§ 3.17 p.m.
§ Lord Graham of EdmontonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will consider referring to the Office of Fair Trading the action of British Rail in making cuts in the level of commission payable to travel agents on the sale of British Rail tickets, in order to ascertain whether the cuts constitute an abuse of monopoly power.
§ Lord Lucas of ChilworthMy Lords, I understand that officials of the Office of Fair Trading have recently considered this matter in relation to the provisions of the Competition Act 1980 and do not consider such action to be anti-competitive in effect or intent.
§ Lord Graham of EdmontonMy Lords, I am grateful to the Minister for that reply. Is he aware that British Rail are imposing this cut without any meaningful negotiation or consultation with the travel agents? To describe what has happened as negotiation or consultation is a travesty of what actually took place. Is the Minister also concerned that the reduction in the commissions, which are already at a low level, will diminish the number of travel agencies that sell British Rail tickets in the high streets and that this will undoubtedly react against the best interests of the travelling public?
Finally, will the Minister accept that public services such as British Rail have responsibilities not only to the public but also to travel agents, and that besides depressing the margins of commission it may be that this action will drive the travelling public from rail to coaches? That could well be to the detriment not only of British Rail but also the taxpayer.
§ Lord Lucas of ChilworthMy Lords, the noble Lord asks three questions. I remind him that British Rail engaged in discussions with ABTA at the convention in November 1986. There were then discussions with the agents' representatives in January and again in February. Therefore, I suggest that there were adequate discussions. On the noble Lord's second question, British Rail are suggesting a reduction of between 8 per cent. and 11 per cent. to 7 per cent. and 9 per cent., reflecting the lower costs in ticket selling.
British Rail are in a very competitive industry because they compete with air and road transport for business. They have to respond with lower prices, which they have done, which in turn reflects in the income of some selling agents. I recognise, as do British Rail, that there is a social responsibility for providing adequate travel. As I said, taken alongside air and road travel I believe that that social responsibility is discharged.
§ Lord UnderhillMy Lords, the Minister referred to British Rail being in competition with air and coach travel. Is it not a fact that the commission payable by airline and coach companies is now far more than British Rail will be offering? Does he agree, as my noble friend suggested, that they have a responsibility to the public; that the amount of money generated by British Rail through ABTA agencies is about £110 million; that a good proportion of first-class travel is sold and that therefore it is not just a question of helping British Rail? It is a question of helping the travelling public who by this policy may be denied some of the outlets from which they can purchase tickets.
§ Lord Lucas of ChilworthMy Lords, as the noble Lord, Lord Underhill, knows, commission rates, whether they are 7 per cent., 8 per cent., 9 per cent. or whatever they may be, should not be looked at in isolation; they should be looked at alongside the cost of selling, the cost of the product being sold and the volume of the product being sold. I believe that the travel agents who engage in this business have the commercial resource to determine whether they wish to continue. British Rail can assess the value or otherwise of the number of outlets the noble Lord suggests that there are.
§ Lord Graham of EdmontonMy Lords, will the Minister reflect carefully on the quality of the information that British Rail have given him? To say that the travel agents were consulted at the ABTA conference in Australia and subsequently is not only a travesty but, I believe, a deceit. The travel agents were told by British Rail what was going to happen. At no stage were the travel agents involved in negotiating or pleading for a change in the commission. All that happened at those meetings was that there was an attempt to delay the implementation. Will the Minister go back to his advisers and say to them that ABTA rejects completely the idea that there has been any meaningful consultation? It is a disgrace.
§ Lord Lucas of ChilworthMy Lords, I do not like contradicting the noble Lord, Lord Graham, because he knows a great deal about this business, but I am sorry to have to say to him that what he has said is just 1486 not true. At the ABTA convention in November 1986, British Rail gave notice of their intention to do certain things. That was discussed again in January and a formal letter was sent seeking the views of the association and its principals. They were considered, and British Rail decided the commercial line that they were going to take.