Will the Conservative-Liberal Democrat coalition be good news for hospitality?

21 May 2010
Will the Conservative-Liberal Democrat coalition be good news for hospitality?

The election has finished, the drama of succession is over, and hordes of political journalists have gone off to collapse in a caffeine-addled heap. At last the country has a new Government.

While many saw a hung Parliament as a possibility, few could claim to have predicted a Conservative/Liberal Democrat coalition, even after Cameron and Clegg's attempts to paint a picture of harmony as they patted each other's backs and grinned in a sunny Downing Street garden.

But is this new Government good news for hospitality? "Emphatically yes," according to Peter Hancock, chief executive of Pride of Britain Hotels.

"Having Cameron at No 10 means the country's monstrous deficit can at last be brought under control, thereby avoiding the high interest rates that would surely ensue otherwise," he said.

"High interest rates place a terrible strain on hotel businesses and make our customers poorer."

Few would disagree with that view, for the moment at least.

"The overriding concern is getting the public sector deficit right, and as long as they are both committed to that in the medium term, that is the main issue," said outgoing British Hospitality Association chief executive Bob Cotton.

Commentators in hospitality also seem surprisingly positive about the coalition itself. Few could identify any policy rifts between the Conservatives and the Lib Dems on tourism and hospitality - at least not yet. And Lib Dem politicians like Don Foster, a former Shadow Culture, Media and Sport Secretary, and Greg Mulholland, chairman of the All Party Parliamentary Beer Group, have won plaudits for their take on the industry.

And then there are the opportunities. Cuts could mean that there will soon be fewer civil servants, but contract caterers are queueing up to take on the job of feeding the ones that remain for less. A reduction in public spending means that "there might be greater opportunity for outsourcing for the contracting industry on a value-for-money basis," commented Elior UK chief executive Mike Audis.

It's a view echoed by his counterparts. Ian Sarson, group managing director at Compass, said: "We'd like to see an open-minded approach to looking at outsourcing and/or self-provision."

And Tony Cooke, government relations director at Sodexo UK and Ireland, said: "It is accepted that the new administration will need to deliver savings across the public sector and we believe we can create real value by working in partnership with them."

But where there is a strong measure of hope, there is also a large degree of uncertainty. Despite the fact that the Government has frozen a proposed rise in employer national insurance contributions, economists predicted last week that VAT may have to jump to 20% to help refill the public purse.

Cotton conceded that this may be pain that businesses simply have to endure on the road to repairing public finances and called for a clear plan to be set out in June's Budget.

But David Bradford, chairman of the Restaurant Association, warned that a hike in VAT that did not include pre-prepared supermarket food would be an unfair step.

"It is crazy if they raise VAT to 20% and continue to zero-rate prepared foods in supermarkets. It is further disadvantaging restaurants and increasing the price differential," he said.

And despite the fact that the Government has appointed a dedicated tourism minister, there are still fears that it may not take tourism as seriously as some would like.

"It's disappointing that the word ‘tourism' isn't in the name of the new department the Department for Culture, Olympics, Media and Sport]," complained Cotton.

"As a signal of taking tourism seriously that would have been a nice little way of doing it."


Jeremy Hunt Secretary for Culture, Olympics, Media and Sport

The Conservative MP for South West Surrey should already be familiar with his new portfolio, having played the role of Shadow Culture Secretary between 2007 and 2010. The 43-year-old Charterhouse- and Oxford-educated politician used to run an educational publishing business, Hotcourses, and his wealth is an estimated £4.1m, according to the New Statesman.

His appointment was welcomed by hospitality insiders, pleased that he has already shadowed his new job. But the fact that he was one of only four Conservative MPs to vote in favour of the controversial Digital Economy Act could be cause for concern.

John Penrose Minister for Tourism

Penrose, 45, is the Conservative MP for Weston-super-Mare. Prior to entering Parliament in 2005 he was chairman of education software firm Logotron. He is married to the Hon. Dido (Diana) Harding, managing director of telecoms firm TalkTalk, who owns 1998 Cheltenham Gold Cup winner Cool Dawn. In 2006, Penrose was appointed Parliamentary Private Secretary to Oliver Letwin, who played an important role in the development of Conservative policy ahead of the 2010 election

John Penrose becomes minister for alcohol licensing>>

Cuts set to hit Department for Culture, Media and Sport>>

Hung Parliament could benefit hospitality, says BHA boss>>

By Neil Gerrard

E-mail your comments to Neil Gerrard here.

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