Delivery Charges in Highlands and Islands
(3 years, 5 months ago)
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Christina Rees (in the Chair)
We do not have anyone participating under the hybrid arrangements today, so Members attending physically should clean their spaces before they use them and before they leave the room.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I beg to move,
That this House has considered delivery charges in Highlands and Islands.
It is indeed a pleasure to serve under your chairmanship, Ms Rees. Like many before me, I represent a part of the world that suffers from delivery charges and surcharges, misleading delivery ads, and a general feeling that we are always being forgotten about and simply punished for our post code.
In my short time in this place, I have discovered that it is customary to show off some statistical knowledge, so please bear with me and allow me to put this on the record. People living in the Highland Council area pay the highest average price for large parcel deliveries. Compared with other general regions of Scotland, the highlands and islands pay the highest average price at every parcel size and have the lowest delivery availability probability—that is, parcels that they will not get. To be precise, my constituents pay, on average, £14.67 more than people in the south of Scotland for a large parcel. For a small parcel, they pay about £5 more. The delivery prices we pay in the highlands and islands are 20% higher than those paid by my friends in Glasgow.
That is enough of statistics. The other day, my constituent Graham, a brave man who served Queen and country for long enough, came to see me about a teensy little parcel containing two tiny batteries that he had nearly ordered online. When he saw that it was going to cost him £10.95 for them to be delivered to the highlands, as opposed to £4.95 for the rest of the UK, he quite understandably decided not to place the order.
The Minister will be familiar with an organisation called Resolver, which looks at the problems uppermost in people’s minds. It has confirmed to me that in the UK, delivery charge rip offs—I call them that—are the second biggest irritation people complain about, behind online shopping. While the debate is primarily about the particular challenge we face in the highlands and islands, I put it to the Minister that the standards and regulations surrounding the delivery service in the UK are not doing anyone a huge amount of justice and I suggest that people across our four nations are pretty cross about their experiences. I do not believe that any of us can ignore that.
To set an historical context, I can say that it was not always like that. On 9 January 1840, the penny post was introduced. That world-beating innovation meant that a letter that arrived anywhere in the UK—from the Shetland Islands to Cornwall via Kinlochbervie or Durness or Inverness to London—did so for precisely one penny. Back then, no one was disadvantaged because of where they lived, and it is wonderful that the same was true of a parcel. Okay, a heavier parcel cost more than a lighter, but it did not matter where it was coming from or going to. There was a flat and fair rate, regardless of where people lived.
The batteries of my constituent, the brave soldier Graham, are the perfect example of an unfair extra charge being levied on people simply because of where they live. I use it because that sort of example strikes a chord in people’s mind. How very different is today’s ethos from the higher-minded ethos that led our Victorian forebears to introduce the penny post. Quite simply, the present situation stinks, and I must admit—forgive my language—I am sick and tired of going on about it.
There seems to be far too much buck passing and slopey shoulders, to use a good Scottish expression. The Scottish Government always say that delivery charges are reserved to Westminster and that while, yes, it is regrettable—and they wave a finger or two about it—it is up to Westminster to sort it out. Then, at the drop of a postman’s hat, Westminster is only too keen to burble on about market forces and say that it is up to the Scottish Government to improve transport links and reduce the price of getting stuff from A to B. There is some truth in that, but it makes me wonder how on earth people ever got the Penny Post going in 1840, long before the transport infrastructure we have today, but do it they did. That is a matter of fact and historical importance.
Amid the buck passing, we are where we are today, with whopping great charges that people cannot afford, particularly during the covid pandemic, when we are relying heavily on online orders. What is to be done? Let me make some suggestions. I believe that both Governments must, to coin a phrase, extract digits, as the late Duke of Edinburgh might have said. They must work together, stop bickering about the Union and who does what, and just sort the problem out.
Secondly, between us, we must fix our roads and properly invest in our transport infrastructure. Dodging potholes often doubles journey times and therefore costs where I live. I therefore gently say to the Minister that if, out of the goodness of his heart, he took a peek at my letter about the levelling-up fund, which has just been debated and has the Highland Council in the bottom tier for investment in Scotland, I would be awfully grateful.
That leads me to another, positive suggestion. Local delivery firms—we have several good examples in the highlands of Scotland—go up and down our roads all the time. They know where the bad potholes are and exactly where a certain Mrs McKay lives in a remote part of Sutherland. That local knowledge is crucial. Legislation should be put in place to oblige companies that do not use Royal Mail for delivery to use local firms. The national firms have a worryingly high level of lost deliveries, and I believe that going local will help solve the problem.
What are we going to do to punish repeat offenders who do not comply with the standards laid out by the Advertising Standards Authority? In all truth, a strongly worded letter will not hack it. Businesses, whether big online retailers or local couriers, should be keen to be transparent with customers about delivery charges and, where possible, enforce a flat-rate fee that does not discriminate by postcode.
There are innovative ideas that could be made to work. For some time, I have gone on about the campaign for community banking hubs, where different banks come together and offer customers their services out of the same room. A shared distribution centre of some sort in the highlands could be a possible solution, which the Minister might care to look at and discuss with businesses in my patch, in his constituency and in other parts of the UK.
Royal Mail rightly has a public service obligation by law. I believe that the law of the land should be changed so that the same standard of service is forced on all other delivery companies and the firms that seek to use them. Next year, Ofcom will review the regulatory framework for Royal Mail. I sincerely hope that the Minister and his colleagues in Government will consider extending Royal Mail’s “one price goes anywhere” rule to other companies.
As I discussed with the Minister before the debate, we last debated delivery charges in December 2020, thanks to the excellent initiative of the hon. Member for Moray (Douglas Ross). He and I and many others have followed the issue on the Scottish Affairs Committee, which has had much to say about it. We have all engaged with Citizens Advice Scotland’s campaign on delivery charges over the past year. Yet, despite political support from all sides, we are still in the same boat. Right now, that boat does not seem to be going anywhere.
In a spirit of co-operation and helpfulness, I implore the Minister to discuss some of the proposals that I have outlined today with industry and perhaps come up with a plan of action. Deeply unfair delivery surcharges must be consigned to the dustbin of history. Nobody should be victimised simply because of where they live—not just in the highlands of Scotland, but in remote parts of England or Wales. It is simply wrong. In January 1840, the Penny Post set the gold standard and we should look to the high ethical standards of our forefathers. All our constituents will be greatly relieved if we can do something about this.
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. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing today’s important debate. Its subject continues to be important for his constituents and, similarly, for other Members across the House, including, as he mentioned, my hon. Friend the Member for Moray (Douglas Ross), who raised this last, in December 2020. The hon. Gentleman was there, and he and my hon. Friend came together in a cross-party spirit, because this is very much a geographical issue rather than a political issue, although there are often political levers we can look to to see what we can work on together.
It is not unreasonable for business to seek to cover the legitimate costs of delivery, but it feels to some customers outside the major conurbations that charges are going beyond that, so I have a lot of sympathy for the case that the hon. Member has made—that consumers in some parts of Scotland continue to be treated differently from those in other parts of the UK. I also recognise that similar issues exist for consumers in, for example, Northern Ireland and, latterly, the Isle of Wight. I am pleased to take part in this debate and to update Members on developments since the previous debate in December 202, but let me first remind colleagues of the Government’s general approach.
The Government recognise that delivery costs can be higher when reaching some parts of the UK, but delivery surcharges should be based on real costs of transportation. Businesses are strongly encouraged, as far as possible, to provide consumers with a range of affordable delivery options. Moreover, the Government have ensured that there is access for everyone, including small retailers, to an affordable, consistently priced postal service for deliveries across the UK under the universal postal service. Royal Mail, through the universal service obligation, must deliver parcels up to 20 kg five days a week at uniform rates throughout the UK.
The Government believe that businesses should be free to choose partners and make the contractual arrangements that best fit their commercial needs. At the same time, consumers need transparency of information so that they can choose the supplier who best meets their requirements. The resulting competition should lead to a more efficient allocation of resource.
Consumer protection laws require transparency of costs, including delivery charges. Retailers are therefore required to be up front about their charges, including where they deliver to, what they charge and when any premiums apply. In that regard, at least, the law was working well for the hon. Gentleman’s constituent, Graham, in terms of his batteries, because at least he could make an informed decision, as unfair as he felt that extra transaction cost was. With that transparency, consumers know exactly where they stand and can therefore decide accordingly. If retailers are to take advantage of the considerable opportunity for online sales, they need to take heed of the needs of consumers in all parts of the country, developing delivery solutions to realise sales potential in every single area.
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 the information given by traders to consumers regarding those delivery costs, including any premiums, must be up front and transparent, as I have said.
In response to concerns raised previously by hon. Members about understanding the rules, highland trading standards established a website to provide advice and delivery charges for consumers and businesses. Any consumer who believes that the rules have been breached should report it through the deliverylaw.uk website so that incidences are recorded and appropriate enforcement can be taken.
Furthermore, as I reported to the House last year, a significant volume of enforcement work has been undertaken by the Competition and Markets Authority and the Advertising Standards Authority. The ASA has issued enforcement notices to online retailers where parcel surcharging practices have been raised and has achieved a compliance rate of over 95%. The CMA has continued to issue advisory notices to the major retail platforms and has published guidance to retailers who sell via those platforms. It continues to work through primary authorities to ensure improvement in this area. On the legal compliance side, our enforcement partners are continuing to monitor the situation and to take action where necessary.
In November last year, the postal sector regulator, Ofcom, published updated information on how this part of the market is operating, as part of its annual postal service monitoring update. I set out Ofcom’s findings in the December 2020 debate in the House. Ofcom found that operators take different approaches to the pricing of parcel delivery services. Some vary their prices by location, but others do not. Businesses have options. For the subset of suppliers who vary delivery charges by location, some use a binary standard charge and an out-of-area charge and some set different prices for different areas. In other cases, the actual prices charged for business-to-consumer parcel deliveries are bespoke. Although operators may start with a standard rate, they often negotiate charges on a bespoke basis with individual retailers. As I outlined in the previous debate on this issue, some major retailers, such as Argos and Wayfair, have taken positive steps, vastly improving the delivery service by removing surcharges for most customers in the Scottish highlands and islands.
The Government have no role in interfering with business decisions. Businesses can adopt a range of options on delivery charges and may apply none at all, and the parcel delivery market is competitive. The hon. Member for Caithness, Sutherland and Easter Ross talked of the Penny Post, which was, in its time, an important standard to reach, but the post service has moved on in the past few years. Parcels, rather than letters, are more predominant in people’s lives than ever before, and the market is hugely competitive. Steps taken by suppliers to apply no delivery surcharge will put downward pressure on charges from other suppliers. Royal Mail clearly needs to be in that space, looking at that downward charge, to be able to modernise and compete with other suppliers.
I reassure the hon. Gentleman that the Government continue to look at this issue. The Consumer Protection Partnership brings together consumer protection organisations from across the UK. It runs a dedicated working group, including consumer advocates, trading standards and Government representatives, to focus on this issue. The working group also includes the Scottish Government.
Ofcom will be undertaking a review of its future regulatory framework for post over the next year. In the call for input between March and May this year, Ofcom invited views and comments from stakeholders. It intends to publish a full consultation on the future regulation of postal services later this year, before concluding its review in 2022. The review will consider issues affecting the broader postal sector, as people’s reliance on parcels continues to grow.
Other ongoing work to enhance compliance with the legislation includes updating the best practice guidance available from the Chartered Trading Standards Institute. The updated guidance has been informed by CPP members, as well as other organisations, and aims to drive the messaging out to online retailer platforms and delivery services.
I continue to believe that the legislative framework is robust and provides appropriate protections for consumers. The Government remain committed to ensuring that the universal service obligation, including the delivery of parcels at a set charge throughout the UK, remains affordable and accessible to all users. My priority is continued enforcement of the law to ensure that customers are not surprised by delivery charges and are able to make choices based on clear information. In that way, consumer decisions will apply competitive pressures that can drive down delivery charges to the benefit of all.
On behalf of the Government, I express my gratitude to postal and parcel workers across the UK, who have been working tirelessly throughout the pandemic to keep us all connected. I thank the hon. Member for Caithness, Sutherland and Easter Ross once again for bringing this important debate to the House, and you, Ms Rees, for chairing it. I look forward to continuing to work on this issue. I know we will be back here again to speak on behalf of the hon. Gentleman’s constituents and others in the affected areas.
Question put and agreed to.