Fourth Standing Committee on Delegated Legislation
Wednesday 19 July 2000
[Mr. Jim Cunningham in the Chair]
Draft Consumer Protection Act 1987 (Product Liability) (Modification) Order 2000
The Minister for Competition and Consumer Affairs (Dr. Kim Howells): I beg to move,
That the Committee has considered the draft Consumer Protection Act 1987 (Product Liability) (Modification) Order 2000.
It is a great pleasure to serve under your chairmanship, Mr. Cunningham. You have always been interested in consumer protection and we shall be taking it forward a little as a result of the order.
The order extends the system of strict liability to include primary agricultural products and gamethat is food in its raw state. Food that has been processed is already included. The change means that under the strict liability system, as for other products, consumers injured by food sold in its raw state will now be able to sue the producer for damages without having to prove that the producer was negligent. However, the injured person must be able to prove that the product was defective and that the defect caused the injury. Producers include farmers, fruit and vegetable growers and fisheries; also included are importers of those products from non-European Union countries. Other suppliers, such as wholesalers and retailers would be liable only if they failed to identify to an injured person the producer or the person who supplied them.
The order implements directive 1999/34, which amends the 1985 product liability directive. That will be achieved by amending part I of the Consumer Protection Act 1987, which implemented the 1985 directive into United Kingdom law. The order is made under section 8 of the 1987 Act, which provides for modification of the Act, following changes to the 1985 directive. The order will apply to England and Wales only. Under devolution, separate arrangements for implementation will be made in Scotland and Northern Ireland. The new measure will come into force on 4 December 2000. It is a small but important step in improving the framework of consumer protection in the all-important area of food safety. In addition, it will remove confusion about which food products are covered by strict liability, as all food will now be covered.
The 1985 product liability directive allowed member states to choose whether to include food sold in its raw state. At that time, concern was expressed that food in its raw state might be more prone to hidden defects, which would be beyond the control of the producer, such as those caused by environmental factors. The mixing of large quantities of bulk supplies at trade markets, such as cereals, was thought likely to create difficulties in determining the source of defective products. It must be acknowledged that those difficulties could happen with other products already covered by the original directive. That brings into question whether producers of food in its raw state should be given special treatment and experience has shown that few problems have arisen. Moreover, the four countries of the European UnionFinland, Sweden, Luxembourg and Greecethat chose to include food in its raw state when implementing the directive have reported no apparent problems.
Furthermore, concerns that the directive would lead to excessive insurance costs have proved unfounded. Insurance is the only significant cost and consultation has shown that at least 75 per cent. of farmers and growersthe vast majorityalready have product liability insurance cover, as do most fish and shellfish producers. I am convinced that any additional cost will be small when compared with the benefits to consumers. The measure will help further to restore public confidence in food safety.
Mr. Nick Gibb (Bognor Regis and Littlehampton): As the Minister explained, the statutory instrument removes from the Consumer Protection Act 1987 the exclusion of agricultural produce. It alters sections 1 and 2 of that Act and is therefore something of a Henry VIII clause in action, as it is a regulation that amends primary legislation. As the Minister said, the removal of the exclusion effectively extends the machinery of the 1987 Act to that of agricultural produce and so introduces strict liability into defective agricultural produce. The order may be popular among consumers and consumer groups, but such a major extension of the law should have been a matter for primary legislation.
This debate comes only two days after the European Commission unveiled a package of new hygiene proposals that extend even further farmers' responsibility to ensure food safety. According to the health and consumer protection commissioner, the package represents the most radical shake up in food hygiene rules in 25 years. More recent legal changes have caused expense and discomfort in village halls throughout Britain and in abattoirs and restaurants.
If the new package is a more radical shake up, it will cause complete havoc in this country. I bet you a hot dog with all the trimmings, Mr. Cunningham, that you will still be able to buy Brie at a market stall in France with the counter just six inches away from the gutter and with dogs wandering up and down the road. That will continue, but in Britain we will implement the new rules with the zealous efficiency of a nation that is transforming itself from a nation of shopkeepers and entrepreneurs to a nation of inspectors. [Laughter.] If hon. Members talk to businesses outside the House, they will find that that is the general feeling.
The order is an example of that trend. Like every individual regulation, its appeal is overwhelming. It forces people to do better and it makes farmers produce food that is good for us, rather than food that poisons us; if they fail to do so, consumers can sue the pants off them. It is, of course, the cumulative effect of such regulations that causes the problems, although provisions such as the order, which simply extend a legal right and do not provide for a set of detailed requirements on matters ranging from the number and height of sinks to the type of work surface, are a better form of regulation than that which is more prescriptive. That is why the Opposition will not oppose the order, although we should like to raise one or two significant issues. By explaining them, the Minister will help not only the Committee, but the wider interested public.
The first issue is traceability. The order ensures that primary producers will be held strictly liable for defective produce that causes injury, death or loss to a consumer. All that the consumer needs to prove is that the produce caused that problem and that injury or harm were sustained. The regulatory impact assessment stated:
There may be some difficulties in tracing a defect back to the producer in the case of mixed bulk products such as milk, cereals and fish.
It went on to state, however, that
these are not seen as an insurmountable problem.
That final throwaway line is easy to write, but it is much less easy to justify and even more difficult to fulfil in practice.
Dr. Howells: I thank the hon. Gentleman for his expression of support for the order. How does he reconcile his argument with the procedures in place for many processed foods, including sausages? The ingredients of such foods are drawn from all manner of sources but, in respect of such foods, we have strict rules about how it might be possible to track the cause of listeria, salmonella or any other deadly disease that can kill people.
Mr. Gibb: It is easier to trace back a processed food because one knows that one bought it from a particular supplier who will know the identity of his own suppliers. If one is eating toast, however, how will one know from which farm the wheat in the bread came? There is a different scale of difficulty in tracing back such ingredients. I am not even sure that the RIA is right to say that such products are not seen as an international problem.
Those are not simply my views; they are responses to the consultation document. When the directive was introduced in the 1980s, the summary of responses to it said:
Some referred to the problems of tracing a defect back to an individual primary producer where products from different producers are mixed as a matter of course.
Clearly, milk is a problem because the dairy might collect it from half a dozen farms. What about a defect in beef? Did it come from a joint of beef on Sunday, a hamburger from McDonald's or, in the case of a longer term complaint, a steak eaten last year?
The response of the National Farmers Union to the consultation document was:
there could be difficulty in certain circumstances in tracing a defect back to the producer in the case of mixed bulk products such as milk, cereals and fish. Where traceability is impossible we would urge there should be no collective liability.
Since the Minister has signed off the RIA, can he explain why traceability does not constitute an insurmountable problem? If traceability is proved to be impossible in some circumstances, will he confirm that there will be no collective liability? The chain of supply to the final consumer should not be responsible and liable for the defect. There should be no liability in those circumstances in which the defect cannot be traced back to the original product.
Traceability that is possible but complex will create a new industry of paper chasing and record keepingall part of the process of creating a nation of inspectors. The Minister's intervention made it clear that he has that in mind. The March 1998 letter issued by the Department of Trade and Industry invited comments. It said:
Traceability was not seen as a major obstacle. If a consumer has a complaint about damage or injury apparently caused by a defective product, his/her first point of contact would in most cases be the retailer. It would then be for the retailer either to accept responsibility or to identify his supplier. It would be for the industry to put in place systems to provide for full traceability back to the original supplier.
The second major issue concerns insurance. Primary agricultural producers take out product liability insurance, presumably for actions in tort when negligence is proven. According to the NFU's submission,
the current cost of product liability insurance is very roughly in the region of £170 to £350
a year. Those same figures emerged in the Government's regulatory impact assessment in which they were attributed to the British Trout Association and the Shellfish Association of Great Britain. The NFU also said:
the level of cover will of course depend entirely on the extent to which our increasingly litigious society takes advantage of the provisions of the regulations once they come into force in December of this year.
Premiums will increase if consumers take advantage of the new rules. It is clear that the Government are sanguine about the likely cost because they hope that the provisions will not be used.