Protecting Tourism

George Osborne made a major speech in Blackpool yesterday about the need to help tourism, a vital industry for Britain and the most important source of income in the Keswick area of the Copeland constituency.

Among other things he promised to undo the damage caused by Labour's disastrous decision in last year's budget, coming into effect next month, to scrap the tax relief on Furnished Holiday Lets,

The full text of the speech was as follows.

“It’s great to be here in Blackpool.

Today, I’m here to talk about the Conservative Party’s plans to rebuild the economy, and boost tourism in the North West and across the country.

It’s good to be here with Jeremy Hunt and our dedicated Tourism Minister Tobias Ellwood.

They’ve done a great job to develop our agenda for tourism and culture that we’ll be putting to the country in less than two months.

Given that the election is almost upon us, some people might ask why someone who aspires to be the next Chancellor of the Exchequer is making a speech about tourism.

I make no bones about it.

I’m here because I believe that British tourism is one of the jewels in the crown of the British economy.


The statistics speak for themselves.

The British tourism industry supports over 2.5 million jobs and 200,000 businesses.

The sector generates over £100 billion of revenue each year – and provides training opportunities for thousands of young people every week.

And of course, as countries like China and India continue to develop in the global economy, more of their citizens will look to take holidays overseas.

That’s a great opportunity for the UK in the years ahead.

So as we go about building a balanced economy that is never again so unsustainably reliant on government debt and the City for growth, we need to do everything we can to boost British tourism.

After all, it’s only by strengthening our leading industries like tourism that we can create the new jobs and business opportunities that Britain so urgently needs.

Unfortunately, it’s clear that the Government is simply not providing the right framework to help our tourism sector achieve its fullest potential.

That’s not just my view.

A few days ago, I received a briefing note from VisitBritain, the tourism body that receives tens of millions of pounds of taxpayers’ money each year from the Department of Culture, Media and Sport.

In this note, VisitBritain out its frank assessment of the Government’s record on tourism.

Let me read you some of the key sections.

"Britain’s position in the international tourism earnings league slipped from sixth to seventh in 2008.”

And looking ahead, VisitBritain concludes that: “Our international competitiveness as a destination is deteriorating.”

To coin a phrase, we can’t go on like this.

When a government organisation passes that kind of verdict on the performance of the Government as whole, you have to pay attention.

It’s obvious that we need real change to support our tourism industry, instead of holding it back.

What does that mean in practice?

First, it means providing strong leadership and a clear sense of direction on the economy as a whole.

We have been absolutely clear about our vision for the economy – we want to build nothing less than a new British economic model.

That means getting the deficit down, and restoring international confidence in our economy. Because if that confidence drains away, then we face higher interest rates and mortgage bills, and the entire recovery put at risk.

That’s no good for the tourism industry – or for the economy as a whole.

So our new model for economic growth will be based on the stability and low interest rates that come from a credible plan to reduce our record budget deficit and protect Britain’s credit rating.

This is the foundation that British tourism businesses need to invest and succeed.

But as well as strong leadership on the economy, we need strong leadership on tourism too.

So a Conservative government will set for ourselves this clear ambition:

We want to increase the proportion of UK residents’ tourism spend that goes on domestic holidays from 38% to 50%.

Let me be clear what achieving this would mean.

It would mean a £6.5 billion boost to the UK economy.

A £700 million boost for the North West.

And thousands of new jobs across the country.

That’s a prize worth fighting for. And we will do what it takes to make it happen.

So if the first thing the tourism industry needs from government is a clear sense of direction, I believe the second is getting the tax and regulation system right.



Let me explain precisely what our plans are.

We will cut the headline rate of corporation tax from 28p to 25p by abolishing complex allowances and reliefs, and we are aiming to create the most competitive tax environment of any major economy.

And to help small business – and I know that 80% of tourism businesses are SMEs – we will lower the small companies’ rate to 20p, once again by reducing complex reliefs.

What’s more, we will make small business rate relief automatic to reduce admin costs and encourage take up.

Of course, tourism businesses – like all businesses – have been hit hard by the growth of red tape in recent years.

So a Conservative government will reduce the burden of red tape on business with a ‘one in one out’ approach for new regulations, as well as mandatory sunset clauses and regulatory budgets for departments.

And to help those who want to start a tourism business, we will introduce a new tax break that means no new business started in the first two years of a Conservative Government will pay Employer National Insurance on the first ten employees it hires during its first year.

And we will build a network of business mentors and provide loans to would-be tourism entrepreneurs, supporting self-employment and franchising as a route back into work. But that’s not all.


I’m sure you’re aware of Labour’s plans to abolish tax relief on Furnished Holiday Lets this April.

I’ve seen the statistics, and it’s obvious that this tax raid will hit the tourism industry hard.

In total 120,000 businesses will be affected – and according to the Tourism Alliance, 4,500 jobs could be lost.

In total, the net cost to the UK economy could be as much as £200 million.

And of course, the repeal of this tax relief will reduce the attractiveness of the self-catering sector for new entrants and make it more difficult for owners to invest in the upkeep of their properties.

I’ve heard all the arguments – and I’ve got to say that I agree with them.

So I can today announce that a Conservative government will take action to undo the damage caused by the abolition the Furnished Holiday Lets reliefs.

We will do this is a way that is fiscally neutral, and consistent with our commitment to cutting the deficit and restoring the public finances to health.

My team is working with tax and legal experts to explore how this should best be achieved, including proposals to change the eligibility thresholds and amending the interest deductibility criteria.

Unlike the current Government, we will take action to support British tourism.

Reversing the damage caused by the abolition of Furnished Holiday Lets relief is yet more evidence of our commitment to this cause.

The final point I want to make today is about our plans to develop the infrastructure framework that British tourism needs.

This is the third way that a Conservative government will support the tourism sector.

Let me start with skills.

Our broken skills and training system is letting too many people and too many tourism businesses down.

That has to change.

So over two years we will fund 200,000 apprenticeships and pre-apprenticeships, 100,000 work pairings and 100,000 further education college places.

Here in the North West that means over 25,000 new apprenticeships and over 20,000 new training places and work pairings.

But of course, for a tourism business, finding qualified staff is only part of the challenge. Our creaking transport system makes it much too difficult for people to get around.

That’s holding back domestic tourism – and holding back our economy as a whole.

We will begin work on Britain’s first ever North-South high speed rail line to connect London and Heathrow with Birmingham, Manchester and Leeds, increasing capacity and reducing travel times.

Our aspiration is to go further in years to come, to a line that stretches north to Newcastle and Scotland and to a network connecting many of the UK’s major cities in a national high-speed network.

And for the rest of the rail system, we will reform the way our existing railways are run, with longer franchises to encourage private sector investment in much needed improvements.

To help tourism businesses expand, we will overhaul the planning system to strip away red tape and give communities real incentives to approve proposed new developments.


Last but not least, getting the infrastructure right also means putting in place a framework that makes the most of the massive opportunity to promote British tourism alongside the Olympics in 2012.

Our aim must be to seize this once in a generation chance to inspire people across the world to visit not just London, but the whole of the country.

So a Conservative government will aim to establish a fund to market London and British tourism around the world.

This marketing should take place before, during and immediately after 2012.



These, then, are our plans to back British tourism.

By providing clear leadership;

By getting the tax and regulation system right;

By undoing the damage caused by Labour’s abolition of furnished holiday let reliefs;

And by building an infrastructure framework that’s fit for purpose...

... We can help create new jobs and attract new investment across the country.

And we can build a more balanced and stable economy based on enterprise and investment, not unsustainable public and private sector debt.

In the weeks ahead, we will be publishing our tourism manifesto, and we will be campaigning around the country on our plans to boost this important industry.

We will do what it takes to boost British tourism.

And get our economy back on its feet.

Thank you.”

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