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Lord Borrie: My Lords, I welcome the order. It restores to individuals the benefits of the protection of the Consumer Credit Act which has been eroded by inflation over the past 15 years. As the Minister indicated, a regulated consumer credit agreement provides a considerable amount of protection to the individual. I refer not just to the cooling-off rights but other rights concerning requirements for the agreement and pre-agreement material including an indication of the rate of interest so that it can be compared in a fair way with other rates of interest. As regards repossession of goods, I refer to the right of a firm stake, as it is sometimes called, in the goods obtained on hire purchase by having paid one third of the total due. It is undoubtedly beneficial to the individual to have the limit raised from £15,000 to £25,000.
However, the draft order raises certain questions in my mind. Why wait 15 years? One may not want such orders coming before the House every time inflation is 3 per cent. or 4 per cent. One does not want such an order coming before the House every year. However, bearing in mind that inflation has eroded protection gradually over a long period, instead of fixing the limits for 12 or 15 years ahead, perhaps by order the limits could be adjusted by the RPI. Alternatively, the Government could come forward with a draft order with a higher limit which one might reach as inflation of 2 per cent., 3 per cent., or 4 per cent. per annum was envisaged, no government apparently envisaging nil inflation. So why not a limit of £35,000 instead of £25,000?
The final point on which I should be grateful for the Minister's comments is this. Why have a limit? The regulation applies only to individuals. I realise that it includes not only the private consumer but those in partnerships. But it excludes those in corporate businesses. It might be said that they do not need this protection; they can look after themselves. I am not sure why any individual should not enjoy the protection of the Consumer Credit Act which exists for regulated agreements. One might argue that the more money at stake--let us say, on a Jaguar or a Mercedes instead of a more modest saloon car--the more one needs the protection that the Consumer Credit Act provides for regulated agreements.
Baroness Blatch: My Lords, the Minister will be relieved that I rise not to oppose the order but to support it, and to make a different point about the prolonged period over which there has been no increase. I put that down to a sustained period of low inflation, which has been welcome, and I hope the prospects of that continuing are good.
The noble Lord, Lord Borrie, raises some interesting points about whether there is to be a commitment to an annual review, or a target to be reached over time. It is important that at some time the Government set out their views. In the meantime I support the order.
Lord Haskel: My Lords, I thank the noble Lord and the noble Baroness for their comments, and for their support. My noble friend asks: why wait 15 years? The matter is reviewed as and when consultations lead one to think it necessary. There may be a good reason for having a regular review. I am sure that the Government will look into the matter.
My noble friend suggests moving towards a limit which envisages what inflation will be. I am not sure that my right honourable friend the Chancellor would wish us to take a view as to what inflation will be and to move towards that total. I do not know how far that proposal will get.
My noble friend referred to the business aspect. That is a separate issue and not related to the order. However, since my noble friend raised the point, let me say that the Government agree with the judgment of the Commons committee which, before the election, examined the previous government's proposals to deregulate business lending. The committee rejected that on the ground that the Consumer Credit Act provides valuable protection to sole traders and unincorporated businesses. The Government have no plans to remove business lending from its scope. I thank noble Lords for their proposals. I commend the order.
The noble Lord said: My Lords, the purpose of the order is to increase the maximum amount of most of the awards that industrial tribunals can make to individuals whose statutory employment rights have been infringed. It also affects the amount of redundancy payments payable to employees.
As your Lordships know, the employment rights legislation requires the Secretary of State to review certain limits annually. Those are the limit on the amount and duration of guaranteed payments; the limit on the weekly amounts payable from the National Insurance Fund to employees of an employer who has become insolvent; and the limit on a week's pay used in calculating statutory redundancy payments, the basic award of compensation for unfair dismissal, and the additional award for an employer's failure to comply with an order for reinstatement or re-engagement.
After taking into account the factors that we must consider--the general level of earnings; the national economic situation as a whole, and other relevant matters--we propose that the limit on the daily amount of guarantee pay should increase roughly by the rate of inflation, as measured by the retail price index. Since the last increase in September 1995, that is, from £14.50 to £15.35 per day, and that the limits on a week's pay should increase from £210 to £220.
The Secretary of State laid a report on 18th February in which she explained why the periods in respect of which guarantee payments can be made would not be increased. The legislation also enables the Secretary of State to review other limits on payments at her discretion. Those are the awards for compensation for unfair dismissal and the special awards which may be made in cases where the dismissal is related to an employee's activities as a trade union or a health and safety representative, as an employee pension scheme trustee, or as a representative for consultation about redundancy or business transfer.
We propose that the limits on these awards should also rise with inflation. We propose that the limit on the maximum award for compensation for unfair dismissal should increase from £11,300 to £12,000. These increases will ensure that the real value of the limit on payments and industrial tribunal awards will not be eroded.
The proposed new limits will be set out in the order. In commending the increases to the House, I wish to say that in reviewing the awards, as well as taking into account the factors I mentioned earlier, we have also had regard to employers' costs and the cost to public expenditure.
In the longer term the Government wish to consider whether the limits, and the arrangements for reviewing them, work in the best way to meet our aims. Although we are not in a position to say yet what the options might be, we should be interested to hear and would welcome representations from your Lordships and from interested parties elsewhere. I commend the order to the House.
Baroness Blatch: My Lords, the order that the noble Lord has set out refers to 12 areas where the increases are to take effect. I wish to repeat the point made by my honourable friend in another place, Mr. Tim Boswell, when he referred to an increase of 4 per cent. for redundancy pay, and an increase in compensation by a tribunal of 6 per cent.
I have read the reply by the Minister in another place. Although the Minister uses the argument of rounding up and rounding down for this range of increases, and indeed the Minister referred today to "roughly by the rate of inflation", I remain of the view that a 2 per cent. differential, when uplifting costs in line with inflation, should not become common practice.
It is important to record, and always to keep at the forefront of one's mind, that any increase must be met by someone. In this case, the burdens fall on business. I believe that the estimated cost to business is between £8 million and £11½ million. Those costs, taken together with many of the other financial burdens being laid on business, certainly as a result of two Budgets from the present Chancellor of the Exchequer, are causing considerable anxiety.
It may come as a relief to the Minister that I shall not oppose the order. However, I ask that extreme sensitivity to the business sector--which will fall subject to these costs--should be shown in future.
It is not simply a question of employers being responsible, and therefore avoiding the need for such measures. That is an argument that I take as read. Legislation is constantly being passed, some during this Session and some to come, which derives from obligations that will result from signing the social chapter. If the country is to flourish, a prerequisite for jobs and prosperity is that business should also flourish.
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