Tourism and the big three Westminster Party’s manifestos

Posted on June 14, 2024 Updated on June 14, 2024

I have spent some time looking at the main Westminster party manifestos released over the course of this week, hopefully so you don’t necessarily now have to in order to identify any major tourism related policies promises. That doesn’t preclude looking at them all for other purposes but be warned combined they aren’t a short or necessarily easy read.

Not unexpectedly or indeed probably not unreasonably, given the nature and purpose of a party manifestos, there are very few direct references to tourism, leisure, hospitality or the wider more all-encompassing visitor economy.  The liberal democrats perhaps come closes to a direct reference with there proposal at their page 84 to “Upgrade the status of tourism in government with a dedicated Minister of State for Tourism and Hospitality” I.E. ensuring that the existing arrangement that see the title and the range of attached responsibilities within the DCMS portfolio, change at the whim of every new Secretary of State and/or on the frequent appointment of each new Minister of State below them.

The conservatives offer at their page 7 to: “Continue to ease the burden of business rates for high street, leisure and hospitality businesses by increasing the multiplier on distribution warehouses that support online sales”. I read this as a promise to continue the current retail, hospitality and leisure relief scheme (extended to 2025 in the 2023 Autumn statement). At page 31 we see a slightly broader but not too dissimilar pledge from Labour at their page 31: “In England Labour will replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and the online giants, better incentivising investment, tackling empty properties and supporting entrepreneurship”.

The majority of other references are either more oblique or more specific to individual sectors within the “tourism industry”.  All three parties promise to address issue within the water industry driving more investment, enforcing (existing) legislation and applying penalties.  New rules to limit to varying degrees executive bonus where environmental harm has been done are also promised. At page 56 the conservatives offer “to: “Launch a seaside Heritage Fund to support enhancements to our seaside heritage, preserve and restore our coastal issues”. At page 11 they also promise to: “Maintain our Brexit pub guarantee that means the duty on drink on draft, such as beer and cider, will be less than in supermarkets”. Or at page 70: “Launch a review of the night time economy in England, looking at how to revive the decline in pubs and clubs and how to make our towns and cities great places to go out”.  Labour offers some less specific promises which may have relevance to “tourism” including a new industry strategy and a 10-year infrastructure plans. 

Clearly all three manifestos cover in their 100 plus pages each, much, much more; a lot of it around the economy and economic regeneration and structural funding support. Far too much to easily or usefully to try to analysis from a purely tourism perspective, at this stage.  Beyond highlighting above the very few direct and a couple of indirect references for interests’ sake, the best course of action I can suggest is to wait a few more weeks until the 5th July.  Then revisit the winning party’s manifesto with the aim of working with industry colleagues to hold the new Government, whoever forms it, to account to deliver on any direct promises or implied opportunities for “tourism” made within it. 

The absence of reference to some recent or ongoing issues from section 21 no fault eviction through statutory registration of short-term let, to VAT refunds on luxury goods purchased by international visitors, does not preclude these issues from being picked up with the new Government. Indeed, their absences in the manifestos, suggests any lobbying effort around these and other hot topics of individual or joint interest will be essential, if any of the momentum gained before the General Elections is not to be totally lost after it. As mentioned in a previous update there are number of actions promised or in train but not completed by the previous Government that need to be identified. Those together with reading between the lines of the manifestos to determine what else is missing, is a critical task for us all in the coming weeks and the early months of the next Government’s term in office.

I would stress again that a lack of direct references to our industry or indeed most other “industries” isn’t either unexpected or unusual. Indeed, a quite the opposite, a big promise around “tourism” would be both extraordinary and, given the diverse nature of tourism, potentially concerning for at least some sub sectors or specific interest groups within it.  You can’t please all of the people all of the time.  This is precisely why main party manifestos tend to focus on a relatively few big-ticket items and major on generalities, other than around a few key popular and/or differentiating issues which may spark the interest of the majority of potential voters. Sadly “tourism” inbound, outbound or domestic seldom if ever falls into one of these votes grabbing categories. 

Making sure that at some point, in some future general election that tourism routinely does feature as a politically important subject remains a long unfulfilled aspiration for many of us and, in particular, for those of whose role is to represent some or all parts of tourism industry. Enhancing the political importance of tourism and/or the wider visitor economy needs to remain firmly on the to do list with the next Government (“it’s the economy stupid”).  In some ways gaining proper recognition of the importance of tourism remains more important than perhaps gaining the occasional concession on some or all individual policy asks.  Arguable the former may be the missing precursor to more regularly achieving the latter.

Apologies for the variation in the presentation of the links below but that just how WordPress has chosen to present the copied links from the three party’s own manifesto pages, however hard I try to persuade it not to:

https://www.libdems.org.uk/manifesto

Here, there and everywhere (2023)

Posted on May 30, 2024

Here, there and everywhere (2023).  Produced for UK Music the reports highlighting the powerful presence of music across every corner of the UK.

2023 Here there and everywhere

Don’t panic, its only a General Election

Posted on May 24, 2024 Updated on May 24, 2024

Unless you are a hermit, the surprise announcement of a General Election to be held on 4 July will no longer come as much of a surprise to you. If, like me, you feel an obligation to try and better understand some of the almost certainly unintended consequences of the decision to call an election a good 3 months earlier than the earliest date most political pundits and, quite alarmingly, than a good many politicians of all parties were predicting and some 6 month before the latest possible date for an election (late January 2025), you are probably already thoroughly sick of the barrage of news, views and comment on it. I don’t wish to add to that burden, other than to point out what I believe to be a couple of points of potential interest from a tourism industry and, in particularly, a destination management prospective.

Parliament will be dissolved within days, the 30th of May to be precises but it is progued and essentially closed with effect today . That gives/gave a formal wash up period of only two days to bring forward and approve any legislation in progress through the Parliamentary process, the joint second shortest wash up period in living memory and/or my 30 year career in tourism; two yardsticks that at this stage in my life are converging to become much the same illustrative measure of time.

Any legislation not addressed in the wash up will not pass in to law. Bills that fail to be enacted and become Acts of Parliament may of course be reintroduced at some future date by any new Government. Unfortunately it would have start the process again from scratch, meaning considerable additional delays, even if that process miraculously began in earnest on the 5th of July. Few, if any brand new Government’s historically choose to run with their predecessors failed Bills, even where in opposition they may have prepared to support them. There is no guarantee that a returning Government would pick up old legislation either; its often an opportunity to ditch old policy commitment and start afresh. It does mean it wont happen, I am just warning that it would be very unwise to plan on it. Getting Bills through wash up normally relies on the mutual agreement between the major parties, that support isn’t always a given but on this occasion time, or the complete lack of it, is a far greater issue. Bills that everyone might wish to become Acts will inevitable fail.

It is not yet totally clear which of any of outstanding Bills will/have gain that support. Nor is it yet clear, to me at least, in which Bills the specific clauses that may or may not impact directly or indirectly on tourism sit. The Bills that matter to tourism are more often than not framed within some obscure sub clause of some larger, often equally obscure, non-tourism related Bill. I am still trying to figure out which Bills are still in progress and which clauses of what Bills have any direct or indirect impact on tourism and therefore, whether the non-existent period before wash up and the unusually short period being allowed for it, genuinely presents a problem specifically for us in tourism.

The immediate takeaway from this, for now, is don’t just assume that everything that we reasonably might have thought was secured or that was in hand, now will be. There is a distinct difference between proposals (policies and promises), Bills (in progress through Parliament), Acts (accepted in to law) and implementation (physically then actually using the power the Act gives). We have had a Development of Tourism Act since 1969 and there are still critical clauses in that yet to be implemented (and now too old and too out of date to realistically do so)!

As I edit this update, I have just heard that the legislation that would have outlawed no fault evictions in England is not going to be progressed. Relief for those who see the free expansion of Airbnb type accommodation as largely beneficial for tourism and bad news for those who see “open season” on long term let, residential accommodation in favour of more lucrative short-term holiday lets, especially in popular rural and urban destination, as a major (critical?) issue for both tourism and wider community cohesion. I suspect that given the past high profile comments around this “proposal”, that many would have reasonably assumed that that particular piece legislation had already received Royal Assent? Watch this space, as other examples may well follow.

There are also some pieces of tourism related legislation which have already received Royal Accent but which may or may not now be implemented by a returning or new Government. A notable example I would suggest being the abolition of Furnished Holiday Let tax rules announced in the Spring Budget and due for implementation on 6 April 2025. Pieces of legislation of this nature will be obvious to those already actively lobbying for or against their implementation but the opportunity or need for the wider industry to lobby, in support, pre and post election may not be as clear or as obvious to all, as it ideally should be.

Similarly, the legislation to allow the implementation of the long discussed registration scheme for short-term lets has been enacted (buried deep in the Regeneration and Leveling-up Act 2023) but the nature of its possible implementation is, now was, still plodding through the post consultation, consultation response and final agreement, process. Despite the permissive legislation being in place, the decision to ignore or to use it to deliver the current soon to be previous Government’s, promise of action will, now fall to new Minister and a new Government post elections. That almost certainly also demands a potential new wave of lobbying in order to deliver what we may have previously thought was already reasonably secure, albeit frankly long delayed and kicked down the road.

I currently suspect but don’t know for certain that the parallel and somewhat controversial plan to amend the the Town and Country Planning (Use Class) Order 1987 (and variously amended since) to create a new specific Class 5 for short term lets, let for more than 90 days in England, may still fall somewhere within the yet to be enacted or yet to be implemented category. Where precisely it sits as at todays date suddenly matters a great deal more than it did just two sort days ago. In all likelihood, there will many other similar examples and “oh dear” moments to come over the coming weeks. The key here is to teases them all out ASAP, get them centrally or jointly listed and widely known within our diverse industry so we can then all start to deal with them again, or not, as each representative group or body sees fit.

A quick audit and a short summary of the post election legislative position may be useful? Ideally that might be an appropriate role/task for a sponsoring Government Department, or the policy team in their relevant delivery agency? Failing that, if colleague would find it helpful, then I will happily undertake to either work with colleagues in other representative bodies to produce a definitive list, or if that proves impossible then produce a quick and dirty version of what from experience I think matters to my own paying members. I think this is something that could be usefully done during the period of pre-election mayhem and an enforced period of minimum essential administrative only activities in Whitehall and more widely across public services.

None of the above, apart from the extraordinary short wash up period is that unusual. Specifics of course change for every election but the implications for the legislative and the implementation processes are similar. The problem is that they only generally come round every 5 years so, not unreasonably, they are not at the forefront of our minds and have to be remember or relearnt. What is very unusual this time round is the date/timing of the election itself. There hasn’t been a July General Election since 1945 (5 July if your interested). The previous latest summer election were in June (7th 2001, 8th 2017 and 11th 1987), the rest of the UK’s General Elections have all fallen to a spattering in early May, with everything else falling well before or after the normally closed for parliamentary business “summer season”.

I have yet to give it any detailed thought and I am obviously not in a position to dictate myself or forecast from experience, how such a late date relative to the normal Parliamentary Summer recess will be handled or what impact any variation from the norm may have. Currently the start of the recess is pencilled/inked in at Friday 26 July, 3 weeks, 15 working days and, if normal practice applies, only 9 parliamentary sitting days after the election. The end of the recess is/was, unusually, still left open in the Parliamentary diary but would normally be 5 to 6 weeks later, in the first full week of September.

I am only guessing but I am struggling to imagine a potentially brand new Government wishing to take over and then close down for all but essential administration three weeks later. What that means if anything for us all outside Parliament and if it matters a jot I don’t yet know. Tongue in cheek it may just mean fewer politicians and civil servant holiday in the coming high season! On a more serious note from a lobbying, consultation, policy direction, decision making etc. prospective it means don’t just assume that this year the late July to early September will be a political business as usual period. I.E. a pause for essential business only, back ground consultation, tidying up and preparation for delivery, principally all done by the civil servants and those minister taking their turn to man the fort, whilst everyone else takes a well earned break.

We (me and others with similar roles) may have to be more proactive or responsive during this summer and that in turn may mean rather more questions for and probing of destination managers and in turn of your business partners and stakeholders. At a time when generally you and they are already at the point of all hands to the pumps. The alternative is to trust to those you pay to represent you to use their existing knowledge, skill and judgement to rise to any challenges set during the summer months. As ever I could well be wrong and indeed I hope I am but forewarned of the potential for an unusual parliamentary summer is forearmed

There is lot of background issue opportunities and updates that I have put aside for now from further comment on the crisis in the private water companies, through to more routine news on things like the publication of the VisitBritain annual review to the publication of research on tourism and the UK’s music industry (released in 2023 but only just discovered by me). I will follow up on these and a host of other more routine titbit, once the excitement of the news of forthcoming General Election subsides. On reflection that means you can expect to hear from me very soon.

The election band wagon is now suddenly rolling and for the next 6 weeks there is not that much else or that much more that any of us in tourism can now do to truly influence where it ends up. Don’t panic its only a General Election; it is the consequences of the outcome, not the events leading up to or the event itself that is now important.

In the meantime, please don’t forget the 26 November, the date of our joint British Destinations, Tourism Alliance and Tourism Society policy conference. The date had been selected in the hope of the General Election falling just before or just after it, making it particularly timely from a point of view of genuinely influencing policy direction. The announcement of the General Election date if anything makes the 26th November an even more timely choice, allowing us to debate among ourselves and engage with a new Government only 5 months into power. A Government well enough established to have the time and yet still have the inclination to engage but not so comfortable and established to have made their minds up irrevocably on the kind issues and policy leavers that typical exercise our minds and that influence our industry, often in ways that may not be as well understood in Westminster as we would wish them to be.

More information on the conference and booking links can be accessed at: https://britishdestinations.wordpress.com/annual-conference-19-march-2018/

Joint Annual Tourism Policy Conference Announcement

Posted on May 20, 2024

I am pleased to announce that this year’s joint British Destinations, Tourism Alliance and Tourism Society’s annual tourism policy conference will take place on Tuesday 26 November at the Royal Over-sea League London SW1A 1LR , 9.30 am to 5 pm.

Given the looming general election, the likelihood of it falling either not long before, or more probably, not too soon after the 26th November and the very real possibility of opportunities for meaningful changes in political/policy direction that this particular election may bring, this is likely to be one of the most important and timely policy conferences that any of the three partner organisations have ever jointly or separately held.

I would urge you all to consider the merits of attending and in doing so supporting our joint endeavour to positively influence tourism’s and the UK’s visitor economy’s future direction during this critical period.

Earlier bird tickets at £185 (£222 inc VAT) are available until the 31st July. For more detail of the event and/or to book please visit:

https://app.tickettailor.com/events/thetourismalliance/1259649/r/bdreferral2024conf

Thames Water, a tourism issue or just someone else’s problem?

Posted on May 3, 2024 Updated on May 3, 2024

Should the UK tourism industry be at all concerned about the financial crisis currently threatening to swamp Thames Water, the largest and most indebted of the 11 major regional water and waste water providers, 5 larger water-only providers and a handful of new entrance much smaller water-only, limited companies in England and Wales? Or is it just another financial storm in a tea cup, or alternatively something too big, too distant and outside our control to be worried about? 

Although it is an issue far greater national significance that just tourism, it remains something that will, whatever the outcome, have several specific direct financial impacts on our customers, on tourism businesses and their supplier, on the state and appeal of key tourism assets; principally rivers, lakes water ways and coastal water and, thus if history is anything to go by, a disproportionate negative impact on the perception of the quality of the domestic product as a whole for at least the next 10 year and quite possibly for upwards of the next 25. 

It also has the potential to absorb and redirect billions of pounds of public funding to correct the errors and omission of the private water industry and of failing in Government policies and in the oversight of its hard pressed, independent regulators.  Scares funding, some of which might otherwise have directly or indirectly benefited tourism.  It also needs to be seen in the context of an equally troubled, partly renationalised partly still privately operated rail industry, a struggling Post Office and a previous failure in another key utility providers and the strains and uncertainties these are imposing on any future Government’s future policy direction and the level of deployable future public finances.  Put politely, the UK’s 40 plus year real-life experiment with the privatisation of public services hasn’t been without its recently exposed unwelcome issues.

Anyone doubting the serious PR implications of water quality for domestic tourism need only look to the well documented history of the implementation of the EU, now UK bathing waters directive and the largely negative impact that it generated during much of its 45-year gestation, on the perception and reputation of coastal destinations.  Sadly, much of the eventual and hard-won benefits of that much needed directive, have recently been subsumed under a consistent stream of bad news about the truly appalling state of the UK waste treatment and disposal arrangements and, in particular, the necessary (?) regular use of combined storm overflows, way in excess of licenced storm incident levels.  Now damage that is being done, often regardless of the actual standards being achieved at each of the UK’s c 600 individual, mainly coastal, designated bathing waters.  A very recent YouGov survey on the likelihood of swimming in the sea and rivers in this coming main season in light of recent publicity regarding sewage discharges, was telling and helps reinforces the obvious conclusion that the water industry’s failings are doing untold damaging, albeit perhaps unintentionally, to the UK’s tourism and leisure industries.

Once almost the sole preserve of the coastal sector, recent waste water industry issues have become an ever-increasing concern for inland destinations.  In the last 4 years we have gone from a couple of lakes sites and no riverine bathing waters whatsoever in the UK, to the prospect of over 30 lakes and rivers designated for the coming May to September bathing season.  This number is likely to continue to increase, possible exponentially, despite the unpalatable fact that most UK rivers are currently incapable of meeting, let alone consistently sustaining the far less stringent, minimum standards required of them, as compared to that used to assess their coastal cousins. In fairness that is not solely due to treated and/or storm water sewage discharges but to a range of factors including, most notably, agricultural runoff and/or discharges. 

The result is that many of these welcome new entrants will inevitably be classified as poor (failed}. “Bathers” and other users will be advised to stay clear of the water both in year whenever a poor sample has been recently detected until the next sufficient or better sample is taken and, potentially in the next full year, when the overall classification generated by last year’s full results is applied. Three poor sample in the 20 taken during the 5-month bathing season, is enough to result in an overall poor classification for the following year.  This is not necessarily good news for bathers or for the “destinations” involved among these new entrants but there are potential far worse consequences to follow.

Four consecutive annual fails and bathing water are declassified and must be “permanently signed to advice against bathing” which is a very serious own goal if it occures. Working to obtain bathing water status in these circumstances is a high reputational risk, high stakes gamble for all but a very few popular riverine bathing sites but no more a high-risk strategy than knowingly permitting or actively encouraging bathing in any significant numbers, in untested but suspect waters, of which there are arguably many. Bathing water status will often be seen by the uninitiated as a nice to have marketing tool.  When in reality it should be regarded and used for what it is; a very important instrument of public health protection to be applied to all popular public bathing sites.  Other immersion related water leisure usages should also be included in the definition of “bathing”. 

Not only are the public far more aware of the problems of sewage discharge into our waterways, they are now also far more aware of the bathing waters classification and many will begin to draw their own conclusions when and wherever an obviously popular water body isn’t classified.  Regardless, of classification, new measures recently imposed on the water industry including automated flow reporting on all combined sewage overflows in England and Wales, and, as of last week, live public mapping and reporting of all combined sewage discharges as the occur across England and Wales have radically change the dynamics of information provision and informed decision making.

Provided the water companies are compelled to maintain the remote sensors (not currently a given) this new source of live information is potentially transformational, helping potential user to make real-time informed decisions about where they go, if they go at all.  It is also likely to result in far more campaign group and EA/Natural Resources Wales investigations and as a consequence more regular enforcement action.  Anyone equipped with a laptop can see when and where discharges are now occurring and anyone with the inclination (of which there are many) can quickly workout when and where they shouldn’t be discharging. All from the comfort there own home, whenever you want, without the need to spend days or weeks, scouring hundreds of miles of water way and watching tens of thousands of outlets, 24/7 on the off chance of catching a discharge, illegal or otherwise, in progress. It isn’t rocket science matching discharge data to existing catchment rainfall data and working out what is and isn’t a supposedly rare storm event for example. Open access to the discharge information is the key to unlocking the previously closed door.

For these and a range of other reasons the current financial and operational state of our water companies and the resulting efficiency and cost of our water supply and the cost, effectiveness and environmental impacts of waste disposal are something that we in the domestic and international inbound industry should all be, at the very least watching closely, if not already starting to aim off for, as far as that is practically possible to do. 

My base assumptions are that Thames Water, although currently a bit of an out layer in terms of it size and the size of its problems, is still a bellwether for much of the rest of the water industry.  Wherever it leads or wherever it is deliberately or unintentionally herded by circumstance, some or all of the rest of the flock are likely to follow. If Thames Water fails, then in all likelihood, the chance of some or all of the others might do the same increases significantly.

Thames Water and its parent company currently account for over 25% of the industry’s combined debt. Its current investors, having failed to persuade Ofwat that it should be allowed to raise bills by in excess of 50% over the next 5-year investment period 2025 to 2030 and also be treated more leniently in terms of compliance and fines for its now inevitable future failures than the raft of newly changed rules, regulation etc, would otherwise soon demand, have declared the company “uninvestable”.  Kemble the parent company has recently defaulted on £400m debt repayment and there are concerns that the company will not meet Ofwat’s requirement to reduce its debt ratio.

Other investors, possibly as if not more interested in extracting profit over providing good service and protecting the environment than the current owners, are now circling the ailing carcass.  Thames Water has now submitted a new revised business plans which, in common with all other water company plans, will be publicly pronounced upon by Ofwat on 12 June, but presumably horse traded and picked over in detail by Ofwat with the individual companies beforehand?

There are perhaps three obvious main scenarios: an indebted Thames Water limps on under its current investors, some other investors take on the running of the company with or without some or all of its debt and it hobble on in the same or similar guise, or the company goes into administration and the now apparently well-developed fallback plans to renationalise the company and secure the essential services it must provide are implemented by Government.   

Whatever the outcome the prospects aren’t particularly rosy for Thames Water, for Thames customer or, by inference, for the rest of the water industry, most of which have similar, albeit, perhaps not so pronounced issues associated with indebtedness, large and as yet unfulfilled investment liabilities and exposure to a suddenly more robust and effective regulatory and enforcement regime.  Whatever happen to Thames Water, it is bound to have some profound implications for investment prospects and investors’ confidence in the rest of the UK’s water industry.  Some of which will now happen, come what may, regardless of Thames Water’s current predicament or its eventual outcome.

In the first instance someone, is going to have to deal with something in excess of £15bn of Thames Waters’ debt, not all of which will necessarily fall to current investors whether the company goes into administration, it is bought out at a bargain price by others, or it is essentially renationalised.  Moreover, whoever runs the company in future will face the prospect of funding the huge levels of investment that should have been undertaken sooner but which clearly have not been.  In practical and financial terms much of that essential and now no longer avoidable investment, is likely to take, at least 10 to 15 years at best to complete and more likely upwards of 25-year, I.E. to the 2050 current agreed Government target date for full compliance with existing regulatory standards. Combined the scale of the works needed and for good practical, as well as financial reasons, the time it will take to complete them, create a further potentially fatal financial flaw.

Whoever operates Thames Water will face the prospect of new much higher, more easily applied fines, for failing that will now be properly investigated by a better resourced, more empowered Environment Agency (EA) and National Recourses Wales (and no longer initially by the companies themselves!), in a newly mandated environment of automated reporting and recording and far greater public transparency.  In the last 12 months a deeply frustrated and arguably publicly shamed and pressured Government has brought in half dozen plus critically new measures that when used together have changed the regulatory, enforcement and transparency of the water companies’ delivery regime beyond all previous recognition. Sadly, not before time and in all honestly only after years of Government procrastination in the face of a mixture of well financed water industry lobbying and arguably much deliberate obscuration on the industry’s part. 

Provided all the new changes are now implemented in full, adequately resourced and properly applied, the Water Companies have nowhere left to hide and everything to fear from being caught out both for future action and critically for the practical consequence of their many past omissions that can’t now be easily of quickly put right.  Ironically there is a very real prospect of the Government finding themselves assiduously perusing and then having to fining itself, for the now all but unavoidable inherited failings of Thames Water and potentially in time those of other water companies.  It is a very interesting prospect that begs questions about whether the potential renationalisation of Thames Water, the worst failing part of an arguable poorly performing industry, might create many more, longer-term problems than it immediately solves? 

There is also major debate to be had about who is best placed to routinely and provide a basic essential service and who is best placed to secure the future of a key national strategic utility; the private or the public sector? The answer doesn’t always have to be one or other but could easily be a combination of both. For example, the building of reservoirs for supply purposes peaked in the 1960, despite obvious supply issue. The last reservoir built for hies purposes was completed in 1991, 2 years after privatisation. Tentative plans for new reservoirs have since inevitable become mired in local planning issues.  Parts of the UK are blessed with more rainfall than they can ever useful user or indeed might ever want, yet there is no commercial imperative to develop strategic national infrastructure to transfer water from places where it is plentiful to those places where it is either increasingly scares or inconsistent (as per the National Grid). Regardless of the outcome and potential consequences of the Thames Water problem, is there potentially also a need for some major publicly funded strategic national water supply infrastructure, beyond that which the current private sector lead arrangement may provide for commercial reasons. I suspect there is.

Equally big questions already revolve around the impact on Government’s own finances and the possibility of Government as a minimum having to pick up some part of the Thames Water’s multi-billion-pound debt and also take on the ongoing liability to undertake unfulfilled multi-billion-pound infrastructure works, at best spread over a 5-to-25-year period.  If Thames Water fails, there is also a very real prospect of “contagion”, with at least another half dozen companies of differing sizes currently carrying, what Ofwat deem to be unsustainable level of debt relative to their market values.  The risk in its simplest form is Thames Water’s well publicised issues and the radically and very rapidly improved regulatory regime may, in combination, cause current investors in any or all other water companies to try and cut and run and/or new or replacement investors to stay clear well clear in future.  That doesn’t necessarily bode well for the future of privatised water and waste provision, nor in the circumstances does it bode well the for a publicly owned alternative or a mixture of both.

So, in summary so far, the water industry is in or on the cusp of a largely self-made crisis that has been allowed to develop to a point where it is bordering on a potential crisis for the country.  A massive and very expensive backlog of urgently needed investment into water and waste water infrastructure has been allowed to develop, largely uncheck by Government, or its more recently under resourced regulator and enforcement bodies.  The backlog will take many years to clear and while it is being cleared the water companies will suffer significant further losses due to exposure to much higher, more easily applied fines for now far more easily identifiable failings.  These new costs will simply add to the costs of servicing the existing debt mountain that most of water companies have individually and jointly accumulated, further distract the water companies from urgently need investment in their infrastructure.  A bit of a Catch 22.

In the next 5-years and in each five-year investment period for potentially the next 25 years, a significant proportion of these combined costs will be passed to both domestic and business customer in higher, essentially unavoidable, utility costs.  In the next 5-year period domestic water and waste costs are predicted to rise, dependent, on areas and company, of between 20% and 50% (to be confirmed by Ofwat on 12 June). 

For the average domestic customer, if approved, that equates to something between the high tens of pounds and the lower few hundred pounds per year, for no immediately discernible improvement, or at least no improvement beyond what the average customer thinks they are already paying for.  It may not be huge amounts of money but it is yet another increased fixed cost that at best nibbles, at worst eat away at discretionary disposable income for the UK’s average household. That in turn will have a relatively small individual but discernible combined impact on discretionary spending and therefore as we only too well know on domestic tourism and the performance of the visitor economy, especially at a time where many other fixed unavoidable costs from Council tax to the weekly shop are also higher and or rising. 

Although less easy to estimate the typical range of increases for business customers in what is now no longer an entirely local monopoly market, the costs charged in the typical water brokerage arrangements has risen by an average of 30% last year and will inevitably increase again if the water company, water costs increase, as they are clearly set to do for the foreseeable future.  The addition of another increase in the fixed cost of doing business in current trading and economic condition is bound to be at best unwelcome.  Again, I would suggest that the majority of businesses would view improvement in water or waste infrastructure and good services, as something they are already paying for and not something that now needs to be paid for gain as an addition new cost.  

It is hard to argue that a relatively large sector in the hands of relatively few companies, that have run a largely geographical monopoly utility services for 35 years, spending between then, depending on whose figures you believe, something in the order of between  £130bn and £200bn on maintain existing and providing new water and waste infrastructure, while accumulating something over £60bn in combined debt and also paying out something also over £60bn in dividend over that period, should now be expecting their business and domestic customers to cough up even more to help them fund, long overdue and long known but deliberately obscured, infrastructure improvements needed to meet there well and long know regulatory liabilities. 

Estimates on the above headline figures do differ depending on sources, as does the estimate of the cost for reaching the required infrastructure standards by 2050.  It is likely to be significantly more than has already been spent but quite how much isn’t obvious to me.  If approved by Ofwat the industry is proposing to spend £96bn in the next 5-year investment period alone. An 88% increases on that spent in the current period or indeed much more than in any previous 5-year period in the last 35 years.  That in itself tells us as much about passed behaviours as it does about future intent, nor apparently would that £96bn solve anything like all the outstanding problems.   Unfortunately, the water industry’s is not a service that any business can chose to do without.  Nor, is it a truely free, completive market, despite Government’s best efforts to create an artificial separate wholesale (water companies) and water suppliers’ (water brokerage) structure to service for business customers.

In addition to the known and more easily quantifiable cost to domestic and business customers, there are also significant and less easily qualified or quantifiable, induced costs to UK domestic and international inbound tourism and to individual destinations performance.  The environmental cost of inadequate investment in waste water treatment and, in particular, combined storm water overflow provision, pale into insignificance when weighed against the potential costs of the reputational damage done to the UK’s tourism, leisure industries and to the visitor economy and the lost opportunity cost likely to be incurred over the next, 5, 10, 15 to 25 years or more. 

Once almost the sole preserve of the traditional rural and urban coastal sector, bathing water and water quality in general has become and is likely to continue to be an increasingly significant consideration for inland rural and urban destinations.  As the coastal sector can testify from many years of bitter experience, it isn’t simply bathers or water users alone who judge a destination by the quality of its waters but a whole raft of other non-water users who not unreasonable judge the health and appeal of a destination as a whole by the standard of its key attraction, in this case, a water be that: a river, lake, waterway, coastal water or other natural or manmade major water feature.  Today Maidenhead cancelled it summer swimming races held annual for over 130 years due to sewage discharge and the organiser’s inability to guarantee water quality (safety) on the day. While the Oxford University Rowing Club among others is voicing its concerns about the safety of water users in the upper reaches of the Thames and the London Mayor his disquiet about fivefold increase in discharges in the low reaches. Similar questions are likely to be raised by other in destinations of all types and sizes that happen to be on or by water in the coming months and years.  All is clearly not well and far more people are far more aware of it, even if the vast majority will not understand the complicated detail but simply write places off as dirty, unsafe, or polluted.

In all likelihood we will know for certain the direction of travel for Thames Water in the coming few months, possibly a little sooner or a little later. The intended or unintended consequences of that are likely to become far more apparent to the next Government, whoever forms it, rather than the immediate concern or problem for the current Government.  In the worst case the current Government might be forced to instigate a renationalisation before the forthcoming general election but not necessarily then handle the real-world, long-term consequences of that action.

Uncertainty about the future of Thames Water and the potential implications of whatever does or does not now happen to it and or in time to any or all of the other companies as a consequence, has potentially profound implications for the funding options and opportunities for the next Government and those that follow it in 5, 10 or more years.  The level of funding that may now be needed, the potential exposure to other people’s accumulated debt and/or the exposure to the unavoidable cost of future liabilities for things that have been left undone and need fixing soon, are frighteningly large.  Potentially so large that they are possibly as, or even far more significant than, for example, taking a few percentage points off or onto National Insurance, or adding a half a percentage of GDP on defence spending. I.E. like it or not, this is by any measure a strategically, politically and economically significant problem and not some passing glitch.

Having given it much thought over many months, Thames Water’s current issues and the wider potentially looming crisis for the water industry is something that I believe should now be give many more of us cause for genuine concern.  Even if individual matters like: the impact on and of disposable income, the effects of additional fixed business costs, the lost opportunity cost of environment issues, or the cost of reputational damage water quality issues can have on individual destination or the domestic and inbound international market in general, aren’t things that concern you personally or your destinations (hard to imagine they aren’t) then the potential impact of the headroom for a future Government’s future  spending has to be a concern to destination mangers, if not the wider tourism industry. 

We have done have austerity for austerity’s sake since 2010, we’ve done austerity for the sake of surviving the economic impacts of covid-19 since 2020 and gone on to do austerity for the sake of the energy crisis, the cost-of-living crisis and the economic fallout from the September 2022 budget. I would wager that very few in destination management at least would willing want to extend austerity for a moment longer than necessary and, in particular, extend austerity by another name, for the sake of bailing out yet another failed private run, public utility or public service. At the destination level at least, public service levels have to start improving, because in many cases they can’t get much worse, or worse without visitors starting to vote with their feet, if they have not already started to do so.

 On that basis I would much prefer any future Government to start by considering bail out indebted Local Government ahead of bailing out or renationalising any or all public utilities or any of the other major public service providers. This may be a minority view, it is a totally untested as yet on any of the membership, but I hope I am not alone in wanting to see some glimmer of light at the end of the local austerity tunnel.

Update on GBTS 2023 and VE attractions survey reminder

Posted on April 18, 2024 Updated on April 18, 2024

In last week’s update on the recently published Great Britain Tourism Statistics (GBTS) for 2023, covering domestic overnight stays, I aired some concern about the unexpected absence of any cross referencing to domestic outbound staying trips; information that had been routinely included prior to the post covid revamp of this annual survey’s methodology.  Colleagues in VisitBritian/Visit England (VB/VE) have responded very quickly and provided a very helpful and positive response, the essence of which I am keen share with you.

The absence of reference to International Passenger Survey (IPS) derived outbound domestic trip data is, as I suspected, a pragmatic response to ongoing concerns and issue regarding the methodology and results of the also recently revamped IPS, which is now undergoing a formal review.  The lack of domestic outbound detail is a temporary measure.  Once the review of IPS is completed and any necessary tweaks to the new methodology are successfully made, reference to domestic outbound staying visits figures and commentary on them will be reintroduced to future GBTS annual (and quarterly update?) reports.  Better still plans are in hand to expand this helpful bigger picture detail within GBTS to include other contextually relevant survey information, for example the Great British domestic day visitor survey (GBDVS).  I am sure colleague will warmly welcome news of the proposed additions. 

In due course post review, GBTS 2022 and 2023 are due to be revised and reissued. I think it is probably unreasonable to expect those revision to include additional data from other sources (they might?) but hopefully we could well see domestic outbound and day trip and other relevant surveys referenced in GBTS in 2025 I.E. in the report for 2024.  Although we would probably all like to see the revised and expanded reports sooner rather than later, later is preferable if it guarantees that the new methodologies are robust and we can have appropriate levels of confidence in all future data provided.

The reference in the 2023 GBTS report that prompted my observations on lack of domestic outbound data that: “On the other hand, UK overnight stays as part of an overseas trip show an increase of 14% in Britain and 19% in England (implying an increase in outbound trips)” are seemingly supported by the 2023 IPS results.  IPS shows an 18% increase on domestic outbound holiday trips and a 20% (unadjusted?) increase in spend for all purposes in 2023. Outbound trips for business, visiting friends and relatives (VFR) and miscellaneous purposes also show similar or larger increases between 2022 and 2023 and the average/total for all four categories of trip purpose was also 18%. 

Notwithstanding ongoing concerns regarding the validity of some of the new IPS data, the apparent surge in outbound domestic holiday trips broadly reflects the perceptions gained in popular well-established domestic destinations and the view of the majority of their destination managers on the current balance of holiday trips and the recent worrying direction of travel. Yes, we would fully expect outbound domestic travel to recover towards and then go beyond 2019 levels at some point.  Just as we would hope and expect domestic tourism to do much the same, preferably in parallel.  Currently the concern relates to the apparent disparity in the pace and direction of the two now clearly competing markets.  The apparent comparative decline in consecutive years in one against an increase in the other is a somewhat alarming trend, that needs to be interrogated, explained and better understood, so that we can ensure that the ubiquitous domestic tourism industry and the wider domestic visitor economy, that also underpin and provides the infrastructure for much of the inbound international market, is properly fostered in obviously changed but, I would argue, not yet properly understood circumstances.  The apparent decline at home in 2023 may simply reflect an exceptionally good domestic post covid, 2022 year, but I and others suspect that far more complex dynamics are in play.

Our current assumptions are that not only is the domestic industry being hit by cost of living and other economic issues at home, it is also apparently being hit by direct competition for the tourism pound, with increasing numbers of UK residents seemingly prioritising a main, usually overseas holiday, over and above a domestic holidays, short breaks and other more routine spending within the domestic visitor economy (days/nights/eating/drinking out etc.).  There is also anecdotal evidence suggesting many of those who would normally holiday at home are cutting back, particularly on spend or just aren’t holidaying as much or at all.

In the previously expanding leisure market, there was arguably plenty of room for both domestic and domestic outbound travel without one harming the other.  In the more recent restricted or contacting leisure market it has become a major issue and one that at the very least deserves proper recognition, if not some serious, appropriate policy interventions.  Step one is evidencing that there is an issue. In the absence of large well-funded representative bodies able to commission big hitting research, the normal starting point for that for the more disparate domestic industry is the figures and commentary from GBTS, IPS, GBDVS etc. Hence, my enthusiasm to see existing national data presented in a form that’s does much of the ground work and is easily understood and interpreted by all.

The relevant IPS  data tables for outbound domestic trips can be found at:  https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/datasets/monthlyoverseastravelandtourismreferencetables .  Annual volume in tab 4, line 70 and values in tab 5, also line 70 of the excel data sheet.  If nothing else the potential difficulty of finding this raw data, let alone interpreting its true meaning and then drawing robust, conclusions unaided by technical experts, neatly demonstrates why it is so important that the national board partnership, who provide, either the data, the commentary or both, should routinely include cross referencing to such contextual data within the likes of GBTS and why, in particularly, the vast majority of lay users should be so grateful that they continue to undertake this vital service for us. 

On a different but related matter I understand that the deadline for responses to the VE annual attractions survey is looming and that VE is understandably keen to ensure that all participants in this important survey submit response and preferably on time, in order to allow a sufficiently large sample to be analysed and a report issued at the earliest opportunity. Although the survey covers England the findings are I think generally relevant to the attractions industry across the UK/GB and therefore important to all destination management interests.  

If you are or know a participating attraction, please can you encourage the completion and return of the survey.  We are all busy people; however, the strategic and operational value of the survey and, thus, the value of the individual contributions made to it can’t be overstated.  In slower time destination managers in England may wish to discuss the potential value and opportunities of joining the survey panel in future years.  I am happy to put any appropriate attraction in touch, or you can go directly to colleague in the VB/VE research department (contact details on the VB/VE research webpages). 

Having had IPS and GBTS 2023 published I believe that VE’s visitor attractions report, usually published in early summer, is the next major annual survey report we can look forward to. There is no release date yet for it.  I will remind you all when it, or any other research or reports of national significance are published.