Delivery Charges (Scotland)

Alistair Carmichael Excerpts

Wednesday 20th December 2017 Westminster Hall

[Douglas Ross]

My hon. Friend raises a very important point; I would expect him to highlight this crucial issue for the borders, as he has done so ably. I think it is something we have to address as we progress this campaign.

The final piece of research that I want to mention is by Ofcom, which has now completed a two-year study of this issue. I welcome the confirmation that I recently received from the Minister that she will work with the Consumer Protection Partnership to establish a review of the evidence collected by Ofcom so far on excessive delivery charges and see what can be done to protect Scottish consumers from excessive charging. I would welcome further comments from the Minister on that point in her response today.

For me, the most important part of today’s debate is sharing just some of the examples that I have received from constituents and others through Parliament’s digital engagement team since I secured the debate. Their testimonies speak far better than anything that we politicians can put forward.

For example, Lynn from Moray was going to order a product from Groupon, but was disgusted to discover that the shipping does not cover her IV36 postcode, with the company saying that it delivers only to mainland UK. On its site, it had a map showing in red the areas to which it would not deliver. However, that red covered hundreds of square miles and included two cities—Aberdeen and Inverness—all of which are most definitely on the UK mainland. When the delivery company said that it would not deliver because it would have to take a ferry to reach Lynn’s address, she made the very valid point that it would not have to do so and, crucially, someone could continue to drive for another three hours north, east or west and still not require a ferry. We are definitely part, and an integral part, of mainland UK.

Lynn finished her correspondence to the company by saying:

“This is a blatant, lazy, cost saving exercise on the part of whichever delivery company this producer is using and is factually incorrect. This is disgusting and insulting.”

I absolutely agree with Lynn.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Perhaps through the hon. Gentleman, we could remind Lynn that actually ferries are very good at carrying parcels as well and the fact that they have to go on a ferry should not be an excuse for a further surcharge.

[Douglas Ross]

I am sure that the right hon. Gentleman will make that point again as the debate progresses. However, I think that using a ferry to get to Moray would incur a greater surcharge when we can use the road, rail and planes as anyone else would.

Marion from Speyside bought a new shower earlier this year. She knew the design that she wanted; she knew the model, the product, but she ended up buying it from Germany with free packaging and postage. That was cheaper than using other firms that advertise free UK mainland carriage, because of the large surcharge on AB and IV postcodes. She added in her email to me,

“It is this type of pricing that really annoys me as you are often at the final stages of paying before you find out. I am glad you and Mr Lockhead are highlighting this issue.”

--- Later in debate ---

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Moray (Douglas Ross) on securing this debate. This is an issue that I have pursued over many years; I think it is fully 15 years since I first initiated an Adjournment debate on this subject. In that time, I think that, if anything, the situation has got worse.

In 2002, it was myself, the then hon. Member for the Western Isles and some colleagues from Northern Ireland who were interested in a debate like this. Since then it appears that the contagion has spread, so that it is now as far south as Moray—indeed, we have heard that communities and conurbations as significant in size as Inverness and Aberdeen can often find themselves excluded.

We have heard also, from the excellent piece of research done by Citizens Advice Scotland, “The Postcode Penalty,” that the cost of delivery to island communities can often be more than 50% higher than to other parts of the country. That is why I say to the Minister today that a market that operates in such a way that it excludes this number of people, our own fellow citizens, from any meaningful access to it, is an instance of market failure.

The problem is that, as the hon. Gentleman said, these are all private companies, and they are doing what private companies do; but when a market fails, it ceases to be a matter just for the private companies involved and it becomes a matter for Government. When a market has failed there is a duty on Government and on the competition authorities set up by them to ensure that it is made to operate in a way that is fair to everyone. That is not happening at the moment and there is an opportunity now for the Government to initiate these discussions and to say to this industry, “You are operating in a way that is not fair to too many of our fellow citizens, and if you are not going to put your house in order, as manifestly has been the case for some years, the Government will take some action to make you do that.”

One of the things I always say when people bring me examples of this situation is that there are many local businesses that can often provide the same thing at a comparable price once the delivery charge is taken into account. But there are often many things that are not available for people to buy, especially in our smaller towns and more remote communities.

Ahead of this debate a magazine, Culture Vulture Direct, was given in to my office in Kirkwall. It included a piece of furniture that I thought could grace the Carmichael living room this Christmas. It is a lovely little piece of furniture: a two-drawer cabinet, painted grey, with a soft whitewashed finish. Who could resist such an idea? What really sealed the deal for me was that it is called the Orkney narrow two-drawer cabinet. Ideal! Who on earth could possibly not want to have that in their living room in Orkney? Unfortunately, it comes from culturevulturedirect.co.uk, which in relation to this piece of furniture states that delivery is to the UK mainland only. That tells you all you need to know, Ms Dorries.

--- Later in debate ---

[Margot James]

I did hear the intervention from the hon. Member for Strangford (Jim Shannon), and I will look into that.

Businesses have a choice through the universal service obligation, which the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) reminded us about. Royal Mail can deliver parcels up to 20 kg, five days a week, at uniform rates throughout the United Kingdom. Regrettably, some businesses and retailers choose not to use that option, and the Government are not in a position to oblige business to choose a particular delivery supplier. There are no regulations that prevent differential charging for deliveries by companies other than Royal Mail. A competitive market should be a sufficient incentive to put pressure on charges applied by retailers and delivery operators, and consumer law requires traders not to mislead consumers or partake in unfair practices.

[Mr Carmichael]

The Minister comes to the nub of the matter: a competitive market should provide the solution. In fact, the way this market is operating now is the problem; competition will not be the solution. Will she look at the issue of market failure, on the basis that courier companies are now a quite different and discrete market from Royal Mail?

[Margot James]

If the right hon. Gentleman will allow me, I will come on to what I propose to do before I close.

We already have legislation in place under the general Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which apply to online purchases. They make it clear that information given by traders to consumers regarding delivery costs must be up front and transparent before a transaction is entered into. Any consumer who believes those rules are being breached should report it to trading standards through the Citizens Advice consumer service.

If misleading advertising about the cost of delivery is an issue, the Advertising Standards Authority, which has responsibility for ensuring compliance with the code of advertising sales, promotion and direct marketing, will act to ban or amend advertisements that have the potential to harm or mislead the public. Decisions on complaints are made public, and where necessary the ASA will report persistent offenders to trading standards for further enforcement action.

The Government’s view is that regulating prices, or intervening in how businesses and retailers establish their pricing structures, would not overall be in consumers’ best interests, because they are commercial matters. The market is highly competitive and innovative, with many different types of companies being selected by online retailers to provide delivery solutions. That has given rise to new ways of receiving packages, such as collecting them from more secure and more convenient locations and post offices.

The issues involve a three-way relationship between consumers, online retailers and delivery companies. As Members stated in the debate, the postal sector regulator, Ofcom, has just concluded a two-year study of parcel delivery surcharges that reflect the cost to operators and go beyond them. It found that some retailers apply a surcharge to consumers for delivery to certain locations, while others do not. It is therefore not clear that surcharges applied by parcel operators to online retailers are automatically passed on to consumers in all cases. The Government will consult Ofcom further on what might be done to improve competition. As highlighted by my hon. Friend the Member for Moray, the Consumer Protection Partnership, which brings together enforcement bodies and advice providers and is chaired by my Department, recognises that this is a priority that requires further work. It brings together a number of important bodies with an interest in this vexatious matter.

A number of Consumer Protection Partnership members, including Citizens Advice Scotland, the Consumer Council for Northern Ireland, the ASA and other enforcement bodies, along with Ofcom, are working together to undertake a review of parcel surcharging. That review is looking at the existing research, evidence and legislative framework, with the aim of improving compliance by online retailers with consumer protection law. It will also consider further proposals relating to concerns about the level and fairness of parcel surcharging, about which we have heard so much this afternoon.