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Clause 4

Volume 890: debated on Monday 14 April 1975

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Contributions For The Purposes Of The Fund By Air Travel Organisers

I beg to move Amendment No. 11, in page 6, line 11, leave out 'subsection (2)' and insert subsections (2) and (2A)'.

With this amendment we are taking also Government Amendments Nos. 19 and 28.

Amendment No. 11 is consequential on Amendment No. 19 to insert a new subsection (2A) to provide for affirmative resolution procedure for regulations made under Clause 4.

In Committee I undertook to consider how regulations made under Clause 4 could best be brought before Parliament for approval. We have considered whether it would be appropriate to make an order subject to confirmation within a certain period, but if for some reason it did not prove possible to obtain the approval of each House within the period serious difficulties could arise. It might be necessary for the CAA to refund contributions already collected or to obtain additional contributions retrospectively.

We have therefore accepted a procedure which will require a draft order to receive parliamentary approval before the regulations take effect, although this could result in delay if the order was laid just before a recess. If the purpose of the order was to reduce the level of contributions this could work to the disadvantage of the travel trade, but we have concluded that the difficulties which could result from the alternative procedure would be far greater.

Amendment No. 28 is consequential on the amendments to which I have referred, which provide for regulations made under Section 26 of the Civil Aviation Act by virtue of Clause 4 to be subject to affirmative instead of negative resolution procedure as provided in the Civil Aviation Act 1971.

Again, might I check two points with the Minister? The first is on Amendment No. 11. It refers to subsection (2) and then to subsection (2A). I have had difficulty in discovering where that was intended to come, because I could not find what presumably would normally be the case, namely, subsection (2B). Perhaps the Minister can clarify this.

On the substance of the issue which, I understand, arises on Amendment No. 19, which effectively means that the regulations will require a positive rather than a negative resolution, that is certainly something which we on this side welcome, because one can seldom recall an occasion when the Government have been prepared to change their mind on this point.

If the hon. Gentleman looks at Amendment No. 19, he will see that it refers to subsection (2A). It is simply an alternative way of dividing the clause. I understand that it is not infrequently done. There could, of course, be (2A) and (2B), but I hope we shall not have a long debate about that.

It is not a question of having a long debate about it. I am merely seeking to establish whether the drafting is correct. There is no need, therefore, for the Minister to reply in those terms. If we are now inserting subsection (2A), there is presumably a corresponding subsection (2B) later in the proceedings. Perhaps the hon. Gentleman will confirm whether this is so. If it is not, I am not clear why this subdivision is needed.

It is simply a different way of subdividing. One could have subsection (2) and subsection (2A), or (2A) and (2B). I have seen legislation where this has been provided for. I am sorry that it does not meet with the hon. Gentleman's approval.

Amendment agreed to.

I beg to move Amendment No. 12, in page 6, line 13, after 'provision', insert:

'(including in particular any such provision as is mentioned in subsection (2) of that section)'.
Section 26 of the Civil Aviation Act 1971 contains the powers under which the Civil Aviation (Air Travel Organisers' Licensing) Regulations are made, and Clause 4 of the Bill in effect widens those powers to enable the regulations to be amended so as to require licence holders to make payments to the reserve fund. Section 26 of the 1971 Act has two subsections. The amendment is necessary for technical and drafting reasons to ensure that subsection (2) of Section 26 applies to provisions for requiring payment of contributions, in the same way as it applies to the regulations presently in force.

Unless the House requires me to do so, I shall not weary it with the technical drafting reasons which have made the amendment necessary.

Amendment agreed to.

I beg to move Amendment No. 13, in page 6, line 15, leave out 'calculated in such manner as may be prescribed by' and insert

'at such a rate as may be specified in'.

The amendment is linked with Amendment No. 14. Its purpose is to simplify the provisions of Clause 4, Contributions to the Reserve Fund payable by any travel organiser are to be a prescribed percentage of his turnover. The amendment spells this out instead of leaving it for the method of calculation to be prescribed in the regulations. The percentage will, of course, be prescribed in the regulations and will be subject to variation from time to time.

Amendment agreed to.

Amendment made: No. 14, in page 6, line 19, leave out from beginning to first 'the' in line 22 and insert:

'The rate of contributions to be required from any air travel organiser under regulations made under section 26 by virtue of subsection (1) above shall be fixed as a percentage of'.— [Mr. Clinton Davis.]

With this amendment we are to consider the following amendments: No. 16, in page 6, line 24, after 'facilities', insert 'to be '.

No. 17, in page 6, line 26, leave out 'the air travel organiser has provided'.

No. 18, in page 6, line 27, after 'flights', insert:
'is to be provided by the air travel organiser'.
No. 20, in page 6, line 43, at end insert:
'shall be payable by instalments on 1st January, 1st April, 1st July and 1st October in any year, each instalment being based on the total amount estimated to be payable by customers of air travel organisers during the ensuing three months and'.
No. 21, in page 6, line 43, at end insert:
'shall be payable in two half-yearly instalments based in each case on the total amount paid or payable by customers of the air travel organiser during the preceding three months and on the total amount estimated to be payable by customers of the air travel organiser during the ensuing three months, and'.
No. 22, in page 6, line 43, at end insert:
'shall be payable by quarterly instalments in advance based on the total amount paid or payable by customers of the air travel organiser during the ensuing three months'.

I am sure that it will be for the convenience of the House to take the amendments together, although they raise somewhat different points. Am I right in assuming, Mr. Speaker, that you will be prepared to allow a separate Division on one or other of the group of amendments, depending on how the debate develops?

I shall be prepared to allow a Division on Amendment No. 15 and on Amendment No. 21 or Amendment No. 22 if need be.

All the amendments have the purpose of easing the burden of payment by the tour operator in the first instance. It is a feature of the Bill that it requires the levy to be made on the tour operator twice yearly in advance, on the basis of the estimated turnover for the ensuing six months. It is a considerable burden of payment, and it is a source of considerable anxiety to the tour operating industry, which has made representations to us on the subject, both during the proceedings in Committee and subsequently.

Shortly before 1st April and 1st October each year, tour operators will be required to estimate their turnover for the ensuing six months, and pay in the immediate future 1 per cent. of the turnover to the agency to be set up under the Bill. From 1st April 1976 it will be 2 per cent. of estimated turnover.

As the money must be made over to the agency before it is recovered from the clients, the levy acts as a tax, albeit a fluctuating tax that descends progressively over the six months. It is a burden on top of many others that have fallen on the travel industry in recent years.

The first burden is that, with much increased capacity in air holiday traffic, people have tended to book much later than they used to. They used to book from Christmas onwards for the following summer, and the tour operating companies benefited from the immediate cash flow of deposits and the interest on them.

As a result of the collapses of last summer, other facilities that the tour operating companies enjoyed will no longer be available to them. For example, hotels and other contractors abroad who have suffered serious losses as a result of recent collapses will no longer be prepared to allow a time to elapse before payment of bills. In addition, they may require payment to be made some months in advance of the client's departure, instead of on arrival or even at the end of his holiday. Advance payment is becoming increasingly necessary to secure seats on aircraft and beds in hotels. This, too, is tying up a great deal of money in advance. Those burdens are already on the industry. There is the doubling of the bond from the level established last year which proved insufficient. That, again, is a considerable burden on the industry as a whole. Now we have this further turn of the screw, the requirement that the levy should be on the tour operator and recoverable from the client only over a period of six months.

I will illustrate the extreme burden by taking the largest tour operator's estimated turnover. In the summer of 1976 a levy of 2 per cent. will require a payment, shortly before 1st April, of £680,000 on the basis of a turnover of £34 million in that summer. In the winter season of 1976–77 there will be an initial levy of £320,000 on an estimated turnover of £16 million. On the basis of a £50 million turnover in that year of tour operation the tour operator in question will be required to make two lump payments of £680,000 and £320,000 respectively, making a payment of £1 million inside a six-month period.

The tour operator will have recovered the amount of the first levy from the clients in that six-month period, but it will be clear to the Minister that this is a tax on the tour operator which will be a considerable burden and may have the effect of achieving what the Minister is trying to avoid, namely, the collapse of travel companies in circumstances in which clients lose their money.

Tour operators lose not only the cash flow which is traditionally customarily available to them as working capital, but under the levy scheme as opposed to the bonding scheme they also lose the interest on that money. That will be a burden on the tour operator and it will be an adminstrative burden on the Civil Aviation Authority which has the responsibility of ensuring that the levy is paid in good time. Unless the CAA is to be staffed up to be able to cope with the two peaks, inevitably it will be seriously overburdened both with bonding and with the insurance levy on two dates in the year, shortly before 1st April and shortly before 1st October. The danger of the CAA's not being able to secure the moneys in time has already been amply illustrated.

I hope that the CAA will forgive me—it has no chance itself to argue the case—for referring to Western Jet which at this time last year was known not to be able to meet the bond requirements and whose licence was not renewed. The company was able to continue to trade in the ignorance of the CAA, and by the time a refusal had finally been entered against the firm's licence application events had gone so far in July last year that the company went broke to the tune of nearly £250,000.

'The CAA has a heavy responsibility to ensure that the money is in bond in good time before the company collapses. To that is to be added the responsibility for ensuring that the levy is paid in good time. In suggesting in Amendment No. 20 that the burden be eased by quarterly payments instead of half-yearly payments, we are suggesting that it will be a lesser responsibility for the CAA to secure the moneys for a three-monthly rather than a six-monthly turnover period.

For these reasons I hope that the Minister will be amenable to a reasonable suggestion which comes from the industry. The industry has grave fears which have been reported in today's copy of the Financial Times by Arthur Sandles, a highly respected correspondent. He has made it clear that the cash flow restrictions on the industry are so serious as to warrant the headline
"Holiday groups face crisis over 11% cash levy".
To the 10 per cent. bond is now to be added the 1 per cent. levy. The combination of those two factors, together with the other factors that I have already mentioned, may represent an insuperable problem for many holiday companies.

11.45 p.m.

I support my hon. Friend the Member for Romford (Mr. Neubert). The difficulties arose which led to the Court Line situation when the industry faced a cash flow problem. If Court Line had had the cash to enable it to carry on business for a few weeks beyond the summer season we would probably not be debating the Bill or the fund.

I hope that the Minister will recognise that in asking for the levy to be paid six months in advance he is taking the risk of imposing a further burden upon the industry. The increased bonding and the general request by the Civil Aviation Authority to so many companies to increase their capital have been accepted by the industry. I have no doubt that the companies will have to accept these provisions if the Minister insists, but I hope he will realise that he is not making matters easy for the companies. There is the risk that some companies may go into liquidation and that the very thing that he is trying to avoid will happen. It is true that the passengers will be covered, but other people will get into difficulties if the companies go into liquidation. Foreign hoteliers may find themselves owed money, for example. It will not help if we have other collapses on our hands.

Another matter that the Minister must bear in mind is that not all tour operators are large concerns. There are a number of small operators. The small organiser may not know what his position will be six months ahead. He may know his position three months ahead but he may not know it six months ahead. He may not know what kind of groupings he will have to organise so far ahead. I hope that the Minister has that well in mind. To insist that the small operator must anticipate his position six months ahead and that he must pay out money which he may not have may mean that he will have to borrow from the bank at a high rate of interest. That may place upon him an obligation which may compel him to go out of business. If that happens the idea is finished that the acorn of today will become the oak tree of tomorrow.

The Minister must accept that he has not given us many concessions. No concessions were made in Committee and the amendments which the Minister has put before the House have been very minor. The fact is that he has given us very little. We are now discussing a matter on which he could make a concession. It would not do any great damage to either the CAA or the Government but it would help in the working of the Bill once it becomes an Act.

Amendment No. 21 is intended to do precisely the same thing as the amendments tabled by my hon. Friend the Member for Chingford (Mr. Neubert). It merely goes about matters in a slightly different way. It may well be that the Minister will find reasons to prefer one or other of the amendments or even to dislike one amendment more than another.

In essence, Amendment No. 21 will enable the company to reduce its cash flow problems in that it would be paying six monthly but it would be basing its payments on the previous three months and on the three months yet to come. It would thus have a much clearer and more accurate idea of how much the payments should be and it would have the benefit of the payments which had already be made three months ago.

All these amendments are put forward with the same idea, which is that if we are to have this Bill it should be possible for companies of all sizes to carry on with their business despite the increased burdens imposed on them.

I support these amendments. There is a further point to be made in addition to those which my hon. Friend the Member for Romford (Mr. Neubert) has raised. Many of the smaller operators are being requested to put up their 10 per cent. bonds in cash. In the past it was normally possible for them to provide these bonds through a bank or an insurance company against the collateral of some of their fixed assets, for example the office building which they might own.

Such are the uncertainties in the property market, due to the activities of the Labour Government, that increasingly the smaller companies are finding it hard to obtain bonds against such collateral. Instead they have to find cash. This means that, with the 10 per cent. bond and the 1 per cent. levy requirement, they are being forced to put up in cash the equivalent of 11 per cent. of their turnover.

Few companies in this country can easily bear that sort of demand for cash. My hon. Friend's modest amendment would somewhat mitigate the burden because it suggests that the companies put forward the levy only at three-monthly intervals rather than a bigger bloc every six months. The Minister has said that he is in sympathy with the objective of seeing that as many as possible of the smaller travel operators remain in business. I trust that the Minister will prove this by accepting the amendment.

Amendment No. 22 together with Amendment No. 21 relates to the basis and dates of payments of contributions to the fund. As proposed in Amendment No. 21, the suggestion is for two half-yearly payments based in each case on the total amount paid or payable by customers of the air travel organiser during the preceding three months and on the total amount estimated to be payable by customers during the ensuring three months.

Similarly, Amendment No. 22 provides for quarterly instalments based on the total amount paid during the ensuing ensuing three months.

What my hon. Friends are trying to achieve, and I share their desire, is to make the basis of the levy more precise and to ease the stress on working capital. In Committee and again tonight my hon. Friend the Member for Romford (Mr. Neubert) has stressed the need to ease the burden which the air travel organiser will have to bear in paying the levy. My hon. Friend is right to do this. That is why we have returned to the problem.

A helpful compromise would be to assess the levy on the three previous months' turnover, in which payments were made by the client to the travel company, while during the ensuing three months it would be estimated. That would make the levy amount more precise and ease the stress on working capital.

In Committee the Minister rejected that proposal on the ground that the Civil Aviation Authority had a duty to consider whether delay in the payment of contributions represented evidence of financial weakness, and, if so, whether the air travel organiser's licence should be suspended or renewed. The Minister also expressed his concern that quarterly payments would involve payment in July, at the height of the season, and that if the Civil Aviation Authority was forced into the position of having to suspend a licence, the dangers would be great.

Amendment No. 22 does not provide for quarterly payments at a fixed month of the year. It provides that the quarterly payments should be based on the three months' previous turnover and three months' estimated turnover, thus easing the strain. There is therefore no need to delay the contribution, to allow three months to ensue, and then to assess the amount of the levy. We recommend that the levy should be assessed part retrospectively and part in advance so that it relates more closely to the number of passengers carried. It will not do so in its entirety because it will be prospective to the extent of three months. With the limit of three months in retrospect it will be much more precisely related to the actual amount of turnover achieved by the tour organiser.

For that reason we believe that the proposal is fair and reasonable. I hope that the Minister will comment on all the amendments and perhaps express a preference for that which might achieve the objective most efficiently.

The hon. Member for Romford (Mr. Neubert) raised the question of Western Jet. I do not accept all of his arguments on that matter. Nor do I accept that his criticism of the CAA was justified.

The hon. Member for Rutland and Stamford (Mr. Lewis) often has an appealing and mollifying influence. However, he must not appeal to me by way of tearful blandishment. He must simply produce arguments. I shall not follow the hon. Gentleman into the details of Court Line since his argument also relates to that company's failure. It would be inappropriate for me to comment on it.

The Opposition argued that payment at six-monthly intervals may place a strain on the cash resources of some tour operators. I recognise that. However, the Bill does not prevent collection at shorter intervals, if desirable.

There are other reasons why I must reject the arguments of the Opposition. The Government think that it is important and necessary to strike the best practical balance between the viability of the fund and the condition of the trade. The amendment moved by the hon. Member for Romford (Mr. Neubert), if accepted, would create a rigid framework. There would be no room for manoeuvre if the payment period were written into the Bill.

It has already been agreed that the regulations governing the levy shall be subject to affirmative resolution, and these regulations will include the payment period. It would be possible at that stage for the House to see that the balance was being struck, and I cannot accept that one element should be permanently established now. This is one of the values of my meeting a point which had been raised about the affirmative procedure, so that the House would be able to see the position.

12 midnight.

We are grateful to the hon. Gentleman for accepting the principle of the affirmative resolution, but am I not right in saying that we would not be able to amend such a resolution? It would merely be a case of the House taking or leaving it, would it not? We would not have an opportunity of amending the periods which were laid down in the regulation.

That is right, but the House would have an opportunity of putting forward its view. It would then be for the Government to determine what action should be taken. I agree that the affirmative resolution procedure —indeed, I had certain experience of it recently—is not always the best vehicle, but we have to operate within whatever procedure is available to the House. This has been designed as the way in which we ought to deal with such matters. I was trying to be helpful and conciliatory.

There is another reason why I submit that the amendment is not acceptable.

The regulations will not state the dates on which payment should be made because it is intended that new licence holders should be required to make contributions from the time that they are granted their first licence. This is a point that I made in Committee. It is my understanding that the CAA has no power to withhold a licence until a particular date from an applicant who is otherwise qualified to hold one. The amendment would enable a new licence holder to operate up to three months without contributing to the fund. That would, of course, be an impossible situation.

It was argued, as a secondary argument perhaps, that an appalling burden would be imposed upon certain tour operators. I have always thought that one of the criticisms—we certainly heard it tonight—has been that the reserve fund would encourage unreliable tour operators. That was the whole burden of the argument in respect of the proposed new clause. We have, therefore, emphasised that the bonding system would not only continue but that it would be strengthened, and it would be surprising if this measure of protection had not resulted in some sifting out of companies in the industry.

As I have indicated before, we expected that there would be some anxiety and difficulty in the period leading up to the renewal date of 1st April. In fact, only 33 operators have failed to obtain a new licence, and the CAA expect these companies, mostly in a small way of business, to be able to provide the necessary security. Therefore, I think that the experience of the CAA in this respect is a matter to be given very careful consideration.

Are not 33 out of a total of, I think, 116 a very large number not yet to have received licences? Secondly, is not the Minister wrong to equate inability to put up 11 per cent. of turnover in cash with unreliability? Many reliable firms would not in the normal course of their business have 11 per cent. of their turnover available in cash.

I think that the real question to be posed in relation to the 33 is: how many of those will not be able to survive? As I have indicated, the advice that I have received from the CAA is that most will be able to provide the necessary security. I think we shall have to await developments and see what happens, but that is one of the bases upon which I reject this amendment.

The hon. Gentleman referred to an article in the Financial Times today. Implicit in that article was that we ought to consider reducing the level of the bonding. That would be a most inappropriate way to proceed. It would throw into dispute the whole purpose of and the necessity to revise the bonding system, which I think virtually the entire House will regard as important, whatever its views on the levy.

Banks have to maintain a certain liquidity ratio and solicitors have to hold money in client's accounts. While there may be a burden on the industry, we believe that it is necessary. As I have already indicated, the CAA considers that most of the 33 firms which have still not obtained licences will obtain them. That therefore justifies the course of action that we are seeking to take.

The industry has had ample notice of what we intended to do. It has or should have been able to make preparations. We are starting at the low level of 1 per cent., but the 2 per cent. levy will arise in April 1976. Those are justifiable reasons for proceeding on the basis that we have suggested.

I turn now to the arguments put forward by the hon. Member for Chingford (Mr. Tebbit.) The hon. Gentleman's purpose is to delay contributions to the reserve fund. We are not prepared to accept the amendment. If an air travel organiser failed in the three months before his contribution was due, it would be impossible to collect it, apart from what might be available in the liquidation. That would be a wholly unsatisfactory way of proceeding. By its nature, it would impose a double burden on the fund with the loss of contributions as well as payments to customers. In effect, payments would be made three months later than if contributions were paid wholly in advance and the build-up of the fund would be delayed.

I am unable to accept the hon. Gentleman's arguments, but I assure the House that the Government will look closely at developments as they arise. There is nothing in the Bill to prevent us from collecting at shorter intervals if that should prove desirable.

I wonder whether the Minister realises the implications of what he has just said. If a company goes bust, because of having to pay the levy in advance, the fund will have to pay the passengers to bail out that company. From what the hon. Gentleman has just said, if a company goes bust because it has to pay the levy in advance, the clients of that company will have a claim on the fund. Therefore, the fund will be pushing out money to clients which it need not have done if it had not demanded the levy in advance.

Indeed that is right. If the hon. Gentleman seeks to qualify that point, I will give way to him. However, that is my understanding of the position.

In Committee we encountered some difficulty in convincing the Under-Secretary that an assurance or a vague indication of intention was not the same as something written into the Bill. Similarly, we do not think that it is satisfactory to argue that regulations will be made and the House can, if it wishes, then express a view one way or the other upon them, because it is not possible to amend regulations. Therefore, there is a case for writing an appropriate provision into the Bill now, rather than waiting for the Government to introduce regulations.

I listened carefully to what the Minister said. The arguments on the amendments were deployed fully by my hon. Friends. There is concern about the cash situation. As the Minister said, a balance must be struck between the viability of the fund and the situation of the trade. None the less, provisions to be set out in regulations could be harsh. I believe that the Minister's objections do not apply to Amendment No. 22. Therefore, if my hon. Friend the Member for Romford (Mr. Neubert) will withdraw Amendment No. 15, it will be appropriate for us to divide on Amendment No. 22, which covers the causes of concern spelt out in the article in today's Financial Times.

In view of what my hon. Friend the Member for Worthing (Mr. Higgins) has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 19, in page 6, line 41, at end insert:

'(2A) No regulations shall be made under section 26 by virtue of subsection (1) above unless a draft of the statutory instrument containing the regulations has been approved by a resolution of each House of Parliament'.— [Mr. Clinton Davis.]

Division No. 168.]AYES[12.13 a.m.
Atkins, Rt Hon H. (Spelthorne)Hunt, JohnRhys Williams, Sir Brandon
Berry, Hon AnthonyJessel, TobyRoberts, Michael (Cardiff NW)
Biffen, JohnKing, Evelyn (South Dorset)Rost, Peter (SE Derbyshire)
Brittan, LeonKnox, DavidSainsbury, Tim
Brotherton, MichaelLawrence, IvanShaw, Michael (Scarborough)
Bulmer, EsmondLawson, NigelShelton, William (Streatham)
Chalker, Mrs LyndaLe Marchant, SpencerShepherd, Colin
Clark, Alan (Plymouth, Sutton)Lester, Jim (Beeston)Shersby, Michael
Clarke, Kenneth (Rushcliffe)Lewis, Kenneth (Rutland)Skeet, T. H. H.
Cooke, Robert (Bristol W)Macfarlane, NeilSpeed, Keith
Cope, JohnMcNair-Wilson, M. (Newbury)Spicer, Michael (S Worcester)
Costain, A. P.Marshall, Michael (Arundel)Steen, Anthony (Wavertree)
Durant, TonyMaxwell-Hyslop, RobinStradling Thomas, J.
Dykes, HughMayhew, PatrickTebbit, Norman
Fairgrieve, RussellMorgan-Giles, Rear-AdmiralThomas, Rt Hon P. (Hendon S)
Fisher, Sir NigelMorrison, Charles (Devizes)Townsend, Cyril D.
Fletcher-Cooke, CharlesNeave, AireyVaughan, Dr Gerard
Fowler, Norman (Sutton C'f'd)Nelson, AnthonyViggers, Peter
Fox, MarcusNeubert, MichaelWalder, David (Clitheroe)
Gilmour, Sir John (East Fife)Newton, TonyWeatherill, Bernard
Glyn, Dr AlanParkinson, CecilYoung, Sir G. (Ealing, Acton)
Goodhew, VictorPenhaligon, David
Grist, IanPercival, IanTELLERS FOR THE AYES:
Grylls, MichaelRees-Davies, W. R.Mr. Fred Silvester and
Higgins, Terence L.Renton, Tim (Mid-Sussex)Mr. Adam Butler.

NOES

Anderson, DonaldEllis, Tom (Wrexham)Magee, Bryan
Archer, PeterEvans, John (Newton)Marquand, David
Armstrong, ErnestEwing, Harry (Stirling)Marshall, Dr Edmund (Goole)
Ashton, JoeFernyhough, Rt Hon E.Morris, Charles R. (Openshaw)
Atkinson, NormanFlannery, MartinMurray, Rt Hon Ronald King
Bagier, Gordon A. T.Fletcher, Ted (Darlington)Noble, Mike
Bates, AlfFord, BenO'Halloran, Michael
Bennett, Andrew (Stockport N)Fowler, Gerald (The Wrekin)Ovenden, John
Boardman, H.Fraser, John (Lambeth, N'w'd)Park, George
Buchanan, RichardGeorge, BruceParry, Robert
Callaghan, Jim (Middleton & P)Golding, JohnPavitt, Laurie
Campbell, IanGrocott, BrucePendry, Tom
Carmichael, NeilHarper, JosephPrescott, John
Carter-Jones, LewisHarrison, Walter (Wakefield)Radice, Giles
Cartwright, JohnHatton, FrankRoberts, Albert (Normanton)
Clemitson, IvorHoyle, Doug (Nelson)Rodgers, George (Chorley)
Cocks, Michael (Bristol S)Hughes, Robert (Aberdeen N)Rooker, J. W.
Cohen, StanleyHunter, AdamRyman, John
Colquhoun, Mrs MaureenJackson. Miss Margaret (Lincoln)Shore, Rt Hon Peter
Cox, Thomas (Tooting)Janner, GrevilleSkinner, Dennis
Craigen, J. M. (Maryhill)Jenkins, Hugh (Putney)Small, William
Cryer, BobJones, Dan (Burnley)Smith, John (N Lanarkshire)
Dalyell, TamJudd, FrankSnape, Peter
Davidson, ArthurKerr, RussellSpearing, Nigel
Davis, Clinton (Hackney C)Kilroy-Silk, RobertSpriggs, Leslie
Deakins, EricLambie, DavidStallard, A. W.
Dean, Joseph (Leeds West)Lester, Miss Joan (Eton & Slough)Stoddart, David
Dempsey, JamesLoyden, EddieStott, Roger
Dormand, J. D.McElhone, Frank
Douglas-Mann, BruceMacFarquhar, RoderickThomas, Ron (Bristol NW)
Duffy, A. E. P.Mackenzie, GregorThorne, Stan (Preston South)
Dunn, James A.Mackintosh, John P.Tinn, James
Dunwoody, Mrs GwynethMaclennan, RobertTomlinson, John
Eadie, AlexMcNamara, KevinWalker, Terry (Kingswood)
Ellis, John (Brigg & Scun)Madden, MaxWard, Michael

Amendment proposed: No. 22, in page 6, line 43, at end insert:

'shall be payable by quarterly instalments in advance based on the total amount paid or payable by customers of the air travel organiser during the ensuing three months'.—[Mr. Higgins.]

Question put, That the amendment be made:—

The House divided: Ayes 71, Noes 112.

White, Frank R. (Bury)Woodall, Alec
White, James (Pollok)Woof, RobertTELLERS FOR THE NOES
Williams, W. T. (Warrington)Wrigglesworth, IanMr. James Hamilton and
Wise, Mrs AudreyYoung, David (Bolton E)Mr. Donald Coleman.

Question accordingly negatived.

I beg to move Amendment No. 23, in page 7, after Clause 4(5) insert—

'(6) This section shall not apply to an air travel organiser incorporated before 6th February 1975 solely for the purpose of organising holidays for persons over the age of 60 years, subject to the Secretary of State being satisfied from time to time as to the security of the payments made by the passengers by the creation of a trust fund, and by the giving of an undertaking by the air travel organiser not to carry any passenger under the age of 60 years'.
This amendment was discussed briefly in Committee, where the Minister objected to it on the ground that it would be hard to monitor. I have had considerable correspondence with the hon. Gentleman since then, and late last week he agreed to see me and representatives of the people who could be affected by the amendment. That meeting was to have taken place today. However, I received a message at 11 o'clock this morning to the effect that the Minister would not be available, from which I assumed that he intended to accept the amendment; in other words, he had decided not to see me because he intended to accept it.

This is a matter affecting organisations set up by people over the age of 60. I know of one such organisation, and there are likely to be others. What happens is that elderly people virtually form a club for the purpose of travelling together. One of the largest organisations operating in this way is in my constituency. Since 1951 it has grown until it now caters for 100,000 people. I suggest that some concession should be made for those 100,000, provided that there are proper safeguards.

The Under-Secretary may argue that these operators do not have a licence. But there is a letter dated 18th February that is on the file and that sets out the position quite clearly. We are discussing whether people over 60 should have advantageous travel facilities. Any hon. Member not supporting the amendment would be saying that he took the view that elderly people should not have that advantage.

The amendment clearly provides that the concession would not apply to air travel organisations incorporated after 6th February 1975. That would prevent a crop of new companies availing themselves of the amendment. It would apply only to those organising holidays for those over 60, subject to the Secretary of State being satisfied as to the security of the payments made by the passengers by the creation of a trust fund, which would give him instant power to cancel if he thought that there was insufficient security.

The organisers would have to undertake not to carry anyone under the age of 60. Companies now operating are prepared to have their licences endorsed to say that in no circumstances may they carry anyone under 60. This would mean that a wife under 60 could not travel with a husband over 60. [HON. MEMBERS: "Hear, hear."] I am glad of that support. Some of those enjoying these schemes come from the North.

I may be asked why these people should have special privileges. It is because this section of the community deserve special consideration. Wherever these people live, they are brought to the airport at no extra cost under an arrangement with British Railways.

The scheme has been introduced because people such as these are able to travel at off-peak times, which is when the airlines want them. Only retired people can take advantage of off-peak travel, and when they do they help the travel industry, the airlines and the hotels, by filling otherwise empty seats.

The amendment is simple. It would give the Secretary of State all the safeguards he requires, and I urge the House to accept it.

12.30 a.m.

I have considerable sympathy with my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). He represents a resort that does a good deal for many old people who live there or, indeed, who visit the area. My hon. Friend has a considerable reputation as a Member of Parliament who ably represents his constituency and the interests of tourists generally. Nevertheless, I say regretfully to my hon. Friend that I cannot support the amendment.

I would remind my hon. Friend that age 60 is not the retiring age for everybody but only for women. He is including in the concession people earning £4,000, £5,000 or £10,000—in other words, people in top jobs who are not yet retired. Those people will be eligible to join the organisation envisaged by my hon. Friend as being exempt from levy. Such a practice would not be acceptable.

Furthermore, the organisation of which my hon. Friend spoke—and it is an organisation which has written to many hon. Members—is a commercial body. It is a body that makes money from travel, and if the amendment were accepted it would enjoy advantages over other travel organisations. It would be able to recruit customers because of the special concession for which my hon. Friend asks.

If the amendment is not accepted, the people for whom I speak will be put at a disadvantage since they will be paying for a service which they will not necessarily receive. My hon. Friend is saying that that category should be penalised.

I do not accept that they will be penalised. In the first place, if within the United Kingdom they will not pay the levy. It is odd that my hon. Friend, who represents a seaside resort, appears to want people to go abroad—which will mean that they will not go to Folkestone.

It is impossible to accept an amendment whose effects will be to put certain people out on a limb and give them a specific concession. Surely the next thing that would happen would be that special concessions would be sought for those who were 18 years old or less and were travelling under organised tours. That category would require special care to be taken and would require couriers. I am sure that the ramifications of such a move are clear to the House.

My hon. Friend made a sympathetic plea, but a plea which in practical terms is not acceptable.

I succumb totally to the blandishments of the hon. Member for Rutland and Stamford (Mr. Lewis). The hon. Member for Folkestone and Hythe (Mr. Costain) tabled a similar amendment in Committee and it was rejected. My Department has made inquiries into the specific matters referred to in his speech and in the correspondence to which he referred.

I did not intend to extend to the hon. Member any discourtesy in not being able to see him this morning. He gave me fairly short notice of his desire to meet me and it was difficult for me to meet him in view of other commitments. I am sorry that the hon. Gentleman formed the impression that the fact I did not meet him meant that I accepted his amendment. That was not in my mind. However, if there was any misunderstanding I hope he will forgive me.

The inquiries which we have made lead us to suppose that the company to which the hon. Member referred does not hold an air travel organiser's licence and is not an air travel organiser for the purposes of the Bill. It is the wholly-owned subsidiary of a recognised agent, and it is the parent company which would be required to make contributions to the fund. These may be passed on to customers of the subsidiary. However, it appears that neither the parent company nor the subsidiary company is registered solely for the purpose of organising holidays for persons over 60 and that neither of them would have satisfied the terms of the amendment. The parent company is licensed to provide inclusive tours generally and not simply for those over 60. Therefore, the point by the hon. Member for Rutland and Stamford is correct.

May I point out to the hon. Gentleman that the literature for the tours specifies that people must be over 60 years of age?

But that does not meet the points to which I have just referred the House. If the hon. Gentleman is to persuade the House, he must be able to answer those points.

As I have indicated, I accept the arguments put by the hon. Member for Rutland and Stamford. The ramifications of accepting the amendment would be enormous, and such a situation is unacceptable.

As my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) said, we have much sympathy for the views put forward by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). Invariably when he puts forward an argument he does so after great thought and careful consideration. It is unfortunate that the Minister has not been able to discuss the matter with my hon. Friend. We certainly do not accept some of the arguments put forward by the Minister as regards monitoring the matter.

As my hon. Friend the Member for Folkestone and Hythe pointed out, the levy scheme creates a number of anomalies. That was why, on the earlier amendment, we suggested that alternatives such as insurance or other protection should be available. I hope that that is a matter to which we may return after the Bill has been considered in another place.

I must express the view that I do not feel able to support my hon. Friend's amendment, although I realise that some of my hon. Friends may well be persuaded by his arguments.

Amendment negatived.