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Mr. Don Foster (Bath): My hon. Friend has rightly raised concerns about the council tax and the lack of transparency of the funding mechanism—the mechanism by which central Government badly fund local government. Does he share my view that a necessary part of the package is to get rid of council tax, to introduce a much fairer system of local income tax, based on people's ability to pay, and to combine that with a system in which a greater proportion of the money that is spent locally is raised locally, with a corresponding reduction in national income tax? Under such a system, people would know who to blame when things went wrong, and, of course, who to praise when they get things right.
Mr. Heath: My hon. Friend is right. A great criticism of the council tax is that it is so sparingly progressive in its effect, and that it impacts horribly on people who can least afford it, in a way that is inappropriate. It is transparently unfair—if such a concept exists—in the way in which it operates. I think that the hon. Member for Braintree (Mr. Hurst) made the point earlier that the difficulty with such a system is that councillors in local government simply get the blame for everything and the credit for nothing because they can take no decisions—or only those that would have a marginal effect—that allow people to connect their actions with the amount of tax being paid. That devalues the whole process of local government.
Local government today is not the local government that I entered back in 1985. When I was running a county council, I had the capacity to change the way in which Somerset operated. The decisions that my colleagues and I took then made a difference to the way in which local
authority services were provided. There was a cost to local people of our taking those decisions, and we had to persuade them that we were justified. That is the way local government should work. A system that makes that relationship impossible to discern devalues the whole process of local government, and allows central Government to hide behind the mask of local government when taking decisions centrally in Whitehall.If we can replace council tax and the uniform business rate—about which I could speak at equal length, because it is an iniquitous tax that disconnects local businesses from the services provided—with a fairer system that would re-establish those connections, we might start to see local government doing the job that we want it to do, taking local decisions for local people in the local interest. That is what it is all about.
It is wrong that the overlaying effects of the standard spending assessment make a child in a Somerset school worth £1,500 a year less—in the Government's terms—than a child in an outer-London suburb. It is also wrong to have systems that unfairly penalise the whole of the west country, the north country and the midlands in favour of the home counties. It is time to introduce the new system that the Government have promised us for so long. It must be in place next year, and it must correct these evils if we are to see proper connections being made and people voting at local government level on proper facts relating to the performance of their local councillors and councils, rather than a myth, which is all that they have to go on at the moment.
4.39 pm
Mr. Andrew Love (Edmonton): I apologise to you, Madam Deputy Speaker, for not being in my place at the start of this debate. It is always a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath) but I wish that he had shared with the House the fact that Liverpool city council, in setting a budget, not only cut social services expenditure substantially this year, but will do so in the coming year. Of course, there is a distinction between that and the comments made by Liberal Democrat Members in relation to Government expenditure.
I want to raise briefly an important issue for my constituents, which, I suspect, is reflected in constituencies across the country. I know that it has been raised in the House on many occasions. That issue is the scandal of energy mis-selling, which has not been dealt with adequately up to now. It was brought home to me a year or two ago by a retired aunt of mine in Scotland, who is relatively frail and quite elderly. She was doorstepped by a salesman, and the pressurised sales tactics that he undertook meant that she signed a form almost without knowing what she was doing. She did, however, contact me almost immediately. Because of that contact, I was able to take the necessary steps to undo the damage that she had suffered. She would not have spoken to anyone else about it—she came to me because she is a relative. Many people who suffer from these tactics do not come forward, but I have noticed a significant increase in this sort of abuse in my constituency. Let me give a couple of recent examples.
A constituent of mine, Mrs. Brimmicombe-Wood, unexpectedly received a letter from Virgin Energy recently. She was surprised and shocked to read that her husband had authorised a switch from her previous
company to Virgin Energy. The reason that she was shocked and surprised was that her husband had died 18 months previously. His signature, which she requested to see, must therefore have been a forgery. Her reaction was:
- "I am absolutely disgusted, it is a scandal that should never happen. It was very upsetting."
- "It is clear that the signature does not match that provided by yourself. Clearly it was not your intention to transfer your supplies to Virgin Energy. The sales agent concerned will be interviewed and please be assured that the appropriate action will be taken—this may result in dismissal".
Let us consider a second case of someone who does not want to be named—I shall call her Mrs. X. Mrs. X was, to her great surprise, transferred to Scottish Power. She was particularly surprised because, when the salesman came to her door, her partner was with her continuously throughout the interview, and both of them totally contradict what Scottish Power has said. They signed nothing, and I have requested on her behalf a copy of that signature. We await with interest—this is a very recent case—the company's response to Mrs. X's claims.
Some would argue that we should go back to the old days of the electricity boards and British Gas, when the supply of utilities was a simple matter. I do not accept that. I believe that deregulation of the energy industry has been good for consumers in general. We must also recognise, however, that many companies are falling over each other to win the custom of consumers. Although it has delivered consumer benefit and greater choice, it has also created enormous pressure for all the companies that have come into the market to sign up customers. That is for a simple reason—there is a fixed number of customers. This is a zero sum game. If a company wants new customers, it must take them from one or other of its competitors. What has happened is that consumers have become somewhat confused by the choices available to them. As can be shown, there is a worrying trend of mis-selling in the marketplace. That issue has been raised on numerous occasions in the House, and I want to quote a recent response by the Minister for Industry and Energy:
- "I have recently written to all gas and electricity suppliers to express my concern about the distress caused by incidences of sales malpractice and demand that suppliers improve their performances."—[Official Report, 16 November 2001; Vol. 374, c. 918W.]
There are many advantages to having competition in energy markets. There is evidence to suggest that it keeps prices down, and there is some evidence—although less—that it provides a better service for the customer. That type of market requires regulation, which was why Ofgem was originally set up. I shall consider whether Ofgem is responding to the real concerns about the way in which
the market operates. I also want to commend the work being done by Energywatch, which is an independent consumer watchdog that tries to represent the consumer in a relationship with some of those companies.Many investigations are taking place—hon. Members have referred to the work being done by the Public Accounts Committee. I am also a former member of the Public Accounts Committee, and it does a tremendous job. It highlighted not only some of the advantages that have come from deregulation but the disadvantages in the marketplace. It made three recommendations in relation to those. First, it recommended that Ofgem should provide a standardised approved form—and a simplified form—for all the companies that want to change customers over. That will ensure that every consumer knows exactly what they are signing up to before they do so. Secondly, it recommended that Ofgem should focus on some of the measures that it needs to take to curb high-pressure sales tactics and some of the misleading information that has gone out to consumers. Consumer information is critically important. Thirdly, it recommended that Ofgem should make use of the powers that are available but that it is not currently using. For example, it can fine companies that are found guilty of such activities.
Energywatch has also recognised some of these concerns and its recent "Stop Now" campaign tries to make it clear to consumers that such sales tactics are unacceptable and must be dealt with. It also encourages consumers to complain to the energy companies. Consumers did not complain much in the past, but I hope that they will do so in future. Some developments, however, are heartening. The statistics show that, from January to October 2001, Energywatch received 2,205 complaints about the gas market and 3,442 complaints about the electricity market. There has been success in encouraging people to bring their complaints forward, and recent statistics show that the number is increasing. We have yet to see whether that is because more people are coming forward or because abuse is increasing.
Echoing some of the comments in the Public Account Committee's report, Energywatch has also made recommendations that it hopes that my hon. Friend the Minister for Industry and Energy will take up. I shall mention one or two of those recommendations. Energywatch believes that Ofgem must strengthen the rules with which energy companies have to comply. That is important, because we need compliance to ensure that abuse does not continue.
Energywatch says that Ofgem must use the full range of its powers, because it does not use all those that it has to make the energy companies comply with the rules. Ofgem must investigate ways to tighten the controls that currently exist, so that it ensures that the companies are doing everything necessary to create an adequate market. Finally, Ofgem must ensure that proper compensation is paid when someone suffers distress and inconvenience. Because Ofgem believes that the current market operates solely to the benefit of the consumer, it often does not recognise the distress that certain practices cause, particularly to the elderly.
My hon. Friend the Minister will valiantly have to answer for every Department on every issue raised, but I ask him to raise these issues with my hon. Friend the Minister for Industry and Energy, who I know shares my
concerns and is somewhat frustrated that Ofgem does not use all its available powers. In recent months, I and many other hon. Members have expressed concerns about the activities that I have described, and action needs to be taken. Ofgem has the powers, and it is for Ministers to put pressure on Ofgem so that consumers do not suffer in future.
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