The tourism sector is one area that is often neglected by policymakers, or at the very least, doesn’t receive as much attention as it ought to. It is, after all, a significant part of the UK economy, estimated to be worth over £257 billion by 2025, just under 10% of UK GDP and supporting almost 3.8 million jobs, roughly 11% of the UK total.
It is also one of the few sectors that seems to have genuinely benefitted from the aftermath of the Brexit vote, at least in the short term, with increases in the number of inbound visitors in the last year and a rise in the number of staycations, all largely attributed to the fall in the value of sterling. Since the referendum, visits to the UK have grown by 6%, with a record breaking 11.1 million inbound visits to the UK in the period from May to July of this year.
Policymakers, however, should be wary of complacency and must instead be creative with their initiatives to support UK tourism, whilst remaining steadfast in their desire to see it continue to grow. This includes a recognition that the tourism sector itself is extremely diverse – ranging from small family run theme parks to high end visitor attractions and hotels in places like central London. This diversity is something that needs to be reflected in policymaking and the recent decision to remove a number of leading tourism bodies from the Government’s Tourism Industry Council unfortunately did little to reassure those concerned that the Government’s focus is perhaps too narrow at the moment.
The Government’s Tourism Action plan was a welcome display of the commitment being shown to the sector. However many criticised some of the initiatives as being too granular and unlikely to have any significant impact on industry growth. The tourism sector deal that is currently being taken forward as part of the Government’s Industrial Strategy is also welcome, but its focus on things such as digital skills, technology and productivity issues, whilst important, have a far greater impact on some parts of the tourism economy than others.
Instead, perhaps the Government should focus to a greater extent on issues that affect all parts of the tourism industry, including business costs such as tax issues. It is widely known that the UK has one of the highest rates of VAT levied on the tourism sector of all the countries in Europe – currently over 10% higher than the European average – meaning that the UK tourism sector is fundamentally uncompetitive internationally. Other costs, such as business rates and insurance premium tax also consume a higher and higher proportion of the costs involved in running tourism businesses, reducing their ability to invest and grow.
These won’t be the answers in and of themselves, but they would demonstrate a welcome commitment by the Government to support tourism business where it matters most – in their pockets.
Whilst the tourism sector does show strong growth, this cannot be taken for granted, with the uncertainty of what trading and visitor patterns will look like post-Brexit continuing to hold back investment in an otherwise buoyant industry. The Government has said that it is committed to supporting the tourism industry – but there are areas where it could go even further. The Budget next month is an opportunity for the Government to be bold in its support for the tourism industry.