300,000THE AGENDA FOR NEW JOBS
MARCH 2013 A MID-TERM REPORT BY THE BRITISH HOSPITALITY ASSOCIATION Foreword
This is the second of the British Hospitality Association’s biannual reports, providing an evidence-based proposition for partnership between one of Britain’s greatest industries for job creation - hospitality - and the policy makers who can make or break the agenda for 300,000 new British jobs.
In August 2010, three months after the formation of in gross tax revenues. scale – and Britain triumphed. Now we must make the coalition government, the Prime Minister made a According to the research set out in this report, the sure that the opportunity afforded by the Games landmark speech on tourism in Britain. Looking ahead hospitality industry generated 153,000 new jobs is not lost. to the Diamond Jubilee and the Olympic and from 2010 to 2012, accounting for 27.7% of all new Today, young people are finding it harder than ever Paralympic Games, he outlined his personal vision for jobs created in the UK over this period. Now before to gain employment. Youth unemployment in the sector. He stated that he wanted to see Britain in responsible for 2.68 million jobs, hospitality is Britain is now higher than every OECD country the top 5 destinations in the world in terms of Britain’s fourth largest industry. With the right with the exception of Greece and Spain. inbound tourism revenues and to increase the regulatory framework, the potential to create a In 2012, the British hospitality industry advanced its proportion of British people who spend a holiday further 300,000 jobs (taking the total to 2.97 commitment to tackling youth unemployment through in the UK from 36% to 50%. million jobs) by 2020 is an attainable target that The Big Hospitality Conversation – a joint campaign We were enormously encouraged by the speech - should be harnessed for the successful future of the with Springboard and Business in The Community - the economic and social contribution of the sector had United Kingdom. aimed at creating jobs, work placements and never before been fully appreciated by the The hospitality industry has actively demonstrated apprenticeships for 18 to 24 year olds across the Government. In October 2010, we published two its commitment to powering jobs. Despite a weak United Kingdom. reports. The first, by Oxford Economics (OE), economy, over the past two years our industry has The changes and reforms critical to the realisation quantified the contribution of Britain’s hospitality continued to grow. Hospitality employment growth is a of further growth are set out in this report. The British sector. The second, Creating Jobs in Britain – a testament to the strength and entrepreneurial flair of Hospitality Association is not calling for ‘support.’ Hospitality Economy Proposition, set out the individuals and businesses in this sector and, in On the contrary, this report calls for a collaborative recommended changes in public policy designed to part, to the contribution of London’s Olympic and partnership in which everyone wins. see the sector grow and develop. In 2010, Oxford Paralympic Games. This report sets out what has been achieved over Economics calculated that hospitality was Britain’s 2012 saw Britain at its best. The Olympic and the last two and a half years. It’s now time for a fifth largest employer, directly employing more than Paralympic Games gave us a once in a lifetime forward look at what more can be done to harness 2.53 million people* and contributing over £34 billion opportunity to showcase our country on a massive and deliver growth.
*As highlighted in the 2013 Oxford Economics report, this figure has been adjusted in light of data revisions. 0 2 THE AGENDA FOR 300,000 NEW JOBS Contents .EXECUTIVE SUMMARY: The agenda for 300,000 new jobs 04 .RECOMMENDATIONS FOR GOVERNMENT 05 1 Harnessing the value of the hospitality and tourism economy 06 • Accountability at the highest levels of government 10 • Cross-government ministerial taskforce 10 • Regionalism, LEPs and the Regional Growth Fund 11
2 Beating our international competition 12 • Price: cutting VAT and Airport Passenger Duty 13 ALAN PARKER CBE • Less expensive and more straightforward visa procedures 15 Chairman • Fast-track decision making on airport capacity and transport/tourism infrastructure 16 • Expanding the role of VisitBritain 18 • Incentivising hospitality enterprise 18
3 Some changes are already within reach 19 • Reducing the burden of regulation 19 • Providing a level playing field for outsourcing and procurement 20 • Collaborating on health, supply chain, government procurement and sustainability policies 21 .DELIVERING ON OUR COMMITMENTS : Achievements & Next Steps 23 .Economic Contribution of hospitality within UK Parliamentary Constituencies 24 UFI IBRAHIM Chief Executive .BHA membership 29
THE AGENDA FOR 300,000 NEW JOBS 0 3 Executive summary
We present a clear choice for the Government and the hospitality industry.
Either we are content with the ‘steady as she goes’ approach or we jointly pilot a path for a more ambitious strategy. The normal trend line of growth will be hard to maintain because of international competition and the continuing weakness in the economy. Putting the right policies in place offers us all a considerable prize -
300,000 more jobs.
We are one of Britain’s most successful industries than 5% of total employment*. With and have displayed resilience and innovation in unemployment, particularly youth unemployment an exceptionally demanding environment for remaining a massive national challenge for this businesses – small and large alike. This success government, and the one to be formed in 2015, is set against a backdrop of the squeeze on we want all the political parties to study and disposable incomes, especially outside London respond to this report and set out a positive and the South East and the real difficulty in programme for growth in the sector. obtaining credit. It’s now time for a forward look and a clear SUCCESS BREEDS SUCCESS agenda on what more can be done to harness and Last year, Britain – and London in particular – deliver growth, working in partnership with had the greatest global advertising campaign Government to rebalance the national economy one could wish for. In organising and running and boost job creation in all parts of the country. the Olympic and Paralymic Games we showed the The figures speak for themselves. Hospitality world what a welcoming and hospitable country represents over 10% of total employment in more we are. We now have a great chance to build on than 20% of parliamentary constituencies and the Olympics momentum and see a transforma - there are only 14 where the industry provides less tional increase in visitors from home and abroad.
* Source: Oxford Economics 2013 0 4 THE AGENDA FOR 300,000 NEW JOBS Recommendations for government
Harnessing the value of the Beating our Some changes are 1 hospitality and tourism economy 2 international competition 3 already within reach • Hold an annual meeting between the Prime • Tourism VAT should be reduced to 5% to improve • Ministers should continue the active deregulation Minister and senior cabinet ministers with the UK's price competitiveness in Europe programme working collaboratively with the hospitality and tourism business leaders to shape • The UK’s visa application procedure and the Hospitality and Tourism Industry Regulation the long term strategy for our sector current perceptions of inbound visitors on the cost Taskforce • Establish a cross-government Ministerial Taskforce and complexity of UK visas need to be improved in • Favour a voluntary approach rather than regulation under the leadership of the Secretary of State to order that we can compete internationally across policy issues such as health, supply chain, deliver the strategy across all government • Increasing airport capacity is of vital importance to government procurement and sustainability departments the hospitality and tourism sector. The • The Treasury should extend the Enhanced Capital • The Government should outline a clear strategy for recommendations of the Davies Commission will Allowance Scheme (ECA) to cover more types of regional growth in England and in particular, clarify require decisive action from the next Government catering equipment. the future role of Local Enterprise Partnerships and maximising Convention and Event capacity is • Appoint a DCMS representative to the Regional an integral part of the ‘airport decision’ in order that Growth Fund Ministerial Panel and secure stronger we can compete effectively hospitality and tourism representation on the • Appoint the Chairman or CEO of VisitBritain to the Fund’s Advisory Panel. Board of UKTI as a permanent member • Review the funding of VisitBritain to ensure that the wider economic and employment advantages of higher visitor numbers are not lost due to marginal ‘departmental savings’ • Amend the rules governing the establishment of Real Estate Investment Trusts (REITS) to encourage hospitality businesses to take advantage of the flexibility they offer • End the exclusion of hotels from the Enterprise Investment Scheme.
THE AGENDA FOR 300,000 NEW JOBS 0 5 Hospitality and tourism Fuelling jobs recovery in every region
0 6 THE AGENDA FOR 300,000 NEW JOBS Hospitality is now Britain’s fourth largest industry, this industry has experienced significant growth over across the entire skills spectrum and most importantly directly employing more than 2.68 million people, the last two years, with employment rising by 153,000 – these jobs are spread across every region of ahead of other industries such as financial jobs to a total of 2.68 million in 2012. Britain. services, education, manufacturing, construction, The British hospitality industry accounted for Employment levels now exceed the peak levels public administration and defence. 27.7% of total UK net jobs growth over 2010-2012. of 2008 by 42,900 jobs with growth being strong According to Oxford Economics research, Evidence shows that this industry is fuelling the UK’s across restaurants and related activities, catering commissioned by the British Hospitality Association, private sector jobs recovery whilst creating jobs and hotels & related activities.
Source: Business Employment Survey (BRES), Source: BRES, LFS, Oxford Economics Source: Annual Business Inquiry (ABI), LFS, Labour Force Survey (LFS), Oxford Economics Oxford Economics THE AGENDA FOR 300,000 NEW JOBS 0 7 Hospitality and tourism
The unbreakable link between What makes up the hospitality economy? hospitality and tourism • Hotels & related services (including camping As an industry comprising internationally renowned grounds and other accommodation) businesses and a wondrous variety of small • Restaurants & related services (including pubs, enterprises, hospitality actively strengthens the visitor takeaway food shops, licensed clubs and motorway economy in every area of the UK, which contributes service areas, where hospitality services are the over £115 billion* to the economy per annum. main activity for the latter) Hospitality engages home and overseas visitors with • Catering (including corporate hospitality/contract the customer service, unique experiences and lifelong catering to both private clients (for example memories that are the essence of tourism. Our vision airlines) and public sectors clients, and in-house at the BHA is to realise fully the potential of the catering across non-hospitality direct sectors such hospitality industry as the heart of the visitor economy as health and education) in the UK. • Event management (including conference and exhibition organisers).
Hospitality economy - UK contribution
• UK’s 4th largest industry (in employment terms) • 8.4% of total employment • Directly contributes 2.68 million jobs (1 in 12 of total jobs) • A further 1.4 million jobs through multiplier effects • £52.7 billion to the UK economy in GVA (wages and profits) • £39.6 billion in tax revenue to the Treasury – Quantifying the combined contribution of equivalent to over 7% of total annual tax receipts hospitality and tourism brings today’s • £9.8 billion of foreign exchange export earnings – employment numbers for the sector to over 2% of total export earnings. 3 million – or over 10% of the UK’s workforce
* Source: VisitBritain Source: ONS, Oxford Economics 0 8 THE AGENDA FOR 300,000 NEW JOBS Powering jobs across the entire United Kingdom
Few industries can match hospitality’s impact on local economic vitality and jobs. Hospitality accounts for more than 5% of total employment in over 97% of all Parliamentary Constituencies across the United Kingdom*. In regions including the Isles of Scilly, Lake District, coastal towns and remote areas of Scotland and Wales, there are few alternatives to hospitality in terms of GVA and jobs. However, the critical role of hospitality is not limited to rural areas. As shown in the graphic, this industry generates a major percentage of total employment in urban areas also.
Research for the full series of Parliamentary Constituencies is presented on page 26 of this report.
* Source: Oxford Economics, 2013 Source: BRES, Oxford Economics THE AGENDA FOR 300,000 NEW JOBS 0 9 Harnessing the value of the hospitality and tourism economy
Accountability at the highest together the best techniques for increasing our share of the major events and conferences which are so important to our economy. Far from being a ‘grievance’ levels of government hearing, such annual meetings would act as a springboard for growth and development.
In June 2012, just before the London Olympics and Paralympics, the BHA Cross-government organised its first Hospitality and Tourism Summit, which brought together 400 business owners and operators from the sector. It was a strong ministerial task-force for demonstration of the vitality, innovation and diversity of Britain’s hospitality and tourism sector. It helped begin to unite a sector which has, historically, hospitality and tourism been too fragmented. Despite the mood of anticipation and ambition, there was frustration that the Government had not lived up to its earlier rhetoric. In response, we will continue to pull together as an industry at our second A cross government ministerial task-force would act as the forum for Summit in June 2013. Its goal will be demonstrating the power of our industry to detailed consideration of policy and act as a driver for reform and change create jobs and growth. We invite the Government to join us in realising this across Whitehall. Whilst there is a Minister responsible for tourism, the fact ambition for our sector is that the sector is influenced by decisions taken by a number of We have noticed how other countries have managed to achieve a more Government departments – the Home Office, Treasury, Transport, BIS, effective partnership with Government achieving coherence and consistency of Health, DCMS, DEFRA, DCLG, DECC and so on. Over the last two years we public policy. It is now time for Britain to catch up. We repeat our suggestion, have worked collaboratively with Ministers on de-regulation and on the made originally in the autumn of 2010, for the Prime Minister and senior cabinet voluntary Responsibility Deal for Public Health. We are active in ministers to meet each year with the leaders of our industry and together shape coordinating the food service industry’s response to the horse meat the agenda for jobs and growth. This is the approach that is taken in other scandal. We would like to see this collaboration extended. This taskforce countries as their governments recognise that the industry’s success is, to a should be led by the DCMS Secretary of State and involve Ministers from the considerable extent, shaped by the coherence and consistency of public policy. other departments. A small secretariat could be established from existing Such an annual dialogue would have provided an ideal opportunity, for DCMS and UKTI personnel as an ideal point of focus for the development of example, for industry leaders to outline the real damage we feel is being done to policy and the speedy resolution of issues. our international image and reputation for friendliness and openness by the We recognise, of course, that many of these activities are covered by the existing visa regime. It would have provided a forum where we could have agreed devolved administrations in Northern Ireland, Wales and Scotland and that
1 0 THE AGENDA FOR 300,000 NEW JOBS Harnessing the value of the hospitality and tourism economy
collaboration and agreement will be a key priority for the task-force. await with interest the government’s response to Lord Heseltine’s report “No Stone In establishing such a task-force, the government would be affording the Unturned – In Pursuit of Growth” (October 2012) where we would hope to see hospitality and tourism sector an equivalent voice to the other industry sectors more clarity on the future role and funding of LEPs. helping to drive forward the British economy – for example aerospace, car The majority of LEPs appear to be aware of how hospitality and tourism drives manufacturing, pharmaceuticals and life sciences. The Government would thus be local growth, inward investment and supports wider economic objectives, such as making a major and important reform and one that would reap immediate skills development, but many are still yet to establish and implement effective local dividends in terms of increased investment and job creation. strategies that avoid duplication of effort with existing bodies such as Destination Management Organisations. Local economic growth, We must continue to increase hospitality and tourism sector representation on each LEP and ensure effective engagement with the Destination Management LEPs and the Regional Organisations (DMOs) within their borders to provide a greater degree of organisational clarity. Individual businesses recognise that building effective local Growth Fund partnerships are vital to strengthening their own fortunes and can be disengaged by the overly complex interplay of VisitEngland; DMOs; LEPs and local authorities. Some English regions have found themselves at a disadvantage compared to In our October 2010 report we outlined our concerns at the forthcoming London, Scotland and Wales and this should not be allowed to continue if we are transition in England from Regional Development Agencies to Local to see the ‘rebalancing’ of the entire economy which is the common political Enterprise Partnerships (LEPs), fearing that not only would the £60 million objective. We are encouraged, by VisitEngland’s work in building their relationship that had already been spent on local tourism development by the RDAs be with BIS and individual LEPs on the visitor economy growth opportunity. lost but also that the focus that it had taken so many years to develop would We are further encouraged that 41 destinations in England are now benefitting also disappear. The RDAs, of course, had always had a mixed press and from the Regional Growth Fund monies allocated to VisitEngland and that a fourth some had been more successful than others in collaborating effectively with round of RGF funds is now open for bidding. We remain concerned that DCMS is the private sector. not represented on the Ministerial Panel for the Regional Growth Fund and One of the strengths in the formation of LEPs was the fact that they were stronger representation from our sector is required on the RGF’s independent constituted by an agreement between businesses and local authorities at local Advisory Panel. level and not centrally determined. As a result, they stand a good chance of reflecting the reality on the ground. We know that the government – and indeed all political parties – are keen to see economic growth in all parts of the country and
THE AGENDA FOR 300,000 NEW JOBS 1 1 Beating our international competition
Britain is in a very competitive marketplace. the effect of our relative uncompetitiveness in the Although global tourism levels are set to increase area of price. Out of 139 countries surveyed by the at a steady annual rate, the fact remains that WEF, only one country is less competitive. This is some nations will do better than others. How will driven principally by the extremely high levels of Air Britain measure up? Passenger Duty, VAT and high fuel prices. In such a competitive environment, Britain will only be able to Does our government fully recognise the importance maintain, or improve, its relative standing in the world of hospitality and tourism to the national economy? if these charges are reduced. Has our government encouraged the right mix of public policy to maximise the potential of Britain’s hospitality and tourism sector? It is important that we note that this has nothing to do with political ideology. It has everything to do with national ambition. Countries as diverse as China, the UAE, Germany, the USA, Turkey, Singapore and Mexico are working hard to construct the right partnerships and the right mix of public policy to develop their tourism economies. The most successful national strategy is based on the fact that tourism is about a broad visitor economy in which, for example, the delegate to a medical conference, the student on a postgraduate course and the project management team evaluating a development site are afforded the same significance as the family seeking a holiday destination. A more coherent and unified approach to policy is required. The World Economic Forum has just published its global Travel and Tourism Competitiveness report for 2013. The good news is that Britain has improved its overall position. However, we have concerns about
Source: The Travel & Toursim Competitiveness Report 2013 1 2 THE AGENDA FOR 300,000 NEW JOBS Beating our international competition
In the following section we outline the specific policy recommendations on taxation and price competitiveness; visas; infrastructure; enterprise policy and the role of the national Visit agencies. Despite the massive boost from the 2012 Olympics, it is clear that Britain will have to move a lot faster if it is to keep up with the other runners in the race.
Price - VAT last eighteen months to undertake further research. We are appreciative of the fact that we have been able to use the Government’s Computable General Equilibrium Britain’s uncompetitive price position was (CGE) Model in our research. highlighted twenty years ago and there have been The intellectual justification for a cut in VAT to 5% consistent calls for reform. Two and a half years (the only reduced level that already exists) for hotel ago, we recognised that there was no early prospect accommod ation and visitor attractions has been clearly of the introduction of a reduced level of VAT established both in the Deloitte/Tourism Respect report designed to stimulate the hospitality and tourism and in the subsequent analysis undertaken by sector. The budget deficit was running at over 10% Professor Adam Blake of Bournemouth University and the new coalition government had, after all, (a Treasury advisor), using the Government’s CGE announced only four months earlier its intention to model. The key findings from this latest report are that increase the standard rate of VAT to 20%. the reduced VAT rate would be largely revenue neutral With this in mind, we called for a reduced level of VAT and boost GDP by £4billion a year, thus generating ‘to be the subject of a detailed study on a jointly agreed jobs. Indeed, in Professor Blake’s words, cutting basis’. A major analysis, commissioned by Bourne tourism VAT is one of ‘the most efficient means of Leisure Group and Merlin Entertainments Group and generating GDP gains at low cost to the Exchequer that undertaken by Deloitte/Tourism Respect, found that I have seen with the CGE model’. Cutting VAT is the reducing VAT on visitor accommodation and attractions ‘big change’ required to put the hospitality and tourism would create 80,000 jobs and generate a return to the economy on the higher rate of employment growth set Treasury of £2.6billion over 10 years. The BHA, together out in this report. (Full details of the campaign and with Bourne, Merlin and BALPPA (the British Association summaries of the Deloitte/Tourism Respect and of Leisure Parks, Piers and Attractions) joined forces Professor Blake reports can be found at the campaign’s and engaged with officials from the Treasury over the website www.cuttourismvat.co.uk).
THE AGENDA FOR 300,000 NEW JOBS 1 3 Beating our international competition
The table reveals that the UK’s hospitality and continue to believe that a compelling case can be AOA report noted that, for economy passengers tourism sector continues to lag behind our key made for reduced VAT on out of home meals due to flying long haul, APD rates are about six times the European competitors – France, Germany, Spain and the very large number of jobs that would be created average of other countries in Europe that still levy Italy – in terms of price competitiveness. Our relative and the growth in GDP. However, we recognise that a charge. Some European countries – Belgium, position remains the same as in 2010. (The EFTA the risk of losing VAT revenue is too high for the the Netherlands and Denmark – have abandoned countries – Iceland, Liechtenstein, and Norway - all Government to contemplate in the present economic their aviation taxes altogether. have lower VAT rates on accommodation – 7%, 3.8%, climate and we have suggested to HM Treasury that it The relatively high levels of APD, combined with a and 8% respectively. Switzerland also has a rate of makes sense to introduce reduced VAT on visitor lack of price competitiveness due to the level of VAT, 3.8%). The fact that this has occurred against a accommodation and attractions first and to see these and a time consuming, bureaucratic and costly background of governments across the EU cutting benefits accruing before an expansion of reduced procedure for applying for a visa combine to make their budget deficits is revealing. Governments across VAT rates to other parts of hospitality and tourism. Britain’s international tourism offer considerably less continental Europe have broadly concluded that attractive than it should be. reduced VAT levels increase visitor activity and Price - We agree with the AOA that there needs to be a overall levels of revenue (indeed in recent years study into the overall effects on total tax revenues and Germany has reduced VAT on accommodation from Air Passenger Duty economic activity arising from these levels of APD. the standard rate and Ireland has further reduced The debate in the House of Commons in December tourism VAT rates). Although recent challenging (APD) 2012 was encouraging in that many MPs from all economic conditions have led some countries to parties were alert to the potential disadvantages of increase VAT rates on tourism services, in nearly all Britain continuing to tax flights at such levels. cases these rates remain substantially reduced from We welcome the fact that the coalition standard rates. Government has restricted increases in APD to be With the intellectual justification for a cut in VAT in line with inflation only. This reversed the having been established, we are convinced that VAT increasingly damaging real terms increases which should be cut now on accommodation and visitor were made in 2007-2010. However, as the Airport attractions. Operators Association (AOA) noted in their report Whilst the VAT campaign has been focussed An Integrated Policy Framework for UK Aviation initially on accommodation and visitor attractions, we (2012), APD is still at a high and potentially remain concerned at the level of VAT on restaurant damaging level – the effects of which have not meals – a key part of the visitor economy. We been analysed by any Government. The same
1 4 THE AGENDA FOR 300,000 NEW JOBS Beating our international competition
Visas review visa restrictions This trend is enormously damaging for Britain. Any • More far reaching opportunities would be sharing of CEO would be alarmed at the declining trend. The biometric data with the French and German UK’s performance has been poor compared to both In our 2010 report, we described the need for reform Governments and a ‘dual processing’ system which France and Germany where estimated annual visitor of the UK’s visa procedures as ‘critical’, stating that would allow Chinese visitors to submit their UK numbers from China are now hundreds of thousands it was a ‘priority to put in place less expensive and forms at the same time as their Schengen forms higher than Britain’s. more straightforward procedures for visas’. • It is estimated that we miss out on an £1.2 billion in Britain should follow the example set by Australia – Two and a half years on, the need for an overhaul annual spend from Chinese tourists* among others – which has introduced an online visa has become more acute. The campaign for visa reform • It is worth looking at the visitor numbers from China programme, storing personal information and doing has now gained the support of The Telegraph, the CBI, in detail. The table below shows that the UK share away with personal stamps. The example from the Institute of Directors and the British Chambers of of the Chinese outbound market has fallen since United States suggests that it is the ‘ambitious’ Commerce. Whilst welcoming the changes that were biometric testing was introduced in 2008. agenda and not the ‘catch up’ agenda that we should made in December 2012 and the further measures follow. The US administration made a number of being introduced by the UKBA during 2013, the fact changes to its visa policies with the deliberate remains that the UK’s overall economic competitiveness intention of increasing the number of international is being seriously weakened by both international arrivals (especially from China). Their campaign is perceptions and the reality of visa policy driving working, with significant increases in the number of business into the hands of our European competitors. visitors. In launching the USA’s National Travel and We are not calling for, nor expect, the UK to join Tourism Strategy, President Obama stated that ‘the the Schengen Agreement but we must recognise that more folks who visit America, the more Americans will other EU countries are able to offer international get back to work. It’s that simple.’ visitors (and investors) a ‘more attractive’ visa – Comments by the Home Office and the UK Border simply because it can be used across 25 countries. Agency show that, at last, the balance of opinion Tour operators have been removing the UK out of within the Government is moving towards reform and European tours from China because of the need for towards a focus on improving the image and both a Schengen and UK visa. perception of the visa system. These need to be • The minimum changes required, in procedural and made as a matter of urgency. It is not just the financial terms, are to bring the UK up to a hospitality and tourism sectors which will benefit from Schengen equivalent as soon as possible and to these changes. It is the British economy as a whole.
* Source: UK-China Visa Alliance 2013 Sources: Chinese Tourism Academy; VisitBritain data supplied by ONS THE AGENDA FOR 300,000 NEW JOBS 1 5 Beating our international competition Airport Capacity and transport infrastructure
The issue of Britain’s airport capacity has been placed at the top of the next Government’s agenda by the establishment of the Davies Commission – due to produce its final report in 2015. The fact that the review should have taken place years ago is no longer the issue. It is critical that when the Davies Commission does report, its recommenda tions should be acted upon as a matter of urgency. We recognise that whichever option(s) the Commission settles upon, it will be the subject of debate, controversy, future review, planning and so forth. All of this takes time and in that time the UK’s existing lack of connectivity to key emerging markets will worsen. This graphic highlights our lower connectivity to three out of four of the BRIC economies. Without a change in Britain’s level of airport capacity, this situation will deteriorate. The figures for China are particularly concerning. In addition to the importance of airport capacity, international hospitality and tourism organisations, and investment funds, monitor carefully the national infrastructure in which they are considering an investment. Central to their investment decision is the quality of national infrastructure and projected levels of demand or throughput. For example, recent announcements on rail infrastructure by Network Rail and the planned investment in HS2 will be viewed positively by investors. Any suggestion that the UK will be a harder place to travel to in the future will have very damaging consequences for the hospitality and tourism sector and the wider economy.
Source: CAPSTATS as cited in the AOA’s 2012 report: An Integrated Policy Framework for UK Aviation 1 6 THE AGENDA FOR 300,000 NEW JOBS Beating our international competition
Conference and planned closure of Earls Court. The improvements to facilities in Birmingham, Telford, Edinburgh and event capacity Harrogate are all welcome, but we must ensure that we do not fall behind our principal European competitors. British conference organisers are now We want government to lay out plans for Britain’s finding an increasing proportion of their income is conference and event capacity. Britain’s lack of derived from organising events outside the UK – such capacity is the principal reason why it has useful, but not as valuable as having international lost ground to Germany, France and Italy. The visitors coming to our country. Research shows that initial investment for big convention centres is business visitors have a higher per capita spend than unlikely to be recouped by the returns from the leisure visitors*. centres themselves: they only become justifiable It is the decision on airport capacity which may give if regard is given to the wider economic benefits us an opportunity to increase conference and event of their construction and operation. capacity and revenues. Whatever the finally agreed Germany dominates the competitive arena in location and its links to HS2 and Crossrail, the airport Europe because over decades their regional and city solution could include space for an international authorities have made the necessary public conference and event facility. It is unrealistic to expect investment. Their leading position in the that we can completely close the gap with Germany manufacturing and engineering trade shows has but we have a great opportunity to improve our share helped them boost bilateral trade and investment with of a growing international business. We must be the world’s developing economies. It has also helped imaginative in finding the right public/private them increase overall visitor numbers. partnership for the centre. UKTI should be concerned Paris, Barcelona, Milan are all ahead of us in terms at our relative weakness in this area. There is real of capacity and even smaller locations like Valencia potential for aligning conferences, events and trade and Cannes offer great facilities. Although we exhibitions with the Government’s other priority acknowledge the added contribution to the London sectors for growth alongside the development of airline economy from the ExCeL centre (recently extended capacity and transport infrastructure. Such a move and is now enjoying a strong level of growth). would be the biggest initiative the next Government However, a reduction in capacity will be caused by the could make in boosting business tourism.
*Mainland China excluding Hong Kong * Source: Britain for Events THE AGENDA FOR 300,000 NEW JOBS 1 7 Beating our international competition
The Role of Devolution government, we want to see it grow and develop as a powerful champion of the sector inside Whitehall and VisitBritain this is more likely to be achieved by further In a devolved environment, VisitBritain already developing its ties with UKTI. Although pleased with has the task of collaborating with VisitScotland, the extension of funding for the ‘GREAT’ campaign, We welcome the increased collaboration between VisitEngland, VisitWales, the Northern Ireland we are concerned that the core funding of VisitBritain VisitBritain and UKTI, particularly the very Tourist Board and London & Partners. This may is being reduced. Bearing in mind the economic successful ‘GREAT’ marketing campaign. We make some sense to those of us inside the UK but to contribution and levels of employment outlined the believe that this collaboration should be extended the investor, decision-maker or traveller from outside hospitality and tourism sector must be considered of in the coming years. One tangible way for the UK it can be confusing. Appeals for match funding equal stature to financial services, pharmaceuticals, VisitBritain and UKTI’s partnership to be from and collaboration with the private sector would life sciences, the aerospace and automotive sectors deepened, over and above the ‘Great marketing work more effectively if the objectives for tourism when Ministers identify and invest in growth sectors. campaign’, would be for the Chairman or Chief promotion and marketing were defined more clearly Seen in this context, and bearing in mind the support Executive of VisitBritain to join the Board of UKTI across the UK and ambiguities avoided. The whole which other national governments offer their as a permanent member. area of collaborative and efficient partnership needs hospitality and tourism sectors, levels of funding for It would be ideal if the VisitBritain team were to to be regularly reviewed and debated. We see a lot of VisitBritain remain extremely modest and in need of continue to work in a much more integrated way with potential in simplifying and setting out a clear pathway urgent review. the teams responsible for inward investment to for the Visit agencies, local authorities, DMOs and achieve an aligned approach to business and leisure LEPs, all of which vie for attention, funding and tourism. engagement with the private sector to varying Encouraging By itself, this further collaboration should have no degrees of success. The proposed introduction of effect on whether tourism remains a responsibility of Tourism Business Improvement Districts, potentially enterprise the DCMS. Although some have argued for tourism to from 2015, may only add to the confusion. The be the responsibility of the BIS, we are of the opinion opportunity should be taken, whenever possible, of that what matters most is effective leadership, simplifying and streamlining this complex multi- Britain’s hospitality and tourism sector is made integration and alignment across Whitehall. agency approach. up, predominantly, of SMEs and micro- Repositioning VisitBritain as a more powerful and businesses. The Government needs to do all it ambitious organisation would help. Whilst recognising can to encourage enterprise and development in that its core funding should continue to come from the the sector and we were pleased to see the
1 8 THE AGENDA FOR 300,000 NEW JOBS Beating our international competition Some changes are
increase to £250,000 in the Annual already within reach Investment Allowance. We restate our recommendation for the rules governing the establishment of Real Estate Regulation permission and amendments to Change of Use Investment Trusts (REITs) to be amended to orders that allow for greater innovation in response to encourage hospitality businesses to take changing trading conditions. advantage of the flexibility they offer. We We were heartened by the strong support we With regard to Fire Safety, there is a need for clear continue to press the Treasury to end the received from the coalition government’s first and consistent national guidance. Costs in this area exclusion of hotels from the Enterprise Tourism Minister, John Penrose MP, in bringing can be very significant and can be disproportionate to Investment Scheme (EIS). The exclusion is the issue of unnecessary regulation and red tape the problem. There appears to be no protocol to completely unreasonable and illogical – public to the attention of other departments. Encouraged suggest that premises with a history of compliance be houses and restaurants do qualify – and it acts by his support, we set up a Tourism Regulation subject to fewer inspections. In the area of Health and as a deterrent to investment/refurbishment and taskforce under the chairmanship of BHA Safety, we will continue to press for a focus on actions growth. In an environment where bank lending President, Alan Parker CBE. The taskforce which will minimise the time and cost of risk has been reduced, the EIS would offer a proposed over sixty proposals for reform and assessments including unnecessary duplication. pathway for investors – particularly outside simplification. We look forward to continuing our Regulators from local authorities should follow the London. Whilst welcoming the continuation of work with the new Tourism Minister, Hugh lead of the HSE: local discretion has caused the Business Premises Renovation Robertson MP, and believe that de-regulation is an confusion, and has led to a lack of common standard Allowance (BPRA) for a further five years, there ideal area for a Ministerial group to address. of implementation. We are working with the Better remains concern at the definition and scope of We recognise that overturning a historic culture will Regulation Delivery Office to explore ways in which qualifying areas. Either hotels are excluded from be challenging and recognise that in some instances the regulations could be enforced at a lower cost to a scheme when there is no good reason (EIS) the regulation has originated in the EU (an example of business and with a greater consistency in but when they are included (BPRA) the process which is the Package Travel Directive, now under enforcement. The Enterprise and Regulatory Reform for determining eligibility and approval can be review). Bill also offers the prospect of extending the Primary needlessly complex. The taskforce set out particular areas of concern in Authority scheme to independent, single site planning where the obtaining of permission to develop businesses through trade association involvement. or expand a tourism business is too slow, too complex The great majority of hospitality and tourism and too hard to predict. We are keen to see a businesses are SMEs or micro-businesses and it is streamlining of procedures to obtain planning the cumulative effect of regulation which is depressing
THE AGENDA FOR 300,000 NEW JOBS 1 9 Some changes are already within reach
investment and innovation. We need the government to the Olympic and Paralympic Games. indebtedness and for the FSM sector keen to grow to be vigilant in continuing to address this issue and, Progress in the public sector has been at a steadier further. Too often we find that there is an ingrained just as importantly, ensure that new regulation is kept pace and there are examples throughout the country opposition to private sector involvement and this to an absolute minimum. where FSM companies are actively engaged in culture needs to be tackled by building greater providing catering and support services in the NHS, professionalism and open-mindedness by Outsourcing and schools, defence establishments, prisons, justice procurement managers in the public sector. Plans for services and government offices. But, too often, this a Commissioning Academy are welcomed by our procurement has been ‘despite the system’ and not because of it. members who have expressed a strong interest in In our 2010 report, Creating Jobs in Britain, we potentially supporting such an organisation. outlined our concerns about the unequal nature of the Procurement in private sector organisations is seen This remains an area where there is considerable tendering process and we commissioned in 2012 as a key business discipline – often reporting to the potential for the hospitality sector to make a further work and research in the area to chart a better CEO or CFO – and this needs to be reflected in the strong contribution to the economy – by providing way forward. public sector. The squeeze on public spending over better levels of service at competitive prices for a Working with the Foodservice Consultants Society the next decade will require the public sector to wide range of public sector contracts in catering International (FCSI), we issued a detailed report change even further and our members are committed and facilities management. Britain has a number Outsourcing 2012: Removing the Barriers for Catering to playing their role in efficient and effective change. of outstandingly good companies in food and and Facilities Management, outlining four service management: FSM has enjoyed recommendations for the process to be made fairer considerable growth in the last two decades as and more open. We have established a joint private sector companies, in the main, have taskforce with FCSI to realise the commitments contracted out a number of non - core (to them) made in the report and are engaging with better activities to more specialist providers. procurement initiatives across government Outsourcing is common throughout the private encompassing the Cabinet Office; the Scottish sector for good reason: purchasers of these Government and the European institutions. Over the services have secured mutually beneficial next five years, £70 billion of government contracts contracts. At sporting, musical and entertainment across 13 different sectors will be put out to tender. events, business conventions and shows, catering This joint industry initiative has the real potential to and other event management activities are carried be a win-win – both for the Government keen to out by innovative private businesses. Think back tackle inefficiencies and high levels of public
2 0 THE AGENDA FOR 300,000 NEW JOBS Some changes are already within reach
Nutrition, health sugar whilst increasing the amount of fruit and Food security vegetables consumed: support increasing physical and wellness activity in the workplace; provide clear labelling on the and food safety calorific content of foods; and improve knowledge and training in nutrition and diet for chefs. From April 2013, we are committed to working with Public Health We worked closely with the FSA, DEFRA and England England and the Health and Wellbeing Boards who member companies in early 2013 in tackling the will have the lead role in promoting public health at damaging consequences on consumer trust and the local level. confidence of the horse meat scandal. Again, in our Creating Jobs in Britain report Our focus has been to support members in the (October 2010), we confirmed our support for the Scotland process of testing and following the correct Department of Health’s voluntary Responsibility processes. The absolute priority now is to work Deal for Public Health in England and, together across the supply chain and with government to, with food manufacturers and retailers, have We have worked with the Scottish Government as where possible, shorten supply chains and put the worked with Ministers and officials in a far- they develop their strategy for the obesity crisis. trust and traceability back into the system. reaching effort to improve public health and They will shortly publish a framework for encouraging Food security and supply is key and the BHA nutritional standards. Our further report: Health partnership between industry, government and NGOs support the Government’s Green Food Project, Works: Lifting the lid on foodservice (May 2011) in Scotland. which aims to increase crop yields. We recognise provided both research and case-studies that that consumer attitudes and behaviours have a indicated the innovation and leadership demonstrated significant impact on the ‘demand signals’ to which by our members to provide customers with healthy Across the UK, we recognise the increasing producers respond. and nutritious food not only on the High Street but burden and challenges that obesity will place on across out-of-home food service encompassing the National Health Service in the coming schools, hospitals, prisons, justice services and decades. We are committed to play a full and defence establishments. Experience has responsible part in the development and demonstrated that collaboration is much more implementation of each nation’s obesity strategy effective than regulation with members supporting as well as the wider public health policy agenda. pledges that: significantly help eliminate transfats and reduce the consumption of calories, salt, fat and
THE AGENDA FOR 300,000 NEW JOBS 2 1 Some changes already within reach
Sustainability Energy efficiency use the calculator to evaluate their capital expenditure and operating expenditure costs for kitchen Resource efficiency equipment. Supply chain collaboration is also at the heart of We remain concerned at the operation of the our work to improve energy efficiency in the Carbon Reduction Commitment – particularly its effect Collaboration with government and across the hospitality and tourism sector. on the franchise sector. Franchising in restaurants hospitality supply chain has informed the Working with the Catering Equipment Suppliers and hotels is a key area for investment and job commitment made in 2010 to put sustainability at Association (CESA) we continue to urge Treasury to creation and the way CRC is presently operating in the heart of the sector’s strategy. Our support for extend the existing Enhanced Capital Allowances franchises acts a real disincentive for growth in the voluntary approach to public health policy has (ECA) scheme, which currently applies to refrigeration Britain. We have set out our concerns to the been matched by our partnership work with Ministers equipment, to cover dish and glass washing Department for Energy and Climate Change and and officials in DEFRA and Waste and Resources equipment and cooking equipment. believe that this is an area which would benefit from Action Programme (WRAP). As a founder supporter, Furthermore, allowing operators to identify the examination by our proposed Ministerial group as it is we played a leading role in setting up the voluntary capital and operational expenditure equipment an area of policy where rules introduced by one Hospitality and Food Service Agreement (HaFSA), implications of their equipment in relation to their department are having a detrimental effect on the with WRAP. By 2015, the HaFSA aims to reduce food foodservice operations is another key area of focus overall agenda of growth and development. and associated packaging waste by 5% and to meeting the need for more technical information and We have a growing disquiet at the plethora of increase to 70%, the percentage of food and meaningful data to improve energy efficiency and sustainability initiatives that cover the hospitality and packaging waste that is recycled, sent for anaerobic encourage modernisation of catering kitchens. tourism sector (over 50 at present). Each initiative digestion or composted. Meeting these targets could The Carbon Trust’s Carbon Lifecycle Calculator may have its own merits but there is potential for see cost savings of up to £76 million by the end of provides a first step in the evaluation of key confusion, duplication and variability in reporting 2015 and reduce the CO2 impact by 570,000 tonnes*. equipment categories. The calculator which has been methodology. We do not wish to discourage Alongside its work on reducing food and packaging developed with BHA, CESA, CEDA (Catering innovation in finding solutions to reducing our waste, the BHA will undertake further work with Equipment Distributors Association), DEFRA, FCSI, industry’s carbon footprint but it is clear that the members from 2013 to help them measure water now also has the Government Procurement Service industry would benefit from a more coherent and consumption and improve water efficiency in their on board. unified approach. businesses. Phase two of its development, to be launched in May 2013, will concentrate on creating partnerships with key hospitality operators and to license them to
* Source: WRAP 2012 2 2 THE AGENDA FOR 300,000 NEW JOBS Delivering on our commitments Achievements and Next Steps
In October 2010, the BHA Commitments made (2010) Delivering tangible outcomes (2012) set out 11 commitments Support programmes to tackle The Big Hospitality Conversation. Our campaign for new jobs. The industry to act as a pragmatic unemployment and skills shortages has so far pledged 10,000 jobs for young people between now and 2015 – partner of government. with many more to come We continue to deliver An event to unite the entire industry Inaugural Hospitality and Tourism Summit in 2012 attended by tangible actions to enable 400 industry leaders the government to do Building on its success the second BHA Summit takes place on likewise. The BHA 11 June 2013 at the Intercontinental Hotel, Park Lane, London remains steadfast on its 11 commitments. Research into the effects of existing VAT Report published by Prof. Adam Blake, Advisor to the Treasury. rate Campaign activated with over 400 supporters at www.cuttourismvat.co.uk This table presents our progress thus far. Supporting Visit Agencies Senior level support, engagement and input into all the UK Visit Agencies
Action for improvement to Strengthening our relationship with Home Office and UK Border Agency to UK Visa system secure improvements in Visa arrangements
Highlight the importance of hospitality Established and published an evidence based demonstration of how and tourism in the local economy hospitality and tourism drives Local Economies in the UK The British Hospitality Association commissioned Share expertise in procurement Report Outsourcing 2012 - Removing the Barriers published in November Oxford Economics to provide 2012 with Foodservice Consultants Society International with four clear recommendations to improve the private sectors participation in public scenario analysis of the future sector contracts contribution of the hospitality industry. Full findings are Support specific programmes on health, Supporter of the Responsibility Deal, encouraging widespread membership food chain security, food and nutrition engagement. Published Health Works Report and Research May 2011 detailed in the Oxford Economics report produced for Put Sustainability at the heart of strategy RESOURCE EFFICIENCY: BHA worked with DEFRA and WRAP to develop the British Hospitality the voluntary agreement on Food and Packaging Waste launched June 2012 Association, March 2013. ENERGY EFFICIENCY: Lobbying for wider inclusion of catering equipment in the Enhanced Capital Allowances scheme Developing with Partners a Carbon Lifecycle Calculator to improve energy efficiency for kitchens !"#$%&'()$ *+#,-./012"304,++5 67899 :;<=> ?9 @<8> !"#$%&'()$ *-)%"2&A1./B(35 =7;99 ?