of tourism support, particularly as many tourists to Scotland come from Europe.

Is the Scottish Office seriously looking at the support that could be available? I suspect that the Minister will refer to the tourist projects that are being underpinned by objective 1 in the highlands and islands. However, in the context of the debate on tourism as a whole, we have to look beyond objective 1 status for one area and look at the funding that is available to Scotland as a whole.

Ms Roseanna Cunningham (Perth and Kinross)

Is my hon. Friend aware that when the Secretary of State visited Crieff hydro earlier this year, he made a promise to increase funding for tourism in Scotland? At about the same time, we were preparing for a decrease in local authority budgets across Scotland. Before my hon. Friend moves off the issue of funding, does she agree that the promises of the Secretary of State are yet to be fulfilled? It will be interesting to hear when we shall get that funding.

Mrs. Ewing

I shall refer to the Minister's speech later. Funding lies at the core of what is happening in the tourism industry, and I urge the Minister to examine what is being done at a national level. The problems can be compressed by referring to a quotation last year from Scottish Business Insider: Tourism in Scotland is large and fragmented. The country is now standing at a critical crossroads … Scotland will struggle to maintain what it has, let alone grow its fair share of the market, if we do not get things right now. Therefore, I ask for a strategic overview. That could be best undertaken by the Scottish Office in conjunction with the Scottish tourist board, the unitary authorities—to which my hon. Friends have referred by way of intervention—and our local enterprise companies.

That review is particularly relevant to the north-east of Scotland. In the months since the reorganisation of local government, discussions have been held in the Aberdeen and Grampian tourist board area. Details of the negotiations and the meetings that have taken place in the past few days are provided in a long fax that Moray council prepared for me. Some progress has been made, but there are deep concerns that the business plan prepared by the board cannot be funded from existing council, Scottish tourist board or local enterprise company budgets. That has implications for the level of service that can be provided. I refer also to the previous comments about tourist information centres.

I therefore ask the Minister to consider granting some discretion to local enterprise companies in terms of funding for the Aberdeen and Grampian tourist board. At present, the LECs direct attention at specific projects rather than at core funding. If we look to the core funding aspect and to a long-term plan, the people of Scotland— particularly those in the north-east—will derive great benefit. I also ask the Scottish Office to review its decisions on local government funding in that area.

I refer now to the point raised by my hon. Friend the Member for Perth and Kinross (Ms Cunningham). When the Minister last spoke at the Scottish hospitality industry congress, he emphasised the importance that is attached to tourism training in Scotland in order to improve standards of training and staff development in that sector. He recognised that that is a daunting prospect, but he did not refer to pay and conditions.

For many involved in the tourism industry—the vast majority of whom are women—work is seasonal, part time and low paid. If we are to enhance our tourism industry, we must remove the element of drudgery and make individuals proud to be part of it. The Confederation of British Industry and the Federation of Small Businesses have argued for enhanced training and improved pay. Will the Scottish Office examine those key factors as part of any tourism initiative? Those who work in the tourism industry should take pride in and receive recompense for their efforts.

Will the Minister talk to the Treasury about variable valued added tax rates for bed-and-breakfast and hotel accommodation? I refer him to my parliamentary question of 28 June 1995 on that subject and to the May 1995 edition of the Voice of the British Hospitality Association magazine. It found that the United Kingdom levies the second highest rate of VAT on tourism goods and services in Europe. The findings conclude that an across-the-board cut in VAT to 8 per cent. would create some 87,000 new jobs in the United Kingdom, increase foreign currency earnings by £1.2 billion and generate an extra 10 million tourists for Britain. Of course, Scotland would receive a proportional increase.

This has necessarily been a short debate. I believe that tourism merits more than simply a lottery of applications for Adjournment debates. Therefore, I have a specific recommendation for the Minister. Earlier today, I checked with the Clerk of the Scottish Affairs Committee as to whether that Committee had undertaken any projects on tourism. Apparently, it has not investigated that subject since its inception—despite the fact that 8 per cent. of Scotland's work force is employed in the industry.

Mr. Andrew Welsh (Angus, East)

My hon. Friend may have noticed that the Chairman of the Scottish Affairs Committee, the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey), is in the Chamber and has heard her comments. No doubt the Committee will take on board my hon. Friend's excellent suggestions.

Mrs. Ewing

I am grateful to my hon. Friend, who is a hard-working member of that Committee. I am sure that the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) will take my comments on board.

I understand that this Thursday, the National Heritage Committee is commencing an inquiry into tourism. It will hear evidence from the Scottish tourist board on 20 June, and the Convention of Scottish Local Authorities has made an approach to submit written evidence to the Committee. However, the inquiry places no emphasis on Scotland's tourist industry and only one of the Committee's 11 members is from Scotland.

I have been advised that the Committee will find it difficult to deal with issues pertaining to Scottish and Welsh tourism because of the complexities in the system. Therefore, I urge the Scottish Affairs Committee to take the issue on board. It should assess the international, national and local impact of tourism, take evidence from all who are involved in the industry and then make positive recommendations. Scotland has a dream to sell, but that dream also provides employment and hope for our constituents and hope for our national economy.

1.16 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)

I congratulate the hon. Member for Moray (Mrs. Ewing) on being selected to introduce the debate today. I agree with her comments about the way in which tourism contributes to Scotland's economy. During my short reply, I hope to demonstrate the high priority that the Government attach to supporting the industry and to assisting it to develop and meet the challenges that it faces.

The industry enjoyed a very good year in 1995: expenditure by tourists in Scotland increased by about 7 per cent. to £2.165 million, and the upward trend in the number of overseas visitors continues. Most encouragingly, the recent decline in the number of trips from England was halted. English tourism turnover increased by 11 per cent. in real terms in 1995. While talking to my hon. Friend the Member for Chelmsford (Mr. Burns) before the debate commenced, I was horrified to learn that he has never visited Scotland. I am sure that the hon. Lady will join me in recommending that he visit Scotland very soon. Many in the tourist industry are reporting increased business this year and I believe that the industry can look to the future with confidence.

The hon. Lady called for a review of the tourism industry. In 1992–93, we conducted a review of the way in which support is provided to the industry. One of the most important outcomes of that review was the preparation of a national tourism strategy. The strategy analysed the performance of Scotland's tourism industry and identified the action that must be taken by those who support the industry and by the industry itself if it is to meet its long-term potential as a major generator of income and employment in Scotland. The hon. Lady is absolutely correct: the tourism industry employs 8 per cent. of the Scottish work force. The figure is even higher in the highlands and islands, at about 20 per cent.

Local tourism strategies are also being prepared in respect of each tourist board area. Together with the national strategy, they will address many of the difficulties caused by fragmentation, about which the hon. Lady is concerned. The Scottish Tourism Co-ordinating Group, which I chair, comprises the chairmen and chief executives of all the public sector agencies involved in supporting the industry, plus the chairman of the Scottish Tourism Forum, which brings together the private sector. It is charged with overseeing the implementation of the national strategy, and I am pleased to tell the House that it is making good progress. Earlier this year, I published a report reviewing that progress, so I shall draw attention to only a few key points today.

One priority was to tackle the problem of seasonality and to extend the season. That is very important, as much of Scotland's tourism is concentrated into the tight period from June to August. We clearly need to do more to encourage visitors to come in the spring and the autumn— which I assure the House, particularly my hon. Friend the Member for Chelmsford, are excellent months to holiday in Scotland. The first initiative was the "Autumn Gold" campaign in the United Kingdom, which was designed to increase the number of visitors to Scotland during October and November last year. I have reported to the Scottish Grand Committee that the campaign proved a great success and generated an estimated additional spend of £9.7 million. Not unsurprisingly, we shall repeat it this year, when I hope that many more visitors will be encouraged to sample the benefits and delights that Scotland has to offer at that time of year.

The hon. Lady mentioned skills and training. Enhancing the skills of all those who work in the industry is essential if we are to tackle some of the problems that she mentioned. We are giving a high priority to management development, to encouraging the industry and employees to become involved in the Investors in People initiative, to developing improved links with the education sector in order to advise prospective employees and to developing initiatives on customer care, to increase standards of quality and professionalism in the industry.

The hon. Lady referred to funding. Last year, we provided to the industry direct support of about £70 million through agencies and local authorities. That is not an exact figure, as there are many areas in which support is being given and it is not easy to identify the specific amount that goes to tourism.

The hon. Member for Perth and Kinross (Ms Cunningham) will be interested to know—and this is where the Secretary of State's commitment comes in— that this year we have increased the resources made available to the Scottish tourist board by 20 per cent., to about £18 million—a record level. The additional funding will enable the board to strengthen its marketing campaigns, both in the United Kingdom and overseas, and to provide substantial additional assistance to Scotland's area tourist boards. We have also provided additional funding to take advantage of specific opportunities that will benefit the industry.

The hon. Member for Moray mentioned promoting Scotland on the back of films. We contributed about £280,000 to the STB in the last financial year, to mount a promotional campaign in Europe to maximise the tourism spin-off from "Braveheart". Not all that long ago, I launched a campaign in the south-east of England on the back of the introduction of low-cost fares to Scotland, to encourage those in the south-east of England to visit Scotland and see its benefits.

Mrs. Ewing

I welcome low-cost fares, but will not the absence of the Motorail service to Fort William undermine many opportunities to visit tourist attractions in the north of Scotland? We experienced the chaos over the Fort William sleeper; there are still no Motorail facilities. Could consideration be given to trying to restore some of those facilities?

Mr. Kynoch

I am sure that the hon. Lady will not be surprised to know that, wearing my constituency hat, I recognise the benefits that Motorail brought, particularly to our part of Scotland. Clearly, Motorail has to be a commercial success for it to be maintained. I was pleased to see the other day in a newspaper that the new franchisee for, I think, the east coast line is considering introducing a form of Motorail service to Scotland, possibly to Edinburgh—clearly, I would encourage that. Private sector involvement provides all sorts of opportunities to identify services that can contribute towards tourism in Scotland.

The hon. Lady referred to value added tax. While the United Kingdom's tourist operators may face higher VAT rates than some of their competitors in other EU countries, they do not face many other costs. The hon. Lady will not be surprised to hear me mention the social chapter, minimum wage legislation or local tourism taxes that are applicable elsewhere. In Scotland, we have a significant premium product that attracts tourists. I do not believe that VAT is the key element to success in Scotland.

The review of support arrangements for the tourism industry found that there was widespread support for a smaller number of larger area tourist boards. We acted on that information and on 1 April this year, a new network of 14 boards was created, replacing the former 31. The new structure is already beginning to bring benefits and will be a great success. The area boards, together with the Scottish tourist board, can provide the lead for the tourism industry, both locally and nationally.

The hon. Lady referred to our joint local tourist board—Aberdeen and Grampian—which she rightly said corresponded to the area of the former NESCOT tourism marketing group. The new area tourist board arrangements mirror almost exactly the arrangements that applied prior to the reorganisation on 1 April. The tourism review concluded that the concept of a locally determined and funded industry and local authority partnership, supported by the STB, generally worked well and should be continued. About 80 per cent. of those commenting on the arrangements at local level commended the system, and I believe that they were correct to do so.

Although the boards have been established by statute, we have provided, as we were asked, that decisions about funding support should remain, as they have always been, at the complete discretion of local authorities. Similarly, the boards should have discretion to determine their priorities and operational arrangements, including the operation of tourist information centres, which the hon. Lady and the hon. Member for Banff and Buchan (Mr. Salmond) mentioned. I have no powers to intervene in those matters and I currently have no plans to alter the arrangements.

Earlier, I drew attention to the additional funding that we are providing this year to the Scottish tourist board. From that funding, £700,000 of extra funding will go directly to the area tourist boards, and all 14 boards will benefit as a result. The grant to the Aberdeen and Grampian tourist board from the Scottish tourist board has risen from £257,000 last year to £285,000 this year—an increase of 10.9 per cent. That demonstrates the importance that the Government attach to the work of the area tourist boards and our commitment to their success.

I clearly look to the local authorities to show a similar level of commitment, and I understand that most have done so by maintaining or increasing their level of spend. I deeply regret that in my area, the north-east, the local authorities have reduced their expenditure. It is for the authorities to decide the priority that is to be attached to tourism in their area and to reflect that priority in the level of funding that they provide to their local tourist board. I have no powers to intervene.

The hon. Member for Aberdeen, North (Mr. Hughes) referred to the possibility of a three-year rolling programme. It is important that the board and its funding partners adopt a local strategy that will apply for a number of years. The Scottish tourist board would be willing to assist in preparing such a strategy if that would help our local tourist board, and I hope that that offer will be taken up.

The hon. Member for Moray mentioned local enterprise companies and the fact that they had previously contributed. The hon. Lady's LEC was almost unique among LECs in contributing to the core funding of local tourist boards. Following the tourism review and the clarification of responsibilities, it is no longer expected that LECs should provide core funding. Because of tourism's economic significance or potential in many parts of Scotland, LECs will—as the hon. Lady said—be prepared to fund, jointly with tourist boards, individual projects. I understand that Grampian Enterprise is willing to forge such partnerships and to consider supporting appropriate projects.

While the support arrangements that we have introduced are much clearer, if the hon. Lady would like to provide me with specific examples of areas where she believes local enterprise companies could further assist the area tourist board, I should be more than happy to consider them and take them to the Scottish Tourism Co-ordinating Group for discussion.

The hon. Lady referred to Ireland and the use of European funding. We must consider the overall funding that goes into tourism. I think that the hon. Lady will find that the overall level is not that different. As she rightly said, objective 1 funding in the highlands and islands area provides for specific projects relating to tourism. The fact that the whole of Ireland has objective 1 status makes it different.

In conclusion, I believe that the Scottish tourism industry has a positive future. I join the hon. Lady in recognising its importance to the economy of Scotland, not just for employment, but for the success of many small businesses, not just in her area, but in mine and elsewhere in Scotland. I shall seek to encourage tourists to come to as many parts of Scotland as possible—many simply come to our capital, Edinburgh, and do not find time to go beyond it, although there are many attractions further north.

I know that the Scottish tourist board, under its chief executive, Derek Reid, has made significant strides in the expansion of the promotion of tourism in Scotland. Some of the recent statistics have proved that we are achieving success, although that is not to say that more cannot be done. The co-ordinating group serves a useful purpose in bringing together all the interested parties to co-ordinate all activities to one common aim.

Our investment is substantial and the tourism industry itself is demonstrating the will to succeed. I believe that it will succeed.