Political progress

The business travel sector needs to make its voice heard if it is to keep up with changing times, says David Churchill

Whichever political party forms the next government - either as a minority administration in a hung parliament or with a small overall majority - there seems little doubt that business travel will still fail to feature anywhere near the top of its agenda.

In spite of its sheer scale, influence and impact on economic growth, the significance of the many billions spent every year by British companies of all sizes on travel at home and abroad will continue to be effectively ignored by those in power, and the election debate will have little to offer those who travel on company business to help ensure an export-led recovery.

This has been made more than clear by the Labour government's attitude to the Department for Transport - the Whitehall department nominally responsible for corporate travel - over the past 13 years. Since 1997, there have been a dozen different politicians heading up UK transport policy, almost one for every year Labour has been in power.

The political ambivalence towards the travel sector as a whole is also shown by the fact that the hotel and hospitality industry, one of the UK's biggest industries in terms of numbers employed and money spent, is hidden within the Department for Media, Culture and Sport (DMCS) - three sectors which even combined are still smaller collectively than the hospitality industry.

Politicians and civil servants usually see hospitality as a 'soft' business sector, based largely on leisure travel. They are, as usual, misinformed; it is business travellers that form the bedrock of hotel sector revenues, not just from standard overnight stays but also as a result of the crucial meetings, incentives, conferences and exhibitions (MICE) markets. Without these sort of MICE guests, especially from overseas, hotels would struggle to survive - as has been seen during the recession.

"The problem is that the people in power forget that the travel and hospitality sector is huge, which makes it sometimes invisible at government level and rather taken for granted," points out Christopher Rodrigues, the former Thomas Cook CEO (in the days when it had a business travel division) and now chairman of VisitBritain.

Yet VisitBritain, sponsored by the DMCS and whose responsibilities include promoting the UK to overseas business travellers, is facing a funding cut over the next financial year, from £45.1 million in 2009/10 to £40.6m in 2010/11. This amply illustrates the lack of joined-up thinking in government over supporting business travel, as the Department for Transport covers air and rail travel, while separate to this the DMCS looks after (in the broadest sense) the hotel industry and tourism.

And don't even mention the Department for Business, Innovation and Skills (latterly headed by Lord Mandelson) which is responsible for promoting British trade overseas - the reason many Britons travel on business in the first place.

Veteran hotelier Alan Parker, the outgoing CEO of Whitbread, believes that Whitehall responsibility for hotels should not be "lumped in with sport in the DMCS ... but instead should be part of a mainstream business department".

This, he suggests, would give the hospitality industry more clout in obtaining government support during difficult times. "Why is it that every other major economy in Western Europe has been cutting VAT on hotel accommodation while we are paying 17.5 per cent, which is probably going to be put up by the next government," argues Parker.

Of course, the problem with focusing on the needs of the business travel sector is hampered by the fragmented nature of the market, which makes identifying priorities difficult. The amount spent and numbers involved may be huge, but the money is provided by many separate companies and organisations, both in the public and private sectors, as well as the hundreds of thousands of people working for small and medium sized enterprises (SMEs) who travel on business.

The Guild of Travel Management Companies (GTMC) has, to its credit, recognised the need for a higher profile approach since 2008, especially after the doubling of air passenger duty (APD) in early 2007 that caught TMCs by surprise. This was not the first time the GTMC and other travel industry organisations, such as ABTA, had been left somewhat out of the loop when it comes to dealing with politicians. It was, in fact, Kenneth Clarke as John Major's chancellor in 1994 who initially sprang the surprise of APD on the unsuspecting airline and travel world - and the duty has been seen ever since as a useful cash cow for the Treasury under the guise of a 'green' tax (even though opponents believe it encourages wasteful emissions rather than curbs them).

For corporate travel buyers, of course, it is just another unnecessary cost imposed on business that effectively means higher fares - and APD is set to go up again in November. For the chancellor, however, it will mean nearly £3 billion in revenue this year, so don't expect whoever forms the next administration to cut it any time soon, although the Tories have promised unspecified reforms of the way it operates but no cut in the tax.

The GTMC has now dropped its use of backbench MPs as paid parliamentary advisers and instead hired political lobbying firm Cavendish Place Communications (CPC) to help gain greater access to Whitehall civil servants, special advisers and MPs. Gareth Morgan, CPC's associate director, acknowledges that "there is not a strong awareness [in government] that business travel management is an industry in and of itself". He says the GTMC is now seeking to change this view by "focusing less on parliamentary procedure and timetable and more on influencing policy at the formative stages".

Earlier this year, for example, the GTMC pre-empted the general election campaign with its first business travel manifesto. This was based initially on discussions among TMCs, travel buyers and business travellers before 1,250 of the latter were surveyed with the help of the Federation of Small Businesses. Perhaps surprisingly, the survey found that seven out of ten business travellers favoured investment in a high-speed rail network over expansion of UK airports. Two-thirds also said they would switch from air to rail if high-speed trains were introduced.

For both main political parties, this provides useful ammunition for their respective transport policies. Labour has become a belated convert to high-speed rail, mainly because a 'railways geek', in the shape of former Financial Times journalist Lord Adonis, is the latest incumbent of the transport portfolio. Yet it was only four years ago that a report by former British Airways CEO Sir Rod Eddington, commissioned by Gordon Brown when he was chancellor, concluded that new high-speed rail links around the UK did not offer value for money and so should not be pursued.

Conservative thinking on rail has always been rather ambiguous - it was, after all, the Tories in the early 1960s who asked British Railways Board chairman Dr Richard Beeching to review the rail network, leading to widespread closures of branch lines.

It was not until the arrival of the 'green' David Cameron as Conservative party leader in 2005 that modern Tory thinking turned to rail as the environmentally friendly option to both road and air transport. Now, Cameron and co are so gung-ho about high-speed rail that there has even been talk of trying to lure the trainspotting Adonis to join the Tory transport team in the event of a Conservative election victory.

Yet while there is little debate between Labour and the Tories on high-speed rail - except, perhaps, over how it should be financed - there is an ocean of difference between them over the future of Heathrow airport (although both major parties agree that another runway at Stansted is off the agenda).

Labour's recently disgraced former transport secretary, Geoff Hoon, gave the go-ahead to a third runway (and terminal) at Heathrow at the start of last year, with the lobbying campaign - called Future Heathrow - for the extension headed by veteran Labour politician Lord Solely.

Yet the Tories are committed to blocking the third runway for environmental reasons, even though providing greater capacity at Heathrow is clearly in the interests of business in general, and particularly corporate travellers. The post-election outlook for the airport therefore remains cloudy. Will Cameron stick to his guns and block expansion if his is a minority or small-majority administration?

Will Brown back down if in a similar position, especially given the vulnerability of Labour seats in west London if another election is imminent? Adding to the fun is London mayor Boris Johnson's support for a new airport to be built in the Thames Estuary - an option that appears to have little support, including from business travellers.

Heathrow's future probably depends on whether its third runway becomes an election issue - and anti-expansion activists have a track record for staging awkward demonstrations - and whether the courts will continue to back legal challenges from environmental groups. GTMC chief executive Anne Godfrey says that, based on the organisation's business travel manifesto, "what most travellers just want is for Heathrow to work better and for them to be able to get to it easily".

But she adds that "clarity on future capacity" is also essential in order to enable businesses to plan properly and make investment decisions.

But it is not just the political debate on travel infrastructure that affects business travel. Governments have enormous impact on companies and their employees working lives - the 2008 corporate manslaughter legislation, for example, has imposed significant new responsibilities on making sure that pressures of work do not lead to corners being cut when employees travel on business.

And while there has been an inevitable slow-down in corporate environmental awareness during the recession, the issue of cutting carbon emissions is not going to go away.

Either a Tory or Labour administration can be expected to press on with measures to meet tougher carbon emission targets, especially those of airlines. The recent technical debate on VAT changes involving the Tour Operators' Margin Scheme and suppliers of billback services to corporate clients has also shown that the business travel world needs to be constantly vigilant over such seemingly minor changes. Both the GTMC and the Hotel Booking Agents Association (HBAA) claim their dealings on the issue with HM Revenue & Customs has been a prime example of how the industry can make its influence felt.

But, inevitably, the next government will be mainly preoccupied with coping with the aftermath of the recession and near financial meltdown. Public spending cuts are inevitable and the election campaign has highlighted the pressure to curb travel costs in the public sector, estimated to account for about £5bn a year.

With both parties focusing on efficiency savings in the public sector, it will not just be MPs, senior officers in the armed forces, civil servants and BBC staff who are expected to travel Second Class on the railways rather than First. Yet it will be the private sector and, more importantly, exporting companies who will be expected to carry the burden of ensuring the nascent economic recovery is sustained. Alistair Darling's budget in March made it all too clear that UK growth projections were underpinned by an anticipated increase in exports, helped by the effective devaluation of sterling against the dollar and euro over the past year. The downside, however, is that Britain's biggest trading partner - the eurozone - is showing sluggish growth itself, so the business may not be there to win.

The political uncertainty caused by the general election is also unlikely to be resolved anytime soon, if the polls are to be believed. But such uncertainty is also bad for business, putting extra pressure on Britain's corporate road warriors. Yet it also creates an opportunity for corporate travel to stand up and make its voice heard even louder.