 |
 |
 |
 |
|
|
|
|
| Policy and Financial Management Review of The Scottish Tourist Board |
| Prior Options Study |
|
Chapter 7
The Future of STB 1. This Chapter considers the future role and shape of STB in response to issues identified during the course of the Review. It also notes a number of related topics on which comment or action is considered appropriate. 2. In sum, the Steering Group has considered the Board's performance and has confirmed that it is generally effective. The Group has also considered the Prior Options and confirmed that STB should remain a NDPB. While the Board discharges its current functions to good effect, the Group also believes that there is some scope for refining and re-focusing both the type of support provided by STB to the Scottish tourism industry and the way in which support is delivered. In reaching its decisions, the Group considered the results of the consultation exercise; the Government's policy requirements; the Board's current role, operational approach and the context within which it operates; the arrangements adopted by National Tourist Organisations (NTOs) elsewhere; and the issue of value for money. 3. As a first step, the Group adopted a set of guiding principles on which future action by the Board should be founded. These principles are as follows:
4. In the Group's view, these principles are already either fully or partly observed by the Board. The Group also felt, however, that their formal adoption offered the opportunity to consider whether detailed action on specific issues was necessary and, if so, what form that action should take. Its conclusions were as follows. STB should continue to undertake marketing, visitor servicing and development functions 5. The 1992-93 review of public sector support for Scottish tourism rationalised the functions exercised by Highlands and Islands Enterprise, Scottish Enterprise and STB. As noted in Chapters 2and 6, the Group concluded that the action taken then remains relevant and believes that no further substantive changes need be made in the responsibilities relating to tourism now allotted to these bodies. 6. Some difficulties remain however over the issue of development. A number of respondents to the consultation exercise criticised the practical value of the Board's current role and the uncertainty caused by an apparent failure to make an adequate distinction between STB's development activities and those of the Enterprise Networks. It was suggested that the Review should take steps to clarify the situation. 7. The suspension of the scheme of financial assistance operated by STB under section 4 of the 1969 Act meant that the Board had to re-focus its role in development matters. This has not proved an easy task but good working relationships among the national bodies, helped by the co-ordination mechanism provided by the Scottish Tourism Co-ordinating Group (STCG), has minimised problems. In terms of operational activity, the Board's principal interest now lies with product development. This is sensible for there is a clear link between marketing activities and the development of the product that is Scottish tourism. The marketing function has a critical role to play in helping identify what the market wants, eg environmentally friendly developments, arts tourism or special interest holidays, and action can thereafter be taken to meet that demand. It is crucial therefore that STB, as the body charged with national marketing responsibilities, is also active in influencing the development of the product and the Group therefore recommends that STB should maintain an interest in such matters. 8. There remains, however, the problem of overlap identified by the consultation exercise. The Enterprise Networks have a legitimate interest in product development as part of their wider responsibilities and, as with STB, there are no grounds for seeking to bar them from such activities. The solution appears to lie in the introduction of a clearer definition of responsibilities. The Steering Group believes that there is a compelling case for STB to disengage completely from the direct funding of product development programmes. Instead, the Steering Group recommends that STB should, as a result of its particular knowledge of market trends and customer requirements, concentrate exclusively on product development policy, identifying those areas of activity which will require to be developed by the industry with support from STCG members, local authorities and ATBs. This action would ensure that the link between STB's marketing and product development functions is maintained and that the resources spent by the Board on this activity are used to best effect. It would also be wholly in line with the more strategic role for STB proposed elsewhere in this chapter. STB should be open and accountable 9. A range of measures are already in place to publicise the Board's role, activities and plans. A copy of the Board's annual report and accounts is laid before Parliament and copies of its Management Statement and annual corporate plan are placed in the libraries of both Houses of Parliament. Copies of all these documents are sent to the Board's main partners and are also available to the public normally on request. STB has initiated a series of annual conferences to present to the industry and other interests details of the Board's achievements and future plans. Ad hoc meetings are also held with interested parties on a wide range of issues. The Board produces a quarterly newsletter which is issued to trade members of Area Tourist Boards as well as local authorities, local enterprise companies and other relevant bodies. Despite what amounts to a very considerable effort on STB's part, it is clear from the consultation exercise that uncertainty remains over STB's role. The Steering Group recommends therefore that STB should continue to develop and refine the means by which it communicates information about its corporate strategy and operational policies and programmes to its private and public sector partners, the tourist industry in general and the wider public. 10. The Board's Management Statement sets out the arrangements concerning STB's relationship to Central Government, including the role and obligations of its appointed board and the ways in which the Board is held accountable for its stewardship of public funds. The Steering Group concluded that consideration of these arrangements falls more properly within the second stage of this Review and should therefore be taken as part of that exercise. 11. In view of some of the comments made by consultees concerning the composition of STB's board and in particular the failure to appoint specific tourist industry interests, it is appropriate to note that the appointments process currently applied to the Board is wholly in line with the principles and criteria set out by the Office of the Commissioner for Public Appointments. Since 1996, forthcoming vacancies on STB's board have been widely advertised, applicants assessed against published criteria, and appointments made on the basis of relevant skills and experience and personal merit. The Steering Group concluded that, given these arrangements, it would be inappropriate to allot places on STB's board to specific industry interests and therefore recommends that no action need be taken on this particular issue. 12. A number of respondents also commented on the Board's role in relation to the new Scottish Parliament and suggested that the Review should clarify this prospective situation. Scope for comment is however limited given that it is neither possible nor appropriate to speculate on the new Parliament's likely attitude to STB and related issues. Instead, some general points can be made. 13. The Government's proposals for devolution in Scotland will help to bring Scottish NDPBs under the proper level of scrutiny that a modern democracy demands. All the public bodies which The Scottish Office currently sponsors including STB will become the responsibility of the Scottish Parliament and Executive. STB's current statutory powers and functions will therefore be carried over by general provisions in the devolution legislation. The Parliament will also have wide-ranging powers in relation to STB and other public bodies and will be free to restructure, merge or abolish them as well as establishing its own arrangements for accountability and public scrutiny. 14. The devolution of legislative competence also means that those BTA activities undertaken in relation to the promotion of Scotland in overseas markets will fall within the Scottish Parliament's interest. Obviously, BTA will for the moment continue to exercise its responsibilities in relation to Scotland and indeed the new Parliament may well wish to endorse continuation of this arrangement. However, it will also be open to the Parliament to review, and make changes in, the respective roles of STB and BTA and their current relationship. STB should have corporate cohesion 15. STB has been the subject of 2 Financial Management Surveys which reported in 1986 and 1992 respectively. On both occasions, the review officers noted that the Board had a marked vertical structure which acted against effective liaison at divisional level and served to discourage greater corporate awareness. Recommendations designed to combat this weakness were proposed and were implemented by the Board. The Board has also taken action on its own account to tackle this problem most recently, the introduction in 1994 of an executive board made up of the Chief Executive and his Directors. Judging by some of the responses to the consultation exercise, however, the view remains that the prime focus of Board activity lies at the divisional rather than corporate level. Such an arrangement may simply and rightly reflect the fact that Board functions are discharged at the divisional level and do not therefore hamper effectiveness where action is confined to a particular division. The Steering Group agreed however that it continues to pose problems as regards effective inter-divisional liaison and the Board's ability to devise, take and present action at the corporate level. The Group concluded that further remedial action remains necessary. It recommends therefore that STB should give early consideration to this issue with a view to implementing appropriate measures and that in due course it should formally notify the Department of its proposals. STB should help give the industry strategic direction 16. A number of respondents to the consultation exercise felt that STB should give greater priority to the identification and analysis of, and development of responses to, key strategic issues. This view complements several other developments noted by the Steering Group. 17. Firstly, the Group's consideration of other NTOs in the UK and elsewhere indicated that greater emphasis is now being given to strategic or indirect action, eg the provision of market information. NTOs are no longer simply seen as active campaigners in consumer markets or as vehicles for disbursing public funds direct to the industry. As was also suggested in Chapter 2, pressures on public funds are likely to accentuate this trend. Secondly and much more significantly for STB an initiative currently being introduced by the STCG also envisages the development of a more forward-looking strategy by public sector bodies. This new initiative arises from the conclusion that, while the Strategic Plan for Scottish Tourism and the various plans derived from it constitute a suitable basis for action, they generally relate to the problems currently facing the industry and those areas which have already been identified as having potential for growth. Today's economic and business environment is, however, characterised by rapid development and change. This is particularly true of the tourism sector where changing work and leisure patterns and the rapid development of rival tourist destinations pose particular challenges. The STCG has concluded that, if the Scottish tourist industry is to compete effectively in this kind of environment, the industry and its public sector partners must look beyond current issues. It has therefore launched a futures exercise which will, inter -alia:
18. STB will have a key role to play in this initiative but will need to ensure that its contribution is a meaningful one. Accordingly, the Steering Group recommends that STB should adopt and develop a more strategic and forward-looking role, centring on the identification and provision of relevant market information and more generally on the facilitation of industry action either at the Board's own hand or through the action of other public bodies. 19. It is clear from these developments that STB's ability to provide, and contribute to the provision of, market information will become all the more important in future and at this point it is appropriate to discuss the Board's research activities in the light of the consultation exercise. 20. While a small number of consultees suggested that the Board's research functions should be outsourced or privatised, a clear majority of those commenting on the issue felt that, on the contrary, research should continue to be undertaken by the Board on an in-house basis and that its role should be enhanced, especially in relation to more and better market information at both the national and sub-national level. Put briefly, consultees wish to see a research programme which is comprehensive and relevant and whose results are readily accessible. 21. At present, the bulk of STB's research budget is spent on the monitoring and evaluation of the industry's and the Board's past performance. While these particular tasks remain entirely appropriate and indeed essential, they do not necessarily meet the needs of industry, especially in relation to the development of future policy. Implementation of the recommendation that STB should adopt a more forward-looking and strategic stance should ensure that some of the concerns expressed by consultees will now be met. In addition, the Steering Group identified several issues on which action can be taken to help STB's research function deliver a better and more relevant service. 22. As far as the responsibilities of the national agencies are concerned, the 1992-93 review of tourism support arrangements took decisions on the major blocks of activity comprising marketing, business development and ATB sponsorship. It did not extend to support activities such as research. Given the ongoing involvement of a number of public bodies in tourism research, it is understandable that there remains uncertainty as to their particular responsibilities. Views expressed in the consultation exercise confirmed this situation and the Steering Group agreed that action should now be taken to clarify matters. The Group recommends therefore that, in view of its statutory role and by virtue of its having the only research function in the Scottish public sector wholly dedicated to tourism, STB should be formally recognised as the lead agency on all matters relating to research into Scottish tourism. As a consequence, STB should be responsible for the compilation and maintenance of a comprehensive national database on tourism and for the effective analysis and dissemination of that material. While final decisions on its research programme must be for STB, the wide range of bodies affected by, and involved in, this subject suggests that some form of consultative arrangement needs to be instituted. The Steering Group recommends therefore that STB establish a consultative committee representing private and public sector interests to advise on key priorities for, and the targeting of, the Board's research programme. The committee should also have the task of co-ordinating and monitoring research activity across the Scottish public sector, advising on the dissemination of research material, and helping ensure that the national database is as comprehensive and up to date as possible. STB's partnerships with the industry and other public sector bodies should be meaningful and, in terms of practical results, effective and efficient 23. A wide range of consultees commented on the need for improved partnerships among public sector bodies at both national and sub-national levels on a range of operational issues. Concern was also expressed about the need for better co-operation and co-ordination between the public and private sectors at the strategic level. The Steering Group accepted that these concerns are very real but concluded that action already taken, currently underway or planned should help resolve these difficulties. 24. As noted elsewhere, the STCG has overall responsibility for ensuring that partnerships among public sector bodies and between the private and public sectors are effective. Efforts to achieve that goal have focused on the Strategic Plan for Scottish Tourism which was launched in 1994 and which has been regularly reviewed and revised since then. The Plan requires the commitment at their discretion of a range of bodies with diverse interests and responsibilities and the STCG has never envisaged that improved relations could be achieved quickly or easily. The Steering Group believes, however, that satisfactory progress has been and is being made with the Plan and that improvements in working relationships already achieved will continue: good examples of collaborative partnerships with close links to the Plan include Tourism Training Scotland and the Tourism and the Environment Task Force. The STCG's initiative to identify and take practical action on likely long-term trends and developments in, or influencing, the Scottish tourist industry will also assist this process by focusing on specific issues and by identifying respective roles for the public and private sectors. 25. Despite the progress made and in prospect, the Steering Group accepted that the issue of co-ordination and co-operation needs to be kept under regular review. The Group recommends therefore that STCG should consider whether current arrangements are effective and, if so, whether the action taken to establish and maintain successful working relationships is sufficiently publicised. 26. In considering the responses to the consultation exercise covering the issue of partnerships, the Steering Group also noted several areas where specific action could be taken by STB to improve matters or where further comment is appropriate. Area Tourist Boards 27. ATBs are the Government's chosen means of supporting Scottish tourism at the sub-national level and it remains Government policy to encourage and support the development of these locally based and led and largely locally financed organisations, wherever possible. In terms of size and composition, moreover, local boards are significant in their own right. Collectively, the ATB network generates and spends income of around £25 million a figure in excess of STB's own gross budget. About 16,000 individuals and organisations representing a significant portion of the Scottish tourist industry are currently subscribing members of ATBs. In some respects, the local boards are STB's most important publicly-funded partners. They constitute a vital link with the industry (and, for that matter, local authorities) and should serve as a means by which STB ensures delivery of its own corporate objectives at the sub-national level. Indeed, many of the Government's objectives for the industry can only be effectively realised by STB and the local boards working together in partnership. 28. While STB's relations with the ATB network are generally good, it is clear from the comments received from local boards that there remains scope for improvement. The current ATB network was established in April 1996 and, as before, STB has been charged by Government with the task of co-ordinating and sponsoring (by way of financial support) ATB activity. ATBs are concerned, however, that STB's approach to local board matters tends to operate on a sub-corporate or ad hoc basis with relatively poor internal co-ordination thus echoing earlier criticisms about the vertical nature of the Board's organisational structure. In formal terms, the ATBs' main point of contact with STB is through the latter's Visitor Services Division. ATBs make the point however that, in many respects, their interests mirror those of STB as a whole. Clearly, ATB activities cross divisional boundaries within STB and the Steering Group agrees that there is a compelling case for all STB divisions to discuss and consult directly with ATBs on matters of mutual interest with Visitor Services Division playing a co-ordinating role. The Group recommends therefore that STB should review current arrangements in consultation with ATBs and make such changes as are necessary to ensure that the Board's corporate sponsorship of ATBs is more effectively discharged. 29. The issue of funding was also one of the major concerns of those consultees commenting on ATB relationships with STB. The overwhelming view was that the current system is inadequate and that ATBs are being placed in financial jeopardy as a result. The Group considered this issue and agreed that, while significant in its own right and in relation to the wider issue of public sector support for tourism at the local level, ATB funding was a distinct and separate issue which could not be regarded as central to the PFMR. The Group concluded therefore that it would not be appropriate to offer detailed comment and recommendations on this issue. It is accepted however that, as noted in Annex D, problems are emerging and that these centre on the level of grants provided by local authorities. It is clearly important that STB, as the ATB network's national sponsor, should play a major role by helping to identify ways in which this problem might be eased and by taking such action as may be appropriate to help alleviate the situation. Marketing 30. The most significant comment made by consultees in relation to the Board's marketing activities concerned the need for such activities to be better integrated with those of ATBs in particular and the industry in general. Such action was needed to ensure a clearer understanding of respective roles, to avoid duplication of effort and to remove uncertainty on the part of the industry. 31. STB already has a well-established planning system for its various marketing programmes. Marketing plans are developed and reviewed on an annual basis, are discussed with partners, and are freely available. The Steering Group believes it sensible for STB to take these arrangements a step further and thereby allay the concerns expressed by consultees. The Steering Group recommends therefore that STB, in full consultation and agreement with ATBs and the industry, devises and publishes at annual intervals a national marketing plan or plans covering both the UK and international markets. Such statements need not be lengthy or overly detailed: it is not envisaged, for instance, that they consist of a comprehensive list of agreed operational activities. Instead, they should provide an outline agreement for action which defines the respective roles of each main interest, eg STB, ATBs and industry, and state in general terms what these roles should entail in terms of practical action and responsibilities within the various market sectors and segments being targeted. The plans should also clarify the roles of STB and ATBs and, specifically, their respective responsibilities for:
STB's Principal Aim 32. Having agreed and considered STB's underlying operational principles and the issues arising from them, the Steering Group turned to the Government's aim for STB as contained in the Board's Management Statement. As noted in Chapter 2, these are currently stated as: The Government's aims for the tourism sector in Scotland are to encourage and secure an improved performance on the industry's part by (1) promoting a fiscal, regulatory and economic climate in which it can prosper and (2) providing appropriate targeted financial and other assistance. STB's main aim is to help maximise the economic benefit of tourism to Scotland. The Board will undertake this task through:
33. The Group felt that, in the light of its earlier conclusions, it would be appropriate to revise this statement. In so doing, it agreed that the reference in the preamble dealing with the Government's aims for the tourism sector remain relevant and should be retained. It was also agreed that the Board's main aim should be expanded to include a reference to the critical issue of market failure and that the statement should recognise the Board's enhanced role as a facilitator of action. Finally, the Group identified a number of themes which arose from issues identified in this chapter or elsewhere in the report as being central to STB's future role. These were:
34. Basing its revision on these themes for action, the Group agreed a new set of underpinning objectives for the Board's principal aim which now reads as follows: The Government's aims for the tourism sector in Scotland are to encourage and secure an improved performance on the industry's part by (1) promoting a fiscal, regulatory and economic climate in which it can prosper and (2) providing targeted and other financial assistance where it would not be in the interest of the private sector to do so. STB's main aim is to help maximise the economic benefit of tourism to Scotland. The Board will do so, either at its own hand or by other means, by:
The Group recommends that the Department should amend the Board's Management Statement to take account of this revised aim and that STB should also review and amend its current corporate and subordinate objectives in response to this change. 35. It was noted in Chapter 3 that STB research indicates a relative decline in the distribution of visitors outwith the main destinations of Edinburgh and Glasgow. As the better dispersal of visitors is now an explicit task for the Board, the Group further recommends that, following on from the review of its own objectives and bearing in mind the comments made in paragraph 31, STB should consider whether current action on encouraging better visitor distribution is sufficient and, if not, what further measures are required. The Board should formally notify the Department of its conclusions. Measurement of STB's and Industry's Performance 36. In overall terms, the Steering Group felt that STB's approach to the monitoring of its performance has been thorough and, given the difficulties involved, effective. This has been achieved over a number of years and after a considerable amount of work. The Review recommends therefore that the Board should build on this solid achievement by continuing to review and refine its current measurement and evaluation system on a regular basis. 37. STB has evolved a very extensive range of intermediate to low level performance indicators directly linked to its operational efficiency and effectiveness. There are, however virtually no high level measures in use. Where final outputs are produced, there appears to be an over-reliance on the analysis of marketing campaigns and little investigation of the effectiveness of other areas of STB spend. Moreover, the use of leverage ratios to compute the complex nature of STB's interaction with the tourist industry in general and the Scottish economy in particular does not seem appropriate. While the difficulties of expressing the Board's performance in terms of final outputs were acknowledged in Chapter 3, the Steering Group felt that further effort should be made to see if these weaknesses can be eliminated. The Group recommends therefore that, during the second stage of the Review, the Department and the Board consider whether STB's performance evaluation programme is sufficiently comprehensive in terms of depth and breadth of coverage and whether improvements can be made in the Board's current series of performance indicators through the introduction of a small number of high level measures which reflect its key objectives. 38. In considering STB's assessments of the industry, the Steering Group noted a lack of detailed information on the industry's structure and main characteristics. The reliance on visitor expenditure as the sole or main indicator of the industry's health does not, for instance, seem a sustainable approach in the long term. While there are considerable problems involved as also noted and discussed in Chapter 3 acquisition of further material is considered essential: self-evidently, the structural features of the tourist industry must heavily influence its performance and that of STB and should wherever possible inform STB's decision-making process. Accordingly, the Steering Group recommends that STB, in consultation with the Department, draws up and implements a programme of research designed to address this lack of information. 39. The Steering Group was also struck by the lack of qualitative information on the industry's performance. The Board's current emphasis is on visitor expenditure and other such quantitative measures. While information of this sort is obviously important, improvements in the quality of skills, services and facilities are regarded as fundamental to the industry's long-term success and this fact is reflected in the national Strategic Plan and in STB's corporate objectives. STB has recently undertaken an analysis of data derived from its Quality Assurance programme with a view to producing statistics on the qualitative performance of the accommodation sector during the 1990s. This is a welcome initiative. The Steering Group recommends therefore that STB continues with this research project, building on it where necessary to produce a suite of qualitative measures to be used to gauge accurately the industry's long-term performance on this issue. The Steering Group further recommends that, as an extension to this exercise, consideration should also be given by STB to the introduction of more regular visitor attitude surveys. STB Structure 40. If, as the Steering Group believes, STB's activities require to be refocused, if the Board is to take greater responsibility for leadership and strategic direction, and if better corporate performance is to be secured, then changes to the Board structure as well as the way it discharges its statutory functions become necessary. Concurrent with this Review, STB's Chief Executive conducted his own examination as to how best to remodel the Board and submitted his views to the Steering Group. The Group agreed however that such decisions were a matter for STB. The Group recommends therefore that the Board should now proceed to implement such changes as it considers necessary in the light of the Review's conclusions and recommendations, subject to such consultation with the Department as is required by the Management Statement and subject to the Department being satisfied that, taking account of any transitional costs, the new structure will over time deliver savings in running cost provision. Location of STB 41. A number of respondents to the consultation exercise commented adversely on the Board's dual location with principal offices sited in both Edinburgh and Inverness. They felt that this arrangement is inefficient and should be reviewed with a single location, preferably Edinburgh, the favoured option. The Steering Group accepted however that, as noted in Annex D, the rationale for the establishment of the Inverness office continues to hold good. But it also accepted that the Board's dual location does pose problems of operational effectiveness and recommends that the second stage of the Review should consider this issue and the scope for securing improvements.
|
|
|
|