On a point of order, Mr. Speaker. My point is not as controversial as those points that were raised before, but I put it to you that essential documents relating to this debate are not available in the Vote Office. As you will know, Mr. Speaker, one of the essential parts of this Bill is to repeal the Trade Descriptions Act 1972, an Act which was approved unanimously by the House. Hon. Members who have asked for the Second Reading Hansard of 25 February 1972 have been advised that it is out of print. It would be ridiculous if hon. Members were asked to make a judgment on whether to repeal an Act if they were not able to read the arguments about why the Act was introduced by the House in 1972.
I understand the hon. Gentleman's point of order. I am sure that Ministers will continue to make available such documents as are absolutely essential for an understanding of Bills. That obligation could not be to provide every Act that may be about to be repealed, because some of them go back over the centuries. I am certain that if the hon. Gentleman went to the Library he would be able to see a copy of the 1972 Act.
I beg to move, That the Bill be now read a Second time.
The Bill originated in another place and was warmly welcomed there. It deals with two principal matters—consumer safety and misleading price indications. Parts I and II of the Bill are addressed to safety. The first provides new civil remedies for those injured by unsafe goods and the second concerns criminal sanctions against those who supply such goods. Part III extends the protection for consumers against misleading price indications.
Before I explain the Bill's provisions in more detail, I should like to say a few words about the Government's general approach to consumer protection policy. For most purposes, the best protection that consumers can have is that provided by fair competition in a free market. In general, that protection can best be achieved by letting business get on with the task of competing for customers, but fair competition can only be achieved in a suitable framework.
The Bill is addressed to two forms of unfair competition. Supplying unsafe goods is a form of unfair competition as it gives the supplier of unsafe goods an unfair advantage over a competitor who is prepared to incur the costs associated with ensuring that his goods are safe. It is also a particularly objectionable practice in its own right. Misleading consumers about the price that they are charged is also unfair competition. Fair competition will not be achieved if consumers are given false or misleading information on which to base the decisions that they make in the market place.
I should like to explain to the House the Bill's principal provisions. Part I provides consumers who arc injured by defective products with a new mechanism for seeking compensation. These provisions implement the European Community directive on liability for defective products.
United Kingdom law as it stands provides injured consumers with two avenues for seeking redress — the law of contract and the law of negligence—but there are deficiencies in these two routes. Under the law of contract, only the purchaser may be compensated by his immediate supplier. Under the law of negligence, compensation can be gained directly from the manufacturer only if the injured person can show that the manufacturer has been negligent. Those anomalies in our existing product liability law were addressed in reports prepared by a Royal Commission chaired by Lord Pearson and by the Law Commission and the Scottish Law Commission. All three recommended that manufacturers should be strictly liable for death or injury arising from a defect in their products, subject to certain defences.
The European Community considered the matter over a period of 10 years and in July 1985 adopted a directive requiring member states to make provisions which follow many of those recommended by the three commissions to which I referred. Accordingly, under part I of the Bill, any person who can show that he was injured as a result of a lack of safety in a product will be able to secure compensation from the manufacturer or, if appropriate, the importer into the Community. He will not have to show negligence and he need not be the purchaser. The benefit to consumers is clear. I might add that it will also assist retailers, who are liable under the law of contract, by tending to channel claims for compensation towards the manufacturer who introduced the defect.
The general purpose of the directive is harmonisation. There are three matters on which member states may derogate from its core provisions, but we intend to take up none of those derogations. First, the directive excludes liability relating to primary agricultural produce. The Government do not intend to depart from this and, to my knowledge, no other member state has proposed legislation which differs from our intentions. Secondly, the directive provides an important defence for the manufacturer if he can show that at the time of supply the general state of scientific and technical knowledge was not such as to enable the defect to be discovered. This is called the development risks defence. Member states may derogate from this provision, but in my view to do so could stifle innovation, which would be in the interests of neither industry nor consumers. Other member states in the Community agree with our view.
If my hon. and learned Friend is referring to what is also known as the state of the art defence, can he say whether he intends to invite the Committee to restore the original wording as presented in another place, which is greatly preferred by the aerospace industry and by other high-tech industries?
I shall be coming to that, but I have not yet reached a final view. I wish to listen to the opinions expressed in the House today, as well as outside, before coming to a final conclusion about whether the original language should be restored.
Will my hon. and learned Friend also consider the possibility of limiting the liability under this provision? That would be a great help for many innovative and science-based industries.
I shall be coming to that almost immediately, although I fear that the help provided by such limits would be largely illusory. First, however, I should like to complete my comments on the development risks defence as the principle of that defence may still be a matter of controversy between the two sides of the House.
As usual, my hon. Friend is entirely accurate in his observation, but we shall await with interest the comments of the Opposition Front-Bench spokesman.
Apart from the German law, which applies only to pharmaceuticals and which was in existence before the directive was adopted, no member state has introduced legislation without the development risks defence in it. Even in France and Belgium, where the existing law on liability does not incorporate this defence, the courts appear to provide a development risks defence in their interpretation of the law.
I should make one further observation about development risks. The House will be aware that the Bill orginally contained a slightly different formulation of that defence—this was the point raised by my hon. Friend the Member for Woking (Mr. Onslow) — and that the wording was altered as a result of an amendment in another place. Some have welcomed that amendment, but others have opposed it. I wish to hear the views of both sides of the House before reaching a final decision.
The third derogation enables us to limit a producer's total liability attaching to a particular defect—this was the point raised by my hon. Friend the Member for Surrey, North-West (Mr. Grylls) —to 70 million ecu, or some £40 million, but I fear that that might lead to injustices when there are many claims and to delays in awarding compensation when there is a possibility of further claims in respect of the same product while offering little real protection to most manufacturers. Having considered the matter carefully, therefore, we do not intend to set such a limit and, apart from the special German pharmaceutical law that I mentioned earlier, no other member state appears likely to impose a limit on liability.
Part II is complementary to the Bill's product liability provisions and is intended to prevent unsafe goods reaching the market in the first place. There are already regulations which make it an offence to supply certain specific types of goods if they are unsafe, but inevitably this results in some dangerous products reaching consumers because there are no regulations prohibiting their supply.
The Government announced their policy on this matter in the White Paper, "The Safety of Goods", in July 1984. We propose to tackle this problem by introducing a new general safety requirement which will make it an offence to supply any unsafe consumer goods. It will, however, be a defence to show that the goods conform to an approved safety standard or otherwise achieve the same level of safety, and we intend to approve a comprehensive regime of standards for this purpose. This will give an important boost to the role of standards, thus improving the quality and competitiveness of British goods. Part II applies throughout the chain of supply, although there w ill be a defence for retailers who often do not have specialised knowledge about the manufacture of goods. We shall, however, broadly retain the existing regulations covering specific goods.
The White Paper also made proposals for the improved enforcement of consumer safety legislation. Those proposals were taken up by my hon. Friend the Member for York (Mr. Gregory) and now constitute the Consumer Safety (Amendment) Act 1986. I am grateful to my hon. Friend for his efforts, and that Act is consolidated in parts II and IV of the Bill.
In consultations with industry and trade representatives about consumer safety, my hon. and learned Friend showed some sympathy with the views expressed by some retailers and, I believe. by the Retail Consortium, that a balance must be struck between retailers' and manufacturers' obligations and the need for consumers to use products correctly and not wilfully or negligently. Is he satisfied that the proposals to be introduced at a later stage will take care of that vital point?
My hon. Friend is right to refer to those concerns. We have considered them carefully and are satisfied that the present language of the Bill more than adequately meets those concerns.
Part III is addressed to misleading price indications. The present legislation, which is contained in section 11 of the Trade Descriptions Act 1968 and the Price Marking (Bargain Offers) Order 1979, has been widely criticised. Both provisions prohibit specific practices. This approach allows other misleading practices to slip through the net. The Trade Descriptions Act allows traders to "disclaim" certain of its requirements, and the bargain offers order is extremely complex, poorly understood and difficult to enforce. The Bill replaces those complex provisions with another general offence — giving a misleading price indication to consumers in respect of any goods, services, accommodation or facilities. The Bill also provides for a code of practice giving traders detailed guidance on this general offence. A copy of the draft code was placed in the Library on 20 November last year.
The House will no doubt wish to know what the code's legal status is to be. When the Bill was introduced in another place, compliance with the code was to be a complete defence. However, during the passage of the Bill through another place, the Retail Consortium, the National Consumer Council, the National Federation of Consumer Groups, the Institute of Trading Standards Administration and the Local Authorities Co-ordinating Body on Trading Standards — all those most directly concerned and now called the "Concordat"—presented an alternative package of proposals.
This package included a proposal that compliance with the code should not be a defence but that compliance or contravention should tend to establish innocence or guilt. We have consulted widely on the package, and we undertook to reflect the outcome of that consultation in the Bill. The consultation is now complete, and the opinions received indicate very considerable support for the Concordat's proposal on the status of the code. I can therefore tell the House that the Government intend to move amendments in Committee which will give the code the status that the Concordat seeks.
Will my hon. and learned Friend go into that in a little more detail? I am sure that what he has just said will be widely welcomed, and not just by those representing the Concordat. Before the Committee stage, and perhaps now, could my hon. and learned Friend say whether the revised code of practice will be, for example, shorter, clearer, and briefer?
We shall be seeking to do what we can to improve the presentation of the code, and it may be that there will be some enhanced scope for that in the light of the decisions taken about the status of the code.
Part IV provides for the enforcement of parts II and III. It consolidates, with minor amendments, the relevant provisions in the current legislation. Part V amends the Health and Safety at Work etc. Act 1974. That Act is intended to ensure that safety considerations are properly taken into account before goods for use at work are supplied. The amendments will improve the working of the Act. The general duty to supply safe goods for use at work is to be extended to fairground equipment.
How will it improve the practice to extend this to fairgrounds and to replacement parts of an article? Does my hon. and learned Friend realise that the Bill gives the Customs the power to stop essential replacement parts for a fairground operation that may be desperately needed to allow the machine that has been authorised and approved as safe to go ahead? Is there not at least a case for saying that replacement parts for a proven article should be exempted?
If the parts are thought to be unsafe, I should have thought that it would be in everyone's interests that they should not be available for use with all the possible dangers to which their use might lead. It is only if the parts are thought to be unsafe that the powers to which my hon. Friend refers will arise. Therefore, I fear that I cannot go along with the concern that he has expressed on that point.
How can my hon. and learned Friend say that? What possible purpose can a replacement part he put to if it is part of a proven, approved article, other than to be put into that particular item and used again?
I understand that that is the contemplated use of the proposed replacement part, but if it comes to the Customs officer's notice that the replacement part, for some reason, might be defective or unsafe, which is the situation with which we are concerned, it is only sensible that powers should be available to ensure that that potentially defective or unsafe part is not put into use.
Finally, I come to a matter which I know is of very great concern to many hon. Members and in particular many of my hon. Friends—the Trade Descriptions Act 1972. The Act requires all imported goods, with a few exceptions, which are supplied in the United Kingdom bearing a United Kingdom name or mark to be marked with their country of origin. Early last year the European Commission renewed a challenge to the Act on the ground that, in its view, it is a measure amounting to a quantitative restriction on imports between member states, which is prohibited by article 30 of the treaty of Rome.
The challenge to the 1972 Act was the initial formal step in the procedure for infraction proceedings under article 169 of the treaty. The next step would have been the issue of a reasoned opinion by the Commission which would, to a large extent, have committed the matter to being brought fairly rapidly before the European Court of Justice. After careful consideration of the legal position, particularly an earlier judgment by the European Court of Justice against the United Kingdom's 1981 origin marking order, the Government have reluctantly concluded that the United Kingdom could not hope successfully to defend the Act before the European Court and that no useful purpose would have been served by seeking to do so. Indeed, an unsuccessful United Kingdom defence could well have been counter-productive since the terms of an adverse judgment might well have inhibited the scope for successor arrangements. Part V of the Bill accordingly makes provision for the repeal of the 1972 Act.
Many hon. Members are, I know, concerned about the potential effect on both consumers and industry in this country of repealing the 1972 Act—as, indeed, I am. As the House knows, in the light of consultation with interested parties, we have been considering the scope—consistent with Community law — for a successor arrangement to be introduced by statutory instrument under the existing powers of the Trade Descriptions Act 1968. As soon as we are able to do so we shall announce a decision. I believe that the House will recognise that it is necessary to provide the power to repeal the 1972 Act when we have an acceptable successor regime. I can assure the House, as I have made clear in the past, that it is not our intention to bring into force the repeal of the 1972 Act until such time as the question of a successor arrangement is resolved.
Whatever arrangements are made, most British manufacturers will doubtless wish to continue to draw attention to the fact that their goods are made in Britain. The repeal of the 1972 Act will not prevent that.
Will my hon. and learned Friend give the House a little more information about the successor arrangements, because some of us are a little apprehensive about them? Does he mean that that will be a new form of words that will effectively be the 1972 Act put in a slightly different way?
Unfortunately, I cannot go as far as acceding to that suggestion by my hon. Friend, because it is the substance of these matters that is looked at by the European Court, not simply the language. We shall be seeking to find not only a formula, but some substance that will protect the consumer against the danger of being misled by some misleading indication of the origin of the goods in question that we can hope successfully to defend before the European Court of Justice.
I assure my hon. Friend that one of the reasons why I am not in a position to identify this successor regime to the House is that we are determined to leave no stone unturned in our efforts to ensure that we get the most effective successor regime possible. For example, we are looking at regimes that have been adopted in other Community countries. I am determined that we shall not have any lesser degree of protection in this country than is afforded, for example, to consumers in France in relation to any similar signs of origin of goods that may be in force under French law. I am afraid that I cannot go any further than that.
Do I understand that this provision in the Bill to repeal the 1972 Act can be invoked at a later stage? If that is the case, and if it is the intention to repeal that not immediately but at some future date, how does that square with our position vis-a-vis the European Court? Presumably, if we are taken to court, we shall be saddled with the 1972 Act. Therefore, we will fall foul of the court in any case.
The prospects are that whereas the European Commission would commence infraction proceedings if there were no legislation to repeal the 1972 Act, if this measure contains a provision for the repeal of the Act, although that repeal is not activated until we have a successor regime ready to put into place, those infraction proceedings will not be commenced
That is a matter for trading standards officers, who are the responsible authorities for prosecutions under the provisions of the 1972 Act.
I am sure that the House will agree that the Bill offers real gains for consumers and responsible businesses. Both will benefit from the more effective operation of the market mechanism. Supplying unsafe goods and giving misleading price indications are clearly harmful to consumers. They are also a way of gaining an unfair competitive advantage over honest business. The Bill will do much to prevent both mischiefs.
I welcome any addition to consumer protection law, whatever its source. Over the years there has been a fairly good consensus approach on legislation such as the Fair Trading Act 1973 and the Consumer Credit Act 1974, which was initiated by one party and taken up, modified and implemented by another.
We are in agreement with much of what the Minister has said. The Bill is a step forward, but when we look at the detail we see that it is a smaller step than we had originally hoped for when we saw it in the Queen's Speech at the start of this Session. For example, the Bill purports to protect consumers but, according to the Consumers Association and the National Consumer Council, it would fail to provide compensation for consumers in the event of another thalidomide tragedy. Inevitably, it will be seen by the general public as a mouse of a Bill and as having failed to deal with one of the most important cases that has arisen with regard to consumer interest and the interests of industry for many years.
The Bill is based on a European directive and is therefore the basis of legislation which is being enacted in various Common Market countries. However, it gives the British consumer — as I hope to demonstrate — less protection than the French or West German Governments have felt appropriate to give to their citizens. For that reason we shall be seeking to move various amendments in Committee, as no doubt the Minister would expect.
I notice that there is a money resolution on the Order Paper. I was very disappointed, when looking at the explanatory memorandum, to see that there are not expected to he any implications for public expenditure or public service manpower. If that is so, I wonder what the Bill is all about and what value it will be to the consumer.
However, if no further resources are forthcoming to meet the wider responsibilities, the quality of existing consumer protection will fall as the resources are spread more thinly over a wider range. Consumer organisations, and trading standards officers in particular, have pointed out that the present consumer safety legislation has not met the objectives that we all want. Various Governments have introduced measures to improve consumer safety. We have nibbled at the issue and that is why I welcome the approach of a general requirement for safety. Under the present legislation as few as 30 categories of goods are covered, but the safety requirement is being extended to the whole sector of the supply of goods. The Minister is saying that he will carry out this enormous extension without any extra manpower or financial resources, so one is a little puzzled as to what that extension will be worth.
The same applies to the misleading prices issue, with which I shall deal in more detail a little later. We all go into shops and look at newspapers and adverts which mention bargain and special offers. A whole industry is misleading the public in terms of the marketing of goods. I hope that that will at last be dealt with, but I recognise the problems that are involved.
In addition to that wider responsibility for safety there will, we hope, be an effective framework for the control of misleading marketing practices. How will we implement the intentions, as opposed to legislating for them, if our trading standards officers are to have no extra resources of manpower or money? It seems that there is more of a declaration of pious hope about extending consumer protection than a likelihood of delivery. Perhaps the Minister will clarify the position in his winding-up speech.
The right hon. Gentleman will have an opportunity to address the House before I reach my winding-up speech. Perhaps on that occasion, if not now, he would be good enough to tell the House the extent to which he thinks that additional resources are appropriate and the proposals of the Labour party on that issue. I am sure that that will interest my right hon. Friend the Chief Secretary to the Treasury when he is trying to identify how much the Labour party's programme would cost.
The hon. and learned Gentleman makes a rather petty debating point which is of no great profundity. I am making an objective analysis of a rather poor and pathetic Bill: it is not my fault that it lays itself open to criticism.
As to the provision of resources, I point out to the Minister that as consumer Minister in 1974 I set up, for the first time, a national network of consumer advice centres, provided resources for them and made sure that the local authorities were able to sustain them throughout the period of the Labour Government. Sadly, as soon as this Administration came to office they set about withdrawing funding, which led to the closure of nearly all the consumer protection centres.
In Committee we shall explain what we need to explain. We are discussing the adequacies and inadequacies of the Bill. By making a minor debating point the Minister does not escape the fact, which I have already put forward, that the Bill imposes enormous additional responsibilities on the consumer protection machinery, which is already creaking because it has been starved of resources since the Government came to office. It is expected to carry out all these extra responsibilities with no extra manpower or resources. It is up to the Minister to defend the penny-pinching attitude of this Administration. Equally, it is for me to demonstrate that that is the attitude of this Administration. In Committee we shall deal with this and many other points.
The Bill waters down the proposals that the EC has put forward. Let us take the fairly basic sector of food and agricultural products. Nothing is more fundamental in terms of the interests of the consumer than foodstuffs. It matters to us as individuals and it matters even more to our children that the quality of our foodstuffs should be protected by consumer legislation. Yet it seems that the Government have made a significant change in the rules affecting foodstuffs. The rules in the EC directive exclude agricultural produce that has not undergone "initial processing", but those words do not appear in the Bill. The Government have adopted a different formula from that applied in the rest of the European Community. Under the Bill, there is an exclusion for agricultural produce that has not undergone industrial processing and even that phrase is qualified by a reference to the essential characteristics of the product being affected. I do not pretend to know what that means and nothing in the Bill tells us what it means. However, I know that it does not mean initial processing and that it is a major departure from the directive's intentions.
As there is no definition of industrial processing in the Bill and as the Minister in another place failed to satisfy their Lordships, I hope that the Under-Secretary will clarify the matter, because it puzzles us all. What is foodstuff that has not undergone industrial processing which has affected the essential characteristics of the product?
I assume that the Bill will exclude the chemical spraying of foodstuffs. Lettuce has a high absorption rate and sustains many of the chemicals sprayed on it. Will such spraying be covered by the Bill? Would it be covered by the directive? We do not know, and we should like to know.
What about the injection of cattle with steroids and antibiotics? Is that "initial processing"? It certainly does not seem to be "industrial processing". Again, we do not know, and the public are entitled to know. Are additives an industrial process? Are preservatives, colourings and flavour enhancers covered by the Bill? Would they be covered by the directive? We need clarification of such matters.
The National Consumer Council believes that the Government have deliberately created a loophole to appease the agriculture lobby and that the Ministry of Agriculture, Fisheries and Food has sabotaged consumer protection legislation. It says:
We are adamantly opposed to the Government's extension of this loophole. There is real and widespread public concern at the use of chemical treatments to make foodstuffs look nicer, last longer and taste better. While the Directive leaves liability for such treatments to the court, the Bill expressly states that there should be no compensation under the product liability laws.
The intentions of the directive are much wider than those of the Bill.
Product liability will be closely investigated in Committee, because there is great anxiety about the subject. The House welcomes the introduction of product liability. It has been a decade in coming, but I recognize
the problems that have had to be overcome. However, we have moved a long way from the Pearson report which stated unequivocally:
to exclude development risks from a regime of strict liability would be to leave a gap in the compensation cover, through which, for example, the victims of another thalidomide disaster might easily slip.
The Pearson commission was asked to look at the issue, and it heard all the evidence before stating clearly that the defence that the Government intend to allow should not be permitted. It might be said that the commission's judgments were perverse; we can all remember committees coming up with unexpected or unbalanced judgments. However, not only the Pearson commission, but the Law Commissions for Scotland and for England and Wales, the Bar Council and the Law Society have all come down against the defence that the Government are building into the Bill.
The National Consumer Council observes that no similar defence is available under French or West German laws. The Minister said that the courts had interpreted the law in France. The French legislature made a decision and the courts interpreted it. The day that a Minister of the Crown comes to the House and tells me that a French judge should determine how a British Government should legislate will be the day I question whether that man is fit to be a Minister. Therefore, I assume that that was not really the point that the Under-Secretary was making.
It is not the point that I was making, and the right hon. Gentleman knows perfectly well that it is not. However, it affects the extent to which he is able to rely on the law of France as a precedent. That is all.
The Governments of France and West Germany passed laws that they wanted to be implemented. The courts have given their interpretation, as our courts would be able to do. The Under-Secretary has said that he would be willing to start from the weakest possible position.
There is great worry on the Conservative Back Benches about one proposal in the Bill, on which the Under-Secretary says, "Because a court on the continent has interpreted the matter in a certain way, we shall not get caught in that trap, but will capitulate at the outset." The hon. and learned Gentleman says that adjudications that he admits differ from the intentions of the French Government should have an influence on the way in which we legislate for the protection of our consumers. I do not accept that view.
The NCC is a body of considerable authority, and it says that because a defence that is not available in France or West Germany will be permitted in this country, and because there are tighter rules about pharmaceuticals in the United States, we could become a testing ground for new drugs. I do not wish to contemplate such a risk.
Of course, consumer groups will argue for the widest protection. That is their job, and our job is to ensure that their views and arguments are fully considered. I recently met representatives of the Association of British Insurers, because consumer groups argued that it might be costly to have full product liability, but that the costs were insurable, and that the insurance premium could be added to the price paid by consumers.
I asked the Association of British Insurers for its views—I know that it has now submitted a brief to Members—following the lunch—rather the meeting—I had with
it on 10 March.[Interruption.] The association members enjoyed the lunch, but I enjoyed their company—I have a waistline problem. However, I must say that a very good mineral water was served. I asked the association to inquire of its member companies and the letter I received states:
The enclosed note explains the general view on product liability taken by insurance companies. This is that they are, by and large, confident that they will be able to provide cover for liabilities under the new legislation for current limits of indemnity at premium levels which will have only a marginal effect on the cost of production".
In fairness, that is not what the association had been asked to address. The question was not what would happen under the present legislation, but what would happen if that legislation were amended in the form that was suggested. Thus, my objectivity is unchallengeable.
I am glad that the Minister appreciates that. The letter continued:
There could, however, be a reduction in the amount of insurance capacity"—
the association did not say there would be non-availability —
if the state-of-the-art defence were not included. This would particularly affect industries, such as pharmaceuticals and aerospace, which present a heavy development risk exposure.
Therefore, the insurance companies are not saying that that risk could not be covered, but they are saying that there may be some limit on the extent of cover.
It is not the same thing. For a company to say that it is willing to insure, even if that insurance is more limited than under the present proposals, is different from saying that the company cannot insure. I am sure that the Minister will admit that. What is available is insurance cover under either scheme, but the insurance companies admit that they would want some type of ceiling on the level of commitment.
If that is the case—I believe that we wish to obtain the best piece of legislation that we can for the consumer—we shall need to explore a series of amendments in Committee. We should have a genuine exploration of those amendments in Committee and get answers from the Government. We shall also seek advice from the various organisations concerned regarding the options. We shall certainly move an amendment on strict liability with insurance. We shall judge that matter in the light of the arguments that are put forward and consider whether we should adopt the New Zealand system. In that country there is a type of state system operating as back-up for compensation. We should consider the merits of that system. I am not sure whether it would work here, but we should consider whether there is anything in it that we can use to the advantage of British consumers.
In Committee we should also consider the precise wording of the defence. We shall need to consider such matters in detail. I am sure the Minister will agree with me that they are important issues and they are not easy to decide upon. I do not consider this a simple black and white issue. There are important arguements on both sides and we must have them rehearsed. However, I do not want to hear the nonsensical argument that it has become so expensive to obtain insurance in America that that means that Britain will follow the same route. I believe that that argument was put forward earlier by certain sectors of the industry, but it has now been thoroughly discredited and we do not hear it so often.
The American system is utterly different from ours. In the United States juries award damages that are often astronomical. In Britain awards are made by judges. I am sure that other hon. Members have dealt with constituents' cases and have shared their anguish when they obtain derisory damages for the death or maiming of a child. In this country damages are judged on the loss of earning power rather than on emotive issues. Therefore, damages in Britain tend to be far smaller than in the United States. In the United States there is a rather peculiar practice—no doubt the United States would be called the -market society" known as the contingent fee system. Under that system solicitors run around offering to take on cases at no cost to the person who is pursuing that case. Instead, the solicitors take a percentage of the spoils. There is a more litigious attitude in the United States than in Britain. Thus, the United States experience in terms of the cost of product liability has little relevance to Britain.
On the question of safety, I intimated earlier that we welcomed the introduction of the general duty. I believe that safety is a more important consideration than value for money. Value for money and misleading prices are important, but safety is the paramount consideration. However, I wish to return to the point that we debated virtually a year ago, but which is encapsulated in the legislation before us and in the Consumer Safety (Amendment) Act 1986. The Government, through their amendments to that Act—incorporated in the legislation we are discussing today — made it more difficult for consumer protection departments and trading standards officers to give the safety protection that the public need.
The Government insisted that trading standards officers should have only 48 hours in which to carry out their initial investigations of goods. If I remember correctly, the Minister was defeated on that issue in Committee by 11 votes to 2. He did not convince anyone—only his Private Parliamentary Secretary dared to vote with him. The PPS did not look happy at the time and I am sure he made a mistake at that time. The Minister's arguments were destroyed in Committee. The Committee asked that, instead of 48 hours, 72 hours should he given. It was pointed out that something might happen late on a Friday evening, and that the 48 hours would have expired by the Monday morning. The Committee asked the Minister to be more generous and make that limit 72 hours. In fact, the limit of 72 hours was in the Bill, but the Minister came along and amended it to 48 hours. The Minister's argument to amend the limit to 48 hours will appeal to the hon. Member for Southend, East (Mr. Taylor). The Minister's argument fits in with what I was saying about the Minister's attitude to what goes on on the continent. In Committee the Minister said:
we are are prepared to increase this period"—
the period in which it is decided whether goods are safe or unsafe—
to 72 hours, primarily for the reason that that extension would be vulnerable to criticism as imposing an unnecessary restraint on trade and might imperil the legislation at the hands of enforcement authorities in the European Community before the European Court of Justice.
Therefore, extending the inspection period from 48 hours to 72 hours would upset all those nice people in Brussels
However, the Minister could not tell us from where he had obtained that judgment, nor quote a document stating that that would happen.
The Minister then decided that perhaps that argument was not the most persuasive. The other reason that he gave for not extending the limit to 72 hours was:
a longer period could lead to undesirable blockages and overcrowding in busy ports"—[Official Report, Standing Committee C, 30 April 1986; c. 12.]
I recall saying to the Minister that he was suggesting that, in addition to butter mountains, we would have teddy bear mountains at the ports of the United Kingdom.
The Minister's arguments were too preposterous to be contemplated, either from the point of view held by the hon. Member for Southend, East and his colleagues or from the aspects that I have discussed. The Minister is sustaining legislation that makes it more difficult for trading standards officers to carry out their proper duties to check the safety of goods.
In Committee we shall also want to discuss second-hand goods. One cannot expect the same standard from secondhand goods as from new goods. That would be illogical, but some consumer organisations have suggested amendments which they think are suitable. Those with the lowest incomes use the second-hand market and they are least able to protect themselves. I think of cases brought to my surgery of people asking for assistance in obtaining kitchen equipment. The Department of Health and Social Security will provide enough money to buy a second-hand stove, but a restored electrical or gas appliance can be unsafe. I know of at least three instances of people who have bought such equipment and found it unsafe or inoperable. In the House of Lords the Minister said that specific regulations could be used to deal with second-hand goods.
That is a slow and laborious way of providing consumer protection. The Department might have streamlined the system but at one time 102 steps had to be taken before an order became law. The system is not convincing. It is even less convincing when one bears in mind that many months ago the Minister promised that he would introduce legislation to cover second-hand gas ovens. I understand from consumer organisations that such legislation has not materialised. All that we have had is the promise.
I can understand the Government's difficulties in relation to misleading prices and the John Methuen case way back in 1975. The Government's attempts were disastrous and had to be lost in the system because the orders were impossible to implement. I am glad that the Minister has at least been willing to take advice on the format. He has explained his intentions this afternoon and we shall examine them constructively in Committee.
We shall also wish to examine protection for the pharmacist — I do not refer to the pharmaceutical industry. The pharmacists have requested a requirement that the name of the manufacturer should appear on a product so that the people against whom claims should be made are known clearly to the public. We shall examine that suggestion in Committee.
My final argument concerns the amendment that is not to be discussed and the repeal of the Trade Descriptions Act 1972. I note the helpful and clear amendment tabled by Conservative Members. They are doing their best to guide the Minister along the correct path. However, I have served on Committees with the right hon. Member for Taunton (Sir E. du Cann) and I know how difficult he is to help. The Minister's argument is that we cannot keep the protection under the Trade Descriptions Act requiring that the country of origin be shown because eventually we might lose in Europe. I cannot imagine a French Minister taking that attitude. I cannot imagine a French Minister saying, "We might lose in the end so we will not fight." A French Minister protecting French rights would say, "We will fight until we have gone through the whole system." All that we have heard from the Minister today is his assessment that an unsuccessful defence might prejudice the proposed replacement regime. I find that a little strange. The Minister is saying that we shall pass the legislation and repeal the Trade Descriptions Act 1972, that we shall not implement the legislation but start negotiations with Europe. I do not find that impressive and I do not think that anybody will be convinced that the Minister is serious.
The Minister is saying that of course he will put something in place of the Act but that he does not know what it will be. It is not as though we are talking of something new. The matter did not come before him last week or the week before. I have letters from the Minister written last year in which he says that the Government intend to put something in place of the Act. Today he tells us that he intends to do something but that he does not know what or when or whether it will be effective.
The Minister was unable to answer when asked what would happen in the meantime, what the trading standards officers would do and whether any cases would be considered. If we approve the Bill it will be the law in theory because the repeals will not have been implemented. The Minister says that everything will be up to the trading standards officers and that they must decide whether to take action in the intervening period. How unconvincing can a Minister be? This is an arch example of passing the buck.
By the time that the Bill reaches Committee we expect to have clear explanations from the Minister of how he intends to replace the Act and with what. His attitude to the Commission has been submissive. He seems to be the Government's political football. He has been kicked around Japan and now he is being kicked around the Commission.
We shall not oppose the legislation because we think that some extra protection is better than no protection. The Bill itself is almost an abuse under the Trade Descriptions Act in that it is far less than it was purported to be when it was first politically marketed by the Government last October.
As I view the acres of empty Benches behind the Opposition spokesman, I find it not surprising that the Labour party does not intend to oppose the legislation.
I shall he brief and refer to part I of the Bill which I am sure will reassure the Minister. As I staggered to my feet, my hon. and learned Friend the Minister might have felt burdened with the thought of opposition from this quarter, but I want to assure him that in principle I am in favour of consumer protection. Also, because we are members of the European Community, which I strongly support in principle — I emphasise the words "in principle" — I am in favour of harmonisation. The greater the common ground in terms of economic and related law the better it is for the internal smooth running of the Community and for the Community's external attitudes to other countries. However, these general principles assume that European Community directives are always drawn up to the greatest common advantage. I am not convinced that it is to the greatest common advantage for part I of the Bill to be drawn as it is.
It looks to me as if those in the Commission who were responsible for part I drew it up for the benefit of lawyers. It looks as if it has been drawn up by lawyers for the benefit of lawyers. Within the concept of consumer protection, I am in favour of manufacturers being responsible for the safety and reliability of their products. Nevertheless, there is a limit. The idea, mooted by my hon. and learned Friend the Minister, of liability up to a maximum of £70 million is not much consolation for a great many manufacturers.
I am the parliamentary representative of the British Scrap Federation. [Laughter.] It is very important. After all, scrap metal provides most of the raw materials for the steel industry, among other industries. It is the considered view of the legal advisers of the federation that members of the federation will be affected by the passing into law of the Bill's provisions on product liability. How far members will be affected is difficult to say because so much of part I of the Bill is couched in such vague terms that the interpretation of those terms will depend upon the construction put upon them by the courts.
Nevertheless, it seems clear that the Bill maps out two ways in which someone may be liable for damage caused by a defective product. The first relates to the originator of the product and the second to intermediaries. The second, presumably, is designed so that where products are sold to consumers by retailers who could not be said to have produced the product, the person damaged is still protected. That is not unreasonable. But it seems that members of the British Scrap Federation could be liable in many cases under clause 2(2)(a), which refers to the producers. As my hon. and learned Friend the Minister knows well, a producer is defined in clause 1 as the person who manufactured the product, or
in the case of a substance which has not been manufactured but has been won or abstracted, the person who won or abstracted it",
or, where the product bears an essential characteristic
attributable to an industrial or other process having been carried out … the person who carried out that process".
However remotely connected, that person could be the scrap metal merchant who sells the original metal, which goes through several manufacturing processes before ultimately it may be discovered that there is a defect. I see my hon. and learned Friend the Minister making a face at that proposition. I cannot believe that it is the intention of the Bill or of the European Community directive that such liability should exist, but, unless the matter is clarified in the legislation, the potential for lengthy and expensive litigation is enormous and the extra insurance costs for scrap metal dealers, among others put in a similar position, could be large.
I know that, rightly, it is the Government's strong desire to strengthen the service industries, but such a provision would be carrying that intention a little too far. Therefore, I trust that my hon. and learned Friend the Minister will be able to reassure me when he winds up the debate.
I welcome the Second Reading of the Bill. The current law is inadequate in several areas, many of which are addressed in the Bill.
With regard to product liability, at present the buyer alone is protected, not the consumer, if he does not happen to be the buyer or necessarily the victim of the product. Currently product liability relates directly only to the seller or the middle man and provides for compensation from the producer of the goods only if he can be proved to be negligent. At present, remedies are available only through common law redress and depend on finding fault in the product.
On consumer safety, at present there are serious doubts, especially in the ability of enforcement authorities to stop the supply and sale of unsafe goods. The misleading price legislation has been described as obscure and full of loopholes, so there is much to be done. Consumers' rights need to be strengthened considerably. The Bill addresses many of the problems.
There is general agreement that liability for defective products should he much stricter—that is, without proof of fault and not based on negligence. Of course, liability should include not only the manufacturer, but the importers and suppliers of own brand goods. However, there is room for further debate on some of the issues where individual states in the EEC are allowed to derogate. The most notable is the state of the art issue. Producers should not be liable for a defect if it could not originally have been foreseen because of the state of technology and scientific knowledge at the time of manufacture. The debate is focusing on the conflict of interest between victims and producers, or, to put it another way, between big business and the individual.
There are limited circumstances in which innocent victims of unforeseen disasters will remain uncompensated, and they will occur from time to time. Victims, such as those of thalidomide, which has been mentioned, will face the same lengthy delay of years, sometimes running into decades, the same complexities and the same legal wrangles that the Bill purports to avoid.
Companies argue that to exclude that clause would raise insurance costs and inhibit innovation. Thus, potential customers as well as businesses would lose out. So we are faced with the choice: do we stifle innovation or leave a huge gap in compensation cover? But there is no clear evidence that insurance costs will soar, as has been predicted. It is clear that in the United States, where juries are notorious for their compensatory awards, the problem is different. Parallels cannot be drawn with the situation here.
Insurers in this country agree that insurance at a modest level would cover that liability. It would seem sensible to consider obliging potential defendants to take out product liability insurance. Surely the cost of insuring against a defective product, ultimately and inevitably paid for by the buyers of the product, is a better way to deal with product defects than individual victims having to remain uncompensated. With major catastrophes of an unforeseen nature, such as thalidomide, surely the state should assume some responsibility for excess risk, as happens in New Zealand, so that injured parties receive speedy and humane redress.
I return to the development risks defence. As has been said, France, Belgium and Luxembourg do not allow that defence, and Germany does not propose to permit its use in the pharmaceutical industry. Surely we should consider similar action, if not across the board, at least for the vital pharmaceutical area. In the event of the clause being retained, I am anxious about the possibility of the phrasing being diluted from "every conceivable effort" to "all reasonable efforts". The two are quite different and that could be a relatively meaningless phrase.
Another related area is the loophole that is currently provided by the insolvency laws. There is evidence that separate companies have been set up to undertake the manufacture or construction of discrete products so that, in the event of a defect arising, liability can be avoided by winding up the company concerned. That loophole must be closed and that practice must be stopped.
Another area needing further consideration is the exemption of primary agricultural products. Again, this leads to anomalies in the system and leaves potential victims entirely unprotected. I accept the difficulties involved in assessing the effect of hidden environmental factors that are beyond the scope of the producer. I accept also the difficulties in detecting the source of the problem. However, that would leave redress for the victims only under the existing laws of negligence. In this day and age, there are major concerns about pesticides, hormones, and the like in agricultural use. Responsibility must be taken for such usage.
We should derogate from the directive on that count, with the same assumption of state responsibility for cases such as thalidomide, in the event of a major environmental problem.
I am speaking for myself. However, the hon. Gentleman may be surprised to know that I am also reflecting my party's views.
Part II of the Bill clearly gives far greater protection to consumers—the onus to ensure safety will be put on suppliers—and consumers will not be reliant solely on enforcement officers stepping in. However, the exclusion from this section of second-hand goods causes some anxiety, and protection must be afforded in that area. Similar concern arises over the exclusion of goods for export. Surely there should be the same safety requirements for people in this country as appertain for those in other countries. Such a dual standard is quite unacceptable.
Finally, I would welcome the commitment to accept the Concordat on the review of the complexities involved in the misleading pricing legislation which would cause great confusion in its current form.
On a point of order, Mr. Speaker. In complete good faith, and on the basis of the information then available, you gave a ruling just after Question Time, in answer to my question about the Attorney-General's role in the publication in a national newspaper, that as that had not been referred to the English courts, there was, therefore, no question of sub judice. It may be that events unknown to you have taken place that would cause you to alter that answer.
That has nothing to do with this debate. However, since the matter has been raised, it is true that when I ruled earlier I was not aware that the Attorney-General had taken steps to initiate proceedings for criminal contempt against The Independent and, I understand, other newspapers. In those circumstances, I must regard the issues raised by the action as being sub judice.
Further to that point of order, Mr. Speaker. As you said in reply to my point of order earlier that the matter was being considered by the Attorney-General, surely what you have just stated would not stop hon. Members raising the matter at the appropriate occasion, be it tomorrow or any other time, during Question Time because you have previously ruled that, since the matter is being pursued in Australia, the allegations made by Mr. Wright can be raised on the Floor of the House. Therefore, I hope that the fact that the Attorney-General is taking the matter to the courts, because of what has appeared in The Independent and in one or two other newspapers, will not stop that matter being raised as, indeed, it was raised prior to what appeared in The Independent today.
Further to that point of order, Mr. Speaker. Could I ask you not to give a ruling now, but to consider it by tomorrow? I realise that everyone has been taken a little by surprise by events. Would you mind clarifying the ruling that you have just given to my hon. Friends by tomorrow because clearly we need to know the extent to which the issue is sub judice? There must be aspects that we can still raise. I have forgotten the precise term that you used, Mr. Speaker, but, so far as we are concerned, it is the area of precise action that will be limited. There must be areas of discussion in relation to the Wright case that are not covered by the ruling that you have just given. It would be helpful if, by tomorrow, you could clarify that.
I shall certainly have to consider that. However, I advise the right hon. Gentleman that if, for instance, the Opposition were to change the subject of their Opposition day tomorrow to include such a debate, I should clearly have to look carefully at the issues that could be raised in it.
I assure the hon. Member for Greenwich (Mrs. Barnes) that the warmth of my congratulations to her owes little to the fact that I have a brother and a sister-in-law who hope to fight at her side as SDP candidates in the forthcoming general election. On many occasions, the hon. Lady has shown that she is a persuasive speaker. Clearly, she is a charming speaker who, this afternoon, has also shown that she is prepared, at times, to take an independent line from that of her party.
Does my hon. Friend agree that the speech made by the hon. Member for Greenwich (Mrs. Barnes) was one of the best SDP speeches that we have heard for a long time and will he disregard the caddish comments of my hon. Friend the Member for Harrow, East (Mr. Dykes), who should be ashamed of himself?
The hon. Lady's speech showed a considerable independence of thought. I agree that it is customary on such occasions to say that one looks forward to hearing the hon. Member addressing the House often in the future. However, on this occasion, one cannot make that customary reference to a maiden speech because it would he inviting Conservative—
I was under the impression that it was the hon. Lady's maiden speech. However, for the sake of charity and chivalry, I shall not withdraw any of the remarks that I have made.
The hon. Lady quoted extensively from a brief that many hon. Members received from the Consumers Association. I agree with a great deal of the contents of that brief, not surprisingly, as I have been a member of the council of the Consumers Association for many years and am now a vice-president of it. I am delighted to extend a warm welcome to the Bill, but the association has two reservations about part I, both of which have already been touched on. I shall return to them, although I take a rather different attitude from that of the right hon. Member for Swansea, West (Mr. Williams).
The association's first criticism relates to clause 2(4) and the proposed exemption of unprocessed agricultural products, including game. Naturally, food is important and Lord Denning has recently reminded us that the whole legal concept of making manufacturers liable for negligence in sending out defective products stems from the famous ginger beer bottle case of 1932. My hon. and learned Friend who introduced the Bill on Second Reading with his customary lucidity was not a ginger beer consumer in 1932 and, indeed, he was not alive then, but I was both alive and a ginger beer consumer at that time. Fortunately, the ginger beer I drank in those days was uncontaminated, but an unfortunate woman purchased a bottle of ginger beer in which she found a snail and, being a sensitive female, seeing the snail in the bottle made her ill and she sued. The House of Lords changed the law on negligence, which allowed her claim to succeed, and the idea of tort and negligence stems from that case. Until then manufacturers were not liable for their negligence.
Today no one would argue in favour of allowing manufacturers to let snails crawl into ginger beer bottles, but do we want to extend liability so that anyone who sells a fresh apple in which half a worm appears also becomes subject to the full weight of product liability? My friends in the association say that it will be a
curious anomaly that consumers—in the most literal sense—of some kinds of food, are offered less protection or redress than others.
That may be so, but the whole world of consumer protection is bound to be full of anomalies and its seems perfectly acceptable that people who buy fresh apples must expect at times to find that they have also bought a worm, and that people who choose to eat pheasant should occasionally find a shotgun pellet in their food.
I am also somewhat doubtful about the association's objections to what has become known as the development risk defence in clause 4(1).
Surely my hon. Friend accepts that if people die as a consequence of eating apples which have been produced by a particular agricultural technique, the same product liability should apply as applies to pharmaceutical products? It is not a question of finding worms or shotgun pellets. If people die or contract serious diseases because of techniques of agricultural production which do not involve doing anything to the produce after it has been grown, surely the same liability should apply as applies to every other industry in Britain.
I would have thought that the use of poisonous insecticides, which is what my hon. Friend has in mind, was covered by legislation other than the Bill and that without the adoption of product liability as enshrined in part I of the Bill consumers would have ample recourse to damages in the courts. I do not believe that the use of poisonous insecticides will be affected in any way by the Bill. Obviously, that is a matter for the courts to decide.
To return to clause 4(1), as has already been explained, broadly speaking, this defence says that a producer shall not be liable as a result of the legislation if he proves that the state of scientific and technical change at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered. Clearly, this has particular relevance to the pharmaceutical industry and the Consumers Association states that
it provides a gap in the law which might leave future victims of Thalidomide-type disaster without adequate compensation.
There is already a great deal of legislation that relates to the safety of medicines and the testing of new pharmaceutical products before they become available to doctors and patients. Meanwhile we must balance the possible risks to the consumer of a medicine which does damage against the risk that an effective, life-saving or pain-reducing drug will not be produced because the company thinks that the financial risks are too great.
It is perhaps worth noting that when the Bill received its Second Reading in another place Lord Denning spoke strongly against allowing the development risk provision and was in favour of amending clause 4. When the Committee stage had been reached he had changed his mind, largely because of a report in a newspaper about the development of an anti-AIDS drug by the Wellcome Foundation. The main research laboratory of the Wellcome Foundation happens to be in my constituency. Indeed, by Committee stage Lord Denning was arguing that the Wellcome Foundation should be able to develop that drug, to experiment with it and to test it without being liable to any patient who happened to have unforeseen side effects.
These days a lot of official spokesmen spend a great deal of time and money warning us about the danger of the acquired immune deficiency syndrome, in particular Dr. Koop, the American Surgeon-General, who keeps telling us that this disease could become the modern equivalent of the black death and could kill tens of millions of people before the end of this century. Even if we think that Dr. Koop is overreacting, do we really want to put more legal and financial inhibitions on people who are trying to develop a cure or a vaccine for this disease?
I do not think that we can give any blanket exemption of liability to those who are involved in trying to find a cure for AIDS. After all, the number of people who die from AIDS is a tiny fraction of those who die from cancer or who suffer from arthritis. The AIDS argument, certainly for the pharmaceutical industry, has tipped the balance against those who wish to do away with the development risk defence.
When I last visited the Wellcome research laboratory in my constituency I was told, both informally and formally, that abolition of the development risk defence would be a considerable cause for concern. There can be no doubt that this view is shared by the British pharmaceutical industry. That industry has earned a great deal of money for this country in the past 20 years and has done an enormous amount to combat pain and ill health. Therefore, I hope that the Government will continue to oppose this attempt to amend clause 4. I am in favour of going back to the original wording of clause 4 in Committee.
I was slightly alarmed to hear how many issues the right hon. Member for Swansea, West intends to raise in Committee. We would have to be monks not to realise that a general election may be called in the next few weeks. This will put the whole future of the Bill at risk. I hope that, through consultation, we could reach some form of self-denying ordinance so that the Committee stage of the Bill is truncated and there is very little, if any, amendment to it. There would then be some chance of the Bill reaching the statute book, even if the general election is called in June.
This is a good Bill, even without amendment, and I would like to see it on the statute book along with the other important consumer protection legislation that the Government have introduced.
I welcome the Bill and I will be supporting it this evening. I hope that my hon. Friend the Member for Beckenham (Sir P. Goodhart) will not mind if I do not respond as fulsomely to his speech as he did to that of the hon. Member for Greenwich (Mrs. Barnes). I simply echo his hope that, in the event of a general election, some deal can be worked out so that parts, if not all, of this Bill can reach the statute book and be put into operation.
I was also very pleased that my hon. and learned Friend the Minister was not wedded to the amendment to clause 4(1) that was moved in another place. Because of those words of hope, I will focus my few words on trying to persuade him to change his mind, to remove the amendment and to reintroduce the state-of-the-art defence as it was understood when it was introduced back in December in another place. As the Bill is presently constructed, it refers — dare I say it, somewhat simplistically — to the state of scientific and technical knowledge at the time not being such as to enable the existence of the defect being discovered. No account is taken of the accessibility of the knowledge or the feasibility of its application. It is open to a number of interpretations and puts the development risk defence in jeopardy.
I will speak in favour of the state-of-the-art defence, for two reasons—one for the consumer and one for the producer. The consumer will suffer because he will be faced with vastly increased costs. The insurance bills will be very much larger than originally anticipated. In another place Lord Williams had a fairly laid-back approach to costs when he said that consumers would be quite willing to pay extra for extra protection. I do not know what experience the noble Lord has with consumers, but my experience is that consumers are exceedingly reluctant to pay any extra money. If a consumer has two similar articles placed in front of him at different prices, he will choose the cheaper.
In this measure we are also looking to remove the markings of origin, which will make it much harder to say that an article is made in Britain or that it is covered by the protection of insurance. The hon. Member for Greenwich spoke about modest costs. That is a red herring. I do not believe that the costs are going to be moderate; I believe that they will be extremely heavy. I do not wish to upset the insurance companies, but they are nothing more than high-grade bookmakers. When one takes one's few shillings and puts them on one's selection for the Derby, one hopes that it will win. One puts one's money on with an insurance company hoping that one will not lose—hoping that one will not get pestilence, flood or theft. If one does lose, one hopes that the insurance company will pay out.
However, insurance companies are commercial organisations, not charities. They expect a reasonable profit margin. If there is an unestimable risk on a new product, they will cover themselves accordingly. Therefore, if this state-of-the-art defence is removed, insurance costs will be much higher.
I will give one or two examples. Some hon. Members, obviously not I, will remember the days when electrical wiring was covered in rubber and a canvas sheath. Somebody had the bright idea of producing a plastic covering. Can hon. Members imagine the manufacturer telling the insurance company that he had this new idea for wiring and asking for cover? The insurance company would think how many tens and hundreds of thousands of houses and how many factories, hospitals and shops that wire would be installed in, and, if there was a defect, how much the incipient liability or cost would be. Insurance companies would charge an astronomical premium or say, "Just do a few houses in a trial area to see how it works. Let us see what it will be like after a few years."
Can anyone see our foreign competition, particularly in the far east, saying that they could not touch a product for a couple of years because we were doing trials? Our competitors would be taking our ideas as quickly as possible. In fact, the Japanese do not even impose strict liability for ordinary design defects, as this Bill does. The exclusion of the defence is likely to be critical for our European companies as regards Japan and our other industrial rivals.
I know that everybody, rightly, mentions thalidomide. I do not wish to minimise the impact that that has had on the individuals involved. I am exceedingly sorry and they have my sympathy for the suffering the victims have undergone. However, we always accentuate the negative; we never look at the positive. Innovation has brought our citizens some advantages. In my constituency, there is a company called Astra Pharmaceuticals, which has produced a chemical called Beta Loc. It is given to victims of heart attacks. The company has discovered that the victims, having been given the drug, have a vastly increased chance of survival and their recuperation is very much quicker. It has also been found that the complications that follow heart disease are very much reduced. I have no doubt that there are hundreds of thousands, if not millions, of people walking the streets today thanks to the drug that has given them an extra lease of life.
I am sure that if the drug had been suggested for its new operation with the state-of-the-art defence removed and mentioned to the insurance companies, they would have said, "Steady, let us take this a little bit slower. Let us load the insurance and increase the field trials." I can assure the House that the graph of differences between those taking the drug and those not taking it is dramatic and the deaths from a slow introduction would have run into thousands.
We are a country of innovation. We are a country of ideas, and too often in the past we have been accused of not implementing our ideas. We have allowed other countries to exploit them. If we are not careful, and if we put too many burdens on our companies, we shall lose out in those areas of innovation. The consumer will lose out on cost and through the slowness of the introduction of innovations.
I have mentioned the consumer and my second point is the effect on the producer. I hope to persuade my hon. and learned Friend the Minister of that effect. I have no doubt that the removal of this defence will make the producer reluctant to bring forward new ideas and it is new ideas on which the employment and growth of this country depends. I can see the producers saying that they should keep on with the old methods and be a bit slower introducing new ideas. Our competition around the rim of the Pacific basin will not be as delicate. They will take our ideas and exploit them.
That brings me to a point that has concerned me regarding British companies for some time. This House tells those companies that they must have health and safety legislation, employment legislation and pollution controls and that they can then get on and produce their product. The House then says, "By the way, we are going to let you compete against products from other countries where producers do not have any of those obligations placed on them." I am not saying that we should remove those protections for the people of this country. However, we have to look a little more carefully at the methods whereby products come into this country and ensure that they are competing fairly with the British manufacturer and do not have an unfair below-the-counter advantage.
If the defence is removed and the costs of insurance increase, I can see other countries bringing their products into our land, and so many ways in which they could take a price advantage. It would not be beyond the wit of any company to set up a shell import company and move the product through the shell company into our land. If something goes wrong, the shell company has no assets in it. That could operate and would cause extreme difficulty. Some people might say that it could be followed back to the manufacturer, but I have to say that we cannot even stop counterfeit material coming into the country.
I have bought plugs and sockets from a reputable distributor believing that they were British made. They had the British kitemarks, all the patent numbers and all the "correct" origins of manufacture. Only when the plug started smouldering, burning and charring around the plastic did I realise that I had bought a far east cheap substitute. I am worried—
I know the path down which my hon. Friend is seeking to lead me, and I am willing to follow. The products said that they were made in England. That is the problem with the counterfeit products coming into this country. Without putting them to the test, they look as if they are made in Britain. I was fooled. The plugs and sockets looked to be genuine articles. I understand that even cricket bats are being manufactured in Asia and coming into this country with all the marks suggesting they were made in Britain. However, I feel that I have gone far enough down this road.
Until the world—I mean the world—has a uniform system of dealing with product liability and insurance, I sincerely ask the Minister to consider in Committee withdrawing the amendment passed in another place and reverting to the state-of-the-art defence as was originally envisaged on Second Reading in the other place.
One of the arguments in favour of an early general election is that we would quickly be able to cut the throat of this measure which is masquerading under the title of the Consumer Protection Bill. I am sure that if an action was taken by a trading standards officer to determine whether that was a satisfactory title explaining what the Bill does, the Minister would certainly be found guilty of misleading the public, because there is no way in which this is a consumer protection Bill. It is a Bill that will create a great deal of confusion. It will cause damage to consumers and remove major consumer rights. The only encouraging aspect of the debate we have had so far was the remarkably encouraging speech of the hon. Member for Greenwich (Mrs. Barnes) showing that within the alliance there is now at least a spark of interest in consumer affairs, rather than the alliance being simply a sort of political wing of the National Farmers Union. That was certainly encouraging and I hope that it will continue.
What are my objections to the Bill as it now stands? First, on the matter of development risks, I almost thought it was worthwhile, with the confusion created by the Bill, to see the rather ridiculous Confederation of British Industry — which occasionally sends us some sensible material—publish a paper, and pass it to Members of Parliament, which says
The wording of the EC Directive is unworkable in the context of a British Statute.
That is further than the CBI is usually prepared to go. Of course, the CBI is absolutely right. The problem is finding a proper definition of what is a "foreseeable" risk. Most people would accept that manufacturers, retailers and wholesalers have a responsibility for products that create risks for the public that can be reasonably foreseen at the time the goods are made. What is certainly not right is to have a situation in which people are held liable for risks that could not be foreseen in any possible way.
That argument has been well canvassed, and the views of the House are well known to the Minister. I hope that he will give two detailed answers to the question that I am now about to ask. Why on earth is he excluding agriculture? He must be well aware that if there are any real, genuine grounds for fearing that the public's health and safety may be damaged, it is because of the manner in which agricultural goods are produced at present.
The Minister is well aware of the use of new chemicals and the damage caused to our water supplies by the use of nitrate and other fertilisers. He must be well aware that excessive agricultural production has led to a situation in which people are at risk. If they are not at risk. there is no reason to exclude agriculture from the Bill.
Why was agriculture excluded? Is there any logical reason why agricultural producers should not be in exactly the same position as the producers of any other commodity? The Minister should give a straight answer to those questions. Would he be willing to reconsider the matter in Committee?
Secondly, what is the nature of the exclusion of agriculture? If, for example, a new agricultural process results in defective produce which at a later stage causes illness, rashes, death or some other kind of problem for the consumer, who is liable and in what way? Does the exclusion of agriculture in clause 2 mean that the producer of the original chemical or pesticide is removed from liability in relation to the effect on agricultural produce? What is the nature of the exclusion, why do we want the exclusion at all and how far does the exclusion extend?
Does not the Minister consider that he has gone too far on consumer safety in clause 10(2)? I have been told by others who have had the privilege of filling my hon. Friend's position that there is a fanatical, go-ahead and keen group in his Department which always wants to ban everything. They told me about the problem of resisting this group. One example of its activities was the famous scented erasures abolition order.
On the other hand, does not the Minister think there is a danger that this envangelical group has got together to draft the wording of clause 10(2), because it appears to make individuals liable for accidents even if, after the goods have been produced, the consumer misuses the goods, does not read the instructions or goes against the instructions? Surely a producer should not be liable for injuries sustained as a direct result of people using materials in an unsafe way.
My third detailed point relates to clause 36 and fairgrounds. I hope that the Minister misunderstood the point that I made earlier, because he gave me a dusty answer. He must be aware that in fairgrounds a number of items are carefully tested and proven to ensure that the general public is in no danger. He will be aware that, because of this new legislation and the increased activities of health and safety officers and local authorities, fairgrounds now come under careful and strict supervision. The public is thereby protected, and no reasonable person would object to that. However, if a part needing replacement breaks down, is it fair and reasonable that powers should be provided to Customs officers to seize or detain the imported replacement part of an existing proven article based on their judgment of its safety?
Let us say that a gearbox fails and requires an imported replacement. Surely it is unreasonable for the Minister to say that it should be excluded, because it is a replacement part of something that has been accepted as fair and reasonable. If a replacement part of a fairground ride is not used for that purpose, is there anything else for which it can reasonably be used, and is it not fair and reasonable that it should be admitted if it is an integral part of an existing proven article?
The Minister will be aware that fairgrounds have difficulty surviving these days, and it is quite unreasonable to create unnecessary problems for them. A delay of 48 hours, 72 hours or however many hours the Common Market may decide to allow us can be vital for an operation that depends for its survival on a few days of good weather.
Apart from the fact that it is important to retain the state-of-the-art defence, is my hon. Friend aware that in some circumstances replacements come from a person different from the producer of the original article? In those circumstances, I understand that the defence would not be available. I am sure that the Committee discussion will be extremely interesting, and there may be occasions when serious legal problems will arise from this legislation. However, I have confidence that somehow we shall overcome them.
As usual, my hon. Friend has studied this matter carefully and he is absolutely right, because we are extending to fairgrounds something that at present applies to other industries. We are concerned about maintaining the safety and protection of the public while not making life impossible for industry and commerce.
My main objection is that under the Bill the Government are repealing the Trade Descriptions Act 1972, which was unanimously approved by the House of Commons. I am sure that hon. Members will regret the fact that the Second Reading debate in Hansard is unfortunately out of print, but I gather from my hon. Friends who have a copy that at that time the present Secretary of State for the Environment put forward a passionate plea in favour of origin marking as a means of giving greater protection to the consumer, of giving the information that they require and of assisting people in making the right consumer choices. He said that that Act would afford greater protection to the consumer and general public, and he gave the wholehearted support of the Government. The Opposition supported it, as did the minority parties. Everyone welcomed origin marking as something of importance to protect and inform the consumer.
Now we are told that, reluctantly, the Minister will have to scrap origin marking. No longer will foreign manufacturers be obliged to mark the country of origin on their goods. The reason, we are told, is that the Common Market thinks that our legislation is unlawful. But if he looks at the discussions in 1972, the Minister will see that the matter was then raised by Mr. George Darling and others, who asked whether that Act was in line with the treaty of Rome, whether the Minister had checked with the Commission and whether it was lawful. The answer was specifically given by the present Secretary of State for the Environment who was then a junior Minister in another Department. He said that there was no question whatever but that that Act was acceptable to the Europeans and the treaty of Rome.
Does not my hon. Friend believe that retaining origin marking is a sentimenal rather than practical gesture? Is it not now exceedingly difficult to discover exactly where a product comes from, as many assembly plants draw components from all over the world? Therefore, it is increasingly difficult to say that an article is produced in one country.
My hon. Friend may hold that point of view, but when the matter was rationally discussed in the House of Commons, every hon. Member supported it because it was thought to be important. Now that things are becoming more complicated it is even more important for consumers to know where goods are made. In the old days one could rely on trade names. For example, if a product was marked Ford or Hotpoint, one had a rough idea of where it was made. As my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) has said, now we do not have the slightest idea where an article comes from.
There may also be safety implications. I read a fascinating article the other day which gave details about Duracell batteries that are advertised as having a lifespan six times that of the average battery. However, that only applies to those Duracell batteries manufactured in Britain. Other Duracell batteries produced in Greece do not possess such qualities. According to the article and the Channel 4 television programme "4 what it's worth", those batteries are described as rather dangerous and do not possess the additional qualities of the British-made product, yet both are sold under the same trade name. If there was ever a need for the consumer to be protected, that need is greater now than ever before.
What changes have occurred among legal opinions with regard to the treaty of Rome? Why, when we were told that the Commission was consulted when the Trade Descriptions Act 1972 was passed, are we told that legislation must now go? What reasons do the Commission give for telling the United Kingdom that our goods must not be marked with their country of origin?
The first argument given by the Commission why British goods should not be so marked—as recorded in the excellent document produced by the Library—was that British regulations increased the production costs of imported goods, making them more difficult to sell in Britain. In other words, if goods were marked made in Germany, Italy, East Germany or Czechoslovakia, it would be more difficult for those goods to be sold in Great Britain and their costs would thereby increase.
The second reason that the Common Market has given why our goods must not be marked is that origin marking would enable consumers to assert any prejudices that they might have against foreign products. I often wonder what those who organise boycotts would do if we abolished origin marking. The Liberal party and others become involved in boycotts of South African goods. If Liberal Members were here tonight — instead of being completely absent from their Benches — they might realise that, from the passing of this Bill, it will not be possible for Liberals, Socialists, the Co-operative or anyone else to organise a boycott of South African goods because they will not know where goods come from.
People such as myself, for reasons which my hon. Friend the Minister might regard as irrational, do not wish to buy goods produced in Communist states, where there is forced labour, and where Jewish people are persecuted. That may be foolish. Perhaps I am not acting as rationally as my hon. and learned Friend the Minister would wish me to act. However, that is my view. Why the blazes should we be told by the Common Market that we should not have information about where goods are produced if the British Parliament unanimously decided that that was a good idea?
Some people say that we must be progressive and forward looking and that the Community's main argument was that we would be un-European if we gave British people the opportunity of knowing which goods were produced in different parts of the Community. My hon. Friend the Member for Harrow, East (Mr. Dykes) will appreciate that this is the vital issue. The Common Market wants to deprive people of the opportunity of making a choice between goods produced in different parts of the Community because it would be un-European to do that—and I know that my hon. Friend the Member for Harrow, East would be the last person who would want to be un-European. However, it is all very well for Germany to make such a claim. Germany originally raised the issue with the European Court. However, we must consider Britain's position in relation to Europe. We are not the same as Germany or France because we have a horrendous trade deficit with those countries.
When the 1972 Act was passed, Britain had a surplus in manufacturing trade with the Common Market of £55 million. It was small, but people still said that we wanted origin marking. We have a deficit in trade with the Common Market for 1986 of £10,000 million. That is a horrendous figure, more than three times the size of our deficit with Japan, about which we have heard so much nonsense recently and about which a great deal of discussion is taking place. Although the Germans may riot particlarly want to know where goods are produced, I suggest that from Britain's point of view the future viability of our economy depends on individuals who are prepared — all things being equal — to choose British goods.
Another reason why people want to retain origin marking is that some people — rightly or wrongly — regard the country of origin as a guide to quality, reliability and value for money. Some people, like myself, try to buy British when we can, not because the goods are always cheaper, but because, by and large, we believe that we will get a better deal and better quality and if something goes wrong it will be easier to do something about it. Why should we be deprived of that right by the Common Market, irrespective of the views of the British Parliament and people?
There is no point in hiding the fact that some people want to buy goods on the basis of where they come from as an expression or sign of their political views and prejudices. What is wrong with that? If we know goods are produced in countries where there is slave labour, why should we not have the right, as consumers, to discriminate against those products? If, as we find was the case in the Soviet Union until very recently, Jews are discriminated against shamefully, surely as individuals we have the right to know whether goods came from such countries. We should not be deprived of the opportunity and should at least have the right to know the origins of goods in those circumstances.
I had the pleasure of hearing our splendid Prime Minister the other day at an exhibition where she made a superb speech about better buying British or better made in Britain—I cannot remember which. However, I know that the Government support, with lots of money, lots of organisations that are concerned with better buying British or better made in Britain. What on earth is the point of the Government spending taxpayers' money or the Prime Minister using her very valuable time addressing a conference telling people to buy British when the Minister has introduced a Bill to deprive people in this country of the chance of knowing where goods are made? This is a retrograde step which we do not want.
The Minister has told us not to worry and that he will not abolish origin marking until he can put something in its place. The Minister will be aware that, on the basis of what the Common Market has said and of the decisions of the European Court and the Commission, nothing that is realistic, significant or of value can be put in its place which will not contradict the whole principle of what the EEC has said today. The Minister will be aware of the advice given by his Department. The Department has told people that it would be happy to consider any other approaches that recipients may propose provided that they seem likely to satisfy the Department's requirements of Community law.
If the 1972 Act is to go, it will be even more difficult to define what is made outside the United Kingdom. It would be very difficult for the courts to interpret that definition if the 1972 Act is not enforced.
My hon. and learned Friend the Minister will be aware that his Department has written to interested organisations explaining that all the reasonable alternatives are regarded by the EEC as completely unacceptable because the EEC takes the view that a place of origin does not confer special characteristics. There is no way in which any meaningful alternative can be introduced.
The problem is, what should the Government do? Should they simply do nothing? Should they tell the Common Market to go and jump and mind its own business or should they go ahead and simply repeal the origin marking laws and let the Europeans make the decision for us? I appreciate that there is a danger that the Government may interpret this simply as an old battle about us joining the Common Market. It is not that kind of a battle. This matter is terribly important and affects one of the fundamental freedoms and rights of the British people. It affects one of the fundamental rights of the British Parliament to make decisions of this kind which, in my view, in no way undermine the principles of membership of the Common Market.
I hope at some stage that the Government will have a long hard look at the extent to which the powers of this Parliament are being gradually taken away and diminished, not by elected politicians, but by the non-elected Common Market Commission. We shall have another opportunity to consider the matter in September when the European Court will give its decision about whether Britain is legally correct not to apply VAT to new house building, protective clothing, protective footwear or to items such as gas and electricity for industry and commerce. The Court will tell us what we are allowed to do. That Court and the Commission are non-elected, but they will take the decision.
I hope that, on that occasion, the Government will at least put up the flag for independence. I hope that in Committee they will withdraw this offensive clause which gives the Government the power to remove origin marking. If they removed it, the Common Market would look rather silly if it took action to deny the British Parliament the right to allow our people to know where goods are made.
I accept that this is a quiet day. The moment the Opposition announced that they would not vote on the Bill, people disappeared from the building quickly. With the other things that have happened today, very few people in Britain will be aware that origin marking has been abolished, but, as the Minister is aware, these matters have a habit of catching up with the Government. I hope that he will remove the clause quickly in Committee and will let matters take their correct course. I very much doubt whether the Common Market would be stupid enough to use its battery of weapons to force the British Government, against their wishes, to abolish the principle of origin marking, which is an important right for every British consumer.
My hon. Friend the Member for Southend, East (Mr. Taylor) has again indulged in his anti-European utterances. We are very used to them. We have the principle of tedious repetition in our debates. I always think that it would be as well to spread the principle over more than one debate, because my hon. Friend's speech was an exact repeat of what we have heard on many other occasions.
In referring to the disappearance of origin markings—if the Trade Descriptions Act 1972 is to disappear—my hon. Friend misunderstood the complexities of the changed world in which we live. Origin marks and trade marks are much more complex than they used to be in 1972. I agree with my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) that, because of the multiplicity of manufacturing efforts and the interdependence of the modern manufacturing world, not only beyond the confines of the EEC but among the member states, it is easier to talk about the specific origin of a manufactured product than to judge it accurately. For example, there may be a crossing of frontiers in the assembly of a product between a non-EEC country and a member state. If a given percentage of the product is assembled or manufactured abroad, that sometimes removes the need to have an origin mark.
Another example cited by my hon. Friend surprised me. In the old days, when the quality of goods coming from Japan was low, it was disadvantageous to the Japanese to put the words "Made in Japan" on their products, when they were compared with the high quality goods that bore the famous description which made us all so proud, "Made in Britain". One would like to think that that was the case nowadays, but in respect of some products that is not so. If Japan was compelled to put the words, "Made in Japan" on its goods—emerging countries, such as Korea, are also beginning to make more high quality, reliable goods — would that he an advantage in promoting British sales? I very much doubt it. We can all imagine the sort of product that I mean.
A combination of the present origin marking system in the United Kingdom and a Community system is likely to be the best result. That is why this provision is not one of the more difficult parts of the Bill. I doubt whether it will cause much anxiety in Committee, but I could be wrong.
The present position is different from the position in 1972. This is very much a changed world in terms of sophisticated consumer durables and many other manufactures, and the point now is not so much that manufacturers can put origin markings on their products, but that the EEC is gradually progressing towards a common definition of an origin marking system. We do not yet know whether it will apply to products imported from outside the EEC or whether it will be compulsory. I believe that the modern attitude will be one of acceptance of the words "Made in the EEC" rather than an insistence that labels should bear the words "Made in France", "Made in Germany" or "Made in Britain". Many of us hope that, by 1992, we shall have a unified trading market in which it will be wrong and, as the European Court has already determined several times, a restraint on trade and misleading for consumers still to have compulsory origin marks. The remarks made in the debate in the House of Lords and today—with the exception of those of my hon. Friend the Member for Southend, East—have been about right.
I welcome the developments in part I of the Bill. I shared the anxiety of other hon. Members when the Opposition spokesman, after 25 minutes, said, "I now come to part II." He then took almost 40 minutes to make a series of clause stand part speeches that would have been more relevant to the Committee stage. We should remember that there was a thorough debate on, although not many amendments to, the Bill in the other place.
I welcome Second Reading of the Bill and the balance of part I. Some matters will have to be considered in Committee, but for the sake of brevity, and because I know that my hon. and learned Friend the Minister wishes to reply to the debate, I shall concentrate on part III and misleading prices. That is apposite, because part III has been mentioned least of all on the debate so far. I should declare an interest not only in the EEC—increasingly in dealing with national legislation, we are considering European matters — but in the retailing industry. The Minister's remarks will be welcomed, and perhaps were expected by some sections of the retailing industry in general. He said that he was willing to accept the so-called Concordat approach of all the groups that took part in the series of discussions since last October with officials and Ministers in the Department of Trade and Industry about introducing a proper misleading prices regime for the future.
Although this part of the Bill has not been mentioned much so far, I believe that it will not be easy to introduce such a regime and that this is the most complex part of the Bill. The House must be aware constantly that it is extremely difficult to draft consumer safety legislation. Just as the draftsmen think that they are reaching a correct legal formula, they begin to think that they are already creating new loopholes which clever, highly paid lawyers can exploit on behalf of their clients. It is almost inescapable in sophisticaed legislation generally; it is even worse in this case. But that does not mean that we should not try to do it, and the problem of misleading prices needs a fresh and determined approach, which the Government are showing.
I speak informally on behalf of retailers on what I believe most of them think to be correct, and I know that they welcome the measure, as they have made clear all along. As represented officially through the Retail Consortium, the British Retailers Association and other groups, many retailers feared that the proposed code of practice would be far too long, complex and difficult—especially for small traders and retailers — to follow realistically. They feared that they would be caught out constantly, which would be very unfair to them, even if it did not harm consumers. It was obviously drafted by a raft of officials, who had put in everything, trying to cover all the ground. It is much more important to create, as the Government do from clause 20 onwards, a correct definition of misleading prices and a general offence, which they can use as a powerful weapon against offenders in the future. Coupling that with sensible regulations, as was requested in the Concordat approach, and a shorter draft code of practice and a final code of practice would improve matters.
I had a letter at the end of March from a retailer representing the Retail Consortium. I think that the views expressed there would coincide with the views of many hon. Members about part III of the Bill. The letter says:
The Concordat has sought to identify the principal areas of abuse currently experienced, and to provide a simpler way of controlling them. We believe that this alternative approach accordingly stands more chance of being observed by a larger number of traders.
We also believe that enforcement officers will be more easily able to proceed against rogue traders if statutory regulations exist in respect of those abuses most frequently found in practice.
It is interesting to note that that fits in well with what the Retail Consortium said in its official letter sent to many people, including Members of Parliament, on 23 April. Speaking about the Second Reading, the letter expressed a degree of optimism that the Minister would accept the revised approach because over 200 interested parties had been consulted on the Concordat and the Government's proposals. The letter says:
We are optimistic that the Minister will announce that he has received a response in favour of the approach advocated by the Concordat, and that as a result he will table amendments to reflect the Concordat's proposals on the status of the code during the Committee Stage of the Bill.
I should like to recall to the House the British Retailers Association's official proposal of 20 February. This was the original Concordat document formulated after all the discussions. On page 2 the retailers argue strongly:
The areas which the parties propose should be covered by regulations are:
The 28-day rule is an extremely important and difficult area in which to try to ensure justice for the consumer in terms of misleading price announcements. The second point about recommended retail prices is also a complex
area. Introductory offers have given rise to many abuses over the years. Some of them are difficult to detect because they are very subtle. I refer to these matters now because it will help the Second Reading debate.
Although the Minister has left the Chamber—no doubt temporarily—I am sure that a note will be made of my requests. Perhaps when the Minister is winding up he will spell out more what he means about accepting the Concordat proposals. It is necessary to affirm that the details of that approach are being accepted rather than just saying in broad outline that he goes along with them. I understand that it may not be possible for the Minister to do that at the end of this debate, but it may be necessary to have it spelt out before the Committee stage.
Reference has been made to the possibility of a general election. Perhaps that is one of the reasons why there is an absence of Opposition Members. It may also have to do with the likelihood of no vote being taken at the end of this debate. Whatever the reason, their absence suggests a feeling in the House that there should be a formal, short Committee stage on the Bill. I share the anxiety of my hon. Friend the Member for Southend, East about that. In an intervention, perhaps a sedentary one, he gave the impression that that would not be a good idea, although clearly he did that for different reasons of content in the Bill than I do.
There has been a material and lengthy debate in the other place on the three main parts of the Bill and to a much lesser extent on the other parts. The House needs to be committed not only intellectually and emotionally, but in terms of practical detail to modern consumer protection legislation. I hope that the Bill, together with some of the amendments that we may consider in Commitee, strikes the right balance. We need to look after consumers in an increasingly complex world where products continually become more complicated and sophisticated, and we need a reasonable basis of comprehensible justice, fairness and understanding for manufacturers, importers, distributors and retailers. If we can strike the right balance, which is difficult, and reflect the requirements of the European Community—which I share with enthusiasm—we will make progress. That cannot be done by way of a Committee stage that is just a formality, as a result perhaps of some deal between the usual channels that might involve wider political reasons.
I am delighted to follow my hon. Friend the Member for Harrow, East (Mr. Dykes), who was unquestionably made in the EC. That is firmly imprinted upon him. I am doing my best to become more communitaire, although between us I think that our brief knowledge of Russian could not yet be described as a communitaire activity. No doubt in his wish to enhance the Community he would like to see us walk in that direction. My hon. Friend spoke about the lack of troops on the Opposition Benches. I thought that the right hon. Member for Swansea, West (Mr. Williams) was seeking to talk the Bill out. Then I realised that he was inspiring the invisible ranks behind him that had fled to their constituencies in the hope of saving their deposits.
I am grateful for the opportunity to welcome the Opposition's Deputy Chief Whip, the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg). I hope that we shall see him do his stuff and that we will he able usefully to instruct him during the remainder of the debate. I also welcome to the Government Front Bench my hon. Friend and neighbour the Member for Staffordshire, South-East (Mr. Lightbown). I hope that one day he will find himself in a ministerial position.
The Bill is of great interest to a wide range of British manufacturing companies. They have been through a tough time in the past few years but are now showing enormously encouraging signs. Manufacturing industry is coming out of the recession looking fitter, more competitive and more determined than ever before. It is right that we should protect the consumer from poor and faulty workmanship. British industry is foremost in wishing to see that protection. However, it is not fair to place intolerable burdens on industry because they have the effect of driving up costs and making industry less competitive than its counterparts in other countries.
It is especially important that hon. Members should not seek to use this House to make pious and sanctimonious arguments about improving consumer protection while at the same time imposing such burdens on industry and piling up hurdles between it and its markets. I noted what my hon. Friend the Member for Southend, East (Mr. Taylor) said about the Department of Trade and Industry and the possibility that there is a nadir-like clique in that Department. If that is the case, I hope that the people in that clique will come to understand that they will do no service to the consumer by making even higher hurdles for industry.
I should like to speak about two aspects of the Bill. The first is product liability and the second is the country of origin mark. I declare my interest as a consultant to the Electric Cable Makers Confederation. I do so with considerable pride because that confederation contains some of the major and most successful companies in British manufacturing. If I name only BICC, GEC, Delta and Rists, one can immediately identify major British companies and success stories.
It is by drawing on specific examples of where this Bill impacts on industry that we can do a service to Parliament and, hopefully, help the Minister to find his way through the complexities of the Bill. He has been good enough to meet members of the industry who have expressed their concern to him. It is a vital industry, employing 28,000 people and with a turnover of £1,100 million, of which 25 per cent. is in exports. Approximately 50 per cent. of the industry's output, in the form of smaller distribution cables, will be affected by the Bill, so the industry has a clear interest in this measure. The Government have gone some way towards meeting the cable industry's concern, but my hon. and learned Friend should be under no illusions—the industry is still concerned about a number of items. I shall list them briefly today as they point to genuine problems that will be encountered if the Bill becomes law in its present form.
The first question is whether an electrical installation is a product. Clause 1(2)(c) defines a producer, but it is not clear who would be the producer of an electrical installation and whether the installation would fall within the definition:
'product' means any goods or electricity and … includes a product which is comprised in another product".
One thinks, for example, of wiring in a house. People are taking on increasingly complex DIY jobs and often rewire their own homes. If a person sells a house after rewiring
it and the new occupant, wishing to hang a picture where previously there was no picture hook, bangs a six-inch nail into the wall and electrocutes himself by driving it straight through an electric cable, who will be liable? Will it be the manufacturer of the cable or the person, whether he be a DIY enthusiast or a professional electrician, who installed the cable? I hope that practical problems of that kind can be addressed in Committee, if not in this debate.
Secondly, with regard to unreasonable misuse, the Bill relies upon clause 3(2) which provides:
In determining for the purposes of subsection (1) above what persons generally are entitled to expect in relaton to a product all the circumstances shall be taken into account, including …
(b) what might reasonably be expected to be done with or in relation to the product".
That is a very general statement. What might reasonably he expected by one person might not be the same for another. I understand that the Unfair Contract Terms Act provided for the publication of guidelines providing much more detailed information for industry. My hon. and learned Friend the Minister may wish to consider whether guidelines would be appropriate in this case, although it may be too complex even for that possibility. For example, if a person uses an electric mowing machine which runs over the cable and cuts it, is that unreasonable use of the cable?
The Government argue that these are matters for the courts to decide. That would be fine if things were as simple as that, but they are not. Companies may not be able to obtain the necessary insurance cover to protect themselves against what could be very substantial financial penalties. The right hon. Member for Swansea, West, who has just returned to the Chamber, mentioned that aspect. He stated very fairly that the Association of British Insurers felt that the existing situation could be covered hut did not express an opinion about the possibility of covering the situation if the Bill became law. If I have got that slightly wrong, perhaps the right hon. Gentleman will correct me.
I left the Chamber briefly to deal with some telephone calls. The association said, not that cover could not be offered but that the amount of cover would be limited. In other words, it could not guarantee the amount.
I am grateful to the right hon. Gentleman. That reservation is itself a serious limitation on what the insurance market can do. The CBI brief states:
The Association of Insurance and Risk Managers in Industry and Commerce (AIRMIC), which represents those responsible for buying insurance on behalf of their companies … point out that high risk and high-tech research and development based industries in this country are having real difficulties in getting appropriate cover for product liability 'at any price'. They continue: 'If, as we know is the case, the insurance industry is not able to provide the cover that we need at present, one must question their ability to provide cover under a strict liability regime, let alone one without a development risks defence'.
I wish to put that point on record. It will be very difficult for companies to obtain cover. One area that my hon. and learned Friend the Minister may wish to consider concerns high-tech companies producing medical equipment.
It is not just a problem of insurance. We are seeking to impose on industry a more time-consuming measure. If these matters go to the courts, people in industry will have to brief lawyers and spend time establishing case law. The preamble to the Bill states:
There are not expected to be any implications for public expenditure or public service manpower.
It says nothing about the expected impact on manpower in industry. There is a defence under clause 4(1)(f) for the supplier of a component if
the d effect—
That is fair enough, but the cable manufacturer has absolutely no control over the ultimate use of the cable. He does not sell directly, for example, to a lawn mower manufacturer; he sells to cable wholesalers. I hope, therefore, that my hon. and learned Friend the Minister will take on board the difficulties faced by an industry of that kind which wants to be responsible and which already exercises enormous care to ensure that its products are safe but which has no control over the end user.
My third point concerns the state of the art defence. I echo the comments of my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). It is vital that there should be a much broader defence, as was originally provided in the Bill. My hon. and learned Friend the Minister was kind enough to say that he would listen carefully to the representations made. I hope that he will take careful note of this one. The Society of British Aerospace Companies and other major elements of industry are most concerned about this. I hope that the Government will consider this in Committee and perhaps restore the original wording.
My fourth point affects not only the cable industry hut many others. Producers in this country are at a potential disadvantage compared with overseas producers selling cheap stuff through importing houses in the United Kingdom which are frequently £100 companies. Export-import businesses are almost the easiest thing to get into if one is at a loss for something to do. One does not need much capital and one can set oneself up as a £100 company. Under the Bill, it will be the importer that the consumer who has been injured, or perhaps has lost a member of his family, will sue. What use will the Bill he in such circumstances? If the importer is just a £100 company, it can simply go bust and not pay up. British companies will be applying all the rules under the Bill while the foreign competition will be able to get off scot-free.
The argument about the origin of country marking was eloquently articulated by my hon. Friend the Member for Southend, East who, as always, spoke with vigour for Britain. While I welcome what my hon. and learned Friend the Minister has said, the Bill states that the 1972 Act will be repealed. I do not quite understand how that squares with what he told me in my intervention in his speech. I hope that he can clarify that. This measure is contrary to everything else that we are doing for consumer protection. The whole emphasis has been on giving the consumer much more information on which to make a balanced judgment. That is what we believe when we say that we are in favour of the market. Giving people choice means giving people information on which to make that choice. The abolition of this requirement will deny the consumer information that he has at the moment, and that will limit his scope for making a choice.
I am one of those who seek at every opportunity to buy British, and I am proud of that. Much to the chagrin of my wife, I turn products over to see whether they are made in Britain. If they are not, I will not buy them unless there is no British substitute. There is still high unemployment in the west midlands. We hear people in the south-east moaning about that, but they run around in foreign motor cars. If they want to improve the unemployment position in the west midlands, they should go out and buy British manufactured goods. That is the biggest contribution that we can all make to solving unemployment. However, the Bill threatens to deny us the opportunity to do what we can as individual consumers to support British industry and solve the unemployment problem.
I hope that my hon. and learned Friend has noted all the observations made from the Government Back Benches. The removal of country of origin marking is not acceptable to the British people. They see it as a manifestation of what they all feared when we entered the EEC—that power would be ceded from Westminster to Brussels. I am sorry if that offends my hon. Friend the Member for Harrow, East, but that is how people outside perceive these things. I hope that my hon. and learned Friend will do everything in his power to resist this trend and to make sure that any successor arrangements are just as good as those that prevail now.
I declare an interest as an adviser to the British Foundry Association, which has made a number of points about the Bill. In particular, it wants to support the state-of-the-art defence. As I said in an intervention, problems also arise under clause 4 and its definitions, which were changed in the other place. The British Foundry Association members have a problem under the new version. Where they have been involved in the making of castings to a specific order of an original producer and these wear out and need to be replaced, orders for replacements can and do come from persons other than the original producer, who may no longer exist. In such circumstances, the association is concerned that there would be no defence for its members, as makers of the castings from the original foundry. I should be grateful if the Minister would consider these points in Committee.
I notice that in part III, which is entitled "Misleading Price Indications", we may have an opportunity to come back to a point about which I have corresponded with the Minister. This arises out of my amendment to the Banking Bill. I was particularly concerned that there should be a proper disclosure of the manner in which interest is accumulated when customers of banks incur overdrafts.
I do not want to go into this in detail, because it is already on the record. I had a most helpful letter from the Minister — one that is worthy of a press release, although I held it back. He has conceded the principle that he will be looking at all this and that something will come of our discussions and correspondence. The voluntary ombudsman service has already stated that there are a number of serious deficiencies in the current system. I see no good reason why the manner in which interest is arrived at could not properly be disclosed.
I am particularly glad to notice that the definition of price of services includes the possibility of interest. In clause 22, under the definition of services, there is included the provision of credit, banking or insurance services. I am hopeful that this may be a mechanism whereby banks would be required to produce accurate information for their customers as to the manner in which interest is accumulated. I hesitate to say this but those who are interested might save time by looking at my comments about this subject made in the Committee considering the Banking Bill, as those comments summarise my position.
In its parliamentary brief, the CBI has said that it is vital, in the interests of society as a whole, that the development risk defence is retained and precisely worded.
I am a member of the Select Committee on European Legislation and I have taken a close interest in European affairs. However, the idea that we should automatically take on the precise wording of a directive fills me with horror. We must not assume, because it is contrary to the nature of a directive in the first place, that it is up to us to implement the objectives of the directive in its exact wording. If we were to do so, we would rapidly get into serious difficulties.
Our method of interpretation is somewhat different from that in the European Community, although when it comes to matters of interpretation before the European Court, we have to follow its method of interpretation. We should stick to the wording in the Bill as originally introduced. We should not take the European directive wording lock, stock and barrel. I have no doubt that my hon. and learned Friend the Minister will have plenty to say on this subject on another occasion.
I thank all hon. Members who have spoken in this interesting debate. Some have suggested various ways in which we might change the Bill to reflect the interests of either industry or the consumer. I shall comment on as many of the points that have been raised as I can, but if I omit any I apologise in advance and no doubt there will be an opportunity to discuss them on other occasions.
I remind hon. Members that our purpose in part I is to implement the product liability directive. That directive was agreed by all member states of the community and there are very few areas where we can make choices. Where we can make a choice, it is right that we should debate that choice. However, it is not our policy to go beyond the directive. Our intention is merely to implement it by the provisions in part I.
The main purpose of the directive is to reduce distortions in competition and barriers to trade throughout the Community by providing a common level of protection for consumers throughout the member states. I agree that this harmonisation is not yet total, but it is an important step towards that goal and we should do all that we can to ensure that the law relating to defective products is completely harmonised throughout the Community.
I now turn to the points which were raised by right hon. and hon. Members on part I of the Bill. First, I shall deal with the point which was made by the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Greenwich (Mrs. Barnes) about the extent to which the development risks defence might give rise to a repetition of the thalidomide tragedy. It is very important to clarify our minds and think about the relevance of that argument to the development risks defence in the Bill.
I have no intention of minimising in any way the anguish and suffering of the children who were damaged by thalidomide, or that of their parents. I question the extent to which the discussion of the liability of the manufacturers of thalidomide is relevant to any discussion on the Bill. A legal decision was never reached on the liability of the manufacturers of thalidomide because the case was settled out of court, and in the absence of that decision it would be irresponsible of me, or anyone else, to make a judgment as to that company's liability.
While I agree that the thalidomide tragedy was the impetus behind protective legislation of several types in many member states, and indeed was the major reason for the initial proposals which resulted in the directive that we are implementing through the Bill, we must be careful not to make unrealistic connections between that matter and the Bill. It is particularly relevant to note that there have been significant changes in the circumstances in which drugs may be tested on human beings or marketed generally in this country since the late 1950s, when thalidomide was first supplied. My hon. Friend the Member for Beckenham (Sir P. Goodhart) pointed out those differences.
The Medicines Act 1968, which in large part was brought into being in the wake of the thalidomide case, ensures that no medicinal product can be manufactured, sold, supplied or imported into this country, except in accordance with the appropriate licences and clinical trial certificates as to the safety and quality of that product. I doubt whether the thalidomide case is relevant to the Bill, and I think that we should concentrate our attention on what the development risks defence means in reality to industry and consumers.
Still on the development risks defence, I should say something about insurance cover. The right hon. Member for Swansea, West, and many other hon. Members who contributed to the debate, said something about the relevance of insurance cover. It is true that the view of the Association of British Insurers is that, as long as the development risks defence is maintained, the Bill as a whole should not lead, and is not expected to lead, to a great increase in the cost of insurance.
The ABI went on to say—the right hon. Member for Swansea, West mentioned this, but I am not sure that he fully and properly conveyed the implications of its second point—that if the development risks defence is taken out of the Bill, the availability of insurance would be reduced. That does not necessarily mean that there will be a limit to the liability which might he covered by insurance in certain circumstances; it could go to the question whether cover could be obtained at all. That is a serious matter; that is what the availability of insurance means; that is what is called into question if the development risks defence is removed.
To suggest, as the hon. Member for Greenwich did, that this was a question of a modest increase was wholly to misrepresent the nature of the risks in relation to the availability of insurance which manufacturers of products in this country would run if the development risks defence were removed from the Bill. That is a matter to which I attach a great deal of importance.
I now turn to the exclusion from the Bill of agricultural products. This point was raised, with his usual forcefulness, by my hon. Friend the Member for Southend, East (Mr. Taylor), who asked a number of questions about it. I shall also attempt to deal with the difference between initial processing and industrial processing, which was raised by the right hon. Member for Swansea, West.
The directive excludes liability for primary agricultural products, and the Government are implementing the directive in this respect. It is true that member states are entitled to derogate from this provision but, so far as we are aware, no other member state intends to make use of that derogration to include liability for primary agricultural products, and for us to do so would not only fly in the face of our aim of eventual harmonisation but could place United Kingdom farmers at a disadvantage throughout the Community. I hope that that would not commend itself to my hon. Friend the Member for Southend, East. That is an important reason behind our decision not to take advantage of this derogation.
I was dealing with the argument put by my hon. Friend the Member for Southend, East and the hon. Member for Greenwich, who said that she was not only speaking for herself but reflecting—an interesting word, I thought—the views of her party. Her party is adept at reflecting the views of the last person who has been speaking to the particular spokesman of the party involved. Perhaps I should not dwell too long on that point.
There are other reasons for our decision not to take advantage of this derogation. Primary agricultural products are particularly prone to environmental defects which are beyond the control of the farmer. More often than not, a farmer's supplies are mixed at market with the supplies of other farmers before undergoing processing. It would be very difficult to identify any particular supplier. I do not claim that agricultural products uniquely have these features, but for them the combination of these features is more common and more important than it is for anything else.
I shall deal with the difference in terminology which was raised by the right hon. Member for Swansea, West. We are quite clear that what is intended to be excluded are the sort of things that are done on farms, such as harvesting and threshing, and things which are necessary to produce the product in its marketable form, so the slaughter of animals is included.
The exact words in the directive—"initial processing"—did not seem very apt. I agree with my hon. Friend the Member for Stafford (Mr. Cash) that we should not simply adopt the language of the Community directive. There is a rather confusing implication in using the words "initial processing". Processing which goes beyond initial processing is not excluded; that result would clearly be absurd. In addition, we believe that the word "initial" may suggest that some processes which we consider to be part and parcel of the production of primary agricultural products are covered by the directive.
We think that the reference to products that have not undergone an industrial process expresses the underlying intentions of the directive, as expressed in its own preamble, rather better than the language of the directive itself. That is why we have chosen to change the wording to that extent from that in the directive.
There is no intention to exclude agricultural products from the kind of liability which they attract at the moment. My hon. Friend the Member for Southend, East mentioned a number of hypothetical circumstances and asked where the liability would lie in those circumstances. At the moment, liability is attracted under the law of contract. There would also be liability under the law of tort — if, for instance, it could be demonstrated that a farmer or manufacturer of a spray, or something of that kind, which was used in the course of the growth of the product concerned were negligent. Nothing in the directive or the Bill affects that liability. The only question is whether the additional liability provided by the Bill should be applied to agricultural products. For the reasons that I have given, we do not think that that would be an appropriate course to take.
I was pleased to hear the warm welcome that the general safety requirement received from, I think, every hon. Member who spoke. Perhaps I should remind the House of the important differences between that part of the Bill and part I. Part I imposes a civil liability only and covers most products. Part II will make it a criminal offence to supply unsafe consumer goods and civil liability will attach only in respect of breaches of specific safety regulations, in a similar way to the provisions in the Consumer Safety Act 1978.
A number of points were raised about part II. The right hon. Member for Swansea, West returned to the pleasant disputation that took place in the Standing Committee on the private Member's Bill promoted last year by my hon. Friend the Member for York (Mr. Gregory) about the time for which Customs officers would be able to detain goods—not, I emphasise, as was incorrectly stated by the right hon. Gentleman, in order to decide whether goods are safe or unsafe—that is not the purpose of detention of goods by customs officers—but so that the officers may form a provisional judgment on whether the attention of trading standards officers should be drawn to those goods. The trading standards officers decide whether goods are safe or unsafe and whether action is to be taken. Customs officers make a preliminary assessment and the Standing Committee was eventually persuaded to agree that 48 hours was a sufficient period within which that assessment should be completed.
The right hon. Member for Swansea, West accepted that it would not be possible to attach to second-hand goods the same standards of safety that one attaches to new goods. That poses the problem of how to assess the appropriate standards of safety. That would be a difficult exercise, which would enormously complicate the enforcement of any provision. Another difficulty is that second-hand goods are often bought by the least advantaged members of the community who know that those items will have to be renovated before they can be used safely. I see no reason to deprive people of that opportunity. To do so would be a splendid example of well-meaning legislation worsening the lot of those whom it is designed to help.
That is not to say that no problem can arise over second-hand goods. We recognise the potential and that is why we propose to deal with second-hand goods that are particularly prone to pose risks to the safety of consumers by relying on regulations. I am confident that that balance is the best one to adopt and that it will survive whatever scrutiny the right hon. Member for Swansea. West and his colleagues submit it to in Committee.
The third part of the Bill makes it an offence to give misleading price indications. There has been a wide welcome for my decision to accept the proposals advanced by the Concordat during the passage of the Bill through another place. I shall certainly take to heart some of the observations made about the possibility of simplifying and shortening the code.
My hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) asked how we could repeal the 1972 Act in the Bill but not activate the repeal until a satisfactory replacement regime had been identified. The answer is that each provision in the Bill will need a commencement order before it is brought into effect. I have said that no commencement order for the repeal of the 1972 Act will take effect until a satisfactory regime has been devised and put in place.
Will the commencement order be subject to the positive or the negative resolution procedure? Will the House have an opportunity to debate the matter again before the 1972 Act is repealed?
We can consider that matter in Committee. I have no doubt that hon. Members on both sides of the House will have views to express.
I am grateful to my hon. Friend for those remarks.
I am grateful to all hon. Members who have contributed to the debate. The discussion has been wide ranging, but no more so than I would have expected on a subject as diverse as the protection of consumers. The Bill is important, both to industry and to the users of its products and services. It is important that we take time to consider its implications for us all, but I hope that those who pay attention to these matters will have been struck, as I was, by the concern expressed by my hon. Friends about the problems that face British industry and the extent to which it can obtain insurance for its products, compete effectively in the market place, and provide employment for our people. That was in contrast to the rather unworldly attitudes adopted by the right hon. Member for Swansea, West, who spoke for the official Opposition, and the hon. Member for Greenwich (Mrs. Barnes), who spoke for the alliance. In that spirit, I commend the Bill to the House.