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If the Bill is to be effective, there must be a duty, rather than a power. We must publicly set out the standards that we expect where we think that that applies. If we do not do so now, I fear that the provision in the Bill for the Secretary of State to intervene will be used far sooner than expected. Then, perhaps, the proof of the pudding will be in the eating.
Without Energywatch to push and probe, I fear that standards of complaint procedure will rapidly deteriorate. Alistair Buchan intimated as much to me when I met him—that there would be a void which Ofgem can and should fill. The question is whether that would be enough. We must make sure that in the Bill Ofgem is compelled, not invited, to do so.
Another gap in the new arrangements involves the collating of evidence surrounding complaints. Energywatch has done a fine job of using its own experience and data to identify trends and solve problems. As we all acknowledge, it has made progress on disconnections, billing and so on, which would not have been identified as problems without that outside pressure. The new NCC will have the far greater power to identify problems across sectors, and I welcome that, but it will be hampered in its efforts if the data are not available to it in the first place. I spent months, as have colleagues in Lanarkshire and elsewhere, attempting to get assorted figures concerning the energy sector from companies, and indeed from Ofgem, and I can assure the House that it was no easy job. Our colleagues in Committee will therefore have to give a great deal of thought to that.
The NCC will be aided by provisions in the Bill on demanding such data. I welcome those provisions, which are absolutely essential. However, the information on a lot of relevant material is not recorded, and we must consider that as well. The Bill must include provision to demand that suppliers keep better records of customers’ complaints, and Ofgem must ensure that they are reliable and completely transparent. That is why I have made the plea to it, and regarding it, about the kind of accountability that I thought we had all taken as agreed. Some issues affected by the Bill go beyond being resolved by competition or regulation, and we must explicitly set them out now; otherwise, they will fall by the wayside, to the extreme detriment of consumers.
All that said, the Bill represents tremendous progress. The debate in another place was extremely well informed, and I have every reason to believe that the same will apply as the Bill makes its way through this House and that we can improve on its excellent objectives. If we do that, the House will be responding to the needs, the rights and, in many cases, the cries of consumers. That is our responsibility today and the reason why I am extremely pleased to say that I shall be supporting the Bill.
5.17 pm
Susan Kramer (Richmond Park) (LD):
Let me start by picking up what the Minister said at the beginning of his speech about the unfair commercial practices directive and how it will work with the Bill to create a stronger framework for consumers and consumer protection. He then did something that can be fatal, and provided a list of examples of items that he
thought would be covered by the directive. One was missing, and I would like to put it on the record. The Irish Government have interpreted aspects of the directive as an opportunity to tackle the practice of companies charging extra to people who pay by some mechanism other than direct debit, even though those people are typically the most vulnerable—for example, those who do not have bank accounts that allow them to use direct debit, or who are trying to keep very close control of their finances. I hope that the Government will take the opportunity that the directive provides, along with the Bill, and working with the new national consumer council, to take on that issue and add it to the Minister’s list.
Let me join the Minister and the hon. Member for Rutland and Melton (Alan Duncan) in congratulating the other place on its work on the Bill. I should like to mention Lord Razzall, Baroness Miller of Chilthorne Domer and Lord Lee of Trafford, who spoke for the Liberal Democrats. The Earl of Caithness, for the Conservatives, produced some interesting amendments, the most important of which, unfortunately, was not passed, but should be revisited by this House.
We all have a common goal: the better protection of consumers and better regulation of estate agencies. Much of the purpose of the Bill is to seek economies and efficiencies in delivering that protection and regulation. It is absolutely key, however, that protections are not diluted in the restructuring of the consumer watchdog agencies, and that protections for estate agencies are adequate to the task rather than directed by resource availability. Much of that work will be taken up in Committee, but let me use this opportunity to raise a few framework questions.
First, let me deal with consumer protection. We all understand that a new national consumer council will initially replace the current National Consumer Council, Postwatch and Energywatch, and that the Bill also provides for abolishing the Consumer Council for Water and the transfer of its functions.
I am not making a partisan comment when I say that, despite earlier ambitions to include rail, air, telecoms and even financial services, the body with which we are presented is much narrower than the original concept. It appears that the new body largely comprises elements associated with the Department of Trade and Industry, with water possibly joining later. The goal of one seamless structure to deal with all consumer protection remains way ahead of us. We will need to examine it in future.
Given that we do not have a single overarching body, it becomes relevant to ask questions about the individual pieces that have been identified as forming part of the new national consumer council. The Minister for Trade knows that the Consumer Council for Water was set up only in October 2005, and that its work during the last drought was driven by its ability to have a regional focus in England itself as well as throughout the UK. The new NCC structure does not necessarily accommodate that. As the hon. Member for Rutland and Melton outlined, a price review is due in 2009 and there will be consultation on the water franchise directive in December 2008.
The Minister for Trade suggested—and the hon. Member for Rutland and Melton appeared to agree with him—that a review to accelerate the inclusion of the water body might be a way round the various aspects of the timetable. If such agreement has been building between Labour and Conservative Front Benchers, I disagree with them. Surely the best resolution to the problem is delay, so as to include the Consumer Council for Water in 2011 rather than accelerating the process, given the important role that it has to play. It should engage in responding to the water franchise directive immediately, not after 2008.
Mr. McCartney: There is no collusion between Front Benchers on the matter. I gave the House a genuine insight into a meeting that I held to try to discuss the way forward. The hon. Lady’s speech is a typical Liberal Democrat response. She starts by criticising us for not including all the regulators in the Bill, but less than 30 seconds later, she criticises us for including one.
Susan Kramer: I feel strongly that delay is the best mechanism for ensuring that water is protected for the consumer. The hon. Member for Rutland and Melton appeared to be enthusiastic about the Minister’s proposal.
On timing, Postwatch comes immediately to mind. The Secretary of State for Trade and Industry will shortly provide the results of the consultation on the compulsory closure of 2,500 Post Office branches. I understand that in the other place, the Government gave assurances that the Bill provides for the new NCC to investigate any matters relating to the number and location of public post offices. However, the Bill uses the word “may” and avoids “shall”. The notion of going through a minimum of 2,500 Post Office branch closures with a consumer body that only “may” consider the matter, and is not required to do so, is discouraging. I hope that in Committee the Government will reconsider the idea of using the word “shall” instead of “may”.
The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): I am sure that the hon. Lady has examined the Bill. My right hon. Friend the Minister for Trade points out to me that clause 16, entitled “Investigations relating to public post offices”, states that “the Council may investigate”. It therefore has a role.
Susan Kramer: I repeat that the use of the word “may” is the cause of our concern, and the Minister has just confirmed that I have read the clause correctly. It is extremely important that there be representation on this issue, and I ask the Government to look at the matter again.
Alan Duncan: Perhaps I am on the Minister’s side on this question. When the clause says “may”, it means “has the power to”; therefore the council can investigate. This is not a question of the council investigating if the Minister lets it; it will be empowered to do so.
Susan Kramer: I repeat that I am concerned. It would be extremely helpful if the Minister could give me an assurance that this will not simply be a question of the council having the power to investigate.
Mr. McCartney: The reason why clause 16 is in the Bill is to give absolute certainty, because in the past, these have been grace and favour arrangements involving the Post Office. The Bill sets out the provisions with absolutely clarity for the first time, and I give the hon. Lady that assurance. That is the whole purpose of clause 16.
Susan Kramer: I thank the Minister. We are now moving forward. In the House of Lords we were unable to obtain that assurance, so I am pleased to have heard that from him today.
The Minister will also be aware that there are resources contingent on providing that scope and level of review. A devolved structure has worked for Postwatch in carrying out such a review. We have no guarantee as to how the different regions of England will find a way of being adequately represented and heard, because post office branches are a local issue. Dealing with what happens in one community, compared with another, requires a great deal of local sensitivity. It would be helpful for our constituents up and down the country if they understood how the new body will deal with that set of issues.
The turmoil among staff should not be underestimated. When a major process of sweeping post office closures on this scale is under way, it is not always clear whether the minds of the staff will always be on the task in hand, of protecting consumers. They might instead be thinking about their future, about where their office may be, or about whether to stay with the organisation or look for another job. That is a serious set of concerns, and it is an argument for a delay in bringing Postwatch into the new body.
There is also the potential for loss of expertise. We have no assurance that the people who have built up the necessary expertise in this area will not decide, perhaps even for a simple reason such as the location of their new headquarters, to move on in their careers. This is not the time for that kind of change.
Mr. McCartney: There are issues of implementation, but that is all that they are. They are not issues of principle. Surely the Liberal Democrats are not saying that they want us to remove this measure from the Bill, as that would disbar the people who use postal services in their millions from having redress if mistakes are made. That is a ludicrous position to take. It is one thing to say that we need to ensure that the implementation of the provisions is effective and that there is proper consultation—which there is; these people are part of the fortnightly and monthly meetings on the implementation strategy, as of right—but it is quite another thing to say that we should not include the measures in the Bill, leaving the users of postal services with no redress until such time as another Bill is introduced. The Liberal Democrats are adopting a nonsensical position.
Susan Kramer:
Again, I disagree with the Minister. Access to redress does not appear to be contingent on introducing all the watchdogs in phase 1. There are mechanisms to deal with this issue. I must stress that implementation matters, as the Government must surely have learned across a wide variety of public services. Yes, the policy needs to be correct, as do the
strategy and the framework, but as far as the consumer is concerned, implementation is everything.
We are talking about 2,500 post office closures, but those are just the compulsory closures. We have not yet discussed the number of voluntary closures that might take place, particularly as Government business shifts away from the Post Office, making it less attractive for quite a number of postmistresses and postmasters to continue in their business. Presumably, they will be replaced by some kind of outreach service, and there will be sets of issues around all of that. The timing is particularly awful.
Peter Luff: I want to come to the hon. Lady’s aid—partly, at least, as she seems to be being attacked from both sides of the House. If the Government were to declare now where the headquarters of the new organisation is to be—and if it were to be in London—that would give some certainty to the many Postwatch staff who are concerned about the disruption that might be caused to their personal lives, so that their expertise might be retained by the new organisation. That expertise could then be used to advise on the post office closure programme if the Government decided to proceed with rapid implementation.
Susan Kramer: I agree that the turmoil and uncertainty will make everything worse. I have been part of organisations that have undergone drastic change—I must confess that that was in the banking sector—and I know that it is unwise to underestimate the impact of such changes on both morale and performance.
Let me now raise the issue of Energywatch, which was discussed so articulately by the right hon. Member for Coatbridge, Chryston and—I hate this long constituency name! Perhaps Coatbridge will do.
Mr. Tom Clarke: My constituency is Coatbridge, Chryston and Bellshill. May I add that I should have referred earlier to Mr. Buchanan rather than to Mr. Buchan?
Susan Kramer: I thank the right hon. Gentleman. He spoke of the issues surrounding the abolition of Energywatch. In principle we can envisage its becoming part of the new body, but there are questions to be asked about timing and implementation. I agree with the right hon. Gentleman that there has been strong evidence of “sticky fingers” as energy suppliers have seen wholesale prices decline, and have delayed lowering their prices to the domestic consumer asymmetrically in terms of the point at which they raised them when wholesale prices rose.
There are questions to be asked about smart metering, and about the effectiveness of consumer switching at a time of volatile pricing. We need to discuss the key role that Energywatch has played in promoting energy efficiency and dealing with issues of sustainability at a time when we are all concerned about climate change. We need to be certain that those activities and strengths will not be lost. The Government must appreciate what a difficult period we are experiencing when introducing changes such as this.
Like the rest of my party, I strongly support the redress structures that the Bill foresees. I also support
the ombudsman system, which builds on the previous energy ombudsman system. However, the scope of redress is left largely to the discretion of the Secretary of State. There is little in the Bill about the operation of the system, and we have a number of questions to ask about issues such as the principle of multiple competitive ombudsmen. We have all observed on examination boards the preference of providers to seek the friendliest arbiter. Multiple ombudsmen pose the risk of a race to the bottom, and a race to be the most sympathetic.
What concerns me most about the transferring of watchdog bodies to the new national consumer council is the potential loss—indeed, the recognised loss—of the advocacy provided by the current system. Postwatch has had difficulty in the past—although recently it has got its act together and become something of an effective advocate—but I do not think anyone would argue that Energywatch is anything other than an effective advocate. The new council will not pursue individual investigations except in relation to a narrowly defined group of the most vulnerable people. We would like a much clearer definition of “vulnerable”—a definition of those included in that group, and preferably an expansion of the definition.
The Minister said that he wished the new body to be the lion that would roar, not the mouse that would squeak. That, too, prompts a series of concerns. As the Minister implied, for most people Consumer Direct will act simply as a traffic light system. People will telephone it, and will be given a number on which to contact, for instance, the complaints office of their energy supplier. They will pursue the matter for three months, and if they do not get anywhere they can hope for a deadlock letter from the supplier. They will then have an opportunity to fill up many forms and consult the ombudsman. The industry is undoubtedly attracted to that structure, because it hopes that many consumers will abandon the process out of frustration.
Energywatch has been diligent in pursuing the issues of the individual consumer. If we look at its record, we will see that it recovered £6.7 million in compensation and bill reductions for domestic consumers in 2005 and 2006. The average award for a domestic consumer with a billing complaint—that accounts for two thirds of complaints—was £168. That is serious money. It had in-depth contact with over 220,000 consumers, and 62,000 complaints merited detailed investigation with the energy companies because they could not be easily resolved. It reduced disconnections of vulnerable customers from 26,000 four years ago to 3,000 today, which is remarkable.
I have personal experience of many of the difficulties of dealing with the utilities. As you will know, Madam Deputy Speaker, I am quite recently widowed. I have had to change the name on many of my utility accounts. I have also moved. When I mention those factors to the energy suppliers, and we meet them when they are out lobbying, they immediately turn very pale and the standard response is, “Oh, my God.” Trying to deal with the customer service arm of many of those utilities is dire. If I had not been working on this speech over the weekend, I would have been trying to compare quite a number of bills; I think that I am being sent
them for the wrong property. Over and over again, I have talked to one consumer after another—and this is a difficult and complex process.
I note, for example, that, in late 2005 British Gas migrated millions of its customers to a new account and billing system. There were significant problems, and Energywatch received over 6,000 complaints in just six months. To this day, customers are still having the same problems with British Gas, including not being able to get through to the call centre. British Gas has said that it will not reach “business as usual” until mid-2007. However, it was kind enough to provide a briefing on the Bill. It is delighted with the new structure because it
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