Clause 30

Consumers, Estate Agents and Redress Bill – in a Public Bill Committee at 12:00 pm on 19th April 2007.

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Abolition of “Energywatch” and “Postwatch”

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. 22, in clause 30, page 17, line 25, leave out subsection (2) and insert—

‘(2) The Secretary of State may make an order by statutory instrument to abolish the Consumer Council for Postal Services, provided that—

(a) no such order shall be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament, and

(b) no such order shall be made before 2010.’.

Photo of Martin Caton Martin Caton Labour, Gower

With this it will be convenient to discuss amendment No. 13, in clause 30, page 17, line 25, leave out subsection (2).

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)

For us, this is one of the most significant amendments that we have tabled in Committee. The effect, Mr. Canton— [ Interruption. ] Sorry, Mr. Caton—

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)

It is always dangerous when the hon. Member for Ealing, North is here.

The twofold effect of the amendment is to provide, first, that an affirmative vote of the House is needed for Postwatch to be merged into the new National Consumer Council and, second, that no such order can be made before 2010.

The Minister will have gathered that my party is extremely concerned about the timing of the merger of Postwatch into the NCC. We do not doubt the long-term value of the merger, but we think that the NCC and its role are sufficiently important that the council must start well, function well and serve the long-term purpose in such a way as to be well regarded by consumers in this country. In other words, it should not get off on the wrong foot.

We are also entering a crucial period for the work of the current Postwatch. As we said earlier our debates, and as others have acknowledged, we are facing the closure of probably 2,500 post offices under a compulsory  programme. In addition, there will be voluntary closures—there always are. There is every reason to think that the pace of voluntary closure may tend to increase, rather than decrease, as uncertainty is added into the general picture. There is a general sense of a network in decline, rather than a network in revival.

In addition, Postwatch is taking on a second role, because Royal Mail has now informed Postcomm that it wishes to change the way that it prices to business. It is interested in a zonal system, which will have a huge impact on rural businesses, which might well face much higher prices for business post. Initially, the price differential would be small but, from a reading of the details from Royal Mail, it would increase significantly over time if the system were to go ahead.

The same issues will face businesses in outer London, including—I may say, for the purposes of conflict of interest—my constituency. Consumers will be impacted upon, because, undoubtedly, business is likely to change how it communicates—certainly with businesses in rural or suburban areas, given the change in the pricing profile. Postwatch is now taking on the work of surveying business, to feed into the consultation on the issue, which will probably run until at least this November. We are looking at two absolutely massive pieces of work, which, frankly, do not overlap; they are completely different aspects of the mail service.

We were concerned earlier that the core structure of the NCC’s remit is not regionally based. The council has the ability to put in place regional committees, but that is not the core of its structure. However, that is the core of Postwatch. In a sense, that is the mechanism, through Postwatch, which will particularly focus on the closure of those 2,500 post offices and any additional voluntary closures. The Postwatch structure currently works regionally, and that is how staff are organised, how the information flow is managed and how authority spreads throughout the system.

We are looking at those massive pieces of work at the same time as the proposed changeover. Unfortunately, I have spent a significant amount of my life in business organisations going through great change. From direct knowledge, I can assure the Committee that nobody ever overestimates the damage to morale that happens in a period of uncertainty and change. It is always underestimated. The impact will be devastating, even on people who are responsible and determined to carry out their job well and to function best—in this case, for this country’s consumers. The uncertainties are shared by families, friends and neighbours. The people affected must make decisions about whether they are going to move, and they do not really know whether they will have a job or quite what is entailed. There is no way to give adequate reassurance. We will be asking people not only to function in that particularly difficult environment, but to carry out those two major cases of work.

It is also evident from our discussions in prior phases of the Committee and today that much of the work that needs to be done to implement transition is still in its early days. How is a vulnerable postal customer identified? If someone calls in to complain about a letter, how do we know whether they are vulnerable if we know nothing about their income, their background or their history? All kinds of questions must be answered before the NCC can step in properly to fulfil its remit.

We are not opposed to the merger of Postwatch into the NCC, but it must be done with clarity and effectively. If it is rushed, that causes various problems. To rush it in the context of two crucial and critical pieces of work that will have a great impact on both consumers and businesses is asking for a disaster in the NCC’s early days and would fail the public. This is a crucial set of issues, and I urge the Government to think again, and 2010 would seem the ideal date to aim for. Let us make sure that everything is done and dusted, and done well, and that the public have been properly served before making this change. The NCC is a body to be there for the long term; it loses nothing by having a little patience at the start.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I welcome you to the Chair this afternoon, Mr. Caton.

The hon. Member for Richmond Park has highlighted many of the issues that we would like the Minister to address. I do not intend therefore to repeat them at length. The Opposition are concerned about the merger of Postwatch and the new council, both in terms of the principle and the timing. The hon. Lady mentioned the latter. While far from perfect, certainly in the view of the National Audit Office, Postwatch is very important in ensuring effective representation for all mail consumers.

Postal services are different from utilities such as gas and electricity, both in their nature and character, as the hon. Lady suggested. Sector-specific expertise needs to be carried over. The Minister alluded to that in an earlier debate. Therefore, what inquiries has he made to satisfy himself that such expertise will be maintained? What processes and sector-specific issues does he believe the new council will need to transfer? Is he satisfied that the timing of the merger will not cause consumer interests to be diminished? That is the heart of the concern, and it would be helpful if he clarified that issue.

Before I was elected to the House, I worked in the business world and it was clear to me that mergers distract organisations and their management from focusing on day-to-day issues. We have to be convinced that the Minister has taken all reasonable steps and has considered what the problems will be, to ensure the vital role of representing those consumers will not be lost or diminished in the coming months.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

AmendmentNo. 13 would prevent the abolition of Postwatch under the Bill and would therefore deny consumers in the postal services sector the benefit of having a stronger, more coherent consumer advocate to represent their interests.

Amendment No. 22 would require the Secretary of State to carry out the abolition of Postwatch by making an order, approved by a resolution of each House. Concerns were raised on Second Reading about the timing of the merger, which coincides with the post office network restructuring programme. Amendment No. 22 seeks to delay the abolition of Postwatch until at least 2010, by which time the restructuring programme should have been completed.

One of the most fundamental objectives of the Bill is the creation of a cross-sectoral consumer advocacy body, which is stronger than the sum of its parts, to address the consumer issues that frequently exist across sectors of the economy. The new body must have the critical mass to engage effectively with the Government, regulators and industry sectors, on the basis of expert and informed analysis, and the benefit of being able to draw on experience and expertise from a number of sectors.

As Opposition Members have said, maintaining the existing sectoral expertise in the postal services sector is vital to the new body’s success and to the Government’s proposals for a sustainable post office network. A strong consumer advocate and the expertise that it will inherit will be important in a sector that has only recently been opened to competition.

In recognition of the importance to consumers of post office restructuring, the new council will be given the specific function of investigating any matter relating to the number and location of public post offices, as we discussed under clause 16. That replicates the provisions in the Postal Services Act 2000 that apply to Postwatch. The new council will therefore continue the role of Postwatch in representing the views of consumers in the post office restructuring programme, thus offering consumers a strong voice on that issue and on similar matters that arise in other sectors.

Delaying the inclusion of Postwatch in the new arrangements for consumer advocacy would not only delay the benefits to consumers of having a strong voice to represent them, but prolong the period of uncertainty for existing staff and consumers and increase the likelihood of staff departures and retention problems.

As I mentioned this morning, we envisage that the new arrangements will be in place within a year of the Bill’s receiving Royal Assent. Postwatch is fully engaged in early planning for the implementation of the new arrangements. Two groups have been set up, tasked with ensuring that the consumer interest continues to be effectively represented during the transition to the new arrangements and when the new arrangements are in place.

For example, work undertaken by the groups so far includes the preparation of a timetable setting out key milestones on a critical path to implementation; the mapping of existing work, resources and best practice to be transferred to the new council, as well as additional work that the new council could usefully undertake, such as greater use of web-based consumer advocacy; the identification of tasks required to close down Energywatch, Postwatch and the NCC; and early planning to extend the consumer direct service to the energy and postal services sectors. That service already provides help and advice to consumers with inquiries and simple complaints relating to other sectors. Its extension to consumers in the energy and postal services sector will provide them with a first port of call for help, whatever sector their inquiry or compliant relates to.

As hon. Members would expect, we are taking great care to ensure that the work being undertaken by Postwatch on post office network restructuring will not be disrupted during the transition period. Additional staff and other  resources are being allocated to Postwatch to assist with the programme, and those resources will be carried forward into the new arrangements for the duration of that work.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform) 1:15 pm, 19th April 2007

I am interested in the additional resources. By whom are they being provided and who is paying?

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

Postwatch is working up what it believes to be the appropriate number of additional staff, and discussions are going on with the shareholder executive. No financial problems have been flagged up, so as far as I am aware, the budget is covering the resources that are required.

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)

Is the Minister referring to the temporary staff that Postwatch always takes on to deal with a project on this scale, or is he suggesting that an additional resource is being put in, because he is trying to manage the transition on top of that? I had understood that the standard number of staff associated with a project on this scale would be involved.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

The hon. Lady is correct in her assumption that the additional staff are those who will have to deal with the additional work load that will need to be undertaken when Post Office Ltd publishes its proposals in the way that we have described and has to engage with local communities, parliamentarians and so on. Arrangements are in hand for them. Discussions are taking place to identify what is required to make the transition as smooth as possible.

I do not underestimate the challenge, as the hon. Lady depicts it, that the new NCC will face in ensuring that the transition is as seamless as possible. Discussions and negotiations are taking place to ensure that the appropriate arrangements are in place. The need for resources, such as staff, will have to be taken into account. In the same way, full weight is being given to the need to provide certainty to Postwatch and the other consumer bodies about the location of the new council’s headquarters.

We are considering the issue with the benefit of input from each of the consumer bodies. The decision about where the new council will be located will take into account such matters as the cost of the existing property portfolio and concerns about the retention of staff and therefore the expertise of the sector—issues raised by the hon. Members for Richmond Park and for Hertford and Stortford.

We recognise the importance that Postwatch places on the work of its regional committees and the role that they will play in the assessment of the post office network restructuring programme. The Bill makes specific provisions to enable the new council to establish regional committees where it considers that they will be beneficial to consumers, as we have already discussed. That is a matter for the new council to determine. However, as I have said, we are working with the existing consumer bodies to plan for the implementation of the new arrangements.

The role of Postwatch in handling complaints by consumers is self-evidently important. The new arrangements for the postal services sector as a whole  include the introduction of redress schemes, to ensure the resolution of complaints and to provide compensation or other forms of redress where they are warranted. The redress mechanism must be independent from both parties involved in a complaint, to ensure that the decisions reached on each case are fair and impartial. That is why Postwatch does not have the statutory functions to ensure complaint resolution, rather than simply complaint handling. However, the redress schemes will ensure that consumers receive resolution of each complaint, as the decisions made by the redress schemes will be binding on suppliers in the postal services sector.

The hon. Member for Richmond Park raises an important point about the identification of vulnerable consumers. She raised it this morning, too. Obviously, we recognise the need to ensure that vulnerable consumers can be identified, and, in any case, that process goes on at present.

I can understand why the hon. Lady discussed Postwatch and Energywatch. They deal with all complaints, and therefore evidence of a customer’s vulnerability can emerge during their exchanges with the consumer. We are currently working with consumer bodies, businesses and established redress schemes on all aspects of addressing complaints in practice, including the identification of vulnerable consumers. However, the new council will need to ensure that there are strong and effective communications with Consumer Direct redress schemes and electricity, gas and postal services companies. Some companies already have specialist teams to help vulnerable consumers. We need to capture that expertise and provide a system of communications to ensure that, wherever vulnerability is identified, the right sort of help can be provided.

We all know that consumers will contact anyone in the first instance—that is entirely understandable—and they often contact us as Members of Parliament, or write directly to Ministers. What we need to do and what we will do is to bring to bear a new, coherent and cohesive approach to dealing with consumer complaints generally and dealing with vulnerable consumers in particular. As I mentioned to the hon. Lady, that work is ongoing.

We believe that these amendments do not best serve the interests of consumers. We understand exactly why they have been proposed, and we recognise that there is a genuine concern. However, we are confident in the arrangements that we are making, and we therefore believe that the amendments are unnecessary. I ask the hon. Lady to withdraw the amendment.

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 appreciate the answer that the Minister has given, and he was very good in expanding beyond the narrowness of some of the issues that I raised; I appreciate that. However, one of his arguments was that to delay the merger—I think that it is actually the takeover by NCC of Postwatch and that it is clearly not a merger—would deny mail users the advantages of a redress scheme. I point out to him that, for a lost letter, the typical redress is one book of 12 first-class stamps; that is hardly what one would call a massive financial benefit. The value of following up complaints in the mail service is to get improvements for the future. So the redress scheme, although it will always be valuable and I would always like one to be in place, is not the most urgent element when dealing with the post.

The Minister was very kind in addressing the issue of vulnerability. I raise that matter at this point—it will be raised again at other points—to demonstrate how early in the process we are, because it is exceedingly difficult to find a way to identify vulnerable users. I am talking about a clause affecting the Post Office. However, as I said before, when someone calls up and complains about a lost letter, what is done? There is not some sort of financial history, as there might be if they were being provided with electricity and they have an account. What do we do? Do we say, “Are you recently bereaved and feeling great grief, so you cannot deal with this? Is your IQ rather low? Have you had a recent bout of depression?” How does one identify a vulnerable user in that case? Perhaps there is a way to do it, but we certainly have not arrived at it.

We are talking about merging the organisations. Anybody who raises a complaint will lose the benefit of Postwatch, which followed through any complaint, and complaints will be narrowed down to the specified group. If we were doing only the merger, I would understand that the Minister needed to progress as fast as possible, but it is being done in the context of two major pieces of work. One of them tends to be missed; I heard no reference to the enormous piece of work that must be done on zonal pricing. It deals primarily with the business sector and with consumers who will be impacted, in addition to all the closures.

I appreciate that the Minister intends for all the work to succeed; I am objecting not for the purpose of prevarication, but because I want the process to be successful, both for consumers and for the NCC. I must therefore press the amendment to a Division.

Question proposed, That the amendment be made.

The Committee divided: Ayes 2, Noes 8.

Division number 1 Nimrod Review — Statement — Clause 30

Aye: 2 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 30 ordered to stand part of the Bill.

Schedule 3 agreed to.