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Lord Campbell of Alloway: My Lords, before the Minister speaks, perhaps I may very briefly support my noble friend Lord Howe, not only for the reasons that he has given, but because they do actually form a type of security for the Bill. They would tend to avoid a mass of litigation over its provisions. I ask noble Lords on the Government Front Bench to take advice on the matter before rejecting the amendment out of hand.
I have listened, as I always do, to what the noble Lord, Lord Peston, has said. At one stage he seemed to be rather in favour of what my noble friend's amendment seeks to do. But at another stage he did not seem to be quite so much in favour. As the noble Lord never understands what I am saying, may I, in amity, say that on this occasion I could not understand what he was saying?
Lord Filkin: My Lords, my response to the noble Earl, Lord Howe, is first to explain why we think that there are risks in general and then to focus on the specific, sensitive area that he mentioned. The amendment would limit the powers under the Bill to regulate brand sharing to where the intention of the brand sharing is to promote a tobacco product and not where the effect is to do so. The problem with that is
that a tobacco company could say that it was not its intention to promote a tobacco product although that was the effect.We discussed brand sharing in Committee and my noble friend Lord Hunt has written to the noble Lord, Lord Naseby, on the subject and placed a copy of the letter in the Library. We remain of the view that there is a need to ensure that mischievous companies do not use that way of working to get round the Bill. I sense that in general the House recognises that that is a danger. For that reason, the Bill is intended to introduce a comprehensive ban on the advertisement and promotion of tobacco products. We have identified from international experience that for that to work, we need to take action to control brand sharing. I seem to recollect discussions of Malaysian restaurants and all sorts of other things that appeared implausible but occurred.
Documents released into the public domain show that many years ago the tobacco industry developed a strategy to use its brands on other products when it became apparent that direct advertising could be curtailed. We also mentioned during Committee that Strathclyde University published research in the British Medical Journal in March 2001 that concluded:
- "when other variables that are known to be associated with smoking are controlled for, awareness of coupon schemes and brandstretching were both associated with the greater possibility of being a current smoker".
The clause as drafted provides the Government with a regulation-making power. We intend to consult on any regulations on brand sharing as we recognise that there are many considerations and interests to be taken into account. Any regulation would of course ensure that genuine business expansion was not hampered. If an existing tobacco company wanted to set up new lines in another trade, as long as it used separate names and branding for the new products, that would be perfectly acceptable, as it would clearly not be intended to promote, or have the effect of promoting, a tobacco product.
However, we need to maintain the clause as drafted to ensure that business that is not genuine diversification and has the intent or effect of promoting a tobacco product is banned. It is right to retain the power to control the use of products where such use could be instrumental in encouraging young people to start smoking, even if that is not the intention. That is consistent with the line taken throughout the Bill. I should stress that it will be for the prosecution in any proceedings to prove beyond reasonable doubt that the effect of the brand-shared goods is to promote the tobacco product. The regulations may also contain defences.
I turn to the specifics of the case raised by the noble Earl, Lord Howe. We spoke about Dunhill at some length in Committee, and in this instance I shall speak to the Bill rather than to the e-commerce directive, for reasons that your Lordships will understand. The Government have some influence over the Bill, but less influence over the e-commerce directive.
It would not be appropriate to include a specific derogation in the Bill for the reasons that I have just outlined, but there are clearly powers under regulation. The Dunhill situation is unusual. In Committee, I speculated on what tests might be in regulations that could differentiate between the Alfred Dunhill situation and that of Camel Active, which I do not think that most Members of the House want to be liberalised in the circumstances.
For reasons that the House will understand, I cannot pre-empt any decision on the content of regulations that the Secretary of State may make in respect of brand sharing, as we would want to have full and genuine consultation on them. But we are certain that it would be possible for any such regulations to treat products such as those of Alfred Dunhill in a different way from a range of goods deliberately developed to promote a tobacco product. I hope that, with those words on the record, the noble Earl will have received substantial comfort.
Lord Clement-Jones: My Lords, I understand the spirit in which the noble Earl, Lord Howe, has moved the amendment and the underlying commercial concerns that firms such as Alfred Dunhill have and have expressed to him. However, for the reasons that the Minister set out, I am not sure that we should—or could—resolve the issue today in the primary legislation.
It is precisely because the clause raises issues such as that raised by the noble Earl that issues relating to brand stretching are best left to regulations. In that case, there should be full consultation about which brands should be included and which excluded. My view, for what it is worth, is that it would be rather perverse if Alfred Dunhill were to be caught by the regulations. It is a long-standing entity, legally separate from BAT, which produces Dunhill cigarettes. Similarly, Cartier produces cigarettes, but they represent such a tiny proportion of the company's turnover compared with jewellery that it would be rather strange if the regulations caught them. Those are just two examples, and consultation on regulations should cover such issues.
In Committee, we discussed the case of Sainsbury's: if it produces an own-brand cigarette, should it be allowed to market it under the Sainsbury name? Would regulations on brand stretching prevent it from advertising their other products? It would not, in a sane world. However, regulations ought to catch products such as Camel boots and Marlboro clothing, which are attempts to get round existing restrictions on advertising for the reasons that we discussed in Committee.
To accept the amendment would—to use the cliché of the day, as the noble Lord, Lord Peston, said—drive a coach and horses through the clause. We must have regulations that work but do not disadvantage commercial players that are not in the business of promoting cigarette brands. I hope that the noble Earl will accept that there is a genuine desire to make sure
that the regulations cover the point. They will be by affirmative resolution, so we will have the opportunity to have a full debate about them.The European directive, as I understand it, explicitly rules out catching non-tobacco products, whether they are made by tobacco companies or not. Member states are at liberty to go further, if they wish, provided that what they do is proportionate under the ECHR. I agree with the principles, but the directive ought to cover brand-stretch goods. At present, however, that is not likely to happen. It is unlikely that a prohibition on Dunhill advertising would be proportionate, given the legal separation of Alfred Dunhill and the producers of the cigarettes. That is the current state of knowledge, and I am sure that the regulations will be drawn up in the light of any further information that we have about the directive.
Earl Howe: My Lords, I am grateful to all noble Lords who have spoken. The House will realise that I sought to make a narrow point. As I admitted, it was not strictly relevant to the text of the Bill.
I am grateful to the Minister for pointing out the literal effect of the amendment, and I realise that the clause must be left as drafted. I was using the amendment as a means of probing the Government; nothing more than that. It provided an opportunity for the Minister to offer a measure of comfort to Alfred Dunhill and other companies in its position. I sought to ensure that the Government were aware of the need, at least, to place a permissive power in the text of the EU directive. I make no other point besides that one.
Of course I recognise that, in the context of the UK per se, we are due to see regulations brought forward at some stage which will be debated in Parliament. I have taken note of the comment of the noble Lord, Lord Clement-Jones, that they will be subject to the affirmative resolution procedure. I am entirely happy with that. The Government appear to be reasonably confident that they are capable of framing regulations in such a way that companies such as Alfred Dunhill will be left in the clear. The company is itself reasonably confident of that on the basis of assurances that it has received from the Department of Health.
I have no problem with that. My concern is simply the position in which Alfred Dunhill will find itself in the EU context if the directive is not framed appropriately; that is, so that it encourages other member states to build in an exemption for innocent parties—if I may put it in those terms. Here I do not refer to companies such as Camel Active or the other examples of brand sharing that we discussed in Committee. It is those companies that have nothing whatever to do with tobacco that could be caught if the regulations are not framed appropriately in other member states as well as in this country.
I hope that, on the strength of what I have said, the Government will consider the matter further. I ask them simply to take on board the points I have made
and, I hope, use them to good effect when they come to negotiate further in Brussels. With that I beg leave to withdraw the amendment.Amendment, by leave, withdrawn.
Clause 14 [Powers of entry, etc]:
2.30 p.m.
Earl Howe moved Amendment No. 54:
- Page 7, line 12, leave out "considers it" and insert "has reasonable grounds for believing that it is"
The noble Earl said: My Lords, a number of amendments were tabled in Committee by my noble friend Lady Noakes and the noble Lord, Lord Monson, which sought to introduce a concept of reasonableness into the powers conferred by Clause 14. The three amendments in this grouping return us to that theme and rest on one simple and, I hope, inherently reasonable aim; that is, to ensure that those powers which have the most potential for being intrusive, disruptive or damaging to a business are exercised on the basis of there being reasonable grounds to do so.
As the clause stands, an enforcement officer has only to be of the opinion that it is necessary for him to exercise the powers before those powers can be exercised. That is a test that is both subjective and, I suggest, weak. With powers to inspect books and records, take copies, take possession of such records and hang on to them, I think that it would be appropriate for there to be a slightly more objective test stated explicitly in the Bill.
As the noble Lord, Lord Filkin, stated in Committee, the gravity of the subject matter in this Bill is of a lesser order than that of, for example, the Consumer Protection Act. Yet the Bill contains enforcement powers that are in every way comparable in terms of their severity and scope. The shift that I propose in this clause is not by any means major, but it would directly replicate the provisions of the Consumer Protection Act in this respect.
On 20th February the noble Lord, Lord Hunt of Kings Heath, wrote to my noble friend Lord Skelmersdale setting out the reasons why he felt that the Bill should not follow this precedent. While it was a helpful letter, I confess to remaining at least partially unconvinced by the Minister's arguments. I am sure that it would assist the House and it would certainly assist me if the Minister were to take the opportunity to set out some of those arguments today. I beg to move.
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