Rural Scotland: Excess Delivery Charges

Wednesday 9th December 2020 Westminster Hall

[Christina Rees in the Chair]

00:04

[Douglas Ross (Moray) (Con)]

I beg to move,

That this House has considered excess delivery charges in rural Scotland.

It is a pleasure to serve under your chairmanship, Ms Rees. The word “rural” can sometimes conjure up an image of a far-flung place, but this issue affects many communities in Moray. Although it is a rural constituency, it is also made up of substantial towns, such as Elgin, Forres, Lossie, Buckie and Keith. This is an issue that also affects the city of Inverness, the capital of the highlands, as well as many communities, towns, villages and cities north of Perth. Although we are talking about rural delivery charges, they have a big impact on many urban areas as well.

I want to start by giving a little background on this issue, which I have raised in the main Chamber and Westminster Hall on many occasions, including during Prime Minister’s questions. Indeed, almost three years ago to the day, I led a similar debate in Westminster Hall. It was a 90-minute debate, and the room was full of Scottish and Northern Irish MPs raising concerns on behalf of their local constituents. Had today’s debate not been a 30-minute debate, we would have seen similar attendance by MPs across the north of Scotland and other parts of the country, whose constituents continue to suffer as a result of excess charges for delivery.

This is also something on which I got the Scottish Affairs Committee to have an inquiry. I was pleased that companies such as Amazon came along to give evidence and commit to tackling any issues that were reported to them about delivery charges being added after a sale had apparently been completed. Indeed, with one sale that I reported, the seller ended up being brought to task and punished by Amazon for adding a surcharge to delivery after a purchase had been made. I will mention later the work I have been doing with the Advertising Standards Authority, which has done a lot of work to tackle this problem and to take enforcement action against companies and couriers who add excessive charges.

I would like to praise Citizens Advice Scotland, which has done a tremendous amount of detailed research and work on this subject. The briefing that it provided ahead of the debate sums up a lot of the issues that we face. Research by Citizens Advice Scotland has found that consumers living in affected areas pay on average 30% to 50% more for delivery of goods bought online than consumers in other parts of Great Britain. Sometimes we think this is just about consumers sitting at home and making individual purchases from online retailers, but the problem also affects many small and medium-sized enterprises in Scotland. The report goes on to say that one in four of the Scottish SMEs that were questioned about this said that they had ordered items online for businesses and were asked to pay an additional charge, so it is affecting our businesses as well as individual consumers.

Clearly, the covid pandemic has increased awareness of this issue. For weeks in the early stage of the pandemic, people across the country were asked to stay at home and go out as little as possible, so many turned to online retailers for purchases. That has led to a surge in online shopping and more parcel deliveries. As I have mentioned parcels and we are in December, it is only right to mention the outstanding work that our posties up and down the country are doing at this extremely busy time of the year and, indeed, all year round. Sadly, unlike in every other year since I have been an MP, we cannot go and thank them in person in the run-up to the Christmas period, but I am sure the Minister and the whole House agree that they do incredible work at this busy time of the year. They have our greatest thanks for that.

It is not surprising that in the early months of the lockdown during the covid pandemic, when people had more time on their hands and were at home rather than getting out and about, they were shopping more online. For people in Moray and other parts of Scotland, however, the ease of online shopping comes with a heavy price: the surcharge they have to pay. If someone has a postcode in Moray, the Highlands or parts of Aberdeenshire, they face a familiar problem. They try to make a purchase, look for a product, browse and then when they put in the postcode or address, they are suddenly faced with an additional charge simply to have it delivered. Now, hon. Members do not need to be experts in geography to know that Moray, the Highlands and Aberdeenshire are all part of mainland UK. They are part of the mainland, yet we are often charged as an island community. Moray is attached to the rest of the United Kingdom in the same way that Highlands and Aberdeenshire are, yet we are faced with charges because some companies do not believe we are part of mainland United Kingdom.



A recent paper published by the Scottish Parliament Information Centre estimated that shoppers had paid an extra £43.1 million for parcels to be delivered in 2020, up from £40 million in 2019 and £38 million in 2018. That is not the cost of the purchases—that is simply the cost to have these parcels delivered to parts of Scotland. That is the surcharge for my constituents and constituents across the north of Scotland.

The report found that the covid-19 lockdown led to a big increase in online shopping, which is not surprising. People had no choice in many cases but to shop online, given they were told to stay at home. Once again, the worst-affected areas were Moray, Highlands and Aberdeenshire. Moray constituents purchasing online paid an extra delivery charge that has mounted up to £3 million.

Unfortunately this is nothing new; I have a long list of constituency cases of people who have tried to challenge these rip-off fees—I will go into more detail later—but many people feel like they are banging their head against a brick wall. When complaints are made to stores or online outlets, courier companies are often blamed. Taking the courier companies to task can be tricky. Often, they simply state that their policy is to charge more for deliveries to certain locations. That in itself should be open to challenge, and I hope that the Minister can look at what the Government can do with couriers and retailers to try and get some form of balance in the charges that they are imposing.

It is not all doom and gloom. We have made some progress in the time that I have been working on this issue, particularly where companies advertise that they say they will deliver for free—no charge at all—or a flat rate everywhere in the United Kingdom, only for a surcharge to be added. Where it has been clearly defined that they offer free delivery or a set charge across mainland United Kingdom, if that is not the case when someone goes to make a purchase, I routinely take up cases with the Advertising Standards Authority.

One recent case involved a constituent who was getting a package from a gin distiller in another part of Scotland. His home is in Spey Bay in Moray, 130 miles away from the retailer, and he was told he did not qualify for free delivery, despite it being explained on their site. However, if he had sent the package to his friend, for whom he was buying the product, in Truro in Cornwall— 596 miles away—it would be shipped free of charge. There is no rational way to explain that disparity. It simply cannot be right.

I was recently passed an email exchange between a customer and a business, and it transpired, as it often does, that the blame for the extra charges was laid at the door of the courier. Again, I raised it with the Advertising Standards Authority, which I am pleased to say responded quickly and has told me that an enforcement notice will now be issued. Citizens Advice Scotland note that enforcement notices were issued to

“almost 300 online retailers during 2018/19”

and that work resulted in a “97% compliance rate.” So we are making some progress.

Sadly, it is not enough, because constituents and individuals are still suffering. People go around in circles trying to claim money back for the extra charges. In one case, a constituent complained that he had been hit with an additional charge of £60 for delivery of a package that weighed less than a pound. In many other cases, people do not complain to their MP; they just grin and bear it, as they feel they have no choice. It is clearly not fair to ask anyone to pay more for delivery of a parcel because they happen to live in the northern half of mainland Scotland. It has gone on for far too long and needs to stop.

Up to now, there have been efforts to give regulators in this area more teeth. In 2018, the Committee of Advertising Practice, which sets the rules that the Advertising Standards Authority enforces, made very clear that it would act to ensure a level playing field across the United Kingdom. It said that companies selling goods online had to abide by its guidance, and it specifically ruled out misleading claims of UK-wide delivery if that is not what they offer. Any surcharges applying to parts of Scotland and Northern Ireland should be clear and up front so that the buyer knows before he or she pays what the final cost will be. That is even meant to apply where there is a headline claim of free UK delivery, for example, but the small print might say something like, “exemptions for north of Perth”. Even in those cases, a company would be found to be misleading customers. The problem is that, two years on, it is still happening and, as far as I am concerned, if a company advertises free delivery or a flat-rate delivery all over the UK, it should stick to that.

Another example is from a constituent in Fochabers who had found what he was looking for and had seen “free UK delivery”, but when he put in his postcode, he was hit with a £75 delivery charge. There are more cases like that. If the companies do not stick to their promises, considerable penalties should be applied. Any repeat offenders should be hit with an increasing severity of sanctions. It is clear that a letter being sent to say that this should not happen again does not do any good. Let us be clear. The industry should not have to wait for Government intervention before doing what is right; it should be able to come up with the solutions to avoid the extra charges. That applies to retailers as well as couriers.

Any online retailer should be keen to keep customers onside. They should not simply shrug their shoulders and say that the charges are set in stone when they clearly are not. If enough companies decide to do something about it, we could finally make some progress.

Likewise, the courier firms could work together to come up with a plan to reduce the burden on buyers to pay unnecessary surcharges. That could take the shape of a shared distribution centre in the highlands that reduces the distance between the warehouse and the delivery address, or a simple commitment to treat mainland Scotland in the same way as mainland England and Wales. I do not think we are asking for too much.

As I referred to earlier, in the past three years more than £100 million in additional charges has been paid by shoppers in the north of Scotland—a huge sum of money. At a time when our economy is struggling, people are losing their jobs and seeing their working hours cut, every little helps. That money could go back into the businesses rather than into paying excessive charges. Let us not allow this discriminatory practice to continue. Let us stand up for all the people who are being ripped off in Moray and across parts of Scotland on a daily basis. Let us say that enough is enough. Let us ask the industry—the retailers and the couriers—to get their house in order. If they will not do that, the Government should take steps to address the inherent unfairness.

I held such a debate as this three years ago on 20 December 2017. I remember the date well because it was my wife’s birthday, so I now have 11 days to make sure she gets the right present for this year’s birthday. I will make sure I buy local in Moray to avoid any excessive delivery charges. By having this debate at this time of year once more, we can again impress on the Minister and any businesses or couriers watching that the practice has gone on for far too long. We have suffered for too long in Moray and parts of the north of Scotland because of the disparity affecting people living in different parts of the country. We can end this practice and, with the Minister’s help and some encouragement from the Government, I am sure we can get these businesses to realise the error of their ways. It would be a cheerful festive message to send out that we are once and for all going to deal with this issue.

16:18

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

It is a pleasure to serve under your chairmanship, Ms Rees. Thank you for stepping in to enable my hon. Friend the Member for Moray (Douglas Ross) to make his really important case. I congratulate him on securing this debate. The issue continues to be important for his constituents and for those of other Members in the similar debates that he has led over the years. He has been a dogged champion for his constituents in Moray on this and other subjects. They should be proud to have someone championing people who live in the highlands and other parts of rural Scotland.

Delivery charges are part of the underpinning of trade within the UK, so I have a lot of sympathy with my hon. Friend’s concern that some consumers in parts of Scotland are charged differently from consumers in other parts of the UK. I also recognise that similar issues exist for consumers in Northern Ireland.

I am pleased to be able to take part in today’s debate, and to outline the progress that has been made since the previous debate back in July 2019. Let me first of all remind colleagues of our general approach as a Government. The Government’s aim in relation to post is to secure a sustainable, efficient and affordable universal postal service. With regard to delivery charges specifically, it is crucial that retailers are up front about those charges, as my hon. Friend eloquently articulated: where they deliver to, what they charge, and what premiums apply, if any. Consumers then know where they stand, and can make an informed decision before they purchase. That is what the law requires.

Our legislation is robust. The Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 set out that information given by traders to consumers regarding delivery costs, including any premiums, must be up front and transparent before a transaction is entered into. Any consumer who believes that these rules are being breached should report it through the specifically set up deliverylaw.uk website, so that incidents are recorded and appropriate enforcement action can be taken.

A significant amount of work has been undertaken by the Advertising Standards Authority—I am glad to hear about my hon. Friend’s work with the ASA on this issue—and by the Competition and Markets Authority to ensure businesses comply with that legislation. Where that compliance has not happened, both bodies have on the whole acted swiftly. The ASA has issued enforcement notices to online retailers whose parcel surcharging practices have been reported, and has achieved a compliance rate of over 95%. The CMA has issued a number of advisory notices to the major retail platforms, and I take the point my hon. Friend makes about letters: just telling companies not to do it again goes part of the way, but clearly those companies need to actually change their behaviour, rather than just getting a warning letter. We need to see the results of that. The CMA has also published guidance to retailers who sell via those platforms, and continues to work through primary authorities to ensure improvement in these areas.

On the legal compliance side, significant progress has been made, and our enforcement partners will continue to monitor and take action where necessary. However, the Government recognise that the delivery costs to reach some parts of the UK can be higher, and strongly encourage businesses to, as far as possible, provide consumers with a range of affordable delivery options. To help achieve this, we have ensured that everyone, including retailers, has access to an affordable postal service for deliveries across the UK under the universal service. Through the universal service obligation, Royal Mail delivers parcels of up to 2 kg six days a week at uniform rates throughout the UK. I echo my hon. Friend’s thanks to posties up and down this country, in every part of the UK, who have been working through the pandemic to make sure we remain connected even when we are locked down. As my hon. Friend has said, it is a shame that we cannot join them in the sorting office to wish them a merry Christmas and thank them for all their work as they enter this particularly busy time, but this is a good platform to be able to echo his thanks and season’s greetings to them all.

Let me make this clear: it is up to businesses to respond to customers’ needs and determine the most appropriate delivery options for their customers. There are no rules to prevent the differential charging between businesses for deliveries, and I do not believe, for example, that imposing a price cap is necessarily a practical answer.

The postal sector regulator, Ofcom, recently published new information on how this part of the market is operating as part of its annual post monitoring update. Ofcom collected information on the extent to which parcel operators vary the price that they charge online retailers for bulk delivery of parcels to different parts of the UK. The long and the short of it is that some operators do vary their prices, whereas others do not.

The information gathered by Ofcom showed that operators take different approaches to the pricing of parcel delivery services: two large business-to-consumer operations, Royal Mail and Hermes, do not set different prices based on location. However, the geographical profile of deliveries can still play some role in determining the uniform price that these operators negotiate with retailers, especially if volumes are skewed towards a particular part of the UK.

[Douglas Ross]

I again go back to the Citizens Advice Scotland briefing for today’s debate. I am looking forward to attending the annual general meeting in Moray tomorrow, where I am sure we shall discuss this issue. One of its recommendations is that consideration should be given to whether Ofcom requires further regulatory powers in relation to the parcels market, following on from the publication of the recent data on this market. Is that something that the Minister would consider, and take up with Ofcom?

[Paul Scully]

Obviously we work with Ofcom; it straddles a number of different Departments. We will always look at issues with it, as we do with other regulators, to make sure it has the powers to do the job it needs to do.

As I was saying, there are a number of delivery options that businesses can adopt. Some have minimal delivery charges, and others are more bespoke models. A competitive market in delivery charges, which will ultimately help consumers, should put downward pressure on the charges applied by retailers and delivery operators. There are positive signs that things are changing in that regard.

In August, for example, Argos announced that it would deliver large items to more than 98% of residents on the main Scottish islands, bringing deliveries to 41,000 more homes and another 56 islands, including Shetland, Orkney, the Inner Hebrides and the Western Isles. In 2019, Wayfair took the decision to scrap delivery charges for orders over £40 anywhere in the UK and charge a standard rate of £4.99 for orders below that threshold. Those are the types of commercial decisions that will set businesses apart from their competitors, drive competition and lead to lower costs.

Let me reassure my hon. Friend that the Government are not complacent. The consumer protection partnership chaired by officials in my Department continues to work on the issues. That goes to the point about working with companies to help foster the necessary competition. I am more than happy to continue to work with my hon. Friend so that we can help, convene, push and shape the conversation. Ultimately it is a free market; we are both free marketeers. However, we can make sure that consumer voices are heard, so that if consumers in his constituency have complaints, and if surcharges are imposed after the event, the consumers’ voice will be amplified and heard, through his work and through the Government, to stop unfair practices.

Alongside the work of the consumer protection partnership, and others, Ofcom will be undertaking a review of its future regulatory framework for post over the next year. A call for inputs from stakeholders will be launched before the end of the financial year and a statement on the future framework is expected to be issued by the end of the 2021-22 financial year. The review will consider issues affecting the broader postal sector, as people’s reliance on parcels continues to grow.

I am unconvinced of the need for further legislation, but my hon. Friend talked about whether there is a need for new powers, and what more can be done to encourage the market, drive competition and make sure we enforce the current regulations and legislation correctly. My priority is exactly that—that robust enforcement of the law should continue to ensure that customers are not surprised by delivery charges, and that competitive pressures should continue to drive down delivery charges, as has already happened. I congratulate my hon. Friend once more on securing the debate and on his further championing of his constituents.

Question put and agreed to.