Small Business, Enterprise and Employment Bill — House of Lords, 2015-03-03
Topic: Domestic Commerce
Jonathan Mendelsohn (Labour, Centre-left): My Lords, this amendment proposes to treat small businesses as consumers. Consumers buy goods and services, and enjoy a range of rights and protections. The offer to businesses is lower, on the basis that they should be either smart or big enough to look after themselves. In reality, the smallest of businesses face many of the same problems as consumers do. Our amendment tries to address two core elements. The first is the right of redress and the imbalance that exists. The second is the rights of consideration. This is particularly acute in circumstances where small businesses deal with regulated markets, such as energy, financial services, water and telecoms Here we have to take into consideration that in talking about small business we are really emphasising the micro-businesses, those that employ between one and nine people. In these circumstances they need regulators to deal with them as consumers; and they are recognised by a number of regulators and their interests are protected as if they are consumers. It is an uneven practice and our amendment would make it applicable across the board, but there is a great deal of assistance given by some regulators. This should be extended to make sure that things such as tariffs, supplier charge, information and certain difficulties are dealt with more expeditiously, because the small businesses are treated as consumers. When it comes to micro-businesses, third-party intermediaries who may offer services that do some of these things are clearly no substitute for reasonable protections and regulators considering them very carefully. On the issue of rights of redress, there are protections for businesses under unfair terms legislation, and under the Sale of Goods Act and Supply of Goods and Services Act, but these apply only to business-to-business transactions. A small micro-business buying anything without establishing a business-to-business arrangement cannot be protected. This pushes every small business with one, two, five or nine people not to buy retail and it is entirely misplaced. We are suggesting that the extension of the provisions to allow businesses to be treated as consumers will deal with this I am bound to say that the Government have extended the gulf between consumers and these micro-businesses by the extension of individual consumer rights under the Consumer Rights Bill that is still before the other House. There was a debate to address this growing gap through that Bill and the suggestion was that it could be done under this Bill as the most obvious and correct location. These amendments seek to address the gap There are arguments against such a provision. One is that it confuses who a consumer is: but that is not really the case. It accords rights as opposed to a sense of definition, and the confusion is not in the definition. As it is, this point is already recognised with respect to how regulators operate in considering small businesses. A second argument is that business does not support the provision, which is true to a degree because bigger businesses do not, but small businesses do. The Federation of Small Businesses has been clear that this is an important and useful device for the very large number of micro-businesses. A third argument is that there is an insufficient level of evidence on which to base this, but that is not the case: there is very strong evidence. It may not meet the highest test of evidence, but that is not for want of the capacity to try to identify it. Putting the burden of trying to monitor this in detail on micro-businesses—many of which stay small—is an unreasonable test Finally, I shall raise another important consideration which I thank the noble Lord, Lord Deben, for highlighting in Committee. This amendment is not just about our commitment to helping small businesses but is a strong recognition of the sort of protection small businesses need to be put in place. It shows that we value encouraging enterprise and individual activity in creating small businesses. We should underpin what they do with the most basic of individual protections. This is a good and reasonable measure to create consistency in a law which is currently fragmented. I beg to move.