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Jeremy Hunt: Tourism revolution an essential part of our recovery

Last week was British Tourism Week and this is normally the time of year when the tourism industry reminds politicians how important it is for the national economy.

If that was true in previous years, it is even more so now as we face one of the most severe economic downturns for a generation.

Tourism is no candy floss industry. As a sector worth £114 billion a year, it is responsible for some 8% of our GDP and employs over two million people. As we seek to rebuild our economy, it has a vital role to play in rebalancing the economy away from dependence on financial services, housing and debt.

But today I want to do more than simply utter platitudes about the importance of the tourism industry. I want to talk about the current downturn, and ways the government can help the industry weather it. I want to place tourism in the context of the Conservative vision for Britain's economic future. And I want to lay down some challenges for us all: challenges for a future Conservative government to deliver for the tourism industry; but also challenges for the industry itself if we are to make the most of its potential.

<h2>Tourism industry one of the biggest victims of current recession</h2>

First of all, we need to be clear about the scale of the crisis facing tourism in the current recession.

An industry which contains 200,000 small and medium sized businesses is particularly vulnerable to a lack of credit. Tourism businesses in particular need finance to see them through the off-peak and quiet periods of the year - but at the moment they simply cannot get it.

Look behind the headlines, and it isn't just big car factories that re suffering. 100 tourism-related businesses are now closing every week.  Small family-run businesses, bed and breakfasts and pubs are the real victims of Britain's boom and bust.

Because the current downturn is synchronised throughout the world, tourism is particularly badly affected. In the three months to December foreign visitors to the UK fell by 5% compared to the year before. Despite a much weaker pound, visitors from North America have fallen by 13%. And it's going to get worse. According to Deloitte and Oxford Economics, overseas visitor numbers are likely to fall by a further 10% between now and 2012, leading directly to a further 70,000 job losses.

In this context we need emergency measures to help tourism businesses survive. And we need a long term vision as to the role the tourism industry can play in a rebalanced national economy.

In order to deal with the short term crisis, we have already proposed a range of measures to help businesses. Many of these are particularly relevant to those operating in tourism.

We will help businesses access credit with our national loan guarantee scheme, something that has I am pleased to say now been taken up by the government. We will reduce corporation tax rates on small companies from 22p to 20p, so reversing the government's £370m tax hike.

We will cut payroll taxes for the smallest employers to help them save money and so keep jobs. And we will allow small and medium sized businesses to defer their VAT bills for up to six months. For a typical business this could impact cashflow by around £90,000, potentially meaning the difference between survival and failure.

<h2>Part of a rebalanced and sustainable economy</h2>

These measures can help deal with the crisis. But we also need a longer term vision for tourism as a thriving part of a rebalanced and sustainable British economy. This vision has been totally lacking from the current government - but I also think it is fair to say that tourism has been neglected by successive governments of all colours. I want to put that right.

In January when setting out his vision for economic and social recovery, David Cameron argued that our economy needed to become more green, more local and more family-friendly. He also said that our future prosperity depended on a more balanced economy and not one reliant on a small number of sectors.  Since then we have highlighted ways we would support emerging green technologies and help foster a new generation of digital businesses.

Tourism too should be an area where the UK plays to its natural competitive strengths.

Our rich history has left us with amazing castles and stately homes and we are blessed with the best galleries and museums in the world.  No other country can boast that it is the home of Shakespeare and the Monarchy; of Stonehenge and the Eden Project; of the Lake District and London. People come from all over the world to see the British Museum, Edinburgh Castle and the London Eye. They come in their millions to watch a West End Show or see our incredible countryside.

Add to that our shared language with the United States, Australia and others, our ties with the Commonwealth and our location in Europe.  All of which has made us - despite our famous weather - the sixth most visited country on the planet.

<h2>A missed opportunity</h2>

Yet despite these natural advantages, we have never as a country realised the potential our tourism industry has to offer.

Although there has been some increase in the number of visitors coming to the UK, our global market share has fallen by 10% since 1997. Our share of world tourism spend has fallen by even more. Our tourism trade deficit has risen in the last 10 years from £4 billion to over £20 billion.

Some of this is understandable. Britons love to travel, and low cost airlines have brought overseas holidays within the reach of many for the first time. At the same time the emergence of newer destinations like Thailand or Dubai means we have to work harder to maintain our global share of the market.

But too often as a country we have shot ourselves in the foot.

A bureaucratic and unwieldy planning process has made it difficult for local tourism businesses to invest and develop the attractions they own. We are one of the few countries in the world where local authorities receive little financial benefit from an increase in visitors to their area.

Indeed often the opposite is the case - more tourists can simply mean bigger bills for emptying bins, maintaining public toilets and cleaning pavements and beaches. So when local authorities should be competing to attract more tourists, our system actually disincentives them from doing so.

At the same time, the government has massively complicated the structures that used to be in place to market UK tourism. The muddled division of responsibilities between local authorities, Regional Development Agencies, Visit Britain and Visit England has resulted in confusing, overlapping and poorly co-ordinated marketing support for the industry. Add to this a 22% cut in the Visit Britain budget since 1997 and it is hardly surprising that our global market share has fallen by more than 10% since Labour came to power.

<h2>Practical action from a Conservative Government</h2>

We should never forget that in an era of globalisation, Britain's tourism offer cannot be reproduced, outsourced or off-shored. Every pound invested in tourism is a pound invested in an industry that will provide sustainable jobs and prosperity for generations to come. Which is why instead of holding it back, we should be seeking to stimulate the greatest possible investment in tourism.

I want a Conservative government to take a real lead on making this happen.

Our Tourism Minister will chair an inter-departmental ministerial group to deal with issues such as planning, immigration and transport that have a direct impact on tourism.

This would mean there is a voice at the heart of Government that could speak up for the tourist industry before the Home Office doubles visa charges. It would not necessarily prevent changes being made that are unpopular with tourist businesses - but it would ensure that the impact on the tourism industry is properly considered before decisions are taken.

Secondly we want to see a clearer structure for the marketing of both domestic and international tourism. I welcome the emergence of a stronger Visit England, working together with Visit Scotland and Visit Wales. But the picture is still extremely complicated, not least by the role of regional development agencies. I know that some do a good job at marketing tourism - One North East in particular. Our plans will disband RDAs, but allow local authorities to combine forces to continue their work where they choose to do so.

This will be part of much broader strategy to encourage local authorities to take a real interest in and ownership of the promotion of tourism for their areas. Our decentralisation plans will allow local authorities to keep any increase in business rates that they attract for six years. They will therefore have a real incentive to attract new tourism businesses.

And we will help them attract these new businesses by giving councils the discretionary power to cut business rates however they like. This will give them a real incentive to support the development of a local tourism industry. Seaside towns could, for example, direct such discounts at tourism businesses if they decided they had a strategic regeneration role.

<h2>A shared responsibility</h2>

But if government lack of interest in tourism has been part of the problem, it has not been the whole problem. If government is to raise its game, the industry too must follow suit.

We still have much to do to improve the welcome tourists get when they come here.

For too long some parts of the industry have been willing to tolerate high prices and poor service levels for the tourists we now have to compete to attract. We need to banish the Fawlty Towers stereotype once and for all and make sure that the excellent welcome and facilities offered by majority of our tourism businesses are not let down by the low standards offered by a few.

For that reason we need to see a single industry standard for quality. No business should be able to take advantage of Government funded tourism agencies unless they are accredited and meet minimum standards. People using Visit Britain or Visit England's websites also need to know that the businesses featured meet those standards too.

The industry also needs to think more about its role as a key employer. Imaginative ways of retaining staff for longer, investing in training and keeping skills up to date are one of the best ways of ensuring that we do offer the highest levels of service.

Finally we need work with the tourism industry in how we make the British economy greener, more sustainable and less energy-intensive. We won't ever stop people wanting to travel abroad for their holidays, but we could do a lot more to make our domestic tourism offer more attractive. In doing so we would massively reduce our national carbon footprint.

Our proposals for a high speed rail network will have a major impact in promoting this. But there is much more that can be done to underpin a sustainable domestic tourism industry - by government and by business. And we should never fall into the trap of saying that what is good for the environment is bad for business. With consumers increasingly environmentally-conscious, what is good for the environment is good business too.

<h2>Seaside towns project</h2>

It is perhaps our seaside towns that are feeling the brunt of government neglect of tourism.

Many of those towns have proud histories as pioneers of short breaks when holidaying at home was the norm. Now more often than not they are pale shadows of their former selves. The most deprived seaside towns have tragically seen a 25 per cent increase in deprivation since 1997 as crime and unemployment have soared and living standards fallen. They now face the double whammy of falling tourist numbers and small business closures.

For that reason David Cameron has asked Mark Simmonds and Tobias Ellwood to develop a seaside towns manifesto. Tobias will be leading on the tourism side of this.  But our coastal towns are about more than tourism and that is why Mark will be considering a wide range of issues including health, education, housing and the economy. We want to make our coastal towns more than just good places to visit - they must be places people want to live, work and establish businesses.

They plan to issue their recommendations later this year and I know they would welcome any contributions you would like to make to their thinking.

<h2>Conclusion</h2>

I recognise that this is the start and not the conclusion of a process of engagement by the Conservative Party with the tourism industry.

We need to have that engagement because the opportunities are extraordinary. The same Deloittes report I quoted earlier said that with the right combination of policies, tourism could generate an additional £22 billion for the economy and 50,000 jobs. Tourism can help make our economy greener, more prosperous and more sustainable. Let's get on and do it.

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