Consumer Rights Bill

Public Bill Committee, 13 February 2014.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Before we begin our line-by-line consideration of the Bill, some explanation might be useful to those relatively new to Public Bill Committees. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate; amendments grouped together are generally on the same or a similar issue.

A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye to speak on the amendments in the group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I will call the Member who moved the lead amendment again; before they sit down, they will need to indicate whether they wish to seek to withdraw the amendment or to press for a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know. I will work on the assumption that the Government wish the Committee to reach a decision on all Government amendments.

Please note that decisions on amendments do not take place in the order in which they are debated, but in the order in which they appear on the amendment paper. Where this is not already indicated on the selection list, I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debate on the relevant amendments. I hope that explanation is helpful.

Clause 1 - Where Part 1 applies

Jennifer Willott (Liberal Democrat, Cardiff Central)

Thank you, Mrs Osborne, and I welcome everyone to what I am sure will be a fascinating few weeks of our lives together.

The clause sets out the scope of part 1 of the Bill, which applies where there is a contract between a trader and a consumer, and the contract is for the trader to supply goods, digital content or services. Successive Governments have regarded it as important to allow businesses freedom to make contracts with each other without guidance from regulation or Government intervention. It would be a significant departure if we changed that, which is why we are not extending the definition to contracts between two traders. Business-to-business contracts and consumer-to-consumer contracts will still enjoy existing protections, in particular under the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982 and the Supply of Goods (Implied Terms) Act 1973.

The Bill does not set out the rules that determine how a contract is made, which means that if a consumer has entered into a contract—however it was made—he or she can be assured that the contract will attract the protections provided by the Bill. Consumers’ protection is not limited just because they have not signed a written contract.

Importantly, the clause also sets out how part 1 applies to a mixed contract, which is important because the Bill sets out separate rights and remedies for goods, digital content and services. If a consumer has entered into a contract to purchase a mixture of those, he or she will have the assurance of knowing that such a mixed contract is nevertheless covered by the Bill and will know which part of the Bill to look to for the relevant rights and remedies.

Stella Creasy (Labour, Walthamstow)

I echo the Minister’s comments about looking forward to an enjoyable number of weeks together discussing the merits of consumer rights in the country. Labour Members are delighted at the opportunity and, cognisant of the fact that in this country we often only get the chance to get our consumer rights legislation right every couple of decades, it is important that we do get things right. We want to see the Bill progress, but as the best piece of consumer legislation possible.

The clause is a technical one about the beginning of the contract. We have tabled amendments to a number of clauses to reflect our concerns and to tease out how the Bill will be implemented. We are not opposed to clause 1, although we have some concerns. I seek some guidance, Mrs Osborne, because there are amendments to a number of other clauses that relate to contract issues, although they appear to have been listed with the wrong clause. I seek your direction about how to clarify that now, before we move on to the clauses that we want to debate. I am talking in particular about clause 9, which has amendment 4 associated with it, although it is an amendment to clause 10.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

They have simply been grouped together. That is the selection, which is what we go by to discuss similar issues.

Stella Creasy (Labour, Walthamstow)

That is helpful. In that case, I see no reason to delay the Committee further.

Clause 2 - Key definitions

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 1, in clause 2, page 2, line 12, at end insert—

‘(b) those who represent businesses with fewer than ten employees and are purchasing goods or services for use within their commercial activities will be considered consumers.’.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

With this it will be convenient to discuss new clause 1—Consumer protection for small business operations—

‘The Government shall publish a report within three months of the enactment of this Act to set out how businesses with fewer than 250 employees can secure appropriate consumer protection in their purchase of goods and services for use within their business operations.’.

Stella Creasy (Labour, Walthamstow)

Although we said that we did not want to debate clause 1, the Minister said in her introduction that the Bill was about relationships between businesses and consumers, and discussed the concept of a consumer versus the concept of a trader. The Opposition agree that it is important to have clear definitions. However, we are concerned about the growing debate about where certain types of businesses fit into the discussion. We think that debate is important.

We have tabled a number of amendments to tease out what the Bill will mean for consumers who are also businesses. We are all cognisant of how important small businesses are to our society and our economy. We must ensure that when we introduce new legislation or tidy up legislation, as the Bill is intended to do, we do not inadvertently exclude a category of businesses. Amendment 1 pertains to micro-businesses—businesses of fewer than 10 people, often sole traders—and new clause 1 pertains to small businesses of fewer than 250 employees.

I am sure that Members on both sides of the Committee will have comments and concerns about this issue. Let me set out why we think it matters. Small businesses create more than half the new jobs in this country and are responsible for the vast majority of our GDP. For small businesses to succeed, it is crucial that they have protection in law so that they are not encumbered by problems to do with purchasing. We must therefore find the best way to provide that protection.

One of our concerns, and the reason why we have tabled the amendment and new clause, is that the presumption that all businesses are able to interact with other businesses in the same way does not bear scrutiny. We want sole traders and micro-businesses to be considered consumers for the purpose of the Bill. A sole trader may be a new landlord or a new business person setting up a home office and looking for goods for it, such as chairs or a kettle. Hon. Members will remember the comments from the British Retail Consortium on Tuesday about the person who buys a kettle to use at work. A person who works or trades from home will have a kettle—I am sure we will all want a cup of tea this morning. [Interruption.] The hon. Member for Spelthorne is offering one, in a consensual way, as always.

How would the Bill apply to that example? Would the person buying a kettle for their home office be classed as a consumer—a private individual—or as a business? As the Bill is drafted, they would have to buy it as a consumer. The question is whether there is a gap there. If the person has a problem with the kettle—if it is faulty, explodes or does not make the requisite number of cups of tea—do they have the right as a consumer to return it? If they do, and the trader knows they bought it for their home office, will that affect their rights? That is the issue that we are trying to tease out this morning.

Steven Baker (Conservative, Wycombe)

The hon. Lady is making a compelling case about the purchase of kettles. However, has she thought about how her amendment would relate to things such as interest rate swaps? We have had endless discussions about when a business is and is not a sophisticated purchaser. Will she need to amend her amendment to take into account the complexity of the products that are sold?

Stella Creasy (Labour, Walthamstow)

The amendment is about those kinds of issues. It would ensure that under the Bill, which covers issues of consumer protection, micro-businesses were treated in the same way as other businesses. A micro-business—a business of fewer than 10 people—should have the same capacity to debate and discuss contracts as a large business.

Steven Baker (Conservative, Wycombe)

The point is that there were businesses larger than a micro-business that did not understand what they were buying with interest rate swaps. If the product is more complex, it may not be enough to assume that 10 people is the right boundary.

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman makes my point; that is why we tabled the new clause as well. I encourage him to look at both. Amendment 1 is about micro-businesses. There is a strong and compelling case for treating them as consumers for the purpose of the Bill, and amending it accordingly.

Andy McDonald (Labour, Middlesbrough)

Does my hon. Friend agree that micro-businesses are in the same space as individual consumers? It is one thing for them to go about their core business, but when they conduct other business activity in furtherance of their trade they do not have the expertise or resources to devote energy and time to exploring the quality of the goods they buy. Surely it would be a freedom for those businesses if they were to be relieved of that sort of burden and if they could rely on the same qualitative standards as other consumers and businesses.

Stella Creasy (Labour, Walthamstow)

My hon. Friend hits the nail on the head. Another example might be someone setting up a new business. On Tuesday night I met a fantastic young woman, Nadine, who is setting up an export business, exporting to Nigeria. At the moment she is the business; but she has some people helping her. It is a micro-business. If she were to purchase a mobile phone contract for the business, she could get a business contract with any mobile phone company; but as she represents perhaps just two or three people, would she get the same sort of deal, and be entitled to the same sort of protection, as a large business? Under the Bill a business contract would not afford her that protection.

When firms negotiate with other businesses, they are not necessarily aware of how big they are. There is a disconnect between understanding the needs of micro-businesses and understanding how to help them and relieve them of the burden. I appeal to the instincts of many coalition Members regarding the importance of reducing regulation. It is a question of clarifying the fact that those businesses are consumers.

Steven Baker (Conservative, Wycombe)

Would the hon. Lady be content for her amendment to catch a micro-business employing fewer than 10 people that happened to be a hedge fund with assets under management of, say, £2 billion?

Stella Creasy (Labour, Walthamstow)

It is an interesting question, but I am curious; perhaps the hon. Gentleman feels he is on the wrong side if he is concerned about how much money a micro-business makes, rather than whether the law stands up to scrutiny with respect to the size of a business, and whether it is fair and reasonable to expect a micro-business to deal with the complexities of consumer law and business-to-business exclusion contracts.

That is why we have tabled new clause 1, to deal with a second group of small businesses—larger ones that might well employ a lawyer. They might make large sums of money and be able to get legal advice from counsel on their consumer purchases. We want to test that. I appreciate that the Government are already in negotiations with organisations such as the Federation of Small Businesses. The new clause would simply set a time scale for the discussion.

As I have said, the Opposition are aware that there are few legislative opportunities to make progress on such issues, so it is right and proper to try to make the legislation the best it can be. We want clear guidelines and we want to support small businesses by establishing that we understand the case in relation to micro-businesses and recognise the need to resolve the issues affecting smaller businesses with fewer than 250 employees. We appreciate that things are not as simple as they are with micro-businesses.

I can provide some examples, which may allay some coalition Members’ concerns about the categories involved and show what already happens. In some contexts the law already treats small businesses as consumers. The legal and financial ombudsman services treat micro-businesses as consumers for the purpose of their complaints-handling process. They acknowledge that in individual cases, smaller businesses should effectively be treated as if they are in the same position as consumers.

The legal ombudsman service is free to all members of the public, very small businesses, charities, clubs and trusts; it recognises that very small businesses are not in the same position as larger or, indeed, major ones to obtain expertise in dealing with the relevant issues—whether they concern kettles, tables, chairs or interest rates.

The amendment and new clause are about securing answers to the questions I have outlined, so that we do not ask small businesses to go blindly or without clarity into consumer regulations, or expect a newly set up trader such as Nadine to struggle to exercise her rights if she buys a faulty mobile phone contract while she is negotiating with her contacts in Nigeria about setting up her business.

Andy McDonald (Labour, Middlesbrough)

On the issue of what are perhaps the unintended benefits for micro-businesses such as hedge fund managers, I never thought I would find myself saying this, but would it not be entirely logical to extend the benefits of good consumer law and protection even to hedge fund managers while they go about their business, as we would to a small greengrocer whose kettle in the back of the shop broke down? Would it not be entirely consistent to say that we want the same standards to apply to all micro-businesses, so they can all have the benefits?

Stella Creasy (Labour, Walthamstow)

I absolutely agree with my hon. Friend. One would not want the greengrocer whose kettle breaks down to go into Argos and the traders there to know that, although the greengrocer may be using that kettle in their back room, a loophole exists that allows them to refuse to fix the kettle because it was not actually a consumer purchase. That is a theoretical possibility under the Bill as drafted, without the clarification that some businesses should be treated as consumers in certain instances. We believe that a micro-business is such a case.

This issue is not only such businesses’ private purchases. We know that small businesses have genuine concerns about some of the tariffs they face on major products or services such as energy, life insurance and loans. Again, the idea that a micro-business can negotiate with a bank manager or an energy company in the same way that a major business can does not hold water. I am sure that when Members, of all parties, talk to small business owners in their constituencies—as I am certain they regularly do—they hear these concerns and expressions of frustration that it is not a fair fight, because such businesses are faced with huge amounts of regulation and an unequal ability to negotiate. It is all very well saying that there might be “business contracts”, but not all businesses are treated equally.

Amendment 1 would give that protection to micro-businesses, so that we put them on a level footing with consumers. They should then be able to enjoy all the consumer protections that the Bill will provide. New clause 1 also says to slightly larger small businesses, “We have an answer for you on this issue. We will make sure that we clarify this element of the law within 12 weeks of the legislation being passed.” That means that such clarification can be absolutely informed by the work the Federation of Small businesses is doing, and by some of the concerns the CBI and the British Retail Consortium raised with us on Tuesday.

These amendments are about giving people the confidence that we understand and share their concerns, which I know Members on both sides of the House have heard expressed by businesses in their constituencies. Members of the Committee, regardless of party, will have been lobbied by the FSB on these issues and will have heard the plaintiff cry of Mr Cherry, who said on Tuesday morning:

“Because we are basically no different.”––––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 26, Q55.]

As I say, that is what these amendments are seeking to reflect.

I urge Members to look at current legislation on major products such as telephone contracts and energy bills. They will see that there are already classifications in law that we can learn from, and which these amendments relate to. Section 51 of the Communications Act 2003 specifies that a small business is classified as a domestic consumer as long as it does not employ more than 10 people or trade in the telecommunications sector, so we already make provision for small businesses in some parts of the law. Our amendment could be seen as simply clarifying the situation across all elements of the law, ensuring that there are no inconsistencies. [Interruption.] One of the Government Members shakes his head. I would love to hear the explanation as to why that should not happen, because I am sure that small businesses in his community, particularly micro-traders, would be concerned if he did not consider it important to have such consistency. Without such clarity in the Bill, there is a genuine risk that micro-businesses could have the status of consumer when dealing with their phone contracts, but not when buying kettles, tables or desks. There seems to be an inconsistency here. I am looking at the Member in question to see if he wants to tell me why he was shaking his head. Perhaps he wants to let the Minister know later; we will hear afterwards.

I would be interested to hear from the Minister on this matter, because I appreciate that there are issues relating to European legislation and the use of consistent terms. Such legislation applies more specifically to larger small businesses, as it were. We recognise that there are difficulties in applying the concepts of “trader” and “consumer” as established in such legislation. That is why it is right to separate out slightly larger small businesses from micro-businesses. However, we think it right to argue that small businesses that are micro-businesses—in other words, businesses with less than 10 employees—could be included in the Bill now. By the time the report proposed in new clause 1 is concluded—12 weeks after the Bill is passed—questions about how we integrate European legislation, and what constitutes a consumer and what constitutes a business, could be resolved to the satisfaction of small businesses.

Mark Durkan (Social Democratic and Labour Party, Foyle)

My hon. Friend did not sit on the Financial Services Bill Committee, so she will not be aware of what the Minister on that Committee said about the provisions relating to the consumer panel and the Financial Conduct Authority, and about the clauses that referred to consumer interests being taken into account. He cautioned that it was important not to have a narrowly defined concept of consumers, and that in the modern market one had to recognise that consumers could include businesses. He was absolutely adamant that businesses, even within the financial services sector, could be included, and they needed to be capable of being regarded as consumers for the purposes of the legislation.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend for that intervention. I hope the hon. Member for Wycombe, who was so concerned about those who work in the financial industry as small traders, heard his words. It is because of such concerns that we wanted to put a pro-business measure before the Committee for consideration and inclusion in the Bill. I hope that Government Members will support us, and recognise that we are trying to understand the difficulties with the definitions of “business” and “consumer” within current legislation. Also, micro-businesses are already recognised in some elements of the law as consumers. The amendment is about standardising the approach. On Tuesday we heard from a range of bodies a strong call for simplification—for laws that people can understand and are easy to apply. It surely simplifies things if we say that micro-businesses, for the purposes of their purchases and contracts, are consumers not only when it comes to telephone contracts or complaints against a solicitor or lawyer, but across the board.

We could simplify matters by saying that, if micro-businesses have fewer than 10 employees, we do not expect them to have independent expert legal advice or a purchasing controller with separate knowledge of how to deal with business-to-business contracts. Instead, we simply expect them to start their business, get moving, get on with exporting and be part of the growth that we want to see in our economy—which measures such as this would support, because we would be taking away one of the inconsistencies that might be causing businesses to lack confidence.

Andy McDonald (Labour, Middlesbrough)

Is it not curious that the unfair commercial practices directive has been taken on board by several of our European partners, yet when we make the case for furthering the single market, this country lags behind? Would this not be an ideal opportunity to join our European partners and bring micro-businesses into this sphere of operation?

Stella Creasy (Labour, Walthamstow)

I hesitate to agree because although my hon. Friend is correct, I am nervous that Government Members might be wary of taking lessons from European nations. However, I would encourage them to look at how member states have already put protections in place; there is already such provision within European legislation. That is why we think the new clause we have tabled is right. Lessons can be learned from other European nations about the interpretation and implementation in law of the terms “business” and “consumer”, but we recognise that we must do that in a way that works in Britain.

The concept of micro-business and the concepts implied in the amendment are robust enough to include in the Bill, and we are separating out the two debates. We hope to reassure Government Members that we can move forward and have the pro-business measure that we want to see. I look forward to the Minister’s comments. I genuinely do not believe that this matter is as simple as we would like to think.

Rebecca Harris (Conservative, Castle Point)

I am very sympathetic to the hon. Lady’s point about businesses, and to the view of the Confederation of Small Businesses. The Business, Innovation and Skills Committee looked closely at the issue and recognised that the definition of “consumer” in the Bill complies with the consumer rights directive and simplifies matters—which I fear we would not if we rushed ahead and introduced a definition of micro-businesses. The hedge fund management company with a turnover of millions of pounds could actually be empowered, as a consumer, against the sole trader working from their living room. There are anomalies that would take much longer to sort out than we can manage during our scrutiny of the Bill.

Stella Creasy (Labour, Walthamstow)

It is certainly an odd turn of events for me to be defending businesses that make substantial amounts of money. I would argue that they could employ lawyers in any case, even if we did say that micro-businesses could be classified as consumers. We must separate out that vast majority of people whom we are trying to help here.

The micro-businesses I meet in my community are not hedge fund managers; they are people such as Nadine who have that “get up and go” and want to start up their own business. Nadine currently works full time for Hackney council and has two young children, but she spotted a gap in the market. She is the kind of entrepreneur I am sure we would all want to encourage. She does not have access to expensive lawyers, and while I hope her business will be phenomenally successful, currently she does not have huge sums of money. To ask her somehow to obtain a separate body of knowledge to deal with the basic problems she might face in setting up her business, as well as showing the “get up and go” to travel to Nigeria to negotiate with people and set up contracts, is to put up a barrier to her achievement, rather than enabling it.

Although I am surprised at the concerns of Government Members—trying to give hedge fund managers a much harder deal when purchasing kettles, tables and chairs—I hope the hon. Member for Castle Point understands that our concern is with the vast majority of micro-traders. Just to reassure her, EU law already contains a definition of a micro-trader, so a distinction is made between micro -traders and small businesses. The amendment would standardise how we treat consumers in this legislation. As I pointed out, a definition of a micro-business is given in other elements of the law, such as the Communications Act 2003, which addresses how ombudsmen deal with such businesses. We are trying to tease out these differences.

The hon. Member for Castle Point is right to be concerned about anomalies relating to larger businesses, but those should not be dealt with in terms of turnover, because that creates an artificial distinction. One or two people who start up a business should not have to employ a lawyer because, for example, they received a bad service when they bought products to set up their office; they should have a simple right of return. The Bill contains strong powers, which I am sure we will all support, so surely we should not be saying to people such as Nadine, just at the point she has just got her business going, “No, you are also going to need to get a lawyer if you don’t get the right contract.” If, for some reason, her mobile phone company does not give her the right tariff, but the advertising is not clear, it can trigger a set of exclusion clauses, causing her a headache when she should be focusing on getting her exports going, getting her orders in and fixing the business.

I caution Government Members that they sound as if they are being less than helpful to those businesses that have raised these issues repeatedly. The FSB has looked into the matter, and it would separate out micro-businesses from larger small businesses. That use of nomenclature is why we have drafted the amendments in this way. We are trying to be reasonable in attempting to resolve these issues, and I hope Government Members will be sympathetic to that.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Beyond the issue of the people operating as a business or within a small business, in the clause as it stands, does the narrow definition of “consumer” not mean that, for instance, individual Members of the House who are claiming expenses through the Independent Parliamentary Standards Authority for their mobile phone, on the basis that it is used wholly or mainly in their capacity as an MP, will not be classed as consumers? If anyone is claiming expenses, or being paid for equipment that they provide for their work, they will not, under the clause, be classed as a consumer.

Stella Creasy (Labour, Walthamstow)

My hon. Friend raises an interesting point. I do not know how many of us have had problems with mobile phone signal in this building and might want to be able to challenge the quality of that service—[ Interruption.]. The hon. Member for Castle Point says, “It’s rubbish” and I completely agree. Under the legislation, would we have a right of repair of a faulty good if we are using our phones for a business purpose? We are all sole traders for the purpose of the taxman and in our constituencies—sometimes, we feel very much like sole traders when dealing with some of the issues we have to deal with.

Those are the type of anomalies we are trying to resolve. Through these amendments, the Opposition are genuinely trying to help. There is a strong case for measures for micro-businesses that would be supported in the community, and in current UK law, and which would address concerns about how EU legislation is implemented. That is why we tabled these amendments. The anomalies to which I referred would apply in many circumstances. Let us consider the example of private landlords who have tenants living in their home. If a tenant breaks a kettle bought by the landlord, does the landlord have the right to return it? Is it a “business” or a “consumer” relationship?

Those are the issues involved. I appreciate that they are theoretical, but they arise because of how the legislation is drafted, deliberately to exclude businesses of some types from consumer protection. I would listen to Members’ concerns if they had examples of where the law does provide protection. It is worth remembering that business-to-business contracts have exclusion clauses that can be quite severe. We are asking that sole trader, Nadine, to deal with those exclusion clauses. That is heavy legwork and a lot to deal with.

We should rather offer Nadine the simplicity of saying that for a business of a certain size, it is not fair and reasonable to be expected to negotiate in that way. We should give her the simple protection that if the phone is not working, it can be taken back. We should enact clear rights about whether it works and about repairs so that such traders can get on with their business. Once they become larger, they are different. For example, they could expect to be able to negotiate a stronger deal. That is why the distinctions are there. However, there is a very strong case for micro-businesses.

If Members have heard otherwise from the micro-businesses and sole traders in their communities about some of the problems they face, I will welcome hearing from them, because we genuinely want to get this right. I hope that, having had this debate, Members will accept our genuine intent to make the Bill the best it can be. We particularly want to deal with the concerns for businesses that we have heard in the debate. I hope that Government Members will reflect on the merits of supporting the amendment and new clause.

I also hope that the Minister will come up with a proposal elsewhere in the Bill, perhaps on Report, to deal with the issue of sole traders and micro-traders, and give us a timeline regarding the FSB report for the Department for Business, Innovation and Skills. I do not think anybody here would want to be seen as being against supporting small businesses. However, there is a risk that we could come across that way if we act as though these issues were not important to the Bill. It is important to try to resolve that problem, and that is what Committee stage is often about. I hope the amendment and new clause will be received in that spirit.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Government have previously considered the case for small businesses to be treated as consumers, as I mentioned in my evidence. The previous Government and this one consulted on the matter in 2008 and 2012. In 2008, in the consumer law review, the Government asked whether the definition of “consumer” should be extended to include small and micro-businesses, whose bargaining power in a contract is often similar to that of a consumer, as the hon. Lady said. Business groups were opposed to that idea in 2008. In 2012, we proposed the definition that is now in the Bill and received broad support for it.

The Business, Innovation and Skills Committee acknowledged that all business groups that responded to the 2008 consumer law review preferred to retain the clarity of the current distinction between a business and a consumer. For example, the CBI said that altering the definition of a consumer would not be in the interests of smaller businesses. That position was supported by the majority of responses to the 2012 consultation, and the British Retail Consortium gave evidence on Tuesday supporting the single definition, to avoid creating discrepancies with the definition of a consumer in EU law.

People clearly feel strongly about the issue, and it is open for debate. That is why this Government and the previous one have consulted on it a number of times. Businesses have told us that it would be unreasonable for them to have the same rights and remedies as consumers, as their use of goods is potentially significantly far greater. We also heard that in evidence earlier in the week. For example, we heard that a kettle in the office of a micro-business would get far heavier use than one in a domestic setting, so to treat it in exactly the same way would not be reasonable.

Small and medium-sized enterprises, like other businesses, are not unprotected when they purchase things. In business-to-business contracts there are requirements that have to be complied with. Goods must be of a satisfactory quality and fit for purpose. They must match a description or a sample, and the seller must have the right to supply those goods. Those requirements are implied in the contract, and a buyer may claim damages or treat the contract as being at an end if they are breached.

The example was given earlier of a greengrocer buying a kettle. If it did not work, presumably it would not be fit for purpose and of satisfactory quality, so the greengrocer would have rights under the existing legislation. All businesses, including micro-businesses, are protected when dealing with other businesses under the Sale of Goods Act, so they have the right to reject. They are also protected by misleading marketing protection and unfair terms legislation.

Andy McDonald (Labour, Middlesbrough)

The Minister highlights an instance where somebody is protected with reference to the existing legislation. There is, perhaps, a missed opportunity to unify the existing legislation. Is it not expecting too much of a sole trader or a micro-business to avail themselves of all that knowledge? Would it not be easier if the entire thing were just simplified and unified into one set of rights that were applicable to consumers and micro-businesses? It puts a burden on those businesses to tool up and be ready to deal with a bigger operation to enforce their rights.

Jennifer Willott (Liberal Democrat, Cardiff Central)

We also need to remember, though, that as part of setting up a business someone obviously has to understand what their role and responsibilities are. Part of that is knowing the legal framework within which it operates. That includes knowing the responsibilities on the business to comply with the law in different areas, and knowing that things apply differently to a business. The tax regime is different for businesses from consumers, and no one suggests that that should be otherwise. Businesses have told us that is important that there is clarity in that relationship. We also have to remember that smaller businesses often supply other small businesses with goods and services, so protecting one group might not necessarily be of unequivocal benefit to all small businesses. That is one matter that some business groups are concerned about.

Including micro-businesses in the definition of a consumer would risk undermining the clarity that we seek to achieve in this Bill, which would be bad for consumers and traders. We heard repeatedly in the evidence the other day that the clarity that the Bill will introduce is one of the most important parts of it and will hopefully make the system much smoother and simpler to understand. If we included micro-businesses in the definition, it would undermine that clarity and could potentially make it more difficult for people to understand what their rights and remedies were.

There may also be unintended consequences of including micro-businesses in the definition. For example, larger businesses might stop doing business with smaller ones if they had to offer them more rights and remedies than they did to a slightly larger business. One might end up with what I think has been described as a glass ceiling for small businesses when they grow. They could end up with a step change in their rights and remedies if they took on one more employee, for instance. That might put some micro-businesses at a disadvantage compared with a slightly larger business.

Andy McDonald (Labour, Middlesbrough)

Is it not a curious concept to talk about a step change? We heard from the FSB that its focus was on getting repeat business and that it wanted to make its customers content and happy. Why on earth open up gaps that mean that people do not receive the same quality of service or product, or do not have the same rights and remedies? I do not quite follow the logic of saying that it is a deterrent to business if somebody has the same rights as a consumer. It does not seem to follow.

Jennifer Willott (Liberal Democrat, Cardiff Central)

What I am suggesting is that the relationship a larger business would have with a company that had 10 employees would then have to be different from the relationship it had with a business that had 12 employees. To all intents and purposes, the negotiating position of those two smaller businesses would not be massively different, but it may make it beneficial for a larger business to ensure that it just did business with other larger businesses, because it would get out of having to comply with certain regulations.

Stella Creasy (Labour, Walthamstow)

The other side of that argument is also true, is it not? Without the protection that the amendment could offer micro-businesses, much larger businesses are much more likely to exploit them, because they do not have the capacity to negotiate equally on a business-to-business contract.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I do not agree with the hon. Lady, because, as I have just said, protection is already built in for business-to-business contracts. That applies to businesses regardless of their size. The Government are also doing a lot to support small businesses, to enable them to operate more effectively and to grow.

Stella Creasy (Labour, Walthamstow)

We disagree about that, because some protections that the Bill will offer will be simpler and clearer for micro-businesses, and that is what we are trying to achieve here. Even if they were able to negotiate on a business-to-business contract, for their rights to be relevant they would need to be able to operate them. The Minister is asking small businesses and micro-traders to have the legal expertise and time to be able to dispute a contract with a large business, in the same way as with another business-to-business contract. That is simply not going to be the case, is it? There will be inequality and an inability to operate those rights.

Jennifer Willott (Liberal Democrat, Cardiff Central)

In any relationship between a significantly larger entity and a smaller entity, clearly there will be a power imbalance of some sort. That does not mean that a significant lack of clarity has to be created in the law to try to counteract that. There are other ways to ensure that smaller businesses are in a position to know what their rights are and enforce them. Part of that is the support that the Government are giving to small businesses by cutting a lot of regulation, to make things a lot simpler for them to operate, which is also saving a significant amount of money. For example, the reduction in business rates is helping small businesses to grow.

It is clear that there are already rights that apply to micro-businesses, as I have said, so they are not completely unprotected in their relationships with larger businesses. Members have mentioned regimes in which micro-businesses have extra protection. The Government have recognised that there are areas in which it is harder for micro-businesses to operate and negotiate, so we have ensured that there are specific sectoral regimes that count micro-businesses as consumers where there is a particular issue. We want to ensure that we do not cut across those regimes in the Bill, and that the systems that are in operation work. Martin Lewis mentioned the other day how effective the Financial Ombudsman Service is. The hon. Member for Walthamstow mentioned that micro-businesses can be considered as consumers in those terms.

Systems are in place that recognise the different position of micro-businesses and ensure that they get the support that they need to operate effectively, but it is not appropriate to amend the Bill as the hon. Lady suggests, because business groups in particular have told us in two consultations that they do not want that to happen.

Stella Creasy (Labour, Walthamstow)

Of course, the Minister is being selective in saying that business groups have told her that they do not want that to happen. In fact, the FSB, in its evidence on Tuesday, was clear that it did want it to happen. Not all business groups are of the same mind as the Minister.

More importantly, I want to test the Minister on her argument that we must provide clarity about the law and that it is much clearer if we just treat individuals as consumers in their private relationships with businesses and do not have a distinction for micro-traders. However, she also argues that there are particular sectors where we do treat micro-businesses as consumers for the purposes of contracts. Does she not see the inconsistency there? She cannot argue for clarity and simplicity in the law in some areas but not others. Either we say that, for the purposes of the relationships and contracts that people enter into as part of their business, we regard micro-businesses as needing the same protections as consumers, or we do not. Surely that is the simplest place to be, and that is what the amendment would achieve.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Unless the hon. Lady suggests that all sector-specific regulation should be wiped out, so that we just have one Bill that applies to everything—no one is suggesting that—we will, by definition, have a system in which there is extra regulation that takes into account specific sectors. We have already discussed that on Second Reading and in the evidence session.

All hon. Members recognise that there are areas where extra regulation applies, because certain sectors need it. The same applies to certain areas where we feel micro-businesses need additional protections, and so they are treated as consumers, but that does not apply across the board.

Mark Durkan (Social Democratic and Labour Party, Foyle)

The Minister is saying there is no point providing for businesses as consumers in the Bill, because they are provided for discretely in sectoral legislation and provisions that we should not cut across. Surely the same applies to individual consumers, who are provided for in all those other bits of legislation. If we are providing in the Bill for consumer protection for individuals, who are also provided for in other legislation, why cannot we equally provide for businesses to be protected here as consumers, just as they are provided for under other arrangements?

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Gentleman is correct that different sectoral regulations apply for consumers and businesses. The Bill, to use the jargon, is a horizontal Bill. It applies with a basic level of consumer rights across the board. On top of that, particular areas for which we all agree further regulation is needed have sectoral regulations. The whole point of the Bill is to ensure that there is clarity about exactly what rights a consumer has at any one time. The Bill is designed to relate to consumer-to-business relationships. Other legislation relates to business-to-business relationships and to consumer-to-consumer relationships, but those are not covered by the Bill.

It is important to maintain clarity on the point that the Bill relates to the consumer-to-business relationship, to ensure that it works and is successful in the long term. The regulations implementing the consumer rights directive, the Consumer Protection from Unfair Trading Regulations 2008 and so on all consistently define “consumer” in the same way as it is defined in the Bill. If we changed the definition in the Bill, different pieces of legislation would define “consumer” differently, and that would introduce significant complexity to the system. It would make it much more difficult for people to identify their rights. The Government are committed to helping businesses, especially SMEs, recognise that they are a fundamentally important part of our economy.

Stella Creasy (Labour, Walthamstow)

The Minister is trying to suggest that if we were to include micro-businesses in the definition of a consumer for the purpose of the Bill—in other, to define it in a different way from other legislation—it would not accord with EU legislation. Will she say a little about the EU directive on small businesses, which sets out the concept of a micro-business? That concept exists in EU legislation, and with the amendment, the Bill would remain in accordance with that.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I did not say that. I said that under British law, the regulations that implement the consumer rights directive and the Consumer Protection from Unfair Trading Regulations have a consistent definition of a consumer. That is the same definition as we are using in the Bill, to ensure that we have consistency. To introduce a different definition in the Bill would mean that different groups would have different rights under different regulations, and that would make things much more complicated.

Stella Creasy (Labour, Walthamstow)

I want to press the Minister on this point. The amendment would not change the definition of a consumer, it would apply that definition to micro-businesses. It argues that there are instances in which small businesses—micro-traders—should be seen as consumers. It would not change what a consumer is for the purposes of the Bill, would it?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Well, yes, it would. It would change the group of people who are counted as a consumer and to whom the regulations apply by adding extra groups. So, yes, it would change the definition of a consumer.

New clause 1 would require the Government to produce a report three months after the Bill is enacted on how businesses with fewer than 250 employees can secure appropriate consumer protections when buying goods or services for business use. I am not quite sure what the new clause would achieve. As the Committee will be aware—it was mentioned today and in our evidence sessions on Tuesday—the FSB is currently conducting research on smaller businesses as consumers. We have already undertaken to examine those findings when they are published and to respond to any of the recommendations that are made in it. We think it is an important area to look into. We have committed to work with the FSB to look at the recommendations and to respond to them, and I am not sure that the new clause would add anything to that commitment. I therefore ask hon. Members not to press the amendment and new clause.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her reply, but I must say that it raises more questions than it answers. First and foremost, I want to put it clearly on record that there is support from the business community, particularly the small business community, for resolving the issue. The suggestion that businesses are overwhelmingly against our suggestion simply is not right. In fact, it would deal with some of the challenges that we are trying to address about the distinctions between various types of businesses. We want them to have a level playing field when it comes to contracts.

The Minister made a number of points to which I will respond. First, she talked about the kettle test. I think that all of us would be concerned if kettles were sold with a test for how many times they could be used, because we would recognise that the idea that businesses— particularly small businesses and micro-businesses—would face a different test for how many cups of tea they could make in a day, rather than being able to make a reasonable number of cups of tea— [Interruption.] The Minister shakes her head, but she used the argument made by the BRC about selling a kettle to justify not considering how we can protect small and micro-businesses from the problems that they might face with basic goods that they buy for use in their business.

I urge the Minister not to confuse cause with consequence. The kettle test is about what fair and reasonable use of a product is. We are trying to ensure that it covers small and micro-traders. We think that that is a fair test. Obviously, if someone is making 500 cups of tea a day, whether they are an individual consumer at home—I am sure that I know some people in this House who appear to drink 500 cups of tea a day —or a business, there should be a fair and reasonable test about their use of that product. That is what the amendment would introduce.

In the Minister’s response, she showed the confusion that already exists among micro-businesses about what their rights are when it comes to some contracts. She talked about sector-specific areas where there is a need to protect them, but did not recognise that they might also need protection as consumers of basic goods, which is what the amendment would introduce. That blows apart the argument that the Bill will somehow simplify the situation. We are trying to simplify it by saying, as we all recognise, that micro-businesses—those with fewer than 10 employees—do not have the capacity to have such negotiations and go line by line through the exclusion clauses that might exist in business contracts. If we recognise that when it comes to telecoms or energy contracts, why do we not recognise it when it comes to basic goods and services if a business bulk-purchases a number of chairs for its office, for example? That is the sort of protection that we are trying to offer people.

The point that I was trying to make—I apologise to the Minister if it was not clear—is that she was arguing that we should not adopt the amendment because it would change the definition of “consumer”. The point, for me, is where the definition of “consumer” is applied at the point of a contract. We are trying to give that protection to micro-businesses rather than change the definition of a consumer, because we recognise, as she does, that there are power imbalances in negotiation. Small businesses cannot negotiate in the same way that larger ones do when they have problems and are seeking redress.

There are two points here: one is about a business contract being offered on competitive terms, and the other is about what happens if something goes wrong. The Bill will give clear and good protections about rights of redress and what can be done to repair things. It is about a greengrocer being able to return the faulty kettle without having to argue about whether it is a faulty repair under small business legislation on business contracts. It is about just being able to say, “It doesn’t switch on, and I want to return it,” without having to quibble about it or take up the day doing it rather than counting cabbages, which I am sure we all want greengrocers to be able to do. The amendment is a simplification and a deregulation for small and micro-businesses.

I am delighted to hear that the Minister supports action on business rates. I am sure that it is another coalition split and that she will be joining the Opposition in supporting business rate cuts, but we believe that it is not just about the money that people are paying. I say that as a London MP who recognises that in some areas of my constituency, business rates are higher than the rents that business owners are paying for their properties. That is not the only problem that our small businesses have. The myriad confusions about their rights and where they can be operated are one of the things that drain the confidence of micro-traders. That is what the amendment is about.

The Minister talks about sectoral protection. I urge her to think about 10 or 15 years ago when things such as Google and social media did not even exist, and nor did the kinds of contract that people might enter into, business to business. Buying a dongle did not even occur to small businesses, because those products were not around then. We only make consumer rights legislation once every 10 to 20 years; to get it right, we should future-proof it. If we recognise that a group of consumers —micro-businesses—has particular problems, so that in some sectors we afford them particular protection, which the Minister accepts already happens, why do we not future-proof their business? Why not simply say, “If in the future a new form of technology is developed that might create a service or a good, we will give you protection and not wait until consumer detriment is at such a level that we have to introduce a sector-specific response”? We are doing that for consumers through this legislation; why should small businesses, and particularly micro-businesses, not be afforded the same protection?

I am just a bit disappointed by the Minister’s response, because it does not go to the heart of what many small businesses will feel when they listen to this debate. They want somebody to be on their side. If the Minister was saying, “We are absolutely sympathetic towards micro-businesses. We want to try to find another way of doing this,” that would be one thing, but she is ruling out doing something to help micro-businesses through this Bill and has not come up with an alternative.

Jennifer Willott (Liberal Democrat, Cardiff Central)

As I said, the FSB is examining the matter, which is not as clear-cut as the hon. Lady suggests. It is much more complicated. The Government have committed to considering the FSB’s conclusions and responding to any recommendations. It may well be that the FSB produces some superb recommendations that the Government are able to implement in full. It may well come up with a range of things, some of which need legislation, some of which need regulations and some of which is just about best practice or Government advice and support. We do not yet know what the FSB will propose, so it is putting the cart before the horse to make proposals now. The FSB will be producing a report, to which the Government have committed to respond.

Stella Creasy (Labour, Walthamstow)

Again, the Minister is arguing on the one hand that we do not need legislation to help micro-businesses and on the other hand that we might. This Bill, which may well affect the issues that she is talking about, is before us now. We think there is a compelling case when it comes to micro-businesses.

Andy McDonald (Labour, Middlesbrough)

We heard earlier from the Minister that when somebody starts a new business, they have to prepare for that environment and understand the legal framework within which they will be working. If the people behind new start-ups could enter a sector knowing that they had the same consumer rights as they did when they went in a grocers or a clothes shop the previous day, and were unfettered from considerations regarding legal advice about the lie of the land, would that not be a stimulus to small business start-ups?

Stella Creasy (Labour, Walthamstow)

I completely agree. If those people are listening to the response of the Minister, who now suggests that legislation might be possible in the future but we do not know, they will be even more confused about the legal framework that they need to understand when setting up a business. They will be looking to us as parliamentarians to push, as we are trying to today, for clarity.

I repeat: this Bill is before us now. The Minister talks about how the Government are discussing the matter with the FSB, which we welcome and encourage—indeed new clause 1 is about setting a timetable for that process. Governments of all colours often talk about negotiating and discussing matters with various interest bodies and stakeholders, but do not necessarily commit either to publishing the research or to acting on it. That is not a partisan point; it is true of all Governments. Establishing a timetable would give businesses some clarity. There is debate to be had about how the proposal would be implemented for businesses with more than 10 employees, but there is a clear-cut case for applying it to businesses with a staff that numbers fewer than 10.

I caution the Minister that it is no good to say, “We are talking to people about it,” when the legislation is here. The cart is there with the horse. We need a commitment from the Government today that they will legislate for the proposal.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am saying that these rights already exist for micro-businesses. I would be concerned if anyone listening to the debate today thinks that micro-businesses do not have any rights if they buy a kettle that does not work. They have rights under the Sale of Goods Acts and other legislation. A greengrocer whose kettle does not work is entitled to return it and get their money back. It is simply not the case that micro-businesses do not have any rights under existing legislation.

Stella Creasy (Labour, Walthamstow)

That makes the Minister’s case even more difficult to understand, because that means either that there is no point to the conversations with the FSB because small and micro-businesses are already covered or that there is an issue to address, but that this is not the legislation in which to do so. Small businesses listening today will be holding their hands up and saying, “I just want someone to tell me what I can get on with and what I might need legal advice on.” We are trying to give them that clarity with the amendment.

The Minister cannot have it both ways. If there is an issue that needs to be addressed, we have legislation on consumer rights in front of us now in the House so this is the time to do it. She said a few minutes ago that legislative measures might be required. [Interruption.] The Minister says she did not say that, but I think that the record will show clearly that she said that legislation might well be required.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I did not say that. I said that we do not know what the FSB is going to recommend. There is a whole range of things that it is looking at and might recommend. We do not know what its recommendations are going to be.

Stella Creasy (Labour, Walthamstow)

Ah, so is the Minister now saying that, through the way that the Government have approached the Bill, they are ruling out any legislation on the issue and are saying that they would not bring in legislation, so that even if the FSB suggests that legislation is required the Government will not listen? I am not clear about that myself and businesses listening today will be even less clear about it.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am saying that the Bill covers relationships between consumers and businesses; other legislation covers relationships between businesses. The FSB has said it is concerned that some issues have still to be considered, and it is looking at them at the moment. The Government have committed to responding to any recommendations the FSB makes later this year. That is the lie of the land now for small businesses and consumers. This Bill refers to consumer-business relationships.

Stella Creasy (Labour, Walthamstow)

If the FSB comes back, then, and says that for the purposes of consumer law we should regard micro-businesses as consumers, the most that can happen is that the Government will say that they agree but the legislative opportunity to resolve the matter has passed, and so we will have to wait another 10 to 15 years for more consumer legislation—either that, or the Government will disagree with the FSB. That does not feel clear or simple to us—it does not seem to be in the spirit of clarifying consumer law.

The case the Government have made for ignoring the issue at this point is not strong. Labour Members will support small businesses by saying that this issue needs to be resolved. We feel that the amendment offers a solution that would work. We know that it has support from the FSB. I am sure that Government Members will be disappointed that they have to explain to FSB members in their local communities why it is that when the Government had the opportunity to make progress, they avoided doing so.

If the Minister is more committed about the Government response to the FSB’s research and sets out a timetable for that response, I will be happy not to press new clause 1. We are concerned because all Governments commission research but then wait months or years before they come back on what the research might mean. The aim of the new clause is to set a timetable for implementation, so if she responds on that matter I will be happy not to press the new clause to a vote.

Jennifer Willott (Liberal Democrat, Cardiff Central)

We do not actually know when the FSB will publish its report, so I cannot give a timetable, but the Government are interested in what the FSB is working on and have made a commitment to respond to it.

Stella Creasy (Labour, Walthamstow)

Let me help the Minister out: if she will say that, within three months of the FSB publishing its report the Government will make a commitment to responding to it, we will not press new clause 1 to a vote. Twelve weeks seems a reasonable timetable for responding to a piece of research. Will she give that commitment?

Jennifer Willott (Liberal Democrat, Cardiff Central)

As I have said, we do not know when the FSB will produce its research. I am not going to commit to a particular deadline, but the Government have committed to responding to the FSB’s report. I cannot commit to a timetable because we do not know when that report will be produced.

Stella Creasy (Labour, Walthamstow)

I am disappointed to hear that. I have dealt with Government timetables previously, in connection with other pieces of legislation, when they have talked about summer and autumn timetables. We all know that the reality is that issues can get kicked into the long grass. The measure that really matters for us and that we feel strongly about is amendment 1, which I will press to a Division. I am happy not to press new clause 1, as I understand that the FSB report has not turned up; I just wish that the Government were more committed to giving a timetable when that research is provided for making progress on the issue for larger businesses. We will press amendment 1, however, because the Opposition feel that it is important to speak up for micro-businesses.

Mark Durkan (Social Democratic and Labour Party, Foyle)

On a point of order, Mrs Osborne. I want to seek your guidance. The amendment relates particularly to the limitations of subsection (3). There are other issues beyond those related to micro-business on which I wish to test the Minister—for instance, how the restriction might apply to employees who themselves provide some equipment that is necessary for their employment, and the example I gave about MPs. Do I raise those matters in the clause stand part debate or should we discuss them now, since they relate to that particular limitation, although not directly to the amendment?

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Order. We will deal with the amendment and consider other issues on clause stand part.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Clause 2 sets out the key definitions that apply in part 1, specifically those of trader, business, consumer, goods and digital content. We have decided to include traders of all sizes within the definition of trader to promote confidence among consumers dealing with small and micro-businesses, and clarity for consumers and traders alike. That objective would be greatly undermined if consumers faced different rules depending on the size of business with which they were dealing. Any variation in basic consumer law applied to different sizes of business would probably be counterproductive, particularly for micro-businesses. Consumers could choose to avoid buying from firms that they perceived as having fewer obligations to treat them fairly if something went wrong. Under EU law, certain rights and remedies must extend to all businesses within their scope, regardless of size. That is the case, for example, under the unfair terms in consumer contracts directive and the sale of consumer goods and associated guarantees directive, both of which form the basis for the relevant chapters of the Bill.

We believe that the Bill will benefit all traders. The simplified and consolidated provisions on unfair contract terms will make it clearer for traders which terms are assessable for fairness and how they can benefit from the exemption from the fairness test. The Government consulted in 2008 and 2012 on whether to include businesses in the definition of “consumer”, and on both occasions the majority of responses supported our position.

We think it is helpful to clarify that included within the definition of “business” are the activities of any Government Department or local or public authority. That is the current position under the Sale of Goods Act 1979. The definition of trader in the Bill is wide enough to include Government Departments, local and public authorities anyway if they enter into contracts with consumers, but we want to put that beyond doubt.

“Goods” means any tangible, moveable items; water, gas and electricity are included only if they are supplied in a limited volume or a set amount. That definition is consistent with those in the regulations that implement the consumer rights directive. We also want to be clear that a set amount of such commodities more obviously constitutes goods than larger or unlimited amounts supplied as part of an ongoing service of providing utilities.

“Digital content” means data produced and supplied in digital form. That is important, because different rights attach to digital content compared with, for example, digital devices, which are goods and may include some digital content. Overall, the definitions are consistent with those used in the regulations that implement the consumer rights directive, so the legislation creates a coherent framework of consumer protection.

Stella Creasy (Labour, Walthamstow)

The Minister will be well aware of our concerns about the Bill, and I do not intend to repeat them in the context of clause 2. The Minister kindly offered to write to us on Tuesday about how public services will be affected. As she has clearly set out, “business” in the context of the Bill includes the work of any Government Department, local or public authority. We look forward to a later debate in this Committee, which I am sure many Government Members will enjoy, about having provisions in the Bill that apply to relationships in the public sector. It is important that we clarify them. I would welcome details about when the letter the Minister offered us on Tuesday will arrive, so we can understand her position on this matter.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Looking at this clause in the context of the stand part debate, I will be grateful if the Minister can help me particularly with subsections (3) and (4) on the definition of who qualifies as a consumer. We have already heard the issues dealt with in terms of those who are obviously trading as businesses, be they micro-businesses or of other scale. There is also the question of the individual. Subsection (3) states that:

“Consumer” means an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”.

Some individuals, for the purposes of their employment, have to provide equipment of their own. It might be that a nurse has to provide a nurse’s watch, a specialist bit of equipment or whatever, but because it has been used wholly or mainly in the context of that profession, does that mean the nurse then does not have the rights of a consumer in relation to any concern that arises?

We know that zero-hours contracts are not only an issue in their own right, but sometimes people have to buy their own uniform. In that instance, because they buy a uniform for the purposes of their trade or craft whenever they get the hours, does that mean that if anything is wrong they do not count as consumers in that regard? Under subsection (4), a trader could say to them that they are obviously using it in their craft or profession and therefore they do not have consumer rights.

I know MPs should not legislate for themselves alone, but it would be odd if it did not occur to us in the context of this legislation where we might stand when it comes to particular goods that we use mainly or wholly in the context of our work as MPs. It might be mobile phones, as was suggested, or other equipment, some of which people may claim on expenses from IPSA on the basis that they are used wholly or mainly in the context of work. If something is wrong with that equipment and we go back to our provider or supplier, do we not have the status of consumers under the Bill?

Under subsection (4) a trader would be able to say: “Surely you are using that in the conduct of your work as an MP? I have read reports that you get expenses and therefore you are not a consumer because you are using it wholly or mainly in the context of your profession.” Where do individuals who are not set up and registered as a business in their own right stand? Where do we stand as consumers in that regard? Does subsection (4) essentially allow a trader or other provider who knows the circumstances and is able to surmise that the equipment is used in the course of employment for which people are either receiving expenses or are not not, as in the case of nurses and others, to say it is used wholly or mainly in the context of their work? Are they then disqualified as consumers? If so, is that wise or proportionate?

What about people who are not consumers under this legislation or covered by all the other bits of sector-specific legislation and provisions that the Minister talked about in reply to the earlier amendment? These individual consumers see themselves as individual consumers and are now in limbo. They will have purchased this equipment. Nobody else will have bought it for them. If they are in a position to claim it on expenses or by whatever means, they will do that, but often they cannot. As long as the trader can show that they are using that equipment, or item or service, “wholly or mainly” in the context of their trade, craft or profession, they are discounted as consumers. Will the Minister explain that and assure me about provisions regarding the variety of individuals?

Many hon. Members could come up with other options and suggestions. I could, too, but I would not want to go through a whole ecosystem of people who could be caught in limbo, whereby the buyer thinks it is an individual purchase, but find that, because of the narrow definitions in the clause, they have no standing as consumers.

Jennifer Willott (Liberal Democrat, Cardiff Central)

On the first point, made by the hon. Member for Walthamstow, I sent Committee members a letter this morning, so they will have that on returning to their offices.

On the points raised by the hon. Member for Foyle, “wholly and mainly” is used the other way round, so if people use something wholly or mainly as a consumer, they do not lose those protections if they also occasionally use the things for business. For example, if they buy a kettle for their house and occasionally work from home, even if they use it while they are working, because it is wholly or mainly used for their personal use, consumer rights relating to that kettle are not undermined.

The definition is consistent with the definitions used in regulations that implement the consumer rights directive. Stakeholders said that it is important that the definition remains the same, which is why we are using the wording here. Essentially, as I said, we want to ensure that consumers do not lose their consumer rights if they use a product for work purposes occasionally. The provision is designed to protect people, rather than the other way round. I am sure that hon. Members agree that we do not want consumers to lose their consumer rights if something is used occasionally for other purposes.

On the instance that the hon. Gentleman raised about using a mobile phone—for example, if an MP purchased a mobile phone—if that is used wholly or mainly as a personal phone, they would be covered by the protections in the Bill. If they purchased it to be used as a work phone, that would be a business issue. I should like to clarify that it is not that business-to-business relationships are governed only by sectoral regulation; basic rights that are effectively consumer rights apply to business relationships. Businesses are protected under the Sale of Goods Act 1979. If something does not work—if it is not satisfactory quality or if it not fit for purpose, and so on—those broad rights apply to people purchasing or buying goods in a business-to-business contract as well, under the 1979 Act. Businesses are also protected from misleading marketing, and so on, and protected under the Unfair Contract Terms Act 1977.

Plenty of legislation would apply if an MP purchased a phone for use in his or her work. That general protection already exists in law. However, the definition in the clause is designed to ensure that people do not lose their consumer rights if they use something occasionally for work purposes.

Stella Creasy (Labour, Walthamstow)

Often, people are required to buy a uniform for their work. Given that they might have to wear that daily, would it be covered by consumer or business legislation? It is not clear to us from what the Minister said whether the “wholly or mainly” purpose only applies to occasional wearing of a uniform, which for many people probably would be an employment offence.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will come back to the hon. Lady later with some clarification.

The clause relates to people’s purchasing something for use as a consumer. If they purchase something for use in work, it would normally be a business-to-business relationship and they would be protected under the Sale of Goods Act and the Unfair Contract Terms Act, and so on, which would apply.

Mark Durkan (Social Democratic and Labour Party, Foyle)

We are talking about individuals. A nurse who buys a watch—there is a particular shape, style and type for their profession—buys it as an individual. That nurse is not a business, but clearly the watch is wholly or mainly to be used for a professional purpose. They will not be defined as a consumer under the Bill, but surely they are not a business either.

Jennifer Willott (Liberal Democrat, Cardiff Central)

If a nurse buys a watch that they wear on their wrist and use all the time, they are purchasing it as a consumer. If they buy a watch that hangs down from the pocket for a specific use they are not an individual consumer buying something for their personal use, because they are purchasing it for their work.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Are they a business?

Jennifer Willott (Liberal Democrat, Cardiff Central)

They are purchasing it for their work. Those definitions already exist in law; the Government are not changing that framework. A nurse who buys a watch is protected by the Sale of Goods Act 1979 and the Unfair Contract Terms Act 1977. The clause pertains to individual consumers purchasing things for their personal consumption.

Mark Durkan (Social Democratic and Labour Party, Foyle)

So it is clear that although the Consumer Rights Bill is supposed to codify, clarify and strengthen things, if people who think of themselves as consumers try to exercise their rights, they will be told, “No, it doesn’t apply to you.” It is like the old story of the two-hour dry cleaners. A customer is told to come back next Tuesday, and when they say, “But it says ‘two-hour dry cleaners’ outside,” they are told, “No, that’s just the name of the shop.” The Consumer Rights Bill is just the name of the Bill.

Jennifer Willott (Liberal Democrat, Cardiff Central)

A broad range of legislation offers protection for consumers, whether they are consuming something in a personal capacity or as a business. The Sale of Goods Act and the Unfair Contract Terms Act apply to any purchase that an individual makes. There is already a significant amount of protection available. Under the definition in the clause, a consumer is somebody who purchases something wholly or mainly for their personal use. We want to ensure that people do not lose the protections they already have. We are broadening the definition by including the phrase “wholly or mainly”, so people do not lose their protections if they use something occasionally for work-related purposes. We are not changing the current set-up of protections under the legislation that I have mentioned.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Let me use the example of MPs who have mobile phones—some may have more than one. I have one contract for which I have never claimed from IPSA or anybody else, and another for which I claim part, which would count as “mainly” used for work purposes. Therefore, I will have consumer rights under the Bill for one contract but not for the other. Is that right? If I raise an issue with the trader, are they in a position to ask, “Did you claim for this on expenses?” Similarly, somebody in another profession may be asked, “Did you claim this on your tax returns?” to identify whether they are using it “wholly or mainly” outside their trade or profession. Surely the clause will create a serious twilight zone.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Order. I would appreciate it if Members ensured that interventions are slightly shorter.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I want to clarify that we are not changing the current set-up. Currently, individuals have different protections, whether they are purchasing something for their personal use or for work purposes. That is the current situation, and the Bill will not change that. Nobody has suggested that that should be changed. If an item is used for work business purposes, it tends to have different usage. A mobile phone for work will often receive more use, and use more data. The use changes, so the rights, and the legislation framing them, will differ. I have not seen evidence of a dramatic problem that people have sought to change. There is legal protection that people can call on.

Stella Creasy (Labour, Walthamstow)

We may want to return to the matter on Report, because there is growing concern about zero-hours contracts. Whatever we think of those, there are requirements for uniforms and specialist equipment that people may be expected to purchase and maintain as part of the job; but is that being done in a business context? What would happen if the stitching on a uniform was faulty? Would someone have rights as a consumer to return it, given that they would be wearing it regularly for work and had to buy it as part of their contract? Clarity is lacking, and I urge the Minister to discuss the issue with her colleagues.

Jennifer Willott (Liberal Democrat, Cardiff Central)

There is no confusion about that. If someone purchases a uniform with faulty stitching and it is not appropriate for use, they have rights under the Sale of Goods Act and are completely covered. If something is not fit for its purpose and as described, the purchaser can return it and get their money back. There is not as much confusion as people sometimes make out.

The clause is about definitions, including those of a consumer and a trader. We are trying to ensure that people do not lose their protection as a consumer when they purchase something that they then occasionally use for work. We are making the definition in the Bill consistent with the one in the regulations implementing the consumer rights directive, to ensure that there is simplicity across the board. With a consistent approach to definitions, people can be clear about their rights.

Clause 3 - Contracts covered by this Chapter

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 2, in clause 3, page 3, line 1, at end insert—

‘(e) financial services contracts which contain a bill of sale agreement regarding the ownership of goods.’.

Welcome, Mr Amess, to our Committee. We had fun this morning and we hope to have even more under your jurisdiction this afternoon. I accept that my definition of fun might not be shared by everyone.

We want to discuss a particular form of contract that we want to ensure is covered by the legislation, because it seems to be an anomaly. Hon. Members will be aware of my predilections regarding high-cost credit and my concern about some credit licensing agreements affecting people in our communities. I welcome the Government’s movement on the issue, so that there will now be a cap on the cost of credit.

However, there is one type of credit, of which Members may not be aware, called a logbook loan, which is underpinned by an agreement called a bill of sale. The amendment addresses problems with bills of sale and seeks to ensure that the Bill covers bill of sale agreements. I want to set out our concern about bills of sale and how they relates to logbook loans. I want to persuade the Committee that it is important that they are covered by this form of consumer protection. I will also alert the Committee to further amendments that we have tabled to deal with other aspects of those loans.

A logbook loan is a loan secured against a vehicle. The logbook for the vehicle is given to the lender as an asset against which the loan is made. That means that the organisation that offers the loan essentially owns the vehicle. A bill of sale is often used to underpin the contract. The loans are made at high rates of interest. As I said, I welcome the fact that the Government are going to legislate for a cap on the cost of credit, which will affect those loans. I am hoping to see confirmation of that from the Financial Conduct Authority.

Logbook loans are often made to people in severe financial difficulty, whose car is the only asset against which they can raise a loan. A logbook loan based on a bill of sale is a particularly egregious piece of consumer credit, because of how a bill of sale operates. Bills of sale are an anachronism. The nature of such contracts goes back to the Victorian era, if not earlier. That they are used for logbook loans compounds the difficulties that many borrowers have, because they do not come with modern consumer protection.

We have already talked about how the Bill will simplify and codify existing pieces of consumer legislation. Bills of sale and the laws on which they are based predate that existing legislation. Without the amendment to clarify that the Bill covers that form of contract, the archaic bill of sale will remain. A bill of sale will cover the transfer or purchase but will not offer simple protections, for instances when the borrower cannot repay the loan. The lender will be able to repossess the vehicle without recourse to a court. They will not have to give the details to insurance companies.

A number of people sell on cars with a bill of sale agreement—and, therefore, a debt—attached to them. The buyer of the second-hand car does not know that there is a debt attached to the vehicle and will then find the car repossessed. Often people who have taken out logbook loans sell their cars as a way of trying to get money to pay back those high-cost forms of credit.

The person who buys the car is unaware of the debt and finds the car repossessed because the ownership of the vehicle remains, through the bill of sale, with the person giving the loan, rather than, as one might expect when buying the car in good faith, with the person who has bought it. We have tabled an amendment to a later clause address that issue of whether it is fair for someone to buy a vehicle or piece of property and not know about any outstanding costs or charges related to the asset.

With amendment 2, we want to bring bill of sale contracts under the auspices of consumer protection legislation, thereby ensuring that people have access to the measures that the Bill offers. I shall give the Committee some examples of the kinds of problems that people get into with logbook loans and show why addressing bill of sale issues is so important.

I see logbook loans in my constituency. I am sure others see them in their communities as well, when people in financial difficulty with such products come to them. Rather than give the impression that the problem is only in Walthamstow, as it might appear when I talk about the problems of high-cost credit, I shall give national examples from Citizens Advice. A citizens advice bureau saw a 26-year-old man on jobseeker’s allowance who lived with his parents and had taken out a logbook loan of £1,500. The man already had debt issues, including a magistrates court fine of more than £300. The logbook loan was taken out to cover those other debts, but he had no means to repay the loan and was worried that he would lose his car.

Under a bill of sale agreement, that person does not have the same protection for that asset that he would have had if he had taken out a payday loan, which comes under modern consumer protection law. We estimate that one in four second-hand cars in this country are sold with such a charge against them, but people would not know about it, and due to the bill of sale agreement they would have no recourse to the courts to challenge the repossession of a vehicle that they bought in good faith.

People are being lent money without the protection of existing financial services laws. For example, if someone is given a loan that they cannot afford to repay, they have the opportunity to negotiate a repayment scheme. We do not see that with logbook loans. If the gentleman I mentioned had borrowed £1,500, and paid £55 a week for 78 weeks with an average annual percentage rate of 400%, which is typical for a logbook loan, he would have paid back £4,250 in total—that is more than £2,750 in interest to borrow £1,500.

The sums are astronomical. A cap on the cost of credit should begin to deal with the cost of such loans, but the issue today is their egregious terms. The amendment seeks to ensure that bill of sale agreements are accountable, in the same way that other forms of consumer credit are. However egregious we might consider those other forms of interest, we argue that logbook loan agreements should be subject to the same protections on debt repayments, the courts, fair lending and other modern forms of consumer protection. One must wonder why lenders continue to use bill of sale agreements for such logbook loans when they offer such detriment to consumers. One can only conclude that it is because they are so preferential to the trader. In a modern consumer framework, it is not right to allow such provisions to remain.

I hope the Committee agrees that it is not contentious to want to ensure that all contracts in the UK are covered by modern consumer protection. A number of stakeholders would certainly support it. Citizens Advice sees a huge amount of complaints about such loans and, unsurprisingly given the current financial crisis, has seen what was a declining market rocket back up again, although not on the scale of payday lending or pawnbroking. Its survey showed that 394 logbook loans were reported to it, and found

“evidence of irresponsible lending, poor practice when dealing with customers in financial difficulty, high default charges, irresponsible debt collection and repossession practices”,

as well as instances of people buying cars that were subject to loans of which they were not aware. We are trying to separate people who might unknowingly buy a car with a logbook loan charge against it from the practice of offering logbook loans with a bill of sale attached in the first place. Citizens Advice says:

“We want to see protection for borrowers from unscrupulous lending and repossession tactics, as well as protection for people who unwittingly buy a car subject to a logbook loan.”

As with payday lending, I know that Government Members might argue, “Hang on a minute, these loans have been around for ever and bills of sale have been around for ever, so why didn’t the previous Administration do something about it?” They were trying to. In 2009, the previous Government launched a consultation with a range of options for dealing with such companies. It looked at reforming or abolishing bill of sale agreements. The consultation reported back in 2010. Unsurprisingly, the industry was against that. Why would turkeys vote for Christmas? That is the question I always want to ask some of these companies.

I note that a year later, the Government decided that it was better to look for self-regulation of how contracts were applied to the logbook loan industry. I simply point out that the view taken about payday lending and high-cost credit to begin with was that to intervene to try to tackle some of the practices that existed would be counter-productive. That the whole House has moved on this issue seems to be a compelling argument for including bills of sale in our legislative update.

Mary Glindon (Labour, North Tyneside)

Specifically on what my hon. Friend was saying about the Government’s response to the consultation, the Government argue that it would be disproportionate to ban the industry because of a few rogue lenders. Does she agree that in 2010 the Office of Fair Trading reported that more than 1,000 consumers had complained about the problems with logbook loans and claimed losses totalling £1.47 million? Does she think it would be disproportionate to ban bills of sale given those kinds of figures?

Stella Creasy (Labour, Walthamstow)

My hon. Friend is right. The House has moved on in how we deal with the high-cost credit market. We all recognise now that this market has a series of behaviours in it that are detrimental to consumers and therefore detrimental to our economy. It seems to us that logbook loans will be the last vestiges of that unreformed market. It is right to examine what we can do to protect consumers who take out such agreements. I want to explain to the Committee just how it works.

The Bills of Sale Act (1878) Amendment Act 1882 only requires a creditor to serve a valid default notice before taking action, which means that there is only a minor delay in taking possession for what could be a minor breach of the agreement such as a day’s delay in repayment. That is a huge amount of pressure to place on consumers, and it is not fair pressure, especially for people who are already in financial difficulty. I do not think any of us would counsel our constituents to take out a logbook loan were they short of cash, even if they had a car. We might suggest that they sell the car, but when we looked at the terms of those loans we would not think that they were a positive, constructive thing for someone in financial difficulty.

The fact that we have a particular type of contract against which such loans are based, which allows draconian measures to be taken, further compounds the difficulties that they create. As StepChange, the debt counselling charity points out, such loans are

“a major driver of bad practice. Repossession or the threat of repossession of a good leaves financially vulnerable customers open to abuse by creditors. The lack of any effective control on creditor behaviour creates a significant imbalance in power between parties that is inherently unfair to borrowers.”

Although such loans have been around for a very long time, the industry has grown greatly, and the practices that it has undertaken by using consumer credits of the type that I have described have expanded rapidly because of the growth of the high-cost credit market in this country. Where once logbook loans were a relatively minor part of a deal, we now see logbook loan stores. I know that the Minister has one in her own patch called Loans2Go, and in other shops we see logbook loans being offered as part of a portfolio of high-cost credit. Those loans will be addressed by a cap on the cost of credit, but the contracts that underpin them, the threat of repossession and the threat of action at such short notice without recourse to a judge or an independent advocate will remain unless we ensure that these contracts are brought under the auspices of modern consumer protection.

I hope that Government Members will see that this is not a deliberate attempt to leave a gap for high-cost credit to persist in this country and unscrupulous practices to persist, but is more a recognition that an arcane piece of legislation—the 1882 Act needs to go or at least be brought under consumer protection. If the Bill is intended to simplify people’s rights, surely we should be able to tell people that whenever they take out a loan, for whatever purpose, and whatever the rate of interest, there are some basic principles of protection against mis-selling, egregious practice and repossession without independent scrutiny. I hope that Government Members will support us in that.

I know that other Members will have seen the effect of logbook loan companies in their constituencies. They will have encountered people who are frightened to open their door. I have to do a distinctive knock on the door sometimes in my community to make it clear to people that I am not the bailiff coming. That is a reflection of certain companies’ practices.

I also wish to draw the Committee’s attention to clauses later in the Bill that relate to the practice of buying a car with a loan outstanding against it, which is permitted under the 1882 Act. Some Government Members care about high-cost loans and have spoken out against payday lenders, and I urge them to see that issue in the same vein.

Bills of sale enable further bad practice on top of the cost of the credit that is provided. Our problem with clause 17 is about what will be done for a consumer who bought a car in good faith and did not know that there was a debt outstanding on it. Surely they deserve our protection, as do those who are in financial difficulty and find that a logbook loan is all that they can get. We can all argue about whether we should have more credit unions, but if people have a car as an asset and take out a logbook loan, it is fair that they expect to get reasonable protection.

Andy McDonald (Labour, Middlesbrough)

My hon. Friend is making an excellent speech and setting out her case extremely well. Is the other side of the coin not the resulting lack of confidence in the market? There is enough trouble in second-hand car sales without this problem persisting. Is this not the opportunity to tackle that head on?

Stella Creasy (Labour, Walthamstow)

My hon. Friend makes a strong point. Second-hand car sales might, in fact, be the biggest source of complaints to groups such as Citizens Advice and Which?. Those who were in the Delegated Legislation Committee on Monday will know that I wagered that, in a pub on a Friday night, in a debate about a politician versus an estate agent, people’s idea of our reputations would probably be even stevens. Second-hand car dealers may also come into the frame when we are thinking about those about whom we might want to say, “Have a pint with them and see whether you think they are a person worth talking to.” The industry obviously has a problem. There are some good second-hand car sales groups, but there is also some sharp practice.

People who buy cars under hire purchase agreements, which are distinctive from bill of sale agreements, have different forms of protection. I will set those out to allow the Committee to understand the point we are trying to make with the amendment and why bill of sale agreements should come under modern consumer protection law. If someone buys a car through hire purchase, that is covered by the Hire Purchase Act 1964, and therefore by clause 3. It is stated that a goods title can pass to an innocent purchaser, but that does not apply to bills of sale.

Current sale of goods laws, including section 24 of the Sale of Goods Act 1979, contain provision that where a person sells a good but remains in possession of it and subsequently sells it on to a third party, the third party can take title to the good if it was purchased in good faith. That provision is similar to that found in the 1964 Act, but it does not apply to a bill of sale agreement. Therefore, even if someone buys a car that has an outstanding bill of sale agreement against it from a seemingly reputable second-hand car salesperson and says that they were not aware of the agreement, that will be no defence against repossession.

The existing bill of sale agreements therefore create huge vulnerability for people buying cars. We would like to see such agreements abolished, but, in the absence of that, we would like to include such sales under the auspices of the Bill. The amendment would offer immediate protection for both the consumers taking out those loans and those who find that they have bought a car with a bill of sale charge against it.

I hope that Members of all parties will support the amendment or, at least, that the Minister will offer us a way in which we can ensure that that particularly arcane form of contract is covered by modern consumer protection laws. Consumers, who may well end up paying a lower cost of credit on such loans in the future, would therefore get similar forms of protection were they not able to maintain their repayments. People who unknowingly bought a car with a debt outstanding on it would also be protected. I look forward to the Minister’s response.

Sheila Gilmore (Labour, Edinburgh East)

I seek some guidance, Mr Amess. I wanted to make some comments in relation to the definitions in Scottish law. Should I do that now, or will there be a clause stand part debate?

Sir David Amess (Conservative, Southend West)

We are considering the amendment first, but I was going to allow a stand part debate.

Sheila Gilmore (Labour, Edinburgh East)

Right, thank you. I want to say something about the amendment, and I will come to my other points later.

We have an opportunity to reform consumer law, so it is important to update it and bring it into the 21st century. Bills of sale and logbook loans are an old-fashioned way of dealing with matters. On Second Reading there was a suggestion that if we keep adding more and more to the Bill, it will become an omnibus Bill—too big and unwieldy. However, if things need to be done and things need to be changed, that is what legislation is for. We should not aim simply to have as neat and small a piece of legislation as we can get, even if it leaves things hanging off the end, so the Bill provides a good opportunity to look again at this issue.

Scots law differs, because such contracts are not recognised in Scotland, but having talked to some of my colleagues in the rest of the UK, I know that they are a problem. They might become a bigger issue as people become conscious of them. The companies involved are keen to encourage people to come to them by saying that they are not payday lenders. They claim to have lower interest rates, which they might well in some circumstances. They can have lower interest rates because they have the car as security, but there is a clearly a downside to that.

The companies’ advertising now claims that they can supply loans in a way that will not affect someone’s credit history, because the loan does not go through some of the same processes as others. The advertising says, “Come to us, rather than going to somebody else. It will not affect your credit history, and if you apply for a mortgage or whatever in future, you will be unaffected.” It therefore might become an increasingly common form of borrowing.

I have had a quick look at some of the online advertising. The bit about “We can take your car away” is in pretty small print or tucked away. It is certainly not on the front page with the advantages. In one case, I could not find it at all. In another, I found it tucked in under the FAQ section, but I think there should be a big warning about the implications of default. It certainly is not clear from the advertising, which stresses the ease of the loan, the interest rates, and the fact that people can get the money within an hour, which is always attractive for people who are in a panic.

In that context, such a loan is appealing. The advertising specifically says that the company will lend to people who have a bad credit history, so such loans attract people who have already had problems with credit, who have had financial difficulties, or who are in a desperate situation and think that it is a way of getting themselves out of it. They do not realise, as perhaps they should, that there is a downside. It would be helpful for us to make room in the Bill for something as important as this, and I am interested to hear the Minister’s view on that.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Across Government we share the concern of the hon. Member for Walthamstow to protect consumers entering financing agreements that involve goods. No doubt we all have examples from our constituencies—the hon. Lady mentioned Loans 2 Go, and there is a branch round the corner from where I live; I see it all the time. This is an issue in many constituencies, particularly those with urban communities where these lenders tend to be focused.

I will come to the specifics of the amendment in a second. First, I will describe how the Bill will help to protect consumers where a trader supplies goods to them, which is tied up in this. The goods must meet the quality standards and the consumer has appropriate remedies if they do not—we have already discussed this and I am sure we will come back to it throughout the Bill—and those protections apply to goods regardless of the method of payment, so they apply to goods supplied under a finance agreement, as well as goods that are simply purchased for cash. What the Bill covers is quite broad.

Clearly logbook loans are an issue in our communities. I know that the hon. Lady has worked on these matters for a number of years and has done some really sterling work on it. It is probably also fair to say that people who access logbook loans are often among the most vulnerable in our society, because for many it is the only legitimate way that they can access credit. It is important that we bear that in mind when we look at the protection we can give those people, to make sure that we take into account the particular vulnerabilities that they may well have.

As hon. Members will be aware, responsibility for consumer credit regulation will transfer from the Office of Fair Trading to the Financial Conduct Authority on 1 April. The FCA will focus its resources on the areas of consumer credit regulation that are most likely to cause consumer harm, and that specifically includes logbook loans. There is consensus that there is a problem there, which is why the previous Government started a consultation in 2009, as the hon. Lady mentioned. There have been a lot of complaints about it over the years and there is clearly an issue of consumer detriment in terms of the amount of money that people complain they have lost.

The FCA will police the gateway to the consumer credit market much more thoroughly than is done under the current regime. Firms that pose the greatest risk to consumers, such as logbook lenders, will be among the first to require full authorisation by the FCA. Logbook loans will be defined by the FCA as high-risk activities, and as such the lenders will face closer supervision and higher regulatory costs to make sure that they are properly policed. Logbook loan providers will be required to meet the standards that the FCA expects of lenders, including making affordability checks and providing adequate pre-contractual explanations to consumers as well. For the first time, the FCA rules will be binding on lenders, so the FCA has a wide enforcement toolkit to take action if those rules are breached, and because those rules are binding, the FCA will be able to take action if they are breached. So consumers will be far better protected under the new regime from 1 April.

I hope that allays some of the concerns that hon. Members have about protecting some really vulnerable people. The FCA will monitor the market, and if it finds that there are further problems, it has been made very clear that it will not hesitate to take robust action. However, we are hopeful that this approach, with much tougher enforcement, may make a difference to consumers’ experience.

As for some of the other issues mentioned, the hon. Member for Edinburgh East referred to small print and how difficult it is for consumers to understand exactly what they are signing up to. That would be covered by the unfair terms element in this legislation—the rules around making sure that things have to be prominent and transparent and to be assessable in court for fairness and so on.

Sheila Gilmore (Labour, Edinburgh East)

Without wishing to pre-empt the provisions around unfair terms, clearly there have been provisions in the law about unfair contract terms for some considerable time, yet this still continues. Perhaps the Minister will explain why she thinks the Bill will improve on this.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am saying that there is a different enforcement regime coming in on 1 April with the Financial Conduct Authority. After the consultation in 2009, a voluntary code of practice was established. Of the reputable lenders—and there are some reputable ones—the vast majority signed up to the code of practice. What is different is how it is being enforced and the fact that these types of lender are counted as high risk, so they will be among the first to go through the full authorisation process. The FCA has a much tougher regime to take action against those organisations that do not comply with the rules. If that does not work, it will consider further measures. However, it is hoped that having a tough regime and that authorisation process will make a difference.

Andy McDonald (Labour, Middlesbrough)

Should we not prevent the regime’s not working by including the amendment, and then we would get the best of all worlds? There seems to be doubt in the Minister’s mind about whether the FCA’s regime will be effective, but perhaps I misunderstood.

Jennifer Willott (Liberal Democrat, Cardiff Central)

No, I do not have any doubt. The code will be tightly enforced; it is not voluntary and it will be legally binding on the companies providing logbook loans. There will be a different regime in place to ensure that people are protected. There are problems with banning the practice outright. The individuals affected are very vulnerable, and evidence received by the previous Government’s consultation suggested that, if one of the last legitimate routes to credit were removed, more people may be forced into taking out loans with loan sharks. There are concerns that it may be slightly counter-productive. The FCA has made it clear that a priority will be to ensure that the system works much better, with the people making these loans being properly authorised and tightly regulated. We hope that will take out a lot of the rogue elements in the sector.

Another issue is the protection of people buying second-hand cars while not being aware of a charge on them. That situation is covered by clause 17. Rather than rehearse the arguments now, if you are amenable, Mr Amess, I would like to reserve that debate until we reach that clause. The matter raised by the hon. Member for Walthamstow and others will be covered by that clause.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her reply and acknowledgment that there is a problem here. I think she slightly got the wrong end of the stick regarding bill of sale agreements. I cannot let her get away with what I call the minimum wage myth. She may smirk but this is an important point. The industry around high-cost credit argued for years that if anyone tried to deal with the price they charged for credit, they would be driven out of business. There is no evidence for that—in fact, the evidence is to the contrary: in countries that have caps on the cost of credit, there are lower levels of illegal lending and personal debt. There is recognition of that evidence.

The Lord Commissioner of Her Majesty's Treasury (Mr Sam Gyimah) indicated dissent.

Stella Creasy (Labour, Walthamstow)

I see the Whip shaking his head but his Government’s policy is now to have a cap on the cost of credit. Perhaps he should have a word with the Chancellor, who has agreed with that evidence.

The idea that reforming what could be charged for high-cost credit would somehow drive people out is flawed. We are not talking about ending logbook loans. The amendment is about bill of sale agreements, and that is what I want the Minister to clarify. It is no good just saying it is for the FCA. I have worked closely with the FCA on its regulatory powers and it is going to do some good and important things, but if it is legal to remove somebody’s car without recourse to other, more modern, forms of consumer protection, such as going to court, lenders will continue to use that method and the FCA will not be able to act because it will still be a legal activity. Lenders will be able to use that pressure on people.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Lady will be aware that the reason I was talking about logbook loans was that that exact subject had been raised. It is slightly disingenuous to suggest that it was not. We are not discussing the cap, because that is an issue of consumer credit and, as the hon. Lady said, the Government are acting on that. Many of the concerns relate to consumer credit and the way it is enforced through the FCA, but that is not a matter for this Bill. Those elements that are relevant, such as unfair terms and clarity of ownership of goods before sale, are covered elsewhere in the Bill and we will debate them later.

Stella Creasy (Labour, Walthamstow)

I agree with the Minister. I said that clause 17 would be where we discussed somebody unknowingly buying goods with a charge on them. Clause 3 sets out the kinds of contracts to which the consumer protections will apply, but the Minister must be clear about how the Bill will cover bill of sale agreements. Subsection (3) states:

“It does not apply…to a contract intended to operate as a mortgage, pledge, charge or other security”.

It therefore leaves a gap in which bill of sale agreements, which are about the ownership of a good as an asset against which a loan is secured, are open for continued exploitation.

We can argue about how to ensure that people have access to alternative sources of credit, although I agree with the Minister that the Bill does not deal with that. However, it does cover contracts offered for goods, and a bill of sale agreement is a contract offered for goods. Our amendment seeks clarity. If the Minister is going to say on the record that bill of sale agreements are explicitly covered, she must clarify why there are exceptions in subsection (3). We all recognise that these organisations have a lot of money and lawyers, and if there is any opacity they will continue to offer bill of sale agreements.

Jennifer Willott (Liberal Democrat, Cardiff Central)

My understanding of how the Bill relates to bills of sale is that the provisions would apply when a consumer’s car transfers back to the consumer when the loan is paid off, because that transfer is from the trader to the consumer. However, if the consumer agrees to transfer their car to the trader, that is not a supply of goods from a trader to a consumer, so it would not be covered.

Stella Creasy (Labour, Walthamstow)

So in fact the Bill will not cover bill of sale agreements. It is therefore possible that those kinds of contracts will continue. Is that what the Minister is suggesting?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Clearly, the terms of the contract will be covered by the unfair terms provisions, which cover issues such as the small print, the consumer’s understanding and the prominence and transparency requirements. The contract element would therefore be covered by legislation. The transfer of goods, as defined at the beginning, is the transfer of the car back to the consumer and would be covered because it is transferred from the trader to the consumer. That is how that example relates to the clause, which specifically addresses the transfer of goods, rather than the contract terms.

Stella Creasy (Labour, Walthamstow)

The Minister is carefully ignoring the first part of the equation, which is when the owner of the good, the consumer, chooses to transfer ownership of the property to the trader, the lender, to facilitate the loan. We seek to include that transfer and that contract in the Bill. We cannot allow bills of sale to avoid all other forms of modern consumer protection.

I appreciate that the Minister recognises that there is a problem with the way in which bill of sale agreements are used. Our amendment is designed to ensure that they fall within the scope of the Bill. The Minister has not yet satisfied me that she will ensure that traders cannot say, “I will give you a loan, but the quid pro quo is that you give me ownership of your vehicle and I will be able to reclaim that vehicle at any time without any recourse to the traditional forms of consumer protection.” That is what we are trying to do.

Jennifer Willott (Liberal Democrat, Cardiff Central)

But that transfer would be covered with the FCA’s requirements. The lender would have to go through the authorisation gateway and would have to be signed up to the legally binding code of practice. Those consumer credit protections would cover that contract. However, the example of an individual who transfers ownership of their car to a trader, as we discussed this morning ad nauseam, is about the relationship between a consumer and a business, and a trade taking place. A consumer transferring his car to a trader does not fit into that category, but he is covered by a lot of other protections in the Bill and the consumer credit regulations. This chapter relates to the purchase of goods, which does not take place in that example.

Stella Creasy (Labour, Walthamstow)

I think the Minister needs to look at what the FCA can actually do. If a transfer is made with a requirement, such as a bill of sale that includes a provision that allows for the repossession of the car, that is legal. Although the FCA is tightening up how logbook loan companies operate and how they deal with debt, if people’s cars can be repossessed legally without recourse to a court, that practice will continue, because the FCA has law enforcement powers, not law-making powers. There is a distinction there.

Our amendment is intended to deal with the fact that such contracts are being offered and say that whenever they are offered, they should be covered by the same forms of protection as other forms of credit. Some Members may have bought a car using a hire purchase agreement. They would have that form of protection. I do not understand why the Minister wants to enable this little loophole to continue. As we have all agreed, it is being exploited by certain companies to exploit people in financial distress. The clause lists very clearly the kinds of contracts that would be covered by this; surely it makes sense to make it explicit that Parliament intends that people taking out any form of contract in the 21st century should get 21st century protection?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Chapter 2 of the Bill relates to goods contracts, so the purchase of goods, whether with cash or through a finance agreement. If someone is borrowing money, whatever the arrangements, they are not purchasing goods, so the contract would not fall under clause 3. Only when the trader sells the car back to the original owner by the pay-off of the loan would it count as a good being transferred. In the original part they are not buying goods. It is money lent so it is covered by legislation, but not by the Bill because it is not a consumer purchase of a product, a good or a service. It would be covered by consumer credit legislation. It is definitely an issue for the FCA and for its legislative framework but it is not an issue for the Bill.

Andy McDonald rose—

Sir David Amess (Conservative, Southend West)

Order we cannot have an intervention on an intervention.

Stella Creasy (Labour, Walthamstow)

Let me try to see whether I can understand the Minister’s point from another perspective. Would she be happy to buy goods, not necessarily a car because we know that bill of sale agreements are used for cars in particular, under the auspices of a bill of sale agreement? [ Interruption. ] I am asking the Minister a question. I have to be clear with the Committee. I would not because it would not come with the requisite consumer protection that I have come to expect as a 21st century citizen. Therefore I am asking the Minister why she persists in not clarifying that these kinds of contract should be covered by 21st century protection.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I have explained about three times now that this is because the clause relates to a goods contract—the purchasing of goods. There may well be an argument for updating the legislation, but this is not the Bill to do it in. The issue she raises is around consumer credit and that is not a matter for the Consumer Rights Bill.

Stella Creasy (Labour, Walthamstow)

The Minister is misrepresenting my position. I am not sure whether she is doing so wilfully or not. The matter is not about consumer credit. It is about the existence of bill of sale agreements and the lack of consumer protection that they enable as a result. The fact that they are used in consumer credit agreements particularly for vulnerable people on low incomes only serves to underline why they are exploitative and need reform. This is about the transfer of goods. A logbook loan agreement is about the transfer of goods. Therefore we are seeking to ensure that that contract, which involves the transfer of goods, cannot be underpinned by a piece of legislation from the 1800s that denies people who undertake those loans, often because it is the only loan that they can get, the forms of consumer protection that those of us who take out other forms of consumer loan would enjoy. That is the issue here. It is not about consumer credit. I hope the Minister can get that. It is about the existence of bill of sale agreements in themselves.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The issues around consumer credit and access to consumer credit are not a matter for this Bill either. The hon. Lady says she wants to see the same protection for bills of sale as for other forms of consumer credit. This is a Consumer Rights Bill; it does not relate to consumer credit. The issue we are talking about here is the type of contract that enables someone to purchase goods from someone whether with cash or through a finance agreement. The question whether the contract is fair in the bill of sale would be covered in the unfair terms part of the Bill but not in this part of the Bill. There will be consumer protections for those individuals under clause 17 and contract terms but not under this clause.

Stella Creasy (Labour, Walthamstow)

Let me try one last time. This is not about consumer credit. Let us have a look at bill of sale agreements. Bill of sale agreements can be used for a charge. I hope the Minister can accept that. The clause states specifically that this consumer legislation will not apply to those kind of contracts; ergo, any of the protections that she argues would exist under the unfair contract terms provisions would not apply as well. This amendment is about bringing bill of sale agreements into the later clauses about unfair contract terms. We accept that it is an unfair contract term for somebody not to be able to repossess your car without recourse to the courts, for example, but as this clause is drafted, it leaves a legal loophole where bill of sale agreements can be retained, so those clauses do not come into play. That is the challenge we face here.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will say for absolutely the final time, the unfair contract terms part of this Bill applies to those contracts. I do not know how much clearer I can say it. The hon. Lady just said there was a gap and they do not apply. To make it as clear as I can: they apply to these contracts.

Stella Creasy (Labour, Walthamstow)

That is wonderful to hear. In which case, why does the Minister oppose ensuring that it is explicit in this section of the Bill that bill of sale agreements are covered by this legislation?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I have made my case very clear.

Stella Creasy (Labour, Walthamstow)

Then we have no choice but to press the amendment to a vote, to make it clear that we would like to see watertight protection for consumers from bill of sale agreements.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Clause 3 is essential to the chapter which follows. It sets out the types of goods contracts to which chapter 2 of the Bill applies, under which a trader agrees to supply goods to a customer. The scale of the domestic trade for goods in the UK is enormous. In 2012, consumers spent around £418 billion on goods and there are an estimated 335,000 goods retail businesses in the UK. As such, it is essential that we have a clear and modern framework of consumer protection in this area.

As part of creating a clear framework for consumers and businesses, chapter 2 aligns the rights and remedies for different contract types under which goods are supplied to consumers. However, because goods can be supplied in different ways—for example, sold outright, by hire purchase or merely hired—it is important that some provisions reflect these different ways in which goods can be supplied. The clause enables this operation of the chapter. Importantly, it also makes it clear that the provisions in chapter 2 apply to a mixed contract, where the goods are supplied together with a service, digital content or both, as part of the same contract.

Stella Creasy (Labour, Walthamstow)

We have expressed our concern about the one issue that we thought was outstanding in the clause. I am conscious that other Members have important points to make about how this provision will be applied in other jurisdictions, and I will give them time to discuss them.

Sheila Gilmore (Labour, Edinburgh East)

Will the Minister indicate the Government’s view on the point raised in our evidence session about the wording of clause 3(3)? It outlines clearly in most regards the types of contract to which the provision will not apply, but clause 3(3)(e) excludes

“in relation to Scotland…a contract for which there is no consideration.”

The issue raised by the witness from the Scottish Law Commission was that, slightly oddly, in seeking to make that particular paragraph apply to Scotland, the Bill does so in language not applicable to Scotland. Consideration, in relation to a payment or equivalent, is not a recognised term; the suggestion was that a “gratuitous contract” would be the appropriate term. That may seem a minor matter, but in a paragraph that applies specifically to Scots law, not to use the appropriate language is wrong in principle and could give rise to issues.

Litigation in what we used to call mercantile law in Scotland, from which legislation such as the Sale of Goods Act 1979 emerged, can be obscure and turn on the use of words. No one wants to see a situation in which the use of an inappropriate term gives someone the opportunity to argue the opposite of what was intended. That might be a relatively minor matter but, by consulting with the Scottish Law Commission and returning on Report with an amendment, it could be corrected simply.

Jennifer Willott (Liberal Democrat, Cardiff Central)

My understanding is that the wording was agreed with the Scottish Law Commission. “Consideration” is used in the Supply of Goods and Services Act 1982 and we intend to be consistent with that. When the discussions took place, we understood that to be an understood phrase in the law. Therefore, to ensure continuity and consistency, we used that in the Bill.

As the hon. Lady said, the legislation covers different jurisdictions. There are, therefore, examples of phraseology that may not have originally appeared in Scottish law but they have been agreed and, over time, used in that context. That wording is in the existing legislation and it is transposed into the Bill.

Clause 4 - Hire-purchase agreements

Jennifer Willott (Liberal Democrat, Cardiff Central)

The clause clarifies what is meant by “ownership of goods” in chapter 2 of the Bill. That is a key concept, as most of the contracts to which chapter 2 applies involve the consumer obtaining ownership of goods.

The clause defines ownership of goods—this is slightly techie, so bear with me—as

“the general property in goods”,

which means full rights over those goods. That is distinguished from situations in which a person can use those goods but does not have full rights of ownership. That is technically called “special property.” The clause ensures that the Bill’s concept of ownership is consistent with the concept of property in goods under the Sale of Goods Act 1979. That means that existing legal rules regarding the passing of ownership or property continue to apply to certain contracts that are also covered by the Bill.

The clause acts as a signpost to specific provisions in the 1979 Act about the passing of property. That will apply for determining when ownership of goods is transferred under a contract of sale of goods.

Stella Creasy (Labour, Walthamstow)

The Opposition do not have any concerns about the clause. Some people have expressed confusion about some of the language and terms used in the Bill. Therefore, will the Minister set out why the Government adopted some phrases from existing legislation when they changed the language in other parts of the Bill? It would be helpful if she set out the thinking behind that discrepancy.

Jennifer Willott (Liberal Democrat, Cardiff Central)

In some areas, in order to ensure consistency across legislation, we have maintained the same language, particularly in those areas where we know that a generally understood concept exists. The Law Commissions, both in England and Wales and in Scotland, have said that well-understood and well-argued concepts exist that people understand. To ensure consistency, we have continued to use them. One purpose of the Bill is to make the system easier for people to understand. Where the language is not bound up with clear past definitions and it is possible to make it slightly easier to understand without losing some of the legal background, we have endeavoured to do so.

Stella Creasy (Labour, Walthamstow)

It is helpful to put that on the record. As my colleagues might point out, lawyers might understand, but those of us with a different background could struggle.

Clause 5 - Sales contracts

Jennifer Willott (Liberal Democrat, Cardiff Central)

Clause 5 defines a sales contract for the purposes of the Bill. The Bill aligns rights and remedies across goods contracts, so that most of chapter 2 applies to all contracts within the scope, but some provisions need to reflect the different ways in which goods can be supplied, so a clear definition of each contract type is necessary. If ownership of goods transfers to a consumer in exchange for a price, it is a sales contract. A contract is also a sales contract if the goods are to be manufactured or produced and then supplied via a trader to a consumer. That makes it clear that the consumer has protection if the finished product does not meet the statutory standards, rather than protections applying only to the materials used. For example, when a baker designs and makes a wedding cake to order for a consumer, the contract between the baker and the consumer would be a sales contract for the finished cake, not just the ingredients that went into it. The clause sets out that definition, so it is important to make the subsequent clauses work.

Stella Creasy (Labour, Walthamstow)

The Opposition do not believe the clause to be contentious and we have no concerns about it.

Clause 6 - Contracts for the hire of goods

Jennifer Willott (Liberal Democrat, Cardiff Central)

The clause defines a contract for the hire of goods as it applies between a trader and a consumer. The Bill aligns rights and remedies across goods contracts, so that most of chapter 2 applies to all contracts in the scope, but some provisions need to reflect the different ways in which goods can be supplied, so a clear definition of each contract type is necessary. A contract is a contract for hire if a trader gives a consumer possession of goods with the right to use them for a given period, but the consumer does not obtain ownership of the goods.

Steven Baker (Conservative, Wycombe)

I thought I would take this opportunity to tell the Government that they seem to have made an omission in the Bill. It does not include the reverse of the clause—where the consumer transfers ownership of goods to the trader, such as in a deposit cap contract in banking. I hope the Minister will not mind if I table amendments on Report to rectify that omission, and I hope she will look at it between now and then.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am more than happy to look at it.

Clause 7 - Hire-purchase agreements

Jennifer Willott (Liberal Democrat, Cardiff Central)

The clause defines what is meant by a hire-purchase agreement for goods for the purposes of chapter 2. A contract is regarded as a hire-purchase agreement if two conditions are met: first, if under the contract the goods are hired to the consumer by the trader in return for periodical payments; secondly, if ownership of those goods will transfer to the consumer, providing that the terms of the contract have been complied with and that the consumer exercises their option to buy the goods or some other condition is satisfied.

Stella Creasy (Labour, Walthamstow)

Again, we do not believe that this is a contentious part of the Bill.

Clause 8 - Contracts for transfer of goods

Jennifer Willott (Liberal Democrat, Cardiff Central)

The clause defines contracts for the transfer of goods by a trader to a consumer. A contract for transfer is a contract under which the consumer becomes the owner of the goods, but which is not a sales contract or hire-purchase agreement. By defining this category, the clause ensures that such contracts benefit from the provisions in chapter 2. An example of a contract under this category could be where there is no monetary value assigned to the goods. For example, if a trader offers a car in exchange for the consumer’s present car plus £100, as no monetary value is assigned to either vehicle, the contract would therefore be classed as a transfer of goods, despite some money changing hands. A contract could also fall under this category if it is a mixed contract—for instance, a contract for both the supply of goods and the performance of services where, although goods are supplied, the transfer of goods is not sufficiently central to the contract to make it a sales contract.

For example, if a consumer contracts with a carpenter to fix a shelf and the carpenter provides the wood and nails, those goods are being transferred, but they are not central enough to the contract to make it a sales contract. The contract between the consumer and the carpenter is for service, with the supply of wood and nails being a transfer of goods.

Stella Creasy (Labour, Walthamstow)

The only thing that I want Ministers to consider is the issue about the different terms, which was raised with us on Tuesday by the Scottish Law Commission. The clause refers to the concept of consideration as a noun rather than the adverb. My colleague from north of the border might have more to say on this. I think that we are all looking for what the witness called “jurisdiction neutral” terminology in the legislation, so that there is no expectation that, when someone gets to the border, somehow things will change. Some thought is required to make sure that the concept of consideration and how it is portrayed in the Bill are consistent. Has the Minister had any further discussions with the Scottish Law Commission about the concerns that it raised on Tuesday?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I think that I covered that in my response to the previous questions asked by the hon. Member for Edinburgh East, who raised the issue of consideration and the use of language.

Sheila Gilmore (Labour, Edinburgh East)

The answer that the Minister gave earlier appeared to say that everything had been resolved, but, given that the issue was raised recently in the evidence session, it may not have been resolved.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I said that consideration is used in the existing legislation, so we are trying to ensure consistency in legislation where there is a well recognised legal understanding and interpretation of the phraseology; in the previous case, that was in the Supply of Goods and Services Act 1982. This relates to the previous point that the hon. Lady raised. On occasion, it is possible to simplify the language; at other times, it is important to ensure that we have consistency in the wording where a legal interpretation is behind it.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that reply. In her own example of a car being given in part-exchange, can she explain how that would work north of the border, given that they do not have the concept of consideration? Does she believe that the law as currently drafted would deal with the anomalies that the Law Commission picked up on Tuesday?

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Bill applies to England, Wales and Scotland. Following a legislative competence order, it will apply to Northern Ireland as well. My understanding is that there is no difference in how the Bill applies. When it is enacted and becomes law, people will have the same rights in Scotland as in England and Wales.

Stella Creasy (Labour, Walthamstow)

The clause talks about consideration as a noun that would be applicable to agreements. Can the Minister set out for the record, so that people can have confidence, that the concerns raised on Tuesday have been addressed? How will hire purchase agreements work in Scotland, as opposed to England where the concept of consideration applies?

Jennifer Willott (Liberal Democrat, Cardiff Central)

They will work in exactly the same way as in England. We have considered this. The Law Commission has been involved. We have consulted the Office of the Advocate General on the application of the law in Scotland, and everyone is happy.

Clause 9 - Goods to be of satisfactory quality

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 3, in clause 9, page 5, line 28, after ‘goods’, insert

‘, or any claim made as to the outcome goods will achieve,’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss amendment 4, in clause 10, page 6, line 14, at end insert—

‘(3A) In assessing whether goods are fit for purpose any public claims made by the trader as to the purpose of goods shall be taken into account.’.

Stella Creasy (Labour, Walthamstow)

We come to what I like to call the Rolling Stones element of this afternoon: the concept of satisfaction. I could make another joke about being fit for purpose, but there is a watershed in this country for a reason.

The amendments are designed to tease out the nub of many consumer complaints: how can someone be confident that what they have bought meets their aspirations? That has been the subject of various debates in the Business, Innovation and Skills Committee and more broadly in society. How can someone be confident that something is of satisfactory quality?

Clauses 9 and 10 are about goods being fit for purpose, and the amendments are probing. I hope that the Minister will accept, in good temper and spirit, that there is a genuine debate about how to decide whether something is satisfactory. The disagreement has been about whether that should be an outcomes-based test or left to the trader to determine what is satisfactory. We recognise that there are arguments on both sides. What might be satisfactory to one person might not be to another. That is why we welcome clarification. For us, the moot point is how to determine whether something is satisfactory or fit for purpose every single time.

Our amendments are designed to get to some of the aspects behind those decisions. The aim is to get behind people’s thinking about what constitutes satisfactory or fit for purpose. That could include claims made to them about a particular good and what it will achieve. The point at which a trader makes a claim about a good and what it might achieve should be taken as a measure of satisfaction. We have read the description that the Minister gives in the clause—I welcome her clarification on that but that is slightly different from the law as it currently stands. There is a margin of disagreement in which many consumer complaints could be generated, with regard to what people consider satisfactory or fit for purpose.

If somebody has made a claim that has influenced the consumer in good faith to buy, that should be taken into account. The amendment would simply set that out as an explicit standard that consumers should expect. If a trader has told someone that a mop will clean floors so that they are spotless, and they are not, the consumer should be able to say that the product is not satisfactory and does not meet the test that the trader set. That would be enshrined in law and not be an after-the-fact matter. The trader said that is what the product would do; it is not satisfactory because the trader said it would do this and it has not done so.

Without the amendment, the risk is that a trader could argue that they believed the floors to be spotless or that, even if they are not spotless, the product has made a good attempt at cleaning, so why complain about the mop? We are all concerned about ensuring that we have mops that make our floors spotless when we are told that they will. I saw an advert the other day that seemed to suggest that and I was tempted.

The amendments would clarify for consumers and traders the nature of the claims that they make and how they would influence, when assessing whether rights have been infringed, whether the product is not fit for purpose or satisfactory. The Business, Innovation and Skills Committee looked at this in detail and came to a slightly different decision. It felt straightaway that there should be an outcomes-based test for these purposes. We understand the Minister’s concerns about that.

We are concerned about advertising that makes particular claims. For example, Lucozade for a while was advertised as hydrating and fuelling people better than water. The Advertising Standards Authority held that that claim was too far removed from the approved statement and that it should not stand. We think that if a consumer buys a bottle of Lucozade and thinks it will have that effect, that should be taken into account when deciding whether it is satisfactory or fit for purpose.

There is also a question of parasitic packaging. I do not know whether the Committee is aware of that concept. It concerns a number of brands and how their branding might be used. Advertising and packaging, such as home brands, can seem similar to very famous brands, and the claims are made through that. By being very clear about explicit terminology in this part of the Bill, we can be confident that consumers base their decisions on accurate information.

We want the role that such advertising issues play in the decisions that consumers make to be made explicit in the legislation. There have been concerns about the enforcement of rules on parasitic packaging. That is an issue for brand competition. We think that this is relevant to the decisions that consumers will make about whether a good is fit for purpose. If they act on one piece of information but are getting another, it is not clear to them whether their rights are being infringed and whether they can assess whether something is spotless. If my home-brand mop claims to keep my floor spotless and a well-known brand does not but looks so similar that I cannot tell from the adverts, where do I stand? It would clarify matters if I could say that an advertiser had promised spotless floors, so that was part of the contract with which I had engaged and therefore that I had a reasonable expectation about satisfaction and spotless floors. That would also stop the erosion of confidence in certain brands that occurs when it is not clear what claims are being made or why that makes a difference in terms of consumer rights.

I am sure that people have complained to other members of the Committee about the quality of goods that they have received and the difficulty of proving to a trader that those goods were not sold as seen and that they did not receive what they expected. We think that there is a balance to be struck between requiring a good to deliver exactly the same outcome every time and leaving it up to traders to determine what constitutes satisfaction and fitness for purpose. The test of whether goods are satisfactory and fit for purpose should hinge on what a consumer was told at the time of purchase. I hope that the Minister can give us further detail on how those issues will be dealt with.

I recognise that satisfaction is slightly different from fitness for purpose, and I will provide an example to illustrate how our proposals would apply to fitness for purpose. Let us imagine that a customer walks into a hardware shop during a rain storm and says that they need something to keep them dry, and the trader explains that they do not sell coats or umbrellas but they sell waterproof bin liners. If the consumer buys those bin liners for the purpose of keeping dry but they turn out not to be waterproof, they would not have fulfilled the requirement that they be fit for purpose. That requirement would not exist if the consumer had not stated or implied a desire to keep themselves dry.

The question in clause 10(4), which amendment 4 is designed to probe, is whether the consumer could reasonably be expected to rely on what the trader says. If a trader tells someone in good faith that something will keep them dry and it does not, does that mean that it is not fit for purpose even if that was not its original purpose? Government Members are looking a bit confused, and so were we. We felt that what someone was told at the time of sale should be the test of whether those requirements have been met, and the amendment is designed to tease out the Minister’s thinking on the matter.

Andy McDonald (Labour, Middlesbrough)

I have another example of entirely misleading claims being made for the qualities of products. Flora pro.activ claimed that no other food lowers cholesterol more. Not only is that an issue of quality, but it is a dangerous claim to make in an attempt to impact on people’s health choices. We should take the matter extremely seriously and ensure that products produce the outcomes that they claim in their advertising puffery.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. His example touches on advertising regulation, which is not the subject of the Bill, and on concerns about the impact that such messages have on consumers’ choices. We must ensure that consumers have appropriate redress locally. It is no good for companies to be able to make persistent misleading claims—the Advertising Standards Authority does an admirable job of tackling such things—that influence consumers’ purchasing decisions, and for consumers to have no clarity of redress. In such a situation, a trader would be able to say, “We think that no other food attacks cholesterol more than this. You may think that that is unsatisfactory, but we disagree.”

If a claim has been made, that should be taken into account, because a consumer bought something in good faith on the basis of that claim. We think that that is different from saying, “It has always got to be that someone’s cholesterol is reduced, and if their cholesterol is not reduced, the good is not fit for purpose.” That recognises the distinction between a consumer’s reasonable expectation about the quality of a good, and their reasonable expectation about the quality of a good based on a claim that was made to them. If a trader has gone so far as to provide such information, the consumer’s rights should be based on that. We should not wait for misleading advertising to be dealt with nationally; we should give consumers clear powers to challenge it, because it affects their purchasing power.

Andy McDonald (Labour, Middlesbrough)

The 50-plus male population seems to be the target of many such products, including foods that claim to lower cholesterol or hair restorative products that claim to target 100% of grey hair. A caveat that explained, for example, that while the hair restorative might target 100% of grey hair, it was likely to miss 50% might provide a bit of clarity for everyone.

Stella Creasy (Labour, Walthamstow)

My hon. Friend makes the case for the amendments by emphasising the need to be honest about what a product might actually achieve. Far be it from me to suggest that he would need such a product, but were he to buy it, his satisfaction would be based on the outcomes that it would generate on the basis of the claims that had been made to him about what it would do for him. So some clarity and honesty is needed about what the product would do, and therefore that influences whether or not he really could go back to a trader.

The amendments are as much about trying to tease out protection for the traders as for the consumers. For traders to be confident that if someone came to them and said, “I am not one of the 50%”, they would want to have a reasonable expectation of saying: “Actually, we never claimed that you would be, but we claimed that half the people involved in this sale would experience this level of satisfaction. That you are unsatisfied is sad, but it is not a reason for returning the product and therefore getting your money back.” I hope I have set out why we felt it was important to clarify those things.

Mark Durkan (Social Democratic and Labour Party, Foyle)

I thank my hon. Friend for giving way. It is a not a voice-activated intervention on the basis of the grey and disappearing hair. Going back to the typical claims made, a leading brand might be well known for the claim of killing 99.9% of all known germs. Many other chain brands and lots of other derivative brands use exactly that same claim. Recently, at a BT young scientist exhibition, a number of schools proved that none of the brands actually did so. In some cases the leading brands performed least well.

Stella Creasy (Labour, Walthamstow)

My hon. Friend proves the point. There would be a distinction between a false and misleading advertising claim, which would be an issue for the Advertising Standards Authority, and a consumer’s right, having bought a product thinking it would kill 99.9% of germs on the basis of seeing the advert and the claim that the trader made at the point of sale. All we are trying to say with these amendments is that where such claims have been made, they should be relevant to tests of satisfaction and fitness for purpose.

This is completely separate to whether or not such claims should be made in the first place. We accept that this is not within the scope of this Bill, but what we feel is in its scope is the idea that consumers’ rights should be dependent on what information they have been provided with. That is where these amendments seek to get to. With that in mind, I hope the Minister will engage in that debate and give us some clarity about where she sees some of these issues of the claims that traders make and how they fit into questions about satisfaction and fitness for purpose. For most consumers who have that quibble, this would be very welcome.

Steven Baker (Conservative, Wycombe)

This is a fascinating debate and I am glad the hon. Lady has opened this subject. I was particularly glad that she began with a degree of humour about satisfaction, because it raises the question of what really is satisfaction when consumers buy goods. I think we could agree that satisfaction is a subjective thing. While I would rarely consider buying a motorcycle with less than 750cc, or 100 horsepower perhaps, others might think that it would be an entirely satisfactory motorcycle. We are always going to look for 100 horsepower per driven wheel, as anybody might reasonably expect on the public highway.

What is important to recognise is that consumers will have different needs in the goods that they select. The hon. Lady brought forward a particularly objective example, the notion that a floor cleaner must achieve the object set out in the advertising. When I look at the Bill, I notice that clause 9 subsection (2)(c) talks about:

“all the other relevant circumstances”,

and refers to subsection (5). This then talks about the “characteristics of the goods”, and subsection (6) states:

“That includes, in particular, any public statement made in advertising or labelling”.

So although she said clearly that this is not a Bill about advertising regulation, the Bill has given her a bit of an open door in saying that the relevant circumstances include public statements being made in advertising.

Where I am cautious about this amendment, is that it seems to indicate some of the Marxist roots of the Labour party. It seems to suggest echoes of the mistaken Labour theory of value, the idea that one can objectively determine whether something is worth a particular price that might be paid, or any other particular means of exchange.

The amendment says:

“or any claim made as to the outcome goods will achieve”.

If only buying and selling was as simple as whether or not the objects of your desires met particular outcomes. I feel sure we will all have watched the Lynx adverts and I doubt very much whether any of us seriously expects angels to fall. I look at this clause and think that, in so far as it is necessary to deal with this issue, the Bill already deals with it; and in a good liberal and conservative way, it deals with it in such a manner as to have a subjective theory of value and, thank goodness, rejects the old, out-of-date, 20th-century, neo-Marxist objective theories of the other side.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Claims about the outcomes that goods will achieve often influence customers. We have heard about my hon. Friend the Member for Wycombe purchasing Lynx in vast quantities as a result of the adverts that he has seen. As has been said, those claims are a key standard against which consumers measure the performance of the goods as well. Therefore it is right that claims about important outcomes—key outcomes—may be taken into account when assessing whether a good is satisfactory. Those sorts of claim can already be taken into account under clause 9.

The clause ensures that, where a consumer contracts with a trader to supply goods, the goods supplied must be of satisfactory quality. The goods should meet a reasonable person’s expectation of quality, taking into account factors such as any description of the goods and the price paid for the goods. But also taken into account are “relevant circumstances”, as the hon. Member for Walthamstow highlighted, which

“include any public statement about the specific characteristics of the goods”.

The phrase “specific characteristics” is deliberately wide. It would capture specific aspects of the goods that were referred to in publicity. That could include key outcomes—for example, that a washing-up liquid will remove grease and that people will get 100 washes from one bottle. It could be something to do with the cleanliness of people’s floors. However, it could also cover other attributes. For example, the bottle could be eco-friendly. That is not an outcome but an attribute of the product. The phrase is therefore designed to cover a wide range of different things that might influence someone to purchase something.

Andy McDonald (Labour, Middlesbrough)

Does the Minister agree that this is really a Ronseal concept? We want products to do what they say on the tin. That is what it is all about. People making extra-special claims that are most unlikely to be fulfilled is surely what concerns us in these circumstances.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Yes, there is a balance to be struck. The phraseology is wide enough to capture a lot of things. One issue that a number of hon. Members have raised is misleading claims. Misleading advertising is already illegal. It is caught by consumer protection regulations. There is also the Advertising Standards Authority. There is protection built into other legislation to ensure that.

Sheila Gilmore (Labour, Edinburgh East)

I think that the Minister is saying that these matters are already dealt with and perhaps it is not necessary for the individual to be able to seek redress in some of these circumstances. If the current law is so good, why is it that the claims that my hon. Friend the Member for Foyle mentioned and that had been tested are still capable of being made?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Currently, consumers do not have an individual right to redress under the consumer protection regulations, which are the regulations that cover misleading and aggressive practices—that would cover many of the issues that have been highlighted today. However, I am glad to be able to reassure hon. Members that the Government will amend those regulations to enable consumers to take action if they have been misled or coerced into a contract in a particular way. I hope that that addresses the point that the hon. Member for Edinburgh East has just made.

The Bill also enables claims made by a trader regarding the outcomes that the goods will achieve to be taken into account when assessing quality, because outcome claims are likely to be a relevant circumstance in someone’s decision as to whether to purchase a good. However, not every claim about outcomes is intended to form a standard against which goods should be assessed. Public statements in advertising can be humorous and not designed to be taken literally, as we have already heard with the example of Lynx. For the women in the room, Herbal Essences shampoo provides another example. If what the makers claimed was true or what they depict in the adverts was true, no other shampoo would ever be bought by a woman. Clearly, a lot of these things are designed to be humorous, rather than to be taken literally, so we have to be careful about how we phrase the legislation in order not to catch that too much.

The health claims on products were mentioned earlier. If the health claims induced a consumer to buy something that they would not otherwise have bought, that would be covered by the legislation that I mentioned earlier as well. The legislation would also cover parasitic packaging, which was another point made by the hon. Member for Walthamstow. It would be covered by the consumer protection regulations, because the claims are misleading. Everything such as that would be covered under existing law.

Amendment 4 would take into account any public claims made by a trader as to the purpose of the goods when assessing whether they are fit for purpose. It is definitely important for consumers to be protected if goods are not fit for their advertised purpose, and the Bill provides that protection in clause 9. The standard of “satisfactory” quality can include goods being fit for their usual purpose, which takes into account public statements made around that. The purpose of clause 10, however—still on amendment 4—is to ensure that where consumers make known to the trader that they intend to use the goods for a specific purpose, the goods must be fit for that particular purpose, if the consumer makes that clear before purchase. This is the bin liners and rain example given by the hon. Lady. Clause 10 protects the consumer even if the intended use is not the normal use. If that has been made clear to the trader beforehand, the goods must be satisfactory in that context. Public claims about the purpose of the goods may not therefore be relevant, so requiring public claims to be taken into account could cut across the public protection provided by clause 10. We therefore do not think the amendment is necessary.

I hope that I have satisfied the hon. Lady that her concerns are already covered by the Bill and that amendment 4 could undo some of the protection that we have built into clause 10.

Stella Creasy (Labour, Walthamstow)

I thank the Minister and several of our colleagues for their comments. I am pleased that we are opening up a debate about Marxism. I draw the attention of the hon. Member for Wycombe to Habermasian theories of critical dialectics, because we are talking about the information that each partner is able to bring to communicative acts. Far be it from me to suggest that Hayek would not have recognised the value of the consumer in that relationship, because he would not have argued that the importance of individuals being able to take part in a communicative act took precedence over their role within the market. I am sure that the hon. Member for Spelthorne has views on that as well.

What matters is the information provided at the point of sale. That is the point at which a consumer could be misled by a claim. That was what lay behind our probing amendment. It is helpful that the Minister has set out for the record that advertising is included. The only issue outstanding for the Opposition is whether labelling and advertising would have priority over other forms of claims made by traders—the point about parasitic packaging is whether people buy something on the basis of general claims made about the quality of another product.

To go back to our mops, which clean floors simply, if people buy one thinking that it is the red brand—a particular type of mop—but they are actually buying an own brand and had not seen the packaging clearly enough, would the packaging for the own brand take precedence in that instance? The mop might not offer as clean a floor as one would have seen in the general advertising for the original product—that is the concern brought up by parasitic packaging.

Some of the own brands supplied by supermarkets, for example, are strikingly similar to well-known national brands, so consumers might buy them thinking that they are buying the real deal and so attribute a similar level of satisfaction or fitness of purpose to the general branding. We would like some clarification as to whether the clause is about the specific product, bottle or mop that someone might buy, rather than in the general sense of buying something in the same colour scheme. That would be helpful for consumers in untangling what this might mean for people when the clause is enacted.

Will the Minister be able to say that? It is helpful for the record if that can be set out, whether the clause is about general or specific claims, given the problem to do with parasitic packaging.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Misleading packaging is a matter for the consumer protection regulations. If someone if misled and the overall presentation is misleading, that could well be a breach of the consumer protection regulations.

Stella Creasy (Labour, Walthamstow)

My point is slightly different. If a consumer buys a mop in a red colour scheme that turns out to be a supermarket own brand mop rather than one made by a well-known national mop maker, does the fact that that person thought that they were buying the well-known national mop maker’s brand supersede the fact that they bought a product in the specific packaging of the own brand mop, when it comes to that person’s rights with regard to the product being satisfactory or fit for purpose? It would be helpful if we set out that, as I suspect is the case, the actual mop that the person bought and the packaging it was in would come into play for any claim that was made, and not the person’s intent to buy a well-known brand of mop rather than the own-brand mop that they have bought in error because the packaging is so similar.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Lady raises two different issues. One is potentially misleading packaging that could encourage somebody to buy a product without realising what product they were buying. The other is the quality outcomes of the product that they buy. That is a different issue. Those would be covered by quality standards. Consumers do not get rights associated with what they thought they had bought but with what they have bought.

Stella Creasy (Labour, Walthamstow)

I think that is what we are trying to get at. If the hon. Member for Wycombe buys an own brand deodorant but thinks that angels will fall because it looks very similar to a national brand deodorant, his rights of satisfaction will relate to the own brand deodorant that he bought. They will not relate to the fact that he might think that angels will fall because he thinks that, in general, somehow a particular smell emanating from him would generate such an experience—something that I am sure is much the case.

Steven Baker (Conservative, Wycombe)

I never said any such thing about myself. I merely referred to the advertising and said that none of us would be taken in.

Stella Creasy (Labour, Walthamstow)

As someone who has to spend the next few weeks in a room with the hon. Gentleman I am pleased to hear that.

With that in mind, we are happy to withdraw the amendment. I am grateful to the Minister for her clarification. I beg to ask leave to withdraw the amendment.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Where a consumer contracts with a trader to be supplied goods, whether buying or hiring the goods or under hire purchase, those goods must be of satisfactory quality. The consumer must be able to rely on the fact that he or she will get the quality that they paid for, and if the goods are not up to scratch, the consumer should be entitled to a remedy.

Satisfactory quality is judged by what a reasonable person would expect of the goods in question, taking into consideration the price, description and anything said in advertising or on labelling. For example, a lower standard might be expected of cheap or disposable goods when compared with an equivalent item that costs more or is advertised as being particularly durable. Let us go back to kettles. With a cheap kettle, a reasonable person might not expect it to last very long in the first place, so if it stops working completely after four years of frequent use, the statutory right might not be breached and a consumer probably could not successfully seek a remedy, as the fact that it has stopped working could be seen as reasonable. If, however, a top-of-the-range kettle was purchased but after six months the heating element failed, a reasonable person could consider that to be unsatisfactory and so the consumer could successfully pursue a remedy.

If a consumer is made aware of a defect before buying a product that defect cannot be grounds for finding the good to be unsatisfactory, a matter raised in the evidence session on Tuesday with Martin Lewis. For example, if a consumer buys a T-shirt from a shop and when they go to pay the shop assistant explains that the T-shirt has a small hole in the armpit, the consumer would have no grounds to seek a remedy for a breach in this statutory right for that specific defect. Likewise, if a consumer has had a chance to examine the goods, a defect that should have been revealed by examination would not be grounds for finding the goods to be unsatisfactory. The same applies if goods were supplied by sample: a defect that would have been clear on a reasonable examination of the sample will not be grounds for finding the goods to be unsatisfactory.

The statutory right could be breached if the goods do not meet the standard or description of the product made in a public statement, as we have been discussing, such as in advertisements or in the labelling of goods. For example, if a TV advert for a washing powder states that it is guaranteed to remove tar from clothes at 30° but a consumer finds that that is not the case and they are left with stained clothes, they could pursue a remedy as the product did not live up to the statement that was advertised. However, such statements are not considered relevant if the trader was not or could not reasonably have been expected to be aware of them, nor if the statement was withdrawn or corrected before the contract was made. Nor should such a statement be considered if a consumer’s decision was not influenced by it.

The clause is important as it continues this existing consumer right and assists in streamlining key consumer rights for goods into one place, providing clarity and balance for consumers and businesses.

Stella Creasy (Labour, Walthamstow)

I think that our amendments have teased out the things that we are slightly concerned about in this clause, and we are grateful for the Minister’s comments. We have no further comments to make.

Clause 11 - Goods to be as described

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 5, in clause 11, page 6, line 24, at end insert—

‘(1A) Where a trader is selling goods that have restrictions on who can purchase them, public communications about those goods, including promotional material and any promotional activities shall be required to reflect these restrictions.’.

There are several amendments to this clause. Because they address slightly different issues, it would be helpful if we debate them in turn. I will take the Chairman’s direction as to whether he wants to go through each amendment individually or wait until the end to see whether any other amendments will be considered by the Committee.

The title of the clause alone would explain to many consumers what the problem is. The title is:

“Goods to be as described”.

Therefore, all the amendments to the clause that we have tabled and the debate that we want to have on the clause are about these descriptions and what kind of information a consumer would need in a description to make a confident purchase. Perhaps we are back to those questions about communicative acts and angels.

Steven Baker (Conservative, Wycombe)

I am grateful to the hon. Lady for drawing my attention to Habermas, because as a humble aerospace and software engineer I do not have the benefits of a Cambridge doctorate in social psychology. Consequently, I am also very grateful to her for confirming my impression that the Labour party is, indeed, of Marxist roots.

Stella Creasy (Labour, Walthamstow)

I look forward to explaining to the hon. Gentleman precisely Habermas’s critique of Marx, why he was not a Marxist and why, in fact, he was part of a new school of progressive thinking about communicative acts and the role of the individual. I contend that that thinking goes to the heart of the clause, because it is the role of the individual to evaluate critically the information provided to them, which implies they would have equality of information to be able to do that.

Not all consumers are created equal; Labour Members want to do our best to help consumers to get there. Therefore we hope that, in the amendments that we have tabled and the critique that we offer, we can encourage those on the Government side to join us in using their best progressive instincts to think about how to empower consumers to take part in the communicative act of buying a good and having a conversation with a trader.

However, in order for a consumer to do that, any purchase needs to be informed by a series of pieces of information. Our amendments to the clause try to get to that concept of description, and what might be included in a description to enable a consumer to make a good purchase. We then want to look at how that might affect the way that goods are marketed, because as I think we saw in our previous debate there are questions about marketing and how it plays into the expectations that consumers have.

Good consumer legislation would not simply wait, perhaps in a draconian way, for state intervention. Those of us who are Habermasians believe very strongly in the collective empowerment of the individual, and therefore we do not merely want to wait for regulators to act to ensure that issues are dealt with but want to see that consumers have the rights to empower themselves to address issues.

Descriptions are at the heart of that process. If someone is sold something and the description of it is not clear, they will not have made a choice based on the information that they wanted to make such a choice. Therefore, amendment 5 is about trying to ensure that where descriptions are given they accord with the wider context in which a purchase is made. It is about where advertising is used, and what advertising it is reasonable to expect people to have seen and therefore to take into consideration in any purchase they might make.

If that sounds rather dry—perish the thought, in terms of consumer rights legislation—this amendment is about trying to understand the connection between the purchases that we might ask people, of any age, to undertake and the material and information, including a description, that they are given. The best example of this—again, I am afraid that I am going back to my specialist subject—is payday lending, and in particular the concern that payday lending advertisers were marketing and targeting their products at children.

This amendment is designed to test how we can address that issue, which we think is also a consumer rights issue, if not in the broadest sense. Any good Gramscian would think about the right of a child to go through an education system and learn about compound interest before being bombarded with adverts telling them to take out a payday loan. In a simpler sense––perhaps Hobbesian, as the hon. Member for Wycombe is so inclined to have a philosophy lesson on a Thursday afternoon in a Committee Room—

Steven Baker (Conservative, Wycombe)

Delighted.

Stella Creasy (Labour, Walthamstow)

I am sure that the hon. Member for Spelthorne would be more than happy to help. Cambridge doctorates are liberally sprinkled throughout the Committee. We think that the guidance on advertising, and therefore the information that consumers have, needs to be consistent. Although payday loans are not supposed to be for under-18s, that they are being marketed for under-18s creates an anomaly that impinges on their consumer rights.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend makes an excellent point. She will be aware that Wonga was advertising its services to babies, or so it seems, on baby-grows at Blackpool football club and some of the other clubs that it has been sponsoring.

Stella Creasy (Labour, Walthamstow)

I know my hon. Friend feels strongly about that, because I believe his own local club was also involved—

Stephen Doughty (Labour, Cardiff South and Penarth)

No.

Stella Creasy (Labour, Walthamstow)

No?

Stephen Doughty (Labour, Cardiff South and Penarth)

It was trying to stop them.

Stella Creasy (Labour, Walthamstow)

It was involved in challenging that, certainly, because of concerns about how consumer protection is linked to advertising. Again, we have set out clearly that we believe the ASA has a role to play. It is shocking that whereas the drink and gambling industries have recognised their role in not infringing on our children’s consumer rights by advertising to them, the payday loan industry did not see such a case. We know that 500,000 payday loan adverts were shown to children in the past year alone. That means that the average child has seen at least 70 of these adverts in a year.

Martin Lewis, who came to speak to us on Tuesday, is passionate about this subject because he sees it as infringing on the ability of young people to make effective choices about purchasing loans. His research suggests that one in three parents with children under the age of 10 have heard their children repeat payday loan slogans from TV adverts. It has also been found that 14% of parents polled said that when they refused to buy something for their under-10s, they had been nagged to take out a payday loan for it.

We can change the advertising guidelines, but we should also consider the rights of the child in their experience of advertising and their ability to make effective decisions. Information transfer is a key part of consumer rights legislation, so amendment 5 is intended to equalise the law on advertising with people’s consumer rights, especially where there are restrictions on selling goods.

If we say that it is not in the interests of a child to be able to buy a payday loan, surely it is not in their interests to be marketed a payday loan. That is what the amendment is getting at. It is intended to ensure that the law on selling is mirrored in the law on marketing, which is a clear part of the selling transaction. It would be helpful if the Minister could set out how she sees that. Obviously the amendment is not just about payday lending advertising, but that is the most obvious example of where egregious behaviour has taken place. How does she see the connection between the information provided to a consumer and the way in which marketing is undertaken, given the Bill’s provisions on the concept of goods being as described? Obviously if the good is described as a good type of loan, as in the “Mr Sandman” advertisement and as in the payday lenders’ advertisements, there is clearly an issue about whether that is misleading.

It is unfair to expect a young child to have the same knowledge as an adult about terms and conditions, or to be able to read the small print of a logbook loan or whatever—children are being advertised logbook loans as well. Is there a case for equalising the way in which we protect them offline and online? Although there might be work that we can do on broadcast advertisements, we know that companies are also continuing to target games that might be marketed at children online, particularly on laptops, iPads, and iPhones. Where does protection begin for our young people in that situation? I should be interested to hear the Minister’s thoughts on that. I do not know whether other members of the Committee want to echo the concern that there is a consumer protection issue here as well as an advertising issue that we need to address.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The amendment would require all public communications about goods that are subject to restrictions on who may buy them to state that restriction. Public communications would include any promotional material or activity. As the hon. Lady said, adverts either in print or in the media would be required the state the restriction.

The Committee will appreciate that, where such restrictions exist, they are found in sector-specific legislation. That makes sense. The fact that special rules are needed in such sectors shows that those rules are best placed in legislation that is specific to those sectors. The Bill will set the basic level of consumer protection for goods in general. Where sector-specific legislation applies, it will operate above the Bill, adding additional protection.

The advertising regulatory system is flexible and responsive. It would not be proportionate or necessary to set out in primary legislation such a sweeping, cross-cutting requirement on all traders to carry messaging in association with all restricted products, particularly where there is no evidence that traders and manufacturers alike are not already carrying responsible messaging. For example, advertising for age-restricted products, including alcohol, gambling and foods high in fat, sugar and salt, is covered by a range of strict rules, specified in the codes for broadcast and non-broadcast advertising, which are set, respectively, by the Broadcast Committee of Advertising Practice and the Committee of Advertising Practice.

Accepting this broad-ranging amendment would not take account of the existing protections for consumers that are in place and enforced by the regulator. I am concerned that the amendment would not allow suitable flexibility for the future. As technologies change, consumer expectations evolve and new products and means of advertising them are always entering the market. Those can far more easily be captured in the relevant advertising codes when evidence of harm is presented or when due precautions need to be taken to prevent potential harm. Establishing such requirements in the Bill could risk cutting across individual pieces of legislation and adding complexity to the law and, ultimately, would benefit no one, as appropriate restrictions and requirements already exist in sectors where they are needed. The amendment could undermine that, so I ask the hon. Lady to withdraw it.

Stella Creasy (Labour, Walthamstow)

I am not sure that the Minister is suggesting that it is acceptable for payday lending companies to target children—we are talking about children who have not yet even learned about compound interest in school—as we know some companies have been doing and have admitted doing. From what she says, she does not believe that there is evidence of any problems. There is no sectoral restriction on their doing that, which is why they have been able to do it.

Advertising restrictions on gambling and alcohol are matters of self-regulation. Those industries have been responsible in recognising that it is not appropriate to advertise alcohol to young people and that it should be clear that people have to be over the age of 18 to purchase such a product. Consumers therefore have the appropriate information about the goods that they can purchase. It is not so with the payday lending industry, which has not been responsible in its advertising and marketing. Hon. Members who have dealt with anyone who has had payday lending problems will be well aware of that.

I am a little bit confused. I understand that the Minister is concerned about this cross-cutting amendment, but will she give the Committee a bit more insight into whether the Government intend to deal with the industry in other ways? We Opposition Members are clear that we need to deal with how it markets its goods.

I am sure that the Minister will not suggest that the evidence from people such as Martin Lewis, about young people seeking to buy payday loans because they are marketed to them without any evidence of their ineligibility to have them, is not a concern. The amendment would require companies to be clear that people have to be over 18 to have such a loan. I have had cases of people under 18 getting such a loan. One could argue that they did not know that they were not supposed to have it, because it is not clear in the advertising, and that the loan was therefore not goods as described. Will the Minister say a little more about what she intends to do, given that there is a consumer detriment here? It is legal for companies to advertise in that way, and they will continue to do it?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am not commenting on whether they should be advertising to children. Clearly, that would concern a lot of us. I am saying that that is not for the Bill, which relates to the sale of goods. Issues to do with advertising standards should not be in primary legislation; they are part of the advertising codes. Those codes are flexible and can be adapted quickly because they are not in primary legislation. The advertising of payday loans might need to be tightened up, but that would be done more effectively by working with the Financial Conduct Authority or through the advertising bodies’ codes of practice; it is not an issue for the Bill.

Stella Creasy (Labour, Walthamstow)

The Minister’s answer makes it clear that she has not been working on this. Given that the information is relevant to a transaction, it would be relevant for a child to know whether they are able to buy the good as described. A child would not, in theory, be able to buy the good as described, because it is not supposed to be advertised to young people, who are not supposed to be able to take out such credit. It is disappointing to hear that she has not particularly engaged with this issue, which concerns many people.

If the Minister really wants to address the matter, she is perhaps selling short the capacity of this debate on consumer protection issues. After all, we are talking about the cost of credit, the information provided at the point of sale and whether the good is as described. Is someone buying a payday loan with the intention of paying it back, or are they buying a payday loan to get into the levels of debt that we are seeing? That is the way these things are marketed, and I am disappointed that the Minister does not feel that she can do more to protect our young people from misleading advertising that might influence their decisions on the goods that they buy.

Opposition Members may want to reflect on that and consider whether we can press our concerns elsewhere in the Bill. I urge the Minister to engage on the issue because, if it is not payday loans, it will be other industries that seek to exploit gaps in the advertising regulations to the detriment of the consumer. I hope she will take that seriously. I beg to ask leave to withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 7, in clause 11, page 6, line 24, at end insert—

‘(1A) The trader is required to provide full details of the total cost of the goods prior to sale, including any additional service fees or charges that could be incurred by the buyer in purchasing the goods. This information should also be portrayed in all public communication.

The amendment follows amendment 5 by probing the issue of information that should be provided at the point of sale. We have all been frustrated when we commit to paying one price and suddenly another booking fee, advertising fee or admin charge is added afterwards. Many Members may have seen adverts recently for, say, broadband and thought they were being offered a fantastic deal only to read, at short notice, the on-screen small print outlining the extra fees. Inevitably, for a consumer to be able to buy a good as described—if it is described as a good deal—they need to know the price of the deal that they are being offered.

The amendment demands that traders provide the total cost of a good that people will have to pay, which should be part of the description. I would hope that that is not contentious. We have seen a number of practices that undermine the provision of such information, which is why the amendment would be worth while. All public communication should be clear, because just having the information in the small print takes us no further forward.

Stephen Doughty (Labour, Cardiff South and Penarth)

I was glad to put my name to the amendment. I had such an experience the other week with Sky. I wanted to watch the Cardiff versus Swansea football match—I do not know why I bothered—and I was offered one price on the screen, but I discovered afterwards that the monthly cost is a lot higher. I cancelled the additional subscription as a result. The information on the screen was not clear, and the purchase can be made with the click of a button. I endorse what my hon. Friend is saying.

Stella Creasy (Labour, Walthamstow)

As a Manchester United fan, I share my hon. Friend’s pain. I wonder whether it is worth purchasing some of the games that I might want to watch.

My hon. Friend makes an interesting point: it is there at the click of a button. I know people might argue that a contract can always be cancelled and that people can always try to reclaim their money, but anyone who has ever had to do that knows how frustrating it can be. Anyone who has ever mistakenly bought something and then had to go through the rigmarole of recouping the cost knows that, if the cost was clearer at the point of sale, people would make a more informed choice.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend makes an excellent point. I had the same experience. I discovered that I had effectively signed up for a monthly rolling contract. I had to give 31 days’ notice to avoid paying a higher cost the next month, so I cancelled the service on the same day that I purchased it. Luckily, I worked that out, but I am sure many people would not work it out and would find themselves locked into a contract for a number of months at a much higher rate than they thought they were paying.

Stella Creasy (Labour, Walthamstow)

Given the frustration, cost and time caused by that, a case can be made for getting a ticket for the game the next time round, as that would be simpler and quicker. Not all of us can do that, however, so we might want to sign up to a subscription service or buy tickets for things. Anyone who has bought train tickets or theatre or gig tickets online might have found themselves suddenly being charged an extra fee that they had not factored into the cost of the good—it was not as described to them. In those cases, what seemed like a great deal or a straightforward price is not as clear as was thought.

The amendment is intended to get to the heart of that problem. Whether something is a good deal is a separate matter. If the consumer knows the full cost of something, however, they can make a more accurate and informed assessment. Surely that is what a good as described should be. From conversations with the Advertising Standards Authority, we have some examples of some of the practices that exist. It has a role to play in how promotions are undertaken, but that is a general action that is not about specific rights when a consumer clicks the button for a game and actually discovers that they have signed up for something else at a much higher cost without realising it.

The ASA found against the Old Vic theatre, because a cursor hovering over “stalls” on their website stated:

“Stalls £16 to £70 standard”,

but made no reference to a £1.50 booking fee, even though that would only have been applied only once regardless of the number of tickets bought. The ASA would have been happy if the wording on the website had said “plus booking fee”, or “plus one-off booking fee”, or “£1.50 booking fee per transaction”, which is effectively what the amendment would make companies do. The fact that that information was not provided changed the price of the product on offer. Therefore, consumers were not getting the good as described, because the price was different. A £1.50 charge might not seem like much, but for consumers who have to sign up to particular contract terms, such as for broadband offers that require six-month commitments for a good deal, such charges should be factored in.

If such information were provided, it would allow consumers greater transparency on pricing and greater ability to compare and contrast the deals that were offered. That seems like a simple request, yet that is clearly not what many vendors want to do, because it is easier for them to say that they are offering a good deal on a partial pricing strategy than on a whole pricing strategy.

The ASA has set out some guidelines intended to ensure that, from the start, any extra fees relevant to a price are always included. That is partly a consumer interest issue. If a consumer has, in good faith, signed up for something and then seen that an additional charge is being applied, they might find out that they were not given the full details not straight away, but only when the bill arrives. In that case, how might they get redress individually? It is one thing to ask the ASA to look at adverts on the Old Vic website, but it is another thing for a consumer who might have booked tickets—In this job, I am envious of anyone who has time to go to the theatre—to get redress directly.

The amendment would require a total cost to be presented. That would also have an impact on things such as payday lending and high-cost credit, because the total cost of a loan or hire-purchase agreement would need to be provided. I will wager that anyone who has ever dealt with BrightHouse and seen its contract offers on white goods, with the mark-up and extra fees on those, would welcome consumers being given greater information before signing up to such a good.

I hope that the Minister will accept that the amendment tries to get at something that is a real concern to many of us and that she will set out how she thinks total cost will be portrayed, so that consumers can be confident that a good is as described—in other words, they know it is a good deal, because they know what they are paying for and when they will pay.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Amendment 7 relates to communication about costs that consumers would face. The Government are committed to providing clarity and transparency to consumers on cost. As I am sure we are all aware from our constituencies, the lack of such clarity irritates people intensely. That is an increasing problem as people purchase more things online, because it is often in online purchases, such as complicated mobile phone contracts, that people might not be completely aware of all the details. That is why the Government have already legislated to tackle some of those issues.

The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 contain provisions that require a trader to make the consumer fully aware of the total costs before a sale is made. The regulations come into force in June 2014 and will operate alongside the Bill once it is enacted. The main body of the amendment is therefore not required, because the matter is covered by those regulations.

However, the requirement in the amendment for information to be included in all public communication is new, and the Government believe that that would be a bit problematic because it could be enormously burdensome to businesses. For example, every time a price was altered, all associated communications would have to be altered. The wording of the amendment concerns me, because if a trader had to provide information about all the costs, in some instances that might put them off lowering a price or offering a special deal because they would have to change all the associated communications.

Furthermore, the provision of such additional information would also have a direct cost to businesses that use TV and radio adverts. Those of us who have heard radio adverts for financial services will be familiar with the babble of barely comprehensible jargon at the end, which is the audio version of small print. I am concerned that the way that the amendment is worded would make that a requirement for everything.

Mary Glindon (Labour, North Tyneside)

I am reminded that the issue is more one of consumer rights than of the potential costs incurred by businesses. Some such costs would be inconsequential to companies such as Sky or other broadband companies, to which my hon. Friend the Member for Walthamstow referred. Would the Minister not agree that how we get things over to the consumer must be the paramount consideration?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I completely agree with the hon. Lady, and I will come on to misleading information in a moment. However, the cost to businesses does have implications for consumers as well. As I have just said, I am concerned that requiring that all the information be provided every time might prevent traders from doing special deals and so on, because it would make it more expensive for them to provide the information all over again. That would actually be to the detriment of consumers.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Does the Minister accept that the effect of the amendment might be not so much to ensure that all the gobbledegook is rammed in at the end of the advertisement as to remove the propensity for hidden charges and all sorts of surreptitious riders that are attached to contracts?

Jennifer Willott (Liberal Democrat, Cardiff Central)

The amendment says:

“This information should also be portrayed in all public communication.”

Providing such information in all public communications could be particularly burdensome and would probably lead to an increase in the amount of gobbledegook.

Mark Durkan (Social Democratic and Labour Party, Foyle)

It might actually encourage providers to go for less complicated offers and bundles and simply make their offer more straightforward and clear so that people know what they are buying, how much it is going to cost them and for how long they are going to be stuck with it.

Jennifer Willott (Liberal Democrat, Cardiff Central)

That might be the case in certain areas, but we are talking about an incredibly wide range of goods—basically, anything that is a good. It is possible to simplify things in some areas, but in other areas the contracts people are signing up to are very complicated and not possible to simplify. [ Interruption. ] Well, a lot of services—for example, mobile phone contracts or bank accounts—require consumers to be given an awful lot of information so that they can judge whether something is a good and appropriate deal for them. There is a limit to how far prices can be simplified.

In 2007, the National Consumer Council conducted research into the amount of information given to consumers and the impact that that had on their behaviour. The report was entitled “Warning: too much information can harm” and showed that if people are provided with too much information, it just becomes white noise and they do not take it in. We must be more selective about ensuring that the information that consumers really need is available. I will address that issue in a moment.

Sheila Gilmore (Labour, Edinburgh East)

I understand the Minister’s point about there being such a thing as too much information because we have all seen examples of that in the details we receive from banks and insurance companies. Far from making it easier to understand, the information given can make it more complicated. The key point is to have the total cost somewhere—at the top, as it were. Some of that might have to be broken down in more detail later, but the key point that people want to know is what it will cost them to make the purchase. That is a quite simple statement, not a complex one.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I totally agree with the hon. Lady; a provision later in the Bill, about unfair contract terms, has a requirement for price and other terms to be prominent and transparent, to be assessed for fairness. That is the hon. Lady’s point: that the price should be up front in one place where it is easy to see. It should be prominent and transparent. The provision I have mentioned is meant to tackle that and the hon. Lady is right to say that that approach would make things much easier.

The amendment, however, does not say that. The important factor is that the individual needs certain information before entering into the contract; they need to know what they are letting themselves in for. That is provided for in regulations that I have already mentioned. There is also a requirement for advertising in other media to include appropriate information.

Work has been done on hidden costs, particularly those that appear when people purchase something online, on the basis of a cost that is shown up front; when they get to the end credit card charges and booking fees are added on, so the deal does not look as good as it did at the beginning. That is being tackled in the consumer contract regulations. Organisations will have to set out charges up front, and not hide them at the end. Which? has been running a successful campaign with ticketing websites, in particular, to make sure that booking fees and so on are given up front.

Stephen Doughty (Labour, Cardiff South and Penarth)

I want to understand a bit more. The Minister talks about it being burdensome for business to change pricing and give the public more information. Many of the examples that we see are online, and changing information online is relatively easy and straightforward, and not particularly costly. I do not understand how the approach in question would be an additional burden to businesses.

Jennifer Willott (Liberal Democrat, Cardiff Central)

That is not what the amendment says. It specifies “all public communication”. That might be easy in some ways, but the amendment does not refer to all online communication, or certain circumstances. I am responding to the amendment that has been tabled.

Stephen Doughty (Labour, Cardiff South and Penarth)

Indeed; but we have considered many examples, such as logbook loans, and I have just been looking at the website of Loans 2 Go, based around the corner from both of our constituencies: it would not be difficult for that company to change information quickly on its website, or on a couple of leaflets that it might have sitting around in the office, for the benefit of consumers so that they can understand what they are engaging in.

Jennifer Willott (Liberal Democrat, Cardiff Central)

That is already going to be set out in the regulations that will be out in June. They will require information to be provided to consumers so that they will be fully aware of the cost before the contract is agreed. That is already happening. The provisions will be in place by June and will run parallel to the Bill.

Mark Durkan (Social Democratic and Labour Party, Foyle)

The Minister must know that some of the firms we are talking about send people information every couple of weeks, in their name, saying “This offer is addressed to you,” or “Here is your new phone” and so on; and it is still complicated information. If those firms can change those leaflets, which seem costly enough, to include people’s names, and target streets with different prices by the fortnight or the month, why is it so complicated to accept the thrust of the logic of amendment 7?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I hope I have made it clear that we accept what is probably intended by the amendment, and that the Government are already bringing in regulations to achieve that. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 will be implemented in June, and will require the trader to make the consumer fully aware of the total cost before the contract goes ahead. That is not necessarily the same as ensuring that that information goes into every single area of public advertising.

We know that providing people with too much information makes it more difficult for them to understand what they are letting themselves in for. The gobbledegook at the end of radio adverts does not help consumers. We need to ensure that when consumers are getting into a contract, they are given the information that they need beforehand in order to ensure that they are properly informed and that they sign up for the deal knowing what they are getting into.

Stephen Doughty (Labour, Cardiff South and Penarth)

Is the only reason why the Minister objects to the amendment that it is about providing too much information to the consumer? I appreciate what she is saying about the regulations, but surely the Government should be on the side of providing more information to the consumer, not less.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Government are on the side of making sure that consumers have the necessary information before entering into a contract. Evidence also shows that providing too much information to people is completely counter-productive. Think about the amount of small print that we have in vast contracts that we sign up to. When people shop online, they get pages of tiny print and they have to click the little terms and conditions. That does not assist people making a decision to know what they are signing up for. With the regulations, we are ensuring that the information people really need about the total cost will have to be provided, and under the unfair terms part of the legislation the price has to be transparent and prominent for it not to be assessable for fairness. That is a way of making sure that the information that people need is provided, rather than there being the complete blanket provision that the amendment proposes.

Stephen Doughty (Labour, Cardiff South and Penarth)

The Minister is trying to suggest that, in some way, loads of additional pages of contract information and so on would be provided. I agree that they are confusing, yet we are regularly required to have them—from banks, for example, when they change terms and conditions. The amendment clearly states that it would be the

“full details of the total cost”

—just the cost, and that that should be

“portrayed in all public communication.”

What is so difficult about that?

Jennifer Willott (Liberal Democrat, Cardiff Central)

A lot of that is already required, particularly on websites if people are purchasing something. We have already taken action to ensure that hidden costs cannot be included at the end. We are saying that ensuring that that information is provided across the board on every single good in every public communication is too draconian a measure. We think that it would potentially end up to the consumer’s detriment. Legislation is being introduced—it will be in force from June—to tackle what is at the nub of the issue, rather than it being done through the wording in the amendment, which we think is unnecessary. I hope that the hon. Member for Walthamstow will withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

We have had a fascinating afternoon. I am sorry that the hon. Member for Wycombe has only just come back in, because he missed a great example, if we are going to talk about philosophers. I cannot tell whether it is an example of a kind of Marxian approach—or rather, Adorno, who believed that the public was too stupid to be able to evaluate critically the information that they were provided with and therefore it was for the state to be overthrown by the elite who were able to understand such things. It sounds like the nanny state to say that we could not possibly be clear with people about the fees and the charges when they are buying something. The Government, having said, “Yes, people ought to have that information”, cannot answer when they should have it.

In terms of saying that it should be in all public communications, we can look at the impact that that would have in another way: perhaps traders would be simpler and clearer in their advertising about what their costs were, which would benefit us all. I am very concerned to see the Minister dismissing financial information as gobbledegook. As a psychologist, I have looked at a lot of work about how people critically evaluate information, and it is not uniform. People require different types of information. However, arguing that giving people the charges, fees and total price that they might pay for a good is gobbledegook does not stack up.

That also seems rather to undermine the work of the Advertising Standards Authority, which states:

“In future we expect these”—

as in, the prices of these

“to be advertised from the start. For example a £25 ticket with a £2.50 per ticket booking fee should be advertised as £27.50. The advertiser may include a breakdown of the cost.”

The ASA is asking advertisers to be more transparent. When the Minister talks about the regulation, she cannot answer how people will get the information. She is looking incredulous, but she cannot answer a simple question: if she thinks it is right that people should have information about the charges and fees, when will they get that information? She has not answered a simple, basic question. It is not good enough to say that, in theory, people should get that information. When will it happen? At what point in the sales transaction will people have the details of the prices they will be asked to pay in order to be able to make an effective decision? That seems to be the nanny state, suggesting that people should not have that information freely and fairly to be able to make those assessments.

Jennifer Willott (Liberal Democrat, Cardiff Central)

At no point have I said that people should not have that information. In fact, I said that the Government have already legislated to ensure that the information is provided. The regulations require that the total cost and charges—for example, delivery charges—must be made clear to the consumer before the contract is made. What the hon. Lady is asking for is already provided in the regulations. However, that is not what the amendment would do. I have in no way contradicted anything that the ASA has suggested. I welcome what it is doing, because it is playing an important part in ensuring that the regulations are implemented effectively.

The rest of the debate is in Hansard.