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Product Liability

Volume 986: debated on Monday 16 June 1980

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asked the Secretary of State for Trade whether he will ensure that the additional cost to the consumer arising from new legislation to cover the provisions of the European Economic Community directive on liability for defective products will be fully explored before any conclusions are reached concerning the United Kingdom position on this directive.

The Government are carefully examining all aspects of the draft directive and will take account of all the implications in the negotiations with the Community.

Is my right hon. Friend aware of the varying estimates put upon the cost of this legislation, ranging from £200 million to £900 million? Does she agree that this will be quite unsupport-able both by consumers and by industry?

My hon. Friend is right to point out that the costs of this measure would be likely to be borne by consumers rather than by the companies concerned. I am certain that some estimates of the likely insurance costs have been greatly exaggerated. Insurance costs will vary between industry and industry and between company and company within the same industry, according to the risks involved. I understand, however, that the British insurance industry is confident that it can provide cover and that the cost of insurance, even for the more hazardous products, is not likely to have any significant effect on production costs.

Is the right hon. Lady aware that for the consumer who gets passed from retailer to wholesaler to manufacturer, with no one being prepared to accept the buck when a product has been bought, the implementation of the product liability directive would be the most major single advance that we could make at present? Will she—as I think she indicated just now—reject the wholly bogus arguments that are being put forward, that in some way this is so damaging that we cannot do it? Is it something that we must do.

As the hon. Gentleman will know, consumers' rights are now purely with the retailer. This should be made clear to them at every opportunity. The EEC proposed draft directive would put some of the responsibility, but not all of it, on to manufacturers.

In reply to the final part of the hon. Gentleman's question, I always reject bogus arguments.

In view of the potentially serious implications for all of British industry and commerce in this matter, will my right hon. Friend consider publishing the consultations of the Council of Ministers when it has considered this matter, so that there can be further detailed consultation? Will she assure us that there will not be any blind implementation of the EEC directive?

As my hon. Friend will be aware, the version currently being considered by the Council of Ministers is a revised draft. In view of the number of representations received, both from institutions in this country and from hon. hon. Members on both sides of the House, the Government must reserve their position until all the implications of the full effects of this revised draft are completely clear.

Bearing in mind that product liability has the backing of the Law Commission and of the Pearson Commission, following the thalidomide tragedy, will the right hon. Lady make a declaration of principle in favour of product liability, recognising, of course, that there are detailed problems to be sorted out?

I think that the hon. Gentleman already knows my views on this matter. Anything of benefit to consumers and which does not place a disproportionate burden on industry has my backing. What is important is to see that that balance is maintained.