My hon. Friend touches on a difficult point, on which neither the Council of Ministers nor I have totally made up our minds. Either one forces the full protection of this directive on anyone who, in any circumstances, arranges a trip of any kind, and there is something to be said for doing that, or one recognises that a wide range of innocent, one-off, non-profit-making activities could be brought to an end if we forced on them the full rigours of the directive. It is a finely balanced argument on which we wish to await the exact proposals of the Council of Ministers before making up our minds. However, I am mindful of the difficult choice which must be faced.
The presidency proposal is a step in the right direction in that it seeks to omit from the definition trips lasting less than 24 hours. We believe that this will take day trips such as a coach trip to the zoo out of the scope of the directive. We also welcome the stipulation that, for an additional service to count towards the definition of a "package", it should not be ancillary to transport or accommodation and should be significant in relation to the contract as a whole.
With regard to the liability of the package organiser—article 5—the liability provisions lie at the heart of the proposals for a directive on package travel. The Government believe that an acceptable proposal would need to strike a fair balance between the interests of the parties, be insurable at acceptable cost and not reduce the range of holidays available. We accept that the organiser should be strictly liable for the provision of the services agreed, but where consequential damages, death or personal injury are concerned, the extent of liability should be limited in some way. I submit that the vast majority of consumer concerns about their package holidays have to do with just that principle, and I have a steady flow of correspondence on which to base that conclusion.
The presidency proposal is also a great step forward on that central issue. It proposes liability for proper performance of the contract, including non-performance due to faults of suppliers such as hoteliers and carriers. We hope, however, that the final proposal will include defences for contributory negligence, acts of third parties and unforeseeable events which could not be forestalled. In our view, inclusion of contractual limitations set by international conventions is fundamental.
As for the financial guarantees—article 7—if the liability provisions lie at the heart of the proposals on package travel, to continue the visceral analogy, those on financial guarantee must be the guts of it. The Government believe that the essence of a workable provision must relate to a free and informed choice, not only for consumers, who must be able to see by what means the organiser intends to cover his liabilities if things go wrong, but for organisers, who must be free to make the most appropriate and cost-effective arrangements. To introduce compulsory licensing of all organisers within the scope of the directive would mean excessively bureaucratic and expensive intervention by the state.
Compulsory insurance for every claim which might arise is also unreasonable and ignores the plight of very small enterprises or new companies in the sector without a track record to enable them to get insurance at economical cost. This would do no favours to consumers because, inevitably, it would drive up prices unnecessarily and reduce competition. Most packages in the United Kingdom are sold through organisers who are fully bonded against insolvency and there might be a case to require others to make arrangements which would provide protection for consumers in those circumstances. We would welcome a proposal which would underpin that approach but allow organisers flexibility to make appropriate arrangements.
At the outset, the Government placed reservations on the proposals for a directive on package travel, not only on the general content of the Commission's proposal but also on the chosen treaty base, article 100A. That is the base which was established by the Single European Act and is designed to facilitate the rapid achievement of the single market. We have been sceptical about whether there is a strong case for choosing that treaty base for this proposal, which struck us as very much a measure for the protection of consumers. On the other hand, however, package travel is a highly specialised area for a number of reasons, and in the light of the final compromise proposal and whatever justification is put forward in the recitals for a Community measure in this area, we may reach a different view.
The reasoning in favour of a balanced set of proposals which take due account of the needs and wishes of both parties must be self-evident to everyone. I invite the House to agree with the motion.