HL Deb 14 May 1987 vol 487 cc784-8

[References are to Bill 119 as printed for the Commons]

1 Clause 4, page 3, line 45, leave out "as to enable the existence of the defects to be discovered" and insert "that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control".

Lord Lucas of Chilworth

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.

This deals with development risks defence. The matter was debated at some length in your Lordships' House at every stage in the passage of the Bill. It is clear that both the other place and your Lordships' House agreed the need for this defence in the Bill as a part of the overall balance between the needs of industry and those of the consumer. We disagreed, however, over the wording of that defence.

When the Government introduced the Bill into your Lordships' House, it contained the form of words in the Bill before us today. On Report, an amendment moved by the noble Baroness, Lady Burton of Coventry, changed the wording to that in the European directive. This was agreed by the House. That decision was reversed in another place so that the Bill now contains the clearer wording with which it was introduced. No one doubts the importance of this defence in the Bill and for that reason it is equally important that the defence is understood by both producers and users of their products.

I have explained to your Lordships' House at both Committee and Report stages that we have used the words of the European directive where we can and where they are readily understood in the United Kingdom law. For most parts of the directive, and thus the Bill, this has been a satisfactory approach and has caused few problems. It has also confirmed the Government's intention, which has been to implement the European directive—no more and no less. However, where there is doubt or vagueness about the wording—and this is undeniably an example—in the interests of all concerned the Government have redrafted the words of the directive so as to make clear the intentions of the directive.

I do not intend, nor do I think I need, to repeat the arguments which were placed before your Lordships during the earliest stages of the Bill. However, perhaps I may say this. Industry has made it quite clear that without a development risks defence in this Bill the future of this country's research and development leading to new products will be severely hampered. What is important now is how that development risks defence is understood by those who produce the products and by those who will insure the risks of those producers; because at the end of the day it is the insurers of the producers' risks who will provide the ultimate protection for any injured user of the product. It is important therefore that the precise nature of the risk is clarified so that premiums can be quantified.

The Government believe that the words in the directive are not clear. However, the directive's intention is clear. The only plausible interpretation of the directive is that the information that is to be taken into account is information that any reasonable person, looking at the matter in an objective way, would say that a producer of products of that kind should be expected to act upon. It is that meaning that we have conveyed in the draft before your Lordships today.

I do not think that I have to remind noble Lords of how narrow this defence will be for a producer or how difficult it will be for him to prove. The times when a producer will be able to rely on this defence will be very few indeed and will only be in those industries which are operating at the forefront of technological knowledge. However, those are the industries on which everyone in the United Kingdom will depend for their future. It is important that those industries understand just what this defence means and that their insurance companies can correctly assess those risks.

For those reasons I hope that your Lordships will see and accept the necessity for using the words that we have in this Bill. I beg to move.

Lord Williams of Elvel

My Lords, I am grateful to the Minister for explaining the reasons for the Commons Amendment No. 1. I am bound to say that we are somewhat disappointed that the Government did not accept the amendment that was passed on Division in your Lordships' House on Report. I am the more disappointed because in another place when this Bill was discussed the Minister in his Second Reading speech said that he wished to hear the views of both sides of the House before reaching a final decision. That was on 27th April 1987. As I understand those words, they meant that he had something of an open mind.

It appeared subsequently—because 27th April is not long ago—that the government collective mind hardened on the subject, and although there was only one speech on the Second Reading in another place that I can see (which came from Mr. Richard Page), arguing very strenuously in favour of the Government's original wording rather than your Lordships' amendment, nevertheless at Committee stage in another place the Government tabled an amendment seeking to reverse what your Lordships had done.

I should have thought that if the Government felt as strongly as they quite obviously do about the amendment that your Lordships approved they would have made their views known in some way or another. I also believe that, had they felt strongly about it, the Minister in another place on Second Reading would have said, "We intend to reverse this." Although there is nothing unconstitutional about this, it would have been customary. One of the points about the revising nature of your Lordships' House is that we have a chance in normal circumstances when the Commons decide to reverse one of our amendments—in particular an amendment that was carried on a Division—to have a full discussion of what the reasons were.

In the circumstances I can only say that with reluctance, but understanding the timetable that has to go forward because of events that are outside your Lordships' control, we on these Benches will not oppose this amendment.

Baroness Burton of Coventry

My Lords, I regret very much the action of the Government in the matter of this particular amendment. Even more than that I regret the manner in which it has been done. I should like to say straight away that that is not a criticism of the noble Lord, Lord Lucas. I am referring to matters outside this Chamber altogether.

At Report stage on 9th March we had a useful discussion on the amendment put forward by myself and supported by the noble Lord, Lord Morton of Shuna, from the Labour Benches, by the noble Lord, Lord Allen of Abbeydale, from the independent ones, and by the noble and learned Lord, Lord Denning, with his wealth of legal experience.

Apart altogether from this amendment, several noble Lords had suggested in previous discussions on the Bill that we should support the proposition that we keep to the words of the directive. Noble Lords and myself wished to do so on this occasion because it seemed to us that the modification put forward by the Government draftsman had surely softened the demands made upon United Kingdom producers. Instead of having to prove that the state of knowledge was not such as to enable the existence of the defect to be discovered at all, we found that what I would term more wishy-washy concepts were introduced. Clause 4(1)(c) stated: might be expected to have discovered the defect if it had existed in his products while they were under his control". But there was nothing in the directive about that. Our argument was accepted by noble Lords and the amendment was agreed to.

In another place on Second Reading on 27th April the Minister, Mr. Michael Howard, in answer to an interruption from a Conservative Member, said: Some have welcomed that amendment, but others have opposed it. I wish to hear the views of both sides of the House before reaching a final decision".—[Official Report, Commons, 27/4/87; col. 53] Moving on to Standing Committee D, meeting on 5th May, I must confess that I find myself at a loss. At col. 32 of the Official Report for that day the Minister said: Government Amendment No. 11 concerns the working of the defence. When the defence was originally introduced in the Bill, it was worded in the same way as that contained in the present amendment. During the Bill's passage through the other place, the words were changed to resemble more nearly the words in the directive. I accept that the words in the Bill now resemble more nearly the words in the directive, but that, I fear, is their only real merit". We in this House thought that real merit had carried the day. Reverting to Standing Committee D, I can find no evidence that the government amendment was either put or voted on and I am wondering whether the Minister, before he replies, would look at col. 36 of the Official Report of the Standing Committee. Perhaps he could enlighten us on that matter.

As I said at the beginning, I very much regret the refusal to accept the amendment passed by this House and particularly the manner in which it has been done. I want to convey to the House that I feel very strongly about this—not about losing a particular issue because somebody has to win and somebody has to lose—because this issue was not settled by argument. It was not settled by vote, but by arrangement. I think that was quite disgraceful.

Lord Airedale

My Lords, did I hear the Minister say that the Government have redrafted the directive? If he said that, did he strictly mean it? Surely even the English language version of the directive is under the control of the Community. If member states are to be allowed to redraft their language version of a directive, at the end of that road we shall arrive at chaos.

Lord Allen of Abbeydale

My Lords, I too, should like to say how sorry I am that the Government decided to reverse engines and to put back the form of words which had been replaced in this House by an amendment which was voted on after full discussion. I am equally sorry that we have still not heard or read any satisfactory explanation—I say this with no disrespect to the Minister—but I suppose we never shall.

The noble Lord, Lord Williams, referred to a decision of the collective mind of government. But I cannot help wondering at what level of government the issue was put. We shall presumably never know that, either, unless we all survive for another 30 years, which seems a somewhat improbable hypothesis.

The CBI briefing—the CBI was kind enough or perhaps rash enough to send me a copy—argues in effect that the amendment now before us will make it easier for a company to mount the defence of development risks. But as the form of words approved of here (as has been pointed out) followed the wording of the directive, what the CBI must be saying is that the clause with the amendment before us will be more favourable to industry than will the directive itself—the directive which the Bill purports to implement. If that is so, it seems to be a pretty serious state of affairs. I am no lawyer, but without going into a detailed discussion at this stage I feel that the substitution of a subjective for an objective test is doubtfully consistent with the directive. Indeed, the whole sense of the wording of the amendment is that the test is whether a producer might reasonably be expected to have discovered the defect. Indeed, I believe that is the interpretation which the Minister put on it when he was explaining the amendment.

I can just see it being argued that a small producer, for example, could not reasonably be expected to carry out any extensive inquiries; but that is not what the directive provides. I cannot help thinking that the Government may be laying up trouble for themselves in the European Court. We shall see.

Although I go along with the view that the Bill as a whole should be lost, tempting though it is to call a Division when one looks at the serried ranks opposite, I regard the action which has been taken as pretty deplorable. I do not think that the Government will be able to look back with any pride on their surrender to the arguments of industry which seem to me largely misconceived and in defiance of the considered view of this House.

Lord Lucas of Chilworth

My Lords, I appreciate the views that the noble Baroness and the noble Lords have made. The noble Lord, Lord Williams, encapsulated, perhaps for all of us, some of the feelings that some of your Lordships might have had over this matter. However, I say to the noble Baroness, Lady Burton, (who referred to the Standing Committee in another place) that it is not for me to comment about the way another place conducts its business; but the amendment was made and this is shown on the record. No vote was taken. Indeed, no vote was needed, so that in effect no further education is needed.

So far as concerns the comment of the noble Lord, Lord Airedale, I did not mean to say that the text of the directive was redrafted. That, as the noble Lord said, was a Community matter; but member states are all free to implement the directive in their own legislation in their own words. This we have done on a number of occasions. As I sought to underline, here we originally made the change which has been sustained in another place purely for the sake of clarity.

To the noble Lord, Lord Allen of Abbeydale, I say that we do not believe that we are storing up trouble for ourselves within the Community largely because of what I have said in answer to the noble Lord, Lord Airedale. I understand the passionate feeling that the noble Lord has about this matter. I take the opportunity, if it is of some comfort to the noble Lord, to remind your Lordships that the development risks defence will be reviewed 10 years after the date of notification of the product liability directive. That will be in July, 1995, eight years from now. The decision about this defence will be considered again throughout the community after we have had the benefit of eight years' experience of the legislation. I beg to move.

On Question, Motion agreed to.

7.15 p.m.