Reducing the regulation burden on tourism businesses

Reviewing the worst regulation thread on Accommodation Know-How shows two things quite clearly: the first is that accommodation businesses operate under considerable regulatory burden and that the level of burden is having a detrimental impact on their ability to provide the level of service and facilities that they want to their customers. The second is that the level of regulatory burden seems to be increasing with many operators unable to keep up never-ending changes to the regulations that govern the sector.

More regulation

Unfortunately, this pace of change seems set to continue. Now that the new Government is in place, the coalition’s policy agenda is starting to translate into more regulation. Two imminent examples highlighted in one of this month’s Accommodation Know-How news articles are further proposals to restrict the sale of alcohol and the tightening of the FHL Rules with increased thresholds for occupancy.

There is also the Government’s over-arching proposal to increase the power of local communities to control their own destiny under the banner of ‘Big Society’. While the ability of local communities to have a greater say in determining their future has a certain appeal, it comes with significant risks to the standardised implementation of regulations at the local and regional level. As a result, a business in one area could end up being treated very differently to a business located across the road in another area.

Over the last 10 years there have been continual undertakings from Government for smarter regulation and better partnerships between enforcement officers and the industry to ensure that regulations are targeted toward specific issues. However, there has been little evidence of this want to reduce regulatory burden translating into concrete measures that have actually supported small businesses. For example, two of the main areas of regulatory reform over recent years – alcohol licensing and fire safety – have seen the amount of regulation reduced but the burden associated with the regulation increase.

New possibilities

However, with the new coalition programme there is some hope that the regulatory burden may ease. The Coalition document introduces a number of pledges aimed specifically at reducing the regulatory burden. These include

introducing a ‘one-in, one-out’ rule whereby no new regulation is brought in without other regulation being cut by a greater amount impose ‘sunset clauses’ on regulations and regulators to ensure that the need for each regulation is regularly reviewed end the culture of ‘tick-box’ regulation, and instead target inspections on high-risk organisations through co-regulation and improving professional standards.

Most importantly, the coalition document specifically states that the Government will “take steps to improve the competitiveness of the UK tourism industry, recognising the important part it plays in our national economy.”

It is easy to dismiss this as simply well-intentioned electioneering that will not translate into actions. However, it is worth noting that the new Tourism Minister, John Penrose, was the shadow Business Minister during the last Government with a brief to look at ways in which the regulatory burden on UK businesses could be reduced.

As such, he is not only aware of the issue and the impact that it has on the productivity and competitiveness of the UK tourism industry, he is committed to finding ways to reduce this burden. Indeed, in his travels round the UK to assess the state of the tourism sector, he is specifically seeking examples of regulations that impose significant costs on the sector without providing significant benefits to customers.

Influencing strategy

This fact-finding mission is the prelude to a new tourism strategy that the Government will announce before the end of the year. The industry therefore has an opportunity to influence those sections of the strategy that seek to reduce regulatory burden and increase competitiveness.

The Tourism Alliance, being the umbrella trade association for the tourism sector, is therefore in the process of developing its submission on how the Government can best reduce the regulatory burden for businesses. The results of Accommodation Know-How’s “worst regulation” forum thread will be incorporated into this submission and will be core to the Alliance’s lobbying activities.

To determine the best suggestions from the thread, we have looked at a number of factors: first, the issues to be taken forward need to be related to national regulation rather than local authority regulation over which the Minister has little influence. Second, the suggestions need to relate to regulations that the tourism minister has the ability to change. So while the VAT rate that apply to the accommodation sector in the UK are double those that apply to other European countries, there is little prospect that the tourism minister will be able to change Government policy on taxation. Third, a distinction has to be drawn between legislation that causes an unnecessary burden on businesses and the local interpretation of regulation causing the burden.

What is the worst regulation?

Taking these factors into account, there were two key issues that came through in the Accommodation Know-How ‘worst regulation’ forum thread. The first was the confused state of copyright licensing for businesses. It is patently ridiculous that a small business that puts a TV and DVD player in a customer’s room has to apply for and pay at least four different licenses and action needs to be taken to simplify this system.

Secondly, in its efforts to address anti-social behaviour associated with a handful of inner city bars and clubs, the Government has imposed a range of broad-brush regulations on businesses that sell alcohol without regard to the level of sales involved or the risk that these establishments pose to the wider community through their sales. In 2007, the independent Elton Review of Licensing recommended that there should be a de minimus approach to alcohol licensing whereby businesses with very low sales were not subject to the full regulations. This recommendation needs to implemented.

The Tourism Alliance will, therefore, incorporate these two issues into its list of regulations that need to be reformed in order to reduce regulatory burden and improve the competitiveness of the UK tourism industry. To help resolve problems associated with the interpretation and implementation of regulations at a local level, the Alliance will also seek a review the system for regulatory enforcement at the local level.