Draft Package Travel and linked travel arrangements regulations 2018

Andrew Griffiths Excerpts

Monday 14th May 2018 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)]

I beg to move,

That the Committee has considered the draft Package Travel and Linked Travel Arrangements Regulations 2018.

It is a pleasure to serve for the first time under your chairmanship, Mr Hosie. The regulations will update and replace existing legislation by implementing the requirements set out in the 2015 European package travel directive.

Package travel regulations have provided protection to travellers for many years, but they were introduced in 1992 and much has changed since then. The way people purchase holidays has changed. Where once people would buy their package holiday from a travel agent on the local high street—or, the more adventurous, by the exciting new technology of Teletext—increasingly they now purchase holidays online via a computer, tablet or smartphone. That increased choice and flexibility in the travel market, allowing consumers to mix and match components of a holiday to suit them, has also brought about changes in what people purchase: fewer packages and more bespoke travel.

People are empowered to choose from a wider range of accommodation, transport and excursions. According to a recent survey by the Association of British Travel Agents, 83% of consumers bought holidays online in the last 12 months. Such rapid change has left new methods of packaging holidays outside the scope of the regulations, and we want to afford new protections to consumers. It has not always been clear what is in scope of the existing regulations, which has led to an uneven regulatory environment in which traditional package organisers are subject to a level of regulation that many of their online competitors are not. In many cases, the consumer is left unprotected if a company goes bust or something goes wrong. I draw attention to our estimate that, should the regulations not be brought into force, consumers will be at risk of losing out on £90 million of protection each year.

The regulations will address the gap. They are being introduced to ensure that people who book package holidays through travel sites online enjoy the same rights and protections as those who book with a traditional travel agent. That requires a broader definition of “package holidays” to capture modern booking models.

The regulations will introduce a new concept of linked travel arrangements. Those are looser commercial connections than a package holiday, so they have fewer requirements. We are making it a requirement that package travellers be given clear information on what they are agreeing to and what their rights are. We have also strengthened insolvency protection so that consumers can get their money back or be returned home if the company that arranged a package goes bust.

Traders who put such packages together, including those operating through online sites, will now be responsible for the entire holiday, even if services are provided by third parties. One requirement is that the UK must designate central contact points to supervise UK-established package organisers selling into other EU member states. After careful consideration and consultation, we have agreed that the Civil Aviation Authority will take on that role from July. Enforcement of the regulations will be as before, with responsibilities taken on by either the CAA or trading standards.

The Department’s impact assessment, published alongside the regulations, estimates a net cost to businesses of about £100 million a year. However, the changes will level the regulatory environment for all businesses selling travel packages. Companies providing packages not previously covered will be subject to the full range of protections under these regulations, including the organiser taking on liability for all services provided under the contract and providing cover against insolvency.

Right hon. and hon. Members can be reassured that, on the day we leave the European Union, we will maintain our high standards of consumer protection, delivering the stability and continuity consumers need and desire. It is our objective to have effective protections in place for consumers purchasing goods and services cross-border, now and into the future. The way that consumer protections will apply when buying across borders is still a matter for negotiation, but the Government are determined to co-operate closely with our EU partners on matters of consumer protection.

The draft regulations before the Committee have been welcomed as a positive step by the travel industry. Throughout the consultation process and the development of the policy, we sought to strike a balance between increased protections for consumers and minimised burdens on businesses. The measures will ensure a level playing field for businesses and greater clarity and protection for consumers for, we estimate, an extra 10 million package holidays a year. Confident businesses and consumers are an important part of an economy that works for everyone, and these measures will achieve those ends.

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[Andrew Griffiths]

I thank all Committee members for their positive contributions. I hope that I can shed a little more light to clarify some of the concerns and to reassure the Committee that we are in a good place in relation to protecting the rights of consumers when travelling in the UK and abroad.

I am grateful to the Committee for its consideration of the regulations. We all agree that booking package holidays and ensuring that people’s rights are protected, whichever way they book, can be a significant issue for consumers, and one on which we need to offer extra protection.

I thank the hon. Member for Sheffield, Brightside and Hillsborough for the positive way in which she engaged in the debate, as always. It is always a pleasure to debate with her. She asked a number of questions, first about analysis of the effect of organisations in the EU selling into the UK under the mutual recognition principle. The directive will raise the level of insurance protection across the EU and give greater protection. The new directive is far more robust about what insolvency protection must legally be in place. In addition, the central contact points, which I will come on to in a minute, and about which there were several questions, will provide a mechanism for us to monitor other member states’ insolvency regimes, so, in effect, there is extra protection as a result of these regulations.

There were some questions in relation to mutual recognition. Let me be clear: if a UK trader sells a package holiday into another EU member state, he can use the UK insolvency regime, rather than having to comply with the regime of the individual member state. The new mutual recognition principle that is introduced by these regulations makes it easier for UK businesses to sell package holidays across the EU.

[Maria Eagle]

Can the Minister tell us whether that will remain the case after the UK leaves the EU? What assurance does he have that it will?

[Andrew Griffiths]

The hon. Lady will know that, way above my paygrade, detailed negotiations are taking place. She will also know the phrase, “Nothing is agreed until everything is agreed,” which I must repeat. I reassure her that the UK has a great reputation and tradition of being at the forefront of protecting consumer rights. We do not need the EU to tell us how to protect the rights of our citizens and our consumers. We were at the forefront of the free market and of bringing in these protections.

I reassure the hon. Lady not only that these regulations will be copied across, as it were, on the day that we leave the European Union, but that ongoing and positive discussions are taking place to ensure that our consumers are protected when travelling abroad and buying packages or linked travel arrangements across the EU, and that European tourists can have confidence in buying packages from UK operators in future, knowing that their rights will be protected. UK consumer protection rights are based on EU law and they will be retained wherever practical.

There were a number of questions in relation to trading standards departments and their adequacy in providing the resources to support consumers in future. The hon. Lady will know that, through my Department, trading standards receives an annual budget of approximately £40 million, which has been pretty static in recent years. I agree that there are increasing demands on trading standards in a more complex world, in relation to package travel as well as consumer protections and safety. That is why the Government took the bold decision to set up the Office for Product Safety and Standards, which we debated last week, to give extra resource to trading standards across the country and act as a repository of information and expert advice. This year, the Government are putting an additional £9 million into that office and, in future, that budget will be £12 million. I reassure the Committee that the Government are putting extra resources into supporting our trading standards officers across the country.

[Gill Furniss]

I would like to ask the Minister what I probably asked him last week when we debated product safety. Clearly, the £9 million is intended to support the functions of the new office, not the functions of the thing that we are actually debating.

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[Andrew Griffiths]

That is absolutely true, but it is an additional resource for trading standards to try to lighten its burden. If we have a repository of information, expertise and advice in relation to product safety that trading standards officers across the country can access, that will make their job easier and, hopefully, free up their time to support their residents on issues such as those covered by the draft regulations.

I will make some progress. Trading standards and the CAA will enforce this legislation—there was a question about that. Their role is to take action where a number of consumers have been put at risk, such as where the provider has committed a serious criminal offence by failing to put in place appropriate insolvency cover or packages. We have not provided additional ring-fenced funding for that purpose. As the Committee will know, the funding of local trading standards is a matter for local authorities.

Let me move on to consumer protection rights post Brexit. We are committed to maintaining our track record of high levels of protection for consumers, and we do not need to be part of the EU to do that.

The Government are committed to implementing the 2015 PTD. It will provide greater protection to UK holidaymakers by bringing more modern methods of booking package holidays, such as through websites, into scope and giving extra protections. The changes in the regulations will ensure that consumers are better protected. The enhanced regulation will protect an extra 10 million UK package holidays each year.

I recognise that you will spend all your recess in Dundee East, Mr Hosie, serving your constituents, and that you will not have time to take a holiday because you are so committed to them. However, if you are able to do so, you can be sure that, because of the regulations, you can book linked travel packages with greater clarity and certainty. I am sure that that will make for an even more enjoyable holiday. I commend the regulations to the Committee.

Question put and agreed to.