---

10.49 am

Mr. Richard Spring (Bury St. Edmunds): I thank you, Madam Deputy Speaker, for giving me the opportunity to make a brief contribution. I congratulate my right hon. Friend the Member for Chelsea (Sir N. Scott) on introducing the Bill in an extremely sensible way, and on putting his case this morning cogently and persuasively.

Over the past 20 years, direct selling--whether it be pyramid selling, multi-level marketing, network marketing or whatever other term is used--has flourished. It is a real phenomenon of our times, and it is estimated that the market is now worth about £200 million. With that truly enormous increase over the past 20 years, many individuals have been brought into direct selling, dealing with kitchen goods, jewellery and other products, many of which are sold from people's homes. Collectively,all those schemes have come to be known as trading schemes.

A market worth £200 million is very big business indeed. The human spirit being what it is, where such sums are involved the market will inevitably attract people who are open to fraud and abuses of the law. Having seen the evolution of the business over 20 years, it is appropriate now to consider the legislative framework under which it all operates, to bring that up to date to cope with the size and complexity of the market and to make it relevant to the marketplace as it is, with all the mushrooming of activity that is involved.

The blunt truth is that the Fair Trading Act 1973 is no longer appropriate. Such a multiplicity of trading schemes operate in the United Kingdom that only some of them

29 Mar 1996 : Column 1306

are subject to the Act's controls. The Bill will protect vulnerable people from loss by ensuring that all trading schemes whose members recruit others are subject to proper control.

A long catalogue of financial tragedy has been mentioned by my hon. Friends, especially my hon. Friends the Members for Beckenham (Mr. Merchant) and for Mid-Kent (Mr. Rowe), who talked about it most poignantly.

Given the changes that we have seen in marketing and consumer activity, the opportunity has arisen for many people to become budding small entrepreneurs. That is why I am pleased to see my hon. Friend the Minister for Small Business, Industry and Energy here to reply to the debate. Entrepreneurial activity at this level often encourages people to set up small businesses.

In this country there has been an explosion of entrepreneurial activity, especially at the small business level, often involving people who have taken redundancy payments or have retired early and decided to go into business, perhaps after some marketing or selling experience. Tragically, some--albeit a minority--have lost their money in crooked schemes. Nevertheless,I believe that the seed-corn of our success as an economy depends on such entrepreneurial and small business activity.

The Government have sought to help small businesses by increasing the value added tax threshold, cutting corporation taxes and removing much of the burden of inheritance tax. That has all led to the dramatic decline in unemployment in the United Kingdom, compared with the contrasting situation in so many of our European competitor nations. That has happened because we have fostered and encouraged the entrepreneurial initiative.

At the heart of the Bill is the idea of giving protection to people who in their own different ways, sometimes even part time, are mini-entrepreneurs. I strongly support that, because it will bring the legislative position to a state relevant to our situation as we approach the millennium. I congratulate my right hon. Friend the Member for Chelsea once again on bringing the Bill through to its Third Reading.

10.54 am

Mr. Nigel Griffiths (Edinburgh, South): I welcome the Bill, and I have listened with great interest to Conservative Members revealing their detailed knowledge of the scams, swindles, schemes and shadowy chancers operating in the market. There appears to be great expertise on the Government side of the Chamber.

Despite all that knowledge of pyramid selling, network selling and multi-level marketing, however, there have been years of inaction in terms of clamping down on the scams about which we have heard in graphic detail. There have been several promises of action by the Government. Sadly, however, those promises have been broken and it has been left to a private Member, the right hon. Member for Chelsea (Sir N. Scott), to promote the Bill because the Government have found neither the will nor the way to do anything about the problem.

When I asked the then Minister at the Department of Trade and Industry, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), on 31 March 1993 whether he would take action on the matter, he declined to do so.

29 Mar 1996 : Column 1307

More time went by and in 1994, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) specifically pressed the then Minister responsible, the hon. Member for West Derbyshire (Mr. McLoughlin), to

"bring forward legislation to outlaw any business scheme of pyramid selling requiring payments purely for the benefit of registration"

and highlighted the sort of problems which existed.The then Minister replied:

"I have, at present, no plans to amend the Fair Trading Act 1973".--[Official Report, 27 April 1994; Vol. 242, c. 167.]

In the same year, on 20 July, the Department of Trade and Industry had to go to the High Court to wind up Alchemy UK Ltd., a company which had preyed on people who had received redundancy payments or had a spare bit of cash, because thousands of people had lost thousands of pounds each.

The Direct Selling Association made fairly urgent representations to the Department--Amway, which we have already heard about, was also involved--and the then Minister said, also in July 1994, that at long last the Government were prepared to legislate. Sadly, however, no legislation followed, despite the fact that James Erlichman--then of The Guardian, now of the BBC--revealed that in that year almost 17,000 people in Britain had lost £10 million in such schemes.

Earl Ferrers, the Minister at the time, said that he was powerless to stop such schemes getting off the ground.We were aware of that fact: that is why we were asking for legislation. In March 1995, the DTI promised us a draft law, and in a boastful press release said that it intended to amend the Fair Trading Act 1973 and to clamp down on such abuses. Yet again, however, Ministers did nothing.

The latest money-for-nothing scam appears to be Titan Marketing, which offers invitations to join a business club. Tony Hetherington, of the Financial Mail on Sunday has exposed the hard sell, the threats of violence and the secrecy surrounding that German-based scheme. It has operated in Cheshire, Greater Manchester, Staffordshire, Stoke-on-Trent and Lancashire, where the trading standards officers have done their best to try to catch up with the crooks, and is similar to Alchemy UK, which the DTI had to wind up, FPW and Inner Sanctum.

My concern is that it has taken so long to get legislation on trading schemes on to the statute book. This legislation--which Labour has supported throughout its passage--was introduced not by the Government but by a private Member, and I am concerned that it was not passed by the House today in 10 minutes. A parliamentary on-line information system check on parliamentary contributions shows that in this debate we have heard from a group of hon. Members who have previously asked no questions and made no contribution--with the exception, of course, of the hon. Member for Mid-Kent (Mr. Rowe), who has shown a long-term interest in this issue and who represents Amway as a Member of Parliament and as a paid consultant, and the hon. Member for Beckenham (Mr. Merchant), who spoke in the debate on the Bill's Second Reading.

Mr. Spring: I am disappointed in what the hon. Gentleman has said. I happen to be vice-chairman of the Small Business Bureau and chairman of the parliamentary advisory group of the Small Business Bureau. Every

29 Mar 1996 : Column 1308

Conservative Member is dedicated to ensuring that small businesses are allowed to operate successfully in this country. That is precisely what this measure is about, directly and indirectly. I hope that the hon. Gentleman will therefore understand why there is considerable interest in it: it is because, unlike the Labour party, Conservative Members have a real interest in creating jobs.

Mr. Dafydd Wigley (Caernarfon): On a point of order, Madam Deputy Speaker. I apologise to the hon. Member for Edinburgh, South (Mr. Griffiths) for cutting across his speech, but 11 am is usually the time for statements in the House. Have you had any request from the Minister of Agriculture, Fisheries and Food to make a statement on the discussions in Brussels? I ask that question because of the very considerable urgency for the farming fraternity to have news of developments there. If no request for a statement has so far been made, can you tell the House whether you would be prepared to consider a request for a statement at 2.30 pm on this matter? Every day counts for farmers and ancillary businesses, Madam Deputy Speaker, as I am sure you know.

Madam Deputy Speaker: I have had no request for such a statement to be made. It is not for me or for any occupant of the Chair to tell the Government what statements they should make; but a Minister is in the Chamber, and no doubt that information can be passed through.

Mr. Griffiths: Madam Deputy Speaker, I should like fully to associate the Labour party with the point of order raised by the hon. Member for Caernarfon (Mr. Wigley), which was, of course, well made.

It is very interesting that the profound interest in this issue declared by the hon. Member for Bury St. Edmunds (Mr. Spring)--which he says that Labour Members do not have--was not manifested in a contribution on the Second Reading. Nor has the hon. Gentleman found time to table any questions on the subject or to take part in previous debates on direct selling--in contrast with the questions tabled, not particularly by me but by a great many of my colleagues, on this matter. We are concerned that people have lost their redundancy payments and that others who have worked and saved hard have been swindled out of their savings because of Government inaction.

I made that point because this measure should have gone through very quickly--on the nod, as we say--because it has had our full co-operation and support.If, as I believe, there is currently an attempt to talk out the Bull Bars (Prohibition) Bill, as there was with disabled rights legislation, the House will be particularly annoyed and the victims of bull bars will vent their anger on Conservative Members. I end my speech with that statement.

---