Consumer Protection Bill [H.L.]

HL Deb 09 March 1987 vol 485 cc886-922

Consideration of amendments on Report resumed.

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—

1. (a)in England and Wales to the High Court; or
2. (b)in Scotland to the Court of Session: or
3. (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 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 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 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 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 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 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 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 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 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". 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 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 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 moved Amendment No. 28:

Page 6, leave out lines 35 to 38 and insert— ("knowingly or recklessly—

1. (a) supplies
2. (b) offers or agrees to supply; or
3. (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 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 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 moved Amendment No. 29:

Page 6, line 41, leave out from ("circumstances,") to end of line 43 and insert (", including—

1. ( ) 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 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 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 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.

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 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: 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 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 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 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—

1. (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
2. (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 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.

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.

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 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 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.

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—

1. (a) sells for human consumption,
2. (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 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 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 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 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 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 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 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 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 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.

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 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.