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Additional Provisions With Respect To The Air Travel Reserve Fund Agency

Volume 890: debated on Monday 14 April 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.

I beg to move Amendment No. 29, in page 9, line 8, leave out from 'appointments' to end of line 9.

With this we can also discuss Amendment No. 30, in page 9, line 23, at end insert:

'2.—(1) Subject to sub-paragraph (2) below, the Agency shall pay to each member such remuneration and such travelling, subsistence or other allowances as the Agency may deter mine.
(2) Any determination of the Agency with respect to the remuneration to be paid to any member shall be subject to the approval of the Secretary of State, and the Secretary of State shall not give his approval without the consent of the Minister for the Civil Service'.

The amendment provides for the remuneration of members of the agency to be subject to the approval not only of the Secretary of State but also of the Minister for the Civil Service as is customary. This enables remuneration to members of statutory bodies to be kept under review centrally.

I do not understand what the Minister has said. He said that because remuneration has to be approved by the Secretary of State for Trade and the Minister for the Civil Service this enables the matter to be kept under review centrally. Why has one followed from the other? I should have thought that it would have been kept under review centrally anyway unless the Secretary of State was so far removed from the centre that he did not know what was going on. Given the difference over the Common Market, it may be that that is so. Perhaps the Minister will explain.

1.0 a.m.

That is not good enough. What does the explanation given by the Minister mean? Why should it be controlled centrally by the operation of the two Ministers?

Amendment agreed to.

Amendment made: No. 30, in page 9, line 23, at end insert:

'2.—(l) Subject to sub-paragraph (2) below, the Agency shall pay to each member such remuneration and such travelling, subsistence or other allowances as the Agency may determine.
(2) Any determination of the Agency with respect to the remuneration to be paid to any member shall be subject to the approval of the Secretary of State, and the Secretary of State shall not give his approval without the consent of the Minister for the Civil Service '.—[Mr. Clinton Davis.]

Motion made, and Question proposed, That the Bill be now read the Third time.

1.2 a.m.

We now come to the Third Reading of the Bill, which we sought to amend in a number of important respects in Committee. There are two matters of concern—the history of the Court Line affair and the future protection of the holiday maker.

The genesis of the Bill is contained in the statements made by the Secretary of State for Industry last summer during the Court Line affair. Yet not once during the proceedings on this Bill has he seen fit to enter the Chamber, still less to join in the debates or to give any explanation of his conduct.

I stressed on 20th February, on Second Reading, that Parliament and the people outside were misled by the statement of the Secretary of State in the House. Many of our constituents booked holidays with Court Line under the impression that the assurance of tile Secretary of State, that their holidays would be protected, would be honoured. That was not the case.

It would have been right for the Secretary of State to have admitted to the House that he had misled the people who lost money as a result, to have resigned, and to have requested Parliament and the Government to support a motion making immediate compensation available to those who had been misled. The Secretary of State was not prepared to do that. It is not possible to construe the remarks of the Secretary of State, which I quoted on Second Reading, in any other way.

It is difficult to envisage any issue on which the Secretary of State for Industry would resign. Therefore, we now await the report of the Ombudsman. We shall return to the matter at that stage. It ought not be necessary for any man of honour who had made a statement such as that made by the Secretary of State to await the result of that formal inquiry. The Secretary of State is not prepared to resign on this matter. We shall, therefore, have to wait until the inquiry is completed. It is a matter for the Ombudsman, but the Minister may wish to say how much longer we shall have to wait for the report.

On Second Reading we raised a number of points with the Secretary of State. We believe that the investigations into the Court Line affair must take longer since they must be thorough. That matter was not apparent from the assurance of the Secretary of State for Industry.

On the second point which we have raised, the question of the future protection of holiday makers, we have already expressed our views. It may be that in another place it will be necessary for members of that House to consider the extent to which an alternative optional scheme for insurance is preferable to the one provided in this Bill, which means that effectively everyone, whether he has a better scheme for protecting consumers or not, will be forced to comply with the Government's requirements and will have to provide protection to consumers at a higher cost than might otherwise be the case. As I say, we may return to that matter at a later stage.

There is a very clear thread in Government policy—a growing tendency for the Government to say that whatever the commercial transaction may be, whether it be in connection with holiday makers or insurance, or in whatever other activity, there should be a form of comprehensive policy, and that cover should be provided not by people acting prudently but by a universal and comprehensive scheme where a levy is raised and a fund is set up. The net effect is to create a situation where the prudent are subsidising the imprudent and where the efficient firms have to subsidise the inefficient firms.

This is not a matter of party dogma. It has evolved within the Department of Trade. It is a very unfortunate development indeed. Therefore, it is certainly an aspect of the Bill which we greatly regret. The reality of the situation is that the Secretary of State has not taken the action which in honour he ought to have taken. The Government have decided to introduce this matter late at night when it is unlikely to get much publicity, in order to shield him from the legitimate criticism which ought to be made of him, well knowing that if the Bill were to be defeated those who suffered as a result of the Court Line collapse and as a result of misleading statements by the Secretary of State for Industry would not get compensated as rapidly as they otherwise would.

This is the wrong way of setting about it. I think the House will understand why, faced with the Government's intransigence, it would not be right positively at this stage to vote the Bill down. This is simply because the Government have left us with no option but to do what can be done to help these people. But it is not the right way of doing it. It is the wrong principle on which to operate, and the Secretary of State for Industry will, I hope, in due course be condemned in this House and retribution will finally be brought upon him.

1.8 a.m.

At an earlier stage the Minister was unwise enough to say that the Opposition had been less than clear in their attitude to the principle of the Bill. He must not be surprised, therefore, if we take the opportunity to explain our attitude, and, in particular, to reinforce the point that we must condition our attitude by the fact that this Bill is brought forward in advance of the Ombudsman's report on the Government's own role and the statement of the Secretary of State for Industry last June.

That being so, the issue has been befogged and clouded from the start. This matter concerns not only Court Line. It concerns two or three smaller companies which also went bankrupt last year and whose clients are also to be compensated by the fund and the agency which is set up to administer the fund. This makes it very difficult for us to argue the situation in principle, although we have already drawn attention to the apparent anomaly that in the matter of insurance, in the case of the Nation Life company, the Minister takes a different attitude to compensation for people who have lost money through companies going bankrupt. We have not been able to adduce the argument with sufficient clarity because the Bill confuses those issues, and must necessarily do so.

The public and Parliament ought to be aware that within this apparently slight, innocuous and relatively minor measure are enshrined two highly questionable precedents.

The first is that the Government, by means of making interest-free loans and allowing the interest at present high levels to be forgone, are making a grant towards the compensation of clients of bankrupt companies. We are used to the Government stepping in and bailing out companies, but I do not know of any other instance where they have come forward to compensate the clients of bankrupt companies, especially at a time when, unfortunately and unhappily, we may expect more companies to go bankrupt. They may be putting themselves on a whirligig of their own contrivance which will be painful in years to come.

The second highly undesirable precedent is that the Government are requiring future clients of commercial companies, by their payments to those companies, to compensate the clients of other unrelated companies which went bankrupt previously. This is the effect of the Bill, for which there appears to be no precedent.

Last November I asked the Secretary of State for Trade whether he could cite any precedent for such a procedure. To date we have received no evidence that there is any such precedent. Indeed, the injustice of it will be evident not only to the industry, but to people when they come to pay the charge. In all the preliminary information which has been published on the provisions of the Bill. particularly the no doubt agreed statement put out by ABTA after consultation with the Department of Trade, there is no mention that this extra safeguard is to be secured by payment by the client. It will come as something of a revelation to clients to find that they are required to make that contribution and even more of a revelation when they discover that they are required to pay compensation to clients of other companies which have gone bust when they may have made a better judgment as to the companies with which to book. This measure is also resented by the travel industry, because it has suffered most from the competitive, cut-throat policies which led to the collapse in the first place.

Therefore, the Bill, though seemingly slight, is a very important measure. Indeed, the Minister may be making history tonight by seeing it through its Third Reading. I should point out that Lucretia Borgia and Attila the Hun also made history, and the hon. Gentleman should not necessarily accept that as a compliment.

1.13 a.m.

I want to quote from a letter which appeared in the Travel Trade Gazette on 4th April, signed by Zvonko Jakopovic, the Director of the Yugoslav National Tourist Office. I will quote only two paragraphs. He writes:

" We watched the Court Line situation very closely during the spring of 1974, but the statement from the highest sources that the British Government was launching a rescue operation for Court Line's shipbuilding interests which would stabilise the situation in respect of Court Line's interests including holidays booked for this season' was taken as an absolute guarantee by us that the company was financially secure.
We sent a telex report to the Tourist Association of Yugoslavia in Belgrade indicating that the statement made in the House led us to believe that the business between Court Line tour operators and foreign hoteliers was 'probably safer now than it had ever been'."
I do not need to quote any more. That was a clear indication from an impeccable source that people overseas thought that the statement made in the House had underwritten the company. Therefore, it was not so much over-optimism on the statement that was made as the Government's failure afterwards to take any action which would take into account what the Minister knew might happen having looked at the company.

Having had that beef, I should like to put another matter to the Minister. The Bill will compensate people who have lost holidays, but there is little compensation for Court Line employees. I believe that Court Line employees who were abroad at the time of the collapse will get no redundancy payment under the Redundancy Payments Act, whereas those who were working at home will get redundancy payment because, under the Act, the compensation will be paid by the Government.

I was one of the last to go on holiday with Court Line and was, with others, caught. The employees working overseas were magnificent. They worked without knowing whether they would be paid. Many of them were not paid. They ere prepared to carry on for however many weeks were involved. Some of them carried on without reward for two, three or four weeks because the company had gone bust. Their salary cheques were cut off. Even their salary cheques for the previous month were cut off. Because of a quirk of the Redundancy Payments Act, they now find that they will not even get redundancy pay.

I ask the Minister to consider the possibility of paying those employees out of the fund the redundancy payments which must be due to them and which, but for a technicality, they would have had and which will be available to their colleagues who were working at home. If the Minister can secure that, there will be a saving grace about the Bill.

1.16 a.m.

On Third Reading we are left with one principle and a couple of mysteries. The principle is that reputable and well-run firms, their customers and their employees will carry the can for any rotten "bucket shop" that wants to set up in this business in the future. That is a principle which hon. Members on both sides should decry.

Two mysteries have arisen during the course of the Bill's passage. We still have unsolved the mystery of the interest-free loan and whether it will really be interest-free. We have had totally contradictory statements by the Minister. He has said nothing to clear up the mystery. He has only made the matter worse by suggesting that the loans will be interest-free unless they happen to be in circumstances where trade is so bad that he decides to charge interest on them to put the final screw on. I have never heard a more absurd argument. It was a totally dishonest and confused argument.

Another mystery was added to that. At the beginning of our proceedings I asked a perfectly simple question; namely, whether any Minister had consulted British Airways about the Bill, that body being one of the main providers of package holidays, and, if so, what the opinion of British Airways was about the proposed measures. The Minister flatly refused to reply. He still sits there arrogant, unwilling to reply, and unwilling to govern openly or honestly in the way that he and his colleagues promised that they would govern. When he comes to the Dispatch Box later I ask him to say whether British Airways was consulted and, if so, what it said about the Bill.

1.20 a.m.

As everyone knows, this small measure is the result of the Court Line affair. Many of us have constituents who would not have put forward their applications and the money for their holidays had the statement not been made by the Minister. It is unfortunate that, although the Parliamentary Commissioner for Administration has not yet reached a decision, we are compelled to pass this legislation in order to help those unfortunate people who have lost money.

We are passing a measure to protect a small number of people who have had the misfortune to be misguided by a Government statement. I am quite happy and in agreement about that part of the Bill. But the second part of the Bill, which allows or encourages the weaker firms to be subsidised by the stronger firms, introduces an entirely new principle. I am not at all sure that this type of legislation does not encourage the inefficient as against the efficient. The caveat emptor principle is entirely forgotten.

Although this measure may be a temporary expedient, it should not be taken as a measure whereby the good firms should subsidise those which are inefficient. It is up to the clients and those who participate to make sure that they book their holidays with good firms in the future.

1.21 a.m.

I served as a member of the Standing Committee on the Bill. Throughout the debates on the Bill the Opposition have produced a number of deplorable and disgusting attacks on the Secretary of State for Industry, who, when he made the announcement on that day last June, was subject to the scrutiny of the Opposition. The hon. Member for Henley (Mr. Heseltine), in his criticisms on behalf of the Opposition, never even mentioned Court Line, because the announcement by the Secretary of State for Industry was very much concerned with sections of shipbuilding which would go into liquidation very rapidly, and but for the action of the Secretary of State for Industry several thousand people would have been rendered unemployed.

Throughout the whole period the Secretary of State for Industry has acted entirely honourably. The way that some Opposition Members have behaved smacks of cheap political opportunism of the very worst nature.

The Opposition have said that the Government have not given concessions on the Bill. However, the whole Bill represents a concession. It is clear that the air travel industry contains many shaky and rickety concerns. Apparently some cannot tolerate an extra 1 per cent. charge without facing financial difficulties. The one and only solution is public ownership. If these firms are so inefficient, why should we prop up like stretcher bearers an ailing capitalist industry? We are not here to do that. We are here to ensure equality in society.

We support the Bill because it will bring immediate relief to our constituents. Some of my constituents made payments to Court Line. They supported a private enterprise which subsequently crashed, in spite of repeated assurances by the directors—which are never mentioned by the Opposition—which were given not only to the company but also to the travel agents almost within hours of the company going into liquidation and facing these financial difficulties.

Let us have a certain balance. We support the Bill, recognising that it is a patchwork operation. We recognise, at the same time, that it will bring relief for past losses and assurance for the future for people who travel on charter flights.

1.24 a.m.

I am grateful to the hon. Member for Keighley (Mr. Cryer) for explaining what we were puzzled about earlier.

As it stands, the Bill has the Government providing the scheme and rules out the private insurance companies. If the Government were seeking, merely to safeguard holiday makers and if the Government believed in a mixed economy, they would allow an area in the Bill for the insurance industry, if it so chose, to provide the cover that the Government are seeking to provide themselves.

The Under-Secretary said that it would be quite unrealistic to expect the insurance industry to rally round and help. I think that was the expression he used. The proposal that the insurance industry should be allowed to provide some cover is not an attempt to persuade the industry to help. It is an attempt to ensure that the Government do not give themselves a monopoly and that they do not lay the heavy hand of bureaucratic control upon the whole industry. If the Government believe in a mixed economy, it would be realistic for them to allow the insurance industry to provide the cover which it is seeking to put in.

This Bill tries to do two things. First, it tries to provide cover for holiday makers. That is realistic, and it would be realistic if it were done in the context of a mixed economy and if the insurance industry were permitted to have a niche in it. It also looks backwards and tries to compensate the Court Line holiday makers and others. The Minister sought to put forward several alternative arguments, none of which held water. I suspect that the real reason for the Government not being prepared to allow anyone other than the Government themselves, through this fund, to take part in the protection proposals which they put forward is, first, the argument adduced by the hon. Member for Keighley—because they are looking for the Socialist revolution—and, secondly, that it would be inconvenient for the Government to have to allow the insurance industry a part of the cover because it would mean that it would not be possible for them conveniently and comprehensively to look retrospectively; it would be inconvenient for them to have some cover provided by private insurance and some by the Government.

Having listened to the hon. Member for Keighley, I am reminded that David Wood wrote in The Times today that the Social Democrats in the Labour Party seemed to lack the will and, indeed, the ability to stop the inexorable march to the Left. We have had a good demonstration of how true that is.

1.27 a.m.

Even though I have been depicted as Atilla the Hun or Lucretia Borgia, I have always thought that the motives of the Opposition throughout the whole debate and long before iv during those summer months were entirely suspect. The hon. Member for Worthing (Mr. Higgins) is normally regarded as a moderate—perhaps a little pedantic in his moderation sometimes. But what he did was to follow the rather unpleasant footsteps of the hon. Member for Henley (Mr. Heseltine) and the hon. Member for Bury St. Edmunds (Mr. Griffiths). It is not worthy of him.

The hon. Member for Worthing has now realised, rather late in the day, that there happens to be a Section 165 investigation into Court Line and that there happens to be an investigation by the Parliamentary Commissioner for Administration. But he does not want to wait for those independent judgments. He wants to join the lynch mob, where there will be no law and no trial—only the impetuous judgment of his right hon. and hon. Friends.

If the Secretary of State for Industry is exonerated, the hon. Member for Worthing will owe him a pretty full apology. A spiteful and venomous campaign was indulged in during those summer months. It was wholly unhelpful. Not for a moment was it designed to assist those who had suffered the appalling anxieties of those months. No positive and constructive contribution was forthcoming from the Opposition. However much the hon. Member for Worthing may shake his head in disagreement with what I say, that remains the fact. If he does not accept what I say, he had better read the contributions made by some of his hon. Friends.

When we came to discuss this Bill, the Opposition were all over the shop. They did not know whether to vote for or against it. They were completely ambivalent in their attitude. We have heard it again tonight in their amendments and in their Third Reading speeches. They lack the courage to back their arguments by a vote on the principle of the Bill.

The hon. Member for Worthing said that the Opposition regretted the caveat emptor aspect. We have brought forward a Bill which we believe to be right in the interests of consumer protection, but basically the hon. Gentleman regrets it. Nevertheless, he will not vote against it. It will be interesting to see whether the Opposition back their speeches with the judgment that matters, which is a vote.

During the Committee stage we were even asked to defer the whole Bill until the Parliamentary Commissioner's report had been formulated. What would have happened to the victims other than the Court Line victims, who could not in any sense be affected by any words spoken by my right hon. Friend? In Committee I asked the hon. Member for Romford (Mr. Neubert) and other hon. Members for their view of what should be done about those people, but their silence was deafening.

As I said in Committee, the hon. Member for Rutland and Stamford (Mr. Lewis) played a more moderate and reasonable part in this whole affair. I regret that, following his hon. Friends, he has sought to talk about Court Line again. However, he made a point about redundancy payments that I undertake to communicate to my right hon. Friend the Secretary of State for Employment. It is not a matter that I or my right hon. Friend, the Secretary of State for Trade can deal with.

The hon. Member for Chingford (Mr. Tebbit) spoke with that typical moderation that most of us in the House have learned to abhor. It is a remarkable argument that reputable firms will carry the can for the "bucket shops", as he termed them. Under the Bill, the "bucket shops" will be obliged to be bonded. They will have to comply with the Bill's stringent requirements. That argument does not hold any more water than the majority of the arguments that the hon. Member seeks to adduce in the House from time to time.

I will not deal with the arguments of the hon. Member for Gosport (Mr. Viggers), because they have been rehearsed time and time again when, apparently, he was not present.

Question put and agreed to.

Bill accordingly read the Third Time and passed.