Holiday Pricing

Tobias Ellwood Excerpts

Monday 24th February 2014 Westminster Hall

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. As an MP who represents a constituency that relies on the tourism industry, I presume you will find this an interesting and topical debate. I pay tribute to my hon. Friend the Member for Birmingham, Yardley (John Hemming) for securing this debate, which has managed to attract more than 200,000 signatures on petitions. I posted about this on Facebook and had 47 separate comments and suggestions from residents, with more than 3,000 views in just 72 hours. A lot of important things that we do in Parliament do not attract quite as much interest. That shows the strength of feeling in parents throughout the country on a real, live issue.

In my mind, this matter is split into three sections. First, it is about the holiday industry, which is why the Minister was selected to respond to the debate. Some have expressed concern about such a significant increase in costs. My hon. Friend the Member for Birmingham, Yardley gave good examples of people going on holidays during school holidays and during term time. However, some parents said that they felt that was a bit of a red herring: it probably reflects supply and demand, because if a firm cannot sell the more expensive holidays, it would be forced to drop those prices. For example, Center Parcs relies on something like a 97% occupancy rate to be a viable business. Prices will reflect—

[Mr Tobias Ellwood (Bournemouth East) (Con)]

As a representative for Bournemouth East, my default position is to support the tourism industry. Like many colleagues, I have received letters on this subject from people who are concerned about the price of holidays. Does my hon. Friend agree with the point made by my hon. Friend for Birmingham, Yardley about co-ordination across the country? Is it really necessary for Dorset to have the same holiday timings as Yorkshire or Kent? Could we not stagger these a little bit, so that supply and demand is spread over a longer period?

[Justin Tomlinson]

Like Bournemouth, which is a fantastic place to go on holiday, my hon. Friend’s intervention was fantastic. I am coming to that point in a bit. I have had many enjoyable holidays in Bournemouth.

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[Damian Hinds]

My hon. Friend makes a good point. The short answer is that such a measure would be welcomed by the travel business because it would extend the season, which would be good for capacity utilisation. There would be an effect, but the effect would not be nearly as big as many people anticipate. The season might be extended by a week or two, but those would still be shoulder periods. They would not be peak periods, so there would be a difference, but the difference would not be huge.

[Mr Ellwood]

My hon. Friend makes an important point on the responsibility of the tourism industry as a whole to ensure that it sets its prices accordingly, but I recall that during the Olympics there was a concern that many hoteliers in London increased their prices too much, which put people off. Does he have any thoughts on whether that should be rationalised for one-off events such as the Olympics? I recall wanting to stay in Manchester during the party conference, but as soon as hoteliers found out that the party conference might be held in the city, the prices suddenly shot up.

[Damian Hinds]

My hon. Friend is correct in identifying price gouging as a problem. From a regulatory perspective, most countries have laws against price gouging, but brand owners and companies have an interest in not doing such things. Even worse than the Olympics, price gouging can occur when there has been a natural disaster. People absolutely have to stay in a hotel, so they are ripped off. That is a bad thing, which is why rack rates exist. Rack rates appear on the back of a hotel door, and it is the maximum amount that may be charged in law. Most European countries, the United States and most advanced economies have that system in hotels, but price gouging remains a problem.

In summary, leisure travel companies have to make more money in peak periods to cover the marginal cost losses incurred during the off-season. The definition of a peak period is when most people want to travel, which is partly, but not wholly, determined by the timing of school holidays. I am interested to hear from the hon. Member for Chesterfield (Toby Perkins), but it is inconceivable that a British Government of any political persuasion would impose price controls on the British-based travel business. If such price controls were imposed, firms would go out of business—plenty of holiday companies go out of business anyway because margins can be thin across the year—and capacity in foreign resorts would not be made available to British tourists. Instead, capacity would be sold to people from other countries, which would have the disastrous consequence of more German towels on loungers, and we can all unite around wanting to avoid that.

What are the alternatives? I have spoken for too long, but I want briefly to address the debate on taking children out of school outside school holidays. I recognise the argument that times are tough and that people are struggling to go on holiday so want to take their kids out of school. One thing that has not yet come up in the debate is that education in this country is free, but that does not mean that education has no cost. The average cost of educating a child is some £4,500 a year, which covers 190 school days or 38 weeks. By my basic maths that works out at about £120-worth of value per child per week. If someone takes both their children out of school for a fortnight to go on holiday, £480-worth of value is forgone in the education of those children. That value cannot be transferred to the education of another child; it is value forgone for ever. The salary of the teacher and all the other things that go into running the school remain and the children miss out.

Children fall behind if they miss part of their education. In the context of a school term, even a week or two weeks is a reasonably big chunk of time. Multiplied over a lifetime, a child taking a fortnight out from school every year from year R to year 13 would be off for 28 weeks, which is three quarters of an academic year. To put that in physical terms, it is the equivalent of saying to that child, “You will do your GCSEs at the beginning of year 11 rather than at the end.”

What are the options? One thing that nobody has mentioned is counter-cyclical travel. If people go to places in the summer that have most of their demand in winter or in business periods, they can get quite a good deal. We have those places—in particular, business-focused destinations—in this country. Travelodge, for example, has hotels in many places and families can find lots of fabulous things to visit within 40 minutes of any of them.

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[Toby Perkins (Chesterfield) (Lab)]

It is a pleasure to serve under your chairmanship, Dr McCrea. You have only just joined us; I assure you that you have missed an excellent debate. I will attempt to do some sort of justice to it, in my own modest way, but you might chose to read Members’ words for yourself later.

I congratulate the hon. Member for Birmingham, Yardley (John Hemming) on bringing the issue for debate and on the way in which he presented it. The strength of opinion that has been articulated in the debate, the size of the petition and the testimony we have heard from hon. Members clearly show how important the matter is and how right he was.

A couple of hon. Members have reflected on the fact that the Minister is from the Department for Business, Innovation and Skills and I am responding as a shadow BIS Minister. The initial petition looked very much at the business aspect of the matter, but the hon. Member for Birmingham, Yardley was right to say that the whole aspect of the debate has changed since the initial petition first went on to the e-petition system. That was reflected in the debate, which did not dwell much on the business aspect but focused much more on educational policy. That perhaps leaves me at a slight disadvantage.

The issue is of great concern for my constituents, many of whom have taken the opportunity to raise it with me at my weekly surgeries, by e-mail and at the school gate. I did a summer survey in which I raised questions about the changes, which demonstrated powerfully to me how strongly people feel about the matter. We all know how desperately difficult it is to get that balance between the fact that we want our children to be in school at all the right times and the huge increase in the cost of holidays during the school breaks. It was therefore no surprise to me that 150,000 people across the country took action by signing the online petition and demanding that MPs discuss the issue. That is why we have had so many valuable contributions from Members on both sides of the House. I will touch on those in a moment.

A situation has been created in which many families who have not previously faced the dilemma of how to afford an annual summer holiday now find themselves financially squeezed and wondering how to do so. All of us know how important holidays together can be for a family. We are an incredibly time-poor nation, and, often, many people are stretched. We struggle to have time with our families given the huge number of pressures on us, so family holidays are incredibly important. It is tremendously difficult for people when they feel that their opportunity to go on those holidays has been removed. We all recognise how important the issue is.

The hon. Member for Birmingham, Yardley was right to say that this is another demonstration of how powerful e-petitions can be. It has shown how issues that we do not immediately see as significant can have their significance powerfully demonstrated to us by our constituents. The response of people to the e-petition demonstrated the importance of this issue.

The hon. Gentleman also raised the issue of staggering holidays, something to which many hon. Members referred. That is an important part of the whole equation. Colleagues in the Department for Education have been looking at that issue and exploring how greater flexibility can be given to schools. The point was made powerfully that we do not want a parent such as myself, with one child in secondary school and one in primary school, to find that their children’s schools have holidays at different times. Perhaps we can try to stretch out the holiday season on a more systematic basis, recognising that although we are not blessed with sunshine all year round in this country, as some areas are, we could none the less stagger holidays to take a bit of pressure off.

The hon. Gentleman also referred to the fact that this issue has been debated in this place since the mid-1960s. It is interesting to question why people feel so strongly about it now. The broader pinch that people are feeling at the moment and how the holiday market has changed in recent years, as well as the recent changes to Government education policy, are perhaps some reasons why what has been to an extent a hoary old chestnut for 40-odd years is now being raised powerfully.

The hon. Member for Portsmouth North (Penny Mordaunt) suggested that discretion does exist—a point repeated a moment ago—and the hon. Member for Solihull (Lorely Burt) raised the important question of what constitutes exceptional circumstances. We heard examples of circumstances that have not been considered exceptional. My hon. Friend the Member for Wirral South (Alison McGovern) spoke about a child with autism whose parents might have specific reasons for not wanting to be on holiday when resorts are most crowded, and asked whether such a case would be considered exceptional.

My hon. Friend the Member for North East Derbyshire (Natascha Engel) highlighted the case of someone whose child had a brain tumour; that was not considered by the head teacher to be an exceptional circumstance. The hon. Member for New Forest East (Dr Lewis) highlighted the case of someone who was exceptionally busy during school holidays because of the kind of business they ran, but their circumstances were not considered exceptional.

It is clear that there has been a change of policy. The Government have communicated that quite deliberately, and it is their right to do so. However, exercising that right has had an impact because of how the policy has been implemented. One aspect of today’s debate that I have found interesting was that no contributions have been made by any hon. Members from Scotland—unless we count Corby as representative of that nation. That is not entirely surprising, because Scottish schools have holidays at a different time of year and Scottish people probably benefit quite nicely from the fact that they all go on holiday in July, when prices are cheaper than they are for us in England. That is an interesting observation.

I will now reflect on some of the other contributions to what I think has been an excellent debate. My hon. Friend the Member for North East Derbyshire said something that was repeated by many colleagues: across the House we all agree about the importance of children being in school, and recognise the disadvantage there is to children when they are out of school, for whatever reason, for any sustained period. None of us is saying that we think it is good for children to miss huge amounts of their schooling. We are all always conscious of our responsibility in this place to ensure that our children have the best opportunity to be successful at school. However, we also have to recognise that there is a cost of living crisis, with families feeling the pinch, and that we need to do what we can to support them in those circumstances. My hon. Friend powerfully highlighted the reality faced by time-poor, financially stretched families at this time, and the difficult circumstances that they face.

The hon. Member for North Swindon (Justin Tomlinson) spoke about the strength of feeling and support on this matter, and he was right to do so. He also raised the issue of whether there will be a greater amount of discretion for a child who is going to a funeral than for someone who wants a holiday without educational benefits; how the policy is being applied shows that there is a difference between such cases. He also touched on one of the devilishly difficult parts of the judgment call on the matter when he called for clear guidelines but more discretion. That is what we all want to an extent, but we should recognise the central contradiction in that.

The hon. Member for Bournemouth East (Mr Ellwood) spoke up for the tourism industry, as we would expect. He spoke about the escalation in cost for popular events, referring to the London Olympics and the fact that in attempting to maximise their opportunities some people potentially priced themselves out of business and ended up falling victim to what they thought would be good times, as they had been too ambitious about what they could charge. I do not know whether he has turned his attention to the frankly extortionate cost to hon. Members of bed and breakfast accommodation in Manchester at the time of the Labour party conference. I have recently tried to make a booking and discovered that Manchester in September is far more expensive that one would expect.

[Mr Ellwood]

rose—

[Toby Perkins]

There may shortly be a plug for having party conferences in Bournemouth.

[Mr Ellwood]

The hon. Gentleman has made my point for me: Bournemouth is better suited for party conferences.

[Toby Perkins]

I congratulate the hon. Gentleman on repeating my suggestion.

It is usual during winding-up speeches to talk about what has been mentioned during the debate, but I will talk about what the hon. Member for Birmingham, Yardley did not talk about: the tourism industry. An important point that some colleagues mentioned is that holiday accommodation is available for 52 weeks a year, or slightly less, and there is pressure to push the customer base into a shorter and shorter period. The petition refers to profiteering holiday companies exploiting people, but that is not the reality. If a crude cap were introduced, they might retain the current price in August but they would be unable to reduce the price in April. The important question is whether people would be better off or whether those who can go away at different times would not get cheaper holidays.

The hon. Member for East Hampshire (Damian Hinds) confessed his sins—it is always good for a Member of Parliament to do that. If he did not quite ask for forgiveness, he at least offered mitigating circumstances. The debate involves the many people who cannot go away during school holidays, as well as the many who can go away only during school holidays—for example, teachers and anyone who works in the education sector and so on. If we increase the pressure, we will push up the cost of their holidays too. The debate started 18 months ago, or 40-odd years ago, depending on how people look at it, but certainly prior to the proposed changes, which, if anything, will push prices up further. What was a problem 18 months ago will be an even bigger problem in a year or two.

My hon. Friend the Member for Leeds East (Mr Mudie) asked why we are talking about the matter now and why it has become so important. I will touch on that, but in his broader view of the debate he said that he supported the petition but not necessarily the proposed remedy. That reflected what many other hon. Members said.

The hon. Member for Suffolk Coastal (Dr Coffey) focused on the semantics of “special” and “exceptional” and seemed to question whether there has been a change in policy. The previous Government introduced fines for people who took their children out of school without authorisation. The Secretary of State was clear that he wanted his direction following the statutory instrument to be seen as a change of policy. Head teachers saw it as that, and many in my constituency wrote to parents saying that the policy had changed and that there would be no discretion other than in narrow and exceptional circumstances. That was clearly the intention of the Secretary of State’s policy.

The debate has been consensual and sensible. It has shown that we all believe strongly and passionately that it is vital for our children to be in school for the maximum amount of time, that standards should be resilient and that parents should recognise their responsibility. We recognise that the present situation is desperate because prices have risen faster than wages in 41 of the last 42 months, and families are feeling the pinch. We are discussing another aspect of that cost-of-living crisis. I intended to give some examples of how prices have increased, but many hon. Members have alluded to that so I need not do so. However, the extent of price differences during the high and low seasons is huge and the success of the e-petition calling for swift action is not surprising.

The Association of British Travel Agents has made it clear that price fluctuations are the commercial reality of running a business in a seasonal market, and we understand that. The hon. Member for East Hampshire asked whether the Labour party is proposing a crude cap and rightly gave some reasons why that would be difficult. We do not have a price control policy at a macro level, but that does not mean that there is never a reason to look into whether there is a properly functioning competitive market. I will touch on that.

Many parents believe that they are exploited by the holiday industry, which uses the tight limits on when they can travel to overcharge them, and the huge cost differentials reflect that. However, there have been no thorough studies of the issue in recent years, so it is hard to get to the bottom of the problem and the extent of exploitation. The lack of such a study seems at odds with the Government’s intention of addressing consumer protection concerns. I should be grateful if the Minister commented on whether the apparent contradiction of one group of consumers apparently paying over the odds to subsidise another group is questionable under our consumer protection laws.

Consumer law has strong protections to ensure that the public are charged a reasonable price for a service. That presumably includes arranging a holiday, and does not exempt the law of supply and demand. That is an interesting question for the Government. The purpose of the Consumer Rights Bill is to make those rules clearer, but there is a glaring omission because it does not give consumers or consumer groups any power to access the information they need to check whether that is the case. Does the Minister accept that the only way to resolve that confusion more broadly is to have a proper analysis of holiday prices, and do the Government plan to conduct such research? Was there any research prior to the change of policy?

The situation demonstrates the consequences when there is no organisation to stand up for the rights of consumers as a group. The hon. Member for Birmingham, Yardley suggested that an Offonholiday regulator might not be the answer, but it might be worth considering a broader consumer rights body to act as a useful brake on exploitative practices. Most people accept that the rules of supply and demand will ensure that prices are higher at peak times, but many believe that the extreme divergence in prices is unfair.

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[Jenny Willott]

That may well be the case, but it does not undermine the argument that we must ensure that parents do not take their children out of school for holidays unless there are exceptional reasons for doing so. As the right hon. Member for Knowsley (Mr Howarth) said, family holidays taken during term time disrupt the education not only of the individual student but of other pupils. The hon. Member for Leeds East, whose wife is a head teacher, said the same thing. Such absences create additional work for teachers who have to try to help pupils catch up on their return while looking after the other students in the class and ensuring that their progress is not disrupted. Removing a child from school has significant implications for other pupils in the class and for teachers. The Government do not want to change the rules on permitted absences, because the effects on a child’s education and a school’s ability to teach pupils effectively are significant.

Another suggestion has been to introduce more flexibility into school term dates. The holiday industry argues that making the peak period longer would spread consumer demand, and because holiday companies could make the same amount of money over a longer period of time, they would be able to reduce prices a little for families. The spreading of demand would also reduce competition for facilities and allow them to be used more efficiently. Although there would still be competition with organisers of holidays from other countries, it would be spread over a longer period of time.

[Mr Ellwood]

Is the Minister saying that she agrees with that proposal? I gave the example of Kent, Yorkshire and Dorset having slightly different school holidays. If she agrees with the idea, how would it best be co-ordinated?

[Jenny Willott]

The staggering of school holiday periods may well lengthen the period of peak demand and help to lower prices. I completely understand the suggestion that the Government should arrange for holiday periods to be spread, but currently local authorities, not the Government, set the term and holiday dates for community and voluntary-controlled schools. Academies, free schools and voluntary-aided schools—including some church schools—set their own dates. The Deregulation Bill, which is currently before the House, will extend the power to set term dates to all schools by 2015. The Government believe that term dates should be dealt with locally, through negotiation and co-operation across an area, to take into account the educational needs of students and the practicalities of varying the school year. I cannot remember which hon. Member raised the fact that someone with a child in a primary school and a child in a secondary school wants their holiday dates to line up.

[Jenny Willott]

It is clear that such a decision will have to be made across a local authority area, or more broadly. When the Deregulation Bill becomes law, we will look at how that can be done most effectively, and with the minimum disruption, to help schools and families.

[Mr Ellwood]

I am sorry to press the matter, but I think it is an important takeaway from the debate. As my hon. Friend has just said, some co-ordination will be required. I am sitting next to my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), and we know that it is quite a challenge to get Poole, Bournemouth and Christchurch to co-ordinate. It does happen, but it takes time. It will be tricky to get all local councils to co-ordinate. I encourage the Government, or at least the Department for Education, to consider the leadership role that may be necessary. Whether the decision is taken on a county or regional basis is something for a later date.

[Jenny Willott]

As I have said, free schools, academies and some church schools can set their own dates. There is already some co-operation, or at least awareness, between some local schools regarding what others in the area are doing. When the Deregulation Bill gives more schools the power to set term and holiday dates, we will encourage schools to collaborate more widely to take into account the needs of families and other schools in the area. I am confident we can ensure that the hon. Gentleman’s views are fed into the process and taken into account by the Department for Education.