Holiday Pricing

Debate between Toby Perkins and Gordon Marsden

Monday 24th February 2014 Westminster Hall

[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.