Enterprise Bill

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Dr. Cable: I wholly agree with the hon. Member for Eastbourne that we need to have a wide-ranging discussion about the introduction of an important principle. Like him, I was struck by the strength of language and feeling in the CBI submission. I do not routinely disregard what the CBI says, as much of it is sensible. Indeed, I happen to agree with a lot of what it said this morning about the revenue-raising part of the Budget. However, I find it difficult to understand why it has been so wound up. I want to comment on the hon. Gentleman's contribution, too. He spoke moderately and raised the right questions, but came to conclusions that were, if not necessarily wrong, different from mine.

We must recognise the importance of consumer advocacy as a principle to be enshrined in the law. It is a fact of life that the people who are most likely to be exploited as consumers, because they are old, ill, infirm, poorly educated or lacking in literacy skills—sadly true of many adults—are those who are least able to pursue an action on their own. That is why we need advocates and one of the important reasons why the consumer movement exists.

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Mr. Field: I appreciate where the hon. Gentleman is coming from, but does he not appreciate that while consumer groups exist as advocates, under the terms of the clauses that we have already discussed, the idea is that it is the OFT that should take cases further forward? The great concern, which was espoused by my hon. Friend the Member for Eastbourne, is that we may find ourselves with super consumer groups, undoubtedly with strong media links, that effectively work as judge and jury, rather than by putting their evidence forward to the OFT.

Dr. Cable: That is a good question. The hon. Gentleman asked why consumer groups should not stop at simply being advocates and leave cases to the OFT, and there are certain reasons why it would be inadequate to leave things as they are. One is the problem of litigation, about which the hon. Member for Eastbourne made some helpful comments. It is extremely difficult—the present Government have a lot to answer for in this regard—for people of modest means in vulnerable circumstances to get legal help. Under the capital rules of the Lord Chancellor, there is probably not one single owner-occupier in my constituency who would be able to achieve legal aid, because of the nature of property prices. The only way that such people could possibly get legal help is by visiting an advocacy group such as the citizens advice bureaux or the Consumers Association, which have in-house lawyers who can take cases up on their behalf.

The work involves going beyond the advocacy stage to working alongside lawyers, so the question is why the Consumers Association should not stop at only preparing a brief and then handing it to the OFT. The answer has probably to do with scale. The OFT is a national body. It will be a kind of quango, presumably sitting in London. I suspect that many issues that consumers and consumer groups want to pursue will be local and of a small scale. There may be an answer to that problem, but I suspect that there is a gap in the scale on which people might wish to pursue actions. Consumer organisations are probably much better at bringing both difficult test cases and small cases.

Mr. Djanogly: That is exactly the point. The scale will be different. We are talking not about super complaints or small consumer-related issues, but about article 81 and 82 prohibitions. Is it not the case that individuals will simply be used for other people's purposes?

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Dr. Cable: That may be the case, which is why I shall raise two useful points that I picked up from the hon. Member for Eastbourne. First, there is an anomaly, whereby the powers appear to exist for big complaints, but not for rogue traders. Perhaps we can eliminate that as we go through the Bill.

The second consideration, which lies behind the question from the hon. Member for Huntingdon, is the motivation of the people who bring the action. We have referred to that issue several times in the discussion on the amendments and in this debate. How do we differentiate between disinterested bodies such as the citizens advice bureaux and the Consumers Association, and opportunistic lawyers who pursue

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no-win, no-fee cases? I genuinely do not know how that distinction will be made after the Bill is enacted and how there will be a disciplined procedure for identifying those consumer associations that will quite properly bring actions on behalf of our constituents, as compared with those whose motivation is wholly different and less disinterested.

My final and major point is that lying behind the CBI's concern is a view of the world that I do not recognise. The picture is of poor big business cowering in the face of all the consumer pressure groups. However, that does not tie in with reality. In many markets, the balance of power is very different. I shall give one example, which relates to the intervention by the hon. Member for Wolverhampton, North-East. Many hon. Members, probably including some in this Room, and many clever people in the legal profession have been victims of mis-selling by Equitable Life. Indeed, in some cases, the most sophisticated people in the community have been victims of the abuse of mis-selling.

The balance of power in the relationship between consumer and producer is very often in the hands of the producer when it comes to sophisticated products with a lot of small print attached to them. However, the balance of the argument must be shifted in favour of consumer protection, which is why my instinct is to support the clause as it is.

Mr. Field: Following the earlier comments by my hon. Friend the Member for Eastbourne, I am glad to be joining the all-party group on film. He has made many of the points that Opposition Members wished to make. We are concerned about aspects of the clause and we are interested to hear what the Under-Secretary has to say.

I am sceptical about the power of many large lobby groups. My great concern is that consumer groups will turn from advocate groups and a voice for those with very little voice, as the hon. Member for Twickenham said, into part and parcel of the legislative process and little more than prosecuting authorities. We should not be naïve about the way forward. It is with great regret that one considers many other areas of public life. We need only look across the Atlantic at the trends there 20 years ago to discern how they will develop here. Class actions are a retrograde step. We should look at all the television advertisements for Claims Direct and other organisations telling people that if there is someone to blame, they have a claim. We will see a rapid unwinding of ethics in many ways if class actions come into play.

I am concerned that these designated consumer bodies will have great power. One recalls the phrase that Baldwin took from Kipling about power without any responsibility. Clearly there will be great media opportunities. Class actions have gone into a high-profile media arena. It is all too easy to see how the media can be whipped up into something of frenzy, particularly over certain campaigns, such as those where a little granny has had some difficulty. The consumer groups will no doubt get their public relations departments to do their best to ensure that their claims are seen in that light. We are being naïve. As my hon. Friend the Member for Eastbourne rightly

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said, we must go into this with our eyes open as to what the medium-term consequences may be.

Mr. Djanogly: The clause is ill conceived and I do not see the point of it. If the loss is so small that the action is not worthwhile, it is a matter for Government to decide whether, taking the infringements as a whole, it would be in the public interest for a claim to go ahead. Many hon. Members have talked about this matter as though we were talking about consumer-type actions. We are not. We are talking about competition-type actions, where sophistication on the part of consumers cannot be assumed. We are heading to a point where individuals' names will be used for little gain for themselves; they will merely suffer disturbance.

That will not earn the Government a reputation as the godfathers of ambulance chasers in the country; that will come from the super complaints clauses. We will be setting up a platform for consumer bodies to flex their muscles on the basis of what they consider to be the overall harm and the public interest. I am not convinced that they are the right institutions to decide what represents the public interest. That is a matter for the Government.

Mr. Carmichael: The consumer bodies can certainly flex their muscles in that way, but they will succeed only if they have a case that the tribunal says has merits. There are two alternatives to class actions. Which is preferable; that people who have a claim do not pursue it or that we have individual actions pursued singly?

Mr. Djanogly: Individuals can join together in a claim in the courts. That is a separate issue.

Mr. Waterson: Has my hon. Friend considered a third option? Personal injury lawyers in America say that few of their cases ever get to court. They make their money by settling cases out of court and taking their 40 per cent. or 60 per cent. It is in the interest of big business to settle claims, whatever their merits, simply because of the non-recoverability of the costs. But that is another matter. My hon. Friend should consider the possibility of that becoming a practice in this country too.

Mr. Djanogly: My hon. Friend is absolutely right. We shall increasingly see consumer lobbies themselves lobbied by lobbying organisations, which will create a whole new industry. Questions will have to be asked about who funds it all. It will come back to businesses; possibly even competitors of the business against which the claims were initially brought. If we are not careful, such circularity might work against competition.

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