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have regard to...such principles as...the...generally accepted principles of best practice.
Of course, that is welcome, but, to my mind, it does not really go far enough. Effective internal complaint handling is central to the aims of the Bill. It should be a prerequisite of redress scheme membership and that should be included in the Bill. Redress schemes are being provided to catch the worst failings of their member companies, but it must be preferable for the redress schemes to be proactive about preventing failures in the first place.
Our third area of disquiet concerns the independence of the new national consumer council. The Government have said that they want the new NCC to be independent and for the relationship between the NCC and the Government to be transparent and accountable. That is a proper aim, but I fear that the text of the Bill reveals a rather different approach. Clauses 17 to 19 concern reports and advice that the NCC may produce on consumer matters. In each of the circumstances described in the Bill, there is discretion as to whether the reports are made publicly available. When the NCC itself determines that the report shall be produced, it has the discretion to publish. However, when the Government ask the NCC to report on specific matters, it is the Secretary of State who chooses whether the public ever get to see what the NCC has to say. This is a serious matter of public accountability and of transparency for the consumer. The NCC will receive public funding, but the reports that it provides to the Government are not necessarilyso it seemsto be made available to the taxpayers who fund them.
We believe that all reports produced by the NCC should automatically be made available to the public. That need not raise a cost issue, as has been claimed, because the documents could simply be made available on the NCCs website. A Minister in another place, arguing against that suggestion, claimed that not all such reports would be of interest to consumers. However, I fail to see how reports from a public body set up to look after consumers interests would not be
of interest and relevant to consumers. Work that one out, Madam Deputy Speaker. I cannot and I do not know who can.
It seems that the Government wish to use the NCC for their own purposes, or at least that could be the perception. The fact that the NCC will not have the right to publish its own reports goes to the heart of the question whether the relationship between the Government and the NCC is sufficiently transparent. On this side of the House, we believe that it is essential that all such reports are published to ensure that the NCC is genuinely independent. For years, the NCC has been funded by the Government but has been unhindered in choosing for itself the focus of the work it undertakes and then reporting on that as it wished. I hope that the Secretary of State will agree that this is a better way to continue in the interests of empowered consumers.
Our fourth, and perhaps most serious, area of concern relates to estate agents. For the vast majority of people, buying a house is the single largest financial commitment they ever make. It is therefore right that the Government have sought to tackle the problem of rogue estate agents. We welcome the steps taken in the Bill to ensure that estate agents are members of an approved redress scheme and to give more powers to the Office of Fair Trading to take action, where appropriate, against estate agents. We are concerned, however, that in both those regards, the provisions do not cover all house sales. The Minister referred to this matter a moment ago, but we will have to explore it further in Committee. The Government cannot hide behind the supposed complications that follow amending an existing piece of legislation. It seems a grave omission that new homes sold directly by the developer and houses bought and sold off-plan are not covered. After all, that still involves the purchase of a house. It seems illogical that the Government should take a positive step regarding estate agents and yet not extend the same provisions to cover all house sales.
I am also worried that the penalties set for estate agents will be too low. For example, the penalty for not joining a redress scheme will be only £1,000I think that the amount was raised from £500 to £1,000 in another place. However, given that the average fee charged by estate agents is approximately three times that£3,000the penalty does not seem an adequate deterrent. We thus intend to table amendments in Committee that would raise the penalties for that and other rogue practices up to even £10,000.
The third flaw in this part of the Bill, and the probably single biggest omission in the Bill, is the lack of any reference to the lettings and residential property management markets. There has been rapid growth in that sector over recent years. Indeed, since the Estate Agents Act 1979 was passed, the proportion of the housing stock that is let has increased by a third. Letting not only accounts for a significant proportion of the housing market, but provides a sizeable chunk of the work undertaken by businesses that would call themselves estate agents. That alone should be reason enough for lettings and residential property management work to be included in the definition of estate agency. However, if we add in the fact that consumers in the lettings market are likely to be less able than others to
afford professional advice and advocacy, it becomes all the more important that protection should be afforded to them.
In another place, the Government argued that fully updating the 1979 Act so that it would to cover lettings and residential property management would be too complex. Despite what the Minister for Trade said in his speech, we still find that totally and utterly unconvincing. The Government further argued that the Office of Fair Trading report on the estate agency market did not cover lettingsthe Minister referred to that today. That was, of course, the Governments omission, and I hope they will not in this House rely on that same omission as a justification for disadvantaging a whole group of consumers.
The redress scheme model that is at the heart of the Bill is a simple enough idea and it is a good one. Conservative Members see no reason at all why the Government could not extend the areas of work covered by redress schemes to include lettings and residential property management. That would be a step in the right direction, but we would urge the Government to go further. They could, and should, use the Bill to update the 1979 Act so that it would cover lettings and, more generally, to make it better reflect a property market that has changed a great deal in the past 28 years. The House might not get an opportunity to examine estate agency again for another 28 years, so surely this is the right time to act.
Although the Bill is somewhat flimsy, it is not a bad Bill, and there are aims in it that are to be commended, especially the provision of a basic redress scheme for home buyers. Our concerns are about the strength and independence of the new national consumer council and the regulation of estate agents in all their activities. In Committee, we will table amendments to ensure that the NCC is free to publish its reports, to increase the penalties for rogue estate agents, and to extend protection to all house purchases, including those bought off-plan, and the lettings market. In the spirit of what we have seen this afternoon, I hope that the Government will work constructively with us on those issues so that we can make a little more of this well-intentioned Bill. As it stands, the Government risk missing a golden opportunity to modernise the 1979 Act and to bring better protection to home buyers and tenants. The Bill should also give more power, protection and representation to consumers, especially those in vulnerable groups, so my colleagues and I look forward to working with the Government to achieve that.
Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): I hope that the hon. Member for Rutland and Melton (Alan Duncan) will forgive me if I do not follow up in detail everything that he said. I was slightly surprised, given his Scottish surname, that he seemed to have great difficulty understanding something that we understood perfectly: the accent of my right hon. Friend the Minister for Trade, who showed wisdom and good judgment as he made his speech. In case my right hon. Friend gets a wee bit worried, I have some questions to ask before I finish my speech.
The main thrust of both the Bill and my right hon. Friends speech to outline the Governments objectives
is extremely welcome. As my right hon. Friend pointed out, some parts of the Bill do not apply to Scotlandfor example, we deal differently with estate agents and some would say we had the wisdom not to privatise waterso I hope that I shall be forgiven for dealing only with those parts of the Bill that I genuinely believe are important to my constituents.
I welcome the fact that the Bill is designed to streamline consumer advocacy. As my remarks will demonstrate, I want to see more consumer advocacy. I also welcome the creation of a body working on behalf of consumers that will have the teeth to stand up to suppliers across the industries covered by the Bill and, indeed, to Governments when it takes the view that that is necessary. However, it seems to me vital to ensure that the responsibilities now carried out by organisations such as Postwatch and Energywatch are not lost along the wayan important point made by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith).
In particular, I shall deal [ Interruption.]not with telecommunications, which seem to be playing a part in our debate, but with the energy industry. The House will understand the reasons why. My constituents have strong views on what has been happeningor not happeningrecently to gas and electricity prices. My Lanarkshire colleagues and I have been pursuing these matters since last June, because we are genuinely concerned. Wholesale prices have been falling, but the consumer is not getting the benefit. Some changes have occurred in recent weeks, but they do not go far enough. My interest in the Bill is centred mainly on whether, given the problems in the energy sector in particular, consumers have the protection that I believe they are entitled to expect and that this House might be expected to endorse. I worry that customers are not being given a fair deal in energy and, to be honest, I am looking for further assurances that the Bill leaves room for customers to be made more aware of advocacy than they seem to be today.
I am particularly concerned about two areas: first, the system for dealing with complaints when they are made and as quickly as possible after they are made; and, secondly, the collation of information on the standards of companies responses to complaints. My understandingif it is wrong, I am sure that the Minister for Consumer Affairs and Competition Policy, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), will correct me is that responsibility for handling complaints, which are currently dealt with fairly comprehensively by Energywatch, will be split between the new NCC, an expanded Consumer Direct helpline and a new focus on suppliers dealing with complaints effectively themselves. I welcome the greater efficiency that that will bring, but I believe that loopholes remain that need to be tightened up; the debate today and in Committee will give us the opportunity to do that. Later, I shall return to the concept of suppliers regulating their complaints system themselves, but my main worry is that certain types of complaint will fall between the posts of Consumer Direct and the new council.
We Members of Parliament all receive representations; we seek to deal with them ourselves, if we can, and then we try to get the help that we think ought to be provided by the bodies that we are
discussing today. Although many people outside the House support the Governments objectives, as I do, they, like me, have questions. As I think hon. Members are aware, Help the Aged gave an example of a particular case to which we can all relate. An elderly lady found that she had a very large bill; clearly, there had been a mistake, and it was not her fault. She contacted Energywatch, which was able to help. As I understand it, under the new system, no one could offer that help immediately, as Energywatch was able to do. The lady was so worried that she was prepared to pay and deal with the problems later, but she would probably have had even greater problems if she had tried to get a solution on her own. That is the kind of issue that the Minister for Consumer Affairs and Competition Policy will want to take on board; I know that he is as committed to consumers as all other hon. Members involved in the debate are.
The Bills huge benefit is that it makes more provision for the new NCC to deal with vulnerable consumers. That is a comprehensive description of many people who have genuine problems, including people with disabilities. People who, for various reasons, are unable to express themselves may find themselves with problems, and they are entitled to the help that society wants to provide.
On a positive note, I welcome the provisions on disconnections. The cases of which I have been made aware have been, without exception, absolutely repugnant, and I am glad that there is a drive by the Government to make sure that the problem is reduced considerably, if not removed altogether. It is important that Consumer Direct staff have the necessary training to identify and deal tactfully with vulnerable customers, as existing organisations clearly do. That is a key area, and the expertise built up by staff and existing organisations must not simply be lost along the way.
Peter Luff: The right hon. Gentleman makes an important point. He discussed the issue of overcharging by a supplier; he is correct that, in the list in clause 13, there is no provision that the new NCC can apply to deal with overcharging, and I am surprised by that. Furthermore, the clause deals exclusively with electricity and gas, but some of the most worrying cases in my constituency have involved overcharging for water. There is no provision at all in the Bill that covers the special issues relating to water supply. He puts his finger on an important point, and I hope that the Minister will address his concerns in detail when he winds up.
Mr. Clarke: I welcome that intervention. Later, I hope to discuss Ofgem, because there are many lessons to be learned. I will give my reasons for saying that at the appropriate time. The hon. Gentleman undoubtedly has a point, and when we had a debate on the same issue in Westminster Hall a few weeks ago, that point was rightly raised several times.
I am concerned that the new NCC will not have sufficient resources to deal with all the cases involving vulnerable consumers that emerge, and I would like reassurance on that point. Will the new NCC have the capability to help all those who genuinely fall into that
category? Some estimate that people in that category account for about 21,000 cases a year.
Sir Robert Smith: The right hon. Gentleman made an important point about vulnerable customers and disconnection. The clause on disconnection requires the new body to take up the consumers case and advocate on their behalf. The clauses on vulnerable consumers enable it to do so, but do not necessarily require it to do so. If it does not have the resources, it may set a high threshold for the vulnerable customers whom it agrees to help.
Mr. Clarke: The hon. Gentleman is on to something but, as I hope to explain, I do not believe that it is enough to introduce legislation to enable public bodies to do things. They must show that they are willing to show their teeth, and I shall go on to discuss Ofgem, because I am not persuaded that that has always been the case. As citizens advice bureaux have pointed out, there should be a duty with regard to vulnerable customers, just as there is in terms of disconnections. Voluntary organisations and Help the Aged have argued for the need not just for empowerment but for clarity in legislation so that people, especially consumers, know what they are entitled to expect.
It is expected that the shortfall will be reduced or eliminated by suppliers providing better standards of complaint handling, but we are giving a great deal of weight to suppliers opinions and their commitment or otherwise. I am enormously worried that those standards have been left entirely to the regulators discretion, so we must monitor that and see how effectively the regulator usesor does not useits powers. Ofgem has made its views abundantly clear to me personallythat is not to mention all the debates that we have had, the correspondence and so onin a meeting about energy prices, in which it said that it regarded its role as one in which it was fully committed to the free market, so it was reluctant to intervene. I do not regard that as acting in consumers defencepeople expect more than that.
Mr. Jim Cunningham: I am inclined to agree with my right hon. Friend. What is the logic of having regulators who say that they cannot do anything and leave it to the free market? Why are we paying them?
Mr. Clarke: My hon. Friend, who is Member of Parliament for Coventry, South and comes from the fine town of Coatbridgemoreover, he was in the same class at school as memakes a particularly logical point, which I welcome.
Ofgems remit is a serious matter, and I know that the House agrees. In the past, wholesale prices have fallen and, again and again, consumers expected to benefit from reductions in retail prices, but that simply did not happen. Ofgem and similar bodies should be subject to a remit that includes the social effectperhaps we should deal with that in later debates. I am not sure that they take that view themselves, but how can they deliver to the consumer, if they do not bear social effects in mind? We cannot ignore those effects in our constituencies, as people come to our surgeries who are unable to meet their bills. We cannot ignore them, when we know that people with prepayment meters are asked to pay far more than the average consumer and,
indeed, ourselves. We cannot ignore those back payments, but, seemingly, the people whom we believe to be responsible say that they are powerless to deal with the problem. Lest it be thought that I am being unfair, Mr. Alistair Buchan, who was very courteous when I met him, told the House of Lords Select Committee on Regulators in February that consumer representation was Ofgems Achilles heel. I agree that that appears to be the case. If it is, we must try to put it right, and the Bill is a wonderful vehicle with which to do that.
I mentioned energy prices. Ofgem issued a statement on Hogmanaymy hon. Friend the Member for Coventry, South will explain to those who are perhaps not in tune that that is 31 Decemberthat if, after a very lengthy period, the power companies failed to pass on to consumers the reduction in wholesale prices, they might be accused of having jam on their fingers. I think the situation called for something much stronger than a statement about Jam on their fingers. There was no problem in terms of the power companies responsibility to their shareholders or to present or past executives, but where, where, where was the commitment to the consumer? No answer was given to that on Hogmanay or on new years day. Consistent with the excellent objectives of the Bill, we need to clarify that.
Peter Luff: I shall be slightly less helpful to the right hon. Gentleman this time. It is important to record that many of us feel that Ofgem does a very good job in regulating the energy sector. It understands the problems of energy companies that bought forward in the market and therefore cannot reduce prices as wholesale prices fall. I am totally confident that Ofgem has a firm grip of the situation and as those wholesale prices fall, it will ensure that prices to consumers also come down, as they are now doing.
Mr. Clarke: The hon. Gentleman is entitled to his opinion. He has put it on record and I am sure his constituents will form their view of what he said, just as my constituents will form their view on what I have said.
Given all that I have said and the fact that we have not reached agreement that the standards of complaint procedure should be written into the BillI think there is still the possibility of persuasion on thatI have little hope, unlike the hon. Gentleman, that that can be dealt with voluntarily.
Mr. Clarke: If so, why do the Opposition believe there is a need for the Bill? As my right hon. Friend the Minister said, the Labour party was elected on a mandate to seek to protect consumers and that we would not be party to rip-offs, nor will we be. Despite the questions that I have put, which I hope are seen in a positive light, I am delighted that the Government accept their responsibilities. On that, I say very well done indeed.
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