Examination of Witnesses (Questions 120-139)
ENERGYWATCH AND
POSTWATCH
19 JANUARY 2005
Q120 Mr Williams: Are you willing to
do something to see whether you can help?
Mr McGregor: We have already done
that in the form of sending out, to MPs and indeed to a range
of interested stakeholders, a desk calendar with just that information
on it, in the hope that people would place it on their desk and
should they need the number, it would be there in front of them.
Mr Williams: The trouble is that we would
need room for about 50 different calendars, would we not, if you
all do that? I am very grateful; I assume somewhere there is a
calendar for me. I have not actually seen it, but I am sure there
is. It is not exactly the most advantageous way of enabling an
MP. It is very helpful actually to have on a board alongside where
you are working and in the middle of the afternoon, when you are
dealing with a case, you can dial that number. Turn your thoughts
to how you can help us carry out our role.
Q121 Mr Allan: In the run-up to this
hearing, the Energy Retail Association sent us a letter which
I think they copied to you. They were quite robustly critical,
saying that " . . . we are concerned that recently Energywatch
has been pursuing a name and shame strategy that is undermining
consumer confidence without good cause". In the privacy of
this room, can you tell us who you have been naming and shaming?[4]
Mr Asher: I hope that many members
will have seen that Energywatch has been highly critical of energy
suppliers who are costing consumers tens of millions of pounds
a year by incompetent billing, use of estimated bills, erroneous
bills, not sending people bills for years and years and then threatening
legal action to enforce them. We are saying that consumers should
not have to put up with such incompetence and they had better
fix it or we will.
Q122 Mr Allan: I was hoping to encourage
you to become a serial offender and I am glad you have. Professor
Gallagher, so that we do not entirely waste your time this afternoon,
can I put to you from the same letter that the Energy Retail Association
have a suggested agenda for you which really says that you should
close your regional offices, cut your costs and stop being such
a pain. Are you going to put their agenda to your board? Do you
think that they are likely to approve it?
Professor Gallagher: We will want
to continue to be a pain while the sorts of activities are going
on that Allan has mentioned. With regard to the regional offices,
again as Allan has said, we have been looking very closely at
how we can be most effective. There has been a suggestion that
we should consolidate all our activities in one office which is
electronically efficient and handles the post very quickly. As
has come out in discussion this afternoon, all that will do is
very efficiently deal with people who are quite capable of dealing
with the problem themselves; the articulate, the well-organised,
those who are robust and persistent. Our regional offices give
us an opportunity, including the London office, of meeting people
face to face. For example, from our Manchester office we have
been out visiting an estate which had had very, very poor quality
heating and we have solved the problem for that estate with the
help of the local council, the energy companies who have responded
positively, with the help of local charity and pressure groups.
It is very difficult to do that sort of positive thing which results
in real benefits to people when you stuck in some efficient electronic
tower, either in London or in Wales or in some other part of the
country. However, we have come down from 23 offices to seven.
It may be that we can do an effective job with fewer than seven.
I should be very worried if we ever got to the stage where we
sat behind desks and read letters. We really do need to have that
contact with the local communities. One way of doing that effectively
is to have some sort of regional presence and some sort of opportunity
to pilot projects on a small scale before we roll them out on
a national scale. I am not answering your question, but I hope
I have illustrated the process by which we will come to a decision.
Q123 Mr Jenkins: At the top of page 24,
paragraph 2.30 it says "Measuring the effectiveness of Energywatch
and Postwatch is not an easy task". A third of the way down,
"Invariably, they are one of many stakeholders working within
their respective markets that are seeking to improve the service
provided to consumers". A very laudable aim. But if you were
to disappear tomorrow, what effect would that have on the average
consumer out there, do you feel?
Mr Asher: I would observe that
since Energywatch was formed, it has dealt with 300,000 consumer
complaints and some millions of contacts with consumers, where
we have provided them with information, advice or resolved complaints.
I believe that we have been instrumental in the substantial reduction
in complaints about mis-selling, about disconnections. I believe
that we have been able to assist many consumers who have been
victims of storm damage and lost power and help them to get reconnected
or compensation, where that has been due, and that until the market
is working fully and effectively there would be a great welfare
loss to consumers of Great Britain if Energywatch stopped or if
the services that we provide, by whoever, ceased.
Mr McGregor: Similarly, 100,000
people who have complained to us would have been disappointed
because they would not have had an independent champion on their
side to take up their complaint and to get redress for it. We
have, I think, had a significant influence in the development
of the regulatory regime and putting forward customer views on
things like price controls and the levels of prices and the levels
of service. As we were discussing earlier, we have had an influential
role, but not obviously a determining role, in the whole of the
post office closures.
Q124 Mr Jenkins: When you appear before
us next time, this heading will obviously not be appearing "Measuring
the effectiveness . . . is not an easy task" and we and the
NAO will be able to measure how effective you really are and how
you can justify your existence and expenditure.
Mr Asher: I believe that the NAO
Report has concluded that on balance we are providing value for
money. I hope that next time we shall be able to do that even
more strongly. We have adopted a range of measures for evaluating
our impact that are currently being implemented and perhaps by
the time that the Committee's Report is out, we might be able
to provide more information to you on that.
Q125 Mr Davidson: May I pick up this
letter we received from the Energy Retail Association, basically
complaining about the strategy of naming and shaming. May I seek
clarification from you about what led you to believe that naming
and shaming is appropriate in these circumstances and why the
route of moderation and liaison and so on was not effective?
Mr Asher: It is a practice which
has come through sheer experience. From 2000, when Energywatch
was formed, there were clear areas of consumer complaint: mis-selling,
disconnections, billing and a couple of others which we had targeted.
Despite all of our early efforts of working with industry associations,
we found they were not responsive. It was only when we started
vigorous naming and shaming campaigns, recruiting Ofgem to undertake
enforcement work and things, that the industry introduced its
billing system. Similarly with the customer transfer process,
they were reticent until we, Ofgem and the Minister, started to
make strong public representations and they put that right. In
relation to billing, it is an outrageous breach of consumer rights,
they have so far failed to do anything at all about it and we
feel it is necessary to expose them to adverse publicity such
as has happened on GMTV this week and then they might listen.
Q126 Mr Davidson: I must confess that
I missed that on GMTV. May I seek clarification about whether
or not the naming and shaming of an individual firm, in your experience,
tars unfairly the rest of the industry, or have you been able
to handle it in such a way that focused only on the worst culprits?
To be fair, I was not entirely sure, from what you were saying
earlier on, whether or not the issues of billing and transfer
were generic, or whether it was particular firms which their colleagues
were not able to police adequately through a voluntary arrangement.
Mr Asher: Where the behaviour
is generic, our criticisms are. Where it is specific, our criticisms
are. Recently PowerGen, which runs a scheme for consumers who
use a large amount of energy because they have a particularly
inefficient home, wrote to some hundreds of thousands of them
threatening to kick them off that tariff and leave them without
supply. We took that up very publicly and we were able to force
them to change their mind on that and to give consumers a much
fairer deal in those arrangements. Similarly, when British Gas
increased its prices far more than anybody else, we singled them
out for criticism and I am really pleased to say that more than
one million and a quarter consumers have switched away from British
Gas since we did that to discipline them for price rises which
were just far too high.
Q127 Mr Davidson: Given that the point
of naming and shaming is to name them—and we have generally
been quite supportive of that—you have managed to work in
both PowerGen and British Gas. If I had asked a slightly longer
question, would you have wanted to give anybody else's name?
Mr Asher: I regret to say that
it is possible to name every company for something or other. I
should like to add, if I may, that that also includes praising
companies for doing good things. We think that British Gas, in
the establishment of their £10 million trust fund, and others
have done a great job. It is not all one way. We think the market
should work and they should respond to consumers' needs.
Q128 Mr Davidson: The follow-on from
that, to Mr McGregor, is, given that Royal Mail have an apparent
virtual monopoly and apparently also have no shame, this is not
a strategy which works for them. What is your equivalent?
Mr McGregor: Our equivalent is
that where Royal Mail provide poor service—and unfortunately
there have been rather too many incidences of that recently—we
do our best to publicise that. First of all we try to prompt Royal
Mail to put right the obvious market failings they have, but,
secondly, also to alert customers, for example to the existence
of compensation, should they have paid for a particular service
which they have not received. A very good example of this was
just before Christmas, when, because of a sharp fall-off, which
happens every Christmas, in the performance of the first class
post, we were advising customers to use the second class post,
but to make sure they posted a little bit earlier. We thought
that was a good value-for-money solution for customers. It is
fair to say that this prompted a considerable amount of ire on
the part of Royal Mail, who thought that we were just trying to
depress their revenues in the run-up to Christmas by persuading
people not to use first class stamps. In fact what our role was
and what we were trying to do was to point out to customers that
there was a better value for money alternative than reliance on
first class mail over the Christmas period.
Q129 Chairman: I thought perhaps we treated
the complaint from the Green Party too lightly. Did you say you
had not received it, Mr McGregor?
Mr McGregor: No, I am not aware
of it.
Chairman: It says it is copied to Postwatch;
it has obviously been lost in the post somewhere, or in your organisation.
It is a catalogue of errors and a serious point. They say "It
was also logistically one of the most complex operations we have
undertaken, but its complexity was amplified enormously by the
utter disarray in which the Royal Mail approached the project".
He talks of a report " . . . which describes the extent of
the last-minute changes, unclear reporting structures, over-bureaucratic
systems, lack of planning and failure to deliver leaflets handed
over well before time. Figures for households in a region given
by Royal Mail varied massively from one week to the next. Artwork
was lost in the post or destroyed by fire. Guidelines were unclear
or absent. And then, finally, we received over six hundred complaints
of poor or non delivery, including late delivery, delivery inside
other publications or junk mail, delivery to the wrong regions,
or just wholesale dumping of leaflets. In total, we estimate that
15% of our Electoral Communication leaflets were not delivered
acceptably". That is a massive indictment of an organisation.
Mr Williams: Otherwise it was all right.
Q130 Chairman: Otherwise it was all right.
In the Comptroller's own Report, paragraph 1.14, it says "
. . . lost and mis-delivered mail remains a persistent problem.
Royal Mail estimates that some 14.5 million letters are lost each
year, of which nearly 60% are delivered to the wrong address".
Are you asleep on your watch? What are you doing about this, Mr
McGregor? If you cannot do a better job in trying to get some
redress for the public, then maybe you should step down and get
somebody more vigorous to do it. This is a scandal.
Mr McGregor: When we began, nearly
four years ago now, it was the case that Royal Mail refused to
admit to losing any single item of mail. We went to them and said
that 30% of the complaints we received in our postbag were about
lost mail, so they must be losing mail. For a period of 18 months
to two years, the Royal Mail management stoutly maintained that
they never lost a single letter. Although progress is slow, we
have made substantial progress in getting Royal Mail management,
first of all to realise that there is a problem, and, secondly,
to address that problem. What we have done is to work with Royal
Mail to understand what the causes of lost mail are. Some 80%
of lost mail is in fact mis-delivered mail; the other main causes
are mail stolen, mail destroyed, mail sometimes dumped by errant
postmen. Having actually got the management to admit that there
is a problem, and got the management then to look at the causes
of the problem, the management—and we are working with them
on this—are now starting to put those fundamental causes
right. We have had a major influence. Yes, perhaps we might have
tried to get the issue addressed sooner than we have, but we think
we have acted as quickly as we could.
Chairman: You have put this on the agenda.
Q131 Mr Williams: Could I ask you to
give us a report in 12 months' time on what progress you have
made in that vast area you have talked about with the Royal Mail,
so that we can then consider, in light of what you say, whether
we want Royal Mail here to talk about these matters?
Mr McGregor: Yes, I should be
very pleased to do that and also I should be very pleased to investigate
personally the Green Party complaint.
Q132 Mr Bacon: We all expect a general
election fairly soon; it certainly has to be by June next year.
Roughly 2,500 people will be standing for Parliament, all of whom
are entitled to send their election address to each person entitled
to vote. Have you had any discussions yet or meetings with the
Royal Mail to discuss that important task or are you going to
wait until you get complaints from people in various political
parties about how the operation is run?
Mr McGregor: We have had those
discussions with Royal Mail and we have also had discussions with
Royal Mail about the recent experience of postal balloting, which
has turned out to be something of a mixed experience for a variety
of reasons.
Q133 Mr Bacon: I have the Green Party
letter here. Are you not aware of that?
Mr McGregor: Personally, no, I
am not.
Q134 Chairman: I think he is aware of
it now.
Mr McGregor: I am now.
Q135 Mr Bacon: Are you saying that as
a result of your discussions with the Royal Mail you are confident
about the Royal Mail's capacity to deliver election addresses
for all candidates of each political party when the election comes,
including the Green Party?
Mr McGregor: The straight answer
to that is yes. What I might have some doubts about is whether
they are capable of delivering them within the existing timeframes
which are set down in their quality of service targets. Royal
Mail have been missing those targets recently and we put a lot
of pressure on them to try to hit those targets.
Q136 Mr Bacon: Just a minute. My question
was: are you satisfied about their ability to deal with this,
their ability to do the job? You said yes, but not within the
existing timetable. Are you saying that you are confident they
can deliver, but that it might arrive after election day? Is that
what you are saying?
Mr McGregor: No; I should hope
not after election day. What is happening is that rather too much
of the mail is perhaps arriving a day late according to their
quality of service targets and that is why we want them to hit
their quality of service targets, so customers can be fully guaranteed
and satisfied that they are getting the service they are paying
for.
Q137 Mr Bacon: Is it possible you could
send us a note summarising your discussions with Royal Mail and
summarising the criticisms you have had of their quality or service
targets, specifically relating to election candidates? This is
something which is very important for our democratic process,
it affects every Member of Parliament and it affects every candidate
for Parliament as well.
Mr McGregor: Yes, we should be
pleased to do that. Since you have raised your concerns this afternoon,
we will in turn raise those concerns again with Royal Mail. [5]
Chairman: I should say that I paid for
a report from parliament to go out to my constituents. I live
in my constituency and, as an ad hoc test, it was never
delivered to my address.
Q138 Mr Williams: They know you are a
lost cause. As one who regards with great disquiet the move towards
ubiquitous postal voting, because to my mind the capacity for
fraud and electoral corruption there is massive, in those areas
where wide-scale postal voting was allowed, did you come across
any disproportionate number of complaints in relation to the volume
sent out? Did you pick up many complaints?
Mr McGregor: No. We were aware
that there were complaints. These were directed towards the Electoral
Commission, whose role it is to assess the pros and cons of postal
balloting. We only received two or three complaints about the
lateness and volume of the mail going through. The actual substance
of the issue was that where issues were raised, they have been
dealt with by the Electoral Commission.
Q139 Chairman: We should like to have
a list by category of complaint for each of the energy suppliers.
Is that possible?
Mr Asher: Certainly. [6]
Chairman: Gentlemen, thank you very much.
We wish you well in your efforts, Mr Asher, in naming and shaming.
We wish you well, Mr McGregor, in naming and shaming the Royal
Mail and others. Thank you very much.
4 Ev 18 Back
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