Energy Bill

Debate between Lord Phillips of Sudbury and Lord Whitty

Wednesday 6th November 2013 Lords Chamber

[Lord Whitty]

My Lords, I would briefly like to add our support to these amendments. It is very good that the intentions of the noble Baroness, Lady Maddock, have been taken on board by the Government, and it should lead to a significant improvement in the way in which consumers understand this market and their own bills. At the end of the day, with the massive changes that are expected in energy policy, unless consumers are themselves convinced that this is all part of a coherent and positive strategy there will be serious political problems down the line for the Government in power, whoever they are. I therefore think the Minister has been very sensible. I congratulate her on taking this initiative and making it her own, and give my thanks to the noble Baroness, Lady Maddock, and the noble Lord, Lord Roper, for pursuing it in the first instance.

[Lord Phillips of Sudbury (LD)]

My Lords, I will comment briefly on this clause because in my life hitherto I have spent a great deal of time trying to help the great British public understand some of the contracts that have come their way. I am afraid to say—and I do not think anyone in the House will disagree—that a good deal of cynicism has been employed by some of the very large energy suppliers, and indeed other suppliers in recent years, designed expressly to confuse the consumer with a view to preventing ordinary folk from understanding what their best tariff, for example, might be. This is a clause of great virtue, which should be supported.

Queen’s Speech

Debate between Lord Phillips of Sudbury and Lord Whitty

Monday 13th May 2013 Lords Chamber

[Lord Whitty]

My Lords, some have said that this Queen’s Speech is too thin. I do not have a problem with that. Frankly, it is an issue of quality rather than width. If the legislation proposed was going to do something about the economy and improve our economic and societal prospects, I would welcome it, however thin it was and however many Bills were involved. As it is, I welcome some of what is there, and welcome the opportunity to debate the rest. I am very glad that we are about to debate the Energy Bill and the water Bill; both will probably be discussed more tomorrow, but both are vital for issues of living standards and cost of living, and for our investment programme. The Energy Bill seems deeply flawed, and I am sure that we will have some serious debates on that. I agree with what is in the water Bill, broadly speaking, but there are great gaps in it—in particular any reform of the abstraction sector, which will be vital for the economic and environmental future of that sector.

I am glad, although it was not mentioned in the gracious Speech, that we will also get banking reform back before the House. However, I am pretty dubious about the present proposal’s ability to reform a sector which both caused the financial crisis by its recklessness and which is failing and holding back the recovery by its caution. It is a sector in this country which, despite the dramatic changes since 2007, has somehow retained, broadly speaking, the same structure. Some institutions are under different ownership, including state ownership but, basically, we have not tackled the problem of the structure of the banking sector in particular. I was hoping that we would see a more decentralised and more segregated banking system, both horizontally and vertically, and an absence of organisations which, for the future, would be “too big to fail”. I regret that we are not yet in that position, and I cannot see that this proposition on banking reform will get us to it.

On other legislation in the gracious Speech, I think I welcome the Mesothilioma Bill, which should—although it requires some detailed scrutiny—right a serious, long-standing and distressing situation. On the deregulation Bill, I hope that it will raise burdens on small and medium-sized firms, but I suspect that it is largely another rehearsal of saloon bar prejudices, and so I cannot give it an unequivocal welcome.

I hope I will be able to welcome the proposed consideration of the draft consumer protection Bill. As my noble friend Lady Hayter has said, the Government’s record on consumer issues in legislation has not been particularly good. They not only abolished my own organisation, Consumer Focus, but resisted proposals from noble Lords on all sides of the House during the previous Session to improve the protection of consumers in Acts that were passed in that Session. I hope that we will see some real proposals for improvements for consumers this time round.

In particular, I hope the Government will return to the issue that was mentioned by my noble friend Lady Hayter: that of collective redress, which I have been banging on about on every possible occasion over the past few years. It was to be included in one of the last pieces of legislation of the last Government, but unfortunately it was lost during the wash-up when it was objected to by the then Opposition. Collective redress would have avoided a lot of the hassle which consumers face, for example with PPI, where they are exploited first by financial institutions and then by claims companies. To have a proper system of collective redress for consumers would be a major step forward, and I hope that the Government have that in their sights in the production of the draft consumer protection Bill.

Excluded from the gracious Speech are some serious proposals on how to get out of the current economic recession. I follow the noble Lord, Lord Patten, in this, although I have seen the same bad example in Wincanton to which he refers. We need a massive housebuilding programme. The Government, after cutting back even on the rather inadequate programme they inherited from the previous Government, have finally realised this, and they are providing some significant support for the purchase of housing. However, as the noble Lord, Lord Shipley, said, that is not enough. In default of increasing the supply of housing—in other words, acting on the provision and capital side as well as supporting potential buyers and landlords—the net effect of underwriting and providing mortgages under Help to Buy and other schemes will be to raise house prices and increase housing costs, aggravating rather than resolving the problems of dysfunctional housing markets. Help on the capital side for building houses, by raising the limit on borrowing for local authorities and housing associations, by joint ventures and by supporting the private sector in housebuilding, is one way out.

Investment in housing ought to be accompanied by investment in infrastructure. The only serious mention of infrastructure in the gracious Speech was the reference to HS2. I broadly support it, but I will not enter into that controversy now. HS2 will bring jobs and serious investment only in several years’ time. We need investment in ready-to-roll projects now. There is an absence of that both in the Queen’s Speech and in the Government’s thinking.

Of course, behind all this is the problem of the economy, which manifests itself in a number of ways. The political obsessions at the moment with the EU and with immigration are a reflection of the failure of the economy. It is probably too late at night and I have too small an audience—actually, the audience is distinguished enough for me to go into a bit of a rant about the economy. Brussels, Frankfurt and Great George Street are all in thrall to a dangerous economic ideology, and they must get out of it if we are to see any economic progress in this country and in Europe.

The effect of the eurozone and the ECB’s view on how they should impose austerity on the rest of Europe is pretty clear. A single currency requires the transfer of resources and credit from the richer part of the EU to the poorer part. The fact that the Deutsche Bundesbank, German politicians and the ECB do not see that sufficiently clearly will, if they are not careful, ruin the eurozone. I speak as a passionate pro-European. I was even broadly in favour of the single currency at some point. However, they are failing to manage it properly because they are in thrall to an ideology that says that the only way out of economic recession and a public finance crisis is to impose austerity in a way that impacts most detrimentally on the poorest part of the eurozone.

Having been critical of the eurozone, I say in a less dramatic way that we are pursuing the same policy here. The Chancellor likewise is locked in the same ideology. The one great success of the Treasury in the past three years has been to convince the bulk of the press and a large proportion of the British public that the current difficulties in the economy and the public finances are entirely the fault of the previous Labour Government. The noble Lord, Lord Hodgson, who is no longer in its place, said that the Labour Party was in denial about this. My assertion tonight is that it is the Government who are in danger of believing their own propaganda. The financial crisis was started by private debt in America and in Europe. It was compounded by the failure of the banks, and compounded further by the fact that Governments throughout Europe and North America decided that they were going to bail out the banks. That is what caused the crisis in public finances.

The UK was more impacted than others because we are more dependent than other countries on the financial sector. The long-run record of the Labour Government was that before 2007-08 we had a debt-to-GDP ratio that was roughly the average of the OECD countries. It got worse because of our dependence on the financial sector. That is something that this Government have to pick up. However, they should not try to do so by imposing a form of austerity on the whole of the country in a way that minimises our chances of getting out of the recession. In particular, they should not focus on the social security budget and misrepresent the way in which it has increased over recent years. The vast majority of that, of course, has been because of the increase in the part of the population of pensionable age. The other two elements include the increase in housing benefit, which has got seriously out of control. But that is due to a failure of the housing market, not of social security policies, and housing benefit should not be included within the universal credit system until we have resolved the problems of the housing market in a way that does not lead to huge increases in housing benefit for those dependent on ever-decreasing opportunities within the housing sector.

If you look at the Government’s credibility in international markets and their inability to stimulate investment within this country, despite the fact, as somebody said, that significant money is available in corporate accounts and pension funds, you can see that people are not investing in the UK because they do not have confidence in this Government’s ability to get growth going in the UK.

[Lord Phillips of Sudbury]

I am grateful to the noble Lord for giving way. I cannot resist asking him, on his second reference to our position in the international markets—he talked about our credibility—whether the most vivid example of where we stand in the eyes of would-be speculators against sterling is not the fact that the rate at which we have to pay on our admittedly massive international debt is little if any more than the Germans pay. Had we not adopted a programme of some austerity, the cost of our borrowing would have been enormously greater.

[Lord Whitty]

No, my Lords, I do not accept that. I accept the first part of what the noble Lord, Lord Phillips, says, but not the second. The ability to borrow in international markets, as with borrowing in almost any context, depends on a number of things. It depends on your ability to have a low rate of interest and low cost of borrowing; a reasonable term of borrowing; and an ability to service that borrowing and to repay the borrowing. On all those counts, throughout the desperate period of 2007 to 2011, the UK retained credibility and could borrow at relatively low rates over relatively long periods. The final qualification is that the markets have to be confident that the Government can raise enough money to repay those debts over the medium to long term. What has lost credibility in this Government is the slow growth and flat-lining of the economy, as well as the downturn of financial income for the Government as a direct result of that economic failure, which has reduced the markets’ confidence in the ability of the UK to repay loans. That is why the credit rating has gone. It was not Gordon Brown who lost the credit rating—it is actually George Osborne and his failure to get economic growth within this country. Unless the Government recognise that and start changing course by investing in infrastructure and housing and getting us out of this economic recession, they will be going down the wrong road. I think that they have already gone too far down that road, but there is still time even for this Government to change their direction.

Financial Services Bill

Debate between Lord Phillips of Sudbury and Lord Whitty

Wednesday 25th July 2012 Lords Chamber

[Lord Phillips of Sudbury]

Rather than the noble Lord remain in rather dangerous flight, I believe he means the noble Viscount, Lord Trenchard, does he not?

[Lord Whitty]

My Lords, I do. I was looking at the Marshalled List and saw the name of the noble Lord, Lord Flight, to the next amendment. I beg the pardon of the noble Viscount, Lord Trenchard.

When faced with issues of consumer care and consumer protection, the FSA, in its early days and for much of its time, tended to resort to stipulating the information that the consumer needed to be given. By the time that had gone through the corporate lawyers of the various banks and insurance companies, it amounted to five, six or sometimes 25 pages of close 10-point type, which was even more difficult for the average consumer to understand than it is for the average Member of the House of Lords to understand this Bill.

That is a very passive form of consumer protection and it is a very passive definition of customer care. The amendment attempts to put an obligation on the FCA to ensure that companies operating in this sector operate positive customer care, not simply passive provision of information which a large number of consumers cannot understand. To answer the noble Baroness, Lady Noakes, one reason why I believe that it is appropriate for it to be in the competition area is that when the FCA looks at where competition is succeeding, one of the measures of the proper outcome of competition that it considers is the way in which companies compete, as regards customer care, for their consumers.

Competition is not an end in itself. Competition policy and the enforcement of competition should protect and enhance benefits to consumers. One of those benefits is that the truly competitive company looks after its customers in a positive way and competes with its competitors in that regard. The passive provision of information is not customer care. This clause goes a significant way towards ensuring that customer care is seen as an objective both of consumer protection and of competition policy.

Public Bodies Bill [HL]

Debate between Lord Phillips of Sudbury and Lord Whitty

Tuesday 11th January 2011 Lords Chamber

[Lord Phillips of Sudbury]

My Lords, I support this amendment and have little to add to what the noble Lords, Lord Faulkner of Worcester and Lord Berkeley, have stated. The inland waterways of this country are one of its glories and, in the present age, the public resort to and benefit from the inland waterways can only increase. We as a Parliament have for too long done things which were well intentioned but which, in the event, proved to be counterproductive. One of the great problems of the present age is that the public are so confused about different bodies, particularly in the voluntary sphere, that a great deal of the good will and potential effect of a body such as the Inland Waterways Advisory Council can be inadvertently lost by chopping and changing. As all Members of the House will know, the inland waterways are covered by a wonderfully diverse mix of mainly charities—I am patron of the charity that looks after the River Stour, for example, but there are hundreds of them. To have a competent, known, well regarded advisory body taking a valuable overview and bringing together the often conflicting demands and interests of the individual charities with their different responsibilities seems indispensable. If that is right, then for mercy’s sake let us leave this body alone and not at some future date have to resurrect it with a loss of public identity and continuity in the mean time.

[Lord Whitty]

My Lords, I will pick up from where the noble Lord, Lord Phillips, has just left off. I have a past interest as a Waterways Minister, which is a fantastic job. I cannot remember if it is part of the portfolio of the noble Lord, Lord Henley, but if not, that is regrettable, because it provides a welcome relief from most of the rest of what one has to do. I also have a present interest as a member of the board of the Environment Agency. British Waterways is the dominant organisation for canals and the Environment Agency is the dominant organisation for rivers. An amendment recently tabled by the noble Lord, Lord Taylor, points the way that the Government are thinking of going in handing over British Waterways to a trust in the third sector and transferring the Environment Agency’s navigation and waterways responsibilities to that body.

I am, broadly speaking, subject to a few caveats, in favour of that sense of direction. Eighty to 90 per cent of British Waterways will probably be covered by that new organisation, which will make it a very dominant organisation. All the small navigation authorities to which the noble Lord, Lord Phillips, referred, supported by volunteers, charities and local efforts for relatively small stretches of canal and river, look to this body for technical advice and for a forum where they can sit and be treated equally with the representatives of British Waterways and the Environment Agency. They will be the people who will most miss out as a result of the abolition of this body. British Waterways, including the Environment Agency’s navigation aspects, will take care of itself, and the charitable status, I hope, will ensure that it does a good job for the public and the environment. However, the smaller navigation authorities need this body and we should seek to retain it for them, certainly for a significant period beyond any transformation of the status of British Waterways, as my noble friend Lord Berkeley suggested.

Public Bodies Bill [HL]

Debate between Lord Phillips of Sudbury and Lord Whitty

Tuesday 9th November 2010 Lords Chamber

[Lord Whitty]

My Lords, I am beginning to feel very sorry for the Minister. When I came back to the Chamber I thought that perhaps he would have gone for a sustaining meal or, even better, to consult his business managers and was advising them to accept my noble friend Lord Hunt’s amendment. But he has stuck it out, for which I commend him. However, he must understand that the range of opinions and concerns over different organisations in this House make it impossible to proceed with this Bill in the normal way. The sooner we agree to my noble friend Lord Hunt’s amendment, the better it will be for the coalition Government, as well as for the authority of this House and its ability to scrutinise properly.

At the beginning, the Minister said that this Bill came out of a “coherent, cross-government assessment”. I am afraid that he is wrong on all three counts. There is no assessment, no rationale and no mechanism for establishing value for money. It is not coherent. Alphabetical lists, with some bodies appearing on several lists, is not particularly coherent, let alone the reasons behind them. The process was not really cross-government. It was done department by department in silos. Then they had a head to head in a Star Chamber procedure with the Cabinet Office. The number of quangos in the departments to end up on these lists depended on the enthusiasm of the individual department or the degree to which they were battered by the Cabinet Office. For example, leaving aside the RDAs—the abolition of which I deplore—of the 36 other bodies on the abolition list, no fewer than 14 are Defra organisations and another seven are from the Ministry of Justice. Effectively, two-thirds of the bodies that this allegedly objective process abolishes come from two small departments. That cannot be right. We must have a better process for this because the normal process of the House is not correct for it.

I declare an interest as a member of the board of the Environment Agency, which appears in the list in Schedule 5 and the list in Schedule 7, and also in Clauses 14 and 15 in relation to Wales. More pertinently, I am also the chair of Consumer Focus, which is for abolition—although it is not really abolition according to the officials of our sponsor department, BIS, because abolition is a technical term and our powers will pass elsewhere. It does not feel technical to the staff and those who support it. However, it is an example. I retire from the chair at the end of this year and therefore I will have no pecuniary benefit from it lasting longer than the Government envisage. However, I am concerned that a body that was set up only four years ago and which came into being only two years ago with the merger of the National Consumer Council, which went back to Lord Young of Dartington in the 1970s, and the bodies that were set up to look after energy and post when they were privatised and liberalised, is going to disappear.

Most or some of its powers—it is not clear—will pass to Citizens Advice. As the noble Lord, Lord Beecham, said, Citizens Advice is an effective body but is different from the kind of body that goes in for consumer advocacy at the policy level and engages in depth with the regulators and the companies in, for example, the energy sector. It may be able to deliver that expertise but you will not find Citizens Advice on this list.

Nor will you find some of the bodies which went into the assessment by BIS dealt with in the same way because they are in other departments. There ought to have been a coherent approach across government to both competition and consumer affairs to produce a rationale which was clear to the House. We would probably have ended up with fewer bodies, but certainly with clearer remits for those bodies. My noble friend Lord Borrie reported on what was happening on the competition side of that equation—we probably will end up with one Monopolies Commission—but it is also clear that some of the things taken away from the OFT cannot be dealt with at a local level, either by Citizens Advice or by trading standards.

That is a microcosm of what is wrong with the Bill. Taken sector by sector and organisation by organisation, the reason why particular quangos are in particular boxes is not at all clear. If the Bill goes to a Committee of the Whole House and we go through it line by line, that means we will go through it body by body, organisation by organisation. In the Minister’s own best interests I suggest that that is not a sensible procedure for him. If the Bill goes to a Select Committee, the Select Committee can begin to make sense of it. It could group organisations; it could look at all bodies, on whatever list they are, in the health area; or at all scientific advisory bodies; or at all bodies dealing with consumer affairs, competition or the environment. It could establish a clear pattern and call witnesses, which, as the noble Lord, Lord Greaves, said, a Select Committee has the power to do. We cannot call it pre-legislative scrutiny because we have started the legislation today. However, it would have some of the same benefits. It could provide a clear, coherent principle and suggestions about how we could better deal with parliamentary scrutiny of quangos in the future. A Select Committee procedure can do that; a Committee of the Whole House cannot.

If we were starting again on a matter of such constitutional importance, as the Constitution Committee has pointed out, I would have advocated a Joint Committee of both Houses. To be faced with such a clear Henry VIII Bill is a unique experience, and the wording in the Constitution Committee’s report, as other noble Lords have said, is unprecedented. We need to take that very seriously and we need as a result to take this Bill through a different procedure. Like other noble Lords, I am not opposed to reducing the number of quangos, I am certainly not opposed to finding value for money from them and merging and reconfiguring them. I think there ought to be a process whereby we review them from time to time.

[Lord Phillips of Sudbury]

I am grateful to the noble Lord for giving way. He made a powerful point about Citizens Advice and the consumer body of which he is chair. Is it not also the case that Citizens Advice is a charity? It is quite outside the control of the state and it is not actually open to any Government to require an independent charity to do this or not to do that.

[Lord Whitty]

My Lords, this is an added difficulty. I think Citizens Advice was as surprised by the decision as we were, from the other end of the spectrum, as it were. It is possible that you could do this. I am not in principle opposed to the functions that Consumer Focus currently carries out being done in the third sector but I think it is difficult. We have very substantial powers, particularly powers to require information from commercial companies. There are questions as to whether it is appropriate to transfer those powers outside a government body. I have great respect for Citizens Advice and we may find a way of doing it, but we have not got there yet. There are other bits of the jigsaw we need to get in place before we do.

This is, in effect, a Henry VIII Bill. However, when Henry VIII actually proposed the dissolution of the monasteries he asked his mate, Thomas Cromwell, to produce a report on each individual monastic house. He needed to do that in order to convince the barons and the powers that be that it was a sensible policy. Those reports were, on balance, pretty prejudicial and the level of debauchery that these people found certainly would not have been found in Consumer Focus. However, it is sensible for Parliament, before it takes a decision on this, to look at each individual body in detail and the context in which it works and the interrelations with the other bodies concerned in that sector and take a decision, sector by sector, type of body by type of body—not to have a whole list presented to us on which we can have only an incoherent debate using the normal procedures of this House.

Even Henry VIII went further than this. We can at least do as well as Henry VIII did. I am not saying that a Select Committee or a super-affirmative resolution would necessarily have prevented the dissolution of the monasteries, but it would have been worth a try. I think it is incumbent on this House to try to find a way in which we can make sense of this procedure. At the moment we are not there and I plead with the noble Lord to accept the alternative procedure and take us down a more sensible road for dealing with this Bill.