House of Commons
Tuesday 28 January 2014
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Chancellor of the Exchequer was asked—
Women in Business
The most important thing that we can do to support women in business is supporting the economy to grow. Today’s gross domestic product figures show that our economy grew by 0.7% in the last quarter, bringing four-quarter growth up to 2.8%. I am sure that that news will be welcome across the House. These numbers are a boost for the economic security of hard-working people. Growth is broadly based, with manufacturing growing fastest of all. It is more evidence that our long-term economic plan is working, but the job is not done, and it is clear that the biggest risk now to the recovery would be to abandon the plan that is delivering jobs and a brighter economic future.
May I congratulate the Chancellor on the appointment of Karren Brady as small business ambassador? Does he agree that our record of 500,000 new businesses started last year, bringing the total to 880,000 now run by women, and accelerating economic growth to 2.8% a year demonstrate that our long-term economic plan for an entrepreneurial recovery is working in the face of the pessimism and bankrupt business credibility of the Opposition?
My hon. Friend is right to draw attention to the remarkable success story of many women entrepreneurs. Karren is a role model for many of them, and she is helping with a mentoring programme to encourage more women to set up their own business and become entrepreneurs. It is all part of the picture where we now have a record number of women in work, and our proposals to bring in tax-free child care next year will help as well.
The Chancellor will know that one of the main barriers for women setting up a business is the cost of child care. Given that it has risen five times faster than wages in this Parliament, what help is he offering to women in this Parliament to meet those costs?
We have provided extra free child care, and we have increased the number of hours available, which has been a real help. We have also helped the parents, including mothers, of those on low incomes by extending the child care offer to younger children, and we will legislate for tax-free child care. I hope the hon. Lady can support that.
22. Little Bee bakery in my constituency is owned by Melissa O’Dwyer, and it is a great example of a business set up from home that has expanded into an industrial unit, employs exclusively female staff and is growing. Does my right hon. Friend agree that this is an example of female entrepreneurs playing a critical part in economic growth? (902229)
I absolutely agree with my hon. Friend, and I congratulate Melissa on her business and her expansion plans. We are there to provide advice and support for women who want to grow their businesses. We are there to provide help, as I have set out, with tax-free child care. Above all, we are there to provide economic conditions in which businesses can grow and our long-term plan is, as the numbers show today, delivering that.
Construction is down as well, but to return to the question—[Interruption.] Well, the Chancellor did not return to it. Support through tax credits and child care tax credits has been crucial for many women going into self-employment for the first time. Proposed universal credit rules will make it a lot more difficult for self-employed people. Will the Chancellor speak to the Secretary of State for Work and Pensions to help him to get this right for women entrepreneurs?
First, the economy shrank by 7% of GDP when the Opposition were in office. It is striking that no Labour MP has yet got up to welcome the good economic news today. They cannot bring themselves to welcome the news that jobs are being created and the economy is growing and, yes, we are reforming our welfare system with universal credit to make sure that work always pays.
My right hon. Friend the Chancellor confirmed in the 2013 autumn statement that fuel duty will be frozen for the remainder of this Parliament. As a result of this Government’s actions, average pump prices are now 13p per litre lower than if the Government had implemented the previous Government’s fuel duty escalator and it will be 20p per litre lower by the end of this Parliament.
Does my hon. Friend agree that it is only because of the difficult decisions that the Government have taken on deficit reduction that they have been able to provide this action on fuel duty? Does she further agree that if these difficult decisions on spending had not been taken, not only would it have been impossible to help motorists, it would have put at risk the economic recovery?
My hon. Friend is entirely right. We all know of many businesses across our constituencies, as well as households, who rely on their vehicles—their lorries and vans—to get about. By 2015, the average motorist will be saving £680 a year and the average small business with a van will be saving £1,300 a year in their fuel costs.
Will the Minister explain to my rural constituents in a low-wage economy area why of the 10 areas where the Chief Secretary has endeavoured to get a special rural fuel discount scheme into place, eight are in Lib Dem constituencies and two are in the hon. Gentleman’s constituency? Is that some kind of coincidence?
On that latter point, I commend the Government for listening in a way that the Labour party never did and I commend the scheme, but may I draw to my hon. Friend’s attention one anomaly, namely the petrol pump at Bettyhill? It meets all the criteria of the others, but because of an anomaly in postcodes will not be included. Is there anything at all that can be done to help that one station?
We heard today that our economy continues to grow and we know that there is currently the greatest number of businesses in the UK on record—around 400,000 more than at the general election. We have supported that by reversing the previous Government’s increase in the small companies tax, undoing their jobs tax, cutting red tape, freezing fuel duty, taking the smallest firms out of business rates and helping the high street, and in a few months’ time, we will have our employment allowance, a £2,000 cashback on jobs, which will take almost half a million small firms out of employer national insurance altogether. Unlike others, we are unabashedly pro-business.
Small businesses recognise the supportive economic framework that the Chancellor has set out, such as reductions in corporation tax, national insurance and business rates, among many others, by recruiting more people than ever before. Will the Chancellor reassure me that he will not follow any advice from the shadow Chancellor, who called for a plan B and predicted a double and even a triple-dip recession?
There is no danger of that. In the last few days, even the Labour Ministers who served with the shadow Chancellor are not prepared to follow his advice. The important point here is that we have supported a private sector recovery, small businesses are absolutely at the centre of that, and the Prime Minister yesterday, at the Federation of Small Businesses, reinforced the point that we are there to do more to help small businesses and we encourage them to come forward with ideas for the Budget.
Town centre businesses in Alton, Bordon and Petersfield will welcome the Government’s package of help for high streets. As many young people rely on local shops and cafés for their first job, will my right hon. Friend update the House on what he is doing to make it easier to employ those young people and give them the key skills that they need to get on in life?
This year, there is the help for the high street and the £1,000 support for business rates for our high street shops, cafés and pubs. We are also introducing the employment allowance, which will take many small businesses out of employer national insurance altogether. Next year, we have the removal of the jobs tax altogether when someone under the age of 21 is employed. That is what we are doing to help the many businesses that my hon. Friend so ably represents in Parliament.
There have been 3,000 new business start-ups in my borough of Dudley since 2010, many of which will benefit from increased research and development tax allowances, the national insurance rebate and the business rates cap. Does my right hon. Friend agree that while the fiscal measures he has introduced make a vital difference, the 2.8% growth in the economy announced today is sure-fire proof that his economic plan is working and that those small and medium-sized enterprises are now on a far better growth trajectory as a result?
I am delighted to hear about the success of businesses in the Dudley borough area and in my hon. Friend’s constituency. The Government made a choice that we were going to back a private sector recovery and that, in a time of limited resources, we would put our efforts into helping small businesses grow by cutting their business and employment taxes. That is what we have done, and we are beginning to see the fruits in the growth of jobs in the west midlands and across the whole country.
In the past 20 months, unemployment in my constituency of Harrogate and Knaresborough has halved. It is now has one of the lowest levels of unemployment in the country, particularly for young people. Much of that growth has come from our strong small business sector. What assessment has my right hon. Friend made of the impact that the employment allowance will have on improving the situation further, and does he agree that the anti-business rhetoric and measures proposed by some would destroy that progress?
The employment allowance will help many small firms that want to invest or take on a new member of staff. I saw that for myself when I visited a small business in Enfield that, as a result of the employment allowance, will take on an extra member of staff. That is the support we can give. It is up to those in this House who promote anti-business rhetoric to get up and explain how that could possibly help our economy. The truth is that by being anti-business, they are anti-recovery, anti-jobs, anti-investment and anti-the British people.
The latest figures show that net lending by banks to businesses has dropped by nearly £56 billion since 2010. The Chancellor is on record as supporting lending to small businesses, so what action is he taking to address the problem?
Credit conditions for small businesses have been one of the huge challenges since the banking crash. The better news is that conditions are starting to ease, as the most recent surveys show, but I am the first to say that the job is not done. That is why we are shifting the focus of the funding for lending scheme with the Bank of England onto small business lending and why we have introduced the British business bank, which did not exist before. We are doing all those things to support credit, including for small businesses.
The British business bank is lending to intermediaries that support non-bank lending to small firms. [Hon. Members: “How many?”] There was no British business bank before. The only bank that the Opposition helped to take into public ownership was the Royal Bank of Scotland, because they completely failed to regulate it.
One of the ways that the Treasury can help small businesses is by giving them a better chance of winning Government contracts. What is the Chancellor doing to use his Department’s clout across Whitehall to ensure that those contracts are not just snaffled up by the big guys?
That is a huge challenge for any Government and any bureaucracy, but I am pleased to report that under this Government, because we have focused all Departments on trying to increase their procurement from small firms, that has gone up from around 10% to around 20% of Government procurement. That is a big step forward, but I am the first to say that the job is not done. We want more procurement from small firms, not least because they are often the most innovative and entrepreneurial in the country.
Business rates are one of the biggest concerns for employers, yet they are still going up and up under this complacent Chancellor. The autumn statement saw some relief for retailers, but will the Government commit to giving genuine support to all small and medium-sized enterprises, which are the lifeblood of our economy, by matching our pledge to cut and freeze business rates for all small firms—not just those in retail, but manufacturers, high-tech firms and other job creators too?
Business rates rocketed under the last Government. First, we have taken about 400,000 of the smallest businesses out of business rates altogether, a scheme that the Labour Government wanted to bring to an end. Secondly, we have capped the increase at 2%, so we have protected businesses from inflation. Thirdly, we have chosen to provide particular support to our high street stores, and I am very disappointed that the hon. Lady does not support that. It is interesting that another of the Labour spokespeople has got to their feet, but not one of them has yet—20 minutes into Treasury questions—welcomed the good economic news today.
Is my right hon. Friend aware of changes in the VAT export rules that are causing concern among auctioneers, damaging EU trade and putting them at a competitive disadvantage? Will he look into this, and try to ensure that Her Majesty’s Revenue and Customs makes the system manageable?
There is evidence that Ulster bank deliberately bankrupted some viable businesses to make more profit, according to one of the Government’s key advisers, Lawrence Tomlinson. What is the Chancellor going to do about this to protect the small businesses affected by Ulster bank and by RBS?
The revelations by Tomlinson shocked everyone, and the business practices of RBS, including Ulster bank, are now under the microscope. Of course, these revelations would not have come to light if we had not asked Tomlinson to do his work and had not published the Tomlinson report.
We are particularly aware of the challenge in Northern Ireland, with the weakness of the Northern Ireland banking system—affected by what has happened in the Republic and the fact that RBS is such an important player through Ulster bank—and we are in constant discussion with the Northern Ireland authorities. I know that my hon. Friend the Financial Secretary is talking to the Northern Ireland Executive about precisely what we can do to help to protect the Northern Ireland economy, as RBS implements its bad bank plan.
The Prime Minister said yesterday:
“I am a tax-cutting Tory”.
So am I. Does the Chancellor agree that, when resources allow, cuts in tax are the best possible tonic that the Government can provide to small businesses? Does he further agree that the best spur to incentives for small businesses is to cut the marginal rates of corporation and personal tax as soon as he can?
I am a low-tax Conservative as well, and I hope that I am in good company on the Government side of the House. We have made reductions in tax. The small companies tax rate was due to go up to 22% under the Budget plans voted on by the Labour party, but we have reversed that and reduced it to 20%. We are now of course bringing the main headline rate of corporation tax down to 20% as well, and getting rid of the complicated taper. That is all further evidence to support the ambition of reducing marginal tax rates for businesses.
Could the Chancellor and I make a deal that I will start to welcome any measure of improvement in the economy if he stops blaming the whole economic world meltdown on the previous Labour Government?
On small businesses, many people find crowdfunding and crowdsourcing a real way to start businesses and get the finance to do it; women, in particular, are coming through that route. Will he meet an all-party group of MPs to talk about the proposed regulation of crowdfunding so that we do not strangle a rather nice baby at birth?
I am glad that the hon. Gentleman welcomes the better news. Indeed, I think that unemployment in his constituency has fallen by 20%, which is further good news. It is the first time in years that I have heard him try to defend the record of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): since he is not here, the hon. Gentleman has to do it for him.
The point that the hon. Gentleman makes about crowdsourcing is a serious one. We are looking at this new market and at what, if anything, the Government should do to support it. It is of course growing without Government support, but we are actively looking at it, and I would very happily consider any positive suggestions he has on what more we can do to support crowdfunding.
Since 2010, the Government have increased the income tax personal allowance by more than 50% and it will reach £10,000 this April. That will cut the income tax bills of more than 25 million working people by £700 a year. We can afford to do that because we have stuck to a credible economic plan that is creating jobs and supporting growth, as is shown by today’s excellent figures.
That means that 2.4 million people have been lifted out of paying tax altogether. In my constituency, thousands of people are no longer paying tax and are in profitable work. My constituency has a 1.9% unemployment rate and thousands of jobs are coming to Daventry. Does that not show that for my constituents, the Government’s long-term economic plan is working?
I would prefer it if those resources were used to fund further increases in the personal allowance. However, the hon. Gentleman should welcome the fact that the Government are saving thousands of people in his constituency £700 a year in income tax that they would be paying if his party had stayed in office.
Raising the income tax threshold to £10,000 is putting more money into the pockets of the low-paid, and their spending is helping to drive the recovery. Will the Chief Secretary consider increasing the threshold to £10,500 in the forthcoming Budget?
My hon. Friend is right to say that this policy is helping people on low incomes, as well as working people up and down the country, many of whom have household budgets that are under pressure. I would like the income tax personal allowance to be higher. As a party, we have set the goal of a £12,500 personal allowance in the next Parliament. In the same way, the £10,000 goal for this Parliament was set by the Liberal Democrats.
I note that, despite a number of opportunities, the Chancellor did not mention the cut to the 50p rate of tax. I wonder whether the Chief Secretary to the Treasury will refer to it in answering a simple question. Will he confirm that people who are earning more than £1 million have received an average income tax cut of more than £100,000 this year—yes or no?
The figures from HMRC show that the cost of reducing the 50p rate to 45p was about £100 million. It is precisely because the tax was not raising any money that I was willing to support the decision to reduce it, on the basis that we would raise much more money from the same people in different ways. The House might like to be updated on one of those measures. The annual tax on enveloped dwellings—the mansion tax for tax dodgers—is raising five times as much as we thought it would.
Sugary Drinks (Taxation)
There are difficulties of principle and practice with using tax instruments to promote public health. Unlike smoking, where any level of consumption can have damaging effects, the consumption of most drinks in moderation can be to the benefit, rather than the detriment, of an individual’s health. The Government are instead working with industry to reduce the nation’s calorie intake.
The Academy of Medical Royal Colleges has called for a 20% tax on sugary drinks, stating that it would provide enormous health benefits and yield £1 billion to the Treasury. We spend £9.8 billion a year on dealing with type 2 diabetes and its complications. Will the Exchequer Secretary consider that idea for inclusion in the next Budget? At the very least, will he meet a delegation of those who want to make the argument in favour of such a tax?
I am grateful for the right hon. Gentleman’s remarks. This is a problem of over-consumption and tax can often be a blunt instrument in dealing with such problems. My hon. Friend the Economic Secretary will be more than happy to meet the right hon. Gentleman and a delegation to discuss the matter.
Does the Exchequer Secretary agree that tackling obesity in children should be a matter for parents, teachers and others who work with children, and that any tax increase such as that proposed by the right hon. Member for Leicester East (Keith Vaz) would be seen as a Treasury tax grab on those who enjoy Pepsi cola, Coca-Cola and Fanta?
My hon. Friend makes a perfectly fair point. It is right that the Government take steps, through the public health responsibility deal, to encourage companies to reduce calories in their products, and that we encourage participation in sport. That is more effective and targeted than a tax increase.
Cost of Living
In addition to lifting the income tax personal allowance, which I mentioned earlier, the Government are supporting working households’ income through other measures such as freezing fuel duty, supporting a council tax freeze and, most importantly, sticking to an economic plan that is getting hundreds of thousands more of our fellow citizens back into work.
I thank my right hon. Friend for that answer. The best way to help people and families on lower incomes is to take them out of tax. What is the effect of the increase in the tax threshold compared with the last Government’s disgraceful decision to abolish the 10p tax rate?
That is a very good question. The tax threshold increases that we have presided over will have taken 2.7 million people out of tax. The personal allowance is a zero rate, whereas a 10p rate would halve the rate of income tax, so raising the personal allowance is literally twice as good.
I would like to draw the Chief Secretary’s attention to people who earn less than £10,000 a year and cannot afford to run a car. With the incredible squeeze on tax credits through low inflation rises and the taper being made even steeper, families in that situation, who are the working poor, are being hit the hardest. What will he do for those people on tax credits?
The hon. Lady is right, of course, that the financial crisis that took place when her party was in office cast a long shadow over the personal finances of millions of people in this country. However, she omits to mention that many of the people she refers to were paying income tax under the previous Government, and it is thanks to this Government’s policies that they are no longer doing so.
When it comes to the cost of living, does the Chief Secretary now agree that it was a big mistake for the Chancellor to issue such dodgy statistics last week, desperately pretending that the public have never had it so good? The Government’s first statistical dodge was adding in only tax changes that they like and ignoring tax rises and cuts to tax credits, which, by the way, disproportionately hit women. Their other dodge was trying to prove that the rich were really doing very well by leaving out that thing that they do not like talking about today—the millionaires’ tax cut. They were such blatantly skewed figures—is the Chief Secretary not just a little bit embarrassed about such statistical trickery?
A vast amount of words, but not one of them welcoming the most important set of statistics today—the growth figures that have been published this morning. The year 2013 was the first calendar year since 2007 with economic growth in all four quarters, and I wish the hon. Gentleman had welcomed that.
Week after week, month after month, we come to the Dispatch Box and beg the Government to do something about the cost of living crisis, but all we hear from the two Government parties is, “Crisis? What crisis?” How out of touch can they possibly be? I want to ask the Chief Secretary a simple question. Does he really, genuinely think that the British public are better off today than when he came to office?
I know for a fact that the British public are better off than they would be if the hon. Gentleman’s party had stayed in office. He’s got a cheek, he really has.
Again, no welcome for the growth figures or the fact that, last week, we saw the largest quarterly rise in employment in our country’s history. No welcome for the big tax cuts for working people in this country or the range of measures that we have taken to ask the wealthiest to pay more. Those are the things that are getting this country back in the right direction, something that the hon. Gentleman’s party would fail to do.
The Government reduced the tax on a typical pint of beer in the Budget 2013, and ended the beer duty escalator. A British Beer and Pub Association survey suggests that 76% of its members have increased investment, and 61% are employing more staff following the beer duty changes.
On Friday I will open a new bottling plant at Marston’s brewery in my constituency—a £7 million investment made possible because of the Chancellor’s decision to cut beer duty. In the past six months, beer sales have gone up for the first time in 10 years, and 120 million extra pints have been sold. Does the Minister agree that the Chancellor was right to cut beer duty to get growth, and can we have the same again please, George?
I thank my hon. Friend very much indeed. He ran a magnificent campaign before the Budget last year in representing Burton, which I understand is the home of British brewing. By ending the beer duty escalator at Budget 2013, it is already assumed in the public finances that beer duty will rise by less than other alcohol duties this year. Pubs and brewers will also benefit from other actions that we have taken to support businesses, including support with business rates and ending employer national insurance contributions for those under 21, but I hear what my hon. Friend says.
Estimates of child poverty are published in the National Statistics “Households below average income” series. The Government remain committed to ending child poverty, but strongly believe that looking at relative income in isolation is not a helpful measure to track progress towards that.
There are now more than 1,000 food banks throughout the country, and the Brick food bank in my constituency is forced to give out cold food packs and kettle packs to some working families who cannot afford to eat or heat. Will the Minister explain why the number of working families with children in relative poverty is increasing?
I thank the hon. Lady for her question. As a Member of Parliament who has held a number of surgeries in my local food bank in Loughborough, I know that there is a variety of different reasons for people having to rely on food banks, and I am sure she will recognise that, under this Government, jobcentres are now able to direct people to food banks. Work remains the best way out of poverty, and the number of children living in workless households has fallen by more than 100,000 since the Government came to office.
Does the Minister agree that Labour’s abolition of the 10p tax rate drove more households into child poverty? By raising the tax threshold to £10,000 and creating more jobs than ever before, this Government are reducing child poverty.
At the heart of my hon. Friend’s question is the fact that, as I said, work remains the best way out of poverty, and the number of children living in workless households has fallen since this Government came to office. He is absolutely right, and we must do more to get people into jobs and therefore benefit from changes to the personal allowance threshold.
16. The Institute for Fiscal Studies estimates that an extra 1.1 million children will be living in poverty by 2020 as a direct result of this Government’s economic policies. Today, research from Demos shows that children living in poverty are also less likely to do well at school. What will the Government do to prevent the multiple and lifelong effects of children living in poverty? (902223)
On poverty projections, in October 2012 the IFS suggested that the number of children in relative poverty would fall by 100,000 in 2010-11, but in fact it fell by 300,000. If the hon. Lady wishes to talk about educational attainment, I am sure she will join me in welcoming the news yesterday that thanks to strong reforms of the education sector by the Secretary of State for Education, more schools are now offering better education than under the previous Government.
Does my hon. Friend agree that, as the Centre for Social Justice has argued for a long time, we must tackle the underlying drivers of poverty—family breakdown, illiteracy and innumeracy, substance abuse among parents and so on—as well as put a welcome emphasis, as she has done, on getting people back into work?
I entirely agree with my hon. Friend. The Government remain committed to ending child poverty by 2020 and to the Child Poverty Act 2010. We understand that poverty is about more than income alone. As he has said, we need to focus on the root causes, one of which is poor mental health, in which I have taken a particular interest.
Consumer price inflation was 2% in December. That is the first time it has been at or below the 2% target since November 2009. It is well below half the peak of 5.2% in September 2011. The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts, and factored in energy prices in the latest forecasts for consumer price inflation.
Given what the Minister says about inflation, in plain English, can she tell us whether she accepts that the energy bills of my constituents and those of all hon. Members have gone up this winter? Does she think that is good or bad for them and our economy?
23. What assessment has been made of the impact on fuel poverty of the proposed changes to the carbon emissions reduction obligation funding, which will prevent insulation work from being carried out on hard-to-treat cavity properties, particularly in the north? (902230)
I am interested to hear the hon. Lady’s question, as she also voted for the decarbonisation target that would have added £125 to bills. However, I am sure she welcomed the winter fuel payments made to 14,000 people in her constituency in winter 2012-13. This Government are on the side of helping people to deal with the rising cost of their fuel bills. In autumn statement 2013, we extended the energy company obligation target, but we have certainly not given up on it.
Private Sector Job Creation
The latest data published by the Office for National Statistics on public and private sector employment are available up to September 2013. Between the first quarter of 2010 and the third quarter of 2013, private sector employment increased by 1.67 million, more than offsetting a decrease in public sector employment of 433,000. Over the period, for every public sector job lost, 3.9 have been created in the private sector.
In Cannock Chase, 4,000 more people were employed in the private sector in the 12 months to June 2013 than in the same period in 2012, an increase of more than 12%. Unemployment is down 40% in Cannock Chase since May 2010. What further action is the Treasury taking to make it easier for small businesses in my constituency to take more people on?
To highlight one measure, the introduction of the employment allowance in April will mean that the first £2,000 of jobs tax will not need to be paid. It is worth noting that some believed it was not possible that growth in private sector job creation would outweigh public sector jobs lost. Indeed, in 2011 the shadow Chancellor said that that whole idea was a “fantasy”.
As the Chancellor is keen for an Opposition Member to endorse his growth figures, I welcome them—[Hon. Members: “Hooray!”] However, a report yesterday indicated that much of the growth in the private sector has been concentrated on London and not on other parts of the United Kingdom. What policies is he undertaking to ensure that the growth we are experiencing is experienced by cities across the UK?
First, may I express my gratitude for the first part of the hon. Gentleman’s question? As to the second part, he should be aware that in 2013 the focus on London changed and that only one in five of the new private sector jobs was created in London. Indeed, over the course of this Parliament employment is up in every region and nation of the United Kingdom.
Apprenticeships (Child Benefit and Tax Credits Eligibility)
14. If he will extend eligibility for child benefit and tax credits to the households of young people who are undertaking apprenticeships. (902221)
The Government continue to support apprenticeships by funding 16-to-18 apprenticeships for every employer who wants to offer them and every young person who secures a place, and by promoting the uptake of apprenticeships among employers and implementing reforms to drive up apprenticeship quality. When a young person takes up an apprenticeship, they are classed as in employment with training. From that point, benefits for the young person paid to their parents cease.
I thank my hon. Friend for that reply. The number starting apprenticeships in my constituency has almost doubled from 630 in 2009 to 1,100 last year. Will the Minister join me in congratulating all those apprentices and their employers? Does he share my view that this is one more sign that the Government’s long-term economic plan is working?
I entirely agree with my hon. Friend. His experience in Hereford in not unique: the number of apprenticeship starts across the nation has gone up by 82% in the course of the past three years. He is absolutely right to describe that as part of a long-term economic plan.
National Infrastructure Plan
I published the updated national infrastructure plan on 4 December 2013. It includes an update on the Government’s top 40 priority investment projects, including a pipeline of £375 billion-worth of planned investment, of which the Government have contributed £100 billion in capital over the long term.
Last month, after detailed analysis, the Financial Times reported that it found progress in infrastructure schemes to be slow, if not minimal, including on many of the 40 priority projects launched to great fanfare by the Government. What will the Minister do to rectify the situation and get infrastructure projects delivered?
I do not think that that analysis is correct. Thirty-six transport projects worth more than £1.7 billion have been delivered, upgrades to more than 150 railway stations and 350 flood and coastal erosion schemes have been completed, superfast broadband last year passed an extra 200,000 premises and electricity generation schemes are being completed across the country. Just last week we completed, several months ahead of schedule, the M4 and M5 managed motorway projects near Bristol—another example of infrastructure being delivered by this Government.
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
When the right hon. Gentleman was first asked to vote on the issue, the figure was 1 million; now it is 5 million—that is, people in hock to payday lenders. Does the Chancellor therefore regret voting against the cap on the cost of credit so many times?
I was the shadow Chancellor for five years and never once did the Labour Government propose a cap on payday lending. It is this coalition Government who are introducing a cap on payday lending. I would have thought that of all people the hon. Lady, considering her campaign, would welcome that.
T2. Does the Chancellor agree that the previous Government led us to financial ruin not through taxing us too little but by spending too much, and that the solution to the problem is to reduce spending to affordable levels? Will he therefore guarantee to plug the remainder of the deficit through spending reductions, rather than through tax rises on hard-working and hard-pressed families? (902199)
While no responsible Chancellor rules out tax changes, I believe the remainder of our deficit reduction plan can be achieved by reducing spending. Indeed, the reduction in the deficit has contributed to the economic stability that has been a platform for the economic growth we have seen. Perhaps the shadow Chancellor will get up and welcome that.
Order. Some people are slow learners, so I will say it slowly: keep calm, be patient; Government Members, you have got the man at the Box for whom you were waiting, and now you should just listen. In tennis, new balls come after the first seven games of a match and subsequently after every nine, so patience is required.
After three damaging years of flatlining, today’s growth figures are welcome, but everything we have seen today from the Chancellor shows he just does not understand that for working people facing a cost of living crisis, this is still no recovery at all. Last week, the Chancellor and the Prime Minister tried to use dodgy figures to tell people they had never had it so good. Why will he not today admit the truth: he has failed to get the deficit down, and since he came to office, working people have been not better off, but worse off?
I am not sure that that was worth waiting for. Since we last met, there has been a very important Labour economic announcement, and one that we wholeheartedly support: the decision to keep the right hon. Gentleman in his job until the general election. He welcomes the economic news through gritted teeth, because he said not only that it would not happen, but that it could not happen if we pursued our economic plan. He predicted that jobs would be lost, but 1 million have been created; he predicted that the deficit would go up, but it has come down; he predicted there would be no economic growth, unless we borrowed and spent more. He has been wrong on all these things. What the Opposition need are new crystal balls.
Very good, Chancellor—a joke about my name being Balls. Fabulous.
The reality is that business investment is still weak, housing demand is outstripping supply, the savings ratio is falling and the average working person is £1,600 a year worse off than they were in 2010. Let me ask the Chancellor about the one thing he has refused to talk about now for four days. He has delivered one massive tax cut for the richest 1% earning more than £150,000, when everybody else is worse off. The Prime Minister and the Mayor of London are now saying that they want to cut the top rate of income tax again, to 40p. Is that really the Conservative party’s priority? If the Chancellor still believes that we are “all in this together”, why will he not stand at the Dispatch Box and rule out another top-rate tax cut from the Conservatives in the next Parliament? Come on, George: stand up and rule it out.
I will tell the right hon. Gentleman what the big tax cut was this Parliament: it was for working people through our increase in the personal allowance to £10,000. After last week, it is clear that the shadow Chancellor has learned absolutely nothing from the economic mess he brought upon this country. He said that Labour should have spent more money in the boom; he has set out fiscal plans that allow billions more of borrowing; and on the top rate of tax, he announced a plan that was attacked by Labour Ministers whom he served with in government, by the people who lent the Labour party money and by credible business people across the country—and his costings were shot down by the Institute for Fiscal Studies last night. There cannot have been a more disastrous policy launch in the history of the modern Labour party. On the day we learn that our economy continues to grow, is it not clear that the anti-business Labour party is now the biggest risk to the economic recovery?
T3. That seems to be game, set and match.The European Commission is considering the removal of the aggregates levy exemption, which would affect the Cornish china clay industry and put up to 500 jobs at risk. Will my right hon. Friend confirm that the Government will do all they can to maintain the exemption and protect these vital jobs? (902200)
Yes, I can confirm that. A state aid investigation has been opened, so we are compelled under European law to suspend the exemption, but, working with the industry, we have provided a very robust response to the Commission outlining why the exemption is justified. We remain confident that the Commission will find that the exemption does not amount to state aid.
T8. Her Majesty’s Revenue and Customs is investigating 12 employment agencies in my constituency for underpayment of the minimum wage. Two investigations have been concluded, penalties imposed and money repaid to local workers, but local people simply do not understand why the Government will not name and shame those two agencies. I think the Government are wrong. Will they reconsider? (902206)
I think the hon. Gentleman raised this topic in the debate on the national minimum wage. I am very happy to take this away and to have a conversation once I have had a chat with Treasury officials.
The economy has grown by 2.8 % over the past four quarters, which is the point. First, when the shadow Chancellor was in office, he predicted that there would be no more boom and bust—we had the biggest boom and the biggest bust—and secondly, he predicted that there would be no recovery unless we borrowed and spent our way into economic risk, which has turned out to be untrue. I do not know why anybody in the Labour party still listens to his predictions at all.
I still very much take the view that Britain is better and stronger as a full member of the European Union and that membership of the European Union is vital for our trade and for 3.5 million jobs in this country, which is why I will resist any attempts to take Britain out of the European Union.
T5. I do not know whether the shadow Chancellor has been to Yorkshire recently, but if he does come up north, he will see that, in Colne valley and Huddersfield, manufacturing is surging, whether it is Magic Rock brewery exporting to Australia, Camira fabrics selling its textiles to the Los Angeles transit system or even Newsholme foods selling black puddings to Spain. Will the Chancellor please continue to reject the doom-mongering, mithering and class warfare from the Labour party and continue with his long-term economic plan? (902202)
I was in Pudsey the other day seeing a very successful manufacturing business near to my hon. Friend’s constituency. What was interesting was that that business is now exporting to China, which is a total reversal of what we have seen in the textile trade over the last few decades. I am very willing to come and see my hon. Friend and perhaps taste some of that delicious black pudding that the Spanish are buying.
Thousands of small businesses are often unaware that they are sitting on a bit of a time-bomb: embedded swaps sitting within personal loans, often sold to them without their knowledge. What will the Chancellor do to bring that back into the Financial Conduct Authority review to ensure that these swaps, which are currently not subject to any regulation, are regulated?
The FCA is looking at the whole issue of swaps and how they were sold to small businesses, and clearly, considerable sums of compensation are going to be paid. I will look at the specific point that the hon. Lady makes. If she believes that there is a group that are not currently included that should be included in that work, I will take a close look at it personally and get back to her.
T6. Last week, we saw the sharpest quarterly increase in the number of people in work since records began. Does my right hon. Friend agree that that is more evidence that the Government should stick with their long-term economic plan to reduce the deficit and create more jobs, which is already providing a record number of people with the stability and security of a regular pay packet from firms such as Steelco in Dudley, which I visited last week? (902203)
I know from visits with my hon. Friend to the manufacturing businesses of Dudley that he is a powerful supporter of their interests in growing those businesses and taking on more people. Unemployment in Dudley has fallen by 19 % since he started to represent that town. I welcome his support. Together let us make sure that we have a business-led recovery and a recovery in the west midlands and that we reject the anti-business approach of the Labour party.
The whole House has heard the Chancellor proclaim over the last three years that when the recovery comes—as it will—it will be a different kind of recovery, based on investment and, indeed, investment-led. Is it not the case that business lending is stagnating, if not falling, that capital investment in the much-heralded infrastructure plan is 7.4% lower than it should be, and that what we are actually seeing is an economic-pick-up based on consumer spending? Does that not send a warning signal to the Chancellor? Instead of boasting about the situation, he should be doing something about it.
Given his experience, the hon. Gentleman must surely consider the growth of the car industry in Coventry, and in the west midlands as a whole, to be as strong as any growth that he has seen in his career. We are exporting cars at a rate at which we have not exported them since the early 1970s. Of course we want to see more business investment and more exports, but what we are seeing now is a rebalancing of the economy. The private sector is growing, and the number of jobs is increasing throughout the country—and that includes the west midlands, an area in which the number of jobs fell during the boom.
Incidentally, given his business experience, I suspect that the hon. Gentleman does not support for one moment the proposals announced by the shadow Chancellor over the past week.
T7. In south Essex, £1.5 billion is being invested at London Gateway, £500 million is on the table for a new power station, £180 million is being invested at Lakeside, and the regeneration of Basildon town centre is about to begin. Does my right hon. Friend agree that those inward investments in my area indicate that our long-term economic plan is working, leading to rising growth and falling unemployment for the benefit of my constituents? (902205)
I entirely agree with my hon. Friend. I congratulate him on the work that he has done to bring that investment into his constituency, and to create jobs and opportunities for the people whom he represents. It is important for us to send a message to the world that we are open for business and open to investment, and because we are doing that, we are now a go-to destination for world investment. Can my hon. Friend imagine the impact on jobs and investment in his constituency if we adopted the Labour party’s approach?
We are not proposing a cap within a cap, as the hon. Gentleman puts it, but we are proposing a welfare cap. We have set out the details of the benefits and the annually managed expenditure that will be part of the cap, but we will announce further details about the level of it at fiscal events later this year.
T9. Next week I shall be hosting an event to celebrate independent retailers, cafés and pubs in the city of Hereford, in particular Hat Trick, La Madeleine and The Barrels. I greatly welcome today’s excellent economic news. Does the Chancellor share my view that low taxes are a vital means of helping and encouraging small businesses to grow and create jobs? (902207)
It sounds very tough, campaigning in Hereford.
I thank my hon. Friend for bringing those businesses to the attention of the House, and congratulate him on the support that he has given to the economic policies that are helping them to grow. He is absolutely right: we must continue to support firms of that kind. High street shops, pubs, cafés and the like will, of course, benefit from the £1,000 rate relief which will be introduced this spring, and which will be a huge help to all—or most—of the businesses on the high streets of Hereford.
Average weekly gross pay in my constituency has fallen by 32.5% since 2010. Why?
The person who had the best answer to that question was the head of the Institute for Fiscal Studies, who said very clearly that the reason why the country was poorer was the very deep recession. He said that we have had the biggest recession in 100 years and that it would be astonishing if household incomes had not fallen and earnings had not fallen. This country is poorer because of the disastrous economic policies of the shadow Chancellor. It is under this Government that the economy is growing and jobs are being created, including jobs in the hon. Gentleman’s constituency.
We know that the Chancellor is keen to cut high marginal rates of tax. Does he appreciate that an advantage of the further increase in the personal allowance for which the Liberal Democrats are calling is that it would almost entirely scrap the effective 30% marginal tax rate faced by those who are aged over 65 and whose incomes amount to no more than the national average?
May I first take this opportunity to congratulate my hon. Friend, and my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on recently becoming parents? He is quite right to suggest that further increases in the personal allowance would benefit all parts of the population. The Chancellor will make announcements in the Budget in March and, as a party, we will be campaigning for further increases in the personal allowance, precisely to ensure that the benefits are spread as widely as possible.
Sex Establishments (Regulation)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to make provision for the statutory regulation of sex establishments; to amend the Local Government (Miscellaneous Provisions) Act 1982; to require local authorities to adhere to the existing voluntary licensing framework for sex establishments; and for connected purposes.
Many right hon. and hon. Members’ constituents will have raised concerns about the changing shape and make-up of their local high streets and town centres, with the proliferation of payday lenders, of gambling dens with fixed odds betting terminals and of lap-dancing clubs. Those clubs have increasingly become a feature of the high streets in many towns and cities over the past 20 years. Many communities often feel that this is happening all around them and that they have little say in the matter. My Bill is about empowering all local communities to have their views heard, in particular their views about lap-dancing clubs. It is also about giving local people the ability to feel that they can start to reclaim their high streets.
Lap-dancing clubs are a fairly new phenomenon in the UK—they first appeared outside London in about 1995—but their growth has been rapid, and that has caused real concern. Some people will ask why that concern exists. Chris Knight is the vice-chair—an apt title, given the nature of the lap-dancing industry—of the Lap Dancing Association. He said on Radio Humberside this morning that the clubs were
“legitimate businesses and any attack on any business is ridiculous”.
According to Mr Knight, elected MPs should keep their noses out of that business. Let us be clear: this man also opposed the previous reform of the law in this area. I believe that if members of the public are concerned about this, MPs should be concerned too.
As well as the specific concerns about the links between the sex entertainment industry and coercion and human trafficking, there is a widespread view that lap-dancing clubs can contribute in a negative way to the general character of an area and detract from the residents’ quality of life, especially if the clubs are located in residential areas or near schools. One such local resident, Tara, has said:
“For a time I lived next door to a pub that hosted table dancing. I was a support worker to adults with learning disabilities and worked shifts, often ending at 11 pm...On those days I was afraid to go home because of the time it took to unlock the door...I was frightened of the men who came out of that pub, especially the men in groups leering at women walking past...I was frightened of being followed into my flat because those men seemed to think that they had a right to do anything they liked. They would stare at me, make comments to each other about my legs, tell me they would give me one...I moved as soon as I could, because of that.”
Another resident, Elaine, has said:
“On several occasions I have experienced sexual harassment: men often make sexually suggestive comments or gestures to me as I walk past the lap-dancing club. I believe that, as a female resident, I should have the right to live without fear of violence and threat, and to walk around my local neighbourhood as freely as any male resident. At present, I do not believe I have that right.”
Another resident, Meredith, has said:
“When I take my daughter swimming on the weekends, she asks me to make sure that we leave before nightfall. Our route from the swimming pool to the train takes us past lap-dancing clubs, and although my daughter has no idea of what is going on, she finds the atmosphere frightening. I often wonder why my city council doesn’t think about my right to an enjoyable night out as much as it seems to think about the money being spent by men in lap-dancing clubs.”
I personally dislike the industry but I am not seeking to ban the clubs. I just want to create greater recognition of what their presence can do to a local neighbourhood or town centre, and to give all communities a greater say in whether they want them or not. In particular, I want all communities and elected councils to have a say over the operation of these venues in general across their local area.
What is the current position and why does the law need amending? The Licensing Act 2003 aimed to consolidate the licensing procedure for different types of venue. That was a noble aim, but it had the unintended consequence of making it much easier to open lap-dancing clubs, and they started to mushroom in number as a result. Many people felt uncomfortable at this rapid increase and felt that the licensing regime was not adequately reflecting the concerns of local communities.
A number of hon. Members have highlighted the problems associated with the spread of such clubs and campaigned for a change in the law. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) and Lynda Waltho, the former MP for Stourbridge, campaigned in Parliament for the changes, and were backed up by excellent work from both Object and the Fawcett Society. The previous Labour Government listened to them and responded by introducing a special licensing category for sexual entertainment venues, which allowed councils to implement specific licensing conditions on lap-dancing clubs. They were adopted powers, which means that there was no requirement on local authorities to use them. However, if councils did choose to use them, they had a range of measures open to them, including governing the areas in which such clubs could open, taking into account their proximity to residential areas, schools or places of worship; the hours in which they could open; what type of advertising they could conduct; and what they could show on the outside of the premises. The change in the law also gave councils the ability to cap the overall number of venues if they so wished.
My Bill is not particularly radical. It seeks to build on the law as it currently stands and would require all local authorities to adopt the full range of powers available to them and consult their local communities for their views on such premises. I am proud to have as co-sponsors my hon. Friend the Member for City of Durham and the former Minister with responsibility for licensing, my hon. Friend the Member for Bradford South (Mr Sutcliffe). The former Minister, my hon. Friend the Member for Tynemouth (Mr Campbell), who introduced the change in the law, also supports that proposal becoming a mandatory requirement.
Where the powers have been adopted, we see communities again having their say in what goes on in their local area. For example, the Labour council in Haringey was a pioneer in adopting these powers and setting a borough-wide limit of zero clubs. I pay particular tribute to councillor Nilgun Canver for trailblazing the use of such powers. Other cities have also begun to adopt them. Swansea, for example, adopted a zero limit after a wide consultation, and Liverpool has restricted such clubs to a particular area of the city.
My aim is for all areas to make better use of the powers. I want to spread good practice and stop the postcode lottery. This is about including local communities at an early stage of the licensing process and giving locals a voice about whether or not they want these types of establishments on their high street. That is a question that should be asked of all communities and that everyone should feel able to contribute to.
The amendment to the law would assist local licensing committees. I want to contrast licensing authorities that give communities a strong voice over these establishments and have a clear policy with licensing decisions that are taken on an individual basis, which is still a proper and legal way of doing things. Let us take, for example, a local authority that has chosen to adopt the sexual entertainment venue powers, but has not issued a specific licensing statement. When that local authority then receives an application, it considers it on an individual basis. If communities want to assert themselves, individuals have to make specific objections. They have to show how that club will impact on their lives, and they need to relate it to vague licensing statements.
It is often difficult for a community collectively to argue about what such a venue means for their area or community. Indeed, considering such general concerns may render the authorities’ decision open to legal challenge, which can be expensive and off-putting. Adopting a clear licensing statement and a cap on the number of such venues negates the risk of a court challenge and both simplifies the process and ensures that the wider community is able to be clear and supported in what it wants its town or city to look like.
I am not seeking to impose some draconian new ban from Whitehall on any activity that is freely and legally participated in, or to restrict legitimate entertainment businesses. I merely want local people and councillors to have more power to resist the spread of sleaze in their neighbourhoods and for current best practice in local government to become universal.
Question put and agreed to.
That Diana Johnson, Mr Gerry Sutcliffe, Roberta Blackman-Woods, Mrs Sharon Hodgson, Mrs Louise Ellman, Andrew Gwynne, Wayne David, Nia Griffith, Ian Austin, Andrew Percy and Stephen Gilbert present the Bill.
Diana Johnson accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 28 February, and to be printed (Bill 164).
Consumer Rights Bill
[Relevant documents: The Sixth Report from the Business, Innovation and Skills Committee, Draft Consumer Rights Bill, HC 697 i-iii, and the Government Response, Cm 8796.]
I beg to move, That the Bill be now read a Second time.
I am delighted to introduce this important Bill. It has been widely consulted on outside and inside the House and our understanding is that it is welcomed by both business and consumer groups. There has been some constructive criticism from inside the House during domestic scrutiny and we have taken on board the large majority of the suggestions. As the Bill proceeds, we will further debate much of the detail.
The context of the Bill is our determination to build and enhance a climate of trust in which UK business operates, restoring trust, which is often needed, in markets and market transactions. The consumer law reforms that we are discussing lie at the heart of a crusade towards trusted business and trusted capitalism. We see them as part of the overarching overhaul of UK competition and consumer legislation that we have been undertaking over the past four years.
Essentially, the coin has two sides: competition policy and consumer protection. Let me start with the competition reforms. A competition regime is essential to encourage efficient and innovative businesses, allowing the best to grow and enter new markets, driving investment in new and better products, and pushing prices down and quality up. That is good for growth and good for consumers. That is why earlier in the Session we introduced reforms of competition policy and the new Competition and Markets Authority, which will come into effect in April with strong new powers to take robust decisions more quickly. Changes we have made to the criminal cartel offence will enable the CMA to address the pernicious influence of cartels.
What we are doing in the UK is mirrored in what is happening in the European Union. There are people who think that the European Commission is entirely about regulation, but it does important work in opening up markets, deregulating and increasing competition. It is worth citing several examples. Last year, fines of almost €1.5 billion were imposed on companies engaged in fixing the price of TV and computer monitor tubes and fines of €1.7 billion were imposed on companies that had established a cartel to fix interest rate derivatives. The European Commission is conducting a competition investigation into Google’s business practices. Among other things, the Commission is considering how Google uses third-party content without consent and how it structures its search results. Our domestic Consumer Rights Bill will enable us to strengthen that framework by making it easier for individuals and businesses to seek redress through private actions where they have been harmed by anti-competitive behaviour. That is covered in one of the clauses.
Competition also relies on consumer law and the framework of protection for individuals who suffer from unfair business behaviour. That is why we are reforming the landscape of consumer bodies funded by Government to improve consumer protection and give greater clarity about where consumers need to turn for help and advice. I hope that will deliver a better deal overall for consumers through clearer responsibilities and better co-ordination.
We cannot expect consumers to be confident when they do not understand their rights or when they find it hard to know what they are entitled to if something goes wrong. Unclear rights and remedies mean that businesses can also find it costly to understand their responsibilities. We seek to address those concerns. We have set out in one place key consumer rights and what consumers are entitled to. The measure covers goods, services and, for the first time, digital content such as e-books and software. We estimate in the impact assessment a value in the order of £4 billion over a 10-year period.
Of course, this involves strengthening statute and regulation, but overall this is a deregulatory measure, with a positive impact on business. It makes it easier for business to understand what should happen when a problem arises. It will stop problems escalating, with all the associated costs and the development of disputes, and it will help to create a level playing field for business. It is pro-consumer, but it is also pro-business.
Will the Secretary of State elaborate on the reason why the downloaded digital regime is different from the physical regime? If I go and buy some software on a physical DVD or CD, under the Bill, that is different from a downloaded version.
I will elaborate on that when I discuss digital measures. The hon. Gentleman is quite right: there are different consumer protection arrangements for the DVD—the physical equipment—and for content. The measures in the Bill specifically relate to how we strengthen protection on content.
The Bill was published in draft last summer and, as I have acknowledged, we are grateful for the feedback we received as a result of scrutiny, particularly by the Select Committee on Business, Innovation and Skills. Many of its recommendations are reflected in the Bill before the House, and I believe that it has been improved as a consequence of that scrutiny.
The first main measure in the Bill deals with goods, which are a critical part of the economy. There are roughly 350,000 retail businesses, but much of the law pertaining to this area is 30 to 40 years old. We have tackled the complexity that makes compliance burdensome for companies and confusing for consumers by setting out in one place the standards that have to be met. For example, we have defined a 30-day period within which goods have to be inspected. We have made it clear that, where consumers have a faulty item repaired or replaced, that repair or replacement must remedy the problem the first time round, or they can insist on some money back. Survey data show that all but 6% of faulty goods can be remedied the first time round, but we have embedded that in a clear set of rules.
We often hear, for example, about consumers trapped in a cycle of repairs that fail to fix a fault. Which? recently reported a case of a car owner who had fault after fault after fault, but he was consistently fobbed off with further repairs that failed each time to fix the fault. Under the Bill, that will not arise, as we will narrow down the obligations.
The hon. Member for Stoke-on-Trent South (Robert Flello) asked about digital content. There is a good deal of legal uncertainty about consumer rights in relation to digital content, which is unacceptable in a rapidly growing segment of the economy with a turnover of around £200 billion. That is why we have introduced a new category of digital content with a set of quality rights. As I said, we need a distinction between the way in which we protect content, which is intangible, and the way in which we protect goods, such as DVDs, which are tangible and are dealt with under the goods provision.
For example, many people now download music albums, but if one of the tracks is corrupted and will not play, it is not clear what they are entitled to. Under the Bill, they are entitled to a repair or replacement of the digital content and, if that does not fix the problem, they will get their money back. This is a complex matter, and we recognise that, in relation to complex software, for example, there are flaws—that is the nature of the business—but we have tried as far as possible to narrow down the areas of fault and consumer obligation. Clear digital rights are good, not just for consumers but for responsive businesses, particularly new market entrants—a key part of the industry—which will find it easier to attract customers, even if they are not an established brand, because they can establish a track record in consumer service underpinned by the legislation.
Another part of the Bill deals with consumer protection in relation to services. We know from reviews by the Law Commission that the law governing the provision of services is difficult to understand and, when things go wrong, there is no statutory redress regime to put them right. However, we are talking about 75% of the British economy. That is why the Bill provides new statutory rights and introduces new statutory remedies when things go wrong. There is a great deal of debate about the specifics: the Business, Innovation and Skills Committee has suggested a statutory quality right, which we looked at, but we found it too complex. We considered the evidence from Australia, and we are certainly happy to engage in further debate on the matter.
As an example of how the new rights would apply, we can look at the case of cowboy builders. Almost all of us have dealt with such cases in our constituencies, and they cause particular anger. A cowboy builder is doing domestic work and altering someone’s bathroom. They start the work, but there are problems, with debris strewn around the house and disruptions to the water supply. Currently, it is unclear what the householder is entitled to, and a lot of frustration flows from that. Under the Bill, there will be a statutory right to ask for a poorly performed service to be redone if possible. If it cannot be redone within a reasonable time or without significant inconvenience there is a right to money back. I stress the example of cowboy builders, as I think that the hon. Member for Walthamstow (Stella Creasy), who may well want to discuss this, issued a press release this morning in which she singled out cowboy builders and said that there was no reference to them in the Bill. In fact, these measures will improve significantly consumer protection in that area.
Another area in which the Bill introduces reform is unfair contract terms—essentially the small-print problem. Legal ambiguity arises from recent landmark court cases—the so-called banks case in particular—and our reforms endeavour to protect consumers from the small print while making it easier for businesses to understand how they can prevent contract terms from being challenged in court. In a typical example, someone joins a gym in January with a lot of enthusiasm, but they have not read or fully understood the details of the small print. When they cancel the contract in March, as many people do—I seem to remember cancelling my gym contract rather earlier in the year—they have to pay for a full year’s membership. Currently, it is not clear whether a court would find that unfair. Under our proposals, it is clear: a court can find it unfair, and if it is unfair the consumer is not bound by it.
The reforms endeavour to make clear what the courts can and cannot consider in assessing fairness. In particular, we make it a key test that price and subject matter in a contract need to be transparent and prominent—the operative word is “prominent”—to ensure that it cannot be challenged for fairness in court.
I am interested and encouraged to hear that proposal, because I dealt with a constituency case in which a young man found himself with precisely the sort of problems that the Secretary of State has described. Does he agree that there is a role for local councils, if it is a local gym or other local body, and their consumer protection departments, which should intervene in these issues? Will he encourage local authorities to use their public protection departments in that way?
Trading standards at a local level are extremely important. It is not a statutory obligation, and councils vary in their support for it, but it is absolutely crucial. This is where much of the enforcement action will be eventually taken. At national level, as the hon. Gentleman will know, we put £13 million a year into the National Trading Standards Board, which provides training support, for example, and helps trading standards authorities to co-ordinate activities. That is often required, because an abuse can occur across borough boundaries. He is absolutely right: local trading standards officers are crucial in implementing much of this legislation.
I am chair of the all-party parliamentary group on consumer affairs and trading standards. In my constituency and around the country, trading standards do a tremendous amount of very good work, but one of their challenges is that their budget depends on local authorities and can be patchy. I appreciate that, as a result of the streamlining measures in the Bill, much of the enforcement will be done by trading standards. I think that the Bill will make that easier and make a real difference. Will the Secretary of State or his officials meet me and some senior trading standards colleagues so that we can work out how that can be done more efficiently or better, or even find ways to squeeze more income from the Government to help them to do that?
I know very well my hon. Friend’s interest in this area and the work that he has done on it. He has made Eastbourne an exemplar of good practice. I accept that local authority budgets are squeezed, and sometimes trading standards are squeezed relatively severely. We can help with that by helping to rationalise their operations, training and cross-border co-operation. I am happy to meet my hon. Friend and others, cross-party or otherwise, to see how we can progress this.
A further set of measures in the Bill relates to consumer law enforcement. We will consolidate and simplify the investigatory powers of consumer law enforcers—this takes us back to the discussion we have just had on local trading standards officers—into one generic set to make it easier for enforcers and businesses to understand what powers can be used and in what circumstances. We estimate that that measure alone will save businesses around £40 million during the next 10 years. We will also make it easier for trading standards to collaborate across local authority boundaries to tackle the kind of rogues we saw in a recent scam drawing people throughout the country into costly and unnecessary driveway repairs.
I thank the Secretary of State for his generosity in giving way, particularly as I unfortunately missed the start of his speech. He makes an interesting speech—as interesting as he can given the subject. Why is there so little in the Bill for people who are failed by public sector agencies? Is there not a great need for increased rights when consumers or citizens find themselves on the wrong side of these bureaucracies when they let them down?
Some of us find this a passionately interesting subject. The enthusiasm shows, I know. There is the ombudsman for the public sector. One could argue that the legislation will bring the private sector up to the same standards of scrutiny that we would expect when there are failures in public administration.
I am extremely interested in what the Secretary of State has been saying, which is important for consumers throughout the United Kingdom. As some of the measures that he has been speaking about today are devolved to Northern Ireland, in the interests of consistency, how will he ensure that whatever is introduced in this House is also introduced in other parts of the UK where there is devolution?
There have already been discussions with the Northern Ireland authorities, and we plan to introduce the same measures in Northern Ireland. There is agreement on the subject. I cannot say off the cuff where we are in relation to Scotland and Wales, but there are discussions with devolved authorities to try to ensure that this is widely applied. Everyone agrees that these are improvements and it would be desirable if everybody throughout the UK benefited from them.
I was so fascinated by what the Secretary of State would be saying today that when I realised that I had missed the start of his speech I came hotfoot over here.
My point also relates to the issue of public services. On premium rate phone lines, the Government have said that all Departments should migrate to the use of geographic phone lines—03 lines—or others to ensure that consumers will not be charged rip-off rates by Government Departments. I welcome that, but will he give us some indication about when that will happen? The promise is good, but consumers need action.
The hon. Gentleman is correct that an undertaking was made, which I understand is in process. Different Departments are proceeding at different speeds, but there is a commitment to do this. If he wants more information on it, I will try to get it to him. It is a perfectly legitimate complaint that people have.
The consumer law enforcement powers establish a primary authority to improve co-ordination. The enhanced consumer measures relate to the law and the gap between criminal and civil law in relation to consumer enforcement. At the moment, consumers rarely get their money back when a business breaks consumer law. That is partly because criminal courts are reluctant to award consumers redress and enforcers are often unable to seek redress in the civil courts. There is a common law remedy, but it is often difficult to realise it. What then tends to happen is that the more extreme cowboys are prosecuted on criminal grounds, but compensation, particularly for lesser levels of abuse, is more difficult to obtain. The legislation will enhance consumer measures to give enforcers greater flexibility to get the best outcome for consumers.
Many of these issues are dealt with through small claims courts. I recognise that there is often a difficulty in enforcing claims in the small claims courts. I am not sure that legal aid is the central issue there. It is a question of ensuring that, when court remedies are imposed by the courts, they enforce them and there are proper fines on companies that do not yield at that point.
The measures on the civil courts seek to ensure that there are properly specified rights aimed at giving consumers their money back, giving them more information and increasing business compliance. We must try to ensure that the measures are reasonable and proportionate, and that there is flexibility. Let me give a concrete example, because this is a slightly abstract and legalistic issue. Under a more flexible regime, a furniture retailer that has made false promises on delivery dates may not only have to give consumers their money back, but have to advertise in the press or social media what they are doing to put the situation right. They may also be required to change their internal systems to ensure that there is no repeat of the breach of the law. Essentially, the changes will enable enforcement to take place in a much more flexible way that reflects the circumstances of particular companies and customers.
How will the Bill address the issue of companies going into liquidation and what happens to their creditors? We have all seen what happened with the Farepak scandal. Consumers do not understand the difference between part-payments, deposits and prepayments. Will that be clarified in the Bill?
Those issues are covered by insolvency legislation, which we hope to review later in this Parliament. I am aware of the hon. Lady’s close involvement in the Farepak victims’ case, on which she has worked with my Department and helped a great deal. The issue that has been triggered is whether we should change the order of claims of creditors. We have looked at this sympathetically. The danger is that by promoting one group of creditors, another, perhaps equally worthy, is subordinated. We have not yet found a satisfactory way of reordering creditor claims that everybody would accept as fair and just. I am aware of the Farepak problems, but we have made quite a lot of progress in that case.
I thank the Secretary of State for singling out the furniture industry, which has a number of problems. In particular, people can spend a lot of money on one item of furniture from a company that they think is UK-based, but discover that that is not so if the product delivered is in any way faulty. It can then take months to get it repaired or replaced. Can we look at how we deal with such companies, including Laura Ashley, which has terrible reviews of its furniture on the complaints board? Its consumers also have to pay 10p a minute to make a complaint. It is very difficult to get redress if it delivers something that is faulty, as with any furniture company not based in the UK.
Will the Bill be in any way retrospective? For example, will it bring relief to a customer who has entered into a long-term contract, the provisions of which extend beyond the Act’s implementation date? Will a customer in those circumstances be able to cancel any unfair terms?
The right hon. Gentleman asks a tricky and quite specific legal question, and I do not want to guess the answer. Of course, in general we always try to avoid retrospective legislation, but I can see that for contracts spanning a period of time we need to cover the whole contract period. I will check the details of the proposal and get back to him.
I appreciate the Secretary of State’s generosity in giving way to me a second time. I want to touch on something my hon. Friend the Member for Bridgend (Mrs Moon) raised: the issue of companies based overseas. The Secretary of State has generously met me and other colleagues from north Staffordshire on a couple of occasions to discuss the ceramics industry. People can sometimes be misled into buying something that they think was made in Stoke-on-Trent, but when they get it home they discover it was made not in Fenton, but in Indonesia or China. How does the consumer get redress in those circumstances? If that is not dealt with in the Bill, is it something he will look at?
As the hon. Gentleman says, I have discussed that with him before. Indeed, there was a discussion in the European Union last week about rules of origin legislation. I am very sympathetic. The potteries are reviving somewhat and the ceramics industry is returning, and we want to ensure that that is sustained. I think that the issues raised are somewhat different from the content of the Bill. We might be talking about fraud, trading standards or enforcement, and there is an issue about mandatory origin reporting, which is currently being debated in the European Union. I fear that the Bill’s provisions will probably not help to solve the problem, but those are important issues.
I want to raise a further question that is not addressed by the Bill as currently drafted, surprisingly. It relates to electrical product recalls, which are clearly a matter of safety for people and properties. The law is currently deficient, and the Electrical Safety Council has made it clear that it wants it improved. It points out that the recall checker on its website often lists products for which there is no procedure in place and no traceable manufacturer. Surely, with regard to consumer rights, that is an area that needs to be addressed.
The hon. Gentleman is right that the safety aspects are dealt with separately. I was under the impression that the relevant law was tightened up several years ago. I am familiar with it because a colleague who formerly represented Richmond Park in the House had a family tragedy in circumstances similar to those that the hon. Gentleman describes. I understood that the regulations relating to defective electrical equipment had been tightened, but that is a specific point that we can check.
With regard to the time it can take for products purchased from manufacturers based overseas to be returned, or the number of times someone may have to be called out to repair a product before it is fit for purpose, does the Bill set out a time scale within which repairs must be done, products must be replaced or money must be returned?
As I tried to explain when describing the reforms relating to deficient goods, repairs must be done the first time round. If they cannot be done in a reasonable time, there will be cash compensation. Previously that was ambiguous and unsatisfactory. There will be either a repair or cash compensation, and that will be much clearer than it has been in the past.
Let me talk about the provisions in the Bill that relate to competition law and the role of private actions. Competition is good for growth and one of the pillars of a vibrant economy, so a key part of the work is tackling anti-competitive behaviour. The European Commission—I quoted some examples a few moments ago—has estimated that cartels can raise prices by between 20% and 35%. Despite the strong competition framework that the Government are putting in place, the Office of Fair Trading has shown that businesses believe that the current regime for private actions is too slow and costly. As a result, businesses and consumers rarely get redress when they have been harmed by anti-competitive behaviour. In 10 years, there has been only one collective action case in this country, and only one 10th of 1% of the consumers who were eligible signed up to it.
We have tried to strike a careful balance. We do not want an American-style system of prodigious and constant litigation, which would be costly and benefit only lawyers. None the less, we believe that there is some imbalance in the current system that needs to be redressed. We will try to discourage parties from engaging in costly court cases by encouraging alternative dispute resolution. We propose reforming the Competition Appeal Tribunal by introducing a fast-track regime so that small and medium-sized companies can get quicker and cheaper access.
For example, let us take a car garage that relies on spare parts from a large supplier that has started withholding supplies to drive up prices, showing cartel-type behaviour. Previously, the garage would have had to take costly legal action in the High Court, possibly bankrupting itself in the process—it is a small company up against a big one. Under the Bill, the garage could take the case to the Competition Appeal Tribunal, which could swiftly issue an injunction resulting in the supplier having to restart its supply.
We will also introduce an opt-out collective action regime for consumers and businesses that have been harmed by anti-competitive practice, with safeguards to ensure that cases are appropriate and merit that approach.
I am grateful for what the Department for Business, Innovation and Skills is doing in relation to the Competition Appeal Tribunal. As a result of the cost of legal intervention, numerous small businesses have been unable to challenge anti-competitive behaviour, so I applaud that and think that it will make a real difference for small businesses. Has the Department made any impact assessment of the number of cases it anticipates over the next three to five years and, if not, is it in the pipeline so that we can get some sort of idea?
I cannot give any figures, but we are starting from virtually zero, so there will almost certainly be an increase. We will have to conduct an impact assessment as part of the regulatory regime in Government. I will endeavour to give my hon. Friend more facts and figures if I can unearth them.
In conclusion, the Bill represents a radical and far-reaching set of reforms designed to streamline the law, making it clearer and more accessible. It will enhance consumer rights and deregulate for business. It will benefit consumers by reducing the time and cost of finding out how to deal with problems. It will protect consumers from the small print in contracts and increase the redress they get when things go wrong. It will benefit businesses by reducing the need for ongoing legal advice, and it will save legitimate businesses from losses from anti-competitive practices. The benefits are substantial. They will create more confident consumers, who in turn will be more likely to try new and innovative goods and services, which in turn will create a more responsive and vibrant UK economy.
I share the Secretary of State’s passion for this subject, and I challenge the idea of my hon. Friend the Member for Barrow and Furness (John Woodcock) that it is boring. I am delighted that so many hon. Members have come into the Chamber to stand firm on the idea that consumer rights are a key concern. Despite the short notice, I hope that they will join us in agreeing that it is important to have a strong consumer rights framework in this country.
We agree that the Bill is long overdue. The previous Government introduced a White Paper on delivering a better deal for consumers. It was designed to take action on rogue traders, empower and assist trading standards and bring in a consumer rights Bill to help modernise consumer sales law, so giving consumers the real power that we all want. The Bill should be the culmination of that elephantine gestation.
We therefore welcome the idea of bringing in consumer rights legislation to meet the test that the Government set on their website, which states:
“The government believes that consumers who are well-informed about their rights and what they’re buying are more confident and more likely to spend money well, getting better deals or buying new goods and services.”
It seems to the Opposition that a good first test to set the Bill is whether it meets this ambition: does it help consumers not to be big spenders, but smart ones, and does it give them the information and rights to be able to use their money well and wisely? I am afraid that the Opposition believe that the Bill falls at that first hurdle, in that it provides neither information nor rights, and it makes the Secretary of State a consolidator, not a champion of consumer rights. As such, this legislative opportunity short-changes, rather than strengthens, the pounds in our pockets.
The Opposition know that healthy, fair and competitive markets and effective methods for information-sharing across providers are vital for building an economy that works both for consumers and for businesses. We know that savvy consumers make for better customers for businesses, and that better-informed citizens get better outcomes.
In my speech, I will set out the scale of the challenge that demands a roar, not a whimper, and a Government who will speak—indeed, shout out—for consumers and their rights in a free, fair and functioning economy to provide a consumer rights framework that does not wait until people get ripped off before coming into force. In explaining what that means, I want to set out the areas of the Bill that need to be strengthened and on which we will therefore table amendments.
This is a Bill on consumer rights, and many consumers would, for example, like the opportunity to shop freely at a large store on a Sunday, as they already can in Scotland. Does the hon. Lady agree with extending the rights of consumers to spend their money in whichever shops they want, whenever they want on a Sunday, or perhaps with devolving that down to local authorities, so that they can vary Sunday trading hours if they so wish? Is she really that much on the side of consumers?
I hope that the hon. Gentleman is on the Public Bill Committee, because I would enjoy many such conversations with him. His interest in how widely consumer rights can be applied is legendary in this House and in the country. We need a fundamental understanding of where rights for consumers make a difference to our economy. We believe that the Bill needs to meet such a test, and I shall set that out today. I hope that I can make clear and compelling arguments about why the Bill should make a real change to people’s lives and redress the balance of power for consumers.
My hon. Friend has already proved herself to be a superb champion of consumer rights since entering the House in 2010. I am following what she is saying about the need for the Bill to go further. Does she agree that one real issue, particularly in my constituency of Blackpool South, is the amount of counterfeit goods that are regularly sold—worth tens of millions of pounds every year—and the crucial role of trading standards? Many trading standards bodies have been affected by the cuts in funding to local government. Does she agree that the Government need to look at supporting such bodies more centrally, especially in their role in relation to counterfeit goods?
I want to come on to precisely my hon. Friend’s question about trading standards, and about how to have stronger powers for consumers at local level, which is one issue that the Bill does not seem to understand or to address.
I am honoured that the Secretary of State made time this morning to read my article for PoliticsHome. I, too, took the time to read his speech last night, and I very much enjoyed his attempt to use Jedi mind tricks on the Government. In particular, he paraphrased one of my personal heroes, Obi-Wan Kenobi, in his attempt to claim that “This is not the recovery you are looking for”, which is recognition that consumers are bearing the burden of this Government’s economic policy as a result of their lopsided attempt to balance the budget. I am therefore glad that the Secretary of State has acknowledged that growth is being driven only by consumer spending, because many of us are concerned about the impact of that.
Although the Secretary of State celebrates the idea that consumers have dipped into savings that they hold for a rainy day, I have to tell him that he is mistaken to presume that they have done so only for long-term investments. His own Money Advice Service shows that a third of British people have no money put aside for rainy days, due to the everyday costs of living, and that those who have such savings have been forced to dip into them to cover those costs, with three quarters of the people surveyed having been hit by a bill that threw them off-budget in the course of the past year. Indeed, a third of people in our country who now have no savings at all have said that not having a high enough income is the problem causing them not to save. We agree that we should be extremely worried about an economy in which, every day, people get further and further into personal debt. We are also worried that when the Government are presented with an opportunity to do something about that, they stand aside. They talk strongly about national debt, but say nothing about personal debt.
I know that the Secretary of State will want to blame the Treasury for the National Audit Office’s damning indictment that Government failure to assess the impact on consumers of investment in infrastructure might lead to consumers facing financial hardship and unplanned taxpayer support being required. That damning report shows that Whitehall Departments are forgetting the needs of consumers, and therefore the cumulative impact of household bills. I know that some in the Government want to cast the Public Accounts Committee as the dark side, but I fear that consumers will feel the Sith inhabit the Treasury, not Committee Room 16. Why does the Secretary of State therefore not use the Bill to address that gap and to help such hard-pressed households, as well as to show that he gets the need to tackle the rip-off charges and broken markets in goods and services that they face?
Does the hon. Lady agree that companies selling products often overlook the rights of consumers on islands and in some rural areas, saying that they will not deliver to them, and often overlook the best distribution network, which is the Royal Mail? Does she agree that the Bill should ensure that consumers who do not live on the mainland are given equal access to the market?
The hon. Gentleman makes some strong points about exactly the kind of contracts that consumers get into and the kind of service standards they should expect. That the Bill will simply consolidate existing rights, rather than address some of the challenges, shows that it could go much further on such issues.
It would not take much to make a real difference to households across this country. The Money Advice Service research shows that if consumers saved just £3 a day, it would be enough to cover their average unexpected bills in a year. That may not sound like much, but for millions of British consumers who have already used up their savings or are getting into debt in dealing with the cost of living crisis created by this Government, it is a stretch. For millions of people, reducing their outgoings would also make a real difference to their financial precariousness. The Centre for Social Justice has estimated that about 4 million British families do not have enough savings to cover their rent or mortgage for more than a month, and that more than 5,000 households became homeless in the past year alone because of arrears.
I hope that the Secretary of State will at least do better than his Cabinet colleague, the Prime Minister, who denies that living standards are falling as the public pay for the cost of this Government’s policies. The Prime Minister claims that it is a matter for statisticians to argue, but I hope that the Secretary of State agrees that it is a matter on which politicians should help out. It is not our role to make decisions for consumers, but it is our role to help to make decision making easier.
We could also help with the cost of living crisis, because it is about not just job creation, but every extortionate charge to which the Government turn a blind eye or every broken market they ignore, and that all adds to the struggles that people face. Every unfair service contract term and every bad decision that consumers are duped into making is more money down the drain.
I hate to interrupt the hon. Lady in full powerful flow, but I want to ask her whether there is anything about the Bill that she likes, or does the whole direction of travel and everything that we are doing on the cost of living crisis, which she has mentioned about five times, mean that it is just a poor Bill?
I can safely say that I will please the hon. Gentleman by talking about the cost of living crisis an awful lot more. I said at the very start that we welcome the Bill. Our concern is that this is a once-in-a-Parliament opportunity to get consumer rights legislation right. There are so many challenges that the Bill does not face that it will become a missed opportunity, to the detriment of all consumers and all our constituents, who are paying the price for our failure to tackle these issues. It will have minimal impact on the problems that we are seeing every day in our constituencies. The fact that nothing in the Bill is of particular concern tells us everything we need to know about its narrow ambitions in addressing the problems that our constituents face.
Does the hon. Lady agree that it is at least something that the coalition has brought the Bill forward? Many consumer groups and people who are involved in this area are very supportive of the Bill. That has to be a good thing. Perhaps it is a shame that the Labour party did not bring forward such legislation six, seven, eight, nine, 10 or even 15 years ago.
The hon. Gentleman is again being a little uncharitable. I pointed out that consumer rights legislation in this country has had an elephantine gestation. If his argument is that something is better than nothing, when we could be aiming for the best for this country, I think that people will see the difference between the choices of the Government and the Opposition.
I want to set out our ambition today. If the hon. Gentleman is on the Committee, I encourage him to support it. We want to get the best possible consumer rights framework in this country and truly tackle the detriment that people in our communities are facing. We want to prevent problems from occuring in the first place, rather than waiting for people to be ripped off. That is the ethos that we want to see in the Bill. We know that when we do not get consumer rights right in this country, it is the poorest and the most vulnerable who pay the biggest price.
Consumer Futures and the Joseph Rowntree Foundation have found that lower-income families can end up paying £19 more a week on average because they face higher charges for the same products. Their research shows that such poverty premiums can add up to 10p for every £1 that is spent by households. Poorer households in this country are subsidising richer households as a result of the levels of detriment that they face.
I will set out for the Secretary of State four questions that we believe could make the Bill better and that will be the focus of our efforts in Committee.
Often, the poorest families shop away from the main street. Something that has long concerned me is that furniture dealers in white vans are selling products that are lethal because they do not meet British fire-retardant foam standards. If a fire starts, it can literally kill a family before they get out of the room. How can we tackle that problem and ensure that poor families are protected by consumer protection legislation, not just those who can afford to shop on the main street?
My hon. Friend is spot on and shows why the Bill falls short. That issue in the furniture industry reveals the problems that we have with the ombudsman system. I will come on to that matter and talk about her work on it.
The first question that we want to ask relates to the role of competition and challenge within markets to produce choice and value for money, which the Secretary of State spoke about. We agree that competition is a key driver of quality, innovation and personalisation in products, goods and services. However, in many markets in Britain, people are paying over the odds for essential goods and services because the barriers to entry into those markets have created dominance for a small number of providers or because there is outdated regulation. The existence of many companies does not always mean that there will be competition either. The ability of small firms to compete with larger providers is a key element of a free and functioning market.
If the Secretary of State wants examples of where those problems lie, there are many. My right hon. Friends the Members for Doncaster North (Edward Miliband) and for Don Valley (Caroline Flint) and my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) have been clear about the broken nature of our energy markets. Six companies dominate the retail market in the UK, supplying to 98% of the domestic market and 82% of the smaller business market. The fact that no new entrant has managed to challenge that dominance suggests that there are significant barriers to newcomers that inhibit competition. That is reflected in the prices that consumers pay. A lack of competition in the retail market for energy has resulted in consumers paying £3.6 million more than they need to every year. Switching levels in that market are the lowest that they have been for years. The low levels of switching mean that the big energy companies have a captured market, which again reduces the incentives to keep prices competitive.
It is not only in the energy market—[Interruption.]
Thank you, Madam Deputy Speaker. I would be delighted to take an intervention from the hon. Lady at any point if she would care to make one. I am sure that whatever she is chuntering from a sedentary position is absolutely fascinating.
It is not only in the energy market that we see such problems. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) and the hon. Member for South Derbyshire (Heather Wheeler) have highlighted similar problems for consumers in the pensions market. The current restrictions on the operations of the National Employment Savings Trust mean that it is impossible for it to compete with other providers, to the detriment of consumers. It is a market where hidden charges and fees create problems for people. There are penalty charges for people who want to change jobs and exit charges for savers who switch schemes. Which? found cases of consumers having up to 50% of their savings being absorbed by such charges and costs.
If the Secretary of State does not believe me on the energy and pensions markets, let us look at my passion, the payday lending market, in which a lack of competition is clearly causing problems for consumers. Not every consumer in that market gets into financial difficulty, but enough of them do because the way in which it operates causes huge detriment to the consumer and huge problems for our economy. The National Audit Office estimates that unscrupulous behaviour by firms in that market costs consumers at least £450 million a year. The lack of competition to provide services to the customers of those companies, as well as a barrier to accessing alternative services being created by borrowing from them in the first place, enables the exploitation of their customers.
If the Secretary of State is not interested in the impact of high-cost credit, perhaps he will look at the banking market. My hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) and the hon. Member for South Northamptonshire (Andrea Leadsom) have again highlighted the raw deal that consumers get. The pricing power of big banks means that they dominate the market in key products such as mortgages. Banks are able to retain their dominance by making it hard for customers to move their custom. Some 1.3 million people have switched their current account in the past year, which is a churn rate of just 2% to 3%. Studies show that a truly competitive industry would have a switching rate nearer to 10%. It is not only in the dominance in the current account market that we see problems. When banks are able to set their own terms, they can set requirements such as those for buy-to-let mortgages that force borrowers to offer only short-term tenancies, which are causing problems in the housing market.
Given the Secretary of State’s speech last night and his commitment to competition, I would have thought that a healthy dose of competition across the sectors I have mentioned for the benefit of consumers is what the doctor would have ordered. However, we do not see that in the Bill.
The second question that I want to pose for the Bill is about the importance of information flows, which is linked to free markets. What are the Government doing in the Bill to address the information gaps and asymmetries that enable consumer detriment? We know that data are vital to ensuring that consumers may compare goods and services in order to make their own choices. We know that a lack of information helps providers to hide behind confusion and a lack of transparency. The Government’s own research shows that if consumers knew more about products, they would be able to gain £150 million to £240 million a year. However, only 13% of those who use price comparison sites get the lowest priced deal. The Government admit that one reason for that is that people do not have accurate information about their past usage and therefore find it difficult to predict future usage.
We are at the bottom of the European league for consumers being able to switch and shop around to get the deals that they want. The contrast with countries such as Australia is clear. Mass movement switching campaigns have led to one in four Australian citizens being part of schemes that get them better deals not just on energy, but on health insurance and financial services.
Consumers have legal rights to request access to personal data, but half the respondents to Which? were not even aware of that right and very few people have exercised it. I am sure that the Secretary of State will point to the midata project, which is a voluntary scheme to give consumers access to their energy, mobile and financial services data. However, that scheme has struggled to have any impact for a simple and obvious reason: companies have little incentive to release commercial data that could convince a customer to go elsewhere. We welcome the fact that the Government took an order-making power through the Enterprise and Regulatory Reform Act 2013 to compel certain businesses to release such data, but that affects only four core sectors and has not yet been applied. It could be applied more widely if secondary legislation were used. That is another missed opportunity in the Bill. Let us revise the Bill to unlock the capacity of information to improve outcomes for all consumers and citizens.
That capacity would help in many sectors. My right hon. Friend the Member for Southampton, Itchen (Mr Denham) has run a tireless campaign, for example, on the lack of clarity in supermarket pricing. We have seen how some deals and special offers mislead shoppers when clear information is not provided. There are products that are more expensive than the original price when they are in a multi-buy offer; products that have been at a sale price for longer than the original price; and products whose prices are increased immediately before they go on offer, to make the discount appear more significant.
Supermarkets, like many other industries, hold a wealth of data about us as consumers that they use to design their pricing strategies. Making those data easily available—in principle, they are already public data—could transform consumers’ power to shop around and to know a good “buy one, get one free” deal from a dud one, unlike some coalition voters, I suspect.
Or the Secretary of State could learn from my hon. Friend the Member for Sefton Central (Bill Esterson) and the hon. Member for Edinburgh West (Mike Crockart) and use the Bill to help consumers protect their data and to deal with nuisance calls, which I know many Members are frustrated by. I know that the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott), who is in her place, has campaigned on that issue. We know that 71% of landline customers say that they have received a live marketing call and 63% a recorded marketing message. The Information Commissioner receives 2,500 complaints a month from people sent unsolicited text messages, usually for debt or payment protection insurance claims. With 75% of landlines being registered with the Telephone Preference Service, the number of complaints shows that something is going seriously wrong. Again, the Bill will do nothing to help consumers protect their own data, which will be to their detriment.
We know that it is not enough just to have data, because they are not a disinfectant if the curtains are closed to the sunlight. Helping people make the right decisions the first time is key to outcomes, yet many people, especially those with complex needs or a lack of confidence, struggle to get the information and advice that they require to make effective decisions. In turn, that generates cost to the public purse, including the costs of putting it right. I know that the hon. Member for Mid Norfolk (George Freeman), who is in his place, feels strongly about that subject.
We know that when good advice is provided, services are improved. Indeed, one study in Nottingham showed that 40% of the cases dealt with by a local advice service referred to poor decision making in the public sector—what was called “preventable failure in the system”. A project that piloted advice services working with the council showed that 60% of those issues were preventable. When we see such studies and the impact of good advice and good access to data, the question is why the Government are not truly empowering consumers and citizens to bring them the benefits of the right changes. Why does the Bill not offer any action on that?
Where the Bill does offer input is on contract terms. It sets minimum standards that supplied goods must meet, sets out that they should be fit for purpose and satisfactory, and provides a legal right to reject faulty goods within 30 days of receiving them. Again, however, consumers will ask whether that will deal with the real problems with terms and conditions that they face time and time again. That must be our third challenge for the Bill.
A lack of clarity about prices causes many of us to purchase products that are not suitable. It is about the most basic of consumer needs—to know the cost of the product that we are purchasing and what our money will buy us. Prominent pricing is not the same as transparent pricing. Hidden charges are a problem for too many in our society. One study found that buying insurance through a broker could push up premiums by £500 a year, and that the gulf was caused largely by the added expense of the broker’s fees.
Many consumers experience the frustration of signing up for services or goods and then finding that the terms and conditions are varied because the prices are not clear. A constituent wrote to me this week about a website called Tax Return Gateway, a copycat of a Government website that looks suspiciously like the real deal. My constituent was charged £500 for filling in her tax return, and only after she had paid it was she told that that was the fee for the service, not the tax return itself. Such sites exist for a whole range of public services, including passport applications, visa programmes and driving licences. It seems a simple principle that people should be told the price before they purchase something, but again, the Bill will do nothing to provide for that.
The hon. Lady raises an important point. There are scam versions of Driver and Vehicle Licensing Agency sites, and many people do not understand what they are purchasing, far less the costs of it. They do not realise that they are only getting a form to apply for a road tax disc or whatever.
The hon. Gentleman is absolutely right, and if the Bill met the test of providing the best consumer rights framework that this country can have, such scams would be addressed. Again, we find the Bill wanting on that point, and we will look to address such challenges in Committee.
The hon. Gentleman’s question reveals one challenge that we face. I would love to sit at a computer with him, google those websites and see whether he could tell the difference. Making that difficult is one thing that the companies in question do. It is fair to ask how we can empower consumers, but it is also fair to ask what we can do to ensure that someone knows precisely what they are buying. That does not need to be an unreasonable requirement on terms and conditions, but the Bill does not address that challenge.
The Bill also fails to address the problem of people paying for services that they cannot get the details of. I beg the House’s indulgence to mention a second case in my constituency. At present, 4,500 leaseholders in Walthamstow have buildings insurance via their leases, on top of which they pay a premium for terrorism cover. According to the freehold manager, that is on the basis that the plane bomber lived in my constituency. Indeed, the freehold manager has sent me newspaper coverage to justify that additional charge of £80 a household to leaseholders in my community on top of their buildings insurance. Yet my constituents cannot get the details of the policy that they are paying for, because the insurer claims that its deal is with the freehold manager, not with the leaseholders. It seems that they cannot test in a tribunal whether the charge is fair, and consequently whether they can challenge it.
If the Secretary of State will not listen to my cases as arguments for why pricing and contract information need to be addressed, perhaps he will listen to the many other Members who have raised similar issues about contract terms and who is selling goods. In particular, there is the question of secondary ticketing sales, which my hon. Friends the Members for Washington and Sunderland West (Mrs Hodgson) and forEltham (Clive Efford) and the hon. Member for Hove (Mike Weatherley) have raised repeatedly.
We know that it is vital that there is a marketplace for the reselling of unwanted or unneeded tickets for events, because there is little scope for refunds or returns in that sector. However, there is also widespread abuse in the sector, because online touts can buy up tickets en masse to resell once an event has sold out. Indeed, Ticketmaster USA has estimated that for some high-profile events, up to 60% of available tickets can be taken in that way. Consumers who are unable to buy tickets on the first release must then pay over the odds to buy them from sites such as eBay or viagogo.
The secondary ticket market in this country thrives on a lack of clarity about who is selling a ticket and what right they have to do so, and it is estimated to be worth £1 billion a year. That is why I am surprised that the Secretary of State, as the Member for Twickenham, is not seeking to use the Bill to protect rugby fans in the run-up to the forthcoming world cup.
I am listening to the hon. Lady with interest, and one cannot help but agree with her on a large number of issues. I recently had a case in my constituency of people being ripped off on what looked like a DVLA website. However, is there not a danger that if we tried to specify every possibility and detail, the Bill would become far too fine-grained and would ultimately be used much less than if we defined things more generally?
We can have that argument in Committee, but being clear about pricing is not about any one of the individual issues that I have mentioned. It is a fundamental principle that should be in contracts. That would benefit consumers and mean that businesses could be clear that they had sold goods, so that we would not have some of the problems that we see further down the road. One point for us to consider in Committee is whether we can make clear what should be specified in a contract across a range of industries. That is not being specific; it is a general principle. Surely the hon. Gentleman would want his constituents to know what they are buying in advance of buying it.
Again, I cannot disagree with the hon. Lady, and that is indeed what the Bill is intended to do. At the same time, she makes specific criticisms about all sorts of cases without recognising that it would be extremely challenging to produce a general rule that would capture them all in a way that the courts could interpret.
I am disappointed that the hon. Gentleman does not believe that we can clarify what should be included in prominent pricing and at what point in the sale that information should be provided. Perhaps that reflects the Government’s small vision for consumer rights, because we could put that basic principle into the Bill and it would help to deal with a range of issues. The Government have chosen not to do that, and we are going to challenge them about it.
My hon. Friend is making some excellent points, especially about the secondary ticketing market. Does she agree that there is now demonstrable market failure, which is one of the measures that the Government always said they would need before they would regulate the market? Does she think that the time has now come when we need to legislate to do something about that parasitic economy?
I pay tribute to my hon. Friend. She has been a tireless campaigner on this issue and seen at first hand the frustration of fans denied the opportunity to go to events. There are ways we can address that market, and principles about how sales are made and who has the opportunity to sell a product. We could put those clear and simple proposals into legislation and they would benefit not just the secondary ticketing market, but also some of the other markets under discussion. The Opposition have committed to testing the Government in Committee about why they feel they cannot provide that protection for people, and I hope the hon. Member for Meon Valley (George Hollingbery) will reflect on that and agree with us. As he said, it is difficult to disagree with these issues, but we now need to act. It is no good wringing our hands when we could prevent some of those problems.