Consumer Rights Bill

Public Bill Committee, 11 March 2014.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Before we begin this morning, I would like to draw to the attention of the Committee the fact that—if they are reached—I will, extraordinarily, select new clauses 7 to 9, which are starred on the amendment paper. There was a misunderstanding as to the instruction to table, so they missed the deadline on Thursday. However, they are offered as replacements for amendments 106 to 108 to clause 79, which have seen out their notice period, so I am content that notification to debate the matters that these new clauses raise has been given.

Clause 77 - investigatory powers etc

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

With this it will be convenient to discuss new clause 4—Guidance on new investigatory powers—

‘(1) The Secretary of State will consult on and publish detailed guidance for all Trading Standards Services in relation to the changes to powers under section 77.’.

Stella Creasy (Labour, Walthamstow)

Good morning to the Committee on our final week together talking about consumer rights. I know I shall miss it and I am sure other hon. Members will too, especially the hon. Member for Wycombe. I hope he has enjoyed all our conversations about political philosophy—I know I have. They have been a moment for recollection and remembrance that I am sure he has enjoyed as well. We are now considering elements of the Bill that all of us agree are quite technical, such as schedules 5 and 6 on the role of Trading Standards and the enforcers of the legislation. It is with that in mind that we have tabled new clause 4, which we are taking alongside clause 77. We recognise that clause 77 brings into effect schedules 5 and 6 to the Bill.

Our concern in tabling the new clause is to try and understand the Government’s thinking over how a lot of these new powers will work, given the new consumer landscape. I hope “landscape” is the appropriate word for it, or reorganisation, reformation, moving of the deckchairs. There has been some quite substantial moving of the deckchairs in the consumer protection landscape over the past couple of years. Opposition Members welcome the notion of bringing together and clarifying the powers enforcement agencies will have when enforcing the Bill. We have tabled the new clause to try to understand how those agencies and powers fit together and sit in the new landscape.

I will set out some of those changes and how Opposition Members see them interacting to ensure there is not an enforcement gap at a local or a national level. Trading Standards is the most well known enforcer, but by no means the only enforcer. The new Competition and Markets Authority is another, which I met the other day. The people I met pointed out, with a slight look of fear and awe in their eyes, that they had just 21 working days before they went live. They will take over many of the roles which were previously undertaken by the Office of Fair Trading. Those of us who have dealt with the OFT over the past couple of years will have a number of comments and concerns over the way it operated, but it is being disbanded as part of the new consumer landscape. Various elements of its enforcement powers and responsibilities are being put into different organisations. The organisations will take on slightly different roles. For example, the Competition and Markets Authority will not look at some of the day-to-day stuff that the OFT considered. Those activities will be given to the National Trading Standards Board.

The changes also mean that, as far as we are concerned, some of the other bodies that perhaps have not traditionally been seen as enforcers—although they have enforcement powers—will come into play too, for example the Civil Aviation Authority when it comes to the pricing of tickets and the new Financial Conduct Authority for financial services. Members of the Committee will recall our debates last week about insurance services and mortgages. The FCA will have enforcement powers in those arenas.

This is a new and different consumer landscape, and we recognise the spirit behind the consumer landscape reform that the Government have put forward, which has tried to clarify who was responsible for which particular element of enforcement. Our concern is that—especially in the way in which the consumer landscape has been re-weighted—there is a substantial expectation on Trading Standards to undertake a number of those roles, particularly at a local level. Opposition Members recognise that most of our constituents will face problems locally—the Committee will come to that when we discuss other amendments—so considering how Trading Standards can undertake its operation locally is key in this new consumer landscape. If it is taking on a greater role, yet it has less resource to do that, we must ensure that that does not make the new consumer landscape barren. I hope that analogy works.

Fiona O'Donnell (Labour, East Lothian)

rose—

Stella Creasy (Labour, Walthamstow)

I give way to my hon. Friend the Member for Midlothian.

Fiona O'Donnell (Labour, East Lothian)

I should point out that I am the Member for East Lothian, but any part of the Lothians is home to me. Does my hon. Friend agree that such a radical change to the consumer landscape could have been tested by pilot schemes in certain areas to see whether there would be problems in the roll-out?

Stella Creasy (Labour, Walthamstow)

I am grateful, and I beg to make a humble apology to my hon. Friend for the error. If she wants 30 days to return me as both her colleague and her friend, I will fully understand. I do not feel that I am fit for purpose if I get East Lothian and Midlothian muddled up. I do apologise.

Considering what we have seen over the past couple of years, and in the context of substantial cuts to Trading Standards at local level, my hon. Friend is right to query whether some of the new arrangements make sense. Members of the Committee will be eerily familiar with Opposition concerns about the change in the way estate agents will be managed, and most of our local residents will still go to their local Trading Standards as a first port of call about any such concerns. The Competition and Markets Authority will pick up those concerns on a national level and undertake market studies. It will have a different remit from the OFT, so there is a question of what might happen in between. How many cases and issues might need to be raised at a local level with a Trading Standards that will, frankly, due to the cuts, be trying to run a Rolls-Royce service on a bus pass budget? That is the second analogy this morning that I hope works for the Committee.

How will all this work together? The new clause is intended to get a handle on how those bodies will work together and how some of the changes will interact to affect our constituents. After all, most of us will be concerned about whether Trading Standards can use the powers in schedules 5 and 6, and in the clause that puts those powers in place. I am mindful that we have another debate coming up about some of the particular changes that the Government are making to the powers of enforcers, but if Trading Standards does not have the resources to use those powers, they will become a moot point; residents will not be able to rely on Trading Standards to fulfil those roles. We all recognise that what Trading Standards does is critical to everybody’s everyday experience and quality of life. These enforcement powers are important, given that enforcement is such an issue at the local level.

Stephen Doughty (Labour, Cardiff South and Penarth)

In particular, I would say to my hon. Friend that the consumer landscape has become more diverse and complex, particularly with online commerce, the advent of eBay and everything else. I have come across a number of cases locally that have involved transactions across the whole of the UK, which Trading Standards had to investigate. It is facing an increasingly complex landscape, so the point she makes is extremely well made.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend. His point about online problems is paramount. We welcome the fact the Government are going to give Trading Standards the ability to act on cross-border issues. We all recognise the problem of who is responsible for taking action, especially when it comes to online problems, even if a consumer buys from a UK-based trader. It is unclear whether Trading Standards is responsible for the area in which the consumer who faces detriment lives or for the place where the trading is taking place.

Cross-border cases are increasingly expensive; estimates range from about £30,000 to £200,000 to take one on, which would spend most trading standard offices’ budgets on one particular issue. That inevitably creates a perverse incentive in dealing with some of these problems: who takes cases forward and why? It is welcome that that change is in the Bill. However, we are concerned about the substantial cuts to Trading Standards across the country. The most recent research I could find is from 2012, which, I fear, means that in 2013 the cuts went even further—there were not enough trading standards officers to respond to a follow-up survey. That survey shows that the average budgeted spending on Trading Standards per head of population has fallen by 13% in England alone over the past two years.

We have talked a lot about the importance of having people to take up powers, but we need people in training jobs, training others how to use those powers and in the relevance of particular laws. While some of us may feel that, after a number of weeks in Committee, we might have a stab at being good trading standards officers because we have an improved knowledge of people’s statutory rights—I freely admit that over the past couple of weeks I have been asking friends and family if they have anything that they want to be returned, because I would like to have a go—it is a profession. In due course, we will debate whether we can further professionalise trading standards officers, so that people have every confidence in their role, but if they do not exist at all we will be considering a fundamentally different question.

The new clause would ensure that we had a point of reference for how the changes were bedding in and how they were dealing with perennial problems. I go back to the example of estate agents being a perennial problem. Whether or not we disagree as a Committee about how we might tackle that problem, we all agree that there is growing concern about their behaviour. An important live question is how the new landscape can address that issue—what the new obligations are that different organisations will have and how they will use the powers the clause enacts. This new clause is simply about having a point where we can assess, as a Parliament, whether those changes have been appropriately made and whether there is a particular impact on Trading Standards. If the Minister does not accept our new clause and our argument that there needs to be a review because quite substantial changes have been made to responsibilities and resources, it would be helpful to know where she sees such work taking place. I am sure she would want to know that such a substantial change in the consumer landscape had been reviewed and that there was an evaluation process, so that we could have confidence that there was not an enforcement gap developing at a local level and that Trading Standards could use the powers in a professional manner.

I am interested to hear the Minister’s take on whether trading standards should become a chartered profession. We have chartered accountants, librarians and architects. That is a mark of the professional nature of the job and the fact that those people undertake very detailed roles. That would give consumers some confidence, and the Trading Standards Institute is interested in exploring the idea. The provision would give us another opportunity to review how that had been put into place and how the powers were being taken forward.

Andy McDonald (Labour, Middlesbrough)

My hon. Friend is making a good point. Does she agree that there is an ever-increasing need to professionalise trading standards officers because, through this change in the landscape, we are asking them to have ever-increasing responsibility for and knowledge of a wide range of subjects. The job is very broad and deep—anything else would result in a completely ineffective service, because there would be so many gaps in it.

Stella Creasy (Labour, Walthamstow)

My hon. Friend makes a fair point. We ask Trading Standards to act across a wide range of issues that the new consumer landscape will broaden. There are some specific powers, which we will come to in subsequent debates. He has a point about having a solid professional base from which to use those powers and where those powers are applicable, especially given how they are supposed to interact. We will come to some of our concerns about the specifics, but the new clause would provide the opportunity to ensure that we had a certain point of evaluation in the new consumer environment, in which we are asking Trading Standards to take a slightly different role.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend is making an excellent point. Has she, as I have, seen a potentially increased demand for the services of trading standards officers, given the cost of living crisis and the austerity that many people across this country have been facing? The demand for those services is likely to increase, as people will increasingly seek out bargains and, potentially, be pushed into the arms of rogue traders. Consumers are seeking lower prices, so are perhaps going to non-traditional or grey areas of the economy, where people may be seeking to exploit them.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. We have seen an increase in concerns. Trading Standards itself reports an increase in concerns where, because people are on tight budgets—indeed, they are finding too much month at the end of their money—they are perhaps striking deals that turn out to not be in their interest at all. On the same point, there has been a reduction in enforcement activity by other agencies.

I was struck yesterday in Home Office questions that the Home Secretary herself was talking about the role of the police in taking up some of the issues that we have discussed in the Committee, in particular Trading Standards and copycat websites. It is clear that resources are stretched by growing consumer detriment. We have both old and new problems arising. We have people being ripped off at a local level by traders exploiting, as my hon. Friend says, a desire to get as much out of money as possible. We also have some new examples of problems arising. In the new consumer landscape there will be a change in how problems are expected to be dealt with. The new clause seeks to ensure that we do not miss that.

I speak as someone who has been frustrated and concerned over the last couple of years, especially with payday lending, as to whose responsibility it is to deal with those issues. A particular issue is, at a local level, the ability to seek Trading Standards’ involvement when we see misleading advertising conducted by an organisation not resident in the local community. We must also consider who is responsible for intervening at national level? I have spent a number of years pleading for the OFT to take part.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

May I say what a pleasure it is to serve under your chairmanship again, Mrs Osborne? Will the hon. Lady explain, given that we are talking about the whole business of information technology and how we use it, whether the Trading Standards people have actually got the expertise and training to deal with some online issues? I am afraid I am not totally convinced that they do. I do not have particularly good expertise in information technology and how to use it and, if we are going down this route, we need to ensure that they understand what they are dealing with.

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman makes a fair point. Those are exactly the sorts of issue that one would expect a chartered professional service to develop. He is right to look at the changing landscape in which we are spending our money. As he will remember from our previous sittings, we have debated issues around, for example, digital content, but there is also the information—and misinformation—that we sometimes see online. I hesitate to point out my sadness that, if he shares that concern, he did not support our proposals around misleading advertising and the role of this legislation in protecting consumers from that. However, he is right to ask whether, when it comes to redress, which is what Trading Standards is supposed to be part of, they will have the requisite knowledge. Having met with trading standards officers and dealt with the Trading Standards Institute, I am confident of their commitment to professionalism. I am also cautious about their capacity, given the restrictions on funding that they are facing, to address all of these issues. In this new consumer landscape, where there is a higher bar for some of the other organisations to reach before they would use some of the enforcement powers set out in clause 77, it is certainly right to ask whether Trading Standards is going to be able to pick up the issues that we are asking it to.

Mary Glindon (Labour, North Tyneside)

My hon. Friend makes a case for how Trading Standards can have clarity, but it is even more important in a borough such as mine in North Tyneside. Many of our services have been outsourced to private management, and trading standards is one of those, which has added complications, so the new clause is important.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend for her intervention, not least because she reminds me of an example of where we might see some of those changes. Hon. Members will be familiar with the fact that myself and my hon. Friend the Member for East Lothian have been concerned about a website called taxreturngateway.com, which I believe is based in the constituency of my hon. Friend the Member for North Tyneside. The question of who would take action against that organisation, given that the complaints were being made in different parts of the county, is absolutely apposite considering that after some public debate on and scrutiny of copycat websites the Home Secretary yesterday pledged that she was taking action on the issue. I wondered whether Ministers in the Department for Business, Innovation and Skills might feel aggrieved, because they have told us that it is they who are taking action on the issue. Either way, additional resources have had to be made available to Trading Standards so that it can deal with the issue, because it clearly does not have the resources at a local level to do so.

When Ministers talk about further complications at a local level with how services are delivered, it makes us even more concerned to ensure that we are adequately reviewing how this new consumer landscape works for our constituents, given the powers in the Bill and how they will be amended. I think we are all concerned to ensure that there is adequate scrutiny—especially if private organisations seek to make judgments about whether to use, for example, the powers of entry or the powers to require the production of information—and that it is carried out in the public interest.

I hope therefore that the Minister sets out how she sees the trading standards profession moving forward, given that it feels underfunded, overstretched and overworked. I appreciate that most people in Britain feel that way at the moment, perhaps with some honourable exceptions. Over the last few years, there has however been a real concern in relation to localism that it has been easy to take this approach with Trading Standards, because people have perhaps not been championing its cause. We know that spending more money on Trading Standards means greater savings for the public purse, because it prevents future problems.

Andy McDonald (Labour, Middlesbrough)

Does my hon. Friend agree that the loss of 743 trading standards officers across England, Wales and Scotland over the last two years will further stretch resources and the capacity to deal with the ever-increasing demands on services?

Stella Creasy (Labour, Walthamstow)

My hon. Friend is right, and we will also lose the expertise that those individuals represent. Given the Bill’s proposed changes to Trading Standards powers, such expertise and experience is even more important because we are dealing with a process of change. Losing people who understand how particular powers can be used, and therefore what particular changes might mean for their role, is a concern for all of us.

I am sure the Minister will claim it is up to local councils and localism to address these concerns. If she therefore does not accept the new clause, we would like to know when she sees such an evaluation process taking place, when we might get a sense of whether Trading Standards has been able to embed these new powers and at what point there might be intervention. As I pointed out, intervention had to come from a national level in relation to copycat websites, with additional funds made available. What might the test be for national intervention to provide such resources, if it is clear there are not resources at a local level to deal with these issues, even if those involved have powers to act across borders? For example, how many complaints would have to be received at a local level? Under this new regime, how many inspections would have to be undertaken before there is recognition that national action needs to be taken? We will discuss how the different powers might fit together in clause 79, but it would be helpful to hear how the Minister sees the relationship between those different enforcers from the other side.

There has been a lot of talk about the problems for local Trading Standards in raising issues with national organisations, but will national organisations be directing local Trading Standards? Will local Trading Standards be able to petition under the new powers? At what point will we see a stronger role, for example, for Ofcom if we have local incidents of people being mis-sold telecoms products? That is something I think we have all seen in our local communities. Will we see a stronger push for the Information Commissioner to take on local cases because Trading Standards lacks resources? What will that mean for the consumer, and what will happen if those organisations say no? Those are all fair questions, especially since the Bill will consolidate those powers and therefore create the expectation that they will be being used.

I hope the Minister will respond positively to these questions. No one is suggesting that change is never a good thing, but we are a little concerned at the number of quite substantial changes, which could counteract each other, to how consumer enforcement takes place. That is especially true in England and Wales, although I appreciate that there are some differences with Scottish courts. That could mean that the primary source of enforcement for most consumers will be the threat of legal action. The whole point of the consumer landscape for all of us, I believe, is to have early and more effective forms of redress, prior to having to seek legal action, and Trading Standards is one of those points of intervention. It would be of substantial concern to us all were the ability of Trading Standards to be such an early point of intervention to be removed. With that in mind, I look forward to hearing what the Minister has to say.

Jennifer Willott (Liberal Democrat, Cardiff Central)

We are heading towards the home straight, and I am sure that hon. Members will be terribly disappointed that we are entering our last week in Committee, knowing that we will not be together again next Tuesday morning.

The new clause would require the Secretary of State to

“consult on and publish detailed guidance for all Trading Standards Services in relation to the”

generic set of powers in schedule 5. The hon. Member for Walthamstow referred to broader issues around the funding of Trading Standards, but I would like first to respond to the new clause and then answer the questions asked by hon. Members.

Consumer law investigatory powers are scattered across 60 pieces of consumer legislation, and the powers are overlapping and inconsistent across that legislation. Slight variations in the powers cause confusion and create the potential for disputes with officers, which means that it is difficult for businesses and enforcers to know in every circumstance what are the officer’s powers. We are trying to resolve that.

In the Bill, we are consolidating and simplifying the consumer law investigatory powers in a generic set to resolve some of those issues and to make it easier for businesses and for enforcers to know what the rules say. The generic set is largely based on the powers in the Consumer Protection from Unfair Trading Regulations 2008, which are already familiar to Trading Standards and other consumer law enforcers because they use those powers daily. However, the Government are also committed to protecting civil liberties and reducing the burdens on businesses, so the Bill adds stronger safeguards to those powers to protect civil liberties in accordance with the requirements of the Protection of Freedoms Act 2012. That is how this aspect has been put together.

The Government have already recognised that a communication and education strategy is important to the success of the Bill, and the Committee has discussed a number of times the importance of consumers, businesses and, in this example, enforcers understanding the rules and being clear about what is needed from them. Therefore, we have drawn together a wide spectrum of consumer, business and enforcer groups to work with us on a co-ordinated approach, which is considering education as well as the content, channels and timing of guidance. We anticipate that any such guidance will take account of other consumer law enforcers, such as the CMA, which will ensure that not only Trading Standards but the broader enforcement body is involved. The new clause refers only to Trading Standards, but the Government’s guidance looks more widely.

The implementation group includes the Trading Standards Institute, and we are working with it, as well as with other stakeholders, to consider what guidance is needed. That is already happening, so there is no need for a specific requirement in statute to provide guidance. It is already in hand.

To move on from the new clause to the broader points that the hon. Lady raised, she mentioned a number of issues around the resources for Trading Standards, training and such things, as well as concerns about the ability of Trading Standards to deliver the new, enhanced consumer enforcement role that the Government envisage for it. That new role is one reason for us putting significant central Government funding— £14 million—into setting up the National Trading Standards Board and getting it running effectively. It has responsibility for prioritising trading standards enforcement across local authority boundaries. For example, the scambuster teams work across local authority boundaries to target the worst rogues, misleading trading practices and fraudulent activity, which might be beyond the capacity of individual local authorities, as a couple of hon. Members said earlier.

The idea is to make much better use of the resources and ensure that those scams that run across local authority boundaries are picked up and tackled. In the past, without that co-ordination, it might have been harder for local authorities to do that work.

As for whether there is a gap in consumer enforcement, the great majority of consumer law enforcement will be done by Trading Standards services, with the new National Trading Standards Board and the extra funding. The board will be responsible for prioritising enforcement nationally, across local authority boundaries, including in respect of scams, illegal money lending and incompetent or rogue traders. The CMA will have primary expertise on unfair contract terms, to allow it to bring enforcement action in areas with market-wide problems. It will also have other consumer enforcement powers, to ensure that consumer choice is not restricted, even where markets are competitive. An issue that has come up a number of times in previous debates is airline payment surcharges as a result of misleading advertising of prices and so on. The CMA will pick up such issues. The consumer landscape is designed to pick up the different levels at which issues arise.

The hon. Member for Cardiff South and Penarth raised the question of online purchases and the hon. Member for Walthamstow asked whether it was too expensive for Trading Standards to pick up cases such as that. This is one reason why we have the National Trading Standards Board: to ensure that it can co-ordinate national trading standards cases which, by definition, go across boundaries. The CMA also has the role of co-ordinating enforcement activity across the EU, an issue raised by the hon. member for Cardiff South and Penarth. It has a broader remit than just across local authority boundaries, so where there are issues across the EU, that clearly falls within the CMA’s remit.

The hon. Member for Walthamstow raised the issue of funding for trading standards. We recognise that some of the enhanced consumer measures in theBill are new and that it will take time to for them to bed down and for trading standards officers to get accustomed to using them. The Trading Standards Institute is looking into what training officers will need in the new measures. As the hon. Lady said, the provision of local trading standards is ultimately a matter for local authorities. She asked whether such training could be a chartered profession, and as she said, that would be a matter for the Trading Standards Institute to look at. It is partly up to the institute to identify whether it wants to establish a chartered profession. It may need the agreement of the Privy Council to use that term, but it is up to the institute to decide whether it wants to pursue the matter. The Government would not get involved in designing the training; that is clearly a role for the Trading Standards Institute, and one it has performed extremely effectively for a number of years.

When we consulted on the draft Bill, we had evidence from the Local Government Association, which felt strongly that local authorities are best placed to determine the competence of their officers and that it should be left to them to design a trading standards service that suits the local conditions, and to ensure they have officers able to perform the service that is needed. The Government recently published the statutory regulators code, which will be subject to parliamentary approval, to replace the statutory regulators compliance code. It requires regulators, including local authorities, to ensure that their officers have the necessary knowledge and skills to support those they regulate, to enable enforcers to choose proportionate and effective approaches. So there is a code that they have to sign up to and within which they have to operate.

On the numbers of staff that have been lost and whether Trading Standards will be able to support the measures in the Bill and enforce them effectively—the point raised by the hon. Member for Middlesbrough—we aim to review the measures in the Bill in three to five years to see how they are bedding in and whether Trading Standards is able to make the best use of those powers. We will look at performance, what is happening across the country and the impact the changes are having.

We recognise that pressures on local authority budgets are clearly having an impact on Trading Standards, but we believe that the National Trading Standards Board, which looks at trading standards across the UK, is well placed to ensure that its resources are being directed towards areas of greatest threat to consumers, and to make sure that it is picking up on issues of concern.

The hon. Member for Walthamstow asked whether local Trading Standards will be able to go the National Trading Standards Board about local issues or to Ofgem or other nationwide organisations. The National Trading Standards Board includes representatives from local Trading Standards teams, so they have that representation already on the NTSB. One of the reasons for creating the National Trading Standards Board was to give Trading Standards a stronger voice. Having a nationwide voice that can act on its behalf makes it easier to raise issues with the sector regulators. The issues being raised locally with Trading Standards can be fed into the National Trading Standards Board, which, if necessary, can raise them with regulators that also have a nationwide remit. The idea is that Trading Standards will have a stronger voice in that regard. I agree with the hon. Lady that it is important to make sure that such actions are co-ordinated.

My hon. Friend the hon. Member for Plymouth, Sutton and Devonport raised the issue of the training necessary for trading standards officers to be able to investigate online trading. Part of the money that the Government are providing to the National Trading Standards Board includes funding to support an e-crime unit. The OFT currently runs an internet lab, which will be transferring over to the CMA, to investigate online crime. There is resourcing, support and expertise in those teams.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

May I thank my hon. Friend for that announcement, which is very good news.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am glad my hon. Friend is pleased; that is excellent news first thing in the morning.

The hon. Members for Walthamstow and for Middlesbrough asked about reviewing progress in this area. There will be a formal review three to five years after implementation, but BIS will also annually monitor the performance of the new system through the grant allocation process. There will be ongoing monitoring to make sure that things are working in the right way, through that grant-making process.

The hon. Member for Walthamstow asked what will be done to ensure that we do not have gaps in enforcement if Trading Standards does not have the resources to carry out its functions. Currently, the NTSB and the OFT work together as part of the Consumer Protection Partnership and the joint task group to agree how to tackle major threats to consumers, and that will continue. The CPP is an effective way of identifying the issues and problems that are of most concern to consumers. It makes sure that enforcement activities are co-ordinated effectively, and that co-ordinated action is taken on the issues that are most likely to cause problems and where such action is most needed. That will continue with the new regime.

I hope that has answered all the questions that were raised, and that I have reassured the hon. Member for Walthamstow that guidance will be produced as part of the implementation group’s work and that such a requirement need not therefore be included in the Bill. I hope she will therefore not press the new clause to a vote.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that reply. It is helpful to know that guidance will be produced. It would also be helpful to know whether the guidance will cover a number of the issues that we were trying to raise with her concerning how Trading Standards will operate in this new consumer landscape. We are asking it to take on a broader role, given the money that will be taken from the Office of Fair Trading budget. The OFT is being abolished and so no new money is being made available; money is being transferred over.

The Minister talked about the scambusters teams—[Interruption.] She pulls a face, but the National Trading Standards Board budget sets out clearly how money is being transferred from the OFT to its reserves. Given that the OFT is being abolished, one would expect the money to go somewhere, but we have to see that resources are being used in a prudent fashion. To where might the funding go at the local and national level? At what point will trading standards officers be given guidance about referring issues on? What they see in their local community might be taking place in other areas.

The Minister talked about using enhanced consumer measures, about guidance on what is a major threat, and about the Consumer Protection Partnership looking at the major threats to consumers. How is a major threat defined? What guidance might be given to Trading Standards? If my trading standards officers in Walthamstow were looking at double charging, would they be told that they should consult their National Trading Standards Board colleagues about whether double charging was taking place in other areas of the country and that the matter should therefore be referred on for a market-wide study? The CMA has a specific vision of market-wide studies and what the test for a national review might be. It would be helpful to know what guidance will be given to trading standards officers about the point at which they should refer on.

It is welcome that the Minister says that Trading Standards will be able to refer things up. She is right to look at the escalation process. It would be helpful to know whether Trading Standards referred up copycat websites, because we have all had casework on that and have tried to refer it on. Given that the landscape is already in place, it would be useful to know whether that happened. We would all like to make the hon. Member for Plymouth, Sutton and Devonport happy and see him content in life. Can we have confidence in the new landscape, and be confident that guidance will be given to trading standards officers about the filtering process? What is happening at a local level, and what might be escalating across the country? None of us wants a system whereby the detriment has to be severe and seen in many different areas before the matter gets referred. That is the sort of guidance we were looking for. At what level will trading standards officers be told that it is not an issue they should deal with individually, but that they should refer it on to the scambusters teams?

The Minister said that the impact of the Bill will be reviewed in three to five years, which is welcome. Given that our Trading Standards officer corps has already been decimated, what will be left to take this forward and how will that impact on Trading Standards’ ability to use these powers? Has the Minister’s Department made any assessment of the current capacity of Trading Standards and the loss in officers we might see during that three to five-year process? If she expects Trading Standards to take on such guidance, but it no longer exists in some areas or exists on a shoestring basis, can these provisions actually be put into practice?

Will the guidance that the Minister expects our pregnant panda of an implementation group to draw up cover escalation and co-ordination? For many of us, increasingly, that is where the pressure on finances will come. There is also the question of the point at which money was provided for national-level work on copycat websites under the current proposal. That seems like quite a good model to use to test the new landscape. [Interruption.] I see that the Minister is working through her notes to find the answers to those questions. It would be incredibly helpful to understand exactly what the guidance will cover.

Jennifer Willott (Liberal Democrat, Cardiff Central)

On the issue of guidance to trading standards about the different parts of its work, we are looking to provide guidance on both the enhanced consumer measures and how to use them, and the investigatory powers. That will be separate from the operational guidance, so a range of different information will be available to trading standards. As for how intelligence is gathered from trading standards to identify nationwide issues, there is a national tasking group. This is where trading standards officers share information on so-called level 3 cases, which are of national importance, and identify them. Trading standards officers are also represented on the board of the National Trading Standards Board, which pulls together the intelligence which comes from across the country. They feed into that automatically, because they are part of the board which operates with the NTSB.

The hon. Lady also raised the issue of local authorities not providing a trading standards service. As I mentioned earlier, there is a regulators code, which will be subject to parliamentary approval. However, that requires regulators, including local authorities, to ensure that their officers have the knowledge and skill to ensure enforcement. The responsibility to provide a trading standards service will still sit with local authorities. They will have a responsibility to provide it.

Let me turn to forecasting trading standards numbers. BIS is liaising closely with the Trading Standards Institute, which is reviewing trading standards numbers across the country. We do not have a forecast of specific numbers, but as I said, we believe strongly that the Trading Standards Institute is an extremely important part of the process. By committing significant amounts of money to the National Trading Standards Board, we are demonstrating the Government’s commitment to the profession and the fact that we think that trading standards has an important role to play. I hope that answers the hon. Lady’s queries.

Stella Creasy (Labour, Walthamstow)

I thank the Minister. On that point, it sounds as though she is suggesting that the National Trading Standards Board might actually fund trading standards officers in local areas should there be pressure on them. The Minister has just said that she is committed to providing trading standards officers. I wonder whether she would clarify that, because I am sure that many local authorities would be very interested to know whether there will be funding at a national level to ensure that a local trading standards service is provided.

Jennifer Willott (Liberal Democrat, Cardiff Central)

No, I did not say that; I said that the Government are showing their commitment to the importance of trading standards work by funding the National Trading Standards Board, which has a separate role from that of trading standards officers at a local authority level. However, we are trying to ensure that trading standards services can make the most efficient use of their resources by co-ordinating the work done across local authority boundaries much better. We need to ensure that we can identify the areas where the local level is not the most effective place to take enforcement action. Issues such as the scambusters team or some of the online crime that the hon. Lady has raised have a nationwide footprint. We need to ensure that this work is better co-ordinated and that trading standards’ resources are used in the most effective way possible.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer; however, I think the question that many of us would like answered is whether we will have a local trading standards person to whom we can report issues. For example, to whom would we report issues about estate agents or copycat websites? What the Minister said does rather suggest that she expects that under the new system there might be some sort of national provision or national organisation, but to whom would we report?

Jennifer Willott (Liberal Democrat, Cardiff Central)

To trading standards.

Stella Creasy (Labour, Walthamstow)

To whom would we report if trading standards is cut back at a local level to such an extent?

Sheila Gilmore (Edinburgh East) (Lab) rose—

Stella Creasy (Labour, Walthamstow)

I see that my hon. Friend is seeking to intervene. She has extensive experience in this area, and I wonder whether she has a scenario that she would like to put to the Minister.

Sheila Gilmore (Labour, Edinburgh East)

I do indeed have an example, from a constituent who contacted me recently. He sought advice from trading standards, but was told that they do not deal with “the public” and that he should phone the Citizens Advice Bureau helpline. However, the person answering the helpline did not give a very satisfactory answer—probably through no fault of their own, but because of a lack of training. He felt let down by the system over what was perhaps a relatively complex problem for CAB volunteers to deal with.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend for telling us about that experience. As I have said, if we get this piece of legislation right, two thirds of our casework will disappear; if we get it wrong, clearly it could increase by two thirds, as increasing numbers of people will come to us because they cannot get an answer at local level.

It is a simple concern: the Minister says there is a statutory duty to provide trading standards through the regulators code; we are concerned about the people on the ground to put that into practice. The Minister is making great play of the national commitment to trading standards and the fact that funding is being made available for services. Given that we are talking about the guidance that might be provided to trading standards officers, it would be helpful if she clarified what she intends to do if there is not a local trading standards person—there might be one only for a region under the system she is talking about. Local authorities might say that they would contribute to a regional base. Indeed, some hon. Members might be interested in pooling trading standards services, but then there will always be a tension about the capacity to deal with very localised issues.

We will debate later how to deal with the very localised example of consumer detriment—the people who often appear on our doorsteps complaining about the same traders—as well as how to deal with regional scams. I will go back to what I know to provide an example. There are illegal loan sharks who are very localised individuals, and companies, such as one called Cash Direct, based in Romford, Essex, that is posting leaflets that do not indicate the interest rates through doors in Walthamstow. Those examples require enforcement action, but who might provide it at those different levels if the officers do not exist?

The Minister says it is a local authority decision to fund initiatives, but there is a national pot of money. Who might pick up the slack? All our constituents want to know who is getting the guidance and where they might information and advice. They want to avoid the trap, identified by my hon. Friend the Member for Edinburgh East, of having to call a helpline that is not particularly helpful in knowing where to start.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Consumers should contact citizens advice bureaux—the main point of contact for consumers—which will be able to direct cases to the most effective enforcement body. That is a much simpler process for consumers to know that they can contact them, and they will ensure that the matter is directed to the right place.

I would like to make it clear that we have seen no evidence of councils getting rid of trading standards officers altogether. They often find more efficient ways to use their resources and co-ordinate more effectively across council boundaries. With regard to the matter just raised by the hon. Lady, about someone advertising in her constituency while based in Romford, it makes a lot of sense on such issues for trading standards to co-ordinate more effectively across boundaries. That is a much more efficient use of their resources.

Stella Creasy (Labour, Walthamstow)

The Minister has indicated the future of trading standards as being not based in local areas, but probably a regional service. We hope citizens advice bureaux will still exist, because we have also seen cuts to the advice landscape at a local level. We hope there will be somebody to pick up the phone to direct the call.

Stephen Doughty (Labour, Cardiff South and Penarth)

To Powys.

Stella Creasy (Labour, Walthamstow)

To Powys—if it is about an estate agent—where we hope they will understand the nature of the property market in London.

I am happy not to press the new clause to a vote, because it would be helpful to move on to other debates about how the powers will operate. However, from what the Minister has said, hon. Members will be mindful that we will be looking at a skeleton service trying to cover the whole country and hoping it will be able to pick up increasingly complex issues. I am not sure that will make the hon. Member for Plymouth, Sutton and Devonport happy. He might find Plymouth trading standards being technically based in Stafford as part of a regional collaboration to be a step too far. I am sure he would be concerned about whether they were really able to exercise the powers in the legislation. The production of guidance on the powers is welcome; however, we are concerned that there might not be the people to put them in place.

Schedule 5 - Investigatory powers etc.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 76, in schedule 5, page 65, line 13, after ‘under’, insert ‘—(a)’.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

Stella Creasy (Labour, Walthamstow)

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

Stella Creasy (Labour, Walthamstow)

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

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

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

Sheila Gilmore (Labour, Edinburgh East)

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

Stella Creasy (Labour, Walthamstow)

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

Andy McDonald (Labour, Middlesbrough)

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

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

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

Stella Creasy (Labour, Walthamstow)

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

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

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

The Government have included some exemptions. For example,

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

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

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

Andy McDonald (Labour, Middlesbrough)

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

Stella Creasy (Labour, Walthamstow)

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

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

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

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

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

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

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

Andy McDonald (Labour, Middlesbrough)

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

Stella Creasy (Labour, Walthamstow)

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

Mary Glindon (Labour, North Tyneside)

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

Stella Creasy (Labour, Walthamstow)

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

“In effect this is likely to kill the routine inspection which while in decline in any case”—

because of reduced resources that trading standards departments have—

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

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

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

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

Andy McDonald (Labour, Middlesbrough)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

Stephen Doughty (Labour, Cardiff South and Penarth)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

Fiona O'Donnell (Labour, East Lothian)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

Fiona O'Donnell (Labour, East Lothian)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

Andy McDonald (Labour, Middlesbrough)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

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

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

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

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

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

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

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

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

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

Andy McDonald (Labour, Middlesbrough)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

Stella Creasy (Labour, Walthamstow)

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

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

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

Stella Creasy (Labour, Walthamstow)

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

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

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

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

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

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

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

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

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

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

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

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

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

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

Stella Creasy (Labour, Walthamstow)

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

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

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

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

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

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

Laura Sandys (Conservative, South Thanet)

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

Jennifer Willott (Liberal Democrat, Cardiff Central)

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

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

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

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

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

Stella Creasy (Labour, Walthamstow)

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

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

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

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

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

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

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

Schedule 6 - Investigatory powers: consequential amendments

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 87, schedule 6, page 92, line 17, at end insert—

44A In section 44(4) (service of documents)—

(a) omit “28(2) or”, and

(b) omit “purchased or” in each place.’.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 88, schedule 6, page 95, line 5, leave out ‘(h),’.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

With this it will be convenient to discuss Government amendments 89 to 96.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Amendments 88 to 96 will introduce minor additional changes in schedule 6 to the Criminal Justice and Police Act 2001 to reflect the fact that certain specific powers are being retained. Amendment 96 makes the same provisions as amendment 88, but it further makes amendments to remedy pre-existing errors in paragraphs 4A and 9A of schedule 2 to the Criminal Justice and Police Act 2001. Again, the amendments are minor in nature and are necessary to deal with technical issues in the current drafting.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 97, in schedule 6, page 97, line 11, at end insert—

Clause 79 - Enterprise Act 2002: enhanced consumer measures and other enforcement

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 105, in clause 79, page 42, line 14, at end insert—

‘(3) For the purposes of the enhanced consumer measures set out in Schedule 7 the Secretary of State shall publish a review of the powers of Trading Standards Officers to consider—

(a) the number of enforcement actions by Trading Standards taken under the enhanced consumer protections set out in this Act;

(b) any additional operational costs to Trading Standards Services associated with the new powers and procedures under sections 77 and 79 of this Act; and

(c) the establishment of a statutory minimum standard for all officers carrying out Trading Standards functions in any local authority and the role of a competent body to set, test against, apply and monitor those standards.’.

Clause 79 will introduce the enhanced consumer measures talked about so much. Enhancement is an apposite term. According to the Government, the clause will give more flexibility to the public enforcers who deal with breaches in consumer law. We have previously debated whether there would be a way to deal with the dodgy builder who preys on the local community, and the Minister has suggested that the enhanced consumer measures might be able to deal with that, with more flexibility for enforcers to take on such individuals.

The clause will bring into play schedule 7, which is about the enhanced powers. It does not specify what the enhanced powers are, because the Government believe that that will give the flexibility. It also opens the door to the possibility of private bodies having the power to exercise enhanced consumer measures and to take action. That is welcome, because organisations such as Which? and Citizens Advice might be able to exercise such powers.

We have, however, questions that we want to ask. We are a little concerned, especially with some of the Government amendments, that loopholes could develop, and it would be useful to get the Government’s perspective on that. We have identified a gap this morning in how local Trading Standards will be able to use the enhanced powers. I do not share the Minister’s confidence that, under the current system and current resourcing, local Trading Standards will be able to take on every rogue builder or dodgy trader in our local communities. I therefore think that private enforcers might have a role to play. I note that a Government amendment will require private enforcers to act in a particular manner.

We are concerned that what I might call the self-regulation or intervention test will come into play. Having enhanced consumer powers and more flexibility is all well and good, but, unless we can back them up with a serious intervention, traders might simply feel that they do not have to comply. Will all enforcers always be able to back up with legal action any threat of intervention and the use of enhanced consumer measures, which, after all, are designed to avoid legal action?

As I have often explained to my partner, it is always self-regulation or intervention, but he has to understand that intervention is a realistic threat, otherwise self-regulation does not seem a conducive option. [Interruption.] My hon. Friend the Member for Middlesbrough looks concerned. We all want to avoid legal challenge, but we recognise that that role is needed. I think that that is why Which? expressed the concern:

“We are concerned that the threat of court action is not always sufficient to encourage traders to engage meaningfully in negotiations with enforcers over remedies... This risk is likely to be especially acute as enforcement budgets are streamlined.”

It is therefore keen to see

“enforcement mechanisms...extended. This could include either the ability for enforcers to impose monetary penalties or a simplified and streamlined court process.”

Put simply, if we are to have enhanced consumer measures, how do we know that they will really have teeth? How do we know that Trading Standards will be able to engage traders in a meaningful conversation? The threat of court action could become the thing that actually prevents court action, because traders will engage with the enhanced consumer measures. Problems will be advertised and particular conduct will stop. That is why we have suggested that it would be helpful to have a report.

I am sure that the Minister will say that the Government will review the powers in three to five years. We think that, because enhanced consumer measures are quite a new thing, it would be worth reviewing in a shorter time frame. We need to be confident that the powers are being used in the pre-emptive way in which we think they are intended. It is also important that the Government are clearer about why they have given only the potential for private enforcement action and for private bodies to have the powers to act in the consumer’s interest.

If there is a case for such measures, the Government should get on and do it, and we could have proper scrutiny. I am sure that the Minister will say that the measures will be introduced in a statutory instrument—we all know how much fun SIs are—but if we are to give private organisations such as Which? the power to act, it is right to see that within the context of the Bill. The fact that the power is there only in principle is a concern to us. We want to make sure that if we are going to do this—we think there is a strong case for doing it—we look at it in the context of the Bill.

We are also concerned that, if private enforcers are brought in, they may be asked to pick up the slack generated by gaps in Trading Standards. Resources for local Trading Standards are increasingly stretched, which the Minister has acknowledged to be a problem, and we could be looking to Citizens Advice or Which? to act as the enforcement agency by default.

Of course, that creates some very real challenges for us in being sure that these services will match up. No one is suggesting that Which? and Citizens Advice do not act in the consumer interest but they may not always act in the public interest, which after all is what we ask public agencies to do. This is a possible tension, which we think needs resolving. I suspect that the Minister will point to Government amendment 112 and suggest that that is how they will resolve it, but that also creates the impression that we will look to these private organisations to fill the gaps in public provision. We want clarification on this issue and that is why we have tabled the amendment. I will be interested to hear the Minister’s response.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The amendment seeks to introduce a requirement on the Secretary of State to review the use of the enhanced consumer measures, including how often they have been used and the cost to Trading Standards. In addition, the review would include the costs to Trading Standards of the changes we are making to its powers in schedule 5, whether a statutory minimum standard for all trading standards should be introduced and if so whether a body should be established to do that. The amendment does not say when the review should take place. As the hon. Lady highlighted, we have of course already committed to a post-implementation review of both the enhanced consumer measures and the changes the Bill makes to Trading Standards’ powers. Our impact assessments for both state that the policies will be reviewed three to five years after the measure comes into force. It is important to give the policies enough time to bed in and start operating effectively before we review them.

In addition, when we introduced the power to extend the enhanced consumer measures to private enforcers, the Government said that we want to see how the measures bed in and what the experience is of the public enforcers using them, before deciding whether their use should be extended to private enforcers. The hon. Lady asked about this when we talked about extending the use of the measures to Which?. At the moment they would only be extended to Which?, because there is a designation of private enforcers, and Which? is the only organisation currently designated as such.

The measures we are introducing in the Bill are innovative and far-reaching, and we are providing enforcers with a great deal of flexibility in order to get the best outcomes for consumers. We think it appropriate that at the beginning, their use be limited to public enforcers only. Before the power is exercised to extend them to private enforcers, we want to see how they bed in and look at the experience of the public enforcers using them. We can then consider whether it is appropriate to exercise the power. This will enable us to have more information on the impact of the measures, including the potential impact of extending their use, and then to make a clear decision on when and how they should be extended.

Clearly, when deciding whether or not to extend the use of these measures, a key, fundamental consideration will be how often they have been used and the cost to Trading Standards of using them. We accept that this is quite a change to the way public enforcers operate at the moment, and we accept that it will not come into regular use overnight and will take a while to get used to. As we have mentioned, the implementation group is looking at the guidance and at what will be required to assist Trading Standards. The Trading Standards Institute will also consider the training which trading standards officers will need to operate these new powers.

Turning to the proposal in the amendment to establish statutory minimum standards for trading standards officers, I have already mentioned that an updated and simplified statutory regulators’ code is expected to come into force in April 2014 and replace the current Regulators’ Compliance Code. Regulators, including local authority trading standards, must have regard to this statutory code. The code requires regulators within scope to ensure their officers have the necessary knowledge and skills to support those they regulate.

The Government will conduct a light-touch monitoring exercise approximately six months after the implementation of the code, to see how regulators have been adapting to the code’s principles. That is quite a short timeframe before we look at this. In addition, the Better Regulation Delivery Office will continue to assist all the relevant bodies to implement the provisions of the code. At a local level, local authorities are best placed to determine their officers’ competency because they have a better understanding of local priorities and are able to take into account new models of delivery and collaborative approaches with other businesses and councils. The Local Government Association supports that view.

The hon. Lady asked whether the enforcement mechanisms should be extended to enable enforcers to impose financial penalties. We do not think enforcers should be able to impose monetary penalties. If they were able to, businesses that dispute a penalty would have to take the case to court to prove their innocence. In disputed cases, it should be for the enforcer to bring the case to court, rather than for businesses to appeal against the penalty. Under the redress measures, an enforcer can seek an undertaking from a business to pay their consumers’ redress, but, importantly, if the business disputes that that redress is warranted, the enforcer will have to prove its case in court. That is an important element.

The hon. Lady expressed concerns about the enforcement mechanisms for ensuring that businesses comply with the measures. If a business does not comply with a court order or an undertaking, individual traders, directors or officers of the company who have wilfully failed to ensure compliance can be committed for contempt of court, which is punishable by up to two years’ imprisonment. There are significant penalties for non-compliance. In addition, individual traders, directors or officers of companies and the company itself can have property sequestered or be given an unlimited fine. Therefore, penalties are available for ensuring that companies comply with the measures.

The question was raised whether Trading Standards will have the resources to use the new powers effectively. A key part of the change is that Trading Standards will have a route through the civil courts, rather than the criminal courts. Civil actions are cheaper than criminal prosecutions, so it will be easier for Trading Standards to use its powers. We feel that the change will save Trading Standards some money each year. As I said, the Trading Standards Institute is looking at its training needs, and it is important to take that into account.

In the consultation, BIS surveyed Trading Standards on this element of the Bill. We found that if these measures had been available, as many as 250 cases could have been dealt with in the civil, rather than criminal, courts in 2011. In 2011-12, there were 1,972 formal proceedings by Trading Standards for breaches of consumer law. Of those, the overwhelming majority were prosecuted under criminal law, and only a small number under civil proceedings. It will be cheaper and easier for Trading Standards to prosecute cases under civil law, and it will have back-up powers to ensure that businesses comply with the agreements. I hope that answers the hon. Lady’s questions. I ask her to withdraw her amendment.

Stella Creasy (Labour, Walthamstow)

It was welcome to hear the Minister say that there will be a review of how the powers operate. We will discuss this matter further when we debate amendment 112, but Opposition Members are concerned that the way the system is being set up could lead to a presumption that private enforcement agents—in particular, Which?—will pick up the issues that Trading Standards cannot. I appreciate that the Minister has said that there will be a review in three to five years without moving forward the powers of private bodies. The Opposition want to see that review fit in with legislation such as the Bill. There needs to be clarity about what added value there would be from private bodies having these powers alongside Trading Standards. The Minister is presuming that Trading Standards will be able to undertake the role that she wants them to undertake.

Earlier, the Minister said that the Government do not have a view about whether Trading Standards should become a chartered profession. Minimum standards are part of the process of standardisation and will ensure the high quality of Trading Standards across the country. Will the Minister clarify whether, if the Trading Standards Institute came forward with such a proposal, the Government would support and, indeed, encourage it? That is a different point from whether they think it should write the guidance itself.

Jennifer Willott (Liberal Democrat, Cardiff Central)

As far as I am aware, the Trading Standards Institute has not raised that with the Government yet.

Stella Creasy (Labour, Walthamstow)

Given that the Government have assured us that such a review will take place and cover those issues, I beg to ask leave to withdraw the amendment.

Schedule 7 - Enterprise Act 2002: enhanced consumer measures and other enforcement

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 111, in schedule 7, page 102, line 1, leave out ‘a private designated’ and insert ‘an’.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 112, in schedule 7, page 102, line 31, at end insert—

‘(8A) Subsection (8B) applies if—

(a) an enforcer exercises a function in relation to a person by virtue of subsection (1) or (2),

(b) that function is a relevant function for the purposes of Part 2 (co-ordination of regulatory enforcement) of the Regulatory Enforcement and Sanctions Act 2008, and

(c) a primary authority (within the meaning of that Part) has given advice or guidance under section 27(1) of that Act—

(i) to that person in relation to that function, or

(ii) to other local authorities (within the meaning of that Part) with that function as to how they should exercise it in relation to that person.

(8B) The enforcer must, in exercising the function in relation to that person, act consistently with that advice or guidance.’.

Stella Creasy (Labour, Walthamstow)

The amendment is quite interesting, and we want to ask a number of questions. It is clear that the Government intend to provide private enforcement bodies with powers of enhanced consumer measures. The Minister said in a previous debate that that will not be introduced for three to five years, because they will first conduct a review of Trading Standards, but they are clearly looking at how the Bill can enable that.

The amendment, which will require private enforcers to act in accordance with the guidance provided by primary authorities, is worthy of further scrutiny, because it raises a number of questions. It would be helpful if the Minister clarified what she sees as a primary authority. Would the National Trading Standards Board be able to direct Which?—the private enforcer that we are looking at the moment—to take a case? Would Which? be able to refuse to take the direction because it is an independent organisation after all? Private enforcers are independent of Government direction, so what would happen if they were unable to exercise their judgment under the Bill to use these enhanced consumer measures? Would they have those powers removed? I ask that because there does not seem to be provision in the Bill for them to be removed. Alternatively, would the private enforcer be sanctioned?

It would be very helpful if the Minister set out how she sees this particular amendment operating, and what would happen if there was a disagreement with the guidance. For example, what would happen if Which? believed that the guidance was not strong enough, because it felt that there was a consumer interest in taking action? What would be its right to use the powers that the Bill gives it? Would it be restricted in speaking out? Would it face having powers removed if it challenged the way that the guidance had been written and it felt that the enhanced consumer measures should be applied to a particular example of trading, but it was not given that opportunity?

Could we see a situation in which private enforcers end up plugging the gaps in public enforcement agencies? Indeed, they might be required to do so. Could they be asked to do so, given the guidance? It would be helpful if the Minister clarified how she sees that relationship working on a day-to-day basis, because a number of us are concerned that either the burden or the restriction on Which? could be excessive, and neither of those situations would be in anybody’s interests. Consequently, I am interested to hear what she has to say on that point.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Government have said that we need to consult before this power would be extended. It is not something that we consulted on when we did the draft Bill. It was raised by, among others, the Business, Innovation and Skills Committee, when it did the pre-legislative scrutiny. The Committee made a recommendation that this power should be introduced.

There is potential for the power to be quite important for Which? and anyone else who may be designated in the future as a private enforcer. However, the hon. Lady has asked some important questions about it, and it is clear that the issues she raises need to be bottomed out before the power could be extended. That is one of the reasons why the Government have said that it is important to consult carefully all the different bodies that would be involved before the power is extended to private enforcers.

The hon. Lady also asked what would happen if a private enforcer disagreed with the advice issued by the primary authority and wished to take enforcement action anyway. To clarify matters for members of the Committee, big companies have a primary authority that is designated to them and with which they have their key relationship. That primary authority acts on behalf of Trading Standards to ensure that there is a consistent relationship and a consistent message, and so that if the company has outlets across the UK, it does not have to deal with individual Trading Standards officers. The primary authority can organise much more effective co-ordination across the country. Primary authorities can also issue advice, which all other authorities across the country must respect, and they can then co-ordinate enforcement and inspection activity on behalf of Trading Standards across the country. That is how that relationship works, and why it is quite important that it is set out in the Bill.

If a private enforcer disagrees with a primary authority’s advice and wishes to go ahead with enforcement action anyway, the Better Regulation Delivery Office recommends that they contact the primary authority as soon as possible to discuss the situation. Most issues can be resolved informally in that way, and the primary authority may well agree with the private enforcer’s arguments regarding enforcement action being justified in the circumstances, so it may well be that there is a way to negotiate an agreement with the primary authority. In those cases, the primary authority can then help the business and the private enforcer to reach a satisfactory resolution.

On occasions when a disagreement between a primary authority and a private enforcer occurs, the BRDO will work with the two parties to try to resolve the matter. However, a lot of the issues that the hon. Lady raised will need to be considered in any consultation that is carried out prior to the power being extended, to ensure that we have looked at all the different issues around the relationship between the primary authority and the private enforcer so that it is well thought through and well planned, and to make it as effective as possible if and when the power is extended.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer. She rightly says that the Government have not yet consulted on how private enforcement agencies could take up the powers, but the amendment seems to pre-empt that. She says that the Better Regulation Delivery Office will be able to resolve any dispute between a private enforcer and a primary authority, but what if it cannot?

The amendment pre-empts any resolution and states that the primary authority will always win out. If that is the Government’s intention, surely they should simply state that so that it defines the consultation. Any private enforcer agency taking on such powers will probably want to know that, ultimately, it will be acting as an arm of the state rather than as an independent body using enhanced consumer measures. I am sure that there are cases for both options, but the amendment seems to pre-empt the consultation that the Minister says must take place.

Let me give an example of where conflict might arise so that the Committee can understand our concern that the Minister is jumping the gun. Owing to my history with payday lenders, I know that a number of consumer organisations were expressing concerns about how payday loans companies were operating some time ago. The primary authority at the time, the Office of Fair Trading, was not concerned—it took a while for it to catch up. Under the enhanced consumer measures, if a private enforcer agency had identified companies acting like the one putting out leaflets in my local community, but the primary authority said that it could not take action—as it did when I asked whether it was acceptable that the Wonga adverts did not show an interest rate—we would be hampered.

The Minister will remember our discussion last Thursday of the growing concern about how legal advice is sold by insurance companies. If the Financial Conduct Authority did not feel that there was cause for concern, would Which? be hampered in challenging that kind of behaviour?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Let me clarify that for the hon. Lady. Neither the OFT nor the FCA are primary authorities. The primary authority is a local authority that has a relationship with a company and acts as the main Trading Standards link to that company. The examples that the hon. Lady raised are not relevant to the amendment.

Stella Creasy (Labour, Walthamstow)

But if a private enforcement agency sought to take action against a national company because of how it was operating in a local area, the enforcement agency would have a relationship with the primary authority. Would it not be regulated by the FCA? Who would set the standards for an enforcement agency’s behaviour? If we take the example of legal advice sold through insurance companies, will the Minister clarify who such companies will be accountable to if a private designated enforcer decided that it wanted to use enhanced consumer measures?

The Minister made great play of the requirement suggested by the hon. Member for South Thanet that information be provided on websites. If Which? wanted insurance companies that were advertising legal advice to set out the limitations of such advice on their websites, would it be able to make them do so under enhanced consumer measures? It seems that that would not be a big enough case to take to the CMA, but it might be something for which enhanced consumer measures could be used.

Jennifer Willott (Liberal Democrat, Cardiff Central)

A lot of the issues the hon. Lady raises show exactly why we must consult before we introduce the power. Nevertheless, I want to clarify the fact that the amendment relates specifically to primary authorities. It therefore concerns local authorities, so the issues that the hon. Lady raises do not relate to the amendment.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that clarification, but will she also clarify whether the enforcers listed in clause 77 come into play on this issue? They would be the authorities that set out guidance about what action and enforcement can be taken.

The Minister has not quite answered the question about insurance companies. How would a private agency take action against insurance companies for how they were advertising legal advice? That is the sort of action against which enhanced consumer measures might be sought.

I take the Minister’s point that such issues will be discussed during the consultation, but we are asking questions about the amendment to make the point that she is pre-empting that consultation. If private enforcement agencies are going to be able to take action, surely a framework that allows them consistency and independence of thought on such matters would be better. Will the Minister clarify whether she sees any of the organisations listed in clause 77 as primary authorities?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will make it very clear: enforcers are laid out in the Bill, but a primary authority is not the same as an enforcement agency. I tried to clarify in my previous comments the fact that the primary authority is a local authority that has a lead relationship with a business, usually based in its area, that has UK-wide coverage. For example, a furniture manufacturing company may have outlets across the UK. Very often, the primary authority will be the local authority—

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Order.

Sir David Amess (Conservative, Southend West)

I advise the Committee that I have been told that there will probably be two Divisions at 2.30 pm, which means that we would suspend for about 20 minutes.

Stella Creasy (Labour, Walthamstow)

On a point of order, Mr Amess. I think the Minister is aware of the concern I am about to raise. Committee members will know of the Opposition’s ongoing concern about the plans for the supervision of estate agency, and in particular about Powys county council’s role in overseeing that as part of the new consumer landscape. Last Thursday, the Minister assured the Committee that it was solely that council that was leading on the proposal to supervise estate agency following the abolition of the Office of Fair Trading. Members will know that the Opposition are concerned about that, because the bid documentation that we have seen identifies both Powys and Isle of Anglesey county councils as being involved in the management of the bid.

I therefore wrote to the Minister on 6 March to seek clarification on the bid documents. This morning, I had a response from her to my request for information, and I seek the guidance of the Chair, because although the Minister still states that Anglesey is no longer involved in delivery of the service, correspondence that I have had from Powys county council this week says that it is. More importantly, our request for information that would allow us to assess whether this was an appropriate form of supervision has been treated as a freedom of information request, and I have been told that we will not get an answer until 3 April at the earliest. That is clearly post-Committee. Given that the Committee is asking for information to clarify a point on which there has been this much confusion—there are contrasting statements on the issue—it seems rather strange that we will not get that information in time for it to be considered by the Committee, or indeed the House of Lords, which will look at the issue this evening. I am sure that it will want clarity on who will run which services.

Let me be clear: the note that we have had from Powys county council says that there will be a direct financial interest for Anglesey in the running of that service. That rather seems to go against the Minister’s statement. I wonder whether the Chair can help us to understand whether we should expect that information in time for the Committee to be able to consider how Trading Standards will be involved in the management of this service. If we ask for such information, it is only fair that we get it in a reasonable time scale. I need to be clear with the Chair that my letter to the Minister did not make any mention of freedom of information requests; it made a specific request for information before the end of this Committee’s consideration, and the House of Lords vote.

Sir David Amess (Conservative, Southend West)

I thank the hon. Lady for alerting me before the sitting to that point of order. I am absolutely sure that the Minister has done, and will continue to do, everything she can to assist the Committee, and I absolutely understand the hon. Lady’s point about time-sensitivity. We cannot have a separate debate on a point of order, but I wonder whether the Minister would like to say something further to that point of order, to continue to help the Committee.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Further to that point of order, Mr Amess. We received the letter on Thursday evening, and replied as soon as we could, with as much information as was available. We have been very open on the issue. We have now debated the subject in a Statutory Instrument Committee, in oral questions to the Department for Business, Innovation and Skills last week, and in Committee. We will provide the rest of the information that the hon. Member for Walthamstow asks for as soon as possible, but she asked for an awful lot of information. We are doing our best to provide it as quickly as we can. We have been very open on the subject and have debated it a number of times. A number of Committee members have participated in debates on the subject in the Statutory Instrument Committee and in this Committee.

Sir David Amess (Conservative, Southend West)

Chairs of Committees are not responsible for the actions of any Government; it is entirely up to the Government what they release. However, the hon. Member for Walthamstow has put her point on the record, and I am sure that the Minister will deal with her colleagues, and respond to the information that she has just been given, in due course.

Stella Creasy (Labour, Walthamstow)

This morning, we had a debate on whether, if private enforcement agencies were enabled to take enhanced consumer measures, they would have to take the guidance of a primary authority when they felt that the authority’s guidance was not appropriate. I appreciate the point that the Minister tried to make earlier; she argued that the enforcers were not primary authorities. Let me give her an example of a case in which we are keen to understand how those two factors will interplay. West Yorkshire Joint Services is a primary authority under the statutory scheme. It also has within its auspices Halifax legal services. Which?, as a private enforcer, may be concerned about the sale of legal services by Halifax legal services and may wish to use enhanced consumer measures to obtain information about the legal charges and the limitation of the legal expertise that is promoted on the business’s website. However, if West Yorkshire Joint Services were to say that it had decided to take a different approach to the regulation of the insurance services, who would be the paramount authority? According to the terms of amendment 112, Which? would have to bow to West Yorkshire Joint Services. We are increasingly concerned that some businesses are having to pay for trading standards advice because the fact that they are paying for a primary authority’s advice may have an impact on those businesses’ relationship with that authority.

I am sure that the Minister will say that the questions can be dealt with during the consultation on the role of private enforcers, but given the possibility of such conflicts, it jumps the gun to propose amendment 112 now, when further primary or secondary legislation about private enforcers may be required at a later stage. Such legislation may prove appropriate once the issues that I have raised have been teased out.

Given the scenario I have described, should West Yorkshire Joint Services decide not to use enhanced consumer measures against an insurance company based in its locality but Which? did decide to do so, in such a stand-off, whose interests would be served by Which? having to subserve to a primary authority rather than retain its independence?

Jennifer Willott (Liberal Democrat, Cardiff Central)

There are two angles to this matter. As I said this morning, a primary authority is a local authority that co-ordinates local authority regulation on behalf of the business with which it partners. Under that scheme, there could be an analogous situation in which a local authority could disagree with the primary authority.

A local authority in which part of the business operates could disagree with the view of the primary authority, as the hon. Lady has suggested, and a formal determination process to resolve that is set out in statute. That scheme has been in operation since 2009, and the determination process has never been used, because disputes have been resolved informally through negotiation. If a private enforcer wished to take enforcement action inconsistent with the advice of the primary authority, I envisage that it would pursue the same route. Discussion of the matter would be the first port of call, but if that failed to produce a resolution, a formal dispute resolution process already exists as the last resort.

In terms of who would be responsible for pursuing an enforcement action, as a private designated enforcer Which? can already take civil actions against traders to stop actions that are detrimental to consumers, but it has never used the enforcement powers given to it in 2005. As a result, as the hon. Lady said, we have committed to carry out a consultation and an impact assessment before extending the proposed measures to Which? That consultation will consider how Which? will use those measures and the interaction with other enforcers. To put it in context, under the Enterprise Act 2002, which designated Which? as a private enforcer, if it took action, it had to inform the Office of Fair Trading—in future the Competition and Markets Authority—that it intended to bring a civil enforcement action. That included any decision to pursue enhanced consumer measures. That enabled the OFT, currently—it will be the CMA—to exercise its functions as a co-ordinator in order to determine who would be the most appropriate enforcer to take action against a particular trader. That process is in place now for Which?, as a designated private enforcer. The co-ordinating role of the OFT—as I said, in future the CMA—is an important function within this process. We will consult on these issues, but that is the process currently in place, and I imagine that we will consult on having a similar system for extending the powers into this area.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer, but she has not engaged with the scenario we drew in order to understand how these situations will be resolved. We are going round in circles. The whole point about a private enforcer body is that it has independence and a capacity to pick up on issues that public bodies might not be willing to challenge. The amendment undermines that and seems premature. As the Minister herself said, Which? is already a private enforcer, and the amendment will restrict its independence of operation. We have made our point, but the question of the independence of private enforcers is not being properly addressed. The Government are already presuming that there is no benefit in this regard. If private enforcers will have to operate in the same way as public enforcers, in that they will have to have regard to primary authorities, what is the difference? What is the added value in giving enhanced consumer measures to a private enforcer in those circumstances?

As I said, we seem to be going round in circles. Given what the Minister has said, I presume that the Government have not explored this area properly. We have raised these issues and put them on the record, and I hope they come up in the consultation.

Clause 80 - Private actions in competition law

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 109, in clause 80, page 42, line 16, at end insert—

‘(1A) A year after the commencement of this section, the Secretary of State will review the powers set out in Schedule 8 and report to Parliament on—

(a) the number of private actions commenced under this power;

(b) the redress provided to consumers under these private actions; and

(c) the scope and potential effect of expanding these private actions powers to all areas of consumer protection law.’.

Opposition members of the Committee know this as the “private actions” clause—the Government’s attempt to increase the capacity for private actions to take place as a form of consumer redress. All of us recognise that the absence of any avenue of enforcement gives an advantage to firms that break the rules. If there is not a sense that accountability may come—be it through an alternative dispute resolution system or through the courts—those who want to exploit people will do so with impunity, and those who do not will suffer the consequences of the resulting lack of consumer trust and confidence.

The OFT calculated that the financial benefit to consumers of the competition regime is some £810 million, because it improves the prices and quality of goods available to them. However, we also know that businesses view the private actions approach—my hon. Friend the Member for Stoke-on-Trent South has strong feelings on this issue—as one of the least effective in the UK. It is therefore welcome that the Government have consulted on how to reform the private actions framework to ensure that it is more accessible and that it can deal with problems such as the prohibitive cost to consumers of participating in legal action. A particular issue is the likely low level of redress that is received through joint action, which is often the only way that people can subsidise such actions.

Members will be familiar, following this morning’s discussion, with attempts to establish a micro-private action process at a local level. Here, we are discussing what we might term macro-private action at a national level. A number of consumer bodies are concerned about the Government’s proposals. They feel, having looked at how we might reform the private action culture, that we have missed an opportunity to make the process as robust and effective as it could be. Again, my hon. Friend the Member for Stoke-on-Trent South has some views about that. We know that such cases are rarely brought before the courts, and there is a distinction between the cases that the High Court and the Competition Appeal Tribunal can deal with. The issue for us, therefore, is: what can we learn in the process of formalising the roles that would prevent the American-style litigation culture, which everyone agrees is not in the interests of British consumers or businesses, and bring benefit to competition law from the increased and enhanced perspective of such private actions, to ensure that competition acts in the interests of the consumer?

Amendment 109 is about looking at how the system would work. The Government’s consultation looked at many issues relating to private actions; in particular, whether to change from an opt-in to an opt-out situation. In opt-in, consumers and those affected by potential cause of detriment would have to opt into a case, whereas in opt-out those affected would be automatically included unless they opted out. We recognise the concern expressed by businesses that the solely opt-out proposals, which would automatically include all those who might be covered—for example, if one were to take on the energy companies, all energy consumers would be included—might lead to an increase in litigation. I note, however, that the Government challenged the idea that purely opt-out processes would somehow lead to a mass culture of litigation. They said:

“The Government considers that other factors in the USA are more directly responsible for the high volume of litigation in the US. These include treble damages—imposing such a high risk on defendants that they may be encouraged to settle cases to which they have a reasonable defence—the lack of the loser-pays rules and jury trials.”

None of those proposals is put forward in the Bill, but there is concern that, because of the way the legislation has been drafted, the limited scope of opt-out arrangements may inadvertently act against consumers. That is what we want to test today; it is the sort of issue that, if our amendment is supported, any review would consider.

In particular, we are mindful of the case made by Which?—we are back again with our favourite private enforcers—who have been champions of consumer interest for many years. It is concerned that current rules, which require a just and reasonable collective settlement to be set out by the Competition Appeal Tribunal, may not act in the consumers’ interest, because it would be difficult for them to understand what is just and reasonable owing to the lack of information on the detriment they faced.

In practice, that means that if an organisation were to be under a private action because there was concern that it had acted against consumer interests, it would hold all the cards. It would know the business model it was operating, the level of the detriment and the profit it was making as a result. Therefore, any settlement that it might offer would be informed by that process and if it were sued by a collective of consumers—perhaps with Which? acting on their behalf—it could set out what it considered to be a fair and reasonable sum for compensation and it would be difficult for the complainant to know whether that was a fair reflection of the risk faced by the people they were representing and, therefore, whether that was a fair offer.

Which? raised with us another issue on that same question of whether consumers affected by a complaint who had been offered a settlement would really have enough information to understand whether that was fair. They may then proceed to legal settlements, only to find that a judgment has gone against them owing to information that they were not aware of. They may have been presented with a just and reasonable offer, but, as they did not have cause to know that, they may have acted against their own interests by going on with the case and therefore ended up having to pay fees, costs and compensation to the trader they were in dispute with. Which? rightly points out that that puts considerable weight against the consumer’s rights. It is almost like playing “21”: no one knows what cards will come up, but an assessment still has to be made. Good consumer law tries to ensure that everyone plays with the same deck of cards and that everyone has as much information as possible to make good choices. We are sympathetic to the points Which? makes about whether it would be right to require traders themselves to certify that a settlement was just and reasonable, and to allow courts to disallow costs for someone who proceeded with a case but lost it, on the basis that they had been offered a reasonable settlement but could not have reasonably known at the time that the settlement was reasonable.

The Government can explore all those issues, given that they are trying to encourage tentatively, not an explosion, but an increase in the amount of private action, in order to have a cleansing effect on consumer detriment in our contemporary economy and to ensure that businesses are aware that they will be held to account if they act unfairly or unjustly. Without the review process, we will not know whether the Bill will have that impact. What we want to know is whether it works and does the things we hope it will do: make it easier for groups of consumers who have been affected by unfair practices to challenge them under competition law; and allow the Competition Appeal Tribunal to play a stronger role in being a champion.

I shall leave it there, as I am conscious that other members of the Committee want to speak on the issue and raise concerns. I am also conscious that there will be a vote in the House shortly. I hope the Minister will respond constructively to our concerns about the system the Government are proposing, which requires consumers to have access to an amount of information that it is not reasonable to expect them to have unless there are additional safeguards in law.

Rob Flello (Labour, Stoke-on-Trent South)

May I seek a nod or a shake of your head, Mr Amess, as to whether we are debating clause stand part at the same time? [ Interruption. ] I will take that as limited permission to wander slightly.

My hon. Friend the Member for Walthamstow referred to the card game Pontoon. That is an interesting analogy, because we are talking about a situation where someone does not know what the cards are. At least with a normal deck of cards, a person knows that there are four suits, and so many picture cards and so many number cards. The problem with the asymmetry of information—

Sir David Amess (Conservative, Southend West)

Order. A little bird has whispered in my ear that this debate will also be the clause stand part debate. The hon. Gentleman may therefore raise wider matters.

Rob Flello (Labour, Stoke-on-Trent South)

I am most grateful, Mr Amess, for the little bird whispering in your ear and for your conveying that message to the Committee.

As I was saying, at least with a pack of cards, someone knows pretty much what is in there. The problem that consumers have with the situation as it stands is that they do not know what they do not know, as has been famously said in the past.

There is thus this crazy situation where someone may well have a just and reasonable settlement, but representatives have no way of knowing whether it is just and reasonable. They will not be able to know what the cards are, which could be something completely different. They will not be privy to the data they need to consider when looking at the loss that a victim might or might not have suffered. The information is exclusively in the hands of the defendants, which cannot be right, and something must be done to address that.

I want to put on record my thanks to Mark McLaren from Which? for providing me with helpful briefing notes and supporting information to clarify a couple of points that I want to make.

One of the examples of providing information that has been proposed—the Minister may well refer to this—is disclosure. The problem with that, however, as colleagues across the Committee will know from their constituency work, is that it normally happens so late in the day that the party to whom a disclosure has been made does not have the time to wade through the bundle and deal with the information in there. Indeed, it may be so late in the day—possibly years later—that important decisions have already been taken that could well have led to the person concerned stopping proceedings had the disclosure come at a more opportune moment.

I therefore hope that the Minister will pick up the wider issue about the clause, namely how somebody can know whether they have a good case, and whether the offer made is just and reasonable or completely unjust and unreasonable. At the moment, people are playing Pontoon in the dark, blindfold, with a mixed pack of cards, or possibly on a Monopoly board. The situation is completely nonsensical and needs to be addressed.

In terms of certifying collective proceedings, I understand that the Select Committee on Business, Innovation and Skills said in its pre-legislative scrutiny report that accepting its recommendation 67 on streamlining the process would

“be crucial to ensuring the effectiveness of, and preventing abuse of, the new collective actions regime.”

As things stand, certifying collective actions acts a barrier. The Bill does not do much to change that.

I will give an example from back in 2007. I understand that Which? is a designated body under the Competition Act 1998 but has used its powers only once. In 2007, it took collective action against JJB Sports regarding alleged price fixing on certain football shirts in contravention of competition laws. The case was settled and Which? was able to provide compensation for some of the consumers affected, but that example speaks volumes: the one and only case there has been was in 2007. That shows that there are barriers and that something needs to be done.

The opt-in basis for actions under the Competition Act leads to low consumer take-up. There are practical hurdles and difficulties about evidence. If it is some time—years, perhaps—since the purchase, and a receipt eludes the person concerned, is there no other way that they can prove purchase? In the one and only case that has been brought, out of the potentially millions of people who had suffered loss, only around 1,000 were able to benefit from the settlement. That shows that the situation is not working. The clause does not go far enough to address that.

Finally, we have been pointed in the direction of research by the European Commission that shows that the overwhelming majority of UK consumers would be more than willing to defend their rights in court if they could join with other consumers who are complaining about the same matter. I am sure that the Minister wholeheartedly agrees on that and is keen to ensure that such actions can happen, but given that the Bill will not make any changes, there is an issue that needs to be addressed.

Amendment 109, tabled by my hon. Friend the Member for Walthamstow, is a good way of tackling the problem. It gives the Secretary of State a finite period in which to look at the issue again, and review it to see how the situation can be improved. I would like the Government to bring forward their own amendment or new clause to address the matter on Report, and to take the issue on strongly, but in the absence of that, I will certainly support the amendment, if my hon. Friend presses it to a vote. If she decides to withdraw it, so be it, but I hope that the message goes through clearly to the Minister.

If the Minister has not had the chance to read the papers circulated by Which?, I hope that her officials will have the chance to read them and will convey to her that the proposal is a good idea. When she responds, I hope that she will address that point.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am not sure how far I will get, as we expect the Division bell any minute.

An effective competition regime benefits both the economy and consumers, which we can all agree is a good starting point. As part of that, it is important to ensure that consumers and businesses have the ability to obtain effective redress for breaches of competition law. Amendment 109 would require the Government to report to Parliament on a range of different things: the number of private action cases taken, the level of redress paid to consumers and the impact of expanding the provisions to all areas of consumer protection law. The hon. Members for Walthamstow and for Stoke-on-Trent South both raised the issue of—[Interruption.]

Jennifer Willott (Liberal Democrat, Cardiff Central)

As I was saying before we were so rudely interrupted, the other issue that hon. Members raised was how people can know whether a settlement that they are offered is just and reasonable. I will go through the issues in turn.

Collective action cases can be commenced only in the Competition Appeal Tribunal. As part of its yearly work, CAT publishes an annual review containing a list of cases taken forward in the previous 12 months and a summary of the judgments made. That provides information about the number of cases commenced under the revised regime, and the level of redress paid to consumers. The report is not laid before Parliament, but it is publicly available on CAT’s website, so the information will be on the public record.

We are also taking action in the Bill to promote alternative dispute resolution. Parties should consider using ADR whenever possible and court action should be used only as a last resort.

Rob Flello (Labour, Stoke-on-Trent South)

Of course, ADR is good and important, but it is no good going into dispute resolution if one party does not have data that the other party does have.

Jennifer Willott (Liberal Democrat, Cardiff Central)

If the hon. Gentleman will let me make a little progress, I will address his point.

The amendment would not incorporate any redress that is paid to consumers through ADR in the figures that are being asked for, even though the amount paid through redress could be considerable. However, I believe that the intention of the amendment, as regards the information to be gathered, will be covered by CAT’s publications. That relates to paragraphs (a) and (b) of the amendment.

Paragraph (c) is about the right for consumers to take collective action on consumer law. We discussed that this morning, and I highlighted the concerns that a number of people raised about the proposal; the Opposition’s own report on the issue raised a number of concerns about doing that, too. As I said this morning, we believe that enhanced consumer measures are a better way of achieving a similar result, with fewer of the associated problems.

On proving that the settlement offer is just and reasonable, the Bill requires CAT to certify a settlement only when it is just and reasonable, and it requires all parties involved to submit evidence to CAT. One party will submit evidence of detriment to consumers and the other will provide evidence about its case. CAT will then certify whether the settlement is just and fair. That seems to be the appropriate place to do that. The Government believe that there is already a sufficient safeguard to allay concern in that area, because CAT must have sufficient evidence before it in order to feel able to agree that the settlement is just and reasonable.

Andy McDonald (Labour, Middlesbrough)

“Sufficient evidence” is distinct from “all of the evidence”. In proceedings, a litigant would be obliged to provide a list of documents, and to disclose those documents that were pertinent to the issue at hand. I hope that the Minister can see that there is a great distinction between “sufficient evidence” and all the information to which parties should have access.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I do not think that CAT will certify a settlement agreement if it does not feel that it has been given enough information to decide whether it is just and reasonable. It will have powers to seek and call for more evidence from all parties before making a decision on the settlement agreement, including from third-party experts, if it feels, as the hon. Gentleman highlighted, that it does not have the evidence that it needs. It will be able to do that to ensure that it has enough evidence to satisfy itself that it can certify the settlement.

For the collective settlement regime to work, consumers must be reassured that the offer of redress is appropriate—that is a really important part of the system’s operating—so paragraphs 10(5) and 11(8) of schedule 8 state that CAT can approve the settlement only

“if satisfied that its terms are just and reasonable.”

The second mechanism for alternative dispute resolution in this part of the Bill grants a new power for the CMA to approve voluntary redress schemes. When the UK competition authority finds an infringement, it is important that a business should have the opportunity to offer redress voluntarily, if it is so minded. Paragraph 12 of the schedule therefore enables the CMA to approve a redress scheme. A business will be able to offer a scheme after an infringement decision has been made, the evidence having been considered and made available, or at the time when a decision is made. Certification by the CMA will reassure consumers that the scheme is fair. There are two slightly different circumstances, but the idea is that in both sets of circumstances an independent arbiter would make a decision, having looked at the evidence to decide whether that settlement agreement was just and fair, so consumers can have faith that the offer that they are being made is reasonable in the circumstances.

I hope that that has answered the queries of the hon. Members for Stoke-on-Trent South, and for Walthamstow. I hope that the hon. Member for Walthamstow feels able to withdraw her amendment.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for the update; she says that the first two paragraphs of the amendment will be covered, that there will be a review of the powers, and that the information in question will be gathered. However, there is a concern; it would be useful if the Minister could set out one point more clearly. She said that she was confident that CAT would not certify a settlement if it does not think it is just and reasonable, or feels that it is not being given the information that it needs to make that assessment. However, that relies on it knowing what information it ought to have been given.

We are interested in exploring the point that Which? makes fairly about who is responsible for providing all that information—for example, for disclosing the entirety of how a business model works, so that CAT can assess whether detriment has occurred, and therefore whether the information it is provided with is whole. We were talking earlier about playing 21 or Pontoon. This is about ensuring that all 52 cards are disclosed to CAT, so that if someone is consistently dealt hands in the low 10s or 11s, or even hands of 22 or 23, they know why. That is the analogy.

On reviewing the number of private actions, it would be useful to know whether the Minister envisages looking at the scope of the information provided, and particularly at whether CAT feels that it is getting the full whack, as it were. We are sympathetic to the position of Which?: a lack of information creates a perverse incentive for the trader not to co-operate wholly and fully with CAT, to minimise any potential settlement suggestion being made. If the Competition Appeal Tribunal had the power to compel the disclosure of certain evidence, that would make a difference. It would be interesting if the Minister committed to reviewing the use of those powers to see whether people were co-operating.

Rob Flello (Labour, Stoke-on-Trent South)

That would also, of course, provide a disincentive to the consumer to agree early on, because they would want to go through the process to ensure that the information was disclosed and certified.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. Those points are about how CAT will work in practice, given that it will take on stand-alone and follow-on cases. We want to make sure that it can provide the cleansing effect that the Government seek.

I am slightly confused by the Minister’s suggestion that alternative dispute resolution is promoted in the Bill, and it would be helpful if she set out where. I am mindful of the fact that the Government have today published the consultation on how they will implement the EU directive on ADR.

Stephen Doughty (Labour, Cardiff South and Penarth)

A remarkable coincidence.

Stella Creasy (Labour, Walthamstow)

As my hon. Friend says, that is a remarkable coincidence, given that we tabled amendments on the matter today.

Earlier, the Minister made particular play of the fact that the consultation on ADR would go alongside the Bill but would not be part of it. It would help us, especially as we come on to the new clauses, if she clarified her remarks on ADR. Will she explain how we will ensure that the Competition Appeal Tribunal has all the information that it requires, rather than simply being able to make a judgment on the information provided to it, and will she explain where ADR fits into the legislation? After all, we are trying to understand the Minister’s commitments on how the system will work in the context of the Bill.

Andy McDonald (Labour, Middlesbrough)

Does my hon. Friend agree that if we look at how ordinary civil litigation operates—getting to the initial case management directions, which include disclosure by way of listed documents, so that each party is fully aware of the hand that the other possesses—a case can be referred to ADR with both parties in full possession of the facts?

Stella Creasy (Labour, Walthamstow)

As ever, my hon. Friend’s legal background adds volume and depth to our questions to the Minister, and I hope that she will take into account the point that my hon. Friend has made. I am conscious that the Minister is scribbling notes, and I want to give her an opportunity to pull everything together. If she is happy to answer those questions, we are keen to hear her responses.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Opposition Members are raising concerns about the idea that CAT would not have the evidence that it needed to certify a decision. It has a lot of experience in this area—it has been operating for a while, and it is extremely competent—and it has the power to ask for the evidence. Its members are experts in their field, who know a lot more than us mere mortals in Committee about the intricacies of cases before them.

The draft rules that we published yesterday for CAT state that evidence must be submitted to it in order for it to consider a settlement offer. CAT can also ask third-party experts to provide evidence, and to comment on the evidence that a business has submitted. If CAT is concerned that it does not have all the information that it needs to make a decision, it can ask for more information. If a business refuses to provide that information, that may ultimately be contempt of court. The idea is that businesses would work with CAT, however; it is not in their interests not to. Given his experience, it would be really helpful if the hon. Member for Middlesbrough looked at the draft rules and fed back any concerns. Those draft rules have been published, so they are available to the Committee during its deliberations on this subject.

The hon. Member for Walthamstow asked about ADR in the Bill. The voluntary redress scheme in competition cases—as I said, that will be certified by the CMA—and the CAT settlement without a court case are forms of ADR. As she said, we have published the consultation today, and we will consider the consultation, and ADR more broadly, when we reach one of the later clauses. I hope that answers the questions raised by Opposition Members.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer, but let me see whether I can be helpful. The draft rules on the Competition Appeal Tribunal state that it will have the power to order disclosure by a number of different parties on any terms it thinks fit. For the record, will she state that the Government intend that the Competition Appeal Tribunal may require disclosure of information to ensure that a settlement is just and reasonable? In other words, can the Competition Appeal Tribunal set a direct requirement that will be taken into account in its operation? It would be helpful if the Minister could put that on the record.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Yes.

Stella Creasy (Labour, Walthamstow)

Marvellous. We have certainly made some progress on this issue, and we are happy to withdraw our amendment, with a caveat. I draw the Minister’s attention back to the previous amendment on private action at a local level and how breaches in consumer protection law can be addressed. Although the national courts might not necessarily be the best approach, we need to do something about local enforcement. Although she is slightly dismissive of proposed paragraph (c), I encourage her to reconsider local enforcement and how we bring people together at local level to address, say, a dodgy builder or second-hand car salesperson, because that is where most people experience detriment. As yet, the Bill does not have an answer to the question of how we might help people individually and privately to work together to take action. We believe that would be a useful third way, shall we say, between private action and an opt-in process on the subject of consumer detriment in people’s everyday lives.

I beg to ask leave to withdraw the amendment.

Schedule 8 - Private actions in competition law

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 113, in schedule 8 page 103, line 38, after ‘(3)’ insert

‘which a person who has suffered loss or damage may make in civil proceedings brought in any part of the United Kingdom’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss Government amendment 114.

Jennifer Willott (Liberal Democrat, Cardiff Central)

These amendments clarify that the territorial jurisdiction of the Competition Appeal Tribunal is the same as that of the High Court and the Court of Session. Under our proposal, a consumer or business will be able to bring forward a claim for damages for a breach of either UK or European competition law. The Bill’s current drafting means that it would be possible for a claim that has no connection to the UK to be brought before the CAT, such as a case where the infringement of competition law did not take place in the UK or where both parties were based outside the UK. That would result in the CAT having a greater territorial jurisdiction than either the High Court or the Court of Session. The Enterprise Act 2002 already provides that the CAT’s jurisdiction is the same as the jurisdiction of the ordinary courts, and I see no reason to depart from that in the Bill. The amendments will ensure that that is the case.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 115, in schedule 8, page 106, line 21, after ‘(5)’ insert ‘Subject to subsection (5A),’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss Government amendment 116.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The amendments will allow the Competition Appeal Tribunal to order that any unclaimed damages be used to cover a claimant’s legal costs. The Bill currently requires that all unclaimed damages be paid to the Access to Justice Foundation, but the Bill also enables the CAT, through its rules, to consider the suitability of a representative’s funding arrangements. It is important that the CAT has discretion to ensure that the funding arrangements are fair and appropriate. The current requirement on unclaimed damages in the Bill would undermine that.

One option to fund opt-out cases would be to use unclaimed damages to cover all or part of a claimant’s costs, which could include any success fee agreed with a legal representative and any insurance taken out. It is imperative that consumers should be the beneficiaries of redress, and the amendment will mean that legal costs can be recovered only after consumers have claimed their redress. It is also right that any amendment on collective redress does not undermine the safeguards that are essential to the regime.

First, if there are cases that do not result in any unclaimed damages, the representative will not be able to recover their legal costs from the damages pot. Secondly, businesses will not be paying any additional redress; they will still be paying only for the harm that they caused. Thirdly, the use of unclaimed damages to pay costs will have to be approved by the CAT.

The amendments are integral to ensuring that consumer bodies and bodies for small and medium-sized enterprises will be able to fund collective action cases. Without them, it would be difficult for consumer bodies to bring a case.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I beg to move amendment 117, in schedule 8, page 111, line 44, leave out ‘only if that person’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss Government amendments 118 to 120.

Jennifer Willott (Liberal Democrat, Cardiff Central)

These Government amendments are designed to introduce a “just and reasonable” test for the Competition Appeal Tribunal to apply in collective settlement cases. The Bill currently requires the CAT to undertake an assessment of whether a representative body is appropriate to act as a representative in a collective settlement. The amendments are designed to introduce the same requirement for individual class members. They will also have the effect of harmonising the requirement, so that it applies to both collective settlements and collective proceedings.

During the pre-legislative scrutiny, the Select Committee on Business, Innovation and Skills recommended that the “just and reasonable” test be extended to class members in respect of collective proceedings. The Government accepted that recommendation, as there might be instances in which it is appropriate for the CAT not to approve an individual class member—for example, if the class member has previously been declared bankrupt or does not have the financial means to bring the case. On reflection, the Government believe that it is also important to introduce the “just and reasonable” test in the case of collective settlement. The same instances in which it might be inappropriate for a class member to act as a representative in collective proceedings would also apply to a collective settlement. It is therefore important that the CAT be given the necessary discretion to reject a proposed representative if it deems the person to be unsuitable.

Stella Creasy (Labour, Walthamstow)

I rise to speak because that I believe that if we create the potential for someone to be rejected as a representative, having come forward, there will inevitably be consequences, and it would be helpful to understand how the Government envisage those consequences.

Let me give the Minister an example that we want to explore in order to understand the position. If Which? wanted to represent a group of small businesses that wanted to bring a claim because they felt that they had been mis-sold a particular service or product, but the Competition Appeal Tribunal decided that it was not the appropriate body to represent small business—perhaps it felt that the Federation of Small Businesses should do so—what would be the consequences? Would that mean that the case would have to be brought by another organisation? Would there be any expectation that another organisation would bring it? Would there be redress for the businesses or consumers in question in any other place?

We are seeking to question not whether that might be an important proposal for the tribunal, but simply what the consequences of such a power to reject a proposal might be and whether the Minister is envisaging stop-gaps for those who would be affected by any such decision.

I am conscious that the Minister wants to ask a question of her officials. I am happy to let her scribble something down, but I am winging it a bit now—I am not sure that I can think of any other examples. Perhaps someone else would like to chip in.

Jenny Willott rose—

Stella Creasy (Labour, Walthamstow)

I will happily take an answer from the Minister now.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I can start to answer the hon. Lady’s question. There may be scenarios in which it would be inappropriate for a class member to act as a representative—for example if, as I said, they had been declared bankrupt or did not have the financial means to act on behalf of the group. Let me give another example. There may be a conflict of interest, or something like that, that meant that they would not be the most appropriate person to act on behalf of the class. The exact reason why a class member was refused would be left to the CAT to explain. However, we envisage that the class of people would be able to submit an alternative class member to the CAT or, indeed, select a representative body to put someone forward to act on their behalf. However, we think that it is important that the CAT has discretion over whether to approve the class member if concerns have been raised.

The amendments are about a person rather than an organisation, and the requirement set out in them is already represented in the Bill. We are talking here about an individual person acting on behalf of a group of consumers who have been affected, so it is about that person. The CAT will also consider whether an organisation is the most appropriate body to represent them, but we want to ensure that the CAT has the discretion to take into account the issues associated with that person, if there are any.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that response. Will she clarify what redress, if any, a person or organisation would have should the CAT decide that they were not an appropriate representative ?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I can write to the hon. Lady with clarification on that point.

Stella Creasy (Labour, Walthamstow)

I appreciate that the Minister is not sure about that. I wish to put it on record that the Opposition are concerned that when there is a power to exclude somebody, they should have a natural right to challenge it. There needs to be co-ordination in the process, because in the scenarios that the Minister envisages, it could be substantially and materially detrimental to a particular individual to be excluded from a class for a certain reason.

Jennifer Willott (Liberal Democrat, Cardiff Central)

rose—

Stella Creasy (Labour, Walthamstow)

I appreciate that the Minister is going to say that they will have the ability to put forward another class, but surely jurisprudence means that there should be an ability for somebody to appeal if such a decision is made.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Can I make a clarification? We are not saying that somebody will be excluded from being part of the class. The amendments are about whether they can act on behalf of that group. We are talking about opt-out competition actions, and they would still be part of the group taking action. This is about who is the best person to represent that class. They would not be excluded from any of the legal action.

Stella Creasy (Labour, Walthamstow)

I appreciate that that is the Minister’s reading. My point is that if somebody has put themselves forward to be a representative, there is usually a reason why they feel they would be the best representative. They may feel that the representation in the tribunal process is not as robust or resolute as they wish it to be. Ergo, there would be an expectation that they would have an ability to challenge any decision to exclude them as the appropriate representative. The Minister does not have details about that process. I hope that maybe the note coming through to her says that there is a process—

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will write to the hon. Lady.

Stella Creasy (Labour, Walthamstow)

The Minister simply says that she will write to me. Again, in those circumstances one would understand if somebody felt aggrieved and looked for a second opinion, which is, after all, what an appeals process is. It is not an uncommon principle to have an appeals process when such a decision is made. It seems rather unusual that there does not seem to be one in this instance.

New Clause 2 - Right to corrective action

Fiona O'Donnell (Labour, East Lothian)

I beg to move, That the clause be read a Second time.

The new clause was tabled by the hon. Member for Foyle, who was responsible for working on this issue for some time. Unfortunately, there are important events back at home and he needs to be there. My name has been added to the new clause in the correct way, and I am grateful to have the opportunity to speak in support of it.

I have been concerned at times during the passage of the Bill, when I have spoken about issues like scatter cushions and balls of yarn, that the proceedings might be seen as frivolous by people who are involved in them or following them. That has never been my intention; it is important that we bring such issues to light, because they relate to real challenges and injustices for real consumers. There has never been an attempt to trivialise matters. With new clause 2, we turn to some of the most serious aspects of what can happen when the experience of a consumer and a trader goes very badly wrong.

The new clause covers the right to corrective action, which is more commonly known as product recall. Product recalls occur when a fault presenting a safety risk to consumers is uncovered in a product or product line. There are currently gaps in the coverage for goods. The Minister and other hon. Members will be aware that car and vehicle faults are already covered by the Vehicle and Operator Services Agency’s code of conduct with manufacturers and the General Product Safety Regulations 2005. Food recalls are the responsibility of the Food Standards Agency, and drugs are the responsibility of the Medicines and Healthcare products Regulatory Agency. When it comes to everything else, there is no single agency responsible.

The law currently states that all appliances must be safe and that if something goes wrong the manufacturer should take action. That is not only a consumer rights issue; badly handled recalls can cause reputational and financial damage to British businesses and can pose serious public safety concerns. It is therefore disconcerting that this serious and important issue has been omitted from the Bill.

Rob Flello (Labour, Stoke-on-Trent South)

While listening to my hon. Friend I recalled two recent incidents. First, I recently went into a shop from a chain that I have not been into for some time. On the counter of the customer service desk was notice of a product recall. Thankfully, it did not affect me, but I could have gone for eight months between visits and not seen that. Secondly, a product recall was put out on the radio the other day. It was from a year earlier, and not enough people had responded. My hon. Friend makes an extremely valid point.

Fiona O'Donnell (Labour, East Lothian)

I am grateful to my hon. Friend. The new clause does cover the time it takes for the trader to respond and make the public aware. It would also place a duty on the Secretary of State to review the matter. I will raise concerns about the success of product recalls later, but I expect many members of the Committee have had experience of them. I did with a microwavable hot water bottle, which could have come in handy during our proceedings in this room. Unfortunately, it was recalled. Several months after I had bought it I walked into Boots and happened to notice the sign on the door saying that the product was dangerous and that people had been burned. I had a narrow and lucky escape.

In a reply to a parliamentary question from the hon. Member for Foyle, the Minister conceded that her Department had made no assessment of the effectiveness of product recalls. The issue has been neglected for too long, and that is why we need new clause 2. I hope that we can come together across the Committee to take the opportunity to fill that glaring gap.

“When you buy a cooker, you don’t expect it to kill.”

Those are not my words but the words of Brian Smith, whose son Richard died in November 2010, aged 30, when a Beko cooker gave out carbon monoxide. The cooker had been recalled in 2009 and could have been made safe by a simple modification, but the message never got to Richard Smith and his housemate, Kevin Branton, aged 32, who also died.

Last July Kevin’s mother Denise participated in a documentary for ITV that looked at the safety of household appliances. Denise explained that, soon after Kevin’s death, she discovered that there had been eight other deaths linked to the same type of cooker, and that there had actually been five deaths in the two months before her son’s cooker had been purchased. A sixth death in January 2009 led Beko to recall the product. I hope that hon. Members will think during our deliberations today about that family and what message we send to them about the value of their son’s life.

Rob Flello (Labour, Stoke-on-Trent South)

I may have misheard my hon. Friend, so I would be grateful if she could clarify something. Did she say that there were deaths before the son purchased the cooker?

Fiona O'Donnell (Labour, East Lothian)

I did indeed say that there had been five deaths in the two months before the son’s cooker had been purchased, yet the product was still available. People thought that they could be confident that it was safe, but it took the lives of those two young men. Those of us who are parents can only imagine how we would rage against the fact that our sons had been exposed to such a risk and that we were not aware that those five others had died.

Denise was advised not to do any press to warn the public about the cookers during the two years that she waited for an inquest into her son’s death. Denise disagreed with that, and with the inquest’s verdict of accidental death. Speaking later, she said that

“surely one or two deaths is an accident but not ten lives? With a more effective and quicker product recall system, I believe that several of these lives could have been saved.”

Those sentiments have been echoed by the Chief Fire Officers Association, which is

“very concerned about the number of faulty products in people’s homes. It is the manufacturers who have created these risks and it is their moral and legal responsibility to ensure the risks are eradicated.”

The association has also criticised the current system of handling product recalls, describing it as “unsuccessful and inadequate”—it is simply not good enough. Indeed, it has been noted that the average success rate for product recalls is between 10% and 20%—that is the issue that my hon. Friend the Member for Walthamstow raised earlier—meaning that 80% to 90% of recalls are unsuccessful. Faulty goods are not returned, and people are using them and putting their lives and possibly other people’s lives at risk.

Sheila Gilmore (Labour, Edinburgh East)

Having seen some recall notices, which may be in a window or on a counter, I find that it can be hard to get a feeling about the nature of the problem. People may think, “Oh, it’s just another one of these things,” or that it is not all that important, and they may ignore the notice.

Fiona O'Donnell (Labour, East Lothian)

My hon. Friend makes a good point about the information that is available. The notice I saw was on the door just as I walked into Boots. There was no information about my rights or whether I would be entitled to money back or compensation. There is not always time for the public to grasp such issues. Much more could be done to make people aware of just how serious the risks can be. They may not always be so grave, but carbon monoxide from a cooker is a serious health risk. One would hope that people would be warned about the ill effects that they could be feeling—headaches or nausea—so that they were aware of the urgency. It was not a simple matter of something being aesthetically unpleasant; people were using something in their homes that was putting their lives at risk.

Rob Flello (Labour, Stoke-on-Trent South)

My hon. Friend mentioned the hot water bottle that she bought. As appalling as the situation with the cooker is, so is being scalded, particularly if the victim is elderly or a small child, and it can be fatal.

Fiona O'Donnell (Labour, East Lothian)

Absolutely. Scalding can be fatal and can cause lasting health problems. My hon. Friend makes an excellent point.

The Electrical Safety Council, which has campaigned tirelessly on the issue, estimates that 1 million recalled electrical products are still in use across the country, which is a terrifying fact. I am sure that if we all look at the products we have in our homes, we may find that we have such goods. By using them we put ourselves and others at risk.

The Electrical Safety Council and organisations such as Which? and RecallUK are trying to raise consumer awareness of product recalls, but the Government should do more to place the onus on manufacturers and suppliers. Under existing legislation, consumers’ rights are asserted and addressed in respect only of faults that they know about and can identify, not of serious and risky faults that are known only to others. New clause 2 would tighten regulations to ensure that recalled electrical products do not cause unnecessary loss of life, injury or damage to property.

The Minister stated the following in her written response to the hon. Member for Foyle on 7 January:

“Liability and responsibility for unsafe products lie with the manufacturer or the importer placing them on the European market. Local authority Trading Standards services…are responsible for enforcement. They have powers to order a recall, but rarely use them.”—[Official Report, 7 January 2014; Vol. 573, c. 191W.]

In short, no Government agency is tasked with actively monitoring and policing safety recalls for white goods and electrical appliances. Manufacturers are required to inform their local Trading Standards authority of issues that pose a serious or moderate risk to health and safety. However, there is little to explain how they should communicate with consumers, how often they should do it, when they can stop communicating details of the recall and, as my hon. Friend the Member for Stoke-on-Trent South said, how quickly they should make the information available to the public.

The current rules are set out in the General Product Safety Regulations 2005, which state that a manufacturer must

“contact consumers who have purchased the product in order to inform them of the recall, where and to the extent it is practicable to do so…publish a notice in such form and such manner as is likely to bring to the attention of purchasers of the product the risk the product poses and the fact of the recall, or…make arrangements for the collection or return of the product from consumers who have purchased it or for its disposal”.

It is for individual companies to decide how and to what extent it is practicable to contact consumers. Manufacturers are given discretion over when and how they choose to deal with dangerous goods. That has led to concerns that we are balancing the need to protect the public with companies’ need to protect their brand, which may result in their failing to meet the expected standard. For example, Hotpoint took at least a year to publish a safety notice about a faulty dishwasher, and Beko was alerted to a problem with its fridge-freezers in 2008, but did not contact customers until the end of 2010. That is why proposed subsection (2) calls on the economic actor responsible for the goods—the trader—to

“take all reasonable steps to inform all persons affected, or likely to be affected…within the shortest period of time practicable.”

Andy McDonald (Labour, Middlesbrough)

My hon. Friend is making a powerful speech on this important issue. Does she agree that in her dreadful example of the cookers, the phrases “all reasonable steps” and

“shortest period of time practicable”

mean that it must be done immediately? No steps are outwith reasonable practicability if the device can kill. In those circumstances, it is imperative that the manufacturer and supplier track people down and knock on their doors to say, “You have a dangerous item in your possession.”

Fiona O'Donnell (Labour, East Lothian)

My hon. Friend makes an excellent point. The current guidance is too subjective and can lead to different interpretations of risk. We must look at the areas that are not covered by regulations. If a car developed a fault in two months and killed five people, it is unthinkable that the manufacturer or the trader would not deal with it, but there is not the same consumer protection for white goods.

Rob Flello (Labour, Stoke-on-Trent South)

My hon. Friend is being very generous with her time and making a powerful speech. My local fire service in Staffordshire is often called out to tumble dryer fires—I gather the problem is quite common. Perhaps I can attract the Minister’s attention to my question for my hon. Friend: has any work been done on cross-checking which tumble dryer fires fire services are being called out to against which models are recalled? It would be very interesting to know how many of the tumble dryers that go up in smoke and cause huge problems—if not leading to deaths—should have been recalled.

Fiona O'Donnell (Labour, East Lothian)

My hon. Friend makes an excellent point, which I hope the Minister will address. Proposed subsections (4) and (5) of the new clause would give the Secretary of State the scope to deal with such important issues, preventing further loss of life and property and incidents of damage.

Denise Branton, the mother of the 32-year-old man who lost his life to carbon monoxide poisoning, has suggested that the Government should gather and make public information on safety incidents caused by recalled goods, together with estimates of how many such goods remain unaccounted for. That idea forms the basis of proposed subsection (4).

As set out in proposed subsection (5), the Secretary of State should periodically review the effectiveness of recall actions and the procedures in place to achieve successful recalls, with reference to the public information gathered for purposes of subsection (4). Evidence-based reviews can lead to a better understanding of what works, thereby helping to improve the success rate of recalls as well as enhance public safety. Public confidence in goods would also be boosted.

The introduction of stricter penalties for manufacturers that fail to meet their obligations could lead to improved product testing and development, as well as more efficient recall. Currently, most recalls are voluntary and do not attract fines; meanwhile, if mandatory recalls are deemed to have been carried out inadequately, manufacturers can be fined up to £5,000. That is a tiny amount compared to the turnover of large multinational companies, and it is worth noting that not one has ever been fined.

Consumer rights legislation may appear abstract and technical, but, quite simply, effective product recall can help to save lives. The case of Richard Smith and Kevin Branton is tragic but sadly not isolated. Across the UK, families have lost their property, their homes and even their loved ones as a result of faulty electrical products that have not been successfully recalled. New clause 2 would be a welcome step, showing the public, including families affected by unsuccessful product recalls, that Ministers are taking their concerns seriously.

I appeal to everyone present to support the new clause in order to send a message to those families and save lives in future.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Government are committed, in the Bill, to clarifying consumer law enforcers’ investigatory powers. Such powers include those to inspect and seize goods and documents.

The hon. Lady has made a powerful case and given some extremely distressing examples that highlight exactly why it is important that we ensure industry works effectively in this area. Some of the cases she referred to are harrowing and extremely upsetting. They highlight the fact that the measures in the Bill are sometimes a matter of life and death. We may sometimes belittle consumer rights matters, but some of the issues relating to the Bill are critical and incredibly important to people. The hon. Lady is right to raise them.

Part of the purpose of the Bill is to clarify enforcers’ investigatory powers for both businesses and consumer law enforcement authorities. The new clause refers to product recall, which is not covered by the Bill because there is already a body of legislation that covers product safety recalls, in particular the General Product Safety Regulations 2005.

Fiona O'Donnell (Labour, East Lothian)

The point I made is that while there may be laws that govern that, there is no regulatory body that has responsibility for enforcing those laws when it comes to white and electrical goods.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Lady mentioned special processes for drugs, food and certain products. The other areas—white goods and the other things she is talking about—are the responsibility of local authorities. They have responsibility for enforcing the General Product Safety Regulations, which cover the items she mentioned, and BIS co-ordinates the process. There are no gaps. There is a clear responsibility there.

Fiona O'Donnell (Labour, East Lothian)

I really must intervene at this point. When five people could die because a faulty product had not been recalled, how can the Minister say there are no gaps?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Because it is very clear where the responsibility lies for taking action. I do not dispute the case that the hon. Lady mentions; there are clearly issues with recalls. She has highlighted some cases where things do not seem to have happened as quickly as they should have. That does not mean that the architecture is not in place for that, and it is clear that local authorities do have that responsibility. That is laid out.

Rob Flello (Labour, Stoke-on-Trent South)

I am slightly incredulous. So there are over 1 million products out there that have not been properly recalled; people are dying, and yet the system—the architecture, if you like—works. I am sorry: the hon. Lady has lost me on that one.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Member for East Lothian asked who was responsible for recalls in a particular area. I do not understand what is so difficult for the hon. Gentleman to understand. As the hon. Lady said, specific bodies are responsible for certain parts, and the rest is the responsibility of local authorities. There are issues, which I will address later, but under the 2005 regulations local authorities have the responsibility to ensure that the enforcement takes place. Those regulations place strict duties on producers and distributors to ensure the safety of products, and the Government consider it right that the liability and responsibility for unsafe products lie with the manufacturer or the importer who places it on the European market. It is right that that is where the responsibility should lie.

Where a producer or a distributor has placed an unsafe product on the market, they are required to notify an enforcement authority, such as Trading Standards. The hon. Member for East Lothian gave a couple of examples where it appears that there has been a delay between a manufacturer’s identifying an issue and notifying the authorities. Clearly, I cannot comment on individual circumstances; I do not know the details, but the requirement is that they must immediately inform the competent authorities and then co-operate with them in removing the risk. That is what is laid out in the 2005 regulations. The competent authority includes Trading Standards and BIS. So the requirement is on them to act immediately; that is what the regulations say.

Fiona O'Donnell (Labour, East Lothian)

As ever, the Minister is being very generous and patient in giving way. The system clearly is not working. There may be a framework, but it is inadequate. These cases are brought to me by reputable organisations such as Which? The Minister says she cannot comment on an individual case. I would like to give the Secretary of State that power, because I think it is time we had a little more of that sunlight which this Government are so fond of on the issue of safety and consumer goods.

Jennifer Willott (Liberal Democrat, Cardiff Central)

If the hon. Lady will bear with me, I will explain what is being done to try and improve the situation. She has raised several issues, but clearly I do not know the details of the cases that she mentioned this afternoon so I cannot comment on them. The regulations say that the manufacturer or importer must immediately inform if there is a concern. Often, it is very difficult to trace all the purchasers of the goods, and when a person buys a cooker or a toaster, they do not necessarily have to give their contact details. Many consumers are often extremely wary about providing their contact details to the manufacturer, so often the manufacturer does not have an accurate record of who has purchased a specific item. The hon. Members for Stoke-on-Trent South and for East Lothian described how they found out that their purchases had been recalled when they went back to the shop. There was no other way. They obviously had not given their contact details to the shop when they purchased the hot water bottle, for example, so there are cases where it is difficult to identify who should be contacted, and work is being done on the effectiveness of ensuring that people are aware of product recalls.

Andy McDonald (Labour, Middlesbrough)

The Minister will no doubt agree that in this day and age, people give very good information about their identity when they purchase goods. More often than not, they pay with a credit card, which is eminently traceable. In such serious cases, should the onus not be on the person who put the product on the market and placed it in someone’s home to take every step to track it down? The information is there.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I may be wrong, but I am fairly sure that handing over credit card or contact details to the trader would be a breach of data protection. It depends entirely on the item. Some very large items have to be registered online. Cars tend to have more effective recalls, because we know who has bought a car. I have had letters saying that something was wrong—I have quite an old car—but traders know who has purchased it and where it has been. There is traceability, so they can identify where it is and recall it, but that is not case for a lot of smaller items, which are often not registered. People are often concerned that if they register their details with a company, they will be bombarded with junk mail. The percentage of people who register their items is nowhere near 100%, so it can be hard to trace them.

Mary Glindon (Labour, North Tyneside)

The Minister is referring to traceable goods, but what about imported goods such as furniture that could be faulty? There is no one to take responsibility for spotting and recalling, and the new clause would cite an organisation that would be an appropriate authority to gather information. Fire safety regulations have made a big difference, saving lives, and our British standards for furniture are very high. However, we cannot guarantee that with products that come from thousands of miles away, where the regulations do not apply.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will get back to the hon. Lady in a minute on the issue of imported furniture.

Stephen McPartland (Conservative, Stevenage)

I am chairman of the all-party group on furniture. I have done work on fire safety regulations and have been to see the Secretary of State on various occasions to discuss the issue. When furniture is imported into the UK, it has to comply with British fire safety regulations, which are of a higher standard than those in Europe.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Gentleman is quite right. The importer is liable to ensure that the service complies with the UK’s regulatory framework, or the legislation could apply to the authorised representative of the manufacturer based in this country. Whoever is based in this country who has brought the item here is responsible if a concern needs to be tackled. The legislation makes it clear who on the business side is responsible for the product.

The producer or the distributor is under a duty to co-operate with the enforcer in taking action to avoid the risk posed by the product. That is laid out in the legislative framework, which is quite comprehensive. Opposition Members asked how the recall process could be made more effective to stop instances such as those raised by the hon. Member for East Lothian. We would probably all like to have the most effective recall system possible.

The hon. Member for Stoke-on-Trent South raised concerns about the number of forced recalls. The producer or the distributor will often take voluntary action to alert consumers to a safety issue and, where necessary, remove the product from sale. That is much more common than an enforced recall, because producers do not want to produce something that is dangerous to their consumers; that is not a very good way to ensure success in business. They will often voluntarily recall something. That might include issuing safety notices or initiating their own recall. If necessary, Trading Standards has the power to order a recall, but as I say, it rarely needs to do so.

Stella Creasy (Labour, Walthamstow)

The new clause relates to gathering data about the number of outstanding products. If any of us was concerned that perhaps a kettle in this very House might breach legislation—[ Interruption ]—or, indeed, a mobile phone could be dangerous to life or limb, there should be a place where one could double-check. I have to admit that there are two kettles in my constituency office, but, basically, it would quicker to put on the oven to try to boil water and there is nowhere I can check whether they are faulty. Does the Minister see merit in the new clause, in at least committing us to a process where we would gather information about outstanding products, so that there could be a place where consumers could inform themselves about products that they should take care when using?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will come to information sharing, but I should like first to finish my point about the legislative framework that is in place. Trading Standards can order a recall, but it has the power to prosecute traders for selling unsafe products under the General Product Safety Regulations 2005. It can take action if a trader is selling something that they are aware is unsafe.

Fiona O'Donnell (Labour, East Lothian)

I realise that the Minister might not be able to give me this information today, but perhaps she could write to me to tell me just how many traders have been prosecuted by Trading Standards for continuing to sell goods that they know are unsafe.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Lady predicts very well: I cannot tell her off the top my head, but I am happy to write to her with the details; that is not a problem at all.

Recalls are expensive for traders and so on. They can often be extremely complex, which is why they are often difficult to do. Manufacturers work with the enforcement authorities to tailor the action to the product given the specific circumstances or risk factors. Some of the issues the hon. Lady raised are matters of life or death whereas a kettle is perhaps slightly faulty but turns off before it boils. Clearly, the effort that needs to be made to ensure that all such items are recalled differs depending on the circumstances. Manufacturers will work with enforcement agencies to ensure that measures appropriate to the circumstances are taken. One of the reasons why it is difficult to compare the effectiveness of recall actions, as highlighted in the new clause, is that what is appropriate differs in different cases and it is difficult to compare different scenarios.

The hon. Members for Stoke-on-Trent South and for East Lothian asked how consumers are informed that a product has been recalled. The amount of effort will vary in different cases. Good practice guidance sets out how manufacturers should inform consumers about unsafe products. For example, direct mailings to those consumers whose details they know, press notices, adverts, media coverage and signs in stores can be used. Manufacturers have a suite of different options available. The guidance sets out the most appropriate steps to take in particular cases.

The Government are working with the electrical products industry, which monitors the impact of such actions to try to improve the effectiveness of recalls. Hon. Members have highlighted that those actions have varying success in terms of the proportion of products recalled. In some cases, consumers decide not to send an item back, and there is no way of forcing them to do that, so the success rate will probably never be 100%.

The industry is looking at how it can improve the recall system. The Government are supporting the efforts of the electrical products industry to monitor the impact of the different actions and identify ways to make product recalls more effective. We are working with the Association of Manufacturers of Domestic Appliances on an industry initiative to encourage the public to register their appliances. The leading appliance manufacturers have committed to facilitating product registration and using the power of their marketing programmes to help the public to understand the wisdom of registering domestic appliances. If appliances are registered with manufacturers, it is much easier for those manufacturers to contact all purchasers of an appliance if a problem arises and let them know that a recall is in place.

Fiona O'Donnell (Labour, East Lothian)

Until the Minister explained earlier in our proceedings the benefits of registering goods, I had no idea why that was done. Nobody who has sold me goods has ever explained to me why I should register them. I always thought it was simply so that manufacturers could bombard me with marketing, which is why I never did so. Does she think that rather than just working together, it is time we took action and placed some directions on traders and manufacturers?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I have sympathy with the hon. Lady. I am not very good at registering things either, because I am always concerned that I will be bombarded with things. There is probably work to be done, particularly via some of the consumer groups, to encourage people to register their products. The industry is working with the supply chain—including the retailers, which have an important role—and with other stakeholders such as Trading Standards, the fire brigade and consumer groups on how to encourage consumers to register their domestic appliances, which would make recalls more effective. Quite a lot of work is being done at the moment, which I hope will tackle some of the issues that she raised.

The hon. Member for Walthamstow asked about suppliers providing information to the consumers whose information they have gathered. Information on unsafe products is shared across the EU via the RAPEX system, on which alerts are posted by Trading Standards. Consumers can access that system on the Trading Standards Institute website to see which items are on the list. In addition, European legislation on the safety of electrical equipment is being revised to improve the traceability of electrical products. That revision to the directive is expected to be agreed later this year, after which the UK will have two years to transpose it into national law.

Turning to the detail of the new clause, the Government consider that it would be disproportionate to place a duty on the Secretary of State to gather evidence of recalls and provide estimates for unaccounted products.

Fiona O'Donnell (Labour, East Lothian)

The Minister has said that that information is already gathered and dealt with by Trading Standards. Surely, the Government would simply have to pull it all together so that they had an overview. I do not see what the Minister objects to in the new clause, or what the problem is.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The information is already publicly available through the RAPEX system. The problem is the provision of estimates for unaccounted products. The information is likely to be unreliable, particularly for older products where it is difficult to estimate and where a consumer may have transferred ownership by selling the product to another person. The information on older products is likely to be of little use to enforcement bodies or consumers. It would be disproportionate to place a duty on the Secretary of State to provide that information, which will not be of much benefit to consumers. It will be much more effective to ensure that the information is available to consumers and to focus on the work that is being done to make product recalls more effective, working with the industry, consumer groups and other stakeholders to try to identify the best ways of doing so.

Fiona O'Donnell (Labour, East Lothian)

The Minister referred to older products. What information does she have? My understanding is that the vast majority of such goods would be new products. Perhaps if companies have taken two years to make us aware of the fault, they might be a bit older, but what is the evidence for her to be so concerned that older products are a problem?

Jennifer Willott (Liberal Democrat, Cardiff Central)

There are a variety of issues. For example, with my car, which was seven and a half years old, there was a recall last year. Issues may crop up later in a cycle, and it may be more difficult to track them down.

The new clause does not specify new items. What is useful for consumers is to ensure that recalls are effective, and that they have easy access to know which items have been recalled, and to ensure that traders and manufacturers can identify who had their products when a recall is necessary, to enable that process to work more quickly.

Fiona O'Donnell (Labour, East Lothian)

I asked the Minister what evidence there was. The story about her car was interesting, but it is not the kind of evidence I was looking for. If she cannot give me that today, does she think there is a breakdown out there? We are being told that the information is not there and that it is too difficult to pull it together. Why is she concerned that there are all these old goods that we cannot track down? What is the evidence for that?

Jennifer Willott (Liberal Democrat, Cardiff Central)

There are a lot of cases in which we do not have ownership information. In the examples provided by the hon. Lady and the hon. Member for Stoke-on-Trent South regarding items that have been recalled, there is no way for the retailer or manufacturer to have any idea that those items had been purchased by those two individuals. One of the main problems with many recalls is that manufacturers and traders simply have no information about who purchased items. Rather than just providing estimates of how many have been affected, it is more effective to ensure that that information is shared and that people register their products, to see whether we can tackle the problem in a way that allows us to trace the goods and their owners.

Andy McDonald (Labour, Middlesbrough)

Has the Minister had the same experience as me? When I go to Comet or Currys to buy white goods, I do not know which manufacturer makes those goods—Indesit, Beko or whoever—but they have a model number. More often than not, the goods will carry a serial number. When I purchase those goods, retailers seem to demand a great deal of information from me, for example, if I ask for the goods to be delivered. A lot will be known about me. Does she feel that she is entirely correct about their not having a great deal of information about who purchased a dangerous cooker? In those circumstances, the defects would come to light quite quickly; the product is new and has an inherent flaw. The information, such as serial numbers, is in the possession of the store and the retailer.

Jennifer Willott (Liberal Democrat, Cardiff Central)

My understanding is that in many such cases, that information is not known to the trader or manufacturer. Certainly there are cases where individuals register their products and details, so they can be contacted. A lot of the work that is going on in the industry is to try to encourage that. As the hon. Gentleman said, that is the way forward. I know that hon. Members want to raise quite a lot of other issues, so I am keen to draw this debate to a close.

Rob Flello (Labour, Stoke-on-Trent South)

Will the Minister give way?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Very briefly.

Rob Flello (Labour, Stoke-on-Trent South)

I am grateful; the Minister has been generous.

The Minister referred to Trading Standards and the website from which consumers may get the information. I must say that that was news to me. I have called up the website. The first item on there is a kettle, which again could be dangerous. Some items on there can be shock hazards—it is quite a long list. Has the Minister ever looked at the website? If she has not, does she not think—to come back to the point made by my hon. Friend the Member for East Lothian—that whichever party is in government, there is a real onus on Government to educate the public about a quick, easy and safe way to find that information out? Rather than it being a case of pot luck, if a consumer happens to go back to their local superstore after eight months, sees a sign when they push the door open and thinks to themselves, “Hang on, I’ve got one of those and they are dangerous,” is there not an onus on Government in that regard?

Jennifer Willott (Liberal Democrat, Cardiff Central)

A lot of these issues are being tackled across the industry, which, as I said earlier, is working with stakeholders such as the fire brigade and consumer groups. Consumer groups have an important role in making sure that people know how to access that information. Sharing information—and that information going both ways round—is an important element. The cases that hon. Members have raised are important, but I hope that I have been able to reassure people this afternoon.

The hon. Member for East Lothian asked what evidence there is about old goods that cannot be tracked. In some recent high-profile examples in the electrical products industry, the products involved—for example, dishwashers —were around seven to 10 years old, so there are instances of old products that may well have changed hands.

I hope that I have been able to reassure hon. Members that a lot of the issues that the hon. Lady has raised are covered by other areas of work that is being done by the Government or by industry and that the relevant information is publicly available. With that, I ask her to withdraw her new clause.

Fiona O'Donnell (Labour, East Lothian)

I really do not feel confident about what the Minister has said. It all feels a little bit laissez-faire and woolly. People may be working together, but the fact is that there are serious problems with the present system and I am really disappointed that the Minister has not used the opportunity the Bill offers to get to grips with that issue. Companies that run loyalty cards are getting really good at targeting us and communicating with us, and I would like some of that energy to go into keeping people safe. Different sectors would respond in terms of their own research and development and product testing.

I am afraid that I feel a duty of care to my constituents on the thousands of faulty goods in homes across the UK, and so I have to press the matter to a vote.

New Clause 3 - Right to supply unique goods

New Clause 5 - Ombudsman Services

Stella Creasy (Labour, Walthamstow)

I beg to move, That the clause be read a Second time.

The Opposition’s subtitle for the new clause is “The elephant in the room”, because it is about alternative dispute resolution—

Stephen Doughty (Labour, Cardiff South and Penarth)

And the panda.

Stella Creasy (Labour, Walthamstow)

We had pandas. One might not want to call this place a zoo, but we certainly had a pregnant panda in the implementation group. Eagle-eyed Members —[Hon. Members: “Oh!”] Oh, come on. Eagle-eyed Members will have seen the new clause that refers to the implementation group, but new clause 5 is the elephant in the room because it is about the implementation of the European directive on alternative dispute resolution. It is welcome that the Government appear to have followed our lead by publishing today their consultation on how to bring in the directive.

For members of the Committee who are not entirely familiar with it, the directive has to be applied by next year; it imposes a series of requirements on Governments regarding the provision of dispute resolution services for all consumers across all sectors. The Government have now had two years to transpose it into law, so the Opposition are faced with a mystery: we cannot fathom why the cage is empty. My hon. Friend the Member for Stoke-on-Trent South is looking at me. I promise to stop there and not to start quoting Simon and Garfunkel. Given the Minister’s earlier remarks about the importance of alternative dispute resolution processes to the exercise of consumer rights, we cannot understand why the Bill makes no mention of the European directive and, indeed, is not part of its implementation.

We tabled the new clause to assist the Minister, just as earlier this morning we discussed how to look at micro-actions. We are concerned and having speed-read the consultation over lunchtime—I apologise if my stomach starts to growl, because I did not eat as much as I would have liked, so that I had time to read the consultation—[Interruption.] I was indeed vexed by the requirement to do this. In the consultation document, the Government make some important points on alternative dispute resolution, calling even more into question their decision not to match up the requirements of the directive and the Bill.

In particular, the Government’s impact assessment accepts that currently alternative dispute resolution in this country does not meet the European requirements: it does not provide independent alternative dispute resolution across all sectors within 90 days or a process by which consumers can be informed whether their appeal has been successful. We all understand how important alternative dispute resolution is to both parties—after all, the idea of having to take someone to court can be overwhelming. An alternative, simple process whereby someone adjudicates whether a complaint is fair and compensation is owed as a result—that compensation may take myriad forms—is even more important. We know that ADR is also good for businesses, because it helps to reduce the possibility of legal action, thus improving customer satisfaction.

None of us expects to buy everything without any problem at all; we all recognise that things can go wrong. During its machinations, the Committee has heard many examples of problems occurring—cases where goods, services and, indeed, digital content have not been satisfactory or fit for purpose. These are simple rules and we welcome the fact that the Bill would introduce them, but we recognise that there are times when consumers will dispute the way in which services, goods and digital content have been provided but will be unable to find resolution internally with the business; an alternative dispute resolution system is important because it avoids the prospect of going to court. Businesses have also found that to be true. That is why it matters that we get these provisions right.

The legal ombudsman found after reviewing the previous 10 years of its work that the net benefit to industry from good complaints handing could range from £6 million to £9 million a year, and that that could improve the profitability of law firms as a result. Good ADR helps businesses to save money, helps to improve customer confidence and helps to resolve matters quickly. As we know, a lot of people’s complaints are not resolved quickly—what happens when there is not good ADR. Only 46% of businesses were able to resolve more than 90% of their complaints, while providing explanations to their customers. This is where ADR comes into play: the customer has been back to the shop, called up the service provider and said, “This isn’t working. It’s not right. I want my money back, or I want the repeat service performed I’m entitled to,” but the company has said, “Well, sorry we disagree.”

This is the spirit of the EU directive, and I think we would all agree with that spirit. If there is a measure that can save money and improve the profitability of companies and the experience of consumers, so that they are more likely to consume, it must be in the interest of our economy, our businesses and our consumers. That is why we were surprised that the Government did not choose to use the Bill, which introduces the rights on which an ADR process would adjudicate, to make sure that that parallel process of remedy and redress is part of our thinking.

We were confused and concerned when the Government said that they did not think legislation was necessarily required, so we are interested to see that in their consultation the Government now accept that there could be a case for primary legislation on ADR, that they will seek to use the 1972 Act, I believe, to introduce proposals and that there will be matters that the House will seek to consider. I do not know whether we, as Members of Parliament, have an opportunity to use alternative dispute resolution with the Government about their taking up our time twice with the question of redress, but I think we could make a case that the Bill, if it does not mesh into that ADR process, is not necessarily fit for purpose or satisfactory, and we might want 30 days to return it. We might want to challenge several aspects of the Bill, but the fact that we will not have the opportunity to consider these matters together is a concern for us.

We are concerned because, at present, there is no fit-for-purpose ADR landscape in this country, as the Government acknowledge in the consultation. There are 70 different ombudsman schemes in this country, but they are of variable quality. The word “ombudsman” does not necessarily guarantee a set of standards. Eagle-eyed Members will have seen that the new clause is designed to deal first and foremost with that concern. What does it mean to seek succour from an ADR process? Although what an ombudsman does is clear in principle, it is confused in practice, because a number of different ombudsmen have been set up along the way in the UK, with varying capabilities and powers. Some are statutory—for example, the housing ombudsman, which I am sure many of us have dealt with in our casework—and others are voluntary or, I dare say, not independent bodies at all but simply cover for a trade association.

The Furniture Industry Research Association is the only profit-making ombudsman service in the UK, but many of us will know of the concerns. I am sure that the hon. Member for Stevenage, with his all-party group hat on, will want to talk about the quality of furniture complaints resolution. Certainly, that organisation does not stand up under same scrutiny as other ombudsman services—ones that do have independent actors within them and do seem to act more in the consumer interest. The fact that the Office of Fair Trading would not accept FIRA self-certification speaks to the concerns about whether it is truly an independent ombudsman service. It therefore seems right to us to ask what the Government are doing to make sure that consumers can have confidence in ombudsmen.

The European directive must be enacted by next year, so there is not a huge amount of time, especially parliamentary time. We are using the new clause to ask how the directive fits in with the Bill and to offer suggestions how that could be done. New clause 5 is an attempt to do precisely that and to look at what matters when it comes to ombudsmen and how that matches with the directive. It deals with their independence and their ability to deal with cases within 90 days and to make recommendations that have meaning. It is no good someone going to an ombudsman whose decision is in their favour if it has little impact. To the consumer, that feels like a process of attrition rather than resolution. When we come to discuss the role of ombudsmen and alternative dispute resolution in the public sector, many of us will be able to think of bodies, as I can in health, where it feels that such procedures have been put in place to create a process of attrition so that, eventually, a user will give up complaining, rather than getting the service they require.

I want to give the Committee the example of a sad story that was brought to me. The financial ombudsman had been involved in the case of a pensioner couple who had been given very bad advice about taking out a second mortgage on their property, so that they could renovate it and realise their capital. The development fell into serious problems at the time of the financial crash, but when the loan company refused to let them exit the scheme, they were forced to take out a further mortgage, incurring further debt. The trust in question increased interest on the loan and subsequently required them to use their own builders to rebuild the property. The financial ombudsman’s findings recognised that there had been detriment.

The lender continued to chase the couple for money and the ombudsman’s case was reviewed again. The local MP got involved, which is perhaps another form of alternative dispute resolution. The family has raised a concern about the conduct of the financial ombudsmen because the review has been suspended but further breaches of regulation have been identified. That shows the mess that can result from using ombudsman services if they are not done to a particular standard or if the consumer does not have confidence in respect of the issues that the ombudsman can deal with and that the ombudsman can punish breaches of regulation.

The new clause speaks to such situations and seeks to ensure that every ombudsman is a gold-standard ombudsman. Indeed, the Government’s impact assessment talks about how the legislation that they intend to introduce could be gold-plated. How we can have confidence in ombudsmen is an important question. The fact that that is not being considered alongside the regulations that the Government propose in this legislation is a problem.

Let me give an example of where the problem might occur from the business perspective. The impact assessment assumes that, when the system comes in, it will take one hour to train a business’s staff on alternative dispute resolution and to make sure that in every sector staff know to whom they should refer customers. That does not take into account any training that might need to be undertaken on the rights in the Bill. The Government have set great store by the idea that the Bill will introduce simplified consumer rights.

We will come on to a new clause about the implementation group and all the different issues that it will look at. Surely, however, if part of that is about access to redress and part is about people’s right to complain and whom they would go to should there be a problem, the group should also look at alternative dispute resolution. Given the already lengthy list that the implementation group has to deal with, the idea that any of this information can be imparted in just one hour and that ADR is not part of the process seems to us to be misplaced.

The Government’s consultation goes through several different proposals for dealing with complaints and, given the acknowledgment that the ADR landscape in this country does not match the standard in the EU directive, how to achieve that standard. That goes from the minimal option, in which the Government create a back-stop dispute resolution process of last resort, to radical reform of the ombudsman landscape, including having a single ombudsman, because the EU directive requires a single point of entry into the complaints process. Those are all radical suggestions about how people might seek redress, but without reference to the Consumer Rights Bill, surely they make no sense. Equally, the Bill makes no sense without reference to the powers of redress.

As we discussed in previous sittings, one of the worrying things about the consultation is that it looks at whether consumers should pay a fee, or go through the process of being asked to pay a fee, to complain. Members will be concerned about the possibility of some consumers not being able to access alternative dispute resolution, given the importance of an ADR system in ensuring consumers’ rights and encouraging businesses to co-operate.

If there is a narrowing of the process to those who can afford to pay, how does that fit in with the rights in the Bill—rights that, up until now, we all thought were for every consumer? The Government talk in the proposals about resolving the issue of whether we could have competing ADR systems. Members will know of my concern about the estate agent industry. There are two different ombudsman services for property management. The consultation talks about that being good for businesses, because, as they can decide between two competing schemes, that will be good for quality. I am not so sure that it is good for consumers. If the consumer seeks redress under one system, the business may threaten the ombudsman with going to the other ombudsman if it finds in the consumer’s favour. In that case, the ombudsman has a clear incentive to keep hold of the business, rather than protect the interest of the consumer.

There are all sorts of questions about how this measure will interact with consumer rights. That is the elephant in the room. The Bill should have been informed and influenced by the way in which the EU directive is brought forward. The Bill has no particular timetable, but the EU directive does. If the Government want to tell us that they could not consult in time on the EU directive, why did they not delay the Bill so that it could have been informed by that? Why have they chosen to double the Department’s work load by separating these two processes? That does not give clarity to consumers on who will act in their interest, or give clarity on how businesses can expect any of the requirements of the legislation to feed through into alternative dispute resolution.

There is clearly a problem with our ombudsman landscape. The fact that that is recognised only shows further that we need to do more to make it work for consumers, and not simply for businesses. We do not want the least worst option that allows us to adhere to the EU directive that we signed up to; we want an ombudsman service that matches the Bill’s standards and ambitions as regards consumer rights.

We tabled the new clause to try to get the Government to look at how we can deal with issues set out by the EU directive in a reasonable time scale. We are thinking particularly about the licensing of ombudsmen, so that when people see the word ombudsman, they know what it means; standardising the powers of redress that ombudsmen offer, including compensation or requiring repeat performances; and how this fits in with the EU directive, in terms of 90 days and single-practice traders. We do not think that the Bill alone will give consumers adequate protection. With a strong and effective ADR system, however, consumers in Britain will be better off. We therefore think it is right to bring the two processes together.

If the Minister is not prepared to accept our new clause, she needs to set out the time scale for the consultation, which will finish in June. Also, given that she accepts and makes the case for primary legislation on ADR in the consultation document, how will she ensure that that occurs in a time scale that does not undermine the Bill, hinder its progress, or delay the operation? There must be no incentive to bring in the least worst option owing to the shortness of time because the Government chose not to use the Bill as a legislative vehicle. We need to get together the right kind of ADR landscape.

I would welcome the Minister’s comments on how she sees the ADR consultation being implemented, and not simply on the consultation taking place. All of us who were frustrated to see the separation of these two important issues need to have confidence that the Government have a timetable not only for a consultation, but for an implementation that makes sense for the Bill. The Opposition will reserve the right to come back on how the Bill may need to be amended to reflect whatever decision the Government make on the ADR system. If the Government choose to go for the least worst, minimal option, which they say carries a number of substantial risks of consumer detriment in their consultation document, all of us will be the poorer for it. I look forward to the Minister’s comments on the EU directive and her explanation as to why, given that the Government have bought forward the consultation now, the Bill and the EU directive could not have been married together to give a completeness of picture. What are her plans on ensuring that we get the kind of ADR system in this country that we all know our consumers and constituents need and deserve?

Jennifer Willott (Liberal Democrat, Cardiff Central)

As I have mentioned a number of times during the passage of the Bill, the Government are very supportive of alternative dispute resolution. It provides a much more accessible route for consumers than taking a case to court, and we want to encourage it. Consumers are often deterred from seeking redress by the prospect of having to navigate the legal system, and we want to make it easier for people to get the redress to which they are entitled. While I see better access to ADR as complementary to the Bill, I would not want to prejudice the outcome of the consultation on the implementation of the ADR directive by amending the Bill. It is important that we consult fully and take into account the views that we get back.

The ADR directive contains many provisions, and the new clause only partially covers them; the directive is broader. Additionally, the implementation process for the new directive gives us the opportunity to look at how effective the UK’s current ADR landscape is and what improvements we can bring. However, we cannot determine how we intend to implement the ADR directive in detail until we formally consult fully on the matter and take people’s views into account.

As the hon. Member for Walthamstow has mentioned, we published our consultation on implementing the directive today, and I thank her for giving the Committee the highlights of it. I therefore do not feel the need to do the same. I have sent members of the Committee copies of the consultation document, because the issue has been raised a number of times during our debate. I am sure that members of the Committee will have views, and I encourage people to respond to the consultation if they feel so moved.

The consultation sets out our proposals for ensuring wide coverage of ADR and how we intend to implement the requirements that ADR bodies will have to meet. We are also using the consultation to call for evidence on possible longer-term reform of the ADR landscape. We are seeking views on whether broader simplification is necessary and feasible, and are looking for further evidence to weigh up the costs and benefits of that. Following the consultation, we will make detailed regulations to transpose the ADR directive in spring 2015, so it is not appropriate to introduce the new clause into the Bill.

The hon. Lady asked whether there was a need for primary legislation or regulation. She seemed to suggest that I have not mentioned the need for primary legislation before, but I have made it extremely clear. For example, when I gave evidence to the Committee in our second sitting, I said:

“A number of the ways that we could ensure that ADR is available across the market do not need legislation. Some of the options can be done through regulation and so on. Some would require legislation.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 64, Q114.]

It is clear that a range of different options are available, all of which we are consulting on through the document published today. The hon. Lady asked how we would implement the directive through legislation. We will use regulations made under the European Communities Act 1972 to implement it. We need to consult in detail before we bring forward regulations to implement the chosen option. We have started that process, and that is the route we will be using.

The Government have brought forward wide-ranging and fundamental reform of the competition and consumer institutional landscape and of the framework of consumer legislation, as well as other reforms to ensure confident consumers. We have discussed that on many occasions during the Bill’s passage. Those reforms all interrelate and form part of a stronger, overarching framework, but not all of them—this includes the legislative reforms—have been, or should be, taken forward in the same Bill at the same time.

It has become clear during our discussions in Committee that other regulations and legislation fit together with the Bill. However, by consulting thoroughly, we are ensuring that our proposals to implement the ADR directive will complement the provisions of the Bill.

The hon. Lady asked whether consumers should pay a fee for access to ADR. The directive requires ADR to be free for consumers, or to cost a nominal amount, and currently the majority of schemes are free to consumers. She also asked about the licensing ombudsman. We will install a competent authority who is responsible for certifying and monitoring a list of approved ADR bodies. Our regulations for implementing the directive will set out the legal requirements that every certified ADR will have to meet, and the competent authority will be responsible for ensuring that certified ADR bodies continue to meet their legal requirements. An ADR body that does not meet the requirements will be removed from the list of certified bodies and be replaced by another certified ADR body. In effect, the competent authority will be running a licensing regime for certified ADR bodies. That is the process we will follow.

The final issue that the hon. Lady raised was about ensuring that a redress scheme had teeth, and that traders complied with rulings. Most ADR schemes work on the basis that a settlement is binding on the trader if the consumer accepts the settlement proposed by the ADR body. Compliance with decisions is not generally an issue. In isolated cases when a business has refused to comply with a decision, depending on the circumstances, either a relevant regulator will take enforcement action, or sanctions can be imposed by a relevant trade association. There is a way of ensuring that traders comply with rulings.

I hope that hon. Members will enjoy reading the consultation that came out today, and I look forward to seeing any responses that members of the Committee may wish to make to the consultation. I also hope that I have made clear why the Government believe that now is not an appropriate time to put this in the Bill, and that it would be jumping the gun. It is more important to ensure that we consult broadly, make the right decision and take account of the views of consumer organisations and a wide range of stakeholders before deciding on this matter. I hope that the hon. Lady will withdraw her new clause.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer, but she did not deal with the elephant in the room. Given the timetable set by Europe for the implementation of this legislation, and given that the directive will marry with the Bill, I call to the Committee’s attention paragraph 87 of the consultation document, which says that an important aim of reforming the ADR system is to complement the improvements of the Consumer Rights Bill. The document explicitly links the two, so why has the Bill been introduced if a separate process is to be undertaken for the EU directive? This is not about whether the Minister should consult widely on the EU directive, but whether we have brought forward legislation that inevitably should be informed by what is decided about implementation of the EU directive. Yet the two are not working together.

The Minister said that she is clear that legislation will be required, but the reverse could be read from her comments on Tuesday 11 February when she said:

“I said it would not necessarily require legislation…Some of the options that we are looking at would not require primary legislation; they can be done through other routes.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 65, Q116.]

I accepted that in good faith, and that we were not looking at the possibility of primary legislation, so it made sense for this not to be part of the brief. For clarity, I will read out what she said:

“A number of the ways that we could ensure that ADR is available across the market do not need legislation.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 64, Q114.]

That is ADR across the market, which is a sweeping statement, but we accepted the Minister’s point in good faith.

Jennifer Willott (Liberal Democrat, Cardiff Central)

To be complete about this, what the hon. Lady has not read out is the next sentence, which was that some would require legislation.

Stella Creasy (Labour, Walthamstow)

I am pointing out that the Minister was very clear that legislation would not necessarily be required, so her answers made sense when we queried the point. If the Minister wants to go into the issue, we can talk about the fact that we raised the point that the Government had not decided to include the ADR directive in the legislation, and we asked why. When the Minister gave an assurance that there were some methods that would not require primary legislation, we presumed that it was the Government’s intention to use those.

It is clear from the consultation that primary legislation is back on the table, and, frankly, that is probably welcome. [Interruption.] The Minister shakes her head. She needs to ask herself whether she was clear with the Committee as to why, if she was going to rule out legislation in those hearings, she subsequently did not.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I specifically did not rule out legislation.

Stella Creasy (Labour, Walthamstow)

I will happily give way to the Minister if she wants to say why she clearly said that ADR could be delivered across the market without primary legislation. She did say that, on the record, on Tuesday 11 March.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Every time I have spoken about this—I do not intend to intervene again—I have made it clear that we are consulting on a range of different options, some of which are filling the gaps and some of which are longer term ones, and we are asking for evidence on the costs and benefits of both. The hon. Lady says that she has read the consultation document. As I made extremely clear—and I have done every time I have said this—there are a range of options: some do not require legislation, some require regulations and some require legislation. We are consulting on a broad range of alternatives, and the methods of implementing them are different depending on the options.

The rest of the debate is in Hansard.