Air Travel Organisers’ Licensing Bill

Julian Knight Excerpts

2nd reading: House of Commons
Monday 3rd July 2017 Commons Chamber

[Robert Courts]

I am grateful for my hon. Friend’s timely intervention, as the next page of my notes deals with clause 1. Existing ATOL legislation applies only when the first leg of a relevant flight booking departs from a UK airport. The new legislation introduces a single-market approach to insolvency, whereby EU-established companies will be required to comply solely with the insolvency protection rules of the state in which they are established, as opposed to the place of sale, which is the current position. The legislation is therefore much wider, and the company will only have to be established.

[Julian Knight (Solihull) (Con)]

Does my hon. Friend agree with me and several consumer groups that £2.50 is a low price to pay for ATOL protection compared with the cost of standard travel insurance? In the longer term, we might see a decline in the cost of travel insurance as more holidays are covered by this enhanced ATOL protection.

[Robert Courts]

My hon. Friend makes an excellent point. He is right that the ATOL scheme is funded by a levy of approximately £2.50 per protected passenger and that it would be extremely unwise of any holidaymaker to go abroad without adequate travel insurance. I encourage everyone always to have such insurance, although it can sometimes be pricey, especially if someone is looking to protect themselves against some of the more routine failures that are easily covered in the ATOL scheme. However, more serious misfortunes can occur when people are on holiday, which is why travel insurance is, of course, still advisable. As my hon. Friend suggests, the cost of insurance may come down in time as a result of this enhanced package.

Clause 1 will allow travel companies established in the UK that sell flight-inclusive packages to use their ATOL membership and protection to cover all EU-wide sales without needing to comply with the insolvency protection rules of any other member state. Clause 2 deals with funding and qualifying trusts within the ATOL trust management structures. The Department for Transport is alive to the fact that because we have seen significant changes to the travel industry—not only since 1973, but since 2004, as well as more recently—it might be necessary to enter into separate trust arrangements for the greater business model, such as linked travel arrangements, to give greater transparency to businesses and consumers. It might be necessary to introduce a new form of qualifying trust to ensure that the ATOL trust will still protect consumers in the all-important area of flight accommodation. The Bill allows the flexibility under trust arrangements so that we can increase funding and ensure that ATOL is adequately funded as time goes on.

Clause 3 addresses a slightly different point: the ability of the CAA—the House will realise that the authority is responsible for running the ATOL scheme—to require and request information from airlines selling ATOL-registrable products within the UK and more widely. Under the Bill, an important change would apply to airlines that have an air service operator’s licence from another EU member state and therefore would not need any of the licences that have been granted by the Civil Aviation Act 1982.

The House will be delighted that this is a short Bill, containing only four clauses. I have needed to deal with only three, so I do not need to go through the other one—I am sure everyone is delighted. [Interruption.] The Bill is short in terms of clauses, as the House will realise.

Air Travel Organisers’ Licensing Bill

Julian Knight Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Report stage: House of Commons
Tuesday 11th July 2017 Commons Chamber

[The Minister of State, Department for Transport (Mr John Hayes)]

I welcome the spirit in which the Opposition have gone about their business on these provisions. We have had measured and sensible exchanges, first when we started to explore the issues in the Vehicle Technology and Aviation Bill earlier this year, before the election, and subsequently in last week’s Second Reading debate on this Bill. There is a determination across the House to get these matters right and a recognition that the protections that these measures offer travellers are important. Furthermore, as the Opposition spokesman made clear a moment or two ago, there is a recognition that we need to maintain the fitness for purpose of these arrangements to take account of changing circumstances in the travel market.

We must remember the context in which we are considering the amendment. The whole House shares the view that it is right for ATOL to continue and to respond to changing market conditions, and that the Government must do their part by ensuring that the necessary framework is in place. In respect of the amendment, I can go even further.

[Julian Knight (Solihull) (Con)]

Will the Minister give way?

[Mr Hayes]

I will happily give way, after I have made this telling and interesting point. I said to Labour Members not long ago that I understand that it is now de rigeur for parties from across the House to work together. That has become immensely fashionable recently; frankly, however, it has been my practice forever. I feel as though the world is catching up with me, and that is a great place to be.

[Julian Knight]

The Labour spokesman suggested earlier that there might be some rowing back of holidaymakers’ rights after we leave the EU, but is that not quite wrong? The UK has led the charge in the EU for holidaymakers’ rights. Will the Minister reassure the House yet again that we will protect holidaymakers’ rights post Brexit?

[Mr Hayes]

Although I do not want my sermocination to be excessive, I will deal with those matters at greater length in my later remarks. My hon. Friend is right to say that Britain can be justly proud of our record in respect of ATOL. To be clear, the Labour party acknowledged that on Second Reading a few days ago. There is an acceptance across the House that Britain has done this well; that that is recognised in continental Europe; and that there is a desire to ensure that future arrangements are inspired by, and perhaps even emulate, the best practice exemplified by the United Kingdom.

I said that I could go further still in building a bridge across the House, and that is because I am sympathetic to the aims behind the amendment. It is crucial that we carefully craft our policy, and the regulatory framework is the key to good governance. To gubernate is to be prepared to listen and learn, and it is absolutely right that we do so in respect of the changes that the Bill will make. It would not be fair to set any of this in stone, which is why I accept the need to consider these matters, as the hon. Member for Kingston upon Hull East (Karl Turner) set out, in the context of future changes to our relationship with Europe.

As I have said repeatedly, I am open-minded about reviewing the effects of these changes, but let me explain a little more. The Bill introduces the ability for ATOL to protect sales by businesses established in the UK and in other member states. It will be for protection schemes in other member states to provide the protections for UK consumers to which the amendment refers. That is not our responsibility—we do not have the power that the amendment suggests we should have—so I am not sure that the amendment works on a technical level.

The amendment does, however, highlight an important point, which it is right for us to consider. It seems to me that the hon. Gentleman’s argument was twofold: first, that we need to understand the potential impact on UK consumers of purchasing from traders that are based overseas under different protection regimes; and, secondly, that we need to consider how Government should keep that element of protection under review. Let me deal with those points in turn.

--- Later in debate ---

[Mr Hayes]

In that punchy and pithy intervention, my hon. Friend made the point that I made when we debated these matters in the Committee considering the previous legislation of which this was originally a part. That is rather convoluted, but it makes the point. I said that the problem with an early review is that it would be too early and would not take account of the changing circumstances in exactly the way she suggests. But I am minded to go further. Given that we discussed the issue in Committee on the Vehicle Technology and Aviation Bill, I want to make two further points.

First, the Small Business, Enterprise and Employment Act 2015—I have a copy with me for the benefit of any hon. Member who may wish to look at the particular clauses—makes a review obligatory within five years of the passing of the legislation. That existing obligation would of course apply to ATOL. However, we can do better than that. I am proud of my Department’s reputation for producing robust analysis to underpin and inform policy decisions, including providing full regulatory impact assessments to assess the effect of significant changes to regulation. That is a principle to which we have adhered in recent years throughout the ATOL reform process. We have already reformed ATOL once, in 2012, as the hon. Member for Kingston upon Hull East knows. We went through a consultation exercise, which I also have with me, and it is important that we continue the process of consulting and publishing the kind of impact assessments I have described before any regulatory changes take place.

It is really important that, when we changed the Civil Aviation Act 1982 in 2012 better to reflect current market practice, the call for evidence on the long-term review of the ATOL scheme produced responses that both informed the changes we made then—as they certainly did—and any further changes.

[Julian Knight]

My right hon. Friend has been most generous in taking interventions. He mentioned that ATOL was last reformed in 2012. Is not the truth that the process will not end with Brexit or with the Bill? It is an ongoing process of reform and renewal.

[Mr Hayes]

That is true and in a sense it is more catalysed by the changing character of communications and the way in which people organise and book their holidays than it is by our relationship with the continental countries of Europe. It is affected by both, but my hon. Friend is right to say that even if we were not leaving the European Union—and, my goodness, I am glad we are —we would still need to reflect on and consider changes that take account of the changing patterns of the way in which people organise and book their holidays. Indeed, he is right that the process of reflection, consultation, impact assessment and review needs to be a continual one.

Last year we consulted on the changes to the Civil Aviation Act 1982 that we are discussing today. We are about to launch a series of consultations on the detailed regulations that will follow, including on this particular issue. Each stage of the work will be the subject of impact assessments and consultations, so we will both consult and publish impact assessments on each stage of the changes that I have described and which will be drawn to the House’s attention by various hon. Members—

--- Later in debate ---

I am sure—absolutely confident—that the committee is already minded to keep a close eye on the impact of the directive on UK consumers. However, in the light of this amendment, the brief debate we have enjoyed and the responsible stance taken by those on the Opposition Benches—

[Julian Knight]

Will my right hon. Friend give way?

[Mr Hayes]

I am moving to my exciting peroration, but I will give way.

[Julian Knight]

Is my right hon. Friend saying that the industry experts—the people who really know—are saying in effect that this amendment is superfluous and is unnecessary?

[Mr Hayes]

I do not want to disagree with any hon. Member unnecessarily, and certainly not with a Member on my side of the Chamber. However, it is true—as my hon. Friend will know as he is a student of these matters who has taken a keen interest in this Bill from its inception—that ABTA has produced a briefing for this debate, and in a moment I will go through it in some detail. While it is true that ABTA welcomes, as the Opposition have, the changes that we are making to ATOL, and there is a broad recommendation from it that we should be doing just that, it has given a detailed critique of the measures we are introducing and the amendments, and, at face value—that is something of an understatement—it seems rather sympathetic to the Opposition amendment. However, it will not have had the benefit of the further commitment I am about to give, which this Committee will be the first to know, for that is as it should be.

I am now going to catch the eye of the hon. Member for Kingston upon Hull East. I am sure that that independent committee, which was set up by a Labour Government for the very purpose of reviewing these matters regularly to ensure they are fit for purpose and with the mission of observing and making recommendations in the interests of consumers will doubtless want to consider the impact of the changes we are making, and will of course be aware of the contextual changes in our relationship with the European Union and the effect of the directive on other countries and their arrangements. Nevertheless, I am prepared to write to the committee reflecting the sentiments the hon. Gentleman has articulated persuasively enough—I was going to say “so persuasively,” but I do not want to overstate the case—to encourage me to make this commitment, and to ask it not only in its annual report to review the implementation of these changes, but also to take account of the other remarks he has made.