Kurt Janson: Tourism has had a key role in recovery

THOUGH still very fragile, the UK economy is starting to show real signs of growth for the first time in over six years.

This is undoubtedly good news, but it begs the question, “Where did this growth come from?” While there is no single simple answer to this, I would like to make the case that even if tourism didn’t single-handedly pull the UK out of recession, it has played a very important and demonstrable role in the recovery.

Since 2010, the UK’s domestic tourism industry has grown by 27 per cent (generating £60.8bn to £77.2bn) in what was known as the “Staycation effect” of people swapping overseas holidays for domestic holidays. In addition, the inbound tourism industry has grown by 18 per cent over the same period to now be worth £21bn per annum to the UK economy.

In total, the UK tourism industry is generating £19.5bn more today than it was in 2010.

This has had a considerable impact on employment. Recent work by Deloitte has found that it only takes an increase of £54,000 in tourism revenue to create a new job. So the £19.5bn in additional tourism revenue generated approximately 360,000 new jobs between 2010 and 2013.

Importantly, these new jobs are distributed relatively evenly across the whole of the UK rather than being concentrated in the South East. For example, in Yorkshire, the tourism economy is now worth £7.4bn, which provides jobs for 140,000. That’s almost as many people as the entire population of York.

The role that tourism has played in boosting the economy is highlighted by the Office for National Statistics’ Labour Force Survey, which showed that between 2010 and 2013, a third of all the additional jobs created in the UK were in tourism-related businesses.

The good news is that the tourism industry’s contribution to the growth of the UK economy hasn’t escaped the attention of government and that over the past year there have been a number of initiatives to support the industry.

These range from removing Air Passenger Duty for children (and decreasing it for visitors from 
long-haul destinations) and improving the processing of visa in growth 
markets such as China through to supporting initiatives like the Tour de France.

However, while these initiatives are all welcomed by the tourism industry as acknowledgement of its performance and the opportunities that it provides, 2015 will still be a challenging year.

On the inbound side, the main concerns are that the eurozone looks to be heading into recession again – the turmoil in Greece is a case in point – and there is the potential for considerable fall-out from the current problems associated with the Russian economy.

On the domestic side, growth opportunities in 2015 also look challenging. There is a general nervousness about the outcome of the election and the impact that this will have on the economy.

The main concern, however, is the pretty open secret that post-election, the incoming government will have to drastically cut public expenditure and that this could have a significant impact on the ability of the UK to market itself both domestically and internationally.

With the likely scenario of a significant decrease in public spending on tourism marketing, the tourism industry has two main priorities for the incoming government.

The first is to increase the international competitiveness of the UK tourism industry by removing barriers to growth.

This ranges from cutting VAT and APD rates to bring them into line with other European destinations (VAT on accommodation in the UK is twice the European average while the level of APD visitors pay to come to the UK is higher than any other country in the world), through to reducing the vast amount of red tape that still hampers businesses and properly rolling-out rural broadband and high-speed broadband programmes so that businesses can successfully compete online.

The key message to government from the tourism industry is that over the recession it has proven its ability to deliver growth and employment. Given the right business environment, it will continue to do so.

Kurt Janson is policy director at the Tourism Alliance.