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Director General Of Fair Trading

Volume 976: debated on Tuesday 18 December 1979

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6.6 am

I am happy, even at this hour, to have the opportunity to raise a matter concerning the salary of the Director General of Fair Trading and thereby to consider the possibilities for the protection of the consumer that are available to that distinguished gentleman in his work and through the efforts of his Department.

Although I am using the parliamentary procedure of considering the salary of the Director General, I am not to be taken as criticising either the existence or the amount of that salary. Nor am I attacking the efforts of this gentleman or of his staff—nor, indeed, those of his predecessor, the founder, as it were, of that office, when he was acting in that role.

I invite the Minister to tell the House how the work of the Director General of Fair Trading is to be strengthened, with especial reference to certain crucial aspects of that work. Although the Director General is an independent person running his own operation independently of the Department, the Minister may none the less be able, either here or through other channels, to inform the House and the country of the prospects of further advance. In other words, what is in the pipeline?

If the Minister finds that, because of the exigencies of the hour and the nature of the debate, he cannot inform the House in this way, I hope that he will make arrangements to do so as fully as possible by way of letter or otherwise. It is important that the House and the public should know exactly what is to be done and what the Director General and his office are to produce in the foreseeable future.

As the Director General of Fair Trading is in charge of what may be described as a quasi-quango, and as the Government are known for their quango-hunting activities, I believe that the House and the country would like an assurance that there is no intention to destroy the work of this Office or to hack away at its effectiveness by cutting its basic costs.

I hope that the Minister will give an assurance on behalf of the Government and that this will not be one of the occasions on which he says that we should ask the Director General himself. This is the responsibility of the Government, as the Director General of Fair Trading is the creation of a previous incarnation of Conservative misrule. Indeed, it has been said that he is one of the few useful products of an otherwise wretched regime. I have heard it said that the production of consumer legislation by previous Conservative Governments represented moments of lucidity in an otherwise crazy effort. I criticise neither the Fair Trading Act nor the Supply of Goods (Implied Terms) Act, which a previous Conservative Government created and on the basis of which one would have hoped that the Government would move forward. Therefore, I hope to receive an assurance that the Director General of Fair Trading and his Department can look forward to the support of their creators and that the Government do not intend to ruin that which they are trying to do.

This concern has a particular impact in view of the announcement from the Department of Trade that the advisory service for consumers is to lose the funds that it needs. That will be a terrible blow to the public and to those local authorities which have come to rely on this service being provided to their citizens. It will deprive the Director General and his department of one of the main sources of their information. Citizens' complaints are well handled and considered at those centres and are processed so that they may be fed back into the consumer protection machinery operated by the Director General.

I was appalled to find that the right hon. Lady who now has responsibility for this Department, which the unfortunate Minister has been dragged from his couch to defend, was one of the creators of that which she is in the process of destroying. I have a photostat copy of a most handsome document described as "Square Deal for Consumers", which was put out by an organisation which is not unknown to the Minister. I refer to the Conservative Political Centre. The document sets out in clear terms why the consumer advice centres are necessary. One of the progenitors of this excellent document is none other than the lady then described as "Mrs. Sally Oppenheim, MP."

The document gave great strength to the Consumers Association in its efforts to spread the consumer advice centre idea. I pay tribute—as I am sure that the Minister would like to do—to the Consumers Association for the tremendous work that it is doing in so many areas. I hope that the Minister will understand the nature of the destruction which the Government propose when they remove the grants at the end of this financial year, saying, as the Minister for Consumer Affairs did, that they do not believe the centres to be "cost effective"—whatever that may mean.

I can only tell the Minister that in the city of Leicester the centre does sterling work. It helps ordinary people with ordinary problems, and the information that is fed back through that centre to the Director General of Fair Trading is, I am sure, of great importance to him when tied in with the information from all the other centres.

The Leicestershire county council, in so far as it has any dealings with consumers, will no doubt co-operate fully with the Government in destroying what has been built, but the city authority, now run by very energetic Labour colleagues of mine, are distraught at the cuts being made and at the removal of much help that is available to ordinary people.

Assuming that the consumers' advice centres are to be destroyed, the question for the Minister—it is not one that can be left to the Director General—is what will be put in their place? How is the Director General to get his information, and how is the consumer to receive his help? What will be done by the Department of Trade to strengthen the work of the Director General of Fair Trading and his department in these circumstances?

I refer to three specific issues which are of deep importance to consumers and which I understand the Director General of Fair Trading together with the Department of Trade has in his sights. The first is quite a short point. There has been, through the Supply of Goods (Implied Terms) Act 1973 and later through the Unfair Contract Terms Act 1977, an attempt to deal with exclusion clauses to make them void in contracts for the supply of goods. They are, in general, also void in other contracts under the Unfair Contract Terms Act in so far as they do not "satisfy the test of reasonableness".

In each case we are referring to exclusion clauses in contracts for the sale of goods where the contract incorporates an implied term that the goods will be of merchantable quality. This term was originally contained in the Sale of Goods Act 1893. It is now incorporated in the Sale of Goods Act 1979, which received the Royal Assent last week.

There is great disquiet about the meaning of the word "merchantability". I know that this matter was dealt with in a written answer only yesterday, but, of necessity, written answers are less loquacious than their oral sisters. I trust that the Minister will be able to give us more information about this matter. What is his view of the definition of "merchantability"? Is he satisfied with the definition as it stands?

If he is not satisfied that sufficient protection is given through the current definition, what does he propose to do about it? If his answer is that we must wait and see what the Law Commission says because the Government will need to take that into account, can he say when he expects the Commission's report to be made and when can we expect action? In the meantime, is the Minister liaising with the Director General of Fair Trading on the protection of people? What is being done about the question of "merchantability"? We recognise the importance of the reports of Law Commissions. I hope that the Minister will take note of the reports and take action on them.

I hope that the Minister's answer on "merchantability" will not be that the Government are waiting for some action, or inaction, to be decided by our European partners. The answer "We are waiting for Europe" is beloved by those who wish to take no action. I paid tribute to the work of the Department when it was run by my colleagues. Unfortunately, that Department gave the same answer when responding to the next problem which I shall raise, that of product liability.

The Director General of Fair Trading appears to have almost an open brief under the Act when dealing with activities detrimental to consumers. He can take steps by making regulations or by leaning on those connected with the manufacture of a product. The Minister may feel that the Director General's powers are not strong enough and that he should have greater opportunity to take further steps. The Director General cannot, on his own, impose strict liability on producers of goods. The courts can do that. The courts in the United States have done so, as to some extent have the legislatures in France and Germany.

Will the Minister take steps to ensure that people such as those who suffered so dreadfully from thalidomide are protected by our law, or does he intend to leave such matters to the Director General of Fair Trading until the European Parliament, Commission or some other European body decides to take action?

I implore the Minister not to wait. We have had reports from the Scottish, English and Welsh Law Commissions recommending that we should introduce laws on product liability similar to those which operate in the United States. When the Commissions agree, there is at least a prima facie case.

The famous Pearson Commission on civil liability recommended the same action. Why should we wait for Europe before taking away from the Director General of Fair Trading an overall discretion of powers and giving direct power to the consumer to take action on his own behalf? That power is sadly lacking. It is necessary because the courts are so weak. Justice in this country is available through legal aid to those who have no money. Justice is available to the rich who can afford to pay for legal help. But justice is not available to a large section of our people—the middle income groups—because they cannot afford the justice that they require. As a judge said many years ago "The courts are like the Waldorf hotel—open to all."

The Government propose to remove the grants that enable ordinary citizens to obtain help from consumer advice centres. Even that avenue is to be removed. More responsibility is to be piled on to the Director General and his staff. I ask for an assurance that the Director General and his organisation will not be starved of the assistance and money that they need to do the work that has become increasingly important to the public.

The final area to which I must refer is that of the ordinary shopper and his protection—how the Director General of Fair Trading and his Department are able to help, and the limits on the help that they are able to give. I believe that a Department such as that of the Director General—indeed like a Department of State—is only as effective as its public relations allow it to be, and it is vital that the Director General should be encouraged to inform the public, with the help of the Department, of the limits as well as the powers that he possesses.

I shall take two specific examples of the way in which the public are deceived by the very existence of legislation that is much weaker than people consider it to be. First, the Unfair Contract Terms Act 1977 has a most unfortunate title. People believe that this Act protects them against unfair contracts, and that if they make a contract that is unfair they can go to some great officer of State, whether it be the Minister or the Director General of Fair Trading, who will be able to flap his wings and produce a remedy.

All of us in this House know that the Unfair Contract Terms Act is extremely limited in its application. It helps enormously where there are unfair exclusion clauses in contracts. What it does not do is protect the shopper against unfair bargains: nor does it give to the Director General or the Minister any powers to protect people against overpayment, against making bad bargains, or against buying goods in shops which they could buy much cheaper somewhere else. Particularly at this time, when people are out doing their Christmas shopping, they ought to be warned by the Director General, or by the Minister on the Director General's behalf, of the risks that they run and of the limits of the powers of authority to protect them, even today, against their own bad bargains.

The old rule used to be caveat emptor—let the buyer beware. It is sometimes said that it has now been changed to caveat vendor—let the seller beware. But in fact the balance is somewhere between the two, and the buyer must still note the limits on the powers of others to help her in her shopping. I say help "her" because, after all, it is the wife who generally does the shopping. It is the wife who shops around. It is the wife who gets berated by her husband if she pays too much. It is the wife who bears the burdens of the purchases physically, and very often it is the wife today who works and earns the money to pay for that shopping.

I ask the Minister, at this Christmas time, to warn shoppers of the dangers of over-confidence in the powers of the law. At the same time, I hope that the Minister will regard it as part of the job of the Director General—a power that ought to be strengthened—to ask shoppers to make use of the powers that they have through the law at this Christmas time. If, for example, they find that goods are offered elsewhere at a price lower than that at which the shopkeeper is prepared to sell them, they should not just pay the higher price and make no complaint. They should tell the local consumer protection people, the local weights and measures people, the local fair trading people, and so on, of the way in which they have been treated, because that is their right. Whether or not the local authority chooses to call in the fair trading officers to protect the public, they are, nevertheless, part of the overall protection provided by successive Governments, of which the Director General of Fair Trading and his staff form such an important part.

I ask the Minister to use this opportunity to strengthen the work of the Director General in that way, and to use this opportunity to warn people who are thronging the shops during this last week before Christmas to take care, to protect themselves against bad bargains and to use their strength to ensure that the law as it stands is enforced.

I hope that the Minister can give the assurance that the steps that have been taken regarding exclusion clauses in contracts will also be enforced. Indeed, the Minister will know from what was said at Question Time recently, including on answer to a question from myself, that it is an offence for manufacturers to include in the contracts that they put forward to consumers exclusion clauses that are unenforceable and void and that steps could be taken to deal with people who behave in that way.

I should like to ask two questions in that regard. First, can the Minister answer the question that I put to the Minister for Consumer Affairs? How many people have been prosecuted for behaving in this unlawful manner? If he feels that that is an unfair question to ask at 6.30 in the morning and that he would require at least until 7.30 to get the answer I accept that. However, I hope that he will ensure that the answer is sent to me as soon as possible, because the public are entitled to know how that rule is being enforced.

Secondly, can he say whether the Director General of Fair Trading, in the exercise of his powers, is leaning on manufacturers, by other routes, to stop the pernicious practice of including in documents exclusion clauses that are not permissible and are unlawful? What is he doing to warn the public that they should take no notice of exclusion clauses in contracts for the supply of goods, when those clauses purport to take away a right which the ordinary person has under the Sale of Goods Act, such as rights to goods that are not defective and rights to goods that are "suitable for the purpose supplied"?

There is one area in which the Director General has no powers, and presumably can have no powers. However, it is an area in which he should share in the responsibility for informing the public. At this time of the year not only are there just a few shopping days left to Christmas; there are also only a few shoplifting days to Christmas, and the thieves are very busy.

None of us in the House has the least sympathy for a person who goes thieving. If he is caught, he deserves the punishment that he should get. We all pay for the activities of those people by an increase in the price of the goods that are sold. All prices take into account what is sometimes referred to as "shrinkage". We know that the law should be enforced in that area and that consumers are entitled to be protected against those who force up prices by stealing. Shoplifting is stealing by another and no more acceptable name.

On the other hand, I hope that the Director General of Fair Trading will have turned his sights on to the unfortunate, forgetful shopper, who in these days of self-service operations is so likely to be wrongly charged with shoplifting. Can any of us say that we have never left a shop with something in our hands for which we have not paid? It is so easy to take goods off the counter and walk out forgetfully or to put goods into a bag and forget to pay for them.

I know of a recent case of a woman in a supermarket doing her Christmas shopping who had goods in her arms and who suddenly remembered that she had not put any money in the parking meter. She rushed out, with her arms still full of goods unpaid for. When she arrived at the car there was a tap on her shoulder and the store detective said "Madam, have you paid for these goods?" She replied "Oh, I am so sorry." If that woman is prosecuted, that statement makes her chances of being acquitted slight.

Over 50 per cent. of those charged with shoplifting and who plead not guilty are acquitted. Perhaps some should have been convicted, but some of those who are convicted should have been found not guilty. While a shoplifter takes the prosecution and the punishment that follows as part of the hazards of his unpleasant trade, the innocent person is often broken in mind, spirit and heart before the case comes up for trial. It is no answer to let the court decide. Long before the case reaches court the person may be ruined—as we in the House know from the experience of colleagues and friends who have been caught in the dreadful net of misery.

Perhaps the Director General could lean on supermarkets to try to persuade them to provide bag parks, such as those in supermarkets in the United States. At least people should be warned at Christmas time that if they take goods off counters those goods should be placed into the wire baskets that are provided and not into their bags until they have been paid for. I advise people, when there are no wire baskets available, to hold the goods above their heads. My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) laughs, but if people hold goods above their heads at least it cannot be said in court that the defendant "furtively held the goods above his head".

I have often seen the great sadness of these cases. Ordinary people are caught in a way that destroys their whole being. Those of us who have been trying to get convictions for shoplifters and avoid the prosecution of innocent people ask the Minister to press the Director General to come up with an answer.

It is all too rare that one turns to Scotland for advice and guidance, but I pay tribute to the Scottish legal system, under which there are no private prose- cutions. Prosecutions are brought by the police. In this country it is often left to the shopkeeper to decide whether he will prosecute or not. In many areas of London, for instance, the decision is left to the owner of the shop. I believe that the decision should be taken on behalf of the public by people who are answerable to the public. It is no answer to say that if the court acquits the person gets off. If one is innocent one may be acquitted, but the scars of the court experience never go.

It does not matter whether the individual is a Member of Parliament or an ordinary housewife or citizen; he can be totally ruined by what happens. The good name of the ordinary private citizen is just as much damaged when it appears in the local press that he or she—and probably she—has been charged with shoplifting as is the reputation of a great public figure who is charged with an offence of which, in due course, he is acquitted.

As we approach this Christmas season, and as this is the last opportunity for private Members to raise matters on the Consolidated Fund, I ask the Minister to exercise a spirit of genial kindness. Even at this late hour in this miserable year of the Government's office, when all other than the wealthiest are to suffer, I ask him at least to throw some crumbs to ordinary buyers.

The Government should say "We will not deprive the Director General of Fair Trading and his staff of their powers by cutting their money. We will think again about consumer advice centres and the work that they do for ordinary people and the information that they feed through to the Director General. We will try to protect people more against goods that are not of merchantable quality and give rights this coming year, through the Director General or otherwise, to those who suffer death or injury through defects in produce. In the meantime, we will inform Christmas shoppers of their rights and help them obtain and enforce those rights, whether it be directly through the Direct General or through the powers that the Minister and his Department exercise themselves"

6.41 a.m

I thank the hon. and learned Member for Leicester, West (Mr. Janner) for his kind reference to the Director General and the way in which he discharges his duties.

Looking at a list of the functions of the Director General and the Office of Fair Trading, one realises the extent of those responsibilities. Under the Fair Trading Act 1973, which established the Office of the Director General of Fair Trading, the Director General was given wide-ranging responsibilities in the area of competition policy and general consumer protection. These duties have since been extended by the Consumer Credit Act 1974 and the Estate Agents Act 1979, and will be further extended by the Competition Bill.

The main responsibilities of the Director General include taking action under the restrictive practices legislation, including keeping a register of such practices, advising on and implementing the monopolies and mergers policy, advising the Secretary of State on consumer policy, making proposals for outlawing business practices that are harmful to consumers, taking action against traders who persistently breach the criminal law or neglect their civil obligations to the detriment of consumers, implementing controls on consumer credit, including administering the licensing system, operating the negative licensing procedures under the Estate Agents Act, negotiating voluntary codes of practice with trade associations and providing consumers with information and advice. That list illustrates the wide range of duties covered.

The hon. and learned Gentleman asks me to say how this work can be strengthened. The Director General decides his priorities for future action, and I know that he will be glad to indicate to the hon. and learned Gentleman—and write to him, if he so requests—the priorities that will govern his actions over this wide range of matters during the coming year.

The hon. and learned Gentleman referred to the Office of Fair Trading as a quango-like organisation and he asked about the resources allocated to the Office As he knows, the resources allocated to all Government Departments and their associated agencies are under review. I can certainly assure him that the Office of Fair Trading will continue in being, and it will continue to discharge its im- portant functions. Like all agencies and Government Departments, it must review its functions in the present stringent economic conditions.

The hon. and learned Member referred to some matters which came within the budget of the Director General and certain others which did not. He quoted the recent statement of the Minister of State in my Department about consumer advice centres. I was happy to note his comments on the work done by the Leicester centre. I know he realises that, because of the limitation that I have mentioned, it would not be appropriate for me to talk at length about policy on advice centres on this occasion. But the Minister of State is anxious to put extra emphasis on the work of the citizens advice bureaux. These agencies have also done good work in the area of consumer advice.

The hon. and learned Member then raised the subject of product liability. I must emphasise that the Department of Trade has consulted large numbers of representative bodies about the latest draft of the EEC product liability directive. It is expected that the EEC working party will begin detailed examination of that directive next year. The United Kingdom delegation will playa full part in these discussions, and it is hoped that agreement will be reached on a text which will provide fair protection for injured consumers without imposing unacceptable burdens on industry.

I make it clear that the Director General has no power to propose a change in the law on product liability, and it would be inappropriate for the United Kingdom to act unilaterally. It is necessary for us to act in parallel with other countries.

Can the Minister explain why it is inappropriate for this country to act unilaterally? Already there are product liability laws in France and West Germany, both of which are members of the EEC. Also, there are much stronger existing laws in most American states. Therefore, why should we not take action now and let the EEC follow us for a change?

I should like to debate this important matter in great detail, but this responsibility falls strictly on the Department of Trade; it is not part of the duties of the Director General. I must not stray too far out of order on this occasion, much as I should like to follow the points made by the hon. and learned Member.

The hon. and learned Gentleman referred to the Unfair Contract Terms Act 1977. This is a part of our civil, not criminal, law. It prevents the supplier of goods from depriving the consumer of certain basic rights, including those under the Sale of Goods Act 1893, by rendering void any conditions of sale that purport to exclude liability for negligence resulting in death or personal injury and by enabling the courts to test the reasonableness of exclusion and indemnity clauses in a wide variety of other circumstances. It also provides in a similar way that the supplier cannot deprive the consumer of his rights under earlier legislation in relation to the fitness, quality and description of goods under contracts for hire, contracts for exchange and contracts for work and materials.

Since the 1977 Act is part of the civil law, it does not create any offences. A retailer, for example, who purports to exclude his liability for negligence in respect of death or personal injury will fail to achieve his object since the Act provides that this is an inalienable right. He will not, however, commit an offence under the 1977 Act and cannot be prosecuted under that Act. Although the Unfair Contract Terms Act 1977 does not create an offence, it is open to the Director General of Fair Trading and the Secretary of State to act against specific consumer trade practices that adversely affect the economic interests of consumers.

If, therefore, the Director General felt that the economic interests of consumers were prejudiced by retailers purporting to alienate consumer rights contrary to the 1977 Act, he could, under section 14 of the Fair Trading Act 1973, refer the practice to the Consumer Protection Advisory Committee indicating that he proposed to recommend that the Secretary of State should exercise his powers under the Act to prohibit the practice. If the committee agrees that the practice is detrimental to the economic interests of consumers and that it should be prohibited, the Secretary of State can then make an order under section 22 of the Fair Trading Act prohibiting the practice.

These procedures were followed in the case of certain practices contrary to the spirit of the Supply of Goods (Implied Terms) Act 1973. As a result, the Consumers Transactions (Restrictions on Statements) Order 1976 made it illegal for retailers to display notices that purport to deprive consumers of certain inalienable rights.

The Director General has already shown, therefore, that he is prepared to invoke these procedures to make it illegal for those involved to mislead consumers about other rights. In July 1978, he issued a very strong warning to shopkeepers and traders to stop displaying notices in their premises or using terms in contracts that could confuse or mislead consumers about their rights. If the Director General's further inquiries showed that consumers were being misled on a large scale, he could use his powers under the Fair Trading Act to propose that the use of such clauses should be made a criminal offence.

However, the Director General has not so far obtained sufficient evidence of abuse to justify his referring the matter to the Consumer Protection Advisory Committee.

The hon. and learned Gentleman referred rightly to Christmas and the January sales, which is clearly the time when consumer expenditure is at its height. He fairly cautioned shoppers about the limitations on powers of others to protect them in all circumstances. I thought that he used some wise words. Undoubtedly, the position of consumers has been strengthened as a result of the measures that I have mentioned. The benefit of those measures applies at Christmas just as much as it applies throughout the year.

I agree, nevertheless, that advice should be given to those customers about to buy some apparent bargain that they should think before they buy. If the customer sees any notice disclaiming responsibility for defects in the goods, advice should be given to think twice before he buys. If, however, he buys goods and subsequently they prove to be unsatisfactory, he ought to consider whether the exclusion clause is void as a result of the Supply of Goods (Implied Terms) Act 1973 or the Unfair Contract Terms Act 1977. In that respect, if he wants advice or help, he should approach his local citizens advice bureau or the trading standards officers, who are often helpful.

The Minister said that the buyer should consider whether the clause is void. The average buyer does not know anything about the clauses or where to go. His only hope is to go to the consumer advice centre. That is why I urgently request the Minister to speak to his right hon. Friend the Minister for Consumer Affairs to consider whether in the circumstances the question of the protection of shoppers by these centres can be reconsidered. It is no use telling the shopper what he or she should consider. The average shopper has not a clue. I hope that at the very least the Minister will tell the shopper what his or her rights are as against the shop, not the manufacturer.

The hon. and learned Gentleman is right to indicate that these are technical matters and that advice is necessary. I have emphasised the importance of the citizens advice bureau and of trading standards officers in that respect. I note what the hon. and learned Gentleman said about the consumer advice centres. They are not spread evenly throughout the country. They exist in some towns. Indeed, the hon. and learned Gentleman has been complimentary about the service that has been provided in Leicester. The citizens advice bureau provides a more widely spread service than the consumer advice centre.

I noted carefully the hon. and learned Gentleman's comments on shoplifting. I realise that what he said came from his wide professional experience in dealing with it. I had sympathy with some of the examples that he gave of hard cases in that respect. But the Director General of Fair Trading does not have responsibility in matters involving the criminal law. I know that a great deal of thought has been given to the definition of offences in this respect and that the hon. and learned Gentleman understands the complexity of these matters, but this is a Home Office responsibility; it does not come within the direct responsibility of the Director General of Fair Trading.

Again, I thank the hon. and learned Gentleman for his complimentary references to the Director General of Fair Trading and to the work of the Office of Fair Trading.

Question put and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House; immediately considered in Committee pursuant to order this day; reported without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 93 ( Consolidated Fund Bills) , and agreed to.

Bill accordingly read the Third time and passed.