§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]
§ 11.33 p.m.
§ Mr. Jim Lester (Beeston)
I am pleased to open this debate and to make as my first point the fact that, although we have just had Divisions on the Scotland Bill, in this debate there is all-party unity and support for the matter I wish to put to the Minister.
I am raising this question because hon. Members have received over 40 letters from their constituents on it. The hon. Member for Derby, North (Mr. White-head) and I have received the same letters because of our special interest in holiday caravans.
1345 I am delighted also that listening to the debate is my hon. Friend the Member for Melton (Mr. Latham), who has taken an interest in the position of caravanners, and my hon. Friend the Member for Pembroke (Mr. Edwards) in whose constituency the case I wish to raise has taken place.
The complaints that I want to put to the Minister emanate from many parts of the country. They come from Oadby, Wednesfield, Tamworth, Uxbridge, Birmingham, Walsall, Smethwick, Stafford, Stockport, Bilston and many areas in Wales. I should particularly like to thank Mrs. Woods of the National Caravan Owners Association who has contributed so much work and interest to this matter.
The case concerns the Dinas Country Club and Caravan Park in Dyfed, which was until 1st January in the ownership of the Gailey Group Ltd., of Gailey near Stafford. Since then it has been transferred to the ownership of Trellis Scott Ltd., of Carlyle House, Cardiff.
Perhaps I should explain what has happened in 1978. What I have to say has been reinforced and confirmed by the investigation of the Welsh Consumer Council, and I thank Jean Bowler-Court for all the work she has done in this respect.
There were on this site 126 caravan owners who on 2nd December 1976 received from the Gailey company the following notice:
To: All Residents at Dinas
§ Dear Sir,
§ We regret any occasion for rent increases but we find it necessary to review rent charges for the coming season.
§ The rent for your caravan for the 1977 season will be:
§ £165 single unit —inclusive of rates
§ £200 twin unit —to 31.3.78
§ An invoice for this amount will be forwarded to you …
§ Yours faithfully,
§ for GAILEY CARAVAN COMPANY LIMITED
§ W. A. BODE,
§ Personal Assistant to
§ the Managing Director."
§ In addition, there were people such as Mrs. Higgins of Coventry, who purchased a caravan on behalf of her family from the same firm only four months ago 1346 and who has not yet used it, or Miss Hughes, who purchased a caravan in September last year and has a receipt marked under the name of Gailey Caravans, as inclusive of rates and site maintenance for 1978. That would be the normal situation.
§ The House can imagine the consternation when, on 3rd January, all owners received a letter from the company Trellis Scott Limited which, in effect, told them that this new company had taken over the site and it was no longer in the business of renting caravans but was now in the business of selling to individual purchasers on lease the 40 ft. by 30 ft. sites on which their caravans rested.
§ The letter is a perfectly reasonable business letter spelling out the sort of improvements which the company sought to make upon the site, but the significant fact is that the last paragraph said that it was important for the owners of caravans on the site to let the company know by 14th January whether they would take on the lease and, in addition, pay the company £10 a year ground rent and £165 a year maintenance charge in addition to the rates. The form which people were asked to sign is quite simple, saying "I wish" or "I do not wish" to undertake this responsibility.
§ To ask people in that situation to make up their minds over such an important issue in only 11 days is totally unreasonable. Those who requested details of the terms and conditions of the lease were told by staff of the company that they were not in the business of showing leases—"Would you please sign the form?".
§ I have evidence in correspondence that many people were telephoned and pestered to sign the form, and when they asked "What is my position if I do not sign?" they were told that if they did not sign by 14th January their caravans would either be towed off the site or be towed on to a hard standing, where they would be required to pay £75 a week until such time as they made other arrangements.
§ Mr. Lester
I understand that even at this stage, in spite of the protests, and in spite of the matter being put by hon. 1347 Members to the Minister, who has taken up the question in Wales, those who have not signed the document have had their services chopped off and their television aerials removed without any reference to them whatever. A copy of the lease has since become available.
Although it is not the first time that this sort of thing has happened, one can understand why Mrs. Higgins of Coventry wrote in the following terms:We have a Down's syndrome child, a mongol child, for whom we struggled to buy this caravan where we could take him and the family for holidays. Having had the van for four months and having had no holiday, we are now faced very suddenly with an immoral lease and a very large amount of extra expense. Trusting you can do something urgently for all people placed in an atrociously expensive situation through no fault of their own.The questions that I want to raise with the Minister are both local and national, because I am sure that he is aware, as we are all aware, that there is no protecion whatever for holiday caravanners by law from such site owners. My first question concerns the relative liability between the two companies on the basis of the documents that I have read to the House. First, what right could Trellis Scott have to issue such a short-term ultimatum, in spite of the commitment of the previous owners over the site, and to people who quite legitimately bought caravans from them only on condition that they could leave them and keep them on this site in 1978? Secondly, what right has the previous company, Gailey Caravans of Stafford, to sell the site without making sure in the conditions of sale to Trellis Scott that these people were protected?
The second matter that I want to raise with the Minister, and to call in question, is this practice of trading. I have been in business for the whole of my life since leaving school, and I have dealt with many caravan sites throughout the country. Never in my experience of 25 years in business have I seen such deplorable trading tactics.
We must consider not only the short-term nature of the time given to make the decision, and the scale, and the pressure that people have been put under to make this decision, but the choice of a time when there is an inability to look at alternatives, as most holiday sites are 1348 closed in the winter. Many site owner-operators go on holiday at this time of the year. In addition, many site operators impose restrictive conditions which say "You cannot put a caravan on my site unless you buy a caravan from me." To put people who have invested £5,000 or £6,000 in a holiday caravan in a situation in which it becomes valueless overnight through no fault of their own is deplorable.
Also, there is a lack of information about interest rates in the letter, and there can be no knowledge of which company would be offering to buy the lease from Trellis Scott. The people had no knowledge of the leasehold terms before being requested to sign the paper. Considering the average person, one can understand why this is an enormous problem for those unwilling or unable to bear the financial burden. We must bear in mind that many are already committed to hire purchase in buying a caravan, anyway.
It is small wonder that one of the tenants has died during this period, possibly due to the pressure and the unfortunate shock of all this. There are other letters in the file, which I shall hand to the Minister, indicating the ill health and worry caused to these people.
Let us look simply at the financial aspects and the difference from last year. Last year, £165 covered all expenses—rates, maintenance and profit for the site owner. But if people took these leases on the terms that the company offered, they would be paying £612 a year for the next five years, and all that they could claim at the end of that period would be that they owned the bit of land, 40 ft. by 30 ft., on which their caravan stood.
The third point that I wish to raise is the relative position of those who sign these leases between the owner and the tenant. First, I should like the Minister to ascertain whether the Price Commission would be interested in the fact that last year the Gailey Caravan people were paying £165, which included, as I have said, rates, rent and profit, and maintenance of the site and, presumably, it covered the running of satisfactory services, and overnight, with a new owner, people are required to pay £165 for maintenance only, a further £10 for ground rent, and rates and other charges on top of that.
1349 Surely that exceeds any index that anyone has in terms of increases in prices, because the cost of services could not increase by that sort of rate, and it is considerably higher than the 10 per cent wage rises that most people are likely to get in the next year.
We must again look at the terms of the lease. The tenants are required to commit real capital. If they sign this lease, they undertake to make the regular payments in terms of maintenance, which, in the letter, the company suggests kindly will be index-linked with the Government's cost of living index so that it can go up automatically each year with the rate of inflation. If they sign this lease, they also undertake that they will get their insurance through the company and that they will get credit through the same company.
The tenants also sign that the company has the right to insist that they buy a new caravan from it at least every 12 years, at the full manufacturer's recommended price. Those of us who know something about caravans know that very rarely do people buy caravans at the full manufacturer's recommended price.
The tenants must pay the company at least one year's maintenance if they seek to assign the lease to anyone else, and, should they be unfortunate enough to default on the payment of any of the sums, they are required to pay 5 per cent, a month—60 per cent, a year. The lease contains 20 conditions, some of which are normal but others of which I find totally unacceptable. In addition, almost as a joke, the tenants are required to pay £50 for the solicitor's fees to sign the lease.
What does the company undertake and covenant to do in return for the lease? It commits itself—I emphasise "commits"—merely to empty the dustbins, keep the site tidy and maintain the existing roads and services already connected to the caravans. In addition, out of the goodness of its heart, it offers to take back the land after five years from anyone who finds the lease unworkable or unsatisfactory—at the original price he paid, although the charges are index linked. The promises in the letter—of improving standards, a swimming pool, and so on—are not commitments.
If I were signing such a lease which bought me a piece of land on a site for 49 years, the first thing I would do would 1350 be to inquire into the nature of the company. I asked the Library to do this for me, and this is the Librarian's report:I am afraid I have had very little success in tracing information about Trellis Scott Ltd. I have contacted Companies House, who told me that the company was incorporated on 6th April 1976 and they had the registered office as 17 Church Street, Northampton, but this was apparently changed to Carlyle House, 507 Newport Road, Cardiff on 24th March 1977. Companies House have not received any annual reports for the company at all to date.All that we know of the company is what we see on its stationery. Mr. S. V. Dunstan is the managing director and a Mrs. Evans is the company secretary. We have no knowledge of its assets, standing or anything else.
What would be the position of someone who has paid the £1,500 for the lease if after, say, two years the company seeks to go into voluntary liquidation and sell to a new company what is left of the site, which can be only the common services? The new company could impose new conditions. What is the balance between landlord and tenant? Is such a company as Trellis Scott in a position to offer credit, as it did in its letter? Can it be licensed under the Fair Trading Act to offer credit?
I feel concern that this could be seen as an asset-stripping operation. A company with no parentage moves into a site and in one year can take off a cool £250,000 in cash, committing itself merely, for the maintenance charge that it will make in succeeding years, to maintain the site as it was. Should not the Price Commission look into the profits and charges relative to those of the previous owners?
§ Sir Raymond Gower (Barry)
Has my hon. Friend been able to ascertain from the local authority whether it knows whether the company owns the land freehold or on a long lease?
§ Mr. Lester
I am sorry to say that I have not had that opportunity, because everything has moved so quickly, but I intend to do that.
What protection have the leaseholders should the company default?
I move on quickly—because other hon. Members wish to support what I have to say—to the inter-relationship between the various companies involved in this site 1351 operation. On the previous occasion when this sort of thing happened in South Wales the buyer and seller companies were part of the Julian Hodge empire.
This case involves Mr. S. V. Dunstan who is managing director and who has long links with the same group. The credit is offered by the same group and the company offering and advertising holidays on this site in Sunday newspapers belongs to the same group. I understand, although it is difficult to check the complex matters of companies and their relationships, that Pyre Corner Caravans, Puppet Sands, Whiteford Bay, St. Dinat's Holiday Estate, and Howell Caravans all belong to the same group.
I am greatly concerned at this interlinking between credit, sites and holidays, which is a virtual monopoly. I ask the Minister whether it is possible for the Monopolies Commission to look into this lack of choice for holiday caravanners and into the position of a caravanner who signs the type of lease I have described, with such a total commitment. Such a caravanner cannot look outside for competition or for better value than that which this company is prepared to offer.
If, as I understand, all of this is legal, I am gravely concerned for the future of holiday caravanners. There are over 500 registered sites in the country and 245,000 holiday vans on static sites. I know from my own experience that many of these sites are well run by decent people. Many others, however, operate unacceptable conditions. I know that the Minister has evidence of this as a result of the mobile homes survey which is currently being conducted in different parts of the country.
Holiday caravanners are not necessarily wealthy people. I have read out a letter from one such person and I could read many more. Many caravanners, particularly in the Midlands, have a caravan because of special family circumstances. I urge the Minister to speed up the mobile homes survey and get work started so that in future there is some minimum protection for holiday caravanners. I consider that such minimum protection should comprise a proper period of notice before major changes render the caravanners' investment valueless, the 1352 establishment of reasonable conditions for leases, and security in one form or another for a worried and defenceless group of people.
§ Mr. Nicholas Edwards
Before my hon. Friend sits down, may I say, as the Member in whose constituency this site is situated, that my hon. Friend has my wholehearted support for the protest he has made and the points he has raised? I support his call for action to deal with the disgraceful conduct of this disreputable company.
§ Mr. Phillip Whitehead (Derby, North)
I echo what has been said by the hon. Member for Pembroke (Mr. Edwards). I omit all of the usual courtesies in view of the lack of time.
As President of the National Association of Caravan Owners, I have received many letters saying that the Dinas affair is a public scandal. I should like to ask my hon. Friend the Minister of State whether he has had Mr. Dunstan in to see him and spelt out the grave concern felt about this issue. Has he been able, in conjunction with the Department of the Environment, to look at the ways in which those caravanners who have refused to sign the pledges demanded of them on 14th January have been treated? Has he been able to give any undertakings to them? What can he say to others throughout the country who fear that if the Dinas affair is allowed to go unpunished the same thing will happen to them, too?
§ The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser)
I am extremely grateful to the hon. Member for Beeston (Mr. Lester) for raising this matter. The attendance in the House of so many hon. Members is a sure sign of the public concern felt over this problem. This is no small matter. It is big business. There are about 245,000 static holiday caravans. I must declare an interest as the owner of such a caravan.
The investment in a static caravan can run into several thousands of pounds. Those who buy such caravans are investing in British industry and helping British tourism so they ought to have some help from this House. Unfortunately, this business is bringing a good deal 1353 of heartache and anxiety and a deep sense of injustice in a limited number of cases. The root of the problem is that a caravan owner cannot negotiate at arm's length and on equal terms because it is physically impossible in most cases for him to take his custom elsewhere by moving a static caravan.
I turn to the abuses of the operators' powers and emphasise that, although the volume of complaints is growing, the complaints are not universal. No holiday retreat ought to be a nest of stinging anxieties for those who possess a holiday caravan. I want to deal with the complaints about Trellis Scott and other similar complaints which have come mainly from South Wales—Gower, Pembroke and Merthyr.
I think that the main complaint is about the time for decision. Inequality of bargaining is inevitable, but what I deplore is that any caravan owner should be bulldozed into making a snap decision in a matter of days. I understand that, allowing time for postage, some of these caravan owners have had about 11 days in which to make a major decision on taking a lease, at a substantial premium, which contains a number of dubiously reasonable terms and involves a good deal of expense.
I use the word "bulldoze" advisedly. These people were told that, if they did not make a decision by 14th January this year, in some cases their caravans would be removed and the services disconnected. I got in touch with Mr. Dunstan, the managing director of Trellis Scott, on the telephone immediately I heard about the matter. He declined to come and meet me, but I discussed the matter with him at length on the telephone. I cannot mention everything that he told me in confidence, but he will not mind my revealing that I expressed my hope that, in view of the concern expressed by the licensees and by many hon. Members, his company would not feel constrained to take precipitate action. In response, he assured me that he would give special consideration to any case of real need or discernible hardship.
I have no specific power to force a company to act in a particular way towards caravan owners. I am not sure what else I can do to relieve what is an extremely distressing situation for some 1354 individuals. I hope that the company and its officers will respond to the deep-seated concern which I have expressed and which has been expressed by hon. Members.
There are many other abuses which I have not had time to deal with, but any owner of a caravan faced with this dilemma ought to take immediate action. A decision within a matter of 10 or 11 days could not have been within the wildest contemplation of people who had caravans on this and other sites. I hope that the company will heed my request and that the owners will take advice and seek to negotiate on that advice.
Although views could be expressed on the prudence of accepting certain clauses in the leases, I think it would be unwise of me to try to offer legal advice from the Dispatch Box in the short time available to me. I will, however, study very carefully all the questions of a legal nature raised by the hon. Gentleman and the documents which he proposes to send to me.
With regard to possible solutions, apart from that of persuasion, I have looked at the Fair Trading Act 1973, but there are problems there over the definition of a consumer transaction and other matters involving land. I have also looked at the possibilities of a code of conduct, but there are so many operations that it would be extremely difficult to get every one within the ambit of the code. These people are suffering from a mini-monopoly situation. There are problems, and I am looking at them very seriously.
I cannot give the House a view at the moment on whether it is possible to have a reference to the Monopolies Commission, but I shall examine that request very carefully indeed, because the situation shows many of the abuses which usually arise out of a monopoly.
The major long-term hope is the mobile homes review. The problems have been listed and my Department has asked 10 consumer bodies for their views on how the law might be changed following the review. About half of these bodies have replied. All of them are in favour of greater protection for holiday caravan owners. I am anxious, as are all hon. Members, that once consultations are complete we should push ahead as fast as possible with the implementation of 1355 the findings of the review in so far as they are relevant to the problems of holiday caravan owners.
It has been suggested that there could be amendment of existing laws, but they have shown such loopholes that we probably need a new approach to the matter. Security of tenure is probably at the heart of the matter.
The hon. Gentleman mentioned the Price Code. We amended the powers of the Price Commission in the Bill which went through the House in the summer. Charges for site licences for holiday caravans in England and Wales are within the scope of the Price Code, although the Price Commission can merely control the profit margins of site operators. It cannot deal with individual transactions between the caravan owner and the site operator, but it can look at the profit margin of the operator.
The Trellis Scott case and the other cases drawn to my attention have been passed on to the regional offices of the Price Commission. In addition to the details of the case, the sense of urgency felt by hon. Members has also been conveyed.
1356 There is, finally, the question of the Consumer Credit Act 1974. Having read the letter which was sent to caravan owners, offering to arrange credit terms, I think that there is no doubt that the Director General of Fair Trading has power to grant or to refuse a credit broker's licence to the Trellis Scott company. Whether that happens or not must be left to the Director General. It would not be proper for me to express a view on the grant of a broker's licence since appeals from licensing cases will come to the Secretary of State. It is therefore a matter which I must leave to his judgment, for absolutely proper reasons.
I am extremely grateful for the speeches made by the hon. Gentleman and other hon. Members. I shall study them with the greatest urgency I hope that, even without the intervention of the law, there will be a change of heart on the part of those who seek to impose decisions in a very short time, involving a great deal of expenditure of money.
§ Question put and agreed to.
§ Adjourned accordingly at one minute past Twelve o'clock.