[Relevant documents: The Second Report from the Joint Committee on Human Rights of Session 2006-07, Legislative Scrutiny: First Progress Report, HC 263, and the letter from the Secretary of State for Trade and Industry to the Chairman of the Committee, dated 12th March 2007.]
Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.
I have been involved in consumer affairs in the House for more than 20 years, and I feel passionate about the issues. I am proud that under the present Government the country is seeing the biggest overhaul of consumer protection for the past 20 years. The Bill is part of that story. We want to empower consumers—to give them a strong voice and access to redress when things go wrong. We also want to ensure that rogue businesses have nowhere to hide. The Bill embodies the Government’s commitment to a fair deal for consumers, and that is why I am delighted to present the Bill to the House today.
The Government have an impressive track record in competition and consumer policy, but we are not complacent. Our goal is to have the best competition and consumer regime in the world by 2008.
Sticking up for consumers does not mean bashing legitimate business. Indeed, we have a responsibility to businesses to get rid of the rogues. Honest, well run businesses should not be undercut by competitors who rip off consumers. Often, the reputations of many responsible firms are tarnished by the actions of the irresponsible few.
Government have a key role to play. Consumers need to have, first, the right information to spot a good deal; secondly, the knowledge to tell when they are being ripped off; and thirdly, we need to give enforcers the power to catch the rip-off merchants. Those are the principles driving the Bill.
Before I speak about the Bill in detail, I want to explain how it fits with other changes that the Government are making to empower consumers. The Consumer Credit Act 2006, which received Royal Assent last March, greatly improves consumer rights and redress in relation to borrowing money. The Act also introduces major changes to the licensing of consumer credit businesses, and new powers to drive dishonest traders out of the market.
The unfair commercial practices directive is another powerful tool. It is designed to tackle the rogue traders and unfair business practices that target the most vulnerable people in society and damage the reputation of honest firms by association. Once implemented, that directive will ban 31 types of unfair commercial practices outright, including high-pressure or unreasonably persistent selling methods. It will tackle unfair sales ploys such as prize draw scams, including phone-in prize draw scams; bogus closing down sales; sellers who refuse to leave a customer's home until a contract is signed; and traders who prey on elderly people's fears about personal security to sell them burglar alarms. The directive also introduces a catch-all “duty” not to trade unfairly. Currently, a practice would be examined against prescriptive legislation, which unfair traders can try to avoid. The general duty will be able to catch all unfair practices that might affect consumers.
I wonder whether the catch-all provision would cover the practice that a number of disabled people experience where there is an advert for an electronic buggy or bed with a phone number. When they phone up asking for a brochure, one arrives that has no prices. If they ask what the price is, they are not told. Instead, a salesman calls and what happens thereafter is pressured sales. Will that kind of sales technique be outlawed under those provisions?
I can confirm that that is the case. As I get into my speech, hon. Members will see that the Bill covers issues relating to solicited or unsolicited sales. That is important. I think that there is all-party support in that respect.
Together with this Bill, those measures form a comprehensive package that will empower consumers more than ever before. As I said, I have been involved in consumer affairs for over 20 years. The Bill is an effective refurbishment of measures introduced over that period.
The Bill represents an important step forward in consumer protection. It contains a range of important provisions that will create a new, stronger, more coherent consumer advocacy body to represent consumers across all markets; introduce availability of redress for consumers in the energy, postal services and estate agency sectors; and improve regulation of estate agents and doorstep selling.
The Bill has already benefited from full and thorough debate in another place. Some valuable changes have been made to it as a result. I shall outline some of those changes as I describe in more detail the content of the Bill itself.
Will the Minister clarify one issue of detail on the name of the new consumer advocacy body that is created by the Bill? The Bill describes it throughout as the National Consumer Council. The phrase “consumer voice” has been used extensively by Ministers. Will he clarify whether that phrase is still in current usage?
It will be the National Consumer Council. As I get into my speech, the hon. Gentleman will see what the process is. If he wants to intervene on me again, he may by all means do so.
I apologise. I just lost the plot there—[Interruption.] I thought that that would get a chuckle. I lost my place in my speech.
As well as creating a new, stronger and more coherent advocacy body, we will introduce the availability of redress schemes and improve the regulation of estate agents and doorstep selling. The Bill has already benefited from having been debated in another place, and further issues might arise in Committee. The Bill was dealt with in another place in a non-controversial and non-partisan way, and I will give serious consideration to suggestions offered in that spirit for improving the Bill—but, obviously, I will not give serious consideration to matters raised simply for partisan reasons.
The consumer voice provisions form the largest part of the Bill. They will bring together the existing National Consumer Council, Energywatch and Postwatch to form a strong and powerful consumer advocate: the new National Consumer Council. The Bill also allows for the Consumer Council for Water to be brought inside the new National Consumer Council tent in the future, after public consultation.
Some critics of those proposals have raised concerns about loss of expertise and loss of independence. Some have even suggested that the Government are creating this new body in order to silence criticism of Government action, on post offices in particular. Let me say now that our objective in bringing these bodies together is to create not a mouse too meek to challenge us, but a lion who will, I hope, roar on behalf of consumers. We do not want to weaken consumer representation, but to strengthen it. We do not want to lose valued expertise, but to build on it and make sure that all sectors benefit from it. A strong rope is made from intertwining different strands together. That is why we will create the new National Consumer Council.
Markets for essential services such as energy, post and water have been liberalised one by one over a period of time. As a result, we now have several sectoral consumer bodies, as well as the National Consumer Council. The National Consumer Council, Energywatch and Postwatch have provided a valuable service to consumers until now, but there are key issues to be addressed. Consumer representation is fragmented. Consumers are confused about where to go for help. Lessons are not being shared between sectors. Resources and information can be shared more effectively.
It is now time for change. The new National Consumer Council will be a strong and independent advocate for the consumer. It will speak with expertise and authority in discussions with companies, with Government and in Europe. It will be able to look across sectors, and to give advice on the basis of expert and informed analysis, and it will draw on all its skills and expertise to tackle the biggest problems in the areas of most concern.
The Minister talks about the new body being an advocate for consumers. Does he mean that it will be so in a general sense by advocating the needs of consumers, or does he envisage it taking up specific issues? I know that changes have been made in the Lords in respect of some energy consumer issues, but there is still concern that vulnerable people might not get their cases dealt with quickly unless someone acts as their advocate.
I assure the hon. Gentleman that its role will be both general and particular, and that it will have a role specifically to tackle issues to do with vulnerable consumers, in terms of dealing with their initial problems and complaints and in assisting them through the process—all the way through, if necessary—of getting redress for their personal circumstances. The hon. Gentleman can rest assured that the proposed legislation will do that.
Consumers will know when to turn for help and who they can turn to for help. Consumer Direct will act as a first port of call, dealing with simple complaints and inquiries, or referring consumers on to redress schemes if the company in question fails to resolve the problem. The hon. Gentleman’s point is well made in that regard. Even at the stage of the first port of call with the company, the most vulnerable consumers will be assisted. When they make contact with Consumer Direct, they will not simply be told, “Well, go away and see what you can do, and then come back to us if the situation has not been resolved.” We will provide an end-to-end service.
Let me be clear: we have big ambitions for the new National Consumer Council that I am confident this House will share. Our challenge is to take the best of the current organisations—their knowledge, their independence, their ability to act quickly—and to build that into something even better: a champion fighter that is able to protect consumers and that is admired for its expertise, trusted for its advice and feared by those who would rip off consumers.
I should at this stage report that we had an informative and thorough debate in another place. As a result of listening to concerns raised, the Government laid a number of amendments. In particular, there were concerns about the position of the Scottish and Welsh Consumer Councils. It has always been our intention that those bodies should undertake the same key functions as the new National Consumer Council. We laid a number of amendments in another place to clarify the role of the Scottish and Welsh Consumer Councils, and to ensure that they are provided with the power to exercise the same key functions within their relevant territories, except for a very few instances where it is necessary for the new National Consumer Council to maintain a co-ordinating role.
The Bill also extends the availability of redress for consumers in the energy and postal sectors. Energywatch and Postwatch currently labour under a significant burden of complaints. However, they can seek to resolve these complaints only through persuasion. They have no powers to enforce resolution and cannot provide for redress or compensation.
The Minister says that he has great hopes for the National Consumer Council. Will it be structured in such a way that other industries can be incorporated at a later stage and is that his intention?
That is a fair question. I have already indicated in consultation that the next sector that I would like to see join is water. We do intend to build on this start over time, but if changes are to be made, they will have to be made by consultation. That is critical.
Part 2 of the Bill will, for the first time, give consumers guaranteed access to redress schemes that have the teeth to enforce their awards. The Bill will enable Ministers to require suppliers or service providers in the energy and postal services sectors to belong to redress schemes. That will give consumers not only confidence that their complaint will be resolved but access to compensation and redress where that is warranted.
The redress provisions in the Bill have been strengthened by changes resulting from discussion in the other place. Gas transporters and electricity distributors have been brought within the scope of the redress schemes. We have also made it absolutely clear that the new national consumer council can investigate complaints relating to threatened disconnection of gas or electricity supplies as well as actual disconnection. That also relates to the point made by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) about vulnerable consumers. Furthermore, the new national consumer council can investigate complaints from consumers who use prepayment meters, where disconnection arises as a result of a failure in the prepayment system. Those changes provide yet further protection for consumers, especially the most vulnerable consumers in our society.
As I understand it, the energy sector already has a redress scheme, and the energy supply ombudsman already exists. However, there is no such ombudsman for the postal sector, which is a major concern for consumer bodies and businesses. When will there be a postal services ombudsman?
I will come back to that point, but the hon. Gentleman may rest assured that for the first time ever each of the sectors in the Bill will have comprehensive redress schemes, which will be consistent with each other. That is the whole purpose of the Bill, as I was trying to get across, and I hope that that reassures the hon. Gentleman.
Estate agents play a crucial role in the home buying and selling process. For most consumers, buying a home is the most critical and the most expensive purchase that they ever make. I speak from personal experience when I say that it can be shattering to the nerves on occasion. It is vital that the estate agency market works well and that consumers are protected against unfair practices. Consumers need to be confident that estate agents will deal honestly with them; and many estate agents are rightly angry that their reputation is tarnished by a small and unscrupulous minority.
The Office of Fair Trading recognised those issues in its study of the estate agency market published in March 2004. The OFT found that the market was generally competitive. However, it also found that a significant number of consumers were not happy with the service that they received. Some consumers simply received poor service with estate agents turning up late for appointments, for example, or not returning keys on time. But other complaints were more serious, such as failure to pass on offers to sellers or failure to declare a personal interest in a property. The OFT therefore made a number of recommendations to put that right.
The Government accepted the OFT’s recommendations in July 2004. In fact, in the area of redress, the Government went even further than the OFT and promised to make membership of a redress scheme mandatory for all UK estate agents. We fulfilled that promise in part by amending the Housing Act 2004. As a result, complaints against estate agents relating to home information packs in England and Wales will now be addressed through redress schemes.
The order requiring estate agents to belong to a redress scheme for the purposes of HIPs was laid on 1 March, and estate agents have until 1 June to sign up to an approved scheme. But this Bill goes further. It will fulfil our promise that a private individual with a complaint against an estate agent should have access to redress. Estate agents could face costly pay-outs and possible loss of livelihood if they do not abide by the law and generally accepted voluntary codes of conduct in the industry. I am confident that we will see higher standards as a result. Our intention is that this should come into force in April 2008.
At the same time as providing redress for consumers the Bill also tightens the current negative licensing regime. First, the Bill will improve the audit trail for transactions by requiring estate agents to make and keep records, including records of offer letters, for six years. Secondly, it will give the OFT and local authority trading standards officers powers to go into premises and inspect records in a wide range of circumstances. That will enable them to investigate not just criminal offences but all breaches of the law and of undertakings given to enforcers. Finally, the Bill will expand the circumstances in which the OFT can consider the fitness of an estate agent to practise, and if necessary it can take regulatory action against them.
At present the OFT can ban an estate agent only when they have been convicted of specified criminal offences. The Bill will allow the OFT to ban an estate agent when there is sufficient evidence that an offence has been committed, even if there is no conviction. That will ensure that the OFT can consider the fitness of estate agents, for example, where another regulator has taken enforcement action against them but they have not been taken to court. Furthermore, the OFT will also be able to ban an estate agent when an enforcement order or a statutory undertaking under the Enterprise Act 2002 has been breached.
Those changes are needed to bring the Estate Agents Act 1979 into line with modern enforcement practice. The Government wholeheartedly support the efforts of the National Association of Estate Agents and the Royal Institution of Chartered Surveyors to raise standards through training. Any good estate agent should have knowledge of the legislation governing estate agents, just as any professional should be aware of the legal obligations relevant to their industry. However, the OFT found that in the majority of cases where it took action against an estate agent the root cause was lack of integrity or honesty—not lack of knowledge of the law.
What the Bill does is more sophisticated than positive licensing: the estate agents provisions will mean that a consumer dealing with an estate agent anywhere in the UK knows that there is somewhere they can go to seek redress. Any estate agent who does not belong to a redress scheme will now face being fined and banned as a result. More evidence and audit trails will make it easier for enforcers to deal with rogue agents and remove them from the marketplace. At the same time, other measures strengthen the current regime and give enforcers the powers they need to take action against rogue agents. Ultimately, that approach will serve consumers better.
Finally on this issue, I shall comment on the concerns raised about the fact that letting agents and others are not included in the Bill. Lettings and new build are important sectors of the property market, and the Government are committed to ensuring that consumers are not disadvantaged in those areas. However, the Bill implements the recommendations made in the OFT report on the estate agency market. The report did not look at lettings agents, property developers or any other property professionals, so we do not yet have a clear evidence base for extending the redress provisions to those sectors.
Secondly, the Bill amends the Estate Agents Act 1979, which has a specific definition of estate agency work. Changing the definition would require a lengthy and careful examination of the consequences for the whole Act. However, the Government are committed to looking at the whole property market and, on the basis of proper research and evidence, to consider what more needs to be done. At my prompting, as Minister with responsibilities for consumers, the Government will conduct a review of the property sector, including looking at redress for lettings and new build. Ministers will consider carefully the conclusions of that work and decide the next steps that should be taken. I hope that is seen as a positive response to the comments made in another place.
Part 4 contains provisions relating to doorstep selling that will give consumers the right to change their mind, whether they asked for the sales visit or not. This part of the Bill has a long history, going back to 2002 when Citizens Advice submitted its report, “Door to Door”, to the OFT as a super-complaint. The OFT subsequently made a number of recommendations for improving consumer protection in that area. As part of the Government’s response to the OFT report, published last September, we decided to introduce primary legislation to enable us to make regulations, so that consumers who ask salespeople into their home will also have cooling-off rights for doorstep sales; at present, they apply only when a salesperson turns up uninvited.
Breaking down the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, business and enforcement agencies alike. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses will not generally need to spend time establishing whether their visit is solicited or unsolicited. The provisions are particularly important for vulnerable consumers who—having invited a salesperson into their home—can feel pressured into buying something they do not want or need. Together with the unfair commercial practices directive, the measure sends a clear message that businesses that lack integrity and feed on fear will not be tolerated.
The Government are committed to a robust and effective consumer and competition regime—one that is fair to consumers as well as to business. First, the Bill creates a new National Consumer Council—a powerful advocate for consumers. Secondly, it gives consumers the rights to redress that they deserve. Thirdly, it demonstrates our commitment to getting rid of rogue estate agents. Fourthly, for the first time, it tackles effectively rogue doorstep sales persons. I look forward to hearing the contributions of right hon. and hon. Members to the debate on this important Bill. I commend it to the House.
I thank the Minister for talking us through the main points of the Bill, which Conservative Members broadly welcome. As he said, it is important for consumers, it merges key consumer bodies and it makes a serious attempt to give consumers greater rights when buying or selling their house.
I pay tribute at the outset to the work done in the other place by my noble Friend Baroness Wilcox and others whose efforts have already significantly improved the Bill. We firmly believe in consumer choice and in the accessibility of information to enable people to exercise that choice. That is best achieved through a spirit of shared responsibility with the Government, businesses and consumers all working together. That, of course, is not always the reality and when businesses fall short of their responsibilities, it is important that consumers have the means available to obtain timely and efficient redress. It is on the basis of those principles that we approach the Bill today.
We support much of what the Bill does, but have several specific concerns, some of which the Minister referred to earlier. One of its principal features is the amalgamation of Energywatch, Postwatch and, in time, the Consumer Council for Water within a new statutory national consumer council. The Government argue that it is designed to strengthen and streamline consumer representation. However, the Government’s record has given rise to concern that the implementation of those changes may mean that consumers are, in fact, disadvantaged by these proposals.
There is, for example, increasing disquiet about how and when the Consumer Council for Water will be merged into the new regime. The next water industry price review, which will fix limits for water companies’ charging systems, is due to be completed in 2009. The period leading up to that date will therefore be a busy one for the Consumer Council for Water, yet it is just the period in which the Government want to begin abolishing it.
I thank the hon. Gentleman for giving way and apologise if I misrepresent what he has said. I recognise the point that he makes, as I have already met representatives of that body and suggested that I would be happy to bring forward the review if it would help in dealing with the other matters that the hon. Gentleman mentioned. I am now waiting for a response.
That is not in the Bill at the moment, but I welcome and appreciate the Minister’s constructive response. If it is amended in Committee along the lines that he described, that would make for good progress and we would be happy to follow that line with him.
The last couple of minutes seem to have been more effective than the entire proceedings of Public Bill Committees, so we are making progress. I am grateful to the Minister. I do not know whether I am going to achieve quite as much with my next point, but I am going to try.
The timing of the abolition of Postwatch is also unfortunate, to say the least. At just the time that the Government are making deep cuts in the post office network, they are planning to mire the postal consumer watchdog in a transition process, too. Surely there is a danger of giving less focus to consumers at just the time that they most need the representation that Postwatch can offer.
I have tried diligently to make use of Postwatch, whose motives are tremendous, but for several years it has been completely overwhelmed and unable to respond within a reasonable time scale. Actually, the best watchdogs are consumers themselves: the people in receipt of the letters––or not, as the case may be.
I have to respond to my next-door neighbour in London. Extensive work has been done in co-ordinating with the body concerned. It is engaged at the very highest level—at every level—on a fortnightly basis with the planning and implementation process. Perhaps it should spend more time on that rather than sending out reports to MPs about fears that are absolutely groundless.
I think many may disagree with what the Minister says about groundless fears. There are serious concerns about the entire future of the Post Office. Postwatch and successor bodies will be responsible for elements of consumer representation and we want to make sure that the mechanisms for that are of the highest possible quality.
Let me just ask the House whether bigger means stronger. Conservative Members are concerned about the skills and experience that have been built up in Postwatch and Energywatch. Those bodies know the detailed issues in their sectors and have experienced people working for them. Perhaps the Minister will now have to concentrate on how he will ensure that those valuable skills are transferred intact to the new body. For example, will the new body retain separate sectoral specialists? Can he assure the House that it will carry at least the same weight and reputation as the existing sectoral bodies that have worked hard to get name recognition?
We are in the fortunate position that the Minister replying to the debate is responsible for post offices, so I would like to reinforce my hon. Friend’s point. Postwatch has learned from the problems of the urban reinvention programme and has become a sufficiently more effective body. It has a big contribution to make to the current round of post office closures planned by the Government, so it is a great shame that it will be abolished at this precise moment.
I am grateful to my hon. Friend. To many, there is a suspicion, on which they need reassurance, that the decision to create the new body was motivated not by a desire to improve consumer representation but simply as a drive to cut costs. My hon. Friend asked the Minister earlier about the name of the new body. I did not quite understand the answer; it came out as a bit of a jumble and appeared to us all as a bit of a Prescottism. I am confused, so perhaps the Minister can clarify what its name will be.
That does clarify the matter, so I am grateful to the Minister. However, in the course of his earlier answer, he used, perhaps by accident, the word “voice”. However, we now know what the answer is, and that is fine.
Our second area of specific concern is the lack of provision relating to internal complaint handling procedures. We differ from the Government over how best to ensure that complaints are dealt with quickly and effectively. Redress schemes are at the heart of the Bill, yet they are the last resort of the unhappy consumer. The first port of call is, and should be, the company from which the goods and services were purchased. Effective complaints procedures at this stage would have the effect of ensuring that more complaints were resolved at their outset. It would reduce the burden on the new NCC and make for better satisfied consumers too. Good internal complaints procedures are the best way to protect and empower consumers, and yet there is precious little about that in the Bill.
Existing redress schemes vary greatly from granting immediate access to insisting on a three-month wait before the consumer can invoke the services of the ombudsman. Three months is a long time to wait for a consumer and that creates an opportunity for supplier companies to avoid resolving complaints quickly, knowing that the process for the consumer may simply turn out to be too long and drawn out for them to bother pursuing things further. Conservative Members believe that companies should have in place effective internal complaints procedures to deal with consumers quickly and efficiently. The best way to make that happen is to insist that internal complaints procedures that reflect best practice are a fundamental requirement for the membership of any approved redress scheme for which the Bill provides.
This is not re-inventing the wheel—a similar model already successfully works in the financial services sector. The Financial Services Authority requires that membership of the Financial Ombudsmen Service is dependent on an organisation having an appropriate and effective internal complaint-handling function. We hope that a similar system can be replicated. I am glad to see the Minister nodding. That is good news, if that is what is going to happen.
Initially, the Government made only a small concession towards this approach when the issue was raised in the other place. The phrase that they introduced into clause 49 was a tad vague. They required regulators only to
“have regard to…such principles as…the…generally accepted principles of best practice”.
Of course, that is welcome, but, to my mind, it does not really go far enough. Effective internal complaint handling is central to the aims of the Bill. It should be a prerequisite of redress scheme membership and that should be included in the Bill. Redress schemes are being provided to catch the worst failings of their member companies, but it must be preferable for the redress schemes to be proactive about preventing failures in the first place.
Our third area of disquiet concerns the independence of the new national consumer council. The Government have said that they want the new NCC to be independent and for the relationship between the NCC and the Government to be transparent and accountable. That is a proper aim, but I fear that the text of the Bill reveals a rather different approach. Clauses 17 to 19 concern reports and advice that the NCC may produce on consumer matters. In each of the circumstances described in the Bill, there is discretion as to whether the reports are made publicly available. When the NCC itself determines that the report shall be produced, it has the discretion to publish. However, when the Government ask the NCC to report on specific matters, it is the Secretary of State who chooses whether the public ever get to see what the NCC has to say. This is a serious matter of public accountability and of transparency for the consumer. The NCC will receive public funding, but the reports that it provides to the Government are not necessarily—so it seems—to be made available to the taxpayers who fund them.
We believe that all reports produced by the NCC should automatically be made available to the public. That need not raise a cost issue, as has been claimed, because the documents could simply be made available on the NCC’s website. A Minister in another place, arguing against that suggestion, claimed that not all such reports would be “of interest to consumers”. However, I fail to see how reports from a public body set up to look after consumers’ interests would not be of interest and relevant to consumers. Work that one out, Madam Deputy Speaker. I cannot and I do not know who can.
It seems that the Government wish to use the NCC for their own purposes, or at least that could be the perception. The fact that the NCC will not have the right to publish its own reports goes to the heart of the question whether the relationship between the Government and the NCC is sufficiently transparent. On this side of the House, we believe that it is essential that all such reports are published to ensure that the NCC is genuinely independent. For years, the NCC has been funded by the Government but has been unhindered in choosing for itself the focus of the work it undertakes and then reporting on that as it wished. I hope that the Secretary of State will agree that this is a better way to continue in the interests of empowered consumers.
Our fourth, and perhaps most serious, area of concern relates to estate agents. For the vast majority of people, buying a house is the single largest financial commitment they ever make. It is therefore right that the Government have sought to tackle the problem of rogue estate agents. We welcome the steps taken in the Bill to ensure that estate agents are members of an approved redress scheme and to give more powers to the Office of Fair Trading to take action, where appropriate, against estate agents. We are concerned, however, that in both those regards, the provisions do not cover all house sales. The Minister referred to this matter a moment ago, but we will have to explore it further in Committee. The Government cannot hide behind the supposed complications that follow amending an existing piece of legislation. It seems a grave omission that new homes sold directly by the developer and houses bought and sold off-plan are not covered. After all, that still involves the purchase of a house. It seems illogical that the Government should take a positive step regarding estate agents and yet not extend the same provisions to cover all house sales.
I am also worried that the penalties set for estate agents will be too low. For example, the penalty for not joining a redress scheme will be only £1,000—I think that the amount was raised from £500 to £1,000 in another place. However, given that the average fee charged by estate agents is approximately three times that—£3,000—the penalty does not seem an adequate deterrent. We thus intend to table amendments in Committee that would raise the penalties for that and other rogue practices up to even £10,000.
The third flaw in this part of the Bill, and the probably single biggest omission in the Bill, is the lack of any reference to the lettings and residential property management markets. There has been rapid growth in that sector over recent years. Indeed, since the Estate Agents Act 1979 was passed, the proportion of the housing stock that is let has increased by a third. Letting not only accounts for a significant proportion of the housing market, but provides a sizeable chunk of the work undertaken by businesses that would call themselves estate agents. That alone should be reason enough for lettings and residential property management work to be included in the definition of estate agency. However, if we add in the fact that consumers in the lettings market are likely to be less able than others to afford professional advice and advocacy, it becomes all the more important that protection should be afforded to them.
In another place, the Government argued that fully updating the 1979 Act so that it would to cover lettings and residential property management would be too complex. Despite what the Minister for Trade said in his speech, we still find that totally and utterly unconvincing. The Government further argued that the Office of Fair Trading report on the estate agency market did not cover lettings—the Minister referred to that today. That was, of course, the Government’s omission, and I hope they will not in this House rely on that same omission as a justification for disadvantaging a whole group of consumers.
The redress scheme model that is at the heart of the Bill is a simple enough idea and it is a good one. Conservative Members see no reason at all why the Government could not extend the areas of work covered by redress schemes to include lettings and residential property management. That would be a step in the right direction, but we would urge the Government to go further. They could, and should, use the Bill to update the 1979 Act so that it would cover lettings and, more generally, to make it better reflect a property market that has changed a great deal in the past 28 years. The House might not get an opportunity to examine estate agency again for another 28 years, so surely this is the right time to act.
Although the Bill is somewhat flimsy, it is not a bad Bill, and there are aims in it that are to be commended, especially the provision of a basic redress scheme for home buyers. Our concerns are about the strength and independence of the new national consumer council and the regulation of estate agents in all their activities. In Committee, we will table amendments to ensure that the NCC is free to publish its reports, to increase the penalties for rogue estate agents, and to extend protection to all house purchases, including those bought off-plan, and the lettings market. In the spirit of what we have seen this afternoon, I hope that the Government will work constructively with us on those issues so that we can make a little more of this well-intentioned Bill. As it stands, the Government risk missing a golden opportunity to modernise the 1979 Act and to bring better protection to home buyers and tenants. The Bill should also give more power, protection and representation to consumers, especially those in vulnerable groups, so my colleagues and I look forward to working with the Government to achieve that.
I hope that the hon. Member for Rutland and Melton (Alan Duncan) will forgive me if I do not follow up in detail everything that he said. I was slightly surprised, given his Scottish surname, that he seemed to have great difficulty understanding something that we understood perfectly: the accent of my right hon. Friend the Minister for Trade, who showed wisdom and good judgment as he made his speech. In case my right hon. Friend gets a wee bit worried, I have some questions to ask before I finish my speech.
The main thrust of both the Bill and my right hon. Friend’s speech to outline the Government’s objectives is extremely welcome. As my right hon. Friend pointed out, some parts of the Bill do not apply to Scotland—for example, we deal differently with estate agents and some would say we had the wisdom not to privatise water—so I hope that I shall be forgiven for dealing only with those parts of the Bill that I genuinely believe are important to my constituents.
I welcome the fact that the Bill is designed to streamline consumer advocacy. As my remarks will demonstrate, I want to see more consumer advocacy. I also welcome the creation of a body working on behalf of consumers that will have the teeth to stand up to suppliers across the industries covered by the Bill and, indeed, to Governments when it takes the view that that is necessary. However, it seems to me vital to ensure that the responsibilities now carried out by organisations such as Postwatch and Energywatch are not lost along the way—an important point made by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith).
In particular, I shall deal—[Interruption.]—not with telecommunications, which seem to be playing a part in our debate, but with the energy industry. The House will understand the reasons why. My constituents have strong views on what has been happening—or not happening—recently to gas and electricity prices. My Lanarkshire colleagues and I have been pursuing these matters since last June, because we are genuinely concerned. Wholesale prices have been falling, but the consumer is not getting the benefit. Some changes have occurred in recent weeks, but they do not go far enough. My interest in the Bill is centred mainly on whether, given the problems in the energy sector in particular, consumers have the protection that I believe they are entitled to expect and that this House might be expected to endorse. I worry that customers are not being given a fair deal in energy and, to be honest, I am looking for further assurances that the Bill leaves room for customers to be made more aware of advocacy than they seem to be today.
I am particularly concerned about two areas: first, the system for dealing with complaints when they are made and as quickly as possible after they are made; and, secondly, the collation of information on the standards of companies’ responses to complaints. My understanding—if it is wrong, I am sure that the Minister for Consumer Affairs and Competition Policy, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), will correct me— is that responsibility for handling complaints, which are currently dealt with fairly comprehensively by Energywatch, will be split between the new NCC, an expanded Consumer Direct helpline and a new focus on suppliers dealing with complaints effectively themselves. I welcome the greater efficiency that that will bring, but I believe that loopholes remain that need to be tightened up; the debate today and in Committee will give us the opportunity to do that. Later, I shall return to the concept of suppliers regulating their complaints system themselves, but my main worry is that certain types of complaint will fall between the posts of Consumer Direct and the new council.
We Members of Parliament all receive representations; we seek to deal with them ourselves, if we can, and then we try to get the help that we think ought to be provided by the bodies that we are discussing today. Although many people outside the House support the Government’s objectives, as I do, they, like me, have questions. As I think hon. Members are aware, Help the Aged gave an example of a particular case to which we can all relate. An elderly lady found that she had a very large bill; clearly, there had been a mistake, and it was not her fault. She contacted Energywatch, which was able to help. As I understand it, under the new system, no one could offer that help immediately, as Energywatch was able to do. The lady was so worried that she was prepared to pay and deal with the problems later, but she would probably have had even greater problems if she had tried to get a solution on her own. That is the kind of issue that the Minister for Consumer Affairs and Competition Policy will want to take on board; I know that he is as committed to consumers as all other hon. Members involved in the debate are.
The Bill’s huge benefit is that it makes more provision for the new NCC to deal with vulnerable consumers. That is a comprehensive description of many people who have genuine problems, including people with disabilities. People who, for various reasons, are unable to express themselves may find themselves with problems, and they are entitled to the help that society wants to provide.
On a positive note, I welcome the provisions on disconnections. The cases of which I have been made aware have been, without exception, absolutely repugnant, and I am glad that there is a drive by the Government to make sure that the problem is reduced considerably, if not removed altogether. It is important that Consumer Direct staff have the necessary training to identify and deal tactfully with vulnerable customers, as existing organisations clearly do. That is a key area, and the expertise built up by staff and existing organisations must not simply be lost along the way.
The right hon. Gentleman makes an important point. He discussed the issue of overcharging by a supplier; he is correct that, in the list in clause 13, there is no provision that the new NCC can apply to deal with overcharging, and I am surprised by that. Furthermore, the clause deals exclusively with electricity and gas, but some of the most worrying cases in my constituency have involved overcharging for water. There is no provision at all in the Bill that covers the special issues relating to water supply. He puts his finger on an important point, and I hope that the Minister will address his concerns in detail when he winds up.
I welcome that intervention. Later, I hope to discuss Ofgem, because there are many lessons to be learned. I will give my reasons for saying that at the appropriate time. The hon. Gentleman undoubtedly has a point, and when we had a debate on the same issue in Westminster Hall a few weeks ago, that point was rightly raised several times.
I am concerned that the new NCC will not have sufficient resources to deal with all the cases involving vulnerable consumers that emerge, and I would like reassurance on that point. Will the new NCC have the capability to help all those who genuinely fall into that category? Some estimate that people in that category account for about 21,000 cases a year.
The right hon. Gentleman made an important point about vulnerable customers and disconnection. The clause on disconnection requires the new body to take up the consumer’s case and advocate on their behalf. The clauses on vulnerable consumers enable it to do so, but do not necessarily require it to do so. If it does not have the resources, it may set a high threshold for the vulnerable customers whom it agrees to help.
The hon. Gentleman is on to something but, as I hope to explain, I do not believe that it is enough to introduce legislation to enable public bodies to do things. They must show that they are willing to show their teeth, and I shall go on to discuss Ofgem, because I am not persuaded that that has always been the case. As citizens advice bureaux have pointed out, there should be a duty with regard to vulnerable customers, just as there is in terms of disconnections. Voluntary organisations and Help the Aged have argued for the need not just for empowerment but for clarity in legislation so that people, especially consumers, know what they are entitled to expect.
It is expected that the shortfall will be reduced or eliminated by suppliers providing better standards of complaint handling, but we are giving a great deal of weight to suppliers’ opinions and their commitment or otherwise. I am enormously worried that those standards have been left entirely to the regulator’s discretion, so we must monitor that and see how effectively the regulator uses—or does not use—its powers. Ofgem has made its views abundantly clear to me personally—that is not to mention all the debates that we have had, the correspondence and so on—in a meeting about energy prices, in which it said that it regarded its role as one in which it was fully committed to the free market, so it was reluctant to intervene. I do not regard that as acting in consumers’ defence—people expect more than that.
My hon. Friend, who is Member of Parliament for Coventry, South and comes from the fine town of Coatbridge—moreover, he was in the same class at school as me—makes a particularly logical point, which I welcome.
Ofgem’s remit is a serious matter, and I know that the House agrees. In the past, wholesale prices have fallen and, again and again, consumers expected to benefit from reductions in retail prices, but that simply did not happen. Ofgem and similar bodies should be subject to a remit that includes the social effect—perhaps we should deal with that in later debates. I am not sure that they take that view themselves, but how can they deliver to the consumer, if they do not bear social effects in mind? We cannot ignore those effects in our constituencies, as people come to our surgeries who are unable to meet their bills. We cannot ignore them, when we know that people with prepayment meters are asked to pay far more than the average consumer and, indeed, ourselves. We cannot ignore those back payments, but, seemingly, the people whom we believe to be responsible say that they are powerless to deal with the problem. Lest it be thought that I am being unfair, Mr. Alistair Buchan, who was very courteous when I met him, told the House of Lords Select Committee on Regulators in February that consumer representation was Ofgem’s “Achilles heel”. I agree that that appears to be the case. If it is, we must try to put it right, and the Bill is a wonderful vehicle with which to do that.
I mentioned energy prices. Ofgem issued a statement on Hogmanay—my hon. Friend the Member for Coventry, South will explain to those who are perhaps not in tune that that is 31 December—that if, after a very lengthy period, the power companies failed to pass on to consumers the reduction in wholesale prices, they might be accused of having “jam on their fingers”. I think the situation called for something much stronger than a statement about “Jam on their fingers”. There was no problem in terms of the power companies’ responsibility to their shareholders or to present or past executives, but where, where, where was the commitment to the consumer? No answer was given to that on Hogmanay or on new year’s day. Consistent with the excellent objectives of the Bill, we need to clarify that.
I shall be slightly less helpful to the right hon. Gentleman this time. It is important to record that many of us feel that Ofgem does a very good job in regulating the energy sector. It understands the problems of energy companies that bought forward in the market and therefore cannot reduce prices as wholesale prices fall. I am totally confident that Ofgem has a firm grip of the situation and as those wholesale prices fall, it will ensure that prices to consumers also come down, as they are now doing.
The hon. Gentleman is entitled to his opinion. He has put it on record and I am sure his constituents will form their view of what he said, just as my constituents will form their view on what I have said.
Given all that I have said and the fact that we have not reached agreement that the standards of complaint procedure should be written into the Bill—I think there is still the possibility of persuasion on that—I have little hope, unlike the hon. Gentleman, that that can be dealt with voluntarily.
If so, why do the Opposition believe there is a need for the Bill? As my right hon. Friend the Minister said, the Labour party was elected on a mandate to seek to protect consumers and that we would not be party to rip-offs, nor will we be. Despite the questions that I have put, which I hope are seen in a positive light, I am delighted that the Government accept their responsibilities. On that, I say very well done indeed.
If the Bill is to be effective, there must be a duty, rather than a power. We must publicly set out the standards that we expect where we think that that applies. If we do not do so now, I fear that the provision in the Bill for the Secretary of State to intervene will be used far sooner than expected. Then, perhaps, the proof of the pudding will be in the eating.
Without Energywatch to push and probe, I fear that standards of complaint procedure will rapidly deteriorate. Alistair Buchan intimated as much to me when I met him—that there would be a void which Ofgem can and should fill. The question is whether that would be enough. We must make sure that in the Bill Ofgem is compelled, not invited, to do so.
Another gap in the new arrangements involves the collating of evidence surrounding complaints. Energywatch has done a fine job of using its own experience and data to identify trends and solve problems. As we all acknowledge, it has made progress on disconnections, billing and so on, which would not have been identified as problems without that outside pressure. The new NCC will have the far greater power to identify problems across sectors, and I welcome that, but it will be hampered in its efforts if the data are not available to it in the first place. I spent months, as have colleagues in Lanarkshire and elsewhere, attempting to get assorted figures concerning the energy sector from companies, and indeed from Ofgem, and I can assure the House that it was no easy job. Our colleagues in Committee will therefore have to give a great deal of thought to that.
The NCC will be aided by provisions in the Bill on demanding such data. I welcome those provisions, which are absolutely essential. However, the information on a lot of relevant material is not recorded, and we must consider that as well. The Bill must include provision to demand that suppliers keep better records of customers’ complaints, and Ofgem must ensure that they are reliable and completely transparent. That is why I have made the plea to it, and regarding it, about the kind of accountability that I thought we had all taken as agreed. Some issues affected by the Bill go beyond being resolved by competition or regulation, and we must explicitly set them out now; otherwise, they will fall by the wayside, to the extreme detriment of consumers.
All that said, the Bill represents tremendous progress. The debate in another place was extremely well informed, and I have every reason to believe that the same will apply as the Bill makes its way through this House and that we can improve on its excellent objectives. If we do that, the House will be responding to the needs, the rights and, in many cases, the cries of consumers. That is our responsibility today and the reason why I am extremely pleased to say that I shall be supporting the Bill.
Let me start by picking up what the Minister said at the beginning of his speech about the unfair commercial practices directive and how it will work with the Bill to create a stronger framework for consumers and consumer protection. He then did something that can be fatal, and provided a list of examples of items that he thought would be covered by the directive. One was missing, and I would like to put it on the record. The Irish Government have interpreted aspects of the directive as an opportunity to tackle the practice of companies charging extra to people who pay by some mechanism other than direct debit, even though those people are typically the most vulnerable—for example, those who do not have bank accounts that allow them to use direct debit, or who are trying to keep very close control of their finances. I hope that the Government will take the opportunity that the directive provides, along with the Bill, and working with the new national consumer council, to take on that issue and add it to the Minister’s list.
Let me join the Minister and the hon. Member for Rutland and Melton (Alan Duncan) in congratulating the other place on its work on the Bill. I should like to mention Lord Razzall, Baroness Miller of Chilthorne Domer and Lord Lee of Trafford, who spoke for the Liberal Democrats. The Earl of Caithness, for the Conservatives, produced some interesting amendments, the most important of which, unfortunately, was not passed, but should be revisited by this House.
We all have a common goal: the better protection of consumers and better regulation of estate agencies. Much of the purpose of the Bill is to seek economies and efficiencies in delivering that protection and regulation. It is absolutely key, however, that protections are not diluted in the restructuring of the consumer watchdog agencies, and that protections for estate agencies are adequate to the task rather than directed by resource availability. Much of that work will be taken up in Committee, but let me use this opportunity to raise a few framework questions.
First, let me deal with consumer protection. We all understand that a new national consumer council will initially replace the current National Consumer Council, Postwatch and Energywatch, and that the Bill also provides for abolishing the Consumer Council for Water and the transfer of its functions.
I am not making a partisan comment when I say that, despite earlier ambitions to include rail, air, telecoms and even financial services, the body with which we are presented is much narrower than the original concept. It appears that the new body largely comprises elements associated with the Department of Trade and Industry, with water possibly joining later. The goal of one seamless structure to deal with all consumer protection remains way ahead of us. We will need to examine it in future.
Given that we do not have a single overarching body, it becomes relevant to ask questions about the individual pieces that have been identified as forming part of the new national consumer council. The Minister for Trade knows that the Consumer Council for Water was set up only in October 2005, and that its work during the last drought was driven by its ability to have a regional focus in England itself as well as throughout the UK. The new NCC structure does not necessarily accommodate that. As the hon. Member for Rutland and Melton outlined, a price review is due in 2009 and there will be consultation on the water franchise directive in December 2008.
The Minister for Trade suggested—and the hon. Member for Rutland and Melton appeared to agree with him—that a review to accelerate the inclusion of the water body might be a way round the various aspects of the timetable. If such agreement has been building between Labour and Conservative Front Benchers, I disagree with them. Surely the best resolution to the problem is delay, so as to include the Consumer Council for Water in 2011 rather than accelerating the process, given the important role that it has to play. It should engage in responding to the water franchise directive immediately, not after 2008.
There is no collusion between Front Benchers on the matter. I gave the House a genuine insight into a meeting that I held to try to discuss the way forward. The hon. Lady’s speech is a typical Liberal Democrat response. She starts by criticising us for not including all the regulators in the Bill, but less than 30 seconds later, she criticises us for including one.
I feel strongly that delay is the best mechanism for ensuring that water is protected for the consumer. The hon. Member for Rutland and Melton appeared to be enthusiastic about the Minister’s proposal.
On timing, Postwatch comes immediately to mind. The Secretary of State for Trade and Industry will shortly provide the results of the consultation on the compulsory closure of 2,500 Post Office branches. I understand that in the other place, the Government gave assurances that the Bill provides for the new NCC to investigate any matters relating to the number and location of public post offices. However, the Bill uses the word “may” and avoids “shall”. The notion of going through a minimum of 2,500 Post Office branch closures with a consumer body that only “may” consider the matter, and is not required to do so, is discouraging. I hope that in Committee the Government will reconsider the idea of using the word “shall” instead of “may”.
I am sure that the hon. Lady has examined the Bill. My right hon. Friend the Minister for Trade points out to me that clause 16, entitled “Investigations relating to public post offices”, states that “the Council may investigate”. It therefore has a role.
I repeat that the use of the word “may” is the cause of our concern, and the Minister has just confirmed that I have read the clause correctly. It is extremely important that there be representation on this issue, and I ask the Government to look at the matter again.
Perhaps I am on the Minister’s side on this question. When the clause says “may”, it means “has the power to”; therefore the council can investigate. This is not a question of the council investigating if the Minister lets it; it will be empowered to do so.
The reason why clause 16 is in the Bill is to give absolute certainty, because in the past, these have been grace and favour arrangements involving the Post Office. The Bill sets out the provisions with absolutely clarity for the first time, and I give the hon. Lady that assurance. That is the whole purpose of clause 16.
I thank the Minister. We are now moving forward. In the House of Lords we were unable to obtain that assurance, so I am pleased to have heard that from him today.
The Minister will also be aware that there are resources contingent on providing that scope and level of review. A devolved structure has worked for Postwatch in carrying out such a review. We have no guarantee as to how the different regions of England will find a way of being adequately represented and heard, because post office branches are a local issue. Dealing with what happens in one community, compared with another, requires a great deal of local sensitivity. It would be helpful for our constituents up and down the country if they understood how the new body will deal with that set of issues.
The turmoil among staff should not be underestimated. When a major process of sweeping post office closures on this scale is under way, it is not always clear whether the minds of the staff will always be on the task in hand, of protecting consumers. They might instead be thinking about their future, about where their office may be, or about whether to stay with the organisation or look for another job. That is a serious set of concerns, and it is an argument for a delay in bringing Postwatch into the new body.
There is also the potential for loss of expertise. We have no assurance that the people who have built up the necessary expertise in this area will not decide, perhaps even for a simple reason such as the location of their new headquarters, to move on in their careers. This is not the time for that kind of change.
There are issues of implementation, but that is all that they are. They are not issues of principle. Surely the Liberal Democrats are not saying that they want us to remove this measure from the Bill, as that would disbar the people who use postal services in their millions from having redress if mistakes are made. That is a ludicrous position to take. It is one thing to say that we need to ensure that the implementation of the provisions is effective and that there is proper consultation—which there is; these people are part of the fortnightly and monthly meetings on the implementation strategy, as of right—but it is quite another thing to say that we should not include the measures in the Bill, leaving the users of postal services with no redress until such time as another Bill is introduced. The Liberal Democrats are adopting a nonsensical position.
Again, I disagree with the Minister. Access to redress does not appear to be contingent on introducing all the watchdogs in phase 1. There are mechanisms to deal with this issue. I must stress that implementation matters, as the Government must surely have learned across a wide variety of public services. Yes, the policy needs to be correct, as do the strategy and the framework, but as far as the consumer is concerned, implementation is everything.
We are talking about 2,500 post office closures, but those are just the compulsory closures. We have not yet discussed the number of voluntary closures that might take place, particularly as Government business shifts away from the Post Office, making it less attractive for quite a number of postmistresses and postmasters to continue in their business. Presumably, they will be replaced by some kind of outreach service, and there will be sets of issues around all of that. The timing is particularly awful.
I want to come to the hon. Lady’s aid—partly, at least, as she seems to be being attacked from both sides of the House. If the Government were to declare now where the headquarters of the new organisation is to be—and if it were to be in London—that would give some certainty to the many Postwatch staff who are concerned about the disruption that might be caused to their personal lives, so that their expertise might be retained by the new organisation. That expertise could then be used to advise on the post office closure programme if the Government decided to proceed with rapid implementation.
I agree that the turmoil and uncertainty will make everything worse. I have been part of organisations that have undergone drastic change—I must confess that that was in the banking sector—and I know that it is unwise to underestimate the impact of such changes on both morale and performance.
Let me now raise the issue of Energywatch, which was discussed so articulately by the right hon. Member for Coatbridge, Chryston and—I hate this long constituency name! Perhaps Coatbridge will do.
I thank the right hon. Gentleman. He spoke of the issues surrounding the abolition of Energywatch. In principle we can envisage its becoming part of the new body, but there are questions to be asked about timing and implementation. I agree with the right hon. Gentleman that there has been strong evidence of “sticky fingers” as energy suppliers have seen wholesale prices decline, and have delayed lowering their prices to the domestic consumer asymmetrically in terms of the point at which they raised them when wholesale prices rose.
There are questions to be asked about smart metering, and about the effectiveness of consumer switching at a time of volatile pricing. We need to discuss the key role that Energywatch has played in promoting energy efficiency and dealing with issues of sustainability at a time when we are all concerned about climate change. We need to be certain that those activities and strengths will not be lost. The Government must appreciate what a difficult period we are experiencing when introducing changes such as this.
Like the rest of my party, I strongly support the redress structures that the Bill foresees. I also support the ombudsman system, which builds on the previous energy ombudsman system. However, the scope of redress is left largely to the discretion of the Secretary of State. There is little in the Bill about the operation of the system, and we have a number of questions to ask about issues such as the principle of multiple competitive ombudsmen. We have all observed on examination boards the preference of providers to seek the friendliest arbiter. Multiple ombudsmen pose the risk of a race to the bottom, and a race to be the most sympathetic.
What concerns me most about the transferring of watchdog bodies to the new national consumer council is the potential loss—indeed, the recognised loss—of the advocacy provided by the current system. Postwatch has had difficulty in the past—although recently it has got its act together and become something of an effective advocate—but I do not think anyone would argue that Energywatch is anything other than an effective advocate. The new council will not pursue individual investigations except in relation to a narrowly defined group of the most vulnerable people. We would like a much clearer definition of “vulnerable”—a definition of those included in that group, and preferably an expansion of the definition.
The Minister said that he wished the new body to be the lion that would roar, not the mouse that would squeak. That, too, prompts a series of concerns. As the Minister implied, for most people Consumer Direct will act simply as a traffic light system. People will telephone it, and will be given a number on which to contact, for instance, the complaints office of their energy supplier. They will pursue the matter for three months, and if they do not get anywhere they can hope for a deadlock letter from the supplier. They will then have an opportunity to fill up many forms and consult the ombudsman. The industry is undoubtedly attracted to that structure, because it hopes that many consumers will abandon the process out of frustration.
Energywatch has been diligent in pursuing the issues of the individual consumer. If we look at its record, we will see that it recovered £6.7 million in compensation and bill reductions for domestic consumers in 2005 and 2006. The average award for a domestic consumer with a billing complaint—that accounts for two thirds of complaints—was £168. That is serious money. It had in-depth contact with over 220,000 consumers, and 62,000 complaints merited detailed investigation with the energy companies because they could not be easily resolved. It reduced disconnections of vulnerable customers from 26,000 four years ago to 3,000 today, which is remarkable.
I have personal experience of many of the difficulties of dealing with the utilities. As you will know, Madam Deputy Speaker, I am quite recently widowed. I have had to change the name on many of my utility accounts. I have also moved. When I mention those factors to the energy suppliers, and we meet them when they are out lobbying, they immediately turn very pale and the standard response is, “Oh, my God.” Trying to deal with the customer service arm of many of those utilities is dire. If I had not been working on this speech over the weekend, I would have been trying to compare quite a number of bills; I think that I am being sent them for the wrong property. Over and over again, I have talked to one consumer after another—and this is a difficult and complex process.
I note, for example, that, in late 2005 British Gas migrated millions of its customers to a new account and billing system. There were significant problems, and Energywatch received over 6,000 complaints in just six months. To this day, customers are still having the same problems with British Gas, including not being able to get through to the call centre. British Gas has said that it will not reach “business as usual” until mid-2007. However, it was kind enough to provide a briefing on the Bill. It is delighted with the new structure because it
“believes that the existing measures that energy suppliers have in place to manage complaints are sufficient”.
There is complacency among suppliers and pleasure in getting the new structure, because they believe that it will finally get that nuisance called Energywatch off their backs.
I understand the importance of having a code of conduct as part of becoming a member of a redress scheme, which would require energy suppliers and any other providers to have a proper complaints resolution scheme in place. All that will be important, and I hope that it can be strengthened in Committee, but I make the following point to the Minister: the new national consumer council should have the powers, and if necessary be assured that it could get the resources, to step back into the advocacy role if the new scheme does not provide the level of service and the resolution that customers have finally begun to achieve after many years of not being able to get their complaints appropriately dealt with. It seems that that is a relatively risky new step. We are taking a chance that the providers, the energy suppliers and others will step up to the level of service that they have been prodded into by groups such as Energywatch and Postwatch. There should be a plan B for dealing with the situation if that is not accomplished.
I am also concerned about businesses. I know that the Minister in the other place gave an assurance that the definition of customers includes businesses. Obviously, in the past the various watchdog bodies have had a specific specialised focus on small businesses. The Minister will be aware that the Federation of Small Businesses is concerned that that same focus may not be shared by the new NCC. Indeed, there is a lack of clarity about the focus of the new NCC, what its culture will be, how intensively it will chase down different issues, and how it will manage its priorities. There is little discussion about that, other than our being told “Trust me” that those who are in charge—Lord Whitty and others—are people of integrity and will do a good job. That is not an adequate answer.
Could we at least get some clarity on the funding of the NCC? Historically, the energy supply industry has provided the funding for the energy watchdog, and the Post Office for Postwatch. That money is now to be merged into the new NCC, and the Department of Trade and Industry has arranged for the funds to be provided to the NCC itself. However, it is unclear whether that will continue to be the arrangement over the long term, particularly if the NCC decides to focus much of its energies outside the traditional sectors. We must have some clarity about that.
In terms of the publishing of reports, consumer confidence will be essential. Information must be made available to the public. That is the case not only because the taxpayer will largely have paid for the reports, but because the idea that an issue that affects consumers should be kept away from consumers, and that reports that might reveal areas of concern should not be fully disclosed, is completely unacceptable in this day and age. The public disclosure of all reports is essential.
I now turn to measures to do with estate agents, which account for a major proportion of the Bill. We welcome the proposals to require estate agents to join a redress scheme and to keep the necessary records, and many of the other innovations that the Bill would introduce. The proposals are not particularly radical, but they represent an improvement on the situation in the past. However, I wish to raise again the concern about the idea of multiple ombudsman schemes; there is a fear that the industry will tend to head for the body that will give it the easiest time, and there could be a race to the bottom.
Does the hon. Lady not agree that what matters is the standards that must be applied to such schemes, and that if there is a common set of standards, whether there are two or three redress or ombudsman schemes is, frankly, neither here nor there?
I hope that a multiple scheme system would operate like that, but I am concerned. Because the schemes will make their money from the number of customers they attract, when so much is a matter of interpretation and so many issues are subjective there will be a great temptation to weaken schemes, rather than to strengthen them.
The Minister has spoken about one of our most fundamental concerns—the fact that the Bill does not cover the lettings industry, which is worth £12 billion. Although he implied that that would be dealt with in a sort of phase 2, I ask that some work be done now so that at least the principle of including lettings is added to the Bill. Delay in such an area would be unfair to consumers. The hon. Member for Rutland and Melton made the point that people who rent are more likely than those who buy to be vulnerable and to have difficulties in taking on the system; that underscores the importance of getting action on lettings.
Shelter conducted an interesting case study that showed that some people were charged as much as £300 in fees for the simplest lettings processes, which is completely out of kilter with the amount of work involved. The Bill would give no opportunity for redress in such circumstances. I do not understand, either, why the definition of what is an estate agent or what is estate agency work cannot be adapted to include developers who sell their own properties, whether they sell them off-plan or after they have been built. That is a huge loophole.
As was mentioned often by those who spoke on behalf of my party in the other place, it is completely unacceptable to have a maximum penalty of only £1,000 for operating outside the scheme. We recognise that that has been increased from £500, but we will continue to seek an upward adjustment. The average estate agency commission on a single sale is more than £3,000; that should be the minimum fine for a first offence, rising to a far higher sum if there are future offences. We have suggested the sum of £10,000, which, interestingly, I also heard being suggested today.
The redress scheme does not include any capacity to monitor what is going on in the industry. That will continue to be the responsibility of consumers at large, Which? or the BBC. That raises in my mind questions about the Government’s approach to having negative licensing, rather than positive as well as negative licensing. The fact that almost anyone can set up as an estate agent without a single qualification for the job is to me, and I believe, to most consumers—both purchasers and sellers—completely unacceptable.
Consumer dissatisfaction with estate agents is high. The Office of Fair Trading report, having first said that nine out of 10 people buying or selling a home used an estate agent, goes on to say that around a quarter of them were dissatisfied—a high level of dissatisfaction. However, few of those people made a formal complaint to the OFT. That is a difficult and challenging process and people do not have the time to do it. They want to get the business over and done with. The industry does not have many fans. It has done its own research and found that only one person in 10 thought that one could usually trust an estate agent.
In 2005 the voluntary ombudsman scheme, to which only two thirds of agents belong, received a whopping 6,000 complaints. Anyone who saw BBC1’s “Whistleblower” programme in March 2006 will have heard about a whole culture of dirty tricks. For most people a house purchase is the largest investment they will ever make. For many it is their retirement nest egg, and a purchase that they will make very few times in their lives. Many people make a purchase in a new part of the country, in an area that they do not know and where they have few points of reference. In such circumstances no one would dream of using an unqualified solicitor and expecting them to provide the necessary paperwork for a house purchase. However, we do expect people to employ a possibly unqualified estate agent, and that seems unacceptable to me.
A redress scheme is all well and good, but surely it would be better to prevent the problem with proper training and qualifications for estate agents. Indeed, the National Association of Estate Agents and Which?—two different sides of the coin—both support that approach. We would not need to invent the qualifications as there is an NVQ level 3, introduced three years ago, which would be an adequate qualification. I mentioned the Earl of Caithness at the beginning of my speech, but his small attempt to amend section 22 of the Estate Agents Act 1979, which sets out standards of competence for estate agents, was defeated.
I lived for many years in the US, where every estate agent has to be licensed. It is not a barrier to competition, but having bought and sold houses in both countries, I can say that the level of service available in the US, where I had a qualified and licensed agent, was a world away from the quality of service in the UK. I hear similar reports from almost everybody to whom I talk. Therefore, I ask the Government to reconsider that issue.
I hope that, as they have suggested, the Government have an open mind on many of the potential improvements that could be made to the Bill. We all want quality protection for consumers. None of us wants to waste money, but bad practice is costly to the consumer, the economy and the taxpayer. Let us not make a false economy. I hope that in the next phases of the Bill’s passage we can add many provisions that will strengthen consumer protection and make it more effective.
I shall be brief. I welcome the Bill. It will greatly strengthen consumer protection and make it more transparent and accessible to the public, which is devoutly to be welcomed. However, an opportunity is being missed. This Bill is a useful legislative vehicle of a kind, as the hon. Member for Rutland and Melton (Alan Duncan) pointed out, that does not come along very often—perhaps every 25 or 30 years. It would be wise to make the most of it.
I am in a curious position today. I little thought when I entered Parliament that I would end up speaking with the backing of estate agents—not an element of society with whom I normally associate —but the National Association of Estate Agents will, I think, endorse my brief remarks on the regulation, or licensing, of estate agents, in particular of letting agents.
The buy-to-let and private rental sectors have mushroomed in recent years and are particularly prevalent in my constituency. For that reason, I am glad that the Government’s new national tenancy deposit scheme is starting up, as it will be important. It will, for instance, save thousands of my constituents from being—literally—robbed of their deposits by unscrupulous letting agents. Money is being withheld for no genuine reason. Of course, as the hon. Member for Richmond Park (Susan Kramer) pointed out, that is not the only way in which unscrupulous letting agents fleece vulnerable tenants. By definition, people in the private rented sector are more vulnerable; they cannot obtain mortgages and do not have the income to get on to the property ladder, so they are at the mercy of letting agents who have all sorts of ways of charging wholly unreasonable fees. In fact some of the activities I have come across can only be described as scandalous.
I know that my right hon. Friend the Minister for Trade has for the moment set his face against positive licensing, but will he reconsider that position during the passage of the Bill through the House? It seems to me that although the redress schemes are welcome and necessary and should be used, far fewer people would have to resort to them if estate agents were licensed. There would then be a reasonable expectation of minimum standards of professional competence and integrity, and a code of conduct would inhibit cowboy elements. There would thus be fewer transgressions that caused members of the public to have recourse to the redress scheme.
Given that in most surveys estate agents and MPs are lumped together at the bottom of the league table as the most disreputable people, and that from the evidence in the national newspapers further regulation and codes of conduct have not seemed to do any good in politics, why does he think they will do any good in estate agency?
I have to take exception to the hon. Gentleman’s latter point. I accept his point about the popularity of politicians and estate agents, although I think we just about shade estate agents—at least I hope so; I should be bitterly disappointed to think that we were classed at exactly the same level. I disagree with the hon. Gentleman that sensible regulation cannot work. Good, reasonably light-touch regulation—it does not need to have knobs on—could be overseen by a body such as the NAEA itself. An annual licence fee will not make a big hole in the enormous turnover of estate agents, given that the sale of just one property can produce a fee of £3,000. If licensing promotes justice for tenants and property buyers it is well worth doing.
My right hon. Friend the Minister said that he was unwilling to move to regulate letting agents because of the lack of an adequate evidence base. Will he consider incorporating in the Bill enabling clauses to provide that in one year, or a maximum of two years, there should be such an evidence base? The Government would then be able to act rapidly and implement a scheme of regulation without having to wait another 20 years for a slot in the Queen’s Speech. That is the main wish—not gripe—I want to put to my right hon. Friend. I ask him to consider it seriously, as it could make an enormous improvement and make a good, well-intentioned Bill even better.
It is not my intention to spend much time discussing the parts of the Bill that deal with estate agents. However, the exchange between my hon. Friend the Member for Rochford and Southend, East (James Duddridge) and the hon. Member for Brighton, Kemptown (Dr. Turner) prompts me to bring forward some remarks I had intended to make later in my speech.
I am indebted to the Committee on Standards in Public Life, which has enabled me to draw some definitive conclusions about the relative popularity of estate agents and Members of Parliament. I have good news for the hon. Gentleman: we do indeed shade estate agents. The survey states:
“These cards show different types of people. Please put them on this board to show which you would generally trust to tell the truth and which you wouldn’t.”
The answers showed that family doctors scored 93 per cent.; “your local MP” scored 48 per cent.; MPs in general scored 29 per cent.; estate agents scored 24 per cent. and journalists on newspapers such as The Sun, The Mirror or the Daily Star scored 9 per cent. But where are Ministers? Their score is 23 per cent.—1 per cent. lower than the estate agents they aspire to regulate in the Bill. Perhaps we should have a Bill to deal with Ministers—not in this Government, but Governments in general—rather than the Bill we are considering. There is a certain irony in the ranking.
Yes, that is right. An apology on behalf of us all for the political class who seem to have lost the trust of the general public.
My hon. Friend the Member for Rutland and Melton (Alan Duncan) and other Members dealt comprehensively with estate agent issues, so I want to talk about other aspects of the Bill. It is my intention to be non-partisan, as my hon. Friend was. However, the more I listen to the debate the more anxious I become about aspects of the Bill. I think we have now clarified that the DTI website is out of date and illiterate. It noted that the Bill
“completed it’s passage through the House of Lords”.
That apostrophe is a grievous error. It stated that the Bill would be given its Second Reading in the House of Commons and then referred—in large letters—to “Consumer Voice”. However, it is quite clear that the name “Consumer Voice” has been dropped by Ministers and the body will now be called the national consumer council. I admit that is not a big point, but it is important. I would have liked a new name for the new body, if it is to have a new role. A bit of rebranding would help to give people the idea that the new body had a slightly different and more ambitious purpose. I regret the fact that we are sticking with the old name.
Perhaps I should declare an interest on behalf of all of us. I think the Bill’s philosophy is right; it has the right objective, but as so often in politics it is a question of how we reach it. I have a big reservation about the abolition, in effect, of the consumer complaint function of Energywatch in particular, but also of Postwatch. We could experience a big increase in our constituency casework for a considerable period of time, because all the problems currently referred to Energywatch and Postwatch will comes to MPs instead. The House should be warned: this is a Bill to increase the postbags of Members of Parliament. Of course, that is not to say that the objective of the proposals is not honourable—it probably is.
I think that the Minister and most Members would agree that the ultimate safeguard for the consumer is a competitive market. In a truly competitive market, the consumer can say, “I don’t like the service you have offered me, so I will go to someone else instead.” That is the real protection: the discipline on the provider of a service or goods that if he does not perform he loses the consumer’s business. In that context, Ofcom’s decision to abandon price regulation in the telecommunications sector is interesting. Competition in the sector is now so intense that price regulation effectively becomes otiose. If we try to shift our mobile phone operators these days, the deals that we can negotiate with our current operator or prospective new ones are legion. That is clearly right.
As I understand it, the new structure that the Bill is designed to bring to consumer redress issues is based on the empowerment of the consumer. The consumer should do more of his or her complaining, assisted by the Consumer Direct service. The proposed national consumer council will look more at the general overarching themes of consumer protection and consumer advocacy and will have a greater advocacy role. Where things cannot be reconciled by a direct complaint with the provider through whatever alternative resolution process is available, there is an ombudsman to deal with those hardest cases. I have no problem with that in principle, but the question is whether the various markets dealt with in the Bill are ready for this new philosophical approach.
I know that sceptical comments have been made about the Bill’s purpose. Is it a cost-saving measure? Well, it should save some costs, but I will give the Government the benefit of the doubt, as I do not think that that is the leading motive. I am concerned, however, about change for change’s sake, and I shall return to that a little later. Change can often be very confusing for the people served by the organisations whose functions are being changed. The basic idea of removing the state-funded intermediary and putting more power into consumers’ hands—with advice from state-funded bodies such as Consumer Direct—is a sound one.
Let us reflect on some of the particular issues. I was interested to read the National Consumer Council’s briefing, which endorses that basic approach. It states:
“The present combination of complaints handling and policy advocacy has necessitated that resources are channelled into resolving complaints which has left advocacy under funded and less effective than it might be”.
I think it has a point there and that the new structure in the Bill stands a real chance of improving matters. I will return to some of the NCC’s specific concerns about energy regulation a little later.
I share the concerns of the hon. Member for Richmond Park (Susan Kramer), who was worried about the completeness of the package offered in the Bill. It aspires to establish a more all-embracing consumer body, yet the two specific functions being rolled into it are—as she rightly said, and perhaps coincidentally, perhaps not—the Department of Trade and Industry functions of postal services and energy, rather than the issues of huge concern to consumers, such as the rail sector, financial services, telecommunications and water, even though the latter is included in the Bill.
Let us examine clause 24, particularly subsections (1) and (9), which deal with the provision of information to the council. Subsection (1) states:
“The Council may, by notice, require a person within subsection (3) to supply it with such information as is specified or described in the notice within such reasonable period as is so specified.”
Subsection (9) states that a “designated regulator” means
“the Gas and Electricity Markets Authority… the Postal Services Commission… the Water Services Regulation Authority… or other person prescribed by the Secretary of State by order”.
I would have thought that some of the biggest issues brought to the proposed national consumer council are likely to be about rail fares, which are a matter of great controversy. I would like the Bill to give the National Consumer Council the confidence that it can expect the information to which it has a right to come from whatever body is responsible in the new railway environment—the Department for Transport, the train-operating companies or whatever. It would be good to see such a provision fleshed out in Committee to ensure that issues of concern to consumers are fully addressed by the new national consumer council.
I happen to think that there is a case for change in the system of regulation as well as consumer protection. It is an interesting question—though I am not advocating it at present—to ask whether the postal regulator, Postcomm, should merge with the communications regulator, Ofcom. When a company is looking into what medium it wants to use to promote its services, it considers a range of options, including direct mail marketing, internet and television advertising, printed media advertising and across the whole spectrum.
More than 90 per cent. of our post in the UK is now business post; only about 7 per cent. is stamped, with letters passing to and from individuals. There is a case for change, but we have to be very careful when we change something, because people get used to systems. They think they know how it works and suddenly the system is abandoned. As far as I can recall, Postcomm was set up only in the Postal Services Act 2000, so it is quite a new organisation. It had a bit of a bumpy start and many would say that it did not do a very good job to begin with, but it has now become very effective. Yet precisely at the moment it becomes effective, it is all change again. I shall deal in more detail later with the impact of the round of post office closures.
I worry about change. I have been in the House for 15 years, during which time I have seen the health service change, change, change and change again in a great circle. It has come back roughly to where it began when I joined the House 15 years ago, with the same system of structures back in place. It is all very well for the experts who are part of the health sector, as they are able to understand the details, but for the poor individual constituent—never mind the Member of Parliament trying to keep up with it all—it poses a real challenge. I am nervous about changing the structure of regulation, as it might actually disempower rather than empower consumers, as they may have a lesser understanding—at least in the interim—of the systems put in place allegedly to protect them.
We have an enormous array of watchdogs and ombudsmen, and the Bill does only a very limited amount of tidying up. We have the parliamentary ombudsman, various sector-specific ombudsmen, the Office of Fair Trading, the Financial Services Authority, Consumer Direct, the trading standards departments of our county councils and unitary authorities—the list goes on and on. The Bill will provide some greater coherence to the system, but not a great deal more. I am worried that in many ways we are not doing enough to rationalise the system. Much will depend on the effectiveness of Consumer Direct.
I would like to deal with two specific issues in greater detail—energy and postal services. The Select Committee on Trade and Industry produced its third report of this Session on 6 March and it included some words of warning on Postwatch in the light of the Bill. It said:
“We understand that the likely timescale for the integration of Postwatch within this new single organisation is around mid-2008. Given the organisation’s role in the consultation process it would be unfortunate if this major reorganisation were to occur in the middle of the restructuring programme”—
the restructuring of post offices. It offers a recommendation for the Secretary of State, stating:
“We welcome the fact that the Secretary of State is ‘reflecting upon’ the likely timetable for the moving of Postwatch’s functions into the proposed single consumer body, and urge him to reflect quickly in order to prevent unnecessary uncertainty within Postwatch”—
a point also made by the hon. Member for Richmond Park and by my hon. Friend the Member for Rutland and Melton.
I am very apprehensive indeed about the timing. The National Consumer Council’s answer is to make more rapid progress with the merger of the bodies to create the certainty. That may be another way forward, but I am clear that the uncertainty that is inevitably being suffered by experienced individuals in Postwatch is not good when we face a very important round of post office closures with very significant consequences for deprived communities—urban and rural alike—over the next 18 or so months. I would like to hear more in the Minister’s reply about the Government’s view of the impact on Postwatch of the changes in the Bill.
I repeat what I said in an earlier intervention—that I do not think Postwatch handled the urban reinvention programme terribly well and that I do not think that Post Office Counters handled the programme terribly well either. The lessons have been learned and we now have an organisation that can genuinely help achieve the right balance in the closures, yet it is suddenly thrown into the maximum possible degree of uncertainty at precisely the time when its expertise is most needed. I am considerably concerned about that.
There is also the question of reliance on an ombudsman service for aggrieved consumers and I intervened on the Minister for Trade in his opening remarks to make a point about it. We already have an energy ombudsman in place, up and running alongside the telecommunications ombudsman, run by the same company. I spoke to a charming gentleman in the corporate affairs department today. I apologise publicly for mistaking his accent as a Yorkshire one when it was a Lancashire one—a pretty serious crime—but I was impressed by what he told me about the working of the telecommunications and energy services regulator. As far as I am aware, there is still no postal services regulator in place, so it seems worrying that we are talking about abolishing the Postwatch function and putting more responsibility back on the mail companies to provide redress for consumers. There is no ultimate redress, so a move on the timing of the establishment of a postal services ombudsman would be welcome.
Clause 12, which deals with the complaints of vulnerable consumers, relates to both the postal services and energy services aspects of the Bill. It is an important issue. The new national consumers council is empowered to act in the interests of vulnerable customers and defines what they are. The clause gives the new council the ultimate jurisdiction over what constitutes vulnerability. As far as I can recall, it is a test of the reasonableness of expecting the individual to take forward the complaint him or herself. On the face of it, that seems a reasonable provision, but who will decide whether the NCC has made the right judgment? If it is not particularly long on resources, as I expect it will not be—like the Minister and the Chancellor of the Exchequer, I am in favour of the efficient operation of public services—I fear that there will be real pressure to giving the benefit of the doubt always to not taking forward the complaint. We will need to know how we can challenge the NCC’s decision not to take forward a complaint on behalf of a vulnerable consumer.
I briefly mentioned the question of location in an earlier intervention, so I will not labour that point. However, I repeat my view that if the people working for the various bodies affected by the Bill can have an early indication of where the new headquarters will be, they will be able to make a much more informed judgment about the impact on their personal lives and we will be much more likely to maximise our access to their services.
The Government have strongly emphasised the need to create a
“stronger, cross-sectoral consumer advocacy body to address consumer issues that frequently arise across sectors of the economy.”
However, they also talk about the need to make sure that they have access to expertise. It will be good to hear exactly how that expertise will be protected within the new reformed system and, if it is going to be protected so robustly, what was the point of destroying the old bodies that offered that expertise in the first place? I am not saying that it is wrong to do so; I am just saying that the idea needs to be tested a little more thoroughly than it has been so far.
I repeat the point I made earlier about Postwatch having improved significantly. The review carried out in March 2006 by PricewaterhouseCoopers said that the body had been effective in being assertive in challenging the Royal Mail Group, as a monopolistic supplier, which it is. The Royal Mail has some interesting ideas on the stocks at present—for example, zonal pricing for business users of mail—that raise fundamental questions about the universal service obligation and so on. Competition is now beginning to develop in the postal services sector, with the Government playing their part in taking business away from the Royal Mail Group. For example, the Department for Work and Pensions has taken its business and put it with a competitor to the Royal Mail Group. There are now big issues in the postal market, and I am not saying that that is wrong. Competition is a good thing. However, it seems a little worrying to be doing away with Postwatch and risking losing its expertise at precisely this moment.
I think that Members will have received a brief from WWAV Rapp Collins, which claims—I have no reason to dispute its claim—that it is
“Europe’s largest direct marketing services provider and creates marketing campaigns using all media including direct mail”.
It boasts that its clients include
“the NSPCC, WWF, Cancer Research UK, Guide Dogs for the Blind, Unicef, Plan UK and the Blue Cross.”
WWAV Rapp Collins has big concerns about the proposal for zonal pricing. It says:
“Fundamentally, there has never been a greater need for an organisation with the expertise and authority of PostWatch. It will be to the severe detriment of all users of mail if it disappears into a watered down umbrella organisation.”
This is a difficult and challenging time to be abolishing Postwatch.
The hon. Gentleman makes an important point about the impact of zonal pricing. Although he is right that most of the Royal Mail’s customers will now be businesses, the recipients of those businesses’ services are the individual constituents who live in our communities. They need to be able to receive that mail as well.
The hon. Gentleman’s intervention speaks for itself. I obviously agree with him. I think that 93 per cent. of all postal services are now provided for businesses and only 7 per cent. for others. He is right. The post ends up going through the post boxes of ordinary people who want a decent service and it is important that that service is protected properly and effectively. I am sure that the Minister will try to reassure me on that when he replies.
On Energywatch, the NCC rightly says:
“Energy is a lifeline service for consumers; if a problem cannot be quickly rectified the consequences can be very serious.
An essential part of the policy objective behind the Bill is to give companies more responsibility for handling complaints.”
It then makes an important and interesting point when it adds:
“Unless the regulators see complaint handling as central to their role, this overall strategy will fail. Part of the failure of regulation in these sectors is that regulators have not viewed complaints-handling as a priority. If this is to be remedied, regulators should have an obligation to exercise this role.”
The NCC worryingly concludes:
“There is a risk that Consumer Direct, the new NCC and the ombudsman scheme will be overrun with higher-than-expected complaint volumes if this issue is not addressed.”
I said earlier that I support the Bill’s objective. It is sound intellectually, but there is the awkward problem of the interregnum and the changeover period—getting from a very desirable A to the even more desirable B of effectively dealing with complaints. I place the remarks in the context of a concern I have. I said earlier that the most effective protection that the consumer can have is competition and the ability to choose which company or organisation supplies them with services. I actually think that the energy market is becoming less competitive, and that concerns me. We are seeing increasing vertical integration in the hands of a small number of foreign owners in the energy sector. The good work being done by the European Commission to open the European energy market—I welcome it unreservedly, even though it is a little belated—may mean that it starts to cast a rather sceptical eye over the British energy market. It is much more integrated than it used to be, with adverse consequences for competition.
There is an independent energy supplier in my constituency and it has provided me with chapter-and-verse explanations of how it finds it difficult to get into the market. It has real concerns about the way in which Ofgem regulates the market. It points out that the failure of the big energy companies to bring in smart metering is a failure of competition in the marketplace. The consumer would be empowered if he or she had smart meters in their home to see exactly what is happening to their energy consumption. If the market were truly competitive, the energy supply companies would be falling over themselves to provide us with that information and so offer us a better service, but they are not doing that. They are actually looking to the Government for handouts to introduce the scheme. It should not be like that. An empowered consumer should have a smart meter. The absence of smart metering is an indication of the declining competitiveness of the energy market.
The NCC will face important challenges in dealing with regulation and dealing with complaints from consumers. As we migrate from the current system, in which Energywatch has a big role, to a different system in which the companies will expect to have a bigger role and the ombudsman takes on the difficult cases, there is a risk that consumers’ real concerns could become stranded. The Bill deals with issues relating to disconnection, and rightly so, but many customers face problems with large bills—a point helpfully made by the right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke). I am not convinced that the proposed system will mean in the short term that their problems can be addressed.
The three-month delay is the crucial point. It takes a lot of bloody-mindedness to pursue an energy company for three months before one goes to the ombudsman. I have had a run-in with BT over the past few days, and it has driven me to distraction. It takes a lot of bloody-mindedness, and sometimes vulnerable people who need help will not necessarily have the skills and the determination to pursue an issue for three months and then take it to the ombudsman. I am genuinely concerned about that point.
One specific concern I have about the new national consumer council is that I understand that it will not have access to information on the nature of the complaints and issues raised with Consumer Direct. That may well curtail its ability to hold organisations, such as energy suppliers and other big organisations, fully to account on their consumer practices.
I raised the question of “Quis custodiet ipsos custodies?” Who is guarding the guards? What happens if we are unhappy with the NCC? However, there is one organisation that has not featured much in the debate—the Office of Fair Trading, which is an important part of the consumer protection framework. I am experiencing declining confidence in some of the bodies that are out there to help me represent the interests of my constituents. I think, for example, of the parliamentary ombudsman. I do not know what has happened there, but I sense that the organisation is perhaps overrun with complaints because of the maladministration of things such as tax credits. Heavens knows, there are enough such complaints. Perhaps there might be a loss of will to take on the complaints of constituents following the debacle over pensions when the Government eventually dismissed—although the decision has since been overturned by the courts—the ombudsman’s findings.
There are also concerns about the way in which the Office of Fair Trading works. I noticed a recent report headlined “Over-active OFT is going OTT in its hunt for scalps”, and I note that the banking sector has expressed its concern about its regulation. The Sunday Telegraph reports:
“Bank lending is regulated by the Financial Services Authority (FSA), the Office of Fair Trading (OFT) the Banking Ombudsman, the Banking Codes Standards Board and also the courts via individual credit agreements. The BBA”—
the British Bankers Association—
“believes the overlaps leave banks unsure which rules to follow.”
Last year, the OFT announced that it would drop between five and 10 of its current investigations under new criteria designed to reduce its work load. That followed criticism from the National Audit Office about the slow speed of investigations, the way cases are selected and a perceived lack of transparency. Against the backdrop, too, of the consumer concerns that are addressed in the Bill, I thought that the House and the Minister might like to know that the Trade and Industry Committee has decided to launch an inquiry into the OFT to see how effectively it is doing its job. It is a chance for the critics to put up or shut up and for the OFT to prove its case.
We have not issued the press release yet, but it will go out very shortly and my announcement in the House may put some pressure on the Committee to make sure that it does. My guess is that we will look for evidence some time towards the end of April, with hearings probably in early May. We regard this area as an important part of consumer protection that has not received enough scrutiny recently. I hope that the House will welcome our decision to conduct the inquiry.
I have spoken for quite long enough. This is an important Bill and I welcome the spirit of what it tries to do. My caveats and cautions are genuinely intended in the spirit of helpfulness. The House should embrace quite warmly the philosophy underlying the Bill, but there are important questions relating to the transition to the new environment and I hope that the Minister will be able to address those when he replies to the debate later.
Thank you, Mr. Deputy Speaker, for calling me to speak in this important debate. I hope to make a short contribution to what is widely seen as an excellent Bill that addresses many of the issues that face consumers. After several decades, this is our opportunity to do that. I know that the general public very much welcome what is happening.
I shall concentrate on part 3, which amends the Estate Agents Act 1979. Members have said many times that buying a house is probably the most mystifying and expensive thing that most people will do. It is probably up on the Richter scale with getting divorced as the most stressful experience in most people’s lives. [Interruption.] I suspect that it probably leads to many divorces. In taking a particular interest in this part of the Bill, I have involved local estate agents from my constituency. Rather than just using estate agents as whipping boys, I felt that it was right and proper to use the expertise of established estate agents in my constituency who have worked in the field for many years. I hasten to add that I have not received many complaints about estate agents, but I have heard from other Members about people who have been used and abused by estate agents. Particularly in areas where prices are high and housing is sought after, it is incredibly important that estate agents do the job that they should do.
That is why I invited a whole series of estate agents to come to the House of Commons. I thank them publicly for their work and for the time that they spent examining the Bill and looking at ways in which to make sure that it does the job that we expect it to do. I suspect that we were comfortable in each other’s company because we all wallow around at the bottom of people’s expectations of how people like us respond to the public. What I found most interesting about the estate agents was that they probably wanted the Bill to go further, because they are good estate agents and they want to drive out the rogue estate agents who give them a bad reputation.
At times—I had to take on board what the estate agents were saying—the public can behave quite badly as well. In fact, one estate agent said, “Wouldn’t it be a good idea if we all had criminal records checks?” He went to a house to measure up and do a valuation and when school-end time came, the mother said, “Do you mind just looking after those two while I skip to the school to collect my children?” She left the estate agent in the house with two small children. He was fairly shocked by that behaviour. At times, the public need help when it comes to how to behave towards people they invite into their homes.
I am deeply grateful to the Minister for Trade, who is steering the Bill through Parliament, for his help, advice and letters. He has responded to the queries that we had throughout our consultation process and clarified that all aspects of the work that estate agents do will be part of the Bill. That has been widely accepted and it makes people feel that this is a really good scheme.
Having an accredited scheme is vital. The quality of the scheme is the most important issue. Members have said that we should perhaps increase the fines for estate agents, but compulsory professional indemnity insurance is a far more important issue. The heart of the Bill is redress. If somebody has been dealt a serious blow by a disreputable estate agent, they should get redress for that. It should not just be a fine, with money going into a black hole. People need to have a real sense that they are going to get some help if they have received bad treatment from an estate agent.
The recording of transactions is vital. Anybody who has worked in the public sector, as I have in nursing, knows that recording a process is crucial when it comes to examining that process later to ensure that all has been done properly. I hope that estate agents will respond properly to that aspect of the Bill.
Quality is essential. To jump to the defence of the DTI website, I thought that the published letters from the estate agent ombudsman and the response letters from the DTI were incredibly helpful in understanding that getting the schemes right is the first and foremost way in which we can get the Bill into the shape that will mean that it will do the job that we expect it to do. I was impressed to see that those who are interested in getting into a redress scheme are responding to all the issues raised by the DTI. It gives us some confidence to know that that work is going on, and going on in public.
I want to clarify a couple of points. I know that the schemes are being examined, but could the Under-Secretary tell me how close we are to making sure that there are some decent schemes available and when he hopes to make an announcement about them?
The hon. Lady said that the estate agents whom she had consulted were keen to widen the scope of the Bill’s amendments to the 1979 Act. Will she clarify whether she believes—as I think that the hon. Member for Brighton, Kemptown (Dr. Turner) felt—that that should include lettings?
I thank the hon. Gentleman for that intervention. We did not discuss lettings. I was referring to the fact that the estate agents were worried that they were being invited into people’s homes without having a criminal records check to protect them in those circumstances. The discussion was not related to lettings. I thank him for allowing me to clarify that.
To conclude, the quality of the redress schemes is going to be the most important aspect of this part of the Bill. I know that there is a lot of work going on and I thank the estate agents in my constituency who were good enough to help me to understand the Bill and to ensure that we get the very best outcome. Good estate agents are sick and tired of the reputation that poor and rogue estate agents give to their profession. The good ones are responsible. They want to do a decent job and to make sure that people have a good experience when buying or selling a house. I know that the Bill will contribute to that enormously.
We have heard passionate speeches from hon. Members on both sides of the House about the consumer, consumer rights and a consumer voice, even if that terminology is being dropped. Although Ministers and Members in general are quite low in the league table of public opinion, with estate agents slightly above them, the debate will go some small way towards encouraging us up the league table—hopefully faster than estate agents.
In the private sector, I once had the privilege of working with a civil service permanent secretary, who said, “If you’ve got a problem, don’t try to reorganise it—sort it out.” While I am broadly supportive of the Bill, I am worried that the Government are trying to reorganise. I am especially worried about Postwatch and postal services. Postal services are a big issue in my constituency. My hon. Friend the Member for Mid-Worcestershire (Peter Luff) talked about a possible growth in Members’ postbags, but my postbag is quite large already, perhaps in no small part because of the survey of sub-post offices that I carried out. The survey showed that 86 per cent. were worried about the removal of the Post Office card account, while more than 71 per cent. said that they would lose staff. Several hon. Members mentioned that 2,500 post offices are likely to close, and the hon. Member for Richmond Park (Susan Kramer) said that it is likely that there will be an additional series of voluntary closures. There will thus be a massive change in the postal arena at a time of massive regulatory change.
The Minister for Trade said that working across sectors would be beneficial, but I am deeply concerned that we will see the loss of a single voice for, and a single expert on, energy, water and postal services. There has been talk of removing the chief inspector of prisons, which was blocked only because of a debate in the other place. I am worried that we are removing strong and passionate voices for the sectors that I cited.
Not all voices need to come from the Government. People do not go to watchdogs such as Postwatch; they are much more likely to go to the television programme “Watchdog”, or Which? I have noticed that correspondence that I receive on which Which? or “Watchdog” have been copied in is more likely to receive a fast response than a letter copied to one of the official Government regulators, so such bodies carry more weight in many ways.
Let me turn to estate agents. We have debated whether the Bill should be extended to letting agents. From reading the popular papers, I am conscious that there is, especially at the upper end of the marketplace, an increasing grey market involving properties that never get to estate agents and private dealers I hope that the Minister will go into more detail in Committee about whether the Bill would cover that market. We also need to consider estate agency on the internet, especially when the transaction is not necessarily financial. Organisations such as gumtree.com offer free publicity to properties for sale. Would such organisations by captured by the Bill?
I commend the Government for extending legislation on door-to-door selling and cooling-off periods to circumstances in which appointments have been made. Elderly members of my family have been duped into buying a vacuum cleaner for more than £1,000, although it probably would have cost £40. The sale took place by appointment in response to a newspaper advertisement. People who are vulnerable, lonely and on their own are being taken advantage of.
I was horrified when the hon. Member for Brighton, Kemptown (Dr. Turner), who is no longer in the Chamber, said something along the lines of, “This is a useful vehicle for legislation that we need to take advantage of.” I would prefer the remit of the legislation to be set out clearly in the Bill. I will want to probe Ministers in Committee to get more clarity. If there is an expansion of the remit beyond water, be that to financial services or another sector, we will need to understand how organisations will be able to interact with this place to ensure that we have a strong voice, rather than extra regulation that is a burden on those who are already doing a good job.
My hon. Friend the Member for Rutland and Melton (Alan Duncan) talked about the publication of reports. I am flabbergasted that reports might not be published. Why on earth would the Government not consider publishing all reports on the website? Such reports will be paid for by the general public. It will be for the general public to decide whether they are of any relevance, not an organisation or, heaven forbid, Ministers. In Committee, or when the Under-Secretary replies, I hope that we will hear a commitment that all reports will be published on the website.
I am pleased to follow the hon. Member for Rochford and Southend, East (James Duddridge). Perhaps the reason why the Government do not want all reports to be published is because they might find that a number of them would not be too helpful to their attempts to tackle some issues. They might thus not want the wide dissemination of advice that they receive.
Given that energy has featured extensively in the debate, I should declare my interest in the oil and gas industry, which is in the Register of Members’ Interests. My interest relates mainly to the upstream and supply side of the industry, but that obviously has an effect on the energy consumer in the end.
I have two concerns that have arisen from our debate. Hon. Members on both sides of the House have expressed the view that the general principle of bringing together seamlessly the consumer voice and the consumer council and getting consumer advice out across sectors is attractive. When there is all-party agreement on the direction in which the Government are going, it must be frustrating for them to find that there is much concern and criticism about the details of the Bill. However, when there is agreement on a general direction, the purpose of a debate must be to flush out remaining concerns so that we can build on the position. I hope that the Government are still willing to build, given that they adopted a sensible approach in the House of Lords by taking on board issues that were raised.
I want to reinforce the concern that has been expressed about Postwatch. The Government have said that Postwatch has a role to play in the programme of post office closures that they are bringing about. I suppose that there is a chance that, when the Government respond to the consultation, they might decide to go for fewer closures, but, at the moment, they are minded to make 2,500 funded closures. However, as my hon. Friend the Member for Richmond Park (Susan Kramer) said, that is only the number of funded closures, rather than a limit on the number of closures. If the Post Office believes that it can deliver a service along the guidelines suggested by the Government with even fewer post offices, there will be no limit on the number of unfunded closures. The role of Postwatch is thus vital.
As the hon. Member for Mid-Worcestershire (Peter Luff) said, the way in which the expertise of Postwatch will be kept will be determined by how the Government handle the merger of the bodies. Alternatively, the merger of Postwatch could be delayed until after this round of closures so that the body could, with its expertise and skills, have an input into the process. People have been worried about Postwatch’s role, but the body has built up expertise. People’s worries about taking individual constituency casework to Postwatch might be due to the fact that there is little ability to get redress from Royal Mail on concerns about mail delivery. That is one of the areas in which the regulator will need to ensure that redress schemes are effective and can actually deliver something. Royal Mail is moving in the direction of giving more redress for failures on the delivery side of its operations. An advocate for consumers can go only as far as is determined by the legal obligation on a supplier.
Postwatch’s expertise needs to be protected during the closure programme because it is vital that we understand the impact of that programme. As many hon. Members have said, constituents have raised real concerns with us about the loss of services from their post offices. When it comes to rural closures, the consumer voice will need to be put even more strongly. There is a great danger of the Post Office producing a simple model that assumes that the closure of post office A will result in a customer simply going to the next-door post office—post office B. However, the geography of rural communities is such that people might well go to a post office in a larger settlement, which would mean that post office B would not pick up the extra custom. A lot of scrutiny will be needed when the closure programme comes forward and Postwatch has the expertise and skills to play a part in that.
I pay tribute to the role that Energywatch has played over the years in flagging up genuine failures in the market that have resulted in consumers not getting a good deal. The hon. Member for Mid-Worcestershire talked about the importance of markets delivering good-quality consumer products. The energy markets are new, so they are finding their feet and evolving, and new skills are needed to understand how they work. When I have taken cases to Energywatch, suppliers have tended to act faster than they would have had they been dealing directly with the consumer. That is partly because of the role played by Energywatch in building up a pattern: suppliers noticed that if they did not deal well with emerging problems that Energywatch brought to their attention, they risked Energywatch taking the matter further through the media and taking it up with Ofgem.
My hon. Friend the Member for Richmond Park and the right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) both expressed concern about prices not decreasing as fast as they rose. The hon. Member for Mid-Worcestershire made the point that suppliers had bought forward in the market and that, in a sense, consumers had some protection on the way up, but there would now be some delay on the way down. However, in the absence of monitoring, there is a danger that laziness will creep in with respect to passing on the full benefits of the market to the consumer. The consumer advocacy that Energywatch has taken up is therefore extremely important.
Clause 13 makes it clear that the new NCC will have to take up advocacy on behalf of people with disconnection problems, but, as has been pointed out, clause 12 might need to be beefed up. How are consumers who are in need and have difficulties but are not getting help from the NCC to be dealt with if there is a conflict arising from clause 12 between the availability of advocacy and the aspirations of the consumer who needs advocacy? Disconnection is not the only major problem relating to energy supply. Massive bills and the confusion that has crept in over the years about how billing is handled and its quality mean that a person who has to wait three months for their problem to be solved before they go to the ombudsman for redress is under considerable stress. Energywatch has shown how the process can be accelerated; we do not want to lose that expertise.
It is extremely important that, during the passage of the Bill, the Government reassure us that the skills of Energywatch will not be lost, that individual advocacy will be strengthened and that the consumer will not lose out. Although markets generally deliver benefits for consumers, in complex areas, consumers—especially the more vulnerable—need detailed support and advice. I hope to hear that Ministers are willing to be flexible on that issue.
I recognise that the Bill is non-contentious, as the debate proves, so I shall keep my remarks as brief as possible. However, I have a duty to my constituents who have raised certain matters with me, and I wish to relay some of their concerns to the Ministers, even though several have been discussed in some depth already.
Like many hon. Members who have spoken during the debate, I welcome the general thrust of the Bill. I understand the Government’s wish to cut bureaucracy and cost, and my guess is that we will hear more about that drive in a couple of days’ time. Equally, I understand and welcome the Government’s wish to strengthen consumer representation. However, I would not want the former to detract from the latter. It seems to me that there is a real need to enhance consumer representation, as the Government believe the Bill will, but I am not sure that that can be done cheaply. In fact, one of the weaknesses of the Bill as it stands is that sufficient effort might not be put into ensuring that consumer representation is as effective and as efficient as it could be.
There is a need to ensure that rogue companies are properly dealt with while not placing too much additional regulation on good companies, particularly in the field of estate agency. I know from my constituents that there are serious problems with certain practices in estate agency, and they would want me to mention those problems to Ministers. I had hoped to spend a little time so doing, but suffice it to say that although there is a need to instil greater responsibility in estate agents, there is an equal need to acknowledge that additional regulation might not be the way to proceed in relation to the great majority of estate agents, who act responsibly. I would therefore like an assurance from the Minister that further discussions will be undertaken with the professional bodies, which are willing to help the Government to achieve their objective.
On redress for individual citizens, Help the Aged believes that it is essential that either Consumer Direct or the new national consumer council is given a mandate and resources to handle disputes for consumers who are vulnerable or who have a complex case. The Bill clearly provides the opportunity for consumers to go to the ombudsman, but only after the company in question has had three months to settle the problems. In my experience, however, when one mentions the word “ombudsman”, people sometimes become frightened: they feel that going to the ombudsman is a pretty heavy judicial process, and they have been warned not to get involved with the law because it is an expensive business. I realise that that is not necessarily true in relation to the ombudsman, but the general feeling pertains. We have to be careful about thinking that ombudsmen can solve all our problems. It seems to me that there is an opportunity to talk with the businesses involved—with the other side, so to speak—and to come up with a disputes conciliation body that can deal with such cases in a less official and less legal way than ombudsmen might do.
I wish to discuss how the Bill may affect businesses, with particular reference to mail volumes and to Energywatch. As we have heard, businesses account for 86 per cent. of mail volumes. Energywatch responded to 20,928 inquiries and handled 8,162 complaints from business customers last year—2005-06—so businesses account for a large part of its work. The DTI is considering consulting small businesses to see whether they should be covered by the ombudsman scheme. I hope that they will be, because small businesses in particular find dealing with disputes and complaints expensive; it takes focus away from the running of the business; and small businesses do not have the support that larger companies have. I hope that the Minister will consider not only how to involve small businesses in the scheme, but how great a cost burden that would impose on them and how to alleviate that burden. We already place many burdens on small businesses out of proportion to the cost to UK plc; I do not want those burdens to be added to dramatically, even though I want small businesses to be included in the scope of the Bill.
I shall not talk about post offices, although there is a problem in that respect. I shall simply conclude my remarks by referring to letting agencies. I do not know whether the Ministers share my experience, but I know from my own surgeries that there are a lot of complaints about letting and I have to deal with many difficult problems. I fear that if activities relating to letting are not included in the regulation of estate agents, we shall be missing out a large chunk of their business. Judging by the nods I see from Ministers, I am hopeful that they will respond favourably on that matter.
Today’s debate is best described as short but surprisingly insightful; in that respect, it reminds me of the Minister for Trade. We have heard a number of contributions from Members on both sides of the House. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) not only tested our ability to name his constituency but highlighted some of his concerns about the way in which the jigsaw will be put together. The hon. Member for Richmond Park (Susan Kramer) spoke of a common purpose. I confess that I was a little confused to hear her first suggest that more organisations should be involved in the Bill, and then ask why Postwatch and Energywatch were included. However, she went on to reiterate our concerns about the need to modernise the Estate Agents Act 1979.
The hon. Member for Brighton, Kemptown (Dr. Turner), who is sadly not in the Chamber at the moment—[Interruption.] I beg his pardon for having missed him; he has moved from left to right, which is always a welcome direction. He highlighted the need for the Minister to reconsider the issue of positive licensing, and he rightly discussed whether residential lettings should come within the scope of the legislation. We then heard an excellent and comprehensive contribution from my hon. Friend the Member for Mid-Worcestershire (Peter Luff), who is of course the Chairman of the Select Committee on Trade and Industry. He put us all in our place, perhaps teasingly, by reminding us just how much we are trusted by the public—about as much as estate agents and journalists. He stressed that the debate should be about practice, not principle, and he raised a number of particularly good points about the remit, and the cost and quality of services, including railway services. I hope that the Under-Secretary of State for Trade and Industry, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick) will respond to those points.
We then heard a contribution from the hon. Member for Crawley (Laura Moffatt), who has consulted her local estate agents; I noticed that they would like the Government to go further in part 3. An excellent, albeit concise, contribution was made by my hon. Friend the Member for Rochford and Southend, East (James Duddridge). He rightly concentrated not on mechanisms, but on the point of view of individual consumers, and the effect that complaints and difficulties of the kind that we have discussed often have on them, particularly those in vulnerable communities. The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith)—there have been a range of interesting Scottish constituency names tonight—rightly highlighted the current post office closures. He also mentioned the confusion in the energy market about billing, and about whether the market is operating effectively.
Last but by no means least, we heard the excellent contribution by my hon. Friend the Member for Northampton, South (Mr. Binley). He raised several important points on behalf of his constituents, but he also raised concerns on behalf of small businesses, and he was absolutely right to do so. If I may say so without embarrassing him, he has experience in that field, and speaks with a passion on the subject, and I always find it enlightening to listen to his contribution. I am grateful to him and other right hon. and hon. Members for their contributions.
At the beginning of the debate, my hon. Friend the Member for Rutland and Melton (Alan Duncan) confirmed that although we have reservations about the Bill, we endorse the Government’s aims and many of the measures in the legislation. As the Minister of State mentioned, pressure sales tactics are still catching people out. As a result, it is becoming increasingly clear that people need the same rights in respect of cancelling contracts that result from solicited sales visits as those that they have in relation to unsolicited visits. The current distinction is being exploited by the unscrupulous. Although I always begin from the principle of caveat emptor—buyer beware—in this instance, the evidence justifies a change in the law.
We have significant reservations about certain aspects of the Bill and about how the legislation will work in practice. As the debate has shown, there are concerns about the planned merger of watchdogs, the future handling of complaints, and how transparent and effective the new regime may prove to be in practice. There is a strong sense that the Bill is a missed opportunity, to use the words of the hon. Member for Brighton, Kemptown, especially in relation to the regulation of estate agents. I shall address that point further in due course.
As hon. Members have said, the first part of the Bill seeks to merge Energywatch, Postwatch and, in time, the Consumer Council for Water, into a new statutory national consumer council. The Minister of State told us at the beginning of the debate that the Government’s purpose is to streamline and strengthen consumer advocacy—a perfectly reasonable aim—but the Government have yet to prove that the new arrangement will strengthen the voice of the consumer. It could well do so, if the merger is implemented effectively and efficiently, but sadly the Government have a pretty dreadful record on merging public bodies. For example, on health care, in my county alone, the Government have merged and remerged strategic health authorities three times in five years, wasting tens of millions of pounds.
As my hon. Friend the Member for Rochford and Southend, East said, sometimes we have to fix the problem, not simply rearrange the deckchairs. Given that, and given the points raised by my hon. Friend the Member for Mid-Worcestershire, the Under-Secretary needs to show us, both here and in Committee, that sector-specific skills and experience in postal, energy and water services will not be lost in any merger, or during any transition. In particular, in view of the cuts that the Government are forcing on to the post office network, we will seek a cast-iron guarantee that the abolition of Postwatch will not mean a diminution of public representation at this crucial time. As the Under-Secretary is directly and personally responsible for Royal Mail, his reply to that point needs to be clear and unequivocal.
Prior to this debate, serious concern was expressed by the water industry about the inclusion of the Consumer Council for Water in the new organisation, a move that many think premature. Indeed, several Members have echoed that concern today, not least because of the impending price review for water companies. We are encouraged to hear that the Minister of State recognises the problem and is considering constructive proposals for adjusting the merger timetable. We are happy to engage in open and positive debate on whether that should be achieved by bringing forward the price review, or by pushing the merger back, and we approach the subject with an open mind. There has certainly been no collusion, contrary to what the hon. Member for Richmond Park might assume. The reality is that we try to take a positive approach and to have an open mind on the subject.
On part 2 of the Bill, which concerns redress schemes, I should first say that we were pleased that the Government accepted amendments from Conservative peers in the other place. The amendments have improved the legislation; for example, complaints by gas consumers will now be investigated prior to any disconnection of supply, and not afterwards, as is the case at present. That change will resolve a long-standing grievance of many consumers. We want that constructive approach to the Bill to continue in the Commons.
My hon. Friend the Member for Rutland and Melton pointed out that there is a clear need to improve companies’ internal complaints handling. As he said, the Government’s wish to improve redress schemes should be matched by good internal complaints procedures. World-class businesses already ensure that, because they recognise the benefit for them and their customers. In the other place, the Government were willing to make only a small concession on that point, in clause 49; yet as we have heard today, there is a good case for effective complaint handling to be a pre-requisite of redress scheme membership. I hope that the Under-Secretary is prepared to reconsider the issue, both in his reply and in Committee.
Today’s debate highlighted an important concern about the relationship between the National Consumer Council and Whitehall. The existing council has, to date, enjoyed an arm’s length relationship with the Government, and that has enabled it to develop a reputation for objectivity and a certain independent authority. That detached position is vital if consumer representation is to remain effective within Whitehall. The arrangement set out in the Bill may reduce that independence. Members on both sides of the House raised questions about the new financial arrangements and the lack of transparency in the NCC’s proposed research and advocacy functions. If a new, larger council is to retain its objectivity, it is essential that it remain, and is seen to remain, detached from undue ministerial influence. I therefore urge the Under-Secretary to address that issue directly in his reply, and to set out clearly the nature of the proposed relationship, particularly between the Secretary of State and the new council.
In his opening speech, the Minister of State spoke about the need to crack down on rogue estate agents. Sadly—and this does not bring me any comfort— the truth is that the Government have failed to match their rhetoric with action. While we welcome the measures to require estate agents to belong to an approved redress scheme, as well as the minor increase in powers for the Office of Fair Trading, that is as far as the Government are prepared to go. For many people, including the public and estate agents, those changes are inadequate. While most agents are competent and professional, a notable minority have been able to trade in an unacceptable manner. Sometimes it is a question of ethics, but sometimes it is a question of competence. For example, a Which? magazine investigation in 2005 showed that estate agency valuations may vary wildly, sometimes by up to £125,000. On some occasions, agents deliberately withheld or misrepresented offers. As a result, according to the Consumers Association, 70 per cent. of people think estate agents frequently give misleading information about properties.
Part of the legislative problem is that the original law dates back over 28 years. The Government’s amendments to the Estate Agents Act 1979 merely tinker at the edges, and an overhaul is needed. We are therefore calling for the 1979 Act to be modernised by the Bill, and for a significant increase in the maximum fine to deter rogue agents. First, the definition of estate agency work must be extended. It should include recent trends such as off-plan sales and direct sales by house builders, which were rare in 1979 but are now commonplace, and are not covered by the law. Secondly, residential lettings must be incorporated into the regulations. Estate agencies, as we have heard, handle millions of such lettings and, according to the National Association of Estate Agents, problems with lettings are one of the main sources of complaints made against its members and against agents generally. As the Bill stands, that activity would not be covered, to the bemusement of millions of our constituents. At the beginning of the debate, the Minister of State spoke about a committee and a review, but he did not give a commitment to legislate. We shall therefore seek to press amendments to correct that omission, and I hope that we can work on a cross-party basis to improve the legislation. Those changes and the increase in fines will help home buyers, and assist the industry in cleaning up its act. Given that it is 28 years since the last piece of legislation in this area, I hope that we will not have to wait a similar period before we introduce new laws. However, I want to work with the Ministers to make sure that we achieve a positive outcome.
There are many provisions in the Bill that will indeed help consumers in the utilities and residential property markets. While the Opposition have concerns about the practicalities, we have a long-standing commitment to the principle of informed consumer choice and effective advocacy, so we wish to improve the Bill, not to damage it. The Ministers enjoy the rough and tumble of party political banter, and so do I, but sometimes it is a distraction. All too often, it is used as an excuse for pushing legislation through the House unimproved. On this occasion, Members on both sides of the House have a genuine opportunity to scrutinise, amend and improve the Bill so that it will have a lasting impact on millions of consumers and house buyers. That collaborative approach will not please the press, who always love a row, but if Ministers are prepared to consider amendments on their merits, we are prepared to engage in proper parliamentary scrutiny of the Bill, which will not only be good for consumers, but will reflect well on the House.
We have had a wide-ranging, useful debate, and I have listened with great interest to contributions from Members on both sides of the House. I am grateful to them, and I will do my best to respond, although we will have the opportunity to examine many of the issues that were raised more thoroughly in Committee.
I welcome the tone of the debate, as almost all the contributions were supportive and were designed to clarify certain points or suggest improvements to the Bill. I hope that I can clarify some of the matters that were raised, and I am confident that we can improve the Bill even further in Committee—a point just made by the hon. Member for Hertford and Stortford (Mr. Prisk), to whom I am grateful. I do not intend to repeat the eloquent and comprehensive reasoning for the Bill’s introduction articulated by my right hon. Friend the Minister of State, who opened the debate, but I will try to address the matters raised by right hon. and hon. Members.
The hon. Member for Mid-Worcestershire (Peter Luff), who chairs the Select Committee on Trade and Industry, and the hon. Member for Rutland and Melton (Alan Duncan) asked about the name of the new body, which is a fundamental issue. The Bill provides for the new body to be given the formal statutory title of “National Consumer Council”. The phrase “Consumer Voice” has been used to describe the overall arrangements, including the new national consumer council, the new redress schemes and the generic powers enabling regulators to prescribe complaint-handling standards. The hon. Member for Mid-Worcestershire asked about redress schemes, which were also raised by the hon. Member for Richmond Park (Susan Kramer). He asked whether a postal services redress scheme would be introduced. The current energy redress scheme is not statutory, and covers only 80 per cent. of complaints. The new statutory energy redress scheme should cover the full range of complaints, so it will be an improvement. A new postal redress scheme will be set up, and we expect that to happen within 12 months of Royal Assent.
The hon. Member for Rutland and Melton asked about the retention of sectoral expertise—a matter raised by several right hon. and hon. Members. I shall come on to that issue. However, it is our objective to retain sectoral expertise as part of the implementation programme involving the consumer bodies themselves. The Bill provides a specific function for the new council to investigate post office closures in clause 16. That function, currently given to Postwatch, will be preserved in the transition to the new body. The hon. Gentleman asked whether it was a cost-cutting exercise but, as he will know, the Government are not saving any money as a result of the arrangements. The savings will be enjoyed by the energy and postal services industries and, ultimately, the consumer.
We will discuss the detail in Committee, but obviously, we want to deal with that as expeditiously as possible.
The hon. Member for Rutland and Melton asked whether penalty charges should be higher. In the other place, the Government accepted an amendment to double the maximum penalty charge from £500 to £1,000 in response to concerns about the level of the charge. A penalty charge is an on-the-spot fine without any opportunity for estate agents to put their case to an independent adjudicator, so a high penalty charge would not be fair. Ultimately, estate agents can lose their livelihood if they are banned by the OFT for not belonging to a redress scheme. The hon. Gentleman asked whether the Bill covered letting agents, as did other right hon. and hon. Members. As my right hon. Friend the Minister of State explained, the evidence base for the Bill’s provisions is the 2004 OFT report on the estate agency market. Estate agents are governed primarily by the Estate Agents Act 1979, which does not cover letting agents. The Bill amends that Act, so its provisions do not apply to letting agents. The tenancy deposit schemes due to be introduced in April 2007 under the Housing Act 2004 will offer greater protection to people who are at unfair risk of losing their deposits—one of the main sources of consumer detriment in the lettings market—but I acknowledge the point made by the hon. Member for Hertford and Stortford, that amendments may well be tabled in Committee. We look forward to debating them.
The hon. Member for Rutland and Melton, who led for the Opposition, expressed concern about the publication of reports, a point also raised by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). Although we envisage that the Secretary of State will generally wish to publish a report requested by him from the new NCC, the discretion given by clause 18 not to publish is necessary to deal with particular circumstances, such as when the report contains information that is commercially confidential or price-sensitive. Such information might be necessary to support the recommendations in the report.
A requirement for the Secretary of State to publish every report requested by him might have a deterrent effect on external experts, industry or other stakeholders, who might be reluctant to provide information or advice because it might be disclosed. That could inhibit the provision of useful or important information to aid the preparation of the report by the new NCC, to the detriment of the quality of the final report and the subsequent advice provided by the Secretary of State. I hope that that deals with the sceptical comment by the hon. Member for West Aberdeenshire and Kincardine.
The hon. Member for Rutland and Melton said that regulators should have a duty to prescribe complaint-handling standards. The position that we have adopted is to give regulators the power to make regulations to prescribe complaint-handling standards that would be binding on regulated providers. We took this approach because we believe that sectoral regulators are best placed to take a view on what is appropriate and necessary within their own sectors. The matter was raised in the other place, and we recognise that this is an important issue. No doubt we will return to it in Committee.
My hon. Friend the Member for Aberdeen, South (Miss Begg) asked about the unfair commercial practices directive and whether that would catch sales tactics where the trader does not mention prices. To clarify my right hon. Friend the Minister of State’s earlier point, the unfair commercial practices directive will introduce a general duty for a trader not to treat the consumer unfairly. It will also ban outright certain types of unfair commercial practice, such as aggressive doorstep selling.
The hon. Member for Richmond Park raised a similar point when she asked whether the Government would use the measure to tackle companies that charge consumers more if they do not use direct debits. The terms in the contract with the consumer that allow the charge to be imposed could be assessed for fairness under the consumer regulations imposed by the Office of Fair Trading, so it is not necessary for the unfair commercial practices directive to require that.
The hon. Member for Mid-Worcestershire and my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) asked about the NCC, and about the fact that it did not have a specific function to look at overpricing in energy and water. The new NCC will be able to examine any market in which it identifies significant consumer detriment. That might include prices in the energy or water sector, although the new NCC must recognise the existence of other consumer bodies, such as the Consumer Council for Water, when exercising its function.
My right hon. Friend also asked about complaints that might in future be split between the new national consumer council and Consumer Direct. The first port of call will be Consumer Direct, which can refer consumers to the supplier, or to the redress scheme if the supplier has not resolved the problem to the satisfaction of the consumer. The redress scheme will be able to resolve a complaint and award compensation, where warranted. Energywatch does not have powers to do that.
The new NCC will be able to support vulnerable consumers through the process—a question raised by the hon. Members for West Aberdeenshire and Kincardine and for Mid-Worcestershire. The understanding of what constitutes vulnerability is developing all the time and will no doubt become better informed in future. The Bill therefore leaves it to the new council to assist those whom it judges to be unable to progress complaints by themselves. In those circumstances, it would not be sensible to make it a duty.
As a secondary point, what happens if there is a dispute between the consumer and the council about whether the consumer is vulnerable? Is there any means of adjudicating, or does the council have absolute power to reject someone, with no possibility of appeal?
The hon. Gentleman raises a fair and sensible point. If he will allow us, we will deal with it in detail in Committee, to give him the clarity and reassurance that he, quite reasonably, seeks.
The hon. Member for Richmond Park asked why Ofcom and financial services consumer panels were not included. The consultation in early 2006 in respect of Ofcom and financial services asked for views on the inclusion of the financial services consumer panel and the Ofcom consumer panel in the new arrangements. The majority of responses to the consultation agreed that the role of those panels was different from those of statutory consumer bodies, as they were primarily regulator-facing and designed to advise the regulator on the consumer interest in developing policy, with no direct consumer-facing role or role in handling complaints. Both roles, however, were considered to be important, and both will be retained under the new arrangements.
The hon. Member for Richmond Park and the hon. Member for Mid-Worcestershire asked whether the new body would be located in London—another fair question. It is an implementation matter that we are considering, with the benefit of input from Energywatch, Postwatch and the National Consumer Council. The decision where the new body will be located will take into account such issues as the cost of the existing property portfolio and concerns surrounding the retention of staff. I acknowledge the importance of the matter.
I cannot gaze into a crystal ball and give the hon. Gentleman a date for that at present. I apologise; I recognise that it is an important point.
The question of regional representation by the new NCC was raised. The Bill allows for the new NCC to establish regional committees, as I am sure the hon. Lady knows, where it believes that that would be beneficial to consumers.
The hon. Member for Rochford and Southend, East (James Duddridge) asked us to be clear about the inclusion of other sectors. The Bill covers the energy sector and the postal services sector, and allows for the inclusion of the water sector after consultation. The inclusion of any other sectoral consumer bodies in future would require further consultation and legislation.
The hon. Lady asked whether small firms would be represented by the new consumer advocacy body. We propose that the remit of the new NCC will be to represent all consumers, including business consumers. It will be left to the new NCC to determine where and on whom the greatest detriment in each market falls, and therefore on which issues to concentrate its resources. She also asked about redress schemes and the fact that they would consider complaints only after three months. The question was raised also by the Chairman of the Trade and Industry Committee. The terms of each redress scheme, including the time given to companies to resolve complaints before the complaint can be dealt with by the scheme must be approved by the sectoral regulator. Deadlock letters can be issued by companies before three months are up. The current practice of existing schemes is to deal with emergency cases without allowing companies the three months.
The hon. Member for Richmond Park asked about the council stepping in if redress schemes were not effective. If I wished to emulate a classic “Yes Minister” response, I might say that this is a clear opportunity for the new council to advance the consumer experience by monitoring the effectiveness of redress schemes, but I hope the hon. Lady will be reassured that we expect that to be the case.
The hon. Lady and other right hon. and hon. Members also asked about positive licensing. The OFT report on the estate agency market in England and Wales specifically addressed the question whether positive licensing, which could include a fitness test and training or competence requirements, would improve regulation and the estate agency market, and rejected it. The OFT concluded that positive licensing would raise costs and inhibit competition, without delivering the benefits to justify that. However, the OFT found that in the majority of cases in which it took action against an estate agent, the root cause was a lack of integrity and honesty, not a lack of knowledge of the law.
The hon. Member for Mid-Worcestershire expressed concerns about the DTI’s website. I have acknowledged that there are problems, which we will deal with. He also raised questions about post office performance and closures, an issue raised by other right hon. and hon. Members. The Bill gives a role to the new NCC to look into post office network restructuring. This replicates the power currently given to Postwatch. The new NCC cross-sectoral body will also be able to bring expertise from other sectors. The hon. Gentleman requested that the new NCC will not have access to information from Consumer Direct. I can reassure him that information about consumer complaints will be a useful source of information on consumer detriment for the new NCC. It is envisaged that the new NCC will establish effective information flows from Consumer Direct and the redress schemes.
The hon. Member for Northampton, South (Mr. Binley) asked about the Government’s continuing discussions with professional bodies. I can assure him that that will indeed continue.
The response of the consumer watchdog community to the Bill is summed up by this quote from the editor of Property Week, Giles Barrie, who says:
“At last, the Government has acknowledged the damage rogue estates can do to people’s lives, which we have highlighted in our campaign. Good agents have nothing to fear but the bad apples now need to clean up their act fast.”
Charles Smailes, president of the National Association of Estate Agents, says:
“This is clearly a step in the right direction.”
Lord Whitty, chairman of the National Consumer Council, says:
“This is good news for consumers.”
Professor Ed Gallacher, the chair of Energywatch, says:
“We are pleased that we now have a clear set of proposals showing a way forward for consumers.”
The head of campaigns for Which?, Louise Hanson, says:
“We broadly welcome the move and particularly the ability of consumers to access redress when things go wrong.”
The OFT says:
“Extending protection in this way means consumers shopping from home can be confident they are protected from unscrupulous doorstep sellers.”
Citizens Advice says:
“We are very pleased that at long last cooling off rights are to be extended to all purchases made at home”.
It occurred to me, perhaps uncharacteristically, to make a tiny partisan point. The report by the economic competitiveness policy group established by the right hon. Member for Witney (Mr. Cameron) suggested abolishing consumer protection for mortgages, pensions, insurance and credit cards, saying:
“In financial services we should allow people to buy and sell products that are not regulated if they have signed to do so.”
I look forward to seeing that in the next manifesto.
In summary, the Bill embodies the Government’s commitment to a robust and effective consumer regime that is fair to consumers as well as to business. It creates a new national consumer council—a powerful advocate for consumers—demonstrates our commitment to get rid of rogue estate agents and doorstep traders and gives consumers the rights and redress they deserve. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
CONSUMERS, ESTATE AGENTS AND REDRESS BILL [LORDS] (PROGRAMME)
Motion made, and Question put forthwith, pursuant to Standing Order No. 83A (Programme motions),
That the following provisions shall apply to the Consumers, Estate Agents and Redress Bill [Lords]
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 26th April 2007.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—[Kevin Brennan.]
Question agreed to.
CONSUMERS, ESTATE AGENTS AND REDRESS BILL [LORDS] [MONEY]
Queen’s recommendation having been signified––
Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
That, for the purposes of any Act resulting from the Consumers, Estate Agents and Redress Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of—
(1) any expenditure incurred by the Secretary of State by virtue of the Act, and
(2) any increase attributable to the Act in the sums payable out of money so provided under any other Act.—[Kevin Brennan.]
Question agreed to.
CONSUMERS, ESTATE AGENTS AND REDRESS BILL [LORDS] [WAYS AND MEANS]
Motion made, and Question put forthwith, pursuant to Standing Order No. 52 (Money resolutions and ways and eans resolutions in connection with bills),
That, for the purposes of any Act resulting from the Consumers, Estate Agents and Redress Bill [Lords], it is expedient to authorise—
(1) the inclusion in—
(a) licences under the Gas Act 1986, the Electricity Act 1989, the Postal Services Act 2000 or the Water Industry Act 1991, and
(b) appointments made under Chapter 1 of Part 2 of the Water Industry Act 1991,
of conditions requiring the payment of increased amounts payable into the Consolidated Fund, and
(2) the imposition of charges to corporation tax by provisions relating to transfer schemes.—[Kevin Brennan.]
Question agreed to.