Baroness Neville-Rolfe
Main Page: Baroness Neville-Rolfe (Conservative - Life peer)Consumer Rights Bill
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Baroness Hayter of Kentish Town
My Lords, Amendment 56ZA, which stands in my name and that of my noble friend Lord Stevenson, deals with a similar area. It would add a type of contractual term to the list of what may be regarded as unfair. The purpose is to ensure that consumers do not have terms imposed on them which could leave them disadvantaged, specifically in a minimum or fixed-term contract where a price was increased and where they would then be disadvantaged if they were to switch products or providers. I refer to the discussion that we had on “mortgage prisoners” earlier in Committee.
Which? has pointed out that the Unfair Terms in Consumer Contracts Regulations 1999 recognise that such variation in contracts can lead to consumer detriment. However, the grey list, as currently drafted, would appear to absolve the person varying the terms of the contract from responsibility should the consumer be unable to end the contract. We discussed examples of where consumers could not leave contracts, for whatever reason. There are clear examples of where ending the contract would lead to significant consumer detriment—for example, if another mortgage is not available or one’s circumstances no longer qualify one for a mortgage. Merely being able in theory to terminate a contract does not alleviate the difficulty of a change being made to the contract for no good reason because the person concerned still needs to find another mortgage but cannot do so at that stage.
A mortgage is not the only kind of contract where growing older during its term could make it disadvantageous suddenly to have to find a new one. Life insurance is another such example, or home insurance where a neighbour might have experienced flooding or subsidence since the consumer first bought their own coverage. In the case of a university degree, where suddenly a subject is withdrawn, merely being able to move to another university does not mean that the student is not disadvantaged, especially if they have worked hard for two years at the first university.
This amendment is limited to fixed-term contracts and minimum-term contracts, where the expectation of the deal advertised is at its clearest. The fairness test allows consumers to challenge a term of a contract to make it non-enforceable. Any compensation would have to be decided separately, whether by the financial ombudsman or elsewhere. The Minister will be aware that the approach we are taking here was supported by the BIS Select Committee and the CMA, so I hope that the Government will find themselves in a position to support it, too.
Amendment 56D returns us to the issue of “mortgage prisoners”, although it takes a slightly different approach. It would add to the grey list a term in a contract which would give a mortgage provider the ability to increase the price of a mortgage in cases where the consumer cannot get a new contract for the reasons we have been through. It would have the effect of giving a consumer recourse to argue that the change in the terms of the contract is not legal and should not take place. This consumer detriment, where people cannot get another contract, will be familiar to the Committee.
The Minister’s letter, received on 27 October, to which my noble friend referred, relates to Amendment 56ZA and contracts that vary in their supposedly fixed lifetime, such as a mortgage. However, it applies only to what the FCA is doing on mortgages. But the bottom line is that there is little concrete provision in the rules to stop a lender changing the terms of a mortgage deal that they have come to regret offering in the first place—perhaps when hidden terms and conditions allow them to do so—leaving consumers high and dry where there is no alternative product. Does the Minister agree that if the banks cannot honour the terms and spirit of a fixed mortgage deal, they should never have offered it in the first place? After all, consumers cannot exit the contract without penalty if this happens the other way round, when there may well be exit fees. Therefore, it is hard to see why the provider should be able to do so.
Furthermore, while the Bank of England example allowed BIS to deflect the issue back to the FCA, this issue can occur in other markets that are regulated by different regulators, such as Ofcom with telecoms fixed contracts and Ofgem with fixed energy contracts. Even more importantly, what happens where there is no regulator at all? Who would take action then? Would it be trading standards or the CMA? Again, it is worth noting that the CMA supports our approach to this.
I turn now to the other issue in the example of the Bank of Ireland. The Government said that it would be for the court to decide if the Bank of Ireland case was unfair, although the FCA has already said that it does not think it was. Furthermore, while the Minister says that consumers can go to the Financial Ombudsman Service, in fact that service adjudicated against the complainant because the unfair contract term regulations are not adequate in this case. The financial ombudsman actually cannot help unless the grey list is complete; that is, if it allows these terms to be open to assessment for fairness. Our amendment would add terms that vary by unknown amounts within a fixed lifetime to the grey list and would thus be able to be assessed for fairness. That is what we are trying to achieve.
I would add once again that although the Government have tried to use the particular case of mortgages to show what the FCA considers to be acceptable, we are worried about wider markets where it does not operate. The amendment would provide a clear route for someone to take their complaint in such a situation, and I hope that the Minister will either be able to accept it or will lay out plans to provide an equivalent level of protection within this legislation. I beg to move.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, these amendments also relate to Schedule 2 covering the grey list, containing terms which are always assessable for fairness under Clause 62. These are terms that are likely to trip up even an astute consumer or that someone would not fully appreciate when agreeing a contract. As the noble Baroness, Lady Drake, set out, consumers do not always appreciate the terms they have agreed, and I agree with the sense of the debate that this is not the easiest area in the Bill in terms of understanding exactly what is happening. I note the points she made not only about regulated areas but other areas as well, and I am grateful to her for making them.
I shall try to address the generalities and then perhaps I may move on to financial services, which are the subject of Amendment 56D. Let me reassure the Committee that there are protections in place to protect consumers from unfair variation clauses. Where traders include a term to allow them unilaterally to change the characteristics of the goods, service, or digital content being provided without a valid reason, that is included on the grey list as set out in paragraph 13 of Schedule 2. Those terms can be challenged in court even if they allow the consumer to exit the contract. For example, if a painter decorating your bathroom includes a term stating, “All materials may vary in style, colour and finish”, that term can rightly be challenged for fairness.
Where traders include a term to allow them unilaterally to change the price of the goods, service, or digital content being provided, that is also included on the grey list as set out in paragraph 15 of Schedule 2. In that case, a term can be challenged for fairness if the increase is too high and it does not allow the consumer to exit a contract. I should remind the Committee that just because an item is not on the grey list, it does not mean that it is fair or exempt from the fairness test. In order for a price term to be exempt, it must be prominent and transparent, and I believe that the requirement for prominence that we are introducing in this Bill marks a significant increase in consumer protection. I hope that the noble Baroness, Lady Hayter, will bear that in mind in her further consideration of this issue.
The noble Baroness, Lady Drake, mentioned that I had written round—thank you for that. It may be worth reiterating a couple of the points that I made in that letter. The Government are determined that lenders should treat mortgage borrowers fairly. That is why, during the course of this Parliament, we have strengthened protections in a number of ways. Most significantly, in April of this year, the new independent consumer regulator, the Financial Conduct Authority, introduced a revised set of rules as part of its mortgage market review. These provide stronger protections than ever before for borrowers taking out a mortgage to buy a home and, indeed, have changed the marketplace a bit. Among the key changes were improvements to sales standards and to affordability assessments. The FCA’s rules are designed to protect consumers who find it difficult to switch once market or regulatory conditions change. Therefore there is a general requirement on firms to treat customers fairly, but there is a specific provision within the FCA rules that forbids lenders from taking advantage of a borrower who is stuck with their current mortgage—a circumstance that the noble Baroness, Lady Hayter, referred to. FCA rules say that lenders should not treat these customers less favourably than other, similar customers. In addition to that specific provision, the FCA has provided for transitional arrangements that allow lenders to waive the new affordability requirements for existing borrowers seeking to remortgage as long as they are not increasing the size of the loan. Finally, and most importantly, the FCA is also undertaking a review of its new mortgage rules which will consider how the rules are working in practice and whether any adjustment or clarifications are required. If need be there is scope for action and the FCA has the powers.
We believe that this amendment would significantly reduce valuable flexibility that lenders currently have in making commercial pricing decisions across the market. If we make it much more difficult for lenders to increase rates in response to changing market conditions, then lenders’ ability and readiness to offer the most competitive deals will be constrained. Ultimately, it will be mortgage borrowers who lose out.
In conclusion, we believe that introducing new legislative requirements would undermine the robust but flexible system of regulation that has been put in place in recent years. It would constitute a backward step in terms of delivering the Government’s aim to deliver a regulatory environment that offers consumers protection as well as choice and good value. I therefore ask that this amendment be withdrawn.
Baroness Hayter of Kentish Town
I am not certain about the flexibility point, because both amendments use the words “without a valid reason”. That is the point—there are valid reasons for things having to change. We are very focused on changes that are made without a valid reason and which therefore of course cannot be within the expectation of the purchaser. Valid changes in interest rates they know; we are worried about changes made without a valid reason. I want to look carefully at the words used in this amendment and the one before, which to some extent try to address the same problem, to see how we might come back to this. I beg leave to withdraw the amendment.
“(7) No order may be made under sub-paragraph (2) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.”
Baroness Neville-Rolfe
My Lords, this amendment was recommended by the Delegated Powers and Regulatory Reform Committee in its report on the Bill. On the committee’s recommendation, we propose to change the parliamentary procedure used to update and amend the list of enforcers of the unfair terms regime by moving from the negative to the affirmative procedure. We agree with the committee that now that the list of enforcers is in primary rather than secondary legislation, this is a significant power because it can be used to add to or amend the list of enforcers who can take action against unfair terms, as set out in Part 2. As such, the higher level of parliamentary scrutiny and the opportunity for debate that the affirmative procedure provides is more appropriate. I beg to move.
Baroness Hayter of Kentish Town
I rise to say “well done”. I should warn the Minister that we will have other amendments on letting agents next week. However, we are very pleased that this will be in the legislation and that it will happen early, by the extra resources, and by the incentive for local authorities to take action, given that they will be able to retain any fines levied. I realise that that is the end of her political career, having had praise from me, but so be it.
Baroness Neville-Rolfe
Before the noble Lady sits down, perhaps I can say thank you to her.
Baroness Hayter of Kentish Town
I am slightly confused by this. If I am completely honest, among friends and just within these four walls, I think our Lib Dem colleagues would very much like to support the amendment of the noble Lord, Lord Best, but are not allowed to. They do not want to confront the Government, so they are trying to find a weasel way of not quite confronting them while almost writing down exactly the same words but making it very complicated. They are not going the whole way but saying, “Well, in certain circumstances other than those already allowed for in the Bill, the 48 hours would not have to be given; that is, when a trading standards officer shows his or her credentials and they are going to see whether an offence has taken place”.
I am sure that the noble Baroness, Lady Bakewell, knows that trading standards do not go around in policemen’s big boots unless they think some offence is being committed. They do not have the time or inclination—why on earth would they? They always show their bona fides anyway. This basically seems to be saying, “We don’t like what the Government are suggesting but can we find a way of saying that round the back?”. I could be quite wrong—and look forward to being corrected—but I have my suspicions.
Of course, the problem with these amendments is that they have all the disadvantages of the Government’s own clause; that is, the uncertainty. The same people do food as do electricity safety, counterfeit booze or whatever else one is looking for. The amendments would still introduce two systems for when somebody could go in to do an inspection. It leaves all that complication and uncertainty of having to checklist things first but with no added advantage. That seems a convoluted way of saying that they do not like the present clause.
There seem to be two things going on here. First, in moving the amendment, the noble Baroness, Lady Bakewell, said very strongly that she supports unannounced inspections—which is exactly what is said in the amendment of the noble Lord, Lord Best. Secondly, she raised the interesting point about costs in civil courts, which we will come on to. I look forward to her support for that amendment when we get there. My concern about these amendments is not that they would not move a little way towards making life easier but that they are actually a rather weak way of telling the Government, “We don’t like your clause”.
Baroness Neville-Rolfe
My Lords, I thank my noble friend Lady Bakewell for her very interesting comments and good examples. They help us to understand so much more clearly the issues that we are debating.
In this part of the Bill we are consolidating and updating our investigatory powers in order to make enforcement more efficient and effective. A further objective is to reduce burdens on business without compromising consumer protection. We are doing this, for example, by making it easier for enforcers and businesses to know what enforcers’ powers are by consolidating them across 60 pieces of legislation and setting them out in one place. I think that the Committee will welcome this. We are also modernising them—clarifying that where there is a good reason enforcers can access information held or stored on computers. This brings us into the 21st century. We will return to the notice requirement again under the amendment of the noble Lord, Lord Best, and I expect that we will have a fuller debate.
I want to say a few words about why we have introduced the requirement for enforcers to give two days’ written notice, subject to some important exemptions. The Government are committed under the Protection of Freedoms Act 2012 to protect civil liberties and to reduce burdensome and intrusive powers of entry. Our aim is to strike a balance between the powers and safeguards that are needed for protecting businesses while ensuring that enforcers can tackle illegal activities. I am sure that we will come back to the detail.
I will answer a couple of points that my noble friend raised. She asked about notices and litigation, and court cases being lost on a technicality. As is currently the case, enforcers will need to ensure that they follow correct investigatory practices and procedures to ensure the integrity of their investigations and supporting evidence. We will not be amending the well developed principles on what amounts to reasonable grounds for suspicion. Many large businesses have a primary authority relationship with a local authority. This includes an inspection plan. Where an inspection plan is in place covering consumer law, this must be considered when deciding whether to carry out an inspection. We are committed to providing good guidance on what the law means; as noble Lords would expect, that is being developed by business and other organisations.
My noble friend also touched on the fact that enforcers risk costs in the civil courts. I reiterate that it is a fundamental principle of civil litigation that one side is at risk of having to pay the other side’s costs if it loses. That would be a difficult principle to change. Of course, the object of that is to deter unmeritorious cases and ensure that the winning party is not too adversely affected.
Amendment 63ZA, on the issue of whether food hygiene visits are covered by the Bill, is a probing amendment. There may be confusion in general as to whether food is covered by the Bill so it is good to have an opportunity to clarify the position. For example, the Bill does not apply to food hygiene inspections carried out under the Food Safety Act. That sort of inspection is normally done by environmental health officers. I should add that, curiously, I was the official Civil Service lead on that very Bill; I remember it with great affection. It was an important Bill at the time. In view of those alternative provisions, we do not see the need for this probing amendment.
On the lessons that horsemeat might give us for this Bill, the issue arose mainly through fraudulent activities of traders. That highlights the importance of greater sharing and use of intelligence sources, and how important that is in safety. The Bill supports the sharing of information and intelligence by local authorities, business and other partners such as the police. That can be used by enforcers to determine whether it is necessary to exercise a power of entry to premises and whether one of the exemptions to giving notice applies.
On Amendments 60, 61, 62 and 63, tabled by the noble Baroness, Lady Bakewell, it is worth noting that currently enforcers such as the Competition and Markets Authority, which has been referenced often today, have to give notice only for civil enforcement purposes. The amendments take us back to that position. However, when an enforcer decides to carry out a visit, they will not necessarily be focusing on whether civil or criminal enforcement action may result. We therefore think it makes more sense to provide a general requirement for notice to be given regardless and then provide a number of clear exemptions to giving notice, such as where giving notice would defeat the purpose of the visit because, for example, counterfeit or illegal software might be destroyed.
I am also keen to emphasise—we will come back to this—that this means notice need be given only for routine inspections. If there is a risk of a breach of a law, enforcers can still carry out unannounced inspections where they need to investigate illegal activities. The exemptions ensure that we have the safeguards we need. Small businesses in particular, which have been consulted about the changes in the Bill, welcome this approach. They welcome clarity, and the noble Baroness, Lady King of Bow, emphasised the importance of that earlier.
I believe that the Bill provides a better and simpler enforcement regime for both businesses and enforcers, whether civil or criminal enforcement action is involved. Hygiene and food inspections are dealt with elsewhere in the statute book. Therefore, I ask my noble friend to withdraw the amendment.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord, Lord Best, for provoking a wide-ranging and thoughtful debate. As I mentioned in respect of the previous amendment, we are consolidating and updating consumer law investigatory powers in order to make enforcement more efficient and more effective. I will try not to be too repetitious of that debate, but I will repeat something I said in earlier sessions of this Committee: I feel strongly that trading standards officers around the country do a very good job. I have dealt with them a lot over many years and I am very grateful for the work they do.
The Government are keen to support the honest trader and to tackle the rogue, so there is a joint and agreed objective in these areas. I am going to speak at some length, for which I apologise in advance. I hope that noble Lords will realise that our heart is in the right place and we are trying to do the right thing in this area. As I have said, we are consolidating and simplifying consumer law investigatory powers across 60 pieces of legislation, setting them all in one place. This variety of instruments can be a cause of confusion and a burden for enforcers as well as businesses. We are also clarifying the law to make it easier for trading standards to work across their local authority boundaries in order to tackle the rogue traders who cause real harm to consumers and damage consumer confidence and reputable businesses.
The noble Baroness, Lady Hayter, asked about what had happened with the consultation and about the benefit to consumers. I can confirm that we did have mixed responses, but the British Retail Consortium and the Federation of Small Businesses, which together represent a large number of small businesses, support the notice provision. Businesses in general welcome it for reasons that I will come on to explain. It reduces the burdens and unnecessary costs that they are facing, and those costs are in turn passed on to consumers in a competitive market. The Government consider it vital that trading standards and other consumer law enforcers can protect us from businesses that are deliberately or inadvertently breaking the law.
Lord Harris of Haringey
I am sorry to interrupt her, but can the Minister tell us why it is more costly for a business to be inspected without notice than it is to be inspected with notice?
Baroness Neville-Rolfe
If the noble Lord would bear with me, I have an example which we can debate.
While we share some common objectives, there are clearly real differences of opinion about how trading standards officers and other law enforcers should carry out their duties. The Government start from the principle behind the Protection of Freedoms Act 2012, which aims to protect civil liberties and reduce burdensome and intrusive powers of entry. It starts from the simple premise that an investigating officer should have good reason for entering premises. This is really important because both as private individuals and as businesses we should rightly expect to be treated as law-abiding unless there is a justification. The requirement in the Bill for enforcers to give two days’ written notice for routine inspections—I emphasise routine—flows from this principle. However, we take very seriously the importance of ensuring that enforcers such as trading standards can continue to tackle rogue traders. I am sorry to keep repeating this but I think it is common ground, and I can assure noble Lords that we are doing nothing to prevent enforcers investigating illegal activities—quite the opposite.
Let me explain in more detail why we have decided to require notice for routine inspections. Enforcers currently have some very intrusive powers such as the power to enter commercial premises without a warrant to carry out their inspections. They can demand that documents are produced and break open containers, and any person on the premises has to provide assistance and the information requested. Small businesses have told us that unannounced inspections are burdensome and inefficient. In particular, the Federation of Small Businesses is concerned about unannounced visits and has said that booking inspections in advance will allow the businesses to ensure the appropriate staff and paperwork are available. This ensures that neither the trader’s nor the enforcer’s time is wasted in these routine inspections. The owner or manager might be visiting a supplier away from the premises, leaving a junior member of staff not equipped to deal with an investigator’s questions or to find the documents needed. Staff may be in the middle of receiving deliveries or busy dealing with customers or an important new client when the enforcer arrives. This can be disruptive and embarrassing for the business. While large retailers may be able to cope more easily—the noble Lord mentioned them—it is really difficult for compliant businesses to see why they should be so disrupted when they are giving no cause for suspicion.
Business disruption hits the bottom line. We estimate that this measure would generate net savings to the economy of almost £50 million over 10 years. This net figure includes the savings to business as well as the costs and benefits to enforcers arising from a greater degree of efficiency in inspection.
Of course, I agree entirely that businesses cannot expect to have notice of an inspection when there is risk of a breach of the law. We have listened very carefully to enforcers’ concerns on that: to local authorities, regulators and trading standards officers, as I think was hinted at earlier in the discussion. Therefore, the Bill provides a number of very clear exemptions that still allow enforcers to carry out unannounced inspections, as they do at present, where they need to investigate illegal activities and matters of urgency. I will go through those and try to pick up the examples that have been quoted in debates and which have obviously been concerning people.
The first exemption would apply where an enforcer reasonably suspects a breach, for example where the sale of counterfeit alcohol is suspected or where a test purchase has been made and failed, e.g. on an age-restricted purchase. The noble Baroness, Lady Crawley, asked about access to warehouses and whether, if the officer suspects a breach, the exemption applies. Of course, that is particularly important in relation to rogue traders and the same would be true of the example of the sale of counterfeit goods.
Lord Harris of Haringey
Is it then reasonable for a local authority to invoke that grounds of reasonable suspicion if, for example, it is clear to the trading standards department in a small town that a certain form of counterfeit or dangerous goods is circulating and there are eight potential retailers who might be selling it? Is it then reasonable for the trading standards department to inspect all eight? If it is reasonable to inspect all eight in that town, is it reasonable to inspect 200 in a city?
Baroness Neville-Rolfe
In my opinion, that is reasonable if there is a suspicion—for example, if trading standards officers have had some intelligence. There is an example I am coming to about cigarette butts, unless we cut that out. In relation to each of these exemptions, I am trying to explain why they are generously drafted so that we can do what we think is needed.
The second exemption would apply where giving notice would defeat the purpose of entry, for example, where an enforcer suspects that counterfeit DVDs are being sold and the enforcer considers that the traders in question are likely to conceal the illegal products if notice is given. The third exemption would apply where it is not reasonably practicable in all the circumstances to give notice, for instance because an officer reasonably suspects that there is an imminent risk to public health or safety. For example, enforcers may find evidence of illicit tobacco, such as stubs and papers, in the street near a couple of suspected outlets. The enforcers need to act swiftly to remove it from sale. I know that illicit tobacco is a concern.
A fourth exemption would apply where the enforcer is carrying out market surveillance, for example to check the safety of toys. Finally, notice need not be given where the trader has waived the requirement to give notice so that agreement to an immediate visit is always possible. We also carefully listened and have already responded to the BIS Select Committee’s very sensible recommendation on this issue by simplifying the exemption for giving notice where that would defeat the purpose of the visit. That is the second safeguard I referred to and I think that noble Lords commented favourably on that earlier in the debate.
I have set out these examples to show that we really are only talking about giving notice for routine inspections. In my view, it is perfectly reasonable to do that and highly desirable. Routine inspections are where a business, such as a DIY store, may be operating properly without any significant breaches of legislation. Trading standards may consider them to present a risk simply due to the nature of the sector in which they operate or because of the time that has lapsed since an inspection. Trading standards officers have raised with us a number of examples where they felt they would need to inspect without notice and, without exception, we were able to show how the powers of these wide-ranging exemptions could be used.
For example, another area which has been referred to in the debate is where an officer wishes to check whether petrol is being sold in short measures. The officer can use the power to carry out a test purchase and if that discloses a potential breach by the trader, he can immediately exercise a power of entry in order to investigate. Another concern that was raised is when an enforcer comes across a new shop during visits to other premises. I am happy to confirm that an enforcer can enter those premises immediately, using the power to observe the business, or indeed he can undertake a test purchase. If while on the premises he discovers that fireworks, for example, are being sold in breach of regulations—or mattresses, as one noble Lord mentioned—the enforcer can make a test purchase. If that discloses a potential breach by the trader, the officer can exercise a power of entry immediately.
Baroness Crawley
The noble Baroness mentioned that when it comes to a new business, there would be a power for trading standards officers to observe. What is meant by “observe”? Does it mean going behind the counter, as my noble friend Lady Hayter asked, or does it mean “observe” as if the officer was a member of the public? In that case, it would hardly be worth walking in.
Baroness Neville-Rolfe
It means observing as though the officer was a member of the public, but obviously a test purchase can be undertaken. The officer can speak to the trader and agree that there should be an exemption, in which case the exemption would apply. Moreover, if the officer suspects a breach, that also implies.
Lord Harris of Haringey
Perhaps I may press this point a little because it is important and getting to the root of the issue now might save the Minister time later. What is sufficient for a suspicion of an individual trader? The officer has made a test purchase and now he has prima facie information to suggest that the trader is up to something. That is straightforward and no one would see any issues around that. However, I will come back to my example. It is known that something is circulating in a town and it is likely that it has only been purchased from retailers in that town. Is that sufficient to cover all the retailers? Does that change if we are talking about eight retailers or 200 retailers? That is also possible. If it covers 200 retailers, that would certainly reduce any concerns I might have, but if it covers eight retailers, I would like to know what the cut-off number is.
Baroness Neville-Rolfe
As my noble friend the Chief Whip has just mentioned, you must have some sense of proportionality. I think that I gave a clear answer to the question of eight retailers earlier and I stand by that. Once we get to 200 retailers, we could be in slightly different territory. However, if there is a reasonable suspicion of a breach—although 200 premises seems to be rather an unlikely example—
Lord Harris of Haringey
I am sorry to interrupt the noble Baroness, but perhaps I may give a specific example. There is a suspicion about a dangerous electrical fitting such as a plug adaptor which the trading standards department has come across and knows is circulating in the area, and those plug adaptors might be on sale in several hundred small retail outlets, local shops and newsagents which sell a range of other things. Without being unreasonable about it, there might well be several hundred outlets in an area. It may be thought that the device was such that it could kill someone, which means that the test would be proportionately higher. That is what I am trying to get at.
Baroness Neville-Rolfe
I can reassure the noble Lord on that point. There is of course another exemption on the grounds of health and safety and I am absolutely clear that it would apply in that case.
Baroness Neville-Rolfe
The officers would be looking for a faulty electrical product that might be in circulation in an area; there would be a suspicion. That is exactly the kind of thing I am talking about. I am sorry, but I wanted to take the noble Lord through the examples in order to explain how the power will be used.
Perhaps noble Lords will bear with me while I make another point about powers of entry. The powers that other law enforcers have when they investigate offences are of interest, and the noble Lord has raised one or two of those. The police have no general powers of entry to commercial premises. They can enter a premises only with reasonable suspicion or a warrant. So there is, if you like, a form of notice. Even with a notice requirement, enforcers such as trading standards will have very substantial powers—more powers than the police, who deal with serious offences and serious crimes.
A noble Lord mentioned Ofsted—a question I have asked, actually. For practical purposes, Ofsted does give notice. It normally gives up to two working days’ notice before a planned inspection to a further education college—that is, a routine visit—but for schools, notice is given by midday on the working day before the start of the inspection. But it also has the right, quite rightly, to undertake unannounced inspections in cases of serious concern.
The noble Lord, Lord Best, asked about interpretation. I assure the Committee that we will be providing guidance. We are not creating principles such as reasonable suspicion. They are already well understood but obviously we will need to explain them for day-to-day work.
The noble Lord, Lord Harris, asked about evidence of the abuse of powers. This is not about abuse of powers; it is about reducing the burden on business from intrusive powers of entry and protecting civil liberties. It is about routine inspections, which, in my opinion, should be the subject of a warning. Where there are reasonable grounds of suspicion, obviously you can proceed immediately. I am a businessperson and I think business planning can have value in these circumstances.
I was also asked how notice can be given. Notice can be given by post or e-mail to the occupier or by leaving it at the premises. Actually, we have engaged extensively with the trading standards community while formulating the exemptions. That brings me on to the point that a number of noble Lords have made about the funding of the trading standards service. Obviously, spending and resourcing decisions are made by individual local authorities, which are better placed to make decisions about the enforcement needs of their communities than central government. Like all parts of central and local government, the services have faced budget reductions in recent years. There is no point denying it; that is agreed.
As noble Lords know, the Government are committed to tackling the inherited budget deficit by making savings and trying to improve value for money for the taxpayer, and this is part of that effort. We greatly value the work of trading standards to protect consumers from rogue traders and scammers, and we want to develop a better understanding of the impact it has across the economy. That is why, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake research to build an evidence base on the impact, effectiveness and efficiency of services, how improvements can be made, what works well and how we can do partnerships. This sort of evaluation is really important in public policy.
I think I have pretty well finished. I was asked about the deterrence effect of inspections. We would be concerned about the resource implications for trading standards services where uncovering breaches by chance is seen as an effective strategy for the future, even on the basis that it has been useful in the past. Targeting finite enforcement resources using an intelligence-led approach is a more efficient and effective strategy. I speak as a former businesswoman, with experience of a pretty small business trying to do a good job, and I think that better planning and targeting can save money both for business and for enforcers.
In conclusion, it has been an important and good debate. I have listened. I have tried to explain where we are coming from in the way in which we have drafted the Bill. I am trying to ensure that the investigatory powers in the Bill, modernised and brought together, strike the right balance between protecting civil liberties, reducing the burden on compliant businesses and ensuring that enforcers can tackle rogue traders.
Baroness Hayter of Kentish Town
The noble Baroness said that the balance is between civil liberties and business. Unfortunately, she did not use the word “consumers”. Perhaps I might leave her with three questions. I know she will not be able to answer them now but they are extremely serious ones. First, she alleges that £50 million will be saved. I would like to know how many visits are included in that £50 million. Secondly, as I understand it, test purchases can be made only in a retail outlet and someone would not be permitted to go into a warehouse or a wholesaler’s premises to make such purchases. Thirdly, the biggest worry about this issue is suspicion, as I mentioned. How could suspicion be proved in a court of law if it was the result of an anonymous tip-off? I am very content for her to write to the Committee on those questions as I do not think that she has answered them this evening.
Baroness Neville-Rolfe
I thank the noble Baroness. Perhaps she will also read Hansard on these points. We carried out an impact assessment and I think that the £50 million figure comes from that assessment, which I can certainly make available. I wanted to say that I was going to mention consumers at the end because this is the Consumer Rights Bill. It is important that we have a deal that is good for all sides. There are various different pressures relating to investigatory powers. I have tried to explain the wider picture and the parallels elsewhere. I am very keen that this should be an effective part of the Bill, which is obviously designed to modernise and improve both consumer rights and consumer enforcement. I therefore ask the noble Lord, Lord Best, if he will consider withdrawing the amendment.
Lord Best
My Lords, that was a powerful exchange all round. Clearly, this is an issue of great interest and concern to your Lordships. I am grateful to the noble Baroness, Lady Crawley, who, among other things, welcomed the fact that the Government have already made a number of concessions along the way—that needs to be on the record. However, she pointed out that there are considerable costs involved for the trading standards service because there is a lot of bureaucracy involved in sending out 7,000 notices of intention to inspect each year, and the correspondence that has to go back and forth on all that. This is not a cost-free new regulation.
I am grateful to the noble Lord, Lord Harris, for calling into question whether there was a problem here that needed to be solved at all. He pointed out that this measure is bound to lead to endless litigation if we are not careful and made the important point that the ability of trading standards officers to make unannounced visits is, in itself, a deterrent, and it is uncertain what the world would look like if that deterrent effect was removed.
I am grateful to the noble Baroness, Lady Hayter, for raising key questions. She asked what would be the benefit of this measure to consumers and whether they would really benefit from it. She made the important point that an awful lot of unannounced visits follow anonymous tip-offs. Other traders know what is going on down the road. They do not want to get into a fight over it but want trading standards to know about it. However, there is a difficulty with that information being used later in a court of law since it is important but confidential information. I can see that that may cause a problem in future.
The Minister provided reassurance under a whole series of headings, which was extremely helpful. We have made some progress on these issues tonight. She paid tribute to trading standards officers, which I welcome, and emphasised continuously that this is about routine inspections only and that the legislation is generously drafted. We are reassured that suspicion is good enough in these cases. If a suspicion of a breach in the law is enough to trigger a perfectly legitimate unannounced visit, that covers an awful lot of cases. However, it leaves unanswered whether it is really worth putting on statute this new regulation and the binding condition on trading standards officers if they are to be able to bypass it in an awful lot of circumstances.
To conclude, we have a lot of new and extra reassurance on the record from tonight which is more than helpful. Putting this in the Bill also seems rather heavy-handed when we know there will be guidance in any case following the legislation. Guidance not statute sounds rather less of a sledgehammer to crack the remaining nut after we have heard about the many exemptions and exceptions. With those words, and the thought that we might need to bring this back again, I beg leave to withdraw the amendment.