§ Order for Second Reading read.
§ 3.57 p.m.
§ The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)
I beg to move, That the Bill be now read a Second time.
The Bill has two principal purposes—first, the promotion of increased economic efficiency and, secondly, the protection of the consumer against unfair trading practices. It is as well that there should be no misunderstanding about the way in which these two purposes are complementary to each other.
They are both founded on the Government's firm belief that competition provides a means of diffusing power and responsibility throughout the community and of continually widening the area of freedom and opportunity. Competition provides spurs to efficiency and incentives to seek out and supply the varied wants of the consumer and methods of sharing the benefits of technical progress in lower prices and higher incomes. Finally, it offers the means of discovering what to produce and where and how to produce it. It is on that basis that the Bill recognises and in no way impairs the importance of the role played by the army of traders, entrepreneurs and retailers in our market economy. By serving themselves, all these people serve the wider community as well, and the Bill is clear in its acknowledgement of that.
But the Bill acknowledges two other factors as well, factors that market economists have acknowledged since the days of Adam Smith, and before that for all I know. The first of these is that competition is not an automatic panacea and that the freedom it provides may be used to concentrate power, to limit competition, and may be used in ways contrary to the public interest. It thus requires—in the interests of the community as a whole, within a properly designed framework of law—a competition policy. The second factor is that the sovereignty of the consumer, which is the most important element in the operation of the free competition market, is not to be taken for 454 granted. Consumer sovereignty requires that the consumer should be adequately and accurately informed and adequately protected against unfair or misleading marketing techniques, and adequately protected, finally, against abuse of market power, monopoly or aspects of imperfect competition.
Just as fair trading is good business, so consumer protection is itself an integral part of the market economy. That is why competition policy needs to be considered, as it is in the Bill, as a whole. It is this integrated view of a competition policy that leads to the first institutional innovation proposed in the Bill—the appointment of a Director General of Fair Trading. This is an important change from the present position, in which Ministers, with the help of their Departments, are required to undertake a diversity of tasks, keeping under review the general workings of competition in the economy, conducting preliminiary examinations of mergers, deciding on references to be made to the Monopolies Commission and taking appropriate action following adverse reports by the Commission.
The Government have concluded that, given the specialist and detailed nature of the work and the need for continuity in its performance, it could best be done by an independent official body. In most other countries that have an active competition policy, this task is already performed by a separate Government agency—for example, the Federal Cartel Office in Western Germany.
The possibility that this function could properly be given to the Monopolies Commission itself has been considered, but the Government have decided instead in favour of the appointment of a distinct and independent agency in the person of the Director General. This has the advantage of maintaining, as an impartial, quasi-judicial body, the Monopolies Commission.
Apart from this, the present institutional framework for the promotion of competition remains broadly unchanged. The Monopolies Commission, which is to be renamed the Monopolies and Mergers Commission, will retain the function of investigating those matters referred to it. The Restrictive Practices Court will also retain its present place, but the scope of its work will be significantly expanded.
455 The Director General of Fair Trading, however, will now be working alongside these two bodies. His or her appointment is provided for in Clause 1, and under Clause 2 his general duties are defined. They are: keeping under review monopoly situations and uncompetitive situations, keeping a constant watch on consumer trade practices, as defined in Clause 3, which might adversely affect the economic interests of consumers, and giving information and making recommendations generally to the Secretary of State or other Ministers for action on these matters.
The Director General is given further specific powers under Parts II and III of the Bill. Under Part II, these powers include making proposals for the exercise of the order-making power in relation to trading practices which are found adversely to affect the economic interests of consumers, and under Part III to take action against people who consistently maintain a course of conduct which is unfair and detrimental to the interests of consumers.
Under the monopolies and mergers provisions of the Bill, the Director General is empowered under Clause 46 to make monopoly references to the Monopolies and Mergers Commission, and in that respect he is subject to the broad policy direction of the Secretary of State and to an ultimate right of veto, which must be exercised openly.
By Clause 71, he is required to vet mergers and to make recommendations as to merger references and to advise and assist Ministers in the implementation of the commission's findings, including the negotiation of voluntary undertakings, where possible. When he is conducting preliminary investigations into monopoly situations, the Director General will additionally have a limited power, conferred by Clause 40, to seek information of an essentially statistical kind to assist him in deciding whether to make monopoly references.
In relation to restrictive trade practices, the Director General will take over the functions and staff of the Registrar of Trading Agreements. He will also have other powers and functions which we shall have further opportunities to examine.
456 I propose now to invite the House to take a closer look at the role of the Director General in relation to consumer protection. Consumer protection is an on-going task, which calls for continuing action because the consumer has to exercise his important influence in a world of continuing change. An increase in disposable income gives rise to an increasing number of decisions as to what to buy. The choice available for the consumer becomes increasingly wide. Goods and services available themselves become increasingly complex and, at the same time, some of the enterprises with which the consumer must deal become increasingly monolithic.
Perhaps the most important of all these changes are the continuing changes in the techniques of marketing and promotion, new ways of persuading the consumer to enter into a transaction, new ways of arranging the transaction and new ways of arranging payment for a transaction. Many of those changes themselves extend the field of consumers' influence and the field of his choice, but some of them increase the hazards to which the consumer can be exposed. That is why there is already much protective legislation on the Statute Book, introduced from time to time to bring consumer protection up to date.
One of the most important provisions of this kind has in practice proved to be the Trade Descriptions Act, 1968. Although that was introduced by the last Labour Government, it was of course largely founded on the recommendations of the Molony Committee, appointed by the preceding Conservative Government. This therefore illustrates the broadly bipartisan approach to much of this field.
On Second Reading of that Act on 22nd February 1968, the then Minister of State at the Board of Trade, the right hon. Member for Sheffield, Hillsborough (Mr. Darling) described the Bill as…a charter for fair trading which will serve as basic law for a long time to come".—[OFFICIAL REPORT, 22nd February 1968; Vol. 759. c. 675.]It is right to acknowledge that the 1968 Act has indeed proved, not least due to the enforcement efforts of local weights and measures authorities, an extremely effective one, but, in retrospect, I dare say 457 the right hon. Gentleman would acknowledge that it has not fulfilled all his expectations.
The Act dealt quite comprehensively with the practice of misdescription, but misdescription is of course only one of the practices that can be unfair to the consumer. It is possible, for example, without using a single word in a deceptive way, to subject a consumer to a contract of sale which is quite inequitable. There are other examples which have been raised in the House in recent weeks and also over the years.
The truth is that, in a complicated and changing world, it is always possible for an astute minority of traders—I emphasise the word "minority"—to devise new ways of outwitting the consumer. In the face of changes of that kind, Parliament in general has to find time for a new Bill every time a new abuse hits the headlines. That is not always easy or even possible, as the House will appreciate.
That is why the Government have decided to introduce this Bill, which will provide, with suitable safeguards for the overwhelming majority of fair traders—I emphasise the word "majority" as well—a much more flexible machinery for responding to changing consumer needs for protecting the consumer against new unfair trading practices as they are identified. In the office of the Director General of Fair Trading, the Bill creates this machinery, whereby a continuing watch can be kept on new developments which are likely to damage the consumer's economic interests.
I emphasise that this does not mean an army of central Government snoopers prying into the affairs of those engaged in business. It means the creation of a focal point of experience of unfair practices, at which information can be gathered from all sources, including in particular the weights and measures authorities who obviously have, from their existing activities under the existing law, a wide knowledge of how the market place works, and that information can be impartially assessed. Clauses 1, 2 and 3 essentially bring that basic machinery into being.
It is Part II which establishes the system whereby trading practices which are found, after full and proper consideration, to have a really adverse effect on 458 the economic interests of consumers, can be dealt with by statutory order, subject to the affirmative resolution of both Houses of Parliament. That machinery can be activated whenever the Director considers that a particular abuse has undesirable effects that merit regulation. But before the machinery can produce an order for the approval of Parliament, there are a number of checks and balances to he taken into account. I am sure that the House will agree that they are essential, given the wide-ranging powers that the Bill will provide.
Clause 17 provides, when the Director considers that a particular practice has one or more of four undesirable effects, that the Director can submit proposals for new regulations to the Consumer Protection Advisory Committee. The committee will consist of people possessing the kind of experience that will enable them to judge properly matters of that kind. That is set out in Clause 4. It will consider whether it agrees with the Director's proposals, which will be published. It will take into account representations from persons who have a substantial interest in the matter.
It will submit a report to the Secretary of State setting out whether it agrees that the practice adversely affects consumers' interests in the way that the Director has said it does, and whether it agrees with the proposals for new regulations which he has submitted to it. It is only when the committee has agreed with the Director's proposals for new regulations or with modifications to those proposals that the Secretary of State may make a statutory instrument to carry the proposals into effect. That is set out in Clause 22.
As I have said, an order of that kind will be subject to the affirmative resolution of both Houses. Such orders will be able to ban particular practices or to allow them to continue subject to certain requirements, some examples of which are set out in Schedule 6. The responsibility for enforcing such orders will be placed upon local weights and measures authorities, who already have experience in that direction.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
Is it intended that the experience which has been accumulated by the weights and measures inspectors 459 should be made available to the Advisory Committee or to the Director General? As enforcement officers, they will have a lot to contribute to the understanding of how best to proceed.
§ Sir G. Howe
I am grateful to my hon. Friend for raising that matter. The weights and measures inspectors have a great deal of experience, which will be made available to the Director in a number of ways. First, the existing provision, whereby weights and measures inspectors report to the Department of Trade and Industry intended prosecutions, will be changed so that they report intended prosecutions to the Director General. He will, in addition, be able to receive information submitted to him from the inspectors, formally or informally. He will also be able to receive information from any other source. He will produce an annual report and additional reports as he thinks necessary.
It is expected that there will be a series of antennae available not only to the inspectors but other people who are active in such matters. It will become the depositor of much of the wisdom which they have to contribute. There will be a centralisation of that kind of information.
The powers that are given by the Bill and the provisions concerning penalties and offences are virtually the same as those set out in the Trade Descriptions Act 1968. It can be concluded that Part II establishes a reasonably swift and sensitive piece of machinery that will enable Parliament to respond to consumer grievances about the state of the protective law.
One point worth noticing about Part II is that it extends significantly the area within which compensation can be available to an aggrieved consumer. The House will recall that the Criminal Justice Act, which comes into force at the beginning of 1973, was subject to an amendment moved by the right hon. Member for Birkenhead (Mr. Dell) to provide for compensation to be payable in respect of convictions under the Trade Descriptions Act.
The same provisions of that Act will apply from 1st January 1973 to convictions for offences under subsequent legislation in the same way as they apply to legislation already on the statute book. 460 Therefore, there will be no need to write into the Bill any special provision to ensure that a consumer is eligible to receive compensation for personal injury, loss or damage resulting from conviction of an offence against a statutory order made under Clause 22. That is important, although by no means a complete expansion of the area in which compensation will be available.
The provisions of Part III have a different but equally important purpose. They aim to bring about a sharp reduction in the number of occasions in which a consumer will have to complain about a denial of his rights under the law as that law has been enacted by Parliament.
The purpose of Part III is to create a climate in which the overwhelming majority of traders, who deal fairly with the public, can continue to flourish without interference and in which the minority of traders, who maintain an unhelpful attitude to the justified complaints by consumers, will see sense and, in the end, the necessity of mending their ways and improving their standards.
The way in which we aim to bring about a reduction in the number of occasions on which consumer grievances will arise is that set out in Part III. The Director, under Clause 35, will be able to take action in the courts against traders who persistently conduct their business in an unfair, unsafe or unhelpful way. Any trader who has been convicted of a series of criminal offences—for example, under the Trade Descriptions Act or the Food and Drugs Act—or who has committed a series of breaches of contract is likely to attract the attention of the Director.
He will first be invited voluntarily to mend his ways. If he declines to do so or fails to keen an undertaking to do so, the Director will be able to take him, as the Bill provides, before the Restrictive Practices Court, which may accept an undertaking that he will act differently in future Or make an order specifically requiring him to do so. We expect the provisions to operate in the main by conciliation and voluntary response. The provisions enable the Director to do a great deal to bring the performance of the laggard minority of traders up to the standards of the best.
The provisions of Part II and Part III taken together represent a leap forward 461 in the protection of the consumer which outdistances any taken in the past.
§ Mr. Ted Rowlands (Merthyr Tydvil)
Can the right hon. and learned Gentleman tell us whether the provisions which he described at the beginning of his speech cover contracts between home buyers and builders?
§ Sir G. Howe
The definition clause at the end of the Bill defines goods as including houses, or services relating to the provision of housing.
§ Mr. Michael Meacher (Oldham, West)
Will the right hon. and learned Gentleman tell the House how an individual claimant, without going through all the cumbersome and expensive procedures of the courts, can get redress apart from the use of the Criminal Justice Act, which is very unlikely to come about?
§ Sir G. Howe
I will deal with that point later. I remind the hon. Member that the provisions of the Criminal Justice Act attach themselves to the Trade Descriptions Act. Any new orders made under the Bill will extend the area in which an individual aggrieved consumer can get compensation if criminal proceedings are being brought.
§ Mr. John Smith (Lanarkshire, North) rose—
§ Sir G. Howe
I do not want to give way. I appreciate that this is a matter which needs further consideration and I will say a word or two about it in a moment.
I turn to the provisions concerning monopolies, mergers and restrictive practices, which are not as formidable as the scale of the Bill suggests. A great part of the Bill's size is due to the fact that we are repealing and consolidating the basic statutes of 1948 and 1965.
The main changes were mainly fore-shadowed by my right hon. Friend the Chancellor of the Duchy of Lancaster when he was Secretary of State for Trade and Industry on 17th December 1970. I take this opportunity of paying tribute to him and to my right hon. Friend the Member for Argyll (Mr. Noble) for the extent to which the Bill is the result of their work over many months past.
I will identify the main changes. The proportion of the market, including im- 462 ports, by reference to which the monopoly situation is defined, is to be reduced from a third to a quarter. In addition, Clause 10 brings local monopolies within the scope of the legislation for the first time. We thought it desirable to widen the field of reference of the Monopolies and Mergers Commission to cover potentially at least a greater number of situations in which the provisions for the exercise of monopoly power may be present. That does not mean that firms which have a quarter share of the relevant market will automatically be referred to the commission in future, or anything like it, any more than references have been made automatically in the past. But it does mean that it will be possible to deal effectively with all these situations, national or local, where lack of competition may be impairing efficiency or harming the consumer.
We have also decided that the provisions relating to the form of monopoly references should be simplified, so that once the commission has confirmed that a monopoly situation exists it should be able to proceed straight on to an assessment of whether practices of the kind specified in Clause 45(3) are against the public interest. This is a useful alternative to the traditional more wide ranging inquiries.
We have also decided to drop the proviso in Section 3(2) of the 1948 Act, under which common action by firms as employers cannot in any circumstances constitute a situation about which a reference can be made. There appears to be no reason why monopolistic practices by firms acting as employers should be wholly exempted from inquiry.
One significant change concerns the nationalised industries. The Government consider that it is anomalous that the monopolies legislation which applies to private industry should not also apply to them, and we have therefore decided to remove the present restrictions on the reference of statutory monopolies, for it may be desirable to seek the commission's views on the consequences for the public interest of the way in which a statutory monopoly is exercised. It is the Government's view, however, that in such cases—broadly defined in the first part of Schedules 5 and 7—Ministers and not the Director General should take 463 the responsibility for calling in the Monopolies and Mergers Commission.
The mergers provisions in Part V of the Bill reproduce with little substantial modification the provisions of the 1965 Act. The Secretary of State will continue to have the sole power to initiate merger references, but the Director General will be able to draw such matters to his attention and to make recommendations about them. There are no changes in the special provisions relating to newspaper mergers.
As regard other mergers, there will be two changes. First, the market share criterion for merger references will also be reduced from one-third to one quarter, but the size of assets criterion will remain at £5 million. The second change is the introduction of a new power in Clause 65(3) to refer to the commission, not the broad question of whether a merger as a whole would be contrary to the public interest, but a narrower question relating to a particular aspect of a merger which gives rise to concern.
I am not now able to discuss further the many questions that arise in connection with the making and consideration of merger references. My hon. Friend the Under-Secretary of State for Trade and Industry dealt with some of these on 24th November 1972, when he explained that we are now reviewing them.
§ Mr. Eric S. Heffer (Liverpool, Walton)
But surely the right hon. and learned Gentleman is not going to dodge round Clause 74, which relates to the question of labour restrictive practices. Is he not going to explain why it has been included in the Bill? Will he not also explain why it applies only to the trade unions, particularly the blue collar workers, while it in no way affects the professional people, such as barristers, solicitors and so on? Why is it directed against the trade unions and not against the professions?
§ Sir G. Howe
I intend to and shall deal with both those points. Even had I not intended to do so, the hon. Gentleman's presence would have inspired me to do so, because I can well imagine that this is where he has a particular interest in the Bill.
§ Sir Tatton Brinton (Kidderminster)
My right hon. and learned Friend is apparently about to leave Part IV and Part V. Why does the Bill in general not contain any criteria on which the public interest should be judged by the commission when a reference is made to it?
§ Sir G. Howe
I was not going to leave that matter but was about to refer to it.
The form of the Bill, in particular Clause 79, exposes our view that it is not only difficult but may well be positively undesirable, despite the pleas for certainty which are made from time to time—for example, over last weekend—to provide an inflexible check list on such matters. The right hon. Member for Grimsby (Mr. Crosland) dealt with this in a way which seems to me to represent the practicalities of the situation on a number of occasions when he said that a rigid series of criteria…would impose a degree of rigidity which would make no sense in a country so heavily dependent on international trade and so subject to international competition as we are in Britain. It is not even clear that they would eliminate uncertainty."—[OFFICIAL REPORT. 17th April 1969; Vol. 781, c. 1358.]He put the conflict perhaps more clearly when he said, on 28th February 1969:…it is difficult to lay down guide-lines which are not either so platitudinous as to be useless…or so rigid or inflexible as to stop many desirable mergers.That does not mean that we have not given consideration to the points raised by my hon. Friend the Member for Kidderminster (Sir T. Brinton).
In Clause 79, however, I would draw particular attention to three features which are taking the place of Section 14 of the 1948 Act. It contains explicit reference to the desirability of maintaining and promoting effective competition, the interests of consumers, and the balanced distribution of industry and employment within the United Kingdom. We can discuss these things in detail at a later stake, but I hope that I have answered my hon. Friend in general terms.
§ Mr. Bruce Millan (Glasgow, Craigton)
Quite apart from what is in the Bill, what we want to know is whether the Government are going to adopt a more active policy towards referring mergers to the commission. In 1971, for example, out of 110 mergers which came within the existing criteria, only one was referred 465 to the commission. Is this to be the trend in the future?
§ Sir G. Howe
The hon. Gentleman will find his answer in column 1829 of HANSARD of 24th November. It was given by my hon. Friend the Under-Secretary of State.
§ Sir G. Howe
I repeat what my hon. Friend said about what the Secretary of State intended to do. My hon. Friend said that the Secretary of State…intends to make greater use of the Monopolies Commission in major mergers, and if there is doubt as to whether a reference is desirable the balance is likely in future to be struck in favour of referring rather than not ref erring."—[OFFICIAL REPORT, 24th November 1972; Vol. 846, c. 1829.]That was the position stated to the House a couple of weeks ago.
Parts IX and X of the Bill relate to the restrictive practices legislation. This legislation has proved to be invaluable in ridding the economy of restrictive agreements in the production and supply of goods. Here I am sure that the whole House would wish to express its appreciation of the admirable way in which Sir Rupert Sich, who has held the post of Registrar since its inception, has carried out his task. The duties of the post will now be transferred to the Director General.
The changes which are being made in the legislation are largely technical and are set out in Part IX. The major change in the scope of the legislation is in Part X which extends it to commercial services, a large and important sector of the economy. This is a logical development of competition policy. In 1965, monopolies legislation was extended to the supply of services and there has subsequently appeared to be no reason to believe that restrictive practices in the provision of such services are likely to be in the public interest.
Restrictions in the supply of professional services—a point mentioned by the hon. Member for Liverpool, Walton (Mr. Heffer)—raise issues different in kind from those raised in connection with goods and commercial services. This was recognised in the general report of the Monopolies Commission published in 466 October 1970. The relationship between a practitioner and his clients is not purely commercial. Restrictions may well be justified to safeguard proper professional standards in the interests not only of the client but also of the public generally. There can be no overriding presumption that restrictive practices in the supply of professional services are against the public interest, although, again as the Monopolies Commission pointed out, some of them may be.
The restrictive practices legislation would therefore be inappropriate for professional services. They are listed in Schedule 4. But that does not imply that the Government intend to remain inactive in relation to professional practices which may give rise to justifiable public concern. On the contrary, for particular professional practices, or the practices of individual professions, can, of course, be referred to the Monopolies and Mergers Commission for inquiry and report. That was the procedure recommended by the Monopolies Commission in its 1970 report, and the Government have that recommendation well in mind.
§ Mr. Douglas Jay (Battersea, North)
As it is now two years since the Monopolies Commission's Report on Supply of Professional Services, can the Minister tell us what the Government have done to follow up the report in the last two years?
§ Sir G. Howe
I have expounded to the right hon. Gentleman the position of the Government at present. I hope that he will mark what I have said. I have drawn attention to the distinctions made by the report.
§ Sir G. Howe
The right hon. Gentleman must wait and see. I have told him that the Government do not intend to remain inactive. He must contain his impatience for a little longer.
I turn now to the provisions in Clause 74 whereby the Secretary of State can ask the commission to report on practices, whether of employers or employees, which may unjustifiably restrict the use 467 of labour. The reason for the introduction of this new type of "study" reference is that the Government believe it is desirable to take power to investigate the economic aspects of restrictive labour practices, to establish the nature and extent of such practices, and to determine how far they may be contrary to the public interest.
The Bill provides only for the commission to investigate the wider economic implications of such practices. There is no provision for subsequent orders, sanctions or penalties of any kind, either on organisations or on individuals.
That appears to be an entirely sensible, practicable and worthwhile conclusion, in line, incidentally, with those foreshadowed on behalf of the Government before the General Election.
Before I close I want to say a few words about the place of the Bill in the whole policy of the Government in relation to consumer affairs. The Bill is just one consequence of the detailed study of the consumer's current needs and problems. It deals mainly with one area of commercial policy. It will enable Parliament, with the assistance of the Director General, to keep consumer protection law up to date. It will enable the Director General to play a significant part in ensuring that the minority of unfair traders live up to the standards observed by the best. It will enable a larger number of consumers but by no means all to obtain compensation for their grievances.
Even so, I am the first to recognise that there are other matters equally deserving of attention. There is, for example, the question of consumer advice—local, accessible advice to enable the individual consumer to sort out his problems. Purely legal advice will be more easily available next year due to tile Legal Advice and Assistance Act. But the greatest need is still for informal advice and conciliation. This is already available from over 500 citizens advice bureaux and from those local authorities which have set up their own consumer advisory services.
Without wishing to belittle what is already being achieved, we must recognise that there are parts of the country in which that kind of advice is still not 468 available. I hope as part of a continuing programme to be able to identify ways in which the Government can act to secure the establishment of a network of local consumer advisory services that will be comprehensive and nationwide.
Another important area is that of consumer redress. There will always be difficult cases in which conciliation does not succeed. How then can the consumer get his wrongs righted? And how then can the trader secure fair disposal of complaints brought against him?
I appreciate the dissatisfaction which exists with existing machinery to deal with consumer claims and I understand why one should be reluctant to go to law, particularly about a relatively small transaction. The major changes in county court procedures which came into force last March were aimed primarily at making the courts simpler, cheaper, swifter and more approachable.
But there are many who argue that we should go further still in improving the existing machinery. Clearly we cannot cover all these areas of consumer need at once. I am very ready and willing to listen to those who have ideas for disposing even more simply and expeditiously of consumer complaints and, indeed, I am willing to study the limited experiments that have so far been initiated.
I hope that this makes it plain that the Bill must be regarded as just one part of what is and must be an evolving and continuing policy. The Government are well aware that policy in this field is not to be found wholly or even mainly in legislation. The Government are also aware of the importance of keeping in mind the invaluable part played by industrialists and traders in serving consumers as they serve themselves.
Effective publicity, effective voluntary schemes evolved by trade and industry itself, have played and can continue to play a vital role in combining the virtues of competition with the good business sense of serving the consumer.
There is nothing in the Bill which need be feared by those honest, good, traders who make up the large majority of British commerce. On the contrary, there is much that they will welcome.
The Bill will indeed make an important contribution to the fair and open operation of the free market system, by 469 means of which consumer, producer and distributor are conducted by an invisible hand in the service of each other's needs.
Upon that basis I commend the Bill to the House.
§ 4.35 p.m.
§ Mr. Alan Williams (Swansea, West)
I fear that the speeches from this Front Bench and from hon. Members on the back benches on both sides will he characterised by an unusually large number of questions about detail, perhaps more so than is usual in a Second Reading debate. This is inevitable, because there has been no White Paper before presentation of the Bill to explain the Government's thinking.
For over a year the Government have carried on a process of concealed consultation. The Confederation of British Industry has been told. The Trades Union Congress has been consulted. The Consumer Association has been consulted. The House of Commons has not been consulted. Within the last year two documents have been circulated by the Government both classified as confidential. I need not remind the House how seriously the Government take the classification of confidentiality, carrying with it the massive power of the law, the threat of secret police swoops, and hurried searches through documents in offices.
Ministers laid down more than a year ago not only that the Opposition should not be allowed to see what the options were that were available to the Government but that their own back bench lobby fodder would not be allowed to participate in the process of evolving Government policy. I appreciate that the Minister recognises that there are on his own back benches many potential national disasters, but I do not see any of them as security risks.
The public were not consulted. One can almost hear the Prime Minister saying, "These proposals are about consumers. What has that got to do with the public?" Surely if there is any issue in which there should have been consultation and public participation, it is an issue on which every housewife probably knows more than any Minister.
Where is the Government's promise of open government now? Indeed, what does "open government" mean? It 470 would be presumptuous of me, as it was not my phrase, to offer a definition. Instead, I take the most up-to-date definition available to us, that given at the Dispatch Box yesterday by the Prime Minister:Open government consists of the Government's having the opportunity to consider the options and publishing them in a Green Paper, or in another way, for public debate in the House."—[OFFICIAL REPORT, 12th December 1972; Vol. 848, c. 233.]That is the Prime Minister's concept of open government—publishing options for those options to be discussed in the House.
Where is the green paper? Where are the options? Instead, we have been presented with a governmental fait accompli. The Prime Minister's pious comments at the Dispatch Box yesterday are just another example of his contempt for the House and of his hypocrisy when he talks of open government. The Prime Minister does not want his left face to know what his right face is doing and his style percolates through the Government.
§ Mr. Williams
We shall see how much of a nonsense it is. It is already established that there was no consultation and no opportunity for it. The Government produced this complicated Bill of 123 clauses and 13 schedules only 12 days before we have to discuss it. I have no objection to such haste if it will get extra protection for the consumer. But it is understandable that hon. Members have had difficulty in carrying out proper consultation about the significance of the Bill.
Last week I telephoned the Minister's Private Office and explained the predicament of the ordinary, non-lawyer Member trying to find his way around a massive legalistic document. I asked whether it would be possible to have a copy of the Press handout. Surely there is nothing more innocent than that. The handouts are available to every Tom, Dick and Harry in the Press Gallery. But they are not available to the Opposition. To this day I have not seen a copy of a Press handout. Before I returned to "shadowing" Trade and Industry, I "shadowed" the Department of Education and Science, and I can tell 471 the hon. Gentleman that the Under-Secretary at the Department acted with far more courtesy to the Opposition than does the hon. Gentleman, because Press handouts were automatically sent to us.
The Minister may recollect that when the then Paymaster-General and I were piloting the Gas Bill through its Committee stage in the last Administration he and his right hon. Friend, the present Minister of Posts and Telecommunications came to me part of the way through the proceedings and asked whether they could consult my officials on points of fact. I readily agreed to this, yet here we are today without any preliminary discussion, without a preliminary outline of the Government's thinking. We have had no White Paper and we have been unable to get even a copy of the Press handout. This is hardly a good start on the long road to consumer emancipation.
§ Sir G. Howe
I wanted to go as far as I could in checking the facts of what the hon. Member has been saying. I recollect that at some point last week an inquiry came to be personally about whether a copy of the Press handout could be made available to an hon. Member, I think on the Opposition benches. My response was, "Yes, certainly." I have not been able to check whether that inquiry came from the hon. Member but there would be no intention of withholding that kind of information. If the hon. Member was so denied, I am sorry that it happened.
§ Mr. Williams
I thank the right hon. and learned Gentleman. I give him my assurance that I would not have made such a statement if the facts were not as I have given them. I have not seen a copy of the Press handout. I did make such a request. Since we appear to have created a mood of temporary good will, it would be helpful to establish the kind of practice operated by the Department of Education and Science, certainly on the higher education side, and to make arrangements for Press handouts to be sent to us as a matter of course. It would be extremely helpful.
The right hon. and learned Gentleman spoke clearly and legalistically for over 35 minutes. It was the clearest, most legalistic and longest confessional in the long history of repenting sinners. The 472 right hon. and learned Gentleman admits that the Government were wrong to execute the Consumer Council instead of strengthening it, as wrong as they were to abandon investment grants, to declare their "lame duck" policy and to condemn prices and incomes policies. More importantly, he declared quite clearly that the doctrinal base of the prejudiced decision to assassinate the Consumer Council was utterly wrong.
The pity is that for two years consumers have been denied the protection of the Council while the Government have learned their lesson. The public has had to pay for the Government's education. This same Government, who have denied public participation in the evolution of a new consumer policy, previously scorned advice when it was offered at the time of their decision to abolish the Consumer Council.
In 1970 the National Council of Women, at its annual general meeting, passed a resolution condemning the abolition of the Consumer Council asleaving consumers without a powerful and influential spokesman.But the Prime Minister brushed the women aside then. He also spurned the previous Director of the Consumers Association who said at that time,The Consumers Association and the Consumer Council have always been complementary, not competing organisations.At that time the Government wilfully destroyed the partnership that had been built up over the years—all to save less than ½p per head of the population per year.
One of their reasons was economy, but there were other, deeper-seated reasons. In 1970 the Government were still suffering from their Selsdon man complex—still having to prove their political virility. So we find the explanation if we explore comments made then, first of all in the publication Trade and Industry of 4th November 1970. The Government said then,other consumer organisations have grown in number and in strength, and the consumer's interest has been widely recognised and protected. The Consumer Council has played a useful part in this development. However, in the different situation which now exists, the Government have concluded that an adequate advancement and presentation of the consumer's interest no longer requires the maintenance of the Consumer Council at public expense.473 In case the message was not becoming clear, Lord Drumalbyn said in another place on 1st December 1970,In 1962 the private organisations in the consumer field were struggling infants; now they are lusty adults. By their vigorous growth they have demonstrated that consumers have the initiative, the will to provide and the confidence to support with their purses services to meet their needs.Note the phrase "with their purses". It is the same philosophy we found at the time of the decisions on school milk, meals and museum charges. Again the noble Lord, recognising how capricious the public is, said that the public would pay only if it were made to pay. The public had to be forced to stand on its own feet. It did not need governmental support, the sort of organisation that we are instituting today. He went on to say,True, some of the needs of the consumers are not likely, perhaps, in the immediate future…to be looked after.He was certainly correct there. He went on,But as long as some part of those needs was met by the Consumer Council, sponsored and supported by the Government, it was unrealistic to expect private initiative to deal with the entire sector of the activity the Council covered."—[OFFICIAL REPORT, House of Lords, 1st December, 1970; Vol. 313, c. 506.]That was the basic philosophy, that the public should be forced to set up its own organisation.
§ Mr. John Gorst (Hendon, North)
Is the hon. Gentleman's argument that the old arrangements with the Consumer Council were better than what is proposed in the Bill, or is he conceding that the Bill is a great improvement on the situation that existed in the past?
§ Mr. Williams
I am afraid that the hon. Gentleman must have nodded off at the time that I made the point that not only should the Government never have abolished the Consumer Council but they should have strengthened it. If he looks at HANSARD tomorrow he will see I made that point. I am only too happy to cooperate in any measure that will strengthen the Consumer Council or whatever it is now to be called.
§ Sir G. Howe
Does the hon. Gentleman recognise that he has spent 15 minutes discussing matters that have 474 nothing to do with the substance of the Bill, which I gather from what he now says he welcomes and endorses enthusiastically? It is a curious commentary. Will he also accept that the institutions provided by the Bill are wholly different in kind from the Consumer Council and are designed to exist alongside and march together with the existing growing and strengthened independent consumer organisations? They make an entirely coherent pattern and the points he has been making for the last 15 minutes have little to do the merits of the argument.
§ Mr. Williams
I can understand the Minister's embarrassment at discovering the mistakes his Government have made. Let me remind him that it was he who said that the process of protecting the consumer is a continuing one. People who in any way abuse the consumer are continually evolving new methods of doing so. It was this Government who, far from continuing the process of consumer protection, set it back two years, and so we are wasting our time today trying to set up again something which the Government wilfully destroyed.
If the right hon. and learned Gentleman is so sure that I am wasting time in discussing this, how is it that two years ago the same Minister, Lord Drumalbyn, was able to boast ofthe achievement of a near-comprehensive system of protective law".—[OFFICIAL REPORT, House of Lords, 1st December 1970; Vol. 313, c. 505.]In this Bill we have 123 clauses and 13 schedules to show we have not got and did not at that time have a near-comprehensive system of protective law. Indeed, the same Minister discovered that we operated in a moral environment different from that of anyone else. He said:What distinguishes us from other countries—he meant those countries with which the Government have pitchforked us into partnership—is that by and large we do better than the law requires—and then he got cold feet and added—at least in this field."—[OFFICIAL REPORT, House of Lords, 1st December 1970; Vol. 313, c. 505.]
§ Sir G. Howe
I am sorry to interrupt the hon. Gentleman again but I must ask him to consider this point. Does he not 475 consider that the kind of sterile denunciation in which he has been indulging for the last 15 minutes is calculated not to impress but to depress consumers of politics as well as consumers generally? This is the level of debate at which he has arrived.
§ Mr. Williams
The right hon. and learned Gentleman has to understand that there is something far more profound—that nothing discredits politics more than the sort of thing which his Government have done continuously: after winning an election on specific mandates, reversing those mandates two years after coming into office. This is completely out of accord with the concept of democratic government. It is important that when the Government fail in their mandate, and when the Government deliberately reverse their policies, it should be pointed out. I can understand why the right hon. and learned Gentleman is trying to squirm away from the discussion.
§ Mrs. Sally Oppenheim (Gloucester) rose—
§ Mr. Williams
I am sorry, but I cannot give way. We are going on at some great length because of interruptions. If we had had a White Paper perhaps one would have been quicker and it would not have been necessary to raise some of these points.
Only in the last two years the Government have decided that the moral standards of this country have slipped somewhat and that, therefore, we now need to reinforce the consumer's position with legal support. Anyhow, however we got there, we have got there. The worm has turned. Indeed, this Governmental worm has turned so fast and so often that Ministers positively stagger around the corridors of this Palace. The Prime Minister's new style of open government consists quite simply of spending the first two years of a term of office passing laws and the next two years repealing them. But, as I say we have got there. We have now a conversion, but—oh—what a reluctant conversion it is—when we explore the nature of it.
The consumer can have adequate protection only if the machinery is right. I would quote from the Observer of 15th October, and a statement by the previous 476 Director of the Consumer Council, Dame Elizabeth Ackroyd:Someone within the administrative machine dealing with abuses is only half the answer. When it comes to the final crunch the monolithic Government view is bound to have its way.To quote the current Director of the Consumers Association:I think it is important that the new Ministry is not sited in the Department of Trade where it will be cheek by jowl with industrial and commercial pressures all the time.What do we have? We have a so-called Minister of Consumer Affairs. And where do we find him? Lurking within the principal sponsoring Department of Trade, subject to all the pressures which are bound to exist within that Department, and in channels which have been built up over the years from industry into Whitehall. He is not even head of the Department. He is a subordinate member of the Department, whether of Cabinet rank or not, I would point out before the right hon. and learned Gentleman gets too confident about his position.
§ Mr. Williams
Let me develop my argument. Hon. Gentlemen cannot, on the one hand, complain that time is passing, and, on the other, want to divert one every few seconds by means of interventions.
§ Mr. Williams
The hon. Gentleman will find out.
The right hon. and learned Gentleman is a subordinate Minister in that Department. He is not even a comprehensive consumer Minister. All he pulls together are consumer interests within the Department. The set-up is so ramshackle that it needs what industry accepts as the hallmark of inefficiency—a co-ordinating committee.
I believe that it has five junior Ministers, from a very wide range of Departments, none of them, to my knowledge, having the primary duty of consumer protection, unless, possibly, it is the junior Minister for Agriculture, and if this is so it hardly fills me with confidence, since I read in the Daily Mirror the day after her appointment that when she was asked, 477 "What can we do about prices?", she answered,I do not know. The Prime Minister will tell us tomorrow.There has not been such an instance of blind faith in a leader since the walking on the water, or of such blind support from a follower. The Government have not got the same blind support from the housewives.
So we have five junior Ministers in the co-ordinating committee all briefed to protect, to look after, their own Department's interests. This is a perfect blocking system stalling any excessive action on behalf of the consumer.
There should be a separate consumer's Department. This is clear. It should have a—
§ Mrs. Oppenheim
Can the hon. Gentleman tell us what provision was made by the last Labour Government for either a consumer Minister or for consumer responsibilities in any Department, even at junior level?
§ Mr. Williams
If the hon. Lady will allow me I will develop policy points as I go along. As I say, I believe there should be, first of all, a completely independent Ministry, which is a lot further than the Government have been willing to go.
As for the Director, there is considerable confusion about his rôle. The right hon. and learned Gentleman tried to clarify it somewhat today. He will appoint his own staff, we gather. Will this be from within the Civil Service, or, outside? He will have power to refer existing monopolies to the commission, but he does not have power to refer to the commission mergers which can give rise to harmful monopolies. He certainly has no such power. He can make recommendations for orders when he considers that there are adverse effects on the economic interests of the consumers. Why should he not do so where he considers that there are adverse effects on the health and safety of consumers? Crowther recommended a consumer credit commission. Is the Director to have the same degree of independence as Crowther recommended for that commissioner? Or is the Director being seen as a substitute for the consumer credit commissioner?
478 As for the Consumer Protection Advisory Committee, what a timid mouse of a body it turns out to be. It is to be appointed by the Minister. He may choose the heads of the consumer bodies. It is up to him. He appoints and chooses the members of the Advisory Committee. Not one of them will sit there as of right, in his own right. All will be subject to ministerial patronage. There is no necessity for a majority representing consumer interests. There is a derisory budget of some £10,000 a year to carry out this work. It has no meaningful staff backing. It will be effectively part-time. It has no power to initiate. It can only wait for either the Director or the Minister to ask it to work. If this body is to have teeth it should be able to initiate, it should have adequate funds, it should have adequate staffing, and it should be guaranteed a consumer majority, a majority from the consumer side, to be there as of right, as a result of certain offices they hold—for example, as that of Director of the Consumers Association.
The Minister will gather that I am not terribly impressed with the machinery which he has set up. Nor, frankly, am I impressed by the way he has started his new duties. The Bill specifically excludes professional services from the extension of the Restrictive Trade Practices Act. We have already noted the disparity of treatment between the industrial worker and the professional worker. Yet the Monopolies Commission Report to which the right hon. and learned Gentleman referred makes clear in paragraph 350 that professional services are of extreme importance, of greater importance than their size may make them appear to be. In paragraph 352 the report goes on:Professional bodies are, on the whole, sincerely convinced of the desirability of their practices and some of their views on this subject appear to us to be based on an idealised view of their functions. To this extent, and also because an element of self-interest is inescapable in all these matters, we cannot regard them as entirely reliable or impartial judges of the public interest.At a meeting with the TUC towards the end of last year I understood that the TUC was convinced that the professional services were to be included. Although I have not seen the first confidential consultative document, I am assured that professional services were included in it. 479 What happened between Document No. 1 and Document No. 2?
Where does the Minister for Trade and Consumer Affairs stand as a lawyer on this issue? Why is he treating his own profession preferentially? Will the Minister come clean and tell the House? Was it his personal decision, or was his own wish changed by the Cabinet? More than one-third of the members of the Cabinet are lawyers; there are seven from this House alone. I suppose we should say six if we discount the Secretary of State for Wales. As we in Wales know to our cost, he has not won an argument in the Cabinet in the last 2½ years. Where was the decision taken? Was the decision to exclude lawyers taken by the lawyer Minister or the lawyer Cabinet? Where was consumer protection then? The public will not believe that their interests are being properly protected if professional services continue to be excluded.
As the Observer said on 3rd December,The exclusion of the professions from this whole area of inquiry cannot be justified.The public will note that the Minister's first decision was to surrender to his own professional lobby. What hope can they hold out that he will be able to stand up against the industrial lobbies, the departmental lobbies, against on occasion his own Secretary of State and, indeed, his own Cabinet?
Another bad omen is that there is no provision in the Bill for compensation. If the Director says that a commercial practice is wrong, if the Advisory Committee says that a commercial practice is wrong and if the Minister agrees, still there is no automatic redress for the abused or wronged consumer—only through the existing court procedures.
Surely the Minister must be aware that the consumers who are most in need of protection are those who neither know nor understand the law, and that the majority of consumers who need protection are afraid of the cost of legal redress and of the formality and atmosphere of the courts. What is needed, therefore, is either a network of small claims courts or an extension of the small claims arbitration system as exercised in Manchester and a nation-wide High Street consumer advice system. Even here we find that the Minister's commitment to 480 a nation-wide network was not announced first to the House. He made the announcement in a speech outside the House, and the Press carried the story last week. It is small wonder that the House feels that it is being ignored in the preparation of this legislation.
When the Under-Secretary of State winds up the debate, will he explain how he refutes the National Farmers Union's allegation that the Bill isgrossly unfair to small undertakingsparticularly in view of what the Bolton Committee said about the need to ensure that small firms do not suffer adversely and disproportionately as a result of the restrictive practices law? Will he tell us why the exclusion clause relating to central pay agreements, which was included in the 1948 and 1965 Acts relating to monopolies, has been dropped? What are the implications of this? What does it mean for the future development of collective bargaining? How will its impact vary between capital-intensive and labour-intensive industries?
I have the impression—as has the TUC—that the Government are not wilfully out to damage the negotiating position but have just not fully considered the implications of their decision. If that is so, will the Minister, before it is too late and before the Bill is considered in Committee, meet the TUC to discuss this point further with a view to the possible amendment of the Bill in Committee?
I warn the Government not to use the existence of the Bill, its passage through the House and the setting up of the machinery as an excuse for failing to do other things which need to be done. The right hon. and learned Gentleman referred to the importance of the Trade Descriptions Act. He will be aware of the motion tabled by my hon. Friends and myself concerning a recent decision by the Lord Chief Justice which makes it clear that certain defences which the House thought it had given to consumers do not exist. The Business Supplement of the Sunday Times in a report by one of its Insight consumer units sums up the Lord Chief Justice's decision as saying that:the Act should not apply to promises made by a trader about future services offered by him but only to false or reckless statements about what he had done in the past.481 The tourist trade lives on promises about the future. Many people have found, to their cost, that the tourist trade does not always live up to its promises. It was thought, until this decision, that the House had given them some protection. We are now well into this year's booking season. It would be simple for the Government to put forward an amendment—and we would readily cooperate in getting it through as rapidly as possible—to the Trade Descriptions Act to cover the loophole revealed by the Lord Chief Justice.
Two years ago the Crowther Report was published. What has happened to it? When shall we see it fully implemented? Is the Bill seen as a substitute? Housewives are being cheated daily through the abuses outlined in the Crowther Report, yet the Minister refuses to act.
There has been great publicity on pyramid selling, but that is not covered by the Bill because the abuse is to a seller and not to a consumer. It is the self-employed salesman who suffers maltreatment. The Minister must have seen the damning report about pyramid selling produced by the Public Interest Research Centre. Is it true that for more than a month the Ministers within the Department of Trade and Industry have been sitting on a report on pyramid selling produced by officials?
The Director has insufficient staff to give the Act teeth. The Minister will be heavily dependent on the Weights and Measures Inspectorate. Has the Weights and Measures Inspectorate enough staff to cope? Should it remain in its present form? Who should pay for it? We should like answers to these questions.
The Bill is wrongly conceived. There should have been two Bills, not one. It would have been simple to divide the consumer protection sections from the monopolies and restrictive trade practices sections. The consumer elements in the Bill are needed urgently; they are needed before April. After April the housewife will need all the support and help she can get against the Government's actions.
For 2½ years the Government have known that they were introducing VAT which will affect 1,500,000 firms. Some of those firms pay selective employment tax for all workers; some do not. They 482 will have varying dependence on goods—exempt, zero-rated or fully rated. It will be impossible for the public to know what the new fair price level is to be. There will be, as has happened in virtually every European country into which this tax has been introduced, nationwide price chaos.
The Government have done nothing to forestall this situation. They have not even introduced protective measures so that they may be in existence in time to be implemented when VAT is introduced in April. I appreciate that the Government believe that VAT will not have these effects, and they deny that the public will need protection from the present Government's actions. Either the Chancellor of the Exchequer is living in a sort of dream world, having squandered £1,000 million of our balance of payments surplus in the space of a year and having also brought about a devaluation, or he has come to the conclusion that one can fool all the people all the time. I suppose it is understandable when one realises that at one moment the Chancellor of the Exchequer can demand wage restraint in this House and in the very next moment go stomping round the country claiming credit for the higher purchasing power which has flowed from those wages. The Chancellor must think that he can get away with anything.
In a debate in this House last week the Chancellor said, as reported at column 1129,…we shall take steps to ensure that following the change-over to VAT the benefits of tax reductions are passed on in lower prices to the consumer and that prices are not increased by more than is strictly warranted after making full allowance for the abolition of SET and purchase tax".How will he achieve this? Would it not have been helpful to have some consumer protection measures ready to be brought into operation? Because of complacency, because the Chancellor of the Exchequer and the Minister for Trade and Consumer Affairs believe that there will not be a flood in increases following the introduction of VAT, they have done nothing about the situation.
Next April when the Chancellor disappears beneath a flood of rising prices he will still be gurgling, "It is all a Labour 'con' trick". The Minister for 483 Trade and Consumer Affairs recently said on television that prices will not rise on average as a result of the introduction of VAT. Therefore, I assume that he believes that the consumer will not need the protection of the Bill. I hope that the Minister will listen to what I am saying. After all, I listened to his tedious speech, and I think he should have the courtesy to listen to mine.
If I told the Minister that the Morning Star said thatVAT will cause a substantial once-for-all rise in the cost of living index…or if I said that Tribune took the view thatretail prices will go up as a result of VAT…the public will certainly notice the increasesno doubt the Minister would dismiss those allegations on grounds of political bias. But Tribune and the Morning Star did not say those things. The first statement was made by The Times on 7th December; the second statement was made by the Sunday Times on 10th December. Does the Minister accuse those newspapers of being part of the same Labour confidence trick to which he referred?
In the debate last week the Chancellor of the Exchequer said:the Labour Party by its attempt to 'con' the housewife, is thereby giving active encouragement to that very small proportion of shopkeepers who might be tempted to cheat"—[OFFICIAL REPORT, 5th December 1972: Vol. 847, c. 1129–30.]Is the right hon. and learned Gentleman saying that The Times and the Sunday Times are also giving active encouragement in pointing out that in April the consumer will need more protection than he is getting at the moment?
If he is so convinced of the rightness of this pretence that there will be no flood of price increases as a result of VAT, let him show the strength of his conviction. Let him say that, if he is proved wrong, he will feel that he has failed in his duty as Minister for Trade and Consumer Affairs and after April, if price rises occur, will offer his resignation. We have warned him about these things and he has denied that they will happen. Such an attitude on his part would at least convince the public that he is sincere 484 in his belief. It would certainly represent one of the shortest periods of time any Minister has had in a Cabinet.
The Government's prices policy has been torpedoed by the Government's own taxation policy. From April the pretence of a prices and incomes policy will go; prices will be out of control—
§ Sir G. Howe rose—
§ Mr. Williams
Just allow me to finish my statement. Prices will be out of control and there will be no protection from this Bill because it will not by then be enacted. In April, all the Government will have left is an incomes policy and there will certainly be no prices policy.
§ Sir G. Howe
What the hon. Member for Swansea, West (Mr. Alan Williams) has been saying in the last ten minutes—a period of time which has been devoted to dealing with matters which are not within the Bill and which have sought to deal with matters which my right hon. Friend the Chancellor of the Exchequer answered last week—reveals the total barrenness of the Opposition's policy in reference to the consumer and their inability to be able to say anything relevant about this important piece of legislation.
§ Mr. Williams
What the right hon. and learned Gentleman has revealed is his ignorance of a problem which will concern consumers whom he has been appointed to protect. He refuses to face the fact that there will be a series of price increases as a result of VAT. He refuses to see the point that it would have been marginally helpful if, instead of producing this massive composite Bill, he had separated the consumer protection elements so that they could have been brought into operation before VAT came into effect.
I conclude by saying that the Bill is a reluctant Bill. The Government are still insisting on controlling all the reins. They are afraid to appoint an independent director, an independent advisory committee or indeed an independent Minister. We believe that there should have been two Bills instead of one to help the consumer after April. There are many areas in which the consumer needs to be helped which are not covered by the Bill, and these are areas where urgent assistance is needed. The method of presentation 485 of the Bill, without any White Paper and without time to consult is an act of contempt to the House.
§ 5.19 p.m.
§ Mr. T. H. H. Skeet (Bedford)
I must say to the hon. Member for Swansea, West (Mr. Alan Williams) that when the Labour Government decimalised currency they did nothing to prepare the public for the subsequent price increases. On this occasion the hon. Gentleman surely must agree that my right hon. Friend the Chancellor of the Exchequer has taken advance steps. Surely the hon. Gentleman agrees that the recent by-elections have shown that the public knows what the Labour Party is against, but does not have the foggiest idea what the Labour Party stands for.
We have listened to a long sequence of irrelevancies and have heard nothing appertaining to this important subject which is dealt with by the Bill. I should like to refer to the Consumer Council and to emphasise that it had no powers. My right hon. and learned Friend the Minister for Trade and Consumer Affairs has put in its place a body which is independent but which has statutory powers—powers which could be extremely useful in bringing out the points which he outlined.
The contributions which can be made by Clause 17, Schedule 6 and Part III will be extremely useful for the consumer. Furthermore, when we bear in mind the restrictive practices which could be taken before Restrictive Practices Court to deal with land problems, we must agree that this again could be most useful.
The legislation on restrictive practices is contained in two Acts of Parliament, the Restrictive Trade Practices Act, 1956, and the Act of 1968. In those provisions it is deemed that restrictions which have been agreed between participating parties are against the national interest. This is contained in Section 21 and Section 10 of the respective Acts. However I believe that both those pieces of legislation put the onus on the wrong foot.
It must not generally be assumed that the consumer is always right and the industrialist is always wrong. What I am suggesting is that the industrialist must live by the consumer because he must sell his goods. Therefore it might be practical to link these proposals more 486 closely with the European concept under Article 85. That may be more advantageous for all concerned. The existing machinery has proved expensive in the past, and it has often acted to the detriment of industry without totally benefiting the consumer.
Further, it has prevented the formation of agreements between participating parties which could lead to rationalisation, specialisation and industrial efficiency, and I should like to make a recommendation. Would it not be practicable to include Sections 7 and 8 of the 1956 Act and Sections 2 and 4 of the 1968 Act in block exemptions? Would it not be useful, with agreements between small companies which are calculated to give support to the recommendation of the Bolton Report, to ensure that these were given block exemption? This would probably fit in comfortably with the arrangements that are being concluded by the Commission in Europe under Article 85.
I support one suggestion made by the hon. Member for Swansea, West, that an agreement between groups of farmers for developing co-operatives and orderly marketing could usefully be considered separately, but the provision that is available under the Agriculture and Forestry Associations (Trading Agreements) Act 1962 does not appear to be working very profitably. There could be another classification. One could consider agreements prima facie sound. This could be reported, and if the Restrictive Practices Court took no action within three months registration could be allowed to lapse.
§ Mr. John Roper (Farnworth)
Does the hon. Gentleman intend, by this block clearance, to include price agreements, or only other kinds of agreements?
§ Mr. Skeet
The Commission in Europe has decided, under considerable case law, where it can best help the small trader or the small commercial man, and it has given block dispensations. The same thing would apply. Where there are cartels fixing prices, they would have to be notified and the court would take decisive action.
Section 9(2) of the 1968 Act has been used as an escape route in the past, and I dare say it could be so used in the future. It seems to me that industry will he faced with the problem that by 487 1st July 1973 it will be obliged to notify its agreements under Article 85 to the Commission under the EEC treaty, and on 1st April 1973 it will have to make its notification of agreements under Article 65 of the ECSC under that treaty.
I wonder whether my right hon. and learned Friend intends gradually to harmonise his legislation with that in Europe and to move along European lines, or whether he wants a system in the United Kingdom which is particularly harsh here while we are experiencing on the continent a breath of liberality. Might it not occur that one could have a clearance before the Commission but, at the same time, because of the provisions of the three Acts that will consolidate the law, an agreement could be disallowed in the United Kingdom? This could lead to serious problems and a conflict of the law.
I should like to tell the House of one or two observations by a learned jurist when speaking to a meeting in this country earlier this year. He said then:the national authorities and courts as well as the Community organs are competent to institute or continue proceedings since the objects of the prohibitions for the control of restrictive practices in these two legal orders are not the same. However, and this is the important part of this judgment, national cartel law may be applied only insofar as it does not restrict the uniform application of Community cartel law and any measures taken for its enforcement throughout the Common Market.In other words, it would appear to me that there could be double sanctions on parallel proceedings.
He went on to say:Although the Court held that the European Court was not a foreign Court and must be treated like a German Court—because this was a German case—with the consequence that a conviction pronounced by such Court would in principle prevent the institution of proceedings in Germany against the same person for the same conduct, it nevertheless affirmed the lawfulness of the institution of proceedings in Germany because the violation of both German and Community Cartel Law could not be dealt with by one Court only as the German Courts had no power to adjudicate on an infringement of Community law whilst the Commission and the European Court were lacking jurisdiction in respect of offences against German law—. The Federal Supreme Court emphasised that 'it would be unbearable and incompatible with the principle of the rule of law if the German State imposed a fine without taking into account that the 488 person concerned had already been ordered to pay a fine by an organ of the Communities'.I should like my right hon. and learned Friend to give an assurance on this. Will it be practical, in the circumstances, if a firm is fined by the European court and is also fined by a domestic court in the United Kingdom, for the equitable principle to prevail and for one fine to be subtracted from the other and only the balance paid?
Clause 74 deals with a matter that was raised by the hon. Member for Liverpool, Walton (Mr. Heffer) about trade unions and employer restrictive labour practices. I should have thought that this was reasonable. This is one of the problems that is affecting the country—and the public are aware of it—and it could lead to serious economic difficulties. It is possible that with both union and employer associations this could lead to a restriction of competition and to considerable disruption. They can apparently act with impunity even though millions of pounds may be lost. Should not this—and I put it in all reasonableness—be referred to the organs under the Bill for dispassionate inquiry?
§ Mr. Heffer
What sort of restrictive practices has the hon. Gentleman in mind? An awful lot of rubbish is talked about restrictive practices. Perhaps the hon. Gentleman will explain what he has in mind, and then we can discover whether he is talking about genuine restrictive practices or about practices which have been the custom within an industry for a long time and which, if they were changed, would lead to more disruption.
§ Mr. Skeet
I have in mind some of the manning agreements in industry and some of the restrictive practices adopted by the print unions and a number of others. These may be agreements which could be referable to the body to consider whether they are in the public interest. If this is an independent court, and if the matters being referred are in the public interest, innocent people will have nothing to fear. If the hon. Gentleman is saying that he does not want any reference at all to the court he is putting himself in the position of supremacy above the law, and I should have thought that as everybody else has to support it there is no reason why he should not do 489 so as well. There is the safeguard that anything done in contemplation of an industrial dispute will be disregarded even though the union is unregistered, and this is a big concession.
Study reports will be available but, unfortunately, no sanctions will be possible. If we are to include Clause 74 in the Bill, I should have thought it reasonable to have some sanctions which could, if necessary, be discussed with the unions and the TUC. If the provision is to rely purely and simply on notification and discussion amongst the public I cannot see how, with the unions holding their present views, it is likely to lead to any change, but I dare say that this can be considered in Committee.
I also refer to the nationalised industries to which I find reference in Clause 16. It says that the Director General can make reference to the CPAC. There is a list in Schedule 5 which requires the assent of the Minister, and Clause 46(2) provides that the Director may make reference to the merger commission. That is in a monopoly situation under Part IV. He can do so jointly with others under Clause 47(2).
The matter which concerns me is that some of the consumer protection interests of the nationalised industries have not proved successful in the past, although I appreciate that they have done their best to strengthen them.
There is a weakness here because the consent of the Minister is required. This may be a Minister who has a vested interest in the matter under consideration. This could be a weakness, because which Minister will recommend that there should be a reference when his own Department is involved? I do not call that entirely independent.
Schedule 5 contains no reference to either coal or steel. Are we to assume that steel has been eliminated partly because there is provision in Section 30 of the Iron and Steel Act 1967 which affects private holdings? Is it true that it falls within the ECSC and therefore does not fall within the domestic law but falls within the Community law? If so—we now have the Hirshfield Report—it might be a reasonable suggestion to put to my right hon. and learned Friend that in view of the recommendations made by Lord Hirshfield, that the private 490 sector has a reasonable complaint against the BSC for its unfair squeeze on their margins for reinforced bars, soft wire rods and hot mill rolling, etc., and that if an application was made to the ECSC after 1st January 1973 it would have the Government's blessing, they having expressed their inability to do anything to remove these inequities because of the continuance of the freeze.
I think it is reasonable that a statement should be made so that we have some view how the other nationalised industries are to be considered and whether a realistic policy can be worked out for them.
For the record I should mention Clause 79. By laying down the provisions with such clarity, my right hon. and learned Friend has made this of remarkable interest. It refers to the public interest, which has a singularly important stance in all our legislation. The public interest is unknown in Europe. Would it not be better to revise this and have a new terminology? The terminology might be "to take improper advantage of dominant position." It might be useful to move an amendment in Committee to see whether something along those lines could be effected.
Clause 10(1) refers to a monopoly situation limited to part of the United Kingdom. How is it that the word "substantial", which was in the 1948 Act, has been dropped? Is there any reason for that?
Clause 7 relates to a monopoly situation in relation to the supply of goods. A monopoly situation is taken to exist where 25 per cent. of the market is in single or associated hands. I should think that would favour the integrated enterprise. Small businesses linked together would be extremely vulnerable even though they could be a fraction of the size. Most of the points I have considered can be dealt with adequately in Committee.
I fire this shot for what it is worth. This is a good piece of legislation and I welcome it, particularly on the consumer side, with which I shall not deal today. I have been dealing with monopoly and restrictive trade practices. However, will it not have to be revised at a later date? I understand that it can he outdated largely because of the continued growth 491 of large domestic and multi-national companies in the private sector. The number is growing fast. We already have a report in a well-published book by Andrew Jackson and Dr. Newbold which indicates that towards the middle of the 1980s we may have about 20 major companies in the private sector. There are difficulties in the public sector, because even this Government have contributed to a number of the nationalised industries. We hope that practice will be discontinued.
There seems to be an acceptance of the need for fewer industries in the technological sector. I wonder whether hon. Members are aware that in the western world markets of 1970, 9.5 per cent. of aerospace industries were held by European companies and 90.5 per cent. by United States manufacturers. Air frame manufacturers in the same area were as follows: three in West Germany, two in France, five in Italy and four in the United Kingdom. These may all constitute monopolies, but because of the technology involved and Government investment there is no way of seeing this position altered substantially. Even though they may have more than 25 per cent. of the market, it is essential because of the technology that they be allowed to continue.
In 1970 the Western European market for computers was as follows: 76 per cent. held by IBM and Honeywell, 9 per cent. by ICL, 3.5 per cent. by Siemens and 1.5 per cent. by CII of France.
The whole structure and balance of industry may alter in the next 10 years and we may find that this legislation will have to be radically altered.
I come back to the major point with which I began, because I think it is singularly important. There will be an evolution in the pattern of European legislation particularly relating to restrictive trade practices. A lot of law has been assembled on this matter. We have a great need to assimilate that law into our own law. I think it is a pity that a start has not been made on this occasion.
I certainly welcome the Bill. It is heading in the right direction. I hope that when it goes into Committee a more conciliatory and sympathetic attitude by the Opposition will enable progress to be 492 made. If Opposition policy is simply that everything this Government have done is wrong because they do not like two clauses in the Bill, that could be a fundamental mistake.
§ 5.36 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I shall be brief and confine my remarks to the consumer protection parts of the Bill.
I thank the Minister for the tribute that he paid to the Trade Descriptions Act, which was a very good piece of legislation carried through with the help of both sides of the House. As the right hon. and learned Gentleman said, it developed from the Molony Report. The Molony Committee was set up by a Conservative Government. I am sure that when the Government get round to dealing with consumer credit tribute will be paid to the Labour Government for setting up the Crowther Committee. This is the way that these matters go on.
I agree that the Trade Descriptions Act was not comprehensive. I am sorry that some of the amendments that needed to be made to that Act out of experience have not been made during the last year or so. I am also sorry that the provisions for definition orders and informative labelling, the more constructive side of what was a piece of criminal legislation, have not been introduced. Many opportunities have been lost to do some positive, active work on behalf of the consumer out of the provisions of the Trade Descriptions Act.
As we are going into Europe—a phrase that I dislike intensely, because we are already there—it is worth looking at European experience in this matter. My examination of consumer protection legislation and administration in Western Europe, the United States and Canada leads me to believe that the Government are not setting about the job in the right way. A report, compiled with the help of quite a lot of research by the OECD and to be published by the Council of Europe, suggests that the right form of consumer protection legislation, assistance and advice is to have a comprehensive set of laws covering the whole sphere, outlawing practices which should not be allowed to go on, with local administration at grass roots level where pre- and post-shopping advice can be obtained on 493 how to deal with complaints, and so on, enforcement officers being available to bring into court those whose illegal behaviour is such that, to quote the Act, to a material degree it should lead to prosecutions.
In the middle there should be a strong body to represent the interests of consumers. In this set-up which is proposed by the Government, that essential middle link is missing. It is a great mistake. After all, the advisory committee which is proposed in the Bill cannot initiate anything. It can only deal with references made to it by the Director General. This Director General is going to be something of a superman because he will deal all over the field, not only with consumer affairs and consumer complaints but with restrictive practices, mergers and monopolies. It is an enormous task. It might be done by any organisation which has a man in charge of it, but, of course, the oganisation has to be split up into departments to do the job properly, and we have no idea in the Bill about the kind of staff which is to be provided to do this work.
I agree with my hon. Friend the Member for Swansea, West (Mr. Alan Williams) that we ought to have had a White Paper to explain the whole to this of policy in detail before coming to the Bill. I fear that I shall be involved in the Committee. We shall be renewing some of old acquaintances. Obviously, the number of probing amendments that will have to be put down to find out what the Bill about will be staggering, and the size of the amendment paper, I think, will be formidable.
But without a strong consumer organisation in the middle—a body broadly resenting consumers—I do not see how the pressure can come upon Ministers to get things done which need to be done, such as changes in the law, and regulations, and not just regulations banning certain practices but regulations, as provided in the Trade Descriptions Act, for giving information and advice to customers.
I think it is important, too, to follow up another point which my hon. Friend made, that the Minister is the Minister for Trade and Consumer Affairs. He will be dealing with trade associations and particularly the CBI. As hon. Members 494 know, a recent report suggested that the CBI should be greatly strengthened. If we are to be equitable on behalf of the consumers, we need a consumers' organisation that can speak with the same kind of authority as is enjoyed by powerful trade associations in speaking on behalf of their members and in the trade interests of their members.
Therefore, I am dubious, first of all, about the organisation of the office of the Director General. Experience, for instance, of the Swedish Ombudsman and his Market Court is, I think, pertinent here. The Ombudsman has been snowed under with trivial complaints, and the job of sorting them out has inevitably led to delays. In fact, if all our consumer complaints are sent into one central organisation, obviously there will be delays, and delays mean that certain practices which ought to be banned will be continued because of the delays. This is what has been happening in Sweden. I gather that more legislation will be brought forward in Sweden in order to try to remedy that situation.
One should also remember that in this country, almost by accident, we have, I think from my examination of the European scene, the best form of administration on protective laws and the provision of advisory services in any of the European countries, and certainly better than in the United States and Canada. This is because we have always given the job to the local authorities.
I do not think the Government have taken sufficient notice of the changes which now come about in England and Wales because of the new Local Government Act, and I would assume that the same sort of system will be followed in Scotland, so that instead of having throughout the country 300 weights and measures authorities we shall have about 60 county authorities or metropolitan authorities. This gives these large authorities a far better opportunity than before not only to co-ordinate their services throughout the country, which is important—we do not want different policies in different areas—but also to provide, because they will have the resources to do it, the advice centres in every main shopping area. They would, of course, take over the weights and measures offices, or trading standards offices as they are now 495 being called, of the old borough councils, the new district councils, in the new county authorities.
As I say, they will have the resources and the staff to provide this network of services. This is to be retained within the Bill, but I think we must be clear about who is to do the job. There is a tendency, particularly on the advisory side, to get people who are—I want to be guarded; I do not want to be offensive to anybody—not qualified to give the very technical advice about the quality of carpets, for instance, for which members of the public quite rightly can ask. Of course, it goes over a much wider field than carpets, to things such as boots and shoes and electrical appliances, and questions of what appliances are most suitable for certain types of homes. This is advice which can be given only by qualified people.
That kind of qualification should be associated with the qualifications of what used to be called weights and measures inspectors. We are still calling them by that title in this Bill, although they now want to call themselves Trading Standards Officers, which more accurately describes the scope of their work. The quality of staffing at the local grass roots level is tremendously important if the work which is going to be thrust on them by this Bill is to be carried out efficiently. I think it will be carried out well.
Apart from my dubiety about the system of administration that is being provided, there are many other questions that need to be raised. For instance, I notice with a certain degree of pleasure that whole sections of the Trade Descriptions Act are now, as it were, spatchcocked into the Bill. But unfortunately the pieces that are taken out of the Trade Descriptions Act and put into the Bill are the pieces that we wanted to amend, in some cases because of court decisions, and which quite clearly are contrary to the intentions of Parliament.
Therefore, as we go through the Bill—and I am sure the statements which were made about getting this job done in a co-operative spirit will really apply—I hope the Government will not be stubborn and stick to the wording of the Bill when it can be proved that the Bill ought to be changed in the interests of 496 the consumers. I am not dealing with any other part of the Bill.
With that I give the Bill a very guarded welcome, and we will try to make it a far more effective instrument for the benefit of consumers.
§ 5.50 p.m.
§ Sir Tatton Brinton (Kidderminster)
So that the House may evaluate what I have to say, I shall give my qualifications. I am a carpet manufacturer.
§ Sir T. Brinton
No, not a carpet-bagger. I was born and bred in the town which I represent. In my capacity as a carpet manufacturer, I had some occasion to visit the right hon. Member for Sheffield, Hillsborough (Mr. Darling) when he was a Minister at the Board of Trade, and I take this opportunity to thank him for the unfailing courtesy and justice with which he always listened to what we had to say about the problems of our industry—and, I am sure, of others. But perhaps the right hon. Gentleman will forgive me now if I do not take up what he had to say, since I wish to direct attention to another aspect of the Bill which has not so far had much attention from back benchers. I refer to Part V, the provisions regarding monopolies and mergers.
The objects of the Bill were described by the Minister as being to achieve economic efficiency, on the one hand, and consumer protection, on the other; and he went on to say that in that connection it was necessary to avoid the dangers of monopoly situations arising. I have paraphrased what my right hon. and leaned Friend said, but I think that that is a fair summary of the underlying philosophy of the whole Bill.
I submit that it does not go far enough and that there are other aspects of the dangers of monopoly and mergers which should be considered in the context the Bill. These matters are very much more part of our lives than question only of pounds and pence and prices the shops.
First, what are the motives which prompt mergers? Sometimes, they have little to do with economic considerations. Often, they arise from questions 497 of high finance or of taxation. For instance, a big overseas company may find that it pays it to acquire a somewhat uneconomic company in this country merely because it has a domestic revenue and this is a tax advantage. To my mind, such considerations do not advance the general public interest.
Another reason for the acquisition of a company is what is known in industry as diversification. One has some spare money or some spare brains, so one thinks, and the idea is that one could run someone else's business better than he runs it himself, even though it does not happen to be in one's own trade. In my view, such motives ought not to be encouraged.
On the other hand, it is sometimes argued in favour of mergers that a better management team at the disposal of a firm taking over another may be able to do something for those taken over. I am not easily convinced by that argument, either. It is true that managements vary greatly in their capacity, but it does not follow that, because one company has good management, it can necessarily water that management down to the extent necessary to take on large additional chunks of responsibility for other companies and make an equal success of them. It is a common enough experience that expansion strains management resources—it may strain financial resources, too—and it is not always effective.
It may be argued that it is necessary to rescue a sinking ship, that a firm taken over had only itself to thank because it had become a dying concern and was, therefore, ripe to be taken over by someone else. I accept that there are such instances, and they are justifiable.
Another principal argument for merger is the "economies of scale" argument. This is a relative matter. Two small companies may achieve economies of scale by amalgamating, but it hardly seems possible that two very large companies could benefit. Indeed, when one sees the gigantic heavings and groanings as the dinosaurs get together, one wonders what will ever come out of it, and, even more, when we see, as we did recently in the case of the unsuccessful proposal between Bovis and P & O, the elephant trying to mate with the whale, 498 one can only wonder what sort of miscegenation we are witnessing. To my mind, such mergers do not have, and cannot have, any real economic basis.
How effective do these mergers prove to be? I do not know. Perhaps other hon. Members may be able to give a better answer than I can. From my experience on a fairly narrow front, my impression is that many mergers do not appear, in the light of the subsequent three, four or five years, to produce any great advantage. If one is to judge by profit results—I do not say that profit is the only criterion, but it is a useful one nevertheless—it does not appear that the amalgamation of two, three or more businesses necessarily produces any significant increase, or, at least, any greater increase than one might in many cases have reasonably expected from the component parts had they remained separate.
Very often, the arguments for putting like and like together are doubtful. It seems to me that there are strong arguments against putting together like and unlike—the conglomerate. There was a great fashion for this. As we know, it started with a very successful American firm, which was primarily a finance house. It built up an enormous conglomerate, and for some time it did extremely well. But from this distance it seemed to me that, when it said that it was doing extremely well, the truth was that it was very well thought of by the stock market, and one had reason to doubt its true success in terms of the basic prosperity, real productiveness and real profit-earning capacity of that great empire of disparate elements.
There is another kind of merger, the vertical merger, and here I come to a case within my own experience. I shall be at risk of mentioning names, but it is an example which, I am sure, may apply to other industries, just as I know that it applies to mine. I refer to the vertical monopoly when the supply of a basic raw material is in the hands of a single company, or virtually in the hands of a single company. Courtaulds produces virtually 100 per cent. of the rayon fibre and yarn made in this country. In fact, it produces 33 per cent, of the entire rayon available in Europe this side of the Iron Curtain, which is a pretty substantial proportion.
499 It is true, as Courtaulds has frequently said, as it said when investigated by the Monopolies Commission, and as I know to be true as a user of its rayon, that it has done a great deal to develop and improve its product. Nor is the price particularly unreasonable. Nevertheless, a monopoly situation prevails, and it was criticised by the Monopolies Commission in 1968.
As the Bill stands, there is nothing to prevent Courtaulds acquiring up to 25 per cent. of my own industry, which is virtually dependent, at least at present, solely on Courtaulds for its rayon supplies. When I say that rayon represents 28 per cent. of all the pile fibres used in carpet manufacture in this country, the House will realise that it is a most important fibre and not one easily replaced. It is cheap, and it is quite a good substitute, especially in what are called budget price carpets. Hon. Members will understand that we do not make such things as "cheap" carpets.
I mention that as a case which the Bill is not designed to cover. Yet, in such circumstances, could not an indirect monopoly situation arise, and ought it not to be dealt with on a considerably more restricted basis than that of 25 per cent. or £5 million assets?
There are other dangers in mergers. We are told throughout the Bill that a merger must not be against the public interest and the criteria for this are laid down in Clause 79. They are mainly economic but they do not take account of the human objections to the excessive concentration of industry. This is an aspect which worries me very much because I believe that enterprises, whether they are shops, professional organisations or manufacturing concerns, have a corporate personality of their own for the people who work in them and who deal with them. They are important human institutions, although the larger they are the less that is true.
The larger they are the less the people working in them feel that they are important and have some individuality. It is therefore in the public interest that we should not over-concentrate our industry without good reason. I do not suggest that those reasons do not exist. Sometimes they do, but often they do not. I would have preferred the Bill to make it 500 more difficult for takeovers and concentrations of businesses to take place without good reason and without the acknowledgement of the Monopolies Commission that the reasons are good.
§ Mr. J. T. Price (Westhoughton)
The hon. Member's argument is fascinating. It makes me glad that I came into the House by accident tonight. But the hon. Member has not mentioned the most important reason for takeovers by the conglomerate financial institutions—that is for the purpose of stripping the assets of businesses. Often the assets are in land, the most valuable asset of all. I can testify that in the North of England old-established family businesses have been taken over because of their land assets which have been sold off and the businesses closed down on the diktat of the financial holding companies in London.
§ Sir T. Brinton
I am grateful to the hon. Member for mentioning that type of takeover. I include it in the list about which I said that the motives were purely financial and not economic. I accept what the hon. Member says and I agree that such takeovers occasion considerable worry, but I hope that he will not assert that the worry is confined to the Opposition.
When takeover fever is in the air there is genuine fear at local level. The employees are worried about what will happen to their jobs and to their firms. They worry that their firms will be bought out overnight and they worry about the position of the staff and about who will be in charge of them. I do not believe that we are taking sufficient account of this.
In the last 25 years in my constituency, where I also live, the little shops in the High Street have disappeared one by one. Businesses have been gradually amalgamated and well-known names in Kidderminster have disappeared and have been replaced by enterprises which, although excellent, are impersonal. They are run by managers who come and go and who are no longer part of our local life because they move on when promoted. I say the best of luck to them, but it is not the same as when the drapery shop was run by a highly respected local citizen who was a member of the council and served on the education committee and so on. These are real losses of independence and identity. I believe that we 501 should consider what sort of criteria we should add to the Bill to stem this tendency. For a start, the criteria for judging takeovers should not read, as they normally do:not against the public interest".They should read:In the public interest".I do not believe in double negatives and I should therefore like to see that criterion turned into a positive statement.
I should like now to consider the effect of insisting that takeovers should normally not be sanctioned unless they are paid for in cash. There might be something in this. Many takeovers are in exchange for paper—shares—which is easy to issue. They are much more easily issued than a large cheque which might have to be covered by an appeal to the general public to confirm that the company is doing the right thing. Such a requirement would impose a financial discipline which is not imposed by the mere issue of shares for a business.
In Clause 79 I should like to add words to the effect that there shall be no unnecessary aggregation of enterprises where there is no demonstrable economic advantage. Such a provision would underline more clearly our rejection of the belief that mergers and the concentration of industry is a neutral matter for the public or even generally beneficial unless proved otherwise. The attitude we should adopt is that takeovers are suspect and the case for them should be fully proved before they are allowed to proceed.
My criticisms are criticisms of detail and, to some extent, of principle. I welcome the rest of the Bill. In Committee no doubt more criticisms will be forthcoming but the Bill represents a further step forward in the control of trading to the benefit of the customer and to some extent in the control of excessive mergers and takeovers. I have indicated where I believe the Bill can go further and I hope that Ministers will be prepared to consider my suggestions.
§ 6.7 p.m.
§ Mr. John Pardoe (Cornwall, North)
I fully share many of the points raised by the hon. Member for Kidderminster (Sir Tatton Brinton) and I particularly welcome his insistence that the public interest should be defined in the legislation in 502 positive rather than in double negative terms.
The Bill covers an immensely important subject and touches the very foundations of our economic system. Not even the most fervent and unrepentent capitalist could opine that capitalism without competition is efficient. Capitalism without competition is probably less efficient than Communism. For that reason the Liberals have long fought for a much tougher competition policy. In this respect the attitude of successive Governments has been ambivalent. Perhaps it was the ambivalence of the Labour Government's approach that led the Opposition to decide not to divide against the Bill tonight.
Of course, we want co-operation. A co-operative approach is essential. But the increasing concentration of modern private industry is not due to its desire for Liberal or even Socialist co-operation. I would have thought that every hon. Member would accept that capitalism inevitably tends towards a monopoly. I believe that it is the rôle of government constantly to be stirring outwards the monopolistically inclined elements of the capitalist system.
We have to ask ourselves whether competition in the old sense of the word is possible. Perfect competition is not possible, of course. But then to go on and say that because perfect competition is not possible we need not legislate for any sort of competition is like saying, "I do not believe in perpetual motion and therefore I do not believe in the motor car."
I give this outline of basic Liberal attitudes to competition in the economy because it is the background to our decision to vote against the Bill tonight. I make it clear at the start that we are not voting against those parts of the Bill which deal with consumer protection, except to say that those parts which deal with consumer protection are an abiding monument to the irrelevance of the two-party system in the 1970s.
The Government must try to say, tonight or at some other time, just why they have stood on their heads over consumer protection. This was a question aimed at them frequently by the hon. Member for Swansea, West (Mr. Alan Williams). I do not apologise for reminding the Government yet again of 503 what they said when they disbanded the Consumer Council. Their excuse then was,Other consumer organisations have grown in number and in strength, and the consumer's interest has been more widely recognised and protected.What has changed? If consumers could stand on their own feet two years ago, why not now? If they cannot stand on their own feet now, why then?
The Government have given no convincing answer to this. The Minister made no attempt to deal with it. So perhaps I should look elsewhere for the reasons. I can only suggest that the Government's disbanding of the Consumer Council derived from the "damned bitter" approach to policy making. Instead of giving the Conservative Party's policy-making committees in opposition terms of reference to assess, rationally and coolly, in the public interest, what policies were required to deal with the problems that the country faced, the Prime Minister said to those committees, "Find out what the Labour Government is for and then be damned bitter about it." This is a symptom of the two-party madness.
If the Minister rejects this reason as to why they were against the Consumer Council, may I suggest another which perhaps is even worse? Shortly before the Government came to power, a new Director of the Consumer Council was appointed, by the name of Des Wilson. I yield to no one in my admiration for the former Director, but the Consumer Council under Des Wilson would have been much more troublesome both to this Government and to its industrial friends than under the former Director. I have no doubt that the Government and some of their industrial friends had nightmares about a British Ralph Nader. Therefore, great pressure was brought to bear on the Government by the Tory Party's friends in industry.
One can see the sort of pressure that was brought when one considers the publication of the Industrial Policy Group, entitled "The Control of Monopoly", published in May 1971, which said,The Commission need no longer concern itself"—504 this is the Monopolies Commission—with the elusive concept of the public interestThe list of people on the group reads like a Who's Who of contributors to the Conservative Party, and one is tempted to say, "Well, they would, wouldn't they". Whatever were the reasons for the decision to disband the Consumer Council, with this Bill we hear the cry, "The Consumer Council is dead; long live the Consumer Protection Advisory Committee."
The powers that the Government are taking and giving to their agencies to protect the consumer will of course be effective if they are vigorously implemented. Unfortunately, past experience suggests that only the most blatant cases will be tackled, and then somewhat reluctantly. I have to ask the Government, why should be believe that these things will be tackled vigorously now?
One particular concern that I have about the Consumer Protection Advisory Committee is its make-up. Who will these people be? They will be appointed by the Secretary of State and we are told that they will be drawn from those with relevant trading experience, as well as those who have had experience in administering the weights and measures legislation and the Trade Descriptions Act. What about consumers? In June 1962 the Liberal Party published a report on consumer protection. One of its main proposals envisaged the setting up of a national consumers council. Yes, this is ten years ago—
§ Sir G. Howe
I am sure that the hon. Member would not wish to make a false point. In Clause 4(5), he will find, the two categories he mentioned are prescribed; in addition, the members of the Advisory Committee are required to include persons appearing to be qualified to advise…on consumer trade practices by virtue of their knowledge of or experience in organisations established, or activities carried on, for the protection of consumers.The consumer interest is one of the three specifically provided for.
§ Mr. Pardoe
One of the three—my whole point. I should like to remind the Minister of exactly what was said ten 505 years ago on this question in the report I mentioned:It should be a representative body, not a Government-controlled one or a Government Department, although it must clearly be established and financed by Parliament. Administratively, its model should be the Arts Council. By a representative body, we mean a body representing the consumer and the consumer only.That is the point which the Minister's intervention has not answered at all.
We went on:We do not trust the type of representative body on which all the interests possibly concerned are represented under a neutral chairman and in which the balance of interest is so nicely calculated as to make agreement improbable and action impossible.This is the essence of the constituent elements of that body; if they represent all the interests, and if there are people there to argue, as there always are, for the interests of industry and for restrictive practices, then the consumer interest will be outweighed.
§ Mr. Pardoe
No, it is by no means clear, and the Minister in his intervention has accepted that the two categories that I have mentioned will be there. He said that there will be a third category—namely, consumers. So my major objection is that this body will be representative of all the interests; I want it to be representative of consumer interests alone. If the hon. Member can find, anywhere in the Bill, any indication that it will be representative of consumer interests alone, he had better tell his right hon. and learned Friend, because I am sure that, since he knows the Bill backwards, he would have told me in his intervention where this is provided for.
I wish to turn now to the provisions relating to monopolies, mergers and restrictive practices. The Minister said—I hope that I do not misquote him and have understood the tenor of his remark—that the proposals on monopolies, mergers and restrictive practices were not as formidable as the size of the Bill might suggest. He can say that again. They fall far short of what is needed. They fall so far short of the Government's own stated intentions as to cast 506 doubt on their integrity and their honesty of purpose.
Competition is on the way out in large sections of British industry and barely a protest is audible. Every reason is trotted out to excuse and defend the limitation of competition. The spread of merger-mania is condoned by successive Labour and Conservative Governments. People have even invented a euphemism to describe it—"responsible marketing" is the term in the best industrial circles.
I do not believe that competition can be the only criterion. The effect on employment should also be an important consideration, although of course redundancies in isolation are not necessarily reason enough to reject a merger. But redundancies in an area of high unemployment should require remedial investment in that area as a condition for allowing the merger. I see nothing in the Government's approach which would lead me to suppose that they would be prepared to do that.
Now let us look at the history of this matter. Between 1948, when it was established, and 1964, the Monopolies Commission made 25 reports, 18 of which called for action to end monopolistic or restrictive practices. In only two cases did the Government of this country make orders to implement those recommendations. Of course, the Government do not want to implement such recommendations, because they were grievously embarrassing to their friends in industry. They were also grieviously embarrassed politically by not implementing the recommendations in all those reports, so they changed the law and introduced the Restrictive Practices Act, 1956.
Like this Bill, that measure was supposed to be tougher than what had been there before. But it did not work out like that at all, and I do not believe that the Bill will do so. Since 1956 the law has been there. The power has been there. But the will has not. Why should we believe that the will is there now? Nothing in the Bill leads me to believe that it is. The powers to tackle monopolies and restrictive practices still remain unsatisfactory. The exercise of the powers is left far too much to the discretion of Ministers, who over the years, in both Labour and Conservative Governments, have shown a remarkable 507 unwillingness to give the public interest the benefit of the doubt.
Behind the scenes unwritten understandings by big business will remain entirely untouched. How will the director discover what the agreements are? I suggest that we need a section of the CID equivalent to the Fraud Squad to investigate unwritten agreements.
§ Mr. Pardoe
Yes, I am prepared to extend the workings of the criminal law to people who offend against the public interest in this way.
§ Sir G. Howe
Will the hon. Gentleman acknowledge—I do not know the nature of the case which he is making—that in relation to the Monopolies Commission reports, quite apart from the cases where orders were made, undertakings were given in other instances which had an equivalent effect? The 1956 Act, which he denounced as being wholly ineffective, led to 45 cases being contested in the Restrictive Practices Court, and 34 agreements were struck down. That led to 2,900 agreements being registered and 1,600 being withdrawn. Therefore, I suggest that it is wrong to suggest that the Act was as ineffective as the hon. Gentleman suggested.
§ Mr. Pardoe
The Minister is so innocent and naïve of the procedures within industry and how industry gets round the legislation against monopolies that it terrifies me to think that the job of policing and ensuring the protection of the consumer is in his hands. Eighteen of the 25 reports of the Monopolies Commission which I quoted from 1948 to 1964 were recommendations against monopolistic practices, and in only two cases were orders made. That was excused on the ground that industry, quietly and nicely, and in a gentlemanly way, accepted the recommendations and gave undertakings. But all it did was to go behind the scenes. The Minister has only to look behind the scenes—
§ Sir G. Howe rose—
§ Mr. Pardoe
Let the Minister wait a minute. I am coming to the recent report of the Monopolies Commission of 1965, on petrol prices. I will show him how 508 that report, which was implemented by orders in this House, has been repeatedly circumvented. The Government have sat by and done nothing about it.
§ Sir G. Howe
I am not seeking to say that in every case have the recommendations been wholly accepted, and that they are completely effective, but it is idle to pretend that the legislation has no teeth. Many proceedings have been brought against firms which have not complied with the recommendations, and the recommendations have been enforced by the most swingeing penalties, sometimes amounting to £100,000. That is an indication that the legislation means business. The reason that we are making these changes is to demonstrate that we mean further business.
§ Mr. Pardoe
That is the point that I am making. Since 1956 the law and the power has been there, but the will has not. Companies have been able to circumvent the law. It is easy to do, and it will be easy under the provisions of the Bill.
§ Mr. Wilfred Proudfoot (Brighouse and Spenborough) rose—
§ Mr. Pardoe
I must make some progress with my argument. The Minister has now interrupted me three times.
The fact is that these matters are extraordinarily difficult to deal with, and I illustrate just how difficult by reference to two examples within my own experience. The first represents a major success—namely, the reference of the cross-channel ferry charges to the Monopolies Commission. First, I asked a Question in the House and caused some publicity to be focused on the fact that cross-channel ferry charges had gone up by exactly the same amount. They had been exactly the same for all the cross-channel crossings of all the companies, irrespective of length of crossing. It was a clear case of collusion, but I could not bring other than circumstantial evidence.
However, because of the publicity which was given in the Press to my accusations, I was asked to meet a representative of British Rail and a representative of Townsend Thorensen Company on B.B.C. radio. At the end of the interview I said, "Come off it. Did you or did you not, in June of last year, meet together, all you companies, 509 to fix the charges?". The B.B.C. representative sat back in his chair and said, "Mr. Pardoe, you have got it all wrong. The meeting was in August." That was the first evidence I had that such a meeting had taken place.
I produced a long memorandum which I presented to the Minister, which he has now referred to the Monopolies Commission. And I remind the right hon. and learned Gentleman that I took one other precaution; I sent my memorandum to the Brussels Commission. The commission has conceded that it is against the provisions of the Treaty of Rome, and it will investigate the matter. So if the Government want to hush up the report of the Monopolies Commission, which will be in accordance with my memorandum, it will not be able to do so this time. That is one advantage of going into Europe.
I have not been so successful on petrol prices. I wrote to the Under-Secretary of State on 15th September, saying that petrol prices had gone up by exactly the same amount and that they had done so on every occasion for goodness knows how long. I said that British motorists were getting a raw deal compared with European motorists. I alleged collusion, and I believe that no reasonable man looking at the increases in petrol prices could say otherwise. But I received a letter from the Minister which said:In your letter you suggest that there is collusion between the companies to fix prices. If you have evidence that this is so, you should bring it to the attention of the Registrar of Restrictive Trading Agreements. Such evidence should be sent direct rather than through the Government.Collusion is extremely difficult to prove, and it would have been easier for the Minister who wrote that letter to produce evidence of collusion. He would have known only too well whether collusion had taken place, because he would have been party to it only months before he became a Minister. It is extremely difficult to fight a Minister on those grounds.
§ Sir G. Howe
Which Minister is the hon. Gentleman talking about? He has not named the Minister who he suggests was a party to the collusion.
§ Mr. Pardoe
He was an Under-Secretary at the time in the Department of Trade and Industry. I understand that he 510 is winding up tonight. I refer to the hon. Member for Honiton (Mr. Emery).
§ Mr. Pardoe
That is right. He was a director of Phillips Petroleum UK Ltd., and knew all that there was to know about collusion in the oil industry. He did not need me to tell him about that.
Petrol is an example of the weakness of evil in this matter. The big companies have openly flouted the monopolies and restrictive practices legislation. It was recommended by the 1965 Monopolies Commission that the petrol companies should desist from forcing the petrol stations which they owned to stock only their own oil and batteries. They gave an undertaking in a gentlemanly way and the Government believed them. But the fact is that this is still going on.
There are now far more stations owned by the petrol companies. I can produce documentary evidence that oil company representatives go on to the forecourts of the stations with the tenancy agreements under their arm. The tenants know what that means. It means, "You will stock our oil and batteries, or else."
The Government's attitude was typified by their decision to refer the merger of Reed International Ltd. and Bowater Ltd. to the commission. The merger was referred to the commission, but the Government specifically allowed the merger to go ahead. Supposing the commission had reported that the merger was against the public's interest?—the merger would have already taken place; what good is that?
I believe that we need to distinguish between monopoly and non-monopoly companies. Where monopolies exist and where they are not going to be broken up, they must be regulated. The choice must he between State regulation and enforced competition. There must be no freedom to exist in a limbo state between the two. Regulated companies should be required to pay additional corporation tax on the part of their gross profits which come from regulated products and services.
Another matter which I find somewhat distressing about the Bill is that the Minister has not yet replied to the point put by the Opposition about the reason why professional services are outside the 511 scope of the Bill. As it happens, we in the Liberal Party have been arguing for a long time that if there are labour restrictive practices there is no reason why they should not be controlled. They should be referred to the commission and investigated. But if one does that, why should lawyers be exempt? The only conceivable reason is that the Minister himself is a leading lawyer and has surrendered to his own faction.
§ Mr. Charles Fletcher-Cooke (Darwen)
This is the third time that it has been said in the debate that lawyers and other professional people are outside the scope of the Monopolies Commission. It is untrue. They are outside the scope of the restrictive practices legislation, but so are workers and others. Lawyers are not excluded from inquiries by the Monopolies Commission.
§ Mr. Pardoe
That is not my interpretation of the Bill. Industrial workers are specifically brought within its terms. If the hon. and learned Gentleman thinks that the Bill has fooled me, then it has fooled the Daily Telegraph as well because it made the same point in its leader of 2nd December. I am by no means the only person who has failed to discover the Government's toughness of attitude towards lawyers.
§ Sir G. Howe
The hon. Gentleman is making a false point through his misunderstanding of the Bill. It is right that he should be put right. The Bill includes provision for reference to the Monopolies Commission. Certainly they are not included in the restrictive practices legislation, but they are in fact already subject to the Monopolies Commission, and under these provisions, orders can be made in relation to their practices. The attitude I have outlined is precisely in line with that set out in the last report of the Monopolies Commission. It is wrong to say that they are not amenable to reference. That point cannot be too clearly understood.
§ Mr. Speaker
Order. I remind the House that this is not the Committee stage but the debate on Second Reading.
§ Mr. Pardoe
I apologise to hon. Members who are waiting to speak, but I have now been interrupted four times by the Minister in lengthy interventions. 512 I had no intention of taking up so much time.
This Bill is window dressing. The Daily Telegraph of 2nd December said:Out goes the stuffy, old-fashioned Registrar of Restrictive Trading Agreements; in strides the brisk, up-to-tile-minute Director-General of Fair Trading. The Minister has given us mostly words rather than action.That is a fair summary of the Bill. The spirit of honest, open competition has been smothered by the lust for power, position and wealth. The giant corporations are here to stay and they will see that competition is squeezed or merged out of existence. Something called capitalism will linger, but private enterprise is in its death throes in Europe. There has to be a wider degree of Government control and intervention in the affairs of big business. Liberals are not afraid to say so. We have a policy to do it. The Government have not.
§ 6.33 p.m.
§ Mr. Charles Fletcher-Cooke (Darwen)
The purpose and principles of the Bill are excellent. If the Liberals vote against the purpose and principles on Second Reading, it will not be understood. The Bill may need strengthening—I think that it does in various places—and perhaps various organs within it may come under criticism. Indeed I do not disagree with some of the points which the hon. Member for Cornwall, North (Mr. Pardoe) has put, but the principles and purpose of the Bill deserve the support of the House and the Labour Party is quite right not to vote against it.
My criticism of the Bill has been somewhat diminished by the concluding words of my right hon. and learned Friend in his excellent speech. He said that the door was not closed to other measures designed for the protection of the public and of commercial interests which may be squeezed out by monopolists in the sense that there will be perhaps in future opportunities for private enforcement. I was, on reading the Bill, somewhat dismayed by the bureaucratic nature of machinery provided. It contrasts very directly with the Government's policy on industrial relations as exemplified in the Industrial Relations Act. There, in my view, rightly, the Government left it to private enforcement. There was not to be intervention by public agencies or by the 513 Government—or at any rate as little as possible. Now, in this comparable sector, Government agencies are all-powerful and there has been no sign that the requests for consumer courts and other means of bringing in private enforcement have as yet produced any fruit.
But in his concluding sentences my right hon. and learned Friend did not exclude that for the future, and I was glad to hear it because otherwise one might have thought that the bureaucratic embrace had been total and that probably the Government were frightened that there would be some sort of consumer "Goad" or even an industrialist "Goad" which might have been inconvenient. But I am glad to know that that is not the intention.
The registrar of restrictive practices is to give way to the director, who is to be the linchpin of the whole structure. He is also now to be the registrar for references to the Monopolies Commission, and this of course fulfils a long expressed policy of the Conservative Party exemplified on the Second Reading of the ill-fated Commission for Industry and Manpower Bill, when my right hon. Friend the present Home Secretary said:We think that the initiative"—of reference to the Monopolies Commission—ought not to be solely in political hands."—[OFFICIAL REPORT, 8th April 1970; Vol. 799, c. 584]That promise has now been fulfilled in this Bill because, although political hands will figure, they are not the sole agency for making references to the Monopolies Commission. The registrar, however, does not make references in the case of mergers, and I wonder whether that is really right. There is, as my right hon. and learned Friend knows, considerable worry about the effect of references of mergers, particularly recently, because it is thought, and to a certain extent thought rightly, that a mere reference prejudges the issue.
We have the recent example of the threatened merger or takeover of Timpsons, the shoe manufacturers, where there was the reference of one of the bidders, Sears, but not of the other, UDS. This has totally prejudged the issue. If this is to be done, surely it is not right 514 that such a reference should be in political hands, however capable they may be.
The justification for the Monopolies Commission is that it is a purely judicial body. One of our criticisms of the Labour Government's Commission for Industry and Manpower Bill—about which we have heard nothing today, although it is only two years ago that we were locked in combat over it—was that it mixed up highly charged political matters with less highly charged matters of competition policy.
If the Department of Trade and Industry is to be the sole referrer of mergers and if the result of a reference is to kill the merger or takeover before the Monopolies Commission has a chance to report, I am sure that my right hon. and learned Friend will see the lurking dangers. There are great problems connected with legislation regarding mergers. It is not surprising that Europe has shied away from this. Although the Community's monopoly and restrictive practices law is strong, it has no merger law and attempts to introduce it by the hack door have been firmly squashed in the recent Continental Car case.
I should like the director to have the same power to refer mergers as he has in the case of monopolies, because I believe that that would be in accordance with the policy of the Conservative Party which is to keep politics out of the work of the Monopolies Commission and the Restrictive Practices Court as much as possible.
In the monopolies field, strictly so-called, the Department of Trade and Industry will have a veto over the director's references. This may he justified but it requires justification and I have no doubt that it will be justified either tonight or in Committee. Clause 13 provides that the Secretary of State may give general directions to the director as to the principles upon which he is to make his references, but the Secretary of State is placed under no obligation to express his own principles when he makes references of his own motion or when he vetoes references made by the director according to those principles.
Although it is a great step forward to have someone the equivalent of the Registrar in the Monopolies and Mergers 515 Commission field, it has not gone quite far enough.
I greatly welcome the commission's new terms of reference embodied in Clause 79. My hon. Friend the Member for Kidderminster (Sir T. Brinton), in his splendid speech, expressed the desire that in future the neutral attitude towards mergers should be departed from and they should be treated as suspect until justified—in other words, that there should be a presumption.
I read something on those lines in the new terms of reference set out in Clause 79. Although it does not say so ipsissima verba, there is in Clause 79(a) very much of a presumption in favour of competition and anybody who, to use the words of others, wishes to eliminate or suppress or reduce "independent decision making units" must justify it. That phrase comes from the general observations in the Report of the Monopolies Commission on the Allied Breweries case, when the commission went out of its way to invite a change of emphasis on the question of the presumption. I support that. Clause 79 goes some way towards embodying it.
Clause 79 also embodies matters which are not strictly matters of competition policy. Clause 79(d) gives the commission the taskof maintaining and promoting the balanced distribution of industry and employment in the United Kingdom".This is a very important function, but it is a highly political one. One of our criticisms of the Commission for Industry and Manpower Bill was that that sort of consideration was to be introduced into the Monopolies Commission perhaps to an even greater extent than here. I see the right hon. Member for Birkenhead (Mr. Dell) here. He will remember that I objected to it on the grounds that that would introduce politics into the commission. I greatly hope that the inclusion of (d) will not have the same effect.
I keep harping on the need for the judicial approach which requires very strict terms of reference rather than the more generalised question of employment, regional policy, and so on, because of the peculiar nature of our competition law.
We do not take the "structural" approach which the Americans take. In America an examination is made of the 516 share of the market, the structure of the industry, the degree of verticalisation, the degree of horizontal or conglomerate dominance or whatever it may be and it is then said, "That is a sufficient monopoly to be attacked." We proceed primarily on the conduct of such set-ups, whatever the structure. If the conduct is or is likely to be bad there is a condemnation. When people's conduct, particularly their future conduct, is being judged, it is impossible to carry confidence if there is any question of political motivation in the judgment.
During the course of the debate, particularly in the speech of the hon. Member for Cornwall, North, anxiety has been expressed about the effects of orders and inquiries and doubt has been expressed about the extent to which they are policed. First, what are the effects of mergers which are allowed, either those which are not referred or those which have been referred and are permitted?
In its general observations in the Allied Breweries Limited case the Monopolies Commission made strong recommendations about the need to acquire information about the results of such mergers. Those recommendations were given effect to in The Commission for Industry and Manpower Bill. That was about the only good thing in that Bill. I am sorry that there are not such provisions in this Bill.
The Monopolies Commission pleaded for opportunities to inquire into the consequence of mergers and stated in paragraph 32 of its observations:We regard this question of information"—that is, about the results of mergers—as important and all the more so in view of the number of points on which at present detailed information need not be made available. We accept the view that in the present state of affairs the increase to date in the scope of merger activity is unlikely to lead to any general collapse of confidence. Nevertheless, this increase could continue and even accelerate and we cannot wholly dismiss the eventual risk of such collapse. This makes it advisable that shareholders should be given fuller and more accurate information, so as to make it easier for them to interpret both the prospect of mergers and their results.The commission stresses constantly the need to provide "more detailed information" of the results of previous mergerswhich might deter companies from going ahead with mergers designed merely or largely 517 to buy the assets and/or profits of the acquired company cheaply.There is a need for the results of mergers to be more easily discovered and made widely known.
Another important matter was touched on by the hon. Member for Cornwall, North. Cannot we have in dealing with these undertakings the same opportunities for private enforcement—that is, for enforcement at the suit of private individuals—as we have in the case of the judgments of the Restrictive Practices Court? There is a statutory duty to obey such judgments which is provided for in Section 4 of the 1964 Act and Section 7 of the 1968 Act. Any private citizen who is damaged by a failure to obey such a judgment can sue for breach of a statutory duty.
I am not sure whether a private individual can sue for breach of an order of the Monopolies Commission. A private individual who is perhaps a competitor may be damaged by a course of action by someone found by the Monopolies Commission to be doing something against the public interest. I agree with my right hon. and learned Friend that it is far better to have an undertaking if it is forthcoming in the proper terms, than to make an order. There is no virtue in making orders simply for the sake of showing that one is virile and important. An undertaking is much better. However, to be the equivalent of an order, the undertaking must first be pubished. I am not sure whether there is any requirement to publish such undertaking so that third parties, who often are intensely interested in the matter, may know what they are. But above all, it must be possible for third parties to sue if there is to be the degree of private enforcement which I should like to see. Although the Government do their best to enforce these matters, there is nothing like a little bit of private enterprise to keep them up to the mark.
I come to something which is not in the Bill but which I regard as perhaps the most important thing to stop the present mania of merger and takeover which I sense every hon. Member feels has gone too far. That is the taxation position. This is not a taxing Bill, and therefore the matter cannot be dealt with in it. However, there is no doubt that 518 the tax advantages of merger or takeover are often very great whereas the tax advantages of demergerisation and divesting are nil. All the tax advantages in mergers are on the side of ever larger units and it is almost impossible, even with the greatest ingenuity, to split these things up, even though the member parts of the constituents may wish to, without incurring enormous taxation bills, particularly as a result of capital gains.
Therefore, the Bill should be supported by an inquiry, and an eventual reform of the taxation system, which would give the drive towards smaller independent units of decision, which we all favour, the tax advantages which at present are given the other way round.
§ 6.54 p.m.
§ Mr. John Roper (Farnworth)
It is always pleasant for me to follow the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) in debate, particularly when I am able to agree with him, as he has the misfortune of having me as one of his constituents. I agreed in particular with his comments about the importance of Clause 79. What he said about the need to continue monitoring of the results of mergers was important. Clause 83 makes provision for the monitoring of certain orders and possibly of undertakings and it should be amended in such a way that mergers could be monitored as well. The Commission for Industry and Manpower Bill, which the hon. and learned Gentleman criticised but also praised a little, included the provision about an asset size of £10 million as an alternative ground for possible reference to the Monopolies Commission. If that provision were reinstated, it would cover a number of the cases and would enable more monitoring of mergers to take place.
Other Bills for which the Minister has been responsible have been much more controversial than this Bill. It is a little ironic that this Bill makes a start on achieving some of the objectives of my right hon. and hon. Friends, because in Schedule 13 it begins the repeal of the European Communities Act 1972 by repealing Section 10(3). Therefore, I suppose that the Bill establishes something of an important constitutional point by showing that, while the European Communities Bill was unamendable, the 519 European Communities Act is amendable. My right hon. Friends the Members for Battersea, North (Mr. Jay) and Stepney (Mr. Shore) were most interested when they spotted this point. Perhaps we shall see them and the right hon. Member for Wolverhampton, South-West (Mr. Powell) extending this part of the Bill in Committee.
I, too, critically welcome some parts of the Bill as being a step forward in the development of competition policy. Certainly not all of it is satisfactory. We on this side of the House take considerable exception to parts of it. We believe that some of it is totally unnecessary and other provisions in it, which might have had a place within the broad scrutiny of all industry which was intended under the Commission for Industry and Manpower Bill, cannot be accepted in a limited Bill of this type.
Also, a number of things which should have been done by the Bill had not been done. I shall consider one or two of them later and I hope that we shall have the chance of dealing with them in Committee. As the hon. and learned Member for Darwen mentioned, there are one or two important developments in monopolies policy. Although I hope that it will be possible to improve it in Committee, Clause 79, which defines the public interest, is a good deal better than Section 14 of the 1948 Act, which it replaces and which successive Monopolies Commissions have shown to be virtually useless in assisting them in their inquiries. In fact, it has been little used in those inquiries.
The presumption that competition is an objective in itself and, therefore, that monopolies are bad, is made much more explicit in the Bill, although it is important that this should be taken in the context of other provisions which make it clear that social factors, such as regional policy, the distribution of industry and technical development in industry, continue to be important. As the hon. and learned Member for Darwen said, we have not followed the structural approach which has found favour on the other side of the Atlantic. In our approach to monopolies we have assumed that we should have a pragmatic policy which attempts to make some assessment of the social costs and social benefits of 520 each monopoly situation. Plainly, in such a pragmatic approach definition of the public interest is one of the most difficult problems but perhaps the most important. Once defined there is still doubt whether this will be used by the commission, but it is certainly important that the objectives are properly settled.
I hope that the Minister can say something more than his right hon. and learned Friend did about the introduction of the concept of a complex monopoly situation. The situation described here might go some way towards meeting some of the misgivings of the hon. Member for Cornwall, North (Mr. Pardoe). I assume that the new provisions for complex monopoly situations taken in conjunction with Clauses 7(2) and 8(2) are designed to catch the non-collusive oligopoly—that rather elusive animal which has eluded successive Presidents of the Board of Trade and Ministers in the Department of Trade and Industry ever since my right hon. Friend the Leader of the Opposition expressed some hope of dealing with this when the 1948 measure was going through the House in 1947.
I hope that we can pursue in Committee these new provisions for complex monopoly situations and the possibility of these non-collusive oligopolies being brought under scrutiny. [Interruption.] My hon. Friend the Member for Liverpool, Walton (Mr. Heifer) inquires, "What is oligopoly?" This is when a limited number of producers gang up against the public interest. If they get together and make an agreement it is a collusive oligopoly; if they do not, and there is one who is a price leader and the others follow, it is a non-collusive oligopoly. The second situation has been the most difficult to catch in previous legislation. I hope that these provisions will cover it.
I turn to price rigging and market rigging. I hope that the application of this new power to the director general will not cause too much trouble to those operating legitimate agreements. I suspect that the powers given to the director general under Clause 83(5) for continued monitoring of orders or undertakings following a Monopoly Commission report is a valuable extension of the director general's powers. I agree that we should see whether we can extend this—whether 521 there can be a similar continuous monitoring of the merger reports. That would be particularly valuable in the light of the further powers given to the Secretary of State under Clause 88(3) and (4). These enable him to take action in court if a firm fails to comply with an order. This is still at the stage when an order has been made.
When undertakings are given rather than orders being made a proper way must be found to know what the undertaking is. Secondly, there must be a proper way for the director general or Secretary of State to take action if they are not complied with. That is certainly not covered by Clause 88 as it stands.
Before dealing with some of the problems of the Restrictive Trade Practices Act 1956 I ask the Minister to tell us the intentions of the Secretary of State about making orders under Clause 98—the clause which will enable the Secretary of State gradually to bring the services under the scrutiny of the Restrictive Trade Practices Act. Although we all regret the exclusions, under Schedule 4, of professional services from the services, it would be helpful to know whether the Secretary of State intends to bring the other services under scrutiny within a year, two years, or whatever.
Clause 96 extends the powers of the Restrictive Trade Practices Court to make orders against trade associations. A number of people will regret that opportunity has not been taken in the Bill to clarify the position about some types of agreement as they affect small firms and trade associations. I return to the point raised earlier by the hon. Member for Bedford (Mr. Skeet). There were fairly clear recommendations in the report of the Bolton Committee. I would particularly like to deal with the position as it affects distribution. I should declare a non-pecuniary interest as a director of a co-operative society.
For some years there has been considerable concern in distribution that there is one law for the multiples—the big boys—and another much more stringent law for the independent shopkeepers, the family groups and the co-operative societies who become enmeshed in the interstices of the 1956 Act. This point was made clear at the Board of Trade's own conference on monopolies, mergers 522 and restrictive practices held in Cambridge in September 1969, when Sir Hugh Weeks, the then Chairman of the Economic Development Committee for the distributive trades, said, dealing with the Restrictive Practices Acts:let us consider the effect of the Acts on distribution. It clearly favours the multiple organisation with a number of units under its financial control, for instructions given to branches on prices, promotions, policy, opening hours and the like would of course not fall foul of the Acts. On the other hand, if a voluntary group which is developed to compete with the multiples sends similar instructions or even makes suggestions to its members on exactly the same points, this would appear, to be a registrable agreement.…Broadly speaking it seems likely that the application of Restrictive Trade Practices Acts to distributions is frequently irrelevant: takes no account of the widespread and flexible competion within the distributive system, and is likely to impede the desirable efforts of voluntary groups and trade associations to improve the efficiency of members.I would not completely agree that all the agreements which are made by trade associations or voluntary groups should be excluded from the Restrictive Trade Practices Acts. While there is a need to keep some control over associations there is equally a need to find a sensible way of doing this. I hope that in Committee we will devise some satisfactory amendment to the 1956 Act. This is of considerable importance. The hon. Member for Kidderminster (Sir T. Brinton) when referring to the small shops in his High Street was touching on a similar point.
I come now to the director general. My right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) said that this was an extraordinary job. Certainly the Bill provides a quite extraordinary job description for any one man. He is expected to be a venturesome knight, sallying forth to protect the consumer. He is expected to be an independent assessor of monopolies and mergers and a legal scrutineer of restrictive practices. I am very sceptical as to whether a paragon with so many virtues exists as an individual, or whether he could easily co-exist within a single corporate organisation.
In some ways it is an ambitious concept. Although I am rather critical of the "phoney" independence of the director general—the fact that he is nominally to make monopoly references but is subject to a Government veto and can he over-ridden by the Secretary of 523 State—in practice I think that it will be difficult to operate as has been suggested, and I feel that we will be amending this in the near future. Having said that, it seems a little perverse to suggest an additional function which should be in the same broad area as that covered by the director general.
In recent years considerable dissatisfaction has been expressed in this House and elsewhere at the possible distortion of fair trading caused by a whole range of practices by multinational companies. Not only their policy with regard to taxation but also their transfer pricing policies provide enormous opportunities of unfair trading of one sort and another. These should be monitored by some public body in this country. Whether, as someone has suggested, this can be done more effectively by the Inland Revenue I am not sure, but clearly it is important to ensure that these companies pay more corporation tax—and perhaps that could be done more effectively by a reorganised director general.
In comparison with some of the other legislation for which the right hon. and learned Gentleman has been responsible, I cannot say that this is a bad Bill, but I very much hope that the Government will allow us to make it a much better Bill before it reaches the Statute Book.
§ 7.10 p.m.
§ Mrs. Sally Oppenheim (Gloucester)
I am delighted on this occasion to be able to eat my own words. In the debate on the Address in reply to the Gracious Speech I predicted that we would be provided by the Government during this Session with some delectable titbits in the way of consumer measures. With the advent of this Bill it is quite clear that what we are being served with is a veritable feast.
However, in that same debate I said that we in this country could not ignore any longer the urgent need to provide comprehensive consumer legislation, that it was an obligation which no Government should attempt to escape, and that it was an obligation which I did not believe a Conservative Government intended to shirk. Far from eating those words, I am delighted with the accuracy of my predictions.
524 I hope that the House will not think it immodest when I say that my hon. Friends and I, who spent a good deal of time this summer studying and researching what is required in the way of consumer measures and in making recommendations, will look upon this Bill with some degree of parental pride, and as partly our own offspring, and we shall want to make sure that it does not turn out to be a changeling, although I am not attributing to my right hon. and learned Friend the rôle of Oberon.
However, this caveat vendor Bill, as it has been called, and as it will undoubtedly become known, certainly serves to provide a most comprehensive, extensive and effective framework of consumer protection, much beyond what we have yet seen in this country or in most other countries. It will create a consumer watchdog that will both bark and bite with one large tooth in the armoury of the Director General of Fair Trading, in that he will be able to bring action in the Restrictive Practices Court, as it says in Clause 35, if businesses or traders consistently pursue a course of action which is unfair to consumers or detrimental to their interests.
The excellent definitions in Clause 3, of consumer trade practices, and in Clause 17, of the effects of certain consumer trade practices, are among the most valuable and significant features of the Bill, because not only do they apply to the supply of goods and services but, with their complementary Clauses 22 and 23, they will, allow, for the first time the law to leap with those who are usually one leap ahead of the law, by enabling the Secretary of State to take power to deal with consumer abuses as and when they arise.
This is entirely in line with our recommendations in "Square Deal for Consumers", with regard to general enabling legislation to permit the Secretary of State to legislate by regulation when new consumer abuses arise suddenly and need more immediate action than is possible during a heavy legislative programme.
This group of clauses would seem to me to bring within their scope the enforcement of all the labelling, warning and packaging regulations which many of us have been calling for for some time, 525 including unit pricing, standard packaging, date stamping, and hazardous product labelling in Clause 35—and doorstep selling of insurance, in Clause 17—and, I think I am correct in saying, though I stand to be corrected, that Clause 17(2)(d) brings a measure of protection in consumer credit transactions pending full implementation of Crowther.
Therefore, naturally, I hope that powers will be taken very early in the life of this Bill, when it becomes an Act, to make those regulations, and if that proves to be the case the Bill will have been a measure of considerable value to consumers at a very early stage of its life.
Those highly important aspects of the Bill which deal with restrictive agreements in the supply of services, with monopolies and mergers, and with restrictive labour practices and restrictive trade practices in the supply of goods and services, are all extremely welcome and valuable, but I do not intend to dwell upon their significance at length because a number of my hon. Friends have already done so and I know that many hon. Members are still hoping to catch your eye, Mr. Deputy Speaker, but I would single out for special welcome the fact that in Clause 45 an attempt is made to deal with parallel pricing. Although the Monopolies Commission has not even reported, the qualifying point for monopolies and mergers is to be reduecd from one-third to one-quarter. Procedures for prosecution under the Trade Descriptions Act should be speeded up, because it will be the Director General of Fair Trading rather than the Department of Trade who will need to be notified.
The provisions for enforcement both in the Restrictive Practices Court and under the Trade Descriptions Act would seem to be highly satisfactory, and the fact that there is to be some provision for compensation for traders in certain circumstances, in Clause 33, demonstrates to me the thoughtfulness which has gone into the drafting of this Bill while the penalties for contravention of the regulations have the merit of being at the same time fair and realistic, and on all these points the drafters of the Bill are to be warmly complimented.
526 I should however, like to make some comments and suggestions to my right hon. and hon. Friends on the proposed administrative machinery for the protection of consumers. Although I am only too well aware of the dangers of looking a gift horse in the mouth I think I must inevitably compare the structure proposed in the Bill with that which we proposed in "Square Deal for Consumers". In many ways it is much more sophisticated than what we proposed, and this constitutes a considerable improvement. However, I cannot help feeling that there will be some duplication in the function of the office of Director General of Fair Trading and the Consumer Protection Advisory Committee. Although it will be the function of the former to be, as it were, the catalyst who will investigate, initiate, research and recommend, while the function of the latter will be that of a consultative body of experts on both sides of the problem, I cannot help feeling that the latter body will be involved in research if it is to do its job properly, and so there could be some unnecessary, time-consuming duplication of the two offices. While the CPAC approximates only very roughly to the central council that we proposed the office of the Director General of Fair Trading and the director general himself approximate very closely indeed to the national consumers' centre which we proposed—with one very important difference, that our centre was to have its feet planted very firmly on the ground by means of close links with local, comprehensive consumer advice centres—a factor which is sadly missing from this Bill, because it could have provided not only an ideal foundation for the researches of the Director General of Fair Trading but also very valuable information from its day to day operation, and also because I believe that the provision of readily accessible consumer advice and education is of vital importance, and this provision cannot be left to voluntary organisations or to the occasional local authority. This is highlighted in Clause 17(2)(b), which speaks of traders misleading consumers and withholding information from them, without regard to their rights and obligations.
That is the whole point, most consumers do not know their existing rights, never mind any new rights, and they therefore do not demand them. Whereas I entirely accept that such information 527 should not be withheld from them by traders, it is a sad commentary that they should in any circumstances whatsoever have to rely upon traders for this information. So the need for consumer advice and education will be as great, if not greater, after the passage of the Bill.
Also, the office of the Director General of Fair Trading seems to have inherited one of the main disadvantages of the old Consumer Council, and that is disappointing. Although, happily, unlike the Consumer Council, it will be the specific function of this office to deal with individual complaints, inevitably it will appear to many consumers to be as remote from them as was the old Consumer Council. I hope that my right hon. and learned Friend will bear that in mind. I am sure he will agree that most people like to make their complaints locally, and to see them dealt with locally. However, the office of the Director General of Fair Trading would provide an ideal nucleus from which a national network of local advice centres could grow, and in addition to the advantages of such centres that I have already mentioned, they would also be able to receive initial complaints and sift them before passing them on to the Director General of Fair Trading, with a commensurate saving in time and money for that office.
Whether the provision of such a service should be the statutory duty of a local authority or should be closely linked to the office of the Director General of Fair Trading is open to argument. It is perhaps, therefore, right that this should not be decided until there has been a degree of experience in the matter in the light of the implementation of the Bill. I am encouraged by the fact that my right hon. and learned Friend implied a great deal of sympathy with this point, and I hope that it may be the subject of further legislation if after a fair trial period it seems desirable, as I believe it will, for the office of the Director General of Fair Trading to put down its own roots and create its own local advice centres.
I support the remarks made by the right hon. Member for Sheffield, Hillsborough (Mr. Darling) who said that in the light of the Bill it will be urgently necessary to change the title of inspectors of weights and measures to that of trading standards officers, so that they can 528 be associated in the minds of the general public with what has for a long time been their main function. I also hope that my right hon. and learned Friend will agree that their numbers will need to be significantly increased for the implementation of the Bill.
My right hon. and learned Friend has expressed sympathy to the view that with every new piece of legislation that extends consumers' rights, especially with regard to specific legislative rights, the need to provide cheap, informal and easily accessible small claims procedure in which consumers can pursue those rights easily is intensified. It is no use legislating for consumers if they are unable to take advantage of the legislation. So, as my right hon. and learned Friend has recognised, there will still remain two outstanding consumer issues. To put it simply, they are that most consumers do not know their rights and, if they do know them, the odds are that it will not pay to pursue them. And if the highly sophisticated machinery for the protection of the consumer that the Bill provides is to be truly effective, it will I believe have to be complemented by a consumer arbitration service and by local advice centres. Without them the effect of the Bill on the consumer could be rather like the effect of putting a learner driver into an Aston Martin with a powerful engine and failing to tell him where the accelerator is and how to operate the controls.
There has been criticism that the Bill provides no new compensation for consumers. The consumers involved in successful actions under the Trade Descriptions Act will be able to claim compensation under Section 1 of the Criminal Justice Act. It is true that this will not apply to cases in the Restrictive Practices Court; there will be no new compensation there. However, if, for the want of a better word, the policing machinery in the Bill is to be as effective as one hopes it will be in stamping out unfair practices, the result will be that the need to bring such action will diminish and, with it, the need for compensation.
I suppose it was inevitable that hon. Gentlemen opposite would not allow this occasion to pass without sneering at the abolition of the Consumer Council. But I say this to them: if the abolition of the Consumer Council created a vacuum 529 which led to the creation of this infinitely superior Mark II model, it was worth while. It has been accepted by hon. Members on both sides that the Consumer Council was not the right body for the job it did. It had neither roots, nor was it able to initiate action. During a normal year the Consumer Council received only about 5,000 complaints, whereas the citizen advice bureaux received about 125,000 at local level, and the Weights and Measures Inspectorate received about 120,000. That proves that the Consumer Council was not in touch with the ordinary consumer and also was unable to take any effective legislative action.
However, there is no comparison between the old Consumer Council and the machinery set up by the Bill, which is vastly more effective and far reaching, and which has wide powers to initiate action both through the Director General of Fair Trading and the Secretary of State with regard to very specific criteria. These are two vital factors missing in the Consumer Council which could not have been grafted on to it as it was.
If hon. Members want to play politics with consumer affairs I warn them that they are on to a loser, because with this Bill, the record of successive Conservative Governments on consumer measures now far outstrips that of successive Labour Governments. And one of the important advantages of the structure which the Bill provides is that it will eliminate the need for emotive Nader-style consumerism in this country. I hope, however, that it will not be used by Ministers who are responsible for answering questions on consumer affairs to fob off hon. Members by referring them to the Director General of Fair Trading. That would be most unsatisfactory from the point of view of hon. Members who are interested in consumer affairs and of this House.
But of course the value of introducing effective consumer protection measures does not lie simply in supplying fairer and more just conditions for consumers. Its significance is much greater than that, for it should lead eventually to the creation of a market place that is unclouded by deception and half truths, and in which quality and value regain their true place as the main elements in competition, with a resulting rise in the 530 standards of manufacturers, retailers and consumers alike.
Finally, I extend a warm welcome to the Bill. It is very gratifying to see our offspring spread its wings and fly a good deal higher and faster than many of us expected. And I hope that the whole House will agree that the Bill constitutes a measure of considerable magnitude, and that it is probably the most significant Bill for the protection of the consumer that has been placed before the House since the Sale of Goods Act 1893. I congratulate my right hon. and learned Friend, my hon. Friend and the Government both on its conception and its presentation.
§ 7.28 p.m.
§ Mr. William Hamilton (Fife, West)
The hon. Member for Gloucester (Mrs. Sally Oppenheim) has a considerable memory, and I congratulate her on being able to speak in detail about certain parts of the Bill without quoting from it and without a note in her hand. Her memory is not all that good, however. She will recall that during the last two years she has twice voted against measures to protect the consumer.
The hon. Lady referred to the Consumer Council. She did not vote for the abolition of the Consumer Council because it was ineffective. She voted against the Council because just after the election the Chancellor of the Exchequer said that he wanted to save public money. The Consumer Council was costing about £200,000, and that was the reason it was abolished. That was why the hon. Lady and her friends supported its abolition.
I regret that the hon. Lady was not made the Minister responsible for these matters so that she could go round Smithfield Market and see how meat prices were soaring, and could tell the housewife how to save a penny on a tin of beans. I rather suspect that the Prime Minister did not appoint the hon. Lady because she was too wealthy. It is a pity, but obviously she could not pretend to be the champion of the housewives of West Fife.
§ Mrs. Oppenheim
The hon. Member must have a strange view of his constitutional duties as a Member of Parliament. I regard it as my constitutional 531 duty as a Member of this House to represent my constituents and their income range, and no other.
§ Mr. Hamilton
I repeat that I find it difficult to accept that the hon. Lady can even begin to understand the problems of the housewife whose husband gives her £15 or £20 a week housekeeping allowance. She cannot understand that situation, and that is why, I suspect, that the Prime Minister appointed the hon. Lady the Member for Rochester and Chatham (Mrs. Fenner) to look at food prices rather than the hon. Lady the Member for Gloucester. Had the hon. Lady been appointed we should have seen less of her in the House, and in that respect we are glad that the Prime Minister made the appointment he did. But if the hon. Lady seeks to pretend that this enormously complicated piece of legislative nonsense will help the harassed housewife in the high street one iota, she and her hon. Friends should think again.
I cannot understand the Bill, and I believe that my hon. Friend the Member for Swansea, West (Mr. Alan Williams) was right to say that this Bill deserved to be accompanied by a White Paper to help people to understand it. Certainly the housewife will want a good deal of explanation in seeking to understand exactly how its provisions will work and what redress she will have if she feels that she is being diddled in the high street. Let us imagine the situation of a housewife who ventures out into the high street to do her shopping, pushing a pram with two or three children trailing behind her. How will she know what action to take when she feels that she is being deceived? It is not easy for her to produce a copy of the Bill, to see which provision applies to such a case and to ask herself, "Do I go to the Director General, the Advisory Committee, or what?" There is no provision whatever to cater for a housewife who faces that kind of situation.
I was rather amused when the Minister for Trade and Consumer Affairs remarked on the limitations on the sovereignty of the consumer. He said that the housewife was often supplied with inadequate or inaccurate information and faced with abuses of monopolistic power. The Bill seeks to deal 532 with monopolies, but we have a classic example of what happened when the Monopolies Commission investigated beer several years ago. That commission said that the tied house operated against the national interest, but the Government have done absolutely nothing about the situation.
When the Erroll Committee was set up to deal with licensing laws, the then Home Secretary wrote to the Erroll Committee saying, "You are specifically excluded from investigating whether the tied house should be abolished". So the situation remains—partly because the brewers contributed £200,000 to the Tory Party election fund in the period up to 1970. The individual drinker—and let me disclaim any interest because if the brewers had to rely on my trade they would be bankrupt tomorrow—is faced with no choice at all because the Monopolies Commission's recommendations have been completely ignored and no action has been taken.
The Bill flatly contradicts all the philosophy on which the Tory Government were elected. In 1970 the Conservatives said that they preferred…a system of competition and free choice which offers a surer protection for the shopper's rights than all the bureaucratic schemes of standardisation and control that Socialists can devise…In other words, competition was of the essence and it was thought that there was no need for legislation. That was an additional reason why the Consumer Council was abolished. The Conservatives wanted to get rid of the Council and shoppers were told to shop around. If they could not afford to buy apples, one Minister told them, they should buy peaches. If they could not afford to buy beef, then they should go and shoot a pigeon—that was the advice given by the present Leader of the House.
In many ways the Bill is vague and incomprehensible. It is not without significance that the Bill was introduced by a lawyer, the same right hon. and learned Gentleman who introduced the Industrial Relations Bill and the European Communities Bill—two Bills which have caused more trouble in this House and in the country than almost any other legislation this century. It was a legislative nightmare and will be a gold mine for the legal profession.
533 I fear that this Bill will have a very long Committee stage. There will be many amendments.
§ Mr. Hamilton
Yes, I shall surely be on that Committee, and we shall seek to promote consumer affairs much more effectively than is provided for in the Bill.
The consumer is the hopeless victim of more than a minority of unscrupulous manufacturers, wholesalers and retailers. Time after time we have had Questions from Conservative Members about the varying weights of packets of biscuits, detergents, and Lord knows what, and it is impossible for the housewife, who is working full time to keep her family alive, to keep contact with price levels and to judge whether they are going up or down or are stabilising. There is no very great change in the Conservative Party's philosophy from the situation in 1970. We are all interventionists now. We no longer believe that competitive forces alone will protect the housewife. We believe in the bureaucratic machine.
Can the hon. Member for Gloucester tell the House whom she has in mind for the job of Director General and what will be his powers? Will she be consulted about the appointment? Will it be advertised? What will be the salary? We do not know the answers. He will be a most busy man or woman and will require exceptional qualities.
We know what the total cost of the Director General and his staff will be. The Explanatory and Financial Memorandum says:The total expenses of the Directorֵ in the discharge of his functions under the Bill are expected to be about £600,000 a year….That is the figure which is to be paid for doing the kind of job to which the hon. Lady the Member for Gloucester referred, and to help him he is to have a staff of about 175. The expenses of the Consumer Protection Advisory Committee are expected to be about £10,000 a year. Those are the sums that we are talking about in the Bill.
I accept the need to protect the consumer, but it is difficult to provide a framework of legislation which the 534 housewife can understand and which will make readily available and accessible to her cheap means of obtaining redress—and, if necessary, compensation from offending manufacturer or retailer. The hon. Lady is right in one respect. There must be local machinery for dealing with the problems of the housewife who goes shopping in the high street. The hon. Lady the Member for Merton and Morden (Miss Fookes) laughs, but there is no provision for that in the Bill. There is no provision to enable a housewife who has reason to complain about something in a high street shop to go to an office in that high street and to lay her complaint without recourse to legal action.
The essence of consumer protection is to ensure that the ordinary housewife, who in any case is afraid of the legal processes and cannot afford them, has access to some machinery which enables her to express her grievance, have it redressed and receive compensation without cost to herself. What is more, this process must be expeditious, because I think most hon. Members will agree that, with the possible exception of professional politicians, lawyers are the most unpopular people in the country. The public do not like them, they do not trust them, they are extremely expensive, and very often they are worthless. Therefore anything that we do to protect the consumer must exclude the legal profession as much as possible, and I approach the Bill from that fundamental standpoint. The fundamental requirement is to ensure that the ordinary housewife gets a fair deal and that if she does not she can obtain redress quickly, cheaply, effectively and without recourse to the law courts.
It is now generally accepted that the housewife—the consumer—is subjected to expensive brainwashing, bamboozling and deception. I looked up the total expenditure on advertising which is, I suppose, an essential part of the capitalist system. In certain circumstances it performs a useful service in so far as it is informative, but very often it is misleading. It is extremely expensive, and it often leads housewives into buying things which are either worthless or which they do not immediately want.
The Reith Report in the Advertising Quarterly saysIn 1948 total advertising expenditure was £121 million. In 1965 it had gone up to £590 million.535 How many hospitals, how many mental hospitals, could we build for £500 million? If one considers display advertising, one finds that in 1970 the total cost of advertising in the Press, on television, on posters, on transport and in cinemas was £360 million.
All advertising is not bad, but a lot of it is misleading. To some extent the Trades Descriptions Act provides an element of protection to the consumer, but only a small minority of consumers—even the literate ones—understand their legal rights. There is so much legislation involving consumers that either they are not aware of their rights, or they are not prepared to exercise them. That also applies to the nationalised industries. When legislation relating to some of the nationalised industries was going through the House provision was made for consumer councils, and so on, but if the average housewife is asked the address of her local consumer council for the nationalised industries, her reply is invariably that she does not know. It is extremely difficult to get a housewife to exercise her rights even if she knows them—and very often she does not.
The Government have introduced the Bill not because they intrinsically and basically believe that the consumer ought to be protected by legislation but because of the enormous growth of consumer pressure in the country as a whole and because of the reaction of the country as a whole to the abolition of the Consumer Council, however inadequate it may have been. To that extent I regard the Bill as a bit of cosmetic politics. It is disguising ugliness with a touch of paint and powder. Intrinsically, the Government still believe that the answer lies in unfettered competition, and for that reason I feel inclined to go along with the Liberal Party and to oppose the Bill. But if that is not the course of action that is recommended by my Front Bench, I hope that we shall give the Bill a thorough going over in Committee because, in the view of many laymen on these benches and, I suspect, on the benches opposite, there is a lot of incomprehensible legalistic mumbo-jumbo in the Bill that needs clearing up.
Meanwhile, the Bill will do absolutely nothing to prevent the escalation of prices that is taking place. In any event, the Bill will not be in operation before the 536 introduction of VAT next April. It will not become an Act before then.
§ The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)
The Opposition could make it law by then.
§ Mr. Hamilton
Yes, but my guess is that they will not. We know how the housewife has been bamboozled by decimalisation, and is now increasingly being baffled by metrication concealing increased prices all along the line. The Bill will offer housewives very little protection from that kind of abuse.
§ 7.50 p.m.
§ Mr. John Gorst (Hendon, North)
I do not intend to follow the hon. Member for Fife, West (Mr. William Hamilton) down the extroardinary by-ways that his speech led him.
I found myself very much in agreement with the hon. Member for Cornwall, North (Mr. Pardoe) until he informed the House that he proposed to lead his weighty numbers into the Division Lobby against this Bill. However, I sympathised with his strong words about monopoly and the need to take the most stringent measures to get rid of it wherever it exists.
I do not believe that justification for consumer protection is necessary. If any explanation is required why it is necessary to increase the protection of the consumer, it is undoubtedly the greater complexity, speed and quality of changes that are taking place in our technological society. As my right hon. and learned Friend said, it is a complicated and changing world.
Concerning monopoly, I believe that the most important point to select from the Bill is the danger of consumer deprivation rather than the need for his or her protection. The result of monopoly all too frequently is that products become more expensive or fewer in terms of choice.
One aspect of the Bill that I particularly welcome is the new definition in Clause 79, which refers to the public interest and the desirabilityof promoting, through competition… the development and use of new techniques and new products".That is what I mean by consumer deprivation, and it can easily occur in one or more of the nationalised industries. For 537 this reason I welcome the fact that the monopoly of the nationalised industries is also to come within the province of the Bill.
There is a particular danger in a nationalised technological industry. One thinks of aircraft and the railways, but more particularly telecommunications. I am glad that the hon. Member for Newcastle-under-Lyme (Mr. Golding) is present. No doubt he will cross swords with me if I go beyond his party political beliefs in this respect.
There is no doubt that a technological industry, such as telecommunications, can suffer, and the consumer can suffer with it, if the range of products is curtailed and the choice, whether it be of quality or of price, is arbitrarily restricted by the nationalised corporation. Indeed, in a fast-growing technological telecommunications industry there are bound to be many examples. Certainly from my experience in looking after consumer interests within this sphere over several years, I am well aware of the dead hand of monopoly, through its lack of enterprise, preventing all manner of instruments which are available in other countries being made available to the consumer in this country.
§ Mr. John Golding (Newcastle-under-Lyme)
Is the hon. Gentleman referring to the conspiracy that is growing up between AEI-GEC and Plessey to try to prevent the development of TXE4 exchange equipment which will be the most advanced that this country could have?
§ Mr. Gorst
No. I assure the hon. Gentleman that I was not thinking of housewives using big exchanges in their homes. I was thinking more in terms of the kind of subscriber apparatus which might be used in bathrooms, bedrooms, living rooms, and so on—gadgets which might or might not have amplification equipment and different designs and facilities. I was thinking of what the man or woman in the street might wish to use, not the heavy engineered equipment to which the hon. Gentleman was referring.
I will put the point in a slightly different way. If the car industry had never been in private hands, but had been a nationalised industry, one wonders 538 whether a Rolls-Royce or a Jaguar, cars of excellence in terms of both price and quality, would have come into existence. I suggest they would not, for the reason that many products are not provided by the telecommunications industry—namely, that it is the duty of a nationalised industry to say, "It is our first responsibility to provide for the needs of everyone and then, if there is any time or money left, to deal with refinements." I wonder whether we would have had Harrods, Aspreys, or even caviar on the market if all retailing had been in nationalised shops.
If insurance companies were now taken over wholly by the State, I wonder whether we would have any BUPA if it fell foul of the ideology of the Government of the day. If the records industry had been nationalised, I wonder whether we would have reached the stage of having anything like hi-fi, let alone stereo equipment. I am sure we would not, because everyone would first have had to be supplied with an instrument which produced sounds before having any quality.
It is this kind of consumer deprivation which may exist in the nationalised industries to which I want to draw the attention of the House when it comes to the investigation of monopolies.
Successive Postmasters-General and Ministers of Posts and Telecommunications have taken the line that there has been progressive liberalisation. This is not meaningful to the consumer, because the greater number of permitted attachments are ancillary equipment not directly used by telephone users.
I shall depart from this aspect of my argument after making one further observation. I do not believe it is the job of nationalised industries to take risks and to develop new speculative equipment, however much it may or may not be desirable for the consumer at a later stage. The Director General and his Advisory Committee will have an important job of assessment to do. That is why I agree with my hon. Friend the Member for Bedford (Mr. Skeet) that it would be an excellent thing if the Minister would consider the Secretary of State or the Minister concerned having a power of veto rather than a power to give permission before a nationalised industry 539 could be investigated. It is highly desirable that such issues should be decided not on a political basis but as the result of a dialogue between, on the one hand, the Director General, the industry or the supplier and, on the other hand, the consumer. These matters should be decided on their merits, not as a result of party political prejudice.
I should like to query some of the points that are not entirely clear—for example, the rôle of the Consumer Protection Advisory Committee. One wonders whether it will be able to get through the enormous body of work which will be referred to it. Therefore, I should like to know whether the members will be full time. Indeed, will they be able to be anything other than full time? If they are full time, what provision will be made for their remuneration? Will they be able to cope with the sheer volume of work which will be put to them? Will they have research facilities or will they be dependent upon the Director General and his staff? How local will be the inquiries that will be put to them, and, indeed, is the job of the Director General to be primarily that of a sort of consumer ombudsman or will he have the power to initiate without references first of all being made to him?
May I put these three questions to my hon. Friend in the hope that he will be able to answer them in his winding-up speech? How far will the officers who are referred to in Clause 24, and who are no longer directors of a company, still be liable in the light of any judgments of the Monopolies Commission or the Restrictive Practices Court? Will the Minister also look at the product liability law? As I am sure my hon. Friend is well aware, under the Sale of Goods Act it is the seller who is liable to the buyer. Will my hon. Friend give consideration to a change which would bring us more into line with practice in the United States where the retailer is regarded as fulfilling the rôle of an agent rather than being the person directly responsible, and consequently could changes be considered to enable manufacturers to be more liable than they are at present? Certainly this would have the effect of ensuring that they would be more conscious of consumer requirements.
540 Finally, with regard to the restrictive labour practices clause, Clause 74, could my hon. Friend enlighten us on one point? Will it be possible for the restricted use of copyright, whether it be copyright relating to music, published works, plays and so on, to be the subject of inquiry along with other restrictive labour practices as outlined in Clause 74?
I am delighted to welcome what I believe is an enormous advance in the protection of the consumer.
§ 8.2 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I have found this Second Reading debate absolutely fascinating. In particular I found the views of the hon. Member for Kidderminster (Sir T. Brinton), who I am sorry is not here at the moment, a most interesting exercise, in that we had an example of the manufacturing industrialist, the industrial capitalist, arguing strongly against the finance capitalist—the manufacturer against the City of London. Anyone who believed that all the Tories and capitalists are totally united ought to have heard that speech. Here was an example of one section of the capitalist class—if one may use that term—being upset about the activities of another section of that class. I found this very interesting. I do not know whether it had much relevance to the Bill; nevertheless it was a fascinating speech which I shall remember for a long time.
I do not want to make a long speech, and I do not want to go too much into the various consumer aspects of the Bill, because I am primarily concerned with another part of the Bill which has been referred to on a number of occasions. However, I believe that the hon. Lady the Member for Gloucester (Mrs. Sally Oppenheim) has a right to say to her hon. Friends on the Front Bench, "My hon. Friends and I have been urging something like this for the last 18 months." It is nice to be able to say, "I said this in my maiden speech." I must admit that some of the things that I said in my maiden speech never came to fruition, which is always a matter of great regret.
§ Mr. Heffer
Rejoicing probably on the part of hon. Members opposite. Perhaps 541 in the next period of Labour government some of the things I said in my maiden speech will come to fruition. However, that is another matter.
The hon. Lady made an absolutely first-class speech, except when she began to defend the decision of her party in relation to the Consumer Council. That was a totally indefensible decision for the Government to take. When they took that decision, so far as I could see, they had absolutely no intention of introducing this type of legislation. The hon. Lady put her finger on the real cause of this legislaton. It arose from pressure from her side of the House and from the great row on this side of the House over the abolition of the Consumer Council. There was a general demand that something should be done in the interests of the consumer.
She said that this will prevent the growth of some sort of great Nader-like campaign. I think she is kidding herself. That may be the intention of the Government, but I think the effect of the Bill will be to make the consumer much more consumer-conscious, and I am delighted. I do not deny that this is a great step forward; it would be foolish to deny it. But when people find that the Bill does not do the job as effectively as the hon. Lady and others of us would like, I believe that the situation will be very like the prices and incomes policy situation.
I remember saying in this House, "If you put a freeze on incomes and introduce legislation to deal with collective bargaining in relation to incomes, you will make the workers far more conscious of incomes than they have ever been before." It was like taking the cork out of the champagne bottle. People said, "We want more money; we are jolly well going to get better wages." People were much more conscious of incomes. Similarly this legislation will make the people much more conscious of consumer rights. I think that is a good thing. I want people to be conscious of their consumer rights. I want them to be interested not only in the cost of a product but in its quality and in whether they are being fiddled and diddled by the manufacturer or the retailer or by somebody else. We have a long way to go in this matter of con- 542 sumer rights and providing the best product for the consumer.
There are other factors to be considered. There is the factor of safety in the motor car industry. This is an issue which we have not even discussed today, but it is absolutely vital. When one drives a car one is driving a lethal weapon, not only in the sense that it can hit and destroy somebody else; and we are not using safe models at the moment. They can be made much safer. When I talk to motor car manufacturers they say, "We do no want anything like the Nader campaign in this country. We are doing our best." I do not think they are doing their best.
§ Mrs. Sally Oppenheim
Does the hon. Gentleman agree that it is especially deplorable that manufacturers in this country can apparently produce vehicles with higher standards of safety for export to meet the regulations in other countries than they are prepared to produce for the home market?
§ Mr. Heffer
I agree that it is deplorable, and I hope that out of the Bill and the interest created by it a greater realisation of that sort of problem will develop and that more positive action will be taken.
I turn to two other small points on the consumer protection side before corning to the matter which I regard as having no place in the Bill whatever. The Director General will have an almost impossible task. He will be involved in so much, in my view, that he will not be able to do any job particularly well. In addition to having advisory committees at local level—I entirely agreed with that proposal —we should have officers of some sort attached to the local authorities who can look at questions of prices and standards, "fiddles" on the consumer, and so on. The two sides of it ought to go together, as I should like to see an extension of that sort of service in every local authority area.
I should particularly like to see a system of price control officers at local level so that the housewife did not have to telephone to somebody in London—she does not get the cost of her phone call back, incidentally—but could contact local people and raise with them questions of price, standards and the rest.
§ Mr. Dan Jones (Burnley)
My hon. Friend makes a very fair point, but I hope that he has given some thought to who would pay this gentleman, or, rather, this large number of gentlemen.
§ Mr. Heffer
They would have to be attached to the local authorities and be paid by the local authorities. My hon. Friend will find this proposal in the Labour Party's green paper. I advanced it during the days of the Labour Government and I was told at that time that it was an impossible suggestion, but I am delighted now to see that it is at least part of the green paper and is open for discussion, even if it is not open for anything else at this stage. They would have to be local authority officers much in the same way as rent control officers and others are at present established.
I come to Clause 74,References as to restrictive labour practices.I cannot for the life of me understand why this has been brought into the Bill. We have two Bills here, one dealing with consumer problems and the other dealing with monopolies and restrictive practices, and I agree with my hon. Friend the Member for Swansea, West (Mr. Alan Williams) that it would have been much more sensible to have two separate Bills. But Clause 74 is another matter entitrely.
I am told that the study could look into a number of matters—first, demarcation; secondly, the use of machinery; thirdly, the question of the correct use of manpower. A great deal of rubbish is talked about restrictive labour practices, and much of what is said arises from ignorance. People who advance arguments about restrictive labour practices do not understand what happens. When I first went into the shipyards, I saw that the boilermakers had a squad of workers and there appeared to be two chaps who did not do much for a good deal of the time but who were very active at certain times. I asked why there were 10 people or so in the squad, and I was told—this was immediately after the war —that before the war in the Merseyside district there were literally hundreds of boilermakers out of work, so they decided the size of a squad so that, when they did a job, there would be at least that number of workers. It was done to protect their 544 fellow workers so that at least some had employment.
Lots of our demarcation problems spring from the fear of unemployment. When there is a clash in a shipyard, for example, between two groups of workers about who should do a certain job, it arises because both sections of workers fear unemployment. If there were a guarantee of continued expanding employment, there would never be any demarcation problems.
In fact—a lot of people do not understand this—over the last 10 years in particular, most of the demarcation issues in the shipyards and the building and construction industry, the industries which were hit by demarcation problems more than any others, have been eliminated because the unions have reached agreement with one another about the future solving of demarcation issues.
One hon. Member opposite spoke earlier about professional standards in the law and other spheres. We have professional standards, too. I served seven years as an apprentice carpenter and joiner. I have two boxes of tools—my tools, not an employer's tools—which I used to take from job to job. We have professional standards, and we have our own interests to maintain. We do not want to see our standards whittled away. Some of the so-called restrictive labour practices arise precisely from our demand to maintain professional standards. Other craftsmen have exactly the same attitude.
It must be understood that this is a complicated matter. It ought not to be brought into the Bill, and doing so will only again complicate industrial relations. I do not say that there are no problems —of course there are—but they ought to be dealt with and settled through proper industrial relations, through collective agreements, through the operation of the TUC Bridlington agreement, through demarcation agreements between trade and trade. It is no good applying legislation such as this to those matters. It is totally unnecessary.
The trade union movement is concerned about these matters. I see the hand of the former Solicitor-General, now the Minister for Trade and Consumer Affairs, in this. I see behind Clause 74 the same sort of mentality as 545 was responsible for the Industrial Relations Act, as though the right hon. and learned Gentleman had not had enough experience of how that Act did not work and how it did not solve industrial relations problems. This will be even worse—no, not that; I must not exaggerate the case—but at least it will create problems.
The right hon. and learned Gentleman is amazing. He never listens to anyone. Just for once, will he listen to what is said in these debates? Will he understand that some of us have experience in industrial relations matters and that we are talking sense? If he had listened to us a little more on the Industrial Relations Bill the country would not be in its present difficulties with industrial relations, with the worst strike record the country has ever known.
§ Sir G. Howe rose—
§ Mr. Heffer
Will the right hon. and learned Gentleman listen to me. He should listen to the TUC and be prepared to meet it and discuss these matters before the Bill goes further.
§ Sir G. Howe
The hon. Member seeks to detect my hand in the Bill. He should acknowledge that the proposal he is now discussing was contained in the consultative document which was disclosed to the TUC and discussed with it as long ago as last December by the then Secretary of State. The hon. Member's detection is, therefore, without foundation in that respect.
§ Mr. Heffer
I am glad to hear that I am wrong and that the right hon. and learned Gentleman was not responsible for this provision. Of course, he may have had a cup of tea with the Secretary of State who drafted it and he may have responsibility in that respect.
This clause and Clause 7(2) cause concern, the latter being related to the question of central pay awards. The TUC is deeply concerned about it. Before the Government proceed any further on these two issues they should listen to what the TUC has to say about them. This time they should be prepared to take advice from the trade union movement before introducing a law that can complicate the industrial relations scene unnecessarily.
546 I do not approach the rest of the Bill in a carping manner, although it could be improved. It has a great deal to commend it. I hope that as it proceeds through Parliament improvements will be made. I have a horrible thought that, having spoken in the debate, I may well find myself serving on the Committee, and if I am I can assure the Minister that my main concern will be the elimination of those provisions which can aggravate industrial relations and create further difficulties which need not be created.
§ 8.25 p.m.
§ Miss Janet Fookes (Merton and Morden)
I warmly welcome the Bill—especially the part dealing with consumer protection. Like my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim), I feel it is in part the result of the efforts of Tory back benchers. In the past I have put a number of consumer protection questions and have received somewhat dusty answers from the Department. I am therefore surprised at the gift that we now have in the form of the Bill. I feel like a poacher who is suddenly summoned to the manor house and presented with a ceremonial rabbit.
I am delighted that the Government are taking this line, and I take the strictures of the Opposition somewhat amiss. They keep telling us that the Government have had a change of heart, but it would appear that they, too, have had a change of heart. Why else was it that during their six years of office they did nothing to set up the machinery that we are now proposing?
§ Mr. Heffer
Let us be fair about this. We brought in the Trade Descriptions Act, and that should not be overlooked. Even the Government have admitted that it was a valuable measure.
§ Miss Fookes
I was referring to the machinery which gives us a political head with responsibility for consumer protection and which establishes a Director General for Fair Trading and a consumer advisory committee. There has been criticism of the appointment of a Minister for consumer affairs who is attached to the Department of Trade and Industry. I believe that it is felt that the Department will have some kind of baneful influence on his activities, but it seems 547 only practical that he should be attached to the Department. If he had his own Department he would be out on a limb. Surely the sort of contribution that such a Minister will make will depend upon the calibre of the person who occupies that post, and in that respect I have the utmost confidence in my right hon. and learned Friend.
I was surprised at the criticism of the composition of the consumer advisory committee by the hon. Member for Cornwall, North (Mr. Pardoe). He paid no heed to the second category, whereby those who are experienced in the enforcement of weights and measures legislation are to be included. That was a very poor response to the excellent work done by a group which will be represented on this body. I am delighted that we are at last pinpointing responsibility, because in the past consumers as individuals have felt helpless when confronted by chain stores and the manufacturers. I welcome particularly the possibility that there will be of dealing with malpractices soon after they arise, without the need for ponderous separate legislation, through the machinery which was outlined by the Minister in his opening speech.
Many subjects should be referred to the committee as a matter of urgency and my top priority would be a comprehensive review of the quantities in which goods are sold. I make no apology for flogging this issue, because it is exceptionally important—all the more so because of the changeover to metrication. I see metrication as an opportunity to rationalise. I hope that we shall seize this opportunity. I should like to see prescribed standard quantities for all packaged goods. If they are not packaged I should like to see a form of unit pricing, whether this be in price per lb., per kilo or per gramme.
I am aware of the lengthy negotiations which may need to take place with manufacturers' organisations. I have been told only too frequently about the difficulties created by the difference in specific gravities between diabetic jams and ordinary jams and in considering whether soap powders should be sold by volume or by weight. I accept that the difficulties exist, but we now have the opportunity of going into these matters in detail and I hope that we shall take that 548 opportunity. But I see other opportunities for this committee, particularly over date stamping, with which I know my hon. Friend the Member for Gloucester is concerned. I am sorry to say that I did not hear her speech. She may well have mentioned that subject.
I should also like to see some research done into packaging, both in respect of deceptive packaging, which is mostly in connection with cosmetics—some jars appear to be larger than they are—and also in respect of what I regard as excessive packaging. A report by the Prices and Incomes Board in 1969 showed that anything up to two-thirds of the value of toiletries could be in packaging, and that for cosmetics the proportion could be three-quarters. Clearly, there is a case for some research.
I should also like to see research done by the committee on the labelling of products, particularly as regards their contents. Consumers have the right to know what they are buying. This is particularly important in what I would describe as "semi-medical" products—beauty preparations, and the like, which have a medical basis. For example, during the recent scare about hexachlorophane, it would have been helpful if one could have been sure that any product containing that substance could be readily identified by its label. I know that I shall be told that it is impractical, that there are too many ingredients, and so on, but I am sure that it is not beyond the bounds of possibility, providing that the will is there.
Then there is the vexed question of the recommended price, which seems to have sprung into prominence only since the passing of the Trade Descriptions Act. I should like to see the recommended price, which is prominently displayed now, abolished altogether, because it relates to nothing. Often a notice is simply displayed saying that there is so much off the recommended price, and no one knows what the real recommended price is. I know that some colleagues of mine do not agree with this, but again it could be a job for the committee.
Although I welcome the Bill warmly, there are a few imperfections in it—and I am not referring to those dwelt upon by the hon. Member for Liverpool, Walton (Mr. Heffer). It is unfortunate 549 that the committee appears to have no power to initiate inquiries itself. It has to be done always, I believe, through the director general. Perhaps there is a good reason for this, and if so we should hear it. At the very least, one would like to feel that the committee could make recommendations to the director general. I should be interested to know what kind of relationship is envisaged between the director general and the committee.
I am also concerned—although not perhaps for the same reasons as some other hon. Members—about the exclusion from the Bill of professional practices. I am concerned with the quality of the services offered, and whether they are always of the highest quality. I suppose that it will be argued that there is no need for such a provision because each of the professional bodies has its own arrangements for dealing with complaints. But the weakness of that argument is that they are apparently their own judge and jury. I should like to feel that the committee could at least ask a professional body to examine some practice which was causing public disquiet and ask for a report to be made by that body.
I have been much concerned lately by bogus educational institutions offering splendid degrees, complete with Latin inscriptions and ornate decorations. I should have liked to see that kind of institution made the subject of scrutiny. But higher education and the universities are specifically excluded—under Schedule 4, I think—from investigation.
Lawyers are sometimes criticised by their clients not so much for malpractice as for extreme delay. This is something on which the committee could do some useful work. I accept that one wants to avoid litigation as far as possible, but I am deeply disappointed that there is no provision for a small claims court or some organisation like it, in which people with a grievance could obtain redress cheaply and on an informal basis.
I am thinking, for example, of a case with which I am still dealing in my constituency—that of a family who went to a holiday home on the coast only to find that the water supply was totally inadequate to their needs. I have been pursuing this matter for months with the weights and measures inspectorate in 550 the place they went to, but it is extraordinarily difficult to obtain any redress. The family were advised by their solicitors that to pursue a claim would be out of all proportion to any compensation that they might receive.
I can also recall some people who had a great deal of difficulty with a fitted carpet. The whole thing was completely botched, and they were put to endless expense and trouble. Again, it was not worth while pursuing the matter in the law courts, but a small claims court would have dealt effectively with their grievance.
I noted that at the end of his speech my right hon. and learned Friend hinted that he might be willing to consider other methods. I press upon him the urgent need for such consideration, because at the moment there is a glaring gap which I should like to see plugged. I believe that I am mixing my metaphors, for which I apologise, but I have made the point. All in all, I am delighted with the Bill. I hope that it will speedily become law, because it is very much needed.
§ 8.36 p.m.
§ Mr. Michael Meacher (Oldham, West)
I support a great deal of what the hon. Member for Merton and Morden (Miss Fookes) said, particularly her reference to a small claims court, which I should like to pursue at greater length. However, as did the hon. Lady, I will concentrate on the consumer protection aspects of the Bill and on the enforcement of consumer rights.
The Bill, while it has many good elements, have some weak points. I select, not in order to carp, the matter of small claims courts, because I introduced a small claims court Bill earlier last year. I am disappointed that the arguments adduced in favour of the Bill did not sufficiently weigh with the Government for them to incorporate provisions along these lines within the network of the Bill.
The Director General will be empowered to take action against a trader who persistently does business in an unfair, unsafe or unhealthy way. Indeed, the Minister has made it clear that if a trader is convicted of a series of criminal offences under, for example, the Trade Descriptions Act, or if he commits a series of breaches of contract, he will have to give an undertaking to cease such 551 practice, which may be the courts.
However, action to stop malpractice after a series of complaints, which is all that the Director General is empowered to offer, is cold comfort to a couple who have bought a settee and found as soon as they sat on it that it collapsed. There is no provision for automatic redress for the victims of unfair trading, even when the trader is convicted. Such consumers will still have to pursue their claims by some form of civil redress. Although I have no doubt, as the Minister said, that it might be possible under the Criminal Justice Act to pursue such claims, that, as I indicated to him, is highly unlikely to happen to the degree that is required to satisfy consumers. I entirely agree with the hon. Member for Merton and Morden that this is one of the glaring gaps and omissions in the Bill.
The Minister made reference to the matter when he made a pronouncement on 7th December, 1972. He repeated some of that statement today. He said:I understand only too well the ordinary citizen's reluctance to go to law. This is why we have recently made major changes in the procedure in the county courts, so as to make them simpler, cheaper, swifter and more approachable. But I am more than willing, as soon as I am able to do so, to resond to the pleas of those who would like us to discover cheaper and still simpler, as well as more expeditious, ways of disposing of consumer complaints.But modification of the county court rules is patently not enough. It is not enough for a simple form to be completed by the claimant beforehand about the nature of his complaints so that he can be advised about the presentation of his case. Similar marginal improvements in the procedure may well help in guiding claimants through the initial stages, but they will not protect them for long against an experienced solicitor who begins to pepper them for the discovery of documents, further and better particulars and so on.
County court judges and registrars using the new rules of procedure try to assist individual litigants as far as they can. But a judge cannot produce evidence which a claimant has not brought along which might be relevant. Nor can he, against the rule of evidence, permit an unskilled litigant to tell his own story of hearsay evidence because 552 he neglected to bring along a key enforceable in witness.
But any possible procedural changes, whether major or minor, are overridden by the fact that the formal, expensive and cumbersome image of the county courts means that consumers just do not use them. A Consumer Council survey of a 2 per cent. sample of all summonses before six courts in 1967 found that only 9 per cent. of the cases were brought by individuals whereas 89 per cent. were brought by business. This makes it crystal clear that the real function of the county court today is debt collection on behalf of mail order houses, hire-purchase companies and the other firms which sell consumer goods or services on credit. Out of 1,238 cases in the survey, there was not a single one by an individual because of faulty goods. The Minister is being absurdly optimistic if he believes that, even after these procedural changes, the county courts are likely to be used to a large degree by consumers.
There is another strong reason why consumers do not use them. It is that solicitors will advise a potential litigant that a consumer claim, however sound, is not worth pursuing. The costs of skilled legal assistance today are so high that it just is not worth risking bringing an action that one might lose.
It is worth giving some indication of the extent of those costs in order to drive the point home. For a day's hearing, counsel's fee may be as much as £35 and the solicitor's bill might be up to £50. That is up to £85 all round before one begins to take account of court fees witnesses' expenses and so on. If the claimant loses, he may have to stand the same degree of costs for the other side. It means that one could have to pay up to £200 or £300 in order to win £100. It is not surprising that only well-off persons are prepared to take that kind of risk.
I believe that only a small claims court can seriously be expected to break the log jam of consumer dissatisfaction and frustration, and we can all from our constituencies quote the kind of case mentioned by the hon. Lady. Under this system, as I envisage it, the registrar of each county court would be responsible for running a small claims court, as a part of the county court system, which 553 would enable individuals to have their claims adjudicated without legal representation. The court would have jurisdiction for claims up to, say, £100 or perhaps rather more in contract and tort, and they would include not only straightforward consumer cases but also personal injury, negligence and damage to property cases.
There can be no doubt about the practicability of these proposals because they are already in operation in the Manchester arbitration scheme. But certain qualifications would be necessary in order to ensure that the proposed court was effective. The first is the need to ensure that it functions truly as a people's court. It would mean that companies or partnerships or associations or assignees of debt would not be permitted to sue. This is designed to prevent the court from being appropriated like the county court merely in order to enable firms to collect debts.
§ Mr. Proudfoot
The hon. Gentleman is quoting statistics and a lot of book-learning about causes of complaints. But how many thousands of millions of transactions go on which are totally satisfactory, and how many hundreds of millions of complaints to retailers are put right without the complainants having to seek redress in the courts? If he knew such figures, the statistics he has quoted would come unstuck.
§ Mr. Meacher
The hon. Gentleman fails to realise that he is not referring to consumers. Where a consumer has a case, he is not able to pursue it legally, and there is known to be a very large pool of cases where no satisfaction is provided. Of course there may be settlements out of court in a large majority of cases, but that leaves entirely out of account the fact that 10 times more cases are brought before the county court by business than by individuals, whereas if it were working properly one would assume that the ratio would be about half and half.
Second, to ensure that the system works properly and to preserve for the court the Franks Committee virtues of cheapness, accessibility, freedom from technicality, expedition and expert knowledge, it should be laid down that the scope for appeals from the court should be deliberately restricted to cases where the 554 judge certifies that an important point of law is involved.
Thirdly and most importantly, practising lawyers should be excluded. This breaks with the hallowed practices of English law, but it is necessary because most claimants would not have lawyers even if they were permitted to do so, because of the expense. If lawyers were admitted, potential claimants would soon feel that they could not proceed properly without a lawyer. This is precisely what happened in the county courts. I suspect that in that situation people would be deterred from using the courts and then once again small claims would have to be sacrificed.
Fourthly, as the parties would still be unequal, though I submit that they would not be as unequal as if lawyers were introduced, the courts should be allotted a certain investigatory function so that enough facts are known on which to base a proper and fair decision. In the tribunal system the chairman has the right to question the parties to elicit their cases so that the essential evidence can be uncovered irrespective of the capabilities of the parties concerned to present their own cases. The affairs of the court should therefore be conducted in the manner in which a reasonable man with a good understanding of the law, if asked to decide a case, would proceed. This means that the registrar would let the parties tell their stories, asking questions to elicit further information and searching out other evidence in a manner entirely at his discretion until he felt able to use his judgment reliably to assess the stories of the two parties.
I believe that the establishment of a small claims court with procedures roughly as outlined is absolutely necessary if consumer rights are to be enforced. I am not convinced, for the reasons I have given, of the Minister's arguments about the adequacy of the changes in the county court rules. I suspect, from the way in which he presented his arguments, that the Minister is not satisfied with them either.
The Minister said that he is willing to respond to simpler and more expeditious ways of disposing of customer complaints. This is precisely what small claims courts offer. We are waiting for that response. Until that response is 555 received, at least as regards consumer protection the Bill will have far too much bark and far too little bite.
§ 8.48 p.m.
§ Mr. Philip Goodhart (Beckenham)
I do not always agree with the hon. Member for Oldham, West (Mr. Meacher), but I am in broad agreement with his argument this evening about the small claims court, though I doubt whether the Manchester experiment has yet been in operation sufficiently long to draw any major lessons from it. The small claims court in the State of New York, which has been in operation for a considerable time and which deals with 60,000 cases a year, has well established its efficiency.
I congratulate my right hon. and learned Friend on introducing an ingenious and sensible Bill. I was never in favour of the destruction of the Consumer Council; indeed, I voted against the Government on the point. I congratulate my right hon. and learned Friend not only on resurrecting the council but on finding an eminently sensible task for it to perform, which was not always the case when it was in its previous incarnation.
The job of vetting consumer legislation is extremely important, because Parliament cannot simply give a blank cheque to the Executive to combat misleading and harmful trading practices. It is equally impracticable to try to combat every malpractice or deception which arises with a fresh Bill. By themselves such malpractices are not worth separate Bills, and certainly they would not be of sufficient importance to find their way into a crowded Government legislative programme.
My Unsolicited Goods and Services Act, in which I was associated with the hon. Member for Accrington (Mr. Arthur Davidson), proved to be fairly effective, but it has not been wholly effective. It needs modification and changes, but it would clearly be absurd to have fresh unsolicited goods legislation every two years or so to try to keep pace with some fresh wheeze thought up by sharp practitioners. Therefore, the Bill gives a certain degree of flexibility in stamping out undesirable trade practices, but it pro- 556 vides only the machinery. The question is how well it will be used.
I do not quarrel with the argument deployed by the representative of the Liberal Party, the hon. Member for Cornwall, North (Mr. Pardoe), who announced his party's intention to divide the House against the Bill and then fled from the scene. He has not been seen since.
However, I do not think that the hon. Member was right when he launched his bitter attack, saying that it was wrong that representatives of trade interests should serve on the Consumer Protection Advisory Committee as of right. The person who suffers most from bad trading practices is the good trader. It is not surprising to find that one of the most effective bodies in consumer protection has been the Retail Trading Standards Association, which is composed entirely of people in the retail trade who know perfectly well that their businesses suffer from the bad practices of a few sharp operators. Therefore, there is room on the proposed body for traders as well as for weights and measures inspectors and people representing consumer organisations.
What will matter will be the knowledge, personality and drive of the director-general. This should be a key post in our public life, equivalent in status to that of the Chairman of the National Coal Board, the Editor of The Times, or the Director-General of the BBC. This should be a major appointment in our public life, and a major public figure should be appointed. Having appointed a major public figure—
§ Mr. Goodhart
In a few years' time the hon. Member might fill this post—when he has attended more of these debates. Having picked the right man—and I do not think that the hon. Gentleman is the right man at the moment—it is important that we give him sufficient powers to carry out his job. I am not sure that the £600,000 which seems to be envisaged for the budget is sufficient. The old Consumer Council had a budget of £240,000 and it was not able to do much with that.
557 The Consumers Association, with which I have some links, now spends £2 million. The Consumer Protection Advisory Committee could spend considerably more than £600,000 with advantage. One of the ways in which it could spend money would be to look at our relationship with the European Commission in Brussels. A great deal of material will be passing through that commission, much much of it of importance to consumers in this country. At the moment the Consumers Association, with, I hope, a certain amount of Government money, is holding a watching brief on the consumers' interests in Brussels. This is one job which could readily be taken over by the Consumer Protection Advisory Committee.
I come to the question of enforcement. I am glad that my right hon. and learned Friend has paid tribute to the role of the Weights and Measures Inspectorate. Its job will certainly become even more important, and if we are to have a lasting review of any prices and incomes policy the inspectorate should clearly be the body to keep an eye on prices. The inspectorate will clearly be under substantial pressure even if recruitment increases, as I hope it will. Some of the pressure over enforcement could be removed if we had a proper small claims procedure.
I share the misgivings of the hon. Member for Oldham, West about the effectiveness of the changes in procedure in the county courts. As he rightly pointed out, these courts are mostly used for debt collection in the consumer sphere. The changes in procedure will merely make it easier to collect debts. I doubt whether the aggrieved housewife will be tempted to take action under those procedures. Something entirely new is needed. I recognise the struggle that my right hon. and learned Friend will have to get at least some of his colleagues to agree to a worth while step forward in this direction. I am sure that till we can get some procedure whereby a housewife who feels aggrieved can obtain redress in a court without bankrupting herself or her husband there will be a major gap in our procedures.
This Bill is not the final step along the road, but it is a most important step forward, and I warmly welcome it.
§ 9.0 p.m.
§ Mr. John Golding (Newcastle-under-Lyme)
Under the twinkle of the Christmas lights I warn the Government that we shall still be talking on this subject at midsummer's day.
The great omission from this Bill is provision to deal with credit. I was interested to receive recently from BBC Radio Stoke-on-Trent and the Consumers Association a report of a local shopping survey which showed that in 29 shops visited in the Stoke-on-Trent area interest rates varied from 14½ per cent. to 71 per cent. for people looking for the same model of washing machine. They made a difference of over £30 on the price. At one shop inquiries were made five times and in each case the total price was different. This is an instance of how the consumer is in need of protection. When we examine the Bill in detail in Committee we shall certainly want to probe the Government's intentions in the matter of credit.
The hon. Member for Hendon, North (Mr. Gorst) raised the question of the telecommunications monopoly. He and other Members on the Government side have been pursuing this question for a long time. In the two or three minutes available to me tonight, suffice it to say that the Americans tried to break down the monopoly of installation of subscribers' apparatus, and that the experiment has been disastrous to many of the consumers because the quality of the service has suffered considerably. What is, perhaps, more important is that at the present this experiment is having grave repercussions on American industry because the result of the liberalisation has been growing infiltration by the Japanese into the American market. If it is my fortune to serve on the Committee on the Bill I am sure I shall be developing this in detail.
Briefly I refer to Clause 74 because I find it the most obnoxious clause in the Bill. It refers to restrictive labour practices. Trade unions call them protective practices. There will be a great deal of ill feeling caused by this provocative clause because from the trade unions' point of view the worst possible time at which to raise the question of protective or restrictive practices is a time of high Unemployment, because the protective 559 practices are designed specifically to defend employment and, in conditions of insecurity, to defend status in employment. It is provocative, in a Bill which excludes the practices of solicitors, barristers, general practitioners and consultants, which excludes every restrictive practice on the part of the professions, and which does not consider the relationship between Members of Parliament and the ombudsman, to attack restrictive practices which are not there to maintain earnings, as the professions' restrictive practices are, but to protect either employment or status.
I promised to finish my speech by five minutes past nine and so I resume my seat.
§ 9.5 p.m.
§ Mr. Bruce Millan (Glasgow, Craigton)
I am grateful to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) for discharging his promise so faithfully. I shall divide my comments on the Bill into two parts—first, the consumer aspect and, secondly, monopolies and mergers.
The consumer protection part of the Bill represents a considerable change of heart by the Government since the days when they abolished the Consumer Council and gave the assurance that all that was required to protect the interests of consumers was full and unfettered competition, perhaps supplemented by the work of the voluntary organisations concerned with consumer protection. As we said vehemently at the time, this was a dereliction of duty by the Government towards consumers, and we are glad that they now accept that view.
The Bill is only a framework. I am not complaining about that, because that is the way in which the Government have chosen to tackle the problem. Since it is only a framework, it is a great pity that the Minister in introducing the Bill did not explain how the Government intended to implement its provisions. That is all the more deplorable because there has been no White Paper on the Bill, although I understand it has been under consideration within the Government for a considerable time. We are still in the dark about how the Government intend to operate the new powers they are taking for themselves in the Bill. That means that we shall expect the 560 Under-Secretary of State in winding up to provide some of the details. It also means that in Committee a good deal of probing will have to be done into how the Government will use the powers.
I agree with the hon. Member for Beckenham (Mr. Goodhart) that the success of this way of tackling the problem will depend greatly on the stature and personality of the Director General of Fair Trading. We want someone who will be actively interested in every aspect of consumer protection, an active personality, a man of standing who will see that the job that requires to be done is done in the most effective way. We shall, therefore, have to probe in Committee the Government's intention about the salary and status of the Director General and we shall need much more information about the staff which will be available to him and how it will be divided between his various functions.
We shall want to consider carefully the composition of the Consumer Protection Advisory Committee. We shall want to consider full-time and part-time membership. One obvious deficiency is that the Committee will have no independent staff and no independent power. It simply waits on the initiative of the Director General.
I welcome the more flexible approach which the Bill allows the Minister in introducing orders to deal with particular aspects of consumer protection which arise sometimes unexpectedly and sometimes out of deficiencies in legislation. It is not just a question of having powers, it is a question of willingness to use the powers. On matters such as date stamping, for example, there are already powers in existing legislation.
What has been deficient is the Government's willingness to use the powers they already have. We are entitled at this stage of the Bill, and certainly in the Committee stage, to have a clearer idea of the Government's priorities in consumer protection matters provided for in Clause 13. The Government are to give general directions to the Director on aspects of consumer protection to which he should give early attention. We are entitled to know what the Government have in mind for the Director's early attention.
561 We have today heard mention of unit pricing, date stamping, and the unsolicited dispatch of bank credit cards, which is a matter of current controversy. There are other doubtful advertising practices which need attention, and also problems relating to travel agencies and the rest. There is a whole list of matters of consumer practice which needs urgent attention, and we are entitled to have some idea of which of these matters are to have the immediate attention of the director once he has been appointed.
There are considerable omissions from the Bill. There is the obvious need for a very much better local structure. This is not a matter of consumer protection which can be dealt with centrally in an effective way. There is a requirement for a network of consumer bureaux spread throughout the country, much more accessible to individual consumers and effectively concerned with local interests. We have had only the vaguest indications about what the Government intend to do about these matters, and how they intend to use the powers which are already available to stimulate local authorities into taking action.
The other matter of controversy relates to compensation and the absence of any small claims procedure. The Minister for Trade and Consumer Affairs, in introducing the Bill, mentioned the limited procedure available under the Criminal Justice Act, but the vast majority of cases where the consumer might have a legitimate case for compensation do not involve a criminal prosecution. Therefore, anything that comes through the criminal procedure can be of only limited value to consumers and in the civil context we need some kind of small claims procedure to provide for compensation to be given to the consumer.
We have had no indication so far—perhaps we shall hear something about this aspect in the Government's winding-up speech—of the Government's attitude to consumer credit. We have had the Crowther Committee's Report on this subject and it is a complicated matter which will require legislation, but we do not know in what respects the Government intend to legislate and how quickly they will do so. This is another area of activity which requires considerable attention.
562 We also wish to draw attention to the exclusion of professional services from the part of the Bill which deals with restrictive practices. Nothing we heard from the Minister today sounded at all plausible or convincing in explaining why professional services should be excluded from the earlier provisions of the Bill and included in Schedule 4. This is a matter to which we shall return with some diligence in Committee.
My hon. Friend the Member for Swansea, West (Mr. Alan Williams), in opening the debate for the Opposition, dealt largely with consumer matters, and in winding up for the Opposition I shall deal with monopolies and mergers.
There is nothing very much here in the way of radical legislation. What we have for monopolies and mergers is largely a restatement of the present law. There are deficiencies in the Bill—and I shall come to them—but what is missing more than anything else is a statement of policy from the Government. There was no policy statement by the Minister when he introduced the Bill. For example, the House is entitled to know the effect of Community legislation on the whole monopolies and merger position in this country. How will it affect the provisions which the Government are asking us to accept in the Bill? This legislation has had a fairly lengthy gestation and the Government are treating the House in a rather shabby way in not making a policy statement on this and consumer protection matters.
Before turning to some of the matters relating particularly to monopolies and mergers I want to deal with two points by way of introduction, namely, central pay agreements and restrictive labour practices—matters mentioned by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and a number of others.
Section 3 of the 1948 Monopolies Act specifically excluded arrangements between employers which had to do with pay arrangements. That exclusion has been omitted from the Bill. A study of Clause 7 and other clauses which basically repeat the provisions of the 1948 Act shows that the exclusion of central pay agreements has been omitted. There has been no explanation from the Government whether that is deliberate. Nor have they told us how they intend to 563 use the monopoly legislation to deal with central pay agreements.
Clause 74 lays down that restrictive labour practices may be referred as study references to the Monopolies Commission, but again the Government have given us no justification for this. On this issue and that of pay agreements we are opposed to what the Government have laid down in the Bill, and in Committee we shall move the necessary amendments to alter these provisions.
It is true that the 1970 Commission for Industry and Manpower Bill provided for references, and so on, but that Bill was replacing, among other things, the Prices and Incomes Board and was importing into one piece of legislation the existing monopolies and prices and income legislation. The Government have virtually abandoned a prices and incomes policy in legislative terms, apart from the recent emergency legislation, and they seem to be importing into this Bill matters which refer to labour practices and pay agreements. We see no justification for this, and we shall oppose these provisions when the Bill is in Committee. We hope that the Government will have second thoughts about this, because if these provisions remain in the Bill they will be another element of provocation in an industrial relations situation which, because of other Government policies and legislation, is already delicate and tense.
I propose first to say something about the restrictive trade practices part of the Bill and then to move on to monopolies and mergers. In my view the judicial approach of the 1956 Act to restrictive trade practices has worked remarkably well. It has not worked perfectly, and there are many matters which still require attention, but it has worked a good deal better than many of us thought it would when the legislation was introduced. Therefore, we welcome the expansion of the restrictive trade practices legislation to services, and look forward to hearing from the Government exactly how they intend services to be brought within this aspect of monopolies and restrictive trade practices legislation.
We do not support, and shall attempt to remove, the exclusion of professional services. The Minister was at great pains to point out in interventions in the speech by the hon. Member for Corn- 564 wall, North (Mr. Pardoe) that the monopolies legislation provides for reference of professional services, but we also know that the Report on Professional Services was published in October 1970 and that the net result in practical terms so far has been nil. We do not, therefore, accept that the monopolies side of the legislation is the only or satisfactory way of dealing with professional services. We believe that they ought to come within the restrictive trade practices aspect of the legislation.
Moving on to monopolies and mergers, I think that the background against which we must judge such legislation is the increasing concentration of power in British industry among a comparative handful of British manufacturing companies.
In 1960 the top 100 companies in British manufacturing represented about 20 per cent. of manufacturing output; in 1970 the top 100 companies represented 50 per cent. of manufacturing output; and by 1980, on present trends, they are likely to represent about 70 per cent. of manufacturing output in this country.
I find these figures quite frightening. They represent a tremendous growth of economic power in a comparative handful of manufacturing companies, and they have the profoundest implications in our internal domestic economic policies, in the general management of the economy, in regional policy, and so on.
§ Mr. Millan
I am talking about manufacturing at the moment. However, there is a considerable degree of concentration in the nationalised industries.
Another aspect of this concentration which is particularly worrying and has considerable implications for the management of the economy is that many of these companies are increasingly becoming multinational in operation. Therefore, the powers of the Government, given the present structure, to deal effectively with these companies are very much reduced. Many lessons need to be learned, not all of them strictly relevant to the particular aspects of economic policy with which we are dealing this evening. It is against that background more than anything else 565 that we must consider the proposals in the Bill.
I want to make only two points concerning monopolies, because I want to relate the main burden of my remarks specifically to mergers and takeovers. First, it is an improvement that one of the criteria for referral to the Monopolies Commission is now a quarter of net output or of capacity rather than a third. However, I think that we need some assets figure as well as a proportionate figure in the Bill. In the Commission for Industry and Manpower Bill in 1970 we had a figure of £10 million. I think that something like that is vital in order to deal with the kind of situation mentioned, for example, by the hon. Member for Kidderminster (Sir T. Brinton) in an extremely interesting and attractively presented speech. Some of the conglomerates about which he was worried are not caught by the third or the quarter, but they would be caught by an assets figure. Some of the practices in which they indulge should be referred to the Monopolies Commission. Therefore, we shall want to look at that aspect.
Secondly, we must do something about the time taken by the Monopolies Commission to produce reports. We also need to do more to see that effective action is taken once a report has been received.
Passing from monopolies as such to mergers and takeovers—and the two matters are very intimately related—we are at present again in one of these periods of merger mania. It seems likely that the total amount of assets involved in acquisitions and mergers in the current year will be a record figure, even exceeding the very large figure that we had in 1968. There is an accelerating trend towards mergers in this country in terms of the amount of assets involved, and the figures demonstrate that fact perfectly well. In considering this Bill, we have to take a general attitude towards this: are we in favour of it, are we against it or are we neutral? Do we think it is likely to happen in any case and that we need not have a policy?
There are certain arguments of bigness. There are areas where, for technological or other reasons, a certain scale of resources available to an individual company is essential if it is to compete par- 566 ticularly on an international scale. However, bigness by itself is not a virtue. Certainly bigness by itself does not always mean efficiency.
One of the worrying features of the present industrial scene is that there are many mergers taking place which, so far as one can see, have absolutely no industrial sense at all but seem to be very much more concerned with financial manipulation and manoeuvering, asset-stripping and the rest, than anything to do with the general economic good of the country. We have a most unhappy situation in Britain. We are probably the most experienced and expert nation in the world at financial manipulation, and we have one of the least successful economic growth records of any industrial nation at the present time. I am not sure that these two factors are separate. I think there is a very close connection between them, and many of our most able people are engaged in financial manipulation when they would be much better engaged in economic regeneration and expansion.
There is also the human factor to be taken into account. The fact is that the present atmosphere of merger mania is extremely disturbing to many people —to workers at the work bench and also to management in small companies. It is an unfortunate atmosphere in which to appeal to work people and to management for economic expansion, co-operation and the rest.
Therefore, we are entitled to have from the Government a firm statement whether they intend, when they have the powers of the Bill, to operate a more active merger policy. I drew the Minister's attention to the fact that in 1971, 110 mergers prospectively fell for reference to the Monopolies Commission only one of which, in fact, was referred. That merger was subsequently withdrawn and, therefore, there were really no merger references to the Monopolies Commission in 1971. We certainly have in the Bill in Clause 79, rather better public interest criteria than in existing legislation. I welcome the changes which are made there, but there is a glaring omission there. There is no reference at all to the people actually involved in the companies which are the subject of takeover bids. That again, the omission of the human factor 567 and the people involved, is a major defiency in what the Government are proposing.
What do we need in the way of policy? I want to make six points, briefly because I know the Minister wants to wind up the debate soon. First of all, in certain cases there should be a presumption against a merger. In other words, a positive benefit from the merger should have to be proved. I think that is true in conglomerate mergers. In cases, above a certain figure of assets—which we shall have to work out carefully in Committee—involved in the takeover, there ought to be a presumption that the merger is against the public interest, and the onus of proof should be on the parties involved in the merger.
Second, again above a certain figure, for the larger mergers there ought to be automatic referral to the Monopolies Commission. Third, when there are referrals, all the bids in a particular operation should be referred. In the present instance, mentioned by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), the Timpson case involving Sears and UDS, one bid has been referred and one has not. That is grossly unfair to all the parties concerned, and it ought to be altered.
Fourth, we need a reform of company law, particularly to deal with what is now becoming the scandal of insider dealings. I hope that we shall have that in the reform of company law which we have been promised for later in the Session.
Fifth, we need far more stringent and effective follow-up provisions. What is in the Bill at present relates only to follow-up by the Director General of undertakings given by a company after a reference to the Monopolies Commission. What I am talking about is a genuine follow-up of the merger operation after the event to see that the claims made for it at the time have been substantiated in practice.
Sixth, with a more active merger policy and with more mergers going to the commission, when adverse reports come from the Monopolies Commission we should have a far tougher policy regarding divestment of assets and the splitting up of conglomerates and large mergers than we have had up to the present.
568 Those points outline the policy basis on which the Opposition approach the Bill now and on which we shall approach it in Committee.
To sum up, on the consumer protection side, we welcome many of the changes proposed, but the Bill needs fleshing out, and it calls for a considerably more coherent explanation of Government policy than we have had so far. On the mergers and monopolies side, it is largely a restatement of the law. It needs considerable improvement, and that will be one of the Opposition's tasks in Committee.
§ 9.32 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)
This has been an interesting, instructive and well informed debate, covering a wide variety of matters. Indeed, it would have been surprising had it been otherwise, in view of the broad range of subjects covered by the Bill and the concern which all of us, without distinction of party, I think, feel about the need to ensure proper protection for the consumer within a vigorous and competitive economy.
I wish, first, to take up the matter raised by the hon. Member for Swansea, West (Mr. Alan Williams)—it was almost a matter of traditional behaviour, an accusation—when he said that a request had been made to my right hon. and learned Friend's office for a Press release. I give him the assurance—I think it only right to put it on record—that it was forwarded to the House of Commons and was put on the board addressed to him, with the instruction upon it, "Leave on the board". I know from something that the hon. Gentleman has written to me that he says that lie did not receive it and that he collected his mail personally. I accept what he says, of course, but I hope that he, for his part, will accept that that is what my right hon. and learned Friend did.
There is room for legitimate argument on whether the Bill goes far enough to secure all the objectives we want or, as certain people have suggested, it goes too far. Some hon. Members, and some commentators in the Press, have suggested that we have not been sufficiently radical in our approach to consumer protection, that the Consumer Protection Advisory Committee should have been given much 569 wider powers and the right to initiate its own inquiries and to engage in consumer education and research. Some want us to take a tougher line still in regard to monopolies and mergers and to lay down stricter tests of acceptability, although this is often not actually spelled out.
On the other hand, there are those who argue that we have been, and still are, in danger of mollycoddling and of stifling a desirable degree of flexibility and freedom in the working of a market economy by surrounding traders with a maze of petty rules and restrictions through which they must find their tortuous way.
A distinguished industrialist and a former President of the CBI, for example, when speaking about the market economy last evening said, according to a newspaper report, that the Government had enthroned the consumer before she was ready to wear the crown. I do not share that view. With respect to what Sir John Partridge said, and making all allowances for the high standards of integrity and discipline which most reputable firms set themselves, any businessman who neglects to recognise the supremacy of the consumer in the market place does so at his peril. Fair trading is good business. It is in everyone's interests that the small minority of traders who cause trouble should be subject to the most effective checks we can devise. The great majority of traders will benefit from the legislation and I hope will be put in a position to provide a still better and more efficient service than now.
It must be understood that there has to be reason on both sides, for there are unreasonable and overbearing customers just as there are traders who do not honour their obligations. Both are equally unacceptable. In the position I occupied before I became a Minister I learned that the best bargain is that which is equally acceptable to both buyer and seller.
A number of hon. Members opposite raised the point which was mentioned by the hon. Member for Swansea, West who suggested that we could have turned the Consumer Council into the sort of structure that we are proposing in the Bill. The Consumer Council was established on a non-statutory basis in 1963 in accordance with the Molony Committee. The council's terms of reference were to 570 inform itself about consumer problems, consider the best action to deal with them, promote that action and provide advice and guidance for consumers, in particular through the citizens advice bureaux and other appropriate organisations. It was not permitted to take up individual consumer's complaints or to take law enforcement action and the idea that the Director General, and the apparatus in the Bill, together with the CPAC could be grafted on to a resuscitated or retained Consumer Council is not to understand either the real working or the benefits of the Bill —[Interruption.]—or to understand the work of the Consumer Council.
§ Mr. Alan Williams
Even if we were to accept the points that the Minister has put forward, why did the Government need to kill the Consumer Council two years before the new body is brought into being?
§ Mr. Pardoe rose—
§ Mr. Emery
I have been asked where the staff for the new structure will come from. They will come from the civil service and will be nominated by the DTI. Perhaps it would be interesting to note that no criticism was made of the fact that the Consumer Council was appointed by the President of the Board of Trade; it was never thought then that that affected its independence.
I have been asked about the circular by the National Farmers' Union. The Minister of Agriculture is considering a comprehensive memorandum, in addition to that which had been sent to the Secretary of State, on behalf of the three National Farmers' Unions, seeking further relief for agriculture from the provisions of the previous trade practices legislation. The matters raised in that memorandum are complex and should not be considered in isolation from the review of agricultural and horticultural marketing policy, both for the United Kingdom and in relation to the EEC, which is being conducted at the moment by the Minister of Agriculture.
571 Although there are many small farms, we regard the problems of farmers as fundamentally different from those facing small firms in industry and commerce. This has been shown in other legislation on the same problems.
My earlier reference to small farms does not imply that we have decided not to give relief in the agricultural and horticultural sectors. There is already a measure of relief for some types of agricultural organisation, and the Ministry is considering whether this is adequate.
The Government are therefore fully aware of the points raised by the different National Farmers' Unions, and my right hon. Friend is taking them into account in his review. If further relief is required for agriculture the necessary measures will be introduced in agricultural legislation.
§ Mr. Dan Jones
It strikes me that, whatever the National Farmers' Unions might decide to recommend, after 1st January the Minister knows that any of their recommendations will be of very little value.
§ Mr. Emery
That comment of the hon. Member is not worthy of an answer.
The hon. Member for Liverpool, Walton (Mr. Heffer) reinforced the request made by the hon. Member for Swansea, West about the position of the TUC over those provisions affecting labour and labour legislation. He asked whether we would be willing to meet the TUC to discuss, before the Committee stage or at any time, all these matters. The doors to my right hon. and learned Friend's office and that to mine are open. If the TUC wants to come to discuss this matter, of course it will be welcome, and of course we will discuss it.
On the Crowther report on Consumer Credit, I announced in the House in our debate on credit cards two or three weeks ago that the Government intend to legislate on consumer credit, but I believe that the House will think it reasonable that these matters should not have been brought into what is already a pretty long and detailed Bill. But nothing has 572 altered our desire to introduce legislation on consumer credit—
§ Mr. Goodhart rose—
§ Mr. Emery
My hon. Friend is too old a parliamentarian to expect to catch me on whether I can give a commitment about when legislation will come forward.
There is a great deal of public concern about pyramid selling. The Government are concerned about these practices which cause particular hardship to many franchisees. I have in mind the kind of operation which prompted Mr. Justice Megarry to say, in his judgement on the Koscot case:The scheme reeks of cunning and dishonesty, a swindle of a grave and far-reaching nature.Mr. Justice Megarry said that the mischief of the system was that it was like a general letter using glittering and deceptive means to recruit franchisees by fair means or foul. He thought that to describe misrepresentation by Koscot's as reckless may in some instances have been too mild a description.
It is clearly not in the public interest to allow schemes which attract this kind of stricture to continue to operate. I am glad to say that it was the action of my Department that ended Koscot's life. We intend to take further action to ensure that similar companies cannot continue to operate. However, pyramid selling is not a practice which directly affects the consumer as defined in the Bill. It is the franchisees who suffer. We are considering whether the practice could reasonably be made to fall within the definition of consumer trade practice. If, as seems likely, that would mean widening the definition unacceptably, we shall take other steps to deal with it. We hope to be able to announce a decision shortly.
My hon. Friend the Member for Bedford (Mr. Skeet) asked about block exemptions. My hon. Friend will realise that the European Commission has issued only one regulation granting block exemptions for inclusive dealing agreements, which do not necessarily relate to small firms. That kind of agreement is already exempt in this country. It is important to refer not only to that aspect of my hon. Friend's remarks but about the dropping of "substantially". The answer is so that we 573 can use the reference "local monopolies". If "substantially" was left in, our definition for local monopolies would not apply.
The right hon. Member for Sheffield, Hillborough (Mr. Darling), whom we all respect as being a great expert in these matters and with whom I have sparred on and off for the last 10 years, raised a number of matters. The right hon. Gentleman has apologised for the fact that he cannot be here for the wind up. I am delighted to say that he has gone to Strasbourg to look after certain European aspects for the Opposition. He asked me whether definition orders and information labelling under the Trade Descriptions Act could be taken by the Director General. The answer is "Yes" under Clause 2(2).
The right hon. Gentleman raised a matter which has been raised by other hon. Members, namely, the giving of information and advice to customers and to consumers. The House may be interested to know that the Director General is empowered by Clause 109 to publish information and advice for consumers about consumer trade practices. The information will enable him to produce the sort of free information or informative pamphlets which the Consumer Council used to produce. This is an area in which I immediately admit that the Consumer Council did useful work. It seems right that a Government agency should continue to offer pamphlets in simple worded language advising consumers, by means of common sense and legal information, how to react to a particular trading practice. That is an area in which we can expect privately financed organisations to provide all that is necessary.
Another important area of consumer information is information about particular products and the points to watch when buying those products.
This is an area where much more can be done by the Department, preferably in co-operation with consumer organisations, and we intend to take steps to encourage greater effort. Product information is not, however, a matter in which the Director General will develop a particular expertise, and it is right to point out that I do not think that it will be 574 appropriate for him to produce publications of that kind on individual subjects.
The speech of my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim) was one of the nicest and most ably presented I have heard for a long time. She spoke as an expert, without a note, and made many valid points about the Bill. One of the points which is of interest to the House itself is that she said she did not want to feel that she could be fobbed off on the issue of Parliamentary Questions. I have never been able to fob her off on anything. Certainly it is my hope to keep the House fully informed by all appropriate means of the working out of the new policies.
I am well aware of the ingenuity of hon. Members in finding means of bringing Questions within the principles laid down by the Chair, bearing in mind the ruling that a Minister should answer only for matters for which he is officially responsible. The hon. Member for Fife, West (Mr. William Hamilton) has shown many of us how to do it. Although the Director General will act independently, Ministers will continue to have a wide range of responsibility under the Bill, and it is not my intention or wish to see any impairment of the present freedom to question Ministers about competition or consumer protection matters.
The hon. Member for Walton referred specifically to the report by the Monopolies Commission on the professions. We should set the record straight. He suggested that nothing had been done, but in fact it was Government action which ensured the statutory instrument which takes effect on 1st January dealing with solicitors' conveyancing fees. Other things have been done without Government action—by the Stock Exchange, for example. The report has been met in a number of instances.
The commission found that some restrictions, such as those on fees to be charged and the restriction on advertising, were unlikely to be in the public interest except in a few cases. It indicated that more detailed investigation would be needed to determine how far restrictive practices in any profession were justified. It recommended that the professions themselves should examine their restrictive practices in the light of 575 the report, with a view to abolishing or amending them as necessary. The Government have asked the individual professions to do so.
The report also suggested that the Department should refer to the commission particular professions in which restrictive practices are known to prevail. My right hon. Friend is of a mind to make early references of certain types of professional practices to the commission. If some hon. Members claim this could be inadequate, I suggest they should wait and see the references, which will prove the Government's intentions on the matter.
I turn now to the question of Clause 74. The hon. Member for Walton suggested that this Bill is the wrong place for it. I am not certain in which legislation we have had recently he would prefer it to have been included. Perhaps that is a debating point which it is unfair to make.
After making international comparisons of labour efficiency, the Donovan Commission concluded that substantial improvements could be made in the United Kingdom. The commission pointed to cases where increases of 15 per cent. or more in output had been achieved without any increase in the labour force. The commission recognised that all restrictive labour practices have or once had some justification, adding that the justification should be judged against the loss which the practices entailed.
The Labour Government's White Paper of 1969 said:There can be no doubt that equipment and manpower are not always used as efficiently in this country as in other comparable industrial countries. This is particularly due to customs and practices which restrict the effective use of resources including manpower.
§ Mr. Heffer
Is the hon. Gentleman aware that the Donovan Report was published some years ago? In the docks
§ industry and other industries there has been a whole process of new technology as a result of Devlin. The Government are out of date about what has happened on the industrial scene.
§ Mr. Emery
Devlin had to be appointed as a special commission. It took a long time to get the Devlin Report. This is why there is sense in having this type of reference to the Monopolies Commission. There is no power for orders to be made on the recommendations. It is only the matter of publicity that the Government are using, whereas as regards the professions the Government have taken power to make orders.
I am very grateful to those who have taken part in this useful debate. I am also grateful for the constructive suggestions which have been made. I have not had time to deal with many points. I must not cast doubt on the careful preparation which has gone into the Bill. but the House will not be surprised if I give an assurance that I have no doubt that the Bill will return to the Floor of the House with amendments. If the House gives the Bill a Second Reading, as I am confident it will, I hope that we can look forward in the new year to an equally helpful, constructive and even good humoured debate in Committee.
The hon. Member for Fife, West and other hon. Members said they wanted the consumer provisions to be on the Statute Book by 1st April, for a number of reasons. This is entirely in the hands of the Opposition. If the Opposition wish to see the Bill on the Statute Book by 1st April they can do more than anybody else to ensure that it comes about.
The Bill is about people, for that is what consumers are. The fair trading legislation is designed to benefit people. The competitive legislation will be necessary for the improvement of the economy.
§ Question put, That the Bill be now read a Second time:—
§ The House divided: Ayes 103, Noes 5.577
|Division No. 34.]||AYES||[9.59 p.m.|
|Alison, Michael (Barkston Ash)||Brinton, Sir Tatton||Deedes, Rt. Hn. W. F.|
|Archer, Jeffrey (Louth)||Chapman, Sydney||du Cann, Rt. Hn. Edward|
|Atkins, Humphrey||Churchill, W. S.||Eden, Rt. Hn. Sir John|
|Baker, W. H. K. (Banff)||Clegg, Walter||Elliott, R. W. (N'c'tle-upon-Tyne,N.)|
|Biffen, John||Cooke, Robert||Emery, Peter|
|Biggs-Davison, John||Cormack, Patrick||Fenner, Mrs. Peggy|
|Body, Richard||Crouch, David||Fisher, Nigel (Surbiton)|
|Boscawen, Hn. Robert||d'Avigdor-Goldsmid, Maj. -Gen. Jack||Fletcher-Cooke, Charles|
|Bray, Ronold||Dean, Paul||Fookes, Miss Janet|
|Fowler, Norman||Luce, R. N.||Roberts, Michael (Cardiff, N.)|
|Fox, Marcus||MacArthur, Ian||Rossi, Hugh (Hornsey)|
|Fry, Peter||McLaren, Martin||Rost, Peter|
|Goodhart, Philip||Maclean, Sir Fitzroy||Russell, Sir Ronald|
|Goodhew, Victor||McNair-Wilson, Michael||St. John-Stevas, Norman|
|Gorst, John||Mather, Carol||Shaw, Michael (Sc'b'gh & Whitby)|
|Gower, Raymond||Mawby, Ray||Shelton, William (Clapham)|
|Gray, Hamish||Maxwell-Hyslop, R. J.||Shersby, Michael|
|Gummer, J. Selwyn||Meyer, Sir Anthony||Simeons, Charles|
|Hall, John (Wycombe)||Mills, Peter (Torrington)||Skeet, T. H. H.|
|Hamilton, Michael (Salisbury)||Mills, Stratton (Belfast, N.)||Spence, John|
|Haselhurst, Alan||Moate, Roger||Stanbrook, Ivor|
|Hayhoe, Barney||Molyneaux, James||Stuttaford, Dr. Tom|
|Hicks, Robert||Monks, Mrs. Connie||Sutcliffe, John|
|Howe, Rt. Hn. Sir Geoffrey||Mudd, David||Taylor, Frank (Moss Side)|
|Howell, Ralph (Norfolk, N.)||Murton, Oscar||Tebbit, Norman|
|Iremonger, T. L.||Nabarro, Sir Gerald||Temple, John M.|
|James, David||Normanton, Tom||Thomas, John Stradling (Monmouth)|
|Jopling, Michael||Oppenheim, Mrs. Sally||Turton, Rt. Hn. Sir Robin|
|Kaberry, Sir Donald||Osborn, John||Ward, Dame Irene|
|Kellett-Bowman, Mrs. Elaine||Owen, Idris (Stockport, N.)||Weatherill, Bernard|
|Kinsey, J. R.||Powell, Rt. Hn. J. Enoch||Winterton, Nicholas|
|Knox, David||Proudfoot, Wilfred|
|Lamont, Norman||Ramsden, Rt. Hn. James||TELLERS FOR THE AYES:|
|Lane, David||Redmond, Robert||Mr. Kenneth Clarke and|
|Le Marchant, Spencer||Reed, Laurance (Bolton, E.)||Mr. Tim Fortescue.|
|Lloyd, Ian (P'tsm'th, Langstone)||Ridley, Hn. Nicholas|
|Grimond, Rt. Hn. J.||Thorpe, Rt. Hn. Jeremy||TELLERS FOR THE NOES:|
|Johnston, Russell (Inverness)||Tope, Graham||Mr. David Steel and|
|Smith, Cyril (Rochdale)||Mr. John Pardoe.|
§ Question accordingly agreed to.
§ Bill read a Second time.
§ Bill committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).