Consumers: Paper Billing

Baroness Hayter of Kentish Town Excerpts

Monday 25th November 2013 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

We must all thank the noble Baroness, Lady Oppenheim-Barnes, for getting this debate in front of the House tonight. I thank also those who have rallied to her cause and who, as my noble friend Lord Lipsey said, are not Luddites. It is a particular delight that the noble and learned Lord, Lord Judge, has chosen this debate in which to break his silence in this House. He may feel that he is needed in Australia at the moment but as he introduced the noble and learned Lord, Lord Thomas, today, who is from Wales, perhaps he should take up rugby instead. We are rather more successful at that.

The case that has been made out by the noble Baroness is quite clear. The service exists, after all, for consumers who pay for it and make the providers’ profits. Those consumers should therefore have a free choice of whether to have a paper or an electronic bill, with no price tag attached to either. This is part of a broader issue of defending consumer rights, especially where consumers cannot shop around to get a better service. We are all fed up of being charged when we want to book our theatre tickets, for example. After all, you cannot go to the theatre without a ticket so it is not an add-on to what is being provided; it is an essential part of it. One cannot shop around for which theatre to go to, as the play is on in only one place. Even budget airlines are beginning to realise that the allocation of a seat and the purchase of a ticket are an essential part of the journey—as opposed to a cup of coffee, which may be an add-on. So, surely, it ought to be in the areas of energy and the telephone.

It is impossible for people to shop around if all the providers are charging for bills, especially when they do not say at the outset what the cost will be or, according to the noble Baroness, Lady Oppenheim-Barnes, when they write it in such a small typeface that none of us can read it. Even if one shops around for a supplier, the issue of billing will hardly be uppermost in one’s mind as one makes that choice. Effectively, these suppliers are adding a fee over which we cannot negotiate. Yet a bill is an essential component of the contract of service, not an optional extra.

These charges are not just the price of a stamp. Talk Talk charges £1.90 a month, and T-Mobile £18 a year. Given the weakness of the negotiating position of individual customers, it must be for the Government, an ombudsman or a regulator to stand in the consumer’s shoes and sort out the problem, as my noble friend Lord Lipsey suggested. Of course, had the Government not abolished Consumer Focus, there would be such a body. But have this Government any interest in consumers, like the noble Baroness, Lady Oppenheim-Barnes, former Minister and consumer champion? Apologies—she is a former Minister but she is still a consumer champion.

Do we not care about the old, the young and the vulnerable, who will be those most disadvantaged by having to pay to get a bill? Losing paper statements will disadvantage the elderly, as we have heard; only one-third of over-75s have browsed the internet. However, it is not just the elderly—7 million adults have never used the internet. One in seven does not have the internet at home and does not intend to get it, a quarter on grounds of cost. Some 16 million consumers over 15 do not have basic online skills. Even young people are not immune. One in 10 of those not in employment, education or training feels out of their depth using a computer. E-mails, even for those who are fairly familiar with them, are not always reliable. In fact, if your e-mail gets caught by a spam filter, it may never reach you, making payments easy to miss. Furthermore, online billing requires you to notify a change in e-mail address; it is sometimes easy to forget to do so—and there is no redirection facility, as with our much beloved Post Office.

Another issue, raised by the noble Baroness, Lady Maddock, is the risk associated with the internet of people fearing that they may lose their identity or access to personal information. One in four new internet users says that they would never share personal information online.

Another problem comes when printing copies of online statements, which may not be regarded as official, and certainly not as proof of address, on those occasions when you need to prove that. People who need a paper copy for tax, or as evidence of a transaction, would have to pay for it, with most banks already charging up to £10 for duplicate statements. As the noble and learned Lord, Lord Judge, reminds us, there is also the issue of remembering passwords as well as user names, especially as we are meant to have a combination of letters, capital letters and numbers—so we cannot even have an easy password. That is difficult not only for the elderly but for anyone with dyslexia or dyspraxia.

Another group that has approached me about this is students and flat sharers, who need paper bills so they can all see who owes what, rather than having to give control over bills to just one person. Those who claim expenses may need a paper copy of a bill to make a claim. Some institutions do not accept printed copies of online statements; indeed, the European Parliament will not even accept a photocopy—it has to be an original invoice, to be able to claim expenses. So people will have to pay for that documentation.

The real issue is why providers consider us users as merely a cost. Why should they be able to save money by charging consumers without whom they simply would not be in business? The average energy bill already includes £53 of profits for the company; the least they can do, surely, is to send us an invoice detailing how much to pay, and for what. As Judith Donovan, mentioned by the noble Baroness, Lady Maddock, also said:

“This is not an anti-online campaign, it’s a pro-choice campaign”.

We turn to the Government on this. We know that half of those with no access to the internet are in the lowest socioeconomic groups, but they are the ones who will have to pay for paper bills, and the ones who can least afford it. Not only that, but the Government are insisting on universal credit being online. This is surely nonsensical, given that even we here, most of whom can use the computer, want to pay our bills on paper. The idea that those who are not confident with the net should have their whole universal credit claim and income dealt with in this way is ridiculous.

The real question for the Government is what they will do about this situation, in which charges are being added, despite the choice that consumers want to make. The Government have a draft Bill on consumer rights, but how can they even use that phrase while allowing these rip-off practices to continue? We look forward to hearing about some robust action that they will take to make sure that consumers get a fair deal.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I first extend my gratitude to my noble friend Lady Oppenheim-Barnes for securing this debate. As my noble friend Lady Maddock has mentioned, I am aware that my noble friend Lady Oppenheim-Barnes asked a supplementary question in this Chamber on a similar subject during an Oral PQ raised initially by the noble Baroness, Lady Deech. My response to her question, and my response to some other questions, clearly did not strike a chord in this House. I recognise this and have had a few weeks to reflect on the subject further.

In replying, I congratulate the noble and learned Lord, Lord Judge on his maiden speech, on sharing his passion for this issue with the House today and on speaking up for those who are concerned about the advances of the digital age and the so-called generational issue.

I say at the outset that I fully recognise and understand that there are those in this House and elsewhere in the country who, as individuals or for business purposes, may wish to continue to receive statements, bills and other documents through the post. I also recognise that some people may never wish to go online, nor indeed even use a computer, let alone other modern gadgets such as iPads or smartphones. The noble Lord, Lord Lipsey, and the noble Baroness, Lady Hayter, both made the good point that some people cannot afford a computer. Again, I respect this. However, noble Lords cannot fail to notice that, whether we like it or not, the movement towards a fast-paced and rapidly changing digital age is inexorable; indeed, my noble friend Lady Oppenheim-Barnes alluded to this very fact. For example, some 60% of the UK population now have a smartphone, and we are responding to the huge demand for a comprehensive rollout of broadband.

The backdrop to this debate is therefore rather complex. The pace of change is fast. If we press the rewind button—if I may be allowed to use that term—e-mail only really became widespread during the late 1990s. Some noble Lords may recall the first cordless phones, as big as a brick and almost as heavy. Now we manage our lives using mobile phones, and even more, from having health gadgets on our wrists to writing e-mails using voice recognition. Doing all sorts of things on the move, be it checking on the weather or traffic, paying bills, even finding places and locating friends using satellite tracking, is becoming the norm. I hasten to add that I need to be brought up to date with all these gadgets myself.

The focus of the debate today is on how we help those facing difficulties or charges when wishing to retain the option of receiving traditional bills and statements through the post. I am the first to say that I have some sympathy with the traditional approach, but if I tried to hold back the tide of change I could on the other hand be accused of being a latter-day King Canute. The sons, daughters and grandchildren of many noble Lords here today do not feel the same need for paper. In exactly one month’s time, many will be sending Christmas e-cards to friends and relatives. Some people lack the space or inclination to store reams of bills. They want information at their digital fingertips, not buried somewhere in a pile on the coffee table. I recognise some of the statistics that have been adduced this evening about people being less efficient if they receive bills online.

The challenge to service providers is therefore to cater for the full spectrum of their customers, providing options and reassurance on billing and prices for the digital and non-digitally minded alike. The questions before us are, first, whether there should be an ongoing, default right to receive documentation through the post by request; secondly, if so, who should foot the cost; and, finally, how it might be underpinned by legislation. I reassure noble Lords that there are already several protections in place for the vulnerable, including the elderly. The Equality and Human Rights Act ensures that the rights of those physically unable to access material online are protected. More generally, the Consumer Rights (Payment Surcharges) Regulations 2012 prohibit excessive charges being applied to specific ways of paying, such as paying over the counter at the Post Office. Regulators such as Ofwat and Ofcom ensure that protections are in place, in their sectors, for the most vulnerable. As was mentioned by the noble Lord, Lord Lipsey, blind or visually impaired people can get their bills in an accessible format such as Braille. In the energy sector, for example, suppliers are not able to levy an additional charge for sending paper bills, but they may still offer a discount to those paying online. In so doing, I make it clear that they are not penalising the paper bill recipient but sharing genuine cost savings with the online customer.

Business is responding. For example, special tariffs for telephones, such as BT Basic, are available to those on low incomes, providing paper bills at no additional charge. In banking, thanks to the Parliamentary Commission on Banking Standards, access to transactional accounts is being broadened so that more people can use electronic payments.

I hope that this provides some reassurance but, as I said before, the digital age is moving rapidly upon us and much of it is driven by demand for efficiency and savings. According to the Digital Efficiency Report in 2011, the cost of an online transaction is 20 times lower than a phone one, and 30 times lower than a postal one. Companies cannot ignore such figures and the Government also need to consider savings.

However, there are wider drivers for change facing all of us that I might also mention. I mentioned earlier that it was a complex picture. Banks, councils and utilities, and the Government too, know that there is an increasing demand from their customers or citizens to go green and cut paper. People want to receive bills, receipts and statements online, reducing their impact on the use of natural resources. One can understand why. I might ask how many of your Lordships—I might ask myself this question—spend the weekend sorting through the post and seeking the right recycling bin to throw out those statements, receipts and circulars which you judge you will never read again. While doing so, you may well also wonder at the number of trees cut down to create all that paper. As a result, the specific question for us here is whether government should focus its efforts on controlling how business responds to customers—reflecting nominal and justifiable charges to certain bills—or on making markets more competitive to the benefit of all customers. Our stance remains to leave operational decisions to companies to act within the commercial spirit while putting in place the appropriate regime to ensure competition and protect the most vulnerable in our society.

It may be that in 20 years’ time, when I am approaching my eighties, this will be a largely paperless world. However, as the Government have committed, those not online will not be left behind. The Government’s approach to assisted digital exemplifies best practice in helping people access digital services and the benefits that going online can bring. Business should be looking to provide similar assistance. This House may recognise that, with advancing technology, the number of people feeling disfranchised by online billing is likely to diminish over time. That does not mean that we ignore the needs of the older generation. Options are there for those who wish to choose paper, but businesses should continue to meet the needs of their customers, both young and old.

In the time available I will address a number of questions that were raised.

[Baroness Hayter of Kentish Town]

Before the noble Viscount does so, let us be absolutely clear. Is he saying that the Government will do nothing about the issues that have been raised, or did I misunderstand him?

[Viscount Younger of Leckie]

I can reassure the noble Baroness that that is not the case. We are encouraging businesses to bring in processes that will help more the vulnerable—I have already spelt out what we are doing. The Government, of course, provide the framework, but we believe that it is very much for companies to decide to put themselves in a position to help people in this respect.