Rail Franchising

Mark Lazarowicz Excerpts

Tuesday 26th March 2013 Commons Chamber

[Mr McLoughlin]

That is not the case—Directly Operated Railways is not a company in its own right; it is a company owned by the Department for Transport. We will certainly be able to see how the companies are doing. The process will be open. I have already seen reports, although I have not had it confirmed, that Virgin will put in a bid for the east coast main line, and a lot of people were very happy with the service they received on the west coast main line.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

On that very point, given that Directly Operated Railways is owned by the Department for Transport, surely the Secretary of State could instruct Directly Operated Railways to put in a public sector comparative bid so that we can judge who will provide best value for money and best value for the customers.

[Mr McLoughlin]

I would just point out to the hon. Gentleman, who has been in the House some time, that he was very happy to support a Government whose Secretary of State said:

“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely”. —[Official Report, House of Lords, 1 July 2009; Vol. 712, c. 232.]

I agree.

Oral Answers to Questions

Mark Lazarowicz Excerpts

Thursday 28th February 2013 Commons Chamber

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I do agree with my hon. Friend. This will be the first occasion on which the United Kingdom has charged those who come from overseas for their use of our roads. The levy will help to maintain the competitive position of UK hauliers, and to maintain the UK’s roads. There was a long-standing desire in the House for the legislation to be passed, and I am delighted that we were able to secure its passage.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Two years ago, the UK Government announced that they would spend £50 million on the provision of new stock on the Caledonian sleeper to Scotland, and that the Scottish Government would match that with a further £50 million. It now appears that only £50 million will be made available, rather than £100 million, and that it will be spent partly on improving existing stock and partly on upgrading other railway lines in Scotland. What has happened to the funds that were promised by the UK and Scottish Governments?

[The Minister of State, Department for Transport (Mr Simon Burns)]

I have considerable sympathy with the hon. Gentleman’s point. [Interruption.] If the hon. Member for Garston and Halewood (Maria Eagle) keeps quiet, she will hear my answer. It is the same answer that I gave to the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) when he raised the issue. We provided the money so that it could be invested in that service, but the Scottish Government decided, in the short term, not to invest in it. We hope that they will divert the money back to the improvements for which it was intended.

High Speed Rail

Mark Lazarowicz Excerpts

Monday 28th January 2013 Commons Chamber

[Mr McLoughlin]

I am determined, by the long-term nature of the notice we are giving, that British companies will be able to compete and win the business that will be available, and will go out to tender in the usual way. From what I have seen of British engineering, I believe it is well able to compete with anywhere else in the world.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The publication today states that the Government have been working productively with the Scottish Government on this issue for two years, yet after two years the only firm commitment we have is for a further study into high-speed rail to Scotland, followed by identification of a remit for further work. That does not sound like very high-speed decision making to me. Why will the Government not commit themselves now to extending high-speed rail to Scotland, and start preparing the route now to make sure it actually happens?

[Mr McLoughlin]

I gently say to the hon. Gentleman, because he is bringing a chord of disharmony into what so far has been a fairly harmonious occasion, that we have made more progress on high-speed rail in two years than the previous Government did in 13.

Oral Answers to Questions

Mark Lazarowicz Excerpts

Thursday 17th January 2013 Commons Chamber

[Norman Baker]

I shall try not to be stuck at Four Oaks, where there is evidently a problem that limits the ability to run through trains. However, we are continuing to monitor London Midland’s performance, and if it breaches further benchmarks, we will take further action. I can say now that it is expected to make losses for the remainder of its franchise period. In my view, given that it created this mess, it is up to London Midland to sort it out on behalf of the taxpayer.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

rose—

[Mr Speaker]

May I suggest to the hon. Gentleman that his question should relate purely to the subject of London Midland trains? [Laughter.]

[Mark Lazarowicz]

If passengers are delayed on London Midland, and indeed on other lines—[Laughter]—they are entitled to compensation. However, when London Midland provides such compensation, it takes the form of paper vouchers, which, as a constituent of mine has pointed out, cannot be exchanged online. That is inconvenient, and it means that they cannot obtain the full benefit of lower fares. Will the Minister look into that when the Government review the fares system?

[Norman Baker]

I am happy to say that that point has been raised by a number of Members, and that we are looking into it. People should not be discriminated against on the basis of the method that they use to buy their tickets.

Rising Cost of Transport

Mark Lazarowicz Excerpts

Wednesday 9th January 2013 Commons Chamber

[Ian Mearns]

There is an awful lot about current fare structures that is desperately unfair, particularly for people on low wages and those trying to get jobs, and particularly in a region such as the north-east, where many have to travel to get work.

As the independent report stated in September, a railway company that was temporarily renationalised by the Government three years ago reported increased profits and an improvement in passenger satisfaction. DOR, which took over the running of the east coast line from National Express, said that its operating profit increased by 7% in the year to March to £7.1 million. Turnover for the year amounted to £665.8 million—an increase of £20 million—leaving a profit before tax and service payments to the Department of £195.7 million. That was an increase of £13 million. Putting that against the £240 million proposed investment in the east coast main line makes the amount look extremely modest indeed.

I have a great deal of respect for east coast main line as a franchise. I sympathise with its staff, who often work in difficult circumstances, dealing with the failures of creaking infrastructure and worn out rolling stock and equipment, yet an awful lot of what the travelling public have to put up with on the east coast main line could be avoided through some relatively modest investment, which would be entirely affordable given its profits.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

My hon. Friend mentions the east coast main line staff, who do indeed provide a good service to passengers. I am sure that he, like me, frequently comes across people who are confused about whether they have the right ticket for a journey—a train might be late or they might get on the wrong train. The poor staff then have to deal with the problems that that creates. Is that not an example of the kind of complication that drives away passengers and often makes them go for higher fares rather than cheaper ones?

[Ian Mearns]

Indeed, and one criticism I would make of the last Government is that they did not sort out the complicated franchising system, which has left us with a complicated rail ownership programme across the country.

The Chancellor of the Exchequer proudly announced investment in infrastructure as a means to unlock growth. However, analysis by the Institute for Public Policy Research shows a biased picture. The think-tank examined the data, detailing the projects to be brought forward as part of the national infrastructure pipeline. Of the projects that were identified as benefiting a particular region and where public funding was involved, it found that London and the south-east accounted for 84% of planned spending, compared with 6% in the north. That equates to some £2,700 a head for each Londoner, which is more than the total for all the other regions combined, which includes £201 a head for Yorkshire and Humberside, £134 a head for the north-west and just a fiver for the north-east of England. My constituents do not believe those figures, but they are absolutely right. Why, if we get a meagre £5 of investment per head, should we pay extortionate rises in rail fares, which have risen nearly three times faster than wages since the recession? In fact, between 2008 and 2012, average rail fares increased by 26.6%, with wages rising by just 9.6% over the same period. Recent research by the think-tank Transport for Quality of Life has shown that UK rail fares are the most expensive in Europe and that rail privatisation is costing taxpayers £1.2 billion a year, with train operating companies making large profits on the back of public subsidies.

Speaking of profits, I was appalled to learn recently of a dispute over pay involving east coast main line and a subsidiary company called ISS—International Service System—which centred on its cleaning staff. Cleaners were being paid £6.08 an hour—a figure that is below the national minimum wage and is, I believe, illegal. On top of that, they got no pension scheme, no enhancements for unsocial hours, bank holidays or weekends, no sick pay above the statutory minimum and no travel allowances. The east coast franchise, which likes to promote itself as a first-class service, was treating employees of its contract cleaning company in a third-class way. ISS is a huge multinational company, with more than 500,000 employees worldwide, 43,000 of whom work in the United Kingdom. It is disgusting that it was able to do that to its hard-working employees. Indeed, following on from yesterday’s debate, this has a knock-on effect, as the Government have to fork out in-work benefits to many of these people to subsidise the industry.

Pressure must be put on Network Rail by the Government to ensure that north-east services get a fair allocation of resources. Connectivity, particularly by rail, is essential to the economic prospects of regions such as the north-east. Despite their stated commitment to reduce the deficit, the Government still find themselves, month after month, deepening the crisis yet further. When will they recognise the essential link between investment in growth, particularly in regions such as the north-east, and their prime aim of deficit reduction? The two are absolutely connected.

--- Later in debate ---

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The starting point for this debate has to be the fact that Great Britain has some of the highest rail fares in Europe. I recognise, of course, that to pay for investment in the rail network the passenger—the fare box—will have to make an important contribution to the funds required. However, the passenger should not be asked to pay an unfair burden, and one way in which we can ensure that passengers are not forced to pay more than they need to is by ensuring that the revenue earned from the network is actually used for the benefit of the network—for the benefit of passengers—and is not siphoned off out of the system.

The evidence from the decades of the privatisation regime, instituted by a previous Conservative Government, is overwhelmingly clear. That approach has meant that billions of pounds has passed out of the system, away from passengers and away from possible benefits of infrastructure investment. Instead, the benefits have been in the form of big profits for many of the companies involved, not just train operating companies but those with ancillary roles in the system, including some of the providers of rolling stock, to mention just one example. This has not just been about money flowing out through large profits; it has also been about operating inefficiencies being brought into the system. Again, those have been to the detriment of passengers and, in their own way, have led to fare increases.

[Mr Andrew Turner]

Can the hon. Gentleman explain why such inefficient companies win these contracts?

[Mark Lazarowicz]

Let us leave aside the fact that there are not many operators in the field to bid. I am not saying that an individual operator is necessarily inefficient, but that the system as a whole leads to inefficiencies as well as to profits being paid out to private companies when they could be invested in the system.

I said that not all companies are inefficient. One example that showed the difficulties and negative effects of privatisation at their highest was the disaster of Railtrack, which was linked not just to private ownership and that company’s motivation in its operations but to the fragmentation of the operators and Railtrack’s distance from the train operating companies. That example also shows how some of the damage caused by privatisation began to be turned around. It is not a perfect organisation, but the publicly owned Network Rail has managed to repair some of the damage caused by fragmentation of the system and we have seen a safer railway network and better value for the taxpayer, for passengers and for other users of the rail network in the costs of maintaining the system.

[Jim Shannon]

One of the greatest burdens for people in employment is that 30% of their wages can go on travel. People are travelling further, too, to get jobs and employment. Does the hon. Gentleman feel that consideration has been given to those people who regularly use public transport, be it bus or rail, to get to work?

[Mark Lazarowicz]

Absolutely. That is an example of how increased rail fares damage people daily and effectively worsen their standard of living.

The most recent example of the damage caused by the privatised regime on the railways has been the fiasco of the west coast main line franchise. That fiasco is likely to land the Department for Transport—and therefore the taxpayer—with a bill for hundreds of millions of pounds, which could have been spent on improvements to routes, stations and rolling stock. In contrast, we have the experience of the east coast main line, to which my hon. Friend the Member for Gateshead (Ian Mearns) referred earlier. Bringing the franchise into the public sector has been good business for the taxpayer and the directly operated company has brought money back into the public sector. In the last year, it has brought a premium of almost £200 million into the Department, which has gone back into the public sector rather than being siphoned off into a privately owned company.

The problem is that there is an inherent difficulty in the tendering system that operates on the railways under the privatisation scheme introduced by a previous Conservative Government. In order to bring about long-term investment and security, a Government will want to see long-term tenders, but the longer the tender the less reliable any prediction of future traffic and income can be. That leads to a risk of the tender becoming either a loss-maker, with the operator seeking to hand it back to the Government and to make them pick up the tab, or one in which excessive profits are reaped by the private operator. The system itself is at the heart of the problems with the railways and of the fact that money that could be used to benefit our passengers has unnecessarily flowed out of the rail system.

I want to concentrate on the east coast main line, which is of particular relevance to my constituency and to communities further south along the line. I urge the Government to drop the ideology and to choose the option that works and that will keep prices down for the traveller. They should keep the east coast line, which is successfully operated by Directly Operated Railways, in the public sector. I would rather that that was done on a permanent basis, but if the Government, for ideological reasons, are not prepared to do that, they should at least give the operators a long-term contract rather than leaving a sword of Damocles hanging over the company, the staff who work for it and the passengers and communities that rely on it.

The Government could also take the opportunity to allow Directly Operated Railways’ east coast line to be a genuine public sector comparator for the rest of the network. If the Government will insist on reprivatisation for the west coast main line, they should at least ensure that a public sector bid can be put on the table as a comparator against which we can judge which provides best value for money for the taxpayer and the best services for the passenger. That is the way forward. Let us start putting passengers first and make sure that they get the benefit of investment rather than the companies, which have taken too much out of the railways for too long since privatisation was introduced by a previous Conservative Government.

[Iain Stewart (Milton Keynes South) (Con)]

I am pleased to have the opportunity to contribute to the debate. This is an important issue; there is a serious debate to be had about how we finance investment in the rail industry in future and about the cost of transport today. Like hon. Friends who have spoken, I will have no problem in voting against the Opposition motion; with depressing predictability, it is rather opportunistic, denies their record and contains few concrete proposals for the future. I asked the House of Commons Library for figures on how much rail fares increased between 1997 and 2010. The answer was 56% for local and regional operators and 98% for long-distance trains. Rail fare increases did not begin in May 2010.

My first main point is that although the debate on rail fare increases is important, the reporting is not always helpful or accurate; the headline turn-up-and-go “Anytime” rail fares are often cited and from that it is extrapolated that Britain has the most expensive rail system in Europe. However, those tickets account for less than 20% of ticket sales. When we look at the whole series of available fares, the position is not as straightforward.

In preparing for this debate, I looked at the Virgin Trains website for a hypothetical journey from Manchester to London. Yes, if I wanted to travel in peak time, turn up and go, a single would cost £154—a large sum. However, a wide selection of other fares for the same journey, as low as £12.50, was available on a wide range of trains. The point is that we have to look at the whole mix of fares, not just the headline ones.

We do not have the same debate in the airline industry. The difference between the cheapest and most expensive air flights on the same route, say to New York, is enormous—from a couple of hundred pounds to £1,500 if someone wanted to turn up and go.

[Mark Lazarowicz]

I am sure that it is possible to get a £12.50 fare from Manchester on Virgin Trains on some occasions. However, does the hon. Gentleman not accept that that £12.50 will be valid to London Euston, but if he wants to go to Brighton, Dover or the south-west of England with a different operator, he will not be able to get a through ticket at that rate? He will have to get two separate tickets, which might cost more than a single through ticket, because he will not be able to get a cheap through ticket.

[Iain Stewart]

I accept that there is an unnecessary complexity in the rail ticketing system. The Transport Committee has looked at that issue and will continue to do so. If the hon. Gentleman will forgive me, I will not go too far down that path, as time is limited, but he has made a valid point.

The comparison with Europe is interesting. A very good website called “The Man in Seat Sixty-One” does an independent comparison of European rail fares. Yes, when you look at the “walk up and go any time” fares, the UK is substantially more expensive, but on other tickets, including buying the day before, Britain is either on a par with France, Germany or Italy or very often considerably cheaper.

I mention that because when we talk about rail fares, we need to differentiate between passengers compelled to travel at a particular time of day and the vast majority who have some flexibility over when they travel. The Opposition are right to highlight in the motion the issue of super-peak tickets, but they miss an important point. I completely accept that some passengers will not be able to change their time of travel, but others can. A super-peak ticket should not be designed to increase prices but to give rail operators the flexibility to discount other peak-time travel and encourage passengers to travel slightly later or earlier if possible.

West Coast Rail Franchise

Mark Lazarowicz Excerpts

Thursday 6th December 2012 Commons Chamber

[Mr McLoughlin]

I am pleased that my hon. Friend welcomes the transparency that I have demonstrated today. I hope I do not have to do it too often.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Edinburgh is served by both the west coast main line and the east coast main line services, and between the two there have been three occasions in recent years when the franchise process has gone wrong. Given that the Government will have to sort out the franchise system, not just for the west coast main line, would it not make sense now to decide to keep services on the east coast main line operated by the current operator and allow it to get the benefits of closer co-operation with Network Rail, rather than force it to go through a franchise process again?

[Mr McLoughlin]

The hon. Gentleman is jumping to too many conclusions at the start. When the previous Government brought in Directly Operated Railways to run the east coast main line, they made it very clear that they would want to move to a franchise process and re-let the franchise, and that is certainly the position that this Government take.

Oral Answers to Questions

Mark Lazarowicz Excerpts

Thursday 29th November 2012 Commons Chamber

[The Minister of State, Department for Transport (Mr Simon Burns)]

I am grateful to my hon. Friend for that question, because, as he will probably be aware, the Welsh Government were particularly anxious for electrification of the valley railways and the extension of electrification from Cardiff to Swansea, which is now happening. They will be looking at and pressing the case for electrification in the next tranche from 2019 to 2024 for north Wales. My right hon. Friend the Secretary of State for Wales strongly supports that, and we will work with the Wales Office and Welsh Government to put together a proper case for consideration.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I wrote to one of the previous Ministers about enforcement of advanced stop lines, but did not get a very positive response. Will the Government now look at ensuring that advanced stop lines at traffic lights are complied with much more effectively?

[Norman Baker]

We are always open to suggestions to improve road safety and traffic management. We are undertaking a review of traffic signs, which has been completed, and a further review of traffic management processes. If the hon. Gentleman gives me specific details of his concern, I will ensure that it is fed into the process and given proper consideration.

Air Travel Organisers’ Licensing

Mark Lazarowicz Excerpts

Thursday 22nd November 2012 Westminster Hall

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

On a point of order, Mr Williams. Before you start proceedings, can I raise a couple of questions? I am not sure what we do in the event of not everybody who indicated that they wanted to speak in this debate turning up. The Select Committee on Transport has scheduled two important debates for this afternoon. Does the Chair have any discretion to delay the start of proceedings to ensure that those who want and are expected to participate have the opportunity to do so? Previously, when I was a Minister, if I had been at a debate and there was nobody in attendance, or if someone to whom I had spoken in the Lobby and who had indicated that they wanted to speak was not there, I would obviously have wanted to ensure that they had a chance to speak.

What are the rules and protocols of the House in the Standing Orders? We would not want anyone to miss the opening speech from the distinguished Chair of the Transport Committee, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), ably supported by the hon. Member for Milton Keynes South (Iain Stewart). The Transport Committee has spent a lot of time on the two reports. I know that my hon. Friend the Member for Edinburgh, Leith and Pentland—or is it just Edinburgh and Leith?

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Edinburgh North.

[Jim Fitzpatrick]

My apologies. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) clearly has something to say in the debate, and it is important that everybody who wants to speak has the chance to listen to the opening speeches. Without an opening speech from the Transport Committee Chair to set the context for this debate—the Opposition have a few things that we would like to say, although the reports deal comprehensively with the issues, and the Government’s response is equally detailed—it would be helpful if you could advise us, Mr Williams, how we might proceed so that everybody who wants to participate can do so.

--- Later in debate ---

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Williams. I am pleased to present two Transport Committee reports for debate. Both are on aviation, and although they deal with complicated matters, they are vital to the public. The first debate is on the reform of Air Travel Organisers’ Licensing, or ATOL.

[Mark Lazarowicz]

Before my hon. Friend proceeds, does she agree that, although we are discussing the first report, it is particularly important that we have a Minister here to hear what is said about the second report? Important negotiations are going on in Europe about flight times, and many of us have constituents working in the industry who have contacted us about the matter. It would be amazing if we did not have the opportunity for a Government response on this important topic.

[Mrs Ellman]

I agree with my hon. Friend. I certainly wish Ministers to listen to what I have to say, and I have numerous questions to pose to them, but the proceedings have started, so I must continue. I hope that the Minister will arrive before I have proceeded much further.

The ATOL scheme was introduced in the 1970s, a decade in which there was a dramatic increase in the number of people travelling abroad on package holidays. ATOL is a Government-backed insurance scheme that protects holidaymakers flying abroad from the effects if travel firms go bankrupt. Holidaymakers can be reimbursed for the cost of holidays and repatriated where necessary. Over the past three years, 250,000 people have received refunds as part of the scheme and 100,000 have been repatriated.

Firms covered by the ATOL scheme charge each passenger £2.50 to cover the cost of ATOL. However, at the time of our inquiry, the Air Travel Trust Fund from which payments are drawn was in deficit to the tune of £42 million. That deficit is now decreasing. I would be grateful if the Minister could tell us the latest figure, as it is important to have. The deficit is falling because the charge per passenger was recently increased from £1 to £2.50, but the scheme remains controversial. Currently, only about half of holiday bookings are covered, an issue at the heart of ATOL reform.

The situation is complicated. Traditional package holidays sold by travel agents and tour operators are covered by ATOL. Holidays sold by agents or firms defined as acting as agents for the consumer, particularly online, are not. Firms selling holidays not covered by the scheme have a competitive advantage, because they do not have to charge for ATOL cover. However, it is not clear whether consumers are aware of that difference. There is also the problem of who pays for repatriating travellers stranded abroad by the bankruptcy of an airline or agent not covered by the scheme.

The Government are in the process of changing ATOL. Two reforms have already been made. First, “flight-plus” holidays—in which a flight plus another part of the holiday, such as a hotel booking or car hire, is bought within a 48-hour window—sold by existing ATOL operators are now covered. Secondly, customers buying holiday packages covered by ATOL must now be issued with a certificate telling them that that is the case. Those two changes are an advance.

The extension of ATOL to certain flight-plus holidays is estimated to bring some 6 million additional holidays into the scheme, ensuring that 60% of holidaymakers are covered. The extra revenue brought into the scheme by those extra travellers should help reduce the charge per passenger, but operators have challenged the Government’s figures, claiming that the travel industry will find ways around the new regulations.

--- Later in debate ---

[Mrs Ellman]

My hon. Friend’s comments reflect views that the Committee has heard over a long period—we have been looking at the issue for a number of years. Particularly when people are stranded on holiday and have problems, we realise that those consumers simply did not know what they were covered for or indeed whether they were covered. That has to be a key issue for the Government. They have partially addressed it, but I will say later how I think that that is proceeding.

The Government were well placed to overcome the problem of that relative lack of formal reaction from consumers and consumer groups by commissioning their own research into whether consumers understood the concept of ATOL cover and whether they wanted it to apply to packages that they assemble themselves online. We must remember the changing nature of the way in which people organise their holidays, because individual consumers organising their own holidays and assembling packages online is a growing trend, so it is important for us to know what consumer views are and about the type of insurance that they think most appropriate. Up until now, however, the Government have not done that. The extension of the scheme has not been based on explicit consumer research, and I want the Minister to tell us why the Government did not do more to find out specifically what consumers want.

The Committee welcomed the introduction of the ATOL certificate, which will increase clarity for consumers about their cover. We have found a consistent issue over the years to be that passengers and holidaymakers simply do not know what they are covered for. There is a risk, however, that consumers who buy holidays that are not ATOL protected will not realise that. Owing to the Government’s positive action, the people who are now ATOL protected will know that they are covered, but the ones who are not covered will not know, because they will not have a certificate. Do the people without a certificate realise that that means they are not covered by ATOL? We simply do not know.

More could be done to inform consumers not covered by scheme of their position and options. The Government agreed to consider our suggestion, perhaps by introducing a voluntary scheme for airlines to inform customers of their protection—or lack of it—when buying a flight. Can the Minister tell me what progress has been made in taking that suggestion forward?

[Mark Lazarowicz]

That is important because, as my hon. Friend said, normal people make their holiday arrangements, effectively, by putting together their own packages, which raises the issue of what cover there should be in the event of an airline-only arrangement falling through if the airline goes out of business. There are clear difficulties with doing something at UK level only, as well as issues of practicality, but the report highlights the importance of voluntary agreements and discussion in the industry up to a European level. Does she think as I do, it important for the Government to be able to show that they are actively pursuing the possibility at European level? That is another point to which the Minister needs to respond when we reach the appropriate point in the proceedings.

[Mrs Ellman]

I agree with my hon. Friend that the matter needs to be pursued in the European arena, because the nature of air travel is such that it is likely to involve travel outside this country. We need to know from the Minister exactly what is happening and what progress, if any, has been made.

As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) mentioned, the Civil Aviation Bill includes clauses that will make more fundamental change possible. Such changes will be implemented, we are told, at a future date. Will the Minister say what the timetable for that implementation is? As my hon. Friend said, there was a debate on the subject yesterday, and amendments to the Bill were discussed, but we need to know the timetable so that we can monitor progress. During the Select Committee inquiry, the then Minister was asked how the Civil Aviation Bill would affect holiday insurance cover, and it was clear that there would be major changes. We need to know the detail of such changes, as well as the timetable for implementation of the Bill.

In future, packages sold by airlines and by those designated as agents for the consumer, will be included in ATOL. The Committee supports that change, because it is an anomaly that a holiday package sold by a travel agent has ATOL protection while the same package sold online by a firm operating as an agent for the consumer—for which there is a specific definition—is not covered. That is extremely confusing for the consumer, and one reason for the reform is to provide greater clarity for the consumer, as well as more comprehensive cover, and to create a more even playing field in the industry. When we conducted our inquiry, we spoke to a range of people, including those from the travel industry and its different sectors. One point made forcefully to us was that different parts of the industry would be affected in different ways, and a strong view from some was that there should be an even playing field for the travel industry itself. The Government are addressing that situation, but we need to know how the proposals will change it. We need to know what progress has been made on providing appropriate cover, clarity and even-handedness for the consumer, and on creating a more equal playing field in the travel sector.

There have been calls for the Government to go further than they propose and to bring all international flights within ATOL, providing passengers with protection from airline insolvency. In our inquiry, we found different views in different parts of the travel sector. ABTA, the Association of British Travel Agents, has argued strongly for that, pointing out that tour operators often fail because airlines have run into financial difficulties. On the whole, the airlines oppose such calls, arguing that there is a significant difference between a holiday package and a flight. They suspect that the change would mean their being asked to bail out the air travel trust fund, which, they argue, has been emptied because of what they allege to be badly managed tour operators going bust. Those were the points made to us in our inquiry, although we did not get a unanimous view from those who came to speak to us.

On balance, it would be helpful to see international flights covered by ATOL. The additional cost per ticket would be small, consumers could be confident of repatriation in the event of an airline becoming insolvent, and the scope for operators to find loopholes in the ATOL rules would be reduced; quite a number of the witnesses to our inquiry felt that if a scheme for partial cover was proposed, part of the industry would find loopholes to get around the new regulations. The European Commission is looking hard at the question, and my hon. Friend the Member for Edinburgh North and Leith was right about the importance of looking at the issue across Europe. When a decision is taken in Europe, it is not taken just by another body with no reference to the United Kingdom Government. There is a process, and the Government and specifically the Department for Transport in this instance have a way of influencing what happens, and should advocate what they believe is best for our travel industry. Will the Minister update us on what is being discussed at European Union level, and on the Government’s view on the matter? It is important to know what the Government, through the Department for Transport or any other appropriate part of Government, are doing to pursue what they believe is the right way to proceed on travel insurance, and getting the best deal for British consumers.

[Mark Lazarowicz]

That is particularly important because in the few instances of airlines going out of business in recent years, most have been pretty small, and passengers have been picked up by other, larger airlines. However, low-cost budget airlines are now operating throughout the European Union, and many are based in other countries where a UK operator might not feel inclined to offer a replacement flight if it had no connection with the UK. Is that not an important reason for addressing the matter at European level, and why the Government must show that they are actively pursuing the issue to try to get an appropriate solution for consumers?

[Mrs Ellman]

My hon. Friend makes an important point. One issue raised during our inquiry was that the European travel package regulations are being renegotiated, which may take some time. That makes it particularly important that our Government, through the Department for Transport or whatever part of the Government is thought to be correct, advocate during the long-drawn-out discussions on that package, what is correct for UK consumers. It is an ongoing process, and it would be helpful to know what the Department is pursuing in this area at European level, what stage those discussions have reached, and how it will be involved as they proceed and before the extensive European travel package regulations are finalised.

The charge of £2.50 per passenger to pay for ATOL is unfair, because it is not linked to the value of the holiday booking or any assessment of risk. Someone booking a cheap package deal with an established operator pays the same for protection as someone buying a luxury trip to a far-flung country with a niche provider. That is unfair, and the situation would be even worse if flight-only bookings were included, because the ATOL charge could be a high proportion of the cost of a cheap flight. The Government have agreed to re-evaluate the level and the basis of the charge. Will the Minister say what progress is being made with the review?

On the long-term options for ATOL, we considered whether it should be scrapped altogether and replaced with private insurance. We concluded that that was not possible. Few insurance policies are available to provide the same level of protection, and the Government cannot avoid their responsibility swiftly to repatriate people stranded abroad because a travel firm has failed. The EU package travel directive requires the UK to provide a financial protection scheme for holidaymakers.

Nevertheless, there is scope for further reform, particularly when the scheme’s deficit has been cleared. In the Committee’s view, a reformed scheme must distinguish clearly between financial protection for consumers, which might sometimes be covered by private insurance, and repatriation, which is unavoidably an issue for the Government. The scheme should be industry funded, not reliant on Government guarantees as at present, and perhaps it should be managed by the industry. Consumers should have a greater say in deciding what is covered, and there should be more research on what consumers want. There must be more clarity and more public information, so that consumers are clear about when they are covered and when they are not. The Committee would like the cost per booking to come down, and be proportionate to the price of the package. If that were done, much of the controversy about the scheme might fade away.

In recent years, the internet has enabled some people to bypass travel agents and tour operators, and to put together their own package holidays. The ATOL scheme has not kept pace with that development. It has run into financial difficulties, and there is now confusion about who is covered by the scheme and who is not. The Committee welcomes the Government’s steps for reform, but there is much more to be done. I look forward to hearing about further proposals for change.

The nature of the leisure industry and holiday bookings has changed. Travel protection needs to reflect those changes and consumers’ needs. The Department has started to address that, but a great deal more needs to be done, and I look forward to hearing from the Minister what steps are being taken, and what the Government’s plans are.

Oral Answers to Questions

Mark Lazarowicz Excerpts

Thursday 18th October 2012 Commons Chamber

[Mr McLoughlin]

A number of opportunities will become available as a result of HS2. We expect there to be 9,000 jobs during construction and 1,500 permanent operational jobs, as well as a huge amount of regeneration in the areas served by HS2.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

HS2 is important to Scotland as well as those places south of the border mentioned by the Secretary of State. Will he update us on what discussions he has had with the Scottish Government on the plans for HS2 to provide benefits to Scotland as well?

[Mr McLoughlin]

I am due to meet Scottish Ministers in the not-too-distant future, and I have had one phone conversation with the First Minister. Last week I announced that we will undertake a study to take HS2 further north into Scotland.

West Coast Main Line

Mark Lazarowicz Excerpts

Monday 15th October 2012 Commons Chamber

[Mr McLoughlin]

I had better be a bit careful, or we might get into a bidding auction. There are a number of places to which people want extra services. That shows that the railways are now held in high esteem by all, and it is very much my intention to try to provide the services that people wish for.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

It will be some years before we know the identity of the long-term operator of the west coast main line. How can anyone have any confidence in the bids for the east coast main line franchise when we have no idea of the long-term plans of the long-term operator of its main competitor on the west coast? Is not that why we should keep the east coast main line directly operated for a good few years—preferably indefinitely?

[Mr McLoughlin]

That is not what the last Secretary of State who sat in the Cabinet for the Labour party said, and it is not what I want to happen.