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(3) The authority must arrange for the list, or a copy of it, to be available for inspection by the public.
(4) In this section “appropriate authority” means—
(a) in relation to England and Wales and Northern Ireland, the Secretary of State;
(b) in relation to Scotland, the Scottish Ministers.”
20A In section 19(1) (special cover for licensee’s liability), for “section 3(5)” substitute “section 3(11)”.20B For section 22 (reporting of and inquiries into dangerous occurrences) substitute—
“22 Reporting of and inquiries into dangerous occurrences
(1) The provisions of this section apply where any prescribed occurrence happens—
(b) in the course of the carriage of nuclear matter on behalf of any person where a duty with respect to that carriage is imposed on that person by section 7, 10 or 11 of this Act.
(2) The licensee or other person mentioned in subsection (1) must ensure that the occurrence is reported without delay in the prescribed manner—
(a) to the appropriate national authority, and
(b) to such other persons, if any, as may be prescribed in relation to occurrences of that kind.
(3) A person who is required by virtue of subsection (2) to report an occurrence and who fails to do so is guilty of an offence.
(4) A person convicted of an offence under subsection (3) in England and Wales or Scotland is liable—
(a) on conviction on indictment to imprisonment for a term not exceeding 2 years, or a fine, or both;
(b) on summary conviction to imprisonment for a term not exceeding 12 months, or a fine (in England and Wales) or a fine not exceeding £20,000 (in Scotland), or both.
(5) A person convicted of an offence under subsection (3) in Northern Ireland is liable on summary conviction to imprisonment for a term not exceeding 3 months, or a fine not exceeding level 3 on the standard scale, or both.
(6) In relation to an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (general limit on magistrates’ court’s power to imprison), the reference to 12 months in subsection (4)(b), as it has effect in England and Wales, is to be read as a reference to 6 months.
(7) Before exercising any function under subsection (1) or (2) in or as regards Scotland, the Secretary of State must consult the Scottish Ministers.
(8) Subsections (9) to (11) have effect only in relation to a prescribed occurrence which happens in Northern Ireland.
(a) may direct an inspector to make a special report with respect to the occurrence, and
(b) may cause any such report, or so much of it as it is not in the Secretary of State’s opinion inconsistent with the interests of national security to disclose, to be made public at such time and in such manner as the Secretary of State considers appropriate.
(10) The Secretary of State may direct an inquiry to be held into the occurrence and its causes, circumstances and effects.
(11) Any such inquiry must be held—
(a) in accordance with the provisions of Schedule 2 to this Act, and
(b) in public, except where or to the extent that it appears to the Secretary of State expedient in the interests of national security to direct otherwise.”.’.
Amendment 92, page 171, line 35, leave out ‘or Wales’.
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Amendment 93, page 171, line 40, at end insert—
(a) in the case of a site in Wales, the Natural Resources Body for Wales;’.
Amendment 144, page 172, line 1, leave out sub-paragraph (3) and insert—
‘( ) Omit the definition of “inspector”.
( ) In the definition of “nuclear site licence” for “section 1(1)” substitute “section 1(2)”.’.
Amendment 145, page 172, leave out line 10 and insert—
‘( ) In the definition of “period of responsibility” for “section 5(3)” substitute “section 5(14)”.
24 In section 27 (Northern Ireland) omit paragraphs (b) and (c) of subsection (1).’.
Amendment 146, page 172, line 13, at end insert—
25A (1) Schedule 2 is amended as follows.
(1) In paragraph 1 for “section 22(5)” substitute “section 22(10)”.
(2) In paragraphs 1, 2, 5 and 6, for “the Minister” in each place where it appears substitute “the Secretary of State”.
(a) for “or, in Scotland, the Court of Session, and the High Court or Court of Session” substitute “and the High Court”;
(b) omit “or, as the case may be, the Court of Session”.
(5) For the title substitute “Inquiries under section 22(10) relating to occurrences in Northern Ireland”.
Consequential repeals and revocations
25B In consequence of the amendments made by paragraphs 16 to 25A, the provisions listed in the following Table are repealed or revoked to the extent specified—
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Amendment 147, page 172, line 22, leave out ‘not exceeding £20,000,’ and insert
‘(in England and Wales) or a fine not exceeding £20,000 (in Scotland or Northern Ireland),’.—(Michael Fallon.)
Consumer redress orders
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I beg to move amendment 2, page 192, line 9, leave out subsection (4).
Madam Deputy Speaker (Dawn Primarolo): With this it will be convenient to discuss the following:
Amendment 3, page 192, line 18, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 4, page 192, line 24, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 5, page 198, line 31, leave out subsection (4).
Amendment 6, page 198, line 40, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 7, page 198, line 46, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Luciana Berger: Forgive me for the delay in getting to my feet, Madam Deputy Speaker. I was expecting the Minister to go first—I am so used to coming after him.
Amendments 2, 3 and 4 to part 1 of schedule 14 relate to gas customers. Amendments 5, 6 and 7 to part 2 cover electricity consumers. We are proposing these changes for a simple reason: we need to do everything we can to protect consumers who lose out when energy suppliers break the rules. I sincerely hope that Members on both sides of the House agree about that. My right hon. Friend the shadow Energy Secretary called for a system to guarantee compensation to customers who have been ripped off as far back as October 2011, which is a year and a half ago now, so it is nice to see that the Government are finally following our advice and doing something to give redress to consumers.
8 pm
We therefore welcome the fact that the Bill gives Ofgem powers to compel energy companies to award compensation. At present the regulator can only try to negotiate voluntary agreements with suppliers. We have
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seen in the past that they do not always deliver the best deal for people who have lost out through no fault of their own. It is good that this wrong is being corrected. However, these new powers do not go far enough.
There are two important aspects of the Bill that need to be addressed. First, it places an arbitrary cap on the amount of compensation that can be paid to customers who have been treated unfairly. Secondly, it contains a crucial loophole.
Mr Weir: On the arbitrary cap, I agree with what the hon. Lady has been saying, but it seems to me that the amendment would mean that a company faced unlimited liability for any consumer redress order that affected more than a single consumer, which could have serious implications, for instance for investment in any infrastructure that might be required. Will she address that point?
Luciana Berger: I am expecting to hear from the Government about that, and I intend to address the point later. After I have done so, I will be happy to respond to any further questions the hon. Gentleman might have.
As I was saying, the Bill also contains a crucial loophole. The new powers would not apply to current Ofgem investigations. That is why we raised concerns in Committee, and it is why we have brought back amendments addressing the point on Report. Before I address the specific issues, let me remind the Minister why this will matter a great deal to households across the country.
Over the last few years there have been far too many cases of people being mistreated or misled by their energy providers. In April last year EDF agreed to pay £4.5 million after an investigation found it had been mis-selling to customers, and in April this year SSE was given a record fine of £10.5 million for running a sales process where people were given information that simply was not true. There are other ongoing investigations into practices at E.ON, npower and ScottishPower, and overall Ofgem is currently carrying out 15 formal investigations into potential malpractice by energy suppliers. Its enforcement team is also informally reviewing an additional 12 cases.
That is why we agree that schedule 14 represents a step in the right direction. It gives the regulator the power to order companies to compensate customers who have been misled about their energy deal and tariffs and the arrangements by which they are put on those tariffs.
None of those ongoing investigations will be covered by the new powers now being introduced, however. That means that any company found guilty of wrongdoing in any inquiry that begins or concludes today, tomorrow, next week, next month or at any time before this Bill receives Royal Assent will escape the new penalties all together. Also, if in future the regulator finds that there have been other failings by suppliers that took place before the Bill became law, those companies will avoid sanction as well.
I wonder how the Minister can think that that is right. How will it be fair to consumers who have suffered bad practice by their suppliers that they are not to receive due compensation? Amendments 2 and 5 would close this loophole and make all energy firms that break
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the rules fully accountable both to their customers and the regulator. I hope the Minister will agree that that is the right thing to do and support these changes.
John Robertson: Does my hon. Friend agree that we have also not used the current rules properly? The fines that have been imposed of late do not even go back to the people who pay the bills. Does she agree that we should be looking to compensate the people who pay the bills, rather than give that money to the Treasury?
Luciana Berger: My hon. Friend raises an important point. Currently, the fines that are being raised are going into the Treasury, and many questions have been asked about where that money should go.
If the Minister does not support our amendments, will he tell us what indication he has had from Ofgem as to how many of its current 15 formal investigations will conclude before these new powers are introduced, and how many consumers could miss out on compensation as a result?
Following the discussions we had in Committee, I suspect the Minister might argue that we are proposing retrospective legislation. Let me be very clear about why that is not the case. These amendments do not alter any of the regulations energy companies currently need to abide by. That is the crucial point. We are not seeking to penalise companies for something that was not against the rules at the time. Our proposals would simply ensure that customers whose providers are found to have broken the rules receive appropriate compensation, including for investigations that fall before the Bill receives Royal Assent. I hope the Minister will bear that in mind and support this change.
Turning to our other amendments, we seek to enshrine an important point of principle in the new powers: that customers who have been treated unfairly can, and always should be, fully compensated. As it is currently drafted, schedule 14 places a limit on compensation to 10% of an energy company’s annual turnover. I ask the Minister to explain what would happen if the losses suffered by customers were greater than that. How was that arbitrary figure reached—and why not 11% or 15%?
John Robertson: Can my hon. Friend clarify what she means by turnover, as factors such as the central pot and whether generation is included as well make a big difference?
Luciana Berger: My hon. Friend raises a point we on the Opposition Benches have raised many times before about the challenges we face with our very opaque energy market, where we do not know the true cost of our energy and many of our generators are also our suppliers. We will wait for the secondary legislation to hear exactly what the Government mean by that term, but it is fair to say that we are dealing a lot in this Bill with a broken market, and it is a shame that the Government are not proposing legislation to fix it.
We accept that there is a relatively small chance of a compensation package exceeding 10%, but that is not an impossibility. If a case ever did exceed that amount, it is likely that an enormous number of consumers would have been affected. It would be irresponsible for the Government not to be prepared for that scenario. In
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Committee, the Minister said that if consumers suffer losses greater than the compensation they receive, they will still be able to seek further redress through the courts, but surely he acknowledges it would be better not to risk that happening in the first place by amending this Bill.
Surely that would be better than abandoning consumers and leaving them to endure a long and protracted court battle to get due recompense. We believe it makes more sense to guarantee that families will always receive pound-for-pound compensation when they have been mistreated, which is why our amendments specify that compensation would be allowed to exceed 10% of turnover if
“one or more consumers have suffered loss or damage greater than this value.”
The Department’s own impact assessment said that such a change would send a powerful signal to energy firms on consumer protection. That is our priority.
This Government claim that they are on the side of consumers and today they have the chance to prove it. Our amendments put consumers first, ensuring that mistreated families will not be short-changed, no matter when they were wronged or how much they are owed. Will the Government stand up for the many? The question for the Minister and his colleagues is simple today: whose side are they on?
The Minister of State, Department of Energy and Climate Change (Gregory Barker): The Opposition amendments seek to amend schedule 14 by removing restrictions on retrospective and unlimited liability. I understand the concerns and motivations of the Opposition, but I can assure them that this coalition is also committed not only to helping hard-working families and, indeed, all consumers with the rising cost of living, but to empowering consumers and protecting hard-working families from rip-offs and scams. So although I have some sympathy with the aim of amendments 2 and 5, which are intended to allow Ofgem to compel energy companies to pay redress for events that happened prior to the enactment of this Bill, I am troubled by the effect of setting a precedent by retrospectively applying powers in the energy market and by the impact that that would have on all consumers. There is a general principle that powers should not be applied by this House retrospectively. Beyond that principle, there is potential for very real, negative impacts on consumers.
The Government are committed to encouraging competitive pressure on the big energy market players, but the regulatory uncertainty these amendments would introduce would be likely to lead to an increase in the cost of capital for energy companies, and that, in turn, could push up bills for everyone. Furthermore, it could create investor uncertainty at the very time we are trying to encourage the necessary private sector investment required to move to a low-carbon economy and renew our energy infrastructure. More expensive finance would most heavily hit the smaller companies that are also covered by this legislation—the very small companies and entrepreneurs we want to attract into the sector. Under the previous Labour Government, competition in the electricity sector shrank to leave just six big supply companies dominating it. The last thing we want to do is accept amendments that could hinder new entrants to the market.
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The amendments may also lead to increases in the cost of insurance premiums for companies, in order to cover the extension of liability for events that took place prior to the enactment of this legislation—again, that is likely to be proportionately higher for smaller energy companies. All these factors could push up the cost of living for hard-working families, at a time when, as we know, many can ill afford it. I understand the intention behind the amendments, but the unintended consequences could end up hitting the very people we are trying to protect, and so we cannot accept them.
Again, I have some sympathy with the intention of Opposition amendments 3, 4, 6 and 7, which seek to ensure that the amount of compensation that can be required through a consumer redress order is not limited. As I said at the outset, the coalition Government are absolutely committed to providing a fair deal to consumers. So when considering these amendments, we should look to balance the need for a redress mechanism that allows consumers timely and proportionate compensation, with an appeal mechanism that is proportionate to the potential liability faced by energy companies.
Under existing arrangements, consumers can obtain redress through the courts, but we recognise that the legal process is lengthier and does not offer a typically quick remedy for consumers who have been badly served or ripped off. That is largely because the courts offer recourse for consumers in cases where compensation may exceed the 10% limit set in this legislation. The legal process is necessarily equal to the potential sums at stake. The powers set out in schedule 14, however, contain appeal mechanisms, proportionate to the potential penalty, limited to 10% of an energy company’s annual turnover.
8.15 pm
John Robertson: I ask the Minister the same question I asked my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger): what is classified as turnover? Does it just include retail or does it also include generation?
Gregory Barker: I will correct myself if I am wrong, but I believe we are talking about global turnover—we are talking about very significant sums. [Interruption.] This relates to the turnover of the company under investigation. [Interruption.] That was very helpful.
John Robertson: Just for clarification, is “the company under investigation” the mother company as well as the subsidiary company, or does it include all the companies that that company is part of?
Gregory Barker: The hon. Gentleman asks a fascinating and timely question, one which deserves a proper answer. He may have misheard me, because when I said “global turnover” what I actually meant was UK turnover. Nevertheless, that is clearly a very significant amount.
Our approach would allow for a relatively straightforward resolution of relatively simple cases. Accepting amendments to remove the cap would require us to make changes to the appeal mechanism, which could deny consumers access to the timely compensation they are due, as it could result in a far lengthier resolution of cases if the stakes are much higher. In considering whether such a trade-off is justifiable, we should take into account just how unlikely it would be for consumers to lose out on
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this scale. Exceeding a 10% cap of annual turnover would mean penalties and compensation of over a £1 billion for the very largest domestic energy supplier. The largest penalty imposed to date by Ofgem has been £15 million and under our legislation the cap for the largest would be set at £1 billion. A cap on redress is therefore unlikely to hinder Ofgem’s ability to impose appropriate redress orders.
In addition, there are unintended consequences of removing the 10% cap on penalty and redress, as that could also increase the costs of capital and insurance premiums for energy companies. Again, that would particularly affect the smaller companies—the very ones we are trying to attract into the sector—with all the adverse impacts on consumer bills that I mentioned earlier.
Energy companies should be in no doubt, however, that these powers are designed to ensure that consumers receive appropriate compensation. The combined 10% cap on penalties and redress will apply to each separate regulatory breach. If companies flout the rules on a number of occasions, they will therefore face correspondingly larger payouts. For the reasons I have set out, I hope that hon. Members will, on balance, agree not to press their amendments to a Division.
Mr Weir: I find myself in the unusual position of agreeing with a lot of what those on both Front Benches have said. I have a lot of sympathy with the amendments and, unlike the Minister, I do not find any difficulties with amendments 2 and 5. If a company has been doing over consumers, whether it has been doing it the day before the Act comes into force or the day after does not seem to make any difference. If we are seriously considering making such companies pay such large sums for their misdemeanours, I would be happy to support those two amendments. That would send a clear message that we are fed up with some of the things that have been coming to light in recent years and with how the consumer has been mistreated, taken for granted and, frankly, milked, by some companies.
My hon. Friend the Member for Glasgow North West (John Robertson), if I may call him that, made very good points about turnover.
Gregory Barker: I am grateful to the hon. Gentleman for giving way, particularly as I have only just sat down. Let me be absolutely clear on this important point. For investigations by Ofgem that are already under way, Ofgem will continue to negotiate compensation on behalf of affected consumers. Companies that fail to negotiate and agree satisfactory redress can expect Ofgem to reflect that lack of co-operation in the penalty it sets.
Mr Weir: I accept that, and I understand what the Minister is saying, but he said in his speech that the maximum penalty to date had been £15 million. Under the Bill he is talking about £1 billion. There is a massive difference between the two and my point stands: if consumers have been ripped off, it does not matter whether it happened just before the new system was introduced or just after that. The same should apply, in my view, and I do not have any great problem with that proposal.
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However, I have a big problem with amendments 3, 4, 6 and 7. As I said in an intervention on the hon. Member for Liverpool, Wavertree (Luciana Berger), I have a worry—the same sort of worry as the Minister—about the effect that the amendments would have on the company. It seems that one aspect of the Bill is about trying to get investment into the energy industry. For far too long there has been insufficient investment; a lot of modernisation and new investment is needed to get our energy system up to scratch. The figure is 10% of the turnover, whatever that turnover will be—I am still not clear what the word covers. That takes me back to the days when I served on the Select Committee on Energy and Climate Change with my hon. Friend the Member for Glasgow North West and we had the big six in one day and asked them about their profits. We asked whether they had made their profits selling to the consumer and they replied, “Oh no, we didn’t do that.” We asked whether they made them through generation, and heard, “Oh no, we didn’t make it from that.” We asked, “Where did you make those profits? You have large profits,” and no one could answer the question. There is great difficulty in pinning down what is meant by profit and turnover. In a time when we have six big energy companies, five of which are effectively multinational companies—we have seen in recent weeks what happens with the tax of multinational companies—we need a bit more clarity about what is meant by turnover.
Although the sums involved in 10% of turnover are significant, my bigger worry is that a company could be under investigation for an alleged breach for a considerable time. If there is a set limit, whether it is 10%, 20% or whatever, anyone thinking of lending that company money for infrastructure projects—most of them borrow from large financial institutions or other lenders—will know the contingent liability and what they are dealing with. I grant that if the liability is absolutely unlimited the sums involved are unlikely greatly to affect the big companies, given their size, but the uncertainty might well affect them. As we all know, those lending sums of money of such magnitude will consider the state of the company. A potential unlimited liability going into many billions of pounds, if there has been such an incident, could seriously undermine the company’s ability to borrow the money for much-needed infrastructure in our energy supply system.
I have a great deal of sympathy with those four amendments and understand what the hon. Member for Liverpool, Wavertree is trying to do, but I have a difficulty with them. Perhaps when she winds up she could expand on them and reassure me on the points I have made.
We must also remember that the provision would affect not only the big six energy companies but all regulated persons. If I understand correctly, that would include the small companies that are trying to get into the market. The Government say that they want to bring new entrants into the market, including the smaller companies that are beginning to nibble away at the edges of the big companies. If they were faced with such a penalty—let us hope that none of them would be—it would be the death knell for them.
John Robertson:
The hon. Gentleman makes a very good argument and I had not thought of going down that road. Does he accept that those small companies
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could, through no fault of their own, follow what the large companies are doing and get themselves into bother that they did not really think about when they first started doing whatever it was that they did?
Mr Weir: My hon. Friend makes an excellent point. Whereas the big six would be able to take that financial hit, many of the smaller companies would not be able to do so. These proposals would take us down a road that could have serious repercussions. Many small companies are beginning to break into the market. Many of them are particularly strong in renewables, for example, and that is one way in which much of our renewables investment might be generated in the future.
I ask the shadow Minister to think about my points. I have sympathy with the amendments and understand what they want to do. We all want to ensure that any energy company that has been mistreating consumers is dealt with severely. There are two sides to this, however, so let us not rush into doing something that could have profound and unforeseen results.
John Robertson: It is a pleasure to follow the hon. Member for Angus (Mr Weir). He was an excellent member of the Energy and Climate Change Committee when it was first put together and I am very sorry that he is not still a part of it—but there is time for him yet, as they say.
I agree with a lot of what the Minister said—I do not pick holes in things just for the sake of it—but it is not my place to worry about whether the big six have financial difficulties or whatever else. Personally, I could not give one jot about any of those companies. They are big enough to look after themselves and they certainly know the rules, because they know how to break them and get away with it.
I support every one of the amendments tabled by my colleagues on the Front Bench. I have no problems with them whatsoever. The only thing I have to say to the Minister is that I was slightly disappointed by his speech. He talked about hard-working families and, yes, I believe that hard-working families should always be looked at and looked after as best we can. My constituency has more than its fair share of elderly people and it has the highest percentage of single women in any constituency in the country, which probably means that most of them will be elderly. That means that they might have some difficulties that other people do not have. There are also quite a number of people who are disabled. We have found over the years that those are the people who do not complain, because they are frightened to, and who do not get the help they probably should get. Once again, we are getting to a stage when people think that their biggest bill is their electricity bill, their gas bill or both. According to some newspaper articles, people will be more worried about how they pay their fuel bills than how they pay their mortgage.
I do not worry about the big six, because they are making plenty of money, but we have to nail down what we mean by profit and turnover. Let us take EDF, a large multinational company that is to build a new nuclear power station, from which it will make a lot of money. It also has other power stations in the United Kingdom on which it makes money, and of course it is involved in retail as well, where it says it makes 2% profit. It makes some 17% to 19% profit from generation.
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It puts that 19% alongside the 2% when it comes to giving shareholders a dividend, but it tells Government that it is making only 2% profit. The company may therefore put up its prices—SSE did so only last October—yet these same companies are making enormous profits. They are telling people, “Invest in our company because you can get a return for your money.” That is not right.
8.30 pm
That brings me to the point that I really want to make about being in default. The Bill is the end or start of a process. The Minister said that 19 cases are going on. Some of them will continue beyond the introduction of the Bill. Will they be judged under the old system, or will there be a “get out of jail free” card as the new Bill takes over? Will there be two different kinds of penalties running side by side?
Gregory Barker: I absolutely assure the hon. Gentleman that there will be no “get out of jail free” card.
John Robertson: That is a very good answer, but the Minister gave an answer earlier that was found to be wrong, so I will wait for a note to come over to him.
Barry Gardiner: I have listened carefully to the debate. Is there not in my hon. Friend’s mind, as there is in mine, a concern that we are putting on companies a financial penalty that will ultimately be borne by consumers? Should we not instead address the real problem, which is directors’ liability? It was noticeable in the recent SSE case that no criminal prosecution for fraud was brought, even though the maximum penalty was imposed. Would it not be better to impose a strict liability on the directors of the companies, so that it is not the consumer who ends up paying the fines?
John Robertson: My hon. Friend makes a very good point, which brings me to the next issue that I wanted to raise: what happens to the money? If we get £1 billion off a company—not that that is likely, because it would be a lot more than we get at present—or even £100 million, surely that company should have to pay that back to its consumers. It should not give it to the Treasury to spend, though I am sure it would spend it in a very nice manner. It should go towards what it was designed for: paying for electricity. That £100 million or £1 billion should go back to the customers of that company. I ask the Minister to look at that.
The Bill is a great deal better than it was when we scrutinised it on the Select Committee. Everything else about the Bill has been rushed. Look at the number of amendments tabled today, and the number of things that we are not being told—the strike price and so on. We are basically being given a promise that it will be all right on the night. We need to know what the Bill is. The Select Committee had five weeks’ scrutiny of the Bill, when normally the period is 12 weeks. Then we waited an inordinate amount of time for the Bill to come back to us. When we got it, we sent it back to the Minister and told him that it was a dog’s breakfast; it was terrible. We then got something else. It has been through Committee, and we have improved it. I implore the Minister to consider the amendments that hon. Members on both sides of the House are putting forward, and seriously look at using the best bits to improve the Bill
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further, because this is an okay Bill, but that is all it is; it is not good. It is probably slightly better than what we had at the start, but we still have a long way to go. I ask the Minister to consider that.
I also ask the Minister to look at the issue of people paying their taxes. We see that npower has admitted that it does not pay corporation tax. Another three of the major companies say that they do not pay much corporation tax. I am pleased to say that the two companies with Scottish links say that they do pay their corporation tax, although I would still like to look at the books.
There lies the biggest problem that we have with energy: looking at the books. What are the books? I have talked to Ofgem and to the Minister. What do the books cover? That goes back to the definition of cost and the definition of turnover. Where does the generation element come in and where does the retail element end? What happens to all the money that is made on either side of the box in the middle? That is a real problem. When billions of pounds of profit are made on one side and appear not to be counted, and billions of pounds are missing on the other side so the companies put the prices up, they keep making money but the consumers—the poor, the elderly, the disabled, the hard-working families that the Minister likes to talk about—are all suffering, and it appears that our Government do not care.
We should be doing more. We have even got to the stage where HMRC hired a gentleman called Volker Beckers, who was the chief executive of RWE npower. I bet he knows how to deal with tax for those energy companies. I hope he uses the same skill as he used for RWE not to pay corporation tax to get the same money out of the same company for HMRC.
There is much that is good in the Bill. I hope the Minister will consider the amendments moved by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) and listen to what my friend the hon. Member for Angus said. Between us all, we will make the Bill better, but we must remember that at the end of the day it is the people who put us here that we should be looking after.
Luciana Berger: I have been listening carefully for almost an hour to the debate, and I listened carefully to what the Minister said. We on the Opposition Benches still intend to divide the House on amendments 2 and 3. Let me explain why.
I reiterate the point that I made about the number of investigations currently under way. Ofgem is carrying out 15 formal investigations into potential malpractice by energy suppliers, and its enforcement team is informally reviewing an additional 12 cases. On that basis we consider it crucial that consumer redress orders be issued in respect of contraventions that might occur before the Bill comes into force. I reiterate that that is not retrospective legislation; it just means that consumers can get the redress they deserve.
Amendment 3 protects an important point of principle. Instead of a cap on the amount of compensation that consumers can receive, customers who have been treated poorly should be entitled to receive what they are rightly due. If the Government are convinced, as I heard the Minister say, that the level of compensation would
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never reach 10% of turnover, whatever that definition of turnover might be, the amendments should not present much difficulty. They would take effect only if the harm to consumers was above the 10% threshold. If it is unlikely ever to reach that threshold, the cost of that risk would be relatively small, and if the level of damages were to exceed that level, surely the Government would want to ensure that customers who had been treated unfairly were properly protected.
Question put, That the amendment be made.
The House divided:
Ayes 217, Noes 276.
Division No. 16]
[
8.38 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Brennan, Kevin
Brown, Lyn
Brown, Mr Russell
Bryant, Chris
Burden, Richard
Byrne, rh Mr Liam
Campbell, Mr Alan
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
Dowd, Jim
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Francis, Dr Hywel
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harman, rh Ms Harriet
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Emma
Lewis, Mr Ivan
Llwyd, rh Mr Elfyn
Lucas, Caroline
Lucas, Ian
Mactaggart, Fiona
Malhotra, Seema
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McFadden, rh Mr Pat
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Mordaunt, Penny
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Sharma, Mr Virendra
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Vaz, Valerie
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodcock, John
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Susan Elan Jones
and
Jonathan Ashworth
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Barclay, Stephen
Barker, rh Gregory
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burstow, rh Paul
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Clappison, Mr James
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Duddridge, James
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Farron, Tim
Featherstone, Lynne
Field, Mark
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Grant, Mrs Helen
Gray, Mr James
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hancock, Matthew
Hands, Greg
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leslie, Charlotte
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maynard, Paul
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Moore, rh Michael
Morgan, Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Paice, rh Sir James
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Phillips, Stephen
Poulter, Dr Daniel
Prisk, Mr Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Redwood, rh Mr John
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Streeter, Mr Gary
Stride, Mel
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swinson, Jo
Swire, rh Mr Hugo
Thornton, Mike
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vickers, Martin
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Tellers for the Noes:
Mr Desmond Swayne
and
Mr Robert Syms
Question accordingly negatived.
3 Jun 2013 : Column 1343
3 Jun 2013 : Column 1344
3 Jun 2013 : Column 1345
Amendment proposed: 3, page 192, line 18, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.—
(Luciana
Berger
.)
Question put, That the amendment be made.
The House divided:
Ayes 213, Noes 280.
Division No. 17]
[
8.50 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Brennan, Kevin
Brown, Lyn
Brown, Mr Russell
Bryant, Chris
Burden, Richard
Byrne, rh Mr Liam
Campbell, Mr Alan
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
Dowd, Jim
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Francis, Dr Hywel
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harman, rh Ms Harriet
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Emma
Lewis, Mr Ivan
Lucas, Caroline
Lucas, Ian
Mactaggart, Fiona
Malhotra, Seema
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McFadden, rh Mr Pat
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Sharma, Mr Virendra
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Vaz, Valerie
Watson, Mr Tom
Watts, Mr Dave
Whitehead, Dr Alan
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wood, Mike
Woodcock, John
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Jonathan Ashworth
and
Susan Elan Jones
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burns, Conor
Burrowes, Mr David
Burstow, rh Paul
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Clappison, Mr James
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Duddridge, James
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Farron, Tim
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Grant, Mrs Helen
Gray, Mr James
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hancock, Matthew
Hands, Greg
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leslie, Charlotte
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maynard, Paul
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Moore, rh Michael
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Paice, rh Sir James
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Phillips, Stephen
Poulter, Dr Daniel
Prisk, Mr Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Redwood, rh Mr John
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Streeter, Mr Gary
Stride, Mel
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Thornton, Mike
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vickers, Martin
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Tellers for the Noes:
Mark Hunter
and
Nicky Morgan
Question accordingly negatived.
3 Jun 2013 : Column 1346
3 Jun 2013 : Column 1347
3 Jun 2013 : Column 1348
3 Jun 2013 : Column 1349
Bill to be further considered tomorrow.
3 Jun 2013 : Column 1350
Business without Debate
delegated legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Employment and Training
That the draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2013, which was laid before this House on 25 March, in the previous Session of Parliament, be approved.—(Greg Hands.)
petition
2013 White Paper on Pension Reform
9.2 pm
Tim Loughton (East Worthing and Shoreham) (Con): I present a petition on behalf of the residents of Lancing, West Sussex, who declare their concern about the Government’s proposals for pensions in the new White Paper on pension reform, “The single-tier pension: a simple foundation for saving”.
The Petition of residents of Lancing, West Sussex,
Declares that the Petitioners are appalled by the Governments proposals for pensions in the 'New White Paper on Pension Reform' - The single tier pension: a simple foundation for saving; further that the Petitioners believe it is unfair to give a pension of £144.00 to a pensioner who retires in 2017 with 35 years National Insurance Credit when pensioners today will have to remain on their current lower pension rate, many of whom will have accumulated Working National Insurance Credits of over 40 years or more; further that anyone who has drawn their state pension before 2017 will not be included in these plans and that will be a disadvantage to millions of older women who currently get less than £144.00 a week.
The Petitioners therefore request that the House of Commons urge the Government to discuss the matter of pensions for at least another 12 months and address any equality and discriminatory issues in the Pensions White Paper.
And the Petitioners remain, as in duty bound, will ever pray.
3 Jun 2013 : Column 1351
Timeshare Contracts
Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)
9.3 pm
Fiona O'Donnell (East Lothian) (Lab): I am grateful for the opportunity to debate the regulation of the timeshare industry. I want to start with a list of thank yous. It is appropriate that we are speaking about timeshare: I thank Ministers from the Department of Energy and Climate Change for disposing of their business so quickly that they have managed to share the time this evening more evenly. I thank the Minister and her officials for the interest they have taken in this issue. I look forward to working with them in the hope that we can find a way to solve the problems faced by the people I will be speaking about. I thank the various consumer organisations that have been supportive: Citizens Advice Scotland, Which? and the trade body of the sector, the Resort Development Organisation. Most of all, however, I would like to thank The Sunday Post, which has run a really effective campaign on the issue. That newspaper is often the subject of urban myths—according to one that does the rounds in Scotland, when the Titanic sank, its headline was “Titanic sinks. Govan man feared drowned”—but this campaign shows that those urban myths are a thing of the past.
For most people, owning a holiday home is little more than a dream, but a solution was apparently found back in the 1960s, with the birth of timeshare. Holidaymakers keen for their own slice of paradise without the full cost of owning a place abroad—something they could not afford—turned to this option. Under a timeshare agreement, individuals and families own not a whole property but the right to occupy a property for a specific period each year. Timeshares are binding, contractual agreements between owners and the company that owns and manages the property, with the owner paying a one-off fee and ongoing maintenance costs. The legal rights and obligations binding the company and owner are detailed in a timeshare agreement.
Timeshares were meant to offer families certainty and security. By investing in a property held in trust for mutual benefit, families could enjoy regular holidays in accommodation of a higher quality than that which they could otherwise have afforded. The idea of timeshare became popular, and recent figures from a European timeshare industry report show that more than 500,000 Britons own timeshares. It is a huge sector in the UK, therefore, and although much progress has been made in terms of regulation and better practice, there is still room for improvement because for many that holiday dream has turned into a nightmare.
During the boom years of the ’80s and ’90s, timeshares were often sold aggressively to tourists who were on holiday and without access to legal advice. Many contracts were not in English and deals were agreed in currencies other than sterling, meaning that maintenance fees have risen as the pound has weakened. Many timeshare owners unwittingly signed contracts that locked them and—it now transpires—their children in for life, because timeshare agreements regularly included an “in perpetuity” clause, extending the right to a property beyond the owner’s death. The only way for these timeshare owners to escape their timeshare is to sell it on, but there is little
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demand for second-hand timeshares, and many owners have been forced to use unscrupulous middlemen to find a buyer. Often, these issues are not reported, but they affect many families across the UK. This debate follows on the heels of scams awareness month, and it seemed an appropriate time to raise it in this place.
The Timeshare Act 1992 and the Timeshare Regulations 1997 were repealed by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010, which came into force in February 2011. The 2010 regulations were introduced to transpose EU directive 2008/122/EC—on the protection of consumers in respect of certain aspects of timeshare, long-term holiday products, and resale and exchange contracts—which had been adopted on 14 January 2009. The directive aimed to enhance consumer rights, especially through stronger rules on the information that companies had to provide to consumers, including on the consumer’s right of withdrawal. Under the new rules, a private individual considering the purchase of a timeshare must be made aware of key information in their own language and in the standardised form. Buyers are also given rights of withdrawal, so that they can cancel a contract during a cooling-off period.
In short, new timeshares with contracts of more than a year must be sold with a 14-day cooling-off period, giving buyers a right to cancel. The seller cannot ask for any money within the 14 days, and if they do not inform the buyer about the cooling-off period, it can be extended to one year and 14 days. This is a great improvement on the previous situation, when there was a cooling-off period only if the timeshare agreement was for at least three years. Afterwards, the buyer can cancel the timeshare if the timeshare allows for it, although they may have to use a timeshare or resale company, which usually charges commission, in order to secure this.
The 2010 regulations sought to address a number of problems by extending protection to holiday products similar to timeshares, including holiday clubs, and improving consumer confidence by ensuring that important information is provided to individuals before they commit to timeshare purchases or resales. The Office of Fair Trading and trading standards officers are responsible for enforcing the regulations, which were broadly welcomed. Consumer bodies such as Which? had lobbied for increased protections. However, the regulations address problems with only certain aspects of timeshare agreements—for example, consumer rights when entering the contract. Meanwhile, issues such as termination of contracts and inheritance of rights and obligations remain regulated by national laws of European Union member states.
The EU Commission will review the application of the directive and report to the European Parliament and the European Council in 2014. I will be interested to hear whether the Minister thinks there might be an opportunity in that review to extend the remit of the regulations. The 2010 regulations indicate that policy makers recognised a need to reform the timeshare market, but protections did not address in-perpetuity contracts, which continue to affect countless timeshare owners. If the timeshare company is a member of the trade body, the Resort Development Organisation, owners can escalate complaints through an internal reconciliation process, although this may prevent future court action. There are also several bodies offering advice to timeshare owners. In addition to the 2010 regulations, the Unfair
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Terms in Consumer Contracts Regulations 1999 may be relevant in determining the legality of a timeshare agreement. It would be for the OFT to decide whether to investigate.
As I have looked further into this issue, it has become clear that there is uncertainty in many areas of regulation. Other than the 2010 regulations, legal protection for timeshare owners is rather ad hoc. Indeed, Citizens Advice Scotland has said:
“The Citizens Advice Service in Scotland advised consumers on more than 300 queries about timeshares in 2012/13…Citizens Advice Scotland is concerned that many consumers are still…ripped off despite recent policy improvements around timeshares.”
Although there has been a fall in complaints about timeshare companies, Citizens Advice, consumer champions Which? and BBC’s “Watchdog” have all raised concerns about timeshare agreements in recent years. As the 2010 regulations were not backdated, many timeshare owners have been left to traverse the tangled web of contract law and property rights, sometimes in the UK and sometimes overseas. Some companies allow owners to terminate timeshare agreements on request, while others provide this option only to the sick or elderly. Owners should check, with the assistance of a legal adviser or Citizens Advice, whether provision exists in their agreement.
Margaret Kaney from Bridge of Allan contacted The Sunday Post about her timeshare. She is 70 years old and bought a timeshare in Scotland with her husband in 1994. They paid £6,600 for their timeshare, and maintenance fees have risen to £1,100 annually. Mrs Kaney’s husband died over seven years ago and then she suffered a stroke, which made travel difficult. Mrs Kaney has had her timeshare up for sale for two years. Following an intervention by The Sunday Post, she was released from her timeshare and the RDO promised that most of its members allowed owners who were over 70 to leave. The Sunday Post has informed me that, despite that assurance, other owners who have asked to end their contract have been met with refusal.
The Trading Standards Institute represents trading standards officials in the UK. An official from the Trading Standards Institute commented in general terms that if a person can prove that they can no longer afford their timeshare or if the conditions under which the contract was signed have changed, they may be able to dissolve it. In practice, timeshare holders can sometimes relinquish their timeshare in exchange—for example—for one year’s maintenance fees.
Myra Murray, aged 63 and from Wishaw, inherited a two-week timeshare with her husband, Alan, from his mother, who had had it for 30 years. They continued to pay maintenance costs for 20 years, and spent £3,500 on a further week’s worth of timeshare. The annual maintenance fee is now more than £1,000. Mr and Mrs Murray used the timeshare annually, but Mr Murray died in 2011. Mrs Murray now fears years of never-ending maintenance fees. She is trapped by an in-perpetuity clause, but the company has said that the contract could be brought to an end in three years’ time if she paid £5,400 up front. Mrs Murray feels that that offer is extremely unreasonable. She is also concerned about passing the debts on to her children. Her situation is simply intolerable. However, the TSI official has said that if a timeshare owner cannot come to an arrangement
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and is not in financial difficulties, it is their responsibility to sell the timeshare. Until a buyer is found, they are legally bound to pay maintenance fees.
Catherine and Peter Ross from Carluke spent £5,500 on a timeshare at Moness Country Club, but were not told that they would need to save two years worth of points to get one weekend in Florida. They ended up paying over £2,500 more to get a one-week timeshare, and they currently pay £500 annually in maintenance fees. They are trapped by an in-perpetuity clause and are allowed to advertise the timeshare for sale only on the company’s website.
In addition, bogus resale companies have proliferated. A recent EU directive tightened the rules on reselling and the charges that can be levied, but The Observer newspaper revealed last year that some people who had previously used bogus resale agents were now being targeted by bogus compensation companies claiming to be able to recoup money that had been lost. That was clearly a case of double scamming. Some companies offer buy-out schemes to enable owners to terminate their agreements, but the Minister’s own Department has warned against using those schemes.
The Department for Business, Innovation and Skills has stated that consumers experiencing problems with their timeshare should be cautious before committing to sell to, or seek the help of, any company without first seeking legal advice. The Department has said that it receives reports and complaints about the trading activities of some resale companies that offer a marketing service for an up-front fee. Sales seldom take place, and additional fees are charged. I hope that the Minister will be able to tell the House this evening what action she is planning to take in response to the information that her Department has gathered.
A Member of the House of Commons, my hon. Friend the Member for Ogmore (Huw Irranca-Davies) has played a part in exposing some of these scams. In October 2010, he took part in a BBC “Watchdog” exercise to highlight the dubious business practices and aggressive selling techniques of those resale companies. He was subjected to pressure selling, and three lawyers confirmed that the company involved had broken several laws.
In-perpetuity contracts lock timeshare owners in for life. After an owner’s death, the contractual obligations may pass to their children or to another beneficiary in their will. There has been conflicting advice over the enforceability of in-perpetuity clauses, and timeshare owners would like clarity. We are hoping for some clarity from the Minister tonight, or at least for an indication of the direction of travel that she is taking on this matter.
I should like to thank the House of Commons Library for providing me with further information on the timeshare sector in the UK and overseas. It informs me that if a timeshare is jointly owned with the right of survivorship, the surviving owner should automatically become the full owner. However, if the deed reflects sole ownership, the property may be handed down to another party according to the terms of the deceased’s will, trust or other legal document that specifies who will inherit his or her estate. In effect, a person could inherit a timeshare that they do not want and cannot afford. The beneficiary can formally disclaim the timeshare if they do not want it. That allows the executor to take charge of the property instead. They may then be able to sell or donate
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the timeshare. The owner of an unwanted timeshare might be better off disposing of it now, rather than leaving it as a problem for his or her executors.
The Sunday Post heard from a Lothians couple who bought a timeshare in 1997—a great year—for £3,800. They have a disabled son in his 20s and they worry about his future. They would like to start saving for his care, but are faced with annual maintenance fees of £530. They say the timeshare was sold to them as an investment for their children, but it is fast becoming a frightening burden as they are again trapped by an in-perpetuity clause. Meanwhile, the newspaper heard from a lady aged 79 from South Lanarkshire who bought a timeshare from Macdonald hotels in 1990 for £7,800. She insists that the timeshare was mis-sold to her. She is struggling to pay maintenance fees of £554 on her state and small occupational pensions. In addition, she has a grown-up disabled son who lives with her. They are unable to use the timeshare; they last used it seven years ago. She asked Macdonald if she could sell it back in 2010, but it suggested letting it out. This raised only £143.
An official from the UK European Consumer Centre, which provides impartial advice for UK consumers, agreed that in-perpetuity clauses are unfair as they pass responsibilities on to people who may not want them. The ECC gets complaints from time to time from people who have inherited a timeshare and have been told that they must continue to pay the maintenance fees or legal action will be taken against them. This is despite the timeshare itself being in someone else’s name. As far as the ECC is aware, no timeshare company has actually taken legal action against a consumer and been successful, although it can rely only on the information provided to them by consumers, and it may be the case that consumers have simply not informed it. The difficulty for UK consumers is that they can argue that the contracts are unfair, but in order to get a confirmed ruling, they have to go via a court and get a judgment, which can be both time-consuming and costly.
I have been informed by an official at the UK ECC that in Spain contracts for longer than 50 years, including contracts in perpetuity, are unenforceable as they are deemed unfair. Although this ruling is beneficial to UK consumers who have agreements with Spanish companies, could the UK Government not look at adopting such a rule in the UK? I look forward to hearing the Minister’s response on that.
With the launch of their draft consumer rights Bill, the Government claim to be acting in the best interests of consumers, but owners of unwanted and costly timeshares do not see any resolution of their worries in the near future. While recent regulations have improved the standing of people purchasing timeshares, those who already own timeshares have been left to fight for their contractual rights in the courts or through industry-run reconciliation processes.
Jim Shannon (Strangford) (DUP): Does the hon. Lady feel that a way forward for those who have timeshares that they cannot get out of would be for the travel companies to purchase them or adopt a system for renting them out? The hon. Lady mentioned a rental system. We all know the pitfalls of such a system, but if a company was able to do it, it might be a way of enabling some people at least to get some benefit from the timeshares they cannot get out of?
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Fiona O'Donnell: I am grateful to the hon. Gentleman for his intervention. I think that is an option that needs to be looked at. The sector needs to be more responsive, creative and imaginative, but the concern in the case with the Macdonald hotels that I quoted is that it brought in only £143. It was £143 rather than nothing, but perhaps companies need to get better at advertising and pushing the sector if additional rental capacity results from an agreement with an owner. The Minister may like to respond to the hon. Gentleman’s intervention as well as to my speech.
The contracts that formed the basis of these legal disputes were signed often unwittingly and over 20 years ago, with the timeshare owners often now elderly, ill and vulnerable. They feel they have no choice but to continue paying crippling maintenance fees. I appeal to the Minister to think about these real people I have spoken about this evening and about the hardship they have been caused. Surely there has to be a way to help them. I know that the Government are not fond of regulation if they can avoid it, but we are talking about often very vulnerable people who are coming to the end of their lives and who want some peace and security; they want to know that they will not have to pass on burdens to their children. I look forward to hearing the Minister’s response.
9.24 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): I congratulate the hon. Member for East Lothian (Fiona O'Donnell) on securing the debate and on raising this issue. It is clear that many consumers such as those to whom she has referred are experiencing real problems. As she said, that esteemed publication The Sunday Post has been conducting a campaign. She made a small jest about the way in which some people have characterised The Sunday Post, but I would describe is as a fine publication that does a lot of great campaigning. I know that it is read by many of my constituents, and I am sure that it is read by many of hers as well.
The hon. Lady rightly pointed out that the issue involves real people, and that a number of them are clearly in an incredibly difficult position. I do not think that anyone could be unmoved by the case of Mrs Kaney, the elderly lady who was still being forced to pay £1,100 a year long after ceasing to benefit from a product that she had bought a long time ago when her husband was still alive, or by the plight of people who feel pressured into paying hundreds of pounds a year or else face a one-off cost of more than £5,000 to buy themselves out. Such costs can impose a huge burden and a huge worry on many families, particularly in these difficult times and, indeed, at any time.
I think it fair to say that the timeshare industry and service providers associated with timeshares and other long-term holiday products have had a pretty poor reputation for a long time. When I was preparing for the debate I spoke about it to some of my colleagues, and a common refrain was “Are timeshares still around?” Of course, given perpetuity contracts, they certainly are still around. Historically, companies in the sector have behaved abominably, pressurising people while they are supposed to be on holiday and trying to persuade them to buy products that they do not really want or even understand at the time. That has left a legacy of difficult issues for some timeshare owners.
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Not only do timeshare contracts generally impose an annual obligation to pay maintenance fees in respect of the properties, but they can be very long-lasting. Although nowadays it is possibly more usual for timeshare agreements to specify a set period such as 10 years, and although people may indeed expect to be happy to visit a certain destination throughout the following decade, it is more difficult to predict whether in a few decades’ time a longer-term contract will still be desirable, and whether people will still be willing to accept the obligation that it involves.
No doubt when the timeshares were originally sold to people, they were assured that they would have an opportunity to sell on the contracts and that they would be worth a significant amount, but I suspect that those promises have not come to much when people have tried to sell. Some timeshare owners now find themselves with liabilities which, for one reason or another—age, altered preferences or a change of circumstances—no longer provide them with any actual benefit.
It is important to see the position in a balanced way. It is true that many thousands of timeshare owners in the United Kingdom, elsewhere in Europe, and indeed worldwide are very happy with the product and the opportunities that it provides, and it is true that, when properly sold and constructed, the product in itself need not be problematic and can be enjoyed by many people. At its best, the timeshare industry can deliver an attractive, high-end product that matches its customers’ requirements extremely well. However, it is not a product that is suitable for everyone. That is why the Department for Business, Innovation and Skills continues to recommend, despite the improved protections that have existed since 2011, that any prospective customer should always seek legal advice before accepting any kind of long-term contract that involves an ongoing financial commitment, including timeshare contracts.
I welcome the hon. Lady’s recognition that significant improvements have been made, and I shall say more about those improvements later. I think it important to note that, although the regulations came into force in 2011 under the present Government, they were formalised in 2010, and were the result of a great deal of work by the last Government and by European partners. This is not a party political issue. We all want better rights for consumers and I am always delighted to work with people across parties who are keen to achieve that, so I welcome the spirit in which the hon. Lady made her remarks. I would be happy to work with her on this.
I sympathise with the concerns that the hon. Lady raised about contracts in perpetuity or contracts that last for an incredibly long time which people no longer wish to have. Perhaps when the contracts were entered into, for many people, the idea of passing on the timeshare to family members was quite attractive but, with the elapsing of time, some consumers no longer wish to be involved in those contracts. The only way they can come out of the situation with any certainty is by pursuing the matter through the courts, which as we all understand is not necessarily an easy option or one that many people have the resources to pursue; or by negotiating with the resort operators, which can lead to wildly varying responses, as has been outlined.
The hon. Lady mentioned the UK ECC. When people inherit a timeshare and are told that they must pay the
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maintenance fees or legal action will be taken—despite the fact that the contract is in someone else’s name; it seems a bizarre obligation under general contract law— it is important to reiterate the point she made, which is that, as far as that organisation is aware, no timeshare company has successfully taken legal action against a consumer and won the case. That is something that many consumers who find themselves in this situation may be interested to know.
The hon. Lady mentioned the law in Spain, where many UK customers have timeshare contracts and where any contract longer than 50 years is unenforceable on the basis that it is unfair. The UK could look at such issues. In normal circumstances, we try not to intervene in individual contractual matters between two parties who can come to an arrangement that suits them. Instead we try to create a framework where the conditions under which fair and honest trading takes place are set out clearly and any imbalance in knowledge between trader and consumer can be addressed. The aim is to create a situation where consumers can make properly informed choices when they buy products and services.
The sale of timeshares, timeshare-related services and other long-term holiday contracts is an area where European-level legislation is considered necessary. We now have a wider range of protections in place. If significant evidence arises that there is general unfairness on an ongoing basis, that is something that the Government can keep under review. The evidence and the cases that the hon. Lady has presented help with that. I encourage consumer groups that have been campaigning on the issue to be prepared to put those cases together and to collect the evidence, particularly when it comes to the review in 2014, which I will come to as she asked for my views on that.
To return to what can be done to help the people who are having problems now— current timeshare owners—the trade body representing the sector across Europe, the Resort Development Organisation, makes it clear that its members recognise the damage that these legacy issues continue to inflict on an industry that is focused on moving on, developing and improving its customer service offer. They clearly have an interest in trying to improve the reputation of timeshare contracts, particularly because, often, the newer types of contract, as a result of the protections that are in place, bear little resemblance to those that were offered in the past. As a result, that organisation and its members are willing to engage with timeshare owners to try to resolve matters when ownership is impractical or unwanted, although, as the hon. Lady pointed out, that is not universally the case.
One element has not been touched on in the debate but is important. What might be the perfect solution for an individual timeshare owner who is stuck with a contract that they do not want, might have knock-on effects for people who own the other weeks of the year of the timeshare, or other properties in the resort. That is where the nub of some of the problems lies. Because the way the contracts are structured is such that there is a collective obligation to fund the maintenance and upkeep of the resort, if individual owners rescind the contracts or hand them back without them being sold to somebody else, the members who remain generally have to bear the increased costs and the burden of the lost revenues unless a new owner can be found. That might not be difficult for popular weeks, such as in the school holidays, but it can present difficulties for less
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attractive contracts. Many timeshare contract owners have already found that reselling is not straightforward. This is where some of the issues of individuals’ rights can rub up against one another. A huge extra burden can be placed on others without their having had the opportunity to do anything about it.
There is a body representing the interests of timeshare owners and owners’ committees which also says it is ready to assist and advise timeshare owners in difficulty who want to get rid of their timeshare contract: the Timeshare Association, also known as TATOC. It publishes a broad range of consumer guides, including a guide on timeshare disposal. It says that it is happy to engage with individuals to discuss their particular problems, and it has a track record of working with resort owners and managers to try to resolve some of the difficult issues.
I want to touch on one group that the hon. Member for East Lothian named: Macdonald resorts. At least one of the cases she mentioned was to do with Macdonald. The Scottish highlands is one of the places in the UK with a lot of timeshare resorts, and those of us who have been to conferences up in Aviemore will be very familiar with Macdonald hotels. Macdonald resorts is aware that significant concerns have been raised. The Timeshare Association has also been trying to engage the company in the issue, and I understand that a way forward has been identified for those who do not want to continue with their timeshares.
It is worth pointing out that Macdonald manages its resorts on behalf of the owners’ committees, and in these cases the owners’ committees had instructed Macdonald to take action against those who no longer wanted to pay the maintenance fees, because the remaining owners would be picking up the tab. It is important that sensitive negotiations to try to resolve such issues take place through organisations including TATOC, as competing interests are involved.
Fiona O'Donnell: Has the Minister considered a model along the lines of what we have in the travel sector, where a levy is made on companies, which is then a pooled resource that can be used when these situations arise?
Jo Swinson: The hon. Lady makes one suggestion about how these issues could be addressed. Clearly in addressing possible ways forward, a proper assessment would have to be made of the benefits against the cost to businesses, including businesses where these models were not being used, where there were not particular problems, or where they had been managing to resolve any issues in a much more consensual way. Without making any firm commitments, I agree that that suggestion might well need to be looked at as part of a broad range of potential solutions. It may well end up being a disproportionate response to the particular problem that needs to be addressed, but I certainly think it is worth considering.
Fiona O'Donnell: Has the Minister looked at the Spanish example and how they have managed to come to terms with that conflict of interests?
Jo Swinson:
In the Spanish example, they also have the 50-year contract unfair term, where the contracts become unenforceable. We are dealing with different
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legal systems, of course, and different economic circumstances, but it is definitely worth looking to see whether any lessons can be learned from how fellow European countries have dealt with some of these issues. Also, as the directive will be up for review three years after it came into force, that presents an ideal opportunity to consider how it has been implemented both here in the UK and in other countries, and whether there is some best practice that can be shared.
Jim Shannon: On the Timeshare Association, the Minister mentioned that alternatives and other options had been found for people who have timeshares. Will she elaborate on that? What is the success rate? What are those options? If they were on hand, perhaps that would help people to identify some way forward.
Jo Swinson: I would not want to paraphrase the entire guide to timeshare disposal, which the TA produced and which could probably say it better than I could. I can recommend that publication to the hon. Gentleman, as it would be useful for him to have a look at it. In general terms, buyers can be found for the contracts in some cases, whereas in others resort owners have a points system in a second-hand market. For example, where the owner of a timeshare contract is no longer able to access the benefits of the contract, perhaps because the location is a long distance away and they can no longer travel far because of age or infirmity, they might be able to swap the contract, through that points market, changing to a different property or a different resort much closer to home. Sometimes people are just seeking variety, because they do not want to go to the same place they have been going to for 15 years, and that can provide a helpful option to individuals in this situation. A wide range of avenues can be explored. Of course I am also looking at the issues arising from some cases where, because of age or a particular medical reason, there clearly will not be any benefit to the individual. In some of those cases resort owners have also been able to show flexibility in taking back those contracts. So a range of different routes can be explored but I certainly encourage anyone who finds themselves in that situation to make contact, because each individual case will be different and getting specific tailored advice would be helpful.
Another issue that has been raised is that of bogus resellers and, indeed, bogus compensators—we end up rolling our eyes, thinking that there will always be people who want to rip other people off. It is a sad state of affairs that we get the bogus compensators as well as the bogus resellers. It is positive to be able to report that the Office of Fair Trading has taken proceedings in the High Court in relation to some of the sales and marketing practices of Incentive Leisure Group Ltd, Personal Travel Group Ltd and others, and that legislation is already in place to tackle bogus resellers. The enforcers, who include not only the OFT, but trading standards, can obtain enforcement orders against companies under the Enterprise Act 2002. Let me give an example of how that can be used. Final enforcement orders were obtained in March 2012 against seven individuals and the companies concerned. Among other things, those orders prohibit the companies and individuals from engaging in misleading sales practices when dealing with people who want to dispose of their timeshares, and the orders require customers to be given cancellation rights in certain
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circumstances. So legislation and protection is in place, and it can be, will be and is enforced. That can provide reassurance, in any event.
Long-standing timeshare owners can pursue solutions through a range of avenues, even though before 2011 they did not have the revised cover of the new European directive on timeshare products. I agree with the hon. Lady that these issues can be very distressing and difficult for the people in the situation she describes. On a positive note, however, these issues should increasingly become a thing of the past, because of the new rules that are in place, to which I referred.
The agreement of the new timeshare directive in 2009 brought with it a raft of new protections to provide consumers with the tools they need properly to assess the value and detail of not only timeshare contracts, but timeshare exchange contracts and, most importantly, contracts for other long-term holiday products. Although “other long-term holiday products” is a clumsy phrase, it had to be designed because when the first directive tightened the conditions under which timeshare contracts could be sold, effectively outlawing the worst of the timeshare sales practices that were so prevalent in the ‘70s and ‘80s, these other products suddenly emerged to circumvent that directive.
The new directive was implemented in the UK by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010, and I will give the House a few examples of how we saw the rules tightened significantly. For example, much more information needs to be provided to consumers about how the contract can be terminated, the methods by which future costs, such as maintenance charges, will be calculated, the degree to which timeshare owners have a role in decisions about future costs and detailed information about precisely what rights are provided under the contract. All that information is considered to be part of the contract. Importantly, the directive also provides the consumer with 14 days in which to consider the decision and withdraw from the contract if they decide it is not for them after all. No money can be taken from the consumer until that 14 days has elapsed.
The regime is generally recognised as a success. As the hon. Member for East Lothian said, complaints about timeshare sales have decreased markedly and the industry reports provisions such as the perpetuity clauses she mentions as such a problem are increasingly rare. I am sure she welcomes that fact. She asked about the review in 2014 and, as with any directives that are implemented, we are looking at how the provisions are working.
It is important that when there is evidence of problems in the industry, it is properly gathered together. Of course, the UK Government are in a position to communicate with the Commission on any problems that have been found. Obviously, whether any changes are needed will ultimately be for European agreement, so I encourage those campaigning on the issue not only
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to pull together the evidence and the case but to consider what is happening in some of the other countries in the EU in order to see whether any links can be forged with those campaigns.
For those products that do not fall under the timeshare directive, other EU legislation provides for contractual rights on the sale of services and withdrawal rights in the case of off-premises sales. Those rights still apply. Irrespective of the extra coverage provided by the timeshare regime, the EU legislation outlawing unfair contract terms and misleading and aggressive commercial practices also applies, as it does to all consumer sales.
I acknowledge that there might be no easy answers for those who have timeshare contracts—agreed, in some cases, a long time ago—in which they have discovered that provisions that did not seem to have significant consequences at the time are now a significant burden and a worry. Aside from encouraging those affected to continue to engage with the contracting parties and associations that might be able to help, I hope that I have been able to reassure the House and the hon. Lady in particular that there are now far more robust protections for consumers in the sector. The signs are positive that the new protections are working. Unfortunately, there will always be some in the market who attempt to operate outside the law, as there are in other markets, but the new regime seems in the main to be robust enough to ensure that the issues that the hon. Lady has so understandably raised tonight should not arise in the future.
Fiona O'Donnell: I sense that the Minister is drawing her remarks to a conclusion, and I wonder whether she thinks it is good enough that there should be such a diversity of response from the different companies when people seek to end the contracts in perpetuity. Is that really good enough? Should there not be one standard throughout the sector?
Jo Swinson: The hon. Lady makes her point very strongly. By raising the issue in the House this evening, she has done a great service in raising its profile. I am sure that the resort owners and companies involved in timeshare contracts will be following proceedings in the House with great interest. As she pointed out, in some cases resort owners were moved to, let us say, more speedy and helpful action for customers when The Sunday Post got involved and drew attention to the issues. There can be great power in highlighting to the public eye cases in which companies are not acting how people would wish them to. The reputational impact of that can be a powerful motivator.
I know that the hon. Lady is an assiduous campaigner and I am quite sure that the debate is not the end of the matter for her. I wish her well with continuing to raise the issue and am happy to engage with her and with others campaigning on the issue in the future.