Package Travel: ECC Report

HL Deb 15 December 1988 vol 502 cc1068-104

6.12 p.m.

Lord Broxbourne rose to move, That this House takes note of the Report of the European Communities Committee on Package Travel (20th Report, 1987-88, HL Paper 107).

The noble Lord said: My Lords, as I rise to move the Motion, some of your Lordships may wonder why that task falls to me. There may be those who recall the story of the counsel and the judge. The counsel was pleased to hear the judge say that of all the counsel opening a case, he would prefer him to any other. Greatly gratified, counsel ventured to ask to what he was indebted for the compliment. "It is always interesting", said the judge, "to see which of two fresh minds first grasps the point of the case." I am not wholly uninformed on this matter. That is not due to any of my own efforts but because I have had the advantage of an excellent briefing by our committee staff and from the learned Mrs. Eileen Denza, the committee's legal adviser. In addition, there was stimulating discussion within Subcommittee E.Cuius minima pars sum.

Reference to that committee leads me to a sad note. Your Lordships will see a list of the Members of the sub-committee responsible for the report at page 25. The names include that of the late Lord Silkin with the sad note recording his decease. Sam Silkin was a friend of mine for many years, from student days in the Middle Temple. He was a man of varied and versatile achievement, in Parliament (both Houses), at the Bar as Queen's Counsel and in government. He brought distinction to all he did. It could fairly be said nihil tetigit quod non ornavit. We mourn his loss and cherish his memory.

Noble Lords

Hear, hear!

Lord Broxbourne

My Lords, your Lordships will notice that we have the advantage of a mass of expert evidence, much of it oral and therefore subject to the salutory process of cross-examination. There is an impressive list at Appendix 2 of the witnesses and those they represented. Appendix 3 has an intriguing glossary of acronyms, as they are called. Some of the abbreviations in that glossary will be familiar, others less so. Indeed they might be suitable for parlour games this Christmas—guessing what those curious acronyms mean.

The report deals with package travel, a relatively new term. Travel had different connotations in earlier times. It was a traditional part of the English way of life, but only for the privileged. Indeed, for many, part of the attraction of travel in those days was to get away from fellow English. Your Lordships may recall a saying of Laurence Sterne: An Englishman does not travel to see Englishmen". The basic attractions in those days were, on the aesthetic side, scenery, art and architecture; and on the corporeal side, the delights of food, wine and a warmer climate. Two hundred years ago Horace Walpole wrote to his friend Sir Horace Mann in Naples: Here in England, summer has broken out with its customary severity". In case your Lordships may think plus ca change plus ca change plus c'est la meme chose, that was a century before Thomas Cook, the first and greatest of the travel agents, started his package tours and with them the democratisation of travel. Of course, democratisation of travel is welcome—a sign of progress and important in the life of the citizen. There is a passage quoted in the report from the National Consumer Council's memorandum: For most people holidays are the high spot of the calendar. They represent a brief respite from the working week, an opportunity to recharge batteries and to relax with one's families. They are expensive and normally require saving for throughout the year. For these reasons expectations are high and the people who sell holidays market dreams". The price of progress is the problems. There again, in the same memorandum the problems are described by the National Consumer Council in these words: Changed hotels or resorts, overbooked aircraft, lost baggage and brochure descriptions about non-existent swimming pools are all matters which should give rise to compensation. When things go wrong on a holiday the distress is often greater than if similar misfortune beset the consumer at home. A bad holiday can never be put right". The existence of these problems and the desire to pursue progress have resulted in the initiative of the Commission, which in turn results in this report. The draft directive of the Commission is identified at the start of the report, sub nomine 5382/88. Your Lordships will not find the text of the directive in the report but it is available in the Printed Paper Office. Some of the key articles are set out in the report. I understand that it is not normal practice, though permitted, to incorporate the text of directives in reports thereon, though perhaps it is a good practice in many cases.

That being the background of the matter, these questions seem to arise: first, is the Community legislation necessary in this context or at any rate desirable? If the answer to that is yes, then, secondly, is the directive as proposed by the Commission procedurally correct; or if not, can it be made so? Thirdly, is the proposed content satisfactory and, in so far as it is not, can it be made so?

On the first question, the answer would seem to be, yes. There is a general unanimity of view in regard to this major question. Your Lordships will see in the report: Virtually all witnesses agreed that there was a good case for Council legislation to establish common rules for the protection of package travellers. This would seem to be a fairly obvious conclusion in a matter so essentially international as travel. The reasons are set out in rather more detail in the text of paragraph 9 on page 9 of the evidence part of the report.

The answer to the first question being yes, the second question arises as to the legal basis and procedural propriety. The report analyses the legal basis of the proposed directive and concludes that it is incorrect. It should be based, we thought, on Article 100 of the Treaty of Rome and not, as proposed, on Article 100A under the amending Act. The reasons for that are given in paragraphs 54 and 55 of the report. It is not a mere technical consideration. It is important because, as your Lordships know, directives based on Article 100 require unanimity in the Council before they can become effective, whereas those based, as suggested here by the Commission, on Article 100A require only a qualified majority in the Council.

The committee is vigilant on questions of the correct legal base and on maintaining the proper distinction between Articles 100 and 100A. However, although this is always important in principle, it is less important in practice in this case than in many others because there is a recognised need for Community legislation which can be made procedurally correct.

I come then to the third question as to the content. The basic answer as to content can be found in the summary of conclusions at paragraph 72 of the report. It reads: Although the package travel industry has been very successful, consumers now want and are ready to pay for a better service. The package traveller is economically vulnerable and needs greater legal protection. There is a good case for Community legislation". Many of the articles in the directive are important, in particular Article 3 dealing with brochures and advertising matter, Article 4 dealing with forms of contract, and Article 5 dealing with liability.

Advertising and brochures are a very important part of package travel. Travellers are dependent upon them and are at risk. These matters are dealt with in paragraphs 21 and 22 of the committee's report. It is agreed that what is proposed in the directive is reasonable and strikes a fair balance.

Travel contracts are dealt with in Article 4, which is described in the committee's report as the heart of the matter. It gives the consumer four basic rights which are listed in paragraph 23 of our report. The rights the consumer would have, which are set out in the report and which your Lordships have before you, should do much to help on this basic matter. Paragraph 23 states: Article 4 may be regarded as the heart of the Directive. The Commission's draft goes most of the way towards prescribing a compulsory standard form of written contract for package travel. The consumer is given rights of four kinds: a right to transfer his booking if he is prevented from travelling for serious reasons, a limited protection against surcharges, a right to withdraw if agreed terms are altered and a right to alternative services and compensation if, after departure, there is a significant deficiency in the services promised". I draw the attention of your Lordships to the reference to standard forms of contract in particular. I regard that as a very welcome and important innovation. I have some experience of standard forms of contract, not in the case of package travel but in building contracts. Indeed, come early next year my nice legal publishers will be celebrating—not of course in this Chamber, but just along the corridor—the jubilee of the work on that subject with which I am associated. I certainly hope to see some of your Lordships present on what I hope will be an interesting and agreeable occasion. Noble Lords will be cordially welcome at that event.

The relevance of the experience in standard forms of building contract does not of course lie in any similarity of subject matter with package holidays, but because it shows that standard forms of contract do not necessarily imply any rigidity. In the case of building forms of contract, many new variations within the standard form have been prescribed to cater for new methods and new circumstances. In that respect, that may be a precedent for the standard forms of contract which are recommended for the travel industry.

There are many other matters referred to and analysed in the report. I need not go into them in further detail as the report is summarised at Part 4 on page 24. The summary is concise but comprehensive. Your Lordships will see the various recommendations, not only those that endorse the recommendations of the Commission but also as regards certain matters in which an amendment is desirable and should be sought for and I hope obtained.

The summary as set out in the report is, as I have said, concise but comprehensive. That being so, I think it would be as well to follow the advice of an eminent and well-loved parliamentarian who posed the following question: Why peer into the crystal when you can read the book"? Perhaps noble Lords would do better to follow Aneurin Bevan's advice and study the matter in the book, rather than rely on what would necessarily only be a paraphrase on my part. With that, I commend the report to noble Lords, and with diffidence and great respect I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on Package Travel (20th Report, 1987–88, HL Paper 107).—(Lord Broxbourne.)

6.35 p.m.

Lord Graham of Edmonton

My Lords, it is a real pleasure to be the first Member of your Lordships' House to follow the noble Lord, Lord Broxbourne, in this debate. I am very grateful for the gentle way in which he led us into this debate. I am absolutely certain that everyone in the House will, like me, have read the report. But we will not have had the benefit of the pleasure that I sense members of the committee had in taking part in the committee proceedings. When I look at the quality of the members of Sub-Committee E, I am very impressed. I also echo the sadness of the noble Lord, Lord Broxbourne, as regards the passing of our dear colleague Lord Silkin of Dulwich during the passage of the inquiry.

My stance will be primarily that of supporting the thrust of the directive and of the report of your Lordships' committee. Someone has referred to something as being the best thing since sliced bread. I think the package holiday is the best thing since sliced bread. Millions of people have been able not only to have a holiday with a difference—that is, with sunshine—but have also been able to enjoy those holidays over many years.

My first package holiday was about 20 years ago. For two weeks in June I paid the princely sum of £49 to go to Austria. I was horror-struck when the next year the price had rocketed to £72 to go to Yugoslavia.

The package tour has a great deal to commend it. It is well worth looking at what the committee said in the report on page 18, paragaph 49, when it stated: The package travel industry has been highly successful. Over the last thirty years tour operators and travel agents have made it easy and affordable for millions of Europeans to holiday abroad, and there is every reason to suppose that the numbers will continue to rise. On any long-term analysis this has contributed to raising the standard of living and promoting closer relations between peoples—both fundamental objectives of the Treaty establishing the European Economic Community". I hope we can start with the generally accepted premise that we are looking at a success story; that is the establishment of what we now know as the package holiday industry. But we are equally entitled to be very critical of the way in which some aspects of it are bringing the business into disrepute. At the end of the exercise we want not only to improve the lot of the travelling public but also to improve the strength of the business and to extend the benefits of holiday travel to many more people.

In this country I understand we are talking about a number of anything up to 20 million package travel holidays which are arranged in any one year. We are talking in terms of very big business. But we are not talking in terms of a monolithic business. There are little tour operators and little travel agents, and there are big tour operators and big travel agents. I declare an interest through my association with the Co-Operative movement, which last year in its 180 shops provided package holidays for 250,000 customers.

One of our businesses, the Ilkeston Co-op, in one shop sells more than 50,000 holidays a year—the biggest single travel shop in the country. Equally, there are some areas where there are no shops. It is a disparate type of business. We are considering the impact of that business on people's lives, health and happiness.

For the most part I shall ask questions, but it is interesting to be able to be fair about the extent of complaints which have been made. There is evidence which would alarm the reader about the number of package holidaymakers who come back dissatisfied with their lot. Yet, in the evidence submitted by ABTA (published on page 53 of the report), there is a quotation from a survey entitled Europeans and their Holidays which was produced by the Directorate-General of Transport (Tourism) of the Commission of the EC. The point is made in the report as to whether that is more up to date and therefore more relevant than some of the statistics used by others.

That survey, as Members of this House will have noted, shows that: The overall picture is one of a very high degree of satisfaction. On a scale of one to 10 (10 being 'completely pleased') respondents gave an average rating of 8.17 for their main holidays in 1985 and, if they had been away more than once, of 8.28 for their other holidays". Again on page 53 it says that: The draft should therefore, in our view, be considered against the true background which is that some 85 per cent. of holidaymakers in the EEC are satisfied with their holidays and furthermore there is a slightly higher rate of satisfaction on holidays organised by tour operators and/or travel agents". I am delighted to note that the noble Baronesses, Lady Elles and Lady Burton, are present and will be taking part in the debate. They are closer than I am to the issues because of their experience, service and commitment to this particular subject. I hope that they might help me in considering how we can reconcile what appears not to be irreconcilable but which causes a problem. To be fair, the committee points out in its report that there is a dichotomy. I should welcome some observations on that point.

The noble Lord, Lord Broxbourne, referred to page 24 of the report and the summary of conclusions. 1 shall use that in part to make some other points.

We are discussing an industry which is subject, as are many others in 1988, to new phenomena. One of the phenomena that the travel business had to face this year arose because ABTA held its annual conference in Israel. Last year it held the conference in Austria, the year before it was in Australia and next year it will be held in Mexico. Yet when ABTA decided to hold its conference in Israel it was subjected, and its members as individual companies were subjected, to what I consider to be absolutely outrageous treatment by the Palestine Liberation Organisation.

Perhaps I may tell the House what people conducting the kind of business we are discussing tonight had to suffer. They were told in a letter from the PLO: This office has already circulated a list of conference sponsors to representatives of the two million strong Muslim community in Britain asking them to boycott such firms. Consideration is now being given to extending the boycott to firms sending delegates to the convention". I think that that is deplorable. By holding the conference there (that is Israel), ABTA is abandoning its political stance and siding with Israel and recognising its rule, against the position of the British government. Accepting Israeli sponsorship makes this all the worse, opening ABTA to charges of having its conscience and reputation bought … By going to Jerusalem, ABTA is boosting Israeli tourism and undercutting the impact of the Palestinian uprising. This is wholly unacceptable and will not be forgiven by Palestinians, the Arabs or the Muslim world in general". In a debate in which we are discussing not only the welfare of the traveller but also the viability of the business I take this opportunity to point out that although many things have changed in the nature of the business, we could do without pressures of that kind on a business which is fiercely competitive.

When one looks at what the British holidaymakers get for their money I know that there will be no dispute that the British package holiday provider offers his product more cheaply than anyone else, if not in the world certainly in Europe. These are people who fly from Gatwick to Portugal and people who fly from Cologne to Portugal. The people who fly from Cologne will pay between 25 per cent. and 30 per cent. more for exactly the same holiday. That is a product of the efficiency and organisation of the British travel business in general, as well as of some of the concentrations of power in other countries.

I ask the House to pay particular attention to some of the special points which I wish to draw to the notice of the Government. As I understand it, in laying greater responsibilities on the travel industry and by setting out in precise terms who is covered by those responsibilities one excludes from those responsibilities other people who provide package holidays. For example, paragraph 66 on page 21 says: There is no difficulty about imposing on the tour operator a duty of professional care in the selection and supervision of contractors to perform the services making up the package, and requiring compensation for any breach of that duty". Paragraph 66(i) states: There is no obvious reason why the package traveller should be placed in a better position than his neighbour who booked his travel directly". Yet when one turns over the page and looks at paragraph 66(ii) one sees that: In respect of deficiencies attributable to a hotel owner or his servants, the tour operator should be strictly liable". The noble Lord, Lord Broxbourne, or the Minister may be able to clarify the position. Is it the case, as I understand it, that in future there will be planeloads of travellers, some of whom will be package tourists and some of whom will not and some of whom will be covered by the directive and some of whom will not? If that is the position, is it what we want? If it is not what we want I should like the Minister to tell us what the Government have in mind, because we have before us the views of the Commission, of the committee, of the House and, more importantly, of the Government. The Government in time will have to be precise and tell this House and others what they intend to do.

There is then the question of strict liability, which the report itself said was perhaps the greatest of the issues that needed to be resolved. The noble Baroness, Lady Elles, who has gone into print in a letter that I saw in a newspaper, pointed out that a sum of 23p (I believe that is the figure she used, and I have seen a figure of around 2 francs in the report) will give the kind of cover that is needed. We are talking in terms of coppers. That is all that is required to give the comprehensive cover which is not currently available.

Yet when I approached ABTA and asked for its views on this matter I was told that when it comes to a question of liability one first of all needs to establish the market. There has to be an insurable product. I look directly at the noble Lord, Lord Broxbourne, at this point. He has an interest in the building industry. Perhaps he will recall the dilemma that occurred when the Government produced a Housing Bill about five years ago which removed from local councils their sole right to give building permission and allowed it to go to architects, engineers and elsewhere. When a quotation from the insurance world was sought and a view requested as to what it would be prepared to charge for cover of that kind, enormous difficulties were raised which have lasted until this day.

I ask the House whether all that we need to envisage is an on-cost per holiday in the region of 20p or 30p? Or are we looking at something in France, which is the source of the quotation, that is not directly comparable to that which the directive asks us to concede? I suspect not. ABTA has given to other noble Lords as well as to me—the figures were not given exclusively to me—an indication that its best estimate of the cost, if it can obtain that cover, is between £5 and £15. Let us say it is £10. It is not a sum that will spoil any holiday.

In the report a great deal has been made about the willingness of holiday-makers to pay more for their holiday. Where is the evidence for that? It is not in the report. A statement is made by the Consumers' Association that people are prepared to pay more for their holidays, but where is the evidence for that? I have not seen it. There has been a vast increase in the number of holidays taken, but the majority are being bought at the lower end of the market and not the middle or higher end. I should like someone to answer my question. If there is a directive and this kind of cover has to be carried, the industry will be faced with a dilemma. What is it likely to cost and what will it cover?

On page 141 of the report there is an interesting piece of evidence from Mason-Bond which says that it writes on behalf of the International Leisure Group. It points to the kind of circumstances for which cover will have to be carried in some form or another. It lists some of the things that can happen in an hotel—events to which nobody can give any forethought or for which they can take any responsibility. In the context, if these events are not acts of God they are nonetheless totally unforeseen incidents.

For instance, in the resort the local authority commenced roadworks outside the hotel. How can one hold a tour operator responsible for discomfort or hurt arising from such an event? I should like the Minister to tell me that that is not what is meant. However, if it is meant, perhaps the House will agree that it is onerous, punitive and unfair to lay the blame on anybody, let alone the tour operators. Then there are the quiet owners of the separate hotel next door who begin work to add an extra storey to their building. When I read these illustrations I understood that they were direct complaints by returned holidaymakers. There is the example of a guest in the hotel who gets drunk and becomes offensive, or the possibility of a waiter accidentally dropping soup on a customer. How can one possibly say to the tour operator or travel agent that he is responsible.

A great deal is made of the warranty of the tour operator. How can one expect anyone to carry a warranty in respect of actions of a third party?

No doubt the noble Lord, Lord Broxbourne, who is very experienced in these matters, will help the House and me in particular at some later stage. I am conscious of the time and of the fact that other noble Lords wish to speak in this debate. I believe that the travel industry warmly welcomes both the directive and the report. There are however some very real problems faced by the travel industry if it is to stay in business and continue to provide in the future the kind of services that it has given to consumers in this country in the past.

6.56 p.m.

The Viscount of Falkland

My Lords, it will come as no surprise to your Lordships that we on these Benches favour any ideas or concepts which lead to further harmonisation of all kinds of activities in Europe. As regards package travel, package holidays and package tours we feel that there is definitely room for European legislation in some respects. Indeed that is reflected in the very excellent and clear report. I congratulate the members of your Lordships' committee, some of whom I see in the Chamber today, for having put the issues so clearly. It is very welcome to someone like myself who, at least in the context of debates in your Lordships' House, is new to the subject of travel and the way in which package travel will develop in the coming years, particularly with our growing participation in Europe.

When I read the report it seemed to me that there was an immediate difficulty—and other noble Lords may touch upon it—which is that in the 12 countries of the European Community there are different legal systems. So far as I know, in this country at present there is no statute covering package travel which is subject to the normal laws of contract, tort and so on. I understand that in other countries the situation is somewhat different. That therefore is one of the problems that have to be tackled.

There is also a very different pattern of travel in this country. From the remarks made by the noble Lord, Lord Graham, who said that he booked a package tour for £49 some time ago—

Lord Graham of Edmonton

Twenty years, my Lords.

The Viscount of Falkland

—I venture to suggest that in this country we were perhaps in the vanguard of the development of package travel, especially at the bottom and cheaper end of the market. The point was brought out by the noble Lord, Lord Graham, that the level of satisfaction registered is very high. I do not quite know how the figures for levels of satisfaction mentioned in the report were obtained, but they are very encouraging and I have no reason to doubt them.

If 85 per cent. of travellers who go on a package tour are satisfied and feel that they have had a better holiday than they would have had had they travelled independently and without the services of the tour operator, it means that there is an extraordinary proportion of satisfaction. Nevertheless, there is always the problem—and it is highly publicised—of disappointment. There is no doubt that the traveller's disappointment gets publicity. It is one of the areas attacked by this proposed legislation of the draft directive.

I think that in many ways the draft overkills. It takes a number of aspects of travel and proposes various types of legislation to cover these aspects of travel, and in particular brochures. When somebody who is of limited means decides to save up to go on a holiday, presumably the first thing that he does is to get hold of a brochure if before that he has not got the recommendation of a friend who has gone on a similar holiday. In the past, brochures have been subject to criticism. However, in my experience in recent years brochures are well produced and fairly clear.

I am worried about the small print, as other noble Lords will he, because people do not read brochures carefully. They are cleverly produced with lots of pictures, and people tend to look at the pictures rather than at the small print. That has been dealt with very well by the Association of British Travel Agents. One does not want to put too great a straitjacket on tour companies in the preparation of their brochures. They should be clear, and they should offer the holiday in clear terms and not give misleading information. Although the package tours on which I have been have been of a specialised nature, I have looked at other brochures and have found them by and large to be satisfactory and attractive.

Another area covered in the draft directive is the right to transfer. This is something that has always been a bother and has worried people, and is subject to an enormous amount of complication. If you ask a travel agent—or a tour operator, if you deal directly—whether you may transfer, he suggests to you that you should take out various insurances and make certain arrangements in order to avoid loss as a result of transferring. I understand that the draft directive will deal with that and will lay down exactly what transfers may be available to travellers.

That seems to be a sensible road on which to proceed. There again I suggest that this will give the tour operators a certain amont of anxiety, with a number of the other suggestions in the draft directive. There is no doubt that all tour operators can comply with anything with which they are required to comply, but at the end of the day it is the cost of producing a product for the traveller which covers all these elements. The noble Lord, Lord Graham of Edmonton, mentioned surcharges. I should also be interested to hear the remarks of other noble Lords on the subject of surcharges.

Surcharges have had a lot of publicity over the years. There is no doubt that there has been quite a lot of abuse of surcharges. There was a lot of abuse of surcharges over a particular period when there were large fluctuations in the price of aviation fuel. A number of operators took advantage of that and over-compensated themselves for these differences. Any way in which this can be targeted and dealt with in the long run will be to the benefit of everybody. It will harmonise and balance the relationship between the traveller and the operator, which after all is the long-term aim of this draft directive.

The one aspect which bothers most travellers and which would bother me if I were to go on one of those package tours to a sunny climate where you stay in a hotel for 10 days and you fly out in the middle of the night from Gatwick— is what care has been taken by the tour operators in his selection first of the airline or the charter company which handles the particular tour. One wonders how much care and attention have been given, and expense incurred. The more attention he pays to this, the more his expenses will go up, but it is important that he pays attention to the quality of the accommodation and to the quality of any other services included in that package.

Another important matter mentioned in the report—I cannot remember precisely where—and which has bothered me before is that at the moment protection is not offered to all those who appear on the booking form. I think protection is only offered to the proposer; the main name on the booking form. Perhaps the noble Lord the Minister may be able to help me over this because I think at present there is a problem here. Often on a package tour there is a group and not all the members of that group who have to appear on that form are covered in the same way as the first name on that proposal; but I may be wrong about that. I should be grateful for the noble Lord's guidance.

To conclude, we welcome this. We think that maybe it smacks of being over-bureaucratic. However, anything that will help the consumer to have travel at the right price and of the right quality and to give him little disappointment will be welcome, and if we can increase the ratio from 85 per cent. to 95 per cent. that would be marvellous. Clearly it is this kind of result that is in the minds of those who have drafted this directive, and in principle we welcome it. I shall be most interested to hear what other noble Lords have to say, and in particular what the Minister has to say when he winds up.

7.7 p.m.

Lord Monson

My Lords, I too should like to thank the noble Lord, Lord Broxbourne, for taking the trouble to explain this report so fully. I felt most hesitant about putting down my name for this debate, because it has to be said that I was totally unaware of the existence of the report until three days ago and I have not really had the chance to study it nearly as thoroughly as I should have liked, particularly as the important debate on southern Africa yesterday, in which I participated, necessitaed a great deal of preparation.

However, two factors prompted me to intervene. First of all, I do not feel that consumer protection for British package travellers is fundamentally any of the European Commission's business. It is a matter for the United Kingdom Parliament to decide. Realistically, as opposed to theoretically, it has nothing to do with facilitating the 1992 single market. I doubt whether in practice one-twentieth of 1 per cent. of British holidaymakers would travel to the Continent to start their package holidays there, especially as ours are the cheapest in Europe, as the noble Lord, Lord Graham of Edmonton, said.

I know that the Commission cites Article 100 in justification of its action. But this seems to me to be stretching Article 100 to its limits. Indeed, it is a perfect example of the obsessive harmonisation about which Professor Ralf Dahrendorf complained approximately 15 years ago. Incidentally, I note that Professor Treitel makes some critical comments on the harmonisation aspect on page 150 of the report. Monsieur Jacques Delors is doubtless delighted with this further example of the Commission's tentacles encroaching upon national sovereignty, but I do not think that your Lordships should be, and I am sure that the British people are not.

And there are practical objections as well as objections of principle. The pioneering, buccaneering, enterprising individual is essentially an Anglo-Saxon figure: I use the term "Anglo-Saxon" in its broadest sense. Since late Victorian times he has been found mainly in English-speaking countries other than our own. But to their credit this Government have tried to revive the "Stand on your own feet" principle, but it is a tender plant and there are plenty of people—not all of them in one quarter of the political spectrum—who would be only too happy to uproot it. They would rather it were supplanted by the much more collectivist Continental ethos, with its roots in Bismarckian welfarism on the one hand and Roman Catholic paternalism on the other. The legacy of Napoleonic bureaucracy may also enter into the picture.

One has only to look at the way in which contested takeover bids are regarded with horror on the Continent, and the way in which German banks—heavily involved in industry as they are; quite unlike British banks in that respect—are practically an arm of the state.

If this excessive caution, paternalism and coolness towards individualism and risk-taking had been allowed to cramp the style of the British travel trade 30 years ago, I doubt whether we would have the cheapest package holidays in Europe today, and the greatest variety—with customers able to opt for anything between the Benidorms and Ibizas of this world and the exotic, adventurous, long distance destinations like Nepal, Madagascar, Lombok or the Galapagos Islands, to name but a few.

When strict liability is imposed on manufactured goods it discourages innovation, as many noble Lords pointed out when we were discussing that topic. When strict liability is imposed upon services such as the travel trade, the same disadvantages start to manifest themselves.

The second reason for my intervention is that my work is such that my wife and I take three or four short holidays every year outside Britain rather than one or two longer ones. Over the past 25 years my family and I have had considerable experience of package holidays. Sometimes we have used the flight only and thrown away the hotel voucher. This was mainly in the days before bucket shops, which enable one to buy a heavily discounted ticket. Sometimes we have used the package hotel for the first and last nights and struck off on our own for the rest of the time. More often than not we have stayed in the hotel for an entire week. It is true that occasionally the allegedly heated swimming pool is coated with a thin film of ice or the mattresses on the beds are positively concave, but generally there are no major problems. By and large you get what you pay for.

If things do go wrong—if one of our more loutish countrymen should pour a litre of lager over your head while you are sitting by the swimming pool, or jam the swimming pool filter with superglue—how could the tour operator possibly have prevented it? That is why I agree strongly with the committee's recommendations in paragraphs 65 and 66 that strict liability be strictly limited.

As one witness points out on page 142, all-embracing strict liability as recommended by the Commission, means that customers will be uniquely protected from the vagaries of life while on holiday, in a way that no one is protected from the identical vagaries in their ordinary day to day life: it appears to militate against any idea that travel might be an adventure, or that part of the point of going to other countries is to experience cultures and standards which may not be the same as at home". Apart from that, the committee and several witnesses draw attention to the absurdity of a situation—this has already been mentioned—in which two passengers would be sitting side by side on a jumbo jet, one of whose family would be limited to Warsaw Convention levels of compensation in the event of a crash, while the family of the other could receive ten times as much if the tour operator were subject to strict liability on the flight element of the package.

There is another snag: the problems of assembling the evidence needed to prove that you have a valid claim against your tour operator in the event of things going wrong. Most of the packages that I use now are fly-drive ones, generally for a long weekend in France rather than a full week elsewhere. Normally the car provided is fine: sometimes you are lucky enough to get upgraded to a larger car at no extra cost. Occasionally you are given a car in bad condition, sometimes shockingly bad condition, as was the case with the Renault 5 supplied to me by Budget Rent-a-Car at Satolas Airport outside Lyons two and a half years ago. It would scarcely climb a 1-in-10 hill, and there are plenty of 1-in-10 hills in the Ard¹che.

Given that one does not want to waste at least half a day out of one's allotted three days' holiday in trying to find an impartial adjudicator to examine the car, there is nothing realistically that one can do. It is your word against the company's The theoretical strict liability protection is in practice mythical.

I am a little uneasy about recommendation 65(ii) that operators' strict liability should apply to all hotel accommodation the world over. We do not want to discourage operators from offering tours to Albania, Tibet or Bolivia. Provided that it would be a valid defence to warn customers in the brochure that accommodation may be both unreliable and uncomfortable, I suppose that the recommendation is just acceptable.

On the question of surcharges, I broadly agree with paragraph 63 of the report, but I cannot quite make out whether operators would be required to limit rises to the precise increases in the fuel or currency costs, as one would hope. As the Consumers' Association points out on page 11 of the minutes of evidence: Surcharges are out of proportion to the actual increase in costs". In some cases they appear to be disgracefully out of proportion, on the evidence given.

I agree with paragraph 61 regarding the transfer of bookings. The Commission has obviously forgotten that under IATA regulations one cannot transfer an Apex ticket. Thus one could not possibly transfer any holiday that involved a scheduled flight which was an Apex one, and most fall into that category.

The most important proposals, I think, are those relating to the quality and quantity of information to be found in the brochure put out by tour operators. In the "stand on your own feet" society that the Government are trying to encourage, it is surely right that customers should he able to opt for, let us say, very cheap holidays with pot-luck accommodation or adventurous holidays entailing a certain amount of discomfort and risk—all this provided that they are given the maximum amount of information beforehand to enable them to decide whether it is worth it.

If the holiday in question is not recommended for children under 12 or people over 70, the brochure should spell this out precisely. For more conventional holidays, the average air and sea water temperature for each month at the resort in question should be included in the brochure. I once saw a brochure that recommended Bermuda as the ideal destination for getting a winter suntan. This was a disgracefully misleading claim. The temperature in Bermuda in midwinter is scarcely higher than that in the Channel Islands.

I agree with the Commission rather than the committee that the addresses of the hotels used by the operator should he given. In this way, an intending traveller with any gumption would be able to ring up the national tourist office of the country that he proposed to visit and ask for the town plan of the resort to which he was going, from which he would be able to work out whether the hotel recommended was sited next to a beach or park on the one hand or to a sewage treatment plant or motorway flyover on the other.

Finally, I do not think that it is a matter for legislation—it would be difficult to legislate for—but it is irresponsible for tour operators and their representatives not to warn the more thoughtless and unsophisticated of their clients against offending the local people by going topless, or wearing provocative T-shirts or brief shorts in Moslem countries—or, for that matter, in many Christian, Hindu or Buddhist countries. Not only is it ill-mannered and insensitive; it can also be dangerous for the person concerned.

As I said at the outset, I do not think that this matter is strictly any business of the EC. But on the evidence provided in the report, I believe that there is a case for some modest unilateral extension of consumer protection in a manner that takes into account British habits, preferences and conditions.

7.20 p.m.

Baroness Elles

My Lords, noble Lords will understand if I do not completely follow all the arguments put forward by the noble Lord, Lord Monson. I should like to congratulate and thank my noble friend Lord Broxbourne for his introduction to an extremely important report—important in that it affects millions of people rather than for its substance. There is particular pleasure in thanking my noble friend who was a distinguished and eloquent chairman of the Legal Affairs Committee of the European Parliament where I have followed modestly in his footsteps.

I declare a moral interest in the draft directive. The noble Lord, Lord Graham of Edmonton, has referred to a letter I wrote to the FinancialTimes relating events which happened to me. I realise that noble Lords may not lead the same kind of life. I went with my family on what was our first and, I believe, will be our last package holiday to Greece. The plane was due to leave at 8 a.m. We were not told what time it would leave but eventually it left at 8 p.m. Instead of arriving at 4 p.m., enabling us to stay in a hotel of which the noble Lord, Lord Monson, would approve because it was extremely comfortable, we arrived at 5.15 a.m. We had been driven in a taxi by a Cretan for three and a half hours. Almost 24 hours of the holiday had been lost.

I asked not only on my behalf but on behalf of many hundreds of people who were affected, what kind of compensation we would receive. Noble Lords may be surprised to hear that I was told, "You might get a free meal". Surely that is unacceptable to those who save all year and for whom a holiday is a major part of their annual expenditure.

I should like to pay tribute to the many thousands of people who were sitting at Gatwick Airport for 25, 27 and 29 hours. They were patient, courteous and always good humoured. I hope not to sound too Anglophile but I believe that it showed the British at their best. It was not an agreeable experience for anyone, particularly those with children. That situation continued through August.

I am appalled because I have read in the press that Gatwick Airport is making arrangements with hotels and restaurants to deal with similar problems next August. The tour operators have not taken on board the responsibility they have for their consumers. It is extraordinary that because one buys a package tour one is considered to be second class. One is paying money to travel on a plane which leaves at a certain time in order to arrive at a certain place. That is an ordinary part of the law of contract on which my noble friend Lord Broxbourne is an expert. It is unreasonable that travellers can pay a sum of money and be treated in that way.

The noble Lord, Lord Graham, rightly pointed out the fact that 85 per cent. of people who buy package tours are satisfied. I accept that and also the fact we have excellent tour operators. However, 15 per cent. of 12 million people is a large number. I have made the calculation on the back of an envelope: the figure is almost 2 million dissatisfied customers. That is an awful lot of people who are dissatisfied with their package tours.

In the light of the diversity of legislation which exists throughout the Community and the kinds of self-regulation or special contract law in different countries, I believe that there should be ground rules which give people some rights against the person with whom they make the contract. That should apply to people whenever they buy their tickets for a package tour and wherever they are going.

Questions have been asked about how the tour operator protects himself or herself against a hotel which does not come up to scratch. The traveller makes the contract with the tour operator who has the right of breach of contract against the person with whom he has made the contract. I believe that to be the simple answer and the basis of the argument used in the draft directive.

I should like to deal with the legal base. I understand the fact that noble Lords prefer Article 100 because it is unanimous. Although it uses the horrible word "harmonisation" instead of the word "approximation" which appears in Article 100 and which I believe to be more suitable, the Commission has proposed Article 100A. We on the Legal Affairs Committee, and I suspect those in the Parliament, will strongly support that base. As of today it has a strong point in its favour. Under Article 100A there is a qualified majority in the Council of Ministers. And the Council of Ministers must listen and read the amendments of the European Parliament.

There are many issues in the directive which noble Lords do not like. Nor do we, who will be tabling amendments from both the Legal Affairs Committee and the committee which is dealing with the subject. The rapporteur is Dr. Caroline Jackson who is English. No doubt some if not all the amendments will be adopted in plenary. The Council of Ministers must listen to the amendments and give an answer under the co-operation procedure. Thereby we shall have a chance at Second Reading to have jusification of why amendments have not been accepted.

Noble Lords have provided us with a most valuable report, and we are having an equally valuable debate. Everything which is said in this House will be taken into account by the European Parliament. I hope that at the end of the day noble Lords will consider that the argument in favour of Article 100A, and the benefit of their wisdom and advice, will not be wasted.

I should like to spend a few minutes considering some of the details of the draft directive because they are important. I hope that my noble friend Lord Broxbourne will take up this issue. In Article 2 there is a lack of clarity in defining what a package tour consists of and who are the operators. Are they only tour operators and agencies registered in the European Community? That is not made clear; I believe that it should be. Is it clear that package tours cover anywhere in the world? I believe that they should. The person making the contract within the European Community will he responsible for the success or failure of the package to wherever it may be. I believe that those issues should be clearly stated in the draft directive.

Similarly, it should be clearly stated whether the directive covers package holidays or package travel as a whole including business travel. It is no use saying that one will be travelling in a plane with only English people. There may be a single European market by the end of 1992, so whether one likes it or not one will not always find oneself sitting next to Englishmen in the coming years, particularly if one travels on business. For example, I flew to Strasbourg on Monday morning this week, but I had to fly back from Frankfurt in order to be here tonight. Therefore we do not move in a cocoon around the world; we travel from place to place. I sat next to an American and two seats away from a person who had been to Russia. We must accept the fact that for many people travel is part of daily life. They must be protected just as much as people who buy holidays in Spain.

We on the Legal Affairs Committee are concerned about the way in which contracts have been concluded with tour operators, particularly the small print on the back of the ticket which sets out exclusions whereby the operator claims no liability. We believe that the brochure should include a specimen form of the contract with all the major items to be concluded. In that way people would know what they are buying. I believe that to be a useful proposal. It is a proposal which we have made as our opinion but it has not yet come before the plenary session of the European Parliament. It is merely our proposal.

The other aspect touched upon by most noble Lords concerns surcharges. Almost everyone who bought a package tour this year was charged between £10 and £14 extra for fuel. It is not very difficult reading the press to discover that fuel has gone down in the past two years or so, but one never sees a reduction in the price of the package. That is understandable. One makes a contract at a price, but that should stick. It should not suddenly be added to so that five or six people pay between £10 and £14 extra. I do not wish to use myself as an example but it helps to show how people who are perhaps not in such a fortunate position can suddenly find in the middle of August or just before going on holiday that they have another £50 to pay in surcharge. In our committee there is a division as to whether or not we should support the idea of a surcharge at all.

The Legal Affairs Committee proposed that the price must rise by more than five per cent. before a surcharge could be imposed. That relates to the three conditions of Article 4 of the draft directive which deals with airport charges, currency rates and fuel. We suggested that five per cent. would be a reasonable amount. It is quite clear that there may be circumstances where it would be totally unjust to expect a tour operator to bear the whole cost in the case of a major change.

I should like to mention insurance. I am surprised by the argument that if one is in a plane one might be covered by a different form of insurance to the person sitting in the next seat. I have never sat next to anyone who does not have a different insurance to me. Of course, we are all covered by the Warsaw Convention. However, I hardly need tell your Lordships that if one buys one's ticket through Access there is an automatic £55,000 insurance—which I have not told my husband. Nevertheless, that is a fact of life. There is no way in which we can all sit in an aeroplane and be covered by exactly the same conditions of insurance. Whether or not the other arguments are valid, that is totally untenable.

As regards cost, France has had strict legislation since 1982 that tour operators or agents de voyages must have insurance. It apparently works out at 22½pence per package per head. I have seen a recent figure by ABTA. When ABTA was saying how expensive it would be, it had not really inquired. I asked several insurance companies in the City, and at that stage ABTA had not inquired what kind of premiums would he necessary. Further, there is no stipulation as to the liability required—total, strict or limited. Even for limited liability, anyone sitting next to me at Gatwick would have gladly paid £5, £15, or more, to know that they would be compensated for the disadvantages and distress they were suffering. It does not take a great mathematician to realise that if one does not pay £10 in surcharge, one would be quite willing to pay £10 for insurance. I do not believe that such insurance would ruin the pockets of many people.

Above all, it gives a sense of responsibility to tour operators who then know that they are obliged to observe the contract, knowing full well that their clients will be protected by insurance if something goes wrong. That is perfectly right and proper. They can take action against the offending hotel, coach operator or whatever in another member state of the Community, or, indeed, outside the Community.

I do not wish to take up the time of your Lordships' House with many other important and legal points. The principle is clear; namely, to protect travellers— not only British travellers. Quite a number of foreigners come to Britain. They deserve to be protected against some of the hotels they visit. They will know that they are protected and that they can claim. I was going to use the example of AIDS, but perhaps I should not. They are protected should they receive some kind of treatment, or food, which is not acceptable.

Therefore, for the benefit of consumers as a whole, I warmly welcome the draft directive. I am glad to see that the Office of Fair Trading also considers it necessary. That is a totally independent body without any political overtones. There is no question of it being European or non-European. I read in the report that it recognises and supports the need for this. I believe that we are all agreed that there are certain elements which need to be looked at more closely. Article 100A gives a chance to change the draft directive more radically than if one sticks to Article 100.

Lord Graham of Edmonton

My Lords, before the noble Baroness sits down, perhaps she could tell me what the 22½ pence in France covers by comparison to what could be covered by £6, £7 or £10 here. Are we comparing like with like? The report says that it was impossible to ascertain from France precisely what the 22½p. covered?

Baroness Elles

My Lords, the noble Lord, Lord Graham, is correct. Nobody quite knows what the 22½ pence covers. That was the figure given by the French tour operators. Even if that is low and the ABTA figure looks high, I assure your Lordships that the people with whom I travelled at Gatwick would be glad to pay £10, particularly if not paying a surcharge. However, I am afraid that I cannot specifically answer the noble Lord's question.

7.36 p.m.

Baroness Burton of Coventry

My Lords, it is a joy to follow the noble Baroness, Lady Elles, and I shall be glad to return to some of the points she made later.

First, I should like to say how glad I was that the noble Lord, Lord Broxbourne, was proposing this Motion, not only because of his legal knowledge but from a personal point of view. Some 35 years ago in another place when he was chairman of the 1922 Committee the noble Lord was good enough to help me in sponsoring a Bill for consumers which we eventually managed to carry forward into an Act. We should never have done that without his support. Therefore, I felt that it was right that someone who cared so much for consumers should move the Motion today and I should like to thank him for what he has said.

I should like to thank the Select Committee as a whole for its report. I thought it was very good and most of us have learnt a great deal from it. I certainly did. I do not believe that it is only we in Parliament who will be thankful, but it will be the millions of people who use package holidays and package holiday facilities year in and year out. I think it would be right if I were to express appreciation to the many organisations which put in a lot of work on this subject and which have sent information. I specifically include the National Consumer Council. the Consumers in the European Community Group, the Consumers' Association and the Office of Fair Trading. I hope that each will recognise its contribution and my appreciation.

I believe that we all feel, and most of us have said, that this report could not be more timely following the dreadful summer which we experienced in 1988. I believe, as does the noble Lord, Lord Graham of Edmonton—and we have often said this in this House—that the charter industry serves this country well. However, there is considerable variation across the package holiday market. In a survey carried out in 1987 on a European level—and the noble Lord, Lord Graham, mentioned the cheapness of some of our tours—UK operators in Europe had the cheapest in three out of four packages. The differential between the dearest and the cheapest price for the same package was 40 per cent. in two thirds of the sample, while in four cases it exceeded 80 per cent. I believe that we should pay tribute to the charter industry for its achievements.

It seems to me that package travel, package holidays and package tours have brought inestimable value and pleasure to people who never thought in their lifetime that it would be possible to travel so far afield. However, having tasted that pleasure, the traveller is not content to have such happenings as those of last summer ruin something so enjoyable.

Furthermore, I believe that today holiday-makers are not prepared to put up with delays, crowded airports and what seems to them to be inefficient services. They pay hard earned money. It is my firm belief that they are perfectly prepared to pay more of their hard earned money to see matters put right. I hope that that lesson has gone home. Travellers are not willing for those conditions to continue. That is the main reason why I welcome this report from the Select Committee and the draft directive from the Commission. If we can get over to the powers-that-be in this country and elsewhere that travellers are determined to have this put right we shall have achieved something.

I was greatly cheered by the strong support from the noble Baroness, Lady Elles, who has had such vast experience in the European Market. I for one am glad that she is there and the Legal Committee is lucky to have her. We shall look to good results from that.

Let us assume that everyone—and I am sure it is true—wants to put this matter right. Where do we start? I start simply with the consumers, the travellers. What do they want? What do we all want when we go on holiday? I have listed three points: first, no change of holiday after booking and no change in arrangements entered into; secondly, no unforeseen extra charges, and I emphasise the word "unforeseen"; thirdly, brochures should come up to expectations. As Article 3 stipulates, descriptive matter must be legible, understandable and accurate". Each of us will have our own list but taking the three I have chosen, what of the first concerning no change of holiday after booking and no change of arrangements entered into? I start with a statistic: 22 per cent. of people had their holiday changed after it was booked and one half of those changes were made after the final payment or during the holiday. That was in 1986. In paragraph 51 the Select Committee states: There is also a strong public policy argument that the package traveller needs special protection because among consumers he is unusually vulnerable. He has paid all his money in advance, he cannot easily take his custom elsewhere or replace a spoilt holiday and he has in practice no realistic remedy against airline delays or foreign hotel owners". Furthermore, the Select Committee goes on to state its agreement with the Commission that there are good consumer reasons for Community legislation to establish common rules which in some states would lead to greater protection of package travellers. I shall come back to that at the end of my remarks, but I am cheered that the noble Lord, Lord Broxbourne, and the noble Baroness, Lady Elles, seem to think that that is the case.

Unfortunately, the draft directive allows the organiser to cancel the package for whatever cause. In addition, the organiser may cancel the travel in two cases without compensation to the consumer for non-fulfilment of the contract. The first case is the cancellation on the ground that the number of persons is less than the minimum number specified. The second case is cancellation for reasons of force majeure, excluding however overbooking. The House knows my views on overbooking and I am glad that the Select Committee recognises this as an increasing phenomenon.

Force majeure needs a better legal brain than mine to interpret, but even I know that its interpretation is not the same throughout the Community. I leave that problem to the noble Lord, Lord Broxbourne, and the Legal Committee with the suggestion that we laymen in the legal world study carefully page 119 in the Select Committee report.

I now come to my second point concerning no unforeseen extra charges. I believe that the present practice of surcharges is unacceptable. Surely the simplest and fairest solution is to lay down that the price cannot be changed once the full price has been paid by the consumer; in other words, the price at the time of booking should be the final price. On 23rd May 1988 the Minister for Consumer Affairs stated that ABTA had proposed a solution which would have the effect of removing the need for up to 90 per cent. of surcharges. In common with the rest of your Lordships I have tried to find out what people who really know the subject think of this. I suggest that it is the considered opinion of researchers on this subject that surcharges are out of proportion to the actual increase in costs, that they are costly to collect, that they are not properly explained and that the calculation of surcharges is a matter of concern. I am very glad—and 1 keep coming back to the Select Committee because we have a friend there—that this matter is to be looked into.

That is a strong indictment made by the researchers. I accept it. I welcome the proposal that the Office of Fair Trading should monitor 20 major tour operators to ensure that surcharges are not abused. The efforts of the Commission on this practice are welcomed but they are considered to be insufficient. However, I know that the Select Committee accepts that surcharging to reflect fuel cost increases and currency fluctuations is inescapable. I assume from that—and I look at the noble Lord, Lord Broxbourne—that when any currency fluctuation favours the cost to the traveller the charges would then be reduced, meaning that travellers would get a refund rather than a surcharge.

I come now to the last of my three points—brochures. The Office of Fair Trading, in its publication of July 1988, said that, Probably the most important face presented by the industry is brochures. The tour operators' code requires them to be clear, accurate and comprehensive". Additionally, it said that holiday brochures, on balance, tended to receive good ratings.

Holiday brochures cost a lot of money to prepare. It seems a pity to spoil them by not getting all the facts right. Evidence to the Select Committee said that consumers complained, for example, that on occasion the illustrations of the resort or of the hotels led them to be misled about what would be provided—perhaps a statement that a hotel was near a beach when, although it was, there was a major roadway between the hotel and the beach so that it was not suitable for children—or perhaps that the picture of the building described in the brochure was only one of the buildings under construction when the brochure was put together.

With others I welcome the obligation on member states to ensure that information in brochures and contracts is legible, accurate and understandable; but I would support also a suggestion that there should be a requirement that the information in the brochure is consistent with that in the contract. I hope that the Select Committee, perhaps prodded by the Legal Committee, will include that point in its recommendations.

I should like to take up one further detail. In paragraph 59 the Select Committee states, that it seems to be unnecessary to require the full address of a hotel or other accommodation to be inserted in a brochure, so long as particulars adequate for identification are included". I do not agree. I believe that it would be of great value to consumers to have this information. I am convinced that it would build up confidence. Perhaps the Select Committee will feel able to consider that point again.

That concludes my three points and I now come to my conclusion. This can be summed up by the first conclusion reached by the Select Committee on page 24: Although the package travel industry has been very successful, consumers now want and are ready to pay for a better service. The package traveller is economically vulnerable and needs greater legal protection. There is a good case for Community legislation". Consumers in the European Community Group (CECG) does not believe that making travel companies responsible for essential measures to protect their clients will automatically lead to substantial price increases. It seems to me very difficult to get any accurate figures on this, and that has already been referred to. The group understands that the Commission's discussions with European insurers suggests that the cost of insuring for liability under the directive would be minimal. In France, where there is already strict liability for package tours, as your Lordships probably know, a 1985 estimate suggested that this added an extra 2.32 French francs or 22 pence to the cost per person.

The National Consumer Council states that the directive envisages a European-wide travel holiday market. If UK consumers are to purchase holidays from French, German or Spanish tour companies, the National Consumer Council does not think it is desirable or realistic to expect them to pursue their grievances with a tour operator in another country. As your Lordships will know, most UK consumers believe that the travel company is responsible when things go wrong, but a tour operator may disclaim strict liability in many instances. Yet tour operators are in a far stronger position than the individual holiday-maker to recover damages from foreign hotels or transport carriers since they can withdraw from future bookings.

If out of this draft directive, the efforts of our Select Committee and the detailed work done by many organisations we succeed in developing policies to promote tourism within the Community, and if we do that by 1992, I for one shall be more than satisfied.

7.52 p.m.

Lord Lucas of Chilworth

My Lords, with the notable exception of the noble Lord, Lord Williams of Elvel, who is to wind up for that side of the House, and my noble friend the Minister; and excepting my noble friend Lord Broxbourne, who has introduced this debate in such a gentle way, at the end of the general list of speakers it is difficult to find some new aspect. I do not have a new aspect. I wish to underline one or two matters.

I am sure that we are all particularly grateful to my noble friend Lady Elles for her explanation why the Community directive is as it is; namely, the differences between Article 100 and 100A. I believe that is helpful. It is a little contrary to what the Select Committee suggest in their report. I believe this to be a very valuable point that we need to keep in the forefront of our minds.

My younger son wrote a thesis at university some years ago on the package holiday industry. I recall him saying that it will bring a dramatic change to the way of life of millions of people. It is not that the package holiday is cheap. I hope that the noble Lord Graham will forgive me because he, among others, spoke about the cheapness. It is perhaps less expensive than other ways of travelling about. I would not use the term package tour but call it an all-in-tour where travel, accommodation and food and some element of entertainment is included. Sadly, nothing in this world is cheap.

The package holiday business has raised the expectations of people—to a degree that the tour operators find difficult to meet. I believe that is where many people go wrong. It is contained in the evidence. I believe it was Miss Cassin who spoke about dreams and nightmares. In December, as the new glossy brochures drop through the letterbox inviting one to go here and there, dreams are created. Most of them are fulfilled. There are some nightmares; and various statistics have been put about. Out of some 20 million users of the service, some 11 per cent. give rise to complaint which means conversely that some 89 per cent. do not complain. The fact that there are no grounds for complaint for the 89 per cent. is immaterial since the numbers continue to go up. That is not a bad record for the industry.

Where and how are the complaints registered and against whom? There are difficulties in this regard to which the report draws attention. I believe that most complaints are against the tour operator. But at the same time I believe that it is the retailer who has a duty and not just to sell a ticket out of a catalogue. A retailer has a duty to make his best endeavours in order to determine what it is that the client is trying to buy. He should give advice. The noble Baroness, Lady Burton, referred to the hotel near the sea. That is fine for an adult; but is not so good for a family with three small children, a perambulator and two big baskets. What is it that the client is expecting to buy, and what advice should be given? What should the expectation be? If that can be better satisfied, then I believe that the number of complaints may well decrease.

A number of your Lordships have referred to the brochure. I believe that most are written in an enthusiastic, glossy style with an element of poetic licence. However, if one is looking for an adventure holiday in some far-flung corner of what used to be called the Empire, it may say that travellers should expect that standards of hygiene are not those normally associated with a European resort. That is perfectly fair and reasonable. The brochure should put quite clearly the down side of the picture. I believe that there is a greater responsibiility on the tour operator in the description of the product than we have seen in recent years. I believe that would remove a number of areas of complaint.

I believe that tour operators, particularly in the more popular areas where there are vast numbers of people moving about, should have a greater and more responsible representation in the field so that a number of difficulties and problems that give rise to complaint when the traveller returns home can be dealt with on the spot. I believe they are called couriers, but I call them representatives in the field. They should have a discretion to settle on the spot the less important complaints. In my view there is a retailer responsibility.

I am broadly in favour of the directive. I cannot agree with the noble Lord, Lord Monson, that this is an incursion into our sovereignty. The holiday travel business is worldwide and we are all part of it. As responsible members of the Community, it is reasonable that we should have a common purpose in this lucrative and important business. Perhaps I may return to a point raised by my noble friend Lady Elles; namely, compensation for delay. I do not wish to go into the matter in great detail, but I suggest that the tour operator should have strict and unlimited liability in terms of the hotel, accommodation and associated services. Whether they should have some liability as regards travel, I slightly dispute. I do not believe that it is entirely necessary. I believe that it is for other companies and institutions to provide compensation. The vagaries of air travel, whether they are due to weather, mechanical or even political reasons, should not necessarily give rise to compensation.

I am always a little worried that people turn to the compensation clause in the contract as the first means of getting rid of their chagrin, disappointment and dismay. The noble Baroness, Lady Burton, referred to changes made by the operator giving rise to compensation. The quid pro quo must apply that, on wise reflection or because of unscheduled expense arising in a household, the consumer decides to make the change. Compensation to the seller of the product should follow. So the changes are not entirely one sided. The noble Baroness would probably agree that there is a responsibility.

As I listened to the debate I wondered whether I might quote the words—and my noble friend Lord Broxbourne will in the kindest way correct me if indeed correction I need— It is better to travel hopefully than to arrive". I wonder whether those might not be watchwords for some of those who look through the catalogues and become frightfully excited during the winter months at the thought of these golden beaches in some foreign field seven or eight months hence, or glance at the catalogues during the summer and look for the snow some five months hence.

Baroness Elles

My Lords, does my noble friend accept that liability for delay can depend on the cause of the delay. Delay could be caused by a strike of traffic controllers in one country or another so that it would be impossible for a flight to take off. But where delay is due to the inefficiency of the carrier, that is another matter. It is not strictly correct to say that there should be no compensation for delay if there is a good reason for the failure of the operator to fulfil his contract. Does my noble friend agree that we should leave this matter open for discussion?

Lord Lucas of Chilworth

My Lords, I concur with what my noble friend says. I hope I did not give the impression that there should be no compensation. I was suggesting that the compensation might come from a different area. No one can guarantee at all times that X or Y will happen. Certain failures may be compensatable; others most certainly would not be.

8.3 p.m.

Lord Williams of Elvel

My Lords, the House is grateful to the noble Lord, Lord Broxbourne, for introducing the Select Committee's report. We on these Benches are grateful to him for his reference to Lord Silkin of Dulwich who died recently. He is missed both on these Benches and generally in your Lordships' House.

We have a number of comments on the Select Committee's conclusions, some of which the committee may not find wholly palatable. Our first is that this is not a consumer protection directive. It is a directive designed to implement in part the internal market of 1992. There are two parts to the directive, as the preamble quite clearly states in the draft. The first requires that consumers should be protected. The other requires that tour operators should have what is known as a level playing field in which to compete throughout the Community when the internal market comes about. That is an important point. It would be quite absurd if we argued for a level playing field on the sale of insurance services throughout the Community and did not also argue for a level playing field in the sale of tourist services throughout the same Community. There is no distinction between a life assurance salesman who may go to Stuttgart or to Glasgow after 1992 when the appropriate directive has been implemented and the tour operator who will be entitled to sell tours right across the same jurisdiction.

It astonishes me that ABTA is so much on the defensive. I should have thought that this is a great opportunity for the tour operators of the United Kingdom, which we all admit are the most efficient, the most clever and the most inventive in Europe. It astonishes me that they do not regard this directive, which establishes the level playing field, as being an enormous opportunity for them to go out and get the market.

I note that the Government have taken a view on strict liability even before the Minister has risen to speak. Mr. John Lee, an Under-Secretary at the Department of Employment, told the meeting of tourism ministers in Brussels yesterday that: It would be unfair to place the burden of responsibility for every holiday hiccough on companies organising millions of package trips each year". It looks as though the Government have taken a view on strict liability even before your Lordships' debate. I find that rather regrettable.

I should like to deal with the status of the directive. Does it come under Article 100 or Article 100A? I regard this not as a consumer protection measure—if it is a consumer protection measure the Government should have introduced it years ago—but as a measure to establish a level playing field across Europe in the Internal market. It therefore comes under Article 100A. I disagree with the conclusions of the Select Commmittee on that point. I was impressed by the words of the noble Baroness, Lady Elles, that, from our point of view, Article 100A is better than Article 100. The European Parliament's legal committee will have the right to make amendments and to hear why the Commission and the Council of Ministers disapprove of amendments. And so there will be an interchange of views which will probably be to our advantage. Not only is the Select Committee wrong in its conclusion that this draft directive should come under Article 100, but it is to our advantage that it comes under where I think it should come under, Article 100A.

Lord Broxbourne

My Lords, I thank the noble Lord for his characteristic courtesy. Does he recall that in my opening remarks I said that the principle has to be applied only to use the correct article as the legal base. But I also said that although the principle is there, in practice we would not be disadvantaged.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord. I recognise that that is what he said. Nevertheless the report came down fairly firmly on one side rather than the other. From this Dispatch Box I wish to make the point that we disagree with the conclusion of the Select Committee.

Assuming that the directive is in the end approved by the Council of Ministers, how do we translate it into United Kingdom law? Noble Lords have not touched on this point directly although the report alluded to it. There are three essential ways of doing this. The first is to deal with it in specific terms of contract giving rise to civil actions by aggrieved persons. This is broadly the system we have at the moment. The second is by making it a criminal offence to violate certain specific provisions of the directive. The third is a licensing system, which the committee specifically rejected, similar to the CAA licensing system which more or less duplicates, but on a statutory basis, the present ABTA code of practice and licensing system.

I do not believe that the specific terms of contract arrangement would work. The directive could not properly be implemented simply by making certain grounds for contractual complaint in the civil courts. The noble Lord, Lord Lucas, and I had long discussions during the passage of the Consumer Protection Bill through your Lordships' House and I think that the problems involved in relying upon civic procedure for some of the remedies became apparent to both of us, even though we approached the matter from slightly different angles.

So we would favour some sort of extension of the CAA licensing system—the type which the committee specifically rejected. The Financial Services Act has a licensing arrangement. I use the world "licensing" in the broadest sense of the word. But there is a body, or bodies, which authorise people to do certain things and if they do not do those things then they are in a lot of trouble and can be not only as in the ABTA case thrown out of the association but in many cases they can be taken to court. I think that something along those lines would be the kind of arrangement which we would favour.

I come now to the scope of the directive. There is the problem of whether the directive should only comprise packages where there is an element of travel. The committee focused on that point and said that there should be such an element of travel involved. I think that that is probably true if we are talking in a purely UK context. But if you go and live, as I have done, in Europe—the noble Baroness, Lady Elles, knows this much better than I do—you can go on a skiing weekend from Stuttgart to Davos; your club will hire the bus in which you go but you will have the package in the hotels. Whereas for us, we have to travel outside to go, as it were, anywhere other than to Whipsnade Zoo, or wherever; but when we come to Europe and we must consider this as a European directive, because that is what we are talking about—there are many occasions on which Germans, French and Italians do not regard it as psychologically essential to have both travel and hotels in the same package. You can have one or the other or the other and one. So I think that we are looking at it from the point of view of the United Kingdom context a bit too much. I hope that we would not argue that point wholly from the British point of view but would understand that our Continental friends have slightly different arrangements.

On the specific points in the draft directive, I take note of what the noble Baroness, Lady Burton, and the noble Lord, Lord Lucas, have said about travel brochures. On the whole I agree with what they say. There is of course the problem of the misleading price indication—Part 111 of the Consumer Protection Act—which no doubt the noble Lord, Lord athclyde, will wish to deal with when he comes to talk about the prices quoted in brochures. Although that part of the Act has not yet been implemented because the commencement order has not yet been produced, nevertheless it will when it comes, which I understand will be fairly soon, affect what price is quoted, and on what basis, on the brochure of a package travel. Unless it is quoted as an estimate, which is specifically excluded on the Consumer Protection Act, it will have the characteristic of being a price indication. If it is misleading in any way, I am afraid that it will be a criminal offence to the retailer or organiser who produces the brochure. If the price changes for unaccountable reasons, when the brochure is in front of the person who is buying the tour on that basis, there may be a problem. It may be possible to overcome that problem, and I shall be most grateful if the noble Lord will comment upon that when he comes to wind up.

On travel contracts, I generally agree again with what the noble Baroness, Lady Burton, said about cancellation. On the other hand, however, I agree with the committee that the problems of ensuring in a directive—which must be translated into law—a right to an alternative (which is Article 4(6)(a)) would run into some very serious problems. I find it in practice very difficult to see how tour operators could, at short notice, be obliged by law in some manner to provide an alternative.

As regards surcharges, I wholly agree with what the noble Baroness, Lady Elles, said. In fact I would go further than what she said. I see no reason at all for surcharges based on currency fluctuations or the cost of fuel. Day after day Ministers speak from the Government Front Bench and say that there is no reason to go into the EMS as a full member because everyone can hedge currency risks. We hear that day after day. Presumably tour operators are reasonably financially competent individuals and they can hedge currency risks, particularly short-term currency risks, just as well as anyone else.

So just because the value between sterling and the deutschemark, or sterling and the peseta changes, it does not seem to me to be at all justifiable to say that a surcharge should be in some way condoned. I would say that the financial director of the tour operator ought to be sacked before that happens. Equally, it is perfectly possible to hedge against the cost of fuel. There is a Rotterdam market in aviation gasolene oil and JP4. Any tour operator if he wants to set about it can hedge against these various commercial risks.

Lord Strathclyde

My Lords, perhaps I may interrupt the noble Lord for one moment. I understand that there is not a long-term futures market for oil, but I may be wrong.

Lord Williams of Elvel

My Lords, no; there is no long-term futures market. But we are not talking about long-term futures; we are talking about holidays which are bought in January and which are taken up in July and August. We are talking about a six-month market. If the noble Lord would like to come along with me I will show him the market in six-nine month futures in these products. Therefore I do not believe that surcharges are on the agenda at all. I think that we ought to be absolutely clear. The noble Baroness, Lady Elles, is right and we ought just to bury that aspect.

The last point that I have on specifics is the question of strict liability. I think that the noble Lord, Lord Lucas, made a very good point that retailers (that is, travel agents) ought at least to be included in some form—I am not quite sure how it could be done, but, assuming the directive comes under Article 100(A), then I have no doubt that the noble Baroness, Lady Elles, will find some suitable formula. But I think that it is quite wrong that the agent should be free of liability, while the tour operator bears the whole liability.

The point about strict liability has been made by one or two noble Lords. It is not that the tour operator admits guilt in some way if something goes wrong. The argument that he has got something wrong is not the point. The question is, who is best able to fight the case in a foreign jurisdiction. The answer is, the tour operator. That is much better than the individual person who has bought the package. That is why we would support the idea of strict liability as spelt out in the draft directive.

As for insurance, figures have been bandied around this evening about whether the figure is 22p, 2½ francs or £5 or £10, or whatever; I know not. I daresay that nobody else in the world at the moment knows what the figure would be if there were an instruction legally binding that there should be strict liability. What I do know is that there will be a market, because at a price there will be a market. It may be a price that the purchaser of the tour may not be prepared to pay; that is his problem. There may be a different price. There may be one price for an uninsured holiday; there may be a price for an insured holiday. All kinds of things are perhaps possible. But, anybody who argues that there is no market for insurance is arguing falsely. We would make that point as strongly as we possibly could. If insurance works, then guarantee funds and the other arrangements that were mentioned in the committee's report do not seem to matter too much. If the insurance market is worth anything, it is worth its liabilities. We do not have any strong feelings about whether there should or should not be guarantee funds or funds held in trust.

I want to return to the point that the draft directive is not merely a consumer protection measure. It is designed—the noble Baroness, Lady Elles, agrees with me, I think—to create after 1992 a level playing field for everyone. It will be part of the internal market and will be selling services. Those services happen to be services to consumers wanting to buy a tourist package. It could equally be, as I said, services providing life insurance or anything else. That is why I believe that this is an amazing opportunity for United Kingdom tour operators. I regret that they seem to be defensive about it.

As the noble Baroness said, we saw on our television screens this summer some appalling scenes of holiday-makers stuck for hours, and sometimes days, in airport lounges. I read on the tape that Christmas holiday-makers are about to risk the same fate. Something must be done. Since the Government are obviously not prepared to do anything by themselves, we have to look to the European Community to force us to do something.

Tour operators must accept their responsibilities: strict liability to deliver the package they offer, at the price they offer and on the conditions that they offer. Nothing else is acceptable. If they fail, proper compensation should be provided immediately and without complaint to those whose holidays have been spoilt.

Tour operators and travel agencies will, I have no doubt, be able to insure themselves against their liabilities if—nowadays perhaps it is when— things go wrong. If they do that, as Europe wishes, they will be in a marvellous position to capture the European markets after 1992. A fair deal for the holiday-maker means prosperity for our efficient package travel industry. The chance should not be lost.

Lord Monson

My Lords, before the noble Lord sits down, does he agree that there is only so much air space available in Europe? That is a fact of nature. There is nothing that the European Community or anyone else can do about it.

Lord Williams of Elvel

My Lords, I agree.

8.22 p.m.

Lord Strathclyde

My Lords, this has been an interesting debate. I especially enjoyed the speech of my noble friend Lord Broxbourne. In his remarks he spoke of fresh minds. I started to tackle the subject with a fresh mind, but as I learnt more and more about it my mind became slightly clouded. However, the report helped to clear it. I joined other noble Lords in regretting the death of Lord Silkin of Dulwich, who will be much missed in the House.

As for the report itself, I should like to begin by congratulating noble Lords who sat on the subcommittee on producing a very well researched, well balanced and well argued report. The Government have followed the proceedings of the sub-committee closely. The evidence presented to the sub-committee and your Lordships' report were of enormous help to the Government in drawing up a detailed negotiating line on the directive.

Like the sub-committee, the Government have found that they have had to consider carefully the respective interests of the two parties concerned: the consumer and the tour operator. To take the interest of the consumer first—I think that the noble Baroness, Lady Burton of Coventry, will agree—the Government believe he is entitled to expect that the tour operator will provide him with precisely the holiday he booked, not an approximation of it. He is entitled to expect that he will go to the hotel he chose from the brochure, not one up the road. He is entitled to expect that he will pay the holiday price quoted in the brochure, and not be surcharged, unless it is made crystal clear to him in the brochure that surcharges may he made and in what circumstances. He is also entitled to expect that the hotel and other services forming the package are of a reasonable standard.

Noble Lords, and in particular my noble friend Lady Elles, have recounted examples of cases where those reasonable expectations may not have been met. I hope that the noble Baroness, Lady Burton of Coventry, will find the comments reassuring even though she and the Government do not see entirely eye to eye on surcharges, subject to which I shall return later.

The consumer's interest does not, however, lie solely in getting the holiday he booked. It lies in getting the holiday he booked at a price he can afford. Here I must join in the tribute paid by the noble Lord, Lord Graham of Edmonton, and the noble Baroness Lady Burton of Coventry, to the success of the package travel industry in bringing foreign holidays within the reach of ordinary people. About 4 million packages per annum were sold 10 years ago. Today the figure is about 13 million. My noble friend Lord Broxbourne mentioned that people travel to get away from the English. With figures like 13 million, people would find that difficult today.

It is a tremendous achievement and it may not be realised just how cheaply British tour operators sell their product. I agree with the noble Lord, Lord Graham of Edmonton, that the European consumer body (BEUC) has undertaken surveys which show that holidays provided by UK tour operators are often 30 per cent. or more cheaper than identical holidays provided by Continental operators. In a typical example (two weeks in Benidorm in July 1988 at the hotel Las Ocas) four UK operators charged between £365 and £392; a Belgian operator £401; two Dutch operators £426 and £471; and three French operators between £470 and £580. In another example, and I shall not give too many., but they show the difference (two weeks in Tunisia in July 1988 at the hotel Les Orangers)—I believe that the noble Lord, Lord Graham, has been there.

Lord Graham of Edmonton

I had a date in Tunisia!

Lord Strathclyde

My Lords, the one UK operator offering the hotel charged £414; eight German operators charged between £472 and £585. I seriously doubt whether those higher prices represent 30 per cent. better quality of service, or 30 per cent. better protection for Continental consumers.

The other interest which must be taken into account is, as I have said, the tour operator's. The tour operator wants to limit or avoid liability for circumstancs outside his control. He is anxious to limit his liability when circumstances such as an air traffic controllers' strike in Greece or Spain, or deliberate overbooking by a Greek of Spanish hotelier, prevent him from fulfilling his contractual obligations to his customers. He will regard it as extremely inequitable if he is held liable for substantial damages for death, personal injury or other loss or damage suffered by his customers as a result of deficiencies in hotel or transport services forming part of the package if he himself exercised all due skill and care in selecting the suppliers concerned. In short, the tour operator does not want to see any provisions from Brussels which will cause him to increase his holiday prices, or to restrict the range of holidays which he offers, if as a result he will sell fewer holidays.

That brings me to what I and other noble Lords believe is the most significant article in the proposed directive, and the most significant of the Select Committee's conclusions. I refer to Article 5, which places strict and unlimited liability on tour operators for any deficiency in the provision of the various elements of the holiday. It not only holds tour operators liable to provide holiday-makers with all the promised elements of the package; it goes much further by imposing liability for death, personal injury, and other loss or damage arising from defects in hotel, transport, or other services forming part of the package, regardless of whether the tour operator was negligent.

The Government agree with the Select Committee that strict liability on the tour operator for performance of all services in the package is neither economically insurable nor right in principle. It is inevitable that the article as drafted would have an adverse effect on the price and range of holidays available. The Government's objective is to ensure that UK holiday-makers continue to enjoy the benefits of cheap package travel to a wide variety of holiday destinations.

The noble Lord, Lord Williams, referred to my honourable friend, the Parliamentary Under-Secretary of State, Mr. Lee, having said today that the Government do not accept that the directive should place strict and unlimited liability on tour operators. He was not of course at that time contradicting the Select Committee's conclusion, to which I have just referred.

The committee's report goes on to recommend that liability for each element of the package should be separately examined, but that there should be strict liability for defects in hotel premises or services. I have to disappoint some noble Lords by saying that I do not want to comment definitively on this recommendation tonight nor on the more detailed suggestions in the body of the Select Committee's report. It is too early to predict exactly how negotiations will develop, although I shall have something to say on that matter in a moment. The Government's starting point is that tour operators should be contractually liable to provide their customers with precisely the holiday which they book, but that beyond this some formula must be found for defining or limiting liability in a sensible way. Many of our Community partners appear to share our general concern but would like to tackle the offending article in different ways. It remains to be seen what sort of formula might be mutually acceptable, but I am extremely grateful to the Select Committee for their detailed suggestions which remain on the table to inform and assist UK negotiators.

At this stage the noble Lord, Lord Graham of Edmonton, talked about the insurance industry. I cannot see any reason why insurance cannot be obtained against the possibility of a customer's holiday being spoilt by excessive noise, as he showed by example, or of his suffering an accident in the hotel. This would need to be explored with the insurance industry itself, and I believe that many other noble Lords made a similar point.

The noble Lord, Lord Graham, also went on to ask, as did the noble Lord, Lord Monson, and the noble Baroness, Lady Elles, whether it is sometimes the position that some travellers on a plane will be covered by the directive and others not. The answer is essentially yes, some passengers will have contracts with the tour operators while others will not. One point which will need to be considered carefully in negotiations is whether it is right that the directive should impose different levels of liabilty in respect of the two classes of passengers. I think that there is a good case for ensuring that these kinds of anomalies are avoided.

I feel that it is appropriate at this point to inform the House about the state of current negotiations although I have been slightly pre-empted by the noble Lord, Lord Williams of Elvel. Following an initial reading of the directive at working level, a progress report was made yesterday to the tourism council. The council agreed that in its present form the directive was not acceptable, particularly with regard to the strict and unlimited liability provisions in Article 5. The Commission was asked to look at the present text again and to produce a more acceptable proposal, following consultations with experts and tour operators. Furthermore, contrary to what the noble Lord, Lord Williams, thinks, the Government are not against consumer protection for holidaymakers. Far from it.

Perhaps I may go on now to say a word about the proposed treaty base for the directive, Article 100A, which again very many noble Lords mentioned during the course of the evening. The Government agree with the ommittee—but I am afraid not with the noble Lord, Lord Williams—that the main object of the directive is consumer protection, and that any purpose or effect of increasing free movement of services is peripheral and subordinate. We have noted the points which the Committee have made about Article 100A being an inappropriate basis for the directive. We shall pursue these with the Commission and other member states during negotiations in Brussels.

Lord Williams of Elvel

My Lords, will the noble Lord allow me to intervene? Will the Government pursue it to the High Court? I think that is the ultimate arbiter for the Treaty of Rome.

Lord Strathclyde

My Lords, of course at the moment we are only discussing it in negotiations. We shall have to see what comes out of the negotiations in the near future. The Government accept the general tenor of the Committee's recommendations covering Articles 2, 3, 4, 6 and 7 of the directive. It is only on relatively minor points of detail that we disagree. I do not think too much should be made of these as the final text will be subject to much negotiation. Compromises will no doubt have to be made along the way. Nevetheless, it may be of interest if I briefly run through the Government's views on these matters.

On the scope of the directive, the Government agree with the committee that the directive should be limited to packages arranged in the course of the organiser's business and which include an element of travel. We should ideally like to go a little further and limit the directive to packages which comprise travel and accommodation, and in which both services are a significant part of the total. A definition on these lines would embrace all package tour operators in the conventional sense but exclude such domestic package arrangements as coach trips to the zoo which would be caught by the present draft. As the Committee notes in its report, it seems excessive to subject such arrangements to the stringent requirements of the directive itself.

Turning to the proposals on travel brochures and travel contracts, specifically mentioned by the noble Lords, Lord Broxbourne and Lord Monson, and the noble Baroness Lady Burton of Coventry, the Government agree with the noble Viscount, Lord Falkland, and the committee that the proposals on brochures and advertising are, broadly speaking, reasonable. We also agree that tour operators should not be required to do more than use their best efforts to transfer bookings where the consumer is unable to travel. We are unconvinced, however, that the proposal for compulsory written contracts is necessary, and we are also unconvinced that the existing wording of the directive is sufficiently flexible to cater for particular trade practices such as "square deal" holidays. We have no criticism of standard contract forms, as the noble Lord, Lord Broxbourne, has advocated; but we question whether it is desirable to make them compulsory in every circumstance, particularly given that the scope of the directive remains unclear at present.

My noble friend Lord Lucas wanted to know about the duty to inform and give advice to customers about a proposed holiday, and that these should be imposed on the travel agent. We do not think it would be reasonable to impose such a duty on the travel agent. He is very often not in a position ',sometimes running an extremely small business) to verify all the facts about the holiday advertised.

On surcharges which I think gave many noble Lords some concern, the Government welcome the committee's conclusion that the proposals in the directive are realistic. On a point of detail, however, we agree with the noble Baroness, Lady Elles. We see no unfairness about including in the list of surchargeable cost items dues, taxes or fees such as airport taxes and landing fees. We therefore remain unpersuaded by the Committee's proposal that this line should be excluded.

The noble Baroness, Lady Elles, said that this subject is a matter of some debate within the committees of the European Parliament. It may be helpful if I outline the Government's position in a little detail. The Government recognise that surcharges are highly unpopular and very much welcome the action taken by many British tour operators in announcing no surcharge guarantees for 1989.

We would not, however, go so far as to outlaw surcharges altogether. The fact is that the mass package travel market in Britain is fiercely price competitive, and profit margins are extremely low. Consumers of course benefit greatly from that situation. Tour operators may simply not have the margins to absorb unbudgeted cost increases and any guarantee may necessitate a substantial increase in holiday prices.

The Government believe decisions such as this should be left to tour operators' commercial judgment. We do however regard it as important that tour operators should make it crystal clear in their brochures whether they reserve the right to levy surcharges, and in what circumstances that would be done. We would be happy to see the directive amended to that effect, but otherwise we regard the provisions in the draft directive as a reasonable compromise, and we are pleased to see that the Select Committee regards them as realistic. I am not sure that that will entirely appease the noble Baroness, Lady Burton, but I shall read her speech in detail in Hansard tomorrow.

On complaints, the Government agree that the provision requiring local tourist authorities so far as possible to investigate complaints is cast in far too rigid terms. We are worried about the burden that would place on tourist authorities in the United Kingdom. We also believe that it would be dangerous to encourage tourist authorities, which will have no knowledge of the holiday-maker's contract with the tour operator, to become involved in contractual disputes between those two parties. We should be happy to see that provision dropped from the directive altogether. As for complaints in general, as the noble Lord, Lord Monson, said, the problem of strict liability is that the tour operator has no choice but to be liable for some situations that sometimes seem faintly ridiculous. I have spoken on this question already.

As regards compulsory insurance and a guarantee fund, the Government take note of the committee's comments. We agree that the ultimate scope of the directive and the extent of potential liabilities need to be clear before the practical repercussions of the provisions of the directive in this area can be properly assessed. We shall be concerned to ensure in negotiation that the directive does not impose uneconomic insurance requirements on tour operators and does not require any unnecessary extension of the UK's present Air Travel Trust guarantee fund, which works efficiently and well.

I shall now deal briefly with other questions that were raised by many noble Lords. Unfortunately, the noble Lord, Lord Graham, has just fled the Chamber. Perhaps he realised I was about to answer his questions. He discussed—to be fair, many other noble Lords also mentioned this—the cost of complying with the directive. Any estimate that is brought up is fraught with difficulty and subject to an extremely large margin of error. But our best assessment is that the directive would increase holiday prices by not less than £5 per head on average, and possibly by as much as £15 per head.

That compares with an average holiday price of £270. The Commission's claim to the Select Committee that the directive would increase prices by only 2.3 French francs, or 22p per customer is, we believe, grossly misleading. So too is the Commission's recently amended claim that the cost would be .23 of a per cent., or 23p per £100. So far as we can ascertain, the figure that the Commission uses may relate solely to the cost of financial guarantees against insolvency. It thus equates to the cost in the UK of bonds against insolvency. They usually cost a matter of pence per customer.

At this point I must disagree with the noble Lord, Lord Williams of Elvel, that all risks are insurable. That is not so. It is very probable that insurers would say that some risks must be covered by the tour operators themselves. Other risks they may cover only up to certain financial limits.

The noble Viscount, Lord Falkland, asked whether persons whose names are on a booking form had the protection of the directive. In Article 8, the benefit of the directive is given to persons on behalf of whom the booking is made, as well as the person who makes the booking. It does not do so in very clear terms however, and we shall seek to ensure that this result is achieved more clearly.

The noble Baroness, Lady Elles, asked whether tour operators had responsibility in the case of airport delays. The directive contains several provisions relevant to tour operators' liability in the case of airport delays. It states that the holidaymaker is allowed to withdraw from the holiday with full refund if there is an unreasonable delay in departure. The Government support that provision. The directive also provides that services forming part of the package must be provided punctually.

The effect of this is probably to make the tour operator liable to compensate the customer for any proportion of the holiday not provided because of a significant delay, for any additional expenses which the customer incurs as a result of such delay and also for the inconvenience he suffers. The Government take the view in principle that tour operators should not escape their contractual obligations to their clients. But in the case of delays beyond their control, it is reasonable that they should be able to limit their liability to such scales of compensation as they may publish. We shall be advancing this view in Brussels.

The noble Baroness also asked whether the directive covered package tours throughout the world. The answer is yes. The noble Lord, Lord Williams, asked how the directive would be implemented in UK law. The Government will need to consider carefully how the directive should be implemented in United Kingdom law, but it would be premature to say at the moment exactly what method will be used until the directive has been adopted. However, it is likely that it will be implemented by imposing criminal sanctions for breach of some provisions and civil sanctions for breach of others. It is unlikely that a licensing system will be introduced, but I am glad the noble Lord has drawn attention to the extra protection provided to consumers by the misleading prices indication of the Consumer Protection Act.

I now conclude by thanking again the Select Committee, and the noble Lords who have spoken tonight, for their constructive contributions. This is by no means an insignificant directive. Annual sales of package holidays are running, as I have said, at about 13 million and the directive, when it comes back in a new form, will therefore affect a sizeable proportion of this country's population. It is important that the directive comes out in a shape that is satisfactory to the United Kingdom. Your Lordships' report will greatly inform and assist our negotiators. For that we are grateful.

8.47 p.m.

Lord Broxbourne

My Lords, in case I notice a flicker of apprehension upon the brows of noble Lords, I shall instantly make it clear that I have no intention of making another speech. It would be an imposition upon noble Lords, as I have already spoken in a little detail in introducing the report. Equally however I think it would be inappropriate and ungrateful if I did not, just in a sentence or two, record my appreciation of the debate and of the speeches of the noble Lords who have contributed so persuasively and eloquently to it.

The debate has covered the main points in the report. These are the legal base, liability, brochures and advertising, surcharges and the scope of the directive. All these things are dealt with in detail in the report. Therefore, I need not say more in regard to them, except perhaps to identify where the matters are dealt with. The matter of liability is covered in paragraphs 64 to 67. Brochures and advertising come in paragraph 59. Surcharges are in paragraph 63, and the scope of the directive is covered in paragraphs 56 to 58.

I am grateful, as I am sure we all are, to my noble friend the Minister for giving us an indication of the Government's present thinking in regard to the report. I am glad to know that the Commission has been told, at any rate provisionally, that in its present form the directive is unacceptable. It should be improved. I think that there is a general opinion that legislation by a directive is desirable, but not in that form.

The noble Baroness, Lady Burton, suggested that improvements could be made both by the European Parliament and by the Select Committee. 1 do not think that it can be done by the Select Committee because I think that we are now fiinctus officio having given our report and enabled this debate to take place. There is also the Legal Affairs Committee—the Commission Juridique, to give it its formal title—of which my noble friend Lady Elles is currently the distinguished chairman. She brings great experience to that office.

Perhaps I may thank the Minister and others who have taken part in the debate. I must correct one point attributing to me the statement that in the present generation Englishmen do not travel to see other Englishmen. I should like to think that anything that Sterne wrote could be written by me, but I made a direct quotation from him and referred to what I call the age of privilege—200 years ago—and not to what I call the democratisation of travel, which I warmly welcome.

Finally, on the subject of citations, the noble Viscount, Lord Falkland, was good enough to ask me to confirm the accuracy of his citation: To travel hopefully is a better thing than to arrive". I think that that is correct, and if my recollection serves it was said by Oliver Goldsmith. If it was not, someone will inform the noble Viscount from their greater knowledge.

Baroness Birk

Robert Louis Stevenson.

On Question, Motion agreed to.