Against this background of experience I want to reflect on a few issues which the industry has to deal with. The list will not be exhaustive and I am not necessarily going to present solutions. You will have your own ideas about these which I would like to hear about so that the Wales Tourism Alliance can represent them. That is part of the function I have taken on to help the WTA in the transition it has made from a Visit Wales funded body to one which is self standing. Adrian Greason Walker will talk more about the work of the WTA in what he has to say.
The public sector supports the tourism industry in a variety of ways although it has to be said that the payback from the industry in tax revenues greatly exceeds that support. The Welsh Government through Visit Wales provides marketing and investment support and local authorities a range of infrastructure support. But that interface has a number of tension points. Visit Wales marketing is vitally important to create a profile for the industry as a whole but there is the dilemma of whether it focuses on new and emerging markets or more traditional ones and what the balance should be between the two. Another dilemma is the balance of resources between Visit Wales strategic campaigns and supporting the industry in its own campaigning.
These are acute dilemmas for Visit Wales. Given the importance of the industry, the argument for the Welsh Government to make a step change increase in the marketing budget of Visit Wales seems indisputable, particularly when the Department of Culture Media and Sport has made a £40 million Discover England Fund available. This will increase the competitive pressures on our businesses; the first schemes to be funded from this fund have recently been announced and interestingly but not surprisingly they are geared to overseas markets making good use of the fall in the exchange rate but increasing the competitive pressure on Wales. However increasing marketing resources for VW has to go hand in hand with liaison with the industry to achieve effective integration between VW’s campaigns and the industry’s own and to get a mutually acceptable balance of resources between strategic and tactical marketing.
Over the last 30 or so years there has been a considerable amount of investment in visitor attractions including new attractions. It has been made in private sector companies, in charitable bodies, by central government and by local authorities. The scale of what has happened reflects the growth in the importance of the visitor economy as other sectors have declined. However has there been too much encouragement of new attractions beyond what the overall market will bear? Does each new attraction have a uniqueness which grows the market as a whole or does in simply diminish the numbers going to existing attractions and reduce their viability?
Financiers, whether grant allocating civil servants or loan giving bank managers, find it very difficult to crystal ball gaze and say with confidence that this new attraction will grow the market overall but that won’t. Certainly the projections of visitor numbers which have been made have often been far too optimistic and should have been greeted with more scepticism but projects develop a momentum of their own and proceed. Then in many cases they do not ‘fly’ but limp along and in some cases crash. The answer cannot be a blanket ban on investment in innovative, new attractions. The industry would atrophy in consequence and the tourism industry in Wales would be the poorer for the absence of the likes of Surf Snowdonia, Zipworld, Bounce below etc but arguably more rigorous scrutiny of projected visitor number is required and perhaps a greater degree of scepticism about the projections made.
Direct central government support for the private sector has always been modest. Section 4 of the Development of Tourism Act was used imaginatively in Wales, if I may say so, and its continuance long after it had ceased in England brought forth squeals from the tourism industry there of unfair competition. I did not lose any sleep over it! But truth to tell the amounts the Government put in were modest compared with what the attractions put in themselves from internal resources and bank borrowing. However even a small percentage of central government support enables sharing of some of the risk with commercial banks, particularly important with high and volatile interest rates, and this gives confidence in the project.
High and volatile interest rates are almost a thing of distant memory –they will not always be—and it is said that our commercial banks are anxious to lend money. HSBC has set up an £8 billion for SMEs and Natwest has made available £1.1 billion to support small businesses. The Government’s Finance Wales, who knows shortly to be transformed into a Development Bank for Wales, has also recently launched a £136 million Wales Business Fund to support SMEs and has reduced its lowest interest rate for loans from 8% to 4%. Professor Dylan Jones Evans remains sceptical that there is sufficient in place to provide support for micro businesses of employing under 10 people. Last week I also saw reference to a new Welsh Government Growth and Prosperity Fund offering in its first phase grants of between £5,000 and £50,000 for capital expenditure prioritised towards increasing exports and the use of super fast broadband; I observe that tourism developments aimed at the overseas markets and those which persuade British people to holiday at home have the same balance of payments impact. I would like to hear of your experience in accessing funding for developments and how important public sector finance including a grant aid element in the funding package remains? The latter may be crucial for projects predicated on EU funding on which the Government, Westminster and Cardiff Bay, needs to confirm continuity of support after we leave the EU.
The public sector is also involved directly in the provision of visitor attractions. Some local authorities either directly or through support of charitable trusts have been responsible for creating visitor attractions which reflect the heritage of their areas. I think for example of Llancaiach Fawr, Tredegar House, the Rhondda Heritage Park and more recently Llanelli house These developments by local authorities are in addition to the local museums they run and their initiatives in creating country parks and nature reserves. Then there is the National Museum of Wales, originally with just one Branch in Cardiff, to which after the Second Worlds War was added St Fagans and then the Roman Legionary Museum in Caerleon and then reflecting desire to reflect the industrial heritage of the nation the National Slate Museum at Llanberis, the National Woollen Museum at Drefach Velindre and the National Coal Museum at Big Pit Blaenavon, the latter taking over the work of a local charitable trust. Finally its 7th branch this very building, the Industrial and Maritime Museum. We need also to recognise that the Welsh Government itself is in the heritage attraction business. Cadw has emerged as a force to be reckoned with a much more commercial edge to its operations in respect of the castles and historic buildings within its care. The National Botanic Garden has also become a player on the scene.The heritage attractions sector would not be complete without reference to the National Trust, a national institution if not a public sector one, and which has developed its estate and properties in Wales to the extent that it is arguably currently the biggest single player in the heritage attractions sector. In recent years one of the major financiers of the huge development there has taken place in this sector has been the Heritage Lottery Fund.
Two questions occur to me about this expansion. First is there a limit to its growth without affecting the viability of existing attractions. We come back to the problem I referred to earlier of demonstrating that each new attraction will grow the market overall.
The second is the knotty issue of whether the expansion of the public sector into the visitor attraction business represents fair competition with nearby private sector operators. This issue came to a head with the Government’s decision to make entry to all its National Museums free of charge. It is fair to say there had been considerable support for such a move across the UK. The justification was in terms of social policy objectives--fairness, equality of access opportunities etc-- and was consistent with the Charter objective of National Museums which is the education of the public. Many private sector attractions felt at the time and still do that this move adversely affected their businesses and was tantamount to unfair competition, pointing out that many of their operations provided education as well as entertainment. There is however an argument that free entry to National Museums in the UK, Wales included, increases the numbers of visitors overall and that this is good for the industry as a whole.
However this issue is going to be given even more prominence following the Secretary of Economy and Transport’s statement last week to set up a new trading organisation ‘Historic Wales’ to combine the commercial arms of Cadw and the National Museum with the declared objective of increasing the overall commercial performance and thus , hopefully, diminishing their reliance on public finance. It remains to be seen how this will be brought about. There will be considerable complications and as in any major reorganisation of this sort there is the danger that the reorganisation impacts adversely in the short to medium term on the operation of each organisation. The National Museum for example is in the middle of a major development at St Fagans and an ongoing programme of exhibitions at the same time as it is having to cut back on staff because of budgetary constraints. There could also be complications because of the Museum’s status as a Charity. But my main point in the context of the theme of this talk is that the creation of a more powerful Cadw/ National Museum commercial arm with inevitably the closest of links to the Welsh Government will be a challenge to private sector operators and this needs to be taken into account and some rules of ‘fair play’ established. An example of the sort of issue which needs to be considered is what should be the ground rules for VW funding marketing campaigns for public sector attractions. Last year there was a the marketing campaign involving Visit Wales, the National Museum, the National Trust and Natural Resources Wales to encourage visitors to their facilities. Nothing wrong with that but transparency is important. How does one avoid disadvantaging the private sector and holding out the prospect of parity of treatment for the private sector in VW’s marketing.. These are difficult issues but they need to be addressed. The WTA will be asking that the Steering Group which has been set up to develop the idea of Historic Wales should take them into account. This is not an exercise only for the public sector. The interests of the private sector in all fairness must also be taken into account.
Another aspect of the public/ private sector interface affecting the tourism industry is the provision of infrastructure services by local authorities and I include Town Councils in this definition because increasingly our County Councils are devolving some services to them. The subject hit the headlines this summer with highly publicised problems in Conwy. Our local authorities are in an unenviable position because of the cutback in resources available to them and they are struggling to maintain the sort of infrastructure which the tourism industry needs to flourish. This is not short sightedness on the part of local authorities. They realise full well how important such infrastructure is but they are faced with almost impossible challenges because of resources constraints. We in the industry have got to get alongside local authorities to look for imaginative solutions to ease particular pressure points. The WTA has written to the Welsh Local Government Association to begin such a dialogue. Maybe too local authority highway departments could use their influence with the Welsh Government’s Transport Department to get them to adopt a more positive and swift response to applications for white on brown tourism signs; we want all the engineers involved to appreciate how important the signing of tourism attractions is and to help the industry in this and be on their side of the industry in this rather than resorting simply to saying ‘it is not in accordance with the rules’.
I am afraid I may have posed more questions than provided you with answers but as I said at the outset, my intention has been to encourage you to give me your views on the issues I have raised so that the Wales Tourism Alliance can better represent you.