Air Travel Organisers’ Licensing Bill

Stephen Hammond 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]

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.

--- Later in debate ---

[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.

--- Later in debate ---

[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—

[Stephen Hammond]

rose—

[Mr Hayes]

I see another hon. Friend who wishes to do so.

[Stephen Hammond]

I always hesitate to stop the Minister in full flow because he is such a joy to hear. Surely his commitment is the key point, because the Government consulted in 2012 and have committed to consulting in bringing in this legislation and aligning ATOL with the European directive. That needs to continue, because we will not transpose it into law until next year.

[Mr Hayes]

That is also true, and it is certainly true that we cannot be premature about imagining, or speculating about, the outcome of that process; but I think we can offer some certainty about our determination to consult on the arrangements in respect of this particular set of regulations—partly, of course, because they exist irrespective of the European Union. ATOL’s coincidental genesis with our entry to the European Union is just that, a coincidence. ATOL, I guess, would have existed regardless of our relationship with the European Union. Indeed, the regulatory and legislative framework that underpins it is domestic. So the domestic legislation that gave life to ATOL, and continues to do so, was very much at the behest of this Parliament, and of successive Governments—of all parties, by the way—who have continued to support that scheme.

--- Later in debate ---

[Mr Hayes]

That is of course right; the committee will look at all those matters in that context. I said that earlier. I have also said, however, that I want to go further and to ensure that this stands proud as an example of analysis. Of course the great repeal Bill and our relationship with the European Union are bound to be the context in which the committee considers these matters; I guess that that is true. However, these ATOL arrangements predate our relationship with the European Union, or, if they came into force at the same time, it was a coincidence. Given that they are framed in domestic legislation rather than European legislation, I believe that ATOL would have existed regardless of our association with the European Union.

[Stephen Hammond]

Just for clarity, when I intervened on the Opposition Front-Bench spokesman, he was making a point about insolvency, but the generous offer that my right hon. Friend just made would clearly cover insolvency as well.