HC Deb 22 January 1982 vol 16 cc582-8

Order for Second Reading read.

1.54 pm
Mr. Gwilym Roberts (Cannock)

I beg to move, That the Bill be now read a Second Time.

In view of the late hour, my remarks will be extremely brief in the hope that the Minister manages to catch your eye, Mr. Deputy Speaker, and can give us at least her reaction to the measure.

It is a very important Bill. It is very much in line with the consumer protection measure to which we have just given a Second Reading. Essentially, it closes some of the loopholes in the Trade Descriptions Act.

We heard in the previous debate that a great deal of our present consumer protection legislation waited for some 90 years. Legislation on the subject with which my Bill deals waited only about six years. Essentially the Bill implements some of the major recommendations of the committee under the chairmanship of the late Sir John Methven when he was Director General of Fair Trading. Although my proposals may not be fully in line with his, my intention is to implement something along those lines.

The Bill has two main proposals, It brings services in general into line with goods with regard to the Trade Descriptions Act. It is amazing that under the Trade Descriptions Act, whereas goods enjoyed the full force of the Act under section 4, services were dealt with differently under section 14, where the individual, to commit an offence, had to give false information knowingly or recklessly.

In its report Sir John Methven's committee felt that there was no fundamental reason why that differentiation between goods and services should remain. The first major proposal in the Bill is that those two things should be brought into line. It is clear that there is enormous abuse of the laxity of the services provision in the Trade Descriptions Act.

In the three or four weeks since I said that I would introduce the Bill, I have had scores of letters from all over the country. A great many refer to brochures that advertise holidays. Often when a family goes on holiday, it finds that its holiday is not what is described in the brochure.

I have heard a particularly sad story from an elderly couple who booked a holiday abroad. They spent a great deal of their life saving for that holiday. It was supposed to be the holiday of a lifetime. However, when they reached their destination they found that the hotel had poor provisions. The brochure had stated that there was a good view of the harbour from the hotel. Only a giraffe with an extremely long neck could have seen the sea from that hotel.

We all hear such stories time and again. They have been repeated in my correspondence. Brochures describe a luxurious swimming pool. When the holidaymakers arrive, they find a hole in the ground. The idyllic country cottage turns out to be an old barn that is falling down. In the brochures we always see pictures of beaches fringed with palm trees. One year the picture is described as Rimini, the following year it is Nice and the third year it might be Bootle—not that I have anything against Bootle.

Such problems apply not only to holidays but to every type of service provision. Today several hon. Members have mentioned the increase in the number of people who knock on the door and offer their services. All sorts of unsolicited literature are coming through the door, which glowingly offers all types of services. The provisions would also apply to those services.

Some hon. Members may feel that the present legislation is adequate and that we can afford to wait for a Royal Commission to report. However, the facts are not like that at all. Mr. Jim Potts, trading standards officer in the West Midlands, says: "We had about 60 complaints last year specifically involving false brochure descriptions. But we didn't manage a single successful prosecution under section 14 of the Trade Descriptions Act. Indeed, it is so hard to make a complaint stick that Mr. Potts says that the Act is "virtually inoperable". If that is the view of that officer, who has considerable experience, as the House will accept, the Act clearly needs to be changed.

Perhaps an obvious example of how absurd the situation can get is that of people who sell hearing aids and the accompanying service. Whether the person benefits from a hearing aid depends greatly upon the service that is provided with it. The absurdity of the existing situation is that whereas the aid itself is goods, and therefore covered by the present provision, only the minimal provisions of section 14 apply to the important service. Rectifying that is one of the major aims of the Bill.

The second aim is to close probably the largest gap in the Trade Descriptions Act 1968—the complete exclusion of real property, whether in the form of houses, shops, factories or whatever. The operation of estate agents in general is, of course, not covered by the Act. As all hon. Members will know from their experience of complaints, this is an area in which action is desperately needed.

The Daily Star has reported a useful example of someone who went to view a house which was advertised as having three bedrooms. The lady concerned thought that one of the bedrooms was rather small. When the family, which desperately needed the third bedroom, tried to push a bed into the third bedroom, having bought the house, they found that it could not get the bed in, whatever contortions they attempted. The sleeping accommodation consisted of two bedrooms and a box room. Clearly the description was unacceptable for that sort of property.

The difficulty does not lie with the unscrupulous estate agent. I am not talking about the man who mentions that the house overlooks the local golf club but "forgets" about the sewerage farm that separates the house from the golf course. One of the real problems lies with the measurement of rooms, which is frequently extremely lax. This results in prospective clients wasting a great deal of time by being led to view property which is obviously unsuitable. Sir John Methven and his committee felt that real property should be embraced by the Act. I understand that the Minister will tell us that he was not prepared to go as far as the Bill, but it appears that there is flexibility. If we go as far as Sir John wants to go, we shall make considerable progress.

The Bill includes the concept of civil penalties, which came from the Consumers Association. The association considered the Bill to be a useful vehicle for exploring that concept. I understand that my hon. Friend the Member for Norwood (Mr. Fraser) has already drawn attention to this sort of provision when debating the Supply of Goods and Services Bill. I accept that on reflection the House may feel that the Bill is not the right vehicle for the introduction of what is virtually a new legal concept. If that is the feeling, I shall withdraw the clause in Committee. Its insertion may not be the best way of making such a major change.

What arguments can be advanced against the Bill? It seems that there are only two. There is the traditional argument advanced by Conservative Members when discussing the Supply of Goods and Services Bill, which is based on cost. It is argued that the good tour operator or estate agent will incur additional costs because he will have to ensure that he is not infringing any of the provisions in the Bill. That is not a valid argument. The good tour operator, the travel agent who is doing his job properly, and the decent estate agent are already ensuring that their brochures and advertising conform with the specifications set out in the Bill. Such operators and agents will incur no additional costs.

Mr. R. A. McCrindle (Brentwood and Ongar)

Certainly cost is a possible argument against the Bill. It is not an argument that I support because in general I approve of what the hon. Gentleman is trying to do. If we consider holiday brochures, is there not an alternative way for tour operators to react that would be to the consumers' disadvantage? That alternative would be not to increase the cost of the holiday but, because of an awareness of their openness to prosecution under the Bill, to be extremely careful about the information that they include in their brochures, thereby reducing a large part of the enjoyment of the great British public in choosing their holidays from catalogues while at home.

Mr. Roberts

I do not accept what the hon. Gentleman says. At present the dream is greater than the reality. It would be far better for the individual to find the reality greater than the dream when on holiday. I hope that that will be achieved if there is any movement of the type that the hon. Gentleman suggests.

The second argument against the new concept to which I have referred is the possible absence of a defence for the tour operator. Would he feel endangered if the Bill were enacted? There are adequate defences already within the Trade Descriptions Act 1968. One defence lies in the travel agent having relied on what he regarded as a reputable tour operator for his information. If he has acted in a reasonable and diligent manner, he will have that defence. I do not accept that the Bill involves any danger for the decent and honest estate agent or for the decent and honest provider of services.

Many organisations have expressed their support for the Bill. I shall not list them, in view of the hour. Among the organisations that have expressed support is the Institute of Trading Standards, which would be responsible for administering the Bill, if enacted, as it is already responsible for administering the Trade Descriptions Act. The Bill would be of great benefit to consumers generally. It would also be beneficial to businesses that provide a service. I hope that the House will accept the Bill and that we can make speedy progress.

2.10 pm
The Under-Secretary of State for Trade (Mr. Reginald Eyre)

First, I congratulate the hon. Member for Cannock (Mr. Roberts) on his success in the ballot. I am pleased that we have an opportunity today, however brief and inadequate it may be, to discuss his Bill. Whatever view the House takes of the hon. Gentleman's proposals, there is no doubt that they raise issues of real interest and importance to consumers. The allowance of time for parliamentary debate on the subject is overdue. Therefore, I have listened with interest to the points made by the hon. Gentleman.

The Bill would give effect to two of the recommendations for amendment of the Trade Descriptions Acts 1968 and 1972 proposed in a report of 1976—there is some significance in that date—by the then Director General of Fair Trading, the late Sir John Methven. Many hon. Members will remember that gentleman with great respect. In that report, many matters were brought forward after a comprehensive review of the Act.

The report, which remains the most comprehensive available analysis of the Trade Descriptions Acts and the issues of consumer policy that lie behind it, proposed that the Act should be amended on a significant number of points, many of which, as in the present Bill, touched upon matters of considerable technical complexity. As the report was written in 1976, the complexity of the matters involved in the recommendations has been the main reason why legislation was not brought forward earlier.

As I shall try later to suggest to the hon. Gentleman, there have been developments. There is legislation about estate agents that may, after some time, overtake some of the concepts or principles that the hon. Gentleman had in mind when he brought forward the Bill. It cannot be denied that there are aspects of considerable technical complexity involved in the matter.

As the hon. Gentleman explained, the underlying aims of the Bill are relatively straightforward. They are also—I know that it will not surprise the hon. Gentleman—radical proposals. They would remove altogether what legal experts call mens rea from section 14 of the Act—that is the requirement of the concept of the guilty mind—with the result that persons making false or misleading statements about services of the sort specified in the section could be convicted of a criminal offence without the need, as at present, for proof that their statements had been made knowingly or recklessly.

Additionally—I realise that the hon. Gentleman is fully aware of these aspects—the Bill would create a new criminal offence in respect of certain statements made in the course of a trade or a business about land and buildings. In effect, it would bring real property within the scope of the main Act.

I should perhaps remind the House at this stage that if a false or misleading statement amounting to a deception is made dishonestly about land, buildings or services, and as a result a pecuniary benefit is obtained, it is already an offence under the Theft Act; and if a false statement is made as a result of negligence, and in consequence an innocent party is induced to acquire services, land or buildings, he may well have a civil remedy available to him. Those are two important existing points concerning the legal position which have to be borne in mind in assessing the significance and importance of the hon. Gentleman's proposal.

Thus, the Bill would leave traders who in all innocence make false statements about services in a significantly worse position concerning the defences available to them than exists at present in respect of misrepresentations about goods.

Whatever the good intention of the hon. Gentleman in bringing his proposals to the House, I feel sure that he and a great many hon. Members would feel, on reflection, that that would not be an acceptable position. It would be a position about which we would need a great deal more thought, study and consideration. Undoubtedly, that part of the hon. Gentleman's proposals could not be described as acceptable.

The Methven report, which I mentioned earlier, outlines some of the main arguments that are relevant to the general purport of the hon. Gentleman's Bill and that could be described as being for and against the proposals and the direction in which the hon. Gentleman wishes to move.

In the case of mens rea in misstatements about services, it has to be borne in mind that assessments of the truth or falsity of descriptions of services are often inherently much more subjective than are similar assessments of descriptions applied to goods. That was, no doubt, one of the reasons why the need to prove knowledge or recklessness was originally included in section 14, of the 1968 Act.

On the other hand, my right hon. Friend the Minister for Consumer Affairs and I are well aware that many consumers see no reason why, in principle, misclescrip-tions of services should be treated differently from misdescriptions of goods. One understands that approach. It is often the technical complexity involved that begins to present the difficulties when one comes to deal with the problems by way of legislative proposals.

With regard to land and buildings, it has been argued that extension of the Act in the way proposed by the Bill is unnecessary and would make little practical difference to the majority of ordinary consumers. That is because people buying houses usually, if they are wise, employ professional advisers of their own to check the accuracy of all important particulars about the property supplied by or on behalf of the vendor. At some stage in the proceedings there is the opportunity for a professional expert to be involved in the examination of these details and in the examination of the circumstances in giving advice to the purchaser in this very important transaction.

The new offence created by the Bill would apply, as Methven recommended, only to misstatements made in the course of a trade or business by private individuals. Those individuals, who provide such a significant proportion of the sales in the housing market, would not be in the same position.

Against that, the Methven report points out that the lack of any provision to deal with false statements about house property, which constitutes the ordinary person's most expensive purchase, has long been regarded by many as a substantial and unwarranted weakness in the 1968 Act. I understand that. Sir John Methven was himself a solicitor, highly experienced in dealing with transactions, and moved on to gain a wide experience of consumer affairs. Undoubtedly, he was right in saying that the lack of these provisions would appear strange to the general mass of laymen.

As I have tried to emphasise, it is the technical complexity that is involved that has caused the years to pass without legislative proposals to deal with the general point that Sir John Methven and other members of his committee had in mind.

My right hon. Friend the Minister for Consumer Affairs asked me to make it clear that she does not regard the present position on house descriptions as satisfactory, and many hon. Members would have similar reservations about certain aspects of it.

Mr. John Fraser (Norwood)

The hon. Gentleman has a peerless reputation for courtesy. Will he allow the Opposition Front Bench spokesman to speak for a few minutes before the end of the debate?

Mr. Eyre

I shall do my very best.

It should be borne in mind that the Estate Agents Act 1979 should help to raise standards in this professional area. My right hon. Friend will certainly consider whether there is need for further Government action and, if so, what the best vehicle might be. Most estate agents already include a disclaimer relating to the accuracy of details published by them of property for sale. It would be helpful if a way could be found for them to advise consumers to have an independent survey carried out on their behalf.

Weighing up the arguments on the Bill as a whole, our conclusion—I am trying to comply with the request of the hon. Member for Norwood (Mr. Fraser)—is that a consumer case can be made in principle for both its proposals, but there are also some important practical points that need prior detailed consideration. The House would have to be prepared to allow a detailed study before further progress could be made.

Sir Ronald Bell (Beaconsfield)

Surely nothing should be done that would inhibit either an owner or an estate agent from describing a ropey old shack as a house of charm and character? I hope that that is not the intention.

Mr. Eyre

I am not sure whether my hon. and learned Friend puts that point seriously. Like him, I am aware of the fact that many descriptions of property are unduly and unreasonably rosy and, therefore, to that extent, misleading. However, the recipients of those communications tend to judge them in the light of that general thought. Therefore, what I have sought to do in the short time available—

Mr. R. A. McCrindle (Brentwood and Ongar)

Presumably, the Minister would not wish to sit down before underlining the fact that although it may be desirable to move in the direction the Bill proposes, under codes of conduct operated by tour operators and the Advertising Standards Authority requirements, there are some protections in existence for consumers. Although it may be ideal to push towards what the hon. Member for Cannock wishes, it would not be fair to leave the impression that there is no protection for the consumer at present.

Mr. Eyre

My hon. Friend is entirely right to emphasise the degrees of protection that already exist. I am glad that he has referred to codes of practice that are developing and setting higher standards in these respects. They apply to a number of trades and professions that are relevant to these considerations. The situation is improving.

For all those solid reasons and also because there are extraordinary technical difficulties and complexities and certain very hard and specific reasons why we should have reservations about the nature of the Bill—I mention particularly the reservation about mens rea—it would not be possible to make progress on the Bill, and I would have to ask my right hon. and hon. Friends to vote against the Bill should there be a Division.

2.26 pm
Mr. John Fraser (Norwood)

The Minister's remarks are unfortunate. This is a short Bill. It has only two clauses, and it would be perfectly appropriate for such a short and important Bill to have a Second Reading in the House today. I recognise that the Government and many hon. Members have reservations about the Bill. Nevertheless, it would be perfectly appropriate for such a short Bill to have a Second Reading and then to be considered in detail, on its three main propositions, in Committee. There are precedents. I give the example of the Unfair Contract Terms Act, which enjoyed the full connivance of the right hon. Lady the Minister for Consumer Affairs, which I recognise and praise. That Bill passed through the House on Second Reading without any debate. Other important matters of legislation, when not highly controversial, have been dealt with in that way and have been properly and thoroughly considered in Committee. Both the House and the country have been grateful for them.

There are three propositions in the Bill that will not receive the same unanimity as the previous Bill, but which are worthy of detailed consideration in Committee. The first is Sir John Methven's proposition that misdescriptions about services should incur the same treatment under the Trade Descriptions Act as misdescriptions of goods. That is a proposition about which the House could probably unite most easily. After all, is it right that a person should be under absolute liability if he misdescribes the contents of a box of matches but that there should be a lesser liability if a person misdescribes a holiday that may cost a family £1, 000? There is a certain logic that the rigour of the law should apply there, as Sir John Methven said in his report. We could discuss it further.

The second important proposition that is worthy of examination in Committee is whether offences such as those under the Trade Descriptions Act should always attract criminal penalties. There could be a long discussion about that, but I believe, very firmly, that there has been an overuse of the criminal law and that its use in trading legislation, weights and measures legislation and motoring legislation has brought the criminal law and respect for it into disrepute. That needs to be recognised.

Thirdly, there is the problem of estate agents. Although I am the sponsor of the Bill, I believe that it goes a little too far and that there ought to be more defences than are available in the Bill. But that is an extremely important matter and well worth examination in Committee. It is a short Bill. The matter has not been dealt with before, not because of its complications but because of the way that Governments of both parties organise their time and because of the vagaries and difficulties of pursuing private Members' legislation. That is why we have not made any progress. Complication is no reason why the House should not engage in a short debate and allow the passage of the Bill this afternoon. It can then be examined in detail in Committee—

It being half-past Two o'clock, the debate stood adjourned.

Debate to be resumed upon Friday 30 April.