My Lords, maybe I could just take the opportunity of welcoming everyone back after the summer. In particular, I welcome the noble Baroness, Lady Wilcox, who first announced that the Bill would happen—it is all down to her, perhaps, that we are here. In his absence, I thank the noble Viscount, Lord Younger of Leckie, for having got us through the Second Reading, and I have great pleasure in welcoming the noble Baroness, Lady Neville-Rolfe, in her new and elevated role. As with her predecessors, she has already shown her willingness to meet with us and to understand our point of view, even if either she or those around or above her do not always agree with it. We look forward to working with her as the winter nights draw in.
Amendment 1, which stands in the names of my noble friend Lord Stevenson and myself, is really about what we can do to help small businesses, three quarters of which are one-man bands—or occasionally one-woman bands—be they hairdressers, builders, plumbers, farmers, publicans or web designers. Such small businesses really have very little bargaining power because they are not making large-scale purchases. They do not have any more time or specialist knowledge than any of us as individual consumers have to do any shopping around; they do not have in-house legal advice or a specialist procurement function.
Amendment 1 tries to give such micro-businesses the protections that are being introduced in the Bill. Without the amendment, they will not have the right to refunds, repairs or replacements for faulty goods or
products or services simply because they are a business. For example, we might expect a small hairdresser to know what they are doing when they are purchasing shampoo or hair-dryers, but they are not in any stronger position than any other individual consumer when they are getting a window cleaner in or buying a type of floor cleaner or purchasing electricity. Similarly, a small café that happens to offer wi-fi to its customers may be as vulnerable as the rest of us to poor service or being fobbed off by a wi-fi supplier. Similarly, small landlords may let out perhaps only one or two properties but some of those landlords will be classed as business and will not be able to enforce their rights when they are dealing with utility suppliers, or indeed the Post Office or anyone else, that they may deal with as a business.
Along with Citizens Advice and others, we are keen that the protections in the Bill, which we welcome, should be afforded to smaller businesses. We also know, from the work for Consumer Futures on The Experience of Small Businesses as Consumers in Regulated Markets, that such businesses are often dissatisfied with their suppliers and with how their complaints are dealt with. Four in 10 businesses that have complained to their water or gas supplier are unhappy with the way that their complaint is dealt with. About one-third feel similarly in dealing with a telecom service. So we want these very small businesses to be able to have these rights.
It is not that unusual a thing to ask. A number of regulators already treat micro-businesses as consumers. The legal services and financial services ombudsmen will both treat micro-businesses as consumers for their complaint handling. Ofcom extends consumer protection to micro-businesses and requires providers to apply an alternative dispute resolution scheme for dealing with unresolved complaints from domestic and small business customers. The Communications Act 2003 specifies that small businesses should be classified with domestic consumers, as long as they do not employ more than 10 people or trade in the telecom sector. The Federation of Small Businesses has reminded us that small businesses also count as consumers in respect of breaches of competition law, and the FSB can act as a super-complainant in that. Small businesses will also be covered under Clause 80 of this Bill with regard to redress under competition law, where the opt-out provisions will cover small businesses and the FSB can be a party to that. So what we are asking is not that unusual.
I know that the Government do not accept this amendment, allegedly because it is not what business wants. In the other place there were quotes from the 2008 and 2012 consultations giving the views of the British Retail Consortium and the CBI, but of course they mostly represent big businesses that maybe do not want their micro-business customers to have these rights. Rather as micro-businesses cannot spend time researching tariff options, I am afraid they also do not have time to respond to government consultations, so the responses may be rather more from big business than from small businesses. The most important point is probably that the Federation of Small Businesses is the voice of micro-businesses, and it supports the appropriate widening of the definition of “consumer”
to encompass micro-businesses so that they can benefit from similar protections as consumers when they are buying goods and services that are not related to their core commercial activity. Again, it understands that hairdressers should know about hair-dryers but not about other products.
I know that the Government have said, “Well, these businesses are already covered by the Sale of Goods Act, which says that goods must be of satisfactory quality and fit for purpose”—so, if a greengrocer buys a kettle, they would be covered under that Act. However, when this Bill is quite rightly aiming for clarity, it seems to be a bit of a nonsense, both for retailers and for everyone else, if two different bits of legislation are relied on when someone goes to buy a kettle from a shop.
The Government have also said in the other place that our amendment would undermine the clarity that the Bill seeks to achieve, as the consumer rights directive uses a common definition of “consumer” and there would be a difference if our amendment were accepted. However, our amendment would not change the definition of “consumer”; it would simply apply the Bill’s provisions to micro-businesses. It should perhaps be noted that the EU directive certainly would not make it difficult because regulations in Germany, Austria, France and Sweden have all included small businesses as consumers within their domestic legislation.
In its pre-legislative scrutiny, the Commons Select Committee recommended that the Government consider the case for small businesses to be treated as consumers. The then Minister in the Commons said that her department was happy to commit to actively considering the treatment of smaller businesses when developing consumer law in future. It is a wasted opportunity not to do that now. At the very least, therefore, perhaps the Government would be wise to build in an enabling power to extend the Bill to micro-businesses so that, should they conclude at some time in future that this is a sensible way to promote small businesses, which I know they are committed to doing, then an order could make that happen. I beg to move.