Tourism

HL Deb 25 October 1995 vol 566 cc1164-84

6.47 p.m

The Earl of Bradford rose to ask Her Majesty's Government what are their future plans for the funding of the promotion of tourism to Great Britain and in particular how they intend to allocate the funds between the British Tourist Authority and the statutory tourist boards for England, Scotland, Wales and Northern Ireland.

The noble Earl said: My Lords, first, I should express a close interest and involvement in tourism as a restaurateur, President of the Master Chefs of Great Britain and Chairman of Weston Park Enterprises. We recently acquired a new Minister of State at the Department of National Heritage who has much experience of budgetary restraints in her previous position as Secretary of State for Health. As a result of her appointment, there now seems to be a far greater understanding of the necessity to improve our efforts at tourism promotion. Shortly she will be outlining the grant for next year.

Sadly, our performance has slipped very badly in recent years, as is borne out in the figures in Her Majesty's Government's own document, Tourism: competing with the best. For instance, our share of world tourism has declined from 6 per cent. in 1987 to only 4.3 per cent. now, six years later, and we were third from the bottom in the league table of tourism growth in Europe between 1980 and 1992.

Our balance of payments performance has been even more dramatic and extremely disappointing, reversing a decent surplus of £500 million in 1985 into a massive deficit of £4.5 billion in 1994. Not only is that money helping to provide employment abroad, but just consider what financial freedom the Chancellor would have if he had that missing £5 billion each year to help solve the balance of payments problem. I anticipate that my noble friend Lord Inglewood will state that the position has improved for the current year. However, I fear that, instead of this being a change in the long-term trend, it is merely a temporary reaction to a combination of unusually fine weather and the weak pound helping to keep more Britons at home.

The fact is that spending money on tourism promotion is not like other forms of government expenditure. It is an investment that actually pays off. It puts people into work. The numbers presently employed in tourism and tourism-related industries are estimated at 1.475 million. Professor Stephen Wonhill, Professor of Tourism Studies at Cardiff University, has demonstrated that one new job is created by an increased tourism spend of just £28,500. That missing £5 billion could have created 175,000 jobs in Britain.

It generates revenue. The World Travel and Tourism Council's assessment is that the UK travel and tourism industry will contribute £26.2 billion in taxes in 1995. Most of all, it yields a direct financial return to the Exchequer. An influential study by a respected firm of international consultants has estimated that every extra pound spent on tourism promotion by the Government produces over £4 in additional tax revenue—a staggering pay-off which is quickly generated. Your Lordships will envisage the imaginary situation. If the Chancellor, in his November Budget, were to increase spending on tourism promotion to £5 billion, there would be truly amazing tax cuts which could then be afforded. Unfortunately, the consequent side-effects would he that the country's infrastructure would collapse totally under the burden of increased tourist numbers; the Tower of London would be worn away in sand; and Yorkshire Water would probably have to cease supplies completely.

However, in recent years the grant has been restrained. It is exactly the same in real terms in 1995 as it was in 1979, which disguises the situation that, as many of the BTA's costs are in foreign currencies, there has been a reduction in its actual resources created by a fall in the value of the pound.

In addition, further cost burdens have also been imposed by the Government on the tourism industry. VAT has been increased from 8 per cent. in 1979 to 17.5 per cent. now. The new airport tax has been created. That is expected to raise a massive £300 million in its first full year of operation and it has been rumoured that there may even be an increase in the next Budget. If that is to happen, why is that money not put to good use by investing it in tourism promotion instead of merely increasing our competitive disadvantage?

It has been suggested by some in Her Majesty's Government that the industry should pay for its own promotion. Of the 224,000 businesses in the tourist industry, 180,000 are owner-operated. Therefore, the cost of promotion would be funded by the largest companies alone. That would tend to drive the smaller ones out of business to the detriment of employment. The stark facts are that we should also be the only major tourist destination in the world not to fund centrally tourism promotion.

Other countries are recognising the need to invest in promotion. Australia, where incidentally the Minister for Tourism has cabinet rank, is currently spending £100 million Australian dollars on world-wide television advertising, including 30 million dollars in Asia, the fastest growing market. Our total grant to the BTA and all the statutory bodies is only £90 million this year.

Tourism will be the world's largest industry by the start of the next millennium. Let us attempt to ensure that we are not left out of the boon to our economy by penny-pinching lack of investment in international promotion—to be paid for by the Exchequer certainly but recouped quickly and many times over.

The facts are incontrovertible. I hope that we shall hear a positive response from the Minister. Finally, I congratulate the noble Lord, Lord Rathcavan, who is to make his maiden speech this evening. I congratulate him as a fellow restaurateur and also as somebody who is eminently qualified to speak on the subject of tourism and tourism promotion.

6.55 p.m.

Lord Rathcavan

My Lords, as this is the first occasion on which I have the privilege to address your Lordships, inevitably I approach the task with some trepidation. I must declare an interest. I am serving my third and final term as chairman of the Northern Ireland Tourist Board, in which capacity I have attended, by invitation, over the past seven years, board meetings of the British Tourist Authority.

With that close involvement in our tourist industry, I share many of the anxieties expressed by the noble Earl, Lord Bradford. I have watched with concern, if not dismay, the diminishing role and reduction in funding of the English Tourist Board. It is statistically overwhelming that England receives nearly 90 per cent. of all overseas visitors as the most popular region of the tourist industry. And yet some of the regions of England such as the south west, from a point of view of product development, have become the most neglected.

In some quarters of government tourism is perceived as a wealthy and successful industry which does not deserve government support. I hope that I can prove easily to your Lordships that the small amount of government assistance given to the tourism industry is exceptional value for money.

Much quoted as the fastest growing industry in the world, tourism has the potential to deliver many benefits to our national economy and in particular in the remoter regions like my own—Northern Ireland—where jobs are most needed. Tourism is extremely important to job creation because it offers opportunities to the semi-skilled; it picks up the unemployed at the lowest level of skills; it trains people in a job and it gives them satisfying jobs. Tourism created 70,000 jobs in the past financial year—one-third of them full time. It is estimated that tourism saved more than £200 million in social security and unemployment costs by the creation of those new jobs; and that trend will continue.

It seems therefore small change to restore, at the least, to the English Tourist Board a greater role, as it has now become little more than a transmission mechanism for funding its own regional tourist organisations in partnerships with local councils.

In my seven years with the British Tourist Authority hoard, I have observed its great professionalism in overseas markets and the value for money that it gives. It wins prizes in many markets year after year around the world as the best national tourist office in the business, not because of the strength of its spend but because of its professionalism. It needs more funding so that it can give even better value for money.

The weakest part of the BTA is the lack of co-ordinated product development and quality assurance in England. That is because the English Tourist Board has been unable to fulfill its role in that area as its funding has been reduced. Admittedly, the funding has been given over to the BTA but the English Tourist Board has suffered very badly in my opinion.

The tourism industry is wildly fragmented. It is a difficult industry to manage. It is the tourist board organisations which must give the leadership to that difficult industry and help it to work together. The English Tourist Board is just not well enough funded to give that leadership at present.

I speak with experience of my own region of Northern Ireland where our tourist board has been given the opportunity to co-ordinate development and give the industry leadership and a strategy. During the past five years or so selling Northern Ireland has not been an enviable task. But I was asked recently to talk to the Barbados Tourist Board about marketing, or so it thought, a difficult destination. That was a more pleasant aspect of the job. Nevertheless, we did double the number of holiday visitors during the past five years, and I believe that that was because of the professional support that we were able to give to our industry.

With the aid of the peace process this year tourism has fulfilled the promise in Northern Ireland with which it has been vested. Holiday visitors have increased by over 60 per cent. so far this year—an increase for which the industry was well prepared. Surveys show that visitor satisfaction has been at a high level. We have created jobs at a faster rate than manufacturing industry. We aim to more than double employment over the next four to five years and we are well on our way to that target. Tourism is playing a major role in the regeneration of the Northern Ireland economy. As in Great Britain, it creates jobs in those areas where they are most needed. Jobs in our case are the cement of the peace process.

Tourism has become vital to the national economy, as the noble Earl, Lord Bradford, mentioned in some detail, and, as I have mentioned, in the great contribution that it makes to reducing the costs of social security and unemployment. Tourism is the conduit to more business for those other important parts of the Department of National Heritage—for example, sports the arts and heritage itself. Therefore, I hope that the noble Lord the Minister will be able to make a forceful argument to the Treasury during this season. I hope that the debate will assist him to make the argument that tourism needs more funding, not less, especially the English Tourist Board, and that it will repay such small assistance many times over and in the very short term.

7.2 p.m.

Lord Cochrane of Cults

My Lords, it gives me very great pleasure to congratulate my noble kinsman on his excellent and well-informed maiden speech on tourism to which we have just listened. My noble kinsman comes from a family which is greatly distinguished—if not the most distinguished—in the political and public service of Northern Ireland. It gives me pleasure to recall that the grandfather of my noble kinsman was my father's best friend throughout his long life and my father's best man; and, indeed, my godfather—and a very handsome silver tankard he gave me too.

My noble kinsman has many enviable appointments, but I shall not detain the House by mentioning them. I shall just congratulate him on the breadth of experience that they must bring him and on the wisdom which he has clearly displayed on the subject of tourism. I have to admit that I envy my noble kinsman his appointment as a director of the Bushmills Distillery.

In saying that my noble kinsman's family was greatly involved in public service, it is perhaps worth recalling that his grandfather sat for an Antrim constituency from 1952 and for the next 37 years and eight months. He then became Father of the House. Upon his retirement from the House, he was succeeded by his son. In total, they acquired between the two of them a period almost equivalent to that of the present reign of 44 years. Surely no greater devotion to duty could be imagined.

I thank the noble Earl for introducing tonight's most valuable debate. I agree with everything that he said. However, I must now declare an interest. I am chairman of a small family company which operates a caravan park in Scotland. The tourist industry is a curious one. It is very large and is probably one of the largest, if not the largest, single employer in the United Kingdom. As the noble Earl said, it is fragmented; indeed, there are some very large operators and a great number of small ones. Therefore, it is not an industry which is readily represented by voluntary associations. For that reason, if for no other, we need a tourist board to give the necessary leadership and sense of direction to the industry.

I am sorry to say that one of the greatest follies of the present Government in relation to tourism is to declare that it is a mature industry. I have no knowledge of what evidence led them to that conclusion. I can only say that I regard it as a profoundly mistaken and extremely damaging conclusion to have reached. Tourism is not a mature industry: it is evolving and growing rapidly throughout the world. Unhappily, following on from that disastrous policy decision, it is shrinking in the United Kingdom.

In Scotland, so the Scottish Tourist Board tells me, it has been shrinking for the past 10 years at a rate of about 2 per cent. a year. In discussion with the tourist board this morning—I hope that I heard right, and I fear that I may have—I was told that, had it grown at the international rate of 4 per cent., as opposed to shrinking by 2 per cent. annually for the past 10 years, tourism receipts in Scotland in 1994 would have been worth another £1 billion. One billion pounds is powerful money in anyone's language. So let us think of that situation as needing to be redressed.

In tourism in Britain we have many strengths and, as others said earlier, we also have weaknesses, some of which are more easily remedied than others. One of the great strengths that we have is that we still live in a country which is politically stable and, compared with many places, extremely law abiding—although I must say that some of us wish that it was sometimes a little more so. However, we have a number of snags, one of which is the fact that the United Kingdom is seen to be a high-cost destination. As the noble Earl said, one of the reasons for that is VAT. The trouble with VAT is that one pays 17.5 per cent. on a holiday here but if one goes on a comparable holiday in, say, France or any adjacent country (which are now not at all far away), one only pays 5 per cent., 6 per cent. or perhaps 7 per cent.

Despite what was said to me after I raised the subject on the debate on the last humble Address, the fact is that the price which is looked at by the purchaser of the holiday—usually the woman of the family—is the one set out in the catalogue. People tend to disregard whether the drink, the cigarettes or the restaurant meals, and so on, are more or less expensive. The headline or list price of catalogue holidays in this country appears large when compared to that of our neighbours. That applies to families going on holiday by land. Those who fly are even better treated.

As I understand it, if one takes a holiday by air, the component of the hotel in the receiving country will be in the order of 5 per cent., the flight will be free of VAT and there seems to be some curious arrangement with Customs and Excise that in the third component of the cost of the holiday—advertising, publicity, overheads, agency commission and so on- -only the profit element attracts the 17.5 per cent. rate. So as I mentioned in your Lordships' House almost a year ago when I was not contradicted, which means that it is just possible that I am right, the net effect on air holidays abroad of VAT is very small compared to other holidays.

However, I have to say there is a slight caveat in that respect in that the rules have recently changed slightly. If the holiday is promoted by a company which is big enough to own its own airline it gives even better terms than those who have to hire aircraft seats and who then pay VAT on the travel element. In short, that is encouraging people to go out of the country, and it is discouraging them from coming in. Surely that is not a policy that can sensibly be followed.

As regards the roles of the tourist boards, the important thing, as I said earlier, is that there should be leadership. A fragmented industry is difficult to lead. There are conflicting interests and there are as many opinions as there are economists advising what should be done. However, one thing that must be tackled is the setting of standards. Certainly a great deal has been done but it has resulted in a substantial degree of confusion in the public's eye because of the proliferation of schemes indicating accommodation standards. In the section of the industry in which I operate—that is—caravans, we have the British holiday parks grading scheme. That has been in existence for a long time.

I am sorry to say—I have made my views patent in the industry and to the tourist board—that the scheme as devised, although with the very best of intentions, first, is not understood by the public (and I do not think it ever will be) and, secondly, it is so constructed that under certain conditions it penalises improvements in the service which one gives to one's customers. That is an important point. I hope that that point will be taken great notice of by those who subsequently, should they choose, read what has been said in this debate tonight.

I am grateful, as I said, to the noble Earl for introducing this debate and I can imagine no more pleasurable occasion than it has given me to thank and congratulate my noble kinsman on his speech, and, curiously, I shall also listen with the greatest of intent to what two more of my noble kinsmen are to say shortly.

7.12 p.m.

The Earl of Glasgow

My Lords, following my noble kinsman I, too, would like to speak on the state of tourism in Scotland and explain why it is so important that the Government, through the Scottish Office, do more to help the Scottish tourist industry. Tourism is arguably Scotland's largest industry. It sustains 185,000 people in employment and generates about £2 billion annually. In many of the rural areas—the north and west of Scotland in particular—it is the only industry and thus essential if we do not want to see the Highlands further depopulated.

Unlike many other industries, world tourism continues to grow. As the noble Earl, Lord Bradford, has already said, the current annual rate of growth is about 4 per cent. and it is expected to become the world's largest industry by the turn of the century. Thus tourism has become a truly global marketplace, moving billions of passengers around the world and distributing billions of dollars in foreign currency. Tourism in 1994 brought £2.05 billion to the Scottish economy. That is the good news. The bad news is that for the past eight years—up until 1994 anyway—tourism in Scotland has been in decline. The number of visitors coming to Scotland has decreased when in most other European countries—for instance, Austria, France, Portugal and Ireland—visitor numbers have increased. As a matter of fact the number of overseas visitors to Scotland has risen by 2 per cent. over this period but the domestic market—that means principally the English, who are by far our biggest market—has fallen by 10 per cent.

Many reasons have been given for our poor performance. Scotland is perceived as being too expensive, as has already been mentioned. Compared with package holidays in Spain and Greece with guaranteed sunshine, it is more expensive. Some visitors feel the standard of service and food in some hotels are not up to those on the Continent. Some regard Scotland as too cold, dark and wet in all but the summer months. That has meant that tourism in Scotland is particularly seasonal; more so than in England. This makes it difficult for many hoteliers and operators, like myself, of visitor attractions to make a profit without keeping their summer prices high. However, against those setbacks, Scotland has so much to offer: spectacular scenery; islands and lochs; mountains to climb; real wild areas with an abundance of wildlife; the best golf courses in the world; a rich heritage, and great cities like Glasgow and Edinburgh. Noble Lords will note that I put Glasgow first.

Scotland is a comparable tourist destination to the Republic of Ireland and both try to attract the same sort of market. Both have similar climates and both rely to some extent on visitors whose ancestors emigrated from there and settled in North America or other ex-British colonies. Both countries offer wonderful, unspoilt scenery, but I always think that Scotland has the edge in that respect. Both countries are rich in history and heritage. Here again, I always think that Scotland's castles and historic houses are just that bit more impressive. Both countries have a friendly and welcoming native population; at least, they are friendly and welcoming in the west of Scotland. Yet where tourism in Scotland has declined, tourism in Ireland has grown and has now overtaken Scotland. In 1994 10.25 million trips were made to Scotland but 11.73 million trips were made to the Republic of Ireland.

In the past I would have put the blame for Scotland's decline on the ineffectiveness of the Scottish Tourist Board. It always seemed an unnecessarily bureaucratic body, with little flair or imagination, that was primarily concerned with justifying its existence when it should have been devoting its energies to selling Scotland, particularly to its biggest market, England. For 10 years, from 1985 to 1994, there was no promotional television campaign in England at all. Now, however, the Scottish Tourist Board, under its new chief executive and with its new remit, is committed to a national tourism strategy and is focusing its energies on marketing Scotland, in Britain and abroad, more aggressively. I am confident that Scottish tourism at last has the policies and leadership it so badly needed. For example, it is now working to solve the problem of "seasonality" with its "Autumn Gold" campaign. It is actively promoting activity holidays in Scotland; tourism relating to the arts and tourism relating to wildlife and the environment. It is introducing the world to the delights of Scottish cuisine. At the same time it is launching a marketing campaign which includes television advertising directed specifically at the English market with the slogan, "When will you come?"

That is very encouraging. However, we shall not catch up with other countries, all competing for their share of the tourist cake, unless our tourist board is adequately financed. The Republic of Ireland with a population of 3.5 million, but a government who take tourism seriously, grants its national tourist board (with some help from the EC) a marketing budget of £17 million. Scotland, with a population of 5.5 million, expects its tourist board to do the same job with a budget of only £7 million. When one considers again that tourism brings over £2 billion into the Scottish economy, £7 million seems a small advertising budget. No wonder the Irish have overtaken Scotland in their bid for English as well as overseas visitors.

Scotland has much to offer the visitor. It must have a flourishing tourist industry to create employment and to ensure its economic survival, particularly in the rural areas. It now has a vigorous and enterprising tourist hoard. All it lacks to compete on equal terms with other European countries is enough money to market itself more effectively. We cannot rely on "Rob Roy" or "Braveheart" to bring visitors to Scotland. I hope that the Minister appreciates the value and importance of tourism to Scotland, and indeed to the whole of Britain, because if more people visit England, that also means that more people will visit Scotland. I hope that the Minister will help to persuade the Government to give the Scottish tourist industry the extra financial support it so badly needs and deserves.

7.18 p.m.

Lord Mountevans

My Lords, I join my noble friend Lord Cochrane in congratulating the noble Lord, Lord Rathcavan, on his excellent maiden speech. His distinguished term of office as chairman of the Northern Ireland Tourist Board has already been commented upon, but my friends in the British Tourist Authority—I declare that interest—particularly valued his anticipation in the rather darker days of the 1980s that there would one day be a peace dividend and that it was apt for colleagues north and south of the Border to prepare for it in many ways, not least by opening a joint presence in 1989 in London's British Travel Centre. The noble Lord mentioned the tourism consequences of the peace process. That they are there for all to see is a tribute to his vision over many years.

I am also grateful to my noble friend Lord Bradford for giving us this opportunity—the second this year—to debate tourism and its importance to Great Britain Limited, its contribution to the balance of payments, its benefits to our economy and to employment creation. Tourism accounts for one-third of all service sector exports. In invisible terms it is more important than the financial services sector or, in more visible terms, our oil and petroleum exports. The industry generates spend in Britain of over £100 million per day. It employs over 1; million people and in the year to 31st March generated thousands of additional jobs, as the noble Lord, Lord Rathcavan, reminded us.

Those figures should be seen against a wider background. Although they are impressive, they cannot hide legitimate anxieties. It seems to me that we shall all be agreed on that tonight. In a global industry which, as we have been reminded, is expected to become the world's largest some time early in the next century, Britain currently ranks fifth. Although since 1980 international tourism to Britain has grown annually by something over 5 per cent., the corresponding figure for Europe is over 7 per cent. Worldwide, annual growth was around 8 per cent., and on the Pacific Rim it was running at 15 per cent. per annum. Although we rank fifth in the world tourism league we are losing market share, as we have been reminded. That must worry us all.

Our statutory tourist boards must go all out to persuade and to sell. We are all agreed that they must be given the resources to do that job of enhancing the £100 million daily spend that I have already mentioned.

In the current financial year the English Tourist Board has grant-in-aid of £10 million, the Scottish Tourist Board almost £17 million, the Welsh Tourist Board just over £14 million, Northern Ireland receives almost £13 million and the BTA £35 million. In round terms, that amounts to £90 million, a not ungenerous figure in a time of restraint. However, if that figure is compared with the £10 million per day which British and foreign visitors spend in VAT and excise duty alone, one can calculate that the Treasury gets its £90 million back almost every nine days. That is a rate of return with which any private industry would be delighted. Put another way, the grant-in-aid is equivalent to only 2.4 per cent. of the tourism tax revenue. Looking at the BTA alone, the Treasury gets a net return within a year of £4 for every grant-in-aid pound given. In wider terms, Britain achieves a return of £23 for every such pound.

Although foreign currency fluctuations have seen the BTA's grant-in-aid eroded by some £2.3 million since late 1992, it still managed to use its central funds last year to attract over £15 million of additional funding from the tourism industry as a whole—a figure which suggests to me that the industry knows a winner when it sees one and hopes that the Government will recognise that winner too.

To ask for more grant-in-aid is one thing. To justify one's request is another. However, I feel that the figures that I and other noble Lords have cited justify that request. I have no difficulty in supporting the BTA's bid for a further £3 million next year for specific initiatives in Asia, Europe and North America. My noble friend who is to reply to our debate this evening has recently visited our North American operations, and I have no doubt that they impressed him not only with their competence but also with the need for more resources.

Aside from more resources, I see a need for greater consistency in allocation of funding. The grants given to the Scottish and Welsh Tourist Boards have each risen by over a third since 1991–92, while that given to the English Tourist Board has fallen by a larger fraction to £10 million this year, with around half of that figure flowing straight through to the English Tourist Board regions. Put another way, ETB works with a grant-in-aid of 25p. per head of population. The Scots have £4 per head of population, the Welsh over £6 and the Northern Irish almost £11 per capita, for reasons that we can all understand.

As we were reminded this evening, that imbalance has always been justified on the basis that the industry in England was said to be more mature. However, the tourism industry, with some 200,000 small businesses, is a fragmented one, needing central help and advice. That is one of the major roles which the statutory tourist boards must play. Among those businesses it is hard to understand that the problems in West Cornwall differ greatly from those in West Wales or that problems in Northumbria are more easily solved than those across the Border. It seems to me that the maturity argument really bit the bullet in the last Budget when my noble friend Lord Astor was able to secure an additional sum of £2 million over two years specifically for London, which is surely the most mature of all our regions.

I believe that the industry and the Government can be proud of their performance to date, the industry perhaps more so than the Government. However, we cannot afford to be complacent in the face of loss of market share. I believe that we can afford increased grant-in-aid but we cannot afford complacency. Nor can we afford inconsistency. Rather, I hope that the Government, having noted how the statutory boards are making substantial progress towards greater co-operation in terms of promotion, standards and training, will also seek to adopt a more Britain-wide stance. That would surely be preferable to sheltering behind the old arguments about departmental structure and departmental responsibility. In tourism we have an opportunity waiting to be seized. The industry and the country are waiting to benefit, but most of all they are waiting for the Government.

7.26 p.m.

The Earl of Mar and Kellie

My Lords, I join in congratulating the noble Lord, Lord Rathcavan, on his excellent maiden speech. I hope that we shall hear him often in the future. I also congratulate the noble Earl, Lord Bradford, on raising this Question about the future of the British Isles tourist industry.

I must declare two interests. First, I am the hereditary Keeper of Stirling Castle, a Historic Scotland visitor attraction enjoying a 30 per cent. increase in visitor numbers this year. Secondly, I am a trustee of Alloa Tower, a new visitor attraction opening in the summer of 1996.

Tourism is an important part of the Scottish economy. The 800 visitor attractions are set in the finest possible natural resource, the Scottish landscape, with its history and its culture. Welcoming visitors generates many jobs, some full-time but a depressing number seasonal or part-time. As my noble friend Lord Glasgow said, tourism contributes £2 billion to the Scottish economy.

The Scottish tourist product is good and unique. I hope that its image will be developed. At present it can, on occasion, be caricatured as a haggis wearing the kilt and playing the bagpipes. That somewhat tacky image must recede and a more characteristic image evolve—the image of a people striving to find their place in the world, set in a rugged environment of mountains, islands and broad straths. Even in the wee county, Clackmannanshire, we have a mountain range, a canoeing and fishing river, a country park, a mill trail, an equestrian centre, several historic buildings and 55 miles of lowland footpaths—all set in only 60,000 acres. At the same time, the countryside is not a theme park but the workshop of the busy rural economy.

The noble Earl's Question asks about the Government's plans for the promotion of tourism in Great Britain and the role of the BTA. I do not believe that that is the correct approach for tourism in the British Isles. First, I see some confusion in the marketing of tourism in Scotland, England, Wales and Northern Ireland. Each country's tourism product is unique. Trying to market the whole as Great Britain through the BTA seems to provoke confusion and a possible lack of focus.

Secondly, I believe that each country should be in charge of its own tourism promotion, not just because of the unique products but also in response to the changing constitutional situation in the UK. As the ties within the UK begin to slacken by popular demand, and as Scotland seeks a velvet separation, rather than divorce, it is sensible to meet that challenge positively and to make tourism one of the industries in the forefront of the new constitutional arrangements. Our future lies in co-operation wherever possible.

That brings me to my third point. Now that the Republic of Ireland is being rehabilitated in the eyes of the Westminster Parliament and Government and the bitterness of bungled devolution in Ireland recedes, the time has come to move ahead in tourism promotion. Within the context of travel and access only, the British Isles should be marketed as a whole. The network of cross border road, rail and air services and of sailings to the islands and between Ireland, Wales and Scotland, and, of course, the rest of the world, need to be promoted as a whole.

For example, the new ferry service to be introduced in 1997 between Campbeltown and Ballycastle illustrates the potential. It will enable the visitor, typically from North America, to land at Shannon Airport, to visit the west and north of Ireland and then cross over to Kintyre and gain access to the Highlands and Islands without touching the industrial areas of the Lagan Valley and the Central Lowlands. Already tourism in Ireland is seen as ripe for cross-border co-operation. That model should be extended to the whole of the British Isles.

To conclude, I hope that the Minister will see the merit of minimising the role of the BTA to that of a travel co-ordinator and promoter after its conversion to the British Isles Tourist Authority in co-operation with Ireland; and I hope that he will see the merit of placing full responsibility for tourism promotion with the four national tourist boards.

7.32 p.m.

Lord Graham of Edmonton

My Lords, perhaps I may begin, as others have done, by thanking most sincerely the noble Earl, Lord Bradford, not only for having initiated the debate but—as one finds on research—for his avid questions to the Government, and requests for information on policy and other initiatives of the Government. Not only does he serve this House well by giving us the opportunity for this debate but he also serves industry well by being persistent.

The Minister should understand that the mood tonight is more benign than malignant. We are not shouting; we are not screaming. We ask him to take seriously the points made and to return to his colleagues with a better understanding of the injustice which has been done to the tourist board and to the tourist industry generally as a result of policies pursued by the Government.

I wish also to say what a joy and pleasure it was to hear the noble Lord, Lord Rathcavan. He brought to the House what we always appreciate—authority, experience and commitment. I am absolutely certain that the House will benefit from his presence today and many times in the future.

I do not ask the Government for details. I have listened with interest to many who are employed in, and whose livelihood depends upon, the tourist industry and who therefore know what they are talking about, as I hope that I do too. However, those people have experience at the sharp end of the industry. The Minister's job involves administration and policy; my job involves advocacy from this Bench. But I always appreciate that the practitioners know far more about a subject than the politicians.

Regarding the size of the tourist industry, different statistics have been given. I was interested to read a Question asked by the noble Earl, Lord Bradford. In the Official Report of 16th May, at column WA 27, he asked Her Majesty's Government: Pursuant to their Written Answer of 3rd April … whether they agree with the World Travel and Tourism Council's estimates that the UK travel and tourism industry contributed £22.5 billion in taxes in 1992 and is expected to contribute £26.2 billion in 1995, compared with Government funding of tourism of £89.8 million; and, if not, whether they will give their own estimate of revenues". The reply from the Minister underlines what the debate is about. The Parliamentary Under-Secretary of State, Department of National Heritage, stated: Tourism will have an impact on the tax revenues raised from a wide range of different industries. No precise estimates are available".—[Official Report, 16/5/95; col. WA 27.] Other people produce precise estimates. They may be challenged, but those people are able to say, "Here is an industry that earns billions of pounds for the country; and here is a situation where, by grant-in-aid, the industry receives peanuts". The Minister must say why the Government or Treasury have a vendetta against the tourism industry. The small amounts doled out are ludicrous when one considers the size of the Treasury cake. The Minister should tell us a little more about a philosophy which is successful from the Treasury's point of view.

The song says, "I will survive". The industry will survive. Some people may go out of business but, in general, the industry will survive. But why do not the Government nurture and cherish the industry and give it a little more of the money that it deserves? In his brief the Minister will speak copiously about the Touche Ross report of 1993. The Government should seriously consider the report's recommendation and elevate the status of the portfolio; with a Ministry of Tourism and its own Minister. I was interested to hear from the noble Earl, Lord Bradford, of the situation in Australia. I was not aware of it. The Minister responsible for tourism in Australia is a member of the Cabinet. A Member of the Cabinet in this country has within his department Ministers whose job, among a dozen others, is to look after tourism. For many years this country has lacked the sharp focus required.

What did the Touche Ross report recommend? First, it pointed out that Ireland, Portugal and France—they have excellent structures with excellent government backing—are able to produce many of the factors that we wish to see in this country. Those successful countries have a clear, coherent central government strategy for developing tourism. We do not. They have a coherent central co-ordination of all policies affecting tourism, such as transport, cultural developments and regional policy. In all three countries, the Government led private sector activity, and acted as a catalyst for it, rather than seeking merely to co-ordinate private sector initiatives. We do not do that in this country. All three governments offered fiscal incentives to private sector in the form of reduced VAT rates for small hotels and accelerated capital allowances. The revival of Ireland's tourism—overseas visitor expenditure grew at 10.8 per cent. per annum between 1980 and 1992 compared with UK growth of 5.9 per cent.—coincided with the Irish Government's decision to cut VAT on hotels from 20 per cent. to 10 per cent. in 1983–84. Any number of times I have heard hoteliers and the industry in general wonder why the Government believe that they are helping tourism by adding burdens to it. The Deputy Prime Minister makes a fetish of the way that this Government want to encourage small businesses by lifting burdens from their backs. The Government are proud of the number of small businesses that they have created. I have news for the Minister. A few years ago those small businesses were big businesses. They have been reduced to being small businesses as a result of this kind of government activity.

The Government's task tonight is to help the House understand why the UK has enjoyed none of the success factors that have characterised our competitors. UK tourism policy has been dominated by short-term rather than strategic considerations. With the sudden reversal of policy, grant-in-aid cuts to the English Tourist Board and such severe restraints on local authority spending, tourism services and investments in, for example, seaside resorts have suffered.

I was glad that the noble Lord, Lord Mountevans, gently introduced the ludicrous disparity between the per capita support for the English Tourist Board in comparison to the others. It was not just a question of doubling or trebling. In some instances they received 10 times as much. The Minister will tell us again that there were special grounds in relation to Scotland. My difficulty is that I do not want to plead the case for reducing the amounts received by others. There is a clear case to be made as to why the English Tourist Board ought to be better treated than it is.

A Labour Government produced the definitive Act, in 1969. It has been improved upon and reworked. I do not deny that the present Minister, and others, genuinely want to see an expansion of tourism in this country. He is going about it in a queer way if he wants support from those who are involved. His colleagues in another place, and the Treasury, may very well enjoy the fact that expenditure has been contained, but it is a sad and strange situation.

For instance, one debate in which the noble Lord, Lord Mountevans, and I engaged was on the incomprehensible decision of the London Tourist Board, driven by a cut in its grant, to abolish the London Convention Bureau. The bureau had within it a special unit whose job was to stimulate interest worldwide regarding conventions in Britain. The amount of money it received was cut, and as a result the convention was cut. Figures that I have show that the cuts made a few years ago include 42 staff from the English Tourist Board and 28 from the British Tourist Authority. Posts in London were lost, and a major revision of activities concentrated on assisting the industry to make its full contribution to the economy but with less money and fewer people. Amazingly, it works and continues to survive and expand.

The Minister might say, "What is Lord Graham complaining about?". I am saying that there needs to be a little equity, fairness, and understanding. I believe the noble Earl, Lord Bradford, mentioned the figure of one-and-a-half million people with personal capital wrapped up in 200,000 businesses, most of them small. Those people fondly believe that the Government have their interests at heart. That is true—but only after the Treasury has been satisfied. That is the wrong way to go about it.

I confidently believe that the Government should revise, for instance, some of the ludicrous policies that are mentioned in the annual report of the BTA. The report mentions the example of London buses being kept red. How could it be credited that part of the Government's policy in deregulating transport was to give rise to the fear and the real danger that London buses, coloured red, would no longer be capable of being seen as a national symbol? The Government stood by and almost allowed that to happen.

There was an allusion to the threatened new duty that is to be imposed and increased. I believe that the possibility is well founded. We shall know the answer in four weeks' time when the Budget is announced. This is a case, if not of killing, then of damaging the goose that lays the golden eggs. The industry has produced billions of pounds which we all enjoy as a subvention to the general taxation system. The Minister clearly has a good opportunity tonight, not to give definitive answers that will be taken away and accepted, but to show tolerance and understanding.

In Sun City in South Africa some three weeks ago the annual conference of ABTA took place. I hope that everyone in the tourism industry respects, as I do, ABTA's worth as a trade association, helping as it does to project and articulate ideas on behalf of a very disparate industry, one that involves hoteliers, bankers, credit merchants, taxis, hotels and restaurants. It is comprised of a whole range of people. ABTA is interested in incomers, but also in people travelling abroad. It is very worried about the impact of the competition that is faced from our main competitors.

Mr. Colin Trigger, the president of ABTA, laid it on the line when he talked in terms of the craziness of the industry living like Alice in Wonderland. I quote: What really concerns me is what I will call the conditioning of the consumer…Whether for market share, or just blind marketing, or for reasons best described as charitable, we are not only confusing the consumer we are spoiling him for years to come". There is a great job to be done by this Government—for as long as they have the remit. They can act as the driving force in combining the best interests of those involved in the industry. I believe that they yearn for leadership. But they do not get it from this Government.

I hope that at the end of our debate the Minister will have some kind remarks to make to the noble Earl, Lord Bradford. Equity, fair play, common sense and nous are what I believe we ought to see from this Government. The industry is troubled. It has difficulty in understanding the strategy that the Government are attempting to put forward. Tonight the Minister can reverse the experience of this House in listening to his predecessors in comparable debates. He can send us away happy with his reply.

7.48 p.m.

Lord Inglewood

My Lords, I am very grateful to my noble friend Lord Bradford for enabling me to speak about the Government's commitment to supporting the tourist industry.

It is a characteristic of the British parliamentary approach that the parties stand opposite each other and there is a kind of dialectic to the way the debate goes. This is a noteworthy debate. It is probably divided between those who are the kinsmen of my noble friend Lord Cochrane of Cults and those who are not. Among those kinsmen is the noble Lord, Lord Rathcavan, whose heartfelt maiden speech we heard with great interest and with great expectation of more to come. Like his predecessors, the noble Lord has played a significant role in Northern Ireland. I am sure that I speak for everybody in this House in wishing him well in his endeavours for that country. I am most grateful to him for drawing my attention to the fact that the Irish Tourist Board is appearing on the same stand as the British Travel Authority at the ASTA world congress next week in Philadelphia, effectively promoting the British Isles for the first time.

I listened with considerable interest to the views expressed and not least to the suggestion that the Minister for tourism should have a seat in the Cabinet. It is a suggestion with which I unequivocally concur. I shall endeavour to answer the points raised by noble Lords but I am sure that your Lordships will appreciate that I cannot say anything at this stage about forthcoming announcements on public expenditure. As a result, I must duck some of the points to which I am sure some of your Lordships would like me to reply. However, I can assure the House that when the Department of National Heritage argues within government, it argues most vigorously. I hope, however, that I can reassure your Lordships of the Government's determination to continue to support this vital industry.

The tourism industry in this country is a very successful and important one. We must not forget that it has the capacity to finance a considerable amount of its own future. It is an industry which will play a vital role in the future growth of our economy in general as well as specifically in the regeneration of poorer areas. It brings enormous amounts of custom and income to the arts and heritage in this country. We must never forget that support for tourism comes from sources such as the single regeneration budget, the European Regional Development Fund and arts and heritage funding. However, good as its performance may be, the industry, we believe, could do even better. It operates in a rapidly growing world market. World spending on international travel will grow by over 4 per cent. per year over the next decade. Tourism will be easily the world's largest industry by the year 2000.

As has been said, our share of that growing market has been falling. We had 6.1 per cent. of international tourism earnings in 1985. That had fallen to around 4.3 per cent. in 1993. We have had a couple of good years since then. But so has everyone else. We must recapture our share of the market. I believe that the figures for 1994 and the first half of this year show an encouraging change. I do not believe that it can simply be a matter of sunshine and exchange rates.

The growth of the world tourism market is welcome but it is also a challenge. As it grows, that market place becomes very much more competitive. New destinations come on stream almost daily. At the same time, people going to more conventional destinations want more for their money. Their expectations of quality are rising all the time. That is true of our domestic tourists as well as our overseas visitors.

If we are to compete at home and abroad, we must not only—as has been suggested—ensure that tourism to Britain is promoted effectively. We must also ensure that visitors are not disappointed. The quality must be right.

Government support for the tourism industry is primarily channelled through the statutory tourist boards, to which I shall turn in a moment. But effective government support for the industry is not simply a matter of funding. Our support for tourism includes a substantial investment of public money, but it goes well beyond that.

The Department of National Heritage is strengthening its sponsorship of the industry. Our broader policies which benefit small businesses are always good for tourism. For example, the opt-out from the social chapter means that small firms in tourism and other sectors do not have to bear unwarranted and damaging costs and obligations.

Earlier this year, we published our document Tourism—Competing with the Best. That set out a work programme for the current year which has been widely welcomed and on which good progress is being made. The programme has never claimed to be comprehensive but it does identify some important issues upon which immediate action is necessary. On the supply side, those concentrate on the quality and value for money provided by hotels and guest houses. Accommodation represents 30 per cent. of the spending of overseas visitors. Despite the fact that many of our guest houses and hotels are very good indeed, too many visitors go away from Britain disappointed with their accommodation. For example, a survey by the London Tourist Board found that about one in four overseas visitors staying in tourist accommodation was dissatisfied.

The five areas for action set out by Competing with the Best include a benchmarking initiative. Seventy small hotels across the country have been studied to identify the features which make for a successful business. The results are now being evaluated and we hope to publish them soon. The report will help small hotels everywhere in Britain to measure their performance against the best and identify areas where they can improve.

Competing with the Best indicated that it is difficult for consumers to know in advance the quality of accommodation that they are buying when they book a hotel room. As a result, many excellent hotels in this country do not reap the full reward of their excellence. Those which are substandard disappoint customers and damage the whole industry. It is therefore essential to have a comprehensive classification and grading scheme for the accommodation sector. A widely recognised, easily understood and used rating system makes it easier for customers to choose what they want and to distinguish the good from the bad. It will encourage operators to improve, enabling them to reap the rewards of providing a quality product.

The ETB is currently reviewing its accommodation classification and grading scheme. It will make proposals by the end of the year for changes to ensure that the scheme focuses clearly on consumer priorities and is user friendly.

Competing with the Best also notes that it is often more difficult to book a holiday in the United Kingdom than it is to book an overseas trip. The English Tourist Board is examining ways of making it easier to arrange domestic holidays. In addition, I am now in the process of convening a group of experts from the industry to suggest what might be done to broaden the scope of booking schemes and marketing consortia to make holidays in this country more accessible to the domestic consumer.

The Government continue to support the British Tourist Authority as the leader of our overseas marketing effort. I do not suppose that your Lordships will be surprised to hear that I cannot agree with the thrust of the argument advanced by the noble Earl, Lord Mar and Kellie. It is clear that the small businesses that predominate in the tourist industry would find it extremely difficult and perhaps impossible to gain access to overseas markets were it not for the services offered by the BTA.

I believe that the funds that the Government invest in the BTA are very well spent, often matching commercial funds, which all add significantly to the country's earnings from overseas visitors. We have asked the authority to improve value for money even further, first by devoting more effort to assessing the opportunities in different overseas markets and, secondly, by enhancing its research to improve our understanding of what customers look for. That will ensure that promotion is targeted on those markets with the greatest return.

Let me turn briefly to the promotion of London, which was a point referred to by my noble friend Lord Mountevans. All the evidence suggests that London is Britain's greatest asset in attracting overseas tourists. For many visitors London is the gateway to Britain. Overseas visitors, brought here by the attractions that our capital offers, when they have once arrived, may well travel on elsewhere in the country or perhaps, which is at least as important, come back on another occasion for more. Hence, securing London's place at the centre of tourism will bring enormous benefits not only to London itself but to the whole of the tourist industry across our country.

Lord Graham of Edmonton

My Lords, perhaps the noble Lord will allow me to intervene. I wonder whether it is recognised that, although the attractions of London are very real and patent, there are apparently limits to the ability of London to accommodate the number of people who are attracted to it. Would the Minister care to comment on an initiative called the Northern Gateway whereby, instead of people automatically coming into Britain through London, they are encouraged to come in, for instance, through Manchester? Visitors will always come to London to see the sights but if the strategy was for them to come through the Northern Gateway at Manchester that would provide an incentive for them to go more easily to Scotland, Yorkshire and other parts of the country.

Lord Inglewood

My Lords, I am most grateful to the noble Lord for referring to the Northern Gateway. It is important to be clear that we are talking about two complementary matters. As I said, there is an enormous amount of evidence to suggest that London is the greatest attraction that our country has to offer. That has been empirically established. Once the visitors are here, we hope we can encourage them to travel further.

The Northern Gateway initiative is very valuable because it encourages people to travel direct to other parts of the country. But the reality of the market place is that those are not alternatives. London is an enormous attraction. The Northern Gateway initiative will enable those who know London well to bypass London when they come to this country, thereby relieving to some extent the congestion to which the noble Lord refers. The London Tourist Board and the Department of National Heritage are concerned about that. They are endeavouring to take steps to ease the problem so that it will not get in the way of an effective and successful tourist industry.

As I was saying, we must make more of this tremendous asset that we have. For that reason the Government have provided £2 million of new money over two years to the British Tourist Authority to improve the promotion of London in overseas markets. The British Tourist Authority will match this from its own resources, and it is using funds in conjunction with the London Tourist Board, which is raising matching private sector contributions.

The debate then turned to the other parts of our country and it was asked how funds were allocated between the statutory tourist boards within the United Kingdom. So far as the countries of the United Kingdom are concerned, it is clear that the tourism industry differs considerably from one to another. For that reason it is important that support for tourism in each of the countries of the United Kingdom is determined accordingly. So the Secretaries of State for Scotland, Wales and Northern Ireland determine allocations from their national budgets to support tourism in their own countries, while it is the Secretary of State for National Heritage who determines the grant to the English Tourist Board and the British Tourist Authority.

Going back to certain remarks made by the noble Earl, Lord Glasgow, I myself, as an Englishman coming from just south of the Border and having no specific governmental responsibility in this regard, would say that I very much do not wish to get involved in the problems of the other home countries in this manner. However, I can assure your Lordships that all your points will be noted by those who have responsibilities in these affairs.

It is, I know, tempting to make simple comparisons between the amounts of grant given in each part of the United Kingdom or a grant per head of the population hut, as I am sure we already know, it is not quite as simple as that. Public money must be allocated on the basis of an assessment of the need for and the return to public investment in tourism in each of the countries. It therefore follows that the amount of funding and the policies for distributing it will differ accordingly. It is worth pausing for just a moment to reflect that many industries which receive no grant at all contribute substantial tax revenue to the Exchequer.

As I mentioned earlier, my noble friend Lord Mountevans referred to the English Tourist Board. Of course it is true that the grant-in-aid to the ETB has been reduced; but this is a result of hard spending decisions and the need to preserve the BTA's capacity to promote overseas. It also reflects our view that the ETB should operate as a strategic organisation, offering leadership and advice, and should reduce its emphasis on running programmes and particular marketing campaigns.

Government support for the tourism industry has never been stronger. Direct financial support for the tourist boards for the United Kingdom in the current year totals almost £90 million, as has been mentioned earlier in the debate. In addition, substantial amounts of money from regeneration programmes such as the European Regional Development Fund are going to tourism projects. Furthermore, much of the £1 billion or so that is spent by the Department of National Heritage this year funds the arts, culture and heritage, which are among our most significant tourist attractions and which can in addition benefit from the huge success of the National Lottery. Equally important is the support from the Government and the statutory tourist boards underpinning the industry's efforts through the quality and promotion of its own products. Never has this support been more carefully considered or so wholeheartedly given.

The Government recognise the tourism industry as a vital component of the future success of the United Kingdom economy in creating wealth and securing jobs. In partnership with the industry we will continue to play our part fully in strengthening its performance and in ensuring that Britain remains one of the world's premier tourist destinations, underpinning one of the world's foremost tourist industries.

House adjourned at four minutes past eight o'clock.