Supply of Goods and Services Bill

HL Deb 05 May 1982 vol 429 cc1235-53

8.23 p.m.

Lord Mishcon

My Lords, I beg to move that this Bill be now read a second time. I do so with a sense of privilege. This Private Member's Bill has come to your Lordships' House after having passed through all its stages in another place, where it was sponsored by my right honourable friend the Member for Sunderland, North, who was fortunate enough to win the first place in the ballot. The present Minister for Consumer Affairs, Dr. Vaughan, recently referred to the Bill as having received—and I quote his words, a chorus of praise from all sides". I am personally gratified that the noble Lord, Lord Cockfield, will be speaking on this Bill from the Government Front Bench in his new and deservedly elevated position of Secretary of State for Trade. I believe it will be the first Bill with which he has dealt in this House in his new office. Using, if I may, the phraseology of the Bill itself, I pay tribute, having suffered from it in debate, to the extensive merchantable quality of his ability and the uncanny fitness of his repartee for the purpose for which it was intended, especially during Questions.

The consumer—indeed, the whole public—is very much in the debt of the Law Commission. Their first report in this field on exemption clauses led to the Supply of Goods (Implied Terms) Act 1973. Their second report led to the Unfair Contract Terms Act 1977. A Consolidation Act, the Sale of Goods Act 1979, consolidated the statutory law relating to the sale of goods as contained in the famous Act of 1893 —which, incidentally, was a model of clarity in legislation—and amended the 1973 Act and some other legislation. But there are contracts for the supply of goods which do not amount legally to a sale of goods as covered by that Act.

May I mention some categories of such transactions which will be quite familiar to your Lordships? There is barter and exchange, covering for example the purchase of a car in part exchange; goods obtained with coupons or vouchers, covering for example goods supplied with cereal packet tops sent in or "10p off" coupons; goods supplied as a bonus with another product; contracts of works and materials of which common examples are car parks supplied by a garage, or a central heating system installed by a builder.

There is also the hire transaction, a very common example of which is the hire of a television set. In such transactions only possession passes to the consumer and not title or membership. Such a transaction would therefore not be covered either by hire-purchase legislation or by the Sale of Goods Act because in both cases title of the goods will or can pass.

It was with this type of transaction, not covered by any statutory provisions, that the third report of the Law Commission dealt. It found that the common law on the subject—the case law—was in a confused state, sometimes hidden away in the recesses of law reports from a bygone era, and sometimes actually contradictory. Wisely, your Lordships may think, the Law Commission recommended that the law relating to these matters should be set out clearly in a statute. Logically, your Lordships may think, the Law Commission recommended that the obligations of a supplier to a consumer, whether or not this amounted to a sale of goods as defined by the Sale of Goods Act, should as nearly as possible be the same; providing for quality, fitness for purpose, title and suchlike. Considerately, your Lordships may think, the Law Commission prepared a draft Bill modelled on the sale of goods legislation. That draft Bill, for which I express my gratitude as I said as well as making proper copyright acknowledgment, is Part I of this Bill.

Part III of the Bill has some supplementary provisions amending the 1973 and 1977 Acts and providing for the interpretation, commencement and extent of the Bill.

That brings me to Part II. Part II of the Bill deals—and your Lordships may think not before time—with contracts for services. Which one of us would not want to pay tribute to those people—and there are many —who supply services, often very essential services, and who keep up standards of efficiency both in terms of quality and the time taken in rendering those services, and who also with integrity do not take advantage of the urgency of the service required by taking the consumer, if I may use the inelegant but descriptive phrase, "for a ride"?

How many of us have, however, suffered from another kind of supplier of services, however much in a minority, be it a garage or be it a plumber, or a firm where a piece of work is performed or a facility provided such as laundering or holidays? Statistics as to consumer complaints reported to the Office of Fair Trading for 1979–80 make interesting reading in this context. They are to be found in the annual report of the Director General published in 1980. In relation to what could be broadly termed services, those complaints number 123,759. Even more illuminating and more eloquent are the findings of a survey carried out for the National Consumer Council by Research Services Limited between November 1979 and November 1980. Of consumers who had had various items serviced or repaired in the previous 12 months, one in 10 motorists or motor-cyclists was dissatisfied with the quality of work done: with grumbles about quality of repairs and servicing of rented television topping the list, 20 per cent. were dissatisfied. And these were closely followed in the customers' complaints league by complaints about the quality of repairs or servicing of gas cookers: 19 per cent. expressed themselves as being dissatisfied. Runners up were the servicing of household appliances of various kinds.

The National Consumer Council, to whom I am indebted for their effective briefing and assistance in connection with this Bill, realised the urgency of doing something in the light of this situation, having regard to the uncertainties of the present law and the absolute jungle of precedents at common law through which the practitioner, and certainly the layman and the man or woman in the Citizens' Advice Bureau, would have to tread a wearisome and confused way to find out what were the legal rights. The National Consumer Council performed a great public service. They produced a report called Service Please, which, again in line with the rights and duties set out in the Sale of Goods Act, researched what the common law is, or is believed to be, and their recommendations are the basis of Part II of this Bill.

Some have sought to say that it is not what the law should be, and I am delighted to say that the Law Commission will, at the Government's request, be studying what reforms, if any, there should be in the law in this area. That, of course, is bound to take some considerable time. Legislation following upon it may either never take place, or on past records, as the noble and learned Lord the Lord Chancellor, to his sorrow, knows only too well, may take a very long time before it can be slotted into a legislative programme, especially if the recommendations are somewhat controversial. In any event, those recommendations are scarcely likely to lessen consumer rights as against the present legal position. Therefore, it must be right, and I understand that the Government fully agree with this view, at least to put the existing law as it is believed to be into a statute, to have it consistent so far as possible with the supply of goods legislation and to do so now, so that the customer and the supplier of services and their advisers will at least know where they stand now by referring to a comparatively short Act of Parliament. That is Part II of the Bill, as I have said.

To ensure that speed of legislation does not operate to affect certain services unjustly or inappropriately by covering them in Part II when they should not be so covered, there is a clause in this Bill, which is Clause 12, which gives the Secretary of State the power to exclude by order the application of the provisions of Part II to specified kinds of contracts. Part II, as drawn, puts into statutory form the existing law on three main aspects—the quality of services, the time for carrying them out and the price to be charged.

Finally, my Lords, may I briefly and in lightning form—

Lord Lloyd of Kilgerran

My Lords, I am so sorry to interrupt the noble Lord, and with his usual courtesy he has given way. May I ask him, before he passes from Part II, to assist me and several others? We have received a note from the Law Society, of which he is a member, indicating quite clearly that Part II of the Bill is unsatisfactory and that therefore it should be deleted, as the Law Commission is now seized of this matter. The noble Lord himself extolled the work of the Law Commission, though I agree about the delay. May I ask him, as a member of the Law Society, what attention am I to pay to this very strong note from the Law Society about Part II of the Bill?

Lord Mishcon

My Lords, I am grateful for the intervention. My recommendation in regard to the Law Society or any document emanating from it would always be, as I am a faithful member of that society, that it should be treated with respect. I happen to believe, however, that the reaction should be limited to respect on this occasion, and not agreement, and I say so for the reasons that I endeavoured to give—namely, that Part II sets out in a way which is urgently necessary what is the present law, and the Law Society in its document in no way says that that is done inaccurately.

What the Law Society says, so far as I understand it, is, first of all, wait for the Law Commission to see what reforms there may be. I have already said that this could mean waiting for years, as we all know. Secondly, it says that there are some things covered—and I remember that it points out through its Company Law Reform Committee the position of non-executive directors—and that that should of course be looked at in regard to Part II. That is why I referred to the clause which enables the Secretary of State to except certain services, certain contracts for services, from Part II of the Act. I therefore feel on this occasion, although I speak with the respect that I advocated, that the Law Society is not correct in advocating that Part II should not be in this Bill. I repeat my gratitude to the noble Lord for that intervention because it has enabled me to elucidate something that I was very keen to make plain.

Lord Lloyd of Kilgerran

My Lords, may I reciprocate that gratitude to the noble Lord for his courtesy?

Lord Mishcon

My Lords, happily in that tone continuing with my remarks, I was about, as I said, to take your Lordships through the clauses of the Bill in lightning form, and I promise that it will be in lightning form.

Clauses 1 to 5 lay down in regard to the supply of goods the terms to be implied into non-sale transactions and make clear the circumstances in which they are to be implied. In regard to the hire of goods, Clauses 7 to 10 lay down the terms which are to be implied into contracts of hire as defined by Clause 6, and make clear again the circumstances in which they are to be implied. Part II does this in the same way for the supply of services. All these are in line, so far as possible, with the Sale of Goods Act.

I should perhaps mention at this stage that the Bill as it now stands does not include Scotland. At the Committee stage provisions were added so that it did, but at the request of the Scottish Law Officer in another place they were removed at the Report stage, much to the disappointment, if I may say so, of the Scottish Consumer Council. However, it is true that the relevant law in Scotland is different in many ways from English law, and it was thought better that their Law Commission should delve into those differences, and generally, before legislation is passed affecting Scotland.

I feel that this Bill fills a serious void in consumer law.

Small wonder", said The Times on 20th December 1981, with the need to rely upon old case law, that aggrieved customers often feel powerless to complain". A provincial newspaper in October 1981 said: It is right that we all know where we stand". I hope that your Lordships will agree with those on all sides in another place and with so many bodies outside Parliament—consumer and trade alike—that this is a good Bill, and that your Lordships will give it, as they did, a general welcome. My Lords, I beg to move.

Moved, That the Bill be now read a second time.—(Lord Mishcon.)

8.43 p.m.

Baroness Seear

My Lords, the hour is late, the list of speakers relatively long and I shall be extremely brief. It is easy to be brief because this Bill, as was made clear in another place, is one that commands very wide general agreement. The most remarkable thing about the Bill is that it is necessary to have it at all. The Bill relieves uncertainty, and uncertainty which a great many of us did not really know existed. It is, for me at any rate, a matter of very considerable surprise to discover as regards the Sale of Goods Act—although I suppose if one had thought about it in detail it would not be a surprise—the many exceptions as regards hire, services and so on which do not come under the same legislation already. Once that has been made clear there can surely be very little doubt that legislation to tidy up the position, to remove the uncertainty, is long overdue. Of course, by the time one has put together a contract for services, hiring and barter, all those different transactions added together cover a very considerable amount of economic activity.

While of course it is true that in common law there is protection, although it is not very clear always what that protection is, I am sure that the great mass of people like myself believed that these transactions were covered in the way in which sales were covered. Once it has been made clear that this is not so, there surely can be no argument that legislation is required to bring this kind of transaction into line with the protection that is given to ordinary sales. So one can surely only give this legislation a very general welcome.

There are one or two points that I should like to raise. It seems to me that not only is this useful and helpful to consumers—a vast group covering everybody in the community, however badly organised groups in relation to other interest groups; not only does it give them protection which is plainly needed, but it must surely also do something to improve the quality of goods and services because there is more extensive coverage requiring better quality. When one thinks how much of the trade of this country is connected with activities of this kind and how widespread are complaints—sometimes no doubt unjustified but often, as we all know and as report after report has shown, all too justified—it can only be good for the general trade of the country, for the economic position of the country generally, if steps are taken to ensure that the standards in these areas are of a higher level than they have been heretofore.

With regard to the apparently slightly controversial Part II and the question raised by my noble friend, prompted—if that is the correct word—by correspondence from the Law Society, I can only say that, listening to the noble Lord, Lord Mishcon, I was persuaded that, even if there are doubts in the minds of the learned members of the Law Society, there surely is a great deal to be said for having Part II included in the Bill. If it is the case that it is necessary for a further investigation to take place, then I am convinced —perhaps too easily, but I am convinced—that Clause 12 gives sufficient coverage to deal with any uncertainties that may arise from further examination, so that we get services, a vast and very important area, on to the statute book while taking action to see that particular cases which may need further investigation can be dealt with.

There is also the question of Scotland. Far be it from any Saxon Act to say what should go on in Scot land. But if it is true, as the noble Lord has said, that the Scottish Consumer Council is unhappy because Scotland is being omitted from the Bill, then would it not be possible—and I ask this with no idea of the answer—to include Scotland in the Bill, but to include also a clause saying that it will not become operative for Scotland until the Secretary of State is satisfied that the doubts that had been raised as regards certain matters connected with Scottish law had been satisfactorily dealt with? I understand that the objection is that Scottish law is different, and therefore to impose this law on to Scottish law might create certain anomalies and difficulties.

The advantage of such a course would be that any such investigation will take a certain amount of time. But we all know that getting a new Act through (which is what would be required) if we have to wait for those investigations, and then be satisfied that a law of this kind can, in fact, be introduced for Scotland, would involve a very long delay before it was made available to the Scots. Whereas if it were now included, but were not to become operative until the Secretary of State so decided, following investigations, then there need be no delay once those investigations had been undertaken. I should like to suggest that this would be worth while looking at if it is seriously considered, as I understand the Scottish Consumer Council believes, that some legislation of this kind is also required for Scotland. With that query I would very much like to give the support of these Benches to the Bill.

8.49 p.m.

Baroness Burton of Coventry

My Lords, I am glad that the Bill seems to be receiving such wholehearted support. I began on this matter very early. Towards the end of October, which seems a long time ago now, I was looking at various aspects of consumer affairs and I was studying in detail a report which was mentioned by the noble Lord, Lord Mishcon; and that was, of course, the report published by the National Consumer Council called Service Please with a subtitle Services and the Law: A Consumer View. I expect that many of us will be referring to that report tonight.

I should like to say a word or two about it because of the effect it had on my thinking. It seemed to me, so long ago as last October, a most excellent piece of work and, as any other student of consumer affairs would have done, I set to work to make detailed notes about it, having no idea that we would have any chance of discussing the points in it as soon as this in both Houses of Parliament.

I thought it was sensible and fundamental of that report to decide that a preliminary necessity was to identify the principles of existing law which cover the problem areas and which are common to all services without exception. Those who read the report will note that three main types of service problems emerged: the first was the quality of the service; the second was problems with delays; and the third was problems over cost. The writers of the report found that those three types of problems covered all categories of service.

This had a particular relevance for me because many years ago I tried to have this done by the Citizens' Advice Bureaux because I believed that if one could identify common problems surfacing throughout the country, then these could be studied centrally by Citizens' Advice Bureaux; they would bring real benefit to all bureaux and to the people who went to them for advice.

The National Consumer Council report, Service Please, went on to suggest that we should all benefit from that if the principles of existing law could be restated as part of an Act of Parliament. The report listed these basic principles as:

1. "1. A service should be carried out with reasonable care and skill:
2. 2. The supplier should perform the service within a reasonable time;
3. 3. The supplier should be entitled to claim only a reasonable price where no price was fixed; and
4. 4. Where the customer is a private consumer, the supplier should not be able to avoid these provisions".

As I understand it, only the fourth point would create new law, and I think it is important to state that these proposals put forward did not change the balance of responsibility between the supplier and the consumer. It was thought in the report that the best way of doing this would be by Act of Parliament, possibly a Goods and Services Act 1982. This is what appeared in the report last October, 1981.

The more I studied the report, the more enthusiastic I became. Then, of course, on 22nd January last we had Mr. Fred Willey's Supply of Goods and Services Bill, which seemed to cover all the points raised in the report of the National Consumer Council. I hope that these few introductory remarks will help to explain my enthusiasm for the Bill, and also at the outset to convey my congratulations to the National Consumer Council for the service that I think they have rendered to every consumer.

I turn now to the Supply of Goods and Services Bill which is before us today. I hope, as both previous speakers have hoped, that we shall not only give this Bill an unopposed Second Reading, but an enthusiastic one. My noble friend Lord Mishcon, with his legal training, was able to give a legal presentation of the Bill. I would not aim to do that, but perhaps I could give a more general one for those consumers who are not legally trained.

The Bill has two objectives. The first is to implement the 1979 Report of the Law Commission on the Sale of Goods. Most important, the Bill will cover goods that are provided under work and materials contracts. My noble friend—and I am sure that he does not mind my calling him my noble friend—did mention this—

Lord Mishcon

My Lords, may I tell the noble Baroness that I am honoured, and will continue to be honoured, every time she refers to me in that way.

Baroness Burton of Coventry

My Lords, old habits die hard, even if we have moved Benches. The Bill will cover goods that are provided under work and materials contracts. Mr. Willey gave as an example that if a plumber provides and fits taps, the protection will be the same as though the taps were bought in a shop. That will cover many goods. Emphasising what I said earlier, this is not an attempt to write new law, but an effort to remove doubts and uncertainties. As the Law Commission said, uncertainty is undesir- able. It is especially undesirable in relation to consumer goods, and these matters are dealt with in Clauses 1 to 5.

We should note, as has been stated, that similar protection for hire transactions is provided—not hirepurchase, which has been dealt with in previous legislation. Hire transactions are outside the provisions of the Sale of Goods Act 1893 because there is no transfer of ownership. It is possession that is transferred. It is getting late and to avoid going into too much detail on Second Reading, may I just say that the problem entitled contracts for the hire of goods is contained in Clauses 6 to 10. Clause 11 deals with the exclusion of implied terms and is in support of the provisions made.

When the Bill arrived back on the Floor of another place following amendments made during the Committee stage, Part II had become the Scottish law of supply of goods. During Report and Third Reading in another place much attention was given to the Scottish aspect. Many points of considerable interest and importance were raised. I know that the noble Baroness, Lady Seear, has mentioned those and I think that they should be commented on in Second Reading, although the Bill, as now before us, does not extend to Scotland. I am particularly glad that my noble and learned friend Lord Wilson of Langside has said that he will do this. As a former Solicitor-General for Scotland and a former Lord Advocate, we obviously could not have anyone better qualified on that subject.

Part I deals with the supply of goods. Part II of the Bill deals with the provision of some statutory protection in the case of contracts for service. The first, already referred to, is the implementation of the 1979 Report of the Law Commission. Anyone who has studied the debate in another place or the Committee stage in another place will have noted the universal congratulations given to the National Consumer Council and to its report. It was recognised that Part II of the Bill that we are discussing today was inspired by this work and I would like, once more, to add my recognition. In fact, I think that we could not do better here than echo what was said by the former Minister for Consumer Affairs, Mrs. Oppenheim, at column 535 on 22nd January, when speaking of the excellent and widely welcomed National Consumer Council Report, Service Please". She went on to say: Indeed, it seemed to be the answer to a cri-de-coeur from many thousands of consumers throughout the country". The help given by the National Consumer Council in its study of the problem of services has been invaluable for the preparation of Part II. If accepted by Parliament, Part II of the Bill will codify for consumers the quality of service that they have a right to expect. Indeed, Mrs. Oppenheim warmly welcomed the attempt made here to codify this existing common law. She herself said that she would like to see wider codification of the common law in this field.

The Minister, as she then was, went on to speak of the problem in Clause 16 which, for Second Reading, was headed "Restriction on exclusion of implied terms". She felt that this might well prejudice what is known as the "two-tier service" system operated by many traders. Mrs. Oppenheim believed that the position of consumers in relation to exclusion clauses had been greatly strengthened following the proceedings on the Unfair Contract Terms Act 1977. Furthermore, the noble and learned Lord the Lord Chancellor had agreed to refer the question of services to the Law Commission, and the Law Commission would review the matters presently covered by Clause 16 of the Bill then being discussed. Upon this, Mr. Willey said that he was willing to withdraw Clause 16 at the Committee stage to allow the Law Commission inquiry to proceed, and this was done.

In conclusion, I believe that all consumers and consumer organisations will be grateful for what is before us now. Obviously it would have been more satisfactory, or easier for discussion, if the present Part II had been drafted by the Law Commission following a review by it and all the consultations with interested parties that would have been inherent in such a review. That was the problem arising from the proposed Clause 16. But for once speed was of the essence. We do not usually get a chance to have legislation through as quickly as this.

If we think back on the dates, the National Consumer Council report was published only three months before the Second Reading in another place. The Bill itself was published only 10 days before. There would have been more time for deliberation had Mr. Fred Willey not come first in the ballot and seized the initiative by selecting this Bill. We are glad that he did so, and in paying tribute to him I would like to pay tribute to the welcome and co-operation offered by the Government through Mrs Oppenheim, and of course once more to the National Consumer Council. I hope that we shall be as speedy in our House, and I also hope that having the Secretary of State for Trade among us will mean that we shall be able to bring more parliamentary weight and influence in future to the whole area of consumer affairs. I hope that everyone will welcome this Bill.

9.2 p.m.

Baroness Elliot of Harwood

My Lords, I should like to add my contribution to this debate entirely agreeing with everything that the noble Baroness, Lady Burton, has just said. I will, if I may, congratulate the noble Lord, Lord Mishcon, on the manner in which he introduced this Bill, which made it simple to understand although in some ways it is a rather complicated Bill.

This Bill is excellent reading, and it responds to so many of the problems connected with consumer needs and consumer queries. It explains the law and how it should be interpreted. It introduces clarity into complicated legal questions. I should like to add my congratulations to the National Consumer Council on the admirable document which they wrote and about which the noble Baroness, Lady Burton, has spoken, and which provides first-class and interesting reading.

If one had been in any doubt as to whether or not this Bill was necessary, there are some statistics which, notwitstanding my quite extensive experience of consumer affairs, surprised me. One of the documents points out that at 879 Citizens' Advice Bureaux in England and Wales, 4.1 million inquiries were made, of which 758,000 related to consumers, trade, or business matters. That surely is a good example of the kind of problems that beset a great many consumers in a great many different fields.

Although the Citizens' Advice Bureaux have trained and skilled advisers they are not necessarily lawyers. There may be many problems which are difficult to answer when legal interpretation is required. Therefore, in Part I of this Bill, which deals with contracts for the supply of goods, hire-purchase can now be explained and clarified to serve both supplier and consumer. The accounts given of the failure of contractors of any kind to fulfil their obligations are also alarming and convincing.

Another point is the cost of work rising far above the contract price, which seems to be quite normal, and consumers, uncertain of their rights, do not like to prosecute. This Bill now explains the problems so definitively that it will enable them to see whether or not they have the right, and indeed the necessity, to try to rectify some of these matters. The Bill seems to me to be in every way excellent, and it is one which I hope everyone will support.

There is one point which has been mentioned by previous speakers, and that is the reception which the Bill had in another place in connection with Scotland. As your Lordships know, I live and work there and I think know as much about Scotland as almost anybody else; and I read with interest on Friday, 2nd April, the Report stage of the Bill. I have it here in my hand. I found it most disappointing.

I am glad that we have the noble and learned Lord, Lord Wilson of Langside, speaking on this because he is one of the great experts, while I am not. Although I know that Scottish law is very different from English law, I was not convinced by the Solicitor General for Scotland arguing that this Bill could not, in its present form, apply to Scotland. He did not indicate that it would never apply, but that in order that it should apply there should be an inquiry by the Law Commission for Scotland.

I do not dispute that. This is a legal point and I have no doubt that the Procurator was quite right, but it is disappointing because all that is described in the Bill, all that is described in the reports of the Consumers' Association, apply to Scotland just as much. I am not in the least surprised that the Consumer Council for Scotland took a dim view of the reception which this Bill had from the Solicitor General. I hope that we shall be able to get round this in some way, or that the Scottish legal people will undertake to make this inquiry in time so that it can be used in, and applied to, Scotland.

I do not know whether Lady Seear's idea is possible—I was quite attracted by it—that Scotland should be included on the understanding that it does not come into effect until the Scottish legal people agree. I slightly doubt whether they would agree to that, but it is certainly an idea. I am disappointed that this Bill should not be able to be applied to Scotland, and I hope that we in this House will support the Bill as it stands, and that it will go through this House and become the law of the land; and then I hope that Scotland will see to it that it follows as quickly as possible in England's footsteps.

9.8 p.m.

Lord Wilson of Langside

My Lords, I wish to add my congratulations to those of the noble Baroness, Lady Elliot, to the noble Lord, Lord Mishcon, for his admirable presentation, and clarity of explanation, of the Bill. The only point on which I wish to touch is that of the circumstances by which Scotland came to be excluded from the terms of measure, and I ask Lord Mischon to believe me when I say that I do it with the greatest of reluctance. I say that because I am one of those peculiar Scotsmen who think that the Scots, on the whole, are at their best when in partnership with the English in terms of the Treaty of Union. I cannot speak for the other side of the partnership. I am always conscious—I was conscious of it when I was in Government and I am equally conscious of it out of Government—that if one puts a strain on that partnership, at however simple a level, that is undesirable, and the Scottish dimension is in danger of becoming a bore to the English, which is bad for the relationship.

I have told the noble and learned Lord the Lord Advocate that I would be raising this matter. I hope that the Government will look at the subject afresh and anew and will consider whether indeed they were right to exclude Scotland from the terms of the measure. I do not wish to argue that they were wrong. However, the circumstances are most unfortunate, and I hope the Secretary of State, for his interest, will look at the matter and take note of these circumstances with a view to the future where legislation of interest to both countries in the Union is involved.

I say that because, when I read the Official Report of the debates in the other place and the whole background to the exclusion of Scotland from the Bill, I could not help thinking that there was something which the sociologists, somewhat pretentiously, call "institutional malfunctioning". That is something, of course, which is always with us, like birth, death and other things. It is something which it is an important function of Government to minimise, to take note of and have regard to for the future. It is something which most of us who have been in Government have probably contributed to. I am sure the noble Lord the Secretary of State will not yet have done that, and is unlikely to do so in the future, but most of us would probably concede that we have. It is also something which results from a wide range of causes, from gross incompetence to mere human inadvertence, sometimes even bad luck. It is also something the consequences of which cover an equally wide range.

I say all that because the short point I wish to make—there is, I believe, great validity in it—is that the functioning of the machinery of Government in relation to Scotland's place in this Bill was somewhat less than adequate. The report on which the Bill is based was printed by order of the House of Commons in July 1979. I do not know when the Law Commission started work on it, but certainly they were at work on it in the middle of 1977, over five years ago. It was not a joint report, as some of the reports of the Law Commission have been, and I make no complaint about that. There were good reasons for that.

I am as jealous as anyone of the independence of the Scottish system, but the point is that there are many areas where it is undesirable that the provisions of the law in the two countries should be out of step. I should have thought—and I do not think that the Government dispute it—that the area of the law concerned with consumer protection was one such area.

Surely common sense requires that, quite apart from those areas where joint reports of the two Law Commissions are undertaken, the Scottish Law Commission should keep under review the programme of the other Law Commission, in order to avoid the danger of the law in two countries of the Union getting out of step, where that is contrary to common sense, or is damaging to matters of importance, matters of public policy.

But, of course, it is not the Scottish Law Commission's job to see that that kind of situation is avoided; it is the Government's job, and they, too, should be alert to the need for it. I ask the noble Lord the Minister whether any time before or after 1979 the Government and the Scottish Law Commission took note of the possibility that, in view of the report on which the English Commission was embarked, the law would get out of step? Whether they did or not, in January 1980—and, after all, that was two and a half years ago—the Scottish Consumer Council wrote to the Scottish Law Commission pointing to the report and asking whether they would review the position and consider whether legislation for Scotland would be appropriate. The reply was to the effect that they could not give the matter priority because it would make too great a demand on their resources.

It is some years since I was involved in such matters, so I speak with a certain reservation, and I might be wrong, but frankly, as a former Lord Advocate and a former civil servant who was responsible for the department which was answerable for the Scottish Law Commission, I am a little sceptical about the plea regarding lack of resources. As for priority, since the letter was written more than two and a half years ago, I find it quite irrelevant to the circumstances of today.

In any event, Scotland has been excluded from the Bill on the ground that a more considered review of the law by the Law Commission is essential. I might concede that this may be so today; I cannot be absolutely sure; the position is quite complex, and I have no resources other than my own on which to depend. But I would ask the Government to look at this matter again and consider whether they are right, and consider, too, what the noble Baroness, Lady Seear, said. I would ask the Government in particular to consider the letter, dated 29th April 1982, which the chairman of the Scottish Consumer Council wrote to the Solicitor General for Scotland, who in the other place had justified the Government's stand. I find it a most impressive and forceful letter. It might be that it is too late to overcome the damage that has been done, but I venture to hope that someone will point out to the Scottish Law Commission—because it is not for them to decide how the law should be reformed; it is for the Government to decide—that these are matters that they should try to anticipate. But, in any event, I think that the Government should anticipate them, and I leave the matter there.

9.19 p.m.

Lord Young of Dartington

My Lords, I should like to follow other noble Lords in thanking Mr. Willey for introducing the Bill in the first place and the noble Lord, Lord Mishcon, for the skill with which he has presented it this evening. I should like also, if I may, to couple with both of them the name of someone not so well known, Rosemary Delbridge, who was mentioned by several speakers in the other place. After leaving the Consumers' Association, she joined the staff of the National Consumer Council, and was indeed one of the first members of the staff of that council when I was the chairman. Intelligent, humane, humorous and attractive, she was also a doughty campaigner and lobbyist for this Bill, and saw it launched, and well launched, before, most unfortunately and tragically, she died at the early age of 32. One of the many reasons why I shall be glad if this Bill gets on to the statute book is that in its own way it will be a memorial to the work of a rather remarkable young person.

An excellent case has already been made out for this Bill, and I do not want to go over that ground again, especially in view of the time. But I would, if I may, like to broaden the context in order to explain why it is that the consumer movement is so deeply in support of this Bill, and would be in support of any further measures that may be taken along the same lines, only more ambitiously, in the future. The fact is that as far as services are concerned—I am referring particularly to Part II of this Bill—the field of concern is continually expanding, and this for three reasons.

The first reason is that the size of the service sector is expanding all the time. It is expanding in this country, and has done so and is doing so in all industrialised countries. As people's incomes increase the proportion going on services increases and the proportion going on goods relatively decreases—a fact first pointed out in a classic work of economics by Colin Clarke as long ago as, I think, 1941—and partly because of this the service sector is bound to baulk larger in the concern of consumers.

The second reason is that consumers can so much more readily be "done down" over services than they can over goods. They can more easily be kept ignorant about what it is that is being supplied to them. It is much more difficult for them to find out, for instance in the case of repairs, whether the work in question has been well and responsibly done. How is the consumer to know (as the report which has been mentioned several times this evening says in very forceful terms) whether his car or the complex piece of equipment which has been repaired has in fact been properly repaired in his interests? In view of this, it is not at all surprising that the statistics (referred to, again, by other noble Lords before me) collected by the Office of Fair Trading should show how enormous are the numbers of consumer complaints about services—about their quality, about the delays and about the excessive cost.

The third reason is that it has been, and still is, more difficult for the law to give consumers protection against unscrupulous traders and tradesmen, or pseudo-tradesmen—people who pass themselves off as tradesmen when in fact they have not the necessary qualifications. But at any rate in this Bill we have a modest but useful contribution to strengthening the law by means of codification which will increase the certainty of the law, the clarity, the ease of reference and the intelligibility of the law, all of which is so important to consumers. There is clearly a great deal more to do, and we can all hope that when the Law Commission has reported again there will be further and, we could hope, much more ambitious legislation to follow up this particular Willey Bill.

The only point of controversy, I think, is about the question raised by the noble and learned Lord, Lord Wilson of Langside, and that concerns Scotland. He spoke about it with authority. I want only to add to what he said by underlining one particular point, and that is the advantage of having a uniform body of commercial law in the two countries unless there is strong reason to the contrary. There may be two nations and there are certainly two systems of law, but there is one economy. That being so, consumers in Scotland, unless there are very strong reasons to the contrary, should not be deprived of the degree of protection given to consumers in England.

Moreover, the Sale of Goods Act 1979, which was the direct progenitor of the Bill before us, was applied to the whole country. Scotland was not excepted. In my view, as in the view powerfully put by the Scottish Consumer Council, this successor Bill should be applied to the whole country. I hope that the Government will be persuaded of this, will be prepared to look anew at this question of Scotland and will be prepared to have Scotland reinserted in the Bill as one of the territories to which this new law is going to apply.

9.28 p.m.

Lord Drumalbyn

My Lords, I have not put down my name to speak, but there is one matter to which I should like to refer and which I was confident would be referred to in the course of the debate. I should like to make brief mention of it, but before I do so, I might say that it would seem almost appropriate that as I am the only person present today, apart from one other, who has not made a speech, I should say a word at this stage. I should like to congratulate the noble Lord, Lord Mishcon, very greatly on the manner in which he has introduced this Bill. He always does things so suavely and acceptably that he has added lustre to what already was a very promising Bill.

The point that I wish to refer to I think I can most easily put to the House by quoting directly from the National Consumer Council's excellent paper called Service Please, at the bottom of page 31. It is talking about the exclusion clauses and says: We have argued that these obligations should attach to a supplier whether or not the customer is a private consumer. In one respect in relation to the exclusion clauses, we are convinced that something slightly more than codification is required. Accordingly, we have further recommended that the Unfair Contracts Terms Act 1977 be amended to prohibit the exclusion of the supplier's obligation to perform his services with reasonable care and skill where the services are supplied to a private consumer". As I understand it, Clause 16 in the Bill—which deals with the possibility of varying or negativing a right, duty or liability arising under a contract for the supply of a service—does not seem to reflect the recommendation of the National Consumer Council. I would only like to ask, if my noble friend would refer to this matter, whether he can briefly indicate why it does not reflect that recommendation of the NCC, and to draw attention to the possibility that we might well discuss it at greater length on the next stage of the Bill.

May I add also a quick reference to the last subsection of that clause which says: This Part of this Act has effect to any other enactment which defines or restricts the rights, duties or liabilities arising in connection with a service of any description". It seems to me that there are quite a number of such provisions in nationalisation Acts and in the practices of nationalised boards, including British Railways, where a great many exclusions of that sort or limitations and restrictions arise either in the statute law itself as it now exists at present or else in orders and regulations made under that law. Can it be that this refers to regulations and orders as well as to the principal enactment? If so, will this not be something worth discussing also? I hope I have not detained your Lordships too long. I thought it right to raise what seems to me to be an important matter.

9.32 p.m.

Lord Ponsonby of Shulbrede

My Lords, my noble friend Lord Mishcon, in moving the Second Reading of this Bill most eloquently, told your Lordships of its purpose. I do not think it necessary for me to repeat what he said. As the noble Baroness, Lady Seear, said, it is surprising that Part I of the Bill concerning the supply of goods should be necessary at all. This Bill has enjoyed widespread support from all sides of the House and from a multiplicity of organisations, as has been mentioned: the National Consumer Council, the Consumers' Association, the Scottish Consumer Council, the Welsh Consumer Council, the National Federation of Consumer Groups, the Citizens' Advice Bureaux and the Institute of Trading Standards Administration. It has now been blessed by the noble Lord, Lord Young of Dartington, who can be regarded as the father of the consumer movement.

The basic purpose of the Bill is to clarify the law as it exists between the supplier of goods and services and the receiver of those goods and services. It should succeed in its purpose so far as the supply of goods is concerned, but we must acknowledge that, so far as it applies to services, it is only a step in the right direction. As we have been told this evening, the Law Commission is, as my noble friend reminded us, undertaking a more comprehensive reform of the law than that attempted by this Bill.

It is an area of great concern to consumers and tends, after housing and social security problems, to be the largest area of concern voiced by those seeking advice from the Citizens' Advice Bureaux. It is also an area of concern to the EEC, who I know are hoping to carry out research in this particular field.

The solution which the Bill adopts is the term of reasonableness. Services should be provided with reasonable care and skill in a reasonable time and at a reasonable charge. The National Consumer Council takes the view that most cases will be black or white and there will be little doubt about reasonableness. But, of course, it will be up to the courts to decide whether a service which has been provided has been provided in a reasonable way. An individual consumer may feel that a charge of £40 for a five-minute job repairing an electrical appliance is unreasonable. On investigation it may be found to be quite reasonable, but will the consumer accept that such a charge is reasonable?

I accept the difficulty of laying down a more definite standard other than that of referring to industry codes of practice; but I do believe that the Bill as it stands is an important step forward and one to which your Lordships should give a Second Reading this evening. I hope that the noble Lord in his reply will look at the question of whether it should also apply to Scotland, as a number of noble Lords have suggested.

9.36 p.m.

The Secretary of State for Trade (Lord Cockfield)

My Lords, may I first of all express my great appreciation of the very kind remarks which the noble Lord, Lord Mishcon, made about me in the introductory part of his speech? I am quite sure that what he said is not covered by the maxim, "timeo Danaos et dona ferentes".

This is an important Bill; it has been widely welcomed on all sides of the House, and the Government join in the general welcome. It is of course, as the noble Lord, Lord Mishcon, has said, a Private Member's Bill, and the responsibility for securing its passage rests primarily with its sponsors, although, if I may be forgiven for saying so, with so powerful and persuasive an advocate as the noble Lord, Lord Mishcon, in charge of the Bill, support by the Government would seem hardly necessary.

The noble Baroness, Lady Seear, made the point that the provisions of the Bill would encourage improvements in the quality of goods and services. This is an attractive and important argument. My noble friend Lady Elliot of Harwood quoted the experience of the Citizens' Advice Bureaux and stressed how important it was that the law should be understandable by the people. Part I of the Bill and indeed much of Part III closely follow the draft Bill prepared by the Law Commission and attached to their report on Implied Terms in Contracts for the Supply of Goods. This Law Commission report, like its predecessors, was based on wide consultation and detailed study of the existing law.

Nevertheless, despite the general support, a number of criticisms have been made of specific parts, and I will return to those in more detail later. I do need to emphasise that the onus of satisfying the critics rests not so much with the Government as with the sponsors of the Bill. I am sure that they will do all in their power to secure a unanimity of approach on these matters.

I should like at this stage, if I may, to pay tribute to the work of the Law Commission in the field of the law relating to the sale of goods and related sectors. The increasing imbalance which has emerged over the years between traders on the one hand and individual consumers on the other was upsetting the balance originally established by the Sale of Goods Act 1893. The Law Commission has undertaken a series of detailed studies in this field, as a result of which three new Acts have reached the Statute Book over the last 10 years, each of them seeking to clarify or strengthen the existing law in a particular part of the field. The first of these, the Supply of Goods (Implied Terms) Act 1973, dealt with an abuse which was developing, under which consumers were deprived of their basic rights by "small print". It provided that, when buying goods or acquiring them by hire purchase, consumers could not be deprived of the benefit of the implied terms about title, merchantability, fitness for purpose and being true to description.

The Unfair Contract Terms Act 1977 dealt with two separate problems. First, it provided additional protection for consumers who acquired goods other than by purchase or hire-purchase, by providing that they could not be deprived of the benefit of any terms implied by common law that goods were merchantable, fit for their purpose or true to a description applied to them. Secondly, it sought to deal with traders who had been escaping liability for negligence as a result of small print in contracts. It prevented traders from escaping liability for death or injury arising from negligence, and allowed them to exclude liability for other negligence only if they could show that such an exclusion was reasonable. The Sale of Goods Act 1979 consolidated the 1893 Act and the subsequent amendments. Although it did not add to the law, it provided a clear statement of the existing law in a single document.

Part I of the present Bill is therefore the fourth piece of legislation in this field for which we are indebted to the Law Commission. It carries forward the work of the 1977 Act by defining the terms which are implied by law in contracts for the transfer or hire of goods (other than contracts of sale or hire-purchase). The Law Commission found that the terms implied by common law in such contracts were close to, but not exactly the same as, the terms prescribed by the Sale of Goods Act. They propose that these should be set out in clear simple terms. Once the Bill is in force, consumers who enter such contracts will have the same rights set out in the same clear statutory terms as those who buy goods in normal straightforward transactions. Indeed, the consumer who hires goods will have the additional right to enjoy what the lawyers call "quiet possession of the goods". The 1977 Act ensures that a consumer cannot be deprived of the benefit of these implied terms. It is a tribute to the thoroughness of the Law Commission's study that few anxieties have been expressed about Part I of the Bill.

Part II deals with a different sector and has a different origin. It stems from the National Consumer Council's report Service Please, which was published last October. This clearly identified the problems which consumers faced when services proved unsatisfactory. It urged that the existing common law on services should be codified in a statute. It suggested, therefore, that the Government should ask the Law Commission to study the law on services. In the meantime, pending that study, it suggested that three terms should be implied by statute into contracts for services, unless the parties agree to the contrary.

The Government accept that the present position is unsatisfactory. My noble and learned friend the Lord Chancellor has therefore agreed to ask the Law Commission to study the law on services. Meanwhile, the sponsors of this Bill suggest that, in general, and unless the parties agree to the contrary, there should be implied terms that a person providing services will do so with reasonable care and skill, do so within a reasonable time and be entitled to make a reasonable charge.

Part II of the Bill is intended to codify the existing common law. I am sure your Lordships will appreciate that the Government would not wish to impose new obligations on important sectors of the service industry without full and proper consideration.

It is clear from what has been said this evening that some noble Lords believe that the Bill would impose new obligations on important sectors of the service industry. The noble Lord, Lord Lloyd of Kilgerran, in an intervention, referred in particular to the representations made by the Law Society. The noble Baroness, Lady Seear, touched on the same point. I hope that the sponsors of the Bill will give very careful consideration to the points which have been raised and will consider whether these make it necessary or desirable to amend the Bill in any way.

The Government will naturally also consider the points which have been made during the debate. I should, however, at this stage like to give some reassurance to those who have expressed anxiety about the problems which particular service industries would face if the Bill were enacted in its present form. I should not make an order bringing Part II into effect until there had been a reasonable opportunity for service industries to study the position and draw my attention to problems which they would face. If a case could be established on a full examination of the facts that the Bill would impose new obligations on a particular sector, I should be prepared to consider using my power under Clause 12 to exclude those services from those provisions of the Bill. I hope this statement will give reassurance to people who have expressed concern regarding a number of these points.

The noble Baroness, Lady Seear, raised the question of the application—or perhaps I ought to say the nonapplication—of the Bill to Scotland. The same point was made by the noble Baroness, Lady Burton of Coventry, by my noble friend Lady Elliot of Harwood, by the noble Lord, Lord Wilson of Langside, and by the noble Lord, Lord Young of Dartington. The application of the Bill to Scotland was opposed in another place essentially because it was considered that it was inappropriate to legislate in relation to the supply of goods in Scotland until there had been separate consideration of this area of law by the Scottish Law Commission. The provisions relating to the supply of goods which apply in England and Wales are, of course, based on the recommendations of the Law Commission, made after widespread consultation. An examination of the law on the buyers' remedies and the standard of quality and fitness in contracts of sale has been started by the Scottish Law Commission.

The law in Scotland, as has been said, is significantly different from what it is in England. There are obvious dangers in trying to apply what is suitable for one jurisdiction to the other without due and full consideration. Similar arguments apply to the supply of services. Indeed, the legal position is even more uncertain, and I understand that the Scottish Law Officers and, indeed, most informed legal opinion in Scotland take the view that legislation on the supply of services for Scotland would be both risky and premature. I am sure, however, that my noble and learned friend the Lord Advocate will consider the suggestions of the noble Lord, Lord Wilson of Langside, in the light of priorities which my noble and learned friend and the Scottish Law Commission need to set for their future work.

My noble friend Lord Drumalbyn raised the question of Clause 16, which was deleted in Committee in the other place. This was done because it would have prevented traders from offering a two-tier service. It was agreed to leave it to the Law Commission to consider whether such an important change in the law was desirable.

Having dealt with these particular points, perhaps I may say in conclusion that even those who have expressed reservations on particular aspects of the Bill nevertheless clearly welcome the Bill as a whole. I welcome it on the same basis and in the same spirit. I hope that the House will give it a Second Reading.

Lord Mishcon

My Lords, I ask your Lordships to give this Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.