Last July, your Committee published its report on "Tourism in Scotland". Following the transfer of devolved functions to the Scottish Parliament on 1 July, including functions in relation to the Scottish Tourist Board, much of the content of the Committee's Report fell to the Scottish Executive; and Henry McLeish, Minister for Enterprise and Lifelong Learning, issued a statement on 27 July welcoming the report and noting that it would be taken into account in the STB's review of its strategy for promoting tourism. The outcome of that review was published in February in a "New Strategy for Scottish Tourism".

At the same time, your report included a number of recommendations in relation to matters which were still reserved to the UK Parliament, and others which recognised the need for continued co-operation between UK and devolved Scottish bodies in the interests of the tourist industry in Scotland. With the publication of the Scottish Executive strategy, I am writing to respond formally to your Committee's report. I regret that this response has been so long delayed.

The "New Strategy for Scottish Tourism" sets out a vision for the tourist industry in Scotland. It reviews the performance of the industry over the past 30 years or so, and looks ahead to anticipate changes in the market that will affect tourism in Scotland in future. It sets out a range of actions needed to meet these challenges, focusing in particular on the impact of information technology, on a marketing strategy, on quality assurance, on raising skills and standards, and on the infrastructure of public support for this important industry.

In particular, the strategy offers a number of specific plans to develop the STB's on-line booking system "Ossian", to make it fully operational for e-commerce from June 2000 with specific targets for the level of electronic transactions and with a commitment to develop it further in partnership with the private sector.

The strategy includes specific targets for growth in the number of visitors from key markets, both from the UK and from overseas, recognising the role played by the British Tourist Authority.

It concludes in favour of maintaining the voluntary approach to quality assurance: the STB estimate that some 90% of accommodation businesses are members of their voluntary quality assurance scheme. Further improvements in standards will be achieved by developing an advisory role to supplement the STB's quality assurance scheme.

The report recognises the need to improve access, including the need to co-operate with the UK Government and the EU on matters outwith the competence of the devolved administration. It focuses, however, on the scope for better information about transport services within Scotland, with a commitment to make this available electronically.

For skills and training, the SE will set up by April 2000 a new, industry-led Tourism Skills body, to promote greater up-take of training.

Finally, the review addresses two concerns; funding of the Area Tourist Boards and the role of the enterprise networks. It proposes to consolidate the partnership approach between the STB and local authorities, by establishing three-year budgeting for the ATBs. The role of the enterprise networks will be subject to review in the wider examination of the enterprise bodies.

Implementation of the review will be overseen by a new group chaired by the Minister for Enterprise and Lifelong Learning.

Copies of the report are enclosed for members of your Committee.[6] As you will see, the report recognises both the importance of this industry to the Scottish economy, and the high standards that are achieved by the best businesses in Scotland, which rank with the best internationally. Even with the growth and improvement that has been achieved in recent years, the report points the way forward to further improvements, focusing in particular in exploiting information technology and recognised Scottish strengths.

Naturally, this review does not address the recommendations in areas now reserved to the UK Parliament. The Scottish Executive's strategy document is primarily concerned with devolved matters. Some of the issues referred to in the Committee's Report relate to areas reserved to the UK Parliament (mainly relating to air transport) and are therefore matters for the UK Government.

The Report's conclusions include reference to the Committee's view that the number of tourists coming to Scotland could be increased if Scotland had better direct air access with overseas hub airports. The Government and the Scottish Executive recognise that the availability of international air passenger connections is likely to be beneficial for tourism and for business development more generally. Both the Government and the Executive would, therefore, seek to support and facilitate the development of new or improved international passenger services. The development of additional routes and new services is, however, a matter for the commercial judgement of the operators. To achieve economic viability operators will generally need to be able to generate a reasonable level of year-round business use in addition to tourism or leisure travel which tend to be more seasonal and command lower fares.

The Committee may also be interested to note in this connection that the Department of Environment, Transport and the Regions will be undertaking a UK wide consultation exercise later this year on the role of regional airports and their economic contribution. The Scottish Airports and Air Services Study commissioned by the Government in conjunction with the Scottish Executive will provide an input to this consultation exercise.

Following the Committee's Report the Government has taken further steps to review Air Passenger Duty (APD). A consultation exercise was undertaken in November 1999 to seek views on the merits of possible changes to the APD regime including exemption from APD for flights from airports in the Highlands and Islands and the application of a reduced rate of APD for low cost fares. In his Budget statement, the Chancellor of the Exchequer announced that a new, fairer structure of APD would be introduced from April 2001, at a lower cost of £5 for economy flights within the European Economic Area, and with an exception from this duty for flights from airports within the Scottish Highlands and Islands.

The Committee's Report refers to the practice adopted by some airlines of showing airport Passenger Service Charges as a separate element. The Department of the Environment, Transport and the Regions have raised this matter with the air service operators with a view to ensuring that passengers receive clear information about the inclusive price of their journey.

In conclusion, may I say that the Government and the Scottish Executive are grateful to your Committee for the work undertaken in preparing your report on Tourism in Scotland. Even after devolution, there remains a need to ensure effective co-operation between the UK Government and Scottish Executive, in the interests of maximising benefits from tourism in Scotland. The framework provided by the Memorandum of Understanding and Concordats published last October is intended to promote such co-operation.

10 April 2000