Lords Sitting of 9 March 1987

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.

ABM Treaty: Soviet Compliance
Lord GladwynMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any indisputable evidence that the Soviet Union is involved in any ABM project comparable to the United States star wars programme; and whether they can confirm that, as recently reported in the magazine Nature, the Soviet Union has now begun to dismantle the installation at Krasnoyarsk, which has always been adduced as proof of Soviet violation of the ABM treaty of 1972.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, details of our understanding of Soviet ballistic missile defence-related research programmes were published as long ago as 1985. We are not aware of any developments which would change our view that the radar raises serious concerns about Soviet compliance with the ABM treaty.
Lord Gladwyn: My Lords, I thank the noble Baroness for that reply. Where exactly does that indisputable evidence come from? From what source is it derived? Do the Government believe in any case that the Russians are ceasing to construct at Krasnoyarsk?
Baroness Young: My Lords, as the noble Lord will know, we are of course aware of the report on which I think his Question is based. We understand that the United States has not changed its assessment of the ABM radar on the basis of that report. Our position on Krasnoyarsk is well known to the House. The noble Lord would not expect me to comment on the first part of his question. Serious questions with regard to compliance are raised. I understand that the United States Administration have raised the matter with the Soviet authorities on various occasions. The United States authorities have not received a satisfactory reply.
Lord Cledwyn of Penrhos: My Lords, does the noble Baroness agree that the situation is unsatisfactory because of the paucity of evidence about the Russian operation? Does she agree that it is difficult to make any comparison of the resources being spent on the American SDI and the Russian SDI operations when evidence is inadequate?
Baroness Young: My Lords, the noble Lord, Lord Cledwyn, will be well aware of our view of the interpretation of the ABM Treaty. It may be helpful to remind the House yet again of what my right
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honourable friend the Prime Minister said in another place on 19th February:
"First, we have no locus in interpreting the ABM Treaty. Secondly, deployment is clearly a matter for negotiation, as we"—
That is the United States and the United Kingdom—
"have agreed. Thirdly, we have received satisfactory assurances from the United States that there will be consultation about any significant change of policy in relation to SDI research. Fourthly, the Government fully support the SDI research programme, which is permitted by the ABM treaty.
—[Official Report, Commons, 19/2/87; col. 1054.]
Lord Cledwyn of Penrhos: My Lords, I am much obliged to the noble Baroness for that information. Does she agree that the great difficulty here is that whereas the United States is an open society, the USSR is a closed society? I accept that it is extremely difficult to obtain firm information, but on the evidence available to Her Majesty's Government, is it not true that the resources being put into SDI by the United States are enormously greater in every respect than anything the Russians are doing?
Baroness Young: My Lords, with regard to details of the Soviet strategic defence research programme, I cannot add anything to the Answer that was given by my noble friend Lord Trefgarne on 13th December 1985. It is in the light of these activities that the United Kingdom supports and participates in the US SDI research programme.
Lord Kennet: My Lords, are the Government aware that the Soviet Union has said that it will stop work on Krasnoyarsk if the Americans stop work on Fylingdales and another station in Greenland? Can the noble Baroness tell the House in words of one syllable why the Government hold that Krasnoyarsk breaks the ABM Treaty but Fylingdales does not?
Baroness Young: My Lords, it is always unwise to answer questions of that nature in words of one syllable. As the noble Lord, Lord Kennet, will appreciate, they are extremely complex. I can only say that it is too early to give any definite views of Soviet actions over radars. Our own view on compliance of Soviet actions with treaty obligations is well known.
Lord Molloy: My Lords, will the noble Baroness agree that in so far as there has always been doubt whenever talks take place as to what the Russians are doing, we are now very much in the dark as to precisely what the USA is doing, and that not many people in the United States Government seem to know what is going on? Bearing in mind that there is a new atmosphere, will she agree that the British Government can make a big contribution in all these matters by underlining how important verification is?
Baroness Young: My Lords, we shall certainly make the point of verification on every occasion.

Plant Breeding Institute: Privatisation
2.42 p.m.
Lord John-Mackie: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

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The Question was as follows:
To ask Her Majesty's Government how far advanced their plans are to privatise the Plant Breeding Institute and the National Seed Development Organisation.
The Earl of Dundee: My Lords, Lazard Brothers and Company hopes to issue an information memorandum on behalf of Her Majesty's Government in the next few months.
Lord John-Mackie: My Lords, I thank the noble Earl for that completely unsatisfactory reply. I know that he is new to the job, but does he realise that I asked a Question in May 1984 about this? From then on, about every six months, as his noble friend who is sitting beside him will tell him I have proceeded to ask it again and again. In March 1986 the noble Earl, Lord Swinton (whom I do not see here today) told me—if he did not quote it I shall do so now—that the Education Minister issued a news bulletin, or whatever one calls it, saying that they had asked Lazard Brothers to do a short study. It is now March 1987 and the Minister can tell us nothing except that Lazard Brothers' short study is not yet ready. Does he realise that 60 of the staff have already left, 30 to 40 by redundancy and the rest simply because of doubts about the future of the place? The director is now off to the USA in July. Is this not a shambles which the Govenment should do something about?
The Earl of Dundee: My Lords, I appreciate the concern of the noble Lord about timing. I can reassure him that there is not in the least a shambles. The process has been more complex than was at first anticipated, but we hope that the issue of an informa-tion memorandum will take place in the next month or so.
Baroness Nicol: My Lords, can the Minister say how many members of staff from the institute are leaving with the professor and going to the US? Is he aware that such scientists are even more important to us now than they were when the Question was first asked? Have the Government no anxieties about this? Are they doing anything to stop it?
The Earl of Dundee: My Lords, it is not anticipated that there will be a brain-drain other than in a marginal respect as a result of privatisation. On the general question of loss of jobs, any AFRC staff made redundant before privatisation will receive the full redundancy or short service payments to which they are now entitled under the AFRC superannuation scheme.
Lord John-Mackie: My Lords, although we are worried about what happens to the redundant staff, that is not the question my noble friend asked. What effect is the proposal having on this world famous plant breeding institute, which is just being—I nearly used a nasty word there—by the Government? They need to look at it more carefully. Has the noble Earl seen the report in the Independent that the plant breeding sell-off has been delayed? The agricultural
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genetics company has a deal with the Plant Breeding Institute over a period of five years for a considerable amount of information and material. Has this fact something to do with the delay? The Government should make a statement about the situation and should not put up a dead bat in the way that the noble Earl is doing today.
The Earl of Dundee: My Lords, with regard to the delay, I repeat that there have been more complexities than were first anticipated. These complexities have concerned the need to resolve the interests of various bodies and their corresponding responsibilities, as well as corresponding legal issues which arise. However, as I say, there is now a clear intention. The Government know that very shortly an information memorandum will be issued and privatisation will be able to take place shortly thereafter.
Lord Elwyn-Jones: My Lords, is the Minister aware that there have already been severe cuts at the plant breeding station at Aberystwyth, which is the only one in Wales and is famous throughout the world for various excellent reasons? Can we have an assurance that there will be no further cuts? Can we even hope that some of the cuts that have taken place will now be withdrawn?
The Earl of Dundee: My Lords, that is perhaps another Question. However, in regard to the WPBS I can assure the noble and learned Lord that the Government have the highest regard for the achieve-ments of this station and there are no plans to privatise any of the departments in that institute.
Lord Kennet: My Lords, quite apart from the director of this institution being "a marginal respect", are the Government still completely untroubled by the prospect of patents for new varieties of plants that may be of world-wide importance for many generations to come passing into the hands of private commercial enterprises which are not responsible to the United Nations, to the world food organisation or even to the government of any country?
The Earl of Dundee: My Lords, in regard to the possible involvement of a company from overseas, no purchaser is ruled out at this stage. But during the tender process interested purchasers will be asked to give a full statement of their future intentions for the assets as they relate to United Kingdom needs and capabilities for plant breeding and seed marketing and benefits to the United Kingdom economy. The choice of purchaser will be made with particular regard to the needs of UK agriculture and horticulture. Thus would-be purchasers will be expected to demonstrate a commitment to the UK market and to continuing plant breeding relevant to UK agriculture and horticultural conditions.
Lord Kennet: My Lords, has the Minister anything to say about patents?
The Earl of Dundee: My Lords, I shall write to the noble Lord on that subject. I do not think that the Government expect any difficulty in this regard.

ABM Treaty: Interpretation
2.48 p.m.
Lord Kennet: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will propose that the United States of America and the Soviet Union submit their differences on the interpretation of the anti-ballistic missile treaty to the International Court of Justice.
Baroness Young: My Lords, no.
Lord Kennet: My Lords, is it not an obvious course to suggest to a friendly power that, when there is a dispute, or when there is likely to be a dispute, about the interpretation of a treaty to which they are a party and to which although we are not a party is yet of the very highest importance and interest to us, they should have recourse to this world institution which has been there for many decades and which exists for the purpose of solving such disputes?
Baroness Young: My Lords, we do not think that it would be appropriate for a third state to intervene in a bilateral dispute between two other states except with the consent of both of them.
Lord Cledwyn of Penrhos: My Lords, in view of the improved climate of possible arms control, or possible arms control agreement, would the noble Baroness and her right honourable and learned friend consider making representations to the United States Administration with a view to an adherence to the original interpretation of the ABM Treaty and not seek to enlarge the ABM Treaty now, which could lead only to a possible difficult situation and affect the possible success of the negotiations?
Baroness Young: My Lords, I fully appreciate the concern of the noble Lord, Lord Cledwyn, when he asks that particular supplementary question. However, I do not feel that I can add anything further to the answer which I gave to the earlier Question by the noble Lord, Lord Cledwyn; namely, that we have no locus in interpreting the ABM Treaty.
Lord Gladwyn: My Lords, is not the interpretation of international treaties something which, under its statute, the International Court of Justice is specifically entitled and indeed expected to undertake?
Baroness Young: My Lords, the ICJ is competent to settle disputes about interpretation of treaties but it has jurisdiction only in particular cases if both parties have agreed.
Lord Jenkins of Putney: My Lords, is the reason that the Government will not make this suggestion because they have a shrewd suspicion that the USSR would accept and the United States would refuse?
Baroness Young: My Lords, in the first place, there has not been any arms control agreement which has ever been submitted to the ICJ, and although the United States has recently withdrawn its acceptance of
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compulsory jurisdiction of the ICJ, it continues to be in favour of resorting to the ICJ by agreement in suitable cases. The Soviet Union has not accepted the compulsory jurisdiction of the ICJ, nor ever submitted a dispute to it voluntarily. There is no reason to believe that it is interested in doing so now on this issue, whatever the attitude of the United States.
Lord Cledwyn of Penrhos: My Lords, in view of the importance of the interpretation of this treaty to any possible agreement on arms control, will the noble Baroness say where Her Majesty's Government stand? Are they in favour of the broad interpretation, or the original narrow interpretation?
Baroness Young: My Lords, at the risk of boring the House yet further, I can say only that we are not a party to the treaty and our views on it are well known to your Lordships.
Lord Molloy: My Lords, would the noble Baroness not agree that these are very vital matters which affect many millions of people, let alone the two super powers? Would she not agree that if we could get something like this under way, perhaps the role of the British Goverment, as I said before, would be not so much to insist on agreement as to what the treaties say, but to ensure that they are being adhered to? They can only be proven and shown to be real if there is a firm system of verification. This is what the British Government should insist on.
Baroness Young: My Lords, in answer to the noble Lord, Lord Molloy, I do not think I can say anything other than the points that I have already made to your Lordships.
Lord Kennet: My Lords, as a fallback suggestion, would the Government consider pointing out to the United States that the 1969 convention on the interpretation of treaties, which they have not signed but which, nevertheless, codifies existing customary law, says that a treaty means what it says according to the common interpretation of the words in it, and that, if that is a difficulty, it means what the negotiators meant it to mean when they signed it.
Baroness Young: My Lords, that is a very interesting piece of information which the noble Lord, Lord Kennet, has put to the House. However, it does not detract in any way from the original Answer which I gave to his first supplementary question.

Interest Rates
2.54 p.m.
Lord Diamond: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they propose to reduce interest rates.
Lord Beaverbrook: My Lords, short term interest rates will continue to be held at whatever levels are necessary to maintain downward pressure on inflation.
Lord Diamond: My Lords, I am grateful for that Answer which does not take the matter very much further. What I am really interested to know is this. When, but for the intervention of the Bank of England at the request of the Government interest rates would have fallen, why the Government then continues to insist on imposing on every businessman and on every house buyer this wholly excessive burden?
Lord Beaverbrook: My Lords, the fact is that decisions on interest rates can be made only in the light of careful assessment of monetary conditions and changes made only when required to maintain steady, but not excessive, downward pressure on inflation.
Lord Ezra: My Lords, would the noble Lord not agree that delay in reducing interest rates at the present time is having three harmful effects: first, it is creating uncertainty; secondly, it is causing borrowers, particularly in industry, to pay more than they otherwise would; and, thirdly, it is pushing up the value of currency and thus diminishing the competitiveness of British goods abroad? Are the Government taking these factors into account?
Lord Beaverbrook: My Lords, we are taking all factors into account in assessing the level of interest rates that are appropriate. As regards industry, company liquidity and profitability remains strong and relaxation of monetary policy fuelling inflation would be a far greater threat to industry than current levels of interest rates.
Lord Mellish: My Lords, coming into the Chamber today, I read on the tape that interest rates went down at midday. I should like to ask whether that is right?
Lord Beaverbrook: Yes, my Lords.
Lord Mellish: Well, why did the noble Lord not say so?
Lord Beaverbrook: Well, my Lords, because I was not asked that Question.
Lord O'Brien of Lothbury: My Lords, is the Minister aware that according to the tape machine in your Lordships' Lobby, interest rates are on the point of going down?
Lord Beaverbrook: Yes, my Lords, I have just covered that point.
Lord Bruce of Donington: My Lords, in that case, will the noble Lord give the House an indication as to what are the Government's views on the fact that, even allowing for the derisory half per cent. by which interests rates are said to have declined today, the commercial bank prime rate still remains four and a half percentage points above those obtaining in Germany and Holland, two percentage points above those obtaining in France, and four percentage points above those in the United States? Have the Government endeavoured to arrive at any rationale on that position?
Lord Beaverbrook: My Lords, yes; but I should point out that the inflation rate in this country is still considerably higher than in all our main competitor countries, except Italy.
Lord Simon of Glaisdale: My Lords, is not the most potent domestic way of reducing interest rates to curtail, contain and progressively reduce, public borrowing?
Lord Beaverbrook: Yes, my Lords; but unfortunately it is not quite as simple as that. There are many other factors that we have to take into account.
Lord Diamond: My Lords, perhaps I may express my deep appreciation to the Government for having brought down interest rates just before the Question came to be answered, having regard to the fact that my Question was put down some weeks ago. Will the noble Lord say whether it is correct (and I have not seen this on the tape) that the other half per cent. will come immediately after the Budget?
Lord Beaverbrook: My Lords, I do not think that your Lordships' House would expect me to comment on that matter. However, I think that the success of the interest rates strategy is demonstrated by the fact that inflation is at its lowest level for 20 years and that we are in our sixth successive year of economic growth.

Business
3 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Brabazon of Tara will, with the leave of the House, repeat a Statement that is being made in another place on the Zeebrugge Ferry Disaster.
It may be for the convenience of the House if I announce that the Report stage of the Consumer Protection Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Third Reading of the Parliamentary Constituencies (Scotland) (Miscellaneous Changes) Order 1987 and the Town and Country Planning (Compensation for Restrictions on Mineral Workings) (Scotland) Regulations 1987 will be taken.

Abolition of Domestic Rates Etc. (Scotland) Bill
Brought from the Commons; read a first time, and to be printed.

Business
Lord Ponsonby of Shulbrede: My Lords, before we move to the next business, I point out that some of my noble friends were worried that the noble Lord did not mention the Fire Safety and Safety of Places of Sport Bill as being taken during the dinner adjournment. We wondered whether the Government had decided not to proceed with it.
Lord Denham: My Lords, I must apologise to the noble Lord the Opposition Chief Whip and to the House that I omitted it from my brief. The Third Reading of the Fire Safety and Safety of Places of Sport Bill will be taken before the Parliamentary Constituencies (Scotland) (Miscellaneous Changes) Order 1987. I am most grateful to the noble Lord.

Rate Support Grants Bill
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with to enable the remaining stages of the Bill to be taken on the same day as the Second Reading.—(Lord Belstead.)
On Question, Motion agreed to.

Grampian Regional Council (Harbours) Order Confirmation Bill
3 p.m.
Read a third time.
In the Preamble:
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 1 to 5:
Page 1, line 1, leave out first ("the") and insert ("a")
Page 1, line 1, leave out from ("Order") to ("has") in line 2 and insert ("relating to harbours in Grampian Region")
Page 1, line 5, at end insert ("with amendments")
Page 1, line 5, at end insert—
("And whereas the said Order as amended is set forth in schedule hereunto annexed:")
In the Title, line 1, after ("confirm") insert ("with amendments")
The noble Earl said: My Lords, with the leave of the House, I beg to move Amendments Nos. 1 to 5 en bloc. The confirmation Bill, as introduced, was drafted on the basis of a modified provisional order as made by the Secretary of State. It was desirable, however, to make certain amendments to the provisional order during the consideration stage of the Bill. The amendment of the order in this way has falsified the Long Title and Preamble. It is now necessary to make amendments to those to give recognition to the fact that the order has been amended during the proceedings on the Bill.
On Question, amendments agreed to.
The Earl of Dundee: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(The Earl of Dundee.)
On Question, Bill passed, and returned to the Commons with amendments.

Consumer Protection Bill [H.L.]
3.4 p.m.
Report received.
Clause 1 [Purpose and construction of Part I]:
The Lord Advocate (Lord Cameron of Lochbroom)The Lord Advocate (Lord Cameron of Lochbroom) moved Amendment No. 1:
Page 1, line 12, at end insert—
(" "dependant" and "relative" have the same meaning as they have in, respectively, the Fatal Accidents Act 1976 and the Damages (Scotland) Act 1976;").
The noble and learned Lord said: My Lords, with the leave of the House, I should like to take this amendment together with Amendments Nos. 19 and 23. Perhaps I should first explain the mechanics of these amendments before dealing with their purpose.
At present the terms of Clause 7(2) of the Bill define the meaning of the words "dependant" and "relative" for the benefit of that clause only. We now, for reasons which I shall shortly explain, wish to apply those definitions to the whole of Part I. Accordingly, Amendment No. 23 deletes that subsection while this amendment inserts a similar subsection in Clause 1 of the Bill where we have defined some of the more important terms relevant to Part I.
In Committee, the noble Lord, Lord Morton, moved an amendment to insert the words "or his representative" after the word "damage" in subsection (3)(a) of Clause 2. At that time I explained that the meaning of the words "the person" at the beginning of that subsection would in effect encompass that person's representative—for example, his solicitor. However, we conceded that in a case where a defective product causes death or where a person subsequently dies there might be a difficulty in Clause 2(3). It could be argued, for instance, that no cause of action will arise until there has been a failure by the supplier to comply with the request from:
"the person who suffered the damage".
In other words, it might be construed that the victim's rights die with him.
Unfortunately, as the noble Lord opposite perhaps presaged in his response to my agreement to consider his amendment, we have required rather more than his three words to achieve the desired objective. As noble Lords will see, we have taken rather more than the six lines that he suggested we might need. The difficulty is that the rights accorded to personal representatives and dependants under the existing law are in a sense derivative. The action of personal representatives depends on the deceased, had he been alive, being entitled to bring an action. Accordingly, it would not be sufficient simply to enable a personal representative or a dependant to make a request after the death because, apart from the making of the request, the conditions in Clause 2(3)(b) and (c) have to be fulfilled to trigger a cause of action.
We have achieved the purpose which we seek by inserting a new subsection in Clause 6 to follow subsection (1). Paragraph (a) describes the situation we are dealing with; namely, where the death of a person is caused by a defect in a product or if a person dies after suffering damage caused by a defect in a product. Paragraph (b) enables a request to be made to the

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supplier of that defective product under Clause 2(3) by that person's personal representatives or, in the case of a person whose death is caused by the defect, by any dependant or relative of that person.
The remainder of the subsection provides that so long as the conditions specified in paragraphs (b) and (c) of subsection (3) of Clause 2 are also satisfied—that is to say, that the request is made within a reasonable time and the supplier fails to comply with the request—it will be as if the liability of the supplier to that injured person did not depend on the deceased person having made the request himself. In other words, he will be deemed to that extent to have had a cause of action on which his representatives or dependants can found a claim. Of course, the general conditions for liability under Part I would still apply.
This small group of three amendments, though somewhat longer than it was perhaps expected, clarify an important point and I am very grateful to the noble Lord for bringing the matter to the attention of the House. I beg to move.
Lord Morton of Shuna: My Lords, I am grateful to the Government and the noble and learned Lord for having considered the amendment and made the necessary alterations. It meets the position of the person who dies either as a result of a defective product or after he has been injured by a defective product. However, I am afraid that it does not in any way meet—I am still not sure that this point is covered—the situation of a person who is so severely injured by the defective product that he is not capable of giving instructions to anybody to deal with it. I am thinking of someone who suffers brain damage or something of that nature. How will such people be covered? They have a duty under Clause 2(3) to ask the supplier who the producer was.
I fail to see how the person's curator in Scotland, or his English equivalent, has a right to do those things that the person has the right to do, as the Bill is drafted. The same position would arise with a child who had not the capacity to act or with a person who, prior to the defective product causing the injury, was mentally incapable of dealing with matters. It still appears to me that the defect exists in this part of the Bill.
Lord Cameron of Lochbroom: My Lords, I should like to respond to that point. I take note of what the noble Lord has said and I think that it is a point which I answered on the last occasion. We still remain of the view that the use of the words "the person" is quite apt to cover the persons who would act for or with him in putting forward a request. For example, in the case of a disabled person unable to deal with the matter by himself, his curator—as the noble Lord is well aware—would, we consider, be entitled to put forward the request as being equivalent to the person.
We shall look at the matter again. It has not gone in the by-game; but, if necessary, we can look at it in another place to make it clear beyond peradventure.
On Question, amendment agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 2:
Page 2, line I, leave out from ("or') to ("the") in line 5 and insert ("game and agricultural produce which has undergone any process").
The noble Lord said: My Lords, this is an attempt not to exclude agricultural produce from the Bill but to put into the Bill what is in the directive and to make it accord with the directive. It has been said on numerous occasions that the purpose of Part I of the Bill is to give effect to the directive. The preamble to the directive, which in my view is not part of the directive, refers to agricultural products and game undergoing a processing of an industrial nature.
Article 2 says:
"For the purposes of this Directive 'product' means all movables, with the exception of primary agricultural products and game, even though incorporated into another movable or into an immovable. 'Primary agricultural products' means the product of soil, of stock farming and of fisheries, excluding products which have undergone initial processing".
If we look at the Bill we have something which is completely different. Subsection (2)(c) reads:
"in the case of a product which has not been manufactured, won or abstracted but essential characteristics of which are attributable to an industrial or other process having been carried out (for example, in relation to agricultural produce), the person who carried out that process".
First, there is nothing in the directive which allows for the exclusion of anything other than agricultural produce or game. Therefore, why we have "for example" in relation to agricultural produce, which implies that there is something else that would be covered, is completely obscure to me. I suggest that it is completely contrary to the directive.
Secondly, there is the phrase:
"essential characteristics of which are attributable to an industrial or other process".
"Essential characteristics" are words which do not appear anywhere in the directive or the preamble, and there is no suggestion that that is an essential matter.
The noble and learned Lord the Lord Advocate referred at the Committee stage to the memorandum and to the draft directive. The memorandum to which he referred is no help on this point because it suggests that all agricultural produce should be included. Reading from the memorandum:
"Whereas liability should extend only to movables, in the interests of the consumer it nevertheless should include all types of movables, including therefore agricultural produce and craft products".
Therefore we gain no help from the memorandum as to what may be meant by that exclusion.
What is intended to be meant by the phrase "essential characteristics"? For example, if one takes a frozen pea, what are we talking about? Is it the frozen nature of the pea that is the essential characteristic or is it the pea itself, whether thawed out or not? If one has potatoes which have been peeled by being washed in a chemical so that peeled potatoes are delivered to restaurants and chip shops, is there a change? Is it still a potato or is the peeling an essential characteristic?
What does "essential" mean? Is it essential to the existence of the defect or essential to the change in the nature of the product, because there is obviously a difference in how it will be applied? If I buy potatoes in a supermarket which have been weighed and put into a plastic bag, are they a product which has:
"essential characteristics of which are attributable to an industrial or other process"?
They have certainly been through a process: they have been weighed and packed.
Surely it would be better—and the purpose of the amendment is to achieve this—to return to the words of the directive which are clear, which are in simple English, which can be easily understood and which fit in with all the legislation which has been introduced in the other countries of the Community, each of which has used the word "first" process.
I also speak to Amendment No. 5, which is the bottom line of page 2, leaving out "an industrial" and inserting "a". I beg to move.
3.15 p.m.
Lord Allen of Abbeydale: My Lords, I should like to say a few words in support of this amendment, to which I have put my name, and I should also like to speak to Amendment No. 5. It will be recalled that the noble and learned Lord the Lord Advocate told us at an earlier stage that the Government had decided to proceed by way of synthesising the force of what is in the directive rather than putting the directive itself in the Bill. It seems to me that here the synthesis has strayed a little too far from what is actually in the directive. It is rather as though the film of the book has moved too far from the original plot.
When I first saw the Bill I could not understand what Clause 1(2)(c) was about. I listened with interest to the Minister's explanation at the Committee stage that it was aimed at processes which fell short of the manufacturing in the normal sense of the word, like the refining of petroleum and the processing of food. That appears in the Official Report at col. 742 on 19th January 1987.
I also listened with interest to the explanation of the Minister of what was meant by the industrial processing of agricultural products, which arises on Amendment No. 5. The Minister said that there were two tests. The first was that the essential characteristics of the products must have been changed—the thought expressed in Clause 1(2)(c) on which the noble Lord has just made some comments. The other test was that the process must have been carried on a large and continuing scale and with the intervention of machinery. That appears in the Official Report at col. 737 on 19th January 1987.
The trouble is that, although those explanations are very interesting, there is nothing in the directive to support any of them. As has been pointed out, there is nothing about changing the essential characteristics of the product and nothing to define industrial processing. I, for one, find it rather hard to accept that, if I were poisoned by some processed food, it would be possible for the producer to get away with it on the argument that he was only a small producer, and that he had carried through that particular process only a couple of times, and that, therefore, on the Minister's criteria, what he had done did not amount to an industrial process.
I go along with the argument that we are getting too far from the directive. I do not believe that Clause 1(2)(c) in its present form reflects anything at all in the directive. The reference to "industrial process" in Clause 2(4), to my mind, cannot be reconciled with Article 2 of the directive. There is indeed no need to have a qualifying adjective at all, whether "initial" or
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"industrial", since what we are concerned with is simply whether the agricultural product has undergone a process however the courts, in the end, define that word. And, evidently, it is something that we shall have to leave to the courts.
The amendments we are discussing seem to represent a better method than the Bill as at present drafted in giving effect to what the Committee, in its wisdom, decided; namely, that there should be retained the exemption for primary agricultural products.
Lord Denning: My Lords, I am afraid that while I sympathise with the amendment I would be against it. This and many other points of amendment, bring into question the relationship between the directive which has been issued by the European Communities and the Bill itself. Perhaps I may remind your Lordships that the directive is addressed to each of the member states and tells them to implement its provisions where necessary. Indeed the European Court has said that when applying national legislation, courts must interpret the legislation in the light of the text and objectives of the directive.
Therefore, when interpreting the Bill before us, we have to interpret it in the light of what the directive says and achieve harmony so far as possible. The directive is itself ambiguous. The recitals exempt "agricultural products and game" except where they have undergone processing of an "industrial nature". But the article itself simply excludes them when they have undergone "initial processing".
Those phrases are ambiguous in themselves. What is "initial processing"? What is a process of an "industrial nature"? I would ask your Lordships to consider the packaging and grading of apples, the getting up of potatoes with machines, and the like. When electrical machines are used for milking, is that an industrial process? It is difficult to say. It is really a question for the courts to decide hereafter. In the clause as it stands, the Government, it seems to me, have done the best they can to explain the position in fulfilment of the objective. Subsection (2)(c) states:
"essential characteristics of which are attributable to an industrial or other process having been carried out".
Then there is the wording of Clause 2(4):
"when it had not undergone an industrial process".
That is going to be difficult to construe. The courts would have to do it. Nevertheless, the wording seems simpler than what is proposed in the amendment, which simply refers to a "process". A "process" is a much wider exclusion. The grading of apples, the getting up of potatoes by machine, or whatever you like to call it, all may be a process. I doubt whether it would be called an "industrial process". The milking of cows by electrical means, or whatever it may be, is a process. I doubt whether it would be called an industrial or other process.
The difficulty is that the words are obscure. They will have to be interpreted by the courts. So far as I can see, the Government have done their best in the clause as it stands to implement the directive. I am afraid that the amendment goes too wide. I would therefore support the Government and not the amendment.
Lord Mottistone: My Lords, may I be allowed to comment from this side on what the noble and learned Lord, Lord Denning, has just said? It seemed to me that all he was doing was making more the point that we sought to make in Committee and on which we were defeated—that trying to draw a distinction between primary agricultural products and processed products is too difficult.
I should have thought that notwithstanding what the noble and learned Lord said—and he is learned, as we all know—when one is in this sort of doubt, it is surely much better to go back to the principles on which the particular clause is based, to wit the directive, and to follow it as closely as may be. That surely is what the amendment seeks to do.
I gave my reasons for saying this at col. 728 on 19th January and I do not want to waste your Lordships' time by repeating all that I said at that time. I should have thought that if there is a doubt—and the noble and learned Lord made it clear that there will be doubts in the courts, whatever conclusion we come to now—surely it is better to follow as closely as possible the directive rather than seek to make one's own interpretation which may in the long run cause even more trouble. Therefore, I strongly support the amendment.
Lord Graham of Edmonton: My Lords, I rise to support the amendment. What we are being invited to do by the Minister and by the noble and learned Lord is to say that if there is going to be trouble, let us leave it to the courts; they will be able to interpret and decide. Without any disrespect to the courts, I should imagine that we have an obligation to be as precise as we possibly can.
Of course, the more words, the more room there is for interpretation and misinterpretation. That is why this amendment is a step in the right direction. But even if we go back to the directive for our fount of wisdom and seek to understand what the directive means by "process", there is no definition of "process" or "processing" in the directive. In other words, the EC directive is deficient so far as guidance is concerned.
It may well be the view of the House that where one comes up against a difficulty of impreciseness one leaves it to the courts. We have had reference to the difficulties of interpretation or application in respect of frozen peas, apples, and potatoes. I have been given an illustration by the Retail Consortium. The Retail Consortium obviously is a major element representing the ultimate in the selling process; the shops and the large stores, that will be involved. They do not give me apples, pears, or potatoes. They give me carrots.
What they ask is: will washing and packing—of carrots, for example—be regarded in the courts as an industrial process? We have illustration after illustration. If that is left out of the term an "industrial process", then, in their view, you leave out a great deal of vegetables and fruit. What the Minister has to tell the House, if he decides not to accept the amendment, is that he is satisfied, as few people outside this Chamber, I venture to suggest, are satisfied—the Retail Consortium is not—that the words that will ultimately appear in the Bill are so well understood and so well applied that there will be acceptance by all sorts of individuals and organisations outside the House.
830
I believe that the Minister has a good deal of explaining to do if I am not to support my noble friend in his amendment.
3.30 p.m.
Lord Stanley of Alderley: My Lords, I think that I shall be in the position at some stage of trying to interpret whether I have carried out a process or not. I have to say to the noble Lord that I do not like this amendment, mainly for the reasons that the noble and learned Lord, Lord Denning, gave. If the words in the amendment "undergone any process" are included, they could well cause doubt in my mind when I am lifting sugar beet or sorting potatoes. At the moment, for better or worse, I consider that the directive allows me to be exempt for what I do inside the farm gate. Once outside, then I believe it becomes a farm process.
The noble Lord falls, I believe, into the trap that I tried to fall into last week when I got involved with hydroponics. I commend a letter that I received from my noble friend on the Front Bench explaining why it was impossible to bring hydroponics into this area as I tried to do on behalf of my noble friend Lord Radnor, who unfortunately cannot be here. We are going against the directive. I take exactly the opposite view to the noble Lord because I think that his amendment makes the directive more difficult than it is as it stands. I accept that the matter is complicated, but I should have preferred not to have the legislation at all.
Lord Mottistone: My Lords, before my noble friend sits down, does he not agree that the old-fashioned idea of the farm gate and things happening one side or the other is a bit out of date these days; and it is not like that? There are not farm gates which separate one sort of factory from another—
Noble Lords: Order.
Lord Stanley of Alderley: I think I had sat down.
Lord Beaverbrook: Your Lordships might like me to remind Members that we are at Report stage.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I do not think it will be any surprise to your Lordships' House if I say that I intend to advise the House to reject Amendments Nos. 2 and 5. The House will recall that we had a very long and full debate during the Committee stage on the principle of whether we should implement the directive as we found it and exclude agricultural products which had not been subjected to industrial processing. Following that very long and informed debate, your Lordships' Committee decided that we would not derogate from the directive. Once that decision was made, we had taken the one serious decision upon that matter that we were entitled to take within the confines of the directive.
A second question which then arose was how properly to implement the exemption as it stands in the directive. Noble Lords opposite argued that an exemption that related to goods that had not undergone initial processing was closer to the intention

831
of the directive than the words we have used; that is, goods that have not undergone industrial processing. We then had another long and interesting debate on that subject in Committee, and the Committee decided that the proper interpretation of the directive in the Bill was that the exemption should be available for goods that had not undergone industrial processing.
The two essential decisions that we had to take—whether or not we should make use of the derogation and how we should implement the directive—have already been discussed and debated in your Lordships' House in Committee and the decisions taken. We are now faced (are we not?) with a further discussion on how to implement the directive. It is suggested again that what the directive really means is that agricultural produce that has been subjected to processing, again without any kind of explanation at all, should fall within the Bill.
I tried to make clear during the Committee stage that in my view there is no doubt at all that the processing referred to in the directive is processing of an industrial nature. So much I believe is clear from the preamble. Of course, I accept what the noble Lord, Lord Morton, had to say; that the preamble is not part of the directive. I suggest however that the preamble helps us in our interpretation of the directive.
The noble Lord, Lord Morton, suggested that Amendment No. 2 was intended to remove the element of uncertainty which would otherwise appear on the face of the Bill. I am suggesting that this is unhelpful. I object to the amendment on that ground. But equally—whether or not the noble Lord, Lord Morton, intended this I do not know, although I think perhaps he might have done—the effect would be to restrict the scope of the exemption for primary agricultural products. I should then object to that because, as noble Lords will note, the word "process" would be given such a wide interpretation as to cover vitually any kind of operation carried out either on the farm or elsewhere.
The noble Lord, Lord Graham, asked us to be precise. I believe we are being more precise than the amendments. He asked us again about the carrots, the washing, the packing and so on. With respect to the noble Lord, we went through all that during Committee stage. Again, I say with respect to my noble friend Lord Stanley of Alderley, we also went through all of what happens within the farm gate at Committee stage.
That which I have described as the outcome of these two amendments is not the proper interpretation to be placed on the words of the directive. I tried to explain—certainly, I took long enough during the Committee stage—that it would further narrow the exemption to the point where it was virtually worthless. One thing that is clear is that derogation in the directive is meant to offer some real choice about a reasonably sized category of agricultural produce.
Finally, while the main burden of these amendments is directed towards Clause 2, I should point out to the House the consequences of the amendment that has been suggested to Clause 1. Clause 1 contains the definition of "a producer". This
832
is a very important definition since it is only producers, importers or, in certain circumstances, suppliers who are to be liable. Producers are defined in Clause 1 in terms of what they have done to the product concerned. The most important case is when they have manufactured it. That is contained in Clause 1(2)(a). Some products are mined or abstracted rather than manufactured. That is covered in paragraph (b). Finally, there are some products where the natural English expression is neither "manufactured" nor "abstracted" but "processed".
Here, I come to the contribution made by the noble and learned Lord, Lord Denning, who reminded us that it is for national governments to interpret the directive so that it conforms to or runs alongside—I prefer to put it that way—our own understanding of law in this direction. That is exactly what the Bill does. As paragraph (c), which covers this subject, indicates, one of the major categories of such products is agricultural produce. But it is not the only one. For example, the activities of those who refine petroleum are more naturally regarded as processing than manufacturing. As a consequence the amendment proposed to Clause 1 will throw the position of such processors in doubt.
It is for those reasons that I cannot advise the House to accept the amendments. The main question of principle on agricultural products has already been decided by your Lordships' Committee. We have also decided how to implement it, and the main amendment here that is proposed undermines those decisions. The more minor amendment also has an unfortunate effect on the definition of "producer". I suggest that noble Lords who are proposing these two amendments be invited to withdraw them.
Lord Morton of Shuna: My Lords, I regret that I cannot accept that. I am grateful to the noble Lord for agreeing with me that the directive is in the words that follow "has adopted this directive" and do not include the preamble. The definition in Article 2 says quite firmly:
" 'Primary agricultural products' mean the products of the soil, of stock farming and of fisheries, excluding products which have undergone initial processing".
That is quite clear. There is nothing whatever to justify the phrase "essential characteristics" in Clause 1(2)(c). There seems to be very little justification for that except perhaps petroleum, but I would have thought that petroleum is manufactured just as flour is manufactured in the grinding of wheat.
It is always with great diffidence that one disagrees with so noble and learned a Lord as Lord Denning, but I should have thought that milk, which has to be sold pasteurised if my information is correct, has certainly undergone a process. If one looks at the third line on page 2 one sees there the words,
"an industrial or other process",
and "other" presumably means other than industrial. One could just as well have "a process" and the sense would be exactly the same. It seems to me that the amendment in my name and that of the noble Lord, Lord Allen of Abbeydale, meets the directive, whereas Clause 1(2)(c) does not. Therefore I must seek the opinion of the House.
Lord Campbell of Alloway: My Lords, before the noble Lord sits down, may I ask him whether he accepts that in Community law the preamble is used as an aid to construction, unlike our system?
Lord Morton of Shuna: My Lords, with the leave of the House, no doubt that is so. An aid to construction is necessary when there is dubiety as to what is meant. The phrase,
"excluding products which have undergone initial processing",
means that all one is left with is the question: what is a process?
3.43 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 94.

DIVISION NO. 1

CONTENTS

Airedale, L.

Kilmarnock, L.

Allen of Abbeydale, L.

Kinloss, Ly.

Amherst, E.

Kirkhill, L.

Annan, L.

Leatherland, L.

Ardwick, L.

Llewelyn-Davies of Hastoe,

Banks, L.

Lloyd of Kilgerran, L.

Barnett, L.

McNair, L.

Blyton, L.

Mishcon, L.

Bonham-Carter, L.

Molloy, L.

Boston of Faversham, L.

Moran, L.

Broadbridge, L.

Morton of Shuna, L.

Brockway, L.

Mottistone, L.

Bruce of Donington, L.

Mulley, L.

Burton of Coventry, B.

Nicol, B.

Campbell of Eskan, L.

Northfield, L.

Caradon, L.

Ogmore, L.

Carmichael of Kelvingrove, L.

Oram, L.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Darcy (de Knayth), B.

Ponsonby of Shulbrede, L.

David, B. [Teller.]

[Teller.]

Davies of Penrhys, L.

Prys-Davies, L.

Dean of Beswick, L.

Rea, L.

Diamond, L.

Reilly, L.

Donaldson of Kingsbridge, L.

Ritchie of Dundee, L.

Elwyn-Jones, L.

Robson of Kiddington, B.

Ezra. L.

Rochester, L.

Falkland, V.

Ross of Marnock, L.

Fisher of Rednal, B.

Sainsbury, L.

Fitt, L.

Serota, B.

Flowers, L.

Silkin of Dulwich, L.

Foot, L.

Simon, V.

Gallacher, L.

Somers, L.

Gladwyn, L.

Stallard, L.

Graham of Edmonton, L.

Stedman, B.

Grey, E.

Stewart of Fulham, L.

Hanworth, V.

Strabolgi, L.

Heycock, L.

Strauss, L.

Hill-Norton, L.

Taylor of Blackburn, L.

Hooson, L.

Taylor of Mansfield, L.

Hunt, L.

Tordoff, L.

Hutchinson of Lullington, L.

Underhill, L.

Hylton-Foster, B.

Wedderburn of Charlton, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Williams of Elvel, L.

Rennet, L.

Winchilsea and Nottingham,

Kilbracken, L.

E.

NOT-CONTENTS

Alexander of Tunis, E.

Bellwin, L.

Auckland, L.

Beloff, L.

Bauer, L.

Belstead, L.

Beaverbrook, L.

Bessborough, E.

Belhaven and Stenton, L.

Biddulph, L.

834

Blake, L.

Kinnaird, L.

Blyth, L.

Lane-Fox, B.

Borthwick, L.

Lauderdale, E.

Boyd-Carpenter, L.

Layton, L.

Brabazon of Tara, L.

Lovat, L.

Brougham and Vaux, L.

Lucas of Chilworth, L.

Caithness, E.

Malmesbury, E.

Cameron of Lochbroom, L.

Manton, L.

Campbell of Alloway, L.

Marley, L.

Campbell of Croy, L.

Merrivale, L.

Carnock, L.

Mersey, V.

Cottesloe, L.

Molson, L.

Cross, V.

Montagu of Beaulieu, L.

Cullen of Ashbourne, L.

Morris, L.

Davidson, V. [Teller.]

Mowbray and Stourton, L.

De Freyne, L.

Munster, E.

De La Warr, E.

Newcastle, Bp.

Deedes, L.

Nugent of Guildford, L.

Denham, L. [Teller.]

Penrhyn, L.

Denning, L.

Plummer of St Marylebone,

Dormer, L.

L.

Drumalbyn, L.

Porritt, L.

Dudley, B.

Portland, D.

Dundee, E.

Roskill, L.

Effingham, E.

St. Aldwyn, E.

Ellenborough, L.

Saint Oswald, L.

Elliot of Harwood, B.

Sandford, L.

Faithfull, B.

Shannon, E.

Fraser of Kilmorack, L.

Sharpies, B.

Gainford, L.

Shaughnessy, L.

Gibson-Watt, L.

Skelmersdale, L.

Gormanston, V.

Slim, V.

Greenway, L.

Stanley of Alderley, L.

Gridley, L.

Strange, B.

Grimthorpe, L.

Strathcarron, L.

Hailsham of Saint

Strathspey, L.

Marylebone, L.

Sudeley, L.

Hesketh, L.

Swansea, L.

Hives, L.

Terrington, L.

Home of the Hirsel, L.

Teviot, L.

Hood, V.

Torrington, V.

Kaberry of Adel, L.

Trumpington, B.

Kimball, L.

Vaux of Harrowden, L.

Resolved in the negative, and amendment disagreed to accordingly.

Zeebrugge Ferry Disaster
3.51 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, with the leave of the House, I shall now repeat a Statement on the loss of the vessel "Herald of Free Enterprise" which is being made in another place by my right honourable friend the Secretary of State for Transport. The Statement is as follows:
"Shortly before 7 p.m. GMT on Friday, 6th March, the roll-on/roll-off passenger ferry "Herald of Free Enterprise" capsized without warning in a position about three-quarters of a mile outside the entrance to the port of Zeebrugge. She had left Zeebrugge about half an hour before on a passage to Dover. It is my sad duty to inform the House that a total of 53 people are known to have died and 82 others are believed to be missing. A total of 408 passengers and crew were rescued. I am sure that the whole House would wish to join me in expressing our deepest sympathy to the bereaved and the injured.
"Immediately the tragedy occurred the Belgian authorities took charge of the search and rescue arrangements, with assistance from HM Coastguard and the Ministry of Defence Rescue Co-ordination

835
Centre at Plymouth. Two British warships were immediately dispatched to the scene, together with search and rescue helicopters carrying divers and other rescue equipment. I wish to pay tribute to all those involved in the rescue arrangements, and particularly to the Belgian authorities and the Belgian people, without whose speedy response the casualties would have been much greater. I should also like to pay tribute to the police, hospitals and fire services on both sides of the Channel, the staff of Townsend Thoresen and the British Ambassador and his staff in Belgium for their assistance to the injured and bereaved.
"A team of marine surveyors from my department led by Captain Vale have begun to conduct a preliminary inquiry into the loss of this vessel. I have decided that a full formal investigation should be held into this disaster. It will be conducted under the provisions of the Merchant Shipping Acts. I am pleased to announce that after consultation with my noble and learned friend the Lord Chancellor, the honourable Mr. Justice Sheen, the Admiralty Judge, has been appointed to be the commissioner for the investigation. He will be assisted by four assessors who will be appointed shortly. The date and venue for the inquiry will be announced when arrangements have been made, but I am anxious that there should be no delay.
"It will be for the formal investigation to investigate the causes of this disaster and to make recommendations to ensure that all possible lessons are learnt. But the preliminary reports which I have received suggest that the cause of the capsize of the vessel was an inrush of water through the bow loading doors. I have no evidence to suggest that this was due to any fundamental fault in the design of the ship.
"My department has today embarked on a programme of checks on ro-ro ships leaving UK ports to ensure that all loading door mechanisms are in working order; that officers and crew are aware of the operating procedures and that all openings in the hull and superstructure must be closed before they proceed to sea in accordance with statutory requirements; and that recommendations of safe practice should be observed. I am also advising owners of ro-ro ferries to fit warning lights on the bridge of the vessels to show whether or not the loading doors are properly closed. I shall consider whether or not to make this a statutory requirement.
"Understandably there is anxiety about the financial difficulties of the injured and bereaved both immediately and in the longer term. As regards immediate needs in Zeebrugge, the British Consul and his staff are offering all possible consular assistance. In this country, the DHSS is providing emergency arrangements so that people arriving at Gatwick and Dover can be given immediate help. As regards concern about longer term financial entitlements a team from DHSS is going out to Zeebrugge today to give advice on the spot.
"I understand P & 0 has announced today that it has set aside £1/4 million to meet immediate personal needs of those in distress following the tragedy. This fund will be handled by the Townsend Thoresen
836
office in Dover. The company will also be advertising in the national press tomorrow with details of the central point for claims. I have its assurance that all claims will be dealt with as quickly as possible.
"On the initiative of Dover District Council, a Channel Ferry Disaster Fund has been established to assist the victims and their relatives. This will not affect claims for compensation. The Government are contributing £1 million to the fund. Parliamentary approval to this payment will be sought in a Supplementary Supply Estimate for the Transport Services and Central Administration Vote. Pending that approval, the £1 million donation will be met by a repayable advance from the Contingencies Fund.
"Every year some 28 million passengers are safely carried on United Kingdom ferries and it is tragic that our fine record of safety has been marred by this disaster. I share the grief and anguish of those who are bereaved and of those who are still uncertain of the fate of their friends and relatives. I am sure the thoughts of all Members of this House are with them".
My Lords, that concludes the Statement.
Lord Underhill: My Lords, I am certain that the whole House will appreciate that the Minister has repeated a Statement on a very tragic occurrence which has shocked the entire nation. I find it difficult to put into words sympathy for those who have suffered bereavement and for families who do not know what has happened to those who are missing. At the same time, we wish to place on record our appreciation of many of the reports of courage shown by passengers.
We welcome the report in the Statement about the action of the rescue and emergency services, particularly the prompt action taken by the Belgian authorities. From all the reports which most of us have read or heard on radio or television, that part of the Statement deserves our wholehearted support. We are pleased that the Government have moved quickly to set up a formal investigation and that the Statement says,
"I am anxious that there should be no delay".
I am certain that there are many points that noble Lords may wish to put, but I do not believe that this is the time to put detailed questions. There is great public concern. What I think the public wants is an interim report which will indicate exactly what happened and perhaps make recommendations for future practices. I am pleased to note that the department has given instructions concerning the operating procedures for loading doors. I hope it will give serious consideration to the suggestion that there should be warning lights on the bridge of the these vessels. I think most of us were somewhat surprised that there has been no technological installation of such equipment. I do not know whether the investigation will cover this, but it is hoped that there will be an inquiry into the design and construction of these vessels, particularly the superstructure and the arrangement and structure of the vehicle decks. I think there is considerable concern. As one who has used the ferries quite frequently, though never the one to Zeebrugge, I can

837
appreciate that there is need for detailed investigation. I wonder whether there is international consultation with other maritime nations which have a need for this type of ferry. In conclusion, let me say how much we on these Benches appreciate the urgent action taken by the DHSS, the £1 million grant and the grant to be given by P & 0. We on these Benches fully support what is being done. We should appreciate reports from time to time on the progress of the DHSS arrangements.
4 p.m.
Lord Tordoff: My Lords, this is an occasion upon which there is no difference among the different parts of your Lordships' House. We are all deeply sorrowful about what has happened. We extend our sympathies from these Benches.
I should like to thank the Minister for what to my mind was an excellent Statement. It covered virtually every point that one might have made on the subject. I should also like to congratulate the authorities both in this country and in Belgium on the speed with which they reacted. It was a remarkable achievement that people were on the spot in such a short time. Again, I should like to praise the courage of all those involved, whether passengers, crew, divers, helicopter pilots or members of the services which were brought so quickly into action.
I am glad that it has been found possible, with the assistance of the noble and learned Lord the Lord Chancellor, to appoint an Admiralty judge as commissioner of the investigation. Such an investigation needs such weight behind it. We have every confidence that the investigation will get to the bottom of this disaster so that we can make sure that nothing like it happens again.
What has been needed in the last 24 hours has been a degree of reassurance to those people who continue to travel. I have a relative who is travelling on a cross-Channel ferry tonight. I feel somewhat relieved after the Statement, particularly as the Secretary of State has stated that there is no evidence to suggest that the incident was due to a fundamental fault in the design of the ship. That will set at rest at least some of the qualms people may have had following statements reportedly made by the Prime Minister when she was in Belgium. Doubtless she was badly advised at that moment, as is perfectly understandable in a situation where there is so much emotion.
I note that the department has embarked on a programme of checks on ships leaving United Kingdom ports and has drawn the attention of operators to the operating procedures. It seems likely that there has been some failure in that area and I should like to have the assurance that operating procedures will be carried out on both sides of the Channel and not just on the United Kingdom side.
Like the noble Lord, Lord Underhill, I am glad to see that stress is being laid on warning lights. I again congratulate the Government on the speed with which they have reacted in contributing to the fund set up by the Dover District Council. Beyond that, all that we can do is to hope and pray for the injured people and offer our immense sympathy to those who are bereaved.
Lord Brabazon of Tara: My Lords, I am grateful to both noble Lords for their reception of the Statement. I should like to endorse what they have said, particularly with regard to the prompt action by the Belgian and other authorities and about the efficient way in which the rescue was co-ordinated. I should also like to offer a tribute to the action taken from this side of the Channel as well.
So far as the inquiry is concerned, the noble Lord, Lord Underhill, suggested that an interim report should be published. I cannot say whether that will be the case. However, I assure the House that any recommendations coming out of either the preliminary inquiry or the formal investigation can and will be acted upon as soon as possible.
As regards international consultation, the ships comply with the International Maritime Organisation regulations for passenger vessels. Therefore, they are up to international standards. As far as the point of the noble Lord, Lord Tordoff, is concerned, I should like to reaffirm, for the reassurance of those continuing to travel, that the correct operating procedures are complied with. I have every reason to believe that all these procedures will continue to be complied with, not only because our operators are going to check that that is the case but because all responsible operators will now wish to make doubly certain that there is no cause for alarm.
Lord Boyd-Carpenter: My Lords, will my noble friend consider one matter which will not necessarily come before the public inquiry which he has announced? Every civil aircraft leaving this country leaves behind a passenger list. Apparently the ferries do not follow that procedure. If in this case such a passenger list had been left behind, much agonising anxiety might have been spared for quite a number of people. Will the Minister consider making it mandatory to follow the civil aviation precedent in respect of ferries and compel them to leave behind a full passenger list?
Lord Brabazon of Tara: My Lords, consideration will be given to that, However, there are great practical difficulties in compiling an accurate passenger list for this type of travel. I believe that as many as 200 people can arrive at a ferry port from a train at one time. Probably all of them have through tickets and it would cause great practical difficulties to compile an accurate passenger list. Of course, the numbers of passengers carried must be compiled accurately. However, that will be something to be taken into account.
Lord Gladwyn: My Lords, we assume that the company concerned is fully insured against any loss arising out of this dreadful disaster.
Lord Brabazon of Tara: My Lords, I understand that that is the case. The parent company of Townsend Thorensen is P & 0, which is one of the world's leading shipping operators.
Lord Dean of Beswick: My Lords, all Members of your Lordships' House fully support what has been said by previous speakers about the people who took part in this terrible tragedy as rescuers. If we can say

839
that any good has come of such a tragedy it is in the number of people who were saved when the ship was engulfed so quickly. However, I find part of the Minister's Statement a bit different from what was said at the weekend. The Minister said, and he repeated in the Statement, that no evidence was found to suggest that the design of the ship was at fault. I should think that that part of the Statement is a bit premature, bearing in mind that the Prime Minister, when interviewed on television over the weekend, hinted that one of the possibilities was that there could be a flaw in the design.
Those of us who have been glued to the television set all weekend will have heard reports from a wide number of people with specialist knowledge on shipping who think that there is a case to be investigated and that there may well be flaws in the design. If it appears early on that the design is flawed, will the Government do as they do with flawed aircraft which are considered unsafe and instruct that they be withdrawn from service until they are made safe?
Lord Brabazon of Tara: My Lords, I have already spoken about the problems as regards the fundamental design of the ferry. It is well known in marine circles that there can be a stability problem with high-rise ferries if sea water enters the vehicle decks. However, both construction standards and operating procedures are designed to ensure that that does not happen. The public inquiry will no doubt address design and safety margins for this type of ship. For the present, there is no evidence to suggest any reason to impose restrictions on their operation.
Lord Taylor of Blackburn: My Lords, I congratulate the Minister on the way in which he carried out his broadcast yesterday morning and the way in which the Government have given as much information as they possibly could to those waiting to receive messages about relatives, friends and so on. The Minister conducted himself exceptionally well in the broadcast, to which we listened with great sorrow.
Noble Lords: Hear, hear!
Lord Brabazon of Tara: My Lords, I am most grateful to the noble Lord. I thank him very much.
Lord Greenway: My Lords, I welcome the arrangements which the Government have put in hand, especially in regard to the placing of warning lights on ships' bridges. Does the Minister agree that perhaps the most worrying aspect of this disaster is the fact that, so far as I am aware, this is the first instance of a roll-on, roll-off passenger ship sinking in calm weather, in that the damage was not caused through stressful weather or through collision? Is he also able to confirm that it is not inherently unsafe for one of these ferries to cross the Channel with her outer doors open, as indeed was the case for a number of weeks some years ago when the French railways' ferry "Cote d'Azur" damaged her outer doors? They were removed for repair and the ferry operated with only her inner door for that period.
Lord Brabazon of Tara: My Lords, as I said in the Statement, it is against regulations for ferries to travel on the open sea with doors open. I certainly would not recommend anybody to try it.
Lord Pitt of Hampstead: My Lords, may I refer back to the Minister's reply about keeping a list of the passengers? It would not be that difficult if all passengers were required to leave their names and addresses before they boarded the ship.
Lord Brabazon of Tara: My Lords, as I said, there are practical difficulties. We are talking about very large numbers of people travelling on these ships. It is almost like travelling on a train. There is no requirement to leave names and addresses before going on a train. But it is a matter which will have to be looked into.

Consumer Protection Bill [H.L.]
4.11 p.m.
Consideration of amendments on Report resumed on Clause 1.
Lord Airedale Lord Airedale moved Amendment No. 3:
Page 2, line 17, after ("which") insert ("other").
The noble Lord said: My Lords, perhaps we may take Amendments Nos. 3 and 4 together. I put down these amendments in Committee and it seemed that the Government were somewhat favourably disposed to them. Accordingly, I have ventured to put them down again. This is simply a matter of making the Bill more easily understandable to the reader. The subsection with which we are dealing refers to two separate categories of product. By inserting the word "other" in the two places indicated, the reader is enabled more easily to understand which category is being referred to each time in the subsection the word "product" appears. I beg to move.
Lord Denning: My Lords, I support the amendment because it leads to clarity, which is needed.
Lord Beaverbrook: My Lords, for the convenience of the House, I shall speak to Amendments Nos. 3 and 4 in the name of the noble Lord, Lord Airedale, and to Amendment No. 13 in the name of my noble friend.
At Committee stage, in moving Amendments Nos. 8, 9 and 10 the noble Lord, Lord Airedale, suggested that it would clarify Clauses 1 and 2 of the Bill if the word "other" was introduced into the appropriate places. It appeared to him that this would make it easier for the reader to appreciate that two separate sets of products were being referred to. I made it clear at the time that we did not consider that the noble Lord's Committee Amendment No. 10 should be accepted on the grounds that the Bill refers,
"to the producer of any product in which the product in question is comprised,"
and that for this reason they could not be the same product. However, I agreed to consider further whether the noble Lord's Committee Amendments Nos. 8 and 9 might indeed add a degree of clarity to Clause 2(3) of the Bill. Those amendments would have

841
inserted "other" before "product" in that subsection. The two amendments are before the House again today as Amendments Nos. 3 and 4.
We have now had time to consider in detail the original amendments of the noble Lord and those he has proposed today. The conclusion we have reached is that it would be inappropriate for us to refer to a finished product as anything other than the sum of its components, and that to do so might create some confusion. First, it is clear that the manufacturer of the finished product is liable for defects attributed to components and we should not wish to throw any doubt on that. Indeed, Amendment No. 13 in the name of my noble friend is designed precisely to remove any such doubt. Secondly, I do not think we should suggest that there is any distinction to be drawn between components which are added to an identifiable product—perhaps the installation of a car radio into a car is a good example—and components which contribute to a substantial extent to the essential characteristics of the finished product—for example, the material from which a dress or a suit is made. On reflection we see no need to include the word "other" in Clause 1(3) of the Bill. Furthermore, by Amendment No. 13, we have taken the opportunity of removing the word "other" from Clause 4(1)(f).
We have also made some minor drafting amendments to make it quite clear that the other producer referred to in Clause 4 may well be the producer of the finished product as well as the producer of the other component to which, for example, the product in question is attached. For these reasons I hope that the noble Lord will withdraw his Amendments Nos. 3 and 4 and that the House will accept the need for Amendment No. 13.
Lord Airedale: My Lords, despite the fact that I have the support of the noble and learned Lord, Lord Denning, I do not want to divide the House on what is a drafting matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
Clause 2 [Liability for defective products]:
[Amendment No. 5 not moved.]
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 6:
Page 3, line 3, leave out ("apart from") and insert ("otherwise than").
The noble Lord said: My Lords, at the Committee stage, in moving Amendment No. 16, as it was then numbered, the noble Lord, Lord Morton of Shuna, proposed deleting subsection (6) of Clause 2 and inserting a new subsection which he suggested would be more easily understood. At that time, my noble and learned friend the Lord Advocate explained that a later amendment which had then been tabled by the noble Lord, Lord Airedale, would take out what he suggested might be described as the most infelicitous phrase in that subsection, and that if the infelicity were taken out, one would find that the subsection would better express what we thought the directive was seeking to achieve.
In response to the amendment of the noble Lord, Lord Airedale, which was then Amendment No. 18 and is now Amendment No. 6, my noble friend Lord Beaverbrook said that, although the amendment did little to alter the sense of the subsection, we believed that some improvement to clarity might be desirable. Having thought about it, we have come back to exactly where we were on 19th January. While not accepting the suggestion of the noble Lord, Lord Airedale, that the original draft contained three adverbs in a row, I believe that we now have an opportunity for the noble Lord to score the goal which he so narrowly missed at Committee.
Before formally moving the amendment, perhaps I may take the opportunity to thank the noble Lord, Lord Airedale, for his usual care and attention to the drafting of legislation. In particular, he drew our attention to the side note to Clause 5 which in the print that the House had before it at Committee stage referred to damages recoverable under Part I. The noble Lord pointed out to the House that Clause 5 defined "damage" and not "damages". We have therefore taken up his suggestion in the print before your Lordships this afternoon. The side note reads,
"damage giving rise to liability".
I am most grateful to the noble Lord for his diligence, as I am to the noble Lord, Lord Morton, for the point that he put at that stage. I beg to move.
Lord Airedale: My Lords, I am very pleased to reciprocate all the gratitude that is being showered upon me.
On Question, amendment agreed to.
Clause 3 [Meaning of "defect"]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 7:
Page 3, line 8, leave out ("shall include") and insert (", in relation to a product, shall include safety with respect to products comprised in that product and")
The noble and learned Lord said: My Lords, the House may recall that during the debate in Committee, on an amendment which was then Amendment No. 7 moved by the noble Lord, Lord Morton, the noble Lord expressed concern that we had not reflected the purpose of the directive, which was that if there is a defect in a component of a product, then the product as a whole is defective. I think the noble Lord mentioned the case of a car with a defective component such as a brake lining, a tyre or a windscreen wiper and asked whether the car itself is thereby made defective.
In Committee, I indicated that we would give consideration to the point and that if necessary an amendment would be brought forward to deal with the matter. On consideration, we have decided that, on balance, it would be preferable to put the matter beyond doubt by the amendment now before your Lordships. The amendment makes clear that safety in relation to a product includes safety with respect to products comprised within the product. I suggest to the House that this amendment provides a useful clarification and I accordingly beg to move.
Lord Morton of Shuna: My Lords, I think I should follow the example of the noble Lord, Lord Airedale, on the last amendment and add my thanks to the Government for accepting the purpose behind my previous amendment, which is an improvement to the Bill.
On Question, amendment agreed to.
Lord Airedale Lord Airedale moved Amendment No. 8:
Page 3, line 12, after ("circumstances") insert ("reasonably ascertainable").
The noble Lord said: My Lords, subsection (2) operates very severely indeed. It is mandatory. It states:
"all the circumstances shall be taken into account, including … (c) the time when the product was supplied by its producer to another".
The example that I took in Committee was of a defective hairdryer which catches fire. The lady who purchased the hairdryer takes back the burnt-out remains to the shop. According to subsection (2) the court shall take into account
"the time when the product was supplied by its producer to another".
That means the time when it was supplied from the factory to the wholesaler.
The retailer from whom the lady purchased the hairdryer took it out of a carton. There were a dozen hairdryers in a cardboard carton. He has thrown the carton away by the time the lady returns because you cannot keep all the packaging material for any length of time. Therefore, he refers the matter to the wholesaler. The wholesaler received 25 cartons, all packed in a crate. Having undone the crate, he will have distributed the cartons to various retailers, out of which they supplied their customers and from which one hairdryer was supplied to the lady.
By now the wholesaler will have used the crate, or the remains of it, to light the boiler of his central heating. Therefore, he goes back to the manufacturer and says, "We have heard that a lady had a defective hairdryer and we want to know when you supplied it." What hope is there of ascertaining that information? There is not the vestige of a chance that the manufacturer can say that that hairdryer was supplied to the wholesaler on a particular date.
What is the use of having an Act of Parliament that says that the court shall take into account "all the circumstances" when we know that some of the circumstances are unascertainable and cannot be taken into account? Therefore, this amendment softens the subsection by amending it to read:
"all the circumstances reasonably ascertainable".
I should have thought that makes sense. The subsection as drafted does not make sense. It cannot be complied with in every case as drafted. Therefore, I beg to move.
Lord Beaverbrook: My Lords, I accept, of course, that "all the circumstances" taken literally appears rather a tall order. Plainly it must be interpreted in the sense of the circumstances which might affect what people are likely to expect at the time which is relevant for considering whether the product is defective. Evidently if the circumstances are not reasonably ascertainable, in the sense that a given individual
844
could not be expected to ascertain what they are, then for the most part they must be given very little weight. If I can put it another way, the extent to which anything could be ascertained would no doubt be, in itself, a matter which should be taken into account. But I would not like to say that it was conclusive.
For example, Clause 3(2)(c) reflects the directive in referring to the time of supply by the producer; and this is intended to reflect, in part, the obvious point that products must be expected to deteriorate when in use. Indeed, the noble Lord made the very point at an earlier stage of our deliberations. I should be very reluctant to agree that because the time of supply by the producer could not be reasonably ascertained, therefore the period which had expired since it left his hands should be disregarded. In spite of the noble Lord opposite's eloquent example, I am afraid that I must resist the amendment.
Baroness Phillips: My Lords, I usually agree with the noble Lord but I must say that I am amazed that he wants to introduce this dreadful word "reasonably". I recall that he has on other occasions objected to the word. We already have the ridiculous phrase,
"what might reasonably be expected to be done with or in relation to".
That is going to be difficult enough to deal with, even in a court of law.
This always brings to mind the old story of the child who is asked to write about "reasonable" and who says that parents are sometimes reasonable, teachers are never reasonable and children are always reasonable. That gave me an indication of how the word can be used. Therefore, I cannot possibly support the noble Lord, Lord Airedale, and I am amazed that he should propose this dreadful phrase, particularly after our recent debate on the English language. I hope the noble Lord is not going to fall into this terrible trap of using the words "reasonably ascertainable". I can assure the noble Lord that the clause is bad enough without adding anything of that kind.
Lord Airedale: My Lords, I do not think there is anything between myself and the Government; the difference is between myself and the noble Baroness. Therefore, perhaps it would be better if I withdrew the amendment and tabled it again at Third Reading leaving out the word "reasonable" and simply leaving in the word "ascertainable". I might then have the support of the noble Baroness and perhaps win the day. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Lord Airedale Lord Airedale: moved Amendment No. 9:
Page 3, line 16, leave out ("the doing or) and insert ("doing or refraining from doing").
The noble Lord said: My Lords, once again, in Committee, I thought I had some sympathy from the Government Benches for an amendment in this form. I ventured to say that in the matter of safety of appliances the "don'ts" are just as important as the "dos". As an example I referred to an electric razor which was labelled "This machine works on 12 volts.

845
Do not plug it into the mains". I should have thought that it stuck out a mile that if you are going to warn people about the doing of things you should equally warn them, and sometimes more emphatically warn them, about refraining from doing things like plugging a 12 volt machine into the mains. I should have thought that this amendment would be acceptable to the House. I beg to move.
Lord Williams of Elvel: My Lords, on these Benches, we have considerable sympathy with the noble Lord, Lord Airedale, in his amendment. In Committee, it was my understanding that he received a fairly favourable reception from the Government in principle. I thought that they were going to go away and think about the matter. He has made a fair and valid point. If my understanding of the tone of the Government's response in Committee was mistaken, I hope the tone of the Government's response may be more sympathetic this time around.
Lord Beaverbrook: My Lords, I am afraid that I am unable to give a favourable response to the amendment. I do not think that we gave it a favourable response in Committee. We agreed to look at the position. As the noble Lord, Lord Airedale, reminded us, the amendments are identical to those he moved in Committee. We agreed to look at the amendments because we thought that they might add some clarity to Clause 3. The noble Lord's amendments were withdrawn on the understanding that we would consider them and on the basis that if we thought it necessary we would bring forward suitable amendments at this time.
Having given the matter the thought that we undertook to give in Committee, we have come to the conclusion that what I said was correct; in other words, by using the word "doing" one must include the idea of not doing anything with, or in relation to, a product, both in the sense that a person is instructed to deal with a product in a particular way and that he is warned not to deal with it in any other way. I am grateful to the noble Lord, Lord Airedale, for reminding the House of that point, but I hope that he will understand that after fully considering the answer that I gave him in Committee, I do not see any reason to change it. I shall therefore have to resist his amendments today.
Lord Airedale: My Lords, I should have said that I was speaking also to Amendment No. 11, which is in identical terms. The Government's reply seems to be that "doing" includes refraining from doing. I do not agree with that. I do not think that the average reader of an Act of Parliament would agree either. Adding those few words would make it clearer to the reader that refraining from doing things—the "don'ts" are just as important, and may be more so, than the "do's". Since I have the support of the Official Opposition Front Bench, I think we should test this matter by a Division.
4.33 p.m.
On Question, Whether the said amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 98; Not-Contents, 91

DIVISION NO. 2

CONTENTS

Ailesbury, M.

Rennet, L.

Airedale, L. [Teller.]

Kilbracken, L.

Amherst, E.

Kilmarnock, L.

Ardwick, L.

Kinnaird, L.

Attlee, E.

Kirkhill, L.

Aylestone, L.

Leatherland, L.

Banks, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Lloyd of Kilgerran, L.

Blyton, L.

Lovell-Davis, L.

Bonham-Carter, L.

McGregor of Durris, L.

Bottomley, L.

McNair, L.

Broadbridge, L.

Manchester, D.

Brockway, L.

Mishcon, L.

Bruce of Donington, L.

Molloy, L.

Burton of Coventry, B.

Morris of Kenwood, L.

Campbell of Eskan, L.

Morton of Shuna, L.

Carmichael of Kelvingrove, L.

Munster, E.

Cledwyn of Penrhos, L.

Nicol, B.

Darcy (de Knayth), B.

Northfield, L.

David, B.

Ogmore, L.

Davies of Penrhys, L.

Oram, L.

De La Warr, E.

Phillips, B.

Dean of Beswick, L.

Pitt of Hampstead, L.

Denington, B.

Ponsonby of Shulbrede, L.

Diamond, L.

Porritt, L.

Donaldson of Kingsbridge, L.

Prys-Davies, L.

Drumalbyn, L.

Rea, L.

Elwyn-Jones, L.

Ritchie of Dundee, L.

Ezra, L.

Robson of Kiddington, B.

Falkender, B.

Rochester, L.

Falkland, V.

Ross of Marnock, L.

Fisher of Rednal, B.

Sainsbury, L.

Fletcher, L.

Seear, B.

Flowers, L.

Serota, B.

Gallacher, L.

Shaughnessy, L.

Galpern, L.

Silkin of Dulwich, L.

Graham of Edmonton, L.

Simon, V.

[Teller.]

Stallard, L.

Grey, E.

Stedman, B.

Hampton, L.

Stewart of Fulham, L.

Hanworth, V.

Strabolgi, L.

Hayter, L.

Taylor of Blackburn, L.

Heycock, L.

Taylor of Mansfield, L.

Houghton of Sowerby, L.

Tordoff, L.

Hunt, L.

Underhill, L.

Hutchinson of Lullington, L.

White, B.

Hylton-Foster, B.

Williams of Elvel, L.

Jeger, B.

Wilson of Rievaulx, L.

Jenkins of Putney, L.

Young of Dartington, L.

John-Mackie, L.

NOT-CONTENTS

Aldington, L.

Cullen of Ashbourne, L.

Alexander of Tunis, E.

Davidson, V. [Teller.]

Auckland, L.

De Freyne, L.

Bauer, L.

Denham, L. [Teller.]

Beaverbrook, L.

Denning, L.

Belhaven and Stenton, L.

Dormer, L.

Beloff, L.

Dundee, E.

Belstead, L.

Ellenborough, L.

Bessborough, E.

Elliot of Hanvood, B.

Biddulph, L.

Faithfull, B.

Blake, L.

Fraser of Kilmorack, L.

Blyth, L.

Gainford, L.

Borthwick, L.

Gibson-Watt, L.

Boyd-Carpenter, L.

Gormanston, V.

Bruce-Gardyne, L.

Gowrie, E.

Caithness, E.

Greenway, L.

Cameron of Lochbroom, L.

Gridley, L.

Campbell of Alloway, L.

Grimthorpe, L.

Campbell of Croy, L.

Hailsham of Saint

Carnock, L.

Marylebone, L.

Cottesloe, L.

Hesketh, L.

847

Hives, L.

Reay, L.

Home of the Hirsel, L.

Richardson, L.

Hood, V.

St. Aldwyn, E.

Killeam, L.

Saint Oswald, L.

Kimball, L.

Sanderson of Bowden, L

Lane-Fox, B.

Selkirk, E.

Lauderdale, E.

Shannon, E.

Layton, L.

Sharpies, B.

Lucas of Chilworth, L.

Skelmersdale, L.

Lyell, L.

Stanley of Alderley, L.

Malmesbury, E.

Strange, B.

Manton, L.

Strathcarron, L.

Marley, L.

Strathspey, L.

Merrivale, L.

Sudeley, L.

Mersey, V.

Teviot, L.

Molson, L.

Teynham, L.

Mottistone, L.

Thomeycroft, L.

Mowbray and Stourton, L.

Torrington, V.

Nugent of Guildford, L.

Tranmire, L.

Onslow, E.

Trefgarne, L.

Orr-Ewing, L.

Trumpington, B.

Pender, L.

Vaux of Harrowden, L.

Penrhyn, L.

Westbury, L.

Plummer of St Marylebone,

Wyatt of Weeford, L.

L.

Young, B.

Portland, D.

Resolved in the affirmative, and amendment agreed to accordingly.
4.42 p.m.
The Deputy Speaker (Lord Nugent of Guildford): My Lords, before I call Amendment No. 10 I should explain to the Minister that Amendment No. 10 pre-empts Amendment No. 11. Perhaps the Minister will indicate how he intends to deal with it.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 10:
Page 3, line 24, leave out subsections (3) and (4).
The noble Lord said: My Lords, I beg to move Amendment No. 10 which, perhaps noble Lords may agree, does not pose a difficulty to Amendment No. 11 since we are in effect going back to where we once have been before. The House may recall that we debated these two subsections at Committee stage. It was then that I undertook to see whether there was a clearer way to express what we wished to say.
From that earlier debate two factors stand out. The first was the difficulty and complexity of the drafting of the provisions as they stood. I tried to explain that we had spent considerable effort in trying to make the provisions clear. We have continued with that effort since our Committee stage on 19th January. However, it has to be recognised that the distinction we are trying to make is irreducibly complex. I am afraid that if the underlying concepts are complex, the drafting must inevitably be so. The second point was that most noble Lords thought that it was absolutely obvious, for example, that advice from an architect would not be covered by this Bill even though the manifestation of that advice was on a piece of paper which was in itself a product. It would be contrary to the whole purpose and spirit of the directive so to consider it.
I am ready to accept that the central proposition is fairly obvious. What is not so obvious is the precise dividing line between advice of that kind on the one hand and, for example, instructions for the use of goods on the other. That has proved enormously difficult to determine and was, I believe, the source of most concern expressed at Committee stage.
There is a balance to be drawn. Where there is serious doubt we obviously wish to make matters clear. To do so is valuable even if noble Lords opposite occasionally take us to task for it. Very often making matters clear is at the cost of introducing even more words and a greater complexity. That is very much the case with these two subsections which many, including some in this House and others outside, found very difficult to understand without any explanation. It was quite obvious at Committee stage that my explanation did not make it any the clearer.
Having studied the debate, and having listened to opinions and comments from many outside the House, I am now of the opinion that in this case our original assessment of the balance was not right. I suggest that the assessment of the balance by the noble Lord, Lord Morton of Shuna, was right. Since the proposition that we wish to establish seems to be essentially an obvious one about which there is no doubt the balance of advantage lies in not complicating the Bill by trying to solve a problem which, very largely speaking, does not exist.
As I said at the outset, we return from where we once have been, and with apologies to the noble Lord, Lord Morton of Shuna, for having spent such a lot of time at Committee stage, and to your Lordships this afternoon in taking further time on this. I beg to move.
Lord Somers: My Lords, I understand the difficulty over the wording. Will the noble Lord agree that there are circumstances where not doing anything could be harmful to the product? For instance, the seller of livestock could have omitted to feed them properly during their breeding period. That is not "doing anything"; it is omitting to do it. But it would have a harmful effect on the stock.
Lord Morton of Shuna: My Lords, I am most grateful to the Minister for the very gracious way in which he says that on reflection he thought that I was right and he was wrong. It could not have been put more pleasantly. Naturally, I support his amendment.
Lord Denning: My Lords, these two subsections as they stood were quite incomprehensible. It is a very good thing that they have been struck out. I also express my gratitude.
Lord Allen of Abbeydale: My Lords, as one who expressed an inability to understand either the subsections or the explanation, I am very grateful for the decision that the Government have taken.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, Amendment No. 11 cannot be called.
Clause 4 [Defences]:
Baroness Burton of Coventry Baroness Burton of Coventry moved Amendment No. 12:
Page 4, line 11, leave out from ("such") to ("or") in line 14 and insert ("as to enable the existence of the defect to be discovered").
The noble Baroness said: My Lords, in rising to move this amendment it is certainly not necessary to remind the House that the problem of a development

849
risks defence looms largely in this Bill. With many others I regretted that we were unable to make progress on this aspect during Committee stage. I hope for some improvement today on Report.
The purpose of this amendment is to alter the wording of the provisions of the Bill dealing with the development risks defence so that it follows exactly the wording of the directive. Article 7 of the directive says:
"The producer shall not be liable as a result of this directive if he proves … that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered.".
However, in the Bill the defence is worded somewhat more loosely. Noble Lords will see that Clause 4(1) says:
"In any civil proceedings by virtue of this Part against any person ('the person proceeded against') in respect of a defect in a product it shall be a defence for him to show … that the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control.".
We shall await what the Minister has to say, but there seems no obvious reason why the draftsman of the Bill has deviated from the wording of the directive. As in previous discussions today there have been several noble Lords supporting the proposition that we keep to the words of the directive and I shall hope for their support at a later stage.
However, whatever his reasons for modifying the wording, the draftsman has surely softened its demands upon UK producers. Instead of having to prove that the state of knowledge was not such as to enable the existence of the defect to be discovered at all, we find that more wishy-washy concepts are introduced. Clause 4(1)(e) states:
"might be expected to have discovered the defect if it had existed in his products while they were under his control".
There is nothing in the directive about that, nothing at all.
The consumers in this country, and many Members of your Lordships' House, feel that it is unfortunate to have the development risk defence at all. They feel that it is adding insult to injury for consumers to find that if we have to have this defence it is watered down from the version that was agreed in Europe. I am indebted to the Consumers' Association for its help on this matter. It has asked me to stress that it strongly opposes the wording adopted in the clause, and would like to know from the Minister why it is that the wording in the directive will not do. Indeed, it questions whether the Bill in its present form actually implements the directive. As far as it can see, such a deviation is not authorised by the directive itself or by community law. Doubtless the noble Lord, Lord Lucas, or his noble and learned friend will explain that point to us when they come to wind up. I agree with the Consumers' Association. I wonder whether in its present form the Bill actually implements the directive.
I think that it is correct to say that by introducing the concept of expectation into the formula, which is what the Bill actually does, rather than the plain, unvarnished concept of discoverability, the strict burden of proof on producers is reduced. We would
850
say that it ceases to be a question of whether the defect was capable of being discovered at all. It becomes a question of whether this particular producer might be expected to have discovered the defect. The words at the end of the Clause 4(1)(e) which read:
"if it had existed in his products while they were under his control",
do not add anything but only cause confusion and difficulty of comprehension.
In the view of the Consumers' Association, consumer organisations in general, certainly of myself and my noble friends on this side of the House and I would hope of noble Lords sitting elsewhere, the stark words of the directive are much to be preferred. We believe that they demonstrate much more clearly than the words of the clause that there is a strict burden on the producer who wishes to rely on this defence to prove in an objective and not a subjective way the non-discoverability of the defect.
If the Government say that there is no legal difference in the two formulations (which we would not feel able to admit) I think that even the Minister might accept that there could well be a difference in the psychological perception of the two approaches. In view of the Government's refusal to do anything at all about the development risks defence, I should like to ask the Government to agree that it is most important in the interests of consumers that the strict wording of the directive should be adhered to, if only to bring home to industry that it really is only in those cases where they could not possibly have known of the defect that they will be excused legal responsibility for compensating the victims of their defective products. I beg to move.
Lord Morton of Shuna: My Lords, I should like strongly to support this amendment. It is quite clear from the directive that what is being talked of in Article 7(e) is whether a defect could, as a matter of capability, be discovered. What is being talked about in Clause 4(1)(e) involves taking a producer (not the producer of the article but any producer) and finding out what he might expect to have discovered if it had existed. That is a wholly hypothetical idea and it raises also the difficulty of what happens if somebody is the only producer of the product. Where does he go to find a producer? If he has the patent on that product, he may well be the only producer. Is he the only person who is expected to have discovered the defect? It is easy for a sole producer to say, "I did not expect this. I might not be expected to know this". Surely it is better to keep to the directive, which is in words which can be understood. There does not seem to be much difficulty in interpreting the words in Article 7(e):
"was not such as to enable the existence of the defect to be discovered".
They are all words which are fairly easy to understand.
Lord Denning: My Lords, I should also like to support the amendment. We come back to the fundamental point that the duty of the legislature is to implement the directive. By implementing the directive, it can clear up ambiguities but it cannot alter the objective or the meaning of the directive. The directive is perfectly clear. Article 7(e) states:

851
"that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered".
That is perfectly simple and intelligible. Those words can be put into our statute. Instead, the words in the Bill as it stands have a different meaning; namely:
"a producer of products of the same description as the products in question".
That limits the range. The words give the man a bigger defence than he ought to have. It would be much better and more correct, in accordance with the directive, to accept the amendment as it stands, thereby putting in exactly the words of the directive.
Lord Allen of Abbeydale: My Lords, this is a pretty radical departure from the directive. I am genuinely puzzled to know why in this respect the synthesis has strayed so far from the original. It has been pointed out that Article 7(e) of the directive lays down an objective test in simple, unambiguous terms. But to my mind the provision in the Bill imports a subjective element. I am not a lawyer but the drafting of the Bill seems to bear a distinct family likeness to the existing legal test in negligence. It would be all too easy to slip into the test of whether another similar producer might reasonably be expected to have discovered the defect. The introduction of this concept of expectation strikes me as being a distinct watering down of the clear and simple provision in the directive.
I agree with noble Lords who have some doubt as to whether this is complying with the directive and whether the European Court would hold that it had succeeded in so doing. I know that there the judges are pretty robust in their interpretation and they may take the line that all we were doing was to try to carry out in our own peculiar way the intentions of the directive. I wonder why we need raise any doubt, why we cannot just do it in the simple terms of the directive. As I say, I am puzzled by this provision.
There is one point on which I should like to have the Minister's views. It is not clear to me what the position would be if the injury were caused by a one-off product and there were no other products of the same description made by either that manufacturer or any other manufacturer. Perhaps when the Minister replies he could explain how the clause would bite in that circumstance. I am sure that the best solution is to substitute what is in the Bill with the words set out in the amendment.
5 p.m.
Lord Lucas of Chilworth: My Lords, put simply, the case for the amendment is that the exclusion it makes for development risks is narrower than the exclusion made by the words that we have used in the Bill. What we are really being asked is why we have not precisely implemented the directive.
My noble and learned friend the Lord Advocate and I have made clear that our purpose in Part I is to implement the product liability directive. We do not want to do any more and we most certainly do not want to do any less. However, I have also made clear that we have done what we can in Part Ito make clear those of its provisions which are cast in terms which are unfamiliar to our law or might otherwise give rise to debate.
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We must accept that Community directives are drafted for the benefit of a number of member states and it is often not practicable to attain that degree of precision which our legislation is designed to achieve and with which our courts and practitioners are familiar. This is, of course, an argument that the noble and learned Lord, Lord Denning, put forward when we were discussing Amendment No. 2. When we were talking about the preamble being a guide to the intent of the directive, I made a note at that time that the noble and learned Lord said that if falls to the national companies to interpret the directive in accordance with their own laws and attempt to bring it near to that.
That is exactly what we are doing. I must confess that I am somewhat surprised that the noble and learned Lord should change tack on this particular amendment. Article 189 of the Rome treaty provides that directives are binding. They are binding as to the result to be achieved, but it leaves to the national authorities the choice of form and method. It must be made quite clear, in the course of the negotiations on this particular directive, that member states might need to complete a number of its provisions in the course of giving it effect in their law. I accept that this presents us with somewhat difficult choices and we have introduced different wording only when we have felt pretty sure of our ground. For example, in the case of the exception for primary agricultural products, we decided that we should not detail any further the class of products which are covered.
However, in this case we feel confident that we can and must introduce the necessary clarification. I say "must" because I accept that this provision is perceived by many as having an important impact on the scope of liability under Part I. So much is evident from our earlier debates. I say "can" because, in our view, the language we have chosen is implicit in the directive itself.
I assure noble Lords that that is a view which we have consistently maintained in the course of the negotiations. What can lead to confusion is that the directive speaks somewhat blandly, if I may say so, about "the state of scientific and technical knowledge". That in itself makes one think that there is some objective block of knowledge which is available to anyone at the press of a button and which would enable a producer to see immediately the risks of marketing a particular product.
Of course, it is not like that at all. In answer to the noble Lord, Lord Morton of Shuna, surely what we are dealing with—and I think that he would accept this—is a spectrum of information which may range from matters which are common knowledge such as perhaps the addictive effects of heroin. It might include experimental results that have been published or that are known. It might include mere speculation.
It is at this lower end of the spectrum where the risks of developing new products are likely to be significant. One can perhaps paint a scenario where in a given area, a speculative account, perhaps in some academic journal, might bear upon the potential effects of a given product. Does that mean that the practical implications must be thought through and tested by any producer of that product before he can properly put that product on the market? That is what the noble

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Lord's amendment must be designed to achieve. I suggest that it is a wholly implausible account of what the directive intends.
Given the information explosion which has occurred in our generation, the amendment would, I suggest, put any producer of a product in a wholly impossible position. Therefore the only plausible interpretation must be that the information which is available is such that any reasonable person, looking at the matter in an objective way, would say that the producer should carry out such-and-such investigations or should carry out such-and-such tests. It is the purpose of Clause 4(1)(f) to express that invitation. I believe that it does so correctly.
The noble Lord, Lord Allen, asked me about the producer of a unique product. That is quite easy if one considers what a hypothetical producer of products of that type would be expected to know and do. I have outlined a range of options to him. I point out to the noble Baroness that I do not believe that she intended to produce another effect. As I say, the only interpretation that I can place upon the amendment is that other effect. It is for that reason that I invite your Lordships to reject the amendment.
Lord Mottistone: My Lords, I support my noble friend. The noble Baroness suggested that there might be no legal difference between the two ways of putting this, but that there could well be a psychological difference. She went on to say that it was important in the interests of the consumer that the wording of the directive should be adhered to, or words to that effect.
I suggest to your Lordships that, first, if there is a possibility that there is no legal difference, it is not really right for us to bother about the psychology of the matter. That seems to me to be rather departing from what we are here to do. More important are the interests of the consumer. The whole point about the state of the art defence is to allow people to do the best they can in developing new products and new ways of doing things for the benefit of the consumer. That is the underlying principle of the state of the art defence. If one did not have such a defence or if one watered it down so much that it did not appear to people to be effective, they would not try so hard to develop new things for the benefit of the consumer. In this case, unlike the noble and learned Lord, Lord Denning, I take an opposite view from that which I took the last time we argued this point; and my noble friend has pointed out that he has changed his view. I believe that it is better to follow what the Government have in the Bill than slavishly to try to follow what is in the directive.
Baroness Burton of Coventry: My Lords, I listened very carefully to what the noble Lord, Lord Lucas, had to say. I tried very hard not to be side-tracked from the main objective by listening to the various points that he made because he really shifts his ground on whatever amendment is before the House or Committee, which I suppose is to be expected.
However, with regard to the comments of the noble Lord, Lord Mottistone, one of the complaints that we made and that I made on this amendment was that the
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draft as produced by the Government draftsman has indeed watered down what the amendment wishes to see done: it has watered down the words of the directive. We on this side of the House really believe that the provisions of this part of the Bill should follow exactly the wording of the directive. I am sorry that the Government do not feel able to agree and I feel that I must test the opinion of the House on this matter.
5.11 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 104; Not-Contents, 96.

DIVISION NO. 3

CONTENTS

Airedale, L.

Hutchinson of Lullington, L.

Allen of Abbeydale, L.

Hylton-Foster, B.

Amherst, E.

Jeger, B.

Ardwick, L.

Jenkins of Putney, L.

Attlee, E.

John-Mackie, L.

Aylestone, L.

Kennet, L.

Banks, L.

Kilbracken, L.

Birk, B.

Kilmarnock, L.

Blyton, L.

Kinloss, Ly.

Bonham-Carter, L.

Kirkhill, L.

Bottomley, L.

Leatherland, L.

Broadbridge, L.

Llewelyn-Davies of Hastoe, B

Brockway, L.

Lloyd of Kilgerran, L.

Bruce of Donington, L.

Lovell-Davis, L.

Buckmaster, V.

McNair, L.

Burton of Coventry, B.

Manchester, D.

[Teller.]

Molloy, L.

Campbell of Eskan, L.

Morris of Kenwood, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Chitnis, L.

Munster, E.

Cledwyn of Penrhos, L.

Nicol, B.

Darcy (de Knayth), B.

Ogmore, L.

David, B.

Oram, L.

Davies of Penrhys, L.

Phillips, B.

Dean of Beswick, L.

Pitt of Hampstead, L.

Denington, B.

Ponsonby of Shulbrede, L.

Denning, L.

[Teller.]

Diamond, L.

Porritt, L.

Donaldson of Kingsbridge, L.

Prys-Davies, L.

Elwyn-Jones, L.

Ritchie of Dundee, L.

Ezra, L.

Robson of Kiddington, B.

Falkender, B.

Ross of Marnock, L.

Falkland, V.

Sainsbury, L.

Fisher of Rednal, B.

Seear, B.

Fitt, L.

Serota, B.

Fletcher, L.

Shaughnessy, L.

Flowers, L.

Shepherd, L.

Gallacher, L.

Silkin of Dulwich, L.

Galpem, L.

Simon, V.

Gladwyn, L.

Somers, L.

Graham of Edmonton, L.

Stallard, L.

Greenway, L.

Stedman, B.

Grey, E.

Stewart of Fulham, L.

Griffiths, L.

Strabolgi, L.

Grimond, L.

Taylor of Blackburn, L.

Hampton, L.

Taylor of Mansfield, L.

Hanworth, V.

Tordoff, L.

Hatch of Lusby, L.

Underhill, L.

Hayter, L.

White, B.

Heycock, L.

Wigoder, L.

Houghton of Sowerby, L.

Williams of Elvel, L.

Howie of Troon, L.

Wilson of Rievaulx, L.

Hunt, L.

Young of Dartington, L.

NOT-CONTENTS

Aldington, L.

Beaverbrook, L.

Alexander of Tunis, E.

Belhaven and Stenton, L.

Auckland, L.

Beloff, L.

Bauer. L.

Belstead, L.

855

Bessborough, E.

Lane-Fox, B.

Biddulph, L.

Lauderdale, E.

Blake, L.

Layton, L.

Blyth, L.

Long, V.

Borthwick, L.

Lucas of Chilworth, L.

Boyd-Carpenter, L.

Lyell, L.

Brabazon of Tara, L.

Malmesbury, E.

Bruce-Gardyne, L.

Man ton, L.

Caithness, E.

Marley, L.

Cameron of Lochbroom, L.

Merrivale, L.

Campbell of Alloway, L.

Mersey, V.

Campbell of Croy, L.

Molson, L.

Carnock, L.

Mottistone, L.

Coleraine, L.

Mowbray and Stourton, L.

Cottesloe, L.

Nugent of Guildford, L.

Craigavon, V.

Onslow, E.

Cullen of Ashbourne, L.

Orr-Ewing, L,

Davidson, V. [Teller.]

Pender, L.

De La Warr, E.

Penrhyn, L.

Denham, L. [Teller.]

Plummer of St Marylebone,

Drumalbyn, L.

L.

Dundee, E.

Portland, D.

Eccles, V.

Reay, L.

Ellenborough, L.

Renwick, L.

Elliot of Harwood, B.

St. Aldwyn, E.

Elliott of Morpeth, L.

Saint Oswald, L.

Faithfull, B.

Sanderson of Bowden, L.

Fraser of Kilmorack, L,

Sandford, L.

Gainford, L.

Selkirk, E.

Gibson-Watt, L.

Shannon, E.

Gowrie, E.

Sharpies, B.

Gray of Contin, L.

Skelmersdale, L.

Greenhill of Harrow, L.

Stanley of Alderley, L.

Gridley, L.

Strange, B.

Grimthorpe, L.

Strathcarron, L.

Hailsham of Saint

Strathspey, L.

Marylebone, L.

Sudeley, L.

Hesketh, L.

Teviot, L.

Hives, L.

Tranmire, L.

Home of the Hirsel, L.

Trefgarne, L.

Hood, V.

Trumpington, B.

Ingrow, L.

Vaux of Harrowden, L.

Killearn, L.

Westbury, L.

Kimball, L.

Whitelaw, V.

Kinnaird, L.

Young, B.

Resolved in the affirmative, and amendment agreed to accordingly.
5.19 p.m.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 13:
Page 4, line 15, leave out from ("the") to end of line 21 and insert ("defect—

(i) constituted a defect in a product ("the subsequent product") in which the product in question had been comprised: and

(ii) was wholly attributable to the design of the subsequent product or to compliance by the producer of the product in question with instructions given by the producer of the subsequent product.").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 14:
Page 4, line 21, at end insert ("provided that the defence in paragraph (e) above shall not be available in respect of any product for which a licence is required under the Therapeutic Substances Act 1956 or a licence or certificate is required under the Medicines Act 1968.").
The noble Lord said: My Lords, I beg to move the amendment standing in my name. Your Lordships will recall that the purpose of Part I of this Bill is to make producers strictly liable for defects without the need to prove negligence, and that the directive allows an exception to be made from that main purpose in
856
respect of what have come to be known as development risks, and about which we have heard a good deal this afternoon already.
At the Committee stage the Committee decided to retain that exception in the Bill, and I am not today seeking to reopen that decision in its general application. What I am seeking to do is to provide that the defence of development risks should not be availabe for what, for brevity, I shall refer to as the manufacture of drugs.
It was the thalidomide tragedy which in part led to the setting up of the Pearson Royal Commission, and it was that tragedy which led West Germany to legislate specifically about drugs in 1978. That legislation removed the defence of development risks in their courts for drug manufacturers, and provided for a maximum of half a million deutsche marks compensation to be payable to an individual, and for a company to be liable for a maximum of 200 million deutsche marks or 12 million in one year. and required compulsory insurance to cover those amounts.
Anyone who has had concern for malformed or brain-damaged children is bound to pause and consider whether there is not good cause for treating specially products which, if things go wrong can have such a devastating effect on human life. Compensation can do only so much, but it can make a difference to the quality of life both of the victims and of their families. In our earlier discussions two main objections were raised to the proposition that the developmment risks defence should be removed altogether. First, that to do so would stifle innovation, and, secondly, that it would create great problems of insurance. I cannot myself see that either of these arguments is conclusive in respect of drugs.
On the first, there is precious little evidence that in the EC countries where this defence is not allowed either the domestic producers or those who import into those countries have been inhibited from innovation in this highly competitive but highly remunerative industry. There have been some marginal indications of this happening in the USA, but we have discussed often enough before why conditions there afford no parallel to what happens here.
On the second point, much of the harm—if indeed there be harm—has surely been done already. The Minister has rightly emphasised that with the reversal of the burden of proof the problems of establishing this defence of development risks are extremely formidable, and they are likely to succeed only very rarely, if ever. Therefore, if the insurance companies have studied the Bill and read their Hansard they will no doubt already be making their arrangements.
Although the Government expect that this defence will rarely be successfully used, they accept that it is impossible to say that another thalidomide type tragedy could never occur. The defences against the bringing into use of a drug with unforeseen tragic consequences are stronger than they were at the time the Pearson Commission was sitting. As I have said before, I doubt if we were writing now whether we would say that there was a gap here through which the victims of another thalidomide disaster could easily slip. We would I think delete "easily". But that there is a gap cannot be denied.
The precise circumstances of that earlier tragedy would obviously not be repeated, but it is a solemn thought that, as I recall, this was a drug which for a time was on sale in Germany without prescription, and in the early days there was no reason to suspect that, when taken during a pregnancy, it would have a devastating effect during a certain limited period of that pregnancy. I am certainly not competent to give an expert opinion; but my own amateur view is that I think it is quite possible that if these circumstances were to happen now this is one of the rare cases where the English suppliers might well be able to plead a defence successfully under the present provisions of this Bill.
This is not an issue where there is any prospect of there being unanimity of treatment throughout the EC countries, an issue which was thought important when we were discussing agricultural products. Article 15 of the directive allows for derogation in respect of the defence of development risks, and at the very least West Germany is likely to derogate in respect of drugs. There is a provision in the directive in that same article for a specific review of the whole defence of development risks in 10 years' time; but that is not an aspect I am pursuing this evening.
Concern was naturally expressed at an earlier stage about drugs for AIDS which might have distressing and possibly unknown side effects. But if there is a warning of the risks and the doctor and patient, in clear knowledge of those risks, decide, nevertheless, to go ahead in the hope that life will be prolonged, there is going to be no likelihood, as I see it, of a successful action under this amendment.
The drafting of the amendment may not commend itself to parliamentary counsel, particularly the draftsman of this Bill, but if necessary that can be taken care of later. What the amendment does is to raise directly whether the development risks defence should be allowed for drugs or whether it should not. For the reasons I have stated as briefly as I could manage, I suggest that it should not. I beg to move.
Lord Williams of Elvel: My Lords, in rising to support this amendment from the Opposition Benches I have no wish to repeat what the noble Lord, Lord Allen, has said in introducing his amendment. Nor indeed have I any wish to repeat the arguments that we went through in Committee on the general question of the development risks defence because I think that the noble Lord, Lord Allen, has wisely taken a rather more narrow point which is specifically the one relating to drugs or pharmaceuticals.
The position was fully set out in the Explanatory Memorandum to which the noble and learned Lord referred in Committee and to which my noble friend Lord Morton referred earlier. The Explanatory Memorandum related to the draft directive, and the draft directive included development risks. Perhaps I may quote one or two sentences from the Explanatory Memorandum; it seems to me to put in a nutshell exactly what the case is. The memorandum says:
"Liability irrespective of fault does not burden the producer to an unjustified extent. Normally he can divide the costs of damage passed on to him as a result of liability being made independent of fault among all users or consumers of products free of defects from the same range, or of his production as a whole, by including the
858
expense incurred (payment of damages or payment of insurance premiums) in his general production costs and in his pricing of the goods. Thus all consumers bear the costs of the damage to a reasonable extent".
It goes on to say that in the cases to which the noble Lord, Lord Allen, referred—where later scientific and technical knowledge made it abundantly clear that there should have been or might have been a defect in the product—if these extremely rare cases of damage were to be excluded from the producers' liability, the consumer would have to bear the risk of unknown defects. In other words instead of spreading it across the whole range of consumers it would be the person who actually suffers who has to bear the penalty.
The noble Lord, Lord Allen, referred to the work of the Pearson Commission, of which he was a distinguished member, and the conclusions that the commission came to. He told us that if the Pearson Commission were sitting today it might have been stronger in its recommendations. I regret that the Community in revising the draft directive omitted the development risks defence, as I said in Committee. Nevertheless, in concentrating on this narrow point of pharmaceuticals in support of the noble Lord, Lord Allen, I simply ask whether we as a Community will ensure that another thalidomide disaster cannot take place without a good, steady and clearly defined system of compensation, or will we not? That is the question before your Lordships' House.
5.30 p.m.
Lord Somers: My Lords, I should like to support the amendment very strongly. During the course of the past two years, while I have been making a translation of a French book on intensive farming, I have learned a great deal about some of the methods used. There is no doubt that a great many drugs and other artificial products are inserted into the artificial foods that these animals eat. For example, hormones are regularly given to calves and pigs, and since the animals, owing to their unnatural life, are in a very delicate state of health, antibiotics are given. We all know that some antibiotics are harmless while others do not agree with us. Other drugs are given, but the trouble is that so often drugs are used of whose side effects not even the scientists themselves are aware. But they are all there in the meat that one eats and one has no protection against them. Therefore, I would say that this amendment is most certainly very necessary to protect the customer from something he has no defence against.
Lord Auckland: My Lords, the intention of this amendment may be admirable, but I do not believe it would work in practice. I was in your Lordships' House and took part during the passage of the Medicines Act, as it now is. My understanding of the Medicines Act is that it was brought in to ensure that pharmaceutical products are tested more thoroughly than they were before the terrible thalidomide tragedy took place.
I do not believe that even this amendment would prevent another thalidomide tragedy in toto. Mistakes are made in the testing of any product, be it pharmaceutical or otherwise. The mandatory length of time during which a drug now has to be tested and patented has been increased. Therefore, I believe that

859
if this amendment were accepted it would have a very harmful effect on the pharmaceutical industry. I have no financial or other interest to declare in the pharmaceutical industry, but it is an industry which is vulnerable to criticism and often very rightly so, or has been in the past. It is essential, if some of the malignant diseases that we presently have are to be tested and treated, that the Bill, with all the provisos it has in it, should stand as it now is.
Lord Denning: My Lords, this is a very difficult point. At an earlier stage I said that I had been converted. At first I thought that there should not be the development risks defence in these cases. Today I have come round and say that, in proper circumstances, there should be. This amendment will not allow that defence in the case of drugs, if I may put it as simply as that. It will alter the directive as it presently stands. I agree with what my noble friend Lord Allen said—that it can be done under the directive as it stands, because under Article 13 a member state may provide in its legislation that a producer shall be liable even if he proves that,
"the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable",
him to detect a defect in it. In other words, a member state can provide in its legislation for such a procedure as this—that is, it can say that in the case of a drug, as an example, the manufacturers shall be liable even though they were ignorant of the defect at the time.
A member state may derogate, but if it does that it has to hold the proposal in abeyance for nine months and it has to go to the Commission before the derogation takes effect. I would suggest that it is better not to implement this amendment at the moment, but to leave the legislation as it stands, to see whether any other member state will derogate in this way and then to go along with that. At the moment I feel it would be premature to agree to this amendment. I should prefer to see the Bill as it stands.
Lord Porritt: My Lords, I am bound to say that I was absolutely shocked when I saw this amendment down today, particularly to see that it had the support of such eminent noble Lords and noble Baronesses. I must declare a direct interest, as I am a director, very much a non-executive director, of a pharmaceutical company. But if, as there seems to be little doubt, the proposers of this amendment are suggesting a specific exclusion of the pharmaceutical profession from the possibility of using a defence that anybody else can use—the development risks defence—then I suggest to your Lordships that that is illogical, unfair, highly discriminating and very much against the benefit of the community. Those, I realise, are harsh words, but I mean them. I am not at all biased or on one side of the picture. In fact because I have made this statement I should like to put some words on the other side of the picture.
Your Lordships will realise that there are already the strictest possible regulations and years and years of intricate testing of every drug that goes on to the market. The Government also have a committee for the safety of medicines through which every drug has to go before it can get a licence and be put on the market. These are long, weary tests—12 years of them as a rule—and they can cost £100 million. These drugs
860
are not just developed for fun: they are there for a definite purpose and it is only fair that one should say something about this continual criticism of the pharmaceutical industry.
There is not only a sense of apathy, but my feeling is that there is actually antagonism against the pharmaceutical profession and it is not limited to any one section of this House or of the community. As a matter of fact, the community appreciates the pharmaceutical industry much more than some other people—shall we say?—mentioning no names.
I should like to put forward just one or two points. First of all, we are talking about risks. It is a cliché to say that life without risks is not worth living, but it is true. It is infinitely more true to say that the risks of coming to any harm from a drug that goes on the market at the moment are infinitesimal compared with the risks of crossing a street—or the Channel.
That being so, it is quite unfair that the pharmaceutical industry should be excluded from the possibility—I repeat, the possibility—of using this defence, remembering that it puts the onus on the producer to prove that he has done nothing wrong. That is a new approach altogether. If I may refer for one moment to the European Community countries mentioned by the noble Lord, Lord Allen, they are not as interested as we are, for the simple reason that they are not innovative. West Germany produces a few new drugs but none of the others do at all. We are miles ahead of all the rest of them, and we are miles ahead of West Germany. That is a very important point. The pharmaceutical industry is very much an innovative industry. I should like to put to your Lordships just one or two points about this industry which is so unfairly criticised.
I ask your Lordships to look at the obstacles and restrictions that have been put in its way, in this House among other places, in the last few years: limited lists, a cut-down on possible profits, the new PPRS, so called, and the small but very important licence-of-right question in respect of which we still await an answer. These are all aimed at the pharmaceutical profession, which, if I may say so, is basically trying to find drugs and compounds which will cure human illness and alleviate the symptoms where the illness cannot be cured. It is a beneficent industry. It is not trying to kill people; it would be too ridiculous to think that. It is working first and foremost for the benefit of the community.
It also employs 75,000 people, most of them skilled. There are very few industrial troubles indeed in the industry. It is the fourth largest producer, through exports, as regards our balance of trade. This year it has gone up yet again to the fairly respectable sum of £850 million. It employs 5,000 graduate scientists at a time when we are getting a bit worried about a new brain-drain of scientists from the country. As I say, it employs 5,000 of them and also does a great deal to increase the prestige of this country abroad, to say nothing of attracting considerable capital from abroad as well as at home.
Here is an industry which is doing a great deal for the community, from the basis upwards with the idea of curing diseases that are still doing enormous harm to the community—not only AIDS, but cancer, high blood pressure and so on. I could quote a long list. The

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industry is working on these products for your Lordships' benefit and for the benefit of all patients. Therefore it needs support. I should have thought that a government would see that an industry as good as this needs support and not criticism.
Therefore I beg your Lordships to think seriously about this suggested amendment. It seems to me the cruellest thing to suggest that it should be excluded from the chance of saving itself from the most enormous damages, for which it is not at all responsible. It is quite impossible to cover every potential trouble. We know in this life that there are certain risks which are just totally unpredictable. That applies in every sphere and it applies equally to drugs. I do not think that a problem such as that with thalidomide is likely to occur again. The restrictions, the tests and the regulations are so strong. I trust that your Lordships will see that there is another side to the picture and will not accept this amendment.
5.45 p.m.
Baroness Robson of Kiddington: My Lords, before the noble Lord sits down, may I ask him a question? He mentioned in his speech that there are only two countries in Europe which are innovators in the drug field: Germany and this country. Am I mistaken in believing that drugs are not protected in Germany?
Lord Porritt: My Lords, with permission, let me say that drugs are not protected except that there is a ceiling, an upper limit, for which compensation can be given.
Lord Mottistone: My Lords, I should like briefly to endorse the splendid speech of the noble Lord, Lord Porritt, and to make just two or three points. The first is that the noble Lord, Lord Allen, rather dismissively referred to "that highly profitable industry", as though that was somehow a wrong thing to be. There is an underlying theme, if I may put it like that, that somehow wealth creation is bad. But wealth creation is essential to the survival of this country. We could have none of the good things that we want if we did not have wealth created by companies in big industries such as the pharmaceutical industry. Quite indepen-dently of everything else, they need to be encouraged to compete in the world market and that should be a thought underlying all our discussions in this House, because without that the country will not survive.
The second point is that my noble friend Lord Auckland pointed out to your Lordships that since the thalidomide disaster the regulations and legislation for the industry have been greatly tightened up. That surely in itself is enough of a special protection for that area.
My final point is this. Let us not get it wrong. People are not going to try to develop new products in any industry if the threat to them is too great. We must keep that as the underlying thought. As to the special pleading, if I may so describe it, of the noble Lord, Lord Allen, having been on the Pearson Commission and all that, I do not think that is applicable in this case at this time. I hope that your Lordships will not support this amendment.
Earl De La Warr: My Lords, I join my noble friend in congratulating the noble Lord, Lord Porritt, on his robust defence of the pharmaceutical industry. Let us all be quite clear that if we want research into such things as cancer, arthritis, AIDS and so on, we have to allow the industry to spend enormous sums of money on it. If we permitted this amendment to go through, we would by definition be saying, "You are not protected as in our opinion you should be".
At Second Reading we discussed the subject thoroughly, and the House came to a conclusion. I am quite sure that what was happening in the pharmaceutical industry was very much in our minds. To my mind, it seems ridiculous to have a risks defence and to exclude the pharmaceutical industry of all industries. They are the people probably doing more in the way of research than anyone else in this country.
Lord Lucas of Chilworth: My Lords, we discussed the inclusion of the development risks defence in Part I of the Bill at some length at Committee stage, and your Lordships will recall that after a Division, the amendment which aimed to remove that defence was disagreed to. It is quite apparent that before us we have an amendment which would remove the availability of that defence in respect of medicines and drugs covered by the relevant Acts. It is apparent from the form of the amendment that the noble Lord, Lord Allen, and other noble Lords opposite accept that the defence should be available generally. But I have to express real surprise that it should not be available to the manufacturers of drugs.
Of course, I am aware that the effect of one particular drug was the main reason why the noble Lord, Lord Allen of Abbeydale, made his objection at Second Reading and later at Committee stage. We discussed that case at length and, where the development risks defence would have been relevant in that case, the House agreed that it would be impossible to make a decision in that area.
I am not going to rehearse all the arguments for the retention of the development risks defence which we have debated previously. However, I should like to refer to a few points that have been made. The noble Lord, Lord Allen, referred to Germany and the introduction of thalidomide which was sold without prescription. He knows that since that time there has been a requirement to test for potential damage in pregnancy. In Germany, although there was evidence to suspect foetal damage, there was then no require-ment to test for that damage. As my noble friend Lord Auckland reminded us this afternoon, the Medicines Act brought in a far greater degree of supervision and of testing requirement. Here, as in the case of the EC pharmaceutical directives, the case that applied in Germany just does not apply.
The noble Lord, Lord Allen, touched upon, in particular, the drugs for AIDS. He suggested that the foreseen and unforeseen side-effects of an AIDS drug should be taken care of by warnings applied to the bottles or warnings given by physicians. But he stretches my imagination a little far. How on earth could a warning be given by anybody about unforeseen effects? The noble Lord, Lord Williams, majored on the question of compensation. He will

863
know, and I am sure he will make the judgment, that the directive holds a balance between all the needs of the community, and compensation for the individual is, of course, one of them. However, I believe—and here I may disagree with the noble Lord—that this is outweighed by the need to have the ability to make important and technological advances.
The noble and learned Lord, Lord Denning, supported the inclusion of the development risks after changing his mind during the course of the Committee. He has no doubt given this further thought and he remains of that changed mind. He agreed that the imposition of strict liability without the defence for a drugs manufacturer may hamper valuable research and tests in regard to all drugs for the benefit of humanity as a whole. That is where I think he disagreed with the warning which the noble Lord, Lord Allen, mentioned. My noble friend Lord Bruce-Gardyne is concerned that we might make it impossible for drugs of the type which we are discussing to be available to the consumer.
Perhaps I may remind the House of what the noble Lord, Lord Hacking, said when we completed our Committee debate. He acknowledged the benefits which society has gained from the development of new drugs. He then went on to consider the impact of absolute liability, on the pharmacuetical industry and how it would affect that industry's research and development. As the noble Lord pointed out, how the industry itself will perceive that problem is important.
I do not believe that the noble Lord, Lord Porritt, in any way defended the industry. I acknowledge that his knowledge is a good deal greater than that of a non-executive director of a pharmaceutical company. He believed that some harsh, unjust and discriminating things were said and done about the industry. He pointed out, as a number of noble Lords have done on a number of occasions, the importance of that industry to this country in employment terms and in earnings terms but, more importantly, in the innovation that it carries out. It is by far the most innovative industry of its kind in the world. There is no doubt about that; it is a world leader.
I believe, as I think the noble Lord, Lord Porritt, said—and he was supported by noble Lords behind me—that if the industry were hindered in its research, we could very easily lose those many advantages which have been outlined. It is for just this sort of industry, which operates at the limits of scientific knowledge for the benefit of all, that the development risks defence is so important. At a time when all of us are conscious of the problems of AIDS, cancer, and so on, not only in this country but throughout Europe and the rest of the world, I find any proposal which would restrict research into possible cures for those diseases difficult if not impossible to accept.
That is my main argument. I should perhaps add that I have some doubt as to whether we can, under the provisions of the directive, make specific provision for any particular sector of industry. The main thrust of my argument, with which I am confident the House will agree, is that to restrict in any way the development of new drugs or medicines cannot be in the interests of anybody at all. I urge your Lordships to reject the amendment.
Lord Allen of Abbeydale: My Lords, I am grateful to the Minister and to those noble Lords who have taken part in this debate, including the noble Lord, Lord Porritt, for his spirited defence of an industry which is not under attack. I am grateful to the Minister and to the noble Lord for the eloquent way in which they expanded the point which I tried humbly to make about the improvements which have taken place since the Pearson Commission sat in the control and supervision of new drugs. The noble Lord, Lord Porritt, will be comforted by the fact that he sees the possibility of another tragedy being so remote as to be reflected in the small insurance premiums which the companies will no doubt be called upon to pay. I am sorry that the noble Lord the Minister dismissed so light-heartedly the validity of a warning about the unknown consequences of using drugs against AIDS, which I thought was a simple enough warning. I am sorry that he, in his view, no doubt, has been so inadequately supported from behind that he has had to quote the views of noble Lords who are not present this evening but who managed to convey their views at an earlier stage. I am under no such obligation.
I am told that it is ridiculous to talk about picking out drugs for special treatment. I am sorry that the West Germans behave in this ridiculous way. No doubt that is their concern. My noble and learned friend Lord Denning suggested that we should wait and see what other people did. I venture to suggest that Germany, at any rate, might get over the legal complications touched upon by the Minister and derogate in respect of drugs. For once in a way, I think that this country might set an example and not meekly follow in the paths of others.
There is talk about experiments with drugs. When we talk about experiments, I find it hard to forget the thalidomide children. When we divide, as we shall, let the House be fully aware of what it is deciding. The Government have accepted that it is impossible to say that another thalidomide-type tragedy could never occur, however fervently we hope that it never will. Those who know me know that I am the last person to be over-dramatic or over-emotional. However, if such a disaster should occur, is it fair and right that the victims should be left with the likelihood that they could not establish a claim to compensation, as the Bill at present provides? Or is there a case for putting on to the drug manufacturers, the stories of whose wealth and prosperity fill the headlines of our city pages, an obligation to carry their share of the responsibility, as this amendment proposes? I invite the House to decide.
6.3 p.m.
On Question, Whether the said amendment (No. 14) shall be agreed to?
Their Lordships divided: Contents, 95; Not-Contents, 110.

DIVISION NO. 4

CONTENTS

Airedale, L.

Banks, L.

Allen of Abbeydale, L.

Birk, B.

[Teller.]

Blyton, L.

Amherst, E.

Bonham-Carter, L.

Ardwick, L

Bottomley, L.

Attlee, E.

Brockway, L.

Aylestone, L.

Brooks of Tremorfa, L.

865

Bruce of Donington, L.

Leatherland, L.

Buckmaster, V.

Llewelyn-Davies of Hastoe, B

Burton of Coventry, B.

Lloyd of Kilgerran, L.

Campbell of F. skan, L.

Longford, E.

Carmichael of Kelvingrove,

Lovell-Davis, L.

Cledwyn of Penrhos, L.

McNair, L.

Darcy (de Knayth), B.

Manchester, D.

David, B.

Molloy, L.

Da vies of Penrhys, L.

Morris of Kenwood, L.

Dean of Beswick, L.

Morton of Shuna, L.

Denington, B.

Nicol, B.

Diamond, L.

Ogmore, L.

Donaldson of Kingsbridge, L.

Oram, L.

Donoughue, L.

Phillips, B.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ezra, L.

Ponsonby of Shulbrede, L.

Falkender, B.

[Teller.]

Falkland, V.

Prys-Davies, L.

Fisher of Rednal, B.

Ritchie of Dundee, L.

Gallacher, L.

Robson of Kiddington, B.

Galpern, L.

Ross of Marnock, L.

Graham of Edmonton, L.

Sainsbury, L.

Grey, E.

Seear, B.

Griffiths. L.

Serota, B.

Grimond, L.

Shepherd, L.

Hampton, L.

Silkin of Dulwich, L.

Hams of Greenwich, L.

Simon, V.

Hatch of Lusby, L.

Somers, L.

Hayter, L.

Stallard, L.

Heycock, L.

Stedman, B.

Houghton of Sowerby, L.

Stewart of Fulham, L.

Howie of Troon, L.

Strabolgi, L.

Hunt, L.

Taylor of Blackburn, L.

Hutchinson of Lullington, L.

Taylor of Mansfield, L.

Ingleby. V.

Underhill, L.

Jeger, B.

White, B.

Jenkins of Putney, L.

Wigoder, L.

John-Mackie, L.

Williams of Elvel, L.

Kilbracken, L.

Wilson of Rievaulx, L.

Kilmarnock. L.

Winterbottom, L.

Kirkhill, L.

Young of Dartington, L.

Lawrence, L.

NOT-CONTENTS

Aldington, L.

Ellenborough, L.

Auckland, L.

Elliott of Morpeth, L.

Bauer, L.

Erne, E.

Beaverbrook, L.

Erroll, E.

Belhaven and Stenton, L.

Fanshawe of Richmond, L.

Beloff, L.

Fraser of Kilmorack, L.

Belstead, L.

Gainford, L.

Bessborough. E.

Gibson-Watt, L.

Biddulph, L.

Gray of Contin. L.

Birdwood, L.

Greenhill of Harrow, L.

Blake, L.

Greenway, L.

Blyth, L.

Gridley, L.

Boardman, L.

Grimthorpe. L.

Borthwick, L.

Hailsham of Saint

Boyd-Carpenter, L.

Marylebone, L.

Brabazon of Tara, L.

Hesketh, L.

Bruce-Gardyne, L.

Hives, L.

Butterworth, L.

Home of the Hirsel, L.

Caithness, E.

Hood, V.

Cameron of Lochbroom, L.

Hooper, B.

Campbell of Alloway, L.

Hylton-Foster, B.

Campbell of Croy, L.

Ingrow, L.

Carnock, L.

Kaberry of Adel, L.

Coleraine, L.

Killearn, L.

Colwyn, L.

Kimball, L.

Cottesloe, L.

Kinloss, Ly.

Cross, V.

Kinnaird, L.

Cullen of Ashbourne, L.

Lane-Fox, B.

Davidson, V. [Teller.]

Lauderdale, E.

De La Warr, E.

Layton, L.

Denham, L. [Teller.]

Lindsey and Abingdon, E.

Denning, L.

Liverpool, E.

Dormer, L.

Long, V.

Dundee, E.

Lucas of Chilworth, L.

Eccles, V.

Lyell, L.

Eden of Winton. L.

Malmesbury, E.

866

Manton, L.

Sanderson of Bowden, L

Vlarley, L.

Sandford, L.

Vterrivale, L.

Selkirk, E.

VIolson, L.

Shannon, E.

VIottistone, L.

Sharpies, B.

Vlowbray and Stourton, L.

Shaughnessy, L.

Vlunster, E.

Skelmersdale, L.

Nugent of Guildford, L.

Stanley of Alderley, L.

Onslow, E.

Strange, B.

Orr-Ewing, L.

Strathcarron, L.

Pender, L.

Strathclyde, L.

Penrhyn, L.

Sudeley, L.

Plummer of St Marylebone,

Teynham, L.

L.

Tranmire, L.

Porritt, L.

Trefgarne, L.

Portland, D.

Trumpington, B.

Reay, L.

Vaux of Harrowden, L.

Renwick, L.

Westbury, L.

St. Aldwyn, E.

Whitelaw, V.

Saint Oswald, L.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.9 p.m.
Clause 5 [Damage giving rise to liability]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 15:
Page 4, line 36, leave out from ("itself") to end of line 38.
The noble Lord said: My Lords, the purpose of the amendment is to bring the Bill into line with the directive. Article 9 of the directive says quite simply:
" 'Damage' means: damage to, or destruction of, any item of property other than the defective article itself, with a lower threshold of 500 ECU. provided that the item of property".
The Bill says:
"A person shall not be liable under section 2 above in respect of any defect in a product for the loss of or any damage to the product itself or for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it".
In our view the last phrase,
"or for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it",
does not comply with the directive, which is quite specific in relating the exclusion only to the defective product itself.
It is quite clear from the Bill and from the directive that a component part is itself a product. If nowhere else that is made clear in Amendment No. 13 to which we have just agreed. It refers to,
"a defect in a product ('the subsequent product') in which the product in question had been comprised".
It is quite clear, and is utterly clear from the terms of the directive itself, that a component is a product. The argument goes like this. If I happen to buy a defective tyre for my car and the car crashes because of the defective tyre, I can get damages because there is no doubt that the tyre is a defective product. But if I buy a car with a defective tyre, the defective tyre is a defective product but, according to the Government, I cannot get damages for that. There seems to be no logic there and quite apart from logic there seems to be nothing in the directive itself which says that. The directive says,
"other than the defective article itself".
At Committee stage the noble and learned Lord the Lord Advocate referred to the Explanatory Memorandum. There is a difficulty in referring to the

867
Explanatory Memorandum because it was delivered with the draft directive on 9th September 1976. We are dealing with a directive which was passed by the Community in July 1985 and which in many material respects is different. It is a little difficult to see how an Explanatory Memorandum produced nine years earlier for a different directive can be held binding as to the intention of the directive, which says something different. Even if it is so, one finds in pargraph 7 of the Explanatory Memorandum:
"Article 2 defines the meaning of the term 'producer'. It covers all persons who were involved on their own responsibility in the process of producing the article. It is obvious that where there are several producers of component parts of an article, only those whose contribution was defective and therefore made the end product defective are liable".
That is quite specific. It says that the liability is to go to the person who made the defective component. Article 9 refers to,
"damage to, or destruction of, any item of property other than the defective product itself—
If I may return to my example of a defective tyre on a car, it is a strange idea that if one buys a car with a defective tyre, or a computer with defective software or a defective chip, one can sue the manufacturer for damage caused but one cannot recover the cost of the car or the cost of the computer. That is not what the directive says. Qne is entitled to choose as to whether the defective product is the component—because a component is within the definition of a defective product—or the article into which many hundreds of components may be built to make another article. In my submission it is quite clear that what is intended is not what is said in the Bill. I beg to move.
6.15 p.m.
Lord Denning: My Lords, I should like to support the amendment. We again come back to the directive. The directive is quite simple. Article 9(b) says:
"damage to, or destruction of, any item of property other than the defective product itself'.
Therefore one cannot recover for the defective tyre but in the instance given by my noble friend, what about the motor car? According to the Bill a person is not liable,
"for the loss of or any damage to the whole or any part of any product which has been supplied with the product".
In other words, he is not liable for the damage to the whole car. That cannot be right. The directive is perfectly simple and the Bill as it stands alters the directive which it ought not to do, and this might be interfered with by the European Court. The amendment is correct and the Bill ought to omit those two lines in subsection (2).
Lord Airedale: My Lords, I too had difficulty with this subsection and I managed to send a note to the Minister last week explaining my difficulty. My difficulty is with the last words of the subsection which refers to a product,
"which has been supplied with the product in question comprised in it".
To take it shortly, if a car is supplied with a component and the component fails, the subsection applies because the component has been supplied with the car. If the component fails, is replaced
868
subsequently and the replacement fails, the subsection does not apply because the component has not been supplied with the vehicle. I wonder whether the Government intended that result to flow.
I also took an example of a motor car. I was not thinking about tyres but about cigarette lighters. I was thinking of the manufacturer who says, "Now that people smoke less, I shall no longer supply cigarette lighters in the dashboards as standard fittings but I shall supply them as optional extras for those who want them". A customer orders a car with the cigarette lighter on the dashboard as an optional extra. The subsection applies because the component has been supplied with the car. Another customer orders a standard model and after a week or two he misses the cigarette lighter in his old car and orders one as an optional extra. The cigarette lighter jams in the "on" position and starts a fire in the wiring of the car and damages or destroys the car. In the first instance where it is supplied with the car, the subsection applies; but in the second case where it has been bought subsequently as an optional extra and the same disaster occurs, the subsection does not apply because the component has not been supplied with the car.
I am not very clever about the directive, but I cannot think that this different result in the two cases is what was intended when this subsection was drafted, and I believe for that reason that the subsection ought to be looked at again.
Lord Cameron of Lochbroom: My Lords, I did set out in Committee the reasoning behind this part of Clause 5. I then pointed out, and I do so again, that there is in the directive a clear distinction to be drawn between personal injuries or damage to other property caused by a defective product and self-destruction or lesser damage to the defective product itself. The former—that is to say, personal injury or damage to other property—is properly covered by the directive. The latter—that is, destruction or damage to the product itself—is a matter for legislation dealing with the quality of goods.
To use the example of the motor car, if I am supplied with a defective motor car we are agreed—indeed as a result of an earlier amendment to make this perfectly clear—that the producer of the motor car is responsible for the safety of all the parts in it.
Let us assume that the motor car runs into a building and damages the building and injuries the occupants of the building and the motor car. There is no difficulty with the directive: the property damaged is covered by the directive; the personal injuries to the occupants of the motor car and of the building are also covered by the directive. If, on the other hand, there is a defect in the motor car and, for instance, as has been suggested, the battery blows up and destroys the car, if that battery was in fact supplied with the car, then the destruction raises quite different considerations because that is a product which has destroyed itself. It was clearly not of merchantable quality and accordingly would be treated by the law which governs quality of goods rather than that governing their safety.
Accordingly, the directive and the first part of this subsection do not cover damage done by the product

869
itself. That is something which is covered by an extensive and well-developed body of existing law. For that reason the words which this amendment seeks to remove are included in the Bill because the loss of the car would be covered by the ordinary law concerning the quality of goods. The owner of the motor car would not be left without a remedy; he could go to his supplier and pursue a claim under the Sale of Goods Act. No doubt he could also—if he could find out who the battery' had been manufactured by—pursue a claim under the ordinary rules of law.
Perhaps I may just refer, as I did in Committee, to the Commission's explanatory memorandum—and I accept that is was produced with the 1976 draft of the directive. This part of the directive has not been affected in any substantial sense since that time and I suggest that the Commission's explanatory memorandum is as helpful now as it was before in this matter.
What was said in paragraph 20 of the memorandum by the Commissioner was this:
"Claims for compensation in respect of damage to or the destruc-tion of the defective product itself are excluded."
It goes on slightly later:
"Liability in respect of the quality of a newly-purchased article, its fitness of particular purposes, including its freedom from defects in the sense that it will not be damaged or destroyed in its entirety as a result of defects in part of it, is normally governed in the laws of all the Member States by the law relating to the sale of goods. This field is not affected by the directive."
I have to say that this amendment does not accord with the directive, despite what the noble Lord opposite has said. The noble Lord, Lord Airedale, did raise a point expanding upon what I think the noble Lord, Lord Morton. had said earlier about the question of the tyre. Why, he asks, if a defective tyre is purchased separately and fitted to the motor car and causes an accident in which that motor car is destroyed, may I sue for destruction of the motor car whereas, if I have a motor car with a defective tyre already fitted to it, I may not do so?
This is because of the way in which the word "product" is used and, if one looks at Articles 8 and 9, for instance, one can sec that one is talking effectively about the product which is supplied to the person who is claiming damage in this case. One looks for instance at Article 8(2), where there is reference to a defect in the product and the fault of the injured person. Then one comes to Article 9(b):
"damage to, or destruction of, any item of property other than the defective product itself—.
For instance, a manufacturer may supply a car with a defective radio in it and the radio may cause the car to he destroyed. So far as the directive is concerned, there is no claim against the car manufacturer for the product which he has supplied. That has always been clear. Neither is there a claim under the directive against the manufacturer of the radio in the car in which it was a component. If a similar defective radio were bought by a consumer and subsequently installed in an identical motor car and the radio destroyed the motor car, there would be different consequences. In that case the radio in the car would be regarded as a different product under the directive and, although one would not be able to claim for damage to the
870
defective radio, one would be able in that case to claim for damage to the car.
I accept that there is a distinction—the one to which the noble Lord, Lord Airedale, has referred. It may perhaps appear to be an artificial distinction, but it does reflect the intention of the directive that the responsibility should be concentrated on the manufacturer of the finished product. It is for that reason that earlier this afternoon the House accepted an amendment which was put forward in the name of my noble friend to make that abundantly plain.
I believe that this is largely the reason why the directive is not fully worked out in relation to components and it is one of the areas that we have endeavoured to complete in Part I. I would add that the point which the noble Lord, Lord Airedale, raised was one which was expressly considered in the course of negotiations about the directive and it was agreed that the distinction was right as a matter of interpretation of the directive. For those reasons, which include the reasons I put forward earlier in Committee, I have to advise the House that the amendment is not in accord with the directive. therefore I cannot accept it.
Lord Morton of Shuna: My Lords, I am bound to say that I find the noble and learned Lord's explanation of the Government's position wholly unacceptable. Of course, Article 8 does not deal with products as opposed to components or finished articles as opposed to components; it deals with the right of contribution when someone else, even the consumer, is also at fault. I have already referred to Article 9, which states that,
"'damage' means … damage to, or destruction of, any item of property other than the defective product itself—.
That is all. It does not say anything about finished articles or about components. One then refers to Article 2 to ascertain what a product is, It reads:
"For the purpose of this Directive 'product' means all movables, with the exception of primary agricultural products and game, even though incorporated into another movable".
Therefore, the tyre incorporated into the car—or the battery or cigar or cigarette lighter—is still a product. That is what Article 2 states. One then moves to Article 9, which reads:
"damage to or destruction of any item of property other than the defective product itself".
If only the tyre is defective there is nothing in Article 9 that covers that. It would have been quite easy, if that is what the Council thought was required in the directive, to put in the words which are in Clause 5(2) and which I wish to take out. It would be quite easy to put in:
"for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it".
All I can say is that if the Council had wanted that in Article 9 it could have included it in happier English; but perhaps that is a different point. However, this is a point on which I must seek the opinion of the House.
6.32 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents, 95.

DIVISION NO. 5

CONTENTS

Airedale, L.

John-Mackie, L.

Allen of Abbeydale, L.

Kjlbracken, L.

Amherst, E.

Kilmamock, L.

Ardwick, L.

Kirkhill, L.

Attlee, E.

Lawrence, L.

Aylestone, L.

Llewelyn-Davies of Hastoe, B

Birk, B.

Longford, E.

Blyton, L.

Lovell-Davis, L.

Bonham-Carter, L.

McNair, L.

Brockway, L.

Mishcon, L.

Brooks of Tremorfa, L.

Molloy, L.

Burton of Coventry, B.

Morris of Kenwood, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Chitnis, L.

Mountevans, L.

Cledwyn of Penrhos, L.

Munster, E.

David, B.

Nicol, B.

Davies of Penrhys, L.

Ogmore, L.

Dean of Beswick, L.

Oram, L.

Denning, L.

Phillips, B.

Diamond, L.

Ponsonbv of Shulbrede, L.

Donoughue, L.

[Teller.]

Elwyn-Jones, L.

Prys-Davies, L.

Enroll, E.

Robson of Kiddington, B.

Falkender, B.

Ross of Marnock, L.

Fisher of Rednal, B.

Russell of Liverpool, L.

Gallacher. L.

Sainsbury, L.

Galpem, L.

Seear, B.

Graham of Edmonton, L.

Serota, B.

[Teller.]

Silkin of Dulwich, L.

Grey, E.

Simon, V.

Grimond, L.

Stedman, B.

Hampton, L.

Stewart of Fulham, L.

Hanworth, V.

Taylor of Blackburn, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hatch of Lusby, L.

Underhill, L.

Heycock, L.

White, B.

Hooson, L.

Williams of Elvel, L.

Houghton of Sowerby, L.

Wilson of Rievaulx, L.

Howie of Troon, L.

Winterbottom. L.

Hutchinson of Lullington, L.

Young of Dartington, L.

Jeger, B.

Ypres, E.

Jenkins of Putney, L.

NOT-CONTENTS

Aldington, L.

Dormer, L.

Ampthill, L.

Dundee, E.

Auckland, L.

Eccles, V.

Bauer, L.

Eden of Winton, L.

Beaverbrook, L.

Elliot of Harwood, B.

Belhaven and Stenton, L.

Elliott of Morpeth, L.

Belstead, L.

Erne, E.

Bessborough, E.

Faithfull, B.

Biddulph, L.

Fraser of Kilmorack, L.

Birdwood, L.

Gray of Contin, L.

Boardman, L.

Gridley, L.

Borthwick, L.

Hailsham of Saint

Brabazon of Tara, L.

Marylebone, L.

Brougham and Vaux, L.

Hesketh, L.

Bruce-Gardyne, L.

Hives, L.

Butterworth, L.

Home of the Hirsel, L.

Caithness, E.

Hood, V.

Cameron of Lochbroom, L.

Hooper, B.

Campbell of Alloway, L.

Hylton-Foster, B.

Campbell of Croy, L.

Ingrow, L.

Carnock, L.

Kaberry of Adel, L.

Coleraine, L.

Kimball, L.

Colwyn, L.

Kinnoull, E.

Cottesloe, L.

Lane-Fox, B.

Craigavon, V.

Lauderdale, E.

Cross, V.

Layton, L.

Cullen of Ashboume, L.

Lindsey and Abingdon, E

Davidson, V. [Teller.]

Liverpool, E.

De La Warr, E.

Long, V.

Denham, L. [Teller.]

Lucas of Chilworth, L.

872

Lyell, L.

Saint Oswald, L.

Malmesbury, E.

Sanderson of Bowden, L

Marley, L.

Sandford, L.

Merrivale, L.

Selkirk, E.

Mersey, V.

Shannon, E.

Mottistone, L.

Sharpies, B.

Mountgarret, V.

Skelmersdale, L.

Mowbray and Stourton, L.

Strange, B.

Onslow. E.

Strathcarron, L.

Orr-Ewing, L.

Strathclyde, L.

Pender, L.

Sudeley, L.

Penrhyn, L.

Swinfen, L.

Plummer of St Marylebone,

Tranmire, L.

L.

Trefgarne, L.

Reay, L.

Trumpington, B.

Renton, L.

Vaux of Harrowden, L.

Renwick, L.

Whitelaw, V.

St. Aldwyn, E.

Wise, L.

St. John of Bletso, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.39 p.m.
Clause 6 [Application of certain enactments etc.]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 16:
Page 5, line 26, leave out ("and")
The noble and learned Lord said: My Lords, with the leave of the House, I shall speak also to Amendments Nos. 17 and 18. It will be easier to explain the reasons for Amendments Nos. 16 and 17 if I begin by turning to Amendment No. 18. Amendment No. 18 ensures that Part H of the Administration of Justice Act 1982, which makes various provisions relating to damages for personal injuries in Scotland, applies in the case where a person is liable to pay damage under Clause 2 of the Bill. It makes it clear that the damage for which a person may be liable under Clause 2 will include damages for services rendered to the injured person by a relative or by the injured person to a relative and that provisional damages may be awarded in appropriate cases.
As for Amendment No. 16, when the Committee agreed to Amendment No. 53 moved by the noble Lord, Lord Morton, which is reflected in the prints of the Bill before the House, that resulted in a new paragraph (c) to Clause 6(1). It was also necessary to introduce the word "and" at the end of paragraph (b). At the same time, we should have removed the word "and" from paragraph (a). The purpose of this amendment is to remedy that omission.
The reason for Amendment No. 17 then becomes obvious. The "and" there is superfluous and falls to be removed. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 17:
Page 5, line 30 leave out ("and").
The noble and learned Lord said: My Lords, I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 18:
Page 5, line 33, at end insert ("; and

(d) for the purposes of Part II of the Administration of Justice Act 1982 (damages for personal injuries, etc.—Scotland), by an act or omission giving rise to liability in that person to pay damages.")

The noble and learned Lord said: My Lords, I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 19:
Page 5, line 33, at end insert—
("(1A) Where—

(a) a person's death is caused wholly or partly by a defect in a product, or a person dies after suffering damage which has been so caused:

(b) a request such as is mentioned in paragraph (a) of subsection (3) of section 2 above is made to a supplier of the product by that person's personal representatives or, in the case of a person whose death is caused wholly or partly by the defect, by any dependant or relative of that person; and

(c) the conditions specified in paragraphs (b) and (c) of that subsection are satisfied in relation to that request,

this Part shall have effect for the purposes of the Law Reform (Miscellaneous Provisions) Act 1934, the Fatal Accidents Act 1976 and the Damages (Scotland) Act 1976 as if liability of the supplier to that person under that subsection did not depend on that person having requested the supplier to identify certain persons or on the said conditions having been satisfied in relation to a request made by that person.").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 1. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Loch broom Lord Cameron of Loch broom moved Amendment No. 20:
Page 5, line 37, after ("is") insert ("or has been").
The noble and learned Lord said: My Lords, with the leave of the House, I shall take Amendment No. 21 with this amendment. These two minor amendments concern the application of the Congenital Disabilities (Civil Liability) Act 1976, which gives a cause of action to a person born disabled as a result of an occurrence affecting a parent for which another person is answerable.
Under Clause 6(2), a person will be treated as answerable if he is liable under Clause 2 of the Bill. Amendment No. 20 adds "or has been". That is intended to prevent a claim under the 1976 Act, as applied, from being defeated by an argument that the person concerned was not sued in due time. Originally we did not think that it was necessary to spell that out, but there is a provision in Section 1 of the 1976 Act to deal with the point, and we considered that it would be safer to put the matter beyond doubt. Amendment No. 21 is purely consequential upon Amendment No. 20. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 21:
Page 5, line 40, leave out ("had").
The noble and learned Lord said: I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 22:
Page 6, line 6, at end insert—
("(5A) It is hereby declared that liability by virtue of this Part is to be treated as liability in tort for the purposes of any enactment conferring jurisdiction on any court with respect to any matter.").
The noble and learned Lord said: In speaking to this amendment I will, with the leave of the House, speak also to Amendments Nos. 27, 100 and 101. This group of amendments arises from an amendment tabled by the noble Lord, Lord Morton, in Committee. At that time, as he said, he wished for a provision ensuring that for the avoidance of doubt liability under this part of the Bill would be a matter relating to tort, delict or quasi-delict. His main concern, as he made clear, was to attract to the Bill the provisions of the Civil Jurisdiction and Judgments Act 1982.
I undertook at that time to look at the matter, being well disposed to the general thrust of the amendment. These amendments are the consequence of that. Your Lordships will be aware that the amendment tabled by the noble Lord, Lord Morton, referred to the terms "tort", "delict" or "quasi-delict". Those terms are used in the 1982 Act. "Tort" is the expression used in English law to cover, broadly speaking, any civil right of action arising from the breach of a duty imposed by law. "Delict" is the term used in Scotland to cover obligations imposed by law to make reparation for any loss or damage caused by a legal wrong. "Quasi-delict" is the name given to some of those legal wrongs, although its use is not consistent.
I do not wish to go further into the use of those words. There is a host of erudite legal learning about them on both sides of the Border. It is fair to say that while the terms "tort" and "delict" cover virtually the same ground, there are certain conceptual differences in the way in which the two classifications have been arrived at which means that what is clearly a delict may not so clearly be a tort. The most striking conceptual difference is, briefly, that the Scottish law focuses on the nature of the obligation to make reparation, whereas English law is more concerned with the breach of duty involved.
I am advised that as a result of those differences, there is no doubt but that the liability imposed by Part I gives rise to an obligation to make reparation. and would therefore constitute delictual liability in Scotland. On the other hand, we accept that there is a legitimate doubt as to whether liability under Part I should be regarded as a liability in tort.
There are of course a number of provisions dealing with that area of the law still contained in the common law. That is partly, as I mentioned earlier, because they have largely been expressed in terms of breach of duty. There are of course a number of statutory provisions which either expressly or impliedly give civil rights of action to injured persons. Those are generally expressed in terms of breach of duty, and hence the term "breach of statutory duty" is frequently used to describe the right of action conferred. It is obvious that Part I is statutory, but, on the other hand, it is not expressed in terms of a duty, and that is the main cause of the doubt which arises with regard to English law.
There may be a question as to whether that classification is of any practical importance. The noble Lord, Lord Morton, rightly pointed out that the classification is used for the purpose of defining the courts' jurisdiction in a way which could have practical significance. In addition to the provisions which we have previously identified in Clause 6 and which relate directly to the subject matter of the directive, we have discovered two other provisions which may in certain circumstances be relevant. In addition, we have made slightly different provisions about Crown application.
Amendment No. 22 reflects the primary concern of the noble Lord, Lord Morton, by declaring that liability under Part I is a liability in tort for the purposes of any enactment conferring jurisdiction on a court. It will apply not only to the Civil Jurisdiction and Judgments Act 1982 but, for example, to the County Courts Act 1984, which confers jurisdiction on the county courts in contract and in tort within certain financial limits.
The other point that I should mention is that the provision is declaratory. The intention is to ensure that contrary arguments cannot be raised about other provisions for strict liability framed in a similar way. There are not many of those, but the Animals Act 1971 is an example.
Amendment No. 100 is of less practical significance. It deals with the Torts (Interference with Goods) Act 1977. That Act contains a number of common provisions governing actions for trespass to goods and other torts affecting goods which are compendiously referred to as "wrongful interference with goods". For example, it regulates the position where there are competing rights to goods which are the subject matter of the action. There is little doubt that liability under Part I of the Bill should be treated in the same way.
Amendment No. 101 deals with Section 16 of the Employment Act 1982 which places certain financial limits on the liability of trade unions in tort. Those limits do not, however, apply to any proceedings in negligence, nuisance or breach of duty resulting in personal injury or to proceedings for breach of duty in connection with the use of property.
The amendment makes clear that liability under Part I of the Bill will be treated in the same way as any breach of duties described there. I do not think that this provision should have any great practical importance in terms of the customary activities of trade unions, but we need to consider the possibility of those activities extending to the supply of products of one kind or another.
I am sure that noble Lords will be relieved that we have not found any other provisions which need to be dealt with. However, these specific amendments are required to be able to pin down the concerns expressed by the noble Lord, Lord Morton.
Amendment No. 27—to which I finally refer—is of a slightly different nature but is based on the same premise. The provisions which presently appear in Clause 9(2) and (3) of the Bill are precedented by similar provisions in other legislation. I cite, for example, Section 51 of the Civil Jurisdiction and Judgments Act 1982. However, in the present context,
876
we think that they may create a doubt as to whether they override the provisions of the Crown Proceedings Act 1947 which deals with civil proceedings by and against the Crown and in particular the liability of the Crown in tort. We would again accept the principle of the proposal put forward by the noble Lord, Lord Morton, and the purpose of this amendment is accordingly to ensure that the limits of the Crown's liability under Part I of the Bill are the same as the limits of its liability under the 1947 Act. There are precedents for this alternative approach as well. I cite Section 16 of the Torts (Interference with Goods) Act 1977.
One further aspect of the matter to which I should draw attention is that Section 10 of the 1947 Act qualifies the rights of members of the armed forces to bring proceedings in tort against the Crown for death or personal injury, notably where it was suffered in consequence of the nature or condition of any equipment or supplies used for the purposes of those forces. This amendment will ensure that that qualification applies to any proceedings which might be brought under Part I.
However, noble Lords will be aware that there is a Bill which has received its Second Reading in another place and which received a warm welcome there. It provides for the repeal of Section 10 of the 1947 Act and will accordingly permit members of the armed forces to bring proceedings in the usual way. It also provides for the revival of Section 10 if it appears necessary or expedient for the Secretary of State to revive it in the case of national danger. That is the explanation for the appearance of the words,
"as that Act has effect from time to time"
in this amendment.
I am very conscious that in what I have been saying I have been going into matters legal but, notwithstanding that, I hope that these amendments will find favour with your Lordships. I beg to move.
Lord Morton of Shuna: My Lords, so far as it goes, Amendment No. 22 is acceptable. But, in my view, it does not go far enough. It is apparently to apply to Scotland. I can think of at least one retired judge of the Court of Session who might raise his eyebrows on reading that the new subsection (5A) was applicable to Scotland. It states:
"It is hereby declared that liability by virtue of this Part is to be treated as liability in tort".
That might cause confusion.
This is merely a declaratory provision. I do not understand why it is difficult to say that for England, Wales and Northern Ireland liability is liability in tort, and for Scotland it is to be treated as liability for delict or quasi-delict. This is my difficulty. I have always been taught and have understood that inherent in the theory of delict and quasi-delict is the idea of a wrong—a wrongful act—for which, having done or threatened such act, one has an obligation to make reparation. That is the whole theory of the Scottish law of delict and quasi-delict. As I understand it, that is also the Continental theory.
What is quite clear, and, in my submission, is not a matter of doubt on anybody's part, is that Part I is not dealing with a wrong at all. There is no question of the defective product implying that the producer has

877
committed a wrong. Because he has produced a defective product, he has created a liability on himself but nobody is saying that he is wrong. The whole purpose is to avoid saying that he is wrong. It therefore appears to me that this new subsection, through inserting Amendment No. 22, does not sit happily with the law of Scotland. Almost as much violence has been done to the law of delict and quasi-delict as certain Englishmen tried to do to certain Welshmen on Saturday. But perhaps that is a different point. I do not wish to stop Amendment No. 22 being agreed to. However, it may be necessary to come back and improve it at a later stage.
If one turns to Amendment No. 27, the difficulty disappears. Section 2 of the Crown Proceedings Act states:
"The Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject".
On the application to Scotland, Section 43 states:
"In the application of this Act to Scotland the expression 'tort' means any wrongful or negligent act or omission".
That definition would not suit Part I of this Bill. It is of no use to Part I because we are not dealing with a wrongful or negligent act. The whole point of product liability is that that is unnecessary. It therefore appears to me that some other provision is needed.
On Amendments Nos. 100 and 101, I have nothing to say. I hope that the Government have found the various legislative provisions. I somehow doubt it, but no doubt they have done their best in Amendments Nos. 100 and 101.
I regret that I can give Amendment No. 22 only a very cool welcome. I cannot see why it could not be worded that,
"it is hereby declared that liability by virtue of this Part is to be treated as liability in tort, delict or quasi-delict".
By the Civil Jurisdiction and Judgments Act, that is the basis on which the court's jurisdiction for the place where the harmful event occurred would be established. I can therefore give this amendment only a very qualified welcome.
Lord Airedale: My Lords, I agree entirely with the noble Lord, Lord Morton. It is unfortunate—when the whole point of Part I is to get rid of the need for an action for liability in tort—then to read that,
"liability by virtue of this Part is to be treated as liability in tort".
I understand what the noble and learned Lord the Lord Advocate is seeking to achieve. However, these words are singularly unfortunate when the whole emphasis throughout the rest of Part I is, at last, that negligence does not have to be proved. There does not have to be liability in tort. Liability is irrespective of liability in tort. That is the whole point of Part I. Then one reads these dismal words:
"liability by virtue of this Part is to be treated as liability in tort",
which seems to me to be very sad and depressing. I wish that it could be expressed in some other way.
Lord Denning: My Lords, I do not share my noble friend's view on the use of the word "tort". "Tort" not only covers negligence, but covers many cases of strict liability—for example, the escaping of dangerous
878
things even though there is no negligence at all. Such a case is treated in the books and in every way as a liability in tort; that is the phraseology of tort. It is something for which you are liable. I do not share the difficulty of my noble friend.
Lord Cameron of Lochbroom: My Lords, I am obviously very grateful for what has been said by noble Lords which we shall certainly take aboard. Perhaps I may just reply to the noble Lord, Lord Airedale, and say that I regret it is necessary to make reference to tort for the very reason which the noble Lord, Lord Morton, identified when he spoke in Committee as regards jurisdiction. I simply say to the noble Lord opposite that this matter has been considered. Certainly, I have listened to what he has said, and obviously will look at it again. But, in turn he may like to bear in mind what is said in Schedule 1 Part II of the Bill. In particular, on Page 43 of the Bill, the new Section 22(B), which is there set out, describes the obligation under Section 2 of the 1987 Act as follows:
"(to make reparation to damage caused wholly or partly by a defect in a product)",
That seems to me adequately to describe what is delict in the law of Scotland. I beg to move.
On Question, amendment agreed to.
Clause 7 [Prohibition on exclusions from liability]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 23:
Page 6, line 14, leave out subsection (2)
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 1. I beg to move.
On Question, amendment agreed to.
Lord Beaverbrook: My Lords, in moving that further consideration on Report be now adjourned, perhaps I may suggest that we do not return to this Report stage until five minutes past eight o'clock.
Moved accordingly and, on Question, Motion agreed to.

Fire Safety and Safety of Places of Sport Bill [H.L.]
7.3 p.m.
Lord Denham: My Lords, I have it on command from Her Majesty the Queen and his Royal Highness the Prince of Wales to acquaint the House that Her Majesty and his Royal Highness, having been informed of the purport of the Fire Safety and Safety of Places of Sport Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Minister of State, Home Office (The Earl of Caithness): I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time. (The Earl of Caithness):
Lord Mishcon: My Lords, as I understand there are no amendments to be moved on Third Reading, it would appear to be appropriate now to make remarks in regard to the Bill as it is about to leave your Lordships' House. It is a rather meaningful lesson that we are dealing with the passing and the last stages of the Bill at a time when Parliament and the nation are in mourning over the terrible happenings near Zeebrugge because this Bill found its origin in another disaster. Irrespective of which Party may be in government, it is noticeable that so often we find ourselves legislating because of a disaster. It would appear to be so much more the duty of Parliament, I repeat whatever Party happens to be in power, to see that there are no disasters because those disasters have been prevented by the care that Parliament has shown in passing safety legislation in vital fields.
This Bill is one which deals with safety in a very vital area, as Mr. Justice Popplewell so clearly pointed out in his recommendations in his detailed report. Many of those recommendations find their way into the Bill. I should like to pay my tribute to the noble Earl, Lord Caithness, and to the noble Lord, Lord Beaverbrook, for the very courteous and able way in which they have dealt with the provisions of the Bill and the discussions which have taken place on the various amendments. After consideration, the Government gave way tç an amendment which I had the privilege of moving from these Benches. The amendment made the dangerous notice procedure one which is likely now to be dealt with in time, rather than going through the courts, by giving the fire authority the ability to issue such a notice which would prohibit the use either in part or in whole, of a building until the danger has been removed.
I could have wished that an amendment that we lost by only two votes in regard to the necessity to inspect before exemption certificates were granted had in fact been won by two votes. I am sure that I can count on the Minister to see that the very substantial voice in regard to that amendment as it came from your Lordships' House in that voting, will be given serious consideration as the Bill goes to another place, as it will do after tonight.
Guidelines have been mentioned very frequently in the course of debates that have taken place. Irrespective of which Party happens to be in power, unfortunately too often guidelines are referred to as excuses for things not being provided for in legislation. Parliament is in the difficulty (whichever House of Parliament it may be) that they do not have the guidelines before the Bill leaves the respective Houses. Such is the position in regard to this Bill. We have heard what is likely to be in the guidelines in regard to exempt premises. I am hoping that an echo that I thought I heard in the Minister's speech at Report stage—namely, that multi-occupied premises will most likely be very carefully dealt with in regard to exempt certificates—will find its way into those guidelines.
I end by saying that in my judgment this House of Parliament said something very positive to help in this legislation when a very vital amendment, which dealt with a Popplewell recommendation concerning annual inspections of all designated sports grounds, was carried and was then inserted into the Bill. That
880
was the will of your Lordships' House. The Government, with courtesy and some degree of humility, accepted that vote and now that provision is in the Bill. I thank the noble Earl, Lord Caithness, and the noble Lord, Lord Beaverbrook, for the care which they have taken in bringing this important Bill before your Lordships.
Lord Brougham and Vaux: My Lords, I should like to say a few words and echo a lot of what the noble Lord, Lord Mishcon, said and also thank my noble friend on the Front Bench and his colleagues. I know that I did not take part in any of the discussions, but I had my knuckles rapped for voting against my noble friends as regards the noble Lord's amendment.
I should like to put forward one matter for my noble friend's consideration. I read in the paper today that the teachers are to have rallies and protest meetings in sports gounds. What happens if a large body gathers at an undesignated sports ground such as an open arena and something hazardous takes place? That is why I feel, like the noble Lord, Lord Mishcon, that these places should be inspected every year, because, if there are 5,000 people in an open space demonstrating against teachers' pay, or whatever it is, we could have the kind of trouble which occurred in Bradford and which led to the Popplewell Report. Otherwise, I welcome the Bill entirely.
The Earl of Caithness: My Lords, we have now reached the final stage in our deliberations on the Bill before it is sent for consideration to another place. A Bill dealing, as this one does, with public safety demands serious attention and a non-partisan approach. I need hardly say that your Lordships have provided both. The Government are grateful for the welcome which was given to the Bill by all sides of the House, and for the efforts of your Lordships to improve the Bill and to seek clarification of its provisions. We have made a number of technical and minor amendments, and in two respects—namely, fire safety prohibition notices and frequency of inspections of sports grounds—the Bill has been significantly changed to take account of the views of the House. The effect of those changes has been to strengthen further the Fire Precautions Act 1971 and the Safety of Sports Grounds Act 1975. I am sure that these changes will be well received in another place, and that the Bill as a whole will be given the same thoughtful reception there as it has received here.
Perhaps I may take this opportunity to thank in particular the noble Lord, Lord Mishcon, for all the valuable contributions he has made during the passage of this Bill through your Lordships' House. He has drawn with impressive effect on his experience, which is well known to the House, and on his knowledge of the work of fire authorities. He has pressed us hard on a number of points, but always from the most sincere wish to ensure that the interests of public safety were being served. Happily, he rarely found it necessary to take the opinion of the House, and I trust that we have been able to reassure him that there are now few differences between us on the matters covered by the Bill.
My noble friend Lord Brougham and Vaux has just made an important point. Of course, such a large

881
meeting as 5,000 people would probably take place in one of the sports grounds that we were going to designate anyway, but his point is well taken. It was taken by the House at an earlier stage and the Bill is amended as a result.
As the noble Lord, Lord Mishcon, has said, it is a sad fact that we tend to legislate after a crisis rather than before. I have no doubt that this Bill goes a long, long way towards preventing another crisis such as we saw at Bradford. Let us hope that it does so.
In view of the sad times that we are in, I know that I have no need to urge your Lordships to accept this Bill. Its importance is clear to us all and I commend the Bill to the House.
On Question, Bill read a third time.
The Earl of Caithness: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass—(The Earl of Caithness.)
On Question, Bill passed and sent to the Commons.

Parliamentary Constituencies (Scotland) (Miscellaneous Changes) Order 1987
7.14 p.m.
The Earl of Dundee: My Lords, I beg to move, that the draft Parliamentary Constituences (Scotland) (Miscellaneous Changes) Order 1987, which was laid before the House on 10th February, be approved.
This draft order is to implement the final recommendations contained in the Boundary Commission for Scotland's report on its 1986 interim review of 14 parliamentary constituencies. The commission submitted its report to my right honourable friend the Secretary of State on 29th December last and he proposes that its recommendations should be implemented without modification. The draft order has been considered by the Joint Committee on Statutory Instruments, which had no comments on its substance but suggested a minor descriptive amendment which will be adopted in future orders. The draft order was approved in another place on 26th February and, if it is approved by your Lordships today, it will be submitted to Her Majesty in Council to be made.
Articles 2 to 8 of the draft order replace 14 of the constituences created by the Parliamentary Constitu-ences (Scotland) Order 1983 with those described in the schedule. Article 1(3) provides for the order to come into operation 14 days after it is made and for the new boundaries to take effect at the next general election. Any by-election before that would therefore be held on the present boundaries.
Reviews of this kind are held at the discretion of the Parliamentary Boundary Commission between the general reviews of parliamentary constituencies which must be completed every 10 to 15 years. They occur at infrequent intervals. The Scottish Commission's last interim review, which affected 16 constituences, was held in 1972. Following the reorganisation of local government in Scotland in 1975 the commission then
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undertook its mandatory general review of all the parliamentary constituences from 1978 to 1983, when its recommendations were implemented in full.
The need for this interim review arose from a number of changes which have been made to regional and district boundaries since the making of the Parliamentary Constituencies (Scotland) Order in March 1983. These changes resulted in the divergence of the boundaries of the new local government areas from those of the present constituencies in a total of seven areas in Borders, Central, Lothian, Strathclyde and Tayside regions. Most of the alterations were quite small but the commission decided to review the boundaries of the 14 constituencies so affected in order to remove the anomalies which had arisen. In each case its proposals disturb the existing pattern of constituencies as little as possible by simply realigning the constituency boundary with the new local government boundary.
The commission's report sets out the steps it took to bring its proposals to the notice of the public, the local authorities, the political parties and the Members of Parliament for the constituencies affected. The acceptance by my right honourable friend the Secretary of State of the commission's proposals was intimated to the authorities and the political parties when the draft order was laid before Parliament last month, and a statement on the commission's proposals was issued to the national and local press at the same time.
The alterations, if implemented, will affect a total of approximately 270 electors. Some 200 of these are in one area, Croftamie, formerly in Dumbarton District and, since 1983, in Stirling District. No objections were received by the commission during the review and none has been received by my right honourable friend the Secretary of State since its report was submitted to him. I therefore commend the draft order giving effect to the commission's recommendations to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 10th February be approved. [12th Report from the Joint Committee.]—(The Earl of Dundee.)
Lord Ross of Marnock: My Lords, I think that the Motion will be agreed to without much heated controversy. Certainly, I am glad to state that I have nothing to do with it. I say that because there was very considerable controversy over the general revision of constituency boundaries between 1978 and 1983. The chairman of the Boundary Commission was named Lord Ross. I found myself getting the blame for all the considerable difficulties created for certain people and had continually to point out that there was another Lord Ross who was a judge in Scotland and had nothing whatever to do with me.
It is interesting that the Minister said that only about 200 voters were concerned—
The Earl of Dundee: My Lords, 270.
Lord Ross of Marnock: My Lords, was that all in the 14 constituencies? That might be very important in the next election. I remember one of the relevant criteria that were put down by the commission when it carried out the last reorganisation: it had to have

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constituencies which were close to one another and which would be of the same size. I have now stopped voting in constituencies so the Alliance need not worry. I am not voting Alliance at the next general election; I shall not even have the chance to vote Labour at the next election by virtue of being here. However, it turned out that in the constituency in which I used to vote side by side there were a constituency that was Labour held and a constituency that was Conservative held. One of those became one of the smallest in Scotland and the other became one of the largest. It may have suited the Member for Cunning-hame South and it may have suited the Member for Ayr (who happened to be the Secretary of State at the time and is now Minister of Defence) but I did not think that it was quite in conformity with the rules laid down by the Boundary Commission for themselves.
However, it may well be that half a dozen votes will make all the difference, certainly in the Ayr constituency, at the next election according to the way matters are going. I should like to know this: are Drybridge, Barassie and Gailes Foreshore now in Ayr or are they in Cunninghame South? Has the change been made to the advantage or disadvantage of Mr. Younger?
The Earl of Dundee: My Lords, I am grateful to the noble Lord for what he has said. I am also glad that he has removed any element of doubt about his role with boundary changes. His namesake, who might have undergone criticism in the reorganisation of constitu-ency boundaries of 1978 and 1983, is to be given some of the blame, fairly or unfairly, but none of the blame should go to the noble Lord. He had nothing to do with this!
The noble Lord asked me about the position in the area of Barassie Beach, Ayrshire. The discrepancy there arose from their delineation of the coastal boundary of Irvine New Town to the high water-mark instead of to the low water-mark as is customary with local authorities. The effect was to place within Kyle and Carrick district instead of within Cunninghame district—the strip of foreshore between those marks running northwards from the boundary of the former borough of Troon to the boundary of the former borough of Irvine. This discrepancy was removed for local government purposes as a result of the Boundaries Amendment Order 1983 referred to in Article 2 of this draft order, which provides for its removal for parliamentary purposes.
Lord Ross of Marnock: My Lords, I am grateful to the Minister for that explanation. I shall be able to sleep tonight after hearing that.
Qn Question, Motion agreed to.

Town and Country Planning (Compensation for Restrictions on Mineral Workings) (Scotland) Regulations 1987
7.24 p.m.
The Earl of Dundee: My Lords, I beg to move that the regulations laid before the House on 6th February 1987 be approved.
Your Lordships will be aware that these regulations were approved by a Committee of the other place on
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25th February 1987. The purpose of these regulations is to make provision for the abatement—in certain prescribed circumstances—of the amount of compensation payable by planning authorities in respect of loss, damage or abortive expenditure arising from an order to restrict mineral workings. The House will be aware, however, that the framework of the regulations, the principles of abatement and the circumstances in which abatement may be made, were extensively considered by Parliament in 1981, during the passage of the Town and Country Planning (Minerals) Act.
The provisions of that Act stemmed in the main from recommendations made by the Stevens Committee which had been appointed to consider the operation of the general planning system in relation to the special problems of mineral extraction. Mineral extraction is of course subject to the same general planning law as other forms of development and the Committee recommended a number of new measures to enable old permissions for mineral workings to be brought into line with present-day standards. However, the committee recognised that it would not be reasonable to expect the local authorities, or their ratepayers to bear the full financial burden of bringing old minerals permissions to modern standards in the way which is usually required by planning law when established rights are altered. They recommended that, in view of the special characteristics of mineral extraction, the minerals industry should accept "reasonable" additional costs arising from the changes in conditions.
During the passage of the 1981 Act it was recognised that the compensation arrangements would be very important for the operation of the Act and there was considerable debate about the proportion of the costs that it would be reasonable for the industry to bear. As a result, an amendment was introduced by the Government which effectively defined the upper and lower limits of the amount by which compensation might be abated. These regulations make provision for the way in which that abatement is arrived at.
The text of the regulations is complicated, as your Lordships will have seen, and it might be useful if I gave a brief example of how the regulations will operate. I should stress at the outset that these regulations deal in the main with the abatement of compensation, not with the actual calculation of compensation itself. They make some modifications to what should be considered when assessing compensation, but their real import is to provide a means of calculating abatement.
First, a planning authority would undertake a review of a minerals site within their area and would decide that they needed to take action. They would then proceed to make an order indicating what steps the minerals operator needed to take to bring the site up to the required standard. When such an order is made the operator is then due compensation for the action taken by the planning authority. It is however considered reasonable, as I mentioned a moment ago, that the planning authority should not have to bear the full cost of compensation and that the minerals operator should bear some of the burden through reduced compensation. Therefore, in certain specified circumstances these regulations now before us would

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then come into play. Basically what will happen is that the full compensation due to the operator will be assessed. Then using the terms of the regulations, an amount will be arrived at by which the compensation should be reduced. Either this will be a lump set out in the regulations, or a figure arrived at taking into account the notional value of the relevant minerals at the site and the estimated life of the site, depending on the type of order the planning authority has made. That in the simplest terms is a rough and ready outline of what the regulations cover.
The formulation of these regulations, within the framework of the 1981 Minerals Act, proved very complicated and exposed a number of contradicting interests. A very real effort has been made to reach a reasonable accommodation of those conflicts however and I commend these regulations to the House.
Moved, That the draft regulations laid before the House on 6th February be approved. [11th Report from the Joint Committee.]—(The Earl of Dundee.)
Lord Ross of Marnock: My Lords, I am grateful to the noble Earl for having threaded his way through a complicated brief. I looked quickly at the 1972 Act and realised that it had nothing much to do with this matter at all: it is the 1981 Act which applies. Most of the modifications in respect of the compensation restrictions stem from the new duty that was laid upon planning authorities to review these mineral workings and to decide what should be done to modify and improve them. Indeed, where they had been stopped for two years (I believe that was the figure given) it was to be construed as unlikely to be continued, and certain things were then agreed and laid down in relation to the compensation and conditions that should be imposed upon those who had been carrying out the mineral workings. It was, as the noble Earl said, pretty well laid down in relation to how the compensation should be calculated and abated, the percentage of 10 per cent. and the prescribed figure, and I think it is eventually reduced to not less than £2,500, or something or other. It is complicated.
The safeguard for us here surely is in who was consulted in relation to the regulations. I believe that it was laid down that there should be consultation with those mining operators who were concerned with it, with the owners of interests in the land and also the planning authorities. Can the noble Earl assure us that these consultations, which to my mind are statutory, have been carried out?
The Earl of Dundee: My Lords, once again I am grateful to the noble Lord for his comments. I agree with him that it is often difficult with regulations of this kind which relate to other legislation to know whether one should go back to 1972, 1981 or indeed to some other date altogether.
On the question that the noble Lord asked me I can assure him that consultations have been carried out. The groups of consultees concerned are, first, the CBI, Scotland, the British aggregate construction materials industries, the sand and gravel associations, the National Coal Board and the National Federation of Licensed Opencast Coal Operators.
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In addition, other bodies and interested parties that have been considered include the Scottish Landowners' Federation, the NFU, Scotland, the Countryside Commission for Scotland, CoSLA, the Town and Country Planning Association, the Royal Institution of Chartered Surveyors, the Law Society, the Royal Town Planning Institute, Scotland, the Lands Tribunal for Scotland, the Scottish Society of Directors of Planning and the Association for the Preservation of Rural Scotland.
Lord Ross of Marnock: My Lords, I am grateful to the noble Earl for that list. It is a rather intriguing list bearing in mind that paragraph 1(2) says that the regulations do not apply to the National Coal Board.
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.33 until 8.5 p.m.]

Consumer Protection Bill [H.L.]
Consideration of amendments on Report resumed.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 24:
Alter Clause 7, insert the following new clause:
("Insurance for product liability.
—(l) If a person to whom section 2(2) above applies satisfies a Court that he is unable to obtain insurance in respect of his potential liability under this Part of this Act in respect of any product produced by him the Secretary of State shall either procure such insurance for that person or shall assume liability to indemnify that person at such cost to that person as in all circumstances is reasonable.
(2) An application may be made under this section—

(a)in England and Wales to the High Court; or

(b)in Scotland to the Court of Session: or

(c)in Northern Ireland to the High Court.").

The noble Lord said: My Lords, it may be for the convenience of the House if I also speak to Amendment No. 26. When your Lordships were in Committee on the Bill we had a discussion about what I referred to then as the insurance problem. It seemed to me at the time that the insurance problem had moved a bit from the date when we were on Second Reading. On Second Reading, as I recall, there was general agreement that unless the development risks defence was disallowed—that is to say in the Bill as drafted—there would be no particular difficulty in general insurance for product liability under the terms of the Bill that we had before us.
The position in Committee seemed to shift a little. A number of noble Lords in Committee said that the provision of insurance for product liability, even under the Bill as drafted, had become somewhat worse since the time of Second Reading. Your Lordships will recall that I moved a similar amendment to Amendment No. 24 in Committee, similar in that it contained a provision about insurance for development risks in the event that that defence was disallowed. The discussion in Committee has prompted me to resubmit this amendment to your

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Lordships on Report without that proviso. In other words, I wish to address the whole question of whether insurance will be available under the Bill as drafted as it came out of Committee and as it has come out of discussion this afternoon on Report.
There is an error in the printing of the amendment which, alas, repeats an error made in the Marshalled List in Committee. I am advised by my noble friend Lord Morton that there is an extra "s" in the word "Sessions". It should read "Court of Session", not "Court of Sessions". I apologise to noble Lords opposite that that error has crept in.
There are two problems with insurance. The first is that there is no financial limit in the Bill. The directive allows national governments in implementing the directive to introduce a financial limit. No financial limit has been put into the Bill and we think that is right. I should not wish to go back on the Government's decision there. Nevertheless the fact that there is unlimited liability involves certain problems as far as insurance is concerned, because, as I think the noble Lord, Lord Airedale, (who will move Amendment No. 26) and I both said in Committee, no underwriter in his senses would insure on unlimited liability. Therefore whatever insurance arrangements may be made in the private market against any liability under Part I of the Bill, it will always have a limit to the insurers' exposure. This means that if there is a claim against the producer or supplier, which is in excess of the limit imposed by the insurer, there will be an exposure which is uncovered.
The second problem we noted in Committee—I think I referred to it during our discussions then—is that the insurance market seems, from what the noble Lord, Lord Clitheroe, was saying on Second Reading and at Committee, to move quite quickly. One day, or perhaps I should say, one week or one month, there is possible cover. But when you get substantial claims, the insurance market may be unable to cope with the new influx of business that arises out of the claims which have been met. So there is a problem of whether in reality and in almost unforeseeable circumstances the insurance market will continue to operate satisfactorily at reasonable rates. There is also a problem of the excess of loss, the exposure which comes over and above the limit that any underwriter will impose in his policy.
Our view, along with that, I think, of the noble Lord, Lord Airedale, is that some arrangement—I am not insisting necessarily upon my formulation; nor, I think is the noble Lord, Lord Airedale, insisting necessarily upon his—must be made to ensure that an excess in respect of companies which are operating normally and sensibly under the Bill and which, for various reasons, may find themselves sued for damages of considerable amounts in excess of the insurance they have been able to arrange in the private market, is met out of the community funds. By "community', of course, I do not mean the European Community: I mean the generality of funds available to the Government.
It seems to be a matter which has aroused considerable interest not only in this country but in New Zealand and also in the United States, or so I
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understand from reading a recent issue of the Economist. The insurance market and product liability arrangements are rather different, but the insurance market in the United States seems to be in difficulties in supporting the producers.
It is an area which I believe we ought to discuss seriously. I am not going to press the amendment to a Division because I do not believe it is a "dividable" issue, if I may so put it. However, I believe that it is worth discussing this matter at Report stage in your Lordships' House, airing the problem and making sure that the Government, if they reject this particular formulation, or indeed that of the noble Lord, Lord Airedale, do so knowing full well that there may be occasions when the insurance market dries up or when it is available only at rates which are quite excessive and also occasions when companies may have to bear the excess of loss themselves. I beg to move.
8.15 p.m.
Lord Airedale: My Lords, I have great pleasure in supporting this amendment. I agree entirely with the noble Lord that neither of our formulations necessarily produces exactly what is required. However, what our amendments indicate quite clearly is the nature of the problem. It would be the greatest disaster if the Bill were to leave this House without the narrow factual issue being agreed on all sides; whether or not underwriters will assume unlimited liability. Either they will or they will not. We must be agreed about this because it is only on a basis of agreement about that fact that we can proceed. Heaven knows, I did my best, both on Second Reading and in Committee, to urge the Government to face this narrow issue and to give their answer. I have not had that answer so far, but there is yet time and I hope that it will be forthcoming this evening.
What we have so far is the knowledge that the British Insurance Association thinks that adequate insurance cover will be available. But that will not satisfy the producer who goes to his insurance broker. He is going to say, "That is not the question I asked you. Under this Act of Parliament, although I may be quite blameless, I stand to be liable up to my last farthing, and what I want to know is whether or not I can get insurance to cover me right up to the full amount of my resources." That is what he will want to know.
Underwriters are cautious men. They are risk takers only in the sense that every insurance policy is the underwriting of some risk. But underwriters bear in mind those words in the Epistle of James, which I am sure are familiar to the Minister:
"Behold how great a matter a little fire kindleth".
Underwriters are perhaps working for members of syndicates who are in it up to their last farthing or for companies who are in it up to the limit of their resources. They are not encouraging their underwriters to risk their total resources on policies of unlimited liability.
Therefore, when the worst disaster occurs, somebody is going to have to pay for it. If it is a matter of negligence I would be prepared to say that the negligent defendant had better pay rather than the

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innocent plaintiff. But where there is no negligence at all, it offends against my sense of natural justice to say that the producer shall be liable up to his last farthing. If we on this side of the House are right about the fact that unlimited liability insurance cover is not available, it tears a great big hole in the argument that the producer is going to be all right because all he has to do is to insure against his liability and pass on the cost in the price of the goods. However, that simply no longer applies.
I may be asked, "Are you not opening the door too wide here? If we allow this we shall get floods of people who suffer damage and injury in ways other than from defective products, and they will all want reimbursement out of public funds." I should be very pleased to see that. It is a very good Christian principle that we should share each other's burdens. However, I appreciate that no government can be expected to take a leap of that kind all at once. I say that it is proper to do this piecemeal in this connection because we have decided, as a matter of policy, that the injured party shall be fully compensated. Therefore if the producer is innocent, it is only right that he should be reimbursed out of public funds to the extent that he was unable to get insurance to cover his liability.
We were told that some of the amendments ran counter to the directive. I hope we shall not be told that on this occasion. I do not see how it could possibly be so. All that the directive is concerned with is that the injured person shall receive full compensation primarily at the hand of the producer. Whether the producer cares to seek reimbursement, either by passing round the hat or in some other way, cannot possibly be any concern of the directive. I hope that the Government will accept the amendment put forward by the noble Lord, Lord Williams.
Lord Auckland: My Lords, this is a new concept in the field of insurance. It is now a few years since I was active in the insurance industry and I was never heavily concerned during the years when I was on the claims side of a Lloyd's syndicate in product liability insurance, which by its very nature is an expensive business.
It seems to me that the amendment poses difficulties, because there are so many kinds of product liability. It may well he that there are some claims which could be made under a product liability policy which came within the ambit of this amendment. But there are others where one wonders just how the financial implications are to be spread. Clearly there are cases where a claim falls outside the terms of the insurance policy, but this can sometimes be settled on an ex gratia basis even if it is not covered. But I think the problem with this amendment, if it is an across-the-board one, is that the cost of enforcing it would be considerable. Therefore the question is who is finally to reimburse the victim, so to speak, in full.
Having said that, I should like to ask my noble friend the Minister, in view of the obvious interest in the matter, whether the Government have had or will have consultations with the insurance industry to find out what the situation is. I sympathise to some extent
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with the movers of the amendment in that the insurance industry as a whole has been placed in a particularly difficult position because there is the problem of how reimbursement will eventually take place.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lords, Lord Williams and Lord Airedale, for telling us what lies behind their two amendments. Of course I forgive the noble Lord, Lord Williams, for that little error. It may be typographical, it may be due to the printers or it may be the error of the noble Lord, Lord Morton. But as the noble Lord, Lord Williams, said, this is a serious matter and we want to discuss it seriously.
The noble Lord suggested during the Committee stage, and gave us some notice of this amendment, that there is value in there being a long stop insurance, given, as he argued, that the availability of insurance was perhaps uncertain. I have nothing new to say about the availability of insurance because I think the most important things about it have been said already. The noble Lord will remember that he asked me before what the Government believed about the availability of insurance. I wonder why he poses that question again today, particularly to me, because I do not think that he is going to be very much influenced by what I have to say. I would prefer to direct him and other noble Lords towards those who should know.
I remind the House again of what the Association of British Insurers told us in its brief prepared for the Second Reading of this Bill. It said:
"Insurance companies are by and large confident that they will be able to provide cover for liabilities under the new legislation for current limits of indemnity at premium levels which will have only a marginal effect on the cost of production. There would however be a reduction in the amount of insurance capacity if the state of the art defence were not included".
That we have dealt with in maintaining that defence. The association went on:
"This would particularly affect industries, such as pharmaceuticals and aerospace, which present a heavy development risk exposure".
That answers the point raised by my noble friend Lord Auckland about the industry being put in a difficult position. It has recognised the position into which this legislation will put it and it has made that statement. There we are. I do not think that the noble Lords, Lord Williams or Lord Airedale, would feel any more confident about the state of the insurance market if I were to say that.
In the light of what the Association of British Insurers has said, the major argument must be that there is no need for the kind of clause which the noble Lord is proposing. I think I made it clear in Committee that we have other objections to this clause which apply in this case just as much as they did with the earlier edition. Because we are talking about this matter seriously, I want to go into that in a moment.
When he was speaking about insurance of unlimited liability, the noble Lord, Lord Williams, was right to say that there will always be a limit upon the amount of insurance for a given risk. But this is not particular

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to product liability. The potential liabilities for many risks—for example, negligence—are not limited. Only finite limited insurance is available and companies and individuals accept the excess but highly improb-able risk that lies therein.
The noble Lord, Lord Airedale, was talking about the relationship between limited and unlimited liability, and I would answer him in three ways. Certainly there is no limit to liability under the directive, so there is no limit under the Bill. However, companies are usually limited in their liability and certainly insurance cannot be obtained for unlimited liability—only for a level thought necessary. Indeed, the premium is related to the risk that the market considers is there.
I should say here quite definitely that the Government are committed to reducing the level of state intervention in industry and we have made great strides in that direction. It is certainly not consistent with the overall thrust of that policy for the Government suddenly to enter the product liabilty insurance broking and insurance underwriting business, for which I may say the Government have no particular aptitude in any case.
The amendments speak of reasonable cost. Presumably by that the noble Lord, Lord Williams, must mean (I do not see how he can mean anything else) the cost of such insurance in the market. That presupposes that the insurance is available. A moment or two ago he questioned that. Or is it that the noble Lord is suggesting that the taxpayer at large should subsidise product liability risk? I cannot see any justification for that.
Again, the noble Lord, Lord Williams, has chosen a curiously time-consuming and bureaucratic way of implementing his suggestion. Insurance will either on the whole be available or it will not. If it is, then every company individually will have to go to the court. The Secretary of State would not be empowered to offer insurance before that court process had been completed. I do not want to be frivolous but a greater waste of everybody's time and money is rather hard to imagine. If insurance is not available then the clause is unnecessary.
I believe that there is another curious feature of the clause. A producer may well be unable to obtain insurance for very good reasons. He may be producing unsafe goods. It may be that he has a bad record for paying his insurance premiums. There are a number of things which might occur. However, so long as he can satisfy the court that he is unable to get insurance—and there is no qualification as to why he is unable to do so—the Secretary of State has to insure this unacceptable risk. I foresee that such a scheme may well provide an incentive for lowering product safety standards. I do not think that any of us wishes to move in that direction.
Perhaps I may turn now to the amendment of the noble Lord, Lord Airedale. I cannot accept it for three reasons. As I said in relation to the amendment of the noble Lord, Lord Williams, I do not regard such provision as necessary. Secondly, it is surely not right for the taxpayer to carry this burden. Thirdly, the
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drafting of the clause has some very odd consequences. I should like to expand for a moment on those consequences.
First, the new clause of the noble Lord, Lord Airedale, will operate after the event. The clause of the noble Lord, Lord Williams, operated before the event. There is therefore a difference. However, I think it comes to much the same thing in the end. In the clause proposed by the noble Lord, Lord Airedale, the Secretary of State is simply asked to pick up the tab. He cannot extract any premium, reasonable (as the clause of the noble Lord, Lord Williams, suggests) or indeed otherwise from the producer. The effect is that the Secretary of State—and that means the taxpayer—should provide free insurance for product liability above a certain limit or where the producer is not able to obtain insurance. I do not think it is right that that burden should fall on the taxpayer generally. Surely it must fall upon the producer of the goods. If he spreads it across his product cost and among his customers, that is his business and his commercial decision.
I wonder whether the new clause, as drafted, achieves quite the effect the noble Lord intends. First, it will be profoundly uncertain for any company to discover what the amount might be for which it could reasonably be expected to obtain insurance cover. It may well obtain cover up to an amount that seems reasonable. However, the company will have no guarantee that the court subsequently will find that amount reasonable.
Secondly, the clause has a very odd effect so far as the completely negligent or even deliberate producer of unsafe products is concerned. I do not believe that there are any. But there may be, and we may be concerned with the deliberate producer of unsafe products. Such a producer quite reasonably, as he fully discloses his negligence, will probably not be able to obtain insurance at all. Yet the effect of the clause will be for the Secretary of State to have to pick up any liabilities that arise because of those activities. That surely cannot be intended.
At the end of the day, one thing stands out. The consumer who has been damaged can sue the producer only for what the producer has. That includes his insurance liability. If the insurance runs out or is nonexistent—and there is no evidence that that is so or is likely to be so—any judgment would have to look to the assets of the producer company. It has always been so, and I do not believe that the position which faces us in this Bill is different to that which has obtained before.
Finally, I repeat that the amendments are unnecessary in the light of the advice of the British Insurance Association to this House; they bring the Secretary of State into a business for which he is unsuited; and both amendments, as drafted, have curious effects of their own which are not compatible with the matters which we are discussing. I hope that both noble Lords opposite will feel able to withdraw their amendments.
Lord Williams of Elvel: My Lords, I said at the outset that I did not regard my amendment as being

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one on which I should wish to divide the House. Nevertheless, I was interested in what the Minister had to say. He first asked me why I addressed the remark to him. I addressed the remark to him because he is the Minister in the Department of Trade and Industry responsible for this Bill. I believe that it is part of the discussion of the Bill that I should address questions to that Minister. I am invited as a Fellow of the Royal Society of Arts to a lecture given by the Secretary of State for Trade and Industry on what is the DTI or why there should be a DTI. I do not intend to go to that lecture, although I am sure it would be very enlightening. I believe that the DTI is there, as the Government are there, to promote its Bills and to answer questions as they are put by the Opposition.
The noble Lord, Lord Auckland, said that this was a new concept. It is not a new concept. It is not a new concept for two reasons. First, there is compulsory insurance under the Road Traffic Act and there is no limitation on liability. Secondly, the Government themselves accepted responsibility in the case of the whooping cough vaccine. Admittedly, there was a limit to the Government's commitment to indemnify people who suffered under that vaccine. But that is not a new concept. The principle was already conceded.
As to the floodgates argument, I think that was disposed of in a judicial committee of your Lordships' House, in McLaughlin v. O'Brien. Fundamentally, the reason why I asked the Minister the question which I did was to ascertain whether the Government had any idea of the social consequences of the legislation which they are promoting. I now know as a matter of record that the Government wish to wash their hands of any liability that may come up under this legislation and that they are going to leave the whole thing to the private sector or to the companies. The community at large, headed by this Government, is not prepared to take a stand on this issue and recognise its responsibilities. That is the fundamental reason why I asked the Minister the question and that is the answer which I have received. I beg leave to withdraw the amendment.
Lord Airedale: My Lords, since we have also discussed my Amendment No. 26, perhaps I am entitled to say a word in reply. We have at last had agreement from the Government Front Bench that unlimited liability insurance is not available. The noble Lord went on to say that in a case of negligence the producer does not get unlimited liability and he has to stand any amount of liability beyond what he can insure for. I thought I said in my speech—at any rate I implied it—that if it is a question of the negligent producer paying or the innocent injured person paying, it is right that the negligent producer should pay.
The Minister failed to deal with the point that we are here dealing with an innocent producer who is not to blame. Is it really to be said that he is to be liable up to his last farthing beyond the point at which he can take out insurance, the Government having previously put forward the argument that he does not have to worry because all he has to do is to take out insurance
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and pass on the cost to the customer? This point has still not been dealt with. Is it right that the innocent producer should be liable to his last farthing beyond the point at which he can insure; and is it not right that public funds should come to his rescue in those circumstances?
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 25:
Insert the following new clause:
("EEC directive.
Judicial notice shall be taken of the English text of the Directive of the Council of the European Communities dated 25th July 1985 (No. 85/374/EEC) in any consideration of this Part of this Act. The text of the Directive will be found in Schedule [EEC Directive].").
The noble Lord said: My Lords, this amendment is fairly straightforward. It states, first, that judicial notice shall be taken of the English text of the directive; and, secondly, that it will be available in the Bill. It is clearly appropriate that the British courts should have power to consider the directive when they are considering Part I of the Bill; otherwise, we shall be in the same position as we are with regard to the Convention on Human Rights. The British courts shut their eyes to the Convention on Human Rights and then the case is taken to Strasbourg. Here it is not at all clear whether, in interpreting Part I, the British courts will be allowed to look at the directive to see what it means. We have been assured time after time that the purpose of Part I is to give effect to the directive; so presumably there is nothing seriously wrong in asking the courts in Britain to look at the directive to see what Part I means. That is what the first part of the amendment seeks to do.
With regard to the second part of the amendment, it may be a surprise to the noble Lord's department that directives are not commonly available to the man in the street. If he has to look at the product liability legislation he will go to the Consumer Protection Act. If he has to see the directive, which is already referred to in Clause 1:
"the product liability Directive' means the Directive of the Council of the European Communities, dated 25th July 1985, (No. 85/374/EEC)",
it would be convenient if it were printed as a schedule, and then he could find it quite easily.
I remind your Lordships that when I spoke at Second Reading on this matter the Hansard reporters had to ask me for a copy of the directive because they could not find one in this House. If this House cannot find one, how is the ordinary consumer, whom the Bill is supposed to protect, to find one? Is there something so drastically wrong that we cannot print the English text of the directive in a schedule? The Government seem very opposed to this and one wonders why. I beg to move.
8.45 p.m.
Lord Cameron of Lochbroom: My Lords, the noble Lord opposite knows perfectly well where the directive is to be found—in the Official Journal. His amendment, however, provides:
"Judicial notice shall be taken of the English text of the Directive…in any consideration of this Part of this Act".

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That is the form of the amendment and of the one which is related to it.
The amendment is unnecessary for a number of reasons. First, the noble Lord will be aware of Section 3(2) of the European Communities Act 1972, which states as follows:
"Judicial notice"—
it starts off in precisely the same terms as the amendment—
"shall be taken of the Treaties, of the Official Journal of the Communities … and the Official Journal shall be admissible as evidence of any instrument or other act thereby communicated of any of the Communities or of any Community institution".
This provision applies to directives such as the directive on product liability which have been published in the Official Journal and published in all the official languages of the Community. Therefore, when the noble Lord opposite was asked by the Hansard reporters where to find it, I should imagine that he replied "In the Official Journal", which will of course be found in the Library of the House. At least I should have been surprised if the noble Lord had not so replied.
By contrast with Section 3(2), the amendment has two rather restrictive and undesirable effects. First, it gives preference to the English text of the directive which, as I hope I made clear at Committee stage, is simply not adequate in terms of a multilingual instrument. Indeed, I say further that this amendment is inconsistent with that section of the 1972 Act which makes it quite clear that it is not limited to the English text of any directive which is published in the Official Journal. Secondly, it appears to be restrictive of proceedings in which provisions of Part I may be put in issue. I see no merit in such restriction.
Earlier this afternoon we had a discussion about the terms of the directive and I recollect the noble and learned Lord, Lord Denning, explaining some of the difficulties of interpreting it. Therefore the argument that it should be printed in its English text as a schedule to the Bill as an aid to the man in the street (when what it is said to be is an aid to the judges) will not stand up. Provision is made already that the directive will be the subject of judicial notice, and for what it is worth, it must be subject of judicial notice in all the official languages of the Community. Therefore the amendment would strike against what is the proper course to the Official Journal and indeed Community instruments. For all these reasons I have to say that we cannot accept the amendment.
Lord Morton of Shuna: I am very much obliged to the noble and learned Lord. Perhaps he could explain to me (because I do not quite follow this) why his government—I appreciate it was his predecessor in office who would have some responsibility—persuaded this House and another place to pass the Civil Jurisdiction and Judgments Act 1982 Section 2 of which says:
"The Conventions shall have the force of law in the United Kingdom, and judicial notice shall be taken of them".
There is no need for that if they are in the official record of the community.
In subsection (2) of section 2, for the convenience of reference, the English texts of the conventions are set
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out in Schedules 1, 2 and 3 respectively. That is the English text not the Italian, the German, the French, the Belgian, the Dutch or any of the other texts. These are set out and these are to have force of law. There is a precedent from this Government. I find for that reason, and if for no other, the answer of the noble and learned Lord rather unsatisfactory; but I beg leave to withdraw the amendment.
Lord Allen of Abbeydale: My Lords, it is not just a question of the judges or the man in the street. There are practising solicitors who might well be consulted by clients about the application of this directive, and I cannot imagine that a solicitor in Stoke-on-Trent or Ashton-under-Lyne would have ready access to the documents that we have been discussing. If the amendment itself is defective, let the Government put it right by all means, but let us have for convenience the text of the directive attached to the Bill and attached to some peg or other.
Lord Cameron of Lochbroom: My Lords, with leave of the House, I suspected—although the noble Lord opposite did not make this part of his original submissions—that he might refer to the Civil Jurisdiction and Judgments Act 1982. We were there dealing with something entirely different. That was a separate convention between the member states on jurisdiction and the enforcement of judgments, which is not in the terms of Section 32 of the 1972 Act: an instrument or other Act of the communities or any community institution. As the noble Lord opposite is well aware, unlike this Bill which translates into Part I the directive for the purposes of our law, the 1982 Act did not in fact do any such thing. What it said in Section 21 was that the conventions shall have the force of law in the United Kingdom, and judicial notice should be taken of them. That was the only part in the statute that referred to the conventions.
Thereafter, it set out the conventions in a schedule to the Act. We were dealing with something entirely different there and not with a community directive which is published in the official journal in this particular case. Perhaps it should be noted in Section 33 that there is reference to certain reports which are to be taken account of, and they are simply referred to as being reproduced in the official journal. That was thought as being sufficient notice to all those who are interested in trying to construe the convention. That seems to me to support precisely the point that I was making to the noble Lord opposite.
Amendment, by leave, withdrawn.
[Amendment No. 26 not moved.]
Clause 9 [Application of Part I to Crown]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 27:
Page 6, line 27, leave out subsections (2) and (3) and insert—
("(2) The Crown shall not, as regards the Crown's liability by virtue of this Part, be bound by this Part further than the Crown is made liable in tort under the Crown Proceedings Act 1947, as that Act has effect from time to time.").
The noble and learned Lord said: My Lords, I spoke to this amendment on Amendment No. 22. I beg to move.
On Question, amendment agreed to.
Clause 10 [The general safety requirement]:
Lord Mottistone Lord Mottistone moved Amendment No. 28:
Page 6, leave out lines 35 to 38 and insert—
("knowingly or recklessly—

(a) supplies

(b) offers or agrees to supply; or

(c) exposes or possesses for supply

any consumer goods which fail to comply with the general safety requirement.").
The noble Lord said: My Lords, at the Committee stage I sought, with the aid of the CBI, to persuade the Government to narrow down and clarify some parts of Clause 10. My noble friend put various arguments against that so I have not sought to pursue it again. Again, with the aid of the CBI, I propose to use a different approach to the problem. This concentrates on introducing an element of mens rea.I must admit to your Lordships that I stopped learning Latin at the age of 13, so I hope that I have pronounced the phrase correctly. Not being a lawyer, I do not quite know what it means except I am told it means guilty intent in regard to the offence. As at present drafted, a producer can be found guilty of a criminal offence merely by virtue of breaching the requirement even though he had no intention of doing so.
The point of this amendment is to try to introduce the concept of a knowing or reckless breach of the duty. In fact, it is those breaches and a rewording of the existing Clause 10(1) which is all that is involved.
In putting down this amendment I told my noble friend the Minister the details of why I was doing so and he very kindly wrote me a letter explaining why he did not accept this amendment. I must confess his letter is fairly convincing, but I will be grateful indeed if he would tell your Lordships about it so it should be put on the record. I beg to move.
Lord Williams of Elvel: My Lords, we would regard this as a wrecking amendment of Part II. If this amendment is accepted by the Government we would regard it as changing the whole basis of Part II for the very reasons which the noble Lord, Lord Mottistone, has introduced. Therefore, if the Government feel at all tempted, we wish to divide the House against it. I hope very much that the Government will not accept this amendment and will stick firmly to the course which is plainly chartered in the Bill as drafted.
Lord Lucas of Chilworth: My Lords, as the noble Lord, Lord Williams, said, I will certainly be advising the House not to accept this amendment. I have already said so to my noble friend Lord Mottistone in a letter which I confess was only written this morning and delivered to him shortly before your Lordships' House sat this afternoon; and I doubt whether many noble Lords have had an opportunity of seeing a copy in the Library. The noble Lord, my old friend, asks me to explain to your Lordships why I will not accept it and this is what I propose to do as shortly as I can and as he suggests, for the record. The amendment does introduce this element of mens rea into the offence of supplying any consumer goods which fail to comply with the general safety requirements.
It has long been held that those statutes whose object is the protection of the public from risks to their health
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and safety should not require proof of mens rea or the state of the defendant's mind, in order to secure a conviction. That is the point which I think the noble Lord, Lord Williams, is really driving at. The prosecution succeed by proving the actions of the defendant, and apart from the offence of supplying goods which contravene the safety regulations, other examples would be many offences under the Road Traffic Act, and the Trade Descriptions Act 1968, and indeed the Food Act 1984.
My noble friend expressed some concern about what he saw as the breadth of the definition of the general safety requirements, and that a producer or supplier could be found guilty of the criminal offence merely by supplying goods which failed to comply with that requirement even though he had no intention of so doing. In the matter of the protection of the public from dangerous goods, that just will not do. Suppliers of consumer goods should not be able to evade their responsibility to consumers by merely saying, "Well, I did not know that the goods were unsafe". We must expect a more positive act by the supplier of consumer goods if the protection envisaged by this part of the Bill is to be achieved. Suppliers of goods must bear the responsibility of determining whether or not the goods are reasonably safe enough to supply or not. If the supplier has taken positive steps to check that the goods are safe, then he has nothing to fear.
Clause 39 contains the defence of due diligence. Thus, any person, manufacturer, importer or retailer who is proceeded against for supplying consumer goods which contravene the general safety require-ment shall have a defence if they can show that they took all reasonable steps and exercised all due diligence to avoid committing that offence. Therefore, if after taking all such steps and exercising all such diligence, a person is nevertheless found to have supplied unsafe consumer goods he will have this defence to any proceedings against him.
Perhaps I may ease the concern of my noble friend Lord Mottistone if I remind him of another part of Clause 10; namely, subsection (4)(b). Following the proposals in the White Paper we have included in this part of the Bill a specific defence for retailers. The Government have accepted that it would be unrealistic to expect retailers, both large and small, who sell a wide range of goods to have sufficient knowledge about all of them to be able to determine whether those goods failed to comply with the general safety requirement. For those reasons we have included these two paragraphs in subsection (4)(b) which make it clear that it will be a defence for a retailer to say that he neither knew nor had reasonable grounds for believing that the goods he supplied failed to comply with the general safety requirement.
I do not think we could apply the same defence to manufacturers, importers or wholesalers. They may reasonably be expected to have more detailed knowledge of their goods and to be in a position to check or insist that their suppliers check that goods comply with the general safety requirement. If the general safety requirement is going to mean anything in terms of protecting consumers from unsafe goods, then the offence should remain as it stands. That is the

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thrust of the short intervention of the noble Lord, Lord Williams, in arguing against the amendment, which, frankly, I think my noble friend now accepts. Having explained the matter to him in rather more detail than in my letter I hope my noble friend will feel able to withdraw his amendment.
9 p.m.
Lord Mottistone: My Lords, I am indeed grateful to my noble friend for spelling out the position in more detail. My only regret is that being convinced by my noble friend means that I have to agree with the noble Lord, Lord Williams. As he was so emphatically against my amendment I regret bitterly that I cannot press it to a Division and defeat him. However, I have undertaken to accept my noble friend's explanation and I therefore beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 29:
Page 6, line 41, leave out from ("circumstances,") to end of line 43 and insert (", including—

( ) the manner in which, and purposes for which, the goods are being or would be marketed, the get-up of the goods, the use of any mark in relation to the goods and any instructions or warnings which are given or would be given with respect to the keeping, use or consumption of the goods;").

The noble Lord said: My Lords, probably noble Lords will recall that during the debate in Committee on Clause 10 stand part both the noble Lords, Lord Williams and Lord Hacking, made certain points about the way in which the drafting of Clause 10 depends on Clause 3. The noble Lord, Lord Hacking—I am sorry he is not in the Chamber tonight—was particularly concerned that we had made the question of whether or not there is a defect in a product for the purposes of Part I a sufficient condition for goods to fail to comply with the general safety requirement. The noble Lord also asked about the differing standards of proof in Parts I and II.
At the same time the noble Lord, Lord Williams, was concerned that while Part II applied as it stands to Northern Ireland, the reference that it made to Part I was somewhat odd since Part I does not apply to Northern Ireland. I think the noble Lord will recall, as will other noble Lords, that I undertook to consider these points.
In view of the points made then, and other concerns put to us, we think there would be an advantage in uncoupling the test of defectiveness in Part I from the consideration of safety in Part II. The amendment is designed to achieve that. It imports into Part II a reference to circumstances specified in Clause 3(2)(a) which need to be taken into account in Part I in determining whether goods are defective. This covers the question of the manner in which, and the purposes for which, the goods are being marketed and other similar factors.
However, all noble Lords will have noticed that we have not imported the other two circumstances specified in Clause 3(2)(b) and (c); that is, the use to which the goods will be put and the time when the product was supplied by the producer. We consider that the first of these is unnecessary because of the
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definition of "safe" in Clause 19. This covers the question of the use to which goods might be put. Nor have we transferred from Part I to Part II the circumstances in Clause 2(3)(c), which refers to the time when the product was supplied by its producer to another. This is relevant to Part I since the damage which a defect in the goods causes may well arise many years after it is first manufactured or supplied. However, Part II only operates upon goods when they are supplied and by virtue of Clause 10(4)(c), which applies only to goods supplied as new. The time when they are produced is, therefore, not relevant.
Perhaps I should add that nothing in the provision contained in Clause 10(2) will override the general requirement that the court must take all the circumstances into account. We believe that this amendment leads to a considerable simplification of the Bill and that it will prevent the kind of questions asked by the noble Lords, Lord Hacking and Lord Williams, being raised and creating possible difficulties over the relationship between Parts I and II. I beg to move.
Lord Williams of Elvel: My Lords, we are grateful to the noble Lord for his explanation of the amendment which has been tabled in response to interventions made in Committee by the noble Lord, Lord Hacking, and myself. I was fearful that I should have to respond on behalf of the noble Lord, Lord Hacking, but I notice that, as if by magic, he appeared in the Chamber while the noble Lord the Minister was speaking and is now in his place. I think the noble Lord heard approximately one-half to five-eighths of what the Minister said, so I will try very hard to summarise for his benefit the three-eighths which are important and which he perhaps did not hear.
The amendment fulfils that purpose of uncoupling Part II from Part I. I think that was the major point that the noble Lord, Lord Hacking, made in Committee. I was worried about that in the case of Northern Ireland and from that point of view it is an immense improvement on the Bill as originally drafted. It fulfils that purpose, but the noble Lord has pointed out that there are one or two other issues which it does not cover. I cannot say whether it will give rise to other problems until I have read carefully in Hansard what the noble Lord said. It is a complicated issue. I am sure that the basic thrust of the amendment, which uncouples Part II from Part I, is right, and I welcome it.
Lord Hacking: My Lords, I should like to express my gratitude to the Minister for moving the amendment. I apologise to him for not being in your Lordships' House when he did so. I cannot therefore comment in any detail on it. I have read the amendment and it is a great improvement on the earlier provision. In uncouples Part I from Part II, which was the concern I expressed in Committee. I am grateful.
On Question, amendment agreed to.
Lord Gallacher Lord Gallacher moved Amendment No. 30:
Page 6, line 44, leave out ("any standards of safety published by any person") and insert ("approved British or European standards").
The noble Lord said: On behalf of my noble friend Lord Graham of Edmonton I beg to move Amendment No. 30, standing in his name on the Order Paper. The amendment is designed to leave out the words:
"any standards of safety published by any person",
and to replace them with:
"approved British or European standards."
The clause as at present drafted seems to us to be too wide. It provides as one criterion of safety that regard must be had to any standards of safety published by any person. That would enable individuals or sectors of trade to draw up their own standards without any independent or official checking or approval, and then use those standards as an absolute defence to a prosecution. That is undesirable and even dangerous for consumers.
The reference in the amendment to "European standards" acknowledges the fact that we are members of the Community and that the Community has a major interest in standards. For some years, it has been actively promoting the harmonisation of standards throughout the Community: first, to facilitate trade and, secondly, and no less importantly, to protect consumers throughout the Community. It seems appropriate that that point should he recognised in Bills of this kind.
Furthermore, Commissioner Lord Cockfield has taken the initiative since becoming a member of the Commission to seek to move more quickly towards the completion of the internal market by 1992, and, in proposals which have now been accepted by the Council of Ministers, it is hoped that the standard for goods in one country will be acceptable as a standard in all member states, thus obviating the long and tedious process of harmonisation as such.
That is a commendable initiative by the noble Lord, Lord Cockfield. It presupposes that the standards that are enforced in particular member states are fair and reasonable and not ones which can be achieved as easily as the Bill now proposes. If that were to be so, it would torpedo the initiative of the noble Lord, Lord Cockfield, and result in a large number of cases going before the European Court when an attempt was made to export goods of poor standard from one member state to another. That would be undesirable, and the effect of the clause would be to slow up the process of completing the internal market, an objective to which I am sure the Government suscribe. It is in those circumstances that I beg to move the amendment.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Gallacher, for moving this amendment in the name of his noble friend Lord Graham. As he says, the amendment attempts to restrict those standards of safety which would be considered in deciding whether consumer goods fail to comply with the general safety requirement to, as the amendment states:
"approved British or European standards".
The purpose of Clause 10(2) is to ensure that all the circumstances are considered when deciding whether consumer goods fail to comply with the general safety
902
requirement. The paragraphs of that subsection, and the new subsection that we have just discussed, are pointers to particular circumstances that could be considered among all the circumstances.
Along with all the qualifications in the preceding subsection about the manner in which the goods are marketed or used and any instructions or warnings given with the goods, and in the subsequent subsection concerning the existence of any means by which it would have been reasonable for the goods to have been made safer, we have also to consider any standards of safety published by any person.
However, that consideration of standards will include whether the standard of safety which applies to the goods in question is suitable. If the public standard does not reach the level of safety which in all the other circumstances is necessary, compliance with that standard will not necessarily be enough to outweigh consideration of these other circumstances.
The amendment proposed is that only "approved British or European standards" should be relevant to compliance. We have in Clause 10 specific reference, in subsection (3)(b)(ii), to approved standards of safety. These standards are more than likely to be British standards, but they may be suitable safety standards from any part of the world. However, for the purposes of the subsection compliance with an approved safety standard will ensure that goods comply with the general safety requirement in relation to matters covered by that standard. No other factors need he taken into account. Compliance with that approved standard will be sufficient.
For the purposes of subsection (2) of Clause 10—I have to repeat this—where all the circumstances are to be taken into account, any standards of safety will he taken into account although only if the level of safety provided by those standards is sufficiently high. There is a distinct difference here between the role of safety standards for the purposes of subsection (2) and subsection (3). The amendment before us would limit the generality of subsection (2) and, as I have already said, compliance with approved standards of safety relates to subsection (3). I should also add that for the purposes of subsection (2) this amendment makes no provision for the approval to which it refers. I am not sure that our GATT trading partners would be over-happy with our insistence on British or European standards for the purpose of the general safety requirement.
For these main reasons, and the additional important reasons I outlined earlier, I hope that the noble Lord will feel able to withdraw his amendment.
9.15 p.m.
Lord Mottistone: My Lords, as the noble Lord, Lord Gallacher, knows well, I put forward an amendment at Committee stage which he supported. It referred to this same area, but was broader. My amendment referred to any approved person. He has narrowed it to British or European approvals.

903
I understand what my noble friend is saying. That is why I proposed another amendment altogether which I have had to admit does not stand up to the criticisms of my noble friend. However, there is uncertainty in this area. I am not sure that we can do anything about it in this House; the next stage will be Third Reading. Perhaps our friends in another place may be able to nag away at this and get the provision right. I am not happy with the reference to "any person". It might give an opening to the wrong kind of person. I referred to this when I spoke earlier. Perhaps the Government will take into account what everyone said at Committee stage—I am not sure that they did at the time—and what has been said now, and see whether they can tidy this up so that one does not have a situation in which the approval is not genuine enough for the circumstances.
Lord Gallacher: My Lords, I thank the Minister for the reply he made to this amendment. I thank the noble Lord, Lord Mottistone, for the words he had to say, which seemed to indicate support for it. I followed as closely as I could the explanation which the Minister gave and the distinction which he drew between subsections (2) and (3). I am sure that there is a distinction. In the sober cold of morning and with the aid of Hansard I hope I shall finally appreciate that distinction. I shall study carefully what the Minister has said. Hopefully, when daylight dawns reason may return. At the moment I must confess to utter confusion about the distinction which the Minister so ably described from what I suppose was a very well-scripted brief. Nevertheless, I beg leave to withdraw the amendment and I do so in the full and certain knowledge that an even better amendment is to follow which will be more ably moved by my noble friend Lady Nicol.
Amendment, by leave, withdrawn.
Baroness Nicol Baroness Nicol moved Amendment No. 31:
Page 6, line 44, after ("person") insert ("approved by the Secretary of State").
The noble Baroness said: My Lords, the substance of this amendment was raised by the noble Lord, Lord Mottistone, at Committee stage. I believe that he has just spoken to that rather than to the amendment of my noble friend. I may perhaps serve to pour a little oil on the troubled waters between the noble Lord, Lord Mottistone, and my Front Bench, if I say that I can do no better than to quote what he said at Committee stage in col. 892 in relation to the subject of this amendment. The noble Lord said:
"any standards of safety published by any person can take effect within this Clause and it lays the matter very wide open to all sorts of people producing a standard of safety".
Lord Mottistone went on to say:
"I, as 'any person', could produce a standard of safety which would be detrimental to my competitor's goods and possibly make it easier for me to sell my own. Therefore one needs to have not just 'any person' but a recognised person, an approved person".
This particular amendment is an attempt to overcome that difficulty. Your Lordships will recall that in reply at col. 894 of Hansard the noble Lord, Lord Beaverbrook, said:
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"There is one point about this amendment which I do not understand, and that is who the noble Lord, Lord Mottistone, believes should be 'an approved' person".
We are saying that an approved person is a person approved by the Secretary of State. We feel that this would reduce the risk of abuse and injustice and I appreciate that part of what the Minister has just said relates to this point. Nevertheless, I feel there is a separate point which needs to be made. I beg to move.
Lord Mottistone: My Lords, I should like to support this amendment in principle—I could hardly not do so in view of the extensive quotations from my own contribution at Committee stage. It follows on from what I was saying before that I am not quite happy about this amendment. It brings the Secretary of State into this area which is perhaps going too high. For example, I suppose it can be said that the BSI is approved as a body but it is an approving body. I should like to think that that did not have to go to the Secretary of State for further approval.
I am not entirely happy about this amendment as such; but I am happy about what it is trying to do. I hope that my noble friend will pick up the point that we are all trying to make to try and refine this to make sure that people are not inadvertently unfairly treated by some sort of person who should not really be contributing at all. I cannot go further than that.
Lord Lucas of Chilworth: My Lords, in view of what I have just said in response to Amendment No. 30, I doubt whether my noble friend Lord Mottistone, or the noble Baroness, Lady Nicol, will wish me to rehearse all the arguments again—no, the noble Baroness indicates that she does not wish me to do so.
I note my noble friend Lord Mottistone's unhappiness. Later, he then went on to say that he would be happy about some other matter. I am not quite sure how this will balance out. I should like to say this to the noble Lord: of course, I am always prepared to look at these matters. I do not think that there is any room for change; I do not think that there is any need for change. I thought I had made it clear in relation to the amendment which we have just discussed that for the purpose of subsection (2) of Clause 10 all the circumstances must include any published standard of safety. Whether that particular safety standard will be taken into account will depend on whether the level of safety provided by that standard was high enough.
Approved standards—namely those approved by the Secretary of State for the purposes of subsection (3) of Clause 10—serve a particular purpose.
If consumer goods comply with a safety standard approved by the Secretary of State for that purpose then those goods will also comply with the general safety requirement. There is no question of any particular body either side of what might be called a fence, being unfairly treated.
I hope that the noble Baroness particularly, (who moved this amendment) will accept my explanation coupled with the explanation that I gave in relation to Amendment No. 30, and feel able to withdraw her amendment.
Baroness Nicol: My Lords, I accept the Minister's explanation: but along with the noble Lord, Lord Mottistone, I feel that there is still an area of unease here. I hope that as the Bill makes its way through the other place a slightly better solution may be found. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Nicol Baroness Nicol moved amendment No. 32:
Page 7, line 2, leave out ("cost").
The noble Baroness said: My Lords, on behalf of my noble friend Lord Graham, I beg to move Amendment No. 32. This amendment has the support of the Association of County Councils which points out that for the first time the question of cost has been introduced into the safety equation. The implication is that making goods safe might be too expensive.
Although the onus of proof would be on the defendant—and it has to be admitted that this would be a difficult task for him—it is submitted that as a matter of principle there should not be a statutory price on safety. Perhaps in passing the Minister can tell me who will estimate the cost under the Bill as it stands?
Lord Beaverbrook: My Lords, it will be clear to the House from our discussion of the preceding amendments that for the purposes of subsection (2) of Clause 10 all the circumstances should be taken into account. We have discussed the new amendment, which refers to the manner in which goods have been marketed and any instructions or warnings given with them. We have also discussed the published standards of safety which could be relevant to those goods. The amendment proposes removing from what will now be the third paragraph of subsection (2) a particular factor which should be taken into account when deciding whether consumer goods fail to comply with the general safety requirement. That factor is the cost of making those goods safer.
This subsection provides that, when deciding whether consumer goods fail to comply with the general safety requirement, one should take into account whether it would have been reasonable for the goods to have been made safer. It particularly emphasises that when doing so one should take into account, along with the likelihood and the extent, the costs of any possible improvement.
I wonder whether there is some confusion in noble Lords' minds as to the reason for this provision. It is there to ensure that when we look to see whether goods comply with the general safety requirement we do not look for a totally unrealistic level of safety. This is not possible in a general requirement of this kind, and this subsection ensures that, not only should we look to see whether it was possible to make the goods any safer, but that if it had been possible, whether the cost in relation to that particular good would have been reasonable. Perhaps an example might help. I think we would all recognise that drinking glasses may break easily and could thus be described as being not absolutely safe. It might well be possible, and I have no doubt that it is, to design and produce drinking glasses which would be completely unbreakable and therefore
906
perhaps more safe. However, the cost of doing this might well increase the price of those glasses so much that they would no longer be a viable commodity.
If an enforcement officer proceeded against a person on the grounds that the consumer goods that he had supplied did not comply with the general safety requirement but that they could have complied with the general safety requirement if certain modifications or alterations had been made to them, then the cost of those alterations or modifications in relation to the cost of the goods in question would have to be taken into account. Thus it would be unreasonable to suggest that an article costing, for example, £5 could have been made safer by the expenditure of £50.
However, at the risk of repeating myself, this subsection is only one of the factors which will be taken into account in "all the circumstances" to be considered when deciding whether consumer goods fail to comply with the general safety requirement. It is there to remind both enforcement officers and the court that, if it is claimed that the goods could have been made safer, then along with the likelihood and extent of any possible improvement, the cost of that improvement must be taken into account and the cost should be reasonable in relation to the product in question.
I hope that after my explanation the noble Baroness may feel able to withdraw the amendment.
9.30 p.m.
Earl De La Warr: My Lords, it seems to me that the noble Baroness is quite right in seeking to take out the word "cost". I referred to the matter at Second Reading when I was talking about the anti-skid device on an expensive car as opposed to no device on a cheaper car. I believe that it will require the judge to take into account a whole new dimension and that it will be extremely difficult for him to do so. I believe that the whole matter would be much simpler if reference to the word "cost" was not there.
Lord Mottistone: My Lords, I could not agree less with my noble friend Lord De La Warr. I entirely agree with my noble friend Lord Beaverbrook, on the Front Bench, and I hope this amendment will not be pursued. I believe the argument about the glass is incontrovertible.
Baroness Nicol: My Lords, I am grateful to the noble Earl for his support. I am grateful to the Minister for his long and detailed reply, although I am not sure that I would have chosen drinking glasses as the best example for a discussion of this kind.
However, it is the first time that we have aired this problem in any detail. I should like to study the Minister's reply and see how we feel about the matter—as my noble friend said earlier—in the cold light of day. At the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Nicol Baroness Nicol moved Amendment No. 33:
Page 7, leave out lines 35 to 42 and insert
("(c) that the goods were not in fact new goods at the time of the supply and that they either—

(i) complied with such standards of safety (if any) as are referred to in subsection 2(a) above as were in existence, and such safety regulations (if any) made under section II below as were in force, at the time when the goods were first supplied as new goods, or

(ii) had attached to them written information about any modifications, repairs, conditions necessary to ensure that they would be safe when used.").

The noble Baroness said: My Lords, this is another attempt to ensure that traders in second-hand goods are under a duty to sell goods which are reasonably safe. I should say at the outset that the amendment has the support of the Consumers' Association and the National Consumer Council.
We have studied the Minister's reply to a similar amendment at Committee stage. Although we were reassured on the subject of gas cookers, we are not satisfied that regulations would provide as secure a protection as this amendment would introduce for items other than gas cookers. We want to prevent unscrupulous traders getting around safety requirements.
Clause 10, as drafted, would enable traders to label unsafe goods, "Not sold as new" and so avoid liability under Part II of the Bill. In the past there have been cases of goods subject to a prohibition order returning to shops when the order has expired. In future, unless the Bill is amended, unsafe goods might appear in markets and other places as second-hand goods and enforcement officers would have the task of proving that the goods were in fact new.
Even then, given the wording of Clause 10(4)(c), the only action open to them would be a prosecution under the Trade Descriptions Act. It seems sensible that second-hand goods should be expected to comply with the safety standards which were in force at the time of manufacture. That would be the effect of this amendment in its first part. The second part would enable traders to sell goods in need of repair provided that they attached information about the precise defects and repairs which needed to be undertaken. I beg to move.
Baroness Burton of Coventry: My Lords, during the Committee stage the noble Baroness, Lady Nicol, moved an amendment that we should leave out lines 21 and 22 on page 7, which, of course, would have deleted one of the defences against offences under the general safety requirements by removing the defence of goods intended for export. Those of us who supported the amendment regretted that it was not acceptable to the Minister.
The noble Baroness tried again when she moved an amendment to bring under the general safety requirements second-hand goods sold in the course of business, as defined in subsection (5)(a) of Clause 10. In spite of strong support from consumer organisations, we really did not fare much better than on the previous amendment. As he will recall, the
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noble Lord, Lord Lucas, said at col. 907 of the Official Report, of 21st January 1987:
"As the noble Baroness, Lady Burton, reminded the Committee, I spoke about the question of gas cookers at Second Reading, and indeed have referred to it on perhaps more than one occasion in response to her penetrating questions. I confirm, and give the Committee an assurance, that the Government's intention to draft regulations to cover the safety of gas cookers is real. We are pressing on with the drafting of these regulations both for new and for second-hand gas cookers, and we hope to go to consultation in a few weeks".
I repeat that because that statement was made on 2Ist January, seven weeks ago. I am wondering when the Minister comes to reply whether he will tell us whether the consultation has started and what progress has been made.
As the House is aware, second-hand goods are specifically excluded from the general safety requirement, Clause 10(4)(c)(i). The Consumers' Association stresses that it recognises that second-hand goods cannot be expected to comply with the general safety requirements for new goods set out in Clause 10(2). It thinks that it is important that traders in second-hand goods should be under a duty to supply products which are reasonably safe. I do not see how any reasonable person could disagree with that point of view.
It may be recalled that during the Committee stage the Government argued, first, that it is not reasonable to require all second-hand goods to comply with current standards and that it is useful for retailers to supply second-hand goods at low prices; secondly, problem areas can be dealt with by regulation. Although I appreciate the usefulness of a second-hand market, I suggest that it should not provide, first, an outlet for inherently and alarmingly dangerous goods, and, secondly, a means whereby rogue traders can circumvent safety requirements.
I believe that Clause 10(4)(c) as drafted would permit traders to issue disclaimers that unregulated, unsafe goods were new and thus avoid liability under Part II of the Bill. In the past there have been cases of goods subject to a prohibition order returning to the shops when the order has expired. In future I believe that unless the Bill is amended unsafe goods might appear in markets and other places as second-hand goods and the enforcement officers would have the task of proving that the goods were in fact new. Even then, I think, given the wording of Clause 10(4)(c), the only action open to them would be a prosecution under the Trade Descriptions Act.
I agree with the Consumers' Association that second-hand goods should not be imminently or unnecessarily dangerous, and they should comply with the safety standards in force at the time of manufacture. The association has helped with this amendment, which would mean that goods sold second-hand would have to comply with standards and regulations in force at the time the goods were made. It would be for the courts to decide whether the extent of wear and tear on the product was such that it rendered it so dangerous that it was totally unsuitable for sale.

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As the House will have noted, we are also proposing that traders should be able to provide legally goods which need repair if attached to the goods is precise information as to their defects and the repairs which need to be undertaken. I am glad to support these amedments moved by my noble friend Lady Nicol. I think they are both reasonable and a contribution to general safety. I suggest that the reasons are entirely non-party and supported by consumer organisations. I hope that the Minister will find them acceptable.
Baroness Elliot of Harwood: My Lords, I should like to support these amendments. Like the noble Baroness, Lady Burton, I have had a long association with the Consumers' Association and I think that the amendments are wise. An enormous number of second-hand goods are being disposed of nowadays. There are electrical goods, children's toys and all sorts of things which are expensive and which are resold and if they are not safe they could be very dangerous indeed and do a great deal of harm. I think the Minister should consider this urgently as it is a matter with which he ought to be able to deal. It has been on the ground, so to speak, for a long time. I hope very much that the Minister will accept these amendments, and, if not tonight, he will see that they are incorporated in any future amendments to this Bill.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Baroness, Lady Nicol, for the way in which she put her amendment; she described it as another attempt. I fear that my response is practically the same. Let me deal, if I may, with the three outstanding points.
The first, which my noble friend Lady Elliot raised, concerned dangerous goods. I remind your Lordships that we already have regulations in place about electrical appliances. They have proved to be pretty successful. In that admittedly dangerous area I do not think there is anything more we should be doing.
Another area which has been described as being dangerous is that of gas cookers. I come straight to the question that the noble Baroness, Lady Burton, asked me. Although I said in January that we should be introducing regulations, she will recognise that there are a number of complex and technical points that have yet to be resolved. One is almost tempted to ask, "When is a cooker a heater? When is a heater a cooker?". That has to be resolved with consumers, as do a number of other matters. We are giving the matter active consideration. I cannot give her a very definite time, but I assure the noble Baroness that it is a matter of extreme concern to us that these matters come into place as soon as possible.
Baroness Burton of Coventry: My Lords, may I ask the Minister to clear up one matter? I asked him whether consultations had actually started.
9.45 p.m.
Lord Lucas of Chilworth: My Lords, I do not want to fall foul of the nomenclature "consultations". I said that we were discussing these matters with a number of interested parties. I think that in the terminology that the noble Baroness means "formal consultations" have not yet taken place.
I tried to make it clear at Committee stage that to require all second-hand consumer goods to comply with the general safety standard requirements would not be reasonable or practicable. I want to be serious about this, because the last time we discussed it we discussed it quite shortly, as I think the noble Baroness, Lady Nicol, will recognise. As the noble Baroness pointed out, the amendments aim to ensure that second-hand goods have to comply with any standard of safety or safety regulation which would have been in force at the time when they were first supplied as new goods or that they had attached to them some written information about the repairs that would be necessary to ensure that they would be safe when used. I exclude now electrical appliances and gas cookers. Having excluded them, I see a number of problems with that approach.
Let me consider the first proposal. I then consider the supply of second-hand furniture. This example will effectively highlight the problem of attempting to amend the Bill in this way. It is also an item which is often sold second-hand and in some quantity. How would a second-hand dealer in furniture comply with the provisions of the first part of the amendment? How would the dealer be able to check the date that the goods were first supplied—not manufactured but, as the amendment points out, supplied? I submit frankly that that task would be impossible. Even if one assumed that supply took place reasonably close to the time of manufacture, and further assumed that it would be possible to find out when the furniture had been manufactured, I doubt whether it would be easy.
We then have a further problem. The dealer in the second-hand furniture now has to consult the statute book to find out what regulations, if any, were in force at the time when he thinks the goods were first supplied as new. Again, I cannot see this as a practical approach at all.
I think the noble Baroness, Lady Nicol, probably recalls that when the upholstered furniture safety regulations of 1980 came into being it was decided that second-hand furniture should be exempted from them. Not only were the problems I have just outlined considered, but it was also thought that it would not be reasonable to expect second-hand older furniture to comply with the higher levels of safety required by those regulations or by later regulations.
There are in many of the safety regulations tests which involve either the destruction of the product in question or the testing of a defined sample taken from the goods in question. This is quite reasonable for manufacturers to carry out when they are producing a range, but if a dealer is selling an item—for example, a sofa or a three-piece suite—it is quite unreasonable for him to have to subject that one piece or that suite of furniture to the tests laid down in the relevant regulations. Not to put too fine a point on it, it might well entail setting light to the sofa, for instance.

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I intend no discourtesy to the noble Baronesses, Lady Nicol or Lady Burton. Neither do I intend to give an appearance of flippancy in my following remarks, but the amendment goes on to suggest in its second part that the alternative way of complying would be for the dealer to attach written information to the goods about what was needed to be done to ensure that they would be safe when used—safe, presumably, by the modern, later standards.
Again, I do not think that that is practicable. It would be extremely difficult and very costly for a dealer to strip down the article concerned so as to determine, for example, in the case of a sofa, the condition of the timber, the fastenings and the springs and the toxicity of the paintwork. Then, after putting it all together again, he would have to have a notice on its saying, for example, "These goods are unsafe by today's standards but if you replace the paintwork, replace the upholstery with non-flammable material and replace the stuffing with some other material, the goods will conform with the current level of safety for new goods". I do not think that is too far away from what is suggested in the amendment.
I find the point difficult. As the noble Baroness pointed out before, she is concerned, as indeed we are, that those persons who wish to buy second-hand goods at lower cost than new goods can do so. The effect of these amendments would be to increase the cost of second-hand goods in relation to that of new goods, and, much more likely, it would stop the supply of second-hand goods. I do not believe the noble Baroness would wish that to happen.
I turn for a moment to one of the last points made by the noble Baroness, Lady Burton, with regard to the general safety requirement applying to second-hand goods and traders selling new, unsafe goods as second-hand or slightly used in order to avoid a prosecution. I remind her that the provisions in Clause 10 do not catch goods which are not sold as new. It is not the state of the goods that is important but how they are presented. New goods sold as slightly used will not be caught by the Bill.
But if a trading standards officer—I pay tribute to trading standards officers for the work that they undertake and for the way in which they do it—believed that this was taking place, he could take action under Section 1 of the Trade Descriptions Act 1968, which provides that it is a criminal offence to apply a false trade description to any goods. This includes the history of the goods, including their previous ownership and usage. With those explanations, I hope I have demonstrated some of the sympathy I have with the noble Baroness in her amendment but, in truth, the impracticability of going all the way that she would like to go. I hope that she will feel able to withdraw the amendment.
Baroness Nicol: My Lords, I am intrigued by the rather bizarre picture of someone taking a Chippendale chair to pieces to see whether it is up to
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modern safety standards or even to any safety standards that may have existed at the time, which is very unlikely. But what we are more concerned with are goods which have an inherent capability for becoming dangerous—goods like prams, pushchairs, climbing frames and other things that children use. One feels that all these ought somehow to be brought within the general safety requirement, and I am sure that some way must be found to do that.
I accept that in selling second-hand furniture one cannot test it to destruction in order to give notice of how it should be repaired. But if a trader decides to sell some goods which he knows to be substandard, I see no reason at all why he should not be expected to say, "These goods require rewiring or strengthening in certain circumstances", before they go on the market. Although for this evening I propose to withdraw the amendment—does the noble Lord wish to intervene?
Lord Lucas of Chilworth: My Lords, with the leave of the House—I think technically I should say, "before the noble Baroness sits down"—I think, if I may say so, that she is getting a little confused. She talked about Chippendale. Chippendale furniture is not an every-day sale. I was talking in terms of furniture on sale which changes hands quite rapidly and frequently in large volume. Chippendale chairs have to be repaired to the standard pertaining at the time of original construction or they fail to keep their value. You cannot bring a modern repair factor to bear in the case of furniture of that kind, and well the noble Baroness knows that. I think she is pulling my leg a little.
She talked about climbing frames and so on. She could bring before your Lordships an almost limitless list. But most of the potentially dangerous secondhand goods she mentioned, such as pushchairs, are covered by the regulations. She mentioned substandard items and rewiring. Again, rewiring is electrical. I do not want to pick her up on detail, but we have a mass of legislation already in force to take care of those items which are of most danger. To embrace this limitless list would be impossible. It would drive these items out of the market-place and we want them in the market-place.
Baroness Nicol: My Lords, I hope the Minister did not mean that he wanted dangerous goods in the market-place. I was, of course, being facetious about Chippendale. I have been impressed by the fact that this amendment is supported by the Consumers' Association. I feel that its knowledge is certainly greater than mine. It felt that it was a possibility that there should be greater protection on second-hand goods and I bow to its superior knowledge. However, I take the point that the Minister has made on a number of matters and I should like to think again about this amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel had given notice of his intention to move Amendment No. 34:
Page 8, line 12, ("food") insert ("(except food that has undergone a process)").
Lord Morton of Shuna: My Lords, Amendment No. 34 is not moved.
Lord Renton: My Lords, is it in order for me to move this amendment? If it is, I beg to move it and I shall briefly explain why. It comes as a surprise to me that food is not included in those consumer goods which are to be the subject of protection on grounds of consumer safety. I think that we should be told why food is being exempted in that way.
Coming to the amendment, I must confess that if I had drafted it myself I should have said, "food that has undergone a manufacturing process". Harvesting is of course a process. In order to understand this particular paragraph of subsection (7), we must first look at the preceding paragraph, which mentions:
"growing crops or things comprised in land by virtue of being attached to it—
whatever that may mean. Perhaps it means trees.
In view of the fact that there is a growing fear—I put it no higher than that at the moment—that the use of inorganic chemicals in the manufacturing process may be a cause of cancer in human beings, to find that food as a whole is entirely exempt from the consumer safety provisions of the Bill is a matter which I believe needs explanation. I should be very grateful, therefore, if my noble friend would consider this amendment and, if the word "manufacturing" should be added to it, perhaps that can be done at Third Reading stage. Meanwhile, I beg to move.
Lord Morton of Shuna: My Lords, may I explain why I said that I was not moving the amendment standing in the name of my noble friends Lord Williams and Lady Nicol? My understanding is that the safety of food is covered by the food and drug legislation. That is the reason why it is not in the Consumer Protection Bill and that is the reason why I did not move the amendment.
Lord Mottistone: My Lords, the noble Lord is absolutely correct.
Lord Renton: My Lords, in that case, may we have a government explanation confirming that that is so?
Lord Lucas of Chilworth: My Lords, if my noble friend Lord Renton wishes a confirmation, I shall indeed confirm that Clause 10 is concerned with consumer goods. There are two main regimes for unsafe goods. One regime concerns the safety of goods used at work. That regime is set out in the Health and Safety at Work Act 1974. That Act contains very broadly speaking a general safety requirement for goods for use at work, and in Clause 36 of this Bill we make some modest improvements to that regime.
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The other main class of goods is those that we use in our private lives—that is, consumer goods—and the general safety requirement in Clause 10 is to set out a regime for consumer goods. However, there are many consumer goods whose safety is already covered by other Acts of Parliament. Motor vehicles are covered by the Road Traffic Acts; gas is covered by the Gas Act. As a general principle we do not think that it is right where there is an existing Act of Parliament to overlay that Act by the general safety requirement.
Reflecting that principle, we have therefore not applied the general safety requirement to food. As noble Lords will be well aware, and as my noble friend Lord Stanley reminded us during the debates on Part I during Committee stage, food is covered by a considerable body of existing legislation. The principal legislation in England and Wales is the Food Act 1984.
It may help my noble friend Lord Renton if I go a little further in this matter and quote from Section 1 of that Act.
"A person is guilty of an offence who—

(a) sells for human consumption,

(b) offers, exposes or advertises for sale for human consumption, or has in his possession for the purpose of such sale, any food rendered injurious to health".

The Act sets out operations that might render food injurious to health, and these include adding substances, and in particular subjecting food to any process or treatment. Section 2(1) of the Food Act 1984 effectively covers the sale of food unfit for human consumption. I think that that will probably answer my noble friend. My noble and learned friend the Lord Advocate reminds me that there is similar legislation for Scotland in the Food and Drugs (Scotland) Act 1956 and for Northern Ireland in the 1958 food legislation.
10 p.m.
Lord Renton: My Lords, perhaps I may say that, having wished to move this amendment, I am grateful to my noble friend Lord Lucas for the clear and obviously satisfactory explanation that he has given, which does not come as a surprise to me. Nevertheless, I thought it right to seek to move the amendment in order to get that explanation on record because many people might think that while we were legislating in relation to consumer safety we appeared to have left such an important matter unprovided for.
[Amendment No. 34 not moved.]
Clause 11 [Safety regulations]:
[Amendment No. 35 not moved.]
Clause 12 [Offences against the safety regulations]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 36:
Page 11, line 1, after ("prohibits") insert ("or requires").
The noble Lord said: My Lords, perhaps I may speak to this amendment in the names of my noble friends Lord Williams and Baroness Nicol. I do so in the

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confident hope that the reasonable spirit that obviously infects the Government Benches will continue to do so. This is casus improvisus.
Lord Lucas of Chilworth: Oh!
Lord Morton of Shuna: My Lords, I am sorry if the noble Lord, Lord Lucas, thought that he was replying to the amendment. I thought that the noble Lord, Lord Beaverbrook, was going to reply and he would understand what I was talking about.
Clause 11(2)(i) has provisions for requiring a mark, warning or instruction to be put on certain goods. The only offence created is that of contravening safety regulations which "prohibit". No offence is created in Clause 12 to cover the provision requiring the mark. That is obviously necessary and that is the reason for the amendment, which adds the words "or requires". I beg to move.
Lord Beaverbrook: My Lords, I am most grateful to the noble Lord opposite for explaining the reasons for the amendment. I say straight away that I am prepared to accept not only his argument but also his amendment. It would seem entirely appropriate for us in our description of offences against the safety regulations to include a provision which relates to both the prohibition and the requiring of provision of information. I commend the amendment to the House.
On Question, amendment agreed to.
Clause 13 [Prohibition notices and notices to warn]:
Baroness Nicol Baroness Nicol moved Amendment No. 37:
Page 11, line 29, at end insert—
("(c) serve on any person a notice ("a product recall notice") requiring that person to recall any relevant goods which the Secretary of State considers are unsafe and which are described in the notice.").
The noble Baroness said: My Lords, at the Committee stage we proposed a new clause to give the Secretary of State power to recall goods found to be unsafe or defective. The Minister was kind enough to commend the aims of that amendment though he thought that the new clause at that time was too complicated. We therefore move this simpler, but we believe still effective, amendment.
We still consider that our safety law should be comprehensive and that, without the fallback power that our amendment would give the Secretary of State, there are loopholes through which defective goods could find their way on to the market.
Perhaps I may quote from the National Consumer Council, which is very concerned about the amendment. It says:
"In 1984 a case involving dangerous hair curlers came to light. After complaints they were quickly removed from the respectable retail traders only to be found shortly afterwards on sale at market stalls and by street traders where they were sold at lower prices but with all the dangers still present. Consumers would have been much better protected had there been mandatory product recall coupled with the power to make destruction orders".
The Minister's reply did not deal with cases such as the one that I have just quoted. We feel that this power is needed. Perhaps I may remind your Lordships that it is a power which exists in the United States of America, where they admit that it has been very seldom used. I really believe that it is something that would not need to be used very often. Nevertheless it would be a very useful power for the Secretary of State to have in his armoury. I said at Committee stage that it would provide a useful threat to have in the background and I think perhaps traders might be a little more careful. I beg to move.
Lord Lucas of Chilworth: My Lords, I feel at something of a loss tonight because the noble Baroness puts her amendments so shortly and my explanations in rejection are so long. All I can pray in aid is the seriousness with which I view the noble Baroness' amendments. As she says, a similar amendment was moved in Committee and this one certainly avoids many of what can be described as the draconian provisions that were evident at that time. However, I have to say that I really still do not believe that a case has been made out for including such a recall power in this Bill. The amendments before us do not remove the administrative difficulties which I have previously referred to. To be really effective any recall produced must be capable of being employed very quickly and of being very effectively enforced and equally effectively monitored.
There would be particular problems, I feel, in securing the co-operation of persons in the supply chain who are not named in the notice. In particular there would be problems of establishing whether a person named in the notice had adequately fulfilled its requirements. To what lengths should a person be required to go to retrieve his goods from the people who had bought them? I think that is a very open-ended issue.
It is evident to me that it is the manufacturer who is best placed to decide how, if necessary, his recall arrangements should proceed. It is not the Secretary of State but the manufacturer who has the detailed knowledge of the unsafe products in question and of the nature of the distribution chain. I should, of course, counter any charge that it is naive to set such store by voluntary procedure. In doing that I say this: it is very much in the manufacturer's hard commercial interest to do what he can to prevent his products from injuring people. There will be very few manufacturers who would risk their good reputation by not recalling their product where this was both necessary and possible.
Again, Part I of the Bill will make a producer liable for any personal damage caused by his unsafe product and this is in addition to the criminal penalties already provided for in existing regulations and in Clause 10 of this Bill. Moreover, I think I reminded the Committee—and here I come to what the noble Baroness described as the threat hanging over the producer—that if, despite the safety legislation, unsafe products do reach consumers, the Secretary of State is empowered by Clause 13 of the Bill to serve on any person a notice requiring him to publish a warning about unsafe goods he has supplied. This power was introduced in the Consumer Safety Act 1978. It has, I

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confess with some pride, never proved necesssary to serve such a notice to warn, and I really do not accept that there is any justification for adding in this way to a power which has been on the statute book for some nine years and which it has never yet proved necessary to invoke. For those reasons I seriously believe that we would be unjustified in taking on the powers set out in these amendments, particularly when voluntary arrangements have been shown to be more than adequate.
That threat is serious because the Secretary of State could, for example, in his notice to warn—which, as I say, requires him to publish a warning about unsafe goods—require that the notice says:
"By direction of the Department of Trade and Industry".
or:
"By the Secretary of State we are required to warn".
He may be able to do that; but what a bad advertisement that is! Let us consider one or two recent events. Rowenta issued a notice; and Zanussi issued a notice which was widely publicised in all the papers—the pictorials and what are described as the "heavies". There were large advertisements. Responsible people take responsible actions. I do not believe that it is necessary for the Government to impose yet further conditions upon those people.
Baroness Nicol: My Lords, I am grateful to the Minister for his reply. But the cases he cites are not those of manufacturers against whom we seek to apply this power. Reputable manufacturers care for their reputations and they co-operate with the Government and do all that is necessary to see that unsafe products which have been sold in their name are not allowed to circulate. Those people are not a problem. It is the next layer of less scrupulous manufacturers who exist. The Minister looks grieved; but I assure him that they exist. Their products turn up on the market with great regularity. Consumer bodies can point to cases where unsafe goods which should have been recalled and destroyed have circulated.
Therefore, I am not arguing about the reputable companies. I fully accept that they co-operate and that we can expect that co-operation to continue in the future; but I am sorry that the Government will not take on board this power to deal with the others who are not so reputable and anxious to co-operate. I feel that it would be a useful power. It exists in other countries such as France and the United States. I have a list of such countries. I regret that the Government do not feel that they can give themselves that power against the day when it will surely be needed. However, I can see that I am not going to get anywhere, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 38 not moved.]
Clause 14 [Suspension notices]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 39:
Page 12, line 21, at end insert—
("(2A) A suspension notice served by an enforcement authority for the purpose of prohibiting a person for any period
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from doing the things mentioned in subsection (1) above in relation to any goods may also require that person to keep the authority informed of the whereabouts throughout that period of any of those goods in which he has an interest.")
The noble Lord said: My Lords, the House will recall that the noble Lord, Lord Gallacher, moved an amendment in Committee which was designed to ensure that goods subject to a suspension notice should not be moved. I said then that I thought the amendment went a little too far but that we ought to consider an amendment designed to ensure that an enforcement authority that lays a suspension notice can be kept informed of the whereabouts of the goods. This is such an amendment.
The amendment should assist enforcement authorities in a practical way in dealing with goods subject to a suspension notice. Normally such notices relate to goods held within the area of the authority concerned. As a result of this provision if the goods are moved either within the enforcement authority's own area or into the area of another enforcement authority the person upon whom the suspension notice is served will have to inform the original enforcement authority of the movement of the goods and their new whereabouts. Accordingly, the enforcement authority will, if the goods have been moved from its own area, be able to contact the enforcement authority of the place to which the goods have been moved and so to enable it to warn that the goods have been moved into that area.
This will provide a modest improvement to the enforcement of suspension notices which, I suspect, was behind the original amendment tabled in Committee by the noble Lord, Lord Gallacher. Therefore, I hope that he finds that this amendment meets the concern he then raised. I beg to move.
10.15 p.m.
Lord Renton: My Lords, may I ask my noble friend why at the end of his amendment he needs the words:
"in which he has an interest".
It is the whereabouts of any of those goods that is important. If those words are to be introduced, it seems to throw some doubt upon the goods that must be specified. I wonder whether my noble friend could explain that because the words seem not only unnecessary but perhaps confusing in their effect.
Baroness Nicol: My Lords, we should like to thank the Minister for moving the amendment which largely meets the points my noble friend made in Committee. We are interested in the point that the noble Lord, Lord Renton, has made, and we look forward with interest to the Minister's reply. We are grateful for the amendment, which is a good one.
Lord Lucas of Chilworth: My Lords, I am not sure that I have the point that my noble friend makes. The amendment merely states:
"A suspension notice served by an enforcement authority for the purpose of prohibiting a person for any period from doing the things mentioned in subsection (1) above in relation to any goods may also

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require that person to keep the authority informed of the whereabouts throughout that period of any of those goods in which he"
"he" being the first local authority—
"has an interest".
We cannot necessarily expect the person to tell the authority about goods that he knows nothing of. We have therefore added to the amendment:
"in which he has an interest"
because without that, it could be other goods.
Lord Renton: My Lords, if I may have the leave of the House to take my noble friend up on that point?
Lord Denham: My Lords, the noble Lord cannot ask the leave of the House, because the House, under its own procedures, cannot grant him that leave. He can use the formula, "Before my noble friend sits down"—very shortly, please.
Lord Renton: My Lords, I am most grateful, as I always am, to my noble friend the Chief Whip. May I, before my noble friend sits down, ask him whether it has occurred to him that the word "he" is misleading and ambiguous? It could refer to the person concerned. That is how I read it. My noble friend says that it refers to the authority. An authority is not always just one person—a "he" or indeed a "she". Those words need to be considered between now and Third Reading.
Lord Lucas of Chilworth: My Lords, with the leave of the House, I am perhaps still speaking because I was interrupted before I sat down. I am sure that your Lordships will be generous to me even at 10.20 p.m. I may have been a little misleading. When I said the local authority, I was referring to what went above. The "he" in the last line of the amendment is the person who is prohibited from supplying the goods. I may have confused my noble friend and the House, for which I apologise. I should like to have a look at this little exchange and write to those noble Lords who have taken an interest in this amendment to make clear the Government's position and to enable them to do what they will later.
On Question, amendment agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 40:
Page 12, line 46, at end insert ("and
(c) it is shown that the officer did not have reasonable grounds for exercising the power.").
The noble Lord said: My Lords, this amendment adds to the defences that prevent an enforcement authority having to pay compensation under subsection (6) of Clause 14. I am also speaking to Amendment No. 68, which deals with the same matter in Clause 34.
Clause 14(1) begins:
"Where an enforcement authority has reasonable grounds for suspecting that any safety provision has been contravened",
the authority may serve a suspension notice. If the enforcement authority has reasonable grounds, it has an obligation, if not a duty, to serve the suspension notice. This is a consumer protection Bill. The effect of subsection (6) by omitting the defence that the
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enforcement authority had reasonable grounds for exercising the power, will be to inhibit it from serving suspension notices. That is the last thing I should have thought any consumer protection legislation would require.
I remind the Minister that the enforcement authority is usually a local authority. A local authority, at least under the present Government, is not always provided with limitless funds. It has certain restrictions on its funds. If the authority has to pay compensation when it has acted reasonably, it may well be severely restricted in doing its duty of serving suspension notices.
When we were discussing the Criminal Justice (Scotland) Bill—to which, to my delight, I saw the noble Lord, Lord Lucas, giving attention at certain points in the debate—I drew attention to the difference between the provisions there and here. The noble Lord will no doubt recollect that in the legislation on misuse of drugs there is a similar distinction. However, if we are to expect the enforcement authority to serve suspension notices where it has reasonable grounds for suspecting that the safety provision has been contravened, we should give it the protection of not having to pay compensation when the court says that it is wrong as long as the authority can show that it has reasonable grounds for that suspicion. I therefore beg to move the amendment.
Lord Lucas of Chilworth: My Lords, this is a rerun. As I said during our Committee stage, an amendment such as this would make a significant change to the application of the provisions for compensation in the event that goods seized by an enforcement authority, or subject to a suspension notice, subsequently do not contravene any of the provisions of the consumer safety legislation.
The noble Lord reminds us that enforcement authorities are liable for this work. I wonder what he meant by his comment about the ability to undertake those tasks under the present Government. Surely he is not suggesting that this Government or any other government would supply limitless funds for the undertaking of the tasks which various authorities have to take in hand.
The noble Lord will recall that at present the enforcement authorities are liable under the Consumer Safety (Amendment) Act 1986 to pay compensation where the goods turn out to be safe for any loss or damage resulting from the seizure or the suspension, unless that seizure or suspension was attributable to any neglect or default by the trader in question. The amendment would require the trader to show that the enforcement authority had acted unreasonably in seizing the goods or suspending their supply (even though the goods were perfectly safe) before he would be entitled to compensation for any loss he may have suffered.
The Government do not accept that compensation should be linked so inextricably with this unreasonable behaviour concept on the part of the enforcement authority. Where issues of safety are in question it may be quite easy for the enforcement authority to show that it acted reasonably in seizing or suspending the supply of goods about which there was some doubt.

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It is quite possible to envisage circumstances where an authority was not acting unreasonably in detaining the goods, even though it transpired ultimately that the trader too had acted perfectly reasonably and that his goods were indeed perfectly safe. For example, there might be a simple mistake due to a third party which leads to the goods being seized. In such circumstances where neither the trader nor the authority acted unreasonably I do not accept that it is the trader who should bear the cost of any damages he has suffered as a result of the exercise of those powers.
The noble Lord spoke earlier about the provisions of the Drug Trafficking Offences Act 1986. I should like to raise this matter tonight because this is the opportunity for so doing. I agree with the noble Lord that under Section 19(2) of that Act there is a provision that compensation shall not be paid unless the court is satisfied that there has been some serious default on the part of a person concerned in the investigation or prosecution of the offence. I accept in broad terms that that provision has a similar effect to the amendments now before the House.
I do not believe that the analogy with the investigation of crime is sufficiently relevant to provide an answer here. This is the point I want to make. A police officer must be free to act on his reasonable suspicion that a crime has been committed. However, it is accepted, and I believe society expects, that where things have gone seriously amiss an innocent person may receive compensation—if, for example, he has been wrongly held in custody.
We are not talking about the same thing when we are concerned with the suspension of supply of goods or their forfeiture. It seems right here that in that case a local authority officer may exercise a greater degree of caution. Consequently, I suggest that it is wrong, as the noble Lord suggested during the Committee stage, that the difference springs from a difference in attitude that the Government may have to the police and to local authorities. I say that because this is the direction in which we were moving before. I do not believe that that is the case. It is the nature of the underlying offences which is the fundamental distinction. Therefore, I hope that the noble Lord will not feel it necessary to press his amendment.
Lord Morton of Shuna: My Lords, I find the distinction quite astonishing. If, for example, I am falsely accused of drug trafficking and all my assets are seized, I can get no compensation from the state unless I can prove both that I have suffered a serious loss and that there has been a serious default by the police, the Customs and Excise and the prosecuting authority. I remind the noble Lord that all those authorities are central government authorities.
Lord Cameron of Lochbroom: No!
Lord Morton of Shuna: But, they are now, I think. The police certainly are partly financed from central government. On the other hand, enforcement officers have a totally different situation. They can have quite reasonable grounds for suspecting that a safety provision has been breached, but if the court holds that they are wrong and that that is not due to any
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neglect or default by the person whose goods they are, then the enforcement authority must pay compensation.
It seems to me that the real loss is suffered by the innocent person who is falsely accused of the drug trafficking offence and the enforcement authority is prevented from acting because of this threat and because of the restraints on local authority expenditure. The Minister shakes his head, but I can assure him, and I have no doubt that he has received such assurance also from the enforcement authorities and from the enforcement officers, that this will happen. If they have reasonable grounds and they are found not to be established in fact, they are liable to pay compensation. That will inhibit the safety provisions.
We are talking about the protection of the consumer. Where there are reasonable grounds for suspecting safety provisions, steps should be taken. But those steps should not be a sword hanging over their head whereby they may have to pay compensation. However, at this late stage, I do not wish to press the amendment. I beg leave to withdraw it in the knowledge that I may return to it at the next stage.
Amendment, by leave, withdrawn.
[Amendment No. 41 not moved.]
Lord Beaverbrook: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at twenty-seven minutes before eleven o'clock.