Clause
13
Investigation
of complaints relating to disconnection of gas or
electricity
Lorely
Burt:
I beg to move amendment No. 49, in
clause 13, page 8, line 3, after
‘transporter’, insert
‘, or there appears to the
Council to be a reasonable probability of such a threat being
made’.
The
Chairman:
With this it will be convenient to discuss the
following amendments:
No. 50, in
clause 13, page 8, line 9, after
‘supplier’, insert
‘, or there appears to the
Council to be a reasonable probability of such a threat being
made’.
No. 51,
in
clause 13, page 8, line 18, after
‘holder’, insert
‘, or there appears to the
Council to be a reasonable probability of such a threat being
made’.
Lorely
Burt:
With these amendments, we seek to extend the powers
where the council feels that there is a reasonable possibility of a
threat of disconnection being made. They are probing amendments, in
that we want to ascertain from the Minister what constitutesa
threat, bearing in mind that the process of disconnection can be quite
long. If one receives a letter saying that one may be disconnected if
the bill is not paid following a missed payment, does that constitute a
threat? A lot of utility companies use low-level threats early on in
the process, which can lead to a great deal of emotional distress to
the many vulnerable—dare I say
it?—customers who often receive such threats. By vulnerable I
mean elderly people and people whoare used to a
straightforward relationship with the company to which they make their
bill payments, who can receive a letter threatening to disconnect them
if the matter is not resolved. The companies can start to issue threats
at an early stage. I should like to know the stage at which the
Minister feels that the reasonable probability of disconnection
constitutes a threat to the individual.
Mr.
McCartney:
Amendments Nos. 49 to 51 would change the scope
of the new council’s duty to investigate disconnection or the
threat of disconnection of a consumer’s gas or electricity
supply, to cover the circumstances in which there would be a reasonable
probability that a threat to disconnect would be made. What constitutes
a threat? That varies from supplier to supplier. Some mention
disconnection at a very early stage; some do so at a very late stage
and allow the consumer to build up a considerable backlog of debt. It
is important that the new council should use its discretion on the
issue to ensure a security of supply in almost all circumstances.
Without that, other problems will arise. It is important that those who
deal with such complaints do so with regard to the
circumstances.
I
shall give an example of something that regularly happens to me as a
constituency MP. Someone makes contact and says that they are being
threatened with disconnection. First, how do they know that they have
been threatened? Have they received a notice? What form does the threat
take? They say, “Well, I haven’t paid my bill.”
There needs to be more than that. There has to be a linkage; if there
is not, all that will happen is a huge paper chase. We have to use
advocates who are specifically able to deal with people who are
vulnerable to disconnection or a threat to disconnect. Such
advocates’ resources and time should be usedto secure
an arrangement that gives effect to the continuation of supply for the
vulnerable consumer.
The amendments are not needed.
A threat to disconnect is already covered in clause 13(1), which
obliges the council to investigate a complaint to decide on the
appropriate action to avoid disconnection, when appropriate. The
amendments would place an undue burden on the council, which would have
to assess in the case of each complaint whether there was a reasonable
probability of a threat to disconnect. No risk assessment would have to
be made; no evidence would have to be provided—only someone
making contact and saying, “I may be at risk.” That would
take up a disproportionate amount of time, which would, as I said, be
more usefully employed in investigating complaints about actual or
threatened disconnection on the basis of evidence that such a thing
existed under clause 13(1).
If vulnerable consumers were
fearful that a threat to disconnect might have been made, they would be
covered by the provisions in clause 12, which empowers the new council
to investigate any matter concerning gas, electricity, postal
services—and, in future, water—when the consumer is
vulnerable. Accepting the amendments would offer no benefits to general
consumers. The hon. Member for Solihull tabled them—the phrase
“belt and braces” comes to mind—to ensure that in
all circumstances, irrespective of any
evidence, the NCC should put resources at the disposal of the person
concerned. I do not agree with that; that is not the role of an
advocacy body.
For
example, if someone simply made contact with the supplier and said,
“I have had a phone call telling me that you are going to
disconnect.” How many calls would have to be made, and what
proportion would state that disconnection was going to take place? The
relevant NCC advocate may have to deal with 50or 60 actual
disconnections; I should rather they concentrated on them than on those
who have no evidence whatever other than a concern or fear. I do not
criticise people with concerns or fears but there needs to be an
ability in the system to make a proper risk assessment and use the
resources effectively, particularly for those who are under threat of
disconnection and require advocacy to make sure that it does not
happen.
Stephen
Pound:
My right hon. Friend makes a telling point about
how a bill could build up. I consider British Gas to lead the market on
the ethical approach. Typically, it takes 140 days to disconnect
following non-payment. It writes an average of 10 letters; as a result,
the total number of gas customers disconnected by British Gas in 2006
was three. The system exists, and surely the NCC should oversee that,
rather than, as my right hon. Friend so strongly said, provide a belt
and braces
system.
Mr.
McCartney:
My hon. Friend is absolutely right and makes an
excellent point. As I said at the outset, the whole purpose is to
change the culture of the organisations that provide the goods and
services. That is a preventive strategy. The more preventive our
strategy is, the less need there is for resources for
intervention.
6.30 pm
Intervention is a sign of
failure. It is important that the providers—in this instance
energy suppliers—have an effective process for engaging with
their vulnerable consumers. If a consumer, vulnerable or otherwise,
gets into difficulties with the payment for their supply, a
decision-making process in the organisation’s ethos should help
to prevent disconnection. The skills, knowledge and experience are
needed within the organisation to act and advocate on behalf of the
consumer on that basis. Only when that fails should the NCC be brought
into play. It should not be the first and only port of call. After a
year of the system operating in that way, we would end up with far more
disconnections. The hon. Lady’s intentions are good, but the
reality is that the amendment would act against vulnerable consumers,
rather than for
them.
Lorely
Burt:
I am grateful to the Minister for his clarification
and to the hon. Member for Ealing, North, who cited examples of good
practice. If procedures are carried out in a caring and effective way,
disconnection should rarely need to take place. I hope that other
utility companies will take note and adopt the practices that he
described.
The
purpose of the amendments is to understand just what the Government
mean by a threat to disconnect and to know at what stage the NCC would
intervene in proceedings. I am not entirely sure that I
am any clearer on that. If the Minister wants to come back to me again,
I should be grateful. Nevertheless, he made a fair point and was very
reasonable. I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Susan
Kramer:
I beg to move amendment No. 52, in
clause 13, page 9, line 22, after
‘payment’, insert ‘,
or
‘(iii) A failure of an
authorised supplier to recalibrate a repayment meter at the
consumer’s premises within one month of any change in tariffs
charged by that supplier for supply of gas or
electricity.’.
This
amendment attempts to address the failure of some power companies to
recalibrate pre-payment meters in a timely way, thereby forcing an
exceedingly onerous debt on to the individual who has been the innocent
victim of the delay in recalibration. Most people who choose to have a
pre-payment meter do so because they are on a pretty low income and are
determined to manage their money sensibly. They want to know where
their pennies are going and how much is being spent on heating, cooking
and so on, and they are careful not to exceed their budget.
In the past year, individuals
on very low incomes have found that, because of delays in
recalibration, they face debts of £400 or
£600—amounts that are completely beyond their means. Most
people who are on token meters are on incomes of less than
£10,000 a year. Even the smallest debt is therefore extremely
burdensome. We have also discussed these issues in Westminster Hall,
and it is clear from my discussions with Energywatch that people on
pre-payment meters probably pay around £180 more a year for the
privilege of giving a risk-free pre-payment to an electricity company,
compared with someone who might be on a direct debit scheme. These
people already carry a high
burden.
We are also
aware that the utility companies could deal with the problem in one
fell swoop by switching over to smart metering. However, there have
been such delays in instigating that sort of programme
thatthey frequently have to go door to door to recalibrate
meters.
Some utility
companies are responsible for how they handle recalibration: if there
are delays, they do not force the charge to fall on the individual
consumer. We should congratulate Scottish and Southern Energy and EDF
Energy on such matters. British Gas has recently changed its scheme, so
that it no longer charges back payments to people who would, in effect,
owe money because of a deferment in the recalibration. However,
Scottish Power, npower and Powergen continue with their systems of back
charges. We have crafted an amendment to hang a threat over those
companies that still take what I consider to be an entirely socially
unacceptable position, although I must admit that we are trying to
shoehorn it into the
Bill.
We are working
into the disconnection language a new paragraph (iii) that would treat
as a disconnection a
failure
“of an
authorised supplier to recalibrate a repayment meter at the
consumer’s premises within one month of any change in tariffs
charged by that supplier for supply of gas or
electricity.”
One month might sound a fairly cruel
timetable, but frankly, the companies have been behaving in a cruel
manner. Since they have not, through exhortation, changed their
practice, it will take threat for them to do so, and the Bill looks
like the perfect opportunity to introduce
it.
Mr.
Clarke:
I have no great desire to delay the Committee
unduly, but the hon. Lady referred tothe debate in Westminster
Hall that I initiated. Incidentally, by moving the amendment, she is
doing a great service to those who suffer from the problems that were
raised at the time, although I look forward to hearing the response of
my right hon. Friend the Minister.
As the hon. Lady has done, it
is important to register the fact that the problem is extremely
serious. I am not convinced that Ofgem has such powers or, if it has,
is willing to use them when inevitably the poorest people who are
obliged to use pre-payment meters are placed in the position in which
they suffer from the decision of companies that refuse to pass on the
reductions in wholesale prices by way of reducing retail prices
overa lengthy period, thus putting consumers at a big
disadvantage. If those consumers happen to be people on pre-payment
meters and are subjected to back payments, it is wholly
unacceptable.
I am
sure that my right hon. Friend the Minister agrees that the problem
must be put right. The hon. Member for Richmond Park mentioned several
companies such as Scottish Power. We who represent Lanarkshire
constituencies wrote to all the companies, including Scottish Power, on
this and other issues. The response was a long letter that we took to
mean that such matters were none of our business. A week or so after we
received it, Scottish Power, having ensured that its shareholders had
the benefits of the reductions in wholesale prices, decided to sell out
to the Spaniards, and where were the consumers, including those that
the amendment would
cover?
I met Ofgem.
It knew that I was not satisfied with the response. Given the robust
nature of the Minister’s contributions this afternoon, I shall
leave the sitting with far greater hope that such issues are being
dealt with. Consumers, particularly those who experience enormous
difficulty because of gas and electricity prices to the extent that the
amendment addresses, will consider that there is a body that sees its
responsibility not simply as a supplier to companies, but one that
feels an obligation to them. I am sure that, if we agree by the end of
our sitting to insist that those responsible for advocating and
defending the rights of consumers should show that they have teeth and
are prepared to use them, the Minister will respond in that
light.
Stephen
Pound:
Like many people, I find myself being seduced by
the hon. Member for Richmond Park—intellectually, I hasten to
add; she is a woman of taste as well as intellect. However, she has
conflated two issues, the first of which is the weighting of the tariff
on pre-payment charges. That is undoubtedly an injustice, and there can
be no more powerful advocate against it than my right hon. Friend the
Member for Coatbridge, Chryston and Bellshill. However, she
suggests—it is implicit in the amendment—not the
abolition of pre-payment but recalibration within a
fixed time, which she referred to as being cruel. The problem is that
every company would like to have its systems recalibrated. All modern
meters are capable of remote updating, and that is what people want.
However, not everyone who uses a pre-payment system is on his uppers.
Some people with second homes find it a convenient way to
pay.
The chief issue
is practicality. If we in the House were to say, “Something
shall be done within four weeks,” we might feel a warm glow of
satisfaction that we had achieved something. However, what would it
mean in practice? In most cases, entry warrants would have to be issued
by magistrates courts up and down the country. I do not know what it is
like in your constituency, Mr. Weir, but I know some parts
of Scotland. The distant but ’n bens on the borders
ofthe berry fields are probably hard to get to. In my
constituency, we are not always over-welcoming to those who call in the
tower blocks at the dead of night. [Interruption.] They might be
Liberal Democrat canvassers. One cannot be too careful nowadays.
Ultimately, recalibration will be resolved by technology; remote
updating is happening. It is not practical to say that we must provide
new meters across the nation within a month.
I entirely agree with the hon.
Lady—something I would always prefer to do—about good and
bad practice. She referred to British Gas. I do not think that any of
us has a financial interest in British Gas except, as in my case, as an
extremely satisfied consumer. However, its announcement last year that
it would not recover any underpayments identified as a result of
recalibration was an extraordinarily generous and ethical step to take.
It should be congratulated on that.
I urge my right hon.
Friend the Minister—although it is against his nature, because
he is a warm and welcoming person and a man who believes in the henotic
qualities of office—to resist the amendment, not because of its
spirit, as it flows from a warm heart, but because of its sheer
impracticality. It would be impossible in most constituencies for every
consumer to allow access for recalibration—there are millions of
them. Ofgem has accepted that point. We have not been terribly kind to
it, but it should be given credit when that is due, and it has said
that it would prefer to see a system under which the utility suppliers
use
“all reasonable
steps to ensure that the meter is reset within a reasonable time after
a price change.”
There will not be a problem in
future thanks to remote updating, but for the moment, the
practicalities make the amendment impossible to sustain. I hope,
reluctant though he will undoubtedly be, that my right hon. Friend the
Minister will resist the warm blandishments of the hon. Member for
Richmond Park on this occasion, though perhaps not onevery
one.
The
Chairman:
I have to inform the hon. Gentleman that his but
’n bens are under gas supply.
Mr.
McCartney:
My hon. Friend the Member for Ealing, North
could be described as the original gas man, given how he has tried to
position himself.
In
respect of the hon. Member for Solihull and my right hon. Friend the
Member for Coatbridge,
Chryston and Bellshill, we are discussing a number of issues, all of
which are important. One is whether or not people with a pre-payment
meter should be disadvantaged, when people such as myself—I have
arrangements to pay both here in London and in my
constituency—can get a reduction in cost by paying in advance.
The amendment is about the recalibration of pre-payment meters and
whether that should be a role for the NCC in all
circumstances. 6.45
pm
It is critical
in structures dealing with consumer issues that the responsibility
should lie in appropriate places. The appropriate place for this issue
is with Ofgem, the regulator. Ofgem has completed its consultation on
proposed licence changes for timely recalibration. The consultation
ended on 2 March, and I am advised that Ofgem will be publishing its
proposals later this month.
To avoid interfering in
Ofgem’s administrative affairs, and given the strength of
feeling in today’s discussion, my officials or I will approach
Ofgem to seek certainty about whether the proposal will be announced
before the end of the Committee’s proceedings. If so, it might
be helpful for Committee members to have those proposals before them. I
cannot guarantee it, nor am I putting any pressure on Ofgem, but given
the nature of today’s debate and its consequences on discussion
of the clause, it might well be appropriate. I will do that tomorrow,
or my officials will do it on my behalf. Using Ofgem is the right way
forward, rather than adding to the list of complaints that the new
council must investigate. It will mean that the cause of the problem is
being tackled directly, as it should be, by the
regulator.
The second
and more general issue is about fairness and individual
companies’ attitude to pre-payment meters. The new council will
be able to consider whether further action is required on pre-payment
meters because we are giving it general powers of investigation under
clause 11 that will permit it to carry out full investigations. It will
be appropriate in some areas for the NCC to investigate and make
recommendations, and we should separate those from the
regulator’s obligations. The council will also have powers under
clause 8 to represent consumer interests. Clause 10 will provide for
information to consumers. The Bill is about putting all the building
blocks together.
In
light of my explanations, I hope that the hon. Lady will withdraw the
amendment. We have provided the certainty that we will await
Ofgem’s proposals and see whether they will be in the public
domain beforethe end of this Committee’s proceedings,
as well as assurances that within the contexts of clauses 8, 10 and 11,
the new NCC will have the capacity to consider general issues of
complaints about pre-payment meters. I hope that that addresses the
complaints on behalf of which my right hon. Friend the Member for
Coatbridge, Chryston and Bellshill has so readily, enthusiastically and
capably been advocating for a considerable time
now.
Mr.
Clarke:
I am grateful to my right hon. Friend. That is
immensely helpful. Will he do me one further favour? I understand that
he will be in Scotland on
Thursday. He might have the opportunity to inform BBC Scotland that the
initiative arose from this Parliament and that it therefore might not
feel the need to interview loose Members of another
establishment.
Mr.
McCartney:
I shall not be in Scotland on Thursday. Much as
I would like to be Scotland on Thursday, I shall be in another part of
the United Kingdom. I shall be in Wigan and in my constituency to deal
with a family issue and to attend an event as a Member of Parliament. I
apologise to the Committee for that, and I also apologise to my hon.
Friend for not being in bonnie Scotland, but his point is well made.
Scotland has benefited twice in the Bill today, first, from the overall
general direction of the NCC in representing Scottish consumers and,
secondly, from the capacity to devolve to Scotland the ability to have
an advocacy body on a day-to-day basis to represent particular aspects
of Scottish consumer issues. This Government have delivered that with
the tacit support, obviously, of the Liberal
Democrats. The Conservatives have now ended their
isolation—[ Interruption.]
The
Chairman:
Order. I think the Minister is straying away
from the
amendment.
Mr.
McCartney:
I wondered how long it would take you to
object, Mr. Weir, but I
apologise.
This is
unfair to a colleague in the Committee, because he is neutral for these
purposes and not political. I will not withdraw my remarks, but will
bring them to a conclusion. I will not even say, “Vote Labour in
the Scottish
elections.”
With
the assurances that I have
given—
Mrs.
Hodgson:
Is my right hon. Friend aware that one of the
problems with pre-payment meters, especially for those on low incomes,
is that if they are recalibrated late people are often
self-disconnected because of debts that have built up through no fault
of their own? I agree with my hon. Friend the Member for
Ealing, North that a month may be too short, and
when it is extended, people may be self-disconnected. Although the
number of those who are cut off is now very low, the number who are
self-disconnected could be
immeasurable.
Mr.
McCartney:
Yes, I understand what my hon. Friend is
saying, and I am sure that Ofgem has taken that into account in its
consultation. I can only repeat that I hope that the hon. Lady will
withdraw her amendment and that before the Committee completes its
deliberations Ofgem’s recommendations will be in the public
domain.
Susan
Kramer:
No one knows more about these issues than the
right hon. Member for Coatbridge and his Westminster Hall debate
highlighted them at a critical time. Energywatch played an important
role in ensuring that the facts about pre-payment and the debts that
resulted from delayed calibration got into the public
arena.
Mr.
Clarke:
I am grateful to the hon. Lady for her reference
to me, and I endorse what she said about Energywatch.
As a matter of interest, my
constituency is Coatbridge, Chryston and Bellshill. I am sure that the
Committee would want to reflect on the fact that those in Bellshill
rejoice in the knowledge that it is the birthplace of Matt Busby, Billy
McNeill and one of our most distinguished parliamentarians, the late
Robin
Cook.
Susan
Kramer:
How can I forget a place that has such a character
connected with it?
I
want to make the point that Energywatch played a key role in ensuring
that the facts were drawn to public attention and that they were a
major issue. I suspect that that was a key reason for Ofgem, which had
looked the other way for some time while the problems were boiling and
bubbling, finally taking the matter on board. I am delighted to hear
that there is a possibility that we will have advance notice of
Ofgem’s conclusions in time to be able to incorporate them into
the Committee’s thinking and
process.
I recognise
that we were attempting to shoehorn in an amendment that is perhaps not
entirely appropriate to this part of the Bill or its character, but it
has had an important result, and I seriously appreciate
that.
Mr.
Wallace:
On a point of order, Mr. Weir. When we
were discussing clause 8 and amendments Nos. 44 to 46, the Minister
rather cruelly indicated that my lack of knowledge of non-ministerial
departments was demonstrated by the fact that I was trying to
saythat Ministers of the Crown were answerable forall
Government Departments, which the Minister disputed. I have managed to
get from the Cabinet its published list of non-ministerial departments.
There are 19 at the moment, but there might be more, although the
Assets Recovery Agency has been abolished. Interestingly
enough—the Committee might like to know this—one of the
non-ministerial departments, UK Trade and Investment, belongs to the
Minister himself and is directly answerable to this House through his
office. All non-ministerial departments are answerable to Parliament
through a Minister of the Crown. Therefore, given that the Minister is
not returning on Thursday, would he like to take this opportunity to
reflect on his comments and his reasoning as to why there was a need to
include all Government Departments in clause
8?
The
Chairman:
Order. This is not really a point of
order—it is an attempt to re-open the debate that we had
earlier. We will move on.
Susan
Kramer:
I beg to ask leave to withdraw the
amendment.
Amendment,
by leave, withdrawn.
Further
consideration adjourned.—[Steve
McCabe.]
Adjourned
accordingly at four minutes to Seven o’clock till Thursday 19
April at Nine
o’clock
.
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