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Lord Marsh: My Lords, before the noble Lord sits down perhaps I may ask a question. Is not the reason the industry continues this practice because, when a customer begins to negotiate the price as the noble Lord, Lord Lucas, does, the large majority of suppliers have fixed a common "add-on" which can be anything up to 15 per cent. of the price where there is no competition at all across most of the industry? The actual additional cost of placing the vehicle on the road is normally estimated at a figure which can be anything up to 10 per cent. of the other retail price for the vehicle. There is no competition in that regard. The cost for the add-ons is always the same proportion, and it is a large proportion. That is why the industry continues the practice.
Baroness Miller of Hendon: My Lords, I have listened to this short debate with great interest. I appreciate the concerns which prompted my noble friend Lord Bradford to present his Bill, and the clear way in which he explained it. His aim of promoting greater clarity in the manner in which the price of motor vehicles is presented to the public is a laudable one. Indeed, it accords with the Government's own aims of ensuring that consumers are given full and accurate information and that the price of goods and services is indicated in a transparent manner.
There is already a body of legislation in place designed to promote transparency in the giving of price indications for most goods and services--including cars--and it may be helpful if I first outline the provisions of the legislation.
The Price Marking Order 1991 applies to any goods--including motor vehicles--which are or may be offered for sale by retail, and also to advertisements which refer to the selling price of those goods. The order provides that, where the purchase of a product is dependent upon payment being made for ancillary goods or services, the price of the product shall be indicated in such a way as to make it clear whether it is exclusive or inclusive of the ancillary goods or services. The order further states that, where the price quoted is an exclusive one, the indication of the price of the ancillary goods or services shall be given as prominently as that of the product itself.
It seems to me that this legislation goes a long way to meeting the concerns which underlie my noble friend's Bill. There can be no doubt that, properly applied, it offers no less than a clear and transparent means of letting consumers know, before they enter into a transaction, what they will have to pay for a product--in this case, a motor vehicle. However, there is more.
There is, in addition, protection of a more general nature for consumers in the form of the Consumer Protection Act 1987. Part III of this Act makes it an offence to give consumers a misleading indication as to the price at which any goods or services are available. It is the definition of "misleading" in this part of the Act that my noble friend's Bill seeks to amend. However, the "catch all" nature of this part of the Act is already designed to provide wide-ranging protection in any circumstances in which a price indication is given to consumers. It therefore has the effect of promoting transparency in any transactions involving any goods, including the retail of motor vehicles.
I recognise that my noble friend is seeking to go further than this. He wishes to see inclusive pricing made, in effect, compulsory for motor vehicles. As I shall explain, the Government have reservations about pursuing such a policy. Our general approach is to be sceptical of making such matters compulsory. But, even if we were persuaded that inclusive pricing for motor vehicles ought to be mandatory, the machinery exists for us to do that without a provision such as my noble friend is proposing.
Section 26 of the 1987 Act already empowers the Secretary of State to make regulations in relation to the circumstances and manner in which price indications may be given. That would certainly allow us to make inclusive pricing mandatory if we were convinced of the need to do so. It would be inappropriate and would not be economical use of parliamentary time to amend an Act of Parliament by primary legislation when that Act already contains provisions for making regulations to achieve the intended aim. Incidentally, Section 26 of the Act makes provision for a consultation process where the Secretary of State chooses to use his regulation-making powers--and for good reason: the importance of canvassing the views of all interested parties on a measure likely to have far-reaching consequences is self-evident.
Your Lordships may be aware of the existence of a statutory code of practice for traders on price indications made under Section 25 of the Consumer Protection Act. This already provides all manner of detailed provisions regarding specific aspects of the indication of price. Compliance with the code is not mandatory but deviation from its recommendations can be used to support a prosecution of a misleading price indication under the Consumer Protection Act. I understand that the code plays an important part in the interpretation by the enforcement authorities of the relevant provisions of the Act. My noble friend Lord Bradford is certainly aware of it and of the fact that review and revision of the code is currently under consideration by my department. Revisions to the code would provide a more flexible way of giving statutory encouragement to the use of
This brings us to the nub of the issue. Is this a matter on which we should be legislating? Given that there already exists legislation to prevent traders from misleading their customers, should we be prescribing the exact manner in which traders should indicate their ancillary costs? In such instances it is useful to ask--if this is such a good idea, why are not market pressures bringing it about? In fact, as I understand it, market pressures are leading to greater use of inclusive pricing. I refer to a new industry-led initiative on this issue. This, I understand, emanates from car manufacturers who are aiming to move to all-inclusive motor vehicle pricing over the course of the next 12 months. We regard this as a most promising initiative which should go a long way towards meeting my noble friend's concerns. I hope he will agree with me that this is the case and that he, like myself, will be watching closely for further developments in the coming months. It would certainly be highly inappropriate for the Government to consider any action before the full effects of this new initiative have been seen.
Should nothing come of the industry's initiative, I am sure that my noble friend and others will press on us the arguments for making regulations under Section 26 of the 1987 Act or for making a suitable amendment to the code of practice. As always, we shall listen very carefully. In doing so, we will wish to remain mindful of the Government's commitment to reducing the regulatory burden on business and continuing to do that. The idea of deregulation has been so well thought out by our party that I am sure the noble Lord, Lord Haskel, will not mind me commenting on the fact that he said that his party certainly wants to deregulate as much as possible. This is something which can be easily overlooked in the well-intentioned clamour to provide another layer of protection for consumers. However, too much regulation can work to the detriment of both businesses and consumers by unnecessarily tying business down with bureaucracy, increasing costs and reducing choice, thus achieving the opposite of the effect which is intended.
As I have said, we believe that the concerns of my noble friend Lord Bradford are likely to be met by the existing legislative protection and that, even if that were not the case, there are, in addition, regulation-making powers and the possibility of amending the code of practice to which I have just referred.
In addition, we have the new industry initiative which I have also just mentioned. In the absence of compelling arguments to the contrary, and also of any evidence of significant consumer concern on this issue, I hope my noble friend will understand that I cannot recommend the Bill to the House.
The Earl of Bradford: My Lords, it would seem that there is a large measure of agreement in your Lordships' House that the aim of my Bill is a laudable one, but that primary legislation is the wrong course of action.
I should like to thank all the Members of your Lordships' House who took part in the debate for their contributions. There is clear support for the practice of all-in pricing for new motor cars, including motor bikes, as the noble Viscount, Lord Falkland, pointed out, and that this should be brought by means of a voluntary but effective code of conduct by the trade. However, it may prove, as has so often been the case in the past, that it will be difficult to achieve this with 100 per cent. support. In that case, let us keep the threat of government action hanging over their heads like a proverbial Sword of Damocles, in the hope that this will encourage them all to come into line. Accordingly, I beg leave to withdraw the Motion for Second Reading.