The
Committee consisted of the following
Members:
Afriyie,
Adam
(Windsor) (Con)
Crabb,
Mr. Stephen
(Preseli Pembrokeshire)
(Con)
Hall,
Mr. Mike
(Weaver Vale)
(Lab)
Heppell,
Mr. John
(Nottingham, East)
(Lab)
Kirkbride,
Miss Julie
(Bromsgrove)
(Con)
Lammy,
Mr. David
(Minister for Higher Education and Intellectual
Property)
Lepper,
David
(Brighton, Pavilion)
(Lab/Co-op)
McGovern,
Mr. Jim
(Dundee, West)
(Lab)
MacShane,
Mr. Denis
(Rotherham)
(Lab)
Main,
Anne
(St. Albans)
(Con)
Moss,
Mr. Malcolm
(North-East Cambridgeshire)
(Con)
Owen,
Albert
(Ynys Môn)
(Lab)
Purchase,
Mr. Ken
(Wolverhampton, North-East)
(Lab/Co-op)
Sharma,
Mr. Virendra
(Ealing, Southall)
(Lab)
Thurso,
John
(Caithness, Sutherland and Easter Ross)
(LD)
Williams,
Stephen
(Bristol, West)
(LD)
Ben Williams, Rhiannon Hollis,
Committee Clerks
attended
the Committee
The following also attended,
pursuant to Standing Order No.
118(2):
Turner,
Mr. Andrew
(Isle of Wight)
(Con)
Eighth
Delegated Legislation
Committee
Wednesday 15
July
2009
[Mr.
Joe Benton in the
Chair]
Draft Hallmarking Act 1973 (Application to Palladium) Order 2009
2.30
pm
The
Minister for Higher Education and Intellectual Property (Mr.
David Lammy): I beg to
move,
That
the Committee has considered the draft Hallmarking Act 1973
(Application to Palladium) Order
2009.
It
is a pleasure to serve under your chairmanship, Mr. Benton.
The draft regulations are intended to apply, under the Hallmarking Act
1973, to the precious metal, palladium. I thank both the Joint
Committee on Statutory Instruments and the House of Lords Select
Committee on the Merits of Statutory Instruments for carefully
considering the draft
order.
The
1973 Act makes it an offence, during the course of trade, to describe
an unhallmarked article as being made wholly or partly of gold, silver
or platinum, or to supply it with such a description attached. The
order proposes to apply the Act to palladium in a similar manner.
Palladium has not been prescribed by the Act previously because
manufacturing difficulties led to high costs and low demand. Those
manufacturing difficulties have now been overcome and the market for
palladium articles is expected to grow
considerably.
Given
the value of the metal, which is less valuable than platinum and gold,
but more valuable than silver, there is an increased danger of fraud. A
consumer is not able to tell by eye the difference between articles
made from palladium and those made from cheaper precious metals, such
as silver or white gold, or base metals. To protect consumers from
fraud and counterfeiting, and as requested by the precious metals and
jewellery industry, I propose that the 1973 Act should be applied to
palladium. There is another reason why palladium should be prescribed
now. Under our obligations to the international hallmarking convention,
of which we are a member, we shall shortly be required to recognise
palladium articles hallmarked with the convention hallmark. That will
be done under an amendment to existing legislationthe
Hallmarking (International Convention) Order 2002but we require
the 1973 Act itself to apply to palladium to enable it to apply in a
consistent manner to all precious metal articles affixed with the
convention
hallmark.
We
conducted a full public consultation on the measure in the autumn of
2008 and it was supported by all stakeholders, including the precious
metals and jewellery industry, the British Hallmarking Council and all
four assay offices.
The order
will come into force on the day after the day on which it is made. My
noble colleague, the Minster for Science and Innovation, agreed that at
the request of the precious metals industry to enable it to
meet its Christmas rush, which peaks in September and October. He has
consulted the sub-committee on
productivity, skills and employment, which is part of the ministerial
committee on economic development, and it agrees with his decision not
to apply a common commencement date.
It will
become an offence to apply to an unhallmarked item a description that
it is wholly or partly made of palladium or to trade in such an item.
That brings palladium into line with the same offence that covers gold,
silver and platinum. The offence provision will apply to palladium with
a finenessor puritynot less than 500 parts per
thousand. That value of minimum fineness is common to the international
hallmarking convention and those EU member states that prescribe
palladium. Small palladium articles weighing less than 1 g are exempt
from hallmarking. Similar minimum weight provisions apply to the other
prescribed precious metals. Hallmarking is not compulsory for any
palladium article manufactured before 1 January 2010, but it will
become an offence to trade in unhallmarked articles that are
manufactured after that date. In the intervening period, manufacturers
and traders may voluntarily have palladium articles hallmarked, if they
so
wish.
To
avoid confusion and to protect the consumer, there are only three
permitted fineness levels with which palladium may be hallmarked. Those
levels conform to the international convention requirements. As with
the well-known pictorial hallmarks for example, a lion or a
Britannia for silverthe trade has requested an optional
pictorial trademark for palladium and has chosen the head of Pallas
Athene, the Greek goddess of war, wisdom and crafts, after whom
palladium was
named.
Palladium
is formally ranked as more precious than silver but less precious than
gold or platinum, which is to enable manufacturers to conform to
coating or plating rules. A precious metal article may only be coated
with the same precious metal having a greater fineness or with a more
precious precious
metal.
As
I mentioned, the measures are supported by the precious metals and
jewellery industry, because they protect both buyers and sellers in a
market that is expected to grow in the next few years. They are also
required to protect articles hallmarked under the international
hallmarking conventions. For those reasons, I commend the order to the
Committee.
2.36
pm
Adam
Afriyie (Windsor) (Con): I am delighted to speak on the
statutory instrument. This superb Act was produced in 1973, with the
support of the Labour party at the time. It is a superb piece of
legislation because it enables a market to function by giving consumers
information and by ensuring the quality of the goods that are bought
and sold. It addresses the information asymmetry between the consumer
and the supplier. In addition, it is a free market piece of legislation
that enables the statutory instrument to be introduced. Furthermore,
from what I can see from the briefing notes, the measures will be
cost-effective in operation and use existing enabling bodies to bring
about the action on the
ground.
The
legislation is deeply Conservative and I am delighted that we are
extending it to palladium today. The application of a hallmark is in
some ways the oldest form of consumer protection.
Hallmark refers to the marking in the guild hall in
London many hundreds of years
ago. I am delighted that we maintain a presence in that measurement
system. Hallmarking is part of a nationwide lead that we have in the
setting of standards overall, whether the National Physical Laboratory
or national weights and measures. We have a strong presence in that
field. We used to have a British empire based on gunboat diplomacy; I
believe that we can have an empire of sorts again, based on
standardised measurements conducted here in the United
Kingdom.
I
very much welcome the extension of the measure. The marks are
universally recognised and each of the assay offices in the UK will be
able to apply the mark, whether in Sheffield, Edinburgh, Birmingham or
London. The system that underpins the market, and has enabled it to
function, is impressive. The system provides jobs in the United Kingdom
and pleasure to those who wear jewellery. However, I would not be doing
my job if I did not have one or two questionsin fact, I have
three.
First,
what will be the impact on existing stocks of palladium if the markings
only come into operation from 1 January 2010? What will happen to the
existing stockshow will they be treated? If someone in March
supplies palladium that is unhallmarked, from previous stock, how does
that work?
Secondly,
£110,000 of economic benefit is identified for charities,
businesses and the economy at large. Where does that number come from
and how is it substantiated? It is not that I question the amount, but
I would like some clarification.
Thirdly, as
shadow Minister for Science and Innovation I am concerned about the
evidence base for any decisions that we make in this place or for any
statutory instruments that we pass. Where is the evidence that there is
an increasing market for palladium? I do not question it, I am simply
asking the Minister. On what evidence does he base his assertions that
the measure will be a good one because the market is growing? I am
aware that the price of palladium is around $250 or $300 at the moment,
relative to around $1,000 for gold, but where is the evidence for the
growing market?
If the
Minister calmly and succinctly deals with those few points,
Conservative Members will be comfortable to let the matter rest and
allow this deeply Conservative and market-oriented piece of legislation
through.
2.40
pm
John
Thurso (Caithness, Sutherland and Easter Ross) (LD):
Mr. Benton, it is always a pleasure to appear under your
chairmanship. I thank the Minister for his erudite and lengthy
exposition of the precious metals market as it applies to jewellery.
The order before us must be one of the most straightforward and
unremarkable statutory instruments with which I have had the pleasure
to deal. It is also possibly uniqueI do not think I have ever
come across a consultation in which 100 per cent. of the consultees
were entirely in favour of the proposed measure. On that basis, it
would seem somewhat churlish even to think of opposing it. I assure the
Minister that we will not do that at all.
I shall pass
on two observations, rather than any questions. First, I was amused and
gratified to see that the mark will be the head of Pallas Athene. That
shows a degree of creativity. I was going to ask whether it was
chosen by an official in the Ministers Department, but he
answered that in advance by telling me that the industry came up with
the mark.
Following on
from the point made by the hon. Member for Windsor, I am quite
interested in how the net present value calculations were put together.
If one had nothing else to do on a rainy afternoon, going through the
assumptions of a net present value calculation for a net benefit would
certainly help one to pass the time. However, given that the measure is
so wholeheartedly wished for by the entire industry, I will confine my
remarks to that, and hope that the measure passes with good
speed.
2.42
pm
Mr.
Lammy: I am grateful for the manner in which the hon.
Gentlemen for Windsor and for Caithness, Sutherland and Easter Ross put
their remarks, and for the swift manner in which we are passing this
important piece of legislation. The hon. Member for Windsor was quite
right to suggest that the legislation is about security and protection.
However, I take slight issue with the fact that he suggested that the
measure is Conservative. I think that the measure is progressive, and
behoves a Government who believe in a welfare state and the security of
all their citizens.
The hon.
Gentleman asked about provisions up to 1 January 2010. It is
important to stress that up until that point, palladium is outside the
scope of the 1973 Act. Therefore, the provisions will not apply to
anything made of palladium. People may choose to mark palladium
articles however they like, provided it is not misleading advertising
or a misrepresentation. There is nothing to stop people adding a
palladium hallmark if they wish to do so. Such goods may be traded
normally before 1 January 2010, until the specific offence provisions
of the 1973 Act apply and come under the Consumer Protection from
Unfair Trading Regulations 2008.
In a sense,
the hon. Gentlemans second and third points are connected. We
are able to hallmark palladium now because manufacturing processes and
science have moved on. The problem with palladiums propensity
to absorb hydrogen from the air when molten during casting has recently
been overcome with improvements in gas cover technology. That means
that we can be fairly confidentwe take our advice from the
industrythat, because palladium is lighter in weight than
silver, it will become popular and its demand will increase; indeed,
there has been a steady increase in trading figures. We are probably
right to assume that, given the economic conditions, as well as the
price of goldhe referred to thatand the price of
platinum, there will be considerable growth in the market. The order is
a preventive measure, coming in before we see that rapid
acceleration.
The evidence
base for the figures provided is the best estimates that we could
garner from the industry. I hope that the hon. Gentleman will take the
figures at face
value.
Question
put and agreed to.
2.46
pm
Committee
rose.