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Does our government support tourism?

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Do we have a government that supports small businesses and the tourism industry in particular?

Government decisions in the last few months make me doubt it.

I’m not even sure the industry’s sponsoring department, the Department for Culture, Media and Sport, recognises the size and importance of the tourism industry – certainly not if its press release, following the Chancellor’s recent Comprehensive Spending Review, is anything to go by.

In that, tourism was mentioned only once, amid plenty of references to the arts and sports. It’s as if the £100bn tourism, hospitality and leisure industry just doesn’t exist.

But it does, and it faces a mounting struggle after recent government decisions that seem to have been aimed at making owning and running small businesses ever more difficult. As the hospitality industry is largely made up of independent owner-operators, any measure that hits the small business affects hospitality to a greater extent.

Let’s just list some of the measures in the last two years that have been introduced by successive Chancellors, all of them damaging to the UK hospitality industry. Is this what government means by supporting enterprise?

First, three measures introduced in the Spring Budget by Gordon Brown, when he was Chancellor of the Exchequer:

• Abolition of Hotel Buildings Allowance which will certainly make all hotel construction more expensive.

• Reduction in capital allowances on the cost of other investment, for example, from 25 per cent to 10 per cent – discouraging small hotel owners from modernising and refurbishing premises – a damaging decision at a time when the government’s own 2012 strategy is urging hotels to upgrade and modernise. • Increase in the top rate of corporation tax for small businesses (while, at the same time, big companies enjoy a reduction in corporation tax). This will rise from 19p to 22p by 2009 and it’s calculated to raise £650m from industry generally.

Then came the new Chancellor’s measures in his October Pre-Budget Report.

• Increasing Capital Gains Tax.

• Reduced funding for Visit Britain. • Supplementary Business Rates.

As if that wasn’t enough, the central funding increase for local authorities is pegged at one per cent: so what will have to give way?

As increasing pressure is brought on local authority finance, and with council tax increases pegged at five per cent, it’s not difficult to see that the so-called non-essentials will get cut back. These include all aspects of leisure activities and those services which attract visitors to the area and which make it attractive and worth visiting. An increase in licence fees will also be a soft target, so expect to pay more there.

In total, this makes for pretty grim reading for any small business, but particularly for those in the hospitality industry. At a time when the government is urging hotel owners to modernise and update their premises; at a time when half the hotels in the country are still not part of the harmonised registration scheme, which ensures a minimum standard; at a time when the Olympic Games will provide a showcase for the British hospitality industry – at such a critical time, these measures represent a withdrawal in taxes and charges of millions of pounds every year from hospitality businesses, leaving that much less to be reinvested in the industry.

Does this make sense? The answer must be no.

Bob Cotton

Chief Executive

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The Leisure Media Company Ltd
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