Government must do more to save our tourist industry
Before the outbreak of foot-and-mouth disease, most people would have thought about the tourist industry only when planning their holidays, and would have been surprised to learn of the huge contribution that tourism makes to the UK economy.
The scale of that contribution has been brought sharply into focus by the difficulties the industry has been facing, as visitors from home and abroad have stayed away from the countryside.
The tourism industry contributes more than £60b a year to the UK economy and employs some 1.7 million people. Many tourist businesses are family firms passed down from one generation to the next - hotels, guesthouses, pubs and B&Bs that frequently serve their local communities as well as the tourist trade.
Because the industry is so dispersed, it is difficult to get a complete picture of how badly businesses are being affected by the crisis. That is why we are asking all those in the tourism industry to let us know about the difficulties they are experiencing via our Web site, www.conservatives.com
What is abundantly clear is that the impact of foot-and-mouth disease on the tourist industry has been serious and merits a serious response. The British Hospitality Association estimates that the number of overseas visitors to Britain is down by 25% as a result of the outbreak.
By the middle of March, the tourist industry was losing £100m a week on account of the disease and, with the loss of trade over the vital Easter weekend, this figure will since have increased considerably.
The Centre for Economic and Business Research estimates that more than 10% of the industry's usual Easter revenue will have been lost on account of foot-and-mouth, and says that the crisis could cost tourism a total of £5b. According to the English Tourism Council, many rural businesses have had to operate at just 20% of their usual Easter turnover.
We also know that 80% of hotels have experienced a fall in business. It's not just countryside accommodation that has been empty - even hotels in London have had to cancel bookings. On average, turnover is down by 10% and forward bookings down by 30%.
Pubs, too, are suffering. Lost sales during March are equivalent to 11 million pints. In the worst affected areas, bookings for pub accommodation are down by 70%.
Conservatives have proposed a series of measures to help the tourist industry through this time of crisis. Among our proposals are an advertising campaign to restore tourist confidence in Britain and a more flexible application of the rules surrounding unemployment benefits, so that people who have been temporarily laid off can do whatever work their employer is able to offer during the crisis.
We also recognise that the most important short-term issue facing many businesses is one of cash-flow. Our approach is grounded in the recognition that these businesses are fundamentally viable and have the potential to prosper in the future, but could go out of business because they can't lay their hands on the cash they need to pay the bills.
Urgent action is clearly required. These firms still have outgoings and overheads to cover, but find themselves suddenly without customers and with no certainty as to when the crisis will abate.
The very least that the Government can do is to ensure that it does not itself exacerbate the cash-flow problems that businesses are facing. Yet that is precisely what will happen if the taxman goes on collecting money that businesses would anyway be able to claim back in due course. In these circumstances, it makes sense to instruct the Inland Revenue to allow businesses to offset losses expected this year against tax due for last year earlier than they otherwise could.
On VAT, too, more flexibility is required. Businesses will have already paid "input VAT" on the things they buy, but will not be collecting as much VAT on the services they sell, and will therefore be entitled to a refund. We think that process should be accelerated - the Government should give an automatic, immediate refund of one month's average monthly VAT liability for each affected business.
Customs and Excise staff should be diverted to ensure that this refund is paid without delay to affected businesses.
Nor should the role of Government be confined to not making matters worse. Government could do something positive to ease the cash-flow problems by offering interest-free loans to affected businesses. We proposed a £500m scheme, offering loans of as much as £10,000.
The prime minister's response - a £120m scheme with interest charged at nearly 9% - has been disappointing, not only to us, but to businesses which don't want to see interest costs mounting at a time of uncertainty.
Getting foot-and-mouth under control must remain the central task of the Government now, but the pressing problems faced by the tourist industry must also be addressed, to ensure that when the disease has finally passed the industry is in a strong position to rebuild itself.
Source: Caterer & Hotelkeeper magazine, 26 April - 2 May 2001
