HL Deb 07 December 2001 vol 629 cc1063-130

11.6 a.m.

Lord Clement-Jones

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

Moved, That the House do now again resolve itself into Committee.(Lord Clement-Jones.)

On Question, Motion agreed to.

House in Committee accordingly.

[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES (Lord Brabazon of Tara) in the Chair. ]

Clause 4 [Advertising: exclusions]:

Lord Naseby moved Amendment No. 22: Page 2, line 19, leave out "(other than an in-flight magazine)

The noble Lord said: We are now on the second day of the Committee stage. It would be to the advantage of the Committee if I reiterated that I have no interest whatever to declare in this matter. I do not even smoke. The only reason I am taking a particular interest in the Bill is that I believe in commercial freedom of speech, particularly in relation to any product or service that is freely available to citizens of the United Kingdom.

There have been a couple of developments since we met some days ago. In particular, I draw the Committee's attention to an interesting whole-page article in the Sunday Times of 2nd December, which I believe merits reading by noble Lords at their leisure. It has particular relevance to the Bill and to the amendments to which I am about to speak.

The article reminds us that nearly 8,000 people are employed in an industry which is worth £7.8 billion. Those figures are fairly accurate. They mean that, as we look at the amendments, we should recognise that this is not a fringe market but a very significant part of United Kingdom industry. It is an industry where the UK itself and the companies in it play a very significant role.

As I move on to speak specifically to the particular features of Amendments Nos. 22 and 23, it seems to me that if the Bill is to comply with the judgment of the European Court of Justice in regard to the previous, annulled, directive, the new directive will prohibit tobacco advertising which crosses borders. The Commission's proposal, published and consulted upon by Her Majesty's Government in the late summer of this year, went further: it banned all tobacco advertising in the press and, incidentally, on the Internet.

It is to be hoped—even if only to avoid a possible legal challenge, which I understand Germany may now be undertaking—that the final wording of the new directive will confine itself to advertising which crosses borders, leaving it to individual member states to maintain and make their own provisions with regard to tobacco advertising which does not cross borders. That seems to me to be—I hope I take the Committee with me—entirely logical.

The Bill should obviously take account of and implement the final terms of the directive. In additionally legislating for the UK only, it can obviously do so only to the extent that the UK has legal jurisdiction. Under the Bill as it stands, it is not—I repeat, it is not—an offence for a tobacco advertisement to be published in a magazine, or its Internet version, as long as the magazine is not the in-flight magazine of a UK airline—I pause because there is a slight caveat—unless that airline appears to the Civil Aviation Authority to have its principal place of business in the Channel Islands or the lisle of Man—in which event no offence is committed—or if the principal market of the publication is not the United Kingdom or any part of it.

There does not appear to be any sound reason, in my judgment, for these tortuous provisions as they relate to magazines on board aircraft. What is more, they are highly anti-competitive and discriminatory. They discriminate between UK airlines, airlines having their principal place of business in the Channel Islands or the Isle of Man and airlines which are riot UK airlines. So there are three categories, and the Bill as it stands discriminates between the three.

To discover the reason for the distinction and discrimination, we have to go back to the Explanatory Notes to the Bill that were previously published by the Government. In those Explanatory Notes—which I know have no legal standing but presumably they are there to help us—it is stated that the reason is to reflect, the fact that in-flight magazines of non-UK airlines are not aimed at a clearly defined national market".

So, if I have taken the Committee with me thus far, I shall move further. That explanation implies that the in-flight magazines of UK international airlines such as British Airways, Virgin and British Midland are different. But they are not different, are they? The in-flight magazines of scheduled British airlines do not generally have "a clearly defined national market". Indeed, I venture to suggest that if any of your Lordships were to contact British Airways, you would find that, while it is very proud of its heritage and Britishness, it is not defined as an "internal" national airline. Its whole strategy can be seen in its advertising strap line—"The World's Favourite Airline". What it wants is travellers from outside the UK.

We have only to look at the different nationalities of those who book seats with the airline—the Committee will be pleased to hear that I shall not list them. I think it will be accepted that the vast majority are not British—certainly, in normal times they are not. The in-flight magazines of BA scheduled flights do not generally have a clearly defined national market. The market is essentially international. It is related to the routes that BA has, the destinations and departure points. Its passengers come from many different countries.

So there is no good reason for introducing special provisions for in-flight magazines. In my judgment, the publications of airlines should be treated no differently in the Bill from other publications. In-flight magazines should be subject to the terms of Clause 4(1)(c). The in-flight proviso of paragraph (d) should be removed. There would then be no need for subsection (4). In-flight magazines should surely be regulated only by whether their principal market is within or outside the UK, just like every other publication covered by the Bill.

As the promoters of the Bill stated earlier, they do not believe that the "principal market" should be a matter defined in the Bill; they believe that it should be determined by the courts. If that is to be the case, the courts will be able to determine whether the principal market for an in-flight magazine was in or outside the UK. Subsection (4) as drafted excludes airlines whose principal place of business is in the Channel Islands—principally, it must be presumed, although I have not checked this, because the Channel Islands airlines legislation on tobacco advertising exempts in-flight magazines.

Amendment No. 22 seeks to remove the distinction that the Bill currently draws between in-flight magazines and other publications. It would remove the competitive nature of the existing provisions, and it requires the consequential amendments included in this grouping. I beg to move.

11.15 a.m.

Lord Faulkner of Worcester

I wish to speak briefly to the two amendments standing in my name on the Marshalled List; namely, Amendments Nos. 23 and 30. I agree—possibly for the only time today—with a great deal of what the noble Lord, Lord Naseby, has just said. This is an opportunity to make what might be termed a modest improvement to the Bill. I very much hope that the noble Lord, Lord Clement-Jones, who is promoting it will consider our remarks and agree to our proposals.

Amendments Nos. 23 and 30 relate to the issue of in-flight magazines. Airline passengers deserve to be protected from intrusive advertising in in-flight magazines as much as anywhere else. Among their number will be a substantial proportion of smokers, 70 per cent of whom—if the national figures are to be believed—want to give up smoking. They will not like the idea of intrusive advertising in in-flight magazines. There is no reason why one type of advertising—namely, in in-flight magazines—should be excluded from this legislation.

However, as the Bill stands, only United Kingdom air carriers would be affected by a prohibition on tobacco advertising in its magazines. Carriers from other nations, which may make as many, if not more, flights into and out of the UK than some UK carriers, are currently exempt from the Bill's provisions. Amendment No. 23 seeks to remove this exemption. putting all air carriers on the same legal footing. UK carriers should not be subject to stricter controls on the content of their in-flight magazines than other carriers using UK airports.

I discussed the amendments yesterday with the noble Lord, Lord Skelmersdale, who cannot be present. I believe that I reflect his view accurately. It makes no difference to him whether all in-flight magazines are included in the terms of the Bill or whether they are excluded; the important point is that they should be treated in the same way. So the noble Lord is in support of what we seek to do in the amendments

The exemption in the Bill as drafted has caused some concern among United Kingdom carriers. I gather that some of the leading carriers have made representations about the matter. They are keen to ensure that there is a level playing field. I am sure that Members on all sides of the Committee will agree that in the current climate we should do nothing that puts United Kingdom airlines in an inferior position in relation to their overseas competitors.

Neither my amendment nor the Bill itself prohibits airlines from selling tobacco products to their customers. Regulations under Clause 4(2) dealing with the point of sale will allow Ministers to specify what advertising will be allowed in connection with the sale of cigarettes and other tobacco products on planes.

Perhaps I may give an example to make the distinction clearer. British Airways, for example. has two main in-flight magazines. High Life is a glossy which carries reading matter interspersed with advertising. It has not carried tobacco advertising for a number of years. Shopping the World is a catalogue and it carries two pages of pictures of tobacco products for sale on the plane and gives details of their prices. The Bill will ban tobacco advertising in publications akin to High Life. The regulation-making power for "point of sale" under Clause 4(2) will allow Ministers to determine the extent to which advertising can continue in publications such as Shopping the World Most carriers flying into and out of Britain have an address in this jurisdiction where process can be served in case of an alleged offence under the provisions of the Bill.

Amendment No. 30 is consequential on Amendment No. 23. It deals with the definition for the purposes of the Bill of a UK airline. Removing the exemption for non-UK airlines would remove the need for that definition. If Amendment No. 23 were accepted, Amendment No. 30 would be uncontroversial.

The case for a total ban on tobacco advertising strengthens with every day that passes. This week we have seen new research suggesting that half of the UK's smokers think that smoking cannot be too dangerous if cigarette advertising remains legal. The passage of an effective Bill to stop tobacco advertising is seen by the public as a test of the Government's commitment on public health. We should listen to that and take account of the clear support that the Bill enjoys among the public. It also makes sense for us to improve the Bill slightly by strengthening its provisions in the way that I have proposed.

Earl Howe

I shall speak to Amendments Nos. 24 and 30. I support the remarks of my noble friend Lord Naseby and the noble Lord, Lord Faulkner. The issue is of considerable concern to UK airlines. In-flight retail services on board UK charter and scheduled airlines have for many years represented a significant revenue stream for those carriers.

There are two main issues as regards these provisions. The first, as the noble Lord, Lord Faulkner, has clearly set out, is that the restrictions that the Bill proposes for the in-flight magazines of UK airlines are specific to those airlines and do not apply to foreign-owned airlines. There are strong grounds for arguing that the provisions are discriminatory and anti-competitive in that sense.

One can ask what that concern amounts to. My belief is that to make such a distinction between UK and non-UK carriers diminishes—in a way that perhaps matters more to smokers than to non-smokers—the service that UK airlines offer to their passengers. We are asking UK airlines to take a hit on their revenue stream arising from on-board retail operations. We have to ask whether that is fair and whether we want to do that when the business of passenger air transport is such a competitive and global one.

The second issue relates to the practical inability of UK airlines to represent merchandise at point of sale. The specific nature of retailing on board an aircraft does not allow for point of sale material or merchandising displays to indicate the range of products available to passengers in flight. There is no room to do that. The only opportunity is through in-flight retail brochures. On that subject, we should bear in mind that airlines compete not simply with one another, but, when it comes to retailing, with ordinary shops in the high street and at airports. The Bill will allow shops to mount advertisements and displays at the point of sale, whereas airlines will be debarred from the nearest practical equivalent to a point-of-sale display.

There are a few elements of the Bill on which we have to pull ourselves up short and ask whether the game is worth the candle. In-flight publications are one example. Do the Government and the noble Lord, Lord Clement-Jones, really believe that the photographic representation of some cigarette cartons beside a price list of merchandise in an in-flight retail brochure promotes smoking or is equivalent in force or status to the advertising of cigarettes on billboards and in magazines? I find that difficult to accept and I question whether these provisions should be in the Bill.

There are other concerns. Why are airlines singled out for such treatment and not ferry companies or cross-Channel rail and coach companies? We may be clear in our minds about what we think a UK airline is, but there are grey areas. The Bill purports to give us a clear definition, but we all know that life in the airline industry is not always as straightforward as it may seem from the outside. British Airways, for example, contracts out some of its services to other carriers. A contracted-out flight may still be listed as a BA flight, but those who book to travel on it will find a different company name on the side of the aeroplane. That practice is known as code sharing. Can the noble Lord, Lord Clement-Jones, tell us whether such contracted-out flights are covered by the Bill? If they arc not—which I suspect is the case from the definition in the Bill—why not? If I am wrong and they are covered, what action is the carrier airline expected to take to be sure of complying with the law?

I hope that the noble Lord, Lord Clement-Jones, does not believe that British Airways, for example, goes about consciously promoting tobacco products. On the contrary, BA has told me that it does not promote or encourage smoking in any way and never has done. Smoking is banned on all BA flights. As far as I know, most domestic flights of other UK airlines are also non-smoking. The only activity that comes remotely close to the promotion of tobacco on board UK airlines is the sale of cigarettes and cigars in-flight, with the benefit of a retail brochure that is given to each passenger. I question whether that activity warrants the discriminatory treatment in the Bill I hope that the Government and the noble Lord, Lord Clement-Jones, will be prepared to think again about the issue.

The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath)

I shall resist the temptation to debate Second Reading principles with the noble Lord, Lord Naseby. We can debate the subject of people employed in the industry on a later amendment.

There are two substantive issues: first, whether in-flight magazines should be covered by the Bill; and secondly, whether there should be a level playing field between UK and non-UK airlines. Having listened to the debate, I accept that there is a persuasive argument in favour of a level playing field. When the Government put the Bill before Parliament before the election, we felt that it would not be right to impose a requirement on airlines that did not have their principal place of business in the United Kingdom. I acknowledge that, as my noble friend. Lord Faulkner suggested, we have received representations from British Airways in particular that it would be wrong to impose a requirement on British carriers that does not apply to its foreign competitors. I accept that that is discriminatory. I also accept that in this difficult time for a very competitive aviation industry we need a level playing field. That is why I am sympathetic to the amendments.

Lord Naseby

Will the Minister clarify that point? Are we to have a level playing field just because things are difficult, or is he saying that we should have one in any case?

Lord Hunt of Kings Heath

I am saying both. Having considered the arguments I am persuaded that it would be better to treat all airlines in the same way. I shall be interested to hear the views of the noble Lord, Lord Clement-Jones, on that. I also took account of the points made by a number of noble Lords that airlines—and British airlines in particular—are going through a pretty tough time at the moment. In that context, I am reluctant to do anything that makes life more difficult for them.

There is also the question of whether we should extend the advertising ban to all in-flight magazines, given a level playing field. My noble friend Lord Faulkner was right to suggest that airline passengers are in the same position as any other passengers or members of the public in that many will be current smokers who want to give up. I believe that they should be protected from intrusive advertising in in-flight magazines as elsewhere.

As regards the point made by the noble Earl, Lord Howe, I ought to make it clear that my understanding is that regulations under subsection (2) of Clause 4 will allow Ministers to specify what advertising will be allowed in connection with the sale of cigarettes and other tobacco products on planes. Should the Bill be passed in both Houses, there will be consultation on those regulations, including the catalogue issue which has been raised as I accept that that matter needs to be resolved in that context.

11.30 a.m.

Lord Naseby

Before the Minister sits down, in relation to those consultations will he use the guidance to which he referred in a previous discussion on the Bill when he said in relation to point of sale at the retail end: In general the Government are happy with the way in which tobacco products are displayed in shops … nor do we expect any significant change in the way in which tobacco products are commonly displayed in gantries either in the corner shop or supermarket"?—[Official Report, 16/11/01; col. 817.] Will the starting point of the consultation be those sentences that the noble Lord put on the record so that people know where they are starting from?

Lord Hunt of Kings Heath

That is a fair point. I recognise that one would have to translate that principle to, if you like, a trolley that is trundled through the gangway—if that is what it is called—between passenger seats. In general, I agree with the noble Lord's interpretation although clearly one has to await the outcome of the consultation on the regulations.

Lord Clement-Jones

This has been an interesting debate. It may surprise the noble Earl, Lord Howe, and the noble Lord, Lord Naseby, to hear that I agree with much of what they said. There is a good case for a level playing field. That has also been put by the noble Lord, Lord Faulkner, and the noble Lord, Lord Hunt. I believe that the current provision discriminates against UK airlines. Many of the points were well made.

I shall not venture into the area of code sharing as I believe that Amendment No. 23 and the consequential Amendment No. 30 should be accepted. Of course, there is a difference between those who have said that in-flight magazines should be caught by the measure and those who believe that they should be excepted. I firmly fall down on the side of those who believe that they should be caught on a non-discriminatory basis. The Minister and the noble Lord, Lord Faulkner, referred to regulations under subsection (2) of Clause 4. I noticed that the noble Earl, Lord Howe, talked about in-flight retail brochures. In-flight magazines are rather more than that, but I am sure that the measure could allow some kind of in-flight advertisement on a trolley or whatever, as the noble Lord, Lord Hunt, mentioned. That subsection clearly provides for that kind of material to be permitted by regulation.

To try to enforce a discriminatory measure as between airlines which are foreign-owned and those which are UK-owned could constitute a minefield, as the noble Earl, Lord Howe, said, especially with regard to airlines which engage in code sharing. Therefore, I believe that Amendments Nos. 23 and 30 are acceptable and that tobacco products can be sold on board aircraft with appropriate material.

I have said that I agree that in-flight magazines should continue to be caught by the legislation. It is not a question of that material coming inadvertently into a minor market such as we talked about in connection with ordinary publications. In-flight magazines are carried on aircraft owned by airlines. They are flown into this country. The system is clear. Airlines are responsible for the material that they carry. Therefore, I do not believe that there is any case for excluding in-flight magazines from the provision. I accept the points made by both the Minister and the noble Lord, Lord Faulkner, with regard to the public protection aspect. I refer to those who wish to give up smoking being reminded of it by glossy advertising in the in-flight magazine that they happen to read. I propose to accept Amendments Nos. 23 and 30, but not Amendments Nos. 24 or 22.

Lord Naseby

I am grateful to the proposer of the Bill for having listened to the contributions that were made. I thought that he might make a comment about the Channel Islands, given his stance on the previous occasion that we discussed the matter, but he resisted that this morning and I am grateful for that. As I say, I am grateful for the way he has listened to the contributions and for the contributions from the Minister who tried to be helpful and recognised that UK airlines must compete on a level playing field. At an appropriate point we shall take the view of the Committee on the two amendments which the promoter of the Bill wishes to accept. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Principal Deputy Chairman of Committees

I should point out that if Amendment No. 23 is accepted, I cannot call Amendment No. 24.

Lord Faullkner of Worcester moved Amendment No. 23: Page 2, line 22, leave out paragraph (d). On Question, amendment agreed to.

[Amendment No. 24 not moved.]

Earl Howe moved Amendment No. 25: Page 2, line 23, at end insert ", or ( ) if it is an advertisement—

  1. (i) whose purpose is to promote a service or product (other than a tobacco product) in connection with which the use of a name emblem or other feature is not prohibited by regulations made pursuant to section 10, or
  2. (ii) whose effect is to do so"

The noble Earl said: We come now to one of the more thorny issues created by the Bill, that of brand sharing or brand diversification. In moving Amendment No. 25, I shall speak also to Amendments Nos. 66, 67, 68 and 70. Brand diversification is the practice of taking a brand name that is already well established for a particular product or service and using it on another quite unrelated product or service with the aim of business diversification.

The concept is considered especially useful when a company wishes to enter a new competitive market because the brand name significantly improves the probability of success. The name "Virgin" is a good example of that. As we know, it has been applied to records, an airline, soft drinks and a whole range of other goods and services. There are many others like it. The question that arises from the Bill, and especially from Clause 11, is whether there are reasonable and legal grounds on which restrictions on brand diversification advertising can be imposed through legislation that is designed to regulate tobacco advertising.

I have perhaps two main concerns in that context. The first concern is that the impact of any regulation on brand diversification is likely to be disproportionate to the main objective of the legislation, which is to reduce smoking. I do not know of any evidence—perhaps the noble Lord, Lord Clement-Jones, can enlighten me—which shows that brand diversification advertising has the effect of encouraging people to smoke.

The second concern I have is that to restrict brand diversification advertising by this means is a disproportionate infringement of freedom of speech and specifically the freedom of speech guaranteed by Article 10 of the European convention. That is a view that has recently been expressed by Advocate General Fennelly to the European Court of Justice in the case brought by Germany against the EU tobacco advertising directive. That directive, as we all know, was annulled by the ECJ in October 2000.

The ECJ did not rule on the brand diversification provisions in the directive. However, we can reach some conclusions about this issue from the directive itself. The directive was negotiated over quite a number of years before being adopted in 1998. It aimed explicitly to regulate what it termed "indirect tobacco advertising" but recognised that brand diversification advertising is legitimate and could therefore be allowed to continue provided that certain safeguards were met. Those safeguards were that companies should act in good faith and that branding should be clearly distinct from tobacco branding.

Unfortunately, the Bill adopts a fairly blanket approach to these matters. The Explanatory Notes make it clear that the advertising provisions are designed to apply to brand diversification products. However, the way in which the Bill is worded means that only a court could judge whether an advertisement had the purpose or effect of promoting a tobacco product. Clause 11 allows the Government to bring forward secondary legislation to regulate brand diversification products.

On the first Committee day I mentioned my concern about legal uncertainties in the Bill, and we had a number of exchanges on that topic. But this matter provides another example because essentially we are being asked to sign up to the unknown. The Government can make "brand-sharing" mean whatever they want it to mean. We are not being given a clear statement of the circumstances in which exceptions will be granted.

I have been in touch with a company called Worldwide Brands Incorporated—a business established some 20 years ago specialising in fashion goods such as clothing, footwear, watches and bags. WBI is the owner of the Camel brand name. Its goods are sold throughout the world and last year its turnover exceeded 600 million US dollars. As a consequence of the European directive, WBI has repositioned its business and has adopted a single new brand name—Camel Active—which applies to all its product lines. Camel Active has a new logo arid symbol which are clearly distinct from the logo and symbol of Camel cigarettes.

The Bill would leave WBI in a most uncertain legal position. The company does not believe that the advertising of its products comes within the scope of Clause 2. It takes that view because, first, the advertising is not intended to promote a tobacco product and, secondly, it does not believe that its advertising, especially with a new branding, can have the effect of promoting a tobacco product. Hence the tabling of these amendments, which I should emphasise are designed to clarify the legal position. They are not intended to weaken the effect of the legislation.

Amendment No. 25 is designed to rectify what may be an inconsistency between Clauses 2 and 11. As the drafting stands, any advertising of fashion products undertaken by WBI could be the subject of criminal prosecution under Clause 2, even though the products themselves were permitted to be marketed under the regulations.

Amendments Nos. 66 and 70 are designed to create consistency between the Bill and the previous UK regulations dating from 1999, whose purpose was to implement the European directive. The basis of these amendments is the proposition that the approach to brand-sharing should be one of principle addressed in the Bill and not left to regulations.

I hope that the noble Lord, Lord Clement-Jones, will agree to consider these proposals on their merits. They are matters of considerable concern to WBI and to other such reputable concerns which have attempted genuine diversification and whose desire is to promote products that are wholly unrelated to tobacco. They believe that their right to do so should not be interfered with by this legislation. I beg to move.

Lord Avebury

Perhaps I may ask the noble Earl why WBI selected the name "Camel Active" to describe its new range of products. Why did it not choose a different animal from the camel as the first part of that name?

Earl Howe

Although that is an understandable question, I do not believe that it is relevant to this matter. Anyone can choose a brand name of any type. I think in particular of Alfred Dunhill. That company has manufactured luxury goods for more than 100 years. It has written to me to ask why on earth its legitimate marketing should be interfered with by the fact that another company manufactures and produces Dunhill cigarettes. I believe that it is a matter of proportion. I understand the noble Lord's question. I do not know the answer to it, but I do not believe that it is relevant to the matter that I have raised.

11.45 a.m.

Lord Naseby

Before my noble friend sits down, perhaps I may help him. First, I believe that he is absolutely right that that matter is not terribly relevant to the Bill, and we want to concentrate on the Bill today. Secondly, it could well be that Camel was registered as a trade mark some years ago and is therefore an existing trade mark. My belief is that one would be very unlikely to be able to register a camel or, indeed, any other animal as a trade mark today under trade mark legislation. Therefore, given that the company presumably already had "Camel" as a trade mark, it would seem entirely logical that it should continue with it.

Earl Howe

I emphasise that the trade mark is not Camel but Camel Active and that it has a totally different logo. I do not believe that if one looked at the two side by side one could claim that there was a suggested or inferred link between them. There is no devious intent to promote tobacco. The company has consciously chosen a different logo.

Baroness Jay of Paddington

I hesitate even to suggest this to the noble Earl, but is he not being a trifle disingenuous when one looks back at the history of, in particular, the Camel company? I have in front of me a reference to the time when the company adopted a cartoon character called "Joe Camel". The noble Earl asked at the beginning of his remarks on the amendments whether brand diversification, and so on, had an impact in terms of advertising on the consumption of tobacco. It is interesting that one study shows that nearly one-third of three year-olds matched the Joe Camel character, who was obviously designed indirectly to promote cigarettes, with cigarettes. By the age of six, children were as familiar with him as with the Mickey Mouse logo on the Disney Channel. It is suggested by the company's own research that the cartoon camel catapulted Camel cigarettes from being a brand smoked by fewer than I per cent of US smokers under the age of 18 to a brand with a one-third share of the youth market.

I apologise to the noble Lord, Lord Naseby, for introducing broader points. But I believe that, in the context of the history of the Camel company, one must be slightly suspicious of its extraordinary devotion to market purity in terms of the adoption of this slightly different perspective.

The Earl of Listowel

I note the important concern expressed by the noble Earl. However, I must voice my own concern about the example that he has given. One of the basic principles of controlling tobacco advertising has been to avoid the association of tobacco smoking with health. To me, Camel Active denotes the fact that Camel cigarettes are associated, if somewhat indirectly, with healthy activity and youth. Those types of issue can be particularly attractive to young people. Therefore, I find that, in a way, that example illustrates the concerns expressed and the reason for the necessity of this legislation.

Earl Howe

If that is the position that the noble Earl takes, does he think that within the Long Title of the Bill it is legitimate to restrict advertising on products that are not tobacco products?

The Earl of Listowel

Perhaps I can consider that point and come back at a later stage if the noble Earl pursues the amendment.

Lord Peston

I think that the answer to the question asked by the noble Earl, Lord Howe, is simply yes. Camel, as my noble friend Lady Jay suggested, is disastrous, as it is precisely that sort of thing that the Bill is intended to stop. The noble Earl should also reflect on Marlboro, which is involved in the jeans market. I hope that there will be no backing down on this matter. With all due respect and good friendship to the noble Earl, Lord Howe, I thought that a better point was made by his colleague, the noble Baroness, Lady Noakes, when we last debated this issue. She referred to Dunhill, which is the more interesting case as it is in the business of selling over-priced luxury goods. No one wants to prevent the company from selling such goods to those who are foolish enough to buy them. But Dunhill cigarettes are promoted, which is one of the consequences of the company being in the cigarette business.

The noble Earl, Lord Howe, must accept that many of us regard the sale of these dangerous products as a business in which companies should not be involved hut, because of our great devotion to liberalism. no one is trying to stop them. It is up to them whether or not they continue in that business. We are trying to ensure that they do not have the opportunity to promote these products, which is the essence of the Bill. We need a tough approach to the brand-sharing problem, which the Bill rightly adopts. I think that the noble Lord, Lord Clement-Jones, will confirm that, as drafted, the Bill does not prevent all brand-sharing.

We should be as tough as possible. My noble friend Lady Jay gave us one example—there are many others—of the antics that such companies get up to in order to legitimise their noxious products.

Lord Lucas

My concerns go back to Clause 2 and the absolute nature of the offences that the Bill creates. On the matter of brand-sharing, we have a fuzzy, difficult to define, offence. It is difficult to know whether an advertisement for Camel Active or Dunhill luxury goods is a tobacco advertisement. Yet we are creating an absolute offence that will affect printers, who merely accept advertisements on a disk and print them. It will affect the distributors and may go all the way down to the paper boy, as was emphasised the last time we discussed the Bill. It is not appropriate to have an absolute offence when the offence itself is so indefinite and hard to establish.

Lord Naseby

The noble Lord, Lord Peston, said that the law should be tough. In my judgment the law should be clear. If it is clear it may bring toughness, but to set out to determine that a law should be tough suggests a degree of prejudice, which is not what your Lordships' House should be about.

Lord Peston

It does not suggest a degree of prejudice. I set out my position, which is strongly prejudicial against tobacco companies. I think that these people are scoundrels. I hope that that makes the matter entirely clear to the noble Lord.

Lord Naseby

More importantly, it makes it clear to the outside world that the contributions of the noble Lord, Lord Peston, are highly prejudicial and should be viewed as such.

I support my noble friend Earl Howe in what he is trying to achieve. He is seeking clarity. He recognises that the promoter of the Bill has a view, with which we may either agree or disagree.

I do not want to go down the animal route too much. I lived and worked in India for some years and there are numerous other animals on cigarette packets—there is certainly an elephant brand.. I wonder what the brand Hamlet recalls to Members of the Committee. Is Hamlet a cigar or a play by Shakespeare? Were a survey to be done by MORI. for example, on what the word meant to the citizens of the United Kingdom, I hope and believe that the answer would be the play by Shakespeare. If the British public said immediately that Hamlet meant a medium-strength cigar, I would back down. Perhaps the Government would like to add that question to one of the general surveys that they are always carrying oat. We could have the results by the time we have our next debate on these issues.

Baroness Gibson of Market Rasen

Perhaps I can say what I believe. It would depend entirely on the context in which the word Hamlet was used.

Lord Naseby

Those who ask the questions always have to deal with that challenge. They are skilled in ensuring that they receive a balanced answer.

My noble friend Lady Noakes drew attention to Dunhill in our previous debate and it has been mentioned again today. I have not had time to talk to Dunhill, but I hope that members of that company will read today's debates. I recollect that the Dunhill brand originally related to pipes. I accept that a pipe is an accessory to smoking but the Dunhill brand was not a cigarette brand in this country and was not the primary source of business of the company. I think that I am right in saying that the extension from pipes was to luxury goods and the cigarettes came last. I am not entirely clear whether the promoter of the Bill is saying that we have to drive Dunhill out of business. If that is what the Bill means, that is a serious matter. I do not think that our role as legislators is to drive people out of legitimate business. There is a big question on that issue.

Since our debate on 16th November, I am told that the health council in a proposal to which I understand Her Majesty's Government do not object, has suggested that cigarette papers should be included within the scope of the EU directive, and presumably within the scope of this Bill. One has to ask where does the scope end?

Three other areas are relevant to this amendment. It is a brave person who casts aside Article 10. It is there to protect freedom of speech and its implications are strong. One of the noble Lords on the Benches on which the promoter of the Bill is sitting is probably the world expert on Article 10.

Members of the Committee will be aware, since many of us drive round the countryside, of what BP has done. It no longer has a sign saying "BP". There is now a multi-coloured daisy, which is just a symbol, but it is BP's trademark. Is that an advertisement? If it is not, in terms of the brand-sharing dimension, all sorts of difficulties will arise. There will be all sorts of designs across the whole spectrum of goods, some of which may be cigarettes.

The brand-sharing clause removes totally the prospect of own-label cigarettes. It will not be possible for a supermarket to sell own-label cigarettes because there would be brand sharing across Sainsbury's, Tesco, Gateway and other supermarkets. From the customer's point of view, that would not be good news—it would affect the price of cigarettes—and from the supermarkets' point of view it would not be good news because one would be denying them legitimate business. The promoter of the Bill and the Government say that that is not what they are about, but that would be the effect of the provisions.

I make those remarks in support of my noble friend on the Front Bench and to seek clarity, so that people will know what is legitimate and what is not.


Lord Brooke of Sutton Mandeville

I am not a smoker; nor is my wife. In these politically correct times, perhaps I should declare that I have a small parcel of shares in Gallaher and BAT, that my wife has a small parcel of shares in Gallaher, that 25 or 35 years ago the firm that I headed did some work for Imperial Tobacco and Gallaher, and that I have an affection for cricket, which has caused Gallaher occasionally to invite me to Lord's. Not one lobbyist from a tobacco company has been in touch with me about the Bill. My closeness to the tobacco industry is clearly not well known.

My enthusiasm and support for my noble friend Lord Howe and this group of amendments arises from my experience when the Government first announced their intentions in this regard in the House of Commons some four years ago. The Statement that the Secretary of State made, and the way in which he answered questions, implied that he believed that brand management had grown up perhaps only during the Thatcher years. I therefore asked him a direct question about when brand management and the creation of brands first began. It is probably well known in this House that that certainly goes back to the 19th century. Perhaps because he did not know the answer, he did not give a direct answer to my extremely simple question, which he treated as a rhetorical assault on the Government's policy as a whole. I subsequently wrote to him and asked him to answer my question in writing. It took the department a very long time to produce an answer from which I infer that it was difficult to make the remarks that the Secretary of State made in the House consistent with the facts of British history.

The Government—or the Secretary of State—set out in total ignorance of the background of management in these areas. I am therefore pleased that we are discussing the matter in detail today and that the comments of noble Lords on the Labour Benches show considerable familiarity with brand management. It is clear that during the past four years familiarity with the realities of life in the commercial world has dawned on those who are concerned with the legislation, which is being treated with more seriousness than it received in the first instance. Of course I acknowledge that the knowledge that has been demonstrated in this House has always been present and that it was only in the other place that ignorance was displayed when the policy was first launched.

Baroness Jay of Paddington

I must respond to the noble Lord, although I do not know whether I will reinforce his point about the understanding in this House of the details of the matter. Our major concern—I speak as the Minister responsible for health in this House when the Bill was originally introduced, and for my right honourable and honourable friends who were in another place when legislation on this subject was first introduced—has been to avoid increasing the market in tobacco, particularly among young people.

I again draw on my now rather tattered sheaf of notes—they go back some years—which relate to brand-sharing concepts and their effect on the numbers of young people taking up smoking. For example, the 1968 campaign by Philip Morris on the introduction of Virginia Slims was dedicated to increasing the number of young women who smoked by using attractive advertising. I do not draw a direct causal relationship between these two facts but after the introduction of the campaign in 1968, within six years the number of teenage girls who smoked in the United States—where the campaign was particularly directed—doubled.

We know that tobacco companies have now moved their efforts into countries in which there has not been such a tradition of cigarette smoking. Children in Kenya are given T-shirts with Marlboro logos on them. That returns us to the point made by the noble Lord, Lord Naseby, about how such items may have, not the company's name, but a familiar slogan that is attractive. Apparently, a range of Marlboro clothing is successfully marketed in Guatemala.

I return to my original comments directed to the noble Earl, Lord Howe, namely, that there is a degree of disingenuousness—I am surprised to see that in your Lordships' House—in suggesting that there is no link between such very wide marketing activities and the increase in smoking in those countries.

Lord Filkin

The noble Earl, Lord Howe, has initiated an important debate in relation to this amendment. It is not for any trivial reason that the Government's view is that the Bill has to address the issue of brand-sharing and recognise the potential consequences for business diversification. The reasons are well known to noble Lords. If the Bill were enacted without any attempt to control brand-sharing, evidence from elsewhere in the world suggests that there would be a strong movement among tobacco companies to use brand-sharing as the means by which they promoted the image of their product and its association. If required, I could later give some evidence of that.

There is also evidence that such brand-sharing promotion activities affect consumption. To leave the matter out of the Bill, as may be the suggestion, would drive a coach and horses through what most noble Lords wish to achieve in the Bill.

I shall also touch on the reason why we have to use regulations to deal with this tricky issue. If we sought to put everything in the Bill, we would simply fail to spot an ingenious means to get around the provisions.

I turn to Amendment No. 25. Clause 11(1) allows the Secretary of State to make regulations prohibiting or restricting the use of non-tobacco products where any name, emblem or other feature is the same or similar to the name, emblem or other feature of a tobacco product. Subsection (1)(b) of the clause provides a similar power to prohibit or restrict the use of a tobacco product. Such regulations may be subject to exceptions and may be made only where the purpose or effect of the use is to promote a tobacco product.

The amendment would ensure that if a particular name, emblem or other feature of a non-tobacco or a tobacco product did not fall foul of regulations that were made under Clause 11, its use would not fall foul of other provisions in the legislation. However Clause 11(3) already does that. That subsection allows the Secretary of State to specify that where the use of a product is allowed under regulations by virtue of the clause, the Secretary of State may provide that advertising of those goods is also allowed. That gives the power to ensure that any company whose goods are allowed to be traded, even if they promote a tobacco product, need not fear "double jeopardy". If the company were able to trade its products under regulations that were made under Clause 11, it would also be able to advertise them, and so on.

If the Bill were enacted, the Government would consult in due course on the content of any regulations made under Clause 11. We would need to ensure that the balance was right between preventing tobacco promotion and stifling business diversification. For those reasons, the amendment should, in the Government's view, be rejected.

I turn to Amendment No. 67. The deletion of Clause 11(11(a), as the amendment suggests, would unacceptably restrict the scope of the Bill and create a loophole. Documents released into the public domain have revealed how the tobacco industry reacted many years ago to the threat of increasing restrictions on direct advertising by developing a strategy to use their brands on other products. There are clearly advantages to both sides in doing so. Marlboro Classic Clothing and Camel Boots get a head start in the marketplace, while the tobacco product gets a lift and regular promotion as a consequence.

A BAT internal document stated: Opportunities should be explored by all companies to find non-tobacco products and other services which can be used to communicate the brand or house name, together with their essential visual identifiers. This is likely to be a long-term and costly operation, but the principle is to ensure that tobacco lines can be effectively publicised when all direct lines of communication are denied". There is evidence that brand-sharing increases overall consumption, which is justification for its control if we want to help teenagers to avoid taking up smoking and to help others who wish to give up smoking. When surveyed for research carried out at the University of Strathclyde, nearly one-third of young smokers were aware of brand-sharing. If we allow brand-sharing, it is obvious that companies will seek to promote branded T-shirts, boots and other apparel to help to promote cigarette products.

I shall give the Committee one or two examples of where we have seen a movement into brand-sharing. Malaysia probably provides the best example of legislation that prohibited direct advertising but did not prohibit indirect advertising. There is substantial evidence from that country as to how companies and their advertisers heavily promoted brand-sharing. Benson & Hedges was concerned about a relatively weak market share, which was declining, so the company opened up a bistro in Kuala Lumpur—Benson & Hedges Bistro—and advertised that café extensively on television. Two years later the sales of Benson & Hedges cigarettes had stabilised and Benson & Hedges was one of the most frequently recalled television commercials. Common commercial sense tells one that that is what companies will do where possible.

Amendment No. 68 seeks to limit the regulation-making power in Clause 11(1)(b) to prohibiting or restricting the use of tobacco goods where the names and emblems are identical to those of non-tobacco goods and excluding any that are similar. That would open up another problem: if it were illegal to advertise Marlboro spelt M A R L B O R 0, the company could easily market Marlborough Classic Clothing using the more traditional spelling. Clearly the effect will be read across by young people.

Amendment No. 70 would prevent regulations being made in connection with a service or product that is first traded in good faith before the Act conies into force. The Government have sympathy with this amendment inasmuch as no one would wish innocent parties to be caught by the provisions of this Bill. In general, it is not intended that companies that merely shared a name with a tobacco brand should be caught by the Bill. For that reason the brand-sharing test will be a strict one.

This is a complex subject and because of its complexity regulations will be essential. The Government intend to consult fully and carefully on such regulations were a Bill to be passed making it possible to produce draft regulations.

Lord Naseby

I am grateful to the Minister for giving way. The Minister now says that the regulations on brand-sharing will be strict. In his opening remarks I believe he said that the creativity of the tobacco companies was such that he could not define brand-sharing in the Bill because no sooner will he have defined it than someone will find a way round it. There is a dichotomy. If the regulations are to be strict, the matter can he dealt with in the Bill, as I and I suspect those in the marketplace would prefer. They will know that the Government are concerned about brand-sharing. The noble Baroness has referred to young women, which is one area of growth within a declining market. In the United Kingdom the market is declining—it is not growing—although among young women it is growing.

That approach appears to be legitimate. The Minister should make the matter clear. If the regulations are to be strict, surely it is a matter that should be in the Bill. If the matter is so vague that it will have to be dealt with by regulations, then they cannot be strict.

12.15 p.m.

Lord Filkin

There are two fundamental reasons why such matters should be dealt with through regulations. First, it is right and proper to consult in great detail, which is not appropriate at this stage. Secondly, these issues are not static. Were we to arrive at this point, we should seek to ensure that full consultation takes place on the regulations so that before the Government acted—were they able to do so—they took into account the need for certainty and clarity which is a legitimate request by the tobacco industry.

On the other hand, to put such matters on the face of the Bill would mean that, were we not to identify a potential further opportunity for promoting the consumption of cigarettes, the only way of making such modifications would be by primary legislation. I do not need to point out to the Committee what a serious inhibition that would be to dealing effectively with this matter.

On freedom of speech, the exercise of freedoms under the human rights convention may be subjected to such formalities, conditions, restrictions or penalties as prescribed by law and which are necessary in a democratic society in the interest of a number of matters including public health. So there is clear provision within the European Convention on Human Rights for legislation of this kind. Quite properly the test will be one of proportionality and whether in practice it is so applied.

I do not believe that I should go into further detail on the regulations, but some important points have been made in the debate. They should inform the Government's consideration when, and if, they reach the point of preparing draft regulations. Some matters that they may consider are whether the name, emblem or other mark had been used to promote a product before a tobacco product that came subsequently; whether such a device had been used before a date nominated—the words dealt with may be historical rather than relating to future issues—and where there is clarity but no intention on the part of the person promoting it to promote a tobacco product.

At this stage those are mere conjectures, but the Government will want to be absolutely clear on prohibiting the ability of tobacco companies to use brand-sharing to continue to promote their products and cigarette smoking, but they do not want to trap innocent companies that are not seeking to do that.

Lord Naseby

The Minister says that there are to be regulations. Presumably the Committee is aware of the statutory instrument and whether that will require negative or affirmative approval. Equally importantly, the Minister must understand, as I am sure the Government do, that the tobacco industry is an important industry in the United Kingdom. One can be certain that at the moment that industry is weighing up the effects of this Bill. That is quite right. If the industry did not do that, it would be considered a gross dereliction of duty to its employees. Therefore, it is behoven to the Minister to say to the Committee that the regulations will be prepared within a certain timespan.

If this Bill is passed and receives Royal Assent, the worst of all possible worlds would be that the Government spend the next year or two conducting consultations. I do not know the definition of words like "similar". On the government Benches there appears to be a view that there is a natural meaning, which I understand from the Minister of Health is something one can always fall back on if one is the Minister of Health, but it is a little more difficult to do that if one is not.

Can the Minister give the House, and more importantly the wider world, an indication that those consultations will take place within a certain timeframe and that those regulations will also be laid within a certain timeframe so that planning can take place? There is nothing worse than a major industry being left to hang on the hook while the Government consider the position.

Lord Filkin

I thank the noble Lord for his questions. The regulations under the brand-sharing issues will be affirmative ones. If the Bill becomes law, the Government will want early consultation to ensure adequate opportunity before the Bill comes fully into effect.

With regard to the noble Lord's point about the effect on the industry, we shall debate that matter later under Amendment No. 93. I shall leave comment on it until then.

Lord Clement-Jones

This is clearly an important part of the Bill. We have had a useful consideration of the arguments. In conclusion—and I shall come to the reasons why—Amendment No. 25 which has been moved and Amendments Nos. 66 to 68 and 70 which are part of the same group would, if accepted, drive a coach and horses through the Bill.

The noble Lord, Lord Naseby, in his delightful way has added a note of unnecessary melodrama to our proceedings. I do not propose to drive any company out of business. Over the past 25 years, as a lawyer, I have extensively advised companies on intellectual property matters. None, so far as I recall, was driven out of business by my advice—at least, no one has come to me and told me that they have been.

The point is that intellectual property is a valuable property. It is part of a company's marketing strategy. The use of that property is of great importance. Brands are extremely valuable. Tobacco companies' extension of brands is clearly part of a strategy which is followed world-wide. If we did not provide for it in fairly careful terms in the Bill, we would be creating a large hole in our provisions against tobacco advertising and sponsorship.

There is evidence about brand diversification and its effect on smoking. The noble Lord, Lord Filkin, talked about the research from the Centre for Tobacco Control at Strathclyde University. I shall not repeat what he said about that, but it is clear that young smokers are affected by brand-sharing. Some of that research is ongoing. Brand-sharing is a relatively new art, precisely because advertising has been restricted in a number of different ways by voluntary agreement.

In addition, a further study at Strathclyde—not the one mentioned by the noble Lord—found that students shown a poster for Marlboro Classics clothing were more likely to associate it with cigarettes than with clothes.

Lord Naseby

I thank the noble Lord for giving way. It would help those of us who do not have the Strathclyde report, or indeed the new report, to have some indication of when the report was published so that we can get the proper references. It is easy enough to trot out that this report has been done here and that that bit of research has been done there.

In passing, perhaps I may say to the Minister that if we are to be told that certain research has been carried out, it would help myself, and, I am quite sure, those who follow these matters, if we knew exactly which research we should be referring to—for example, by whom and the date on which it was carried out. To have the title of the research would help even more.

Lord Clement-Jones

I was speaking of a very respectable source—the British Medical Journal, 3rd March 2001, volume 322, page 513. I am sure that the noble Lord can pick up a copy on his way out of the House today.

Lord Naseby

I require the primary reference not the second-hand reference from the publication, the BMJ. The BMJ may well have it right. However, I suggest to Members of the Committee that since we are dealing here with matters of primary legislation, the reports should refer to the primary source and not to those transmitted through a trade union publication.

Lord Clement-Jones

If the noble Lord knew anything about medical research, he would know that medical research is not considered respectable until it has been peer-reviewed and published in a medical journal. That is exactly what has taken place. The journal is treated as the case reference.

Baroness Finlay of Llandaff

Perhaps I may inform the Committee, and particularly the noble Lord opposite, that the BMJ is not controlled by the BMA.

It is an independent journal. It is peer-reviewed. All the articles are available on the website arid are accessible through the Library. The reference given by the noble Lord, Lord Clement-Jones, is the correct reference.

Lord Naseby

I was not challenging whether or not the reference given was correct, but the noble Baroness, as a scientist, should know that she would not take the printed version from the BMJ as being necessarily absolutely accurate of the whole content of the research. By definition, a publication quite often will give the primary summary and some of its elements and not have all the detailed tables. If the noble Lord who is promoting primary legislation wants us to take seriously the research, all I am saying is that I should like to have access to that research.

Perhaps I may also say to the noble Lord that I am married to a general practitioner. I have a son who is a qualified medical practitioner. My daughter-in-law is a physiotherapist. So I do not need any lessons on the medical world from the noble Lord promoting the Bill.

Lord Clement-Jones

I thank the noble Lord for that splendid intervention. But the fact remains that, whether or not all his relations are doctors, all scientists and doctors take the publication as being the peer-reviewed evidence which the researchers in question want to see out there for discussion by other scientists and doctors. That is the way it is done in the scientific and medical profession. That is a matter of fact. If the noble Lord checks with his family. I am sure that they will confirm that that is the absolutely correct way of doing it. Scientists do not start producing sheaves and sheaves of all their protocols and replies to questionnaires simply because someone decides that they think that their research is not particularly palatable to them in the course of an argument. We must move on; but there is ongoing research which demonstrates that brand-sharing has an effect on smoking. I am sure that when the noble Lord reads the publication, he will be utterly convinced of that as well.

Another fact that is bandied about is that the Advocate General said that there is no evidence linking this to increased consumption. All that the Advocate General actually said was that he had seen no evidence. It was not put in evidence, precisely because it was not the point of the case. We need to nail this particular issue.

It is very easy to say that the original decision of the European Court was contrary to brand-sharing and so on and so forth, but that is absolutely not the case. The European Court's decision on the Tobacco Advertising Directive, which was withdrawn, was made on other grounds. Of course, as the noble Lord and the Members of the Committee know, it has been substituted by a draft directive putting into effect many of the comments made by the European Court of Justice, particularly that the directive must be confined to cross-border matters and not try to issue a blanket ban on advertising and sponsorship across the board.

I turn to the issues raised by the noble Earl, Lord Howe. The noble Earl did not raise matters—he never does—in a melodramatic form, but he played the violin slightly, if I may say so, on this subject. The noble Baroness, Lady Jay, gave the lie to that. It is quite clear that if the Camel Active trademark is worth anything, it is because of the goodwill built up over the years in the Camel tobacco trademark. That is the only reason. What other reason could there be? How many active Camels does one see? I am afraid that at the risk of being enormously unfair to the noble Earl, we must be very stony hearted in these circumstances. Really, that does not hold water at all.

I turn to the question of regulations. Of course we expect those regulations to be fair, commercial, sensitive and flexible—all those things. The noble Lord, Lord Filkin, made it clear that there will be extensive consultation on those matters. It is a matter of degree. The fact is that the legislation is designed to rest on a matter of fact as to whether or not advertising of tobacco products or brand-stretching is actually taking place. Of course, in some ways we may be in new territory when making regulations under Clause 11. However, I do not understand why Amendment No. 25 was tabled to Clause 2. Tobacco advertising is a question of fact: whether or not a tobacco product is being advertised. Clause 11 is there precisely to cover brand-stretching; otherwise it would not be caught.

Brand-stretching will be dealt with by regulations; the appropriate point to discuss some of the fine detail will be when they are framed. I accept that issues will be involved, but, as the noble Lord, Lord Peston, reminded us, tobacco companies will try to take advantage of every loophole in the Bill. We must ensure that we cover those loopholes in regulations. I am sure that hordes of intellectual property lawyers and their marketing agents will be poring over the Bill.

12.30 p.m.

Lord Naseby

As regards loopholes, would the noble Lord consider it a loophole if a UK tobacco company, recognising the strength of the primary legislation, decided to diversify into other products unrelated to tobacco? If it did so, it would have to use resources from its previous tobacco sales. Is he saying that there is absolutely no way that it could use a name for a brand that has ever been the name of a cigarette or any tobacco product? If so, that must be made clear in the regulations, because it is of fundamental importance to those tobacco companies—which, I repeat, employ 10,000 people directly, let alone the several hundreds of thousands who are indirectly employed. That is an important point and I seek clarification on it.

As I am on my feet, in order to save time, perhaps I may mention that I do not view medical scientific reports as qualified to comment on the development of global brands, Euro-brands or other brands. That was the tenor of the noble Lord's comments on research.

Baroness Jay of Paddington

Perhaps I may ask the noble Lord, Lord Clement-Jones, when he replies to the point raised by the noble Lord, Lord Naseby, to address the question about diversification raised by the noble Earl, Lord Howe, using the Camel company as an example. Is not the point that if the company diversifies and starts to make something totally different but continues to make cigarettes and there is, as it were, a connection between cigarettes and the subsequent product—we have all given examples such as clothing, especially of a kind attractive to young people—in the nature of things, there is bound to be anelement of cross-promotion? If the company abandons cigarettes and makes only T-shirts, that is fine, it seems to me.

Lord Clement-Jones

The noble Baroness, Lady Jay, puts it more temperately than I might have done, although I realise that the noble Lord, Lord Naseby, is a mere seeker after truth.

The essence of the matter is that if the company goes straight and gives up selling tobacco, it will not be caught by the Bill, except under the regulations provided for in Clause 11. Those regulations will provide that companies are not brand-stretching if the brand is no longer a tobacco brand and the activity does not constitute tobacco advertising or sponsorship. There is an element of faux naïveté to the matters that have been raised, which are highly commercial. No one involved in tobacco sales or advertising is naïve and we should not be when addressing such issues.

I could cite examples from Malaysia other than those that we have heard about today. One of the great problems—I regret this—is that many of the tobaccocompanies will target the developing and not so developing world, which does not ban such activities. For instance, the brand Salem has set up as a concert promoter in Malaysia. That is another example of getting around cigarette advertising. We have heard about Sainsbury's problem with own brands. Regulations can deal with such matters.

Lord Naseby

Does that mean that supermarket chains' own brands will be exempt? If so, that drives a coach and horses through the whole Bill.

Lord Clement-Jones

The noble Lord asked a question in the context of brand-stretching: whether Sainsbury could advertise full stop or whether that would be brand-stretching a tobacco product. The answer is that I have no doubt that the regulations would ensure that they were not caught. I hope that that is a clear answer to his question. I certainly did not say that Sainsbury would be the only company entitled to advertise tobacco products; if it were, that would be a massive commercial advantage to it, but I must say that I have not been lobbied on the matter by Sainsbury.

We must accept the Minister's assurances about how consultation will take place on the regulations, which need to be flexible. I think that we have had enough knock-about on this group of amendments and that my approach is clear.

Lord Lucas

It being proverbially hard for a camel to pass through a loophole, especially if it is driving a coach and horses at the time, I probably agree with the argument of the noble Lord, Lord Clement-Jones. However, he has raised a question in my mind about Clause 11. Why was not the approach taken of deeming the use of the emblem, or whatever, to be a tobacco advertisement? We would then be back within the mechanism of the Bill, knowing who commits an offence in what circumstances and what are the defences. Under Clause 11, the use of the emblem, say, is made an offence under subsection (4), but, because the offence is separately constructed, it is not clear who is guilty.

If Marlboro prints a T-shirt in America, it does not commit an offence under the Bill. If someone imports that T-shirt into the United Kingdom, does he commit an offence? If someone prints a T-shirt for Marlboro in this country, does he commit an offence? If someone is seen wearing the T-shirt, does he commit an offence? It is unclear what "use" means or what defences people have to the offence. I should greatly appreciate clarification—by letter if not today.

Lord Clement-Jones

I thank the noble Lord, Lord Lucas, for that point. That is precisely why it is important to consult about the regulations. The matter is not absolutely straightforward; the clause does not say, "Regulations shall apply only to X, Y and Z persons". A range of people will be affected by the regulations. I understand the noble Lord's point, and I thank him for his support in opposing the amendments.

Earl Howe

I hope that my noble friend Lord Lucas has enabled the noble Lord, Lord Clement-Jones, to understand, at least in part, why I tabled Amendment No. 25. As we all know, the noble Lord is adept at knock-about argument, and some of it has clearly had an effect on the Committee, but I caution Members of the Committee. There is a danger that in knock-about argument we lose sight of the serious points that have been raised.

I especially regret that, at least occasionally, we have heard the language of a witch-hunt against tobacco companies. I hope that we do not fall into that trap as we proceed with the Bill. We may have private views about tobacco companies, but I hope that we shall not be deflected from the Bill's central purpose, which is to ensure that tobacco advertising is restricted. I humbly suggest that we should avoid putting any emotional or judgment gloss on that.

Lord Peston

I thank the noble Earl for giving way. He was right to raise these matters because they will then influence the regulations. However, surely we must not lose sight of the fact that we are dealing with the Tobacco Advertising and Promotion Bill and not, for example, the Apple Advertising and Promotion Bill. We are considering tobacco for a definite reason.

The noble Earl used the words "witch hunt", which is slightly too strong, but we would not be considering the matter if, say, a modicum of antipathy to these companies did not lie behind our considerations. Surely the noble Earl accepts that.

Earl Howe

I certainly accept what the noble Lord, Lord Peston, says as regards himself and no doubt other noble Lords. I do not want to position myself on one side of the line or the other.

I ask the noble Lord, Lord Clement-Jones, to reflect on what I said earlier, particularly as regards the principle of proportionality. My amendments are riot about—and are not intended to be about—creating loopholes. They do not suggest that the Bill should ignore brand-sharing altogether, as the noble Lord, Lord Filkin, suggested. I am sorry that the noble Baroness, Lady Jay, believes that I am a touch disingenuous. I can assure her that I am as keen as she is to ensure that there are no loopholes in the legislation for people to exploit.

However, the purpose of the Bill is to regulate tobacco advertising and in so doing to reduce the prevalence of smoking. The Long Title of the Bill reflects that specific purpose. It is not justifiable but, more to the point, it is not proportionate to sweep up other types of advertising and other Types of product into the jaws of this legislation. I suggested that in terms of European law it is dangerous to try to do so. It is too restrictive.

Nor do I believe that it is fair to seek to leave these matters entirely to secondary legislation, which the noble Lord, Lord Clement-Jones, knows cannot be amended. I have not suggested that there should be no power in the Bill to create regulations. but we ought to have an explicit provision on the face of the Bill making clear that genuine brand-diversification will be exempt from the scope of the legislation. That is only fair on companies such as WBI, which cannot at present carry on its business with any certainty.

Indeed, I believe that there is a strong argument for saying that we should be encouraging tobacco companies to diversify. In that context, considerable concern has been expressed to me about the current EU draft directive. I should like to raise a further point for the Minister to consider. Some British companies operating internationally do not manufacture tobacco products but they share a brand-name with a cigarette manufacturer. I mentioned the example of Alfred Dunhill Limited, which is a luxury goods company. It has been a luxury goods company for more than 100 years and it uses its brand-name in good faith for its own products.

The concern which it has about the latest text of the draft directive is that it contains no instruction to member states to include in their national legislation a due allowance for bone fide brand-sharing. In fact, brand-sharing and indirect advertising are not mentioned, although in the past they have always been recognised as an integral issue—as well they might have been. I do not dispute the concept of brand-sharing as a potential loophole, but the directive does not appear to mention that. Apart from the single market implications of different rules operating in different member states, companies such as Alfred Dunhill Limited are alarmed at the prospect of having to lobby up to 14 more parliaments to amend their secondary legislation so that they can continue to trade.

This is a separate issue from those which I have been discussing, but I wonder whether in advance of the next health council the Minister could put down a marker to ensure that this matter is again discussed at EU level. There is a danger to bona fide non-tobacco companies operating within Europe that their advertising rights will be curtailed and British economic interests thereby damaged.

With that, I shall reflect on what has been said in the debate. I shall reserve the right to raise the matter again if necessary on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 26 not moved.]

12.45 p.m.

Lord Naseby moved Amendment No. 27: Page 2, line 24, leave out "appropriate Minister" and insert "Secretary of State The noble Lord said: I must go across the northern Border and therefore I move with some trepidation. Clause 4(2) provides for the regulations to be made governing advertising at the point of sale and on websites where tobacco products are offered for sale. Clause 8 also provides for regulations to be made governing displays of tobacco products and their prices in places, including websites, where the products are offered for sale. Both Clauses 4 and 8 permit regulations to be made for Scotland quite separately from England, Wales and Northern Ireland and for those regulations to be made by Scottish Ministers and the Scottish Parliament.

It has been said that that is necessary because there may be different circumstances and requirements in Scotland. However, at no time in either Westminster or Edinburgh has a single example been provided, until this morning, which establishes the need for different provisions applying in Scotland as opposed to any other part of the United Kingdom. Manufacturers and retailers are puzzled by the need to provide separate regulations in the Bill and they are also deeply concerned.

I submit to the Committee that it is not sensible that the many retailers that have businesses on both sides of the Border might have to comply with two different sets of regulations and the higher costs of the operations involved, for which no justification has been provided. Furthermore, as Clause 4(2) states, the regulations are also to apply to websites. In that regard, the Minister in the other place admitted in the previous Parliament that there would be considerable problems if different regulations were to be made for Scotland in respect of websites. The opportunity for that to occur should not be provided by the Bill.

At one time, it was the thought and intention of the Scottish Parliament to make the former directive, now annulled, the first European measure to be implemented by the Scottish Parliament, quite separately from England and Wales. There may well have been political reasons or pressures as to why that particular course was later discarded. But there may also have been a reason which lies in the different provisions which apply to legislation in Scotland in relation to human rights and which permits legislation to be challenged in the courts on human rights grounds.

The power that the Bill gives to Scotland to make its own regulations in respect of advertising at the point of sale, including websites, may therefore be intended to be some form of consolation for the Scottish Parliament for not having its own tobacco and advertising and promotion Bill. I submit to the Committee that such political window-dressing should not be permitted by the Bill and it is not something which I imagine the promoter of the Bill—if he is listening to me—would ever consider. I should like him to respond specifically to that point.

In my judgment, there is no justification for the regulations governing points of sale to differ between Scotland and the rest of the UK. That should be recognised by the acceptance of the amendment, which would effectively permit just one set of regulations. I beg to move.

Lord Lucas

It is clear that the Scottish regulations would apply to a branch of, say, W H Smith north of the Border, whereas a branch south of the Border would be subject to the English regulations. But how can that be done for a website? Where is a website located? I use the Scottish company Thus to provide my website. Is my website English or Scottish? I do not know where the particular server is located; it may be switched around from week to week. Do the regulations apply according to where Thus chooses to host my website or do they apply to me, which would be illogical because it is not that way round for a newsagent? Must I know the nationality of the people who provide my website and the regulations that go with it? If it happens to be an American website, are there any regulations at all? I am very confused.

Lord Hunt of Kings Heath

I should like to pick up the general principles contained in the amendment moved by the noble Lord. As he rightly says, it enables the "appropriate Minister" to make regulations concerning point of sale advertising in shops and elsewhere. Clause 20 defines "appropriate Minister" as the Secretary of State in relation to England, Wales and Northern Ireland and the Scottish Ministers for Scotland. The amendment would delete the phrase "appropriate Minister" in Clause 4(2) and substitute "Secretary of State" who would thereby have the power to make these regulations for Scotland as for elsewhere.

In relation to Scotland, there are two groups of regulations in the Bill. Clause 4(2), along with Clause 6 on specialist tobacconists, Clause 8 on displays, and Clause 19 on transitional arrangements for sponsorship, empower Scottish Ministers to make regulations for Scotland. Other regulation-making powers under Clause 7 on new technologies, Clause 9 on discounted products, and Clause 11 on brand-sharing empower the Secretary of State to act for the whole of the UK.

I should make clear that in the context of our debate tobacco advertising is a devolved matter. In January, the Scottish Parliament gave its consent for the earlier government Bill to extend to Scotland. We have checked to confirm that the consent applies also to the current Bill. It is my understanding that the Scottish Executive continues to support UK-wide legislation because it believes that it will deliver a more comprehensive and effective ban.

It may be worth quoting from the debate that took place in the Scottish Parliament on 17th January when Mr Malcolm Chisholm, speaking on behalf of the Executive, said: The Bill contains a number of regulations and order-making powers, some of which will be conferred on Scottish Ministers. In other areas … it is intended to legislate on a UK-wide basis. Those are areas on which it is difficult to legislate from both a technical and legal standpoint and on which legislation would be difficult to enforce in a Scotland-only context". I believe that in that context a sensible approach has been taken. The argument is that compelling reasons exist in relation only to Clauses 7, 9 and 11 in terms of regulations because of the legal and technical complexity where a divergence—this is what Mr Chisholm was getting at—would create considerable enforcement difficulty and weaken the impact of the measures. That argument does not exist in the areas where regulation-making powers are being conferred on Scottish Ministers.

UK-wide companies have coped perfectly well for many years, the differences between Scotland and the rest of the UK reflecting the realities of a different legal system. For that purpose, this appears to be a perfectly sensible arrangement.

Lord Swinfen

Perhaps the noble Lord would deal with websites. My server is in Australia. How can the regulations laid down for England, Wales and separately for Scotland apply to a website that is not in the United Kingdom?

Lord Hunt of Kings Heath

My understanding is that the regulations applying to websites would depend on where the website was based.

Lord Lucas

That is exactly the point. Where is my website based? I can establish where I am based. Most of the legislation to do with the regulation of the Internet is concerned with where I am based. Whether my server is in Australia, Timbuktu or Scotland, the regulations apply to me because I am English. That is the only sensible way to do it. One of my websites is hosted by Thus, a big international company. Thus could host it in Australia one week and Timbuktu the next. I would not know. One cannot go by the location of the website which may not even have a single physical location. The regulation of websites must apply to the persons who operate them, but this clause is drafted on the basis of the location of the shops and the websites. The website does not have a location in a way that this Bill can grasp. There needs to be an amendment here.

Lord Avebury

Does the noble Lord agree that different regulations could apply to the originator of the material and the service provider, provided the latter was under the jurisdiction of one or other of the United Kingdom authorities?

Lord Lucas

Yes, but I need to establish with certainty whether the English or Scottish regulations, which may be different and, as the Minister points out, are based on a different legal system, apply to me. The only sensible way answer is to apply them to me as an English business. English regulations should apply to me wherever my website happens to be hosted, but that is not how the clause reads at the moment.

Lord Hunt of Kings Heath

My understanding is that Clause 4(2) relates to people who sell tobacco over a website. Therefore, the regulations apply to where those people are located.

Lord Naseby

Which people?

Lord Hunt of Kings Heath

The people who sell tobacco over a website.

Lord Swinfen

People can access websites from anywhere in the world. Therefore, people who are not based anywhere in the United Kingdom can advertise on a website outside the jurisdiction of the UK which can be easily accessed by anyone who is online within this country.

Lord Hunt of Kings Heath

That may be so, but the issue here is the competence of the Scottish Parliament to regulate in this area, which I submit is perfectly appropriate.

Lord Lucas

I have no difficulty with that. If one reads Clause 4(2) as applying to a shop, it is clear that it does not apply to the owner, who may be English or foreign, but its location. But the same subsection says that it does not apply to the location of the website but the person who owns it. We cannot have two different constructions in the same line of the subsection. Either the construction applies to the person who owns it or to the location of the point of sale. We must have some sense and clarity.

Lord Clement-Jones

We are straying into some very interesting areas which I am not sure necessarily require to be debated in the context of this amendment. Clearly, this is a constitutional issue. As for devolved powers, the Committee may be aware that a Sewel Motion needs to be passed by the Scottish Executive to permit a Bill to have effect in Scotland. This measure does not yet have that because it is a Private Member's Bill. But the previous Bill, which was in identical terms, did. Therefore, the Scottish Parliament is prepared to see these matters dealt with by a Bill passed by the Westminster Parliament, but clearly there are matters to be dealt with by the Scottish Executive when the Bill is passed. As the Minister explained, that division has been sensibly parcelled up according to terms thought appropriate by the Scottish Executive.

There are bound to be issues about websites. I am sure that the Committee will have a fair discussion about the defences available to those who run websites. It is probably more appropriate to have that debate under that particular set of amendments rather than now. For the moment, as far as I can see, Amendment No. 27 is not possible simply on constitutional grounds. We can have a debate about country of origin versus country of destination versus all the other aspects relating to websites in connection with later amendments.

1 p.m.

Lord Naseby

The noble Lord is a great one for putting off debate until subsequent amendments, mainly because he has no idea what the answer is. I suppose he is gaining a little time, but let us hope that by the time we reach that later amendment, he will be a little better informed than he is now.

The kernel of the amendment is that there seems to be no other example of any difference between Scotland and the rest of the United Kingdom. My amendment seeks to ensure that the two are identical. If the Minister is saying that following consultations with his colleague in the Scottish Parliament, he feels there are differences, we should, in the interests of clarity, know what they are. If there are no differences, the amendment has great validity.

Lord Hunt of Kings Heath

Is it not the point that this is a devolved matter? In January, the Scottish Parliament decided that it was appropriate for the government Bill to apply to Scotland, but with the ability for the Scottish Parliament to make regulations in certain areas covered by the Bill. We do not know the outcome of that. It may be that the Scottish Parliament decides that the regulations it wants are the same as those for the rest of the country, but that is a matter for it to decide.

If the Scottish Parliament did not accept this approach, it could have legislated in all the areas covered by the Bill. In that sense, the position would have been even worse.

Lord Naseby

I entirely accept that latter point. But we are now in December, and given the extensive consultations promised for the future, I should have thought that there might have been consultations during the past 10 months. But obviously there have not been any.

Lord Hunt of Kings Heath

With the greatest respect, there were discussions when the Bill was first considered in another place, as a government Bill during the previous Session of Parliament. But there was insufficient time for the Bill to complete its passage through this House. We are now discussing a Private Member's Bill, and it is appropriate that discussions with the Scottish Parliament and the Government should take place within the context of whether the Bill is to become law.

Lord Clement-Jones

The Minister has put the matter fairly. Clearly the Scottish Parliament cannot take a view on this Private Member's Bill until is passed or becomes an official government Bill. But the approach to the Government's official Bill has left the Bill with these regulations to be made by the Scottish Parliament. There may be points of discussion about websites, but if the noble Lord had been here for the second half of the last Committee stage, he would have heard a very interesting debate about some aspects of websites and the European e-commerce directive, with which I am pretty conversant. I could answer most of the questions, but it would be better to leave them to later amendments.

Lord Naseby

This is not an entirely satisfactory situation. I am still of the opinion that there could have been consultations and developments. These things are not static. I therefore reserve the right to return to this issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments. Nos. 28 and 29 not moved.]

Earl Howe moved Amendment No. 30: Page 2, line 31, leave out subsection (4). On Question, amendment agreed to.

Clause 4, as amended, agreed to.

Lord Lucas moved Amendment No. 31: After Clause 4, insert the following new clause— "OFFENCES UNDER SECTION 2 OR 3: ASSUMED KNOWLEDGEA person charged with an offence under section 2 or 3(a) or (b) shall be assumed to have knowledge of the purpose or effect of an advertisement, or of its intended place of publication, if he had not taken such care as may be specified.

The noble Lord said: This is more of a probing than a serious amendment. It suggests that it might be a good idea to provide some certainty to those who will be subject to the absolute offences in Clauses 2 and 3, so that they know what they are supposed to do to make use of the defences made available to them. Clearly a duty of care is placed on somebody who is accused of having a magazine in their shop with a tobacco advertisement in it. But it is difficult to know what that duty of care is. The amendment suggests that the Government should set out in regulations the duty of care that is expected of, say, the printer, newsagent or paperboy, so that they know what they have to do to comply with the legislation. I beg to move.

Lord Hunt of Kings Heath

The noble Lord pursues a theme that he developed on our first day in Committee. I understand that it is a probing amendment. The implication of the wording is that someone could be found not guilty even if he knew about the advertisement, as long as he could show that he had taken care.

Throughout the debate two threads have been apparent. One is the desire to have as tight a definition as possible, and the other is the concern that the tighter the provisions, the more loopholes are potentially created, and the less ability to deal with them is possible, given the tightness of the legislation. For these reasons, the Government's view is that the Bill already provides various defences in Clause 5. In a criminal prosecution the prosecution has to establish the guilt of the individual beyond reasonable doubt, which is a high standard of proof. The obligation means proving not only all the ingredients of the offence but also negativing any defence that is put to an issue.

In addition, there is also a risk of taking discretion away from trading standards officers. In the context of enforcing the Bill, it is worth bearing in mind that trading standards officers are well used to using their discretion, that their policy is often to draw attention to offences, and that their approach is often prevention and education with prosecution as a last resort. That seems a very sensible approach.

Lord Naseby

I am confident that the noble Lord has regularly visited trading standards offices. Certainly when I was the Member for Northampton South, I maintained a close working relationship with the local trading standards officers. However, the noble Lord will know as well as I do that while the majority of trading standards officers will take the line that he has suggested in his response, which is the correct approach, occasionally a particular trading standards officer may feel as strongly about tobacco as the noble Lord who intervened earlier. As a non-smoker who hated anyone who did smoke, he might feel that it was his mission in life to look carefully at the Act and decide that this was a good one to have a fly at.

That kind of action has taken place in other areas. I recall, in the days of advertising regulations for outdoor adverts, the trading standards officer for Norfolk—I think that it was that officer, although I remain to he advised—built up quite a reputation for carrying on his own little vendetta against outdoor advertising. My noble friend's amendment seeks to ensure that that could not happen.

Although it is all very well for the Minister to say that other safeguards are in place, I believe that my noble friend's amendment is somewhat more important than a probing amendment; it has more Strength than that. To that end, I hope that the point I have made in regard to a particular trading standards officer will be taken seriously.

Lord Hunt of Kings Heath

I have some experience of the performance of trading standards officers, which I suspect is the case for most Members of the Committee. However, I have to say that it is my experience that those officers are a highly competent group of people. Of course it is always possible that a very few may act in the way that the noble Lord has suggested.

We have to strike a balance here and ask whether the potential unwise practice of certain individuals should cause us to change our approach in the Bill. Because I am satisfied that the great majority of trading standards officers are highly competent and accustomed to taking an approach aimed more at education rather than prosecution, which is viewed as a last resort, I believe that the approach taken in the legislation is right.

Lord Peston

Before the noble Lord, Lord Clement-Jones, rises to comment, may I ask the noble Lord, Lord Lucas, to clarify a point? Unless I misheard him, when speaking to his amendment the noble Lord cited an example that appeared to apply to Clause 3(c) rather than subsections (a) and (b), with which I believe that he is concerned. I thought that he referred to the paper boy, who would be covered by Clause 3(c) and to the retailer. Have I misunderstood the nature of the amendment or was Clause 3(c) simply left out?

Lord Lucas

I am quite happy to suppose that Clause (3)(c) was left out. All I sought to do with the amendment was to raise the general point. These provisions mean that those who are essentially not complicit in the crime of producing an advertisement or of taking executive decisions are walking through a legal minefield. Whatever the assurances given by the Minister—that a real defence has been provided: I agree with that—in order to take advantage of the defence, a defendant would have to prove that he maintained a proper standard of care to ensure that he had not committed the offence.

I seek to ensure some certainty as to exactly what is that proper standard of care; otherwise we shall be asking a person in the business of printing—I stress, only printing—information in a print-run to inspect the content of the thousands of pages of print that he produces each day. Furthermore, we shall be asking the newsagent to inspect every page of every magazine that is displayed across his shelves. I do not believe that that is reasonable in the context of a tobacco advertisement, which is not the most heinous of crimes. I should like to make available to such essentially innocent parties a proper understanding of what they would have to do to fulfil their standard of care and thus avoid committing an offence under the terms of the Bill. How can they avail themselves of the defences offered under the terms of the Bill?

As I have said, this is a probing amendment and I apologise if the drafting is imperfect. Indeed, the noble Lord, Lord Hunt, pointed out another imperfection which, on looking again at the amendment, I cannot yet see. However, that does not matter because the amendment provides an opportunity to probe whether such an approach might help to alleviate some of the difficulties which could arise from the phrasing of the offences under the Bill.

1.15 p.m.

Lord Peston

Does the noble Lord, Lord Lucas, accept that there is a difference here? The owner and the editor of a publication are different from the advertising company, which in turn is different from the retailer, who in turn is different from his employees—the case of the paper boys? Each of those four categories is different from the other. In other words, the noble Lord's probing amendment seems not to probe sufficiently in order to secure an appropriate set of answers.

Perhaps I may anticipate for a moment the reply to be given by the noble Lord, Lord Clement-Jones. It seems to me that, under the terms of the Bill, there is no shadow of doubt but that the proprietor and editor of a publication have a very definite responsibility for what is put into their publications; those involved in the advertising business have a definite responsibility for what they are party to; and that both of those responsibilities are different from those who retail the publications—although I do not think that all responsibility disappears from the final two groups. I believe that retailers should know what is in the products they sell and that they should not be allowed to get away with it by saying that it was too difficult for them to find out.

Lastly, I still do not see how the paper boy is ever involved. I have been waiting for some time to hear an answer to the paper boy problem, having myself, like many noble Lords, been a paper boy. I did not know that paper boys had any responsibilities other than to deliver the newspapers, as instructed.

Lord Lucas

The paper boy comes into the equation because he remains an unanswered question from our previous debate on this. I agree entirely with the noble Lord, Lord Peston, that of course there is a great difference between those who are complicit in an offence and those who are not. If this approach appeals to the noble Lord, Lord Clement-Jones, I imagine that regulations under such a clause would be very different for those who are complicit as against those who are not.

However, the people who concern me are not those who are complicit—if a newspaper proprietor publishes a tobacco advert, then he has it coming; he should have put every possible system in place to ensure that that could not happen. I have no objection to the book being thrown at him. The people I seek to protect are those whom we have no business asking to "take care". It should not be something that a commercial printer has to do, as it should not be something that a newsagent has to do, beyond a very ordinary level of care. I believe that there should have to be proof that the printer or the newsagent knew about the advertisement.

The distribution of magazines is a large business. The publications are wrapped in large parcels with the names of newsagents stuck on them. The parcels are chucked into a lorry and then chucked out to the newsagents at the end of the journey. Such drivers are "distributors" under the terms of the Bill and thus have a duty of care which remains undefined. What should they be doing to ensure that they do not distribute a tobacco advertisement? If a tobacco advertisement is included in one of those sealed parcels, a lorry driver would be committing an absolute offence under this legislation.

The defence would be to prove that the drivers did not know about the advertisement. Fine, they can say, "I did not know; I did not look". But then the question arises, "Why did you not look? You have a duty of care". This is an absolute offence. Under those circumstances, what duty of care is owed? At the moment, we would have to wait until the case went before a court to find out. I am suggesting that the Government should set this out in secondary legislation so that those who are subject to the Bill will know.

Lord Clement-Jones

The last exchange between the noble Lord, Lord Peston, and the noble Lord, Lord Lucas, has been the most useful of the whole debate. The amendment does not refer purely to definition: it also asks how high the hurdle should be set. As the noble Lord, Lord Peston, says, the hurdle has been set high: one cannot deny that. It is a matter of public policy. We had the debate last time regarding the onus of proof, which was wholly or partially reversed. We referred to the duties of printers in these circumstances and we are now talking about the paper boy. The issue is as to the height of the hurdle and whether the defences are adequate. I firmly believe that the defences set out in Clause 5 are adequate. We have already discussed them in some detail.

If you look at Clause 5(7)—the paper boy defence—there is a defence for the paper boy to prove that he did not know and had no reason to suspect that a publication contained a tobacco advertisement. On the last occasion the Minister made it clear how a court would view the raising of that defence. It raises a presumption that then has to be rebutted in turn, and that is how the legal process operates in court. This set of defences appears to me to be well drafted in these circumstances.

The noble Lord, Lord Lucas, in his usual clear way, has set out what he would like to see, but it is a matter of policy and I fear we must agree to disagree on how high the hurdle should be for those caught in the situations of Clauses 2 and 3.

Baroness Noakes

Does the noble Lord, Lord Clement-Jones, think it is reasonable for those who might be affected by this clause to know how high the hurdle is? He has said, quite rightly, that it should be a high hurdle. Those of us who follow horse-racing know that when you arrive at a racetrack you do know how high the hurdles are. I think my noble friend Lord Lucas was trying to achieve greater certainty over the height of the hurdle.

Lord Clement-Jones

Many of my legal colleagues will no doubt be advising their clients on precisely how this Act will bite. Personally, in advising a client I would have absolutely no problem. You have a defence if you do not know and have no reason to suspect. In such circumstances it is pretty clear to a newspaper proprietor or someone who is directly or indirectly procuring the inclusion of an advertisement what the defences are. This Bill is not unusually draconian or unusually opaque in the way it operates. The interreaction between Clauses 2, 3 and 5 do not represent an unusual formulation. We have already explained that some 12 Acts of Parliament were formulated during the last 15 years in virtually the same way.

Baroness Noakes

I put it to the noble Lord that this Act should not act to the benefit of the legal profession. Those concerned should be able to refer to this Act and see clearly in what way their actions might fall foul of it.

Lord Clement-Jones

If the noble Baroness is saying that once an Act is passed it need never be referred to, it seems a very peculiar thing. Whether you are a lay person or a lawyer, you cannot just put the Act in a drawer and say, "That's fine; we all know where we stand". Life is not like that and people do need to refer to an Act. I believe the language to be very clear, but if one has been charged with an offence, clearly it may be advisable to use a lawyer but I would not wish to legislate in advance for the use of lawyers.

Lord Lucas

There is a fundamental difference between us but I do not think it is as wide as the noble Lord, Lord Clement-Jones, makes out. I think we agree on the initial steps of a legal process. I am presented with a crime. Do I have a defence? I have to say that I did not know or had no reason to suspect. Those are negative propositions and unprovable in the absolute. But I stand up and say that I did not know and had no reason to suspect. That throws the burden of proof back on the prosecution and they will say, "You ought to have known; you never looked, and had you taken proper care you would have found that this advertisement was there on page 15 of the magazine which you say you never opened".

That is the way these offences operate. If there is an offence to which the only defences are to prove a negative, you cannot just prove a defence by assertion but you have to prove that you have taken proper care. What that proper care might be is a matter of ordinary common sense in most cases. Clearly, for the proprietor of a newspaper "taking care" will mean taking all care and they will be unlikely to be able to take advantage of that sort of defence if in fact they have printed a tobacco advertisement, or at least one which is clear rather than by implication with some logo on the back of a pair of jeans somewhere.

For those who are complicit in that kind of process, I can see that it is fair to be subject to that kind. of process. However, in the case of the magazine distribution industry, where the magazines come wrapped and labelled, they are delivered wrapped and labelled. They would say they have no duty of care. Why should they have to open the parcels and inspect the contents? I would be content if at some stage we get the Minister to say what he expects a newsagent to do and what he expects a jobbing printer to do, when. he does nothing but print. What is the duty of care which should be applied to these people, given that they are not a complicit part of the process by which a tobacco advertisement is created and distributed?

Lord Peston

I am getting more intrigued by the minute. I thought my noble friend the Minister gave a good answer earlier, which is that people would use their common sense. If you are in the magazine distributing business, what happens in practice? There are all these things wrapped in transparent plastic, but you do not look at them because you are only in the business of picking them up here and putting them down there. Subsequently someone finds out that these magazines have tobacco advertisements in them; they find them being sold somewhere else and go hack to the distributor. He says that he did not know. I would have thought every reasonable person would say, "Fine: from now on I hope you will take better care although you are clearly not involved in this". Prosecutions certainly will not begin on such a basis, but if it happened persistently it seems perfectly reasonable that a duty of care would emerge from that point if such and such a magazine continued to contain. these advertisements. It might be said, "From now on I think you ought to check whether these magazines are carrying advertisements for tobacco". Is that not perfectly reasonable? It does not require any highfalutin changes to legislation or fundamental matters relating to the legal profession.

Let me say to the noble Baroness, Lady Noakes, that I stand second to none in my antipathy to the legal profession. My main aim in life is to make economists at least as well paid and as much sought after as lawyers, and if there is reincarnation I intend to be reborn as a lawyer and not an economist. The fact is that when legislation is passed people ask how it is going to affect them. There is nothing unusual in that and there is nothing new in this Bill. Everything the noble Lord, Lord Lucas, says is interesting but if we were to tackle legislation on this basis all the time we would end up carrying no legislation at all as far as 1 can see.

Lord Lucas

One of my great sadnesses following the 1997 election was that the noble Lord, Lord Peston, did not become a Minister immediately thereafter. I still believe that to be one of the Prime Minister's great misjudgments.

I hope that I call persuade the Minister to say something along the lines of what the noble Lord, Lord Peston, said rather than relying on what the noble Lord, Lord Clement-Jones, said—that is, that it is a high hurdle and they have to jump it. If there could be some guidance in Hansard from the Minister of what is his view of common sense in these circumstances, rather than merely the comment, "Yes, everyone is supposed to start checking everything from day one", I would be delighted. I suspect that that would answer many of the questions that I have posed, and will pose, about the Bill.

Lord Hunt of Kings Heath

I thought that the confidence I expressed about the discretion of trading standards officers implied that what is required is common sense and a proportionate approach. My experience of trading standards officers is that that is the approach they will adopt.

I suspect that the noble Lord, Lord Lucas, wants me to go a step further and define too exactly the steps that might be taken. I am reluctant to do so because the whole experience of countries which have within them the industry that we are debating is that the more explicit the detail in the legislation, the easier it will be for the industry to find loopholes. That is my dilemma. The general philosophy expressed by my noble friend is no different from my own. I argue for the common sense and discretion of trading standards officers to operate.

Lord Lucas

We are nearly there, if the Minister will say what the noble Lord, Lord Peston, said. So long as people pursued their ordinary business practices, taking the care to avoid libel damages and so on, and if they were not complicit in producing advertisements, that would probably be sufficient unless there was evidence to indicate a problem with the business in which they were involved that should have led them to take greater care. If we can achieve that kind of common sense, we shall know where we are and I shall feel much happier with the way the offences are set out under the Bill.

Lord Naseby

The noble Lord, Lord Peston, mentioned that if the distributors are persistent offenders, they should presumably remove the cellophane and check periodically whether a particular publication is or is not carrying inserts.

Lord Peston

I was not suggesting that distributors should check; I was following the noble Lord, Lord Lucas. I said that if it was discovered subsequently that they had carried something they should not have carried, and this went on, then they ought to check. I was not introducing a new duty of care of carrying out random sampling and checking. I am simply saying that if we have other evidence—this is completely compatible with what everyone else has said—then the distributors should be "sensible" from that point on. That seems perfectly reasonable to me.

Lord Naseby

It may seem sensible to the noble Lord. If there were one single distributor across the United Kingdom and we were dealing with a limited number of publications—although that might be argued about—the noble Lord's viewpoint could well be relevant. But we are dealing with hundreds of distributors and thousands of magazines. How on earth, even if a distributor's attention is drawn to it, can a check be made on subsequent issues—other than the one immediately following? If I were a distributor I would say, "Right, I will check a sample of the next issue. If it is clear, I shall assume it will be clear thereafter". These are woolly areas.

I repeat what I said about trading standards officers. The Minister is right. The vast majority of them do a genuine, good, balanced job of work. Unfortunately, there are a few who will take a particular issue, and tobacco creates great emotions. That is very clear from across the Chamber. I am sorry, but we have to legislate for the rogue element. It is not adequate for the Minister to come to the Dispatch Box and say "Well, go and read Hansard. I have given a reassurance". That does not stack up in a court of law.

Lord Hunt of Kings Heath

Coming back to the point at issue—the role of trading standards officers—doesthe noble Lord accept that it is much better to legislate on the basis of our knowledge and experience of the way the great majority operate, and to ensure that, through the proper relationships between government, local government associations and local authorities, good practice is developed and expanded; and that local authorities are encouraged to rein in those officers who are not behaving appropriately? Surely that is the best approach.

Lord Naseby

I am afraid that I like safeguards as well. All my noble friend seeks is a clear safeguard.

Lord Clement-Jones

I hope that the noble Lord, Lord Lucas, will be withdrawing the amendment shortly. If you look at the amendment, in some ways it could be said legally to give fewer safeguards because "as may be specified" seems to assume that there is a concrete set of circumstances in which you can always say what is the duty of care. The more I have listened to the debate—it has been very interesting in many ways—the more one has to infer all kinds of things, such as context, conduct and numbers. The noble Lord, Lord Naseby, argued against the amendment in terms of numbers, distributors, magazines and so on, in a particular case. He said that this did not stack up in a court of law. Actually, that is precisely where it does stack up.

Lord Lucas

The noble Lord, Lord Clement-Jones, is right. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Advertising: defences]:

The Deputy Chairman of Committees

Before I call Amendment No. 32, I have to advise the Committee that if that amendment were to be accepted, I would not be able to call Amendment No. 33.

[Amendment No. 32 not moved.]

Lord Naseby moved Amendment No. 33: Page 2, line 38, leave out "had no reason to suspect" and insert "could not reasonably have been expected to know

The noble Lord said: My noble friend is most generous. Amendment No. 33 and the other amendments which follow, with the exception of Amendment No. 35, seek to replace the words, had no reason to suspect", with the phrase, could not reasonably have been expected to know".

As we all know by now, the Bill creates many offences which may be committed by one or more of numerous parties involved in devising, printing, publishing, distributing or selling a tobacco advertisement; of making a display of products as an advertisement; of giving products or coupons away; of sponsoring something which has the purpose or the effect of promoting a tobacco product; and of using a brand name or other device which is deemed to have the purpose or the effect of promoting a tobacco product. That is a fairly all-embracing catalogue.

The penalties—it is the penalties I am concerned about—on summary conviction or conviction on indictment are fierce and, as may be debated later, in my judgment, disproportionate to the nature of the offences concerned. It is therefore important that the defences provided in the Bill should be reasonable and not give rise to further pointless dispute and argument—unless, of course, one is a lawyer, which I am not, thankfully.

"Reasonableness" is recognised in Clause 5(2) where a defence is available if the person charged with an offence could not reasonably have foreseen that promotion of a tobacco product would be the effect of an advertisement. The word "reasonable" is not present where the Bill relates to the defendant having no reason to suspect.

There is a subtle difference—but an important one—between suspicion and reasonably being expected to know. In terms of court proceedings, it is surely also the case that having no reason to suspect is a great deal more difficult to prove than establishing whether there was a reasonable expectation that the person would know.

Amendment No. 35 is of a somewhat different nature; none the less, it is related. It embraces the concept of "reasonable expectation of knowing", but is principally designed to provide a defence for a publisher in the case of a tobacco advertisement being inserted into that publisher's publication after its production but before its distribution.

I know that may Members of the Committee find inserts irritating as they fall out of magazines, particularly on Saturday and Sunday. However, we are not here to legislate for irritation. Inserts are common and will continue to grow in newspapers and magazines. They need not always be put there with the knowledge of the publisher.

Furthermore, inserts are not always necessarily inserted into a magazine at a single location; they can be put there at a number of different locations. It is important, therefore, that there should be clarity that, where a publication includes a tobacco advertisement by way of an insert put there after the printing of the publication—after publication so far as the publisher is concerned and without his knowledge—an appropriate defence should be available to that publisher. Amendment No. 35 provides that defence. A similar defence is provided in the context of publication by electronic means in subsections (5) and (6) of Clause 5; and a similar defence is available to distributors of other publications under Clause 5(4). I beg to move.

The Earl of Liverpool

Amendment No. 35, to which I have added my name, has been grouped with this one. The noble Lord, Lord Naseby, has spoken eloquently in support of it and I do riot have a great deal more to add. It is important that there should be clarity. Amendment No. 35 seeks to achieve that.

Many of us hate inserts, but they do exist and we must face the fact that they are an increasing aspect of newspapers and magazines. We had an interesting discussion on Amendment No. 31, tabled by the noble Lord, Lord Lucas, which was generally connected with Amendment No. 35. I shall study in Hansard the points that were made. I commend Amendment No. 35 to the Committee.

1.45 p.m.

Lord Hunt of Kings Heath

One point on which we can agree is that none of us likes inserts in our newspapers. Indeed, this House is always concerned about litter. Apart from anything else, inserts contribute to a great deal of litter in our streets as well. However, I assure the Committee that the Government have no intention of legislating in this area.

Turning first to Amendment No. 35, I understand the issue that it raises and the fear that, for example, a local free newspaper may have flyers added to it at some stage in the distribution chain before it is put through readers' front doors. In that example, if the insert is added after the act of publishing—perhaps in the wholesaler's or in the newsagent's—the person who published the newspaper will not have published the offending insert and will not be liable. If, however, the offending insert is added before the act of publishing—perhaps at the printer's—then the newspaper publisher will have some responsibility for the separate publication. But, of course, if he was not aware that the purpose or effect of the separate publication was to promote a tobacco product, he will be able to raise defences under subsections (1) or (2) of Clause 5; namely, that he did not know, and had no reason to suspect, that the purpose of the advertisement was to promote a tobacco product". The rest of the amendments in the group follow the logic and reasoning of the noble Lord, Lord Lucas. I do not think that it is necessary for me to go through those in detail again.

However, with the leave of the Committee, perhaps I may return to the matter of trading standards officers. It is extremely relevant to debates on this clause. It is worth bearing in mind that in addition to the good sense of most of those officers, there is a local authority associations/Cabinet Office enforcement concordat, which was published in March 1998 through the auspices of the Better Regulation Unit. That is very much concerned with publishing performance standards between local authorities. It also provides the means to complain and to follow up on complaints received.

That simply reinforces the point that I made earlier; namely, that in addition to relying on trading standards officers there is government and local authority association action to ensure that the performance of those officers is as effective and proportionate as possible. In the end, however much we agree or disagree on the contents of the Bill and the regulations, it will still depend enormously on the way in which local trading standards officers perform. We can have some assurance that there is an enormous effort going on between government and the local authority associations to make sure that local authority trading standards officers do a competent professional job.

Lord Clement-Jones

The Minister has answered the issues arising from the amendments. For the bulk of the amendments, apart from Amendment No. 35, there is a return to the debate on hurdles that we have had previously. The issue is: as a matter of public policy, does one use a "constructive suspicion" defence or a "constructive knowledge" defence? The choice is there. My choice is to take the line of the Bill; namely, constructive suspicion. That seems to be a firmer basis. It is broader than "constructive knowledge", but that is what the Bill is designed to do.

The Minister pointed out very clearly in relation to Amendment No. 35 that there are adequate safeguards in Clause 5. I repeat that Clause 5 is central to the Bill. We debated it at length in Committee last time and we have referred to it again and again during today's debates. That demonstrates that this is a central clause—the defences are key parts of the Bill. In my view they are adequate to deal with the circumstances set out in Amendment No. 35.

Lord Naseby

The noble Lord, Lord Clement-Jones, has had an interesting approach to a number of amendments throughout the Committee stage. He simply takes the view that what he has put down on the face of the Bill is right and so far as he is concerned that is all he is going to deal with. That is not quite in the spirit of this House. When amendments are tabled quite genuinely, as this one was, even as a non-lawyer I should expect to hear a reasoned argument why the phrase, had no reason to suspect is so much stronger than the one I have suggested. My amendment suggests that, because so much is caught by the Bill and because the penalties are relatively great, the hurdle should not be quite so high. The noble Lord who is promoting the Bill simply says, "I do not agree with that at all. I'll just put down what is in my Bill and I am sticking to that". That is not in the spirit of debate. I give way to the noble Lord.

Lord Clement-Jones

The position is straightforward. I do not simply assert matters. The fact is that the constructive suspicion defence is a higher hurdle than the constructive knowledge defence. On public policy grounds, that is how the Bill has been drafted. It is designed to make it more difficult in those circumstances, so that we can ensure that people genuinely did not act in the wrong way. Constructive suspicion is a broader test and a narrower defence. If somebody has a suspicion in their mind that such and such is the case, of course they have a greater duty of care than if the test is simply based on constructive knowledge. I am simply asserting that that test is my public policy preference. I am not saying that the noble Lord must accept the Bill or else. He is perfectly at liberty to put the issue to the test in the Committee if he wishes to do so.

Lord Naseby

I am grateful to the noble Lord for explaining his views. It would help the Committee if he would do so on future amendments as well. That contribution took him the best part of 45 seconds, but it was certainly a great deal more detailed than just casting an amendment aside because he alleges that it does not conform to public policy.

Having listened to the noble Lord and the Minister, I am not at all happy with the result. I reserve the right to come back to the amendment, but at this point I beg leave to withdraw the amendment.

The Deputy Chairman of Committees (Lord Lyell)

Is it your Lordships' pleasure that Amendment No. 33 be withdrawn?

Noble Lords


1.52 p.m.

On Question, Whether the said amendment (No. 33) shall be agreed to?

Their Lordships divided: Contents, 16; Not-Contents, 55.

Division No.1
Clark of Kempson, L. Monson, L.
Henley, L. Moynihan, L.
Hooper, B. Naseby, L. [Teller]
Howe, E. Noakes, B.
Kingsland, L. Northesk, E.
Liverpool, E. Oxfuird,V. [Teller]
Lucas, L. Rawlings, B.
Lyell,L. Swinfen, L.
Acton, L. Bradshaw, L.
AUenby of Megjddo, V. Campbell-Savours, L.
Ampthill, L. Carter, L.
Andrews, B. Clement-Jones, L. [Teller
Avebury, L. Dholakia, L.
Elder, L. Northover, B.
Evans of Parkside, L. Oakeshott of Seagrove Bay, L
Faulkner of Worcester, L. Perry of Southwark, B.
[Teller] Peston, L.
Filkin, L. Phillips of Sudbury, L.
Finlay of Llandaff, B. Rea, L.
Gale, B. Redesdale, L.
Gibson of Market Rasen, B. Richard, L.
Hamwee, B. Rodgers of Quarry Bank, L.
Harris of Richmond, B. Roper, L.
Haskel, L. Scott of Needham Market, B.
Hayhoe, L. Simon, V.
Hayman, B. Slim, V.
Hunt of Kings Heath, L. Smith of Clifton, L.
Stone of Blackheath, L.
Janner of Braunstone, L. Thomas of Walliswood, B.
Lisey, L. Tope, L.
Listowel, E. Turner of Camden, B.
Mclntosh of Haringey, L Wallace of Saltaire, L.
MacKenzieof Culkein, L. Walmsley, B.
Maclennan of Rogart, L. Wigoder, L.
McNally, L. Wilkins, B.
Massey of Darwen, B. Williams of Crosby, B.
Mitchell, L. Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

2.3 p.m.

[Amendments Nos. 34 to 38 not moved.]

Lord Lucas moved Amendment No. 39: Page 3, line 9, leave out subsection (5).

The noble Lord said: The point here is really quite simple; namely, that Internet service providers are not publishers. They are admitted by European directive to he mere conduits. Under no circumstances are they publishers and they should not be said to be publishers in the Bill. I beg to move.

Lord Filkin

The Government support Amendment No. 39 to delete subsection (5) of Clause 5. Clause 5(5) provides defences for Internet service providers when they are deemed to have "published" a tobacco advertisement. As the noble Lord, Lord Lucas, has previously indicated, this measure has caused considerable concern to Internet service providers, who claim that their activity does not amount to publishing.

The question of whether ISPs are publishers or distributors is complex and there is at present no legal certainty. It was for that reason that the government Bill was amended in Committee in another place to ensure that, should they be found to have published a tobacco advertisement, ISPs would be furnished with a robust defence.

Nothing in the Bill states that ISPs are necessarily publishers; the measure in question merely states that in any case where an ISP publishes an advertisement by electronic means there is the defence that he was unaware that what he had published was, or contained, a tobacco advertisement.

Clause 5(5) has caused considerable concern for Internet service providers. The noble Lord, Lord Lucas, brought their representatives to see the noble Lord, Lord Hunt, in connection with our earlier Bill.

They made it clear that they had no intention of trying to evade their responsibilities but argued strongly that the clause be dropped.

Although the Government do not accept the claim that ISPs can never be "publishers", they believe that subsection (5) of Clause 5 can be deleted without weakening the Bill. The Government are committed to supporting the e-commerce industry and therefore support the amendment, which clearly reflects a matter of concern to ISPs.

In due course the Government will lay regulations which implement in the United Kingdom the provisions of the e-commerce directive. These regulations will limit the liability of intermediaries such as ISPs to circumstances in which there is actual knowledge of illegal activity and corrective action is not taken expeditiously. Obviously, the provisions of this Bill will need to be fully consistent with those regulations in the interests of legal clarity and certainty.

The Earl of Northesk

The Minister suggests that there is uncertainty around the issue of whether ISPs are publishers and I can probably agree with the thrust of his comments. However, will he confirm that Article 12 of the directive states clearly that ISPs are "mete conduits"? There is another issue that intrigues me. There is a requirement for member states to transpose that directive into national law by 17th January. I do not know what the Government's timetable is on that matter. I should be interested to hear what light the Minister can shed on that, particularly as it is my understanding that the DTI has indicated that it is its intention, as regards ISP liability on this point, to transpose the directive word for word.

Lord Filkin

As has been pointed out, ISPs can be mere conduits under Article 12. But I am advised that cacheing under Article 13 and hosting under Article 14 are also relevant to the ISP position. I do not believe that I can clarify the matter more other than to say that clearly the Government's intention is to make the if it progresses, fully compliant with the European regulations, as previously indicated. Further details of that will be provided later.

Lord Clement-Jones

I, too, very much take on board the intent behind the amendment and I am very pleased that the Government accept the force of it. I have the pleasure and privilege of having the e-commerce directive in front of me. It is a splendid piece of work. I read it every day if I possibly can for amusement—especially when trying to get to sleep.

Article 12 is headed "Mere Conduit", but that is only where those words appear. If one looks through the article, it is not entirely clear whether that constitutes what in the UK one might consider legally to be a mere conduit. Of course, as the noble Lord, Lord Filkin, mentioned, cacheing under Article 13 and hosting under Article 14 are activities which can be carried out by Internet service providers and, in a sense, they go beyond the mere duty of being an Internet service provider. Therefore, the position is not entirely clear. However, I believe that ISPs should be reassured to some extent that, if the amendment were to be accepted, greater consistency—whatever that may be—would be achieved with the e-commerce directive. On those grounds, I am very happy to support the amendment.

Lord Lucas

I am very grateful for what the Minister said. I am sure that the Internet service provider industry will be too. This matter reflects a much wider concern among ISPs; that is, that they do not wish to he regarded under any circumstances as a publisher. Were they to be regarded as such, there would be many implications for them under other statutes and other regulations, and it would make their business extremely difficult. Therefore, although I believe that they understood from the first that the intention of this clause was to provide them with a defence, the very fact that it referred to them as a "publisher" meant that the ensuing problems would outweigh any benefit which would come from the additional protection that they would receive were they ever to be a publisher. Therefore, I am extraordinarily grateful to the Minister.

The Deputy Chairman of Committees (Viscount Allenby of Megiddo)

I should inform the Committee that, if Amendment No. 39 is agreed to, I cannot call Amendments Nos. 40 to 43 under the pre-emption rules.

On Question, amendment agreed to.

[Amendments Nos. 40 to 43 not moved.]

[Amendment No. 44 not moved.]

Lord Lucas moved Amendment No. 45: Page 3, line 19, after "not" insert "reasonably".

The noble Lord said: Amendment No. 49, which is not grouped with Amendment No. 45, has something of the same flavour to it. Therefore, if it is for the convenience of the Committee, I shall cover it at the same time. The point here is that an obligation is imposed by this subsection on Internet service providers to do something about a tobacco advertisement which is found to be—

Lord Hunt of Kings Heath

Perhaps the noble Lord will forgive me. Will he clarify whether he is also speaking to Amendment No. 46? I did not quite catch his opening remarks.

Lord Lucas

Amendment No. 46 is not in my name. Therefore, I was not intending to speak to it. I imagined that the noble Earl, Lord Howe, would speak to it. It seems to address very much the same point, and I am happy that the two amendments are grouped together. However, I was addressing only Amendment No. 45.

Quite rightly, when it is discovered that an ISP is hosting or acting as a channel for a tobacco advertisement, an obligation is imposed on him by this subsection in Clause 5 to have it removed. In many circumstances, that will not be a problem. If it is found that one of the ISP's customers is the source of a tobacco advertisement, he can cut off that customer. If it is a website that he is hosting, he can have it expunged from his site. That should be an absolute obligation. However, when I come to discuss Amendment No. 49, there will be small caveats to that.

Subsection (6)(b) states that, having become aware of it, he was not able to prevent its further distribution". That phrase does not have any limits to it. A great deal of traffic goes through an ISP which he has no easy way of dealing with. Packets will simply pass through his network of which he may not be the originator or for which he may not be the end position. The only way in which to deal with such a tobacco advertisement would be if the ISP inspected every packet as it went through. Beyond anything else, that would probably be illegal under the RIP Act as the ISP has no right to know what is inside a packet. None the less, he would be able to do it.

As the clause stands, it yet again places an obligation on an Internet service provider to commit a crime. He can do it, but he should not be doing it. I have simply inserted the word "reasonably", so that if the ISP can do something at a reasonable cost he should do it. But if he has to buy a million pounds worth of equipment to do it, he will not have to do it in those circumstances. He no more has to go through his wires than a telephone company has to inspect what is going through its wires.

I do not intend to press Amendment No. 49. It considers what has to be done if an Internet service provider is asked to take down a website. It has to he clear who has the authority to tell someone to take down a website. If I host a website and a member of the public says that it contains a tobacco advertisement, what am I supposed to do? It is difficult to know under those circumstances whether to take down the website and incur enormous damages from its owner for having done so wrongly, or whether not to take it down and wait to be sent to prison for two years for failing to take down a tobacco advertisement.

There has to be some understanding of what process an Internet service provider should be subject to that will lead to an obligation to take down a website or discontinue someone's e-mail facilities. Otherwise they will be between a rock and a hard place of either being sued by a customer or convicted of a crime. Neither I nor the industry are certain how that circumstance will be dealt with in practice. Perhaps the Minister can clarify how those provisions will work. I should like something in the Bill that offered a little more certainty on the operation of these provisions.

2.15 p.m.

Baroness Noakes

Amendment No. 46 stands in my name and that of my noble friend Earl Howe. The difference between Amendments Nos. 45 and 46 is relatively small. The word "reasonably" is shifted one word along in the clause. There is nothing in substance that I wish to add to the commentary of my noble friend Lord Lucas, save to say that we support the amendment and I would not die in the ditch on the position of one word as the substance has been adequately conveyed.

Lord Filkin

At present, the clause provides that the person does not commit an offence if, having become aware that he was distributing tobacco advertisements by electronic means, he was unable to prevent its further distribution. The amendment of the noble Lord, Lord Lucas, would add the word "reasonably" after "able". In theory a person providing the means of transmission could prevent its further distribution, as the noble Lord said, by physically removing access to the medium containing the tobacco advertisement. However, it is not intended that BT or suchlike would be required to take such drastic action by closing down the whole or part of a network.

Without wishing to damage the reputation of the noble Lord, Lord Lucas, by having a further success, the Government believe that the amendment is a reasonable one. I should like to think again about the best way in which to draft Clause 5(6) to achieve the desired outcome, and I ask the noble Lord to withdraw his amendment on the understanding that we shall return to this point at Report stage.

I trust also that the noble Baroness, Lady Noakes, and the noble Earl, Lord Howe, will be similarly comforted by those remarks.

Lord Clement-Jones

I, too, very much sympathise with either or both of the amendments, depending on the grammatical construction. They both derive from the view that the Bill is not entirely consistent with the e-commerce directive. The noble Earl, Lord Northesk, and I had a mini- debate last time around about Article 13 and the question of expeditiously removing or disabling access. This amendment is trying to provide the mirror of that. The addition of "reasonably" is a better mirror, but it depends on how the Government plan to implement the e-commerce directive. That is. a proper reason for the Government to reflect On whether the amendment is the best way of doing that. I certainly support the spirit of the amendment.

Lord Lucas

I am grateful to the Minister for his response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 46 to 48 not moved.]

On Question, Whether Clause 5 as amended, shall stand part of the Bill?

Lord Naseby

The template for the way in which the Bill is constructed is relatively simple. It begins by stating what a tobacco advertisement is, creates offences in Clauses 2 and 3, makes limited exceptions in Clause 4 and lays out the available defences in Clause 5. Given the sweeping nature of the prohibitions and the high level of penalties for offences—interestingly, we have not yet debated those high levels—Clause 5 is of particular importance.

Like Clauses 1 to 4, Clause 5 seeks to deal with advertisements that appear in print and by electronic means, such as via the Internet. In doing so, and related as the clause is to the preceding four clauses, I submit that the clause is confusing and requires significant amendment. One amendment has already been agreed to, and others are possibly in the offing.

When considered in the light of the provisions in the first four clauses and in Clause 7, which will allow the Secretary of State to amend any provisions in the Act by order, there are strong grounds for proposing that the Bill should deal with advertisements that are distributed by electronic means in an entirely separate clause or in a group of clauses. There is also good reason to go further and to propose that such aspects as concern electronic publication and distribution should be covered more generally in e-commerce legislation. I believe that the promoter of the Bill said that we might go down that route. In any case, I suspect that they should be promoted not by the Department of Health but by the DTI.

As matters currently stand, the Bill relates to a person who publishes a tobacco advertisement; causes the advertisement to be published; prints, devises or distributes the advertisement; transmits it or participates in transmitting it or provides the means of transmission; carries on business in the UK and publishes or causes a tobacco advertisement to be published by means of a website that is accessed in the UK; devises or causes the devising of that advertisement; is a proprietor or editor of a printed publication or one published by electronic means; or is a person who directly or indirectly procured the advertisement. Defences are available to that person if he can prove that he did not know that the purpose of the advertisement was to promote a tobacco product, and had no reason to suspect that promotion of a tobacco product was the purpose of the advertisement; or, if promotion of a tobacco product was not the purpose but the effect of the advertisement, that he could not reasonably have foreseen that that would be the effect of the advertisement. That involves only the start of the clause—subsections (1) and (2).

Subsection (3) provides a defence for a person who prints, devises, distributes or causes any of those things in relation to a tobacco advertisement that is published in the UK; who is the proprietor or editor of the publication; or who procured the advertisement for publication. The defence applies if he can prove that he did not know and had no reason to suspect that the advertisement would be published in the UK.

Subsection (4) provides another defence to a person who distributes or causes a tobacco advertisement to be distributed by means other than in electronic form—that of proving that he did not know and had no reason to suspect that what he distributed or caused to be distributed was, or contained, a tobacco advertisement.

Subsection (7) provides a defence for a person who sells a publication, or offers it for sale, or otherwise makes it available to the public, if they can prove that they did not know and had no reason to suspect that the publication contained a tobacco advertisement.

So far, that deals only with the defences that are available in respect of tobacco advertisements, which appear in a form other than that achieved by electronic means. However, they involve the difficulty of interpreting and proving, having no reason to suspect"; of establishing the effect of an advertisement, the purpose of which was not to promote a tobacco product—that is an important dimension—and of the person proving that they, could not reasonably have foreseen that that would be the effect". As the Minister from the Department of Health has said, the principal enforcement agency in respect of this Bill in England and Wales will be the weights and measures authorities. Therefore, the trading standards officers are expected to understand the complexities of Clause 5. Daily they will have to cope with it. If any noble Lord has not visited a trading standards office recently, I invite them to do so to see the welter of work with which they contend, not least at Christmas time when counterfeit products of one kind or another invade these shores.

The trading standards officers are expected to understand the complexities of Clause 5 and the other provisions of this Bill and, not least, to ensure that the numerous regulations to which the Bill will give birth are complied with. That is also the case with regard to the provisions of Clause 5 that relate specifically to advertisements that are published or distributed by electronic means. Frankly, those provisions show all the signs of being added to the Bill after it was originally drafted. Indeed, that was the case, as they were introduced by amendments in the other place tabled by the Government in the previous Parliament.

For the first time in this Bill, and without the Bill providing any definition of the term, subsection (5) applies specifically to Internet service providers. It wrongly attributes to them the role of publishers and the commitment of an offence of publishing a tobacco advertisement.

Lord Peston

I may have been asleep, but I thought that we had taken Internet service providers out of the Bill. I thought that that had been agreed. Was I hallucinating, or did we do that?

Lord McNally

Yes, we did.

Lord Naseby

I am grateful. I took a two-minute refreshment break. Perhaps I missed that point. If so, I apologise to the Committee. I am a pensioner, as are other noble Lords, and occasionally it is necessary to take a break.

As there may have been some movement on this point, I shall have to read Hansard to see exactly what movement there has been. My understanding is that subsection (6) compounds the perception of misunderstanding of the Internet by dealing with distribution by means of transmission in electronic form. It provides defences of proving that the person was unaware of distributing a tobacco advertisement and that, having become aware, was not able to prevent its further distribution, or that the person concerned did not carry on business—whatever that may mean—in the United Kingdom at the relevant time.

The provisions for publication or distribution by electronic means are confused. I now understand that they are to be taken away. Perhaps when the promoter of the Bill responds, he can clarify the point. As I understand it, at the moment they do not recognise the availability of current technology to filter the Internet and to access websites. They also do not take account of the fact that providers of electronic and Internet services have contracts with their customers. Therefore, they find themselves in a catch-22 position, of either breaching the law or breaching existing terms of contracts.

We have discussed the e-commerce directive and whether or not these provisions conform, so I shall not develop that dimension of the argument. I hope that cognisance will be taken of the point made by my noble friend Lord Lucas that the place of establishment is absolutely crucial. At the moment it is very confusing.

I am not sure whether my next point has been discussed. As far as I can see the provisions make no specific reference to information society services nor to the definition of that term within the meaning of Article 1(2) of Directive 98/34. I am sure that the promoter of the Bill will be able to reassure the Committee about that. Perhaps he will also be able to give me time and date in relation to that. In my judgment subsections (5) and (6) of Clause 5 are wholly unsatisfactory. They and other subsections in the clause require substantial review and amendment. However, if the noble Lord promoting the Bill will do that, we are making some progress.

2.30 p.m.

Lord Hunt of Kings Heath

Perhaps I may make a couple of comments in relation to the Clause 5 stand part debate which the noble Lord, Lord Naseby, has developed.

In our earlier debates we discussed the substance of the wording of this particular part of the Bill. It is highly significant that the wording used is not breaking new ground in legislative terminology—for example, with regard to the defences, "did not know" and "had no reason to suspect". That is language which has been used in a consistent way in a number of Bills over the past at least 10 to 15 years. To pick up one of the key points raised by the noble Lord, I am not aware that this has caused a particular problem in relation to enforcement.

That brings me to the point raised by the noble Lord about how trading standards officers will learn to implement the legislation, and to what extent it will be clear to them how they are to do that. I am not aware of any particular difficulties for trading standards officers in implementing new legislation. Local authorities have directly employed lawyers who are there to advise officers in the course of their duties.

In addition, the role of the Local Government Association and of other local authority associations is clearly to advise local authorities. This particular legislation is not any different from previous legislation. I would expect those officers to be given advice and to have the opportunity to implement the provisions in full.

Lord Naseby

I understand where the Minister comes from. I basically agree with him. The big problem is that the promoter of the Bill has explicitly put up very high hurdles. So while the Minister is probably right, he may not be entirely right. If he is not entirely right, because the hurdle is so high and the penalties so relatively great, we shall find some people in a situation that no Member of the Committee would want. That is the problem.

Lord Hunt of Kings Heath

There are two points that I should like to make. First, if the hurdles are high, then the defences contained in the Bill are substantive; and, secondly, the noble Lord is right to draw attention to the question of penalties. I have no doubt that we shall debate Clause 16—I doubt whether that will be today—when we return to Committee stage.

It is worth making a point that the penalties are penalties "up to". I have no doubt that the penalties handed down by the court will be proportionate to the offence.

Lord Clement-Jones

This has been an interesting short debate on Clause 5. Before talking about the substance of the clause, perhaps I should say that many of those with the interests of the Internet service providers at heart are much more satisfied with the contents of the clause as amended today, and as the Government have indicated that they will agree that it should be amended in the future.

I turn to the point made by the noble Lord, Lord Naseby, about Clause 5(5). I can confirm that that clause has now been deleted. Also, I have indicated that I will accept, and the Government have indicated that they are very happy to formulate, an addition to Clause 5(6)(b), which adds the words "reasonably able". That would bring the subsection much closer and the position of the ISPs much closer to the e-commerce directive. That effectively answers the question asked by the noble Lord, Lord Naseby, about information society services. Under Article 12, which is labelled "mere conduit", the Internet service provider—the information society service—is treated as a mere conduit, provided that it does not do certain things. The second element is provided by Article 13 labelled "cacheing". It is designed to be closer to the e-commerce directive. To that extent, ISPs' problem with their treatment under Clause 5 no longer stands.

For the life of me, I cannot see in principle why one should split off electronic communications from other forms of communications, provided that we get the treatment right in the e-commerce directive, in terms of the defences available through other forms of publication. The whole purpose of Clause 5 is bring all those defences together, which it does effectively.

As regards trading standards, I entirely accept what the Minister said. I have some experience of campaigning against Sunday trading laws. They were fairly arcane, yet trading standards officers were good at enforcing them, if I remember correctly. They have a body called the Local Authorities Co-ordinating Body on Food and Trading Standards that spreads best practice and is extremely effective. They have the concept of home authorities, which means that the place of establishment of a business is the area in which the trading standards officers have prime responsibility for enforcement. They are then consulted by trading standards officers in all other parts of the country where offences or alleged offences take place. So there is a pretty good network. Trading standards officers will have no problem enforcing the Bill.

As regards the substance of the clause, we are back in the public policy debate about the threshold. As the Minister said, we are discussing substantive defences. Several times during the Bill's passage, we have considered particular situations. During our last sitting, we considered printers; today we have considered the paper boy. I am sure that Members of the Committee could come up with other examples this afternoon—although I hope that they do not.

But when we consider the clause, the reasonableness of the defences is apparent. They are perhaps not as broad as the noble Lord, Lord Naseby, would want, but, as I have said, there is a public policy issue. It is not enough for someone to have absolute knowledge that there is a tobacco advertisement in a magazine that he happens to publish, print or distribute. There is a greater duty on the prosecution. Ministers and I have admitted that. There is no hidden agenda; the defences are broad. They are perfectly capable of being administered by trading standards officers and dealt with by the courts.

Clause 5, as amended, agreed to.

[Amendment No. 49 not moved.]

Clause 6 [Specialist tobacconists]:

Lord Monson moved Amendment No. 49A: Page 3, line 36, leave out from "things)" to the end of line 38 and insert "on which premises more than 100 brands or brand variants of tobacco products are stocked and available for sale

The noble Lord said: The amendment in no way challenges the Bill's main purpose. The Committee will be aware that Clause 6 allows specialist tobacconists certain modest and tightly drawn exemptions from the restrictions on point of sale advertising that apply to other tobacco outlets. There are remarkably few specialist tobacconists left. It is estimated that there are no more than 380 in the country. Unfortunately, the Bill draws the definition of "specialist" in such a restrictive way that many of those 380—almost certainly more than 100—will fail to qualify for those limited exemptions. The reason is that, as the Bill stands, no tobacconists deriving more than half their income from cigarettes or rolling tobacco are deemed to be specialists. Put another way, they must derive more than half their gross income from cigars, pipe tobacco, snuff and smokers' accessories.

At Christmas time, when people in a last-minute panic often tend to rush into such places and snap up cigars, cigarillos, pipes, cigar cutters, fancy ash trays and so forth for their nearest and dearest, that target may be readily attainable. But that is not necessarily so at other times of the year. How does one remedy that? The noble Earl, Lord Liverpool, in his amendments suggests by way of remedy that the threshold in subsection (2) be lowered from one-half to one-third, thus permitting two-thirds of their sales by value to comprise cigarettes and rolling tobacco.

That would certainly be an improvement and well worth having faute de mieux. However, one problem is that whatever fraction one chooses, it is extremely difficult to monitor. If someone goes into one of the specialist shops to buy a packet of Silk Cut and 10 cigarillos, presumably the shop will have to issue two separate receipts so that the sales can be divided up.

The remedy I propose is different. It is modelled on the system which prevails in the Netherlands, a fact which should make it extremely attractive to Liberal Democrats and new Labour, given that the Netherlands is socially liberal, progressive, health conscious and, above all, Europhiliac. In the Netherlands, "specialist tobacconist" is defined simply as one which stocks more than 95 brands of tobacco or tobacco products, thus setting it totally apart from the average kiosk, corner shop or self-service store which would find it wholly uneconomic to stock much more than one-third of that amount.

In order to try to accommodate the noble Lord, Lord Clement-Jones, and the Government, my proposal is stricter than the Dutch model in that a shop would have to stock more than 100 rather than 95 brands to qualify. Bearing in mind that the tight restrictions set out in Clause 6(1)(c) would still remain in place, and that this restriction would be easier and, I dare say, cheaper to monitor than the restriction proposed in the Bill—a fact which alone must make it attractive to the Government—I hope that the noble Lord, Lord Clement-Jones, will accept the amendment. I beg to move.

The Deputy Chairman

Before putting the amendment forward, I should inform the Committee that if it is agreed to, I cannot call Amendments Nos. 50 and 51 under the pre-emption rules.

The Earl of Liverpool

My Amendments Nos. 50, 51 and 52 are grouped with Amendment No. 49A, tabled by the noble Lord, Lord Monson, and I rise to speak to them. However, I want to support the noble Lord's amendment. As a solution to the problem it is preferable to mine and I hope that the noble Lord, Lord Clement-Jones, will have sympathy with it. I should therefore be happy to lose my amendments.

I am in favour of Amendment No. 49A because it is capable of being established more easily, literally visibly, by the simple process of counting the number of brands and brand-variants of tobacco products stocked and for sale. As the noble Lord, Lord Monson, said, that approach has been adopted by the Netherlands. However, if that amendment is not acceptable, I shall move Amendment No. 50. Fifty per cent is an arbitrary figure and cannot include the sale of cigarettes and hand-rolling tobacco. I believe that a more preferable proportion is one-third.

Amendments Nos. 51 and 52 are of a more minor character and seek to establish that a shop, or part of a shop, and sales on the premises may not be the appropriate practical yardstick. The Bill as a whole does not legislate for specialist tobacconists which operate principally by mail order without shop premises and only the customary marketing tools that are presently at their disposal but largely denied by the Bill under Clause 4.

Lord Naseby

I support the noble Lord, Lord Monson, and my noble friend's contribution. There are a number of key points here. The promoter of the Bill and the Government recognise that specialist tobacco shops are not the main way in which cigarettes reach the market. That is a significant point of recognition. We are indebted to the noble Lord, Lord Monson, for informing the Committee that there are 380 specialist shops. By any yardstick, 380 specialist retailers—I should have checked the number of retailers in the United Kingdom who sell cigarettes, but it must be well over 100,000—will hardly drive a coach and horses through the public policy of the Bill. But it could drive a coach and horses through the specialist tobacco shops. If the legislation gets it wrong they will go out of business. Most of those businesses are single traders, but perhaps one or two own more than one shop. If we get it wrong both the consumer and those businesses will lose. Therefore, it behoves us to get it right.

Reference has been made to the yardstick of 50 per cent of sales. As one who has been involved in business, I am not terribly interested in sales alone. If I were to run a specialist retail tobacco shop—I assure the Minister that I do not have it in mind to do so—I would be interested in where the profit arose. It is the profit which keeps the shop viable. It may be that cigarettes account for 50 per cent of the sales, but I am interested in the profit. I believe that if a retailer gets more than 50 per cent of his profit from products other than cigarettes and hand-rolling tobacco he should be recognised as a specialist tobacco shop.

I am not entirely clear what "specialist" means. As the Bill stands, the two elements on one side are cigarettes and hand-rolling tobacco, but there is a move afoot by the Health Council to include cigarette papers. My understanding, which the Minister can clarify, is that the Government are minded to accept that recommendation. I am not an expert on cigarette papers, but I recognise that there is more than one brand and type. It is not just that people who like to hand roll their own cigarettes buy one sort of paper. They tend to match particular tobacco to particular papers for particular occasions. It would therefore be wrong to include cigarette papers on the cigarette sales side of the equation, as opposed to the specialist side of it, for these specialist shops. I draw a distinction between such specialist shops, and other confectionery, tobacco and newsagent shops.

I also wonder why somebody landed on 50 per cent as the threshold. We had a long debate earlier about research, sources of evidence and inquiries that have been made. I hope that the Bill's promoter can tell us that 50 per cent arose as a figure because somebody had done some research and decided that that was the key trigger for making a decision. I hope that he will not say that 50 per cent seemed a fair figure, so that can be the norm.

I understand that the Department of Health has had discussions with the representative organisations of about half the total number of specialist tobacconists in the country, but that they were held when the Bill was originally published. I do not remember the date, but it certainly was not recently. Can we presume that the trade bodies representing about half of the 380 were happy with the 50 per cent threshold? Were they fully appreciative of the fact that this would exclude a significant part of their turnover? I do not know the answer, but I am sure that the Minister can enlighten us.

That raises the question of those who are riot members of the trade associations, who may have a very different viewpoint. Part of the purpose of debating Bills is to ensure that the little man, the underdog or minority interest is at least discussed so that if a decision is taken against that interest, it is done consciously. Their views are important. If there are only 380 of them, I should have thought we could find out their views.

I support the comments made about the Netherlands. There is little point in re-inventing the wheel if we have direct evidence from a fellow member of the European Union, which has already enacted legislation that apparently works well. Why not copy that rather than going down a different route? I hope that that argument will find favour with the Bill's promoter.

The other amendments are minor and seek to recognise that a shop or part of a shop or sales on the premises may not be the appropriate practical yardstick. As matters stand, the provisions do not legislate for specialist tobacconists who operate principally by mail order, without any premises. Therefore that is a further dimension.

The noble Lord who originally moved the amendment has spoken to it with conviction. Already in place is a practical example in the Netherlands. Furthermore. the points raised by the amendment are highly relevant. I hope that the promoter of the Bill will recognise that this is a helpful amendment and one that does not seek to push a coach and horses through the public policy dimension.

Baroness Finlay of Llandaff

I should like to add a few observations on the amendment. I appreciate the representations made by the noble Lord, Lord Monson. I am sure that it is not his intention to weaken the Bill, but I am concerned that the amendment arid those grouped with it could do that.

I remain unconvinced of the need to define specialist tobacco outlets in a different way since a point of sale is exactly that, a point of sale. For consumers seeking to make a purchase, they will go to whichever point of sale best meets their needs. However, it seems sensible to define a specialist in terms of turnover rather than in terms of the number of items stocked; otherwise I do not see why premises which previously would not have been classified as a specialist oulet could not be persuaded to stock one or two items of up to 100 separate classified products and thus immediately fall into that proposed category. As a result, a number of so-called specialist outlets could abuse the role and position of those outlets that are truly specialist.

If a specialist outlet is defined in terms of business turnover, because every business must keep accounts, it would become clear that 50 per cent of the turnover is related to the specialist activity. The moment one tries to impose any other method of collecting data, a burden is immediately imposed on small businesses. To that end, I fully accept what has already been said; that is, that tobacco specialists are small businesses. Personally, I believe that a threshold of 50 per cent is quite generous for a specialist retail outlet, but so be it. I fully support that anything over 50 per cent of turnover should allow an outlet to qualify as a specialist organisation.

However, given that the general tenor of the Bill is to seek to decrease the sale of tobacco and tobacco products, in particular to young people who are vulnerable to advertising, I would have grave concerns about any clause that sought to weaken that original intent.

Lord Naseby

Why would a specialist tobacco outlet be particularly attractive to teenagers? Earlier today all Members of the Committee acknowledged that the Bill seeks to address young people. By their nature. specialist tobacco shops are not shops that are attractive to teenagers. I should have thought that the incidence of teenagers using specialist tobacco shops would be extremely low.

I would also suggest to the noble Baroness that perhaps she is not totally au fait with the modern specialist tobacco shop or other specialist outlets. Those retailers know about a great deal more than simply turnover. The modern niche market player at the retail end of business knows exactly what the profitability is on each line. He will know what takes place month by month. Sales are not the determining factor other than that a certain volume of sales is required in order to run a viable business. Overall profitability and profitability by line are equally important.

Baroness Finlay of Llandaff

I fully accept that a specialist retailer will know a great deal more about his products than the level of sales. The quality of specialist knowledge about the products is what would define a specialist outlet. However, the difficulty is that that is a qualitative judgment. The role of the wording in the Bill is to provide a simple measure that can be determined in a numerical sense; that is, sales of tobacco would total either over 50 per cent or under 50 per cent of turnover. I fully understand that the amendment proposes to take the arbitrary standpoint of 100 brands of tobacco products. But as I have said, that is a relatively arbitrary cut-off point.

I fully accept that teenagers do not go into specialist tobacco outlets, but my concern is that other outlets which are currently very attractive to teenagers could easily start stocking 100 products and then become re-designated as specialists without having any of the specialist's expertise that has been referred to.

Lord Peston

I think that, once again, we might bring in some common sense. To the question, "What is a butcher?", the answer is, "Someone who sells meat". It is not someone who derives this amount of profit from this or that bit of meat; they are in the meat business. A bookshop is one which sells books. A specialist tobacconist is someone who specialises in the sale of particular products. I am indebted to the noble Lord, Lord Monson, for telling us that there are 380 of them. I assume he is saying that he has spoken to some of those who call themselves specialist tobacconists but are not so "specialist" that more than half their business is in these products. How can they call themselves specialists if typically their products are not these special items? Wearing my economist's hat, I am a bit lost by that.

Lord Monson

All I can say to the noble Lord, Lord Peston, is that you know a specialist tobacco shop when you see one. The atmosphere, as has been intimated, is old fashioned and rather fogey-ish, and therefore not attractive to young people. They stock virtually nothing but tobacco products.

Lord Peston

I very much agree with the noble Lord, Lord Monson, and therefore I would expect to find cigars, snuff, pipe tobacco and smoking accessories as typical products. I can see the shop and therefore I am not at all clear what the noble Lord is on about. We are trying to make some progress—I do not say this in any acerbic spirit to him—with a rather important piece of legislation. I read Clause 6 as making a concession to these people. This is saying to them that they get a special right with regard to a special class of advertisements because of the business they are engaged in. Some of us, given my attitude, would never make such concessions, but one is offered here and therefore I would ask again: what really are they on about?

Lord Naseby

Before the noble Lord sits down, perhaps I can help him. He is an economist. I read economics, I have been in business, and I got an Upper Second at Cambridge, which is not too bad. However, leaving that aside, a specialist tobacco shop—I appreciate that this is a concession and I am pleased that the noble Lord, the promoter, recognises that these places are in a different category—may well sell cigarettes, but they are cigarettes of a specialist nature.

I do not smoke and presumably the noble Lord does not either—certainly I would hope he does not; otherwise he might be found questionable in some of his views. These people would sell Turkish cigarettes and all sorts of different types of "gut-rot" tobacco that none of us would ever contemplate smoking. They are knowledgeable in advising those consumers who want them about special types of cigarettes. That is why I think that the yardstick of 50 per cent of revenue is actually a little too high a hurdle. I accept that the promoter wants high hurdles everywhere but I think that, for once, this is too high. I come back to the point already mentioned. If the Netherlands, where the incidence of smoking is higher than here, have got something on the ground that works, why on earth do we not just take what they have got?

Lord Hunt of Kings Heath

The figure of 380 is similar to the one that I have of the number of specialist tobacconists who will be affected by the Bill. I readily acknowledge that many of them are small, family businesses. Certainly, when the Government were drafting the Bill originally, there was no intention to try to put those specialist tobacconists out of business. That is why the concession was made.

I understand that my noble friend Lord Peston and other noble Lords would have preferred not to make such a concession. There are arguments on both sides, but, when the Bill was being drafted originally, the Government felt that it was right to afford some protection for the specialist shops, many of which are small family businesses. We can come on to the issue of whether 50 per cent of sales is the right figure, but clearly the Government have sought to achieve a balance between protection and, as in other aspects of the Bill, ensuring that there are no loopholes through which other retail outlets might use these provisions to get round the intent of the Bill.

To be classed as a "specialist tobacconist" and to be allowed to advertise specialist products in the shop or affixed to the outside of the premises, a person must derive half of his or her sales on the premises from pipe tobacco, snuff, cigars and smoking accessories. That seems to be a reasonable qualification. If the shop owner derives a substantial part of his income from these products, he is more likely to suffer loss if he is not allowed to advertise them.

I listened with great interest to the noble Lord, Lord Monson. I well understand his intent, but, in many ways, the test that he seeks to apply is more arbitrary than the one chosen by the drafters of the Bill. Some businesses may sell more than 100 brands but find that sales of each brand are low and that the bulk of their income comes from non-tobacco items. In that case, they will not be substantially dependent on tobacco sales and will not particularly need the right to advertise in-store.

We need to go back to what the Bill seeks to do—that is, to ban tobacco advertising. Clause 6 allows limited concessions for specialist shops to take into account the needs of small businesses and not to place undue burdens on them. The Bill does this on the basis of sales. If we move away from sales to a test based on the number of brands a shop carries, there is a danger of a loophole. The noble Baroness, Lady Finlay, made the point that if you move to a test based on the number of brands a shop carries, anyone can then potentially call themselves a tobacconist and avail themselves of the provisions of Clause 6.

I should point out to the noble Lord, Lord Monson, that the test in his amendment is based on tobacco products not "specialist" tobacco products. Clause 6(1)(b) makes clear that the provisions regarding advertising by specialist tobacconists do not cover cigarettes arid hand-rolling tobacco. It does not make sense to include a test based partly on cigarette brands sold as a criterion for advertising specialist tobacco products.

Amendment No. 50 refers to Clause 6(2), which allows a limited exemption for in-shop advertising by specialist tobacconists. It allows them to advertise snuff, cigars and pipe tobacco inside their shops and on their shop fronts, provided that they comply with any regulations that might be made in relation to this. It does not allow them any special dispensation to advertise cigarettes and hand-rolling tobacco.

The clause defines a "specialist tobacconist" as someone more than half of whose sales on the premises derive from the sale of cigars, pipe tobacco, snuff and smoking accessories. The amendment seeks to lower the threshold for qualifying as a specialist from one-half to one-third of turnover. The noble Lord, Lord Naseby, asked me if I could put my hand to any particular research that suggests that 50 per cent is the appropriate figure. I regret that I cannot refer to a BMJ article or even to primary research. However, it seemed to me that the figure was chosen as a sensible balance: if you made the threshold lower, it would create too many loopholes; on the other hand, you did not want a higher threshold because that might make things difficult for the specialist tobacconist. It is based on a common sense approach.

The noble Lord asked about consultation with trade associations. I understand that consultation did take place with trade associations at an early stage when the original Bill was being drafted and taken through the other place. My understanding is that the 50 per cent threshold did not cause particular concern.

As someone who used to run a trade association, in a manner of speaking, I understand the points that the noble Lord raised about those who do not belong; to trade associations. I must say that I am not instinctively in sympathy with organisations that do not belong to trade associations. In terms of normal government business, we generally have to deal with the trade associations.

I now turn to Amendment No. 51, which seeks to delete the phrase, on the premises in question", from Clause 6(2). As presently worded, the criterion for qualifying as a "specialist" is based on shop sales and excludes such areas as mail order or Internet sales. That makes sense, because the concession is to allow wider advertising within the shop to be seen by those customers who come in person to make such purchases. In providing a special defence to the Bill, the Government have recognised that specialist tobacconists should be given greater freedom to advertise their specialist products. When someone walks into a specialist tobacconist's, he or she will generally already have decided to purchase a specialist product. More importantly—this point was made by the noble Baroness, Lady Finlay—such shops do not generally appeal to children. Hence the Bill allows them to advertise cigars, pipe tobaccos and snuff within or outside their premises.

Giving greater latitude would be inappropriate. These products are still dangerous. Although they are not very popular among smokers now, that might change. If we were to expand the criterion for qualifying as a "specialist tobacconist" to, for example, mail order and Internet sales, surely we should be going against the whole purpose of the Bill.

Amendment No. 52 seeks to widen the meaning of "shop" in Clause 6(4). The term "shop" is not exhaustively defined in the clause. I believe that, like many matters in the Bill, in the event of dispute it is best left to the courts. However, it appears to me that a long-established temporary unit could well be held to be a "shop". But to allow the amendment could create a loophole and could lead to more doubt.

Lord Naseby

Before the Minister sits down, I and another Member of the Committee raised the question of the Netherlands, which has experience in this area. It would be incomprehensible if the Minister had not already contacted the Netherlands in relation to the Bill. Undoubtedly he would have wanted to assess the results in the Netherlands. Is he in a position to tell us his findings? Unless there are strong reasons why the experience in the Netherlands drives a coach arid horses through the public policy dimension to the Bill, I should have thought that the Minister would welcome the Netherlands having done the donkey work, as it were.

Lord Hunt of Kings Heath

It may come as a surprise to the noble Lord to know that we do not always look to the Netherlands for guidance and advice on how we should legislate. Alas, no, I have not investigated the position in the Netherlands, although I should always look with interest at any reference or article of research that he would care to send me which would indicate the Netherlands' experience.

We have to legislate in a context that we understand in the UK. I believe that such definitions, particularly that included in Amendment No. 49A, would drive a coach and horses through the Bill. The amendment would remove the protection that the Bill as drafted gives in relation to specialist products. The use of the phrase "100 brands" could allow many other retail outlets to advertise in the way permitted in the Bill. It is not a sensible road to go down.

3.15 p.m.

Lord Naseby

I am sorry to persist on the Netherlands. Given that the amendment had been tabled, it is disappointing that the Minister was unable to anticipate that the point would be raised. Will he now undertake to consult with the Netherlands? I am capable of writing, but the free postage for Back-Benchers does not extend to EU countries—although the House authorities may be looking at that—and I think that he may have more resources than I have. I am sure that we would all welcome an objective assessment by one of his officials.

Lord Hunt of Kings Heath

I feel that a trip to the Netherlands is coming. If the noble Lord had alerted me before our debate that he would raise this important question of the Netherlands experience, no doubt I would have been able to do further research. Of course the Government look at international experience, which has been very relevant to our research on the impact of a tobacco advertising ban on smoking prevalence in this country. I am always prepared to look at any research that is available. No doubt the noble Lord, Lord Clement-Jones, will also wish to look at it.

I believe that the drafting is a sensible approach. We believe that it is right to protect small family specialist tobacconists, but we have sought to do so in a way that will not lead to further loopholes.

Lord Clement-Jones

We need to remind ourselves, as the Minister and the noble Lord, Lord Peston, have done, that the Bill makes a concession here. The issue is who should benefit from it. I do not want to reinvigorate the noble Lord, Lord Lucas, at this stage in our proceedings, but the onus of proof is on those who want to widen the concession. I do not believe that that case has been made. The noble Lord, Lord Monson, and others have described the amendments as modest and helpful, but I believe that they would go too far by trying to expand the number of specialist tobacconists that could be included under the clause.

I understand that there are somewhere in the order of 380 such tobacconists. I believe that a parliamentary Written Answer last week confirmed the number of those who believed that they fell within the definition. That shows how straightforward the definition is. If it is clear among those specialist tobacconists whether they fall within the provisions, surely that certainty is useful.

I have a little experience in the retail business. I am not as distinguished an economist as the noble Lord, Lord Peston—indeed, I am not a distinguished economist at all—but I know that turnover is a very straightforward measure, whereas profit is not. All kinds of issues relating to the margin that someone chooses to take on a product affect the profit that is made. Profit does not necessarily represent the bulk of someone's trade. The number of brands stocked is an even more uncertain definition. Someone could easily stock all sorts of small and insignificant brands from all sorts of far away countries, but the bulk of their trade could still be in other products.

It is important to have a clear idea of the concession that we are making. We are talking about the family shops that the Minister referred to, selling products such as cigars and humidors, which are not, by and large, attractive to children and teenagers, as the noble Baroness, Lady Finlay, said. As with all our deliberations, the concession is a matter of degree. It is a substantial concession to allow such shops to have displays in their stores for their products. In the face of a complete ban in the rest of the Bill, except for point of sale material, that is a considerable concession.

I am firmly of the view that these amendments are not appropriate in the circumstances. I believe that the balance of the Bill, and the balance of the concession in the current Bill, are correct. I believe also that if one took account—the Minister dealt with this point adequately—of Internet sales, one would rebalance in a completely different way how one viewed the specialist stores. Would a conventional retail store which sells cigars on the Internet then be classified as a specialist store? That is not the kind of concession which I envisage under the Bill. I do not believe that the case is made for that and I am afraid that I do not believe the case is made for the other amendments we are discussing.

Lord Naseby

Before the promoter of the Bill sits down, he has gone to great lengths in his preparation for the Bill, as is self-evident from the nature of some of his contributions. He will have recognised that the measure we are discussing is the one major exception affecting just 380 tobacconists. He will have known of the consultations that the Minister and one of his colleagues undertook when the original Bill was discussed with the relevant trade association. The Government are to be commended on doing that. Is the promoter of the Bill able to enlighten the Committee on what arose from his discussions with the trade association?

Lord Clement-Jones

I thank the noble Lord for his comments. It is interesting to note that the noble Lord says that some of my contributions are too short but that I have also carefully considered, and made careful remarks on, other matters. I am grateful for that level of inconsistency.

Lord Naseby

I believe that there is absolutely no inconsistency. Where the promoter of the Bill deals with my amendments or my noble friends' amendments in depth and properly, we will say so. However, where he just casts them aside because he thinks that he has taken a stance and then simply sits down, we will criticise him.

Lord Clement-Jones

I am grateful that my responses will not be subject to a blanket condemnation but that it will be purely selective and highly targeted.

I have not had consultations with tobacconists. I have not had a single representation since I put forward the Bill from any specialist tobacconist, and given that the Bill has received such a considerable degree of publicity I believe that that demonstrates that, generally, we have the balance right in the Bill.

Lord Monson

I am grateful to the noble Earl, Lord Liverpool, and to the noble Lord, Lord Naseby, for their support. I am particularly grateful too, in view of what the noble Lord, Lord Clement-Jones, has just said, to the noble Lord, Lord Naseby, for pointing out that not all retailers belong to trade associations, any more than all farmers belong to the NFU. Often larger farmers and larger retailers belong to such organisations. Their views do not always coincide with those of smaller retailers or smaller farmers. That is perhaps one of the reasons that the noble Lord, Lord Clement-Jones, has not received any letters on the subject. I am not sure that the publicity attending the Bill has been quite as great as he suggests. Actually, very little that happens in this Chamber seems to get the publicity it deserves.

The noble Lord, Lord Hunt, and the noble Baroness, Lady Finlay, suppose that if this amendment were to be accepted, retailers might get in a few token boxes of Balkan Sobranie or something that they do not normally stock merely to make up the number to 100. I really do not think that would happen in practice. It would be most unusual. In any case, if that is the case, why does it not happen in the Netherlands? The measure works in the Netherlands. As the noble Lord, Lord Hunt, says, we do not model our legislation automatically on that of the Netherlands, although as far as cannabis is concerned, the Government are moving slightly in that direction. However, I let that pass. The measure is up and working in the Netherlands. Does the noble Lord want to intervene?

Lord Hunt of Kings Heath

As regards cannabis, there has been no change in the legislation at all.

Lord Lucas

Perhaps the noble Lord wanted to add it to the Bill but was not allowed to.

Lord Monson

It has not been included in the legislation, but not all changes are legislated for, as we know. What has been overlooked is this enormous concession which is talked about by noble Lords who are in favour of the Bill. It is actually a tiny concession. People will not be allowed to plaster the walls of their shops with 10-foot high letters saying, "Come in, tobacco sold here". The Minister has enormous powers under Clause 6(1)(4 I do not object to that at all. The advertisements will be discreet and small, so we are not talking about anything very striking.

The noble Lord, Lord Clement-Jones, said earlier that he does not want to drive people out of business. I commend him for that. It is a very reassuring statement. However, following on from that, he suggested that we were trying to expand the number of 380. That is not the case at all. We are trying to prevent some of the 380 being driven out of business. The noble Lord says that he is in favour of that. If some of the smaller businesses which do not quite meet the test are not allowed to advertise, they will be driven out of business.

Lord Peston

Is the noble Lord saying, in terms, that the people who came to see him—I understand that some specific people came to see him—told him that if they were not given this rather small concession they would go out of business? Have they told the noble Lord in terms that their businesses depend on this small, discreet advertisement being available to them? I must admit that I wonder where on the margin of production they find themselves if that is the determining factor.

Lord Monson

I did not say that anyone had come to see me about this matter. I believe that the noble Lord, Lord Peston, must have misheard. But they have told people who are more closely concerned with the issue that they are worried about it. That is the whole point.

I ask both the Minister and the nolble Lord, Lord Clement-Jones, to be open-minded about this matter, as the noble Lord, Lord Naseby, asked them to be. Would they consider looking at the Dutch experience before we reach the next stage of the Bill? I do not believe that that is too much to ask. If the system seems to be working effectively in Holland, and if people are not taking advantage of the so-called "loopholes" to push cigarettes when, in the normal way, they would not be allowed to do so, there is no reason why it should not work just as well in this country.

Obviously I realise that the noble Lord cannot give any promises about what he will accept at the next stage, but at least if he was to agree to look at any evidence put before him and possibly to reflect upon it, I should be very grateful. I do not expect to receive a response straight away.

Lord Naseby

Before the noble Lord sits down, with regard to the plea that he is making, does he believe that we shall have a Report stage? With the best will in the world, I do not believe that that will take place before the Christmas Recess. It may do so; one never knows with the Liberal Democrat Whips. I say that, in particular, having known those Whips in some depth over the years. However, I consider it to he unlikely. We shall certainly not have it next week.

I understand that the promoter of the Bill has not sought to see the specialist tobacconists. I find that surprising. I believe that in a Bill of this nature, where a particular interest stands out, it is very unusual for the promoter to have chosen not to contact that interest. Perhaps we could add to the plea that the promoter of the Bill should, first, make contact with the trade association and, secondly, see that there is some means of contacting those who are not members of that association.

Lord Monson

I am grateful to the noble Lord. Lord Naseby, for what I consider to be a very useful suggestion. I believe that it would be better if some of the specialist tobacconists who are not aware of this matter were made aware of it. Perhaps they would meet half way. Perhaps they will approach the noble Lord. Lord Clement-Jones, or perhaps the approach could be made the other way round. However, perhaps the Government will keep an open mind about the Dutch model. If they believe that there are any reasons why such a model would not work here, obviously they can say so. Is it possible to give an undertaking that that will happen before the next stage? Perhaps the Government are reserving judgment on that.

Lord Hunt of Kings Heath

I had already said to the noble Lord, Lord Naseby, that we would be happy to look at research or evidence, as your Lordships would expect. I also said that I thought that the approach in the Bill was fairly robust in the context of UK legislation.

Lord Monson

I am grateful to the Minister for that assurance. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 50 to 52 not moved.]

Clause 6 agreed to.

The Deputy Chairman of Committees (Viscount Simon)

I take this opportunity to say that the numbers voting Not Content in the Division were 56 and not 55, as announced.

Lord Hunt of Kings Heath

I suggest that now might be a convenient time to adjourn our discussions on the Bill. I beg to move that the House be now resumed.

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

House resumed.

House adjourned at twenty-nine minutes before four o'clock.

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