Bob Cotton explains how the upcoming election presents an opportunity for the hospitality sector to address key issues.
The General Election 2015 is quite possibly the most important in a generation. It also presents possibly the most problematic outcome if the opinion polls are to be believed with predictions of no overall winner and the potential for a minority government. Whatever the outcome, the hospitality industry needs to seize the opportunity to influence the parties and their policies in the lead up to, and post, 7th May.
In over 70 constituencies, tourism and hospitality is the major industry and it plays a key role in the economic life of almost every part of the country. With over 2.5m people working in it, male and female, young and old, in over 250,000 individual businesses, the industry needs to make its voice heard. The fact that the sector has such a large voting base can help ensure that those who are elected understand the industry’s contribution to the economic growth of the country and the challenges it faces. For tourism and hospitality the election comes at a time when many of our key challenges remain unresolved.
The National Minimum Wage (NMW) increases have been absorbed largely by businesses but now there are strident calls for the Living Wage (LW) and London Living Wage (LLW) to be introduced – pro rata in the provinces. If these do come in, and with the added burden of the government’s new workplace pension arrangements coming into force, the survival of many hospitality businesses will likely be in jeopardy. Few would be able to continue trading with just Ma and Pa operators, who have no staff, escaping this cost rise. You only have to look at the table below to see the significant impact a move to LW and LLW would have on company payrolls from a historical perspective.
What is needed is not a VAT cut (which will never be accepted by the government, nor passed on in full, anyway) but tax incentives to encourage investment in new facilities. There are new hotels aplenty – but older properties must be encouraged to update, refurbish and expand through investment and tax incentives. The doubling of the Annual Investment Allowance was a step in the right direction however, the time limit imposed hasn’t allowed businesses much scope to plan their spending.
The industry has a lousy – though improving – training record. More attention must be paid to apprenticeships: many are just too short and are not worth the name. Yes – we want more young people in the industry, but we also need them to be better trained so they are more productive. Greater investment in vocational training by businesses and by the government would be repaid many times over by greater efficiency and higher productivity. This might also help improve staff retention rates, a tell tale sign of a successful business.
National and regional tourism budgets are under pressure – they now have to do more and more with less and less funding. Indeed, the very existence of the various Visit organisations is coming under increasing threat. Underfunded Local Enterprise Partnerships, which are supposed to generate growth in the local areas, are largely a waste of space as far as tourism and hospitality is concerned. Yet competition from other international tourism destinations grows more and more intense by the day. The next government needs to recognize that nurturing the £110bn tourism economy will yield immense benefits in terms of creating new jobs, generating income and improving tax receipts. In that sense the potential returns far outweigh the costs involved.
We need to see fewer regulations, particularly in employment. The business community as a whole need to ensure that the government elected in May (along with all opposition parties) recognise that new rules and regulations increase business costs, hold back investment and reduce incentives without, in all too many cases, providing any benefit to organisations, their staff or their customers.
Tourism and hospitality is one of the country’s principal economic drivers; the election gives it an opportunity to express its voice. The 2.5m voters within the sector represent a huge constituency which must not be wasted. In voting the aim must be to protect the industry’s future and enable it to better meet the challenges it faces. So, be sure to make constructive use of your freedom and rights – get out there and vote!