Air Travel Organisers’ Licensing Bill

Karl Turner Excerpts

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

[Karl Turner (Kingston upon Hull East) (Lab)]

I beg to move amendment 2, in page 1, line 13, at end insert—

“(4) The Government must publish a review within one year of this Act receiving Royal Assent on the impact on UK consumers using EU-based companies affected by changes to consumer protection introduced by this section.”

This amendment requires the Government to review the impact of provisions under this section to ensure that they are not adversely affecting UK consumers using EU-based companies.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to consider clause 1 stand part.

[Karl Turner]

The amendment would require the Government to review the impact of clause 1 to ensure that it does not adversely affect UK consumers using EU-based companies. Essentially, the clause updates ATOL—the air travel organisers’ licence—to ensure that it is harmonised with the 2015 EU package travel directive. The provision therefore extends ATOL to cover a wider range of holidays and protect more consumers. UK travel companies, we are told, will be able to sell more seamlessly across Europe, as they will need to comply with protections based not in the country of sale, but the country in which they are established. Those are the objectives that the Government seek to achieve. There is no difference of principle between the Government and the Opposition on this matter. Indeed, it is due to the package travel directive that it has been necessary to put such a provision into the Bill.

However, we seek clarification on some issues, which was why we tabled amendment 2. The amendment would provide a guarantee that the Government will review the impact of the ATOL revisions to ensure that they do not adversely affect UK consumers using EU-based companies. The whole idea of the clause is to improve the range of protections available. The broad substance of the changes to ATOL are necessary and are broadly welcome. As I said, they will harmonise UK law with the latest EU package travel directive, and that should have many benefits. A wider range of operators, including more dynamic package providers, are likely to be covered by the changes. That will hopefully bring protection to many more UK holidaymakers who are not covered under existing ATOL provisions.

For UK travel companies, standards will have to be in line with those of the country in which the company is established, rather than the place where the company sells the holiday. That should mean that companies established in the UK can sell far more seamlessly across Europe by simply adhering to the widely respected ATOL flag. However, the changes at the EU level could have adverse effects for UK consumers who purchase their holiday or travel from EU-based travel companies, rather than British companies that sell into other European countries.

Amendment 2 would address that issue. The changes made through the directive will now mean that EU-based companies selling in the UK will have to adhere to ATOL-equivalent insolvency protections laid out in the member state where the business is based. In practice, that could lead to unintended consequences and, more significantly, costs for UK consumers. Processes and timescales for recompense may be distinctly different from what many travellers would expect under the current ATOL provisions, which are in many ways regarded as the gold standard.

The impact assessment warns:

“If consumers purchase a trip from a business established elsewhere in the EU and the company becomes insolvent there may be some costs to the consumer of processing a claim with a non-UK insolvency protector.”

Based on the latest Civil Aviation Authority figures, this will affect not just a relatively small number of holidaymakers. If this goes wrong, more than 500,000 passengers could be compromised, so a significant number of people could be adversely affected. It is therefore important that the Government take steps to anticipate and prepare for any possible negative impacts.

Amendment 2 would achieve that by requiring the UK Government to monitor the impact on UK consumers using EU-based companies. That would help to inform whether the UK Government should consider issuing further guidance, or co-operating with consumers and member states to ensure that protections are adequate.

The changes envisaged by the clause clearly make sense and are in line with what is required under the package travel directive. There is no doubt that when UK-established companies are selling into other countries, the consumers in those countries will have the benefit of the gold standard of ATOL protection. However, we are concerned about the protection given by EU-based companies selling in the UK. We hope that it will be equivalent to that under ATOL, but it will be subject to the rules and regulations of the EU country concerned. We are nervous about whether UK holidaymakers could lose out, so we are asking the Government to consider the issue and to monitor the situation properly.

As with so many other things, the environment is changing, particularly in relation to Brexit. ATOL will still be there post-Brexit, but we will explore possible changes when we discuss the next group of amendments. The package travel directive will no doubt still be there for those states that will still be members of the EU. What is uncertain at this stage is what the interface will be between the two things post-Brexit.

[Stephen Hammond (Wimbledon) (Con)]

I have been following the hon. Gentleman’s line of thought carefully. He seems to be seeking full protection for UK consumers buying in the EU. The EU package travel directive applies while we are still a member of the EU, but when we cease to be a member, the repeal Bill will have put its provisions in UK legislation, so surely the hon. Gentleman’s argument is unnecessary.

[Karl Turner]

With respect, we do not know that yet, and nor do we know what the insolvency arrangements will be for companies abroad. The Government must address this real issue.

[Stephen Hammond]

rose—

[Karl Turner]

I will not give way.

We ask the Government to get the ball rolling within a year of the Bill receiving Royal Assent, but a regular review is also needed, particularly in the light of Brexit. Our amendment is supported by the Association of British Travel Agents and other travel organisations. Despite ministerial assurances, we want our amendment to be made to the Bill, so we will press it to a Division.

[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.

--- Later in debate ---

[Mr Hayes]

I am extremely grateful, Mr Hoyle.

I will address my hon. Friend’s remarks later in my brief speech. She is right, of course, that it is too early to know how the package travel directive will lead to changes in purchasing behaviour across borders. That was a point that the hon. Member for Kingston upon Hull East made, too. We hope—

[Karl Turner]

Will the Minister give way?

[Mr Hayes]

I think this might make the hon. Gentleman’s point even better than it would be otherwise. I described earlier the desire of the Europeans essentially to—I hate to use this word, because it is so often a loaded term when it emanates from the EU, but I will—harmonise arrangements across Europe, but he is right to say, as is my hon. Friend the Member for Chelmsford (Vicky Ford), that we do not know.

[Karl Turner]

That is the precise reason we need a review.

[Mr Hayes]

Yes, which is why I have said that, in principle, I agree. I will come to how I am going to satisfy the hon. Gentleman by assuaging his fears. He has already declared his intent to divide the Committee, Mr Hoyle, but I might be able to persuade him not to. I might be able, in the generous remarks that I am about to make, to discourage him from that course of action. We shall wait to see. If I do not, I am not going to blame myself. Just so you know, Mr Hoyle, there will be no self-blame here; I will blame it on the hon. Gentleman. But let me do my best.

The hon. Gentleman is right to say that it is not clear how this will work out. If other member states implement as they are required to, consumers will be able to purchase across Europe knowing that the protection offered will need to meet the improved standards in the new directive. In practice, that should see insolvency protection across the EU improved to levels, as my hon. Friend the Member for Solihull (Julian Knight) said, that are broadly in line with ATOL.

There is also an increased onus on member states to ensure that businesses in their own territory have effective protection in place, but if the Civil Aviation Authority or trading standards has doubts or concerns about traders based overseas, it will be able to contact designating bodies in other member states to check compliance. We will ensure—I say this directly to the hon. Member for Kingston upon Hull East and to the shadow Secretary of State, the hon. Member for Middlesbrough (Andy McDonald)—that compliance in other member states is a matter that the CAA monitors, and that it makes contact with its like in those member states to ensure that proper practice is being observed. But—

--- Later in debate ---

[Patricia Gibson]

The Minister is an eminently sensible man, but the point is that I can only wonder why he is resisting yearly reviews which he has told us already happen. If they already happen, why not write them into this piece of legislation, if for no other reason than to reassure passengers as we face a post-Brexit world? I know he is an honourable man, and I urge him to reconsider and accept the amendment.

[Karl Turner]

The Minister is a terribly generous chap, but his attempts to pacify the Opposition with his promise of a letter to ATIPAC simply are not enough. That does not cut the mustard, so we will push the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Mr John Hayes]

I can satisfy the hon. Lady entirely. I fully intend to ensure exactly what she asked for: full consultation and a comprehensive impact assessment in respect of any regulations to be made under these measures. On that basis, I hope she will withdraw the amendment. If she does not, she will look rather daft.

[Karl Turner]

We will press amendment 3 to a Division. We seek a commitment that the Minister gave in the Vehicle Technology and Aviation Bill Committee—that the Government would conduct a thorough impact assessment and consultation before implementing the power. Clause 2 relates to the Air Travel Trust, which is the legal vehicle that holds the money that is then used to refund consumers under ATOL protections. It gives the Secretary of State the power to define separate trust arrangements to reflect different market models, prefiguring some of the changes in the package holiday market mentioned by the Minister.

Amendment 3 would require the Government to undertake a full and proper review, and public consultation, before introducing any of the changes that would be enabled under the powers in clause 2. Unlike clause 1, clause 2 does not seem directly relevant to harmonising EU and UK regulations. Instead, it is a dormant power that the Government will retain in order to make considerable changes to ATOL, and particularly to the Air Travel Trust. That is where Brexit comes in because, were such changes to happen, they would most likely be in the event of the UK leaving the European Union.

During one of the VTAB Committee evidence sessions, Richard Moriarty of the Civil Aviation Authority—a trustee of the current Air Travel Trust—said that he recognised the possible merits of separating the trust to reflect the variations of products in the market. However, he explained that we simply are not there yet, and that it would be wrong for the Government to use the Bill as a means of making wholesale changes without due consultation. The Minister made it clear in a letter to my hon. Friend the Member for Middlesbrough (Andy McDonald) that changes would be made only through the affirmative procedure, yet the Bill does not account for any further consultation as part of this measure.

The Government’s impact assessment explicitly states that it

“does not consider proposals for ATOL reform, beyond what is required”

in the package travel directive. It would therefore be rather inappropriate for the Minister to go beyond that, without providing assurances that proper consultation and scrutiny will take place if the Government are minded to go beyond changes that were already envisaged.

During the VTAB evidence session, Mr Moriarty said that he hoped the Government would

“follow the practice that they have followed today: consult with us, consult the industry, do the impact assessment, and so on.”

Amendment 3 simply says that. It is fair and reasonable and would guarantee scrutiny of further changes that may come down the track regarding ATOL protection.

--- Later in debate ---

[Mr John Hayes]

As I did with the amendments, I start by saying that I fully endorse, and indeed support, the purpose of the new clause. By the way, I am grateful to the hon. Member for North Ayrshire and Arran (Patricia Gibson) for withdrawing her earlier amendment following the assurances that I gave her. I say to the hon. Member for Kingston upon Hull East (Karl Turner) that I am fully committed to full consultation and a full impact assessment on the regulations as they are rolled out as a result of the Bill.

The point is that the ATOL legislation is not dependent on the package travel directive. The Bill will harmonise ATOL with the package travel directive in the immediate term. As I made clear earlier, ATOL legislation and protection will remain in place as we leave the European Union. They are made by, framed in and supported by domestic legislation.

Although I understand the point that the hon. Member for North Ayrshire and Arran makes, I have to tell her that the new clause is unnecessary, because ATOL is enshrined in an Act of this Parliament, and only this Parliament can change that. Mindful of that; mindful of the assurances that I have given about consultation, further review and impact assessments, which I repeat; mindful of the fact that, as I have mentioned, there will be a review of all these matters; and given what I have said about ATIPAC, I hope that she might withdraw the new clause.

[Karl Turner]

New clause 1 seems eminently sensible. These consumer protection measures require an assessment, so we will support the new clause.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Karl Turner]

The Labour party supports the Bill, and we will vote in support of it. There are, however, some concerns about the impact of some parts of it, which we expressed when the clauses were first debated as part of the Vehicle Technology and Aviation Bill and again throughout the passage of this Bill. We hope that the Minister has taken on board the points raised by Labour and echoed by the Scottish National party, who re-tabled Labour’s amendments to VTAB in Committee. As the House will know, the Prime Minister has asked the Opposition to help the Government by providing some policy suggestions. However, it seems that SNP Members are not even asking for help, but are simply taking Labour’s policy ideas as their own. We should probably take that as a compliment.

We support the Bill because it brings ATOL up to date and will ensure that it is harmonised with the latest European Union package travel directive, extending to a wider range of holidays and protecting more consumers, as well as allowing United Kingdom travel companies to sell more seamlessly across Europe. While we harbour some real concerns over whether UK consumers will be sufficiently protected by EU-based companies, as they will no longer be subject to ATOL but to member state equivalents, we welcome changes that will ultimately help to protect more holidaymakers.

The implications for ATOL after Brexit are also a cause for concern. Hidden in the Bill are proposals that the Secretary of State should require only an affirmative resolution to significantly reform ATOL and the air travel trust fund. Labour recognises the merits of some reforms, but we believe that an impact assessment, full consultation and full scrutiny should have been required before any fundamental changes are made to these consumer protections.

These issues bring to the forefront uncertainties over the future of UK aviation following the decision to leave the EU. The Labour party has been clear that, whichever framework is chosen by the Government, we should prioritise retaining an essentially unchanged operating environment. They should prioritise air service agreements as part of exit negotiations. As is customary, such agreements should be negotiated separately from, and prior to, the UK’s negotiations on trade with the EU. The Government must not waste the opportunity this Bill presents to clarify their intended future arrangements for our aviation industry.

The UK aviation sector is the largest in Europe and the third largest in the world, supporting 1 million jobs and bringing £9 billion into the Treasury in tax receipts. Over a quarter of a billion passengers were transported in 2015. But aviation also provides a network infrastructure that enables other industries to do well. Half a million jobs in the UK tourism industry are supported by aviation, and 40% of UK imports and exports by value go via UK airports. The EU is the UK’s single biggest destination, accounting for 49% of passengers and 54% of scheduled commercial flights. Airlines that operate from within the UK are able to rely on the EU single aviation market, which allows any airline owned and controlled by EU nationals to operate freely in the EU without restrictions on capacity, frequency or pricing.

Additionally, EU carriers are able to take advantage of the traffic rights contained in the many air services agreements that the EU has negotiated on behalf of all member states with non-EU countries. Significantly, this includes the EU-US open skies agreement which enables airlines from the EU and the US to fly between the EU and the US. If Britain leaves the EU without retaining any form of European common aviation area membership, airlines will need to negotiate new rights to operate freely within the EU and operate transatlantic routes. This means that there will be no legal framework that allows airlines to fly to those destinations from the UK. So UK airlines would also lose the right to operate within the remaining EU27, and EU airlines might lose the right to fly UK domestic routes as well.

Aviation is legally unique: it is separate from trade agreements and does not form part of the World Trade Organisation system. Instead, countries negotiate bilateral or multilateral air services agreements to provide airlines with the legal rights to fly to certain places. To ensure the continuity of connectivity, the UK will need to negotiate a new air services agreement with the EU and countries such as the US. If there is no such agreement by the time the UK leaves the EU, the UK’s connectivity will be undermined and its ability to trade will be more difficult. So it is imperative that the Government prioritise retaining an essentially unchanged operating environment. That is why they should prioritise air services agreements as part of Brexit negotiations.

While the measures in this Bill are important and will provide additional security to UK holidaymakers, it is strange that the Government thought it necessary to debate the Bill in a Committee of the whole House. The measures in the Bill were included in VTAB, which had passed through its Committee stages before the Prime Minister decided to call the unnecessary snap general election. I think I am right in saying that these provisions in that Bill were debated in no more than 45 minutes in Committee. The Government have not made changes to their proposals and the Opposition supported them as part of VTAB in the last Parliament, so we simply do not understand why the decision was taken for this small, agreeable and largely non-contentious niche Bill to take up time in the Chamber, other than to try to disguise the fact that this chaotic Government have a threadbare legislative programme for this Parliament.

[Mr John Hayes]

As a result of that scrutiny—which the hon. Gentleman should not disparage because he has played an important part in making it real—we have had a good debate on the issues of review, of impact assessments and of further consultation. He will have heard what I have said about all those things, which are matters close to his heart, so actually the debate has served a really useful purpose.

[Karl Turner]

The Minister makes a fair enough point, but with respect, it has been a terrible waste of time debating this matter in the Committee of the whole House when it was previously dealt with in 45 minutes in Committee upstairs. For the sake of appearances, VTAB has been broken up into its component parts and is now being given undue time for debate in this Chamber.

[Lady Hermon (North Down) (Ind)]

It is never a waste of time to discuss anything pertaining to the whole of the UK in this House or in a Committee of the whole House. This gives me the opportunity to remind the Minister that we have three airports in Northern Ireland. We are the only part of the United Kingdom that is physically connected to another EU member state—the Republic of Ireland—and it is really important, as has been stated in the debate, that we do not lose air traffic and business from Northern Ireland to airports such as Dublin.

[Karl Turner]

The hon. Lady makes her point on behalf of her constituents, and she makes it well, but I do not think that it requires a response from me.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

This is a bit of an occasion, really, because when legislation is debated in this place, the Opposition traditionally complain that it is not given enough time, that the Government have tried to rush it through or that there has been insufficient examination of the provisions. The shadow Minister seems to be setting a precedent here today, in that he seems to be complaining that the Bill has been given too much time. Why is that?

[Karl Turner]

If the right hon. Gentleman will allow me to continue, I will make the point in a moment that important issues were debated in VTAB that are not now going to be discussed or made into legislation.

As a result of breaking up VTAB, measures that were previously included have been dropped, and measures that could have been included to improve this legislation through new clauses and amendments can no longer be added because they are no longer within the scope of forthcoming Bills. The proposal to make the shining of lasers at vehicles or control towers an enforceable criminal offence, which was strongly supported by those on this side of the House and which we would still be happy to support, has been dropped altogether. That is clearly concerning. We do not want to see avoidable disasters brought about by the malicious use of laser pens, and neither does the Minister, so will he explain why he has dropped these crucial plans, and whether or indeed when he proposes to legislate to tackle this serious problem?

There is also nothing in the Bill on the inclusion of much-needed regulations on drones—a matter previously caught by VTAB. The Government will respond to the consultation on drones in the next few weeks, but they should have made much more progress already, including making decisions on whether the UK should follow other countries by establishing a compulsory registration scheme and getting systematic geo-fencing in place to physically prevent drones from getting near airports and other places where they have the potential to be so dangerous.

It makes no sense for the Government to have abandoned the Bill in which action on drones could have been included. These are decisions that will make aviation less safe than it should be. The latest figures show that 33 such incidents were confirmed in the first five months of this year, and 70 last year, whereas there were 29 in 2015 and just 10 in the preceding five years. We need legislation to regulate the use of drones in order to tackle the worrying trend of near misses with planes. The aviation industry has been clear that it needs the Government to act on these concerns now. The Opposition have been pressing the Government on this issue for many years. Without action, it is a question of when, rather than if, a passenger plane is involved in a drone-related incident, so will the Minister explain why the proposal has been dropped and what plans he has to put this right?

We are just one month into this new Parliament and the Government are already running out of steam, which is why we have been debating this Bill on the Floor of the House rather than upstairs in Committee. The Prime Minister is attempting to crowd source policy ideas from the Opposition, and we can assist in this instance. The Government need to bring forward legislation on the misuse of lasers and on the regulation of drones and to provide clarity and certainty for UK aviation post-Brexit. We would welcome the Government adopting those policies, and they will have our full support if they do so. Labour broadly supports the Bill, because it extends protections to many more holidaymakers, but we want clarity on how EU-based companies, which will no longer be subject to ATOL but rather their respective member state equivalents, will provide protection to UK consumers. We want the best possible framework to ensure that the sector flourishes, but that means adequately preparing ourselves for the many implications that Brexit will have for ATOL and our aviation sector as a whole.

[Patricia Gibson]

I end where I began by welcoming and supporting the Government’s measures to update the ATOL scheme to provide more protection for passengers when they go on holiday and to align it with the latest EU directives. I welcome the progress made in this evening’s debate, but I was disappointed to hear the hon. Member for Kingston upon Hull East (Karl Turner) complain that today’s process has taken too long. If he sees that as a problem, I suggest that he perhaps contributed to it with his extensive remarks. I am sure that we all enjoyed them, but he seems to have contributed to the problem that he identified.

[Karl Turner]

I did not complain that the process was taking too long; I simply made the point that time in this House is incredibly important. An awful lot of things that were discussed during the proceedings on the Vehicle Technology and Aviation Bill could have made this legislation, but time has been wasted. These matters took 45 minutes in Committee. That was my point.

[Patricia Gibson]

I believe that the Minister has taken on board the legitimate concerns expressed tonight about how consumers are to be protected and have their current rights guaranteed as we head towards a post-Brexit world. There must be no diminution or stagnation of passenger rights as society and technology advance. It has been heartening to see how the Bill has proceeded through the House, and I have been delighted to be a part of these debates.