Holiday Pricing

Debate between Toby Perkins and Jenny Willott

Monday 24th February 2014 Westminster Hall

[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.