Consumer Protection Bill [H.L.]

HL Deb 29 January 1987 vol 483 cc1463-512

3.30 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 20 [Offence of giving misleading indication]:

Lord Gallacher moved Amendment No. 71: Page 18, line 9, leave out subsection (4).

The noble Lord said: In moving Amendment No. 71, I should like, with the leave of the Committee, to speak also to Amendments Nos. 76 and 81. This amendment is the first amendment to Part III of the Bill which, as your Lordships will see, is concerned with misleading prices. In particular, it is directed at the status of the code of conduct, which is a very important part of the machinery being created under the Bill by way of regulating misleading prices and conduct generally by retailers.

Before moving on to the actual details of the amendment, I should like to seek information from the Government when the Minister comes to reply to the amendment about the state of play regarding some discussions which I believe have been taking place between representatives of national bodies covering consumers, retailers and the enforcement authorities. This point was raised on Second Reading because at that time speeches from various parts of your Lordships' Chamber expressed concern about the workability of the third draft of the code of conduct, the general view during Second Reading being that, as then drafted, the code was unworkable, unenforceable and therefore not likely to achieve the purposes which the Government had in mind for it.

I understand that these talks on a tripartite basis reached fairly speedy conclusions of a unanimous character which, in my limited experience of dealing with the three bodies in question, is in itself unique. When I was actively engaged in this kind of discussion between consumers, retailers and enforcement authorities we were all very gratified if we managed to achieve a "live and let live" basis of understanding. Apparently on this occasion such is the concern about the defects in the draft code of conduct that the parties in question have reached an understanding and, as I am informed, have communicated the outcome of that understanding to the Minister for his approval and, it is hoped for an amendment to be made to the code of conduct. That, I think, would meet the wishes certainly of a number of Members on all sides of the Committee.

With permission, I shall read the basis of the understanding to the Committee. It is that there should be a tripartite arrangement so far as concerns this section of the Bill. First of all, primary legislation should introduce a general prohibition on misleading price indications and include some general indication of the meaning of "misleading" as in Part III. The primary legislation should also establish the status of any code or codes introduced under its provisions. Regulations should be made under Section 26 of the Bill to introduce a few specific requirements to control actual abuses on the following issues: the 28-day-old; recommended retail prices; introductory offers; worth and value claims; and substantiation of price claims. Lastly, any code of practice introduced into the primary legislation should be of practical guidance, as stated in Clause 25(1)(a) of the Bill, and should be of evidential weight for both prosecution and defence in any legal proceedings. Compliance with the code should not constitute an absolute defence; nor should failure to comply with the code constitute a no offence.

Those three heads of agreement, so far as we are concerned, constitute a very practical, businesslike and acceptable basis for amending the code of conduct. It would be helpful to the Committee if, when the Minister replies, he can give some indication of the response which his Ministry is likely to make to what I say is a unique tripartite agreement on behalf of the three bodies most directly concerned with this particular matter.

We must however for the purposes of this amendment proceed on the assumption that the Government want the code as it is, and as it is we find it not particularly acceptable because we go along with the criticism that however much effort has been expended upon it, leading to this third draft, it still contains a mix of regulation and advice which is, first, unsatisfactory as a mix and, secondly, is likely to be unenforceable in the courts. Furthermore, the proposition that compliance with the code should constitute an absolute defence whereas non-compliance would not necessarily result in an acquittal seems to us to be a rather unusual basis for any document of this kind and is a further reason for querying the validity of the code and its likely effectiveness if and when it becomes part of the Bill.

One should have some sympathy with magistrates' courts, who may be called upon to operate the code as it stands. It is very likely that the high degree of certainty which compliance will give as a defence to traders will distract from the general prohibition, and it will be coupled with the proposition that if noncompliance is not likely to be acceptable as a defence then enforcement officers are probably not going to bring many cases before the courts under the code because the prospect of proving to magistrates' satisfaction that the code is an effective document is a remote one. Trading standards officers, who are very busy people with a whole range of duties to perform, are likely to feel that it is not worth their bringing many cases under this document because if they were to do that the courts would be faced with an impossible enforcement problem. Such an event would not enhance the reputation of the enforcing authority before the court.

In addition, I can see, without ever having been a lay magistrate, that confronted with this document as the basis of a prosecution one would have to place a very great deal of reliance upon guidance given to the magistrates presumably by the clerk of the court; and at the end of the day even the magistrates are likely to feel that they are being tested needlessly by a piece of legislation which should never have seen the light of day and which therefore is not one which would commend itself to the magistrates as being helpful to the consumer.

If the Government really want to proceed with the code, we feel that its status should be altered and it should cease to have the clout it is proposed to give it under the Bill as it stands; the document should become an evidential document like the Highway Code and in fact it should tend to guide the court either as to compliance or non-compliance but should not of itself constitute the basis of a conviction or a finding of not guilty.

Therefore in these circumstances we are proposing in Amendments Nos. 71, 76 and 81 to change the basis of the code to one of evidential only, and in that way I hope we would seek to make the code more acceptable to those who will be affected by it. However, as I say, the basic weakness remains, as I tried to outline at the beginning of this proposition, and I hope that when the Minister comes to reply to these amendments he will give this side of the Committee and also other Members some assurance that, if we are prepared to wait until the Report stage, then maybe there will be the prospect of something from the Government based on the approaches made to them by consumers, retailers and the enforcement authorities, which will be to everyone's advantage. I beg to move.

3.45 p.m.

Baroness Burton of Coventry

As the amendments selected deal with Clauses 20, 24 and 25, I should like to separate my brief remarks into two sections, the first dealing with Clause 20 on misleading prices indication and the second with Clause 25, to which the noble Lord, Lord Gallacher, has just been speaking, on the status of the code of practice.

As regards Clause 20, I paid tribute at Second Reading to the Department of Trade and Industry's summary declaring that Part III of the Bill has as its centre a general offence which is, The offence of giving to consumers a misleading price indication about any goods, services, accommodation or facilities but saying that we should want to look carefully at the actual status of the code of practice. This is what we are now moving towards.

As the Committee is aware, under Clause 20 the present legislation will be replaced by a new general prohibition on false and misleading price information backed up by an approved code of practice, which would provide the necessary guidance on ways of complying with the new law. There is general agreement that the control of misleading price claims is a difficult area on which to legislate, since the "misleadingness"—the word used by the Consumers' Association—of a price claim depends upon the impact on people's understanding, which is not always easy to assess.

I wonder whether the Government would pay particular attention to a point which was made by the Consumers' Association, I think by the National Consumer Council and certainly by myself. We all believe that one of the reasons why the current Bargain Offers Order has failed to provide an adequate system of control against misleading pricing—the noble Lord, Lord Gallacher, was also, I think, referring to this—is that it ties the courts to examining the technical detail of the order instead of allowing them to make a judgment on whether the alleged misleading price claim is indeed misleading. I should welcome the comment of the noble Lord, Lord Lucas, or the noble and learned Lord the Lord Advocate on this narrow aspect, which I think is basic to the adequate system that we want.

Having said that, I should like to add that I believe that the Government's main proposals will allow more effective control over misleading price claims and I welcome the extension of the law to cover pricing on accommodation and services. If the proposals succeed, they will go a long way to removing the feeling among most consumer organisations that the law as it now stands is unclear, inflexible, difficult to understand and provides inadequate protection.

Looking back over the years, as doubtless other noble Lords have done, I come across many examples of damage to consumers caused by misleading prices. On the other hand, I believe that price comparisons are of value to consumers provided that control is adequate. In any trade, industry or profession, there is an unscrupulous minority bringing wholly reputable members into disrepute. The noble Lord, Lord Williams of Elvel, on Second Reading, recalled the late 1970s—when he was chairman of the Price Commission—and the problem of price indication of bargain offers etc. My mind went back to the notorious Bargain Offers Order in 1968. That was, of course, a disaster. How well I remember saying that one could drive a coach and horses through Section 11 of the Trade Descriptions Act and how unpopular I was with the government of the day for saying it.

A few moments ago, I said that consumer organisations felt the present law to be unclear. The National Consumer Council emphasised this point in saying that the Government proposals go a long way towards explaining to traders what is lawful behaviour but create much uncertainty as to what is not. The council wishes to be clear about the 28-day rule which it thinks should be addressed to the primary legislation. The present law states that the higher price must have been offered for 28 days. To remove this as a clear rule would be a retrograde and confusing step, and we all await the Minister's reply.

Moving on to my other section, many Members of the Committee have a long-standing interest in codes of practice. I looked up my files. I noted that in June 1984, I was pursuing the noble Lord, Lord Belstead, on trading codes of practice and the noble Lord, Lord Lucas, himself in July last year. As the Committee will remember, the House debated codes of practice a year ago in January 1986. I shall be most interested to hear the comments made in Committee today, because, personally, I am far from happy about the Government's proposal.

If I understand the matter aright, the main proposal being put forward is without precedent. It is that compliance with the code of practice will be an absolute defence to a charge of misleading pricing. I take the same view as the National Consumer Council; namely, that such a proposal has the effect of elevating the code beyond one of guidance and that it will detract from the general duty.

That brings me to the narrow point I made previously. I am sure that the noble Lord, Lord Lucas, will comment upon it. Is there not a danger in this Bill that we become too legalistic so that examination of technical detail overrides the necessity of making a judgment?

Coming back to my fears on this proposed code of practice, I believe that what the Government are proposing will encourage, as the National Consumer Council say, a narrow, legalistic interpretation of the code. I would support what I think the noble Lord, Lord Gallacher, proposed in his remarks, and say that I would accept the view that the code we are now discussing should have the same status as the Highway Code. I would accept such a solution, because I believe, in common with consumer organisations, that we have an important constitutional dimension to bear in mind. If the code is granted formal status, it will assume the importance of delegated legislation. But Parliament will not have had the opportunity to discuss in detail what behaviour should or should not be lawful in this area. This seems to me serious and, I should have thought, an unwelcome innovation both to another place and to our House.

On Clause 25, if I have got it right, the Secretary of State does not have to approve a code at all, but he can of course, by a provision in this clause, approve codes made by other persons. Again, if I understand it correctly, such codes also provide an absolute defence. I wonder whether the Minister accepts the interpretation that Parliament would be delegating to the Executive the power to give legislative effect to codes drawn up by interest groups whether in industry or elsewhere. Concern on this constitutional aspect is expressed by the National Consumer Council, by consumer organisations, and by myself. It will also, I hope, be expressed by many Members of the Committee today.

I think it relevant before I sit down to add here the concern expressed by the Association of County Councils and the Retail Consortium. The Association of County Councils has written to many Members of the Committee stating that Clause 25(3) provides that the code of practice relating to misleading price indications shall be admissible in evidence for the purpose of defence, but contravention of the code is not of itself an offence.

While the Government consider that this gives a degree of certainty to the trade, the Association of County Councils believes that it is a one-sided certainty. The Retail Consortium expresses the view that the code is a rogues' charter. Obviously, whatever our views, there are loopholes in the code. I support entirely what the noble Lord, Lord Gallacher, has said, and the Committee awaits the reply of the Minister with considerable interest.

Lord Campbell of Alloway

These grouped amendments, Amendments Nos. 71, 76 and 81, raise important questions concerning the principles of enforcement procedures under Part III of this Bill. I take it that it is in order to speak to the amendments as they are grouped.

Amendment No. 72, standing in my name and in the name of the noble Lord, Lord Henderson of Brompton, rests upon the assumption that Amendment No. 71 is well founded and that Clause 20(4) cannot remain in the Bill. Such is the extent of the common ground on the grouped amendments between myself and the noble Lord, Lord Gallacher, that in fact we excise Clause 20(4) in this Bill. However, the grouping of the amendments marks the gap which lies between us on Amendments Nos. 76 and 81.

If one accepts that Clause 20(4) must be deleted, the fundamental question is whether the Government wish to resort to contravention of a code of practice in any form as an aid to conviction under Clause 20(1) and (2) or, on the other hand, wish to adopt the traditional approach of introducing a statutory code of practice where breach of provision creates a criminal offence—this as an adjunct to Clauses 20 to 23, enforcement procedures—by the introduction of a statutory instrument under Clause 26.

The hope must be that my noble friend the Minister will not only accept that Clause 20(4) cannot remain for various reasons which I hope to give in a moment, but also that he will adopt the traditional approach. It is the provisions of Clause 25 of this Bill which will require fundamental recasting. That would be done on the assumption that Clauses 20 to 24 can stand, with the excision of Clause 20(4). There is no great feat of draftsmanship involved in this, because as soon as the principle is plain and has been accepted, then that can be done without difficulty.

Clause 26 stands, and here I would support the late amendment supplementary to the Marshalled List. I would therefore support Amendment No. 71 and I would oppose Amendment No. 76, which removes compliance with the code of practice as a defence under Clause 24(1)(a). However, I accept that the code will require some redrafting for such a purpose.

I oppose Amendment No. 81 and respectfully dissent from the views expressed by the noble Lord, Lord Gallacher, and the noble Baroness, Lady Burton, that the Highway Code approach is at all appropriate. What the noble Lord seeks to suggest is that the code should have a status akin to that of the Highway Code as introduced by Section 35(5) of the Transport Act 1972. It could then be relied upon for the purpose of establishing liability as an aid to conviction under Clause 20.

The reason why the Highway Code approach is misconceived is that the code as it stands is not in such a form as could be used for the purpose. Its content over 20 pages is wholly inappropriate as an aid to conviction under Clause 20(1) or (2), unless particulars of the part of the code to be relied upon by the Crown as relevant to the charge are given to an accused before his trial starts to enable him to know the substance of the case and even to prepare his defence and such particulars in a defended case in the criminal court were put to the accused in cross-examination and formed part of the evidence at the trial. Without such safeguards, Amendment No. 81 would work a substantial injustice—a concept which is of course germane to the resort to any code and which is covered by Amendment No. 72 which follows.

The second reason why the Highway Code approach is not appropriate was given by my noble and learned friend the Lord Advocate on 15th January 1986 in the debate to which the noble Baroness, Lady Burton, referred. I quote from col. 1099 of the Official Report: There are a few instances such as the provisions which introduce the Highway Code, where compliance or non-compliance with the code may have an important bearing on the outcome of civil or criminal proceedings, but these instances are, I think, exceptional and represent the extreme end of the spectrum of legal effect. Any obligation, breach of which would result in civil or criminal liability"— and here we are concerned with criminal liability— I suggest, should be in the primary or secondary legislation: and it is breach of that obligation, and not breach of any code relating to the obligation, which results in civil or criminal liability". I say in the presence of my noble and learned friend that that is advice of the highest order and advice which the Government should heed.

The reasons given by my noble and learned friend the Lord Advocate are relevant to support the excision of Clause 20(4) from the Bill. On objective analysis, the subsection is ill-conceived. It is neither requisite, nor is it apt; it is neither workable, nor is it consistent with criminal procedure. Furthermore, it is suggested that in any event it should be rewritten in two parts. Perhaps my noble friend the Minister can consider that suggestion. However, I do not expect any considered reply today.

As regards Part 1, one can extract from this rather loose verbiage in 20 pages about eight specific criminal offences. One then puts them into a statutory instrument and introduces that under Clause 26. Part 1 has then gone.

Then one is left with Part 2 and the rest of the material. Under these provisions compliance with the code affords a statutory defence under Clause 24(1)(a). So be it, but those provisions are not admissible for any purpose other than the question of the defence. For that purpose Part 2 of the code should be rewritten.

It is quite simple. One introduces Part 1 by means of a statutory instrument. It is then removed from the code. One redrafts Part 2 and introduces that in redrafted form under Clause 24(1)(a). This code of practice would have legal efficacy and would be subject to the approval of both Houses of Parliament—and I would support Amendments Nos. 83 and 84 in this regard—and it should be issued by the Secretary of State under Amendment No. 78.

If the Secretary of State wishes to issue a code of guidance to traders—this is another point taken by the noble Lord, Lord Gallacher—the Bill could provide for that. In a sense it does so already, although it is desperately confused as it stands.

If one looks at Clause 25(1)(b) and takes it out of its general context, there is the trigger clause to introduce a code of guidance which has no legal efficacy and would not be admissible in procedures for any purpose whatsoever, and as regards such equality of code the question of approval by Parliament would not arise. This third limb of what was called by the noble Lord, Lord Gallacher, the tripartite arrangement is totally misconceived. One gets to the stage where in one breath one is treating it as if it is a mere code of guidance and in another breath one is saying that it can be admitted in court proceedings. The two simply will not work.

The Bill would be workable as it stands under Clause 20(1) and (2), as applied by Clauses 21 to 23, and it would stand as primary legislation without any extraneous aid to conviction. The statutory defence of compliance with the code could remain under Clause 24(1)(a), and the Control of Pollution Act 1974 stands as an interesting precedent for this very thing. The other defences which are built in to Clause 24(1)(b) would remain.

In that situation, and holding to the primary legislation—the first point made by my noble and learned friend the Lord Advocate on 15th January—the Government could, if so advised, extend the ambit of primary legislation by introducing secondary legislation under Clause 26 in the form of a statutory instrument. There is ample precedent for that—the Health and Safety at Work, etc. Act 1974, the Radioactive Substances Act and so on. But what is not acceptable is this half-way house substitution for secondary legislation, whereby, although contravention of the code cannot as such constitute an offence under Clause 25(3), it may be used as an aid to conviction as proposed by Clause 20(4). I agree with the noble Baroness, Lady Burton, that this is ill-conceived; and there is no precedent for it in our law.

The mould from which Clause 20(4), taken in conjunction with Clause 25(3), was cast has been used for well over 10 years to establish the legal status of codes of practice introduced by statute. But this has been done in a wholly dissimilar context and not in a criminal context. One can cite as examples the codes under the Employment Act, the Sex Discrimination Act, the Race Relations Act and so on. The latest example is Section 67(11) of the Police and Criminal Evidence Act which introduced and dealt with a variety of police powers and procedural matters concerned with criminal law. But in this case the clause is being used in a totally unprecedented way, as has been pointed out by the noble Baroness, in order to show that contravention is an aid to conviction.

It comes to this. Used as a shield by way of defence, under Clause 24 the redrafted code of practice would be a wholly acceptable safeguard for an accused trader. But if it is used as a sword under Clause 20(4), where contravention of the code serves as an aid to conviction, it is wholly unacceptable. In any event it is not appropriate that the present law regulating misleading price indications (Section 11 of the Trade Descriptions Act 1968 and the Price Marking of Bargain Offers Order 1979, as amended) should be replaced and extended in this way. If they are to be replaced, it is suggested for the consideration of the Government that the traditional approach of resort to the statutory instrument under Clause 26 would be more appropriate.

Lastly, the mandatory provision "if the court thinks" and "the court shall" is wholly inconsistent with any traditional concept of trial by jury and is totally unworkable. It is unacceptable in a summary trial. The court cannot think half way through a criminal trial: hence the proposals in Amendment No. 72 to avoid injustice to the accused and to safeguard some of the fundamental aspects of criminal procedure. This being a matter of general concern, the hope is—and I share the hope of the noble Lord, Lord Gallacher—that my noble friend the Minister will be able to accept, whatever else is accepted, that Clause 20(4) must go.

The hope is also that he will consider resorting to the simple, traditional approach which I have proposed, and which indeed was the second leg of the tripartite arrangement referred to by the noble Lord, that a statutory instrument should be introduced under Clause 26 if the ambit of the offences under Clause 20(1) and (2) is to be extended; and that my noble friend may accept retaining compliance with the code as a defence, redrafted albeit, and that it may not be relied upon at all as an aid to prosecution. In those circumstances the hope must be that, at this stage of the Bill, your Lordships' Committee will not divide on any of these amendments. I respectfully suggest that it would be to the mutual benefit of all of us to study what noble Lords have had to say on a very technical and difficult problem.

Lord Lucas of Chilworth

It may well be for the benefit of the Committee if I speak now. That is not to say that I shall not listen carefully to anything your Lordships may have to say following my remarks.

I am grateful to the noble Lord, Lord Gallacher, for the way in which he has put this group of amendments. I start by setting the scene, as it were, because the status of an approved code of practice is touched on at three points in Part III of the Bill. This group of amendments deals with all three points. The main provision is Clause 24(1) which makes it a defence for a trader to show that he has complied with the requirements of an approved code or practice. Clauses 25(3) and 20(4) deal with related matters, that is, the status of the code when it is not a defence. But they do raise slightly different issues. It might be helpful to deal with these first before coming on to the status of the code as a defence. They are relevant too, to Amendment No. 72 put down by my noble friend Lord Campbell of Alloway.

The intention behind Clause 20(4) and Clause 25(3) is to establish what use can be made of the code of practice in proceedings where it is not being relied upon as a defence. We intend—and I believe this intention is shared by a number of noble Lords—that in those circumstances, it should be open to both the prosecution and the defence to refer to the provisions of an approved code of practice as part of their case. Where this is done and the provisions are relevant, the courts should take account of them in determining whether the price indication was misleading.

I said "we intend" advisedly, because I would like now to make clear that we have some doubts that the Bill as drafted in fact fulfils our intentions. For example, Clause 20(4) to which my noble friend has referred could be read as suggesting that the courts should take account of an approved code whether or not it is cited in evidence by either of the parties—a point I think the noble Baroness made. It also limits the circumstances in which the code is to be taken into account to those where there has been a contravention of relevant provisions, and this would clearly not assist the defendant.

I should like to assure my noble friend Lord Campbell of Alloway that we shall in any event be seriously considering the drafting of Clause 20(4) with the intention of bringing forward amendments to reflect our intentions more accurately and to make clearer what the status and effect of the code is in the circumstances I have described.

So much for that, because I have, surely, to address myself to the major point before the Committee, which is the status of the code of practice as a defence, and the point that the noble Lord, Lord Gallacher, made with regard to a document which we received. I confirm that we did receive on 22nd January—last Thursday—a set of agreed proposals concerning this part of the Bill. This document was from the Retail Consortium, the National Consumer Council and the Local Authorities Co-ordinating Body on Trading Standards. Looking at that document, I am glad to say that the concordat—if I may so call the joint body—endorsed the broad approach of the Bill now before the Committee; that is to say, they endorsed a general offence of giving a misleading price indication; and they endorsed a code of practice and a power to make specific regulations. However, the bodies concerned, the concordat, made it clear that among other things they had serious reservations concerning the status of the code of practice. Notwithstanding the time element of Thursday 22nd January, just a week ago, it would clearly be wrong for the Government to ignore the considered opinions of so many of those so closely involved. I am quite sure the Committee will agree that the proposals have serious and wide ranging implications. It has not been possible to assess all those in the course of just one week. In addition, the views of those not party to that concordat need to be heard.

Accordingly, we now propose to hold further serious consultations on all aspects of the question with all the parties involved. The matter is complicated and many interests are concerned. I hope, therefore, that the Committee will understand that this may take some time. While I have to say that at present we remain convinced on balance that the status of the code now in the Bill offers many advantages, I take the opportunity to assure the Committee that my right honourable friend the Secretary of State is prepared to reflect the outcome of the serious and proper consultations to which I have referred when this Bill is before another place. Therefore, I think it would be injudicious of me if I were to respond directly this afternoon to a number of points which have already been raised because of the relevance that my answers might have in any subsequent matters before another place or, indeed, your Lordships' House.

Having said that, and repeating that I should like to have the views of the Committee so that we can enter into these consultations knowing those views, and with the assurance that such a consultation is to be serious, I would ask the noble Lord, Lord Gallacher, whether, on reflection, as we come towards the end of our debate, he would care at this stage to withdraw the amendment.

4.15 p.m.

Lord Williams of Elvel

The noble Lord the Minister has made a very important statement in respect of the amendment moved by my noble friend Lord Gallacher. As I understand him, what he is saying in effect is that the Government are going to rethink this part of the Bill in the light of consultations which they will hold with all parties, including those who are party to the concordat which submitted certain proposals. Furthermore, I understood the noble Lord to say that the result of those discussions will not be available to your Lordships and that this will be incorporated in the Bill as and when it goes to another place. I find that procedure very odd. I find it odd that your Lordships can accept that a Bill which, by all standards and by the Government's admission, is imperfectly drafted should leave this Committee in the state that it is in and go to another place for the matter to be settled. It is up to noble Lords to decide what they will do and whether they wish to speak further on this. I shall be consulting with my noble friend about how we handle this particular amendment, but I cannot refrain from saying that I find this procedure quite extraordinary.

Lord Denning

I should like to approach this problem as a lawyer. Codes of practice are comparatively new in legislation. They have proved most valuable. For example, there is the Highway Code, the industrial relations code, the police code, and so on. However, their proper role is to give guidance and, if need be, illustrations as to the operation of the law. I have here Section 11 of the Trade Descriptions Act 1968, which came in long before this Bill. I quote from Section 11, and the Committee will see how difficult this would be to apply. If any person offering to supply goods of any description gives, by whatever means, any false indication to the effect that the price at which the goods are offered is equal to or less than—

1. (a) recommended price; or
2. (b) the price at which the goods or goods of the same description were previously offered by him; or is less than such a price by a specified amount, he shall, subject to the provisions of this Act, be guilty of an offence".

That is the provision which traders, the public and the magistrates have to apply and it is a hopeless form of legislation for ordinary individuals.

The code of practice should be illustrative. It should give guidance for the people who have to apply the law. However, it should not go further. It should not be part of the law itself. The code should not lay down requirements, as these clauses do one way or another. Reading the clauses as they stand, the code can require this or that. That is delegated legislation. It should not be done in that form in a code of practice. If there are to be requirements in the law they should be done by statutory instrument or by regulation.

Therefore, the requirements in this part of the Bill should go out completely. The code of practice should give practical illustrated guidance to the people who have to carry out the law—the traders on the one side and the enforcement officers on the other. The enforcement officer can then say, "Look here, is that description 'reduced by 10 per cent.' true? Have you really reduced your prices by 10 per cent. or are you saying that they are 10 per cent. lower than some other person's prices?". In other words, the code should give guidance to the trader when putting up his notices, and so on, and guidance on what the enforcement officer must do. The enforcement officer can advise the trader on what he can or cannot do and the trader can comply without referring to the magistrates. The code of practice should give guidance, with illustrations, and go no further.

We then come to the Bill itself. It should include the code of practice but should give it a proper status. Subsection (4) should not contain the requirement that for, any contravention of a requirement … the court shall take that contravention into account", whether it is for the prosecution or the defence. That is not the proper function of a code of practice.

I was glad to hear what my noble friend Lord Campbell of Alloway said, and indeed, what the Minister said, but the Government should take this back and consider it in relation to the right standings of law. An Act of Parliament should contain statutory regulations to carry out requirements in relation to a code of practice. A code of practice is not an enactment of any law. It should give guidance and illustrations for the people who have to act on the law. Then when the matter comes to the magistrates or a court, you go by the actual statute provisions and let the code of practice come in evidentially to see whether there has been a breach of the law.

I have tried to give a simple explanation of what the law ought to be in regard to codes of practice and I hope that when the Government put forward an amendment it will conform to those principles.

Lord Graham of Edmonton

The Minister will appreciate that many people in addition to the Front Bench spokesman in this debate have shown a keen interest in this subject. I believe that the Minister has seriously taken on board the views conveyed to him from major interests outside the House. He referred to the manner in which those interests have got together to form a concordat and produce a concerted view.

He was absolutely right in pointing out that they did not represent the sum total of all those whose views are entitled to be represented. That is absolutely right. However, if one wanted to look for a limited number of people who can best say that they represent the majority of views outside this place, then he has been in touch with that limited number of organisations. It is not an exclusive brethren but certainly the sum total of collective wisdom on this matter.

The Minister will recall that when we had this part of the Bill before us on Second Reading it was immediately picked upon by many speakers and he was reminded that we were not looking at the first draft, or even the second draft, but the third draft. We recognise the difficulties and the complexity in trying to get the Bill right, but I remind the noble Lord, with respect, that the Government took the view that they had it right in producing the wording on the face of the Bill. They took the view that this would be a unique code of practice because it was to have attached to it a status that did not make it a code of practice as we know it but a piece of legislation. However, it is not only a piece of legislation with power but also legislation that is lopsided in terms that are inequitable in its application.

I simply say this to the Minister. I do not understand precisely how this matter can be resolved, but if the Government thought fit after all the consultation that took place before we saw the Bill to put on the face of the Bill the words that they have, then quite clearly they were determined on what they intended to do. If the Minister is now telling us that they are in a mood to reflect, no one in this Committee wishes to inhibit the Government in reaching satisfactory arrangements with outside interests.

We do not have a timescale in this place which chops off a part of our province in order to meet a government timetable here or in the other place. We are not duty bound in this place to proceed to the Report stage and Third Reading. The necessity to, as it were, kick this part of the Bill into court is to meet a timescale which is not part of our doing. I imagine that the House can wait a very long time for the next stage of the Bill if in that interim period a satisfactory arrangement can be made.

I carefully noted what the Minister said. He said that his right honourable friend would look at the product of further discussions and see that they were reflected in other changes to the Bill which are brought forward in another place. The Minister shakes his head, not for the first time. I may have misunderstood what he said, but if the Minister in another place is to come forward with changes in the Bill which simply reflect views, he must understand that our bêete noire in this matter is the status of the code.

If, among all the provisions that appear in any amendment in another place, the status of the code still remains unchanged, then all that will have happened is that the battle will have moved on to another place and this Chamber will have been denied what I believe it wants; namely, to be able to tell the Minister in clear terms that what matters is the status of the code. As the noble and learned Lord, Lord Denning, pointed out, inclusion of the code in a piece of legislation dressed up, as it is, with the words that the Minister has used is not merely undesirable but unworthy of it.

I very much hope that the Minister will reflect and seek further advice. Everyone is entitled to his views but I venture to say to him that on this matter the comments will not differ from the views that he has received from the Retail Consortium, the Cooperative Union, the Consumers Association, the National Consumer Council and the trading standards inspectors. There will be other viewpoints, but so far as concerns the quality and the status of the code the advice will be the same.

4.30 p.m.

Earl De La Warr

I should like to thank my noble friend the Minister for the extremely generous way in which he has listened to the arguments that have been put forward by the noble Lord, Lord Gallacher, and argued so brilliantly, if I may say so, by my noble friend Lord Campbell of Alloway.

Before I make any comments about the code of practice—and many of these comments are now superfluous because so much has already been said—I should just like to take up the point about the timing of the negotiations in relation to the timetable of this Chamber.

I understand the objections put forward by the noble Lords, Lord Williams and Lord Graham of Edmonton, but surely there are two important points to consider. The first is that these discussions between the Government and the trade have to be got right. I am talking perhaps more as a businessman than a politician, but I do not believe that this kind of negotiation can necessarily fit into government timetables. My noble friend said that this Bill will have to go to another place, and perhaps that is so, but maybe the negotiations will be completed more speedily than has been expected. However, let us remember that we are used to acting as a revising Chamber and being the second place to receive Bills. We constantly have the job of dealing with matters that have been ill-considered in the other place.

I believe that there are powerful arguments on both sides but I insist that the most important one is that which says, "Let these negotiations be carried out fully and completely and be got right". That is more important than the timetable of one House in this Parliament.

I said that many of my remarks had been rendered superfluous but I should like to point out that long before I heard the powerful legal arguments that were put forward by my noble friend Lord Campbell of Alloway, I had, as someone who for a number of years had a very large number of shops under my control, concluded that there was something in the highest degree impractical about this code of practice. I envisaged a shop manager, preparing for the sales the next day with his hands full of price cards and a third hand, presumably, holding on to this complex code, who would be wondering exactly where he stood.

I also took the point which was subsequently made so powerfully that this code really related to two different types of animal. There were the requirements and there were the pieces of advice. I should like to give one example of each. Paragraph no. 1.2.2, which deals with previous price comparisons and introduces what is known as the 28-day rule, is quite clearly a requirement. On the other hand, paragraph no. 1.3.6 reads as follows: It is not practical to provide in this Code a generally acceptable length of time for which you could let an introductory offer … run on before it would become misleading … You should be careful to avoid letting these situations arise but what is a reasonable length of time must depend on the individual circumstances". One cannot have that sort of statement coming up in a court of law. It is of an advisory nature.

When I heard this proposition that the important requirements (the abuses that are well known in the market-place already) should be taken out of the code and put into statutory regulations, it seemed to me that for the first time we were going along the right path. Although I shall not press this point, I for one conclude that there is no need for a code of practice at all. I shall not enlarge on that point because I think it has been covered already by implication. I appreciate that the Government have been working on this code for eight months and it might be a little hard on them to ask them to remove it altogether, so let us be charitable, and if the code must remain as a piece of good, homely advice, let it do just that.

I repeat that I am extremely grateful to my noble friend for what he has so generously said. If it be necessary—and I do not think it will be—I beg the noble Lord, Lord Gallacher, who has moved these amendments so well, not to press them.

Lord Ezra

All the Members who have spoken in this debate have expressed grave concern about the code of practice and the noble Lord, Lord Lucas, in replying to the discussions at an earlier stage, indicated that the Government were reviewing the whole position and were in the process of talking to interested parties. However, what worries me—as it has worried the noble Lord, Lord Williams—is that in the Government's present thinking we shall not have the opportunity of coming back to this question before the Bill leaves this Chamber. I feel that that is a matter of very grave concern.

We are a Chamber which prides itself on trying to get legislation right and any Bills that are discussed here first and are sent by us to another place should at least be sent in their entirety after our full consideration and not have one important part of the Bill left unattended to. I should like to ask the noble Lord, Lord Lucas, whether it is possible for the Government to come back to this issue at Report and give us an indication of what they intend to do so that we can then have a further debate on the matter before the Bill leaves us.

Lord Mottistone

I, too, should like very much to support the remarks that have just been made by the noble Lord, Lord Ezra, and from the Benches opposite. One gathers from listening to the argument that this is a. very difficult problem.

My noble friend Lord De La Wan has told the Committee that the department has been engaged upon this matter for eight months. I note that the draft of this code of practice, which is the third revision, is dated November. Surely it is not wise for Parliament as a whole not to give this very difficult subject a chance of proper review by both Chambers. If it comes to the fore first in another place, this Chamber cannot give it proper scrutiny when considering any' amendments that the other place may have made. It is not a stage at which one really gets one's teeth into the issues.

Personally, I should prefer it if, over and above what has been proposed, the section of the Bill concerning these various matters were brought back for recommitment so that we may have proper discussions to and fro. If this means that the legislation, for all sorts of reasons, will be much later than the Government intended, it would not matter in the same way that it did not matter in 1983 when some excellent Bills died and came back when Parliament resumed. It could even be thought of in those terms. It is that sort of legislation—not political with a capital "P" but the sort that needs careful consideration by many learned and expert minds such as the House can provide. I hope that my noble friend will persuade his right honourable friends that the Bill requires proper treatment by this House before it goes to another place so that Parliament as a whole can do its job properly.

Lord Henderson of Brompton

I wish to express an opinion contrary to that expressed by the noble Lord, Lord Graham of Edmonton, and the noble Lord, Lord Mottistone. Most Bills start in the House of Commons. They go to Standing Committees and, where possible, undertakings given in Standing Committee are fulfilled during consideration on Report. The Bill then comes here. Undertakings may also be given that cannot be fulfilled in time for consideration on Report in another place. Those undertakings are fulfilled in this House. We, too, have had experience of this. Exactly the same process occurred only the other day.

It sems to me eminently reasonable, the Minister having made such an important statement, that we should allow him and his department time for the highly complex consultations that will have to take place. I am sure that the noble Lord the Minister would wish to bring the results of those complex consultations to this House in time for Report and Third Reading. If not, it is surely better to get them right and put them into the Bill in the House of Commons rather than put them in, possibly in an unconsidered form, in this House. Therefore, I find myself in disagreement, I hope for valid reasons, with the contrary opinions that have been expressed hitherto.

I wish to deal with only one matter. As the noble and learned Lord the Lord Advocate knows, I have hunted with the noble Lord, Lord Campbell of Alloway, on the subject of codes of practice. It is close to the anniversary of the debate that we had last year when the noble and learned Lord, Lord Cameron of Lochbroom, answered and was extremely helpful. I remember having proposed that there should be a code of practice on codes of practice because they had got into such a muddle. I only wish that there had been such a code of practice on codes of practice. This dog's dinner would never have occurred. Perhaps the noble and learned Lord the Lord Advocate might yet reconsider having some guidance on codes of practice so that if specific criminal offences and the admissibility thereof in court proceedings have to be put into codes of practice, they are put in a separate part and subject to statutory instrument. I could not ask for more than that. That is, I think, what Lord Campbell of Alloway is after; it is certainly what I am after. The muddle that the department has got into on this occasion would be well sorted out if the noble Lord could give some undertaking that he will consider that suggestion carefully.

Lord Graham of Edmonton

Because we are in Committee, the noble Lord, Lord Henderson of Brompton, suggests that we are in an analogous situation to that in Committee in another place when the Government say that there are some matters that they will put right on Report. Some things they say they cannot put right on Report but undertake to put right in another place.

If we were considering an undertaking by the Government to put right in another place that which they say they cannot put right in this place, it would be an analogous situation. As I understand what the Minister has said, he is not telling us that he hears what we say, that the Government agree with what we want, but that they cannot put it right here, and so will put it right in another place. If that were the gravamen of what was being said, we would say: all right, we know that it is coming, not here, but in another place. With great respect, I did not understand the Minister to tell us that he was giving an undertaking that what we want—that is, a change in the status of the code—would be put right in another place.

If the Minister, when he speaks again, as I imagine he will, proceeds to tell us that he takes on board seriously that this, among other things, is what we want and that it will be put right in another place, then it puts a different complexion on the discussion. I may have misheard the Minister, but I do not think that that is so.

4.45 p.m.

Lord Campbell of Alloway

I should like to thank my noble friend the Minister for the magnificent gesture that he has made. Now that I have listened to the debate, I fully appreciate the difficulties that he has. Having had representations from the trade for some eight months, three drafts and a dog's dinner of a code in the end, he has my sympathy.

There are two separate points here, both valid and important. One is the objection in limine to Clause 20(4) for the reasons given by the noble and learned Lord, Lord Denning, and that I attempted to give myself. The other is the trade objection. I do not know whether my noble friend the Minister could meet one and take time on the other.

I am seeking to meet the the point made by the noble Lord, Lord Graham of Edmonton. It seems to me that subsection (4) must go, and the Government should accept that it must go. If the Government accept that and it goes, one needs no more and one can leave the matter to go ahead.

Lord Williams of Elvel

To summarise the Opposition's position on the Minister's proposal, it takes us somewhat by surprise that the Government have produced a Bill, laid it before your Lordships' House and suddenly in Committee, as a result of representations made from third parties, decide that they now want to change it. Yet that is the situation before us.

We would hope for—indeed, we would expect—two things from the noble Lord the Minister: first—I refer to what the noble Lord, Lord Campbell of Alloway, said—a statement in principle now about the direction in which the Government intend to move; secondly, on Report, to have some formulation of that intention. It may not be a final formulation, but we would like some formulation that the Committee with the great depth and breadth of experience that the members have, can then debate.

I shall be advising the noble Lord, Lord Gallacher, to withdraw the amendment; but I very much hope that the Minister can give us the two assurances that I have outlined. If he cannot, I am afraid that we will be under an obligation to move the same amendments on Report, and to repeat the debate.

Lord Lucas of Chilworth

I am grateful to all noble Lords who have taken part on this further debate on the substance of the amendments. As I said earlier, I shall of course give careful consideration to what they have said.

We seem to have spent some little while on matters of procedure. I do not complain about that, because it is important. I think that the noble Lord, Lord Williams was right, when I had finished, in drawing our attention to these procedural matters. He will perhaps agree on reflection that what I was proposing is not quite so unusual. It has been done before, and I think that we may be a little wiser for the benefit of the advice given us by the noble Lord, Lord Henderson of Brompton.

What it now comes down to is that I have to answer the two points the noble Lord, Lord Williams of Elvel, has just put to me. Against that background, he will I am sure accept that the Government had few doubts as to the principles that were endorsed in the Bill until last Thursday, when the document from the Retail Consortium and others was put before us. It was because of the weight of that representation that we felt that we had to give the matter further consideration. That is what I have offered to do, and that is what we shall continue to do.

I cannot make a statement as to the direction that we propose to take, because I then prejudge what may be said to me, my right honourable friend, my honourable friend or my officials. All of us will be involved in these serious and complex discussions. I cannot give the noble Lord an answer on that. The Committee will see that I am not being unreasonable.

On the second point, I believe that we may well have advanced sufficiently in those consultations by the time this place comes back to the Bill for me to give an indication of the progress of those consultations and possibly even the direction they are taking. I gladly undertake to advise this place at that time how things are going. With those two assurances, I ask the noble Lord not to press his amendments this afternoon.

Lord Gallacher

I thank all Members of the Committee who have taken part in the consideration of the amendment and in the subsequent procedural discussion arising from the Minister's statement. I thank the Minister for the statement which he made fairly early in our deliberations and which I think helped the committee. The spirit in which it was made is also appreciated by me.

When I spoke, admittedly from the Back Benches, on Second Reading on 8th December, I suggested a tripartite approach under the good offices of the Department of Trade and Industry. In his reply the Minister did not mention what I had suggested. In my innocence I took that to be a good sign and believed that he did not want to commit himself to anything that evening. I left the matter there. Unfortunately, it may have been better if I had pushed a little during the intervening period. We may then have been slightly further along the road than we find ourselves today; nevertheless, I respond to what has been asked of me. I accept what my noble friend Lord Williams said in his final comment on this matter. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Lord Campbell of Alloway moved Amendment No. 72:

Page 18, line, 9, leave out subsection (4) and insert— ("( ) In any proceedings for an offence under subsection (1) or (2) above the charge shall contain particulars of the requirements of the Code of Practice as approved under section 25 below alleged to have been contravened. ( ) If it is concluded that any such contravention is relevant to any question to be determined in such proceedings it shall be taken into account in determining rich question. ( ) On trial on indictment the court shall direct the jury as to whether any alleged contravention can be relevant to any particular question arising for determination.").

The noble Lord said: This amendment, which I can speak to much more briefly, relies upon the assumption that Clause 20(4) in some form remains in the Bill, which of course is the antithesis of the true argument for which I contend. The amendment is worthy of consideration because it assumes that Clause 20(4) is deleted but that the words printed in the Marshalled List are substituted by way of safeguards. Those safeguards are, it is suggested, wholly essential if resort is to be had to a code of practice as an aid to conviction.

The mandatory provisions of Clause 20(4) provide that contraventions of the code shall be taken into account if relevant, to any question that falls to be determined in those proceedings". That is unworkable without some qualification or safeguard as proposed by the amendment. For example, what is the "question"? We must identify that.

I have already referred to the form of the code. If the offences are not singled out (eight of them perhaps) and put into a statutory instrument but are left lying around in a code of practice (1.1.3 and 2.2.1 are two possible examples which I shall not cite to save time) one is in cloud-cuckoo-land when it comes to legal proceedings in the criminal courts. We have a 22-page document which is called a Code of Practice for Traders on Price Indications. That is a legitimate document. But if it is to be used in a court it would have to be totally rewritten and adapted.

Two fundamental principles of the criminal law do not appear to have been recognised by the draftsman of Clause 20(4). The first is that an accused must always know the substance of the case he has to meet with sufficient particularity to enable him to prepare his defence. The Bill provides for trial by jury on indictment.

The second point is that the draftsman betrays an ignorance of the respective functions of judge and jury in a criminal trial. At the close of the Crown case it is for the judge to rule whether as a matter of law there is evidence of any contravention of the code of practice which can go to the jury; having got past that stage, if there is, whether such contravention (if found by the jury to be a contravention) can be relevant: to any question that falls to be determined in those proceedings and it identifies the question.

That brings to an end the judge's function in summing up in a jury trial. Having ruled in favour of the Crown on both those issues in the absence of the jury, it is then entirely a matter of fact for the jury to decide whether such a contravention was relevant to such question and, if so, then to take it into account.

It is not the court which takes that into account; it is the jury who takes it into account if it thinks that it is relevant after having been directed by the judge. It is not for the judge to "think", as enjoined by Clause 20(4); it is a matter for the jury, who at the end of the day has to return a verdict not upon what it "thinks" but upon what it is satisfied about beyond all reasonable doubt. But the judge may indicate his thoughts on matters of fact under Clause 24(4), and that is as far as it goes. The form in which this is cast, to which I referred before, is wholly inappropriate to the conduct of criminal proceedings.

Referring to another part of the amendment, unless provisions of the code have been identified and particularised in relation to an alleged contravention, which is relevant also to the question to be determined, this would merely work an intolerable injustice, would be redolent of delay, and would serve as a source of confusion. The charge in this regard has to be laid as suggested in this amendment—specifically; and at all events, particulars must be given well in advance of the trial.

While we are discussing this purely legal question, proceedings for an offence under Clause 20(4) will not include appellate proceedings. So only to the extent that an identifiable provision of the code of practice, as supporting an allegation of contravention relevant to an identifiable question to be determined, has been led in evidence, has been put to the accused, and has become part of the material in the trial, may it be raised in the appellate court. The form of Clause 20(4) is totally flawed and utterly misconceived.

I ask the Minister this. After his deliberations, if he comes to the conclusion that he wishes to use a code of practice as an aid to conviction—namely contravention of the code—then instead of issuing a statutory instrument under Clause 26, would he then consider with an open mind the spirit of Amendment No. 72? However I would never dream of foisting upon him my drafting because as Members of the Committee know, I am no draftsman.

5 p.m.

Lord Lucas of Chilworth

I am most grateful to my noble friend Lord Campbell of Alloway for the way in which he has explained his amendment. I have said earlier that we accept that there are difficulties with Clause 20(4) as it is at present drafted.

Then we have to consider seriously the drafting of that clause and with it, Clause 25(3) with the intention of bringing forward amendments to reflect our intentions more accurately and to make clearer the status and the effect of the code in the circumstances that I have described.

I think my noble friend will recognise that the Committee has agreed that the Government should give much wider consideration to the matters touched on in his amendment. I assure him that will be so, and I hope that he will not feel that the brevity of my response is in any way dismissive of the very careful analysis which he has put before the Committee. With that assurance, I hope that he will be prepared to withdraw the amendment.

Lord Campbell of Alloway

I am extremely grateful to my noble friend the Minister for his magnanimity. It is quite something to take this all back at this stage. I do not think it should be underestimated. I am extremely grateful and I am fully content to withdraw my amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 20 shall stand part of the Bill?

Lord Monson

Before we leave Clause 20, perhaps I may put one question to the Minister concerning the prohibition of misleading price indications, and in so doing descend from the general to the particular.

Anyone who has glanced at the City pages of our national daily and Sunday newspapers will have noticed numerous advertisements for unit trusts. But, whereas the benefits and the alleged financial advantages of investing one or other unit trust are blazened across the page in bold type, the actual costs of so doing (by which I mean the initial and annual charges) are generally listed in a typeface so small as to be unreadable without the use of a magnifying glass.

Front-end loading ranges from 0 to 5 per cent., in the case of gilt trusts and from 3 to 5¼ per cent., in the case of equity-based trusts. The annual charges range from to ½ 2 per cent. plus VAT. Over a five to 10 year period this makes quite a difference on the assumption that the underlying performance of each trust is identical for the purposes of comparison. There is no guarantee whatsoever that high charges are compensated for by a superior performance. Sometimes this is the case, but quite frequently it is not.

We are not talking about a negligible matter, particularly bearing in mind the large number of unsophisticated small investors who are currently entering the market for the first time in the wake of the British Telecom and British Gas flotations. It would appear that investors in single premium bonds, which contain an element of insurance, are covered or protected by this Bill by virtue of Clause 21(1) (a) in combination with Clause 22(1)(a). Investors in unit trusts are not so covered, which is illogical.

I should like to ask the Minister whether or not he regards the listing of the unit trust initial and annual charges in minuscule type as tantamount to misleading price indications as defined in this Bill. Or, are the advertisers remaining just within the letter of law, even if not within the spirit of the law?

Lord Lucas of Chilworth

I think if the noble Lord, Lord Monson, addresses himself carefully to Clause 22 he will see that prices of investment such as unit trusts are covered by the Financial Services Act 1986 which was discussed by your Lordships last year. They are excluded from this Bill by virtue of that clause. I would anticipate that the regulations, or the rules as I think they are to be called, under the Financial Services Act will ensure that all relevant matters that an investor should take into account or to whose attention matters should be drawn will be reflected in those rules. I cannot really offer anything to the noble Lord under the terms of the Bill before the Committee this afternoon.

Lord Graham of Edmonton

I wonder whether under the Question whether the clause shall stand part of the Bill the Minister can help me with this problem? We are dealing with the first clause concerning misleading prices. I am certain that this will affect the interests of millions of people. We take on board the interests of traders and organisations, and also the legal profession, in guiding us. I should like to ask the Minister to tell us whether or not he or his department have in mind how they are going to publicise in an attractive way to the general public the net product of what will finally emerge at the end of the Bill.

The Government have quite rightly considered it apropriate that the Bill sees the light of day in 1987. I am most anxious that this matter is not left simply to traders, organisations, councils and others. I understand that the Government genuinely want to see the Bill work effectively. Perhaps the Minister can indicate whether this is the appropriate clause on which to raise the matter. I do not seek to amend the Bill. I want to publicise it as adequately and effectively as possible in the future. Can the Government give me some indication of any plans they have to ensure that it is in effect sold to the public once it becomes law?

Lord Lucas of Chilworth

I am grateful to the noble Lord. His question raises a fundamental matter. This part of the Bill on misleading prices is directed in particular to the consumer in order that he may have a proper choice—as it is simply put, that he is not misled.

We have a certain flexibility—indeed I might almost call it a fluidity—in our plans to advertise the outcome of Parliament's deliberations on the Bill in this clause in particular. We would hope to publish the code in an attractive form with sufficient guidance to the consumer. We would rely upon all those other agencies—the noble Lords knows of them; I need not spell them out—who have at all times been tremendously helpful to governments of all persuasions in disseminating useful information. I talk about radio, television and the other agencies. We would want to be talking with them on how best we can give effect to what the noble Lord asks.

Lord Monson

Let me briefly reply to the Minister. I am grateful to him for what he said. There is no reason why he should remember this point—he has a lot on his plate—but in the course of our debates on the Financial Services Bill I specifically brought up the matter of unit trust charges being printed in unacceptably small type and suggested that some rectification might be incorporated into that Bill. I was specifically told by the Minister that that Bill was not a suitable vehicle for so doing. I am now suggesting that it be incorporated into this Bill. But the noble Lord now says that this Bill is not a suitable vehicle.

I am not entirely satisfied with his reply. I shall have to consider carefully what to do at the next stage of the Bill. I merely give the noble Lord notice of that matter.

Clause 20 agreed to.

Clause 21 [Meaning of "misleading"]:

5.15 p.m.

On Question, Whether Clause 21 shall stand part of the Bill?

Lord Williams of Elvel

I should be grateful if the noble Lord can help me with one or two questions of interpretation. This is an exceedingly complex clause in its drafting. It is not an easy one for the layman to read. If I mention one or two examples of my problems I hope that the noble Lord will not think that I am being exhaustive. I am sure that many others can cite all kinds of instances where similar problems arise.

I quote Clause 21(1)(a), which says that the expectation might be: that the price is less than in fact it is", and paragraph (b) that the applicability of the price does not depend on facts or circumstances on which its applicability does in fact depend". Does this cover quantity discounts? Does it cover promotional offers where an offer is made to sell an object at, let us say, 20p plus a wine glass or something if one buys the object? That is not "a sum" as defined in the word "price" under Clause 20, but it is part of the consideration for the exchange of the object.

One can go further and refer to vouchers which have a monetary value. The noble Lord, Lord Strathcarron, mentioned this matter at Question Time. If one has a voucher which can be cashed in somewhere else for the equivalent of, say, 10p, which is given to you if you buy an object the price of which is 20p, what is "the price" under those circumstances and how is that covered by this clause?

Referring to Clause 21(1)(c) I ask the Minister this question. What happens if the price is quoted net of VAT? Clause 21(1)(c) says: that price covers matters in respect of which an additional charge is in fact made". Does VAT constitute an additional charge and, if the price is quoted net, does that mean that the price is in some way misleading as defined?

Those are the questions that I should like to start with. I do not wish to come back provided that the Minister can help us. If he cannot, perhaps he would be kind enough to indicate that he would prefer to write to me. I speak from considerable experience of having to deal with these problems, as I said on Second Reading, when I was at the Price Commission. It is immensely difficult to define what is a misleading price and how it might work. I am not for a moment suggesting that we oppose the general notion that misleading price indications should be an offence. I am trying to ensure that I understand what the legislation is meant to say.

Lord Beaverbrook

This is a complicated clause. The difficulties of defining the word "misleading" demonstrate very clearly the need for some kind of supporting code of practice. On the points that the noble Lord makes about quantity discounts, what is "the price" in Clause 21(1)(b) and so on, broadly, yes, the matters are covered. The noble Lord mentioned VAT, and there may be other hidden extras. These are a continuing problem. Subsection (1)(c) will make it an offence to state or to imply that such charges are included in the price when they are not. I hope that answer goes some way to help the noble Lord on that clause.

Lord Campbell of Alloway

Will the Minister accept that I am concerned at what he has just said? It seems to run totally counter to my understanding of the whole spirit of the concessions in this debate. I merely wish to register my concern. I seek no answer.

When the noble Lord says that a code of practice will be necessary, does he mean that in his ministerial mind he still understands that contraventions of the code of practice should be relevant and permissible as an aid to conviction under Clauses 21 and 22? If he does, we are back where we started.

Lord Graham of Edmonton

I should be grateful if the Minister could assist the Committee in clarifying this point. The clause is dominated by the word "facts". It includes "in fact", "the facts" and "on facts". For instance, where the Bill states that the applicability of the clause will be determined by the facts, who will determine them? Will they be determined by the courts? Where there is a dispute, or someone takes a trader to court, will the matter be determined wholly by the court or has the Minister any other mechanism whereby one is able to contrast what is alleged to be the price and what is purported to be the real price? Are we simply saying that in all instances this will need to be considered or clarified in the courts? In that case I venture to suggest that the courts will be very busy indeed.

Lord Williams of Elvel

Before the Minister replies, perhaps I may say that the noble Lord, Lord Campbell of Alloway, in a sense took the words out of my mouth. The point that I was going to make—which was referring to our last debate, and is contrary to the point of the noble Lord, Lord Henderson of Brompton, whose advice we normally accept on matters of this type—is that it now appears from this debate that the whole of Part III really depends on what direction the Government are going to take on the code of practice. The whole of Clauses 20, 21 and 22 of Part III depend on what direction the Government are going to take on the code of practice.

Until we know that, it is extremely difficult for us to debate these matters. If we are told that the interpretation of these points must be subject to the code of practice, explained in a code of practice or in some secondary legislation, or whatever, then we shall have to say that we shall have to wait until that occurs. I would argue most firmly, as I argued before, that we need some indication of the way the Government are moving before your Lordships' House takes this Bill on Report.

Lord Beaverbrook

May I deal with these few matters. My noble friend Lord Campbell of Alloway raised a point about the code of practice. I was merely pointing out the difficulties that we have indentified in this area. I wish to make no statement as to how we resolve those difficulties at this stage.

There was the point raised by the noble Lord, Lord Graham, about the courts being rather busy. Ultimately the courts have to determine the facts in the event of a prosecution, as with any criminal matter. Perhaps I may go back a little further to one of Lord Williams' earlier points, in that the price in relation to any goods is defined at line 40 as: the aggregate of the sums required to be paid by a consumer for or otherwise in respect of the supply of the goods or the provision of the services, accommodation or facilities".

Lord Williams of Elvel

Does "sums" under those circumstances mean sums of money plus money represented by vouchers of value?

Lord Beaverbrook

I think that in this instance it would be better if I considered the matter further and wrote to the noble Lord on these points. They are complicated, and I prefer to get them absolutely right for him.

Baroness Phillips

The Minister mentioned price and VAT, or not stated. As I understand the law, and I am subject to his correction, one is duty bound to state the price and the VAT separately.

Lord Beaverbrook

The point I was making was really about hidden extras in general in this case. For instance, VAT is one, as the noble Baroness pointed out; delivery charges are another example. As for the matter of VAT being pointed out separately, it is of course open for any consumer to ask for that information; but as the noble Baroness will know, many prices are shown as inclusive of VAT.

Clause 21 agreed to.

Clause 22 [Application to provision of services and facilities]:

On Question, Whether Clause 22 shall stand part of the Bill?

Lord Williams of Elvel

I apologise to the Committee for these numerous clause stand part debates; but I am sure that the Committee will understand that there are aspects of this Bill which are extremely difficult to understand and are not properly subject to amendment but to interpretation. I hope that particularly Members on the Front Bench opposite will excluse me if I ask certain questions on interpretation—I hope briefly.

Clause 22(1)(a) first, I fully understand that the provision of credit is subject to this Bill, but that credit has the same meaning as in the Consumer Credit Act. In other words, as I understand it, the charging of bank interest will not be controlled by this Bill. It will not come within the ambit of this Bill. I should be grateful if the Minister can confirm that I am right. It is only banking services that are caught by 22(1)(a).

In other words, if I go along to my bank and ask them to make me a loan and they say, "We will make you a loan at X per cent. over base"—and I would not dream of quoting the figure that the bank might charge me or any other Member in the Committee—and in addition they say, "We will charge you Y as an arrangement fee" (this is the common expression) does the Bill provide that Y is covered within the Bill and that X is not? This would be a strange application of the Bill. I should be grateful if the Minister can enlighten me on that point.

Now to the purchase or sale of foreign currencies. Again referring back to Clause 21, subsection (1)(d) says: that a person who in fact has no such expectation—

1. (i)expects the price to be increased or reduced (whether or not at a particular time or by a particular amount); or
2. (ii)expects the price, or the price as increased or reduced, to be maintained (whether or not for a particular period)".

Foreign exchange transactions are, of course, the subject of negotiation as to the price and spread, and all sorts of things come into it. Does this mean that if there is an indication that there is an expectation that the price might change—which indeed it would do from minute to minute, and possibly from second to second—that these transactions of a wholesale nature are covered by this Bill? Or is there the same exemption as we had in the Financial Services Act to exempt wholesale money markets and money transactions from this Bill?

The third point I wish to raise is on Clause 22(1)(d) which concerns, the provision of a place, other than on a highway, for the parking of a motor vehicle". Does this mean that, for instance, local authority residents' parking permits and parking meters are not covered by the Bill whereas other parking facilities are?

Lord Beaverbrook

This clause sets out the extent to which Part III applies to services and facilities. Its coverage is wide. All services and facilities fall within Part III subject to a number of exceptions. Services provided to an employer under a contract of employment are not covered, as this is a matter for employment law. Neither are any services or facilities provided by an authorised person, or an appointed representative, in the course of carrying on investment business within the meaning of the Financial Services Act 1986. That Act already protects investors against misleading indications of the price of investments.

The clause also provides for the sake of clarity that certain particular matters are to be construed as services or facilities; namely, credit, banking, insurance, and incidental services, the purchase or sale of foreign currency, the supply of electricity, and the provision of off-highway caravan and parking. Price indications about credit are covered but credit as such is not. But the prices of services, such as an arrangement fee for a line of credit, are covered by the Bill. Subsection (4) makes particular provision that the rate of exchange of foreign currency is, for the purposes of Part III, a method of determining a price. As regards wholesale money markets, the price indication is not given to consumers, and therefore it is not covered.

The noble Lord, Lord Williams, asked a question about parking meters. Parking meters are not covered. The reference in Clause 22(1)(d) to off-highway parking facilities is included because technically they involve the creation of a licence. Parking meters and other parking spaces do not involve a licence but rather a statutory right for a vehicle to remain subject to conditions including payment of statutory a fee. I hope that that covers the noble Lord's points.

Lord Williams of Elvel

I am grateful to the noble Lord. I understand that "an authorised person" in this clause means an authorised person under the Financial Services Act. However, as Members opposite know, there are certain exemptions in the Financial Services Act of people who do not need authorisation. When the noble Lord says that these people are not consumers, I have then to ask him what is a consumer? These people may be acting on behalf of a private individual. Indeed we had a long debate on Schedule 1 of the Financial Services Act—I remember it well—about private individuals going into the foreign exchange market via agents. I am slightly confused about the noble Lord's response and I should be grateful if he could look at this more carefully and perhaps write to me if he comes up with any different conclusions.

Lord Beaverbrook

I shall look at the matter and write to the noble Lord on the subject.

Clause 22 agreed to.

5.30 p.m.

Clause 23 [Application to provisions of accommodation etc.]:

Lord Gallacher moved Amendment No. 73: Page 20, line 42, leave out ("his main or only") and insert ("a").

The noble Lord said: Amendment No. 73 arises from Clause 23(2), which we are pleased to see brings within the scope of the Bill the provision of new residential dwellings which are the only or the main residence of the purchaser. That raises the question as to why the limitation should be imposed in the Bill. It seems to us and to those who have written to us about this clause that there are probably other areas where similar protection is at least desirable, if not essential. For example, retirement homes are now very much in evidence.

Sometimes these are purchased well in advance of actual retirement so that the person or family in question can put down roots in the area to which they propose to retire. In addition to that, the purchase of holiday homes is now fairly popular. I think we can point to the recognition which holiday homes got for income tax relief in a Finance Act which, if memory serves, was passed about two years ago. I can recall that one had to show that the home was available for letting and had been let for at least 10 weeks in any tax year to qualify for mortgage interest relief on that holiday home.

It seems to us that there is a case for bringing those two categories at least—there may be others—within the scope of Clause 23(2). Therefore it seems appropriate to ask the Government for a view on this. I should have said at the outset that in moving this amendment I was also speaking to Amendment No. 73A with which it is grouped. I beg to move.

Lord Campbell of Alloway

I support the reasoning of the amendment, subject to anything that is said to the contrary as a matter of reasoning by my noble and learned friend the Minister.

The Lord Advocate (Lord Cameron of Lochbroom)

I am grateful to the noble Lord for moving this amendment. While we are both agreed on the abuse that we are attempting to deal with in the subsection, the words to which he directs attention in the amendments may prevent the protection extending to the rare circumstances where a misleading price indication is given only to a consumer who does not intend to use the accommodation as his main or only residence. That being so, I am ready to consider the point. I hope in view of that assurance the noble Lord will agree to withdraw these amendments.

Lord Gallacher

I am grateful to the noble and learned Lord for his response and for the offer he has made, which I gladly accept. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 73A not moved.]

Lord Morton of Shuna moved Amendment No. 74: Page 21, line 12, leave out ("(a) the freehold estate in the dwelling; or (b)") and insert ("in England and Wales and Northern Ireland, the freehold estate in the dwelling or").

The noble Lord said: This is purely a matter of drafting, perhaps with a little—the Committee may think too much—Scottish sensibility. The amendment deals with the definition of "relevant interest" in a dwelling. We start with paragraphs (a) and (b) between lines 10 and 15 which do not have any restriction on their latitude and therefore apparently apply to the whole of Great Britain. Then we have paragraph (c) relating to Scotland. All the amendments seek to do is to say that paragraphs (a) and (b) apply to England, Wales and Northern Ireland and the other paragraph applies to Scotland. That seems a better way of putting it. I beg to move.

Lord Campbell of Alloway

Again very briefly and subject to what is said by my noble and learned friend, may I be allowed to support the reasoning of the amendment?

Lord Cameron of Lochbroom

I am only too aware that it is but a short time since an anniversary of Robert Burns' birth. While I do not think this amendment has any substantive effect, and nor is it necessary to enhance the Bill's clarity, I should like to look at it again, though I give no undertaking whatsoever that I shall come back with any alteration. As I believe the noble Lord opposite accepts, it is important from the point of view of Scottish practitioners for there to be a separate paragraph for Scotland. His argument was directed perhaps to a slightly different target because he has what he needs. Obviously without giving an undertaking I shall consider this again, particularly in view of the fact that some support was given by my noble friend.

Lord Morton of Shuna

I am obliged. The difficulty is that as the Bill stands paragraphs (a) and (b) apply to Scotland, as well as paragraph (c). That is unnecessary. But in the circumstances I beg leave to withdraw the amendment

Amendment, by leave, withdrawn.

[Amendment No. 75 not moved.]

On Question, Whether Clause 23 shall stand part of the Bill?

Lord Graham of Edmonton

I should be grateful if the noble and learned Lord could explain why this is necessary. As I understand from the questions that have been asked and the Minister's replies, what we have here by virtue of the exclusions listed are two classes of consumer. At the end of the day all services are consumed, either once or twice removed. I should be grateful if the Minister could tell us why it is considered necessary to have a clause of this kind. The first two lines read: accommodation or facilities shall not include references to accommodation or facilities provided by means of the creation or disposal of an interest in land, except where". The Minister may say to me that I should have understood the purpose of the clause earlier than the Committee stage. But the Committee stage of a Bill is where one asks questions such as this. Why is it felt necessary that this aspect needs to be caught by the provisions of the Bill? I should be grateful if the Minister would spend a little time (not too long, of course) on the genesis of this. I understand why many interests have felt it necessary to plead with the Minister and his colleagues over the years as to why their own interests should be included. I should genuinely like to ask what has been the pressure for this kind of clause, worded in this way, being put into the Bill.

Lord Cameron of Lochbroom

I shall be happy to attempt to satisfy the noble Lord's curiosity. In Clause 20 one starts off with a general reference to accommodation and facilities, but the purpose of Clause 23 is to deal with the extent to which this part applies to real property; that is, the provision of accommodation which involves the creation or the transfer of an interest in land.

I think the noble Lord will have understood from the debate we have just had on his noble friend's amendment that the application in that circumstance is only to the area of what are called new homes, to deal with a particular abuse that arises there. It is for that reason that Clause 23 commences in the way it does. Subsection (2) is important in defining the particular area to which this clause will apply in relation to real property. I think that becomes clear when one considers the terms of subsection (3), and particularly the definition in subsection (4). I hope that what I have said is of some assistance to the noble Lord regarding the intention behind this clause as against the general reference to accommodation in Clause 20.

Lord Graham of Edmonton

I am sorry to be "thick". I can hear what the Minister says, but my question was: why should these exclusions be thought necessary? If the exclusions cover consumers at one level or another, why are they not given the protection of the clause and the Bill?

Lord Cameron of Lochbroom

The abuse to which I referred—and perhaps I should have dealt with it earlier—is that in relation to new homes, or what I might term starter homes. These were being increasingly marketed in much the same way as any other product and typically there were offers made "free" in relation to such homes.

However, there were also a number of other considerations as to why it should not be extended. The sellers of what I might term "secondhand homes" rather than new homes are private individuals. They will not generally be in business and therefore would not be caught by these provisions. They would of course apply to their estate agents, who would become liable in respect of the actions of their clients over which they have no control. I do not think that that would be fair, as perhaps the noble Lord would accept.

The general character, furthermore, of a secondhand house purchase is quite different from the purchase of a new house. It proceeds by negotiation, during which there will usually be ample opportunity for a prospective buyer to establish all the circumstances which would bear upon the initial price indication. In that respect, again, there is a substantial difference between a new house and a secondhand house.

The noble Lord might also ask: why does it not apply to tenancies, because that is leasehold property? Again, there is a great shortage of private rented accommodation, and the Government have been concerned to take steps to encourage an increase in supply. But that will not be achieved by imposing unnecessary regulation.

The potential mischiefs we are concerned to remedy in this Bill are not really relevant to the rented sector and, as the noble Lord knows, there is already legislation to protect the general interests of tenants. It is for that reason that the clause is very carefully defined to deal with one aspect of what I might call the property market and house purchase; namely, that of new houses and in particular the abuse to which I made specific reference.

5.45 p.m.

Lord Graham of Edmonton

I am most grateful to the noble and learned Lord, but the more he goes on, the more questions he raises in my mind. It is not his fault: it is simply because I am curious. If what the noble and learned Lord is saying is that he and his advisers noted a particular manifestation whereby the consumer needed protection—that is the consumer of new homes and particularly starter homes—the point I start from is that all consumers need protection if they are at risk from people trying to take advantage of them. For instance, if we look at the top of page 21 a new home, means any building or part of a building which has been constructed or adapted to be occupied as a person's main or only residence". Does that mean to say that if the new home is a person's second home or his third home, he then diminishes the quality of the protection of the law from having been induced, misled or in some way invited to part with his money? What I am trying to get at is: why is the variation in the quality of protection dependent upon whether it is a young person, an old person, a starter home or a second home?

I can appreciate that new first-time buyers may be more vulnerable and may need more protection, sometimes from themselves, because they might be eager to buy and thereby get caught. I still want to know why that person needs the protection of the law as opposed to a person who, for very good reasons, in 1987 may be buying a new home which is not a first home or indeed an only home.

Lord Cameron of Lochbroom

I think, with respect, that the noble Lord may have misunderstood my definition of a new home. It is of course that in the Bill. It is a new dwelling, which means any building as referred to in subsection (4). The noble Lord has referred to the words "main or only" and that point was dealt with during the debate we had as a consequence of his noble friend's amendment. I am going to look at that.

I think I have made clear that the reason for the differentiation is that in this clause we are talking about something that has been constructed and is put on the market for the first time, as against something which has already been occupied. I have indicated the distinction that arises because, in general terms, it is put on the market by a private individual. If such private individuals operate through estate agents the latter are simply acting as the agents for their clients. The occupiers are not in business in the same way as are those who are struck at in this Bill—the traders, if I may use the term rather loosely. It is for that reason that we make the distinction that we do.

Lord Graham, of Edmonton

I am most grateful.

Clause 23 agreed to.

Clause 24 [Defences]:

[Amendment No. 76 not moved.]

Lord Gallacher moved Amendment No. 77: Page 22, line 8, leave out ("for the most part").

The noble Lord said: This amendment is concerned with Clause 24, and that clause is concerned with defences for publishers of catalogues and advertisements. As I am sure the Committee will know, this is a growth area, particularly since the advent of free newspapers and similar advertising matter. Undoubtedly the growth of this material in addition to that which is long established by way of advertising, has a significant influence on the market and therefore it must be of considerable importance to consumers who may be influenced by it.

One takes Clause 24 as a whole. It is certainly drawn very widely, and one accepts that in the circumstances to which the clause addresses itself, width is very necessary. However, reading the various subsections, one begins to feel that the cumulative effect of this clause is to give little or no protection, and indeed to exonerate completely the advertiser from any responsibility for what may or may not appear in his advertisements.

For example, when we come to subsection (4) (d) we get the words "for the most part" and, as I said, on reading the clause as a whole it seemed to us that it might be desirable slightly to narrow the width of exemption offered by Clause 24. The purpose of the amendment is to achieve just that. The narrowing of the clause in the minor way suggested in the amendment would constitute an additional defence for consumers and therefore it is worthy of consideration.

When I was thinking about what one might say further in support of this amendment I chanced upon a report in my local paper only last week that a vacancy advertised in a Job centre led a young woman into prostitution at a massage parlour. So a case was brought to court and subsequently sent for trial on that basis. I am happy to assure the Committee that so far as the young lady is concerned the case had a fairly happy ending, because it is also reported that she is now pursuing successfully a career in the Civil Service.

Although it may be that the point I am raising here belongs properly within the legislation which the Government may find it necessary to introduce at a later date to deal with the European Convention directive on unfair and misleading advertising, it seems to me that at this stage in our deliberations we should pause and ask ourselves whether we are perhaps giving excessive exemption to the advertising industry in this important area. The purpose of the amendment is to give the Government an opportunity of saying why in Clause 24, in general, the exemption is as wide as it is and why the modest restriction proposed by Amendment No. 77 should not be accepted. I beg to move.

Lord Campbell of Alloway

I wonder whether my noble and learned friend the Lord Advocate could possibly give further consideration to this point on the grounds of practicability, because we are talking about a defence to a criminal charge under Clause 21 and I ask the Committee to bear in mind that a case is being tried by a jury on indictment, as is proposed. I know not—and I am in the hands of my noble and learned friend who has greater experience than I—of any other statutory defence to a criminal charge which says, "For the most part, I did this". If there is some precedent for this sort of defence, so be it, but I have never come across it and it seems to me on analysis rather absurd and unworkable. If my noble and learned friend could just have a look at this one, I for my part would be very grateful.

Lord Beaverbrook

If the noble Lord's amendment were adopted, it would impose a very heavy and, I believe, unreasonable burden on traders who give the sort of price indications covered by this defence. The scope of the defence is already very narrow. It is intended to deal with the situation where manufacturers advertise the price at which their goods are available in the shops. Motor manufacturers, for example, often advertise the prices they have recommended to dealers to charge. It is available only when the alleged offence relates to an indication of a price which has been recommended to all those from whom the goods, services, accommodation or facilities are indicated as being available; the indication was misleading only because someone failed to follow the recommendation; and it was nevertheless reasonable for the person who both gave the indication and made the recommendation to assume that his recommendation was generally being followed.

This amendment creates, in my view, an unduly onerous condition in circumstances where it must be remembered that the indication is not given at the point of sale and the person who gave the indication is not involved in the transaction with the consumer. For that reason I am unable to accept the noble Lord's amendment.

Lord Campbell of Alloway

I wonder whether my noble friend might conceivably reconsider, because he read from a brief which was written by somebody who had not heard any of the argument. We can all be wrong. If the point I made is totally misconceived, it would be nice to have a reasoned riposte before being turned down out of hand.

Lord Mottistone

In many cases I would sympathise with my noble friend Lord Campbell of Alloway, but in this case I think what my noble friend on the Front Bench said was perfectly straightforward. I found it very easy to understand and I do not see why he should go any further.

Lord Beaverbrook

I am most grateful to my noble friend. The brief I have is intended to set out very clearly the reason why we feel that we cannot accept this amendment. But of course we always listen to whatever is said in your Lordships' House and will read what my noble friend Lord Campbell has said. But I have set out our case for being unable to accept this amendment.

Lord Gallacher

I am grateful to the Minister for his reply to this amendment. In particular, I am grateful to the noble Lord, Lord Campbell of Alloway, for his support. Like him, on first hearing I thought the reply to the amendment was somewhat terse. The mere mention of motor manufacturers' recommended prices made me almost wish that I was in another place. Nevertheless, I am grateful that the assurance was given that there will be some further consideration of it. Although we are not expecting that consideration to take a very tangible form at Report stage, I am nevertheless grateful to the Minister for what he has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 agreed to.

Clause 25 [Code of practice]:

Lord Gallacher moved Amendment No. 78: Page 22, line 19, leave out from ("issued") to end of line and insert ("by the Secretary of State").

The noble Lord said: This amendment is one which has occasioned considerable discussion on this side of the Committee because it seems to us that Clause 25(1) is rather dangerously wide in that it would allow not merely the Secretary of State to approve a code of practice but "another person" for the purpose of the points which are contained in the remainder of the clause.

I do not want to reopen the discussion which we had at the beginning of this Committee stage on the status of the code of practice. But whatever its status, whether it has great legal status in the ultimate or whether it is merely an advisory document for retailers, it seems to us to be very undesirable that any person other than the Secretary of State should be allowed to approve codes of practice. That would apply even if the Director General of Fair Trading and the Secretary of State had a sight of the code.

We feel that this clause as it now stands is far too wide. It could give rise to all manner of abuses. Indeed, even where abuse did not take place the mere existence of codes devised by persons other than the Secretary of State could considerably mislead consumers. That, too, seems to us to be contrary to the spirit and intent of the Bill. For this reason, we feel that Amendment No. 78 which we are proposing is well worth consideration and I hope that the Government will be able to accept it. I beg to move.

Lord Campbell of Alloway

Irrespective as to whether contravention of the code is used as an aid to conviction, irrespective as to whether compliance with the code affords a statutory defence, and irrespective as to whether the third type of code, having no legal efficacy, were to be introduced, surely it would be within the proper remit of the Secretary of State himself, in an important area such as this—if the codes have legal efficacy—to be responsible for introducing the code.

Lord Mottistone

Surely we are talking here about the Secretary of State approving a code issued possibly by somebody else. The noble Lord, Lord Gallacher, earlier on in this general debate was talking about this tripartite-issued concordat, as it was described at one stage. Suppose that was accepted by the Government and was prepared and perhaps issued by the three parties concerned. The Secretary of State might then approve it. Is that not the circumstance in which the Bill as we now have it would be relevant? Is it necessary to have this change, since the Secretary of State does the final approving as the Bill is now written? It is only the issuing of such a document which is under question.

6 p.m.

Lord Lucas of Chilworth

I agree with the noble Lord, Lord Gallacher, that this amendment, dealing as it does with codes, stands on its own irrespective of the discussions of the Committee earlier today. I can understand some of the concern which I believe has prompted the amendment.

Rather like my noble friend Lord Mottistone, I think that the amendment is misplaced because the power for the Secretary of State to approve codes issued by other persons does not mean that anyone can approve a statutory code of practice. As my noble friend has said, any code must be approved by the Secretary of State. Should he wish to approve a code issued by someone else, it will be subject to the same careful consideration as that which he would give a code of his own.

The Bill requires that any code be the subject of consultation with the Director General of Fair Trading. He has a special interest in codes of practice. It would also be the subject of consultation with other appropriate persons. Having cleared those hurdles, the Bill then requires the order approving the code to be laid before Parliament, thus once again providing an opportunity for consideration by both Houses.

Perhaps I should attempt to assure the noble Lord, Lord Gallacher, of our plans. We have no plans to approve more than the code drawn up by my department, and that code has been placed in the Library. Whatever may happen to that code, the same principle applies. However, a case may emerge for having a code relating to a specific sector, in which case a trade associations' code might be suitable for approval. Again it may be submitted to the Secretary of State, he may approve it and it may, as I have described, come before both Houses of Parliament. Therefore, there is no great opportunity for excess here.

If the Committee passes the amendment, I believe that it will deprive the Bill of a really useful tool for dealing with particular matters which might arise. I hope that the noble Lord, Lord Gallacher, will be reassured as regards his points and that he will feel able to withdraw his amendment.

Lord Campbell of Alloway

having heard the explanation given by my noble friend, may I say that I am, for my part, entirely satisfied with that.

Lord Gallacher

I am grateful to the noble Lord the Minister for the remarks that he has made in connection with this amendment. I could not help smiling to myself when he spoke of the time it will take to redraft this code, on the assumption that redrafting is necessary. We were all very lenient with him. Now we find that in certain circumstances—though not in these circumstances—codes can be drawn up by other people, submitted to the Director General of Fair Trading and the Secretary of State and, subject to parliamentary approval, they are A1.

If time is of the essence, perhaps I may say without disrespect to the Department of Trade and Industry that the three members of the concordat could quickly put together a code which I think would satisfy them, although it might not satisify the Secretary of State. We might then find ourselves able to do our proper duty as a revising Chamber at Report stage and send the Bill to the other place in a form that the Committee would feel satisfied with and which would not put them in the unenviable position of waving goodbye knowing that we disliked intensely a major part of the Bill.

I say that because it seems to me to be justified on the basis of the reply which the Secretary of State made to me. However, in the light of what he has said and in view of the safeguards which he says are firmly built into this particular clause, I beg leave to withdraw the amendment.

Lord Lucas of Chilworth

Before the noble Lord sits down, he tempts me and I cannot resist that temptation. When he speaks about speed, he will recall that when I spoke earlier I said that the document of the concordat would have to be discussed with a wide range of people who have not had the opportunity of putting their views on the paper of the concordat. Therefore, I am not too sure that the analogy which the noble Lord draws is entirely fair.

Baroness Phillips

Before my noble friend replies, I should say to the Minister that, as regards speed, the manufacturers of small electrical goods drew up a voluntary code of practice (and an excellent one) which was submitted to the Office of Fair Trading about 18 months ago, as I recall. They have been operating that code of practice in any case. However, they cannot move at all. My experience of the department is that it is incredibly slow and cumbersome. Therefore, how they can be so speedy over something else is a puzzle. I hope that this Bill means that they will speed up their efforts as regards some of the people who have been trying to do the right thing and who only need the blessing of the Government.

Lord Gallacher

I thank the noble Lord the Minister for his further clarification of the attitude of the Government to the amendment. I can only say that if this wide range of additional consultation is necessary in respect of the code which is occupying our prime attention then much the same considerations would apply to any code because the mere fact that it came from the trade association or a body equally representative of the sector would not mean that all the constituents of that sector had played a part in the formulation of the code. Neither would it mean that other parties who may be interested or affected by it would take a similar view. That leads me to think that the wording of the clause as it stands would have been improved by the acceptance of the amendment proposed. Nevertheless, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Campbell of Alloway had given notice of his intention to move Amendments Nos. 79 and 89: Page 22, line 21, leave out ("giving practical guidance with respect to"). Page 22, line 22, leave out ("section 20") and insert ("sections 20 and 24").

The noble Lord said: Amendment No. 79 is grouped with Amendment No. 80. Both amendments were moved for clarification and are probing amendments. In view of the most helpful concession made by my noble friend the Minister to reconsider the whole position in Clause 20(4) and to take on board the representations and points made in debate of the status of the code, there is absolutely no object in detaining the Committee further with the matter. These amendments have been overtaken by events. The only point which arises is the one to which I referred, in that under Clause 25(1) (b) we have perhaps an ideal type of trigger to introduce the third type of code which is the one of mere recommendation having no legal effect. I shall therefore not move these amendments.

[Amendments Nos. 79 and 80 not moved.]

[Amendments Nos. 81 to 84 not moved.]

Clause 25 agreed to.

Clause 26 [Power to make regulations]:

Lord Gallacher moved Amendment No. 84A: Page 23, line 32, leave out ("annulment") and insert ("approval").

The noble Lord said: With the leave of the Committee, I shall speak also to Amendment No. 84B.

Clause 26 is concerned with the power to make regulations. As the clause now stands, the power, shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament". As we are dealing here with regulations, and as we are quite certain from what was said earlier in this stage of the Committee's proceedings that the regulatory procedure is likely to be used quite significantly under this clause, it is our opinion that those regulations ought to be subject to the affirmative procedure in your Lordships' House. That is the purpose of the amendment.

We believe that the negative procedure does not adequately reflect the importance of regulations which may be quite far reaching. They may have considerable significance and of course they have legal force. In these circumstances we believe that the affirmative procedure is fully justified. It may be argued that the affirmative procedure should be used sparingly. Indeed we are not advocating that that principle should be departed from. But, wearing another hat, I sometimes assist a colleague from this side of the House with agricultural matters. I am always quite amazed at the extent to which the affirmative procedure is necessary over a wide range of agricultural affairs, some of them not nearly as potentially significant as the regulations which may be made under this Part of the Bill.

In those circumstances, and in order that Parliament may know fully what is being done and may have the opportunity to approve what it is proposed will be done, we wish to bring the affirmative procedure into the Bill as concerns the making of regulations. That is the purpose of Amendments Nos. 84A and 84B. I beg to move.

Lord Campbell of Alloway

I intervene briefly to support the amendments. Whatever happens, the code of practice will have legal efficacy akin to that of a statutory defence under Clause 24. In those circumstances it is a matter for Parliament to consider and discuss by affirmative resolution before any such form of law is introduced. I should have thought that my noble friend the Minister might well accept this. As I understand it, this is the wish of the Retail Consortium and it seems to me to be an entirely reasonable wish. I wonder whether my noble friend will consider it without giving any form of commitment.

6.15 p.m.

Lord Lucas of Chilworth

The negative resolution procedure is quite appropriate for regulations which may be made under the powers conferred in this clause. There are a number of precedents. Indeed one of the precursors of this Bill, the Price Marking of Bargain Offers Order, was itself made under that procedure. The same applies to regulations made under the Trade Descriptions Act, the Fair Trading Act and the Consumer Credit Act. All these provisions may impose requirements contravention of which will be an offence.

In any event the wide-ranging consultations that are required by the Bill will have to take place before any regulations can be introduced. The wishes to which my noble friend Lord Campbell of Alloway referred were taken rather out of the context of all that the Retail Consortium proposed in its package. I should not like to separate one from the other, particularly having offered to go into these consultations.

I think it is unnecessary to require Parliament to debate regulations when demands on its time are already excessive. I understand what the noble Lord, Lord Gallacher, said about using the affirmative procedure sparingly. There may well be particular significance in the matters we are discussing but with the precedents I have quoted I do not think they are sufficiently significant for us to depart from what has proved to be an adequate practice.

If there are strong feelings about certain draft regulations there may be an opportunity for debate if arrangements can be made with the business managers. I do not think that there is a lack of opportunity for Parliament to discuss regulations. I am not persuaded that any change in the procedure to which we are now accustomed and which we are able to accept is warranted in this Bill.

Lord Williams of Elvel

I hope that the noble Lord the Minister is taking our amendment as seriously as it warrants. The clause as presently drafted states: The Secretary of State may…by regulations make provision"— I am missing out certain words which seem to me not to be relevant— (a) for the purpose of regulating the circumstances and manner in which any person in the course of any business of his—

1. (i)gives any indication as to the price at which any goods, services, accommodation or facilities will be or are available or have been supplied or provided; or
2. (ii)indicates any other matter in respect of which any such indication may be misleading".

In other words, this clause gives to the Secretary of State power to amend the Bill by redefining in certain circumstances what may or may not be a price and what may or may not be misleading. Under those circumstances my noble friend is perfectly justified in asking that if this is to be an effective amendment to the Bill it should come before your Lordships' House before it is passed in draft.

Lord Lucas of Chilworth

I take all the amendments that are put down by noble Lords opposite with the seriousness they deserve. This amendment is a serious matter. Of course it is a serious matter. The noble Lord, Lord Gallacher, has ensured that the Committee recognises the seriousness of it. But I have to say that the suggestion of the noble Lord, Lord Williams, that the Secretary of State can, of his own volition, amend the Bill is wrong. He has to consult and he has then to lay regulations which are subject to the approval of both Houses of Parliament.

Parliament can refuse to accept those regulations, although it would be very unusual. The noble Lord the Leader of the Opposition may recall that about five or six years ago regulations that were placed before your Lordships had to be withdrawn because there was a technical error. They were reintroduced two or three days later but had to be withdrawn again for another reason. Only on the third occasion, after noble Lords had drawn the Government's attention to these matters, was the House prepared to accept the regulations. That is just a modest demonstration of the fact that both Houses of Parliament have authority and have the power to accept or reject regulations.

Lord Mottistone

Perhaps I may supplement what my noble friend has said. In my experience, on the two or three occasions when I have prayed against a negative order I have got a better debate going at a better time of day than when we have debated an affirmative order. We have had long arguments about this, and I know it affects the status, but, as for the practicality of stopping the Government doing something that looks nasty, the negative procedure is just as good and I think in some ways better.

Lord Gallacher

I thank the noble Lord the Minister for the reply he has made. I have taken very careful note of all that he has had to say. However, on this side of the Committee we feel that the affirmative procedure is appropriate in these circumstances, particularly having regard to the additional remarks made by my noble friend Lord Williams of Elvel when he drew attention to Clause 26(1) of the Bill. I think that the affirmative procedure gives the House the opportunity that it needs and, if an order has passed the other place, this House has a code of conduct of its own in regard to these matters which I am happy to say is strictly observed. Nevertheless, even within the code there is an opportunity for discussion, for comment and for the passing of opinions upon the content of the regulation, as well as its validity and, indeed, its necessity.

In all those circumstances, I think we should test the opinion of the Committee on this. I beg to move.

6.22 p.m.

On Question, Whether the said amendment (No. 84A) shall be agreed to.

Their Lordships divided: Contents 46; Not-Contents, 84.

DIVISION NO. 1
CONTENTS
Airedale, L.	Kilmarnock, L.
Ardwick, L.	Llewelyn-Davies of Hastoe, B.
Bonham Carter, L.
Bottomley, L.	Longford, E.
Brockway, L.	Monson, L.
Burton of Coventry, B.	Morton of Shuna, L.
Carmichael of Kelvingrove, L.	Nicol, B.
	Northfield, L.
Cledwyn of Penrhos, L.	Phillips, B.
David, B. [Teller]	Ponsonby of Shulbrede, L. [Teller.]
Dean of Beswick, L.
Diamond, L.	Robson of Kiddington, B.
Elwyn-Jones, L.	Seear, B.
Ennals, L.	Shackleton, L.
Fitt, L.	Stewart of Fulham, L.
Gallacher, L.	Strabolgi, L.
Graham of Edmonton, L.	Tordoff, L.
Hampton, L.	Underhill, L.
Hanworth, V.	Wallace of Coslany, L.
Hooson, L.	Wells-Pestell, L.
Irving of Dartford, L.	White, B.
Jeger, B.	Williams of Elvel, L.
John-Mackie, L.	Winterbottom, L.
Kennet, L.	Ypres, E.
Kilbracken, L.

NOT CONTENTS
Aldenham, L.	Hesketh, L.
Aldington, L.	Home of the Hirsel, L.
Alexander of Tunis, E.	Hooper, B.
Ampthill, L.	Killearn, L.
Auckland, L.	Lane-Fox, B.
Bauer, L.	Lawrence, L.
Beaverbrook, L.	Layton, L.
Belhaven and Stenton, L.	Lindsey and Abingdon, E.
Belstead, L.	Long, V.
Boyd-Carpenter, L.	Lucas of Chilworth, L.
Brabazon of Tara, L.	Lyell, L.
Broadbridge, L.	Macleod of Borve, B.
Brougham and Vaux, L.	Marshall of Leeds, L.
Bruce-Gardyne, L.	Maude of Stratford-upon-Avon, L.
Butterworth, L.
Cameron of Lochbroom, L.	Merrivale, L.
	Mersey, V.
Campbell of Alloway, L.	Milverton, L.
Carnock, L.	Molson, L.
Cathcart, E.	Mottistone, L.
Colville of Culross, V.	Mountevans,L.
Cork and Orrery, E.	Munster, E.
Cowley, E.	Murton of Lindisfarne, L.
Craigavon, V.	Newall, L.
Cullen of Ashbourne, L.	Norfolk, D.
Dacre of Glanton, L.	Rankeillour, L.
Davidson, V. [Teller]	Renton, L.
De La Warr, E.	Renwick, L.
Denham, L. [Teller]	Russell of Liverpool, L.
Derwent, L.	St. Davids, V.
Digby, L.	Saltoun of Abernethy, Ly.
Dormer, L.	Sandford, L.
Dundee, E.	Selkirk, E.
Eden of Winton, L.	Shrewsbury, E.
Elles, B.	Skelmersdale, L.
Elliot of Harwood, B.	Somers, L.
Elliott of Morpeth, L.	Strathclyde, L.
Ferrier, L.	Sudeley, L.
Fraser of Kilmorack, L.	Teynham, L.
Gibson-Watt, L.	Thurlow, L.
Glanusk, L.	Trumpington, B.
Halsbury, E.	Ward of Witley, V.
Hardinge of Penshurst, L.	Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.

6.31 p.m.

[Amendment No. 84B not moved.]

On Question, Whether Clause 26 shall stand part of the Bill?

Baroness Burton of Coventry

I should like to raise two separate matters on Clause 26. At the moment I am merely seeking information, so I have not put down an amendment on these two points, but I gave notice to the noble Lord, Lord Lucas, that I would be raising them.

The Committee will be aware that for some considerable time I have been concerned about the position on the resale of gas and electricity to tenants by landlords with secondary meters. The Committee will know that the maximum permissible resale price for a therm of gas is now controlled by the Director-General of Gas Supply and landlords must not charge more than that figure. At present tenants who believe that they are being overcharged have to take civil action against their landlord, which most are unwilling to do.

The Gas Consumers Council feels that a more effective measure is needed to prevent overcharging. The council wrote to me stating that both during the House of Lords' debate on the Queen's Speech and on the Second Reading of the Consumer Protection Bill the Government gave assurances about their intention to introduce under Clause 26 of the Bill appropriate regulations on the resale of fuel. The noble Lord, Lord Lucas and I well remember those discussions and I appreciate the help he gave in getting us to the stage that we have now reached.

The council welcomed these assurances and the requirement for landlords who resell gas or electricity to provide their tenants with itemised accounts stating the number of units consumed and the statutory maximum price. While this should be sufficient to deter unscrupulous or ignorant landlords from overcharging, the council feels that action against landlords who fail to provide an itemised bill or who give a false price should not depend on civil action by the tenant. Consequently, the council wishes to see specific mention of regulations regarding the resale of gas and electricity included in the Bill itself. The council also wishes to be consulted about any draft regulations produced.

In view of the importance accorded to the Gas Consumers Council by the Government following the privatisation of the industry, I believe that its views should be taken into account. I should be glad to have the Minister's comments. Perhaps we may return to this matter on Report.

The other matter that I wish to raise is somewhat different. I note what the Government said about Clause 26 at Paragraph 32 in their layman's guide to the Bill. I should be glad if the Minister could clear up a matter that has been brought to my attention and which may or may not be correct. It puzzles me and I should like to have an answer. I have been informed that for some time the Department of Trade and Industry has been discussing with interested parties detailed provisions for a price indications code which would provide a number of rules expressed in plain, easily understood language which would help traders to avoid making misleading claims about prices.

The courts would be entitled to take these rules into account in determining whether a particular claim is misleading but a breach of the rules would not be conclusive evidence of an offence; and traders would have a good defence if they could show that they had followed the code in making a price claim. According to my information this appeared to everyone concerned in those discussions to be a good practicable solution to a particularly tricky area of trade.

My indignant—or perhaps I should say perplexed—informant asked me what we find in this Consumer Protection Bill. He declares that we find a substantial and, in places, obscurely drafted Clause 21 setting out the respects in which a price indication may be misleading. Whether or not a claim is misleading is obviously a question of fact, and the proposed code was advanced on the basis that it would help in determining such questions. Why then, my informant asked, do we want Clause 21 at all? It opens the problem of legal interpretations on what may be misleading and in practice may impede the courts when they take into account the code's provisions.

It seems to me that my informant was right in asking: what do we find in Clause 25? We have already mentioned today that the Secretary of State does not have to approve a code at all. He may do so if he chooses, and in the light of Clause 21 the courts could rule on misleading price indications without the help of a code. Probably all this needs a lawyer to unravel it, and I notice that the noble Lord, Lord Lucas, has one sitting next to him now. I raise this matter because I respect the knowledge and experience of my informant and because I, and doubtless the Committee, will welcome the Government's response to two questions.

First, is it correct that in the light of Clause 21 the courts could rule on misleading price indications without the help of a code? Do the Government consider this as a possible option? Secondly, is it the intention of the Government to approve a price indications code?

Lord Lucas of Chilworth

By way of introduction perhaps I may say that Clause 26 gives the Secretary of State the power to make regulations governing the manner and circumstances in which price indications or any associated information are given by a person in the course of any business of his. Regulations may also make provision for the enforcement of Clause 20 or of any regulations made under this clause.

The purpose of the regulation-making power is to enable specific and detailed requirements to be imposed in any area where this proves to be necessary. For example, it was found that in several sectors recommended retail prices were well out of line with market prices; and the bargain offers order imposed a ban on comparisons with recommended retail prices in the relevant sectors. We intend to use the powers given by the clause to retain those bans.

I accept—and I think the noble Baroness ought to be reasonably pleased—that the regulation-making power is a wide and a general one. Subsection (2) lists certain specific matters for which the regulations may provide. They may prohibit reference to specified matters in a price indication. They may require that a price indication be accompanied by a specified explanation or additional information. The power may be used to prohibit the use of disclaimers or to provide that expressions used in a price indication shall be construed in a specific way for the purposes of Part III. They may make contravention of the regulations an offence and provide for the mode of trial and penalties; and they may apply to an offence created by the regulations any provisions of the Bill relating to a criminal offence. That list is not exhaustive but it gives the noble Baroness an indication of our thinking in this area.

I turn to one of the specific points made by the noble Baroness, Lady Burton, concerning the resale of gas. Let me say here and now that I am sure the Committee is appreciative of the efforts of the Gas Consumers' Council and indeed of all the consumer councils. I think that we are all aware of the pressure that they have brought to bear in relation to the price of gas.

We intend to make regulations under Part III of the Bill to require landlords who resell gas and electricity to give itemised bills to their tenants stating the number of units consumed and the statutory maximum price. If there are any other matters the noble Baroness wishes us to consider in regard to that point I am sure that she will make them known to us.

Perhaps I may add one small observation in regard to short term holiday flats or caravans. I accept that in the case of a short-term holiday flatlet or caravan, it could be burdensome to provide individual bills. On the other hand, we have to balance that against a reasonable expectation that the visitor should know exactly how much he is being charged for any gas or electricity that he uses. It may be preferable in those circumstances if regulations were to require a statement of the charges for gas or electricity to be made to the guest on arrival, or perhaps declared by means of a notice on the meter itself. At this stage, I cannot say with total certainty exactly what form the regulations will take but I think that I have given a clear enough indication of the way in which we are moving.

The noble Baroness gave me notice that she intended to raise the question of a price indicators code. In fact, I think that her correspondent was referring to the code of practice. Clause 20 is necessary to set out the basic general offence and the courts must look at Clause 21 when deciding whether a price is misleading. How they use the code will depend, of course, on its status. These are matters that we have put aside for the moment. I think it is clear that we all agree—and certainly the concordat agreed—that we need a code. It is its status that is at issue.

I believe that the noble Baroness's informant has perhaps misunderstood. Some people have called this a code of practice; some people have called it a guide. All sorts of names have been attached to it. I can see that there may have been confusion. If, however, the noble Baroness's informant has a different view, I hope that she will get in touch with me, when I shall try to answer her points. However, that is what I believe has happened in this case.

Baroness Burton of Coventry

I am most grateful to the Minister and I should like to study what he has said. I think, however, that paragraph 32 in the layman's guide speaks quite definitely of price indications as well as the code. I do not believe my correspondent was mistaken and I shall take the opportunity of writing to the Minister. However, I thank him for what he has said.

Clause 26 agreed to.

6.45 p.m.

Clause 27 [Enforcement.]

Baroness Robson of Kiddington moved Amendment No. 85: Page 23, line 46, leave out subsections (2), (3) and (4).

The noble Baroness said: This is an amendment standing in the name of my noble friend Lord Ezra who is very sorry that he is unable to be here owing to a long-standing previous engagement. It is a probing amendment, tabled in the hope that the Minister will be able to put our minds at rest. We are concerned about the wording of subsection (2) (a). That refers to the power of the Secretary of State by regulations to: wholly or partly transfer any duty imposed by subsection (1) above on a weights and measures authority or a district council in Northern Ireland to such other person whereas subsection (4) refers to: or any person".

We feel that the wording is much too loose, not specific enough. The Minister may remember that my noble friend Lord Ezra raised this subject at Second Reading. The Minister very kindly replied, saying among other things: This subsection is in fact in the existing 1978 Consumer Safety Act". [Official Report, 8/12/86; col. 1059.] I am sure it is, but the fact that it is in the 1978 Consumer Safety Act does not mean that we have to reproduce in this new Consumer Protection Bill something that is not very precise.

The Minister also attempted to reassure us that the transfer of responsibilities for specific regulations would be to such bodies as the Health and Safety Executive. I can see why, on occasions, the Health and Safety Executive would be the appropriate body to enforce the regulations, but I believe that it is perfectly possible for the Government to lay down in the Bill itself the bodies that might enforce the regulations.

We are concerned about the words "any other person" or "such other person" which in our view open the floodgate. We think that the wording should be much more specific. I wonder whether the Minister can assure the Committee of the possibility of such amendment to the clause.

Baroness Nicol

We support the spirit behind this amendment. I shall refer to the wording a little later. The Association of County Councils is concerned about the wording of the Bill as it stands and is anxious that it should be changed and this provision removed. We agree with most of the arguments put by the noble Baroness. We feel that if the Government mean the Health and Safety Executive, or any other bodies, they should say so in the Bill.

We strongly support the intention of the amendment, but, looking at the wording, I have to say that subsection (4) will need to remain because it excludes Scotland from the provision. We also feel that there should be a facility to allow the Secretary of State to make regulations. That is removed by this amendment. Having said that, with improved wording, we support the intention of the amendment.

Lord Lucas of Chilworth

I am very grateful to the noble Baroness, Lady Robson of Kiddington, for moving the amendment which she describes as a probing amendment. I am of course glad to hear what the noble Baroness, Lady Nicol, said in general support, although I think that she may like to go a little further than the noble Baroness, Lady Robson, indicated.

The noble Baroness reminded the Committee of what I said earlier when the noble Lord, Lord Ezra, raised the matter. It is a little difficult for me to do much more than pad out what I said at that time. In essence, that said it all.

I can understand that some local authority associations may be unhappy about the power. Indeed they have expressed a certain amount of unhappiness about the power already conferred by Section 5(2) of the Consumer Safety Act 1978. I do not know why that should be, because the power under that Act has not been used to date. Nevertheless, it exists.

One can understand that arguments may be produced that the power to transfer enforcement duty to persons other than what I would call local weights and measures authorities—I put it that way because they have so many different names in different areas, but I think Members of the Committee understand to whom I refer—is unnecessary and inappropriate. However, we think that the power is necessary. Although it is not a new power and, as I suggested, it has not been used, we feel it is necessary to keep it.

The Government have no intention of transferring this enforcement duty wholesale either to central government or to some other body. The power is there for use in exceptional cases. It might be appropriate in respect of goods primarily used at work but also available to consumers or where safety regulations require inspection at factory level.

In some instances the Health and Safety Executive may be the most appropriate enforcement agency in these areas. If one takes the case of medical products other than controlled drugs, which fall within the scope of the safety regulation power, the Secretary of State may be the most appropriate enforcement authority.

It is not practical to require us to list other bodies to which the powers may be transferred. It would be difficult to ensure at this stage that such a list is complete or would even remain complete. We may be able to foresee this evening or next week a role in specialist areas such as I have suggested for the Health and Safety Executive, but I do not think that we can be totally sure about others. With fast-changing technologies it may be that we have to go to a body that is respected and regarded as having particular and specific expertise, a body that may not yet have been formed.

Since the passing of the Consumer Safety Act 1978—and here we are eight or nine years on—there has been no demonstration that this power has opened a gate too wide—I believe that was the expression used by the noble Baroness—and so we should like to keep it.

I wish to touch on the point raised by the noble Baroness, Lady Nicol, about Scotland. I am somewhat diffident in doing this when I see the noble Lord, Lord Morton of Shuna, sitting beside the noble Baroness. We do not believe that the deletion of Clause 27(4) will enable weights and measures authorities to bring proceedings. They do not generally have these powers. Subsection (4) is for the avoidance of doubt only. Nor do I think it desirable that the weights and measures authorities should have these powers. I am advised that the Procurator-fiscal is the prosecuting authority in Scotland, and we see no advantage in bypassing him.

Having replied to what the noble Baroness asked me, I ask her to withdraw the amendment on the understanding that I take the point that she has raised.

Baroness Robson of Kiddington

I thank the noble Lord very much for his long and full reply. I am also grateful to the noble Baroness, Lady Nicol, for her support of the amendment.

I said in introducing it that it was a probing amendment to discuss one specific aspect of the enforcement regulations. I heard with interest what the Minister said. I shall take this away and reconsider it. After discussion with my noble friend Lord Ezra, I may bring it back at a future date. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 27 agreed to.

Clauses 28 and 29 agreed to.

Clause 30 [Provisions supplemental to s. 29]:

Lord Morton of Shuna moved Amendment No. 86:

Page 27, line 3, leave out from ("liable") to end of line 4 and insert—

1. ("(a) on summary conviction to a fine not exceeding the statutory maximum; or
2. (b) on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or to both.")

The noble Lord said: The amendment deals with the sanctions available against a person who pretends to be an officer of an enforcement authority under Clause 30(5). It relates also to a pretence under Clause 29. Clause 29 provides the powers for authorised persons to enter premises other than a residence and to obtain certain records. Clause 30 authorises officers to seize goods and records and to act on a warrant. The only penalty provided by the Bill for a person who engages in one of these activities while pretending to be an enforcement officer is a summary charge and a level 5 fine.

In Clause 38 one finds the penalties that may be imposed on an enforcement officer who goes wrong. Under subsection (5) he may be liable: on summary conviction, to a fine not exceeding the statutory maximum; on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both".

Looking at the earlier part of Clause 38, one sees what he may be up to. He can disclose information that he has obtained, he can find out secret manufacturing processes and disclose that information and he can disclose anything which was obtained by him in any activity under Part IV.

As I said on Second Reading—and I think this is one of the questions about which the Minister said he would write to me, but it was not included in the answer that I received on the first day of Committee—it seems strange to me that somebody who pretends to be an officer and in this way obtains a secret manufacturing process is liable to a less severe penalty than an authorised officer who discloses information. The one seems just as dishonest as the other.

One can visualise circumstances where it is a serious matter for the possessor of the records, information or process if someone pretending to be a trading standards officer goes in and whips away his records and uses them in competition with or to destroy his business in some way. Why should not the penalty be the same for both? That is the purpose of my amendment. I beg to move.

7 p.m.

Lord Lucas of Chilworth

First, I express my sorrow and tender my apologies to the noble Lord, Lord Morton of Shuna, for any omission in the correspondence we have had since the Bill came to this place. I should not want him to go without the benefit of our view on these matters.

As the noble Lord says, Clause 30(5) makes it an offence to impersonate an enforcement officer. He contrasts that with Clause 38(5). I suggest that that is different, because it would be an abuse of a position of trust for an enforcement officer to disclose confidential information. I think I understand the thinking behind the amendment. The noble Lord has put it clearly. I do not see the necessity for such a provision when the courts and prisons are already overstretched.

I am sure that the impersonation of the enforcement officers will be extremely rare. I ask myself, rather than the noble Lord, what motive would incite someone to act in such a way. I do not deny that such motives may exist, nor do I seek to suggest that impersonation will never occur, but so far as I am aware the penalties contained in the Consumer Safety Act 1978 have not proved to be inadequate. I do not therefore see that there is any point in putting greater burdens upon the courts when there is a measure in force which has proved to be satisfactory. For those few but sincere reasons I suggest that the noble Lord does not press his amendment.

Lord Morton of Shuna

I always find the answers given by the Minister interesting. In Scotland, and I suspect elsewhere in Britain, considerable trouble is caused to the elderly by people pretending to be council officers entering their houses and stealing their property. That is a method that thieves frequently use. I am sure that among the dishonest the relevant section of the Consumer Safety Act 1978 is not general knowledge. If it gets around that all someone who pretends to be an enforcement officer can be penalized by is a level 5 fine, people may find it more attractive to try that.

All I am suggesting is that the maximum penalty, not the minimum, should be higher. It would be up to the prosecuting authorities and the courts to decide whether to deal with the matter summarily or on indictment. This provision gives a wider discretion, and that is all that I am asking for. Under the threat that I may come back to this, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 30 shall be agreed to?

Lord Graham of Edmonton

I wonder whether this is a suitable moment to invite the Government to look again at one of the most misleading passages of the Bill. It is the one which deals with the financial and manpower implications. We are discussing Clause 30 and considering the range of duties contained in Clauses 30 and 31 where responsibilities will be laid upon the authorities to ensure that the Bill works.

It is stated: There are not expected to be any implications for public expenditure or public service manpower". I raised that issue on Second Reading, and the Minister made one or two points. He did not accept my strictures. The Association of County Councils has said that the Minister dissembled. I realise that that is a delicate word for anyone to interpret. I leave it to the Minister to draw his own conclusions as to what it means.

All the Minister said was that if extra duties flowed from the Bill, the authorities would have to find from their budget and by the dispersal of their manpower ways in which they could be carried out and that something else may have to go. I am sure the Minister does not intend that we should improve consumer protection by forcing local authorities to squeeze some other service.

We yet again ask the Minister to say something to satisfy the people at the sharp end—the councillors and the council officers—who are running tight ships and who have a wide range of responsibilities. They are worried that without any additional finance, they will be asked to carry a considerable additional burden. I await the Minister's comments.

Baroness Nicol

I wish to reinforce what my noble friend has said. I shall quote what the Minister said on Second Reading: Local authorities have the responsibility of directing their energies to enforcement as to other of their responsibilities as they see fit. This has always been so. What effort they put into the enforcement of trading standards is their business".—[Official Report, 8/12/86; col. 1060.] That statement on its own is all very well, but taken in conjunction with the passage from the Bill that my noble friend quoted it becomes almost cynical.

If the Bill's success or failure is to depend upon the success or failure of the enforcement proceedings, to say that local authorities must find extra money—I think the Minister in his reply was allowing for the fact that there may be extra expenditure—from overstretched budgets is not good enough.

We are all behind this Bill and behind increased and improved consumer protection. Given the wide-ranging powers contained in the Bill, that means that there will have to be increased supervision by local authorities and trading standard authorities. It is not good enough to say that they must find this money out of existing budgets. I hope that the Minister will give a more sympathetic answer than he did last time.

Lord Lucas of Chilworth

I anticipated that the noble Lord, Lord Graham of Edmonton, might return to this. I confess that I thought he might have moved an amendment which would have enabled me to give more detailed consideration of the response that he now invites me to make. I have to be very careful. I do not underestimate for one moment the work and the dedication of enforcement officers. They have wide-ranging responsibilities in a number of very different areas. Their time is extremely precious.

The noble Baroness quoted what I said at Second Reading; I do not have Hansard with me. However, when I talked about the balance that a local authority had to make with regard to its expenditure, that was a perfectly true statement. They have a budget, and it should be noted here and now that the amount allocated to local authorities for consumer protection and trading standards activities in the rate support grant settlement has increased in recent years—in Great Britain anyway. The allocation was £68.5 million in 1984–85, £70.6 million in 1985–86, and £77.6 million in this financial year. I therefore suggest to the Committee that there is no real shortage of resources for enforcement.

The enforcement authorities already have responsibilities for safety regulations, as we know. The 1986 Act provides for improved enforcement procedures.

A general safety requirement provides a new sanction against unsafe consumer goods and involves enforcement responsibilities.

However, having said that, our trading standards departments are often involved in dealing with complaints and problems about goods not covered by regulations. The general safety requirements that we are introducing into this Bill will facilitate taking more effective direct action in such cases. In other words, I am suggesting that there may indeed be a lessening of the load. Part III replaces Section 2 of the Trade Descriptions Act 1986 and the Bargain Offers Order. The new provision takes account of the difficulties of enforcement encountered under the present law. Again, I am suggesting to the Committee that this will enable more efficient and effective enforcement.

We have given very careful consideration to these matters to which we had to address ourselves, after the noble Lord drew our attention to them. However, we feel fairly satisfied that on balance the new provisions do not have any implications for public expenditure or public service manpower. I do not think I ought to go on further about the general resources—the adequacy or otherwise—made available to local authorities. I do not want to suggest that the report issued today by the audit office has a relevance. There are matters in this Bill which we think have relieved the load to some extent. We believe that the job can be done more effectively. We believe that with a greater element of good management and practice the fears which the noble Lord expresses will not be realised.

He asks me to make a comment, and to have a little mini debate on the Question, That the clause stand part. Those are the comments I should like to make. But I should not like the noble Lord or the noble Baroness, or anybody else who may read these proceedings to think that there is any reduction of the standard or standing of enforcement officers in this very difficult and delicate area.

Lord Graham of Edmonton

I am grateful to the Minister. The noble Lord has assured us that he and his colleagues anticipated the possible criticism. They have satisfied themselves on balance with a diminution in some responsibilities and a reallocation of officers. I can understand the argument. Those outside the House inform us of the situation, and not those in Whitehall. From their knowledge they say that this will impose additional burdens. They could be wrong; only time will tell.

On this side of the House we have sought to underline the points raised not only by the ACC but by other authorities. I am not aware of comments or briefs from the enforcement officers themselves. I believe that they will try to do their best, as they have always done, within the limit of their resources. An amendment might have provided a more structured debate but it could not have given us more information than we have from the Minister. The noble Lord knows very well that there is a potential danger but he does not think that it will arise. Those outside the House will have to reflect on the position and advise us if they wish us to do anything else at Report stage.

Clause 30 agreed to.

Lord Beaverbrook

Perhaps it will be for the convenience of the Committee if we do not return to the Committee stage until 8.15. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.