Draft Package Travel and Linked Travel Arrangements (Amendment) Regulations 2026
(1 day, 6 hours ago)
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The Comptroller of His Majesty’s Household (Nesil Caliskan)
I beg to move,
That the Committee has considered the draft Package Travel and Linked Travel Arrangements (Amendment) Regulations 2026.
I cannot tell you, Mr Twigg, how very delighted I am to be opening this debate. The draft regulations were laid before the House on 2 March. I am grateful for the opportunity to set out why they matter, why change is needed and how the Government’s proposals strike the right balance between protecting consumers and supporting a successful travel sector.
As I think all hon. Members would recognise, the travel sector plays a vital role in the lives of millions of people across the UK. A holiday is often the most significant discretionary purchase a family makes in a year, and our constituents will often spend many weeks saving for it. Holidays are a source of joy, support people’s wellbeing, bring people together and help families to explore new places in the UK and overseas. The sector is also economically significant, supporting around £58 billion of the UK’s economic output and more than 1 million jobs.
Package holidays remain a central part of the market, and the UK package holiday sector alone was valued at around £11 billion in 2022. From high street travel agents to airlines, accommodation providers and small domestic tourism businesses, package holidays are a central part of the market. Each year, around 15 million to 20 million people in the UK take a package holiday, often choosing them over other types of travel because of their added convenience and protections. The Package Travel and Linked Travel Arrangements Regulations 2018 are the cornerstone of consumer protection in the sector, and the changes we propose will support businesses to thrive and grow while ensuring robust consumer safeguards.
The package travel regulations exist to make the market work effectively. They give consumers confidence when they are paying for travel in advance, often months before departure, and give businesses a clear framework in which to operate. In practical terms, the regulations provide a framework of financial protection if a company becomes insolvent, require clear information to be given before booking, set out responsibilities if something goes wrong during a holiday, and protect consumers from unexpected price rises after a booking has been made. Those protections matter both to people and to the industry, but they can only work well if they are clear, understood and proportionate. [Interruption.] Do I continue, Mr Twigg?
Nesil Caliskan
An additional pressure has just entered the room.
Why and what changes are needed? Over time, it has become clear that parts of the current framework are not working as well as intended and are creating confusion for consumers, as well as unnecessary complexity for businesses. Having engaged extensively with a range of stakeholders across industry and consumer groups, we have prioritised a number of targeted reforms to support both consumers and traders.
First, we will remove the category of linked travel arrangements altogether. Currently, those exist as looser arrangements than holiday packages that require businesses to take out insolvency protections. However, there is clear evidence that they are not achieving their purpose. Many consumers do not understand when they are protected and when they are not, and many businesses struggle to understand exactly what their obligations are. That uncertainty benefits no one. It can undermine consumer confidence, increase the number of disputes and place unnecessary burdens on businesses, especially small operators.
Our changes will mean that, in the future, when consumers make bookings in circumstances that closely resemble a package—such as booking multiple travel services through the same trader in a single visit—they will now receive a full package of protections. That will align the law more closely with how people understand their bookings in practice and will strengthen consumer protection. At the same time, we will reduce burdens on businesses that simply facilitate a later booking of a second service within 24 hours. That will allow, for example, domestic tourism businesses to refer customers to one another without triggering wider obligations, supporting collaboration and growth while ensuring that consumers remain protected under wider consumer law.
Secondly, recognising the complex set of relationships that are required to organise a package holiday, we will introduce new provisions to clarify requirements around refunds and redress for businesses working with third parties. When services are cancelled, travel organisers will now benefit from refunds from those third parties within 14 days, bringing their rights of refund in line with those consumers. We will also update provisions to give organisers greater clarity about their ability to obtain redress from third party suppliers. That will help ensure that financial risk sits more fairly across the supply chain.
Let me turn to the impact on consumers and businesses. Strong and consistent protections build consumer confidence to book package holidays, which supports demand and benefits compliant businesses across the travel sector. For consumers, the changes will make the regulations clearer and easier to understand by removing the confusing linked travel arrangements category and clarifying when package rules apply. Clearer rules reduce disputes and uncertainty, helping consumers to book with confidence and reinforcing trust in the travel market. Consumers return to businesses that treat them fairly, creating growth that supports the economy.
For businesses that provide package holidays, the proposals reduce unnecessary complexity and support more straightforward compliance. At the same time, clarifying the right to redress from third party suppliers helps to ensure that costs fall to where failures occur, ensuring a fairer distribution of financial risk. That makes it easier for businesses to plan, manage cash flow and work collaboratively across the sector. Subject to parliamentary approval, the new regulations will commence in April 2027, to allow some time for travel operators to adapt their approach for the new arrangements.
In summary, the regulations underpin the complex but vital relationship between consumers and travel businesses. Consumers rely on businesses to deliver holidays that are often paid for well in advance. Businesses rely on consumer confidence to invest, operate and grow. The regulations help that relationship to function by setting clear rights and responsibilities on both sides.
The changes we are making preserve the core bargain—strong, trusted consumer protections alongside a framework that is workable and proportionate for business. The reforms demonstrate the Government’s commitment to maintaining strong consumer protections, while also reducing unnecessary regulatory burdens, to create an environment where travel businesses can thrive, contributing to economic growth across the county. I commend the regulations to the Committee.
Gareth Davies (Grantham and Bourne) (Con)
It is a great pleasure to see you in the Chair presiding over us, Mr Twigg. I am very grateful to the Government Whip for setting out the regulations. It is clear that this is a matter of great importance across Government, and it is an important matter for the Opposition, too. In fact, the regulations carry on work that the Conservatives started—work that the Labour Government are now continuing.
The aim has always been for reforms that support our domestic tourism and hospitality industries, while still providing appropriate protections for consumers. That is exactly what our goal should be with all regulations. I am pleased that, in this area at least, the Government seem to recognise that growth is increasingly being held back by red tape that brings little benefit to anyone. At least one of the four changes before us reduces regulation, which is a good thing and something that I applaud.
While I welcome the sensible measures to alleviate the regulatory burden, however, we must always remember that there is little point having pro-growth deregulation while increasing anti-growth taxation. Over the past two years, many in the domestic tourism and hospitality industries have felt like a target—in fact, many have felt like target No. 1—when it comes to additional red tape and higher taxes. At least two of the four changes we are considering still act to increase regulation. I have a few questions on those changes.
First, as type A linked travel arrangements become absorbed into the package definition, in the explanatory memorandum the Department has clearly set out that this will increase the regulatory burden. The ongoing compliance costs for businesses offering those services will increase. Can the Minister now give us an estimate of how many businesses the Department feels this will impact, and can she confirm that she has at least met with some of those businesses to hear their views on how the regulations will impact their day-to-day operations?
Secondly, as the Government Whip set out, the regulations also establish a 14-day period for the refund of cancelled services. Can the Minister therefore set out the rationale for arriving at that 14-day period? When the Government come up with these periods, I am always interested to know how they arrived at, say, 14 days rather than another period. Is there a specific reason for that number of days?
Finally, I was contacted overnight by Expedia Group, which has set out its detailed thoughts on the regulations. I will write to the Department with the concerns it has raised. Its requests include that the Government publish guidance defining the terms “single visit” and “facilitate” within the regulations before commencement takes effect, so that operators such as Expedia have legal certainty about the scope of the new package definition. On that specific point, I would be very grateful if the Minister could explain her views.
The Parliamentary Under-Secretary of State for Business and Trade (Kate Dearden)
Thank you for chairing, Mr Twigg, and I apologise for arriving late—I was confused about whether there was another Division in the Chamber. I thank the Government Whip for stepping in and the shadow Minister, the hon. Member for Grantham and Bourne, for his remarks.
The regulations build on legislation from the previous Government, and we have worked really closely with the sector, which is an important driver of growth in the UK. Great holidays bring so much joy to consumers all over the country, and our reforms are all about strengthening the package—which the hon. Gentleman touched on—for the travel framework, ensuring that consumers continue to benefit from strong protections, while clarifying those obligations to ease the burdens on business, supporting the sector and supporting a healthy and thriving economy.
The shadow Minister asked a couple of questions that I will respond to, first on the cost and the impact on businesses. The policy will deliver a net benefit to business of £19 million over 10 years, with £98 million in costs outweighed by £117 million in savings. The analysis considered a range of sources, including feedback from the consultation.
The best estimate we can point to from published analysis is from the 2023 impact assessment of the Package Travel and Linked Travel Arrangements Regulations 2018, as the hon. Gentleman might know. That analysis estimates that 13,979 UK businesses sell packages. I hope that provides him with clarity on the costs.
Gareth Davies
Can the Minister clarify whether she has met any businesses since taking office in this specific industry, and not just relied on the 2023 piece of work?
Kate Dearden
I was getting to those points—I thank the hon. Gentleman for the nudge.
Kate Dearden
We have expressed our intention for the regulations to come into force on 6 April 2027. These regulations are commencing next year to give businesses almost a year to implement the changes, and they have been aware of these changes since the Government response in December.
We have been working closely with industry to develop guidance and will continue to do so in the coming months. Officials have already conducted engagement and consulted on the regulation at pace. It is really important for these changes that we work closely with the industry and that it welcomes them. We want to make sure we work closely with the industry on that guidance.
The shadow Minister also asked about the 14-day refund period for businesses. Travel organisers are required to refund consumers within 14 days of cancellation, but sometimes that will be because of a failure from a third party. Introducing a 14-day refund period for businesses from those third parties will create more certainty for travel organisers, helping them to manage cash flow and recover costs. That covers most of his questions, but I am happy to answer any more if he has any. Otherwise, I commend the regulations to the Committee.
Question put and agreed to.