Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014

Baroness Hayter of Kentish Town Excerpts

Monday 24th February 2014 Grand Committee

[Lord Harris of Haringey]

My Lords, when the Division intervened, I was simply making the point that trading standards departments around the country have been facing substantial reductions in their budgets over the past few years. It is estimated that, overall, trading standards funding from individual local authorities will, on average, have diminished by 40% by 2015, which is a substantial change. The only assurance that I can give my noble friend Lord Whitty is that the resources for the estate agency function will be ring-fenced.

The only other point that I wish to make is that the service that will be provided through Powys County Council will, however, be branded as a national trading standards function. It will quite clearly be a national function supporting estate agent regulation throughout England and Wales.

[Baroness Hayter of Kentish Town]

My Lords, I share the views of my noble friend Lord Whitty that this is actually a sad day. I am sorry that the Minister did not pay tribute to the extraordinary work that the NCC has done over its life. It has been seen as that third part of civil society. There have always been the employers and the trade unions, represented quite rightly by their bodies; a third body representing consumers has been really important for making markets work, being a big national player along with the TUC and the CBI. It is a great sadness to lose that, particularly—and I will come back to this—given the fragmentation that the Government have managed to put in its place. This was just about trying to get rid of a certain number of quangos; we know that that is what it was. There was a rush into it and very little understanding of what the NCC actually did because, as my noble friend Lord Whitty said, there was very little duplication. I should confess—or rather boast—that I was a member of the NCC council and there was very little duplication between what we were doing and what Citizens Advice was doing. Citizens Advice deals with people coming through the door; we were trying to think of problems five, 10 or sometimes 15 years ahead.

Sadly, we lost the argument by just 12 votes at the time that the Public Bodies Bill went through the House, and my guess is that, having dealt with the complexity of transferring those functions, BIS may have belatedly recognised the force of our arguments. There are problems with Citizens Advice taking over the work of the NCC. At the moment, it can answer only 45% of its telephone calls and we have heard from my noble friend about the cuts to the advice service, so there are problems there. However, we recognise that the decision has been taken and we therefore need, or want, whatever replaces the NCC to work as well as possible for the sake of consumers. That is the important criterion.

I have five questions ready to ask about the order, but before that, I have another question. Given the report on the pre-emption of Parliament by our own Constitution Committee—which noted, when the Public Bodies Act 2011 was merely a Bill, that a number of public bodies began to wind down their activities in anticipation of abolition—can the Minister confirm that no public money was spent on the abolition of the NCC and the transfer of functions prior to the relevant approval by Parliament?

On the order, there are five areas in which we seek either assurances or answers. One is on the transfer of Consumer Focus’s statutory information-gathering powers—which have already been mentioned—to Citizens Advice. There was an earlier debate here about whether those could be overused, and in fact our Secondary Legislation Scrutiny Committee returned to that issue. My concern is different: it is the potential underuse of those powers by Citizens Advice. Given the increasing demand on it for its own advice services from very hard-pressed consumers, my concern is that it might take its eye off its longer-term policy role, which has been played hitherto by Consumer Focus. It was partly with that in mind, when the ERR Bill went through, that my noble friend and I argued at that stage that someone—I think we suggested the CMA—should have a sort of reserve power to ensure that sufficient attention was paid to this element of Citizens Advice’s work, given that its own programme and budget were laid down by its individual charitable trustees. Those trustees are not accountable to BIS or any other arm of government. Our question, therefore, is: what happens if Citizens Advice falls down on that part of consumer protection? Who would know? It would certainly not be the consumers: there is no accountability for this work to consumers. The letter that Vincent Cable wrote to the noble Lord, Lord Goodlad, on 17 January, said:

“The Consumer Affairs Minister will hold…Citizens Advice…to account for effective delivery of these functions on behalf of consumers”.

I am not clear how that will happen. Will it be done simply by the terms of the grant? If so, how will the Minister hear consumers’ views and what action would she take if, for example, Citizens Advice failed to prioritise vulnerable consumers or the users of government-provided services? How would the Minister know and what would she do if she found any such problems?

--- Later in debate ---

[Viscount Younger of Leckie]

Absolutely. I was going to say that I will be more than happy to write to the noble Lord to confirm the precise figures. I reiterate that it is not our intent to cut the funding. The funding to the service to deliver advocacy on energy and postal matters will be maintained as currently allocated to Consumer Futures, at £8.7 million, with an additional £220,000 allocated to the general Consumer Council for Northern Ireland to deliver postal advocacy. This funding will be recouped via the levy from the energy and postal industries.

The noble Lord, Lord Whitty, also asked whether I would ensure that the lead local authority is properly resourced to undertake this work. This is to do with the estate agency functions. The baseline costs of policing the UK estate agency market will transfer, as he knows, from the OFT into the NTSB’s enforcement grant. This amount will be ring-fenced from the main portion of the grant to ensure that the full funding will be used for the purpose intended.

The noble Lord, Lord Harris, spent some time speaking about Powys and the transfer of the OFT estate agency function. In thanking him for his support, I want to clarify—perhaps for the noble Baroness, Lady Hayter—that we believe that the role of Powys is very important within the new national enforcement regime, and I re-emphasise the national element of that for the avoidance of doubt. The noble Lord and the noble Baroness asked why the Government were not harmonising letting agencies in addition to the changes that we are making to estate agents. The noble Baroness will be aware that letting agents are already subject to consumer protection legislation. The Government do not believe in excessive regulation. The amendment of the Estate Agents Act to include letting agents would lead to overregulation of the market, which would run a real risk of reducing supply in the rented sector, which in turn would drive up rents and reduce the choice for hard-working tenants.

[Baroness Hayter of Kentish Town]

I am sorry that I was not clear. I absolutely understand that—I may not go along with it but I completely understand it. I asked about a different issue. At the moment, a redress scheme for estate agents has been approved by the OFT. Approval for that redress scheme will now go to Powys. I understand that. There will then be redress schemes for letting agents—I think they will be the same schemes, but that is neither here nor there. In order for a letting agent to be approved by the redress scheme, they will not be able to go to Powys to get a tick; I understand that they will have to go through the DCLG. That is the same issue mentioned earlier by my noble friend about two departments not quite co-operating. My question is not about the letting agents themselves but the approval of a redress scheme for letting agents. It is extraordinary that it is not being done in the same way as for estate agents.

[Viscount Younger of Leckie]

I have listened carefully to the noble Baroness, and I believe that she is correct. She mentioned the DCLG, and I can say that the reforms will create a new requirement for letting agents to join an approved redress scheme. It will be implemented through the Enterprise and Regulatory Reform Act 2013, which she was very much a part of, with my good self. The order simply transfers existing enforcement arrangements from one body to another rather than creating a new redress scheme. I do not know whether that answers the noble Baroness’s question.

[Baroness Hayter of Kentish Town]

We will exchange letters.

[Viscount Younger of Leckie]

Indeed, a further exchange of letters would certainly clarify the matter.

The noble Baroness raised an important point about Citizens Advice being able to answer only about 45% of calls—to paraphrase her question. I am not clear where those figures come from because Citizens Advice is now reporting very high levels of satisfaction on the use of its national call line. Perhaps the noble Baroness can advise me on where she got those figures. They may, dare I say, be slightly outdated, but I would be very pleased to speak to her offline, as it were, about that.

The noble Baroness also raised the important issue of accountability relating to Powys County Council. She said that it is convoluted and unclear, but we believe that that is not true. Ultimately Powys County Council will be accountable to BIS, as I explained in my opening speech. As she knows, Powys will report to the National Trading Standards Board in its role as co-ordinator, and the NTSB is accountable to BIS. I am not entirely sure why she is concerned about that because we believe that there is actually quite a short direct reporting line to BIS. Again, I am extremely happy to speak to her outside this Room to clarify what I mean by that. At the same time, the noble Baroness raised the issue of Anglesey. I can confirm that Anglesey’s licensing committee will play no role in appeals against Powys’s warning and prohibition orders. These will be made first to the First-tier Tribunal.

The noble Baroness also asked how the Government will ensure that Citizens Advice will deliver on the work that it has been given and how its work will be monitored. We will hold annual performance reviews with the Citizens Advice service to ensure that the new arrangements are effective and that the successor bodies are delivering on behalf of consumers. We will also make a review of the full suite of statutory provisions within five years of the order coming into force.

The noble Baroness also raised the question of whether Section 24—in other words, the information-gathering powers—would be underused. I reassure her that Citizens Advice will have full access to these powers should it require them. She also asked when Powys and HMRC would receive the list of estate agents from the OFT. HMRC is already in an information-sharing agreement with the OFT as a supervisor under the Money Laundering Regulations 2007. The order provides an information-sharing gateway for Powys that will come into force as soon as the order is made.

The noble Baroness also asked how the consumer will be represented in Europe. The CMA will be responsible for acting as the UK’s single liaison officer in ensuring compliance with the consumer protection co-operation regulation. It will forward individual enforcement actions to the NTSB unless they relate to problems where it takes the lead. However, Citizens Advice will continue to work closely with its European counterparts, as Consumer Focus does now.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. I hope that I have answered all the questions that were raised. If I have not—there were quite a few questions—I will be more than delighted to expand the letters that I have already committed to writing to the noble Baroness, Lady Hayter, and any other Peer. The Government conclude that the order meets the requirements of the Act, and I commend it to the Committee.