Enterprise Bill

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Miss Johnson: As the hon. Gentleman said, the amendment would ensure that only consumer bodies could bring consumer group claims. He invited me to accept it, but it would add little to the clause. Organisations that wanted to bring consumer group claims would have to apply to be designated by the Secretary of State specifically for the purpose, as we have discussed. Applicants would then have to meet the published criteria if they were to be included in the list of specified bodies. As we discussed, the criteria will be subject to consultation, but they will include a requirement for organisations to demonstrate that they represent the interests of consumers. As the amendment would not add anything, I do not feel sufficiently moved to accept it. I hope that the hon. Gentleman will take that in the spirit in which it is said.

Mr. Waterson: It is thoroughly demoralising to hear that one of my amendments is unsatisfactory or unnecessary, but I understand the Under-Secretary's comments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Waterson: I beg to move amendment No. 57, in page 8, line 34, leave out 'two' and insert 'fifty'.

The Chairman: With this it will be convenient to consider amendment No. 58, in page 8, line 41, after 'may', insert 'only'.

Mr. Waterson: I am sure that hon. Members will characterise the amendments as another attempt to emasculate the legislation, but they are nothing of the sort. They represent a desire to be clear about how it will work in the real world, which includes business and industry as well as consumer bodies and politicians, whether some hon. Members like it or not.

Miss Johnson: Can we be clear that we do like the world like that?

Mr. Waterson: I am sure that we can be clear. I am clear about that, as I am sure that you are, Mr. Conway, but as someone once said, ''By their deeds shall they be known''.

For some puzzling reason—one can imagine the poor draftsman late at night stretching his legs and coming up with this whimsical piece of drafting—new section 47B(1) says that a claim may be made

    ''on behalf of two or more individuals''.

I am puzzled why one would want to specify ''two or more'' on the basis that one complaint should be enough. If a consumer stumbled across a massive abuse or infringement, surely that would be enough on the general whistleblower principle. However, the Government believe that it should be two or more. I do not know whether there is a danger that the one person might simply be bonkers.

I intend to discuss this at as much length as you will permit me on the stand part debate, Mr. Conway, as we are into brand new territory in English and, I dare say, Scots law. It needs careful attention, otherwise a law with unintended consequences will really kick in

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with a vengeance. The CBI, among others, was concerned about the phrase and came up with a proposed amendment, which I was happy to adopt. Given that for some reason the Government want to specify a number of individuals, it proposed that we should make it 50 or more. The basis for that proposal is the far-reaching nature and complete novelty of the power, as well as an attempt to be sure that whatever body brings an action represents a significant section of consumers.

In a sense, we are back to the danger of frivolous and vexatious claims and we could re-run that whole debate, but I suspect that we would have the same result. I should be fascinated to hear a ministerial justification for the provision referring to ''two or more'' individuals. I believe that there is merit in the suggestion that if we are to specify a number, it should be a significant number.

The Under-Secretary may reply that that would be the position anyway and that only pretty big league matters would be taken forward under the procedure, which almost by definition would mean large numbers of consumers were affected. I simply do not know, but if we are to specify a number, we could easily incorporate another safeguard by specifying a minimum of 50. I am not dogmatic about the number, but there should be some recognition that a not insignificant number of consumers must be affected. That is the basis of amendment No. 57.

Amendment No. 58 would provide an important safeguard in relation to this far-reaching power. Without it, there is a risk that the consumer body would retain the damages. Before anyone accuses me of facing both ways, I should point out that we shall come later to amendments that consider the possibility of a consumer body using funds obtained in that way for other purposes. If we are to go down that route, let us go down it with our eyes open. It is important to have this modest safeguard and I should be grateful to hear the Under-Secretary's comments.

Dr. Vincent Cable (Twickenham): As the hon. Gentleman has suggested, the clause raises some big issues. I imagine that the substance of them will be discussed when we reach the stand part debate. I am talking about the philosophy of whether consumer associations should be allowed to have real advocacy powers, followed up by possible legal action. However, we are dealing first with the safeguards, rather than the principle.

When we dealt with many earlier clauses, I sympathised with the way in which the Conservative spokesman was approaching the Bill, but we rather part company in this area. As we shall reach the bigger issues in the stand part debate, I will now deal with the two points that he made.

The first issue is cost recovery and damages. The hon. Gentleman envisages the possible emergence of an American-style, ambulance-chasing culture. Theoretically, that could happen, but surely it depends substantially on which organisations are authorised under the legislation to use the powers. Consumer organisations in this country are not into that sort of game at present; it is not their business.

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A few years ago, the Consumers Association took an important action, which I think was essentially a class action, to establish an issue of principle in relation to orphan assets in the insurance industry. It was a big case, involving big costs, and not unreasonably the association would have expected to recover its costs, although not to profit from the process. Again, I am not sure whether the hon. Gentleman is concerned about consumer organisations ensuring that they have full cost recovery or whether they seek to make a profit.

The front-line consumer organisations of which I am thinking—the Consumers Association, the National Association of Citizens Advice Bureaux, and local citizens advice bureaux—are not ambulance chasers. That is not their mission and it is not why they would be authorised to take on the function that we are discussing. They do not operate in that way. We need to face the issue of how, presumably under secondary legislation, those organisations would be defined to prevent the opportunism that the hon. Gentleman described. I am not sure whether it is necessary to enshrine it in quite that way.

The second issue that the hon. Gentleman raised was multiple cases. I listened to his argument and he made the right point early on. Even one well-developed argument by one consumer should be enough to trigger an action. However, he then proceeded to argue that 50 cases should be needed. Even apart from the logic of that, I can foresee all kinds of difficulties with insisting on 50 cases, particularly in regard to a relatively local and minor issue that may be taken up by local CAB.

Mr. Carmichael: I bring to my hon. Friend's attention the example of the residents of Papa Stour in my constituency. As there are only 17 of them, if they were disadvantaged in some way—although they are of course blessed in every imaginable way and I commend the island to the hon. Member for Twickenham—and sought to bring a class action, as the Conservatives call it, they would not be able to do so.

Dr. Cable: As the hon. Member knows, I shall visit the residents of Papa Stour in a few weeks' time, so I shall be able to test that proposition at first hand. He makes the point precisely. Most actions that consumer bodies might take up involve fairly localised uses. We should consider the matter in common-sense terms.

3.30 pm

As Members of Parliament, we often act as consumer advocates. We do not have legal powers but we have powers to name and shame and to go to the local newspaper. That is often quite effective. When I hear of abuses, I ask myself whether it is an odd case or an example of systematic abuse. At what point does one pass that threshold? It happens when one has two or three identical cases.

An example is a case involving energy liberalisation that was brought to my attention at my surgery last Friday. I have to deal with many cases involving companies taking over electricity and gas supply on a questionable basis. A lady came to see me because a competitor company had taken over her supply. She

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had been asked whether she wanted it and had said no, but the company had given her the gas none the less. When she got the bill and protested, saying that she did not want the gas and had not ordered it, the company apologised profusely but said that the deadline for cancelling the order had been passed. She said that she had spent the previous two months trying to ring its offices but the phone was always off the hook and no one answered; the company said that the law was the law and that she had to pay because she had not cancelled within the two-month period. I thought that that was perhaps just bad luck—such things happen—but I then had two identical cases involving the same company in the same area. One does not need to be a statistical genius to see statistical significance in that trend and perhaps the basis for a case.

Mr. Waterson: Maybe we should form our own little interest group on that issue. I have had similar cases in my constituency. I have finally got to the root of the problem: people who are going around trying to peddle the change are working on an incentive basis. There have been cases of requests being falsified.

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