Mobile Phone Contracts

Carol Monaghan Excerpts

Tuesday 16th January 2018 Westminster Hall

[The Minister of State, Department for Digital, Culture, Media and Sport (Margot James)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing the debate to highlight this important issue and on her passionate speech, which I listened to with great interest.

I am delighted to have responsibility for championing the interests of digital consumers as part of my new role at the Department for Digital, Culture, Media and Sport as the Minister for digital and creative industries. In my previous role, I had responsibility for small business and consumers, which included retail energy markets and competition law, so I have some experience of the type of issues consumers in this market face, as well as of some of the potential solutions.

The hon. Lady mentioned the Citizens Advice research in her speech, and I pay tribute to Citizens Advice, with whom I worked a great deal in my former job. It does a marvellous job and has been pursuing this issue with the Government, Ofcom and the mobile phone operators over the last 12 months. I have reviewed its research with interest.

Ofcom estimates that about 1 million people continue to pay the full monthly charge after the end of their contract rather than switching to a cheaper deal and that those people could collectively be overpaying by £130 million per year. That is far too great a scale of consumer detriment for us to live with. It represents too many people paying more than they need to, by continuing to pay for the cost of a mobile handset when they should no longer be doing so—essentially after they have paid for it. Many of those people are more vulnerable consumers, including older people—the hon. Lady referred to the difference between the percentage of older people who were continuing to pay for their handset after it had been paid off—and those in lower income segments. Some people may just be very busy. The Government recognise that action is needed.

Ofcom estimates that the issue affects a minority of customers with a mobile phone contract, approximately 6%. In percentage terms, it is a small minority, but it amounts to about 1 million people, which is no small number. On the plus side, we have a highly competitive market in telecoms, which is good for consumers, and we should recognise that fact, as well as working tirelessly to address those areas that work less well.

[Carol Monaghan (Glasgow North West) (SNP)]

There is a highly competitive market, but for many of the vulnerable consumers we are talking about—many of whom are elderly or possibly without access to the internet—the landscape is extremely confusing. The onus should be on the phone companies to help those customers get the best deal.

[Margot James]

I recognise what the hon. Lady says and I quite agree. I found the same thing in respect of the energy market; I am well attuned to that fact. For the sake of completeness, I wanted to mention some of the positive things that are happening, which I accept may be less accessible to some older consumers.

The Digital Economy Act 2017 included several measures that are helping Ofcom to empower and protect consumers. Of particular relevance is that the legislation included help for Ofcom to set switching rules for communications services. As a result, Ofcom has recently announced the implementation of a new text-to-switch process for all mobile customers. Consumers will be able to send a free text to their current provider to request a switching code that they give to their new provider for a timely and seamless switch. The change will make switching much quicker and easier for consumers and will go some way towards addressing the issue that the hon. Member for Glasgow North West (Carol Monaghan) raised. The measure must come into effect no later than July next year.

We recognise that we may well need to go further. As the hon. Member for North Ayrshire and Arran said, in our manifesto we set out our commitment to make billing for telecoms customers fairer and easier to understand. In my opinion, that means it must be more transparent. That includes making it clearer when a customer has paid off the price of their handset and is in a position to switch to a cheaper deal, saving them money. She emphasised how important it is for the Government to work with Ofcom, mobile providers and other stakeholders, such as Citizens Advice, to resolve the issue in a way that helps people save money. I assure her that my Department has already been working with all of those parties, and I am committed to continuing that engagement.

I have not come to any firm conclusions about the best solution to this issue. I will listen to the views of all stakeholders—in particular, to those expressed by the hon. Lady in this debate—and we will work in partnership with Ofcom and the mobile providers to get a fairer system with lower prices. I am clear that any solution we develop with Ofcom and the mobile providers must stop people languishing on their mobile phone contracts after their contract period has ended. We want the savings that are their due to be returned to them. Importantly, any solution needs to address the needs of all consumers—particularly those who are older and most vulnerable.