§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)
I beg to move,That this House takes note of European Community Documents Nos. 5382/88 and 7996/89 relating to package travel; and endorses the Government view that any proposal must strike a balance between consumer protection and the need to avoid undue burdens on the travel industry, which would adversely affect the price and range of holidays available to consumers.Next to the home and the car, the family holiday must rank as one of the most important items of expenditure in the average British household budget. As might be expected with an island nation, a large proportion of holidays are taken abroad, and during 1988 some 13 million overseas package holidays were taken. This makes the United Kingdom one of the largest exporters of holidaymakers in the Community, and it is difficult to over-emphasise the importance of this sector.
The sheer popularity of the package holiday is a tribute to the success of the package travel industry and to the excellent value for money which the large majority of holidays sold represent. It is possible for consumers in this country to find packages to just about every conceivable destination and, increasingly, covering just about every conceivable activity, As has been highlighted by the European consumer body, Bureau Européen des Unions de Consommateurs, the United Kingdom package tour operator is able to market a much less costly package holiday than his Community counterparts—comparable packages can work out up to 30 per cent. cheaper. We have been concerned, therefore, to give very careful consideration to the proposals emanating from Brussels for a directive in this area.
The consumer is particularly vulnerable when he books an overseas holiday, pays in advance for the service and then has a substantial part of it performed overseas. Clearly, there is a balance to be struck between some clarification and strengthening of the consumer's rights and increasing prices to the point at which ordinary people can no longer afford them.
The Government have held that the consumer is entitled to expect that the tour operator will provide him with precisely the holiday that he booked and not an approximation to it. He should get the hotel that he chose from the brochure and not one up the road. He is entitled to expect that he will pay the price quoted in the brochure and not be surcharged unless it is made crystal clear to him at the outset that surcharges may be made and in what circumstances. He is also entitled to expect the services comprising the package to be performed to a reasonable standard. In extreme and, I hope, very rare circumstances, the deficiencies in services may lead to death or personal injury. Damages are potentialy very high and the extent of the tour operator's liability is important.
The consumer will not be best served if, in providing him with increased protection, the tour operator is forced to increase prices beyond the consumer's reach or to forgo inclusion of certain holiday destinations or holiday activities. Nor are consumers well served if newcomers are discouraged from entering the market. The Government 150 have been equally concerned, therefore, that any increased liability imposed on the tour operator should be equitable and insurable.
That brings me to the array of proposals which have come out of Brussels and on which we have tried to keep the House informed. I should like to bring the House up to date on what has been happening.
Recent discussions have centred on a proposal under development by the current French presidency, which it hopes will form the basis of a compromise for adoption by the Commission. The presidency is to be congratulated on its strenuous efforts to pull this more balanced proposal together, even at this late stage of negotiation. I warmly praise the work of officials at the Department of Trade and Industry who have borne the brunt of the negotiations. They have done a magnificent job to represent the views of the Government, the consumer and the industry in some difficult and complex negotiations. During those negotiations, the Government have been mindful of concerns which fall broadly under three headings.
With regard to the scope of the proposal—article 2—we believe, first and foremost, that the directive ought to be confined to tour operators and their direct competitors. That statement requires some elaboration. To apply widely the stringent provisions envisaged would mean the severe limitation, if not the complete demise, of activities such as day trips to an event or activity and the rental of holiday cottages with ancillary services such as fishing rights. In that respect, the effects on small enterprises could be catastrophic. It would also mean that the likes of schools, clubs and churches would have to think carefully about continuing with traditional outings and holidays. One also has to question the wisdom of embracing ad hoc business travel arrangements in a directive intended to apply primarily to package holidays. We shall continue to negotiate with those principles in mind.
The presidency proposal is therefore a step in the right direction—
§ Mr. Conal Gregory (York)
I am grateful to my hon. Friend for giving way on this important point. Will he tell the House why he would resist the safeguard for those who go away on a trip for 24 hours, whether they be members of Church parties, political parties, or others? They need that fundamental protection and it seems inexplicable not to give it to them. Why is the Minister seeking to remove it?
§ Mr. Forth
My hon. Friend touches on a difficult point, on which neither the Council of Ministers nor I have totally made up our minds. Either one forces the full protection of this directive on anyone who, in any circumstances, arranges a trip of any kind, and there is something to be said for doing that, or one recognises that a wide range of innocent, one-off, non-profit-making activities could be brought to an end if we forced on them the full rigours of the directive. It is a finely balanced argument on which we wish to await the exact proposals of the Council of Ministers before making up our minds. However, I am mindful of the difficult choice which must be faced.
The presidency proposal is a step in the right direction in that it seeks to omit from the definition trips lasting less than 24 hours. We believe that this will take day trips such as a coach trip to the zoo out of the scope of the directive. We also welcome the stipulation that, for an additional 151 service to count towards the definition of a "package", it should not be ancillary to transport or accommodation and should be significant in relation to the contract as a whole.
With regard to the liability of the package organiser—article 5—the liability provisions lie at the heart of the proposals for a directive on package travel. The Government believe that an acceptable proposal would need to strike a fair balance between the interests of the parties, be insurable at acceptable cost and not reduce the range of holidays available. We accept that the organiser should be strictly liable for the provision of the services agreed, but where consequential damages, death or personal injury are concerned, the extent of liability should be limited in some way. I submit that the vast majority of consumer concerns about their package holidays have to do with just that principle, and I have a steady flow of correspondence on which to base that conclusion.
The presidency proposal is also a great step forward on that central issue. It proposes liability for proper performance of the contract, including non-performance due to faults of suppliers such as hoteliers and carriers. We hope, however, that the final proposal will include defences for contributory negligence, acts of third parties and unforeseeable events which could not be forestalled. In our view, inclusion of contractual limitations set by international conventions is fundamental.
As for the financial guarantees—article 7—if the liability provisions lie at the heart of the proposals on package travel, to continue the visceral analogy, those on financial guarantee must be the guts of it. The Government believe that the essence of a workable provision must relate to a free and informed choice, not only for consumers, who must be able to see by what means the organiser intends to cover his liabilities if things go wrong, but for organisers, who must be free to make the most appropriate and cost-effective arrangements. To introduce compulsory licensing of all organisers within the scope of the directive would mean excessively bureaucratic and expensive intervention by the state.
Compulsory insurance for every claim which might arise is also unreasonable and ignores the plight of very small enterprises or new companies in the sector without a track record to enable them to get insurance at economical cost. This would do no favours to consumers because, inevitably, it would drive up prices unnecessarily and reduce competition. Most packages in the United Kingdom are sold through organisers who are fully bonded against insolvency and there might be a case to require others to make arrangements which would provide protection for consumers in those circumstances. We would welcome a proposal which would underpin that approach but allow organisers flexibility to make appropriate arrangements.
At the outset, the Government placed reservations on the proposals for a directive on package travel, not only on the general content of the Commission's proposal but also on the chosen treaty base, article 100A. That is the base which was established by the Single European Act and is designed to facilitate the rapid achievement of the single market. We have been sceptical about whether there is a strong case for choosing that treaty base for this proposal, which struck us as very much a measure for the protection 152 of consumers. On the other hand, however, package travel is a highly specialised area for a number of reasons, and in the light of the final compromise proposal and whatever justification is put forward in the recitals for a Community measure in this area, we may reach a different view.
The reasoning in favour of a balanced set of proposals which take due account of the needs and wishes of both parties must be self-evident to everyone. I invite the House to agree with the motion.
§ Mr. Nigel Griffiths (Edinburgh, South)
This directive is, in a number of areas, a pale shadow of the original draft and it offers only limited protection for holidaymakers. I do not recognise the rosy picture that the Minister has just painted, and nor do hundreds of thousands of holidaymakers who annually run the gauntlet of surcharges, airport delays, overbookings, dangerous facilities, switched destinations and unsuitable accommodation.
I welcome the efforts of the travel industry to ensure that more than 10 million people enjoy package holidays every year, but I also share the concern of the I million holidaymakers whose holidays have given cause for complaint.
The Minister has never made a secret of his desire to ensure that the directive gives less protection to the tourist than to the tourist trade. It comes as no surprise that the Government cannot welcome unreservedly even the modest package of measures to protect the travelling public that this directive offers.
Sadly, when the Commission suggested measures to protect holidaymakers, the Government lobbied to weaken the proposals, not to strengthen them. This directive allows people's holidays to be cancelled up to 24 hours before departure. It now offers no protection to the person crossing the Channel for a day trip—the first draft did. It sanctions bigger surcharges on the consumer than did the original, and provides no right to written reasons for surcharges. It burdens the consumer who has suffered with the need to prove negligence in some areas. It removes the requirement for brochures to detail contract conditions and for local tourist authorities to assist in resolving disputes.
There are some safeguards, which the Minister quaintly describes as burdens on the trade, but we want to know from the Consumer Minister about the burdens on the consumer—the burden of buying a holiday paid for in advance, with no guarantee of specific accommodation or even price. I am told that, when things go wrong on a package holiday, it is difficult to find anyone to take responsibility.
In six key areas, this directive is defective and far weaker than its original draft. The 1 million holidaymakers whose holidays were spoilt last year are entitled to know why a directive that offered them so much better provision has been watered down.
The Government have never made a secret of their concerns, not for the travelling public but for the travel trade. On 22 April, the Minister's predecessor spelled out his key fears in a letter. He said:Another important implication of the directive from the tour operators' point of view is that it may circumscribe their present abilities to restrict their liabilities when a third party (eg, a foreign hotelier) fails to provide the service contracted.153 By 22 August we had a new Minister, whose comments on this directive to protect holidaymakers were even more hostile. He wrote that his Departmentconsiders that the proposal … is unnecessarily burdensome and fails to strike a fair balance between consumer and supplier interest.I note that the Minister nods in assent. That was followed by three months of the most disgraceful lobbying by the Minister to weaken the directive. By 8 December the Minister had failed the consumer. He was able to write that the proposalhas moved towards a more acceptable balance between consumer and supplier interests.He has used similar words tonight.
The changes in the proposals were severely criticised by consumer groups. The European Union of Consumers deplored what it calledsabotage on behalf of government experts".It spoke ofcompromises which are less and less favourable to consumers.With more and more people going abroad, the need for consumer protection has never been greater.
My attention has been drawn to the plight of Mr. Clement, who booked a five-person apartment in Corfu. The total trip cost over £1,300 but the apartment was already occupied when he arrived. When he eventually got in there was room for only four beds, the kitchen was filthy, the shower was broken and when the toilet was flushed waste came up through a grille in the bathroom floor. The company representative was unhelpful and when he asked for compensation Cosmos offered nothing. He wrote again and was offered £50. He eventually had to resort to a court summons to receive a higher amount. He needed on-the-spot help from independent local tourist authorities to ensure that his holiday was satisfactory in the first place.
Under the directive, tour companies can still limit their liability to supply the holiday as booked and paid for. It appears that one can spend £400 on a holiday and the blame for failure can be shifted to some foreign supplier, often with impunity. The seller of a £400 television cannot legally tell the purchaser to seek redress in Japan or West Germany. In that respect, perhaps the travel trade is getting off lightly.
A holiday is bought on trust and paid for in advance, yet is subject to changes that may appear arbitrary and without a guarantee that the item supplied is the item that was purchased. The Minister should investigate whether practices such as surcharges and combining holidays when there are not enough bookings should be permitted unless they are advertised as such. He should spell out what redress is available to tourists at the holiday location.
In May, the Consumers Association carried out a study on travel agents. It asked a number of them for the cheapest flight to Europe and four out of five got it wrong. The Which? verdict was "appalling". The association asked for a holiday on an island suitable for an elderly grandmother and only two out of 36 got it right. The Consumers Association concluded that most agents were poorly informed.
The Minister recently gave his verdict on the travel industry. In a long-distance video presentation to a world conference in Mexico on the travel trade, he said:The industry has set itself a standard which is going to be very difficult to maintain.154 To hear the Minister one would think that this country has the highest standards, the best public protection and the lowest levels of consumer dissatisfaction. That is simply not the case. A survey of package travellers by the European Commission shows that while 27 holidaymakers in every 100 interviewed in Italy experienced problems with their package holiday, the figure for Britain was 37 in every 100. Those surveyed in France and Germany had lower dissatisfaction ratings, of 31 and 32 respectively. The Commission revealed a serious crisis of confidence in the British travel industry.
That fewer than 5 per cent. of people pursue their complaint raises a major question about the current complaints procedure. The Commission stated:The reason … is that the consumer, having paid the price in full before departing on his holiday feels that by making a formal complaint he may well find himself involved in an endless argument which if it has to be terminated in a courtroom may cost him more money than he can afford.Article 6 in its original form would have helped to tackle that problem.
I pay tribute to the work of the Association of British Travel Agents to try to monitor and improve standards. The revised ABTA code of conduct will give welcome protection to its consumers after November 1990, especially against negligence resulting in injury or death, and it makes provision for higher compensation in the event of a holiday being cancelled or altered. There is still scope for the trade to substitute holidays on a massive scale. Holidaymakers can still get a holiday in a hotel different from the one that they booked, and cannot cancel the holiday if the hotel is in the same category in price. Holidaymakers may still be forced to accept changes, such as the absence of advertised child care, because these are not seen as material alterations.
Welcome though the codes of conduct are, powerful trade regulations and sanctions are no substitute for Government-led consumer protection. Only last year, the Director General of Fair Trading had to step in an warn ABTA that holidaymakers were being surcharged for fuel price increases when world fuel prices were falling. In spite of the Minister's much-loved codes, supposedly prohibiting this unjustified type of surcharge, it went ahead. In his latest report, the director general, Sir Gordon Borrie, says:Examples of costing subsequently submitted by ABTA failed to convince the Office that unjustified surcharging had not taken place.Before this revised directive, surcharges of under 10 per cent. of the cost of the holiday were to be absorbed by the tour operator, and the reasons for surcharging were then to be set out in writing. Now, there are virtually no limitations on surcharging.
We have no specific legislation that exclusively protects the holidaymaker. Despite the enormous scale of our holiday industry, the United Kingdom lags behind several other European states in establishing specific legislation on the holiday trade. Other countries have specific laws that define the rights of the consumer and the obligations of tour operators. France, Belgium, Italy, Portugal and Spain all have such laws. In this country, the operators do not require a licence from the Government. The only licensing of any part of the trade is carried out not by the Government but by the Civil Aviation Authority.
Some countries have laws to protect the travelling public. In some—Belgium, Greece, Ireland, Portugal and Spain—those laws are backed with licensing of all travel companies. The laws exist not because the consumers there 155 have more need of them than we do. France and Italy, which featured so much more favourably in the Commission's study than the United Kingdom, also have laws and licensing. They have laws because their Governments aspire to give holidaymakers greater protection than ours will give.
Although ABTA covers 90 per cent. of the holiday trade, that still leaves more than 1 million holidaymakers with minimal protection. In his video from Acapulco, the Minister made it clear that he has no plans to force travel companies to abide by ABTA's new code of practice, but the need for protection has never been greater. That number of 1 million holidaymakers with complaints is growing, not shrinking. Standards are not improving, they are declining.
The Consumers Association published its survey on holidays in January. A fifth of holidaymakers reported that the tour operators made a change in their holiday arrangements, and half those changes were made during the actual holiday or within a fortnight from departure. Two thirds had their flight time changed, and for nearly one third, the resort itself or the accommodation was changed. The survey found that most holidaymakers were perfectly happy with their tour operator, but it also reported a significant drop in people's rating of tour operators since the last survey in 1986, with 9 per cent. expressing clear dissatisfaction with the operator, as against 7 per cent. two years previously. Sadly, when the Commission suggested measures to protect holidaymakers, such as an arbitration service by local tourist officers, the Minister, to use the words of the Secretary of State, felt for his wallet.
This is a minimum directive. When the legislation is implemented here, the Minister should seek four safeguards for the consumer. He must consider banning surcharges. He should ensure that the holidaymaker does not have to establish negligence so as to obtain redress. He must examine the need for joint liability between the operator in the United Kingdom and the agent abroad, with the appropriate on-site advice and help. He should enshrine in legislation the standards that ABTA applies to its members where these are higher than standards in the directive, including strict liability for property damaged.
The Minister began by stating that British holiday-makers get the cheapest holidays. We know, however, that cheapest is not best and that value for money is not synonymous with cheapness. Thousands of holidaymakers believe that they are not getting value for the money that they have paid. That is because they did not receive the holiday for which they asked, not because their expectations are too high.
We do not endorse the Government's hostility to EC directives that are designed to strengthen consumer rights. Travel organisers should provide the holiday that is booked. The price at the time of booking should be the price that is finally paid. On-the-spot, independent arbitration should be considered. If an hotel is not the one advertised, there must be immediate help if the holiday is to be saved, not the right to register a complaint on return after the holiday has been ruined. To put it simply, people want the holiday that they have booked at the price that they have paid. Sadly, neither the directive nor the Government are backing the holiday consumer.
§ Sir Anthony Grant (Cambridgeshire, South-West)
I do not agree with much of what the hon. Member for Edinburgh, South (Mr. Griffiths) said, but in this short debate, I want to refer to a specific matter and a different one from those mentioned by the hon. Gentleman.
First, I declare an interest in the Guild of Business Travel Agents, a body which I have had the honour to advise for many years. The guild consists of about 50 of the largest companies that specialise in business travel. The companies have a turnover of £2.8 billion and they are responsible for four out of five business flights to and from the United Kingdom.
The guild is not to be confused with ABTA, the Association of British Travel Agents, although many of the guild's members have shared membership and on many issues the guild and the association go along the same path. If my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) catches your eye, Mr. Deputy Speaker, he will be able to speak better than I can on behalf of the association.
Following the Single European Act, the Guild of Business Travel Agents took the initiative in an endeavour to form a European guild dealing with business travel exclusively, but the business travel agents in the United Kingdom are not happy with the directives as drafted. We are a trading nation. We depend on exports and it is essential that we manage to move our business men about the world speedily, efficiently and economically.
I noted that the Minister said that he considered the proposals as a whole unnecessarily burdensome and added that they failed to strike a fair balance between consumer and supplier interests. I think that he was probably right. Therefore, I congratulate the Minister and Europe on achieving some amendments. I say to my hon. Friend that we do not help the ordinary traveller by crucifying the agent who has to move him. There is a balance to be struck, and the Government are right to draw attention to the overburdening nature of the proposals that are before us.
Even more inappropriate is the directive on business travel itself. I was pleased when the Minister said, in emphasising the changes that would have to be considered, that the implications of including some business travel in the directive required further consideration. So they do. I do not believe that the Commission understands business travel and how the proposals will affect business travel. The basic intention of the scheme is to place liability on the tour organiser, the person who assembles two or more components of the package.
As drafted, business travel appears to be caught up in the articles. The Commission has not dealt with a number of issues—for example, it has not considered the composition of business travel and the definition of "package". Article 2 defines "package" and the commentary on the articles refers to all sorts of matters that are not relevant to business travel. It refers to travel to and from the holiday place, excursions to places of interest or pleasure, sporting holidays, school buildings and sporting equipment. All those relate to holiday traffic and are not relevant to business travel.
The Commission paid no attention to the move towards management fees. Business travel agents are increasingly operating not on a commission basis but by fees charged 157 to their large corporate clients. The Commission also did not deal with the fact that in business travel, the customer often specifies his choice of what he wants to do.
Nor did the Commission consider the question of incentive travel. For example, Ford or any other vast organisation may wish to have an incentive travel scheme to send its dealers or salesmen to a certain place. It will instruct a well-known business travel agent to arrange that. The business travel agent will have no direct dealings with those who are travelling; its contractual basis is with the large corporate client. In any event, most businesses that engage in business travel are already covered by insurance.
If the proposals come into force, they would inhibit proper business travel and lead to the detriment of our economy. They would increase costs, and the insurance would inevitably be passed on to the consumer. The protection of the business traveller conies not from European directives or bureaucrats in Brussels, but from the vigorous and healthy competition that already prevails in the business travel sector.
It would be quite absurd for the liability arrangement for poor Mr. and Mrs. Snooks going on their hard-earned holiday to be applied to, for example, ICI ordering flights, hotels and cars for its salesmen throughout the world. Article 5 is inappropriate and unacceptable to the business travel world. I hope that ad hoc business travel will not be included and that the Minister can give me a few words of encouragement about that. If not, when he goes to the Internal Market Council at the end of the week, I hope that he will press this case with his customary forthrightness.
§ Mrs. Llin Golding (Newcastle-under-Lyme)
I have looked long and hard for an opportunity to raise a certain matter, and I think that this debate is an appropriate time to do so. Two years ago there was a sad case of a young constituent of mine who died while away on holiday. There was a problem with the insurance cover, as that young person was not insured for death by natural causes, but only for accidental death or for any sort of accident.
The parents brought the young person home to Britain after a pathologist in the EEC country that she was visiting had carried out a post mortem. A British pathologist told me that such was the quality of that post mortem that the body was not in a fit state for him to carry out a proper examination.
I am concerned about this. Most people do not realise that when they take out additional insurance cover it does not cover death by natural causes. Quite often, when a pathologist abroad has done the post mortem, he comes up with some inconclusive reports, and it is unclear whether the death was accidental or due to natural causes. That distinction can make an enormous difference in an insurance claim or in any claim against the tour operator, who usually subcontracts the additional insurance.
I wonder whether that aspect could be taken into account. The cover that is provided and not provided could be clearly set out. With more and more elderly people going abroad for their holidays—often for two or three months at a time—it is becoming increasingly important that they be made aware that death by natural causes is often not covered by the insurance policies offered by tour operators.
§ Mr. Conal Gregory (York)
The House debates this matter at a significant time. Package holidays numbered fewer than 4 million in 1977, but by last year the figure had increased to 13 million. The Office of Fair Trading, in statistics to which my hon. Friend the Minister did not refer—perhaps significantly—reveals that one in five of those package holidays resulted in complaints. I am full of praise for my hon. Friend the Minister for bringing this important EC matter before the House in advance of any final decisions being made, and he will go with our best wishes to round up the matter on 21 December under the current presidency.
I also praise the Commission for taking the initiative to protect consumers. Many right hon. and hon. Members will recall that last Monday, the European Year of Tourism received its official send-off in Strasbourg in the presence of that mystery man, the tourism Commissioner, Antonio Cardoso E Cunha. Although we have not yet seen him in the United Kingdom, we shall welcome him, if and when he comes to this House. It is jolly nice to know that the Commissioner, together with the 12 Tourism Ministers of EC member states and representatives of the six EFTA countries, was present on that occasion, and I hope that my hon. Friend the Minister will eventually meet him and use the opportunity to praise him for attending the launch of European Tourism Year.
In that connection, I praise the European Member of Parliament for York, Edward McMillan-Scott, on being one of the leading lights in European tourism.
Many right hon. and hon. Members will recall the remarks of my noble and learned Friend Lord Broxbourne in a debate in another place on 15 December, when he quoted Laurence Stern's remark thatan English man does not travel to see English men.I declare an interest as vice-chairman of the Conservative parliamentary tourism committee, secretary of the all-party tourism committee and as a consultant to Consort Hotels, which is the largest consortium of independent hoteliers in the United Kingdom.
It is ridiculous that consumers cannot take out a contract via a travel agent that incorporates all the necessary safeguards. As my hon. Friend the Minister correctly said, after the lifetime or perhaps twice-a-lifetime purchase of a house, the next most significant purchase is a motor car, and the third—the second most regular purchase—is a holiday or package tour. However, there is great consumer dissatisfaction with them.
The hon. Member for Edinburgh, South (Mr. Griffiths) made a very forthright speech, and what a change it is for the Opposition to take tourism seriously. His predecessors referred to it, quite unnecessarily, as a Mickey Mouse industry and one fit only for those who appreciated the subject. I am glad to see the change that has occurred in the Opposition's attitude, although I would still like to read a definitive statement from them on the subject.
§ Mr. Nigel Griffiths
I want to place on record the fact that my right hon. and hon. Friends do not take the view that the hon. Gentleman suggests. We appreciate the employment consequences of tourism and we know that it provides a great many people with pleasure and recreation. We take tourism very seriously, and I welcome the hon. Gentleman's acknowledgement of that fact.
§ Mr. Gregory
The hon. Gentleman's remarks are extremely welcome. One of my wishes is to read the Labour party's statement on tourism, which has not yet been forthcoming. Perhaps I may look fonvard to receiving it in Santa's stocking..
The problems to which I refer should not be shirked. One is disability. Members of the Association of British Travel Agents in Yorkshire encountered a problem. Relatives of a young couple advised them of a wish to go on holiday, but one relative had problems with asthma, and needed ground floor accommodation. When they got to their holiday destination, that request had not been fulfilled. Perhaps the agent was not putting the information through correctly to the operator. I suspect that he was, but that it had not got through to the ground handler, and to the accommodation on time.
Changes in flights are another problem. Many couples, particularly pensioners, like to travel in the middle of the day in daylight, and will undertake a holiday only on that basis. Will the directive safeguard that, and will people get adequate compensation? I am afraid that in most cases the brochures state that compensation is payable only if there is a delay in excess of 12 hours. Pensioners may go to the airport one or two hours before their flight and can be delayed for 14 hours before they get a single penny in compensation. They are not like my right hon. and hon. Friends, who rush there 45 minutes before their flight.
Will the Minister say, "Yes, that is in the implied terms but it will not lead to greater compensation," or will we see more consumer safeguards?
Another problem is when holiday dates are changed. People who work at the Rowntrees or Terry's factories in York, or in other important factories in Britain, have specific dates for their holidays and they have agreed them with their partners. A few days before their holiday, they find that the dates are changed.
Luggage delays are another common problem. I recall the rather nice cartoon in which a gentleman goes into a travel agent, probably on Boxing day when holidays feature on television, and says that he would like to go to a destination in a sunny spot, but he is not too concerned where as long as his luggage can accompany him. When one loses one's luggage, or it is damaged, the airline compensation amounts to the staggering figure of £13.80 per kilo. Frankly, that is a paltry figure if one loses a suitcase full of clothes.
I would hate to see my hon. Friend the Minister—if he had gone to Acapulco rather than Brussels and had lost his suitcase—have to stand up in the same clothes throughout the ABTA convention, with compensation of £1180 per kilo. The figure is inadequate, and he would know that if he had attended that international conference.
Overbooking is another problem. A Yorkshire couple booked a holiday through an ABTA operator and found that the floor area of their hotel bedroom measured 7 ft by 3 ft. If either of them wished to change, the other had to leave the room or get on the bed. Is that the sort of compensation that will be covered by the directive?
There is a lack of information in brochures about such things as how many Mediterranean hotels have fire doors, or safe lifts. I could continue in that vein.
I have contacted the president of ABTA to see whether it could put the matter right. Travel agents are the experts. Did they enjoy good facilities and travel en route to their 160 recent convention in Acapulco, Mexico? To my surprise, I found that Mr. Ron Ellison, managing director of Square Deal Travel, said:We do not want excuses. We want explanations. Even if just one thing went wrong, that would be one too many. We are supposed to be travel professionals.He was commenting on some of the problems in Acapulco. Mrs. Beryl Wilcox, of Jones Travel, also an ABTA member, said:I have enjoyed the convention but I have had problems coping with the heat. And I have just found out that my flight in the morning is not there.I could go on with a series of complaints from ABTA members. If they cannot get it right, who can?
The Consumers Association questioned travel agents for accuracy of information and unbiased advice. It found that 83 per cent. quoted the wrong fare in answer to its request for the cheapest scheduled flight to Geneva, Paris or Brussels and that 27 gave a completely incorrect fare—in six cases it was £82 too much. The moral is that those who want independent, good and accurate information should go not to an ABTA agent but to the public library or ask around. I made inquiries about a flight at one of the travel agents in my constituency and was quoted over £250 more than by another, although the young lady had a brochure which showed a quite different price within 2 ft of her. That shows that training is at rock bottom in the trade.
There are, of course, non-ABTA agents. Some 10 per cent. of people who book package holidays do so without the safeguards of ABTA. One example involves Sunseeker Holidays, which operates from Leeds and Hull and left 700 tourists stranded abroad in September. It was not bonded or a member of ABTA. What advice would my hon. Friend the Minister give those people about how far they will be helped by the directive? I am aware that the new ABTA code is to be much wider and will include the total package. That is good. If people go on holiday to Greece and the coach does not turn up, they cannot be expected to get their solicitor to sue the Greek coach operator. The agent and the operator should take on that responsibility.
Insurance is inadequate. Under the insurance offered by most companies and by ABTA agents—the silver and gold schemes—people have to be stranded in an airport for more than 12 hours before one penny is coughed up. The message that should go out from the House tonight can be summed up in one sentence. This is marketing hype and there is not enough honesty or training. I look to my hon. Friend the Minister to correct that.
We should consider the legal safeguards. There is no holiday legislation, so major regulatory control lies in the Trade Descriptions Act 1968, section 1 of which provides strict liability offences for the false description of goods. For the majority of complaints about the holiday trade, however, the important provisions are in section 14, which provides offences for recklessly or knowingly making a false statement aboutservices, accommodation or facilities in the course of any trade or business".The inclusion of the key words "recklessly" and "knowingly" means that, to obtain a conviction, the prosecution needs to prove an element of guilt or guilty knowledge on the part of the maker of the statement. That 161 compares unfavourably with the strict liability offences created in relation to goods by section 1 of the Act. I appreciate that skill and care—implied terms, in other words—are contained in the Supply of Goods and Services Act 1982, but we should consider the false statement. There have been several cases to help the House in this respect.
There are two precedents to which I would like to draw attention. The first is that a false statement about a future event needs to be false when it is made. That is the case of Beckett v. Cohen in 1972. The second is that it is not reckless if events happening subsequent to the making of the statement render is false. That was the case of Sunair Holidays v. Dodd. We should consider amending the law to ensure that we introduce either holiday legislation or strict liability offences for services, with appropriate definitions under the Trade Descriptions Act 1968. The proposed directive goes further than the ABTA codes as it imposes on organisers a strict liability for the package.
In conclusion, will my hon. Friend the Minister clarify two points? Paragraph 3 of article 6 statesthat in each of their territories there is available whether provided by public or private bodies a rapid, efficient, inexpensive and independent procedure for use by the consumer in dealing with his complaints ".Can my hon. Friend throw some light on the identity of that rapid, efficient, inexpensive and independent person or body? Does he look favourably on the idea of a tourism ombudsman?
There is before the House an early-day motion signed by right hon. and hon. Members of all parties calling for a tourism ombudsman, drawing attention to the sad inadequacies of the Association of British Travel Agents and stressing the fact that we want the independence of a tourism ombudsman. We have one in banking and we had one in insurance. I was one of the Members of Parliament responsible for getting the building societies ombudsman on the statute book. We now need that safeguard for those who buy package holidays abroad.
Even at this late hour, we should mention those who holiday in the United Kingdom. I believe that they have better safeguards than holidaymakers anywhere. If someone who lives in the west country and sensibly chooses to take his holidays in Yorkshire, and in particular York, finds that the hotel accommodation and services are inadequate or not to the level that he has expected, he can contact the regional tourist board, and if the person or organisation is a member of that board, it can take appropriate action and provide compensation. That is a big plus.
I hope that when my hon. Friend or his representative goes to Brussels on 21 December, he will stress the fact that in Britain we take complaints very seriously and we expect our counterparts in the EC to do the same. He goes with our blessing, but with the caveat that we would like him to fight as strenuously for the consumer as he has done so ardently for the travel trade.
§ 1.6 am
§ Mr. Richard Page (Hertfordshire, South-West)
I begin by placing it on record that I am the parliamentary adviser to the Association of British Travel Agents that has been referred to once or twice during the debate. I thank my hon. Friend the Minister for the courtesy and attention he has given members of the travel industry whenever they have come to see him to discuss the directive.
It is a touch difficult to talk directly about the directive because, as the hon. Member for Edinburgh, South (Mr. Griffiths) said, it has been a moving target—and sometimes a fast moving one—which was constantly changing shape. However, it is now slowing down and starting to assume a definable profile. There has been a general welcome for the aims of the directive in the House and in the travel industry. If other countries in the EC had organisations such as those in Britain, matters would have been dealt with more speedily and there would not have been such a need for the to-ing and fro-ing that has taken place in the past year. I wish to make two or three points about the directive, mainly arising out of the need for definition. The first relates to scope.
I should like to follow the remarks of my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) about business travel. I believe that it was never intended to bring business travel into this holiday directive. However, I recognise the great difficulties in definition. I suggest that when my hon. Friend goes to Brussels he regards it as though it were a suit of clothes. One can have either a bespoke suit of clothes or one can buy one off the peg. Bespoke business travel is when a business man orders individual, special travel requirements which should not be covered by the directive. However, if there were business travel agents or operatives advertising package business travel of a standard nature to a standard destination, those arrangements should be swept into the terms of the directive.
There is a need to define accurately what is a package holiday. In the United Kingdom, we tend to think that travel is an essential part of a package holiday. We do not recognise the differences between a package holiday in this country and on the continent. Many people in continental countries do not regard travel as part of the package. They book their accommodation and excursions but make their own travel arrangements, as we see when we are foolish enough to travel in France at the end of July or the end of August. Many Frenchmen book a package holiday but make their own travel arrangements.
As I understand it, under the directive two out of three categories—travel, accommodation, excursions—will constitute the basis of a package holiday. It is important to remember, therefore, that it goes a little wider than we at first appreciated. Someone booking a cottage in the Lake District with a little pony trekking included will be subject to the requirements of the directive and will receive the protection that it offers.
A further aspect is the need to define an organiser. As I understand it, he is someone who organises package holidays on a regular basis. Immediately, we run into the problem of defining "regular". My hon. Friend the Member for York (Mr. Gregory) has already drawn 163 attention to the possible spread of that definition and to closed groups, such as someone taking scouts on their annual holiday or a local clergyman taking people to Lourdes. That definition must be clearly understood so that people know whether they are protected by the directive.
Another major aspect which must be considered comes under article 5. The Minister must be congratulated on bringing the article more into line with United Kingdom law. The reverse burden of proof is removed, so there is a requirement to show negligence. That offers a defence to any liability such as force majeure. It is important that, wherever possible, we remove the element of doubt from the directive so that people know exactly where they stand. I do not want woolly definitions which allow people to change their interpretation as things develop.
The hon. Member for Edinburgh, South (Mr. Griffiths) made some points with which I agreed and, he will not be surprised to hear, many with which I did not. I should like to point out the dangers of the superficial attraction of, and his enthusiasm for, on-the-spot arbitration or treatment when one is abroad. The holidaymaker would be far better served seeking redress against the travel operator back in the United Kingdom in a slightly calmer and more reasoned atmosphere. He would do better to progress his case through the necessary procedures rather than trying to do so in a great rush in a foreign country, where language may also be a problem.
Much reference has been made to the new ABTA codes, which have been approved by the Office of Fair Trading. They offer improved protection for the consumer and show a steady uplift in standards. Many holidaymakers and possibly some hon. Members do not appreciate that there is already a procedure whereby people who have a feeling of grievance can get independent redress. If they feel that they have an objection or complaint, provided that they booked through an ABTA agent, they can go to the conciliation service, and if that fails they have the opportunity to go to the independent arbitration system administrated by the Chartered Institute of Arbitrators with the cost subsidised by ABTA.
I understand from the figures given to me that in 1988 some 411 cases were referred, of which 320 were found in favour of the consumer. As I have said, it is an independent system and I understand that the costs are subsidised by ABTA members.
§ Mr. Gregory
I am grateful to my hon. Friend for giving way on the important point about the procedures that are available. He referred, correctly, to two procedures—conciliation which, with great respect, is not independent because it is funded by ABTA, and arbitration which is, indeed, independent. If it is such a good procedure, however, why is there no travel bible to which an individual can refer to see past cases and judge whether there is a precedent and to see what level of compensation might be payable or whether it is frivolous? I understand that seven fully trained lawyers undertake this work, but that each works in a vacuum without any published 164 records. If the system of independent arbitrators is to continue, does my hon. Friend commend the idea of their having the benefit of past judgments?
§ Mr. Page
My hon. Friend makes his point, but he has pre-empted the next stage of the process, to which I was about to refer in passing. There has been much reference to the idea of an ombudsman. I know that ABTA is examining the need to revamp or reorganise the arbitration system. To that end, it has called in independent experts to advise on the effectiveness of the arbitration and how it could be improved. It is not for me to pre-empt the findings, but no doubt, in the fulness of time, the independent auditors will make their report.
In March 1988 the then draft directive estimated the package holiday market at 25 million. A series of figures have been quoted and each time they have increased. The figures given to me, however, outbid the lot because I understand that the package holiday business in West Germany totals about 18 million holidays, in the United Kingdom it is just under 14 million and the rest of the Community makes up 6 million. We are therefore talking about 37 million package holidays per year. The sheer size of the market demands the protection of a directive across the whole of the EEC. In reading the directive and all the changes that have taken place, I ask the House to endorse the Government's view as encapsulated in the motion.
§ Mr. Teddy Taylor (Southend, East)
Every hon. Member who has spoken has had a great deal to say about the directive itself. I do not want to say a great deal about it because the points have been well covered. Listening to most of the speeches made me realise that I am rather lucky that our family goes on holiday only to either Scotland or Pakistan, where problems simply do not arise.
I hope that my hon. Friend the Minister will clarify the point that he made at the end of his speech about article 100A of the Single European Act when he seemed to speak faster than during the rest of his speech, thus giving me the impression that something significant was happening. When I looked around me and saw the smiling faces, I realised that something dramatic had happened. The Minister knows that the legal advice given to the Government and the Select Committee on European Legislation is that there is no question that this could reasonably be regarded as an article 100A proposal.
The legal advice given to the Select Committee on European Legislation on the directive was:The internal market element is insignificant—or even theoretical, if one looks for evidence about just how the proposal would affect 'the free movement of goods, persons, services … … If an element of such dimensions is sufficient to found recourse to Article 100A, then the scope of that Article is virtually limitless. Neither the context of nor the background to Article 100A suggests that this could be right.Some people may think that that is simply an attempt to find a legal quibble. I was fascinated that the Minister has spent all his time corresponding or talking to officials since I raised the point. He must feel an element of guilt about it. I never thought that the day would come when the Minister, of all people, would apparently serve the interests of people, such as Mr. Delors, who propose to expand the extent to which the Community makes laws which apply to countries and leave domestic parliaments out.
165 The Minister must be aware that, when the Single European Act was passed, it was made abundantly clear to the House and to our people that some internal market issues would be decided by majority vote but that the majority of issues would be decided by unanimous vote. The Minister must be abundantly clear from all that has been said by legal advisers and on the Single European Act that this is not a 100A directive. At the end of his speech he said, "Yes, we had doubts about it in the past, but on reflection we think that it may be a 100A." If the Government cave in on this one and do not put up a battle on article 100A, the House of Commons may as well shut up shop and call itself a county council. Mr. Jacques Delors has said that in his view 80 per cent. of all legislation will be made through the Community's non-democratic institutions. If we allow this directive to go through under article 100A without a battle, the figure will be well above 90 per cent.
Why have the Government apparently changed their mind? Will the Minister be willing to go along on 21 December and fight or will he say, "The directive has been moderated so we shall not fight"? I hope that he will regard the matter as serious because it is desperately serious for our democracy. He knows that the directive cannot be passed under article 100A. If the Government are not prepared to battle on this, I wonder if they are willing to battle on anything.
§ Mr. Forth
I am grateful to all hon. Members who have come here at this late hour to guide me in my deliberations on this important matter. It is important, if for no other reason, than that so many British people avail themselves of the holidays offered by our package holiday industry. As always when EC directives are considered by the Council of Ministers, we shall end up—if at all—with a directive which will inevitably be the result of a compromise among 12 different member states.
In this case some member states, such as Britain, send many of their citizens on package holidays each year. Other states receive them. Given that difference of perspective, the House will not be surprised that it has been difficult to reach consensus on the directive. If we end up with a directive, I counsel hon. Members that it may not meet all their exact requirements. That may explain why, should a directive emerge from the Council of Ministers, it may be less than ideal and may not meet all the views expressed this evening. I assure hon. Members that we shall endeavour to take account, as far as we can, of the reasonable points that they have made.
The hon. Member for Edinburgh, South (Mr. Griffiths) and I may have to agree to disagree about almost every aspect of this matter. That difference starts with the industry, which the hon. Gentleman painted in a black way. I have an upbeat and optimistic view of that industry, and he was right to quote what I have said unashamedly about it. It has served our people well and it provides a large number of holidays for many people. Perhaps I should declare an interest as I take a package holiday every year. I have already booked it for next year and I have always been happy with those holidays.
§ Mr. Forth
I never got to Acapulco. At the time that I might have been there I was in Brussels representing Her Majesty's Government and our people to the best of my ability in the Council of Ministers.
Although I have often praised the British holiday industry, I am not blind to its faults. There may be a place for a directive of the kind under consideration now so that perceived loopholes either in our law or in the more general provisions relating to the holiday industry can be filled in. I do not agree with the hon. Member for Edinburgh, South when he talks about a crisis of confidence. I share his praise, however, for the ABTA code of practice, which has been updated and improved. That code takes our industry a stage further and the latest code provides standards in most respects superior to those provided by the directive.
The hon. Gentleman was busy criticising me for single-handedly removing most of the directive's effective provisions. He appeared to forget that I sit in solemn conclave with representatives from 11 other member states when I consider such things. I must reach agreement with them. Whether the directive has been watered down, strengthened or whatever is the result of what 12 Ministers from 12 different member states have been able to agree.
§ Mr. Nigel Griffiths
When the Minister introduced legislation on this matter, will he embody in it the higher standards of the ABTA code, which we both believe to be desirable?
§ Mr. Forth
No, I will not give that assurance. If the directive is agreed and put in place by the Community we shall be obliged, as a member state, to put the appropriate regulations in place. That answers one of the points made by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). We will endeavour to fill in the details that he has identified as missing from the directive. If those details are not clarified once the directive is agreed we shall have to clarify them in our regulations. We would attempt to do so responsibly—no doubt after consultation with the industry and consumer groups as is our practice when seeking to make regulations.
I cannot give the undertaking asked for by the hon. Member for Edinburgh, South as I envisage that our regulations would reflect the wording of the directive. If the industry chose to continue to have a code of practice that went beyond that directive I would welcome and support that decision. I see no need, however, to legislate to give effect to that code. It is far more effective when it is operated on a voluntary basis.
I give my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) more or less the assurance that he seeks. It is true that business travel was never intended to be part of the directive. It was fairly late in the day when we identified the danger that my hon. Friend correctly pointed out and which was echoed by my hon. Friend the Member for Hertfordshire, South-West. We have always had serious reservations about that matter and I raised it at the Council of Ministers. We expect that the final text to the directive, should it be agreed, will have attached to it a minute statement by the Council and the Commission to clarify that the directive will not coverbusiness trips which involve separate bookings of transport and hotel accommodation which do not constitute elements of a pre-arranged package, even though they are invoiced simultaneously.167 That is Community jargon for saying, broadly speaking, that business travel will not be within the directive's scope. I hope that that gives my hon. Friend the assurance that he seeks.
I sympathise with the point made by the hon. Member for Newcastle-under-Lyme (Mrs. Golding). She was absolutely right to bring this tragic constituency case to the attention of the House this evening. I cannot give her any comfort in terms of the wording of the present directive, but I draw to her attention the words in the new ABTA code, endorsed by the Office of Fair Trading. It says:A tour operator shall include as a term of any contract relating to the sale of their foreign inclusive holidays or tours—I come to the important words—a provision stating that every assistance shall be afforded by them to a client who through misadventure suffers illness, personal injury or death during the period of their holiday arising out of an activity which does not form part of the foreign inclusive holiday arrangement".ABTA provides a form of words that may have assisted the hon. Lady's constituent had they been in place at the time. I hope that they will now help anyone who finds him or herself in the same tragic circumstances. I invite the hon. Lady to take up the point with ABTA to see whether it can satisfy her. If it cannot, she should by all means come back to me to see whether I can assist her.
§ Mrs. Golding
I thank the Minister for that assurance. I took up the matter with ABTA, which was helpful. Thomson's made quite a large ex gratia payment, but that does not solve the problem of the pathologist's difficulty in establishing the cause of death. It means a lot to families to know why people have died, and the EC could put a lot more pressure on pathologists to bring them up to the standard of those in this country.
§ Mr. Forth
I understand the hon. Lady's important point. The standard of pathology available in member states in the Community is not a matter for this directive. The hon. Lady might wish to raise the matter with the Commission through her Member of the European Parliament or pursue it with the Department of Health. I do not think that the point is for me or the directive.
§ Mr. Forth
That ties in with what the hon. Lady has just said and shows that we must not forget, when considering this matter, that we are fortunate to have in this country an industry that has gone to extraordinary lengths to provide a voluntary code and mechanism whereby complaints can be dealt with. Even the industry and my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) would say that the mechanism has never been perfect, but the industry has been, and still is, working to see whether it can be improved. We should encourage and value that, and praise, not criticise, it.
My hon. Friend the Member for York (Mr. Gregory), as always, has shown an enormous amount of knowledge and experience of this matter. He asked me some relevant and, as usual, difficult questions which I shall do my best 168 to answer. If I fail to answer all his points, I shall write to him to give him a proper answer, but I shall pick up one or two of his points.
My hon. Friend made general points about flight and date changes which, I think, are covered under article 4, paragraph 5, of the directive in its latest wording. It says:if any of the essential terms of the package are … altered by the organiser before departure, the consumer may, within seven days of receiving notification of the change:—either withdraw from the contract without penalty,—or accept a rider to the contract specifying the alterations made and their impact on the price.That goes some way towards answering his points. I should like to look at it again to see whether it is completely adequate, but there is a recognition of my hon. Friend's fair points about the distress that can often be caused, usually to elderly people or those who are not as robust as hon. Members undoubtedly are. To be here at this hour of the night they have to be robust—but I shall not explore that further.
My hon. Friend then made an important point about bonding and insurance. I refer him again to article 7 of the directive, which says:The organiser and/or retailer party to the contract shall provide sufficient evidence of ability: in the event of insolvency, to refund money paid over and to repatriate the consumer, and—to cover compensation for losses suffered as a result of the failure to perform or the improper performance of the contract.So the directive requires that a reasonable amount of cover be provided, although it is right to leave it to the discretion of the operators to decide how to do that.
Although ABTA provides cover for ABTA members, if the directive were agreed, it would extend that safety net to all operators.
§ Mr. Gregory
I think that my hon. Friend has partly missed the point. I was talking about non-ABTA members who subsequently go into liquidation, and I gave the example of a firm based in Yorkshire which had gone into liquidation as recently as September. There is little point in pursuing it through the courts if it has already gone into liquidation.
§ Mr. Forth
Yes, but the article that I read out refers to ability in the event of insolvency to refund money paid over or to repatriate. That covers my hon. Friend's point.
My hon. Friend the Member for York also referred to the ombudsman. His reference to a "rapid and inexpensive means" has been dropped from the directive; it did not survive the rigorous examination of the Council of Ministers. However, I endorse what he said about the principle of an ombudsman and I hope that the industry will urgently press on towards introducing another mechanism for dealing with complaints.
My hon. Friend the Member for Hertfordshire, South-West is an expert in this area, and I acknowledge his contribution to guiding ABTA towards a positive approach to this directive. I have already answered his point about business travel when discussing the scope of the directive. Pony trekking and cottages are matters of great concern to at least one other member state—I am sure that he can guess which one—and I hope that his point about them and their organisation on a regular basis will be covered while putting the regulations in place. His points may not be entirely covered in the directive, even when it is complete.
My hon. Friend the Member for Southend, East (Mr. Taylor) is unflagging in his anxiety to ensure that we do 169 not become supine in the face of the onslaught on our sovereignty by the institutions of the EC. I am not sure that this is the right issue on which to take a stand, however. My hon. Friend spoke as usual with great passion, and he knows very well that I have shared a number of his views over the years about unnecessary extensions of the Community's competence. My hon. Friend is here, as he always is, to use the opportunity that the House has been given to examine the matter. It is not as though we are trying to slip this through on the quiet, undebated. The House is discharging its responsibility and has been given the chance to do so, and I hope that my hon. Friend acknowledges that.
My hon. Friend asked whether the treaty base was suitable in this case. I have given that much thought and have come to the conclusion, with some reluctance, that this may be a legitimate internal market matter. This is an important business which involves millions of people throughout the Community and which crosses national boundaries. Some member states send people on holiday; others receive them. It is right that the Community should try to provide reasonable safeguards, given the movements of people and the transaction of Community business across these borders. He and I may not be able to agree on that, but if he gives the matter some thought he will see that it is not the matter upon which to fight the final battle on sovereignty.
I have tried, perhaps at excessive length, to answer the questions asked in the debate. Having heard my replies, I hope that hon. Members will see fit to support the motion.
§ Question put and agreed to.
That this House takes note of European Community Documents Nos. 5382/88 and 7996/89 relating to package travel; and endorses the Government view that any proposal must strike a balance between consumer protection and the need to avoid undue burdens on the travel industry, which would adversely affect the price and range of holidays available to consumers.