HC Deb 19 May 1993 vol 225 cc226-7
4. Dr. Godman

To ask the President of the Board of Trade what further steps he is taking to ensure that travel agents and tour operators have sufficient funds to protect holidaymakers in the event of financial collapse; and if he will make a statement.

Mr. Leigh

Tour operators and travel agents who sell packages are required under the Package Travel Regulations 1992 to have security for the refund of customers' prepayments and for repatriation in the event of insolvency. It is their responsibility to ensure that they have sufficient funds to provide that security.

Dr. Godman

Is it not the case, if we can hear the truth, that the Minister has implemented an Arthur Daley-type charter for unscrupulous tour operators? What will he do this summer, when the first unbonded tour operator collapses, to repatriate stranded holidaymakers abroad who have no financial protection? Should we not all be urging our constituents to stick to dealing with firms in membership of the Association of British Travel Agents?

Mr. Leigh

For the first time under the directive, holidaymakers who deal with a package tour operator will have the reassurance that their deposit will be protected under an insurance, bonding or trust scheme. The Opposition proposed that we should institute an immensely bureaucratic licensing system, which would add enormously to consumer costs and to business regulation. That is why we rejected that licensing system, and we consider that our proposal gives sufficient consumer protection.

Mr. Page

I support my hon. Friend's remark that bonding and insurance will give greater protection to holidaymakers than ever before, reinforced by criminal sanctions if bonding and insurance do not take place. Does my hon. Friend accept that efforts by the five trade bodies to form an umbrella organisation, the Travel Protection Association, will give even more protection to holidaymakers wishing to travel under the auspices of those five organisations?

Mr. Leigh

I have heard of that scheme, which is much in the spirit of the directive. It is based on a flexible approach, the industry regulating itself, and ensuring customer protection without enormous costs and bureaucratic burdens being placed on the industry. That is precisely the approach that the Department favours.

Mr. Nigel Griffiths

The Minister says that a licensing scheme would be excessively burdensome and bureaucratic. Why is it that, before the last election, he issued a press statement saying that he would introduce licensing? Does the Minister realise that his regulations fail to implement fully article 7 of the package travel directive? What will he do to ensure that holidaymakers stranded abroad by travel companies that collapse are brought home at no extra cost?

Mr. Leigh

When we launched a consultation exercise, we found that if we were to introduce a licensing system, literally tens of thousands of operators would be covered by it. We would be tying them up in a tangle of red tape. One cannot legislate against fraud. We would only have ensured that business would be over-regulated and that the consumer would have to pay a lot more for his holiday. We have ensured that, when a deposit is paid to a travel package company, that deposit is protected by bonding, insurance or a trust scheme. That is a flexible approach, behind which the whole House can unite.