HC Deb 23 April 1964 vol 693 cc1654-62
Mr. John Harvey (Walthamstow, East)

I beg to move Amendment No. 170, in page 8, line 34, at the end, to insert: seasonal sale" means a sale held not more than twice a year for periods of not longer than two consecutive weeks in order to dispose of goods which have not been specifically acquired for the purpose of being sold at such a seasonal sale. clearance sale" means a sale held for a period of not longer than three weeks in order to dispose of goods which have not been specifically acquired for the purpose of the sale by a firm or business that is permanently ceasing to sell the type of goods offered at such a clearance sale in the shop premises in which the sale is held. At a much earlier stage in our deliberations on Clause 3, I made the point that in view of the fact that in page 3, line 30, appear the words (otherwise titan at seasonal or clearance sales) It seemed important that we should seek during the course of the Bill to define what was meant by "seasonal or clearance sales".

When I drive home from the House of Commons at night, I pass a shop in North London which has had a clearance sale for as many years as I have been driving past it. I am sure that cannot be intended to come within the meaning of Clause 3.

In trying my hand at drafting Amendments to so important a Measure I have benefited from a little more qualified advice. The definitions put in the Amendment seem to me to be both reasonable and worthy of consideration. "Seasonal sale" I suggest should be …a sale held not more than twice a year for periods of not longer than two consecutive weeks… This is in accord with reasonable and normal practice in reputable stores with their summer and winter sales for the disposal of s surplus lines.

A clearance sale is taken in my Amendment to be …a sale held for a period of not longer than three weeks in order to dispose of goods which have not been specifically acquired for the purpose of the sale by a firm or business that is permanently ceasing to sell the type of goods offered at such a clearance sale in the shop premises in which the sale is held. If that definition were accepted I do not think that it would create any sort of difficulty for the average, ordinary trader because the casual surpluses that he builds up would be saleable in seasonal sales. The clearance sale would presumably be something instituted only if he were closing down or selling out or ceasing to trade in a particular type of goods on those premises.

I believe that everything one could reasonably expect is caught under these two definitions. One or two shopkeepers have written to me since this Amendment was published in the trade papers. They seem to fear that it would prevent them from selling in sales goods specifically acquired for a sale. Of course they would not be prevented from so doing. All that these definitions would do would be to apply to Clause 3 and therefore to the conditions under which a supplier could withhold supplies or cause or procure any other suppliers to do so if a shop indulged in loss-leading.

The Amendment, therefore, has to be taken together with Clause 3. If the form of words does not commend itself to my right hon. Friend then I would be happy if he undertook to try his own more expert hand at finding a definition more satisfactory. I hope that he will at least agree that the very fact that Clause 3 refers to seasonal or clearance sales makes it necessary somewhere in the Bill to attempt to define what we mean by such sales.

Mr. Harold Lever (Manchester, Cheetham)

For the benefit of those hon. Members who, like myself, would like clarification I hope that the Secretary of State will tell us the Government's view of what constitutes a clearance sale. Most hon. Members who have to legislate on these rather out of the way points have never actually experienced a clearance sale. All we have seen of them is posters in the windows. I did not want to continue the debate until I had heard him.

Mr. Heath

I know that my hon. Friend and many other hon. Members have given a great deal of thought to this problem. When the Bill was first presented it spoke of seasonal sales and clearance sales. For the benefit of the hon. Member for Manchester, Cheetham (Mr. H. Lever), a clearance sale is a sale held by a retailer in order to clear rapidly stock which he no longer wishes to keep, and which he is therefore disposed to sell at a lower price, in order to bring fresh stock in, in the normal way.

After the Bill was presented we gave thought to the question whether there should be a more specific definition of these classes of sale, along the lines suggested by my hon. Friend—by defining the number of occasions in the year when they could be held and the length of time during which they could be held—but we came to the conclusion as we did on other occasions, including Clause 3 itself, when we attempted to be specific about the nature of loss-leading, that to adopt that procedure would introduce a considerable element of rigidity into the process, and that the best way was to amend the Clause by inserting the word "genuine" before "seasonal sales" and "clearance sales."

There is no doubt that the supplier is quite well able to judge whether a retailer is carrying on a genuine clearance sale or seasonal sale, or whether he is indulging in the type of activity to which my hon. Friend has referred by displaying the notice "Clearance Sale" permanently in his window. In the latter case the supplier could take action if he wanted to, and if that action were challenged it would go to the Court.

I suggest that it is better that the Court should judge, on the evidence, whether the sale was a genuine seasonal or clearance sale, and adjudicate accordingly, rather than that we should try to lay down a specific definition such as my hon. Friend suggests, and limit it as he does. To limit a seasonal sale to being held twice yearly is a strict limitation for most trades. We recognise at least four seasons in the calendar.

Again, on the point about a clearance sale, it is for the retailer to decide whether he wants to clear stocks which he no longer wants to hold, in order to take on fresh stocks. I suggest that we can best meet the point by the Amendment we have made, which introduces the word "genuine" into the definition, and then leave the Court, on the evidence, to decide whether this was a genuine case, or whether the retailer was disguising a perpetual sale by using misleading labels. I hope that my hon. Friend will realise that we have thought about this a great deal. We have tried to find the best solution. I think that it is better for the Court to give its decision when the matter is challenged.

Mr. H. Lever

I am glad that I made a brief intervention, seeking clarity. The result of hearing the Secretary of State has been to reinforce the shock I felt at the whole manner in which the Bill has been prepared and presented. Here we have a situation where a man is compelled to supply a trader who demands supplies from him, under pain of unlimited damages for breach of statutory duty if he wrongly withholds goods. The question whether he is entitled to withhold them depends on his assessment whether the man to whom he is supplying the goods is guilty of loss leading, whatever this new language introduced in the Bill means.

He mast assess whether the man who is demanding supplies from him has been guilty of loss leading. This may depend on whether the man has been having a genuine clearance sale. When we seek to find out what a clearance sale is we find that there are 10 or 20 ideas on the subject. Some hon. Members would regard a clearance sale as being testable in point of time—that is to say, if a trader is having a clearance sale more or less all the year round it is not a genuine clearance sale. But why not? Why cannot a man have a clearance sale for six months of the year?

From the Secretary of State's definition it sounded like an ordinary sale of any ordinary articles. He said when a trader has stock and wants to clear it, then it is a clearance sale. I thought that was why traders take stock in the first place—not as a sort of aesthetic adornment of their establishments but to clear or sell it out of the place. In terms of time, we are not very much helped by the suggestion of the Secretary of State. He has not told us whether he would regard a man as not have a genuine clearance sale if he had it all the year round.

11.0 p.m.

The hon. Member for Walthamstow, East (Mr. J Harvey) obviously thinks it is not a clearance sale if he is clearing all the year round. If he were a supplier and he came to the conclusion that the person he was supplying was not holding a genuine clearance sale because he was clearing all the year round, and he refused supplies he may face an action for damages, be ruined by it, bankrupted, and incidentally disqualified from sittting in the House of Commons, a; a result of not being able to define a genuine clearance sale. We could lose a very valuable Member of the House simply because he took a different view of what was a clearance sale, which most Members would consider lamentable. I do not think that the hon. Member wishes to expose the manufactures of this country to financial ruin and lawsuits for unlimited damages. He should have some precision in what it is that entitles him to refuse supplies to a retailer.

The Secretary of State has descended to the depths of illogicality when he says, "I am a reasonable chap. Since you do not understand what a sale is and want it defined more sharply, I am going to solve your difficulties. I am going to insert the word 'genuine' before the word 'sale'."

By this sort of logic, if we did not know what a dishwasher was and found the term ambiguous, our difficulties could be solved by inserting the word "genuine" before the word "dishwasher" We could make the character and description of an object clearer by talking about a "genuine" dishwasher or a "genuine" clearance sale.

Let us start with the assumption that a clearance sale might be regarded as the unknowable, indefinable or very unclear and ambiguous. Now we have a genuine, unclear; ambiguous, unknowable and indefinable condition that entitles a manufacturer to refuse supplies. But if he has the definition wrong and is ruined by the Secretary of State, who is supposed to represent and encourage the leaders of industry in this country. I feel very sorry for the manufacturer. One can imagine board meetings where the manages says, "We have this man in Manchester who wants supplies and who says he will sue us for unlimited damages if we do not supply him." The chairman says, "I am not going to supply him because I think he has been having some clearance sales that were not genuine." The other chap says, "How do you know? What is a genuine clearance sale?"

The Secretary of State obviously did not know what a clearance sale was, because he did not venture to give any definition of it to the House of Commons. The one he did give was plainly a definition of every sale that takes place in any shop at any time, so a clearance sale is any sale or anything any judge cares to think it means. When we asked him to define it so the manufacturer may have some plain words to guide him, the Secretary of State thought he had done his job by inserting the word "genuine". He confers upon the High Court judges, with their vast experience in clearance sales, the duty of defining whether a man shall be ruined or not depending on whether a clearance sale was genuine or not. It is monstrous.

I submit we are failing in our duty if we do not exact from the Secretary of State a better undertaking than merely to insert the word "genuine", which adds nothing to the clarity of the term whatever, and if the Committee does not insist on a better definition of the duties, obligations and rights with some greater sharpness than has been the case so far.

Sir John Eden (Bournemouth, West)

Could the hon. Member help us by suggesting a form of words which might be suitable to him?

Mr. Lever

This is not my Bill. Although I do my best to make modest contributions from time to time to our debates, I do not think I am called on to be a Government draftsman. It is for the Government to draft their Bills, not for hon. Members to do so.

Sir D. Walker-Smith

Would not the criterion be what is "the dominant purpose of the sale"—to use the words in a famous judgment in another context with which the hon. Member for Manchester, Cheetham (Mr. H. Lever) will be very familiar? If the dominant purpose is to effect a commercial sale for the best price available, that is one thing. If it is to clear stock to make way for other stock, that is a clearance sale because the dominant purpose is not the commercial one of making the best profit, but simply to replace other stock. Is not that the logical distinction between the two?

Perhaps while I am asking these questions I may ask the hon. Member another one. He referred to his serious sense of shock. May I ask what has lulled it in the last few days and what has re-stimulated it to bring us the pleasure of his company tonight?

Mr. Lever

I am grateful to the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) for his very helpful intervention. He also will realise that, if anything, he has corroborated the need for a closer definition because he has been saying that the Court will have to inquire into the mind of the man who is selling. It will have to know whether he sold an article in this way to attract custom by selling at a loss or simply to dispose and get rid of it. It becomes a psychological question for the High Court judge. As well as having to decide what is and what is not a clearance sale, he will have to investigate the psychological condition and motive in the mind of the man making the sale.

If the right hon. and learned Member wants a Roland for his Oliver: The devil himself knoweth not what is in the mind of man. It is this unknown quantity which the Secretary of State suggests should be explored, but it is something with which the judge will not be particularly familiar.

The right hon. and learned Member also asked whether my sense of shock and resentment about the Bill was lulled in the last few days. It was because I had not wanted in any way to delay or engage in any unnecessary argument about the Bill. I felt that the most helpful thing in the last few days was not to interfere with the serious family warfare, the fratricidal and suicidal strife which was raging in the Conservative Party. Some of us have a sense of tact. It was only when I came into the Committee and found the atmosphere of benign, brotherly affection existing for the first time for a considerable period between the Government and their supposed supporters that I felt able to inter- vene without, as it were, opening a wound. The right hon. and learned Member must acquit me of anything but the kindest motives in the prevailing atmosphere in the Conservative Party.

I also did not interfere because I hoped that the Secretary of State would not be in the vitriolic mood he was in not long ago.

Mr. Shepherd

Will the hon. Member help us by telling us exactly why he came here tonight?

Mr. Lever

I do not wish to lengthen my intervention, but I thought this was a serious point and it was raised in all seriousness. The fact that I raised it in, I hope, not an excessively tedious way, does not alter the fact that I came in to hear the debate. Many hon. Members do so and many do not—as can be seen by the numbers on the benches on this side of the Committee and the numbers opposite. I happened to come in to hear the debate and had no special view until I heard hon. Members on the Government benches and the totally unsatisfactory reply of the Secretary of State. I submit in all seriousness that we have failed in our duty in relation to this Bill in that we have imposed on people obligations of a most grave character

The right hon. Gentleman does not challenge the accuracy of this. One of the mischiefs of this mischievous Bill is that the supplier, before refusing supplies, has to take it upon himself to determine whether it is a clearance sale or is likely to be held by the High Court judge to be a clearance sale. He has no means of deciding except by sticking out his neck and risking total ruin if he makes a wrong decision about whether there has been a clearance sale.

I urge the Minister not to be content with words such as "genuine". He should not take it for granted that the legislature or the High Court or manufacturers are experts and authoritative on the question of what is a clearance sale. When he studies his words in HANSARD he will see that he left the matter in the greatest state of vagueness and doubt. I know that he is an open-minded man when he is not discussing the Leader of the Opposition and that he will look at this matter with candour and afresh to try to put it in sharper and more reasonable form from the point of view of those who incur liabilities as a result of the Clause.

Mr. Jay

Whether the Committee has suffered a substantial, genuine detriment by losing my hon. Friend the Member for Sheffield. Brightside (Mr. Winter-bottom) and gaining my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever), I do not know. Nevertheless, some of us on this side of the Committee believe that on this point the Minister has probably found the best solution.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clause 12 ordered to stand part of the Bill.