Clause 13

Consumers, Estate Agents and Redress Bill – in a Public Bill Committee at 6:15 pm on 17th April 2007.

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Investigation of complaints relating to disconnection of gas or electricity

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Business, Enterprise and Regulatory Reform)

I beg to move amendment No. 49, in clause 13, page 8, line 3, after ‘transporter’, insert

‘, or there appears to the Council to be a reasonable probability of such a threat being made’.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

With this it will be convenient to discuss the following amendments:

No. 50, in clause 13, page 8, line 9, after ‘supplier’, insert

‘, or there appears to the Council to be a reasonable probability of such a threat being made’.

No. 51, in clause 13, page 8, line 18, after ‘holder’, insert

‘, or there appears to the Council to be a reasonable probability of such a threat being made’.

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Business, Enterprise and Regulatory Reform)

With these amendments, we seek to extend the powers where the council feels that there is a reasonable possibility of a threat of disconnection being made. They are probing amendments, in that we want to ascertain from the Minister what constitutesa threat, bearing in mind that the process of disconnection can be quite long. If one receives a letter saying that one may be disconnected if the bill is not paid following a missed payment, does that constitute a threat? A lot of utility companies use low-level threats early on in the process, which can lead to a great deal of emotional distress to the many vulnerable—dare I say  it?—customers who often receive such threats. By vulnerable I mean elderly people and people whoare used to a straightforward relationship with the company to which they make their bill payments, who can receive a letter threatening to disconnect them if the matter is not resolved. The companies can start to issue threats at an early stage. I should like to know the stage at which the Minister feels that the reasonable probability of disconnection constitutes a threat to the individual.

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

Amendments Nos. 49 to 51 would change the scope of the new council’s duty to investigate disconnection or the threat of disconnection of a consumer’s gas or electricity supply, to cover the circumstances in which there would be a reasonable probability that a threat to disconnect would be made. What constitutes a threat? That varies from supplier to supplier. Some mention disconnection at a very early stage; some do so at a very late stage and allow the consumer to build up a considerable backlog of debt. It is important that the new council should use its discretion on the issue to ensure a security of supply in almost all circumstances. Without that, other problems will arise. It is important that those who deal with such complaints do so with regard to the circumstances.

I shall give an example of something that regularly happens to me as a constituency MP. Someone makes contact and says that they are being threatened with disconnection. First, how do they know that they have been threatened? Have they received a notice? What form does the threat take? They say, “Well, I haven’t paid my bill.” There needs to be more than that. There has to be a linkage; if there is not, all that will happen is a huge paper chase. We have to use advocates who are specifically able to deal with people who are vulnerable to disconnection or a threat to disconnect. Such advocates’ resources and time should be usedto secure an arrangement that gives effect to the continuation of supply for the vulnerable consumer.

The amendments are not needed. A threat to disconnect is already covered in clause 13(1), which obliges the council to investigate a complaint to decide on the appropriate action to avoid disconnection, when appropriate. The amendments would place an undue burden on the council, which would have to assess in the case of each complaint whether there was a reasonable probability of a threat to disconnect. No risk assessment would have to be made; no evidence would have to be provided—only someone making contact and saying, “I may be at risk.” That would take up a disproportionate amount of time, which would, as I said, be more usefully employed in investigating complaints about actual or threatened disconnection on the basis of evidence that such a thing existed under clause 13(1).

If vulnerable consumers were fearful that a threat to disconnect might have been made, they would be covered by the provisions in clause 12, which empowers the new council to investigate any matter concerning gas, electricity, postal services—and, in future, water—when the consumer is vulnerable. Accepting the amendments would offer no benefits to general consumers. The hon. Member for Solihull tabled them—the phrase “belt and braces” comes to mind—to ensure that in all circumstances, irrespective of any  evidence, the NCC should put resources at the disposal of the person concerned. I do not agree with that; that is not the role of an advocacy body.

For example, if someone simply made contact with the supplier and said, “I have had a phone call telling me that you are going to disconnect.” How many calls would have to be made, and what proportion would state that disconnection was going to take place? The relevant NCC advocate may have to deal with 50or 60 actual disconnections; I should rather they concentrated on them than on those who have no evidence whatever other than a concern or fear. I do not criticise people with concerns or fears but there needs to be an ability in the system to make a proper risk assessment and use the resources effectively, particularly for those who are under threat of disconnection and require advocacy to make sure that it does not happen.

Photo of Steve Pound Steve Pound Labour, Ealing North

My right hon. Friend makes a telling point about how a bill could build up. I consider British Gas to lead the market on the ethical approach. Typically, it takes 140 days to disconnect following non-payment. It writes an average of 10 letters; as a result, the total number of gas customers disconnected by British Gas in 2006 was three. The system exists, and surely the NCC should oversee that, rather than, as my right hon. Friend so strongly said, provide a belt and braces system.

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

My hon. Friend is absolutely right and makes an excellent point. As I said at the outset, the whole purpose is to change the culture of the organisations that provide the goods and services. That is a preventive strategy. The more preventive our strategy is, the less need there is for resources for intervention.

Intervention is a sign of failure. It is important that the providers—in this instance energy suppliers—have an effective process for engaging with their vulnerable consumers. If a consumer, vulnerable or otherwise, gets into difficulties with the payment for their supply, a decision-making process in the organisation’s ethos should help to prevent disconnection. The skills, knowledge and experience are needed within the organisation to act and advocate on behalf of the consumer on that basis. Only when that fails should the NCC be brought into play. It should not be the first and only port of call. After a year of the system operating in that way, we would end up with far more disconnections. The hon. Lady’s intentions are good, but the reality is that the amendment would act against vulnerable consumers, rather than for them.

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Business, Enterprise and Regulatory Reform) 6:30 pm, 17th April 2007

I am grateful to the Minister for his clarification and to the hon. Member for Ealing, North, who cited examples of good practice. If procedures are carried out in a caring and effective way, disconnection should rarely need to take place. I hope that other utility companies will take note and adopt the practices that he described.

The purpose of the amendments is to understand just what the Government mean by a threat to disconnect and to know at what stage the NCC would intervene in proceedings. I am not entirely sure that I  am any clearer on that. If the Minister wants to come back to me again, I should be grateful. Nevertheless, he made a fair point and was very reasonable. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

I beg to move amendment No. 52, in clause 13, page 9, line 22, after ‘payment’, insert ‘, or

‘(iii) A failure of an authorised supplier to recalibrate a repayment meter at the consumer’s premises within one month of any change in tariffs charged by that supplier for supply of gas or electricity.’.

This amendment attempts to address the failure of some power companies to recalibrate pre-payment meters in a timely way, thereby forcing an exceedingly onerous debt on to the individual who has been the innocent victim of the delay in recalibration. Most people who choose to have a pre-payment meter do so because they are on a pretty low income and are determined to manage their money sensibly. They want to know where their pennies are going and how much is being spent on heating, cooking and so on, and they are careful not to exceed their budget.

In the past year, individuals on very low incomes have found that, because of delays in recalibration, they face debts of £400 or £600—amounts that are completely beyond their means. Most people who are on token meters are on incomes of less than £10,000 a year. Even the smallest debt is therefore extremely burdensome. We have also discussed these issues in Westminster Hall, and it is clear from my discussions with Energywatch that people on pre-payment meters probably pay around £180 more a year for the privilege of giving a risk-free pre-payment to an electricity company, compared with someone who might be on a direct debit scheme. These people already carry a high burden.

We are also aware that the utility companies could deal with the problem in one fell swoop by switching over to smart metering. However, there have been such delays in instigating that sort of programme thatthey frequently have to go door to door to recalibrate meters.

Some utility companies are responsible for how they handle recalibration: if there are delays, they do not force the charge to fall on the individual consumer. We should congratulate Scottish and Southern Energy and EDF Energy on such matters. British Gas has recently changed its scheme, so that it no longer charges back payments to people who would, in effect, owe money because of a deferment in the recalibration. However, Scottish Power, npower and Powergen continue with their systems of back charges. We have crafted an amendment to hang a threat over those companies that still take what I consider to be an entirely socially unacceptable position, although I must admit that we are trying to shoehorn it into the Bill.

We are working into the disconnection language a new paragraph (iii) that would treat as a disconnection a failure

“of an authorised supplier to recalibrate a repayment meter at the consumer’s premises within one month of any change in tariffs charged by that supplier for supply of gas or electricity.”

One month might sound a fairly cruel timetable, but frankly, the companies have been behaving in a cruel manner. Since they have not, through exhortation, changed their practice, it will take threat for them to do so, and the Bill looks like the perfect opportunity to introduce it.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

I have no great desire to delay the Committee unduly, but the hon. Lady referred tothe debate in Westminster Hall that I initiated. Incidentally, by moving the amendment, she is doing a great service to those who suffer from the problems that were raised at the time, although I look forward to hearing the response of my right hon. Friend the Minister.

As the hon. Lady has done, it is important to register the fact that the problem is extremely serious. I am not convinced that Ofgem has such powers or, if it has, is willing to use them when inevitably the poorest people who are obliged to use pre-payment meters are placed in the position in which they suffer from the decision of companies that refuse to pass on the reductions in wholesale prices by way of reducing retail prices overa lengthy period, thus putting consumers at a big disadvantage. If those consumers happen to be people on pre-payment meters and are subjected to back payments, it is wholly unacceptable.

I am sure that my right hon. Friend the Minister agrees that the problem must be put right. The hon. Member for Richmond Park mentioned several companies such as Scottish Power. We who represent Lanarkshire constituencies wrote to all the companies, including Scottish Power, on this and other issues. The response was a long letter that we took to mean that such matters were none of our business. A week or so after we received it, Scottish Power, having ensured that its shareholders had the benefits of the reductions in wholesale prices, decided to sell out to the Spaniards, and where were the consumers, including those that the amendment would cover?

I met Ofgem. It knew that I was not satisfied with the response. Given the robust nature of the Minister’s contributions this afternoon, I shall leave the sitting with far greater hope that such issues are being dealt with. Consumers, particularly those who experience enormous difficulty because of gas and electricity prices to the extent that the amendment addresses, will consider that there is a body that sees its responsibility not simply as a supplier to companies, but one that feels an obligation to them. I am sure that, if we agree by the end of our sitting to insist that those responsible for advocating and defending the rights of consumers should show that they have teeth and are prepared to use them, the Minister will respond in that light.

Photo of Steve Pound Steve Pound Labour, Ealing North

Like many people, I find myself being seduced by the hon. Member for Richmond Park—intellectually, I hasten to add; she is a woman of taste as well as intellect. However, she has conflated two issues, the first of which is the weighting of the tariff on pre-payment charges. That is undoubtedly an injustice, and there can be no more powerful advocate against it than my right hon. Friend the Member for Coatbridge, Chryston and Bellshill. However, she suggests—it is implicit in the amendment—not the abolition of pre-payment but recalibration within a  fixed time, which she referred to as being cruel. The problem is that every company would like to have its systems recalibrated. All modern meters are capable of remote updating, and that is what people want. However, not everyone who uses a pre-payment system is on his uppers. Some people with second homes find it a convenient way to pay.

The chief issue is practicality. If we in the House were to say, “Something shall be done within four weeks,” we might feel a warm glow of satisfaction that we had achieved something. However, what would it mean in practice? In most cases, entry warrants would have to be issued by magistrates courts up and down the country. I do not know what it is like in your constituency, Mr. Weir, but I know some parts of Scotland. The distant but ’n bens on the borders ofthe berry fields are probably hard to get to. In my constituency, we are not always over-welcoming to those who call in the tower blocks at the dead of night. [Interruption.] They might be Liberal Democrat canvassers. One cannot be too careful nowadays. Ultimately, recalibration will be resolved by technology; remote updating is happening. It is not practical to say that we must provide new meters across the nation within a month.

I entirely agree with the hon. Lady—something I would always prefer to do—about good and bad practice. She referred to British Gas. I do not think that any of us has a financial interest in British Gas except, as in my case, as an extremely satisfied consumer. However, its announcement last year that it would not recover any underpayments identified as a result of recalibration was an extraordinarily generous and ethical step to take. It should be congratulated on that.

I urge my right hon. Friend the Minister—although it is against his nature, because he is a warm and welcoming person and a man who believes in the henotic qualities of office—to resist the amendment, not because of its spirit, as it flows from a warm heart, but because of its sheer impracticality. It would be impossible in most constituencies for every consumer to allow access for recalibration—there are millions of them. Ofgem has accepted that point. We have not been terribly kind to it, but it should be given credit when that is due, and it has said that it would prefer to see a system under which the utility suppliers use

“all reasonable steps to ensure that the meter is reset within a reasonable time after a price change.”

There will not be a problem in future thanks to remote updating, but for the moment, the practicalities make the amendment impossible to sustain. I hope, reluctant though he will undoubtedly be, that my right hon. Friend the Minister will resist the warm blandishments of the hon. Member for Richmond Park on this occasion, though perhaps not onevery one.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

I have to inform the hon. Gentleman that his but ’n bens are under gas supply.

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

My hon. Friend the Member for Ealing, North could be described as the original gas man, given how he has tried to position himself.

In respect of the hon. Member for Solihull and my right hon. Friend the Member for Coatbridge,  Chryston and Bellshill, we are discussing a number of issues, all of which are important. One is whether or not people with a pre-payment meter should be disadvantaged, when people such as myself—I have arrangements to pay both here in London and in my constituency—can get a reduction in cost by paying in advance. The amendment is about the recalibration of pre-payment meters and whether that should be a role for the NCC in all circumstances.

It is critical in structures dealing with consumer issues that the responsibility should lie in appropriate places. The appropriate place for this issue is with Ofgem, the regulator. Ofgem has completed its consultation on proposed licence changes for timely recalibration. The consultation ended on 2 March, and I am advised that Ofgem will be publishing its proposals later this month.

To avoid interfering in Ofgem’s administrative affairs, and given the strength of feeling in today’s discussion, my officials or I will approach Ofgem to seek certainty about whether the proposal will be announced before the end of the Committee’s proceedings. If so, it might be helpful for Committee members to have those proposals before them. I cannot guarantee it, nor am I putting any pressure on Ofgem, but given the nature of today’s debate and its consequences on discussion of the clause, it might well be appropriate. I will do that tomorrow, or my officials will do it on my behalf. Using Ofgem is the right way forward, rather than adding to the list of complaints that the new council must investigate. It will mean that the cause of the problem is being tackled directly, as it should be, by the regulator.

The second and more general issue is about fairness and individual companies’ attitude to pre-payment meters. The new council will be able to consider whether further action is required on pre-payment meters because we are giving it general powers of investigation under clause 11 that will permit it to carry out full investigations. It will be appropriate in some areas for the NCC to investigate and make recommendations, and we should separate those from the regulator’s obligations. The council will also have powers under clause 8 to represent consumer interests. Clause 10 will provide for information to consumers. The Bill is about putting all the building blocks together.

In light of my explanations, I hope that the hon. Lady will withdraw the amendment. We have provided the certainty that we will await Ofgem’s proposals and see whether they will be in the public domain beforethe end of this Committee’s proceedings, as well as assurances that within the contexts of clauses 8, 10 and 11, the new NCC will have the capacity to consider general issues of complaints about pre-payment meters. I hope that that addresses the complaints on behalf of which my right hon. Friend the Member for Coatbridge, Chryston and Bellshill has so readily, enthusiastically and capably been advocating for a considerable time now.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill 6:45 pm, 17th April 2007

I am grateful to my right hon. Friend. That is immensely helpful. Will he do me one further favour? I understand that he will be in Scotland on  Thursday. He might have the opportunity to inform BBC Scotland that the initiative arose from this Parliament and that it therefore might not feel the need to interview loose Members of another establishment.

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

I shall not be in Scotland on Thursday. Much as I would like to be Scotland on Thursday, I shall be in another part of the United Kingdom. I shall be in Wigan and in my constituency to deal with a family issue and to attend an event as a Member of Parliament. I apologise to the Committee for that, and I also apologise to my hon. Friend for not being in bonnie Scotland, but his point is well made. Scotland has benefited twice in the Bill today, first, from the overall general direction of the NCC in representing Scottish consumers and, secondly, from the capacity to devolve to Scotland the ability to have an advocacy body on a day-to-day basis to represent particular aspects of Scottish consumer issues. This Government have delivered that with the tacit support, obviously, of the Liberal Democrats. The Conservatives have now ended their isolation—[Interruption.]

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

I wondered how long it would take you to object, Mr. Weir, but I apologise.

This is unfair to a colleague in the Committee, because he is neutral for these purposes and not political. I will not withdraw my remarks, but will bring them to a conclusion. I will not even say, “Vote Labour in the Scottish elections.”

With the assurances that I have given—

Photo of Sharon Hodgson Sharon Hodgson PPS (Mr Liam Byrne, Minister of State), Home Office

Is my right hon. Friend aware that one of the problems with pre-payment meters, especially for those on low incomes, is that if they are recalibrated late people are often self-disconnected because of debts that have built up through no fault of their own? I agree with my right hon. Friend the Member for Coatbridge, Chryston and Bellshill that a month may be too short, and when it is extended, people may be self-disconnected. Although the number of those who are cut off is now very low, the number who are self-disconnected could be immeasurable.

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

Yes, I understand what my hon. Friend is saying, and I am sure that Ofgem has taken that into account in its consultation. I can only repeat that I hope that the hon. Lady will withdraw her amendment and that before the Committee completes its deliberations Ofgem’s recommendations will be in the public domain.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

No one knows more about these issues than the right hon. Member for Coatbridge and his Westminster Hall debate highlighted them at a critical time. Energywatch played an important role in ensuring that the facts about pre-payment and the debts that resulted from delayed calibration got into the public arena.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

I am grateful to the hon. Lady for her reference to me, and I endorse what she said about Energywatch.

As a matter of interest, my constituency is Coatbridge, Chryston and Bellshill. I am sure that the Committee would want to reflect on the fact that those in Bellshill rejoice in the knowledge that it is the birthplace of Matt Busby, Billy McNeill and one of our most distinguished parliamentarians, the late Robin Cook.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

How can I forget a place that has such a character connected with it?

I want to make the point that Energywatch played a key role in ensuring that the facts were drawn to public attention and that they were a major issue. I suspect that that was a key reason for Ofgem, which had looked the other way for some time while the problems were boiling and bubbling, finally taking the matter on board. I am delighted to hear that there is a possibility that we will have advance notice of Ofgem’s conclusions in time to be able to incorporate them into the Committee’s thinking and process.

I recognise that we were attempting to shoehorn in an amendment that is perhaps not entirely appropriate to this part of the Bill or its character, but it has had an important result, and I seriously appreciate that.

Photo of Ben Wallace Ben Wallace Conservative, Lancaster and Wyre

On a point of order, Mr. Weir. When we were discussing clause 8 and amendments Nos. 44 to 46, the Minister rather cruelly indicated that my lack of knowledge of non-ministerial departments was demonstrated by the fact that I was trying to saythat Ministers of the Crown were answerable forall Government Departments, which the Minister disputed. I have managed to get from the Cabinet its published list of non-ministerial departments. There are 19 at the moment, but there might be more, although the Assets Recovery Agency has been abolished. Interestingly enough—the Committee might like to know this—one of the non-ministerial departments, UK Trade and Investment, belongs to the Minister himself and is directly answerable to this House through his office. All non-ministerial departments are answerable to Parliament through a Minister of the Crown. Therefore, given that the Minister is not returning on Thursday, would he like to take this opportunity to reflect on his comments and his reasoning as to why there was a need to include all Government Departments in clause 8?

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

Order. This is not really a point of order—it is an attempt to re-open the debate that we had earlier. We will move on.

Amendment, by leave, withdrawn.

Further consideration adjourned.—[Steve McCabe.]

Adjourned accordingly at four minutes to Seven o’clock till Thursday 19 April at Nine o’clock.