Orders of the Day — Holiday Travel Trade

Part of the debate – in the House of Commons at 12:00 am on 13th December 1965.

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Photo of Mr Roy Mason Mr Roy Mason , Barnsley 12:00 am, 13th December 1965

The title of the debate, Mr. Deputy Speaker is "The future of the travel trade in Britain", or something of that nature. Perhaps I may be allowed to paint a rather broad picture, instead of looking rather narrowly at the seamier side of what may be a very small area of the travel trade. If my hon. Friend the Member for Accrington (Mr.H.Hynd) will exercise a little patience, and not be too impulsive, I will come precisely to some of the points raised by my hon. Friend the Member for Blyth.

For the first time in history the date of a Bank Holiday was changed to bring about better staggering of holidays and encourage holiday taking in September. This Bank Holiday experiment will continue and will indeed be extended to Whitsun during the next three years, after which we shall have to consider what might be done on a more permanent basis.

Next year too—and much more important—all but one of the examining bodies will be completing before July starts the school examinations for the G.C.E. at both O and A levels. This kind of innovation together with the gradual unrolling of the road programme and the building of new hotels and so on, will obviously give us a better basis for looking after our growing intake of visitors.

These reflections lead me to emphasise one point. With greater numbers of the public travelling whether at home or abroad, and including these days not just the wealthy and the privileged but people literally from all walks of life including many who are not very experienced, it becomes the more important for the travel trades to ensure that the services which they sell to the public are fully as good as the public can reasonably expect.

In this connection, I have been noting with particular attention the assurances of the leaders of the Association of British Travel Agents that their "Stabiliser Operation" has been designed with one single aim—the aim of affording a better assurance to any customer of any member firm who buys one of their inclusive tours that he will, when the time comes, get the tour he has paid for.

Recently, and more particularly since the widely publicised accounts of holidaymakers stranded abroad or losing holiday or money or both as a result of financial default on the part of a handful of tour organisers during the summer of 1964, there has been a good deal of pressure for Government legislation to control the activities of travel agents and tour operators. The Government has the greatest sympathy with the victims of the defaults I have mentioned and is greatly concerned that the public should not lose their holidays or the money they have saved for them.

As my hon. Friend mentioned, it will be recalled that I told the House in February this year that I was considering whether it would be practicable, without restricting legitimate enterprise or materially increasing costs to the travelling public, to devise legislation to protect tourists against the risk of financial default by organisers of inclusive tours. However knowing the difficulties there are to provide protection—for most buyers of inclusive tours—if this problem can be adequately dealt with by action within the trade itself this will be all to the good.

Before attempting to reach a conclusion on the practicability of legislation, therefore, we are now proposing to await some experience of how the travel trade and its structure are in practice being affected by the introduction of the A.B.T.A. "Stabiliser Operation" to which I and my hon. Friend have referred. This will of course be without prejudice to any eventual conclusion of the Government on any restrictive aspect of the scheme and on the question of possible legislation. If, as I have said repeatedly, the scheme shows signs of developing in any direction which seems on balance to be undesirable, we should need to consider intervention. As at present advised, however, we do not feel that we should be justified in urging A.B.T.A. to reconsider its scheme.

Efforts have been made by the two major travel trade bodies. For 1965 the Travel Trade Association took out an insurance to protect clients of its members from loss of holidays through financial default on the part of a tour operator. Limits of liability are £100,000 in the aggregate and £25,000 on any one tour operator. So far as we know, only three T.T.A. members are tour operators on a substantial scale.

The Association of British Travel Agents has been exercising its mind a great deal on this problem. Talk of legislation may have encouraged this. A.B.T.A. has a scheme which really falls into three parts—first, accounting rules; secondly, the common fund; and, thirdly, now upon us, operation stabiliser.

The accounts rules were adopted in October, 1964. They require every member, whether tour organiser or true travel agent, to submit balance sheets in prescribed form to an independent qualified accountant at regular intervals of no more than one year, to open his books to the accountant, and to give him all other necessary information. The accountant reports to the member: and within six months of the balance sheet date the member must present a signed copy of the accountant's report to the A.B.T.A. Council.

The by-law establishing a common fund was adopted in February, 1965. All members are to contribute such sums as may be directed by the Council, subject to a maximum of one-half of the individual member's annual subscription to the Association. The fund, expected to realise £13,000 in the first year, rising to —35,000 in the second, assuming there are no claims on it, is to be used mainly to prevent members of the travelling public from being stranded overseas because of financial default on the part of an A.B.T.A. member. A secondary use, if funds permit, would be for the benefit of tourists who have paid for holidays which had not started before the financial collapse of the member tour organiser responsible for the arrangements.

A.B.T.A. claims that operation stabiliser, which was duly adopted at its Annual Convention held in Jersey late last October, is a necessary complement to the earlier establishment of the common fund. The essence of the arrangement is that for the sale in the United Kingdom of holidays or tours to places outside the British Isles, first, tour operators who are members of A.B.T.A. shall appoint as agents and pay commission only to travel agents who are also members of A.B.T.A. and, secondly, travel agents who are members of A.B.T.A. shall sell tours and holidays as defined above only on behalf of tour operators who are members of A.B.T.A.

These arrangements already take effect, though a period of grace until 1st November, 1966, is allowed to existing agents of A.B.T.A. tour operators, provided they undertake during that period not to sell tours produced by non-A.B.T.A. members and to pay to the A.B.T.A. common fund the minimum contribution currently required of A.B.T.A. members. To ensue that firms now wishing to join A.B.T.A. are not prevented from doing so on grounds other than insolvency or the employment of inadequately qualified staff, A.B.T.A. is setting up a Membership Arbitration Panel of three people, one a representative of the Association and the other two, including the chairman, independent persons of standing outside the travel industry—I understand that the persons in mind are General Sir Malcolm Cartwright-Taylor and Mr. F. W. Beney, Q.C. A.B.T.A. tells us that about 50 firms from the T.T.A's two northern branches are in process of being admitted to membership and that "hundreds" of applications from other retail firms, some of them no doubt T.T.A. members, are already under consideration.

I have recently received several representations about the operation stabiliser scheme from those who fear that it might tend to create a closed shop in a trade where initiative, enterprise, imagination and new ideas are essential. I have answered such representations on the following lines. A.B.T.A.'s scheme, which will come fully into effect next year, is certainly likely in practice to confine the organisation and retailing of virtually all inclusive tours to places outside the British Isles to tour operators and travel agents in membership of the Association. A.B.T.A., however, claims that the scheme is a necessary complement to the establishment of a reserve fund for protecting the customers of member firms in case any firm defaults financially after a client has booked and paid for a holiday. It disclaims any intention to stifle competition from financially sound firms with experienced staff, and so far we have no reason for challenging their disclaimer.

I am watching this development most closely and I want to inform the House that we have the right, if it so needs exercising, either to legislate or to refer it to the Monopolies Commission if it tends to develop in a most undesirable way.