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“The Council may, by notice, require a person within subsection (3) to supply it with such information as is specified or described in the notice within such reasonable period as is so specified.”
Subsection (9) states that a “designated regulator” means
“the Gas and Electricity Markets Authority... the Postal Services Commission... the Water Services Regulation Authority... or other person prescribed by the Secretary of State by order”.
I would have thought that some of the biggest issues brought to the proposed national consumer council are likely to be about rail fares, which are a matter of great controversy. I would like the Bill to give the National Consumer Council the confidence that it can expect the information to which it has a right to come from
whatever body is responsible in the new railway environment—the Department for Transport, the train-operating companies or whatever. It would be good to see such a provision fleshed out in Committee to ensure that issues of concern to consumers are fully addressed by the new national consumer council.
I happen to think that there is a case for change in the system of regulation as well as consumer protection. It is an interesting question—though I am not advocating it at present—to ask whether the postal regulator, Postcomm, should merge with the communications regulator, Ofcom. When a company is looking into what medium it wants to use to promote its services, it considers a range of options, including direct mail marketing, internet and television advertising, printed media advertising and across the whole spectrum.
More than 90 per cent. of our post in the UK is now business post; only about 7 per cent. is stamped, with letters passing to and from individuals. There is a case for change, but we have to be very careful when we change something, because people get used to systems. They think they know how it works and suddenly the system is abandoned. As far as I can recall, Postcomm was set up only in the Postal Services Act 2000, so it is quite a new organisation. It had a bit of a bumpy start and many would say that it did not do a very good job to begin with, but it has now become very effective. Yet precisely at the moment it becomes effective, it is all change again. I shall deal in more detail later with the impact of the round of post office closures.
I worry about change. I have been in the House for 15 years, during which time I have seen the health service change, change, change and change again in a great circle. It has come back roughly to where it began when I joined the House 15 years ago, with the same system of structures back in place. It is all very well for the experts who are part of the health sector, as they are able to understand the details, but for the poor individual constituent—never mind the Member of Parliament trying to keep up with it all—it poses a real challenge. I am nervous about changing the structure of regulation, as it might actually disempower rather than empower consumers, as they may have a lesser understanding—at least in the interim—of the systems put in place allegedly to protect them.
We have an enormous array of watchdogs and ombudsmen, and the Bill does only a very limited amount of tidying up. We have the parliamentary ombudsman, various sector-specific ombudsmen, the Office of Fair Trading, the Financial Services Authority, Consumer Direct, the trading standards departments of our county councils and unitary authorities—the list goes on and on. The Bill will provide some greater coherence to the system, but not a great deal more. I am worried that in many ways we are not doing enough to rationalise the system. Much will depend on the effectiveness of Consumer Direct.
I would like to deal with two specific issues in greater detail—energy and postal services. The Select Committee on Trade and Industry produced its third report of this Session on 6 March and it included some words of warning on Postwatch in the light of the Bill. It said:
“We understand that the likely timescale for the integration of Postwatch within this new single organisation is around mid-2008. Given the organisation’s role in the consultation process it would be unfortunate if this major reorganisation were to occur in the middle of the restructuring programme”—
the restructuring of post offices. It offers a recommendation for the Secretary of State, stating:
“We welcome the fact that the Secretary of State is ‘reflecting upon’ the likely timetable for the moving of Postwatch’s functions into the proposed single consumer body, and urge him to reflect quickly in order to prevent unnecessary uncertainty within Postwatch”—
a point also made by the hon. Member for Richmond Park and by my hon. Friend the Member for Rutland and Melton.
I am very apprehensive indeed about the timing. The National Consumer Council’s answer is to make more rapid progress with the merger of the bodies to create the certainty. That may be another way forward, but I am clear that the uncertainty that is inevitably being suffered by experienced individuals in Postwatch is not good when we face a very important round of post office closures with very significant consequences for deprived communities—urban and rural alike—over the next 18 or so months. I would like to hear more in the Minister’s reply about the Government’s view of the impact on Postwatch of the changes in the Bill.
I repeat what I said in an earlier intervention—that I do not think Postwatch handled the urban reinvention programme terribly well and that I do not think that Post Office Counters handled the programme terribly well either. The lessons have been learned and we now have an organisation that can genuinely help achieve the right balance in the closures, yet it is suddenly thrown into the maximum possible degree of uncertainty at precisely the time when its expertise is most needed. I am considerably concerned about that.
There is also the question of reliance on an ombudsman service for aggrieved consumers and I intervened on the Minister for Trade in his opening remarks to make a point about it. We already have an energy ombudsman in place, up and running alongside the telecommunications ombudsman, run by the same company. I spoke to a charming gentleman in the corporate affairs department today. I apologise publicly for mistaking his accent as a Yorkshire one when it was a Lancashire one—a pretty serious crime—but I was impressed by what he told me about the working of the telecommunications and energy services regulator. As far as I am aware, there is still no postal services regulator in place, so it seems worrying that we are talking about abolishing the Postwatch function and putting more responsibility back on the mail companies to provide redress for consumers. There is no ultimate redress, so a move on the timing of the establishment of a postal services ombudsman would be welcome.
Clause 12, which deals with the complaints of vulnerable consumers, relates to both the postal services and energy services aspects of the Bill. It is an important issue. The new national consumers council is empowered to act in the interests of vulnerable customers and defines what they are. The clause gives the new council the ultimate jurisdiction over what constitutes vulnerability. As far as I can recall, it is a test of the reasonableness of expecting the individual
to take forward the complaint him or herself. On the face of it, that seems a reasonable provision, but who will decide whether the NCC has made the right judgment? If it is not particularly long on resources, as I expect it will not be—like the Minister and the Chancellor of the Exchequer, I am in favour of the efficient operation of public services—I fear that there will be real pressure to giving the benefit of the doubt always to not taking forward the complaint. We will need to know how we can challenge the NCC’s decision not to take forward a complaint on behalf of a vulnerable consumer.
I briefly mentioned the question of location in an earlier intervention, so I will not labour that point. However, I repeat my view that if the people working for the various bodies affected by the Bill can have an early indication of where the new headquarters will be, they will be able to make a much more informed judgment about the impact on their personal lives and we will be much more likely to maximise our access to their services.
The Government have strongly emphasised the need to create a
“stronger, cross-sectoral consumer advocacy body to address consumer issues that frequently arise across sectors of the economy.”
However, they also talk about the need to make sure that they have access to expertise. It will be good to hear exactly how that expertise will be protected within the new reformed system and, if it is going to be protected so robustly, what was the point of destroying the old bodies that offered that expertise in the first place? I am not saying that it is wrong to do so; I am just saying that the idea needs to be tested a little more thoroughly than it has been so far.
I repeat the point I made earlier about Postwatch having improved significantly. The review carried out in March 2006 by PricewaterhouseCoopers said that the body had been effective in being assertive in challenging the Royal Mail Group, as a monopolistic supplier, which it is. The Royal Mail has some interesting ideas on the stocks at present—for example, zonal pricing for business users of mail—that raise fundamental questions about the universal service obligation and so on. Competition is now beginning to develop in the postal services sector, with the Government playing their part in taking business away from the Royal Mail Group. For example, the Department for Work and Pensions has taken its business and put it with a competitor to the Royal Mail Group. There are now big issues in the postal market, and I am not saying that that is wrong. Competition is a good thing. However, it seems a little worrying to be doing away with Postwatch and risking losing its expertise at precisely this moment.
I think that Members will have received a brief from WWAV Rapp Collins, which claims—I have no reason to dispute its claim—that it is
“Europe’s largest direct marketing services provider and creates marketing campaigns using all media including direct mail”.
It boasts that its clients include
“the NSPCC, WWF, Cancer Research UK, Guide Dogs for the Blind, Unicef, Plan UK and the Blue Cross.”
WWAV Rapp Collins has big concerns about the proposal for zonal pricing. It says:
“Fundamentally, there has never been a greater need for an organisation with the expertise and authority of PostWatch. It will be to the severe detriment of all users of mail if it disappears into a watered down umbrella organisation.”
This is a difficult and challenging time to be abolishing Postwatch.
Sir Robert Smith: The hon. Gentleman makes an important point about the impact of zonal pricing. Although he is right that most of the Royal Mail’s customers will now be businesses, the recipients of those businesses’ services are the individual constituents who live in our communities. They need to be able to receive that mail as well.
Peter Luff: The hon. Gentleman’s intervention speaks for itself. I obviously agree with him. I think that 93 per cent. of all postal services are now provided for businesses and only 7 per cent. for others. He is right. The post ends up going through the post boxes of ordinary people who want a decent service and it is important that that service is protected properly and effectively. I am sure that the Minister will try to reassure me on that when he replies.
On Energywatch, the NCC rightly says:
“Energy is a lifeline service for consumers; if a problem cannot be quickly rectified the consequences can be very serious.
An essential part of the policy objective behind the Bill is to give companies more responsibility for handling complaints.”
It then makes an important and interesting point when it adds:
“Unless the regulators see complaint handling as central to their role, this overall strategy will fail. Part of the failure of regulation in these sectors is that regulators have not viewed complaints-handling as a priority. If this is to be remedied, regulators should have an obligation to exercise this role.”
“There is a risk that Consumer Direct, the new NCC and the ombudsman scheme will be overrun with higher-than-expected complaint volumes if this issue is not addressed.”
I said earlier that I support the Bill’s objective. It is sound intellectually, but there is the awkward problem of the interregnum and the changeover period—getting from a very desirable A to the even more desirable B of effectively dealing with complaints. I place the remarks in the context of a concern I have. I said earlier that the most effective protection that the consumer can have is competition and the ability to choose which company or organisation supplies them with services. I actually think that the energy market is becoming less competitive, and that concerns me. We are seeing increasing vertical integration in the hands of a small number of foreign owners in the energy sector. The good work being done by the European Commission to open the European energy market—I welcome it unreservedly, even though it is a little belated—may mean that it starts to cast a rather sceptical eye over the British energy market. It is much more integrated than it used to be, with adverse consequences for competition.
There is an independent energy supplier in my constituency and it has provided me with chapter-and-verse explanations of how it finds it difficult to get into the market. It has real concerns about the way in which Ofgem regulates the market. It points out that the failure of the big energy companies to bring in smart
metering is a failure of competition in the marketplace. The consumer would be empowered if he or she had smart meters in their home to see exactly what is happening to their energy consumption. If the market were truly competitive, the energy supply companies would be falling over themselves to provide us with that information and so offer us a better service, but they are not doing that. They are actually looking to the Government for handouts to introduce the scheme. It should not be like that. An empowered consumer should have a smart meter. The absence of smart metering is an indication of the declining competitiveness of the energy market.
The NCC will face important challenges in dealing with regulation and dealing with complaints from consumers. As we migrate from the current system, in which Energywatch has a big role, to a different system in which the companies will expect to have a bigger role and the ombudsman takes on the difficult cases, there is a risk that consumers’ real concerns could become stranded. The Bill deals with issues relating to disconnection, and rightly so, but many customers face problems with large bills—a point helpfully made by the right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke). I am not convinced that the proposed system will mean in the short term that their problems can be addressed.
The three-month delay is the crucial point. It takes a lot of bloody-mindedness to pursue an energy company for three months before one goes to the ombudsman. I have had a run-in with BT over the past few days, and it has driven me to distraction. It takes a lot of bloody-mindedness, and sometimes vulnerable people who need help will not necessarily have the skills and the determination to pursue an issue for three months and then take it to the ombudsman. I am genuinely concerned about that point.
One specific concern I have about the new national consumer council is that I understand that it will not have access to information on the nature of the complaints and issues raised with Consumer Direct. That may well curtail its ability to hold organisations, such as energy suppliers and other big organisations, fully to account on their consumer practices.
I raised the question of “Quis custodiet ipsos custodies?” Who is guarding the guards? What happens if we are unhappy with the NCC? However, there is one organisation that has not featured much in the debate—the Office of Fair Trading, which is an important part of the consumer protection framework. I am experiencing declining confidence in some of the bodies that are out there to help me represent the interests of my constituents. I think, for example, of the parliamentary ombudsman. I do not know what has happened there, but I sense that the organisation is perhaps overrun with complaints because of the maladministration of things such as tax credits. Heavens knows, there are enough such complaints. Perhaps there might be a loss of will to take on the complaints of constituents following the debacle over pensions when the Government eventually dismissed—although the decision has since been overturned by the courts—the ombudsman’s findings.
There are also concerns about the way in which the Office of Fair Trading works. I noticed a recent report
headlined “Over-active OFT is going OTT in its hunt for scalps”, and I note that the banking sector has expressed its concern about its regulation. The Sunday Telegraph reports:
“Bank lending is regulated by the Financial Services Authority (FSA), the Office of Fair Trading (OFT) the Banking Ombudsman, the Banking Codes Standards Board and also the courts via individual credit agreements. The BBA”—
the British Bankers Association—
“believes the overlaps leave banks unsure which rules to follow.”
Last year, the OFT announced that it would drop between five and 10 of its current investigations under new criteria designed to reduce its work load. That followed criticism from the National Audit Office about the slow speed of investigations, the way cases are selected and a perceived lack of transparency. Against the backdrop, too, of the consumer concerns that are addressed in the Bill, I thought that the House and the Minister might like to know that the Trade and Industry Committee has decided to launch an inquiry into the OFT to see how effectively it is doing its job. It is a chance for the critics to put up or shut up and for the OFT to prove its case.
James Duddridge: I am sure that that inquiry will be gratefully received. Can my hon. Friend give me an indication of the time scale for evidence being given to that inquiry?
Peter Luff: We have not issued the press release yet, but it will go out very shortly and my announcement in the House may put some pressure on the Committee to make sure that it does. My guess is that we will look for evidence some time towards the end of April, with hearings probably in early May. We regard this area as an important part of consumer protection that has not received enough scrutiny recently. I hope that the House will welcome our decision to conduct the inquiry.
I have spoken for quite long enough. This is an important Bill and I welcome the spirit of what it tries to do. My caveats and cautions are genuinely intended in the spirit of helpfulness. The House should embrace quite warmly the philosophy underlying the Bill, but there are important questions relating to the transition to the new environment and I hope that the Minister will be able to address those when he replies to the debate later.
6.21 pm
Laura Moffatt (Crawley) (Lab): Thank you, Mr. Deputy Speaker, for calling me to speak in this important debate. I hope to make a short contribution to what is widely seen as an excellent Bill that addresses many of the issues that face consumers. After several decades, this is our opportunity to do that. I know that the general public very much welcome what is happening.
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