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6.50 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): Today’s debate is best described as short but surprisingly insightful; in that respect, it reminds me of the Minister for Trade. We have heard a number of contributions from Members on both sides of the House. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) not only tested our ability to name his constituency but highlighted some of his concerns about the way in which the jigsaw will be put together. The hon. Member for Richmond Park (Susan Kramer) spoke of a common purpose. I confess that I was a little confused to hear her first suggest that more organisations should be involved in the Bill, and then ask why Postwatch and Energywatch were
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included. However, she went on to reiterate our concerns about the need to modernise the Estate Agents Act 1979.

The hon. Member for Brighton, Kemptown (Dr. Turner), who is sadly not in the Chamber at the moment— [Interruption.] I beg his pardon for having missed him; he has moved from left to right, which is always a welcome direction. He highlighted the need for the Minister to reconsider the issue of positive licensing, and he rightly discussed whether residential lettings should come within the scope of the legislation. We then heard an excellent and comprehensive contribution from my hon. Friend the Member for Mid-Worcestershire (Peter Luff), who is of course the Chairman of the Select Committee on Trade and Industry. He put us all in our place, perhaps teasingly, by reminding us just how much we are trusted by the public—about as much as estate agents and journalists. He stressed that the debate should be about practice, not principle, and he raised a number of particularly good points about the remit, and the cost and quality of services, including railway services. I hope that the Under-Secretary of State for Trade and Industry, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick) will respond to those points.

We then heard a contribution from the hon. Member for Crawley (Laura Moffatt), who has consulted her local estate agents; I noticed that they would like the Government to go further in part 3. An excellent, albeit concise, contribution was made by my hon. Friend the Member for Rochford and Southend, East (James Duddridge). He rightly concentrated not on mechanisms, but on the point of view of individual consumers, and the effect that complaints and difficulties of the kind that we have discussed often have on them, particularly those in vulnerable communities. The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith)—there have been a range of interesting Scottish constituency names tonight—rightly highlighted the current post office closures. He also mentioned the confusion in the energy market about billing, and about whether the market is operating effectively.

Last but by no means least, we heard the excellent contribution by my hon. Friend the Member for Northampton, South (Mr. Binley). He raised several important points on behalf of his constituents, but he also raised concerns on behalf of small businesses, and he was absolutely right to do so. If I may say so without embarrassing him, he has experience in that field, and speaks with a passion on the subject, and I always find it enlightening to listen to his contribution. I am grateful to him and other right hon. and hon. Members for their contributions.

At the beginning of the debate, my hon. Friend the Member for Rutland and Melton (Alan Duncan) confirmed that although we have reservations about the Bill, we endorse the Government’s aims and many of the measures in the legislation. As the Minister of State mentioned, pressure sales tactics are still catching people out. As a result, it is becoming increasingly clear that people need the same rights in respect of cancelling contracts that result from solicited sales visits as those that they have in relation to unsolicited visits. The current distinction is being exploited by the unscrupulous. Although I always begin from the
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principle of caveat emptor—buyer beware—in this instance, the evidence justifies a change in the law.

We have significant reservations about certain aspects of the Bill and about how the legislation will work in practice. As the debate has shown, there are concerns about the planned merger of watchdogs, the future handling of complaints, and how transparent and effective the new regime may prove to be in practice. There is a strong sense that the Bill is a missed opportunity, to use the words of the hon. Member for Brighton, Kemptown, especially in relation to the regulation of estate agents. I shall address that point further in due course.

As hon. Members have said, the first part of the Bill seeks to merge Energywatch, Postwatch and, in time, the Consumer Council for Water, into a new statutory national consumer council. The Minister of State told us at the beginning of the debate that the Government’s purpose is to streamline and strengthen consumer advocacy—a perfectly reasonable aim—but the Government have yet to prove that the new arrangement will strengthen the voice of the consumer. It could well do so, if the merger is implemented effectively and efficiently, but sadly the Government have a pretty dreadful record on merging public bodies. For example, on health care, in my county alone, the Government have merged and remerged strategic health authorities three times in five years, wasting tens of millions of pounds.

As my hon. Friend the Member for Rochford and Southend, East said, sometimes we have to fix the problem, not simply rearrange the deckchairs. Given that, and given the points raised by my hon. Friend the Member for Mid-Worcestershire, the Under-Secretary needs to show us, both here and in Committee, that sector-specific skills and experience in postal, energy and water services will not be lost in any merger, or during any transition. In particular, in view of the cuts that the Government are forcing on to the post office network, we will seek a cast-iron guarantee that the abolition of Postwatch will not mean a diminution of public representation at this crucial time. As the Under-Secretary is directly and personally responsible for Royal Mail, his reply to that point needs to be clear and unequivocal.

Prior to this debate, serious concern was expressed by the water industry about the inclusion of the Consumer Council for Water in the new organisation, a move that many think premature. Indeed, several Members have echoed that concern today, not least because of the impending price review for water companies. We are encouraged to hear that the Minister of State recognises the problem and is considering constructive proposals for adjusting the merger timetable. We are happy to engage in open and positive debate on whether that should be achieved by bringing forward the price review, or by pushing the merger back, and we approach the subject with an open mind. There has certainly been no collusion, contrary to what the hon. Member for Richmond Park might assume. The reality is that we try to take a positive approach and to have an open mind on the subject.

On part 2 of the Bill, which concerns redress schemes, I should first say that we were pleased that the Government accepted amendments from Conservative
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peers in the other place. The amendments have improved the legislation; for example, complaints by gas consumers will now be investigated prior to any disconnection of supply, and not afterwards, as is the case at present. That change will resolve a long-standing grievance of many consumers. We want that constructive approach to the Bill to continue in the Commons.

My hon. Friend the Member for Rutland and Melton pointed out that there is a clear need to improve companies’ internal complaints handling. As he said, the Government’s wish to improve redress schemes should be matched by good internal complaints procedures. World-class businesses already ensure that, because they recognise the benefit for them and their customers. In the other place, the Government were willing to make only a small concession on that point, in clause 49; yet as we have heard today, there is a good case for effective complaint handling to be a pre-requisite of redress scheme membership. I hope that the Under-Secretary is prepared to reconsider the issue, both in his reply and in Committee.

Today’s debate highlighted an important concern about the relationship between the National Consumer Council and Whitehall. The existing council has, to date, enjoyed an arm’s length relationship with the Government, and that has enabled it to develop a reputation for objectivity and a certain independent authority. That detached position is vital if consumer representation is to remain effective within Whitehall. The arrangement set out in the Bill may reduce that independence. Members on both sides of the House raised questions about the new financial arrangements and the lack of transparency in the NCC’s proposed research and advocacy functions. If a new, larger council is to retain its objectivity, it is essential that it remain, and is seen to remain, detached from undue ministerial influence. I therefore urge the Under-Secretary to address that issue directly in his reply, and to set out clearly the nature of the proposed relationship, particularly between the Secretary of State and the new council.

In his opening speech, the Minister of State spoke about the need to crack down on rogue estate agents. Sadly—and this does not bring me any comfort— the truth is that the Government have failed to match their rhetoric with action. While we welcome the measures to require estate agents to belong to an approved redress scheme, as well as the minor increase in powers for the Office of Fair Trading, that is as far as the Government are prepared to go. For many people, including the public and estate agents, those changes are inadequate. While most agents are competent and professional, a notable minority have been able to trade in an unacceptable manner. Sometimes it is a question of ethics, but sometimes it is a question of competence. For example, a Which? magazine investigation in 2005 showed that estate agency valuations may vary wildly, sometimes by up to £125,000. On some occasions, agents deliberately withheld or misrepresented offers. As a result, according to the Consumers Association, 70 per cent. of people think estate agents frequently give misleading information about properties.

Part of the legislative problem is that the original law dates back over 28 years. The Government’s amendments to the Estate Agents Act 1979 merely tinker at the edges, and an overhaul is needed. We are
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therefore calling for the 1979 Act to be modernised by the Bill, and for a significant increase in the maximum fine to deter rogue agents. First, the definition of estate agency work must be extended. It should include recent trends such as off-plan sales and direct sales by house builders, which were rare in 1979 but are now commonplace, and are not covered by the law. Secondly, residential lettings must be incorporated into the regulations. Estate agencies, as we have heard, handle millions of such lettings and, according to the National Association of Estate Agents, problems with lettings are one of the main sources of complaints made against its members and against agents generally. As the Bill stands, that activity would not be covered, to the bemusement of millions of our constituents. At the beginning of the debate, the Minister of State spoke about a committee and a review, but he did not give a commitment to legislate. We shall therefore seek to press amendments to correct that omission, and I hope that we can work on a cross-party basis to improve the legislation. Those changes and the increase in fines will help home buyers, and assist the industry in cleaning up its act. Given that it is 28 years since the last piece of legislation in this area, I hope that we will not have to wait a similar period before we introduce new laws. However, I want to work with the Ministers to make sure that we achieve a positive outcome.

There are many provisions in the Bill that will indeed help consumers in the utilities and residential property markets. While the Opposition have concerns about the practicalities, we have a long-standing commitment to the principle of informed consumer choice and effective advocacy, so we wish to improve the Bill, not to damage it. The Ministers enjoy the rough and tumble of party political banter, and so do I, but sometimes it is a distraction. All too often, it is used as an excuse for pushing legislation through the House unimproved. On this occasion, Members on both sides of the House have a genuine opportunity to scrutinise, amend and improve the Bill so that it will have a lasting impact on millions of consumers and house buyers. That collaborative approach will not please the press, who always love a row, but if Ministers are prepared to consider amendments on their merits, we are prepared to engage in proper parliamentary scrutiny of the Bill, which will not only be good for consumers, but will reflect well on the House.

7.4 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): We have had a wide-ranging, useful debate, and I have listened with great interest to contributions from Members on both sides of the House. I am grateful to them, and I will do my best to respond, although we will have the opportunity to examine many of the issues that were raised more thoroughly in Committee.

I welcome the tone of the debate, as almost all the contributions were supportive and were designed to clarify certain points or suggest improvements to the Bill. I hope that I can clarify some of the matters that were raised, and I am confident that we can improve the Bill even further in Committee—a point just made by the hon. Member for Hertford and Stortford
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(Mr. Prisk), to whom I am grateful. I do not intend to repeat the eloquent and comprehensive reasoning for the Bill’s introduction articulated by my right hon. Friend the Minister of State, who opened the debate, but I will try to address the matters raised by right hon. and hon. Members.

The hon. Member for Mid-Worcestershire (Peter Luff), who chairs the Select Committee on Trade and Industry, and the hon. Member for Rutland and Melton (Alan Duncan) asked about the name of the new body, which is a fundamental issue. The Bill provides for the new body to be given the formal statutory title of “National Consumer Council”. The phrase “Consumer Voice” has been used to describe the overall arrangements, including the new national consumer council, the new redress schemes and the generic powers enabling regulators to prescribe complaint-handling standards. The hon. Member for Mid-Worcestershire asked about redress schemes, which were also raised by the hon. Member for Richmond Park (Susan Kramer). He asked whether a postal services redress scheme would be introduced. The current energy redress scheme is not statutory, and covers only 80 per cent. of complaints. The new statutory energy redress scheme should cover the full range of complaints, so it will be an improvement. A new postal redress scheme will be set up, and we expect that to happen within 12 months of Royal Assent.

The hon. Member for Rutland and Melton asked about the retention of sectoral expertise—a matter raised by several right hon. and hon. Members. I shall come on to that issue. However, it is our objective to retain sectoral expertise as part of the implementation programme involving the consumer bodies themselves. The Bill provides a specific function for the new council to investigate post office closures in clause 16. That function, currently given to Postwatch, will be preserved in the transition to the new body. The hon. Gentleman asked whether it was a cost-cutting exercise but, as he will know, the Government are not saving any money as a result of the arrangements. The savings will be enjoyed by the energy and postal services industries and, ultimately, the consumer.

Sir Robert Smith: Will the Minister give way?

Jim Fitzpatrick: Yes, but the House is keen to proceed to other urgent business, so I urge the hon. Gentleman to be brief.

Sir Robert Smith: The Minister discussed the transition from Postwatch to the new body. What timetable does he envisage for that transfer? Unless he has good news for us, the closure programme proposed by the Government will soon take place.

Jim Fitzpatrick: We will discuss the detail in Committee, but obviously, we want to deal with that as expeditiously as possible.

The hon. Member for Rutland and Melton asked whether penalty charges should be higher. In the other place, the Government accepted an amendment to double the maximum penalty charge from £500 to £1,000 in response to concerns about the level of the charge. A penalty charge is an on-the-spot fine without any opportunity for estate agents to put their case to an independent adjudicator, so a high penalty charge
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would not be fair. Ultimately, estate agents can lose their livelihood if they are banned by the OFT for not belonging to a redress scheme. The hon. Gentleman asked whether the Bill covered letting agents, as did other right hon. and hon. Members. As my right hon. Friend the Minister of State explained, the evidence base for the Bill’s provisions is the 2004 OFT report on the estate agency market. Estate agents are governed primarily by the Estate Agents Act 1979, which does not cover letting agents. The Bill amends that Act, so its provisions do not apply to letting agents. The tenancy deposit schemes due to be introduced in April 2007 under the Housing Act 2004 will offer greater protection to people who are at unfair risk of losing their deposits—one of the main sources of consumer detriment in the lettings market—but I acknowledge the point made by the hon. Member for Hertford and Stortford, that amendments may well be tabled in Committee. We look forward to debating them.

The hon. Member for Rutland and Melton, who led for the Opposition, expressed concern about the publication of reports, a point also raised by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). Although we envisage that the Secretary of State will generally wish to publish a report requested by him from the new NCC, the discretion given by clause 18 not to publish is necessary to deal with particular circumstances, such as when the report contains information that is commercially confidential or price-sensitive. Such information might be necessary to support the recommendations in the report.

A requirement for the Secretary of State to publish every report requested by him might have a deterrent effect on external experts, industry or other stakeholders, who might be reluctant to provide information or advice because it might be disclosed. That could inhibit the provision of useful or important information to aid the preparation of the report by the new NCC, to the detriment of the quality of the final report and the subsequent advice provided by the Secretary of State. I hope that that deals with the sceptical comment by the hon. Member for West Aberdeenshire and Kincardine.

The hon. Member for Rutland and Melton said that regulators should have a duty to prescribe complaint-handling standards. The position that we have adopted is to give regulators the power to make regulations to prescribe complaint-handling standards that would be binding on regulated providers. We took this approach because we believe that sectoral regulators are best placed to take a view on what is appropriate and necessary within their own sectors. The matter was raised in the other place, and we recognise that this is an important issue. No doubt we will return to it in Committee.

My hon. Friend the Member for Aberdeen, South (Miss Begg) asked about the unfair commercial practices directive and whether that would catch sales tactics where the trader does not mention prices. To clarify my right hon. Friend the Minister of State’s earlier point, the unfair commercial practices directive will introduce a general duty for a trader not to treat the consumer unfairly. It will also ban outright certain types of unfair commercial practice, such as aggressive doorstep selling.

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The hon. Member for Richmond Park raised a similar point when she asked whether the Government would use the measure to tackle companies that charge consumers more if they do not use direct debits. The terms in the contract with the consumer that allow the charge to be imposed could be assessed for fairness under the consumer regulations imposed by the Office of Fair Trading, so it is not necessary for the unfair commercial practices directive to require that.

The hon. Member for Mid-Worcestershire and my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) asked about the NCC, and about the fact that it did not have a specific function to look at overpricing in energy and water. The new NCC will be able to examine any market in which it identifies significant consumer detriment. That might include prices in the energy or water sector, although the new NCC must recognise the existence of other consumer bodies, such as the Consumer Council for Water, when exercising its function.

My right hon. Friend also asked about complaints that might in future be split between the new national consumer council and Consumer Direct. The first port of call will be Consumer Direct, which can refer consumers to the supplier, or to the redress scheme if the supplier has not resolved the problem to the satisfaction of the consumer. The redress scheme will be able to resolve a complaint and award compensation, where warranted. Energywatch does not have powers to do that.

The new NCC will be able to support vulnerable consumers through the process—a question raised by the hon. Members for West Aberdeenshire and Kincardine and for Mid-Worcestershire. The understanding of what constitutes vulnerability is developing all the time and will no doubt become better informed in future. The Bill therefore leaves it to the new council to assist those whom it judges to be unable to progress complaints by themselves. In those circumstances, it would not be sensible to make it a duty.

Sir Robert Smith: As a secondary point, what happens if there is a dispute between the consumer and the council about whether the consumer is vulnerable? Is there any means of adjudicating, or does the council have absolute power to reject someone, with no possibility of appeal?

Jim Fitzpatrick: The hon. Gentleman raises a fair and sensible point. If he will allow us, we will deal with it in detail in Committee, to give him the clarity and reassurance that he, quite reasonably, seeks.

The hon. Member for Richmond Park asked why Ofcom and financial services consumer panels were not included. The consultation in early 2006 in respect of Ofcom and financial services asked for views on the inclusion of the financial services consumer panel and the Ofcom consumer panel in the new arrangements. The majority of responses to the consultation agreed that the role of those panels was different from those of statutory consumer bodies, as they were primarily regulator-facing and designed to advise the regulator on the consumer interest in developing policy, with no direct consumer-facing role or role in handling complaints. Both roles, however, were considered to be important, and both will be retained under the new arrangements.

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