Schedule 5 - Investigatory powers etc.

Consumer Rights Bill – in a Public Bill Committee at 9:45 am on 11th March 2014.

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This amendment and amendments 77 to 86 reflect the fact that enforcement action is sometimes taken under legislation under which the enforcer’s legislation is made, not under the enforcer’s legislation itself. For example, a breach of safety regulations under the Consumer Protection Act 1987 is an offence under that Act not the regulations.

Photo of Sandra Osborne Sandra Osborne Labour, Ayr, Carrick and Cumnock

With this it will be convenient to discuss Government amendments 77 to 86.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Amendments 76 to 86 concern the investigatory powers in schedule 5. They are minor, technical amendments that are necessary to address technical issues in the existing drafting of the schedule. They clarify provisions relating to a breach of the enforcers legislation and offences under that legislation. This reflects the fact that certain enforcement actions, such as enforcement notices and proceedings, may not necessarily be brought under the enforcers legislation. Such actions may instead be brought under the legislation under which the enforcers legislation was made. For example, a number of safety regulations—the enforcers legislation—were made under the Consumer Protection Act 1987. A breach of the safety regulations is not, therefore, an offence under the regulations—and under the enforcers legislation—but is instead an offence under the 1987 Act.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

I rise only to commend the Minister on trying to find a way through the convoluted nature of the regulations. I think we understand the distinction that she is trying to make, and we have no concerns about it.

Amendment 76 agreed to.

Amendments made: 77, in schedule 5, page 65, line 14 at end insert ‘, or

(b) legislation under which the enforcer’s legislation is made.’.

78, in schedule 5, page 84, line 9 leave out ‘under that legislation’ and insert ‘by the enforcer’.

79, in schedule 5, page 84, line 10 leave out ‘under the enforcer’s legislation’ and insert ‘by the enforcer’.

80, in schedule 5, page 87, line 7, after ‘enforce’, insert—

‘(ca) legislation under which legislation mentioned in paragraph (c) is made,’.

81, in schedule 5, page 87, line 36 at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

82, in schedule 5, page 87, line 42 after ‘(a)’, insert ‘, (aa)’.

83, in schedule 5, page 88, line 7 at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

84, in schedule 5, page 88, line 9 after ‘(a)’, insert ‘ or (aa)’.

85, in schedule 5, page 88, line 17 at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

86, in schedule 5, page 88, line 19 after ‘(a)’, insert ‘ or (aa)’.—(Jenny Willott.)

The explanatory statement for amendment 76 also applies to these amendments.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

I beg to move amendment 104, in schedule 5, page 74, line 37, leave out sub-paragraphs (3) to (5).’.

We have debated whether trading standards will remain to guide people in the new consumer landscape; this amendment refers to one of the powers that trading standards would have if it remains in existence. I was struck by the fact that the Minister proudly proclaimed that the changes were being made to protect civil liberties, including through the Protection of Freedoms Act 2012, but we have a concern. Paragraph 23 of schedule 5 grants enforcers the powers to enter premises. The Government have severely restricted the way in which that power, which has been used by trading standards for many years, can operate. It requires that trading standards give 48 hours’ notice before entering premises to conduct an inspection. [Interruption.] My hon. Friend the Member for East Lothian makes a quizzical face. Yes, that is one of the suggestions that the Government have made.

By scrutinising the Bill, we can see some clarity. We can see the alternative civil liberties argument that says that the reason we have trading standards is so that we may all live free from the fear of buying products that may be bad for us. Enabling a trader to have notice that an inspection might take place—and therefore to remove the goods that might be causing a restriction on our liberty—is the counter-argument from a civil liberties approach. It is no good saying that it is in our own interest and in the interest of our freedom—perhaps the hon. Member for Wycombe might want to look up Locke at this point, because I am sure Locke talked about this—if the behaviour of others curtails our freedom by default. Traders who mis-sell goods and seek to sell counterfeit goods undermine our own freedoms by undermining the social contract.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

In many other inspection regimes, one of the first things that gets said is that we should not do pre-arranged or pre-announced inspections. That has been the case, for example, with hospital and care home inspections. When there is a problem, the first thing that people call for is unannounced inspections, so it seems odd to be moving slightly in the other direction.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

I agree with my hon. Friend. The Government stated that the change is necessary because they have a number of concerns. On the one hand, they say that to allow trading standards suddenly to turn up unannounced would place a burden on business; on the other, they suggest that giving notice helps trading standards because it allows businesses to get the relevant information ready.

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough

Is this not a bit like Dr Doolittle’s pushmi-pullyu creature? Paragraph 23(4)(c) states that two working days’ notice must be given, but sub-paragraph (5)(c) states:

“A notice need not be given if…the officer reasonably considers that to give notice in accordance with this paragraph would defeat the purpose of the entry”.

Does not notice, by its nature, defeat the purpose of the entry? Giving somebody two days to get their act together—to clear up the rat faeces from the food establishment or to disappear the evidence—defeats the purpose.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

My hon. Friend is right. We all recognise the difference between a trading standards officer who contacts a business to say, “It would be helpful to have X or Y piece of information,” and one who contacts a business because of a concern that a breach of legislation is taking place on its premises and who does not want the effectiveness of the investigation or their ability to gather evidence to be undermined.

My hon. Friend said that the Bill might create confusion in seeking to repeal this pronouncement. It states that notice need not be given if the officer considers that it would defeat the purpose of a visit. The question arises: how will they know? Surely someone undertaking an investigation seeks to investigate, not to confirm. How will they know whether they have just cause until they get there?

We recognise that the Government have moved somewhat on this issue since trading standards said that they were concerned about the convoluted nature of the proposal. However, the convolution has not been adequately resolved. We tabled the amendment because we are not convinced that the schedule as drafted, even with the exemptions, will adequately encourage trading standards to have a relationship with businesses. It makes sense to ensure that somebody—for example, the owner of the business—is on the premises when trading standards seek to gather information, but that is different from when trading standards investigate a business because they are concerned that illegal activities are taking place.

The Government have included some exemptions. For example,

“notice need not be given if…the occupier has waived the requirement to give notice”.

I am sure that some businesses do that, but they are unlikely to be those that the officers want to inspect. There is an exemption if an officer suspects that a breach of the law has taken place, but why should we have that precondition? Equally, we do not want officers to conduct unnecessary inspections. As we have already said, we are talking about a skeleton service that probably does not have a lot of time. We want officers to inspect only if it is important that they do so. There is an exemption if it is not possible to issue a notice. Again, whether it is possible to issue a notice is open to interpretation.

Finally, there is an exemption if the enforcer has special surveillance powers. We know that they have substantial surveillance powers. The proposal fits in with concerns about the Regulation of Investigatory Powers Act 2000, which the Minister probed when she talked about the Protection of Freedoms Act. However, rather than meshing together, the provisions seem to conflict with each other. Trading standards said that they are concerned that the drafting of the schedule will confuse, rather than clarify what powers trading standards officers have.

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough

It does not merely confuse. It may damage satellite litigation—for example, a trader may want to claim that a trading standards officer has not reasonably considered that to give notice would defeat the purpose. That creates the environment in which these matters can be tested, rather than doing the right thing, which is to leave the power with the trading standards officer on behalf of the consumer.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

My hon. Friend, who has substantial experience of litigation, knows that as soon as the possibility of confusion is created, the possibility of a defence and the possibility of pressure are also created, which may not be in the interest of consumers and their freedoms. As I said, we see it as an issue of protection of freedom and civil liberties to ensure that people do not live in an environment where there are unsafe goods, because that undermines their freedom. That is why Trading Standards has said that it feels that

“the overall requirement to serve notice is counter intuitive and that deciding how a trading standards service should engage with business on ‘routine’ matters should be a matter for local authority not for statute.”

We have heard a lot in the Committee about how Opposition amendments and proposals for scrutiny will burden business. I am disappointed that the hon. Member for Braintree is not here at the moment; if he were, I am sure he would pop up now and robustly state that red tape and bureaucracy run counter to freedom and efficiency. This is a test. If we specify to such a degree the circumstances in which a trading standards officer may enter a premises, we create a burden and bind with council red tape an individual acting on behalf of consumers.

Let me give the Committee examples of where and how the legislation as it stands would come into play in those circumstances. Trading standards inspections find counterfeit goods, seek illegal activity or deal with issues such as rat faeces, which my hon. Friend the Member for Middlesbrough mentioned. I am ashamed to say that a number of fast food outlets in Walthamstow have been investigated recently and found to be horror shops, as far as I am concerned. I would be concerned if local residents were buying food from them, because the lack of cleanliness and the way they have stored goods in the buildings is a breach of consumer law. One would expect trading standards officers to be able to turn up unannounced to ensure that those properties were not in such a condition; or, if they were in such a condition and enforcement action was taken, one would expect trading standards officers to be able to return unannounced to ensure that standards were maintained, so that the public could have confidence in buying food from those properties, which were previously shut down.

There is concern that the Bill will restrict such inspections to only those properties for which there is prior suspicion of a problem. There will have to have been a report and a previous inspection for officers to maintain supervision of the premises. A trader would clearly not have acted in the interests of the public by letting their premises get into that state. Trading standards departments are concerned that they will have to have prior intelligence of a nature that meets the tests my hon. Friend talked about. If there was a threat of litigation from the trader, trading standards officers would have to have had a prior report; they would not be able to exercise their own judgment about the appropriate course of conduct.

When trading standards officers become aware of counterfeit tobacco, for example, being sold in a local community, but are not sure about which individual businesses are responsible for the sale, how will they investigate? If they have to give 48 hours’ notice to conduct a premises search to find counterfeit tobacco, I imagine that there would not many cigarettes left by the time the search took place. This defeat-the-purpose clause will undermine officers’ ability to investigate.

Legal practitioners from whom the Trading Standards Institute has sought counsel suggest that although the burden of proof of the test is quite low, there would need to be an actual link in the suspicion between a particular premises and the activity about which the officers are concerned. That could undermine their ability to investigate and follow leads. There could be difficulties if they had no evidence of previous non-compliance. If a trader trading in counterfeit goods finds a colleague with a business that has not been searched, will officers be hampered in searching that property if they are concerned that it is involved in illegal trade?

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough 10:00 am, 11th March 2014

On the issue of “reasonably considers”, is my hon. Friend aware—I am not—of any evidence of local authority trading standards officers exercising powers of entry for inspection and search unreasonably? It is in the interest of local authorities that businesses thrive; we want the good, clean, fair businesses to be successful. I am not aware of any abuse, but does she agree that if any were to occur, plenty of other legal remedies are available to a trader who feels unfairly or prejudicially targeted for inspections? Such a person or company would be able to make a complaint of maladministration against the council.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

Again, my hon. Friend, with his expertise in litigation, is right: other remedies are available. I am reminded of a concern that has been raised throughout the progress of the Bill through Parliament: that although the Bill is supposed to be a piece of consumer rights legislation, the Government have based it firmly on what the trader would consider a consumer’s rights to be, which is not necessarily the standard that consumers might expect.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

On that specific point, as I read and re-read the schedule, I am thinking from the point of view of a local person who reports their concerns only to be told, “We cannot do anything for a couple of days.” Consumers will be frustrated and their confidence dented.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

My hon. Friend is right, and her point echoes the debate on clause 77 about what guidance will be given to trading standards departments. I am sure the Minister will argue that the Bill contains exemptions, but Trading Standards is telling us that it is confused as to how that might operate—how one could use the defence that one had a reasonable belief that the notice would undermine the purpose of a visit. That is why Trading Standards says:

“In effect this is likely to kill the routine inspection which while in decline in any case”— because of reduced resources that trading standards departments have—

“is essential for building up the very intelligence base we need to develop our strategy on.”

Take a real-life example based on what my hon. Friend the Member for North Tyneside said. If a concerned consumer reported that a local newsagent was selling counterfeit tobacco, and trading standards had not previously had intelligence that that newsagent might be involved in such sales, 48 hours’ notice would have to be given of an inspection to see whether the tobacco was counterfeit. [Interruption.] My hon. Friend laughs, because it is fairly obvious what any trader with at least two brain cells would do to ensure that they continued to stay off the radar. Trading standards’ role and ability to investigate would clearly be undermined. Indeed, having received such a report, were trading standards officers to turn up at a newsagent on spec in order to see for themselves, would that be considered evidence gathering? Would they therefore be at risk that a trader could challenge them through litigation, as suggested by my hon. Friend the Member for Middlesbrough?

We think it would be simpler to remove the provision entirely from the Bill. We are also concerned that it might conflict with other enforcement powers. For example, the Food Standards Agency has investigatory powers relating to food labelling. Everyone will remember the concerns that followed the horsemeat scandal; how would existing powers conflict with the proposals in the schedule?

If the Minister will not accept our suggestion that the schedule contains a clarifying measure too far, will she explain how we can be confident that the provision will not mean that trading standards departments will be acting with one hand tied behind their back? What operational guidance will she give to trading standards? After all, the Business, Innovation and Skills Committee also felt that the provisions in the schedule were not an appropriate addition to the Bill. I look forward to the Minister’s comments on how sub-paragraphs (3) to (5) conflict with other legislation, the resultant confusion that might arise, and how she will resolve that.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

As the hon. Lady said, amendment 104 would remove entirely from the Bill the requirement for enforcers to give notice of routine inspections. I would like to clarify that we are discussing enforcers giving notice of routine inspections only.

A number of hon. Members have raised concerns. For example, the hon. Member for North Tyneside raised the situation in which a member of the public reported concerns to trading standards, so that officers had intelligence of a potential breach of the law. In those circumstances, they would not have to give two  days’ notice and would not have to keep people waiting around—it would amount to one of the exemptions. If the report gave rise to reasonable suspicion of a breach, they would not have to give two days’ notice. It would obviously depend on the circumstances and the information provided, but we are not saying that they have to give two days’ notice under any circumstances.

Businesses have told us that unannounced inspections are burdensome, particularly for small businesses. Opposition Members have raised a number of concerns during the passage of the Bill about the implications for small and micro-businesses, which are often those that have issues with unannounced visits—for example, if an owner is away from a premises when the officer visits.

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough

I am against the idea that businesses find this legislation burdensome. The whole point is to be a burden and to say, “We are inspecting”. They may find it a bit inconvenient, but that is the whole point. Such events do not happen every day; they are very infrequent and the whole purpose is to find evidence, which will disappear if you give notice. It is common sense.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The hon. Gentleman is totally misinterpreting what I am saying. The issue for many small businesses is that the right person is very often not there. The owner of a small or micro-business will often be away doing something else and the members of staff do not have access to the right paperwork, do not know where the information is and cannot answer the questions, so the process is a bit of a waste of time for the staff and the trading standards officer. Routine inspections ensure that the right staff are present to answer the officers’ questions and that the paperwork is ready. Where that is possible, it can often save the trading standards officer a second visit to get the answers he would otherwise be unable to get the first time.

Photo of Stephen Doughty Stephen Doughty Opposition Whip (Commons)

I am struggling with the Minister’s logic; that they can come back and make a second visit is exactly the point. Surely, we want to investigate matters thoroughly. Whether or not the trading standards officer has to come back a second time, they can do an initial investigation and if a staff member who has information is not there, they can demand that they come back and that information be provided. I do not understand the logic.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Clearly, it is much easier for trading standards officers to have to visit a business only once. Obviously, it is possible to come back multiple times, but we are talking about routine inspections, not situations where there is a suspicion that the law has been breached. In an earlier debate Opposition Members raised concerns about the resources available for Trading Standards. This is a way to ensure that Trading Standards can make much better use of its resources and more efficient use of its time—by not having to make multiple visits for routine inspections.

Photo of Fiona O'Donnell Fiona O'Donnell Labour, East Lothian

Can the Minister give an example of another regulatory framework that does not make use of unannounced inspections?

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Trading standards officers will still have the power to make unannounced inspections in a wide range of circumstances. We are talking about routine inspections. Even with these measures in place and the need to give two days’ notice, Trading Standards will have fewer constraints on entering commercial premises than the police have, for example. I do not think that anyone would suggest that the police are not investigating equally serious crimes. We are talking about giving notice for routine inspections. Trading Standards has a wide range of powers under which it can enter premises without notice if it has concerns about breaches in the law.

Photo of Fiona O'Donnell Fiona O'Donnell Labour, East Lothian

The Minister misses the point that those routine inspections are often when problems are uncovered. If notice is given it will really weaken their effectiveness.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Trading standards officers are very good at knowing the communities in which they work, knowing where there are likely to be concerns, picking up intelligence and identifying businesses where there may well be issues. We should not underestimate their ability to operate in their local communities and to know very well what is going on. To judge by my experience in my area—I am sure the hon. Member for Cardiff South and Penarth has had the same experience—they are extremely well informed about the businesses in their local community and they know which are more likely, and which are less likely, to have issues. They are extremely well plugged into their local communities.

We are talking about routine inspections, not inspections that take place when there are issues that may give rise to concern. The ability to give notice would improve the efficiency of enforcers; they would not waste their time and businesses’ time. The efficiency of enforcers would also be improved if safeguards were added to the use of some of the powers. Consolidating and simplifying investigatory powers and adding safeguards to the use of such powers will generate savings; we estimate that the net savings over 10 years will be £45 million to businesses and £2 million to enforcers, which are not insignificant sums of money. I can assure you, Mrs Osborne, that I do not intend to weaken the enforcement powers to tackle rogue traders.

In a previous debate, the Government agreed that it was absolutely vital that enforcers such as trading standards officers be able to investigate rogue trading and to take effective, efficient action to tackle those rogue traders.

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough 10:15 am, 11th March 2014

I am genuinely asking for clarification. The Minister is suggesting that what we are talking about here are routine inspections, as opposed to unannounced ones. I am struggling to see how that plays out. While she is having a think about that, may I give her an example, in answer to the question posed earlier, of an Ofsted inspector turning up at a school for an unannounced visit? He was told, “I’m sorry; the head’s not here. We can’t find the safeguarding papers. We haven’t got anybody qualified who can deal with it.” That is simply not acceptable. I think what the Minister is saying is that the circumstances that we are discussing are completely at odds with every other area of life in this modern day.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

It is unreasonable to compare a school with many staff, whom one would expect to be on the premises most of the time, to a small or a micro-business where, very often, the staff are out of the office doing jobs. It is unreasonable to compare the two.

On the first point that the hon. Gentleman raised, about the type of inspection, the Bill provides a number of exemptions, which hon. Members have highlighted and which I will explain in more detail, which allow inspections to be made without notice. One of the exemptions to giving notice—I think the hon. Gentleman highlighted this—is

“where giving notice would defeat the purpose of the entry”.

That is likely to apply in situations where the retailer may conceal items that breach the law, which was the point raised by the hon. Members for North Tyneside and for Middlesbrough. As the hon. Member for Walthamstow said, the Bill was scrutinised by the Business, Innovation and Skills Committee, and on this point I have accepted in full its recommendation to amend that exemption to make it clearer what the intention is. We have taken on board, following the pre-legislative scrutiny, the Committee’s recommendation in this area.

A trading standards officer who receives information that a travelling salesman is selling counterfeit vodka or cigarettes will know from experience that those items are regularly concealed during a routine visit, as the hon. Member for Middlesbrough highlighted. If the information that he has is that the salesman is selling the product to small independent retailers in the local area, the officer may not know exactly which retailers are selling the vodka or the cigarettes, but that does not matter. The officer will be able to use that local knowledge to help focus enforcement activity on the retailers in the locality that are likely to be selling that product. He need not know exactly which shop it is; he can do an unannounced inspection in the different shops that are likely to be selling it, so that he can identify which ones are in breach of the law. So the exemption

“where giving notice would defeat the purpose of the entry” enables the officer to carry out unannounced spot checks at those premises to find out whether the vodka or the cigarettes are being sold, and if so, to remove them from sale. One or more of the other exemptions from giving notice might also apply in such situations.

A number of hon. Members mentioned issues regarding the carrying out of food safety inspections. The powers in schedule 5 do not cover food safety legislation, and the Bill does not cover or affect inspections. The hon. Member for Walthamstow asked whether the provisions would conflict with the powers of the Food Standards Agency, and how the investigatory powers under the Bill would work with the FSA’s. If Trading Standards investigates a food premises, no notice need be given, and the FSA’s powers are separate from that. I hope that that clarifies her point.

The hon. Member for Middlesbrough, with his legal background, raised concerns about the threat of litigation. Enforcers must already comply with the correct investigatory practices and procedures to ensure the integrity of their investigations. They are already used to operating within the framework, in the same way that other enforcers have to comply with processes to ensure that they are able to secure successful outcomes for their cases.

The Bill includes a range of other powers that enforcers may use without giving notice, which can be effective in combating rogue traders. They include the ability to enter commercial premises to which the public normally have access to carry out test purchases or to observe the carrying on of business.

A point was raised earlier about how a trading standards officer would know whether they had just cause until they got there. Officers may use a number of sources of intelligence to help focus their enforcement activity and determine whether entry is required. For example, they may gather intelligence under the other powers in schedule 5, for example the power to observe the carrying on of business or to carry out a test purchase. From that, they will be able to identify whether any activity is going on that would allow one of the exemptions to kick in, and they will be able to conduct an unannounced inspection.

Far from inhibiting enforcers’ ability to investigate wrongdoing, the Bill supports an intelligence-led approach to enforcement to tackle rogue activities effectively. The measures will not only ensure consistency of powers of enforcement bodies in different circumstances but reflect what happens in practice. Trading standards officers have told us that they already give notice in between 12% and 19% of their inspections, so they are already used to doing that. I am sure we would all agree that targeting finite enforcement resources using that approach is a more efficient strategy.

Photo of Andy McDonald Andy McDonald Labour, Middlesbrough

The Minister just said that trading standards officers are giving notice already. Why on earth, then, are we here debating a provision that would tie their hands? How on earth will that be policed? Would we say to local authorities, “Produce your record. Let us see how many times you went in unannounced and how many you went in with notice”? We are getting ourselves absolutely entangled here, completely unnecessarily.

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Trading standards officers in a range of local authority areas already give notice. They have already identified that to be a more effective way of working with compliant businesses—give notice, get the right people there, and get a more effective outcome from the inspection as a result. We are trying to ensure that businesses, when they comply with the law, are able to rely on that, so that they know that it is a more efficient use of their time. It reduces the burden on businesses, and it makes a much more efficient use of the time of trading standards officers.

We are trying to strike a careful balance between ensuring that officers can take effective action when necessary, when they have concerns that the law has been breached, and ensuring that compliant businesses, about which trading standards officers have no concerns, are able to maintain a positive relationship with those officers, allowing both parties to make the most efficient use of their time.

Even with the notice requirement, consumer law enforcers will still have more powers to enter premises than the police. We are not talking about taking away significant powers from trading standards officers. The Government consider that the Bill’s approach strikes the right balance  between protecting civil liberties and compliant businesses and enabling enforcers to tackle rogue traders. With that, I hope that I have answered hon. Members’ queries.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

The case that the Minister has just made shows exactly why the Opposition are not satisfied that the exemption process in the Bill is clear. In fact, it seems further convoluted. The Minister talked about routine inspections, but then set out a number of powers that trading standards officers will also have to continue to inspect. Trading standards officers themselves say that they do not want this confusion in the Bill or to leave open this loophole which means that they could be open to challenge.

The Minister also raises the prospect of food safety officers, for example, doing an inspection without notice. If they inspect a newsagent’s premises because they think he is not storing ice lollies properly and find counterfeit cigarettes, can they seize them when they did not have previous intelligence about it? The Minister says that trading standards officers already give notice in situations where they want to speak to a particular person, such as the owner of a business. It seems that she wants to give maximum flexibility to traders, but to tie the hands of trading standards officers. I trust trading standards officers. We do not need to specify to such an extent how they do their job. Surely, at the very most, that could be an issue for guidance and for the wonderful implementation group to take on, rather than putting it into statute.

The Minister says that trading standards officers know well what is going on in their area. Our concern is that under the changes the Government are making, there will not even be a locally based trading standards officer to have the sensitivity that she suggests. We do not think there is a clear divide between the purposes of routine inspections and unannounced inspections, so we are not satisfied that those elements of the Bill should remain. Accordingly, we would like to test the Committee’s opinion and push the amendment to a vote.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 9.

Division number 10 Decision Time — Schedule 5 - Investigatory powers etc.

Aye: 6 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Amendments made: 78, in schedule 5,  page 84, line 9, leave out ‘under that legislation’ and insert ‘by the enforcer’.

79, in schedule 5,  page 84, line 10, leave out ‘under the enforcer’s legislation’ and insert ‘by the enforcer’.

80, in schedule 5,  page 87, line 7, after ‘enforce’, insert—

‘(ca) legislation under which legislation mentioned in paragraph (c) is made,’.—(Jenny Willott.)

The explanatory statement for amendment 76 also applies to these amendments.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

I beg to move amendment 103, in schedule 5,  page 87, line 28, at end insert—

‘(45A) The Secretary of State shall within three months of Royal Assent of this Act produce a report on the effect of an area enforcer, in order to protect consumers, to—

(a) issue enforcement orders, as set out in Part 8 of the Enterprise Act 2002, for traders who persistently cause detriment within a local area; and;

(b) enable the disclosure to consumers and other interested parties without legal liability of complaints they have received regarding traders when—

(i) a consumer has consented to their contact details and the nature of their complaint being shared with others who wish to raise concerns about a trader; and

(ii) the area enforcer considers the behaviour of the trader to have breached consumer protection regulations and it is in the public interest for their conduct to be known.’.

We have tabled this amendment to help the Government. I know they might not believe me, but we genuinely seek to be helpful. We recognise that in the consumer landscape we have been discussing this morning, there is the potential for gaps to arise at a local level in trading standards provision. Yet, as we have already discussed, most consumers experience detriment at a local level, with the traders that they encounter in their local communities. Many of us will have dealt with several consumers who have had problems with the same trader, so we may become aware of a trader in a local area who is behaving in a way that is of concern.

According to its last year’s figures, the Citizens Advice consumer service dealt with 837,000 unique issues with goods and services. Faulty goods accounted for 250,000 complaints, which added up to about £225 million of mis-spent money. However, Which? found that 40% of complaints about services were not resolved. Consumers are complaining in ever greater numbers, especially at local level, about an ever greater number of traders, and finding it difficult to get redress. The lack of resources locally—and we have already seen this morning that there is rightly concern that those resources will be stretched even further—means that Trading Standards, under the guise of efficiency, tends to focus its resources primarily on those conducting illegal trading.

We fear that some broader consumer protection measures may be at risk, such as those on unfair contracts or traders who are not fit purpose and who may confuse rather than clarify consumers’ rights. That is why we propose that one of the consumer rights that should be in the Bill is help for consumers to deal with rogue traders at local level. We all know of situations such as that of a rogue second-hand car salesman about whom we have seen a number of complaints. I have an example in my local community of a builder who clearly does not offer services of a satisfactory standard. Residents used old and new media to warn each other about him, but he continued to operate and tried a practice that  many of us—he declared himself bankrupt and then set up a new business, which continued to have the same problems. I have seen people in other parts of the country face exactly the same sort of issue.

We recognise that in these difficult, austere times, the ambition that Trading Standards could primarily take on such individuals may not always be the reality. We propose in the amendment a suggestion for how that gap could be bridged and how we could bring together consumers who have experienced problems with the same trader locally, to enable them to decide whether they wished to take up, collectively, some of the forms of redress in the Bill. The Minister has talked at length about the common-law remedies available to members of the public when they experience consumer detriment. We all know that the cost of legal action can be prohibitively expensive, but we also understand that if people can share that burden and bring a collective case, that in itself can strengthen both their resolve and their willingness to act, because there is someone to share the cost and the potential risk that comes with it.

We therefore believe that there needs to be a framework to enable local Trading Standards to disclose complaints about a trader in the local community to others complaining about the same trader, if they have had the consent to do so. We have a number of systems of disclosure in our local communities already, such as for domestic violence, which protects community safety and enables a proactive approach to the women—it is primarily women—and some men who are at risk. There are models for how that can be done, and we think that it would be worth exploring whether there is a role for Trading Standards, not necessarily in having to take forward every individual case, but in bringing together complainants. We will turn later in the Bill to the issue of private actions, under clause 80, which is primarily intended to be used at a national level. The amendment is about trying to understand how we might be able to help people at a local level.

I am sure, as I said, that many of us have dealt with cases in our constituencies in which a number of people have complained about someone but have been hampered by the inability to share information about the complaints. In such cases, people clearly have an interest in working together. I know of a case of one gentlemen who was going around looking for the signs for a particular builder so that he could knock on the doors of the people who were using that builder and advise them. I fear that it may be the builder the hon. Member for Plymouth, Sutton and Devonport had, but I certainly hope not. I am delighted to hear that his building works went so well and have been completed to a satisfactory standard, but what if they had not been?

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport 10:30 am, 11th March 2014

The hon. Lady may like to know that they have done an incredibly good job.

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

That is very good to hear. We have “rate my trader” websites and a number of informal mechanisms for hearing about good traders. The amendment would create a framework for bringing together consumers who have real concerns about a trader so that they could take action together. If in a year’s time what the hon. Gentleman thought had been fantastic work was leaking because the roof had not been laid properly, he could work with fellow consumers to bring a case.

Such a provision seems to be a way to bridge the gap. Although no one wants to see an American-style litigation culture in the UK, we want to give consumers a stronger ability to exercise their rights. If they have a right under common law to seek redress against an individual, they could do so collectively. If the trader was consistently behaving in such a fashion, it would strengthen their case. It could provide a format for providing information to ombudsmen and regulators. If a number of consumers were clubbing together to complain about a particular person or a particular trader, they could be flagged up as higher-risk.

We recognise that the disclosure system would need some safeguards against vexatious complainants. I am sure we have all dealt with constituents who have complained about a trader when it has not been merited. We would also want to prevent traders from using the system in an anti-competitive way to complain about their competitors. We therefore think that Trading Standards could act as that filter. Indeed, Citizens Advice is already piloting a scheme like that to try to bring together consumers so they can seek private redress. That is a very welcome development. We think it would have been appropriate to put provisions in the Bill to give consumers the right to act in that way and a mechanism to facilitate it.

The amendment simply seeks a report into how such a system could be put into place. It would not commit the Government to anything but is intended to explore how we might learn from that best practice from Citizens Advice and how we might link with Trading Standards to provide a disclosure mechanism in a way that would provide protection from litigation, because it would be without disclosure. How does the Minister see the potential for such localised action—micro private action, to coin a phrase—to help consumers exercise their rights where individually legal redress would be prohibitive? Someone who has just spent their life savings of £15,000 having their loft converted probably does not have the money to chase the trader if the work has not been satisfactory. Finding a way to share the burden with others who have been affected by that trader seems a fair and reasonable thing to do. I hope that the Minister will accept the amendment in the spirit in which it was intended, which is a suggestion for a policy that could be developed further. Does she see any merit in bringing consumers together? If not, can she tell us why she does not feel we have a role to play in helping people seek individual redress in that way?

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The amendment would require the Government to produce a report on the benefits of sharing the information in question. Under the Enterprise Act 2002 there is already a requirement on enforcers such as Trading Standards to inform the Office of Fair Trading of any intended proceedings and to give notice of criminal convictions and civil proceedings. There is also a requirement on enforcers to notify the OFT of the outcome of any such proceedings. The Government intend that the CMA will take over that role from the OFT.

The outcomes of criminal prosecutions and civil proceedings are already a matter of public record. That information is already publicly available. In addition, mechanisms are already in place that balance the right  to share information with the need to protect data. As we have discussed earlier, they are found in the Freedom of Information Act 2000 and the Data Protection Act 1998, which are overseen by the Information Commissioner, so there is already legislation that covers the matter.

Our reforms to the consumer enforcement landscape provide a better service for consumers through a more coherent approach to trading standards enforcement and by combining the power of the trading standards community to enable it to act in the wider interest. A number of the changes will pull together the way that Trading Standards operates and provide more co-ordination through the National Trading Standards Board and Trading Standards Scotland. Trading standards practitioners will pool intelligence in a way similar to the one that the hon. Lady highlighted. They will be better able to identify potential detriment and deploy resources to prioritise cases that have the greatest impact. So there is already sharing of intelligence across enforcement agencies, with cases prioritised up to national level, to pull that information together. The National Trading Standards Board and Trading Standards Scotland are required to produce quarterly and annual reports to BIS outlining their work in tackling consumer detriment, particularly in relation to rogue traders. That information is pulled together across the UK and is then reported.

The issue of collective redress and ensuring that action can be taken when a number of consumers are affected by the same trader comes under the enhanced consumer measures part of the Bill, which we shall come on to shortly. The enhanced consumer measures will provide more flexible tools for enforcers to tackle breaches of consumer law. A key element of those measures is giving consumers more information to enable them to make better purchasing decisions.

The measures could be used to require a business to advertise its breach of the law and what it is doing to put the situation right. That could be by putting information on their website or a notice in the press or on social media. My hon. Friend the Member for South Thanet raised that point during the evidence sessions at the beginning of the Committee process. Requiring that of businesses will mean that public information is available in the way that the hon. Member for Walthamstow highlighted. It will also incentivise business compliance and encourage consumers to switch to more compliant businesses if they are able to see more easily which businesses have been in breach of the law in the past.

Photo of Laura Sandys Laura Sandys Conservative, South Thanet

Do we recognise, through introducing this legislation, and through the attitude of BIS, that Trading Standards has not necessarily used all its tools to publicise the misdemeanours of companies that have contravened trading standards, and that we should encourage it to use some of the more public platforms?

Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I certainly think that an important part of the enhanced consumer measures is that they allow Trading Standards to better identify the most appropriate way to tackle breaches. In many cases it may well be about redress for consumers. Both my hon. Friend and the hon. Member for Walthamstow have highlighted the need for consumers to have information about a particular builder or rogue trader and to know that that person has breached the law before. That will enable them to change their behaviour and decide who  they are going to go with to build their extension, or whatever it may be. Being able to access that information and know whether a trader has been caught out by Trading Standards in the past is a very important part of the information that consumers need when making good decisions about who they are going to purchase goods or services from. That is something that members of both sides of the House agree on.

I do not believe that all complaints should be made public, because they may not all be justified or proven. As the hon. Member for Walthamstow highlighted, there may be instances of frivolous complaints to try to cause problems for competitors and so on, but where there is a problem or a breach of the law, enforcers already have the power through the Bill to publicise it. I agree with her that it is important that those powers are used.

As for whether we should consider introducing a collective redress for breaches of consumer law, which was the hon. Lady’s other point, I believe that the enhanced consumer measures offer a more flexible, balanced and proportionate approach. As well as getting redress, which we have identified as being as much as £12 million per year, it will lead to fewer businesses reoffending and consumers will have more information on businesses that breach the law, which is a critical part of making this work. The Opposition’s policy report on that highlighted the risks of introducing collective redress for breaches of consumer law, including the fact that consumers sometimes receive little or no benefit and are sometimes bound with a low settlement, and that lawyers’ fees mean that they can benefit as much as consumers.

A more proportionate way to take action is to introduce enhanced consumer measures, under which businesses may have to offer redress, if that is the most appropriate step forward. However, Trading Standards can do other things with those businesses as well, such as requiring public information, requiring them to join up to an ombudsman service, if appropriate, and improving their complaints procedures, and so on. That is a much more flexible way to tackle breaches of the law and provides a more appropriate measure to ensure redress for consumers and improvements to services and goods.

I hope that I have reassured hon. Members that information sharing is already in place through various mechanisms and that, in terms of collective redress, the enhanced consumer measures are a better way to do a similar thing without the potential disadvantages of a collective redress system. I hope that I have reassured the hon. Lady that no additional reporting requirements are required, because the information is already being made available

Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills) 10:45 am, 11th March 2014

I thank the Minister for her response. I feel that she has not quite understood the point that we are trying to make and I take responsibility if that is so. It is not about whether information is available, notifying people of criminal or civil proceedings taken by Trading Standards, but about the first, basic complaint that someone might make when they are concerned about the quality of a builder, giving Trading Standards the ability to say, “Well, actually, somebody else has come to us about this builder as well. They have given consent for their details to be shared with anybody else  who might have concerns about them, so that you, individually, can decide whether you want to work together in taking action against this trader.” That process of information disclosure is different from Trading Standards itself taking civil or criminal proceedings against somebody and that being reported to the Office of Fair Trading.

Whether consumers in a local area would seek FOI information from the Office of Fair Trading, or contact it to ask whether Joe Bloggs, builder in East Lothian had a number of complaints against him—that is what we are trying to get at—is a separate point. Most consumer detriment takes place at a micro level. We sought to encourage the Government to explore how that information could be made public.

I should like to pick the Minister up on the Enterprise Act, because I know first hand, bitterly, that there is no capacity for revealing organisations against which action is being taken. The Government will remember, 18 months ago, the OFT’s trumpeting loudly that it was taking action against the top 50 payday lenders. However, it could not tell us who they were because the Enterprise Act precluded disclosure of information about any ongoing investigation, and that investigation was perpetually ongoing. Indeed, some payday lenders that we knew must be covered claimed not to be, so there was confusion for consumers.

The Enterprise Act does not, perhaps, allow the transmission of information in the way that the Minister suggests. Either way, we were not seeking to expand collective redress locally; we were seeking a way to help consumers exercise their rights to individual redress under the current law and to find a way to work with others to do so.

I hope that the Minister will investigate this matter further, because there is a case for trying to find ways to help those people persistently affected by rogue traders, whether the second-hand car salesman or the rogue shop that is persistently selling goods that may not necessarily cause a breach and lead to criminal proceedings but is a source of concern. Groups of consumers locally could club together. Finding a way to facilitate that is separate from determining whether Trading Standards would take the issue up themselves.

I am happy to ask leave to withdraw the amendment, because we have made the point that an enforcement gap is developing. I hope that the Minister, in taking forward the legislation, perhaps even in the House of Lords, will return to the idea of being able to disclose, in a trusted way, who rogue traders are locally, not just through a rate-my-trader site. If people think that they have been sold a loft conversion that is not fit for purpose, other people may have been sold such a loft conversion, and the person having to knock on doors to find other people who might be victims of the same rogue trader needs support from Trading Standards. That is the point we are trying to make in the amendment.

Perhaps the Minister has misunderstood that we are talking about very local disclosure, as opposed to situations where enhanced consumer measures or the OFT’s successor, the CMA, might be brought in. Having made the point that there is an enforcement gap locally as a result of this measure, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 81, in schedule 5, page 87, line 36, at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

Amendment 82, in schedule 5, page 87, line 42, after ‘(a)’, insert ‘, (aa)’.

Amendment 83, in schedule 5, page 88, line 7, at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

Amendment 84, in schedule 5, page 88, line 9, after ‘(a)’, insert ‘ or (aa)’.

Amendment 85, in schedule 5, page 88, line 17, at end insert—

‘(aa) an offence under legislation under which legislation within paragraph (a) is made,’.

Amendment 86, in schedule 5, page 88, line 19, after ‘(a)’, insert ‘ or (aa)’.—(Jenny Willott.)

The explanatory statement for amendment 76 also applies to these amendments.

Schedule 5, as amended, agreed to.