Clause 49 - Consumer complaints

Water Bill [Lords] – in a Public Bill Committee at 10:30 am on 16 October 2003.

Alert me about debates like this

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs) 10:30, 16 October 2003

I beg to move amendment No. 57, in

clause 49, page 59, line 39, at end insert—

'(12A) Where a report is made to the Authority pursuant to subsection (10), and the report shows that, in the opinion of the Council, the relevant undertaker (in respect of any matter relating to its functions) by failing properly to consult the complainant, or by acting unreasonably caused the complainant to suffer loss or damage or be subjected to inconvenience, the Authority may direct the relevant undertaker to pay to the complainant an amount, not exceeding £5000, in respect of that loss, damage or inconvenience.

(12B) The Authority shall not direct a relevant undertaker to pay an amount to a complainant pursuant to subsection (12A) in respect of any loss, damage or inconvenience for which compensation is recoverable under any other enactment except in so far as it appears to be appropriate to do so by reason of the failure of the amount of any such compensation to reflect the fact that it was not reasonable for the relevant undertaker to cause the complainant to sustain the loss or damage or to be subjected to the inconvenience.

(12C) The Authority shall not make a direction pursuant to subsection (12A) unless it has given the relevant undertaker and the customer the opportunity to submit evidence and make representations.

(12D) A person to whom any amount is directed to be paid by a direction under this section shall be entitled to recover that amount from the relevant undertaker against whom the direction is made by virtue of this section.

(12E) The Secretary of State may by regulations substitute a different amount for the amount for the time being specified in subsection (12A).'.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following:

Amendment No. 154, in

clause 49, page 59, line 39, at end insert—

'(12A) Where a report is made to the Authority pursuant to subsection (10), and the report shows that, in the opinion of the Council, the relevant undertaker (in respect of any matter relating to its functions) by failing properly to consult the complainant, or by acting unreasonably caused the complainant to suffer loss or damage or be subjected to inconvenience, the Authority may direct the relevant undertaker to pay to the complainant an amount, not exceeding £5000, in respect of that loss, damage or inconvenience.

(12B) The Authority shall not direct a relevant undertaker to pay an amount to a complainant pursuant to subsection (12A) in respect of any loss, damage or inconvenience for which compensation is recoverable under any other enactment except in so far as it appears to be appropriate to do so by reason of the failure of the amount of any such compensation to reflect the fact that it was not reasonable for the relevant undertaker to cause the complainant to sustain the loss or damage or to be subjected to the inconvenience.'.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

We have a curious anomaly in which my amendment and that tabled by the hon. Member for Lewes are very similar. In fact, mine goes just a bit further, but that is the good thing about being a Conservative. I hope that the points that I make, and those made by the hon. Member for Lewes, will be taken into account by the Government, because the amendments concern money, consumer complaints and the authority's behaviour.

We seek to change the way in which the authority reports, and to ensure that there is a certain amount of proportionality—I am beginning to get addicted to that word—in its behaviour. We seek to add provisions that prevent it from doing more than it should.

Proposed new subsection (12D) states:

''A person to whom any amount is directed to be paid by a direction under this section shall be entitled to recover that amount from the relevant undertaker against whom the direction is made by virtue of this section.''

I agree that that is pretty wordy stuff, but we are trying to build in a proper sense of balance. I hope that the amendment will be acceptable to the Government and, if it is not, I am keen to hear why that is the case, so I will take up no more time. I also know that the hon. Member for Lewes will be keen to make his own points.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 10:45, 16 October 2003

It is spooky, as not only have we used the same words in the amendments, arrived at by some process of synchronicity or telepathy—

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Indeed. Moreover, the comments that I was intending to make are almost word for word those that we have just heard. If two parties independently reach the same conclusions, that suggests to me that we are making a strong case. I therefore commend the amendment to the Minister.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

Not having tabled my own amendment, I support one or other of the two under discussion.

The central case addressed by the amendments—redress to the consumer, and how the council will operate—is important. I am concerned that if the

amendments are not accepted, or if the Government do not adopt a similar approach, the new consumer council will be no more powerful than an MP is when he intervenes on behalf of a voter. What would then be the point of the consumer council? Any MP can do what the consumer council would do under the Bill: intervene, intercede, exchange letters, write to authorities, water companies or the National Assembly, publicise the issue in the local press or gain information. We are ultimately talking about how we ensure that those who have not undertaken their duties correctly are in some way brought to book.

It was interesting to hear the Minister reply to the earlier debate on clause 47 when the hon. Member for Lewes asked what would happen if there were a disagreement about commercial confidentiality. He answered that there would be an appeal to the authority—so the Government have already acknowledged that the authority can be an arbiter between the consumer council, or consumers and general society as a whole, and the water companies. It is the authority that can say what is or is not commercially confidential information.

The amendment quite correctly brings in the authority as a third party arbiter where there are disagreements about whether a consumer's complaint has been successfully resolved. It is to be commended, and I hope that the Government will have an amazing change of mind and introduce a similar set of words, perhaps on Report.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Of course it is right that the consumer bodies should, on occasion, press for compensation from the water companies. What is important is the mechanism for doing that. The authority and the consumer councils have powers that MPs do not, particularly the power to obtain information. We can ask companies for information, but we cannot force them to give it to us. There is empowerment in the legislation. That is one of the slight differences.

The consumer councils have been very successful in pursuing claims on behalf of consumers. They do that by negotiations with the company. Formal powers are not needed for negotiations with companies and the taking up of consumer complaints. Water Voice has been successful in negotiations. In 2002–03 alone, it obtained something in the region of £535,786 in compensation and rebates for consumers. That was quite an achievement. I understand that since 1991 Water Voice has managed to obtain compensation and rebates to the tune of £8.1 million.

I have no problem with the principle of compensation, which is right and proper, or with the idea that the consumer body should pursue that on occasion when consumers make complaints. That, too, is right and proper. But the problem with the amendment is that we get into difficult legal waters when we give the authority the power to impose compensation on companies. There may be situations in which companies are adamant that they are not responsible. Such cases are quasi-judicial and the authority is not really geared up to handle those.

The proper procedure is for the consumer council to approach the water companies. We have already

discussed how they can appeal to the authority, and how, if the council wants more information, the authority will back it up, take care of negotiations and, hopefully, come to a conclusion. If there were a real dispute, however, it would probably be most appropriately dealt with through the courts, because they are geared up for such disputes.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

Just so that I do not misunderstand the Minister, is he referring to circumstances other than when the company is in breach of its performance standards?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Yes, I can confirm that, because it is quite clear under statutory regulations. I am referring to a wide variety of individual complaints, which we have all come across as MPs and perhaps referred to consumer bodies for assistance and advice. It is a familiar process.

The process falls into a very difficult legal area, which I am not entirely sure the authority is geared up for. Specialists must be brought in, which causes problems, and one duplicates the procedure that exists in the small claims court. The potential negative effect of the amendment would be to give customers a financial incentive to make frequent complaints in the hope of receiving compensation without any risk of loss if they were unsuccessful. They could make complaint after complaint at no cost.

One should not take away the right to press compensation cases because a minority might abuse the system. I am not sure, however, that the authority is geared up for potentially complex legal arguments.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

To be clear about the Minister's reference to the courts, is he suggesting that the council will simply say, ''Well I'm sorry, we have tried our best, it's over to you,'' and leave individuals to pursue the matter in court? Or does he imagine the council taking cases to court, acting as an advocate on points of principle and pursuing the matter on behalf of the consumer?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Yes, there is nothing in the Bill to stop the council assisting the customer, providing advice and preparing and pressing a case in the small claims court. That is not a problem.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

The point on which the hon. Member for Lewes has asked for clarification is extremely important. Up to £500 can be claimed in a small claims court, but because of the size of water companies it would be very easy for them to enlarge the case and prevent a consumer from pursuing them. It would leave such a trail of costs that it would be impossible for a consumer to afford to pursue a major company.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

If it were a larger amount, it would have to go to a higher court. There is nothing to stop the consumer council assisting a consumer to pursue a case in a higher court. Cases are not restricted to the small claims court, although it is likely that a lot of cases will remain at that stage, because it is a simpler, cheaper system and a lot of the claims would fall within that category.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I would like clarification of ''assisting''. When the Minister says that the council could assist a consumer, does he mean by providing an

opinion and advice, or by championing the case and taking it to court on behalf of the consumer?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Generally, assisting would mean advice, but that would be a decision for the consumer council. It might want to pursue a case because it is a very important test case, for example.

We are discussing cases where agreement cannot be reached. Generally, agreement is reached and the companies accept that there has been a problem. Their repayments of £8.1 million have demonstrated that the system works. There is a danger of giving inappropriate responsibility to the authority and overloading it with distractions and work that it is not geared up for or designed to deal with.

With support from the consumer council and, if required, fall-back to the courts, the right balance is provided for consumers.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

The Minister spoke about the current success of Water Voice, but will he accept that Water Voice says that it needs such a redress? On the basis of its present success it has a different interpretation of the need for arbitration from that of the Minister.

Does the Minister also accept that, with other regulatory bodies in gas, electricity or telecoms, consumers have a choice? They can say, ''I've had enough of that company, I'm shifting to another.'' In the water industry, the average consumer does not have that choice; only a few consumers, who deal with huge amounts of water, have the choice to switch their water supply company. We must seriously consider that particular aspect.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I understand Water Voice's views on the matter. It is a fine organisation, which I respect. However, responsibility falls on the authority and not Water Voice, and I have outlined the problems associated with that. There are risks of overwhelming the authority with work for which it was not set up and does not have the appropriate facilities. That is what the small claims court and its procedures are for. On that basis, although I understand the reasoning behind the amendment, it is not practicable. It is important that the consumer council is given the necessary support to pursue cases on behalf of consumers, but the most appropriate place for the resolution of disputes is in the courts.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

The Minister has done all that he was supposed to do, but it is a shame because the amendments would have strengthened Water Voice and the consumer council, and improved the Bill. The amendments in my name would have gone further, and it is a shame that the principle has not properly been addressed.

At least the Minister is sympathetic to the views expressed today. As he said, the authority will not have the resources or manpower to support consumers as consumer bodies would want. We must acknowledge the difficulties that water companies face, because they are not a cheque book into which anybody can dip when they feel like it. We need a degree of proportionality that we do not yet have. I hope that the Minister will consider our discussions and, if possible, re-examine the issue. I will not press

for a vote as we may bring up the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 49 ordered to stand part of the Bill.