Holiday Pricing

Toby Perkins Excerpts

Monday 24th February 2014 Westminster Hall

[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.

[Toby Perkins (Chesterfield) (Lab)]

I am grateful to the hon. Member for North Swindon (Justin Tomlinson) for giving way and to the hon. Member for Bournemouth East (Mr Ellwood) for his comment. We support greater flexibility for different authorities, but can we ensure that Derbyshire gets the warmest months?

[Justin Tomlinson]

Derbyshire is also a fantastic place to go on holiday. Let us champion every constituency. I think that we are on safe ground, with cross-party support, when championing the UK tourism industry.

We need to be 100% sure that there are not some unscrupulous operators, but predominantly we need to focus on the two other areas of discretion and flexibility. On discretion, there is already confusion among a lot of parents. A lot of parents have contacted me to say, “We have triggered fines. We feel that our decision to take our children out of school was justified, but the school came back and said, ‘Under the new rules, there is absolutely no discretion; you will be fined’.” As a Government representative, I have almost felt obliged to apologise on behalf of the Government.

At one school that has made the new rules clear, the chair of governors said, “No. Actually, there is discretion. We, through the pastoral team, will look at those parents whose children have excellent attendance records and are achieving well in school and we will look at why they might be taken out of school, for a funeral, say, compared to a holiday without educational benefits, and it would be weighed up.” Clearly, there is confusion and that needs to be resolved.

There is the assumption that there is pressure from Ofsted because it looks at attendance records when rating a school. If a school decides to say that, because of cost and work pressures, it will allow a good level of discretion, its attendance records do not look good. That also needs to be considered, because that would be a disincentive for a school to apply common-sense discretion.

I think that all hon. Members would agree that, perhaps, discretion should apply where children are doing well and where parents work during school holidays. My hon. Friend the Member for Portsmouth North (Penny Mordaunt), who is a champion for the armed forces, highlights one career, but I am sure that there many others, in all our constituencies, where parents can take their children on holiday only during school time. We have all noticed the cost of peak holidays.

There are some challenges. I have been contacted by teachers who say that they do not like being in the firing line and having discretion, because if they feel that the child should not be given time off they are the ones who are blamed. Sometimes there are reasons why that should not be so. I have also been told that, in the past, when there was discretion about 10 days or 10 sessions, some parents felt that it was an automatic right to have that every year, even if the child was struggling. There was never a case of a parent saying, “You’re absolutely right. I’ll now withdraw that request.” It would create heated discussion. If we are to consider discretions, clear guidelines, which were suggested earlier, are an absolute must.

We must also consider teachers, because although discretion can help pupils and parents, the teachers would not have discretion to take time off during terms. That is not necessarily a complete, one-size-fits-all solution.

I am a big fan of flexibility in this regard. One big suggestion is flexible term times. About a year ago I was contacted by a resident, Nicki Mitchell, on this issue. I suggested flexible term times and was asked, “What happens if you have a child in a primary school and another at a secondary school, and they have different term times? That will make it even harder.” A number of residents have contacted me and said that such flexibility exists in Europe and that it is done by county or region. We might decide that the south-east goes a couple of weeks earlier and the south-west goes a couple of weeks later. However, in Europe it is done in rotation, so it is not always the south-west or south-east first. Not only would that help parents and children, but it would probably help the tourism industry, because almost regardless of what it charges it can fill up at peak time, but the rest of year it faces a real challenge. Spreading that across the year would be helpful.

If we cannot manage flexible term times, another suggestion is extending the school year by two weeks and allowing everybody automatically two weeks’ worth of discretion throughout the year. That would probably be incredibly unpopular with teachers, who would then face an extra two weeks, but I thought that I would mention it.

--- Later in debate ---

[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.

[Damian Hinds]

Is the hon. Gentleman saying that there is something in the operation of some elements of the travel industry market over and above that which can be coped with by the current competition arrangements?

[Toby Perkins]

That is a valid question. A broader study would provide better information to establish whether that is the case. In July 2012, the Office of Fair Trading concluded a two-year investigation and found that two travel giants had struck deals with a hotel group to restrict smaller agents’ ability to offer discounted hotel rooms. Expedia admitted afterwards that it had

“engaged in cartel conduct in breach of the law”.

In 2013, a discount hotel site alleged that it was forced out of the market after attempting to undercut rivals by offering cheaper prices. There have been allegations of cartel-like activities, and those involved should be investigated and pursued rigorously. Only when we have open, competitive markets can consumers have faith in the prices that they are paying. That is important and entirely legitimate. At the same time, although we recognise that market forces exist, we do not say, “There is never anything to look at”, in the context of whether those markets are being fairly operated. We stand absolutely resolutely on the side of consumers and would be willing to investigate whether action is necessary to ensure that they get a fair deal in the travel market.

The abolition of the Office of Fair Trading, which would have looked at this issue, has highlighted the fact that a gap now exists. There is not another appropriate body that can do what the OFT did. The Competition and Markets Authority is focused on competition and not on outcomes for consumers, and therefore does not complete the same work. Does the Minister share my concerns about the lack of an appropriate body? Does she think that that makes it more likely that consumers will get a raw deal in future?

Other things can be done to support the tourism industry. We recognise that the issue is not only about tourism overseas, but very much about tourism here in the UK. We know that the VAT increase to 20% placed our tourist industry at a competitive disadvantage compared with many of our European competitors, and that the huge increase in business rates over the past three years has had a big impact on many small businesses in the hospitality and tourism industry.

[Mr Gordon Marsden (Blackpool South) (Lab)]

I apologise to my hon. Friend for missing the beginning of his speech, but I had a previous engagement. On the point he just made, does he agree that just as small travel businesses are disproportionately affected by some of those issues, particularly in terms of VAT, small businesses in the hotel and guest house industry can be as well? That is another facet of a complicated debate. I have had representations in my constituency from hoteliers and guest house owners who are concerned about the issue.

[Toby Perkins]

My hon. Friend makes the important point, exactly as one might expect of a Member of Parliament for Blackpool, that the tourism industry is not immune to what is happening in the wider economy. It struggles when people do not have money in their pockets. The industry recognises that people are facing a cost-of-living crisis, but it is also facing a cost-of-doing-business crisis and paying ever higher business rates and ever higher energy prices. That impacts on the prices that people have to charge to make a profit. My hon. Friend makes an important point, which fits in precisely with the one I was making.

To reinforce my hon. Friend’s point, I should say that many small hoteliers want to offer cheaper deals but are held back, not only because of the costs of doing business, but because their cash flows are impeded by large travel websites they supply to. My hon. Friend the Member for Streatham (Mr Umunna) has highlighted the totally outrageous way in which large organisations, effectively through being perpetrators of paying late, force small businesses to bankroll them. The issue of late payments is incredibly important and has a real impact on the tourism industry and the cost we end up paying as consumers.

The previous Labour Government created an interest rate penalty for large firms that delayed payment to their small suppliers. The next Labour Government will further tackle the issue of late payments, which will be very important to small businesses in the tourism industry here in the UK, and will hopefully also be part of easing that cost-of-doing-business crisis.

In conclusion, I strongly welcome this thoughtful, useful debate. We must ensure that markets are fair. We also have a responsibility in this place to respond when our constituents tell us that the Government’s policies are causing problems. In this debate, each of us has reflected on the difficult decisions that we face, between wanting to make sure that all children are in school for the maximum amount of time and recognising that people are feeling the pinch, that there is a cost-of-living crisis and that we need do all we can to help people, not exacerbate the problem.

--- Later in debate ---

[Jenny Willott]

I shall come back to the point about the schools regulations if my hon. Friend will bear with me. If he is not satisfied with my comments, he can come back to me.

There is another important element to consider in respect of the prices in this sector, and it was mentioned by the hon. Member for East Hampshire. During peak periods, the UK industry is in fierce competition with those of other countries, whose consumers want to go on holiday to the same destinations. That competition for limited facilities means that costs rise—it is not all being driven by consumers in the UK—and those costs are reflected in the price put to the consumer. As this is a Europe-wide market, consumers are similarly affected in other countries across Europe. As a result, Governments across Europe have decided that protection is needed for consumers in the package holiday sector over and above that provided by general consumer protection law.

I hope that what I say now answers a point made by the hon. Member for Chesterfield. One of the key protections in the package travel directive is the requirement that those arranging and selling package holidays and package tours have in place protection for consumers against their insolvency. That additional protection is an area in which we in the UK were leaders. The air travel organisers’ license—ATOL—system was brought in before the European regime as a result of the huge growth in the UK of the package holiday market in the 1970s and 1980s.

The extra protection is considered necessary because those operating in the package travel market are deemed to be more at risk of insolvency than businesses in other sectors. That is because the business model in the holiday industry is based on predicting demand and committing to those predictions in advance. I mention that because it is further evidence of the extent and level of competition in that market—the industry is forced by those pressures to price as competitively as it can. There is considered to be a higher risk of insolvency in that sector because the margins are thin and because the market is so competitive.

[Toby Perkins]

The Minister describes the pressures on the market, and we have heard that there was no impact assessment because it was considered that there would be no impact on the industry. Given that the change was introduced after people had booked their holidays and after the holiday companies had set their prices, does she think that it was right to say that there would be no impact whatever on the industry from the change?

[Jenny Willott]

I cannot comment on the impact assessment done by the Department for Education, but I will come back to the point about the regulations. I think it is wrong to say that the 2013 change was a significant change in the law, but I will come back to that in a minute.

Hon. Members will have gathered from what I have said that I am not convinced that businesses in the holiday market are treating consumers unfairly in the way in which they price their products. It is pressures in the market that cause the fluctuation in prices that some have concluded is unfair. However, the hon. Member for Chesterfield raised allegations of cartel-like behaviour. If hon. Members come across allegations of that nature, they should be referred to the Competition and Markets Authority for investigation. That is what it is there for, or at least it will be from 1 April. Cases like that involving Expedia, which the hon. Member for Chesterfield mentioned, were dealt with by the Office of Fair Trading, but will in the future be dealt with by the Competition and Markets Authority. However, the CMA will also have a role in keeping markets under review for breaches of competition law and consumer detriment, so it has a broader remit. It will also have a role in dealing with consumer enforcement issues when an issue has nationwide implications. This would be an area where that could be considered.

The hon. Member for Leeds East (Mr Mudie) asked about discussions between travel agents, the holiday industry and the Department for Business, Innovation and Skills. BIS is in regular contact with the holiday industry on a very wide range of issues—that is the relationship—and my officials will of course raise the points that have been raised in today’s debate when they next meet representatives of the industry, so we will ensure that hon. Members’ views are fed back.

Having said that, I am very sympathetic to those who struggle to afford a holiday in peak season. I appreciate that the difference in price between off season and high season can be very significant. If people have children, it becomes increasingly expensive and difficult to take holidays, and I appreciate that the problem places an extra burden on families. I also completely agree that family holidays are enormously important. They give children opportunities to relax and unwind and create lasting memories, as well as building family relationships and broadening the experiences of children. I have very fond memories of taking holidays as a child with my grandparents and parents and I am sure that everyone in the room would say the same. It is important that children are able to have those experiences and benefit from them.

Clearly, in all of this, the dates of the school holidays are critical. It has been suggested that pressures on the industry might be alleviated by extending the periods during which families can take a holiday, thereby spreading the demand over a longer period. We have heard that idea mentioned today, and it is put forward not only by those who want cheaper family holidays; it is also supported by many in the industry. We have also heard it said a lot today that the rules on school attendance are too strict. Almost every hon. Member who spoke discussed that. People have suggested that schools should be able to approve families going on holiday during term time. Others believe that it would help if schools had different term dates. I shall come back to that point, but, on the issue of absence, despite the clear value that a family holiday can have for children and also for parents, the Government’s view is that a good education is more valuable for pupils in the long run and that getting a good education depends on regular school attendance throughout the school year.

We have heard a lot about the change in regulations in 2013. The hon. Member for Suffolk Coastal (Dr Coffey) gave a very useful summary of the legal framework. I found it quite illuminating and am sure that a number of other colleagues did as well. What the Government did in 2013 was remove the misconception held by some parents that pupils were entitled to 10 days’ absence for holidays per year. There was actually no entitlement in the previous regulations—that was not what they said. We have clarified that school heads should accept a request for a leave of absence only in exceptional circumstances.

We have heard a number of examples of cases in which requests have been turned down by head teachers. Many of them are very distressing, but I clearly cannot comment on individual cases, not knowing the full details. Let me make it clear that the Government have not said that any absence is not possible. We have given head teachers the discretion to make that call. In addition, we have not specified what constitutes exceptional circumstances, as we believe that cases need to be considered individually. A number of hon. Members mentioned the need to trust head teachers, and that is exactly what the Government are trying to do—we want to ensure that head teachers have the power and discretion to look at the individual circumstances of an application and take them into account.