Draft Package Travel and linked travel arrangements regulations 2018

Gill Furniss Excerpts

Monday 14th May 2018 General Committees

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

It is a pleasure to serve under your chairpersonship, Mr Hosie.

Consumers often buy package holidays a long time in advance. They often spend a considerable amount of money on a holiday, including flights and hotels, and sometimes more, such as car rentals. According to the data in the impact assessment for the draft regulations:

“Households spend on average £22.10 per week on package holidays which constitutes 33% of total spending on recreation and culture.”

Indeed, with the rise of the internet and the boom in low-cost airlines, the way we book our holidays has changed significantly since the original package travel directive was introduced in 1990.

However, the risks involved are ever present, including the risk of insolvency of the trader, leaving consumers stranded; accommodation providers going bust; and difficulty accessing information, help or redress, to name but a few. It is therefore fitting that the law should change and modernise, to catch up with the changes in technology and in the attitudes and habits of consumers, so that they are protected from such risks.

In a nutshell, the draft regulations will widen the definition of a package holiday to encompass modern methods of purchasing package holidays, particularly online. They will create a new concept of linked travel arrangements, which are looser combinations of travel services, and introduce limited protection for consumers who purchase them. Bookings defined as limited travel arrangements will require financial protection against the risk of a company going into insolvency but will not carry the liabilities of a package.

An important element of the draft regulations is the mutual recognition of insolvency protection. Insolvency protection was an important feature of the 1990 directive and the 1992 regulations. It remains an important feature of the PTD 2015, but has now been overhauled to provide for mutual recognition of insolvency protection schemes between member states. The 1990 directive required only that member states have an insolvency protection regime. As a result, implementation across the EU was inconsistent. The PTD 2015 requires member states to recognise each other’s insolvency protection schemes and prohibits the imposition of additional requirements on foreign organisers. That means that organisers will be required only to comply with the insolvency protection scheme in the member state in which they are established, and in doing so will be deemed to be compliant across the EU.

However, the effect that mutual recognition of insolvency protection will have on regulatory behaviour is unclear. Fears have been raised that member states will engage in a deregulation arms race to attract business, to the detriment of consumers. What assessment has the Minister made of the effect of mutual recognition on regulatory behaviour? How can he assure us that this will not in any way hamper consumer choice and protection?

As the impact assessment outlines, businesses will have to become familiar with the changes in PTD 2015 to comply with the regulations. It also estimates that

“businesses offering packages that would be new in scope of PTD 2015 would face costs of £20.88 million for ensuring proper performance of a package.”

I understand that the Department for Business, Energy and Industrial Strategy will develop guidance to inform stakeholders and businesses.

During the scandal that resulted in the cancellation of thousands of flights by Ryanair and Monarch Airlines in 2017, an undercover Which? investigation discovered that vital ATOL—air travel organisers’ licence—protection is misunderstood at some travel companies, including Thomas Cook, one of Britain’s best-known agents. At the time, Which? travel editor, Rory Boland, said:

“Atol registered companies need to improve the accuracy of the information they are providing to their customers, and companies registered abroad must do more to inform customers in the UK about what protections they will be covered by.”

How will the Minister ensure and enforce the policy, so that companies are providing up-to-date and accurate information to consumers? What steps will he take to check whether these standards are being upheld? If they are not, what action will he take against companies that do not provide accurate and correct information?

Part 7 of the draft statutory instrument deals with the enforcement of the regulations. Under this provision, trading standards will be responsible for the enforcement of the following provisions of information: content of package, insolvency protection and offence arising from breach of regulation. The regulations contain a number of criminal offences in relation to failure to provide, and the authority to enforce the regulation falls largely on local authority trading standards departments. Local trading bodies, however, have particularly suffered severe cuts since 2010, when this Government came to power. The Government’s own consumer Green Paper admitted that this has diminished their ability to enforce consumer rights adequately. On page 57 it says that

“the capacity of Local Authorities to take national cases has reduced. Two-thirds of English local authorities have reported not having the expertise to cover fully the range of statutory duties required of trading standards teams.”

Will the Minister announce further funding specifically for trading standards bodies, so that the regulation is properly enforced? If not, the implication is that it might not be adequately monitored and enforced.

As the UK leaves the EU in March 2019, what will this mean for such legislation? Will the Minister outline what representation he is making to the member of the Cabinet negotiating on Brexit with regard to such vital consumer protections? How will they be enforced following our departure? While Labour Members support the objectives and content of the measure, I would be grateful if the Minister responded to the questions I have raised.

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[Andrew Griffiths]

The hon. Lady will know that, way above my paygrade, detailed negotiations are taking place. She will also know the phrase, “Nothing is agreed until everything is agreed,” which I must repeat. I reassure her that the UK has a great reputation and tradition of being at the forefront of protecting consumer rights. We do not need the EU to tell us how to protect the rights of our citizens and our consumers. We were at the forefront of the free market and of bringing in these protections.

I reassure the hon. Lady not only that these regulations will be copied across, as it were, on the day that we leave the European Union, but that ongoing and positive discussions are taking place to ensure that our consumers are protected when travelling abroad and buying packages or linked travel arrangements across the EU, and that European tourists can have confidence in buying packages from UK operators in future, knowing that their rights will be protected. UK consumer protection rights are based on EU law and they will be retained wherever practical.

There were a number of questions in relation to trading standards departments and their adequacy in providing the resources to support consumers in future. The hon. Lady will know that, through my Department, trading standards receives an annual budget of approximately £40 million, which has been pretty static in recent years. I agree that there are increasing demands on trading standards in a more complex world, in relation to package travel as well as consumer protections and safety. That is why the Government took the bold decision to set up the Office for Product Safety and Standards, which we debated last week, to give extra resource to trading standards across the country and act as a repository of information and expert advice. This year, the Government are putting an additional £9 million into that office and, in future, that budget will be £12 million. I reassure the Committee that the Government are putting extra resources into supporting our trading standards officers across the country.

[Gill Furniss]

I would like to ask the Minister what I probably asked him last week when we debated product safety. Clearly, the £9 million is intended to support the functions of the new office, not the functions of the thing that we are actually debating.