§ 4.7 p.m.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick)My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, that the House do now resolve itself into Committee.—(Lord Beswick.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The Earl of Listowel in the Chair.]
§ Clause 1 [The Air Travel Reserve Fund Agency]:
§
Lord BELSTEAD moved Amendment No. 1:
Page 2, line 7, leave out ("include") and insert ("be").
§ The noble Lord said: I beg to move Amendment No. 1, and, with the leave of the Committee, will also speak to Amendments Nos. 2 and 3. The reason for these Amendments is to try to discover the intentions of the Government in the drafting of subsection (4) of Clause 1. It appears that the Agency shall include representatives of the Civil Aviation Authority, representatives of the travel industry and consumer representatives. However, the use of the word "include" leads me to wonder in what proportions these three sets of representatives would be found upon the Agency. Therefore, in seeking in Amendment No. 1 to amend the word "include", I am asking two questions. First, what size of Agency does the Secretary of State envisage; and, secondly, what proportion on the Agency will these named representatives provide?
§ The two other Amendments which I am also asking the leave of the Committee to discuss, change the word "and" in lines 9 and 14 to "or". As I understand the existing wording, representatives of those who are providing travel facilities could possibly also be members or officers of the Authority. Certainly those who are representing consumer interests or the travel trade could be representatives of the Authority. Therefore, I am seeking to find out whether the Government intend that those described in paragraphs (a) and (b) and in lines 14 to 18 will be 632 entirely separate appointments. I have sought to try to make the intention of the Amendments absolutely clear by rewording the provision covering consumer representatives in lines 14 to 18.
§ Without wearying the Committee, as this is the first Amendment may I say that this Agency will be a new body, and I think it will be common cause on all sides of the Chamber that it will have a most important function. It will be the guardian of very substantial sums of money levied from air travel companies, and will be empowered to draw on £15 million of Government money—so far as we know, interest free. So the air travel organisers will have the major interest in the sound running of the Agency, because it is they in the first instance who will pay the levy. As is only proper, the Authority will be able to make the rules within which the Agency will operate, and in a consumer protection Bill there is provision for consumer representation. I doubt whether the existing wording actually requires these three interests to be quite separately represented on the Agency, and it is for this reason that I have also asked for leave to speak to Amendments 2 and 3. I beg to move Amendment No. 1.
§ Lord BESWICKI appreciate the purpose of the noble Lord, Lord Belstead, and I am happy to think that I can probably help him in getting a picture of the sort of persons who would compose this Agency. May I say first that there is obviously a little difficulty in getting words to express exactly what one wants. I believe there is nothing between us as to what we want, but there must be some difficulty in using the English language, because, although I know what the noble Lord, Lord Belstead, wants, what he says in these Amendments is that we shall have persons from the travel trade, or we shall have persons who travel, or we shall have persons from the Civil Aviation Authority. That, I am advised, is the effect of having "or" and "or". What he wants is something rather different from a body composed of the travel trade, or of persons who travel, or of persons from the Civil Aviation Authority. So the words do not secure what he is seeking.
As for the general picture of the Agency, it is intended to be a fairly small and compact body. I was going to say 633 on a later Amendment that we anticipate the Agency will possibly number seven persons, of whom the chairman would be an independent member. Three of the other six—in other words, a half—would be from the travel trade and the other three would be appointed by the Secretary of State, to include a representative of, or someone specially qualified to represent, the consumer interest. I think one would possibly need someone with accountancy qualifications or some knowledge of investment, or something of that kind. I believe this would give the balance that is needed and I hope it is the sort of balance that the noble Lord, Lord Belstead, and his friends would agree is about right.
Lord HAWKEI was not quite clear when the noble Lord was giving the list. Did he say that three of these persons should be representative of the interests engaged in the provision of travel facilities and three should be from some other source, or did he say three from the Authority?
§ Lord BESWICKWhat I said was that there would be representation of the CAA, the travel trade and the consumer interests, possibly. Three of those would come from the travel interests.
Lord HAWKEI am not quite sure where the people from the Authority come in. I do not quite see the necessity for them, and the noble Lord does not seem to have mentioned them.
§ Lord BESWICKThey would be included in the other three.
§ Lord HARMAR-NICHOLLSWould the representatives from the travel agencies be nominated by the travel agencies themselves, or would the choice be left to the discretion of the Minister?
§ Lord BESWICKThe intention is that they would be nominated after consultation with the Association of British Travel Agents.
§ Lord BELSTEADIf I may say so, I think the noble Lord has been extremely helpful. I was not entirely certain that we would be told by the noble Lord that he expected (and I hope I have now got this right) there would be three persons from the travel trade and three other persons, including consumer interests and 634 he Authority, and also—I have forgotten the third one.
§ A Noble Lord: The chairman.
§ Lord BELSTEADAnd the chairman. I am so sorry; may I say it again? As I understand it, there will be three persons from the travel trade, and three presumably representing consumer interests and the Authority, as well the the Secretary of State's appointment of the chairman. As I understand it, that is what the noble Lord has said and I think it is extremely helpful. Perhaps I may be forgiven for just repeating it and, without appearing to be too bone-headed, pointing out that the noble Lord has not answered one question which was, in a way, my worry. Is there still going to be overlap? Perhaps I may explain what I mean.
As I understand it, the Civil Aviation Act most certainly lays a duty on the Civil Aviation Authority to represent consumer interests. I am afraid that I am not very well informed about the Act, but one has only to glance at Section 2 to see that there has to be assistance and information provided by the Authority; and one has only to glance at Section 3 to see these there is a duty upon the CAA to secure that British airlines provide air transport services which satisfy all substantial categories of public demand. Therefore, I think one can be forgiven for saying that, of course, the CAA has a consumer interest; and, indeed, the chairman and his staff do their utmost, as I think both Houses of Parliament know, to promote that interest. Similarly, air travel organisers and travel agents also have a consumer interest. Good heavens!, if they did not they would soon be out of business. I think that many of us who take licensed travel and package holidays have good reason to know that they, too, do their best to secure that they are acting in the public interest.
Therefore, may I repeat this question? Although the noble Lord has given us some very useful information, does he envisage that under the present wording—which is what the Amendments arc seeking to change—someone in the three who were representing the travel trade could also represent the consumer interests? The consumers might find themselves not represented by the 635 other three, because the Minister would say, "I am looking at my nominations and I think you are already very well represented ". Is there an overlap? I should like to end with an apology. I think that in replying again the noble Lord may say to me that what I am in danger of doing is talking about rigid representation upon a board or an agency, and that this is something the Government do not like. I do not like it either, but I think that when one starts to set up agencies and boards it is something that one simply cannot avoid.
§ Lord BESWICKI shall not accuse the noble Lord of doing anything untoward, because I think he has been very reasonable. I think I can give him a quite categorical assurance that those three persons of the six who constitute the Agency under the chairman will be from the travel trade and none of them will be held to represent the consumer. It is perfectly true that a good exponent of travel business may well say that he has the consumer interest in mind. That is so, but so far as this Bill is concerned and so far as this Agency is concerned he will be there because he understands the problems of the travel trade. Within these three I may also add that I hope we can arrive at a proper balance as between the different categories of firms some who operate and some who do not operate aeroplanes; those who are engaged in the package business specifically and those who are possibly in another section of the travel trade. I think it would be feasible to get a fair representation from the three, and as I have said, the Association of British Travel Agents will be consulted. Then, when we come to the other three I hope—if it is possible to get such a pristine character—we can get some consumer representative.
§ Lord CLITHEROEMay I ask who will represent the consumers? I have travelled by air since 1920, when I first moved from Paris to Croydon. I have travelled every year since and still travel many times a year, but I have never yet come across anybody who appeared to represent the consumer. I have many observations I should care to make to anyone who represents the consumer, but I have never been told of any organisa- 636 tion to whom I should make those representations.
Lord HAWKEIt would seem that the noble Lord has not been listening to the noble Baroness, Lady Burton of Coventry.
§ Lord BESWICKI was going to suggest, if I may say so quite kindly, that if the noble Lord, Lord Clitheroe, came more often to the House, I am sure he would hear the noble Baroness, Lady Burton of Coventry, and notice her claims to represent the consumer.
§ Lord CLITHEROEI beg the pardon of noble Lords. I did not know that the noble Baroness represents the consumer. I will certainly make contact with her.
§ Amendment, by leave, withdrawn.
§ 4.22 p.m.
§ Lord BELSTEAD moved Amendment No. 4:
§
Page 2, line 18, at end insert—
(" Provided that not less than one-half of the members of the Agency shall be appointed by the Secretary of State as appearing to him to be representatives of the interests of persons engaged in the United Kingdom in the provision of travel facilities to members of the public.")
§ The noble Lord said: In the light of what the noble Lord, Lord Beswick, has said, I shall certainly not press this Amendment. However, in order not to keep the Committee too long, may I briefly make three points. First of all, this is an Amendment about which the travel trade in general, both operators and travel agents, feel very deeply. They naturally feel that in regard to such matters as deciding on the application of the Fund under Clauses 2 and 3, seeing that the new arrangements arc understood, making the annual report to the Secretary of State and giving advice on Clause 6 about the future of the Fund, they should have a proper representation on the Agency.
§ The noble Lord in his reply on the previous Amendment gave an undertaking. I accept that undertaking and am not going to press this Amendment, but may I, just for the record, say that I was grateful to him for saying, in answer to one of my noble friends, that the Government would take into account the fact that the travel trade does not mean just travel agents or just travel organisers. I would particularly ask that the right 637 honourable friend of the noble Lord, Lord Beswick, should take into account those who in the first instance will actually pay the cash, namely, the air travel organisers. Although they pay the cash, it is true that the travel agents will be collecting the cash from the customers. I do not think I either want to or should say more on this matter. I am grateful to the noble Lord for what he has said, and, subject to what he may wish to say in reply, I intend to withdraw the Amendment.
§ Lord BESWICKI accept what the noble Lord, Lord Belstead, said. May I add this, so that there is no misunderstanding between us? Reference was made in another place to not less than one half of the members of the Agency being representative of the travel trade. However, I should make it clear that there is no difference between that and what I said, because in the other place the reference was intended to apply to the six members under the chairman. Having made that clear, and it being accepted by the noble Lord, Lord Belstead, I think there is nothing between us. In fact, we are doing what lie wishes us to do. So far as the three are concerned, it is the intention, in discussion with the Association of British Travel Agents, that there shall be a proper spread of those three so that all sections of the industry are reasonably represented.
§ Lord BELSTEADI beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
§
Lord BELSTEAD moved Amendment No. 5:
Page 2, line 25, at end insert (" otherwise than as a customer as defined in section 2(2) of this Act.")
§
The noble Lord said: We come now to an Amendment which relates to the office of chairman of this new Agency, referred to by the noble Lord, Lord Beswick. The purpose of the Amendment is to make that office more tolerable, more possible to be more efficient, and also to ensure that the chairman is not excluded under Clause 2(2). We believe that this is a slip of the draftsman's pen, because as the Bill stands drafted, under Clause 1(5),
638
The person appointed chairman of the Agency shall be a person who is neither—
§
Our Amendment proposes to add the words as printed—
(" otherwise than as a customer as defined in section 2(2) of this Act.")
§ The reason for our apprehension is that the chairman of the Agency under Clause 1(5) may not be "in any way associated by way of business" with air travel organisers of any sort. This really is a prohibition. As Clause 2(2) makes the point that a customer of an air travel organiser is someone who enters into a contract, and by that we understand is meant a person who purchases a ticket or goes into some package arrangement with the air travel organiser or air firm, the inevitable conclusion is that the chairman would be "associated by way of business "if he ever became such a customer. Therefore, our Amendment would save the chairman this embarrassment. The second point is really in association with this. What evidence do the Government have that entry into a contract is not being "associated by way of business "? I think that what we propose would make the office of chairman more tolerable. We believe the Amendment is worth while. If we can be assured that it is unnecessary I will, with pleasure, withdraw it.
§ Lord BESWICKIn a way, we are up against a problem referred to by the noble Lord, Lord Clitheroe—this "rare bird" who is a consumer. The definition here is someone who is a consumer but is nothing else, and such a consumer is becoming difficult to come by. When I first saw this provision I said to myself, "How can you get an independent chairman? Independent of what? "If this chairman was completely independent of modern life, which surely involves flying about occasionally, he would be someone we should look at in a glass case. However, I am assured that in fact, when we come to the wording and the legality of the situation, Clause 1(5)(b) would not prevent a person who had booked a package holiday from serving as chairman of this Agency. I am assured that that would be only a contractual relationship 639 as a customer and not a business association with the company or the interest concerned. So I hope that the noble Lord, Lord Belstead, will accept that as giving him what he wants, without amending the Bill. I might go on to say that the existing clause was intended to exclude, for example, members of banking and financial institutions which have a direct interest in travel companies and who would therefore be held inappropriate as chairman. As things now are, I give the assurance wanted by the noble Lord, Lord Belstead, that if a person flies around occasionally on holiday he will not be considered disqualified as chairman.
§ Lord HARMAR-NICHOLLSThe noble Lord, Lord Beswick, shows himself to be a realist. One understands the problems of trying to find this "rare bird", as he called it. I do not think he can do much about the particular point that I want to make, but I think it would be a good thing to have it on the record. The words "in any way associated" are very wide and include a lot of things within the net. It could well be that a man who ought to be chairman, who has all the qualifications required to carry out the task, may have shares in a company which is a subsidiary and which has some connection one way or another with these travel agencies. We know that these days there are journalists who feel it their duty to try to probe and present the dark sides of things when they do not really exist and who could latch on to the very clear words, "in any way associated ", in a way that would make it unpleasant, to say the least, to the person to be appointed chairman. I do not think the noble Lord can do much about it, but I do not think it does any harm at all to have on the record that this possibility of a deliberate misrepresentation of a very remote contact is realised, and it may help to let it be seen that it has been thought of at this very early stage.
§ Lord BESWICKMy Lords, I have listened to what the noble Lord has said and I understand why he has said it. But I am advised that the wording would not preclude the type of person we all have in mind as a suitable chairman. I would go on to add—because I have lived with this question of the consumer for such a long time—that I 640 would not be at all surprised if, having found this very special category of person and made him the chairman, somebody accused him of being a consumer.
§ Lord SANDYSWith the assurances the noble Lord, Lord Beswick, has given, I should like in a moment to ask leave to withdraw the Amendment, but first I should like to associate myself most warmly with the remarks of my noble friend. It occurs to my noble friend Lord Belstead and me that perhaps the noble Lord, Lord Beswick, may wish to reveal the name of the chairman he has in mind for this role. In the circumstances, I think we ought to allow ourselves a further opportunity at a later stage in the consideration of the Bill for representations on this important question of the appointment of the chairman. Nevertheless, at this stage I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ Clause 2 agreed to.
§ Clause 3 [Rules for the payment of benefits from the Fund]:
§ On Question, Whether Clause 3 shall stand part of the Bill?
§ 4.33 p.m.
§ Lord BELSTEADMay I ask the noble Lord a question. The very last subsection of Clause 3 deals with the duty of the Agency to supply copies of the benefit rules. I wondered whether this might be an appropriate moment to ask the noble Lord what the situation is to be about informing ordinary members of the public, who go to travel organisers and travel agents to make their bookings for package holidays, whether or not they are covered. In essence, what I am asking is, what kind of advertising will be done, what kind of advice will be given to the ordinary man or woman going into a travel agency as to whether the booking they are making is supported by this second line of defence, which the Fund, under the Bill, is to provide.
§ Lord BESWICKI confess I am not readily able to say exactly what will be done in this regard. Certainly some assurance will have to be given. As of now, of course, the agent or the operator will 641 say that he is a member of the British Association of Travel Agents, or he will say, and this is held to be relevant, "licensed by the Civil Aviation Authority as an operator." They are not at all slow in saying that they are covered in this way. I should have thought that anyone selling something would make certain that the prospective customer was made aware of the fact that this cover was provided by the Bill. At a later stage I will clarify if anything has been done, but I rather suspect that we have not got as far as that at the present time.
§ Lord BELSTEADI do not want to appear to make a cheap point. I think those who have read the Bill are aware that it is not totally straightforward; it is not easy for the person who does not readily understand the licensing arrangements to realise what is definitely covered. I have found from reading the report of proceedings in another place—and, indeed, the noble Lord referred to the matter on Second Reading—that, of course, all scheduled flights are not covered. I do not cavil at this at all. I understand that ITX flights, individual excursions, are not covered, and I understand that part-charter is not covered and that group-inclusive tours are not covered. I must admit that already I am in realms that I do not understand. I simply do not understand what the last two mean. Therefore, I think there is reason to ask the Government this: when one walks into one's travel agent how is one to know whether or not one is covered? If there is to be a Report stage, we will be having it fairly soon after the Committee stage. I wonder whether I might possibly raise this again on Clause 7. My noble friend Lord Trefgarne has put down an Amendment about flights to the Channel Isles and the Isle of Man. Perhaps it might be convenient to the Committee if I raised this matter again briefly under Clause 7.
§ Lord BESWICKCertainly, but I do not think there is very much more I can say, except that I am now informed that the Department of Trade will be publishing a leaflet explaining both the degree of cover and who is covered. I would have thought that would go some way to help. Looking at it almost from the outside, it seems to me that here we are imposing on the travel trade certain 642 obligations; indeed the noble Lord, quite rightly, voiced apprehensions as to whether we were not placing upon them too onerous responsibilities. If they have to accept those responsibilities by law, I am quite certain that the travel agents themselves will ensure that their prospective customers are aware of the extent to which this cover is now made obligatory by law. I shall be very surprised indeed if the travel agents and the other bodies involved do not see to it that their prospective customers are well aware of what is to be done in the future.
§ Lord TREFGARNEI am not at all happy about this. As the noble Lord, Lord Belstead, explained, there are quite a number of what the travelling public would regard as package holidays which are not covered by the provisions of the Bill. I think the time to tell the customer whether or not he is covered is at the point of sale in the travel agents' shop. I hope the noble Lord will be able to consider this matter more deeply, and perhaps we can raise it again, as my noble friend suggests, on Clause 7. I think there is a gap here, and I hope the noble Lord will consider it carefully.
§ Lord HARMAR-NICHOLLSMay I add that I think it is good advice which is being offered to the noble Lord. Those that are covered we need not bother about. But, in terms of administering this, it is those who are not covered, but who might think they are, who will create much administrative trouble for the people who will have to administer this. I think it is very worth while at this early stage to make it quite clear in regard to those who are not covered as well as to those who are. Those who are covered will at the end of the day receive compensation. I think it is worth the extra thought at this stage, when the public is first aware of this facility, to make quite clear exactly where the matter begins and ends.
§ Lord BESWICKI accept that the advice that is being given from all quarters is good advice; all advice given in this House is good advice. But I wonder whether I might be given a little longer than Clause 7 to consider it. What passes through my mind is that, if I were to accept what is now being said, we would have to engage in publicity to tell some 643 people that they are not covered; yet the passenger is dealing with perfectly reputable people offering a perfectly safe, economic, splendid service. If we go out of our way to give them a public warning—as on a cigarette packet—that they are not covered by this insurance, I can well see that would be arousing doubts where no doubts should be aroused. This just occurs to me as I sit here. But, if I may be allowed to discuss with advisers what is involved, what the Association of British Travel Agents intend to do, because they will be interested in this, at a later stage of the Bill I can come back with a little more helpful response to the helpful advice that I have had.
§ Clause 3 agreed to.
§ Clause 4 [Contributions for the purposes of the Fund by air travel organisers]:
§ 4.41 p.m.
§ Lord BELSTEAD moved Amendment No. 6:
§
Page 7, line 4, at end insert—
(" ( ) Sums payable in respect of contributions from air travel organisers to whom this section applies shall be paid by instalments at intervals of not more than three months and no such sum shall be payable before 1st September 1975.")
§ The noble Lord said: May I first make clear what this Amendment does not seek to do. It does not oppose the payment of levies under this Bill; it does not attempt to oppose the retrospective payment to be made under this Bill, and it does not alter the principle of having to pay in advance. What the Amendment seeks to do is to try to achieve the Bill's objective without putting too great a burden on air travel organisers by dealing with two problems. The first problem is the arrangement of forward payments at six monthly intervals, to which I referred on Second Reading. To be issued with an air travel organiser's licence a company has to put up a bond. I do not think that there is any argument about the desirability of this for anyone who is connected with licensed air travel. Indeed, the Tour Operators' Study Group introduced voluntary bonding in 1970, and it has always been the intention that bonding should in fact cover the possible liabilities of a company to the people it is carrying. The difficulty is that in the 644 space of a year the bond has been doubled, from 5 per cent. to 10 per cent. of forthcoming turnover for companies. So before an air travel organiser can actually carry passengers there is the expense of a licence, and the doubled expense of the bonding to be met.
§ In addition to those two items there is the levy to be paid at 1 per cent. and then, next year, at 2 per cent. six months in advance. Just to give a simple example, an air travel organiser with an annual turnover of £50 million will find himself having to put up £2½ million extra as a result of the bonding increase in the last year. Then, in addition, next April, if one was to take, as I am advised would be reasonable, £34 million as being the turnover for the forthcoming six months, that firm would have to find £680,000 in cash; and then, if you take £16 million as being the winter turnover, another £320,000, again in cash. Today, when everyone in business is in the greatest difficulty, these cash payments for the levy will be quite difficult to find. They are, in a sense, a tax on firms, because they are to be paid in advance. Therefore, the first part of this Amendment provides for quarterly payments, and at more frequent intervals if the Secretary of State so wishes.
§ The Amendment also provides for the first levy payment to be on or after 1st September of this year. My reason for including that is that if the first payment is demanded immediately this Bill becomes law, two things may happen. First, firms will have to find the money very hurriedly indeed, and secondly, so far as I can see, by levying surcharges at the airport. Because the Bill, in Clauses 2, 4 and 5. to which we have now agreed, specifically excludes from the levy anyone travelling between 6th February of this year and the date of Royal Assent, it would be improper for firms to commence raising the extra money needed for the forthcoming levies while Parliament is deciding whether the Bill should become law. Of course firms have not been doing that. That means that they will have suddenly to impose the levy, probably by surcharging at airports. I understand that this is a practice which was all too familiar last year, and which the Airports Authority has asked to be discontinued. I suggest to the Committee that this procedure can be avoided 645 if firms are given a reasonable period of time before the first contribution to the Fund has to be made. The submission I make to the Government is that not earlier than 1st September of this year would be appropriate. I beg to move.
§ 4.45 p.m.
§ Earl AMHERSTI wish to support the Amendment. As these levies are to be made in advance—and at best are on best estimates—it would be helpful for the organisations to have these payments made quarterly on smaller amounts rather than half-yearly on bigger amounts. Further, if the first payment is to be made after 1st September the organisers have a little time to get a little cash into the kitty—bearing in mind the great difficulties these days for what is known as "cash flow"—through the receipts from this year's summer traffic. Therefore, I very much support this Amendment.
§ Lord SLATERWould it be asking too much of the mover of the Amendment to be more explicit as to why he has fixed on 1st September?
§ Lord BELSTEADI understand that payments for package holidays are normally made eight weeks in advance. I must admit to the noble Lord that I asked the ABTA organisation what effect this would have on their payment of the levy. The reply I received, which seemed to me reasonable, was that they would want at least two months, and what they would like for collecting the levy was three months. They feel that this is absolutely necessary. Assuming that this Bill receives Royal Assent about 1st June or, as I hope, a little earlier, I fixed on not before 1st September of this year.
§ Lord HARMAR-NICHOLLSThis is a concession which is absolutely essential. The purpose of this Bill is not to penalise the travel agents; we all know that it is to try to deal with a problem that has shown itself in recent years and which reacts unfairly on the travelling public, particularly at holiday times. When you get down to the practicalities involved, in these days, when liquidity is a problem with very wealthy firms, to put an impost in the way that at present would be put upon them, may well result in driving them out of business.
646 Who carries that amount of liquidity nowadays if they are running their businesses properly? If they have their reserves invested in order to carry them over the difficult times that have to be met at various times of the year, to force them into a position where they would have to sell their investments, possibly at a time when the market is not right, would be an impost upon a well based legitimate business which I know it is not the intention of the noble Lord or his colleagues in the Government to put upon them. It would seem, if the suggestion made by my noble friend is accepted, that the funds would certainly be available to meet any claims that might be made upon them while, at the same time, at the end of the day not injuring in a fundamental way (which the present wording would do) the people whom we want to be successful in carrying out this travel facility for the people of this country.
§ Lord TREFGARNEI should like to support my noble friend Lord Belstead in this Amendment. There are two points that I hope the noble Lord, Lord Beswick, will bear in mind. I fear that he will not agree with them. First, air travel operators, like many other businessmen, make-their arrangements in advance. They have entered into contracts with their customers. To have to go back to the customer just a few days or weeks before he is to enjoy his holiday, although no doubt provided for in the small print, is very distasteful. Of course they have had to do it in the past because of currency fluctuations and other things. However, I hope that the Government will at least be able to dispense with such an action, which is so very unsatisfactory and which, as my noble friend Lord Belstead said, the British Airports Authority are now deprecating. I do not suppose that the BAA are aiming specifically at the practice of surcharging holidays, but rather against the practice of collecting the surcharge at the airport, and if he is not to collect the surcharge at the airport it is difficult to see how the tour operator can do it at short notice. This Bill provides for the compensation of those customers of the Court Line Group who last year suffered financial injury. I hope the noble Lord will be able to remove from my suspicious mind any thought that this 647 early start to the levy is to provide funds for that purpose.
§ Lord SANDYSI too support my noble friend Lord Belstead and others of my noble friends who have spoken in support of the Amendment. We feel most strongly about this. One cannot say "cash flow" more than once from this Dispatch Box, but I feel that this is a very important matter, to which the Government's attention has been drawn by those who have spoken on this subject. Our interest, and indeed our suspicions, as my noble friend Lord Trefgarne said, were aroused initially by the noble Lord's right honourable friend the Secretary of State, Mr. Shore, on Second Reading in another place when he said that the contributions would commence,
… within a few weeks of Royal Assent … and are likely to be at the rate of 1 per cent …"—[Official Report, Commons, 20/2/75; col. 1582.]This gives rise to great anxiety. We want to ensure that the travel trade has a very good season this year and it would allay our great anxiety about this matter if the Government would accept this Amendment.
§ Lord SLATERAll the speeches that have been made by noble Lords opposite appear to have been concerned solely with the travel agency, and some have spoken of the operator as a sort of charitable organisation. They seem to have forgotten that without any customers the travel agent cannot operate in accordance with the regulation, and it seems that the customer has been left out of the picture altogether. I urge noble Lords opposite to accept that thought should be given to the customer, to how he is to meet his commitment to the travel agent for the holiday on which he is to embark, and, through the agent, the tour operator who is to take him to and from his destination.
§ 4.53 p.m.
§ Lord BESWICKI wish first to answer the suspicion raised by the noble Lord, Lord Trefgarne. Unless I am a very innocent character and I have been misled, there is absolutely no question of levying these contributions in order to evade any responsibility in connection with Court Line. That we can eliminate from the discussion altogether. I give the 648 noble Lord that assurance. My noble and helpful friend Lord Slater is the only noble Lord who has mentioned the word "regulation". The Bill does not provide for any contributions at all, as to date or level. This will be done by regulation and I suggest that if there is a serious anxiety here about the timing of the first contribution, it should be done when the regulation is laid before the House because it will be necessary to lay it before the House. Because we do not know when the Royal Assent will be received to this Bill—it is receiving a very helpful passage here and I hope it will not be delayed—it would be a mistake to provide for 1st September or any other date in this Bill. The actual date when the first contributions will be made should properly be in the regulation when the measure is on the Statute Book.
I come to the question of liquidity. If there is an emotive word in the English language I would say that it is "liquidity", and my heart bleeds when one begins to talk about it. I am listening to people talking about this wretched problem nearly every day now, so I am full of sympathy when it is said that we must have regard to the liquidity of the companies engaged in the travel trade. To some extent we have made a concession here to meet this very point. First of all, there will be the loan from the Government. The trade is not being asked in the first place to provide all the money that has reasonably to be put aside for contingencies. A very sizeable sum will be coming from the Government, precisely because we recognise that there will be this liquidity problem in the first instance; and it is only in the first place so far as this Amendment is concerned. That one has to pay at quarterly intervals does not mean that one pays any less. But having swallowed the pill initially and paid for six months, one then has twice as long as one would have under this Amendment to save up for the next contribution. Therefore, only this first contribution is involved.
The Government have tried to be helpful by more or less accepting what the noble Lord, Lord Belstead, said. They have said in this case, "Because there are difficulties, let us halve the rate." The noble Lord wanted to do it by making two separate contributions, whereas we were proposing to do it by halving the 649 rate and having a 1 per cent. levy first of all and a 2 per cent. levy later on. I understand the problem that the noble Lord is trying to meet, but I hope that having studied that aspect, he will accept what I have said, in the first place because the matter will have to come up again as a regulation and, secondly, because if he looks at the arithmetic he will find that we have met his point, but in another way.
§ Lord DRUMALBYNYour Lordships' House does not very much like retrospective legislation of any kind, but it dislikes far more retrospective regulations. We are entitled to be told in broad terms what the regulations will provide because, if I have understood him, the noble Lord is proposing here that payments should be made in respect of travel arrangements made this year in this current season.
This will therefore mean that the regulations will already be retrospective, to a certain extent, to cover arrangements that have been made for accommodation and services this year. Is this correct? If so, that would mean, in turn, that in the first stage, if a later date is put in the Bill, as my noble friend suggests—and the noble Lord did not say that there would not be a later date; he did not say whether the date would be earlier, later or even on 1st September—what will happen plainly is that the loan will cover the payments for the first period until the Bill comes into operation. Is this correct or will there be retrospective payments even before the Bill becomes law? These are the kind of questions I have in mind. I understand that some travel agents have already been making it clear that their customers will be covered in the current year. Is this so? Is this what has been arranged and, if so, how will it be financed?
§ Lord BESWICKThe noble Lord, Lord Drumalbyn, asked me to give an indication. This is only an indication, but if the Bill went through this House and did not require to come back for amendment, I would calculate, drawing on my previous experience as a business manager, that it might get the Royal Assent by the end of May, before we rise for Whit-sun. We are to rise a little early, anyhow, and that is another difficulty, but it is conceivable that we should get the Royal 650 Assent by the end of May, in which case the regulations would be laid in June and the first contribution would, I expect, become due on 1st August.
Having said that, however, it is only an expectation, and if, for example, we had even one Amendment and the Bill went down the corridor and had to come back here, it could make two or three weeks' difference. It is conceivable that we should then require the first contribution to be made later. For technical reasons, which others in the Committee probably understand better than I do, it might be necessary to put back the date to October rather than September. If one has intervals which bring one of the payments into the middle of the travel season one runs into other difficulties. It is hoped that the payments will be made either in April, at the beginning of the season, or in October, at the end. If they became mixed up in the middle of the season, there could be problems. That is the best I can offer by way of assessment of the likely dates but, in any case, we shall have to lay regulations, and I shall consider all that has been said at that time. The House will be in a position to take a decision when the regulation is laid.
§ Lord DRUMALBYNWith great respect, I do not think the noble Lord has answered the major question. Is it the case that, under the Bill, it is intended that contracts made for this current season will be covered? If so, when will contributions in respect of that start to be payable? I notice that my noble friend's Amendment says:
no such sum shall be payable before 1st September ".He might have said, "payable in respect of any period occurring before 1st September ". The Committee would like to know when payments are to start so that an assessment can be made of the impact on the travel organisers. If I am right in thinking that the travel organisers have been advised that these arrangements are to cover the current season, perhaps the noble Lord could tell us whether they have also been advised to take into account the payment they will have to make under the Bill. Have they been advised to take that into account or, in other words, have they already increased their charges to cover the payment?
§ Lord BESWICKI should like to try to get rid of some of the uncertainty here. The noble Lord asked me whether a person travelling before 1st August would be covered. He said that he understood that certain travel agents were already assuring their clients that they were covered. Of course they are covered, and that applies not only to persons who are to travel this month or next month but—thanks to the agitation of various people—to persons who travelled last year. They will be covered. That is one reason why there will be a loan from the Government to cover those persons who travel before the first contributions are made.
The second element in this matter is the responsibility or liability of the agent. If the Bill proceeds according to the time-table I have described, they will be liable as from 1st August, but their liability would then be only in respect of persons travelling after 1st August. That seems to me an eminently sound bargain, and I do not think that we could criticise it.
§ 5.5 p.m.
§ Lord BELSTEADI should like to put four points to the noble Lord, Certainly, he has tried to help us, but our difficulty is this: the noble Lord has given full answers to various of my noble friends and other noble Lords who have spoken, but the familiar cry goes up that what the noble Lord says in this House is not, effectively, legislation. It certainly is not regulations which, of course, can be only either agreed to or disagreed to. That is my first worry.
My second worry arises from what my noble friend Lord Drumalbyn said. I wonder whether the air travel organisers have really taken on board in consultation with the Government what the Government intend—which is what the noble Lord has just said at the Dispatch Box is to be the fact—and whether the banks will carry them in this matter. It seems a long time ago, but when I was moving the Amendment I gave an indication of the truly gigantic sums of money which will be asked for from air travel firms in the very near future. It is the sole purpose of the Amendment to see that a reasonable length of time is taken to allow those sums of money to be accumulated.
652 On this point, as I understand what the noble Lord has said, there will be an element of retrospection. I certainly do not disagree with that, but the effect of the Amendment is to ask that payment shall start later. I am comforted by the fact that there is £15 million of interest-free Government money which will underwrite the whole operation. When one bears in mind that the Policy-holders Protection Bill which the noble Lord introduced less than a week ago will not require any payments to be made until there is an unfortunate occurrence and remembers that under the present Bill £15 million of Government money is to be made available, one cannot quite see why the first payment of levy should not be put off until on or after 1st September.
Without being tedious, I should like to support what my noble friend and other noble Lords have said about liquidity. Listening to the noble Lord, Lord Slater, I felt that he perhaps thought that the Amendment was a plea on behalf of shaky firms. Recently, I heard that one of the largest—perhaps, indeed the largest—of the travel organisers in this country has guaranteed that holidays three months in advance will be at a fixed price. My goodness me!, that is something to be thankful for at this time in our national life. In doing that, however, that firm has to be able to estimate what will be the costs of, for instance, landing charges, fuel and exchange rates. To extract one of those three elements, imagine the difficulty of that firm in trying to estimate exchange rates at the present time. I feel, bearing that example in mind, that the effect of the Amendment is worth while.
Finally, the noble Lord put the point to me that, as one cannot be sure when the Bill will become law, one cannot be sure whether I have chosen the right date. However, as my noble friend kindly reminded the Committee, the effect of the Amendment is modest. It is simply that the first payment of levy should not be made before 1st September. But-tressed by £15 million of Government loan, I think that this would he reasonable. I hope that the noble Lord will be able to look with favour on the Amendment.
§ Lord BESWICKI look with favour on the principle underlying the Amendment, but I say again that the Bill does not provide for rate or dates. Those will be provided for in the regulations. I cannot see how, without getting into difficulties, we can amend the Bill on these matters when elsewhere in the Bill we have provision for regulations. I re-emphasise that we have, in effect, accepted what the noble Lord wants; that is, we have agreed that the first contribution will be a smaller one than any actuarial estimate would suggest. We suggest here—and, as it happens, we have taken the 50 per cent. cut which the noble Lord, Lord Belstead, is suggesting—that we make it more effective over a longer period than three months. We are suggesting that, in the first place, the levy should be half what it will be in the subsequent year. Surely that meets the point which the noble Lord is making.
As for the difficulties the companies are experiencing, I recognise these and sympathise with the companies as much as does the noble Lord, Lord Belstead. I know only too well what their difficulties are. But they are not being asked to make any contribution this year—so far as most of their customers are concerned. Not until 1st August—if it so happens that we are able to make the first contribution on that date—will anyone be liable to pay anything at all. This is going to be met by the Government. After 1st August there will be a half rate levy. As I have said, the exact amount will have to be put into the regulation. But it is our intention to meet the very point which the noble Lord has made, about the difficulties in the first year, by reducing the levy and topping up the amount by money from this loan. In that circumstance I hope that the noble Lord will consider on reflection that I have made an effort to meet him.
§ Lord BELSTEADThis must certainly be my last word. The noble Lord has certainly done his best to meet me, but in case I seem to be totally unreasonable I should say that I do not think he can really meet me on this point on the. ground on which he stands. I say this for two reasons. First, it is not the rate at which the levy is being paid which is at issue; it is the date. The second reason interlinks with that. Noble Lords who have studied the proceedings in an- 654 other place have noticed that the Government loan, which we come to on a later Amendment, was said to have been interest free. It is now being said by the Government—for understandable reasons; I am not trying to make a political point on this—that the loan will possibly have to bear some sort of interest. It is because of the uncertainties, which one cannot help, and the fact that this means so much to those who will have to pay the levy, that I really must insist on an Amendment which will, at least, give the undertaking to those who are going to pay the levy that they have three months clear in which to find the very large sums of money which the levy will require.
§ Lord HARMAR-NICHOLLSI, too, must apologise for pursuing the point, but I do not approach it from the point of view of this Bill. Those of us who run businesses, no matter how small, recognise that there is something in this problem of liquidity. Even when you are sound and your assets are there, leaving you in a very healthy position overall, to be asked to find this amount of money—however small a percentage of an original levy it may be—is inconvenient to the point of really damaging a company. If a company has to go to the bank to get cover for this sort of thing—which, undoubtedly, it would have to do—it will find that there is all the difference in the world between asking for a three months' bridging loan in anticipation of something that is well understood, and asking for a lump sum, however small a percentage of an original levy, running into the proportions involved. I should like to know what sort of advice the Government will give to the banks? Will this be one of the priorities with which they will expect the banks to help their customers?
Those of us who today go to the banks in order to run our various businesses are told continually that what we propose does not come into the priority class. We are told that what we propose may well be a very good scheme in normal times, and that the bank would like to help us with it, but it does not have the special claim which is needed, due to the stringency of the times. Are the Government prepared to tell the banks that in 655 order to fulfil the obligation under the Bill they are to give that sort of priority?
I accept the point made by the noble Lord, Lord Beswick, that this will come out in the regulation. But I do not think it wrong to emphasise the point now, because I am hoping that the noble Lord will have quite a lot to do with the framing of that regulation at the end of the day. He is one of the most experienced members of the Government and one remembers his experience over many years. I hope, in the light of the arguments put forward today, that the words put into the regulation will perhaps meet some of the points made by my noble friend.
§ Lord SLATERI am very sorry that the noble Lord, Lord Belstead, has taken this attitude, in view of the statement of my noble friend in reply to the speeches on this Amendment. I think that the noble Lord, Lord Belstead, has been very ungenerous to my noble friend, who has endeavoured to commit himself in regard to this matter and has tried to cover the position as the noble Lord, Lord Belstead, would like it to be covered, in the interests of all parties—not only the operators or the agencies, but the general public as well. I sincerely hope that before the noble Lord thinks for one moment of going any
§ further—as he seems to be endeavouring to do—he will have second thoughts, because it could rebound and he could meet himself coming back if he pressed his Amendment later.
§ Lord BESWICKI am not sure that I can add anything more, but I should like to say one word to the noble Lord, Lord Harmar-Nicholls. Had I the power to make a regulation now I would, in the light of his kind remarks, write out the most accommodating regulation. But I think he overdid it a little, so far as some of the travel agents are concerned. If the noble Lord reads my Second Reading speech, he will notice that one of the reasons why the industry got into difficulties was not because it had to go to the bank, but because it took so much money in advance from customers. Much of the money on which the industry operates comes not from the bank at all, but from deposits or payments made by customers. We are merely trying to help those customers. I shall look at this question of the three months' notice and see to what extent it is really justified, and perhaps we can come back to it again.
§ 5.16 p.m.
§ On Question, Whether the said Amendment (No. 6) shall be agreed to?
§ Their Lordships divided: Contents, 81; Not-Contents, 68.
657| CONTENTS | ||
| Aberdare, L. | Elliot of Harwood, B. | Mowbray and Stourton, L. [Teller.] |
| Alexander of Tunis, E. | Elton, L. | |
| Allan of Kilmahew, L. | Emmet of Amberley, B. | Northchurch, B. |
| Allerton, L. | Essex, E. | Nugent of Guildford, L. |
| Alport, L. | Exeter, M. | Onslow, E. |
| Amory, V. | Fraser of Kilmorack, L. | Rankeillour, L. |
| Balfour of Inchrye, L. | Gage, V. | Redesdale, L. |
| Belstead, L. | Gainford, L. | St. Aldwyn, E. |
| Berkeley, B. | Glenkinglas, L. | Salisbury, M. |
| Bessborough, E. | Goschen, V. | Sandford, L. |
| Carrington, L. | Grenfell, L. | Sandys, L. |
| Cathcart, E. | Gridley, L. | Savile, L. |
| Clitheroe, L. | Grimston of Westbury, L. | Somers, L. |
| Cork and Orrery, E. | Harmar-Nicholls, L. | Stamp, L. |
| Cottesloe, L. | Harvington, L. | Strange, L. |
| Courtown, E. | Hawke, L. | Strathspey, L. |
| Cowley, E. | Hornsby-Smith, B. | Sudeley, L. |
| Daventry, V. | Inglewood, L. | Suffield, L. |
| de Freyne, L. | Kindersley, L. | Tenby, V. |
| Denham, L. [Teller.] | Lauderdale, E. | Trefgarne, L. |
| Derwent, L. | Lindsey and Abingdon, E. | Tweedsmuir, L. |
| Digby, L. | Lyell, L. | Vernon, L. |
| Drumalbyn, L. | Mancroft, L. | Vivian, L. |
| Dudley, E. | Margadale, L. | Ward of North Tyneside, B. |
| Dundee, E. | Merrivale, L. | Ward of Witley, V. |
| Dundonald, E. | Monk Bretton, L. | Wolverton, L. |
| Ebbisham, L. | Monson, L. | Young, B. |
| Eccles, V. | ||
| NOT-CONTENTS | ||
| Arwyn, L. | Hall, V. | Segal, L. |
| Auckland, L. | Henderson, L. | Shinwell, L. |
| Aylestone, L. | Houghton of Sowerby, L. | Simon, V. |
| Bacon, B. | Hoy, L. | Slater, L. |
| Bernstein, L. | Hughes, L. | Stedman, B. |
| Beswick, L. | Hylton-Foster, B. | Stewart of Alvechurch, B. |
| Birk, B. | Jacques, L. | Stow Hill, L. |
| Brockway, L. | Kinloss, Ly. | Strabolgi, L. [Teller.] |
| Bruce of Donington, L. | Lee of Newton, L. | Strang, L. |
| Buckinghamshire, E. | Llewelyn-Davies of Hastoe, B. | Strathcarron, L. |
| Castle, L. | Loudoun, C. | Summerskill, B. |
| Champion, L. | Lovell-Davis, L. | Taylor of Gryfe, L. |
| Chorley, L. | Maelor, L. | Taylor of Mansfield, L. |
| Clifford of Chudleigh, L. | Maybray-King, L. | Thurlow, L. |
| Donaldson of Kingsbridge, L. | Melchett, L. | Walston, L. |
| Douglas of Barloch, L. | Newall, L. | Wells-Pestell, L. |
| Elwyn-Jones, L. (L. Chancellor) | Peddie, L. | White, B. |
| Evans of Hungershall, L. | Phillips, B. | Wigg, L. |
| Fisher of Rednal, B. | Pitt of Hampstead, L. | Willis, L. |
| Gardiner, L. | Pritchard, L. | Wilson of Radcliffe, L. |
| Garner, L. | Roberthall, L. | Winterbottom, L. [Teller.] |
| Gordon-Walker, L. | Sainsbury, L. | Wootton of Abinger, B. |
| Hale, L. | St. Just, L. |
On Question, Motion agreed to.
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ Clause 4, as amended, agreed to.
§ 5.25 p.m.
§
Lord BELSTEAD moved Amendment No. 7:
After Clause 4 insert the following new Clause—
§ Scheme for safeguarding customers by insurance &c.
§ (" .—(1) It shall be the duty of the Authority, after consultation with the Agency, to prepare and submit to the Secretary of State a scheme under which licensed air travel organisers will be enabled by means of insurance and bonding obligations to make payments to or for the benefit of their customers sufficient to meet losses or liabilities incurred by the customers in connection with overseas air travel contracts or overseas surface travel contracts entered into by the air travel organisers with their customers.
§ (2) The Secretary of State may if satisfied that adequate provision is made by the scheme for safeguarding customers of air travel organisers in respect of such losses or liabilities and after making in the scheme such modifications, if any, as after consultation with the Authority, he thinks expedient approve the scheme and, thereupon it shall be the duty of the Authority to take such measures as the Secretary of State may direct for the purpose of giving effect to the scheme.
§ (3) The scheme approved by the Secretary of State in accordance with the provisions of this section may be modified, supplemented or replaced by a further scheme prepared, submitted and approved in accordance with those provisions.
§ (4) As soon as is reasonably practicable after the scheme has been made under subsection (1) of this section the Secretary of 658 State shall make an order under Section 6 of this Act for the dissolution of the Agency the winding up of the Fund and the disposal of the assets standing to the credit of the Fund.")
§ The noble Lord said: The effect of this new clause would be ultimately to give air travel organisers the option of insuring instead of paying the levy. In essence, this new clause lays a duty on the Civil Aviation Authority to prepare a scheme under which air travel organisers will be able, by bonding and by insurance, to make future provision for their possible liabilities to customers; and the scheme would need the approval of the Secretary of State. I think that the need for the new clause is twofold. First, there is a case for not multiplying statutory agencies and boards. This Bill is presented by the Government because last year's disasters called for some action to be taken; but I think we delude ourselves if we believe that wherever there is a business risk it must always be underwritten by one's competitors. I should have thought that would lead to lazy management, and possibly risky management as well. I should not have thought that our country could afford either at the present time. On the available evidence this Bill is quite an expensive creature. It is going to involve advance payments by air travel firms, by customers and by the Government; and the Agency has to have its activities serviced and its expenses paid.
§ Will this new clause in any way damage the Bill's intentions? I think the answer is, No. It will not damage retrospective 659 payments to those who lost their holidays last year. Obviously, the Fund will have to be built up by the air travel organisers contributing for a time. I would suggest to the Committee that under subsection (1) of the new clause the CAA would not prepare the scheme for introduction until the Fund could at least be in sight of repaying the loan for last year's failures. The main principle of the Bill, that there should be full financial assurance for air charter travellers, will be upheld by the new clause. The scheme will be an amalgamation of bond and insurance.
§ The reason why this new clause is being put forward is that the result could be cheaper. In the other place, as your Lordships may be aware, a cost of 35 shillings for insuring a £100 holiday was given. The Government may have more up-to-date figures than I have; but what is clear is that next year's travellers will find themselves paying £2 a head extra, or probably more, in order to cover their holidays. I think that this is worth looking at again. The Government said on Second Reading in the other place that they would do just that. I hope the length of time that has elapsed has allowed them not only to look at the principle of insurance coming after the Bill has come fully into operation, but has also led them to agree with that principle. I beg to move.
§ Lord SANDYSI should like to support my noble friend in this Amendment, because it gives an opportunity to the Government of winding up this statutory Board, this agency. I am quite sure it is a view shared on many sides of the Committee, save perhaps on the Government side, that we should look to a future situation in which there are fewer agencies and not more. The proposal as drafted in this clause is an imaginative one, casting forward the situation to what it will be in two or three years' time when the immediate intention of the Agency has been achieved. This gives an opportunity for a review of the whole procedure of unwinding a board and setting it aside. As regards the cost-effective point which my noble friend Lord Belstead made, it is almost axiomatic in present circumstances that this is a highly desirable end and one we should look to if there is a small margin at the present time between what the traveller, the customer, will pay in present circumstances, as proposed in the Bill, 660 and the circumstances in two or three years' time. One must look to circumstances in which the cost of this Agency must inevitably rise because of Parkinson's law.
§ 5.30 p.m.
§ Lord BESWICKIt is unwise to talk about encouraging lazy management. Anybody who knows anything at all about this business will know that management have to be on their toes if they are going to remain in business this year and next; competitition is going to be acute. To say that anything in the Bill is going to make management lazy is going beyond any remarks that noble Lords have made so far this evening. At Second Reading I expressed some sympathy with the conception that the development of the licensing arrangements and the general improvement of respectability and stability in the trade could lead us to the point when the Agency would be no longer required. I am absolutely certain that under the wise guidance of the noble Lord, Lord Boyd-Carpenter, we shall see licensing systems become more and more sophisticated and the chances of any unstable person getting a licence to operate will become less. But we have not reached that point yet and therefore we must have this safety net.
The Amendment says that the Civil Aviation Authority should do certain things, including making provision for surface travel; but the CAA will have no power to carry out obligations put into this Amendment, and to that extent I hope the noble Lord will accept that the Amendment is inappropriate. He says in the Amendment that he wants to have an insurance system. If that were possible, it might be encouraged, but all the information available at the present time indicates that the insurance industry is unlikely to make available across the board to all companies, large and small, doubtful and less doubtful, the kind of insurance arrangements that will be required in the present period. We may develop into a situation where everything is much more stable; in that case insurance companies can probably come up with a policy. The noble Lord would find that if he tried to get insurance companies now to provide equal cover for all persons, irrespective of which travel agent they went through, he would be 661 unlikely to get the right response from the insurance world. If the noble Lord wants to make provision for winding up the Agency, he will find that that is the purpose of Clause 6. If developments make it possible to wind this Agency up, we have power in Clause 6 to do just that. On that basis, I hope the noble Lord will not press the Amendment.
§ Lord BELSTEADThe intention of this Amendment is not to implement Clause 6 in some way or another; it is to look beyond Clause 6 and wonder what is going to happen when Clause 6 is implemented and the Fund and Agency are wound up. After all that has been said in another place and now in this House, I should have thought it would be accepted that there are great difficulties. The noble Lord, in disagreeing with what I said, pointed to some of them which management at the moment will experience in running air travel organisation operations. I have not heard anything so far which has answered the question which was in my mind when I drafted this new clause—namely, what actually will happen when Clause 6 has been implemented? The noble Lord went some way towards answering that by saying that the tightening of licensing and the underlying bonding will deal with it. But I wonder if that is so; and that is why I put down this Amendment.
The noble Lord has thrown certain difficulties in the way, and he reminded me of what was said of Mr. Jinnah, who could always find a difficulty for every solution. There are some merits in this new clause. First of all, I made clear on Second Reading that I did not like, and I confess I still do not like, the fact that in this Bill we are setting up a second line of statutory defence. What we are doing is saying that bonding has not been sufficient and therefore Parliament will pass a Bill to collect another lot of money. It will be like a second bonding. I do not like that; it seems like a belt-and-braces approach, like driving two roads, one beside the other, which one so often sees in this country. In an endeavour to overcome that difficulty, I drafted this clause, which is a different idea.
Surely, it is better to use the services which the financial world has to offer rather than by-pass those services, and 662 set up a statutory Agency. The noble Lord said, perfectly reasonably, that he felt the financial world would not be offering their services at the moment so far as insurance is concerned in what is a very difficult business to run. That may be so. But the only thing absolutely certain is that we shall not know, if we do not agree to this new clause. If there is an Agency and a Fund insurance will not be necessary, so nobody will find out. Only by agreeing with this Amendment is it possible to discover whether by consultation between the Authority and the Agency—and, I trust, also the travel industry generally—something can be sorted out. I should have thought that that in itself would be desirable.
May I refer the Committee to the wording of the clause? If the scheme were found not to be workable, the Secretary of State would not bring it in. Presumably the Agency and Fund would continue, although there would be power in the new clause to allow the Secretary of State and the Authority to return to the matter once again. I do not think that that is any reason for rejecting this new clause in principle, although the noble Lord put one technical point. On the contrary, there is every reason for accepting its principle. The Government have no idea what is going to happen if there is a winding up under Clause 6. If the Government do not agree to this Amendment I feel that they have a duty to offer some alternative, which I am still waiting to hear.
§ Lord BESWICKThe noble Lord has this matter the wrong way round. He is saying he does not know what is going to happen if we implement Clause 6; but we should not implement it until—and after all it is a new industry just coming through a trauma of difficulties—things in the industry had settled down. I indicated—and I believe I carry noble Lords with me—that the CAA, which is a rapidly developing new organisation, will devise licensing techniques and utilise experience in the future, better than it has done in the past, and certainly better than in the days when we did not have the CAA. It is taking on a new task and has not had the chance yet to gain full control of what was an unhealthy growth industry.
663 The outlook seems simple: when there is an improved licensing system with the bonding facility, and some of the less responsible people have been eliminated, when things have settled down a little, it is conceivable that an insurance arrangement, if such a scheme were necessary, could be devised. But, as of now, there is no evidence at all—the agents have not come up with anything, and there is no evidence from any inquiries which have been made—that the insurance world will be able to satisfy by a private enterprise effort the requirements that we say should be met. In that situation it is premature to consider this responsibility, which in any case the CAA have not the power to implement in full. Let us have the Bill; let us continue to police the industry; let us provide this protection in the meantime. Then, if in the years to come it is found to be unnecessary to have this insurance cover, we can implement Clause 6.
§ Lord BELSTEADI think that there is a difference of opinion on this matter. In essence, I am saying that not only do I like the idea of using private enterprise in foreseeing the end of a statutory agency but also that I think it would be cheaper. The very small amount of evidence that there is, and which was given in another place, was to the effect that it would be cheaper. The Parliamentary Secretary, when replying to this Amendment which was put down for the second time on Report in another place, indeed used words to the effect that he accepted that insurance, if it existed, would be cheaper.
§ Lord BESWICKIt would be cheaper, but in relation to the responsible companies about which we are not mostly concerned. The difficulty concerns the companies which are most likely to give trouble.
§ Lord BELSTEADThis would come out in any scheme which was devised. The noble Lord, if he will forgive my saying so, is speaking in the dark, because in resisting the Amendment it is simply not possible to find out whether or not the CAA, in consultation with the trade or the Agency, could work out a scheme. However, we have given this a good airing and I am grateful to the noble Lord for what he has said. May I just say that I wonder whether those noble 664 Lords with long, experience of Government matters would agree with me in my perturbation over the proliferation of boards and agencies. Invariably they are manned by extremely competent and very conscientious people. Their chairmen are to be thanked for all the time they bring to their work and the amount of work that is done. But the fact of the matter is that, to some extent, they provide a kind of guarantee to industry and commerce which is not necessarily always for the best in these days when we have to make our way in a fashion we have never had to do before. And, of course, these boards and agencies have to be serviced and their expenses have to be paid. So there is a difference in outlook between the noble Lord and myself on that point. He has quite fairly pointed out that, technically, this Amendment is defective. I thank him for what he has said, because he has given me some information; and for that reason I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 5 [Loans to the Agency by the Secretary of State]:
§ 5.43 p.m.
§ Lord SANDYS moved Amendment No. 8:
§
Page 7, line 34, at end insert—
(" (5) Interest shall not be charged on any loan under this section except at such a rate and in accordance with such terms and conditions as the Secretary of State may, after consultation with the Treasury, by order prescribe, and any such order shall be contained in a statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
§ The noble Lord said: We are now approaching the point where we concern ourselves with loans to the Agency by the Secretary of State. The purpose of this Amendment is to ensure that the loans shall be interest free, and the reason for putting down this Amendment is because of exchanges which took place in Standing Committee D in another place. It is not the normal practice in your Lordships' House to quote proceedings in Standing Committees except where Ministers are concerned. I think it would be inappropriate if I were to do so at any great length, but attention was very 665 strongly drawn to the fact that the question of whether the loan would or would not be interest-free gave us cause for considerable anxiety.
§ Perhaps I might give chapter and verse for your Lordships' information. It occurred on the Fourth Sitting of Standing Committee D on Thursday, 13th March 1975, at column 205 of the report of the proceedings. There we were led to believe by the Minister that the whole of the loan would be interest-free. However, on that day remarks were made which tended to indicate that this might not be so and that regulations might be made at a later stage which would indicate the necessity to have interest payable on the sum or on part of the sum.
§ Secondly, the clause as drafted brings in retrospection. This is a matter to which we have drawn attention previously on Second Reading and which we took into account in drafting this Amendment. I think it is very clear—from the exchanges in another place and from the remarks which have been made—that there is ample ground for believing that we should include an Amendment to the clause whereby it might be made emphatically clear that interest should not be charged. I beg to move.
§ Earl AMHERSTIs it not sensible to suggest—as is suggested in this Amendment—that the Secretary of State should have consultation with the Treasury, who presumably would rule that whatever loan is to be made should run pari passu with other Government loans, interest-free or partly interest-free, as the case may be? If the Secretary of State were to overrule that or pay no attention to this recommendation by the Treasury, then it would surely raise the question of why this loan should be different from all the others.
§ Lord BESWICKThe noble Earl, Lord Amherst, has introduced an important consideration here. It is difficult to persuade the Treasury that this loan should be treated in a manner different from any other loans. Certainly they do not wish to put into a piece of legislation a precedent of this kind. Nevertheless, although not establishing the precedent by law, the Secretary of State has said it is not the intention to charge interest; the loan 666 would be interest free. That is something which I confirm, but it was not considered reasonable to put it in a Statute. Moreover, it is conceivable—and this is no doubt what caused anxiety in the minds of noble Lords opposite—that there could be a situation in which there were a series of failures and the demands upon the Fund were especially heavy, so that it would make it impossible for the Agency to repay the Government loan. In those circumstances, it might be necessary for the Secretary of State to go to the Treasury and come to some other arrangement with them. Leaving out this provision, of course, gives an extra degree of manoeuvrability.
I hope the noble Lord, Lord Belstead, will find this to be a sensible way of leaving the matter. I confirm that it is the Government's intention that the loans made to the Agency should be interest-free, at least in all the circumstances we anticipate. If circumstances arose which are not at the moment anticipated, it might well be necessary to review the situation. In any event, it is undesirable to establish in an Act that this Agency shall be treated differently from most others and that the loan should be put down there as an interest-free loan.
§ Lord BELSTEADLooking at the Explanatory Memorandum of the Bill, there it is said:
It is expected that repayments of the loans will start in October 1976 and will be completed within the following three years.The noble Lord has said that there is an undertaking, which he has repeated and for which we are grateful, that this loan shall be interest free. May I ask whether it is the intention that, if the Agency went beyond the expectations of the Explanatory Memorandum, interest might perhaps then need to be charged? Perhaps I might put it a little more specifically: has the noble Lord anything to tell the Committee this afternoon about the amount of retrospective payment which the Government expect? I asked this question on Second Reading and the noble Lord gave me an answer; but this is something which obviously must change from week to week as the liquidators continue their work on the unfortunate failures of last year. I think it would be for the convenience of the Committee if the noble Lord could say, first, 667 whether he has any up-to-date information on what will be the size of the retrospective payments which will have to come out of the levy and also what the income from the levy is going to be. I wonder whether the Department in consultation with the travel trade, have made any assessment about that.
§ Lord BESWICKMy Lords, I am not quite sure what the noble Lord means by going beyond the provisions of the Explanatory Memorandum. The Explanatory Memorandum seems to set out what the intentions are.
§ Lord BELSTEADMy meaning is this. One reads in the Explanatory Memorandum about repayments of the loans being completed before October 1979. Are we to interpret the noble Lord as saying that if things go wrong—which I think is the burden of what he was saying—then it may be necessary to make some different arrangements? Would the cut-off point be October 1979?
§ Lord BESWICKI am looking into the future now and it would be unwise to be too dogmatic about it. I repeat what is said here:
It is expected that repayments of the loans will start in October 1976 and will be completed within the following three years.I said earlier that if something quite unusual happened and if instead of gradually repaying the loan it was found that payments were slipping further back, then obviously some other discussions would have to take place. That is why I say that there is a justification for manœuvre on this point. I was asked about the proportion of the loan which would be used to meet the retrospective payments. The figure I gave in Second Reading was £7 million. I cannot give a different figure. As the noble Lord knows, it will be affected as a result of proceedings now taking place in the courts, and until those proceedings come to an end I cannot give any other figure.
§ Lord BELSTEADTo repeat the question—and I think this is important—have the Government any estimate of what the levy income is going to be? Let us, for ease of reference, take next year when it is 2 per cent.: have the Government any idea what the probable income is going to be from the levy next year or what it will be during this winter?
§ Lord BESWICKOddly enough, I have some idea. At 1 per cent. it would be about £3 million in a full year, of which about two-thirds arises in the summer period. At 2 per cent., oddly enough again, it comes to twice the above figure.
§ Lord TREFGARNEI wonder whether I may support my noble friend in this Amendment. It rather seems to me—and indeed the noble Lord, Lord Beswick, has confirmed this—that a large part of the loan facility which is being made available to the new Board is to cover retrospective claims from the unfortunate people who suffered from the Court Line failure last year. Those people were told that they would be able to recover money as a result of all sorts of pronouncements from the right honourable gentleman the Secretary of State. Some of us thought at the time that those pronouncements were at least ill advised. I do not think it is right for the travel industry to be asked to bear the interest charges, and in due course indeed to repay carte blanche the loan arising out of those pronouncements. There is a strong case for at least part of the loan to be interest-free. In other words, the Government must bear the cost of the undertakings they have given.
§ Lord BESWICKI think the noble Lord, Lord Trefgarne, is inclined to look at things a little on the gloomy side. He is now asking that they should get part of the loan interest free. I have already said that it is the intention of the Government not to charge any interest at all. I should have thought that he would be more satisfied with that, rather than by saying that in some unspecified circumstances in some gloomy period in the future they might be excused part of the payment. That intention is an honourable one. It will he free.
§ Lord TREFGARNEWith the leave of the Committee, may I say that I fully accept the assurances which the noble Lord has given. I keep being confused by the contrary remarks made by his right honourable friend in the Standing Committee in another place.
§ Lord BESWICKIf the noble Lord would like to tell me where there is a difference between what I have said and what my honourable friend has said, I should be glad to look at it.
§ Lord SANDYSIn support of my noble friend Lord Trefgarne, may I say that I think a reference will be found in the report of the Standing Committee on 13th March—a reference which I gave previously. I am much obliged to the noble Lord, Lord Beswick, for the assurances he has given here, which have allayed anxiety in this regard. We are keenly aware of the situation and, further, we are grateful to the noble Earl, Lord Amherst, for bringing out the situation as he saw it, not only in his speech on Second Reading but also in his remarks this afternoon, which have been most helpful. It appears to us that it would be much more satisfactory to withdraw this Amendment, and I do so in the certain knowledge that the assurances given by the noble Lord, Lord Beswick, will be honoured.
§ Amendment, by leave, withdrawn.
§ Clause 5 agreed to.
§ Clause 6 [Power of the Secretary of State to dissolve the Agency and wind up the Fund]:
§ 5.58 p.m.
§
Earl AMHERST moved Amendment No. 9:
Page 7, line 41, at end insert (" always provided that the first charge upon such assets shall be to the reimbursement in due proportions of such persons or organisations who have contributed to the fund.").
§
The noble Earl said: On the Second Reading of the Bill, I asked what would happen to the assets as and when this new Agency is wound up. In reply, the noble Lord, Lord Beswick, said—and I quote:
My information does not reach quite so far ahead, but I agree that it is something to which we shall give a little more thought. I think I can say more on this point in the other stages of the Bill, and I shall be very happy to do that."—[Official Report, 28/4/75, col. 1175.]
Therefore I put forward this Amendment in the hope that the noble Lord will do just that.
§ Lord BESWICKThis Amendment, as originally put, was on a point which aroused some degree of sympathy with me, and I thought that this was something on which we should try to meet what was being said. We have looked further into it and I hope that the noble Lord will accept the difficulties to which I shall refer. They spring in part from the fact 670 that we do not know when the Agency will be wound up or the conditions under which it will be wound up. The money in the kitty at the point in the future when the Agency is wound up may have come from someone who started contributing in August of this year but who, by the time the Agency is wound up, is no longer in business. There would be a situation in which it would be impossible to identify the aggregated contributions. There is also the other point which I put to the noble Lord—I am sure he will be concerned with this. If he wants to see justice done—and he and I are equally desirous of that—he will realise that this money will come indirectly, and when the travel agents make a special charge for it will come directly from the customer. If you have a sum of money to distribute in three years' time, that money has really come from the customer, not from a particular travel agent. How is it going to be possible to identify the customers? Much as I should like to help in this case, I feel that it would be impossible to accept the noble Earl's Amendment. If and when the day comes when the Fund is to be wound up, we shall have to have regard to all the circumstances, consult with the Travel Agents' Association and consult widely with the industry as to what is best to be done.
§ 6.0 p.m.
§ Lord HARMAR-NICHOLLSwonder whether the noble Lord can help me. Unless travel agencies run their businesses differently from other businesses, all this talk about customers' money does not really fit in. On previous Amendments the noble Lord, Lord Slater, has spoken about the customer and the customer's money. I should be very surprised indeed if, in fixing the charges they make for whatever services they give, the travel agencies do not take into account the interest they earn from investing the money the customer has paid in advance, and as a consequence of the income from that customer's money the charges they make are that much less. That is what happens in the case of a competitive business such as this. I am not in it and have no interest to declare on this matter, but I should be very surprised indeed if the reason why the charges are reduced on many occasions to a level which has surprised people is not to a large extent due to the income 671 the agencies have had from the customers' money, which they knew they would hold and have invested.
If the customer has already received the benefit of the money he has paid early because it has earned interest, it is not quite right—and I do not think it reflects the way business is run—to give the impression that what business firms do is make their profit and, on top of that, have extra income from money paid in advance. Usually all factors are taken into account and the result is reflected in the tariff which is eventually fixed. I want only to ask the noble Lord, Lord Beswick, whether, so far as he knows, the travel agencies are run differently? If they are run as normal businesses, the point I am making is sound and it is not fair to speak about customers' money as though the agencies are taking advantage of it. If, on the other hand, agencies are run differently I should be interested to know about it.
§ Lord BELSTEADI think that the noble Earl, Lord Amherst, has raised a very worrying point. I expressed myself as worried about Clause 6 on an earlier Amendment, a proposed new clause, which I withdrew. I confess that I do not think my new clause would have solved the noble Lord's problem here, although it might have; I do not know. It might be that funds could have been used for alternative arrangements. In any event, that Amendment has been withdrawn. I listened carefully to what the noble Lord, Lord Beswick, said and the essence of it was that when the time comes for the Fund to be wound up it will be necessary to have regard and it will be necessary to consult. I hope the noble Lord does not think me discourteous in saying that I do not think he knows, and frankly I do not think I know, either.
The noble Lord has given us a useful piece of information in the last 10 minutes, which is that when the Fund is going fully £6 million will be coming in. May I for the record ask the noble Lord this question, even though it arises on a previous clause? Am I right in thinking that it will be open to the Secretary of State to reduce the percentage at which the levy is paid, or even to turn off the levy tap completely, although the Agency is continuing to run? In other words, if the Secretary of State finds that the Fund has 672 reached £25 million or some such sum, but he still wants the Agency to continue, am I correct in assuming that it will not be necessary to continue to expand the size of the Fund? Otherwise, I think we are going to get into a very difficult situation indeed.
§ Lord BESWICKI will answer the noble Lord, Lord Harmar-Nicholls, first about whether this industry is run in a different way from other industries. To some extent of course it is. I indicated earlier that in one respect it was different in so far as the customer was often required to pay so far in advance for the product he was eventually going to enjoy. The noble Lord said it would be impossible to identify that element in the cost of the product that was attributable to this contribution. Although I do not know, I suspect it is probable that travel agents will have a surcharge on their fee or cost of holiday which will be specifically devoted to meeting the contribution they have to pay. If that is so, then my argument about this money coming from the customer is strengthened. But, in any case, directly or indirectly it will come from the customer. I hope the point I was making about that was taken: if you want to give back the money to the person from whom it comes it cannot be done by just giving it to a travel agent. It would be as unreasonable for them to pocket it as for the agency to do so. One could make out as good a case against their having it as against the agency. Therefore, I come to the point that if and when—the noble Lord, Lord Belstead, kept quoting me as saying, "when the Agency is wound up "; I said, very carefully," if and when"—the Agency is wound up we shall have to consider the circumstances.
The noble Lord, Lord Belstead, also asked me what is going to happen when the kitty begins to mount. I can give him the assurance that it will be the intention to have in the Fund only an amount that would be reasonable in relation to responsibilities. That amount could change. If the number of people travelling increases and the contributions increase, the liability also would be increased and therefore it would be impossible to put a fixed figure to it. But the expectation is that this £15 million figure is probably of the order that is necessary 673 to make certain that all contingencies should be covered. If that amount is reached, if the demands on it do not reduce the amount, then it will be the intention to reduce the levy. If we go further and the seas become even calmer and business is even brighter, it could even be feasible that the levy was not collected at all and we might even return to the noble Earl's Amendment and consider whether we were at about the point where we could implement Clause 6.
§ Earl AMHERSTI thank the noble Lord for his full explanation and for pointing out the difficulties my Amendment would raise, which I appreciate. In the light of that information, I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 6 agreed to.
§ Clause 7 [Interpretation and supplementary and consequential provisions]:
§ 6.7 p.m.
§
Lord TREFGARNE moved Amendment No. 10:
Page 8, line 10, at end insert (" or any flight between places within the United Kingdom, where one of the places is situated in the Channel Islands or the Isle of Man; ").
§
The noble Lord said: This Amendment is, I suppose, in the nature of a probing Amendment and I hope the noble Lord, Lord Beswick, will be able to help me. Clause 7 of this Bill defines, among other things, the nature of the flights that are to be covered by the provisions of the Bill. We read:
' overseas flight ' means any flight between places one or both of which are situated outside the United Kingdom.
There are two destinations within the United Kingdom to which package flights are sometimes arranged and one of them in particular, the Channel Islands, ought I suggest to come within the compass of the Bill. It is for that purpose that I put down this Amendment. I have nothing further to say in support of it, except that I want to emphasise that this is a destination to which package flights are arranged, sometimes by the smaller but no less efficient companies, and I hope the noble Lord will be able to help me. I beg to move.
§ Lord BESWICKThe noble Lord, Lord Trefgarne, was being modest when he said that sometimes there are flights to the two areas to which he referred. In fact, quite a lot of flights go there and I appreciate that he should be concerned about them. I am happy to be able to give him the assurance that he requires. These territories, being dependencies of the Crown and not part of the United Kingdom, are covered by the definition of an "overseas flight" as it stands. Therefore, the Amendment is not necessary.
I did not look quite so worried as the noble Lord is looking, but I asked for a little more information on this point, and I am told that Section 2(2) of The Royal and Parliamentary Titles Act 1927 provides that:
In every Act passed and public document issued after the passing of this Act the expression 'United Kingdom' shall, unless the context otherwise requires, mean Great Britain and Northern Ireland".This excludes the Channel Islands and the Isle of Man since Great Britain means England and Scotland—Union with Scotland Act 1706, Article 1.
§ Lord BELSTEADMay I ask the noble Lord why the Government have chosen to make the Bill refer only to overseas flights?
§ Lord BESWICKI should have thought one reason would be the difficulties of getting home. We had to consider the human problem. If you go to Southend from London, the difficulties of getting home are less than if you go to Majorca or even the Channel Islands.
§ Lord TREFGARNEMy Amendment refers only to the Channel Islands and the Isle of Man. However, the noble Lord, Lord Belstead, has made me wonder whether we ought to have included, for example, the Outer Hebrides. If your charter firm goes out of business, it is not very easy to get back to London from the Outer Hebrides. As my noble friend reminds me, it costs a great deal of money. Why has the United Kingdom been excluded from the Bill? The noble Lord says that it is easy to get home from Southend. Maybe it is, but it is not easy to get home from other points in the United Kingdom. My Amendment does 675 not cover the whole of the United Kingdom. Not being familiar with the Act which the noble Lord has recited to me, my Amendment relates specifically to two points which I thought were within the United Kingdom. Obviously, I am not going to proceed with my Amendment. However, before I withdraw it, will the noble Lord accept that this is a point which perhaps warrants a little further consideration?
§ Lord BESWICKI am not quite sure which is the point, but I will consider all of them! If the noble Lord is asking the Government why they are not including Southend and the Hebrides, I am bound to say that I have great difficulty in reconciling this demand with the criticisms of the Bill which were made earlier in the discussion.
§ Lord TREFGARNEI am not going to take this argument further. However, it is a matter which we on this side of the Committee can consider at our leisure. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 7 shall stand part of the Bill?
§ Lord BELSTEADMay I ask the noble Lord a question before we leave this clause? My question relates to surface travel. As I understand the Bill, if a shipping company uses air transport for which an air travel organiser's licence is needed, the levy will have to be paid. My noble friend has just moved an Amendment which has given us some useful information. In reply to the Amendment, the noble Lord has stated that his view is that because overseas flights would involve people who are stranded in considerable difficulties about getting home, this is a reason for making the Bill apply only to overseas flights. May I put the point to the Committee that this does not apply when one is talking about shipping companies. If a shipping line flies passengers to its ships, those passengers never leave British soil; they take off from England and arrive at a ship which is under the British flag. If anything goes wrong, the ship, which is under the British flag, will bring them home.
676 This very much applies to the Bill. Some of your Lordships may know of educational cruises. For several years it has been the practice of a shipping line to station a ship in the Mediterranean and to fly passengers, both children and adults, from British soil out to the ship. I understand that when these cruises start in Greece, the passengers are never considered to have set foot on Greek soil. Technically, they go straight from the aircraft into the ship and come under the British flag. On those occasions, usually the passenger line has the charter of an aircraft on an exclusive basis. Consequently, it becomes a travel organiser and is licensed by the Civil Aviation Authority with an air travel organiser's licence.
This is quite a serious point. Therefore, I should like to put two questions to the noble Lord, and I apologise for not having warned him that I should do so. First, will the noble Lord consider the point I have put to him and, if he feels that it merits support, bring forward on Report a Government Amendment to ensure that overseas flights associated with accommodation on board a British ship are not included in the Bill? Secondly, will the noble Lord now answer whether the Government intend at any time to extend the Bill to surface travel alone, regardless of anything to do with aircraft; and am I correct in thinking that in fact there is no power under this Bill for the Government to do that?
§ Lord BESWICKThe noble Lord is correct in assuming that under this Bill the Government could not do what he suggests might be done in relation to surface travel. I could not say whether or not this is the intention of my right honourable friend. I know of no such intention at the moment.
The question of the overseas flights which might take place from a point outside the United Kingdom because the passenger has gone there by ship is an interesting one which has not been discussed in my presence. However, I will see whether I can obtain any information about it and let the noble Lord know, or I will deal with it at a later stage of the Bill.
§ Clause 7 agreed to.
§ Remaining clause agreed to.
677§ The Schedule [Additional provisions with respect to the Air Travel Reserve Fund Agency]:
§ On Question, Whether the Schedule shall be a Schedule to the Bill?
§ 6.17 p.m.
§ Lord BELSTEADMay I ask the noble Lord one question about the Schedule? When one looks at paragraph 9 of the Schedule, which provides, among other things, for the auditing of accounts, I am surprised that the Bill does not provide for the auditing by a properly qualified auditor of the accounts of the Air Travel Reserve Fund Agency. In support of what I am saying, may I point out that under Clause 4 the Fund will be financed by contributions from air travel organisers. The Department of Trade is authorised to make loans to the Agency, subject to the approval of the Treasury, but these, of course, may not be made after 1977. Repayments are expected to start in 1976 and to be completed within the following three years. Thereafter, the Fund is supposed to be self-financing. I am not an accountant, although my noble friend Lord Lyell is, and I hope he may say a word in support of this. However, as a layman it surprises me that with these fairly complex matters, there is not written into the Bill some requirement that professional audit by independent accountants is required.
§ Lord LYELLMay I commence my support of my noble friend Lord Belstead by declaring an interest. As he so kindly pointed out, I am a member of the Chartered Accountants of Scotland. It was only late in the day yesterday that I was telephoned by the Chartered Accountants of England, who asked me to raise what they considered to be a very valid point on this Schedule.
As I think noble Lords will be aware, the accountancy profession is very much concerned in any audit, particularly in the audit of an Agency such as this. As I understand it and as the profession understands it, paragraph 9 of the Schedule to the Bill gives fairly firm instructions to the Agency to keep proper books of account. This is fairly evident and clear to the layman, and certainly to the profession. The definitions do not allow much latitude in this respect. 678 Secondly, the Agency is given instructions to prepare a suitable form of accounts, as laid down or agreed by the Treasury. I think that this is absolutely reasonable. There is no purpose in presenting accounts which may be suitable for large corporations—for Imperial Chemical Industries or corporations of that kind—when that particular form of accounts is not suitable. However, sub-paragraph (2) states that
The accounts of the Agency shall he audited in such manner as the Secretary of State may direct with the approval of the Treasury.I think it is clear that an audit will be carried out, but especially the audit of a body like this—particularly a semi-Government or a Government appointed authority—should have a somewhat clearer code of practice than is laid down in the Bill. This is also the feeling of the profession. The profession itself is keen that an auditor should be of the same standard as one who audits the accounts of a company. His duties are already laid down very clearly and succinctly in the Companies Act 1948, and the profession knows exactly what is expected of it. I think the public, the shareholders of companies, and anyone else, know precisely what the auditor is responsible for and how he may be seen to be carrying out his duty, and how not.That same Act—the Companies Act 1948—in Section 162 gives an indication of certain statutory powers which are available to the auditors. These include powers to have access to all books and accounts and vouchers of a company, and also to require any such explanations or information as that auditor—it may be a firm or an individual—may require to enable him to satisfy himself that the books are in order, and indeed that the business is being run in a proper commercial manner. Certainly I think the noble Lord and the Government must intend this, but the profession have some slight worries that the Bill does not lay down set rules. If there is a possibility of the Government guaranteeing the powers of the auditors, possibly on the lines of the Companies Act 1948, especially when the Fund goes to recompense the victims of previous misfortunes such as we have heard about this afternoon, the profession would be very grateful.
§ Lord BESWICKAs the noble Lord has said, the code is laid down in the Companies Act, and when the Secretary of State under paragraph 9(2) of the Schedule gives directions he will require that the accounts be prepared at least to the standard of the Companies Act, and of course by properly qualified persons. But the situation is a little different, in so far as public money is involved—and at the outset it will largely be money provided by the Government, the £15 million loan—in that the audit will be carried out by the Comptroller and Auditor-General. Thereafter it will be in accordance with normal commercial practice.
§ The Schedule agreed to.
§ House resumed: Bill reported with the Amendment.