Equitable Life

Jenny Willott Excerpts

Thursday 26th February 2015 Commons Chamber

[Bob Blackman]

I thank my hon. Friend for his suggestion. The Chancellor will be listening to such rumours, and will no doubt want to hoover up that money to dispense for appropriate good causes, of which this is clearly one.

[Jenny Willott (Cardiff Central) (LD)]

Does the hon. Gentleman agree that people have been pushed into an extremely difficult position, and that some of them are extremely close to poverty as a result of the amount they have lost? In many cases, they are not at an age at which there is anything they can do to replace the funds they have lost. They face a very uncertain future, as they have for many years, but there is absolutely nothing they can do to make a difference.

[Bob Blackman]

I do not normally agree with the right hon. Member for Holborn and St Pancras (Frank Dobson), but he has said:

“They were not like the people who put their savings into outfits offering dubious and extraordinary returns, such as those who decided to chance their savings with the Icelandic banks. The Equitable policyholders are in their current position through absolutely no fault of their own.”—[Official Report, 14 September 2010; Vol. 515, c. 781.]

He went on to say that those at fault were Equitable Life, the Government and the regulator.

Oral Answers to Questions

Jenny Willott Excerpts

Tuesday 9th December 2014 Commons Chamber

[Mr Speaker]

Order. The hon. Member for Cardiff Central (Jenny Willott) would have been called earlier, but she was not here. She is now, and she can have a go if she prefers asking a question to talking to a Government Whip, albeit a distinguished Government Whip.

[Jenny Willott (Cardiff Central) (LD)]

Thank you, Mr Speaker, and my apologies. I wanted to ask about tax avoidance. At a time of falling incomes when many people are finding it difficult to make ends meet, does the Minister agree that those on high incomes should avoid using expensive lawyers—if they can afford to use them—to assist with tax avoidance? Does he share my hope that tax avoidance, like drink-driving, will become a moral taboo?

[Danny Alexander]

I agree with my hon. Friend. This Government have taken consistent action to tackle tax avoidance and to reduce tax evasion, raising billions of pounds to help avoid some of the pressures to which she refers. Dodging taxes is as morally reprehensible as claiming the wrong benefits or doing what she described. Those are all things that we, as a society, want to see stopped, and the Government are taking action to see that they are.

Eid and Diwali (Public Holidays)

Jenny Willott Excerpts

Monday 21st July 2014 Westminster Hall

[Jenny Willott (Cardiff Central) (LD)]

The subject of this debate is an important issue for us to discuss. I thank my hon. Friend the Member for Harrow East (Bob Blackman) for ensuring that we have the debate before the petition expires. The issue is important to a very large number of people throughout the country.

I cannot claim a constituency as diverse as that of my hon. Friend’s, but Cardiff Central is mixed. I have two gurdwaras, two synagogues, five mosques and goodness knows how many churches, of all denominations and both English language and Welsh speaking. There is a ring of temples around the edge of my constituency, although none are in the constituency, and I have a Quaker meeting house and a Buddhist centre. A broad range of different religions is therefore represented. That diversity and vibrancy are among the things that I love about my constituency and my city. I am sure that my hon. Friend feels the same about his area. In this country, we are lucky to have such a hugely diverse, mixed and vibrant community, which we all benefit and learn from. We can all see the benefits to the country of that diversity.

Faith groups play a hugely important role in our communities throughout the country. Wherever they are, people from different faiths are working hard in churches, mosques, temples, gurdwaras, synagogues and so on, as well as in charities and community groups, to address problems in their local communities. The faith groups of the country play a hugely important role in making life better for other people and in making our communities a better place to live. The Government want to support that, to develop friendly relationships between people of different faiths and to help those groups that are active, co-operating and working together for the benefit of all in our society.

We are talking about people from different backgrounds coming together, not only to sit down and share tea, samosas, pakoras or whatever, but to work together for the common good and to tackle shared social problems, regardless of faith background. That might be to deal with something that my hon. Friend mentioned, tackling extremism, but it might be about planning issues or protecting green spaces in our communities. Our faith communities should be working together on all such issues.

The Government have invested more than £8 million in the Near Neighbours programme, which is intended to build productive local relationships between people of different faiths in areas of high deprivation. Since the start of the programme in 2011, we have funded a number of Eid and Diwali-related projects, including many successful events, such as at the Quba mosque in Leicester or the Shree Krishna community centre in Bradford. Those events have been targeted at local residents and at local people of all faiths and of none.

The Shree Krishna centre in Bradford, for example, worked with a nearby Sikh temple, St Clement’s church and the Ahmadiyya mosque, as well as local schools, to put together a Diwali celebration for as many local people as possible. More than 2,000 people attended the event—hugely successful—where food, entertainment and a fireworks display were laid on for them to enjoy. Such events help to build relationships between communities and faith groups and make people in a local area feel more part of the community, more supportive of each other and stronger together.

The Quba mosque in Leicester supports the local Somali community and acts as a place of worship and a community centre. It held an Eid celebration for the local community, which was opened up to local residents of all faiths, with the intention of building relationships across the community. The mosque worked with Leicester city council and the St Philip’s centre to bring in a wider group of people to celebrate Eid.

The Government also funded the Oldham Interfaith Forum, which has hosted events to bring together different faith groups. It hosted a seasonal Festival of Lights to celebrate Hanukkah, Diwali, Eid and Christmas and to show the links between the different religions, bringing everyone together to celebrate each others’ religious festivals. Representatives of faith groups from the town had the opportunity to explain their festivals to other groups and to put on an artistic show involving music or dance. The Government funding ensured that many members of the local community were able to come together to share the event.

Together in Service is another Government programme to build on those relationships. It was launched last year to strengthen social action around the country. We are investing £300,000 in the programme over two years and 37 projects are already running. For example, the Dagenham Bangladeshi Women and Children’s Association runs a project to improve quality of life through participation in local community events, again bringing people together to have a better understanding of the different faiths in a community.

The Government are also funding a project called Remembering the Brave, which is particularly interesting. It works across faith groups, whether Christians, Hindus, Muslims, Sikhs or others, to remember those who died for our country. When I meet members of my local community and discuss remembering the first and second world wars, the role of different faith communities and their contribution is frequently raised with me, because it is often overlooked and not remembered in quite the way that it should be. Such projects can therefore make a big contribution to bringing people together and to making them feel that their contribution to the past as well as the present of the country is properly recognised.

We continue to fund the important work of the Inter Faith Network for the UK in linking and encouraging inter-faith dialogue throughout the country. As part of that, I am pleased to say that more than 409 events are known to have taken place across England, Wales and Northern Ireland in 2013, which is an increase of nearly a third on the previous year. We are putting our money where our mouth is, and communities are coming together, which I am sure we all think is a good thing.

As we know, members of our Muslim communities are observing the month of Ramadan, so it is particularly appropriate to mention the Big Iftar, which I am not sure that people have heard about. In the past, many non-Muslims felt that they knew little about Ramadan and its meaning. In recent years, many have felt that they would like to learn more about it and to understand it more.

I was on holiday in Morocco a few years ago, when Ramadan began, and the owners of the apartment block in which we were staying invited us to break the fast with them and their family and to share the evening meal. It was a quite extraordinary experience. Not only was the food out of this world, but it showed what an important part of the celebration the coming together is. It is not only the food, but the fact that everyone is together and everyone shares the experience. I cherish the memory.

The Big Iftar initiative, which is supported by the Government, is designed to spread awareness and understanding of Ramadan, its implications and what it means throughout our communities. I am delighted that this year hundreds of multi-faith iftars have taken place. From Birmingham to Bradford, Leeds to London and Maidenhead to Manchester, a range of different events have taken place. Iftars have taken place in mosques, churches, synagogues, town squares and parks, and with the homeless. We have even seen World cup iftars—a real innovation.

My hon. Friend mentioned hate crime and the fact that ChildLine has reported a significant increase in the number of students who have said that they have suffered racial and Islamophobic bullying. An increase of 60% is clearly extremely worrying and something that we take very seriously. The Government have funded Tell MAMA—Monitoring Anti-Muslim Attacks—which is the first service to report such incidents specifically, as well as to offer support to victims. We also set up the first ever cross-Government working group on anti-Muslim hatred to tackle that dreadful crime. We all recognise it as a worrying trend, which needs to be tackled as soon as possible.

I have set all that out to show that the Government support all that work because we understand that strengthening relationships with our neighbours and within communities is critical to teaching future generations to respect each other and to building links between members of a community. The more people understand each other the better it is for all of us. It helps us to accept differences between people and to break down some of the barriers and misunderstandings there may otherwise be. It also makes a real difference to integration and the way that people feel about the communities in which they live.

As part of that, we welcome the celebration of Diwali, Eid and various other religious festivals, just as we have always enjoyed celebrating Easter and Christmas together as a country. All faiths have a home in this country and it is important that their members feel that their faiths are valued and recognised. The religious observances and celebrations of Eid and Diwali are clearly important to followers of the Islamic and Hindu faiths. As I have already said, wider communities are now getting involved in the celebrations, showing the many common values that we all share regardless of our own religious beliefs.

The Government regularly receive requests for additional bank and public holidays to celebrate a variety of occasions, both religious and non-religious. The hon. Member for Chesterfield (Toby Perkins) spoke about requests to recognise St George’s day. I am the MP for a Welsh constituency, and there are always calls to recognise St David’s day as a bank holiday in Wales. I think there have even been requests for a Margaret Thatcher day as a recognised bank holiday, so a range of different suggestions has been put forward over the years. However, the current pattern of bank holidays is well established and accepted. The Banking and Financial Dealings Act 1971 provides the statutory basis for UK bank holidays and bank holidays designated since 1971 are appointed each year by royal proclamation.

Provisions in the legislation enable the dates of bank holidays to be changed or other holidays to be declared, as we saw with the diamond jubilee, but that has to be done by royal proclamation. Such holidays are for celebrating special occasions or for one-off events such as the millennium. Proposals for the declaration of special bank holidays are considered by a ministerial committee. Any final decision requires the approval of Her Majesty the Queen. It is the usual process to consult widely when considering new bank holidays or amending the date of an existing one, and an impact assessment is carried out as part of that.

As hon. Members will know, there are currently eight permanent bank and public holidays in England and Wales, nine in Scotland and 10 in Northern Ireland, including St Patrick’s day and Battle of the Boyne day. Those figures include Christmas day and Good Friday, which in England, Wales and Northern Ireland are common-law holidays—they are not specified by law as bank holidays but have become customary holidays because of common observance. The last change to the pattern of bank holidays was for the Queen’s diamond jubilee in 2012, which followed precedents for celebrating jubilees with an additional bank holiday.

Although bank holidays have become widely observed across the board, legislation does not give employees any right to time off or extra pay on bank holidays. Workers may use some of their annual leave entitlement for them. In the UK, that entitlement is 28 days, which is intended to reflect the combination of the eight bank holidays with EU minimum annual leave of 20 days. Those eight days of leave do not need not be taken on the bank holidays themselves, giving flexibility to workers.

My hon. Friend the Member for Harrow East talked about international comparisons. The hon. Member for Chesterfield took that one stage further and talked about total leave taken in different countries. The UK’s statutory leave entitlement is very generous when compared with countries outside the EU. The US has 10 public holidays, but there is no statutory entitlement to either annual leave or public holidays. Japan has 15 public holidays but employees are only eligible for 10 working days of annual leave, with one additional day’s leave for each year of tenure up to a total of 20 working days. There is also no guarantee of pay for public holidays there.

Our statutory entitlement is in line with that of other European countries. As I have said, providing an annual leave entitlement that does not distinguish between public holidays and annual leave gives employees greater freedom over how they use their leave entitlement, as they can choose when they wish to take it. Public holidays in Germany are paid, but the additional entitlement is 20 days of annual leave only for those who are over 18 years old and are working five days per week. Many other countries such as Denmark and Sweden offer only the European minimum of 20 days per year, with no additional public holiday entitlement. The UK entitlement is generous.

As the hon. Member for Chesterfield said, the Government’s policy is to encourage employers to respond flexibly and sympathetically to any requests for leave, including requests for religious holidays, bearing in mind business needs. The Equality Act 2010 also makes it unlawful for employers to treat staff from a particular religious group less favourably than those from other religions when considering requests for leave or requests to refrain from work on particular days. It is absolutely right that people should not suffer discrimination at work due to their religious beliefs. Under the Equality Act, employees can challenge their employers’ rules and practices if they unreasonably put people who have a particular religion or belief at a particular disadvantage and cannot be justified. We welcome any reasonable steps that employers can take themselves to accommodate the wishes of their religious employees. British employers are generally very good at being reasonable in accommodating people’s religious beliefs and there is often quite a lot of flexibility.

Although I appreciate a new public holiday may benefit some communities and sectors, both my hon. Friend the Member for Harrow East and the hon. Member for Chesterfield raised the cost to the economy, which remains considerable. For example, the most recent assessment of the economic cost of the additional holiday for the diamond jubilee shows that bank holidays across the UK as a whole cost employers around £1.2 billion, despite there being no statutory right to time off or extra pay on the additional holiday. That estimated cost of £1.2 billion is calculated by considering different scenarios for the extent to which businesses will be shut on the bank holiday and the associated loss in output.

The costs are partially offset by increased revenues for businesses in the leisure and tourism sectors and a boost in retail spending, but it is not expected that additional bank holidays for Eid and Diwali will result in increased tourism. Taking that into account, the cost figure would be higher for each bank holiday. In addition to the business cost, there is the unquantified operational impact from staff absences in health, local authority and transport services.

It is important that as a country we celebrate all major religious festivals together. As my hon. Friend the Member for Harrow East said, the Government already take the lead in doing so—by hosting annual Eid and Diwali celebrations in Downing street, for example, which are extremely popular and always well attended. Ministers also take opportunities to go out to local communities to share in the celebrations marking major religious festivals. I am sure that all of us, as Members of Parliament, do the same in our own local communities.

The Government do not believe there should be a public holiday to mark these two particular occasions. I know that will disappoint some people, but I am very grateful to my hon. Friend for raising the issue today. It is important that we should be able to discuss it and put on the record the value of the huge diversity and wide range of different faith groups represented in our communities, and the massive contribution they all make to our local communities and to society as a whole.

I thank my hon. Friend for raising the matter today and for his continuing dedication to and support for the work of those communities. I hope that people who have been listening to us are at least happy and satisfied that we have debated the matter at length and that all of us have put on the record our belief that the contribution made by faith communities in the UK is critical to the way our society functions.

Zero-hours Contracts

Jenny Willott Excerpts

Wednesday 25th June 2014 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

Last summer, the coalition Government conducted an informal information-gathering exercise on zero-hours contracts in response to concerns about abuse of these contracts by a small number of employers.

Following that review, on 19 December 2013 the Government launched a public consultation on zero-hours contracts. The consultation closed on 19 March and received a record number of responses—over 36,000. Responses came from businesses of all sizes, charities and social enterprises, unions, union representatives and individuals.

We sought views on a number of issues including banning exclusivity clauses in zero-hours contracts, whether a code of practice should be introduced covering the fair use of exclusivity clauses in zero-hours contracts and these contracts generally, and how useful respondents found existing information, advice and guidance on these contracts. The consultation found:

The overwhelming majority of respondents, 83% of responses, supported a ban on exclusivity clauses in zero-hours contracts.

Many respondents felt that a code of practice focusing solely on the fair use of exclusivity clauses would not go far enough to tackle potential abuses. They wanted Government to develop a code of practice covering all aspects of the fair use of zero-hours contracts.

In relation to the quality of existing information, advice and guidance on these contracts, 42% of respondents said the current guidance was “not helpful”. Only 14% said they found existing guidance “very helpful”. This clearly demonstrates that more should be done in this area.

As a result, today, through the Small Business, Enterprise and Employment Bill, we will be introducing legislation which stops abuses of vulnerable workers who work under zero-hours contracts:

We will be banning the use of exclusivity clauses in contracts which do not guarantee any hours. This will ensure that individuals will be free to look for work elsewhere to help boost their income if they so wish.

We will also be introducing provisions via the Bill which provide a power which will allow avoidance of this ban to be dealt with. We will be consulting further on the best mechanism to tackle avoidance of the ban and the issue of redress should this law be broken.

Government will now work with business representatives and unions to develop a code of practice on the fair use of zero-hours contracts; and

Government will also work with interested parties to review existing guidance and improve information available to individuals and employers on using these contracts.

These measures will allow individuals on zero-hours contracts to seek additional work, if they choose to, and ensure that no employer can tie down an individual when they make no reciprocal commitment to provide that individual with any guaranteed work.

National Minimum Wage

Jenny Willott Excerpts

Wednesday 18th June 2014 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I am pleased to announce that the Government have today written to the Low Pay Commission setting out the remit for its 2015 report.

The Government support the national minimum wage (NMW) because of the protection it provides to low-paid workers and the incentives to work it provides. Our aim is to have NMW rates that help as many low-paid workers as possible, while making sure that we do not damage their employment prospects.

The Low Pay Commission (LPC) is asked to:

Monitor, evaluate and review the levels of each of the different NMW rates and make recommendations on the levels it believes should apply from October 2015.

Consider whether any changes can be made to the apprentice rate:

to make the structure simpler and improve compliance; and

whether the structure and level of the apprentice rate should continue to be applied to all levels of apprenticeship, including higher levels.

Review the conditions that need to be in place to allow the value of the minimum wage to increase in real terms. This would include an update on their advice on the future path of the NMW.

In making recommendations in the areas set out above, the Low Pay Commission is asked to take account of the state of the economy, and employment and unemployment levels.

Timing

The LPC is asked to report to the Prime Minister, Deputy Prime Minister, and the Secretary of State for Business, Innovation and Skills as early as possible in February 2015.

Copies of the remit have been placed in the Libraries of both Houses.

Insolvency Regime

Jenny Willott Excerpts

Monday 16th June 2014 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

Everyone who is affected by insolvency should be able to have confidence that insolvency procedures are used fairly and that insolvency practitioners deliver the best possible outcome in what are often difficult and challenging circumstances. I am today announcing measures that will deal with abuse and misconduct and improve confidence in the insolvency regime and profession.

These measures include the publication of the report the Secretary of State for Business, Innovation and Skills commissioned from Teresa Graham into pre-pack administration (“the Graham review”), together with associated research, as well as the Government’s response to the consultation, “Strengthening the regulatory regime and fee structure for insolvency practitioners”.

Pre-pack sales are when arrangements are made to sell the viable parts of a failing business before it is announced that it has become insolvent, to make sure the best price is obtained.

I am grateful for Ms Graham’s diligent work on the review and her well thought-out report and recommendations. The review finds that pre-pack administrations have an important place in the UK insolvency landscape, but that reforms should be brought forward to increase transparency, boost the survival rates of the purchaser business and reform practices that are correlated with lower distributions to creditors. The report proposes a package of reforms that I think will improve business confidence in the pre-pack process and improve returns to creditors.

I welcome the report and I agree with all of the Graham review’s recommendations. It will now be the responsibility of industry and business to adopt the various voluntary measures proposed. The report also makes recommendations for how regulatory guidance might be strengthened and the Joint Insolvency Committee, which has responsibility for current guidance, will be looking at these recommendations.

The report recommends, in addition, that the Government should take a backstop power to legislate if necessary. I very much hope that the voluntary package, together with strengthened guidance, will work effectively to address the concerns raised. However, I agree that it would be sensible to provide the recommended power and the Government plans to do so. Such a power would only be used if the voluntary reforms are not successfully implemented, as I hope they will be, by the market.

I will be placing copies of the report and research in the Libraries of both Houses. Alternatively this can be found at: www.gov.uk/government/publications/ graham-review-into-pre-pack-administration.

I am also pleased to announce that following consultation, the Government will bring forward measures to strengthen the regulatory regime for insolvency practitioners by introducing regulatory objectives for the industry and appropriate powers for the Insolvency Service, as oversight regulator, to deal with poor performance or misconduct.

That consultation also covered proposals relating to insolvency practitioner fees. A number of responses on the proposals to restrict the use of time and rate charging have been received, which we will be discussing further with interested parties before finalising the way forward. Our aim remains to ensure that insolvency practitioners receive fair remuneration for work properly carried out but also that creditors are getting the greatest return possible in the circumstances.

A copy of the responses to the consultation can be found at:

www.qov.uk/qovernment/consultations/insolvencv-practitioner-requlation-and-fee-structure.

Consumer Rights Bill

Jenny Willott Excerpts

Monday 16th June 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Government new clause 25—Letting agents to which the duty applies.

Government new clause 26—Fees to which the duty applies.

Government new clause 27—Letting agency work and property management work.

Government new clause 28—Enforcement of the duty.

Government new clause 29—Supplementary provisions.

New clause 30—Letting Agents: Report—

‘Within three months of Royal Assent of this Act, the Secretary of State shall prepare and publish a report, and lay a copy of the report before Parliament, on—

(a) the consumer detriment caused to tenants by letting agent fees and the impact this has on the ability of tenants to secure and maintain tenancies, and

(b) the steps that the government intends to take to prohibit fees that cause detriment to tenants.’

Government amendment 23.

[Jenny Willott]

We know that consumers in the private rented sector are especially concerned about the fees charged by letting agents, particularly when they are unexpected or unreasonably high. There are calls for a ban on letting agents charging fees to tenants, but I am concerned, as we discussed on the previous debate on Report, that an outright ban would simply increase the pressure on rents. Making agents publish their fees is a better approach, giving consumers the information they want and supporting good letting agents. Such transparency would deter double charging and enable tenants and landlords to shop around, which would encourage agents to offer competitive fees.

The vast majority of letting agents provide a good service to tenants and landlords, but we are determined to tackle the minority of rogue agents who offer a poor service. Although good agents already make information about their fees and charges readily available, the new clause will introduce, for the first time, a financial penalty when an agent fails to display their fees. We are introducing legislation that will require all letting agents and property managers to belong to an approved redress scheme. That will give tenants an effective way to address complaints about fees, as well as, more generally, when the tenant is not happy with the agent’s performance.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure to see the debate on the Consumer Rights Bill come back to the House because many Members on both sides of the House are concerned about the impact of what the Minister calls unreasonably high fees. In relation to the Government’s proposal and our entirely reasonable new clause, the challenge for us all is to understand quite what damage such fees do to the private rented sector and how we can address those fees to give us a fair market in private rented accommodation.

I welcome the fact that the Government have now understood the case that the Opposition have been making, which is that we cannot ignore—try though the Government have in previous debates—the 9 million people in the private rented sector in this country. In particular, we must understand the impact of agency fees on people’s ability to keep a roof over their head, so it is worth thinking what kind of fees we are talking about. The Minister did not go into much detail, but it is worth reminding Members in the Chamber about the fees.

On average, tenants are forced to pay letting agents about £355 every single time they move. Indeed, some mystery shopping in my constituency has found average fees of £450, and Shelter has identified the eye-watering figure of £700 in total agency fees. Shelter has certainly found that one in seven of those using an agency is charged more than £500 a time, meaning that people have to find £500 every single time they move. That is a considerable sum, before we even consider the deposit and the rent. Such fees are putting huge pressure on people in the private rented sector, particularly in relation to their ability to make ends meet. Shelter’s research shows that 27% of those who have used a letting agency in the past three years have had to borrow or use a loan to pay the fees, and that 17% have had to cut down their spending on basic essentials, such as food or heating, to be able to cover them.

For the first day on Report, we tabled an amendment to recognise that there is a fundamental conflict of interest for an agent to take money from both the tenant and the landlord for the same transaction, and therefore to ban the laying of fees on tenants. In doing so, we were learning from the experience in Scotland. The Minister said, as she has again today, that banning fees will not make it cheaper for tenants, who will just end up paying higher rents through up-front fees.

In responding to our new clause 30, I hope that the Minister will use this opportunity to tell us what she takes from the research done in Scotland, where such a provision was made in 2012, because the research shows that the reverse is true—that there is no evidence that banning agency fees leads to an increase in rents. Indeed, fewer than one in five letting agencies interviewed in Shelter’s research said that it had increased fees to landlords. In fact, taking away the conflict of interest has had no impact on the market, but has done everything to help on the cost of housing.

I note the comments by the Deputy Prime Minister, who has admitted that there is a problem with fees and has said that there is an issue about the length of tenancies. The Opposition have been making those arguments for some time. In relation to the Government new clauses, what is it about our arguments and the evidence—that taking away fees does not increase rents, but makes renting a home more affordable for people—that explains why the Government have not as yet fully come over to our side of the argument.

The Government new clauses include some admirable claims about transparency. We certainly support the idea that it is important for tenants to be aware of the fees that they might be charged. However, I have several questions about how the new clauses are drafted, because it is not clear how they will work in practice. I am sure that the Minister would argue that all her proposed new clauses must work in practice, not just in principle.

One new clause mentions that the description of a fee must be understandable, but will the Minister clarify quite what that means? Will she require agents to break fees down and, for example, to say whether they will charge for a credit check and for an inventory fee, as often happens? In my constituency, I have seen tenants charged a pet fee, so will there be a description of all the fees that might possibly be applied?

What does the Minister mean by “likely to be seen”? We have seen examples of agencies putting a list of their fees in the toilets of their offices for tenants to read. Under the Bill, would that be considered a place where such a list is likely to be seen? What redress would a tenant have if they had not had cause to use the facilities of a letting agency and had therefore not seen the information?

--- Later in debate ---

[Stella Creasy]

My hon. Friend makes an important point about the kind of repeat fees we are seeing, which any legislation must address. More importantly—this relates to the proposals that we have made—I would wager that the landlord was also charged in that transaction for the same amount of photocopying. Fees are clearly being charged when a contract is repeated and that needs to be addressed.

New clause 24 talks about how a fee can be calculated if the amount is not yet known. Will the Minister set out what protection will be available to consumers if they miscalculate the amount based on the information that is provided? How clear does the information of the letting agency have to be?

All the issues that I have raised relate to enforcement. New clause 28 provides the power to impose a £5,000 penalty. It would be very interesting to hear what kind of enforcement process the Minister envisages. We talked in Committee about the cuts to trading standards—the Cinderella service that does not even have enough buttons at the moment to address the many issues the Government expect it to address under the consumer rights legislation.

The Minister talked in passing about the letting agent redress scheme. I must pay tribute to my noble Friend Baroness Hayter, who argued passionately for the redress scheme because of her experience of these issues. It is not clear to the Opposition quite what will happen. Will the Minister therefore set out what she thinks will happen if an agent does not display their fees clearly and what kind of enforcement action will be taken? She talked about issuing civil penalties. Will those penalties go to the tenant who has had to pay £1,300 for the photocopying to be repeated, but who was not told about that when they signed up to the letting agency?

All those questions speak to the fundamental challenge that we are dealing with, which is that information, although welcome, is not enough to deal with the fundamental problem of the impact that excessively high agency fees have on a person’s ability to rent a property. As we said in the previous debate on Report, it is a bit like telling someone who is tied to the train tracks what the timetable is for the trains. The fundamental issue that we have to deal with is the consequence of agents being able to charge tenants such fees.

That is why we tabled new clause 30. I hope that the Minister will recognise that it is an entirely reasonable response to the Government new clauses. New clause 30 would do two things. First, it would require the Government to produce a report on

“the consumer detriment caused to tenants by letting agent fees and the impact this has on the ability of tenants to secure and maintain tenancies”.

I am sure that everybody in the House would welcome such a report, because it would at least give some depth to the conversations that we have all been having about this issue. Secondly, it would commit the Government to taking action to

“prohibit fees that cause detriment to tenants.”

Surely, if fees are pushing people out of their homes and distorting the market in private rented accommodation, it is in the interests of all consumers and, indeed, landlords that we act.

I hope that the Minister will accept new clause 30 and commit the Government to truly tackling the issues in the private rented sector, including the impact of agency fees. I am sorry that the hon. Member for Brigg and Goole (Andrew Percy) is not here because he, too, has argued that banning agency fees would somehow lead to higher rents. I look forward to the Minister responding to all those tenants in Scotland who have not found the banning of fees to be a negative experience. What does she think we can learn from that experience?

If the Minister does not yet accept the case for banning fees outright, does she accept that there are fees that can be detrimental and that it is appropriate for the Government to intervene? Alternatively, is she simply saying that if a letting agency wants to charge somebody £700 a time to renew their tenancy, it is fine, as long as they have told them about it? I am sure that is not her intention and that she recognises that people do not shop around for a letting agency: they shop around for a property to try to keep a roof above their family’s heads. Because such costs cause detriment to consumers, they are unacceptable. If the Minister does not accept that they cause detriment, I hope that she will at least accept our amendment that would provide that the Government should carry out research on this issue and commit to action if detriment is proved. Nine million people are waiting on the Minister’s every move to see whether they can keep a roof above their heads, not just in 2014 but in 2015 and beyond. Should we win the next election, we will take action if the Government will not do so now.

[Jenny Willott]

The irony of the hon. Lady’s last sentence is astounding, given that the Government are legislating to tackle this issue, but the previous Labour Government did not. The issue has not suddenly arisen in the last three years, and the Government have committed to tackling the minority of rogue landlords, something that her party did not do.

We are taking action to ensure that tenants have proper redress and a fair deal. We recognise that there are real issues with a minority of rogue landlords who do not treat tenants fairly, and that is why we are taking action. Today, we are ensuring transparency and openness on fees so that landlords and tenants can shop around. The hon. Lady mentioned the experience in Scotland and the recent Shelter report on the impact of banning fees. However, concerns have been raised that the Shelter report ignores the widespread non-compliance with the ban in Scotland. I have seen an estimate that some 25% of firms are still charging admin fees for tenants who move in, and a higher proportion are still charging other fees during the tenancy.

As the hon. Lady said, those agents that are complying have got around the fact that they cannot charge fees to tenants by, for example, raising landlords’ fees, but that has had an impact on rents in certain areas. Landlords are not absorbing the increase in fees, but passing it on to tenants through the rent. For example, in Edinburgh, rents went up by more than 5% and in Aberdeen by more than 6%—significantly higher increases than in England and Wales. The evidence is that the introduction of the ban north of the border has had a significant negative impact on tenants.

[Stella Creasy]

Can the Minister clarify that she disputes what Shelter has said—that any increase in rent is not related to the banning of agency fees—or that she has her own research? She is telling a very different story from the evidence of the research conducted by Shelter in Scotland, and the House may be confused by what she is saying as a result.

[Jenny Willott]

I have made it clear that we have concerns about the Shelter report because, for example, it ignores the widespread non-compliance that I mentioned. The evidence on rents is that they have risen faster in Scotland than they have in England and Wales.

The hon. Lady raised some questions about how fees would need to be broken down and what evidence would need to be provided. The regulations will make that clear. For example, a general administration fee would need to be broken down to show exactly what it covered. That information will therefore be available to tenants. The hon. Lady also asked whether repeat fees would be covered, and I can confirm that the fees associated with property management would also be covered, so they would need to be provided and published.

The hon. Lady asked how the provisions would operate. The Bill provides a power, and we will consult on and publish secondary legislation to ensure that the provision is as tight as it can be. We will ensure that information is available to tenants and landlords so that they can make a judgment on the most appropriate agent for their business. The legislation will be enforced by local authorities as they are involved in the licensing of landlords and also have the local knowledge about the agencies in their area. They are in the best place to enforce it and to ensure it is operating in the best interests of tenants.

Finally, we have said that we will review it after a year of operation to see how it is working and to ensure that it has made a difference to tenants. We do not want rents to go up, as that would cause widespread problems for, as the hon. Lady says, the large number of people who rent in the private sector. We want to protect those tenants. We do not want their rents to go up; we want them instead to get a fair deal from agencies and to be able to see what the charges are. We want openness and proper redress in place to ensure they receive a fair deal.

Question put and agreed to.

New clause 24 accordingly read a Second time, and added to the Bill.

New Clause 25

Letting agents to which the duty applies

‘(1) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) “letting agent” means a person who engages in letting agency work (whether or not that person engages in other work).

(2) A person is not a letting agent for the purposes of sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) if the person engages in letting agency work in the course of that person’s employment under a contract of employment.

(3) A person is not a letting agent for the purposes of sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) if—

(a) the person is of a description specified in regulations made by the Secretary of State;

(b) the person engages in work of a description specified in regulations made by the Secretary of State.”—(Jenny Willott.)

This new Clause provides that the duty applies to a person who engages in letting agency work. Employees are exempt from the duty. The Secretary of State may make regulations exempting other persons or types of work.

New Clause 26

Fees to which the duty applies

‘(1) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) “relevant fees”, in relation to a letting agent, means the fees, charges or penalties (however expressed) payable to the agent by a landlord or tenant—

(a) in respect of letting agency work carried on by the agent,

(b) in respect of property management work carried on by the agent, or

(c) otherwise in connection with—

(i) an assured tenancy of a dwelling-house in England, or

(ii) a dwelling-house in England that is, has been or is proposed to be let under an assured tenancy.

(2) Subsection (1) does not apply to—

(a) the rent payable to a landlord under a tenancy,

(b) any fees, charges or penalties which the letting agent receives from a landlord under a tenancy on behalf of another person,

(c) a tenancy deposit within the meaning of section 212(8) of the Housing Act 2004, or

(d) any fees, charges or penalties of a description specified in regulations made by the Secretary of State.” —(Jenny Willott.)

This new Clause provides that the duty applies to fees payable in respect of letting agency work, property management work and other work done in connection with assured tenancies. The clause provides that certain payments are not fees for the purposes of the duty. The Secretary of State may make regulations to exempt other payments.

New Clause 27

Letting agency work and property management work

‘(1) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) “letting agency work” means things done by a person in the course of a business in response to instructions received from—

(a) a person (“a prospective landlord”) seeking to find another person wishing to rent a dwelling-house in England under an assured tenancy and, having found such a person, to grant such a tenancy, or

(b) a person (“a prospective tenant”) seeking to find a dwelling-house in England to rent under an assured tenancy and, having found such a dwelling-house, to obtain such a tenancy of it.

(2) But “letting agency work” does not include any of the following things when done by a person who does nothing else within subsection (1)—

(a) publishing advertisements or disseminating information;

(b) providing a means by which a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or a prospective landlord;

(c) providing a means by which a prospective landlord and a prospective tenant can communicate directly with each other.

(3) “Letting agency work” also does not include things done by a local authority.

(4) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) “property management work”, in relation to a letting agent, means things done by the agent in the course of a business in response to instructions received from another person where—

(a) that person wishes the agent to arrange services, repairs, maintenance, improvements or insurance in respect of, or to deal with any other aspect of the management of, premises in England on the person’s behalf, and

(b) the premises consist of a dwelling-house let under an assured tenancy.”—(Jenny Willott.)

This new Clause defines letting agency work and property management work. It provides that letting agency work does not include publishing advertisements, enabling landlords and tenants to communicate directly with one another or things done by a local authority.

New Clause 28

Enforcement of the duty

‘(1) The Secretary of State may by regulations—

(a) impose functions on a local authority in connection with the enforcement of the duty in section (Duty of letting agents to publicise fees);

(b) make provision for civil penalties to be imposed in respect of a breach of that duty.

(2) Regulations under subsection (1)(b) may provide for the amount of a civil penalty to be determined by the person imposing it, subject to subsection (3).

(3) The amount of a civil penalty that a person may impose by virtue of regulations under subsection (1)(b) may not exceed £5,000 for each breach of the duty in section (Duty of letting agents to publicise fees).

(4) The Secretary of State may by regulations amend the figure for the time being specified in subsection (3).

(5) Regulations under subsection (1)(b) must make provision about the procedure for imposing a civil penalty and, in particular, must require a person imposing a penalty to give the person on whom it is imposed a written notice stating—

(a) the amount of the penalty,

(b) the reasons for imposing it, and

(c) the date by which and manner in which it is to be paid.

(6) Regulations under subsection (1)(b)—

(a) may give a person on whom a civil penalty is imposed a right to request a review of the decision to impose the penalty, and

(b) must give such a person a right to appeal against the decision to the First-tier Tribunal.

(7) Regulations under subsection (1)(b) must, in particular, specify the grounds on which a person may appeal against a decision to impose a civil penalty, which must include the grounds—

(a) that the decision was based on an error of fact,

(b) that the decision was wrong in law, and

(c) that the decision was unreasonable (including that the amount of the penalty is unreasonable).

(8) Regulations under subsection (1)(b) may, in particular—

(a) specify the time within which a person must request a review of, or appeal against, a decision to impose a civil penalty;

(b) require a person to request a review before appealing;

(c) specify the grounds on which a person may request a review;

(d) make provision about the procedure for a review;

(e) make further provision about reviews and appeals (including provision as to the powers available on a review or appeal).

(9) Regulations under subsection (1)(b) may make provision about the recovery of a civil penalty, including—

(a) provision for the person by whom it is imposed to recover the penalty as a civil debt;

(b) provision for the penalty to be recoverable, on the order of a court, as if payable under a court order.

(10) Sums received by a local authority under regulations under this section may be used by the authority for the purposes of any of its functions.

(11) A local authority on whom functions are conferred by regulations under this section must have regard to any guidance issued by the Secretary of State about—

(a) compliance by letting agents with the duty in section (Duty of letting agents to publicise fees);

(b) the exercise of those functions.” —(Jenny Willott.)

This new Clause enables the Secretary of State to make regulations about enforcement of the duty. The penalty for non-compliance will be a civil penalty of up to £5,000. The regulations must provide for a right of appeal against the penalty to the First-tier Tribunal.

New Clause 29

Supplementary provisions

‘(1) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions)—

“assured tenancy” means a tenancy which is an assured tenancy for the purposes of the Housing Act 1988 except where—

(a) the landlord is a private registered provider of social housing, or

(b) the tenancy is a long lease;

“dwelling-house” may be a house or part of a house;

“landlord” includes a person who proposes to be a landlord under a tenancy and a person who has ceased to be a landlord under a tenancy because the tenancy has come to an end;

“long lease” means a lease which—

(c) is a long lease for the purposes of Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993, or

(d) in the case of a shared ownership lease (within the meaning given by section 7(7) of that Act), would be a lease within paragraph (a) of this definition if the tenant’s total share (within the meaning given by that section) were 100%;

“tenant” includes a person who proposes to be a tenant under a tenancy and a person who has ceased to be a tenant under a tenancy because the tenancy has come to an end.

(2) In sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) “local authority” means—

(a) a county council in England,

(b) a district council,

(c) a London borough council,

(d) the Common Council of the City of London in its capacity as local authority, or

(e) the Council of the Isles of Scilly.

(3) References in sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) to a tenancy include a proposed tenancy and a tenancy that has come to an end.

(4) References in sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) to anything which is payable, or which a person is liable to pay, to a letting agent include anything that the letting agent claims a person is liable to pay, regardless of whether the person is in fact liable to pay it.

(5) Regulations under sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) are to be made by statutory instrument.

(6) A statutory instrument containing (whether alone or with other provision)—

(a) the first regulations to be made under section (Enforcement of the duty)(1)(b), or

(b) regulations under section (Enforcement of the duty)(4),

is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

(7) A statutory instrument containing regulations under sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) other than one to which subsection (6) applies is subject to annulment in pursuance of a resolution of either House of Parliament.

(8) Regulations under sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions)—

(a) may make different provision for different purposes;

(b) may make provision generally or in relation to specific cases.

(9) Regulations under sections (Duty of letting agents to publicise fees), (Letting agents to which the duty applies), (Fees to which the duty applies), (Letting agency work and property management work), (Enforcement of the duty) and (Supplementary provisions) may include incidental, supplementary, consequential, transitional, transitory or saving provision.”—(Jenny Willott.)

This new Clause provides definitions of the terms used in the new clauses and sets out the procedures for making regulations.

Brought up, read the First and Second time, and added to the Bill.

New Clause 30

Letting Agents: Report

Within three months of Royal Assent of this Act, the Secretary of State shall prepare and publish a report, and lay a copy of the report before Parliament, on—

(a) the consumer detriment caused to tenants by letting agent fees and the impact this has on the ability of tenants to secure and maintain tenancies, and

(b) the steps that the government intends to take to prohibit fees that cause detriment to tenants.”—(Stella Creasy.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Yvonne Fovargue (Makerfield) (Lab)]

I add my congratulations to those of my hon. Friend the Member for Bishop Auckland (Helen Goodman) and those that I am sure you have received from Members across the House, Madam Deputy Speaker.

I want to concentrate on amendments 2 and 3. I think that there is cross-party agreement that logbook loans are an anachronism. If the Government do not remedy that anachronism, it will be a missed opportunity. To leave the Law Commission time to go through the outdated legislation would take too long for the vulnerable consumers who are affected. I know that because I have been a member of the Joint Committee on Consolidation Bills and in 2010 we repealed something to do with the dissolution of the monasteries.

We cannot wait that long for the bill of sale provision to come off the statute book. It was never intended to apply to loans on vehicles such as cars and it should be abolished now. If it is not abolished, consumers need to be able to challenge it in court. I am sure that they will be supported in that by the advice agencies that brought the attention of the House and the country to the anachronism that is the bill of sale legislation.

The Financial Conduct Authority said only two weeks ago that such loans are high risk. It is considering the issue already, but while it is doing so people are taking out the loans either because they are not aware of the pitfalls or because they are their last or only resort. They put their only asset, their vehicle, on the line, pay the companies, end up owing money and still have no vehicle. They are in a worse position than if they had not taken out the loan in the first place.

I also want to mention those whom we might call the innocent consumers—those who buy a vehicle that is subject to a bill of sale. It does not show up on the HPI register, as hire purchase does, and the first they know about it is when somebody comes round to repossess the car because they are not its legal owners. They can never be its legal owners while there is a bill of sale on it and they are left with no vehicle and no money. It is about time that we considered the bill of sale legislation. A law that was passed in the 1870s should not apply to today’s consumer market and should be allowed to be challenged in the courts if not repealed immediately.

I have long campaigned on debt management companies. It has always seemed particularly perverse to me that people in debt should pay to get out of it. There are usually two reasons given by the companies for why people turn to them. The first is the lack of knowledge about the availability of free advice. Frankly, I am not surprised. I regularly get texts telling me that there is new Government legislation, that my debts can be written off and that I am entitled to payment protection insurance compensation and various other things, and debt management companies are one of the worst offenders. The Information Commissioner needs more powers to stop that misleading advertising.

There is also a lack of provision for advice. I thank the Minister for her reply to my question on that point, which said that the Money Advice Service sets its own budget. Yes, it does, but as the Government rejected new clause 6, which would have meant the increased levy automatically going towards increasing the amount of debt advice, I hope that MAS will listen to the strength of feeling on both sides of the House and increase its budget to ensure that the introduction of payday lenders into the levy will increase the total amount raised and that it will not simply keep it at the same level with the other people paying less.

There needs to be more funding for free debt advice. As we know, some 2.5 million people are in fee-charging debt management plans. That is 2.5 million people who, if those plans were not available, would need free debt advice. There is obviously a need for that funding. If the interest rate were to rise by only 0.5%, which is quite likely, an extra half a million people would be pushed over the edge from just about coping. It is essential that the Money Advice Service looks at the trends and asks for an increased budget.

There is also a risk that those companies may go out of business and while doing so will not pay their creditors. A company in Manchester in my area of the north-west went out of business two weeks ago. About 2,500 people who had a plan with it were left with no money. People had been paying into that company, assuming that it was going to creditors, but the company has gone bankrupt. It is time that we challenge these debt management companies. They push people further into debt and can charge 50% of what somebody owes. Therefore, if someone owes £18,000, that is another £9,000 on the debt for something that an organisation such as StepChange or a citizens advice bureau can do just as competently for free. Indeed, in many ways they will do it better because such organisations have links with other companies and, for example, will know all the remedies for insolvency. They will put forward the remedy that is best for the consumer, not best for the company. To allow debt management companies to continue without being challenged on pushing people further into debt should not be allowable, and I fervently support the amendment to clause 3.

[Jenny Willott]

May I add my congratulations to you, Madam Deputy Speaker? You will get bored with it soon, but at the moment I am sure it is probably still quite a novel surprise.

I share the concerns of the hon. Member for Walthamstow (Stella Creasy) about the practice of double charging by estate agents. That issue has been raised in the House a number of times and in Committee. Under existing legislation—in particular consumer protection regulations and the unfair contract terms law—as well as their own industry codes, estate agents must already make fees and charges clear for consumers. I believe that there are risks in rushing into further legislative measures and applying them prematurely, which is why a better way of addressing the issue is through estate agent redress schemes.

As the hon. Member for Walthamstow mentioned, on 7 May I met the property ombudsman and ombudsman services: property, to draw their attention to my concerns on this issue, and those raised by hon. Members in Committee and the House. Both redress schemes have agreed to monitor any complaints they receive, and more is being done. The property ombudsman has committed to producing new guidance that will put in place strict controls on the practice of charging the buyer a fee, or charges being placed on both buyer and seller, and the potential for conflicts of interest. That guidance will ensure that agents recognise their obligations under the ombudsman’s code of practice for transparency, disclosure and avoidance of conflicts of interest. If the guidance is not complied with, agents will be in breach of that code.

Estate agents must belong to an ombudsman service, and ombudsmen have strong powers to tackle bad behaviour by estate agents. For example, they can give a financial award to the complainant or enforce obligations on the estate agent. As a last resort, estate agents can be struck off a redress scheme. Because it is a requirement on estate agents to belong to a redress scheme, if they have been struck off, they are effectively out of business and cannot continue to operate. If they continue to operate under those circumstances, it is a criminal offence.

[Andy McDonald]

Does the Minister accept that instead of codes of practice and all that paraphernalia going round the houses, it is fundamentally a breach of the fiduciary duty that an estate agent owes to one client if they are in discussions with another and charging a fee for the same transaction? The interests are not united; they are completely and utterly divergent. Would it not be better to say simply, “You cannot charge two contracting parties a fee for the same service”?

[Jenny Willott]

As I said, I met both ombudsmen in May and discussed the best way forward. As a result, they are looking at the conflict of interest, which I think is key to this issue, and at how guidance can be tightened so that the responsibility estate agents have to the buyer and seller is made clear.

[Mark Tami (Alyn and Deeside) (Lab)]

Can the Minister tell the House the size of some of those awards and how often they are handed out?

[Jenny Willott]

No I cannot, but I will write to the hon. Gentleman to give him more information on that.

The ombudsman has committed to calling an early meeting of all interested parties to discuss the need for stricter controls, and I assure hon. Members that new guidance is being worked up for the industry as a matter of priority. The hon. Member for Walthamstow raised concerns about estate agents discriminating against buyers who will not take services from them—for example, mortgages and so on. Discriminating against buyers for refusing services from an estate agent is already banned and covered by the regulations.

A number of hon. Members mentioned logbook lenders. We have discussed that issue a number of times and it is clearly a matter that concerns people across the House. Responsibility for consumer credit regulation, including logbook lenders, transferred from the Office of Fair Trading to the Financial Conduct Authority on 1 April.

[Yvonne Fovargue]

Will the Minister tell the House how many licences to logbook lenders have been revoked by the FCA? What has happened to the bills of sale for those who have borrowed from a company whose licence has been revoked, if indeed there are any?

[Jenny Willott]

That responsibility has only just been transferred to the FCA, and it is working with credit companies that must register with it. I believe that those companies start registering on 1 October, which gives them time to ensure that they comply with the regulations. From that date, therefore, the FCA will start to process licence applications. At the moment it is a little premature to answer the hon. Lady’s question, but the issue will be raised later in the year and I am sure she will ask Ministers at that point.

There are concerns about the way logbook loans operate and their impact on consumers. Consumers will be far better protected under the FCA regime than under the old system. Logbook loan providers are now required to meet the standards that the FCA expects of lenders, including making thorough affordability checks and providing adequate pre-contractual explanations to consumers. They are also subject to the FCA’s high-level principles, which include the overarching requirement to “treat customers fairly”.

[Stella Creasy]

I know the Minister has logbook loans companies in her constituency. Given what she is saying, why will she not support our amendment, which simply states that all borrowers should be treated equally and be able to have modern consumer contracts—the sorts of things she mentioned with the FCA? Why leave a loophole for bill of sale agreements?

[Jenny Willott]

If the hon. Lady gives me a chance I will come to that point.

As the hon. Member for Makerfield (Yvonne Fovargue) highlighted, logbook loans have been defined by the FCA as “higher risk activities”. As such, they will be in the first phase to require the full authorisation I mentioned, and they will face closer supervision and higher regulatory costs as a result. The Government have also ensured that the FCA has a wide enforcement toolkit to take action wherever its binding rules are breached. For example, there is no limit on the fines it can levy, and—crucially—it can force firms to provide redress to customers. It also has flexible rule-making powers, so if it finds further problems, it will not hesitate to take action. Indeed, the FCA has said that it is

“putting logbook lenders on notice”

because it is concerned about that issue. Furthermore, the FCA’s new rules give it

“the power to tackle any firm found not putting customers’ interests first”.

Treasury Ministers have asked the Law Commission to look at how best to reform the Bills of Sale Act 1878. As the hon. Members for Walthamstow and for Makerfield mentioned, the legislation underpinning logbook loans is extremely old, lengthy and complex, and the Government believe that the Law Commission is best placed to undertake a thorough assessment of how to bring it up to date. The hon. Member for Makerfield raised concerns about how long the process might take and suggested that it had been kicked into the long grass. I would like to reassure her that the Law Commission has responded favourably to the Treasury’s request for the review, and will confirm its work programme in the near future .

--- Later in debate ---

[Jenny Willott]

I beg to move, That the Bill be now read the Third time.

I am sorry that so many hon. Members are leaving the Chamber at this exciting point in this evening’s proceedings. Let me first convey my thanks to everyone in the House, including those currently leaving, and everyone outside who gave their time and expertise and shared their experience to help strengthen and improve this important Bill. We are most grateful. In particular, I would like to thank the Business, Innovation and Skills Committee and its Chair, the hon. Member for West Bromwich West (Mr Bailey), for conducting such invaluable pre-legislative scrutiny of the draft Bill. The Government accepted a great many of its recommendations. I firmly believe that our reforms are stronger and that the Bill is better as a consequence of that scrutiny.

I would also like to thank those individuals who gave oral evidence to the Public Bill Committee and the individuals and organisations who provided written evidence and suggested recommendations. I extend particular thanks to members of the Public Bill Committee, on which the hon. Member for Walthamstow (Stella Creasy) led for the Opposition, for their detailed examination and thorough scrutiny of the Bill’s provisions and for their extensive discussions about items of clothing, curtains, cushions and any number of soft furnishings.

We have spent almost two days on Report examining a wide range of issues that affect consumers. I sincerely thank Opposition Members and hon. Friends for providing the House with the opportunity to debate such a broad range of consumer issues. I am grateful for hon. Members’ incisive inquiries on these significant matters; they have helped to ensure that our important discussions, and the action that the Government are taking, will properly tackle harmful behaviour swiftly and head-on.

The Government’s reforms in the Bill amount to the most fundamental change to UK consumer rights in more than a generation. We want confident consumers who are willing to try new products and services, and to shop around. Consumers who understand their rights can play a crucial role in driving growth, because they encourage businesses to innovate and to be more responsive and efficient. That is why we are removing complexity and ensuring that the law keeps up with technological developments. The reforms proposed in the Bill make the rights and responsibilities of consumers and businesses clear and easily understood, and they take account of the way that modern consumers shop. There are an estimated 350,000 retail businesses in the UK, and goods are a critical part of the UK economy. That is why business and consumer groups agree that it is vital that we remove the complexity that makes compliance burdensome for business and confusing for consumers.

The market for digital content is growing more rapidly than ever, and has an estimated annual turnover of around £200 billion. The new category of digital content proposed in the Bill, with its own set of tailored quality rights, will make consumers more confident about trying something new. That not only benefits consumers but helps the most responsive businesses—especially new market entrants that are not well-known brands with established track records—to attract custom.

The services sector is worth more than 75% of the UK’s gross domestic product. That underlines just how important it is that the Bill gives consumers clearer, more accessible statutory rights, and introduces statutory remedies for the first time. As the Confederation of British Industry told the Business, Innovation and Skills Committee

“the time is right to make sure that consumer law keeps in step with how those areas of the economy have evolved”.

The law on unfair terms in consumer contracts is particularly complicated. We asked the Law Commission to look at unfair terms law in detail. It recommended three additions to the grey list, which we accept. It considered and rejected other additions—conclusions with which we also agree.

Creating the National Trading Standards Board was a key step towards better equipping enforcers to tackle complex criminal activity. We are building on that in the Bill by making it easier for trading standards bodies to work more effectively across boundaries. Those reforms together will help tackle the estimated £4.8 billion-worth of consumer detriment arising from rogue trading activities.

Setting out consumer law enforcers’ investigatory powers in the Bill will make them more transparent, which benefits both regulator and business. Clearly, we want enforcers to pursue rogue traders, but it is important that we do not disproportionately burden businesses that are already compliant. On the requirement to give businesses 48 hours’ notice of a routine inspection, the British Retail Consortium has said in evidence sessions:

“The safeguards in the statute are absolutely perfect”,

and:

“If you have notice…it does not waste our time, and it does not waste the regulator’s time.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 32, Q68.]

The Bill will also give public enforcers greater flexibility to seek new and innovative ways of dealing with businesses that have broken consumer law. More consumers will get their money back, and they will be better informed about those businesses that choose to flout the law. Consumers will be able to take the past performance of businesses that choose to ignore consumer rights into account when deciding whether to buy from them. The flexibility to get better outcomes for consumers is seen as a welcome addition to the enforcement toolkit by both Which? and Citizens Advice.

The UK has a world-class competition framework that benefits both business and consumers. However, evidence from the Office of Fair Trading highlights that the private actions regime is the least effective aspect of the UK’s competition regime. Anti-competitive behaviour harms consumers by lowering output, increasing prices and reducing quality, but the costs of going to court make it very hard for consumers to obtain redress. As Which? highlighted in its evidence during pre-legislative scrutiny:

“The whole Bill is aimed at empowering consumers. Part of an empowered consumer is that they are confident that when things go wrong they will be put right.”

Finally and importantly, we are determined to tackle the minority of rogue letting agents who offer a poor service. We are introducing legislation to require all letting agents and property managers to belong to an approved redress scheme, giving tenants an effective way of pursuing complaints. We are making agents publish their fees; that will give consumers the information that they want and support good letting agents. Such transparency deters double-charging and enables tenants and landlords to shop around, which encourages more competitive fees.

The Bill contains important new protections for consumers and measures to lower regulatory burdens for business, so that markets work better and consumers are well protected. Overall, the suite of consumer law reforms is set to benefit businesses and consumers by more than £4 billion over 10 years. The Bill is therefore good for consumers, good for business, and good for growth, and I commend it to the House.

--- Later in debate ---

[Jenny Willott]

With the leave of the House, I will respond to some of the points made. The Bill has benefited from thorough and considered debate in this House. We have now had lengthy discussions on many subjects covered by the Bill, and possibly even more on those not covered by it.

The hon. Member for Congleton (Fiona Bruce) raised the issue of mitochondrial donation or transfer. The Human Fertilisation and Embryology Authority set up an expert panel, which has conducted three reviews on the safety and efficacy of the proposed treatment. I want to reassure her that any proposed regulations on this matter would be subject to debates in both Houses of Parliament under the affirmative procedure, so were measures to be taken forward, there would be a full debate.

[Fiona Bruce]

Will the Minister reassure me that regulations permitting such a treatment will not be laid before the House until clinical procedures that have been described by the HFEA as critical are concluded and reviewed?

[Jenny Willott]

I suggest that the hon. Lady take up that issue with Health Ministers, as this policy area sits firmly under their portfolio. She is asking a very technical question about the background to the regulations, and it might be more proper for one of them to respond.

I was a little disappointed by the response of the hon. Member for Walthamstow (Stella Creasy). She is very dismissive of the Bill, which she has described as full of loopholes. Consumer and business organisations all agree that the Government are doing the right thing and that the Bill will make a real difference, as we repeatedly heard in evidence to the Public Bill Committee and to the Business, Innovation and Skills Committee during its pre-legislative scrutiny.

It cannot be denied that the Bill is the most dramatic overhaul of consumer protection for a generation. The UK already has very high levels of consumer confidence and knowledge—higher than almost any other country in the European Union—but I believe that we can raise them higher. It drives huge change both in business and across society to have consumers who are well informed and confident of their rights, and who know what they can do when something goes wrong. Consumer protection drives innovation across businesses, growth in the economy and confidence among our consumers. I believe that this Bill is the way to achieve that, and I commend it to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Undeclared Work (Reasoned Opinion)

Jenny Willott Excerpts

Monday 9th June 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I beg to move,

That this House considers that the draft Decision on establishing a European Platform to enhance cooperation in the prevention and deterrence of undeclared work (European Union Document No. 9008/14 and Addenda 1 and 2) does not comply with the principle of subsidiarity for the reasons set out in the annex to Chapter One of the Forty-ninth Report of the European Scrutiny Committee (HC 83-xliv); and, in accordance with Article 6 of Protocol (No. 2) annexed to the EU Treaties on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.

This debate will give the House a welcome opportunity to discuss the proposed platform on undeclared work, and to decide whether to send a reasoned opinion to the European Commission. The Commission proposal seeks to establish an EU-level platform on undeclared work. Undeclared work is defined by the Commission as paid activities that are lawful but are not declared to public authorities. This matter is high on the European Commission’s agenda, against a backdrop of efforts to improve job creation, job quality and fiscal consolidation.

The proposal highlights a number of concerns, based on a perception of high levels of undeclared work in the EU, including tax evasion, mis-declaration of hours worked and benefit fraud. The Commission is proposing a platform, whose members will be drawn from member states’ nominated enforcement bodies, to try to improve co-operation, share best practices and identify common principles for inspections. I should of course stress that addressing undeclared work is a priority for the Government. We have taken action at national level to detect and deter fraud through inspection, as well as to encourage good practice by providing guidance for employers.

The debate has been called because the European Scrutiny Committee requested an opportunity to discuss its concerns about whether the proposal respects the principle of subsidiarity. There are also very short time scales and deadlines to which the European Commission is seeking to secure agreement on a position; hence the debate taking place tonight.

Let me first turn to the issue of subsidiarity. The concerns that I set out in the explanatory memorandum—the Committee shares those concerns—were based on the initial draft of the proposal, which sought to mandate member states to participate both in the platform and in any enforcement activities arising from the platform’s recommendations. Like the Committee, we remain to be persuaded that the Commission has demonstrated a need to mandate member states to take part in the platform or that EU-level intervention action will add value.

However, it emerged in negotiations late last week that although member states’ participation in the high-level platform would be mandatory, participation in any cross-border operational activities recommended by the platform would be voluntary. The Council’s legal service has indicated that that is the case, and we have asked it to clarify its official position. Therefore, the principal concern about subsidiarity that we identified in the explanatory memorandum—based on an earlier text—drops away. We could decide, issue by issue, whether the UK should participate in further activity, and we would of course seek the Committee’s views on such matters. However, we have not yet had advice from the Council’s legal service in writing, and the proposals are still being negotiated, so they may change. I therefore understand that the Committee will want to decide for itself whether the proposal respects the principle of subsidiarity.

Our concerns about the detail of the proposal have been shared by other member states and, together, we have secured some changes. The changes, alongside the fact that the activities identified will not be mandatory, mean that the majority of member states will support the proposal. Therefore, the original subsidiarity risk that we identified does not still stand. Moreover, we should be involved in discussions about activities in relation to which we could be asked to take action, even if we probably do not want so to act. Negotiations are ongoing and the European Parliament is yet to begin its consideration of the proposals, so we will be continuing to work throughout the negotiations to ensure that our concerns about subsidiarity are addressed in the final text.

Let me now turn to justice and home affairs. Since publishing the explanatory memorandum, our ongoing analysis has identified that the proposal may include elements relating to justice and home affairs, thus invoking the UK’s JHA opt-in. That is because the proposals suggest, for example, that enforcement bodies such as the police will collaborate in cross-border activity. No decision has yet been made on whether or not to opt in to the proposal. Once a decision has been made, we will write to the European Scrutiny Committee. Having said that, as it is not mandatory to participate in any activities that result from the discussions, no significant burden would be placed on the UK by opting in.

The Commission and presidency are pushing hard on the proposal, and we were informed on Friday that they hope to reach a general approach on 11 June, which is very soon. The deadline for sending the reasoned opinion to the Commission is 11 pm tonight. With the timing of the recess and the Queen’s Speech, this evening was the earliest opportunity to facilitate a discussion in time to meet the deadline, although I appreciate that the timing is not ideal for such an important discussion. If we run out of time tonight, I will be happy to follow up any questions in writing, although given the numbers present, that seems somewhat unlikely—[Interruption.] The shadow Minister may want to raise lots of questions.

[Ian Murray (Edinburgh South) (Lab)]

indicated dissent.

[Jenny Willott]

Oh, I am looking at the wrong side of the House. I hope that we will have time for a reasonable discussion and come to a decision on issuing a reasoned opinion tonight.

--- Later in debate ---

[Jenny Willott]

A number of the points that have been raised by hon. Members are very similar. First, it is important to put on the record that undeclared work is an extremely important issue across Europe. It is on a larger scale in some countries than others. The hon. Member for Edinburgh South (Ian Murray) asked what research had been undertaken on the levels of undeclared work in the UK. The most recent estimate for the UK was, I think, 1.7%—extremely low. In other member states the figure is significantly higher, so it is clearly a bigger issue in other states.

Cross-border working was mentioned by the hon. Member for Stone (Mr Cash) and the hon. Member for Edinburgh South. One of our concerns is that very little evidence has been put forward on the implications and requirement to take action on cross-border work. On the assessment of the numbers and the amount of detriment that can be attributed to them, we are not convinced that the data are particularly accurate. We have asked the European Commission to identify, in a much better way, the scale of the problem. The UK, alongside other member states, does a lot of work internationally across borders, in a completely voluntary way, to try to tackle these issues. A huge amount of work is done because, as responsible Governments across different countries, we all think it is really important to tackle this issue. We do not feel that the Commission has provided evidence that what is being done at the moment is not a good enough approach and we have not seen evidence to suggest that the problem is significantly larger. That is one of the main reasons why we feel that the Commission has not made the case for why this needs to be done at EU level, rather than at member state level.

The hon. Member for Stone asked about participation and about our position on the subsidiarity principle, given that we are saying that the position has changed. We still have concerns that the mandatory nature of the platform is a breach of the subsidiarity principle. However, as regards the operation, given that the only mandatory element is attendance at the platform, we now believe that the concerns we raised in explanatory memorandums about the requirements for member states to take action when it is for them to decide—it has been agreed in the negotiations that it should not be mandatory—are not such a problem for the UK. Yet we feel it is really important that any activity should remain voluntary rather than mandatory.

[Mr Cash]

Is the Minister saying that she still believes that, as far as the UK Parliament is concerned, there should be a yellow card for the purpose? The question is as simple as that.

--- Later in debate ---

[Jenny Willott]

We certainly support today’s motion, and we think that we should be sending a reasoned opinion. Our concerns are, however, less, now that the rest of it appears to be voluntary. We still feel strongly about the mandation, which is why we are working with other member states on the negotiation to ensure that the activity that follows from the platform should be voluntary. That is why we have asked for written confirmation from the Council legal services. We tried to get it for this evening’s debate so that we could be clear on the position. It is still a moveable feast and we are still in negotiations, but we hope to reach that position. A number of other member states have similar concerns about the mandatory element and we are not the only member state working to try to ensure that the rest remains voluntary.

The hon. Member for Edinburgh South referred to the issue of bogus self-employment in the construction sector. We hope that the work of the platform will include looking at such issues and analysing them. We will press for a full analysis of areas that we think it would be useful for the platform to consider.

The points raised by the hon. Member for Stone about the yellow card system generally are above my pay grade, but I think that his points were well made and I will make sure that they are referred back to the most appropriate Minister.

I hope that I have tackled all the issues raised. If I have not—we can go through the Hansard—I will be more than happy to clarify anything I may have overlooked.

Question put and agreed to.

Consumer Rights Bill

Jenny Willott Excerpts

Tuesday 13th May 2014 Commons Chamber

[Tom Greatrex]

My hon. Friend makes a very important point about that specific market. I am also aware, as a result of talking to my constituents, that there is almost an expectation on people working for other retailers to sell these warranties, even if it is not obligatory for consumers to have them. In some cases, they even receive a commission for doing so.

That leads me to my concern about a specific case, in which what was written in the signed document was clear, but the way in which the warranty was described and explained to the consumer certainly was not clear and was very different. In that case, a constituent of mine bought a television set from a high street electrical store. He was told that the additional warranty he took out—on top of the manufacturer’s one—would entitle him to a new set if anything went wrong within the five-year period. His television set broke down during that period, but he found in the small print that he was only entitled to a repair or a replacement, which was exactly the same as the manufacturer’s guarantee. That meant that, on the basis of what he was told in the store, he had paid what for him was a significant amount of money every month for something that was effectively worthless.

Fundamentally, I believe that retailers have a duty to consumers not to sell them products that they know to be worthless, which appears to be the case if a warranty simply duplicates existing rights. Warranties very often apply to electronic goods that are significantly expensive, so we can see how a consumer could easily be persuaded to pay for an expensive warranty scheme that delivers no extra benefit, as the retailer is often probably very well aware. That is an area on which the implementation group should certainly undertake some work. Some provisions in the Bill—for example, clause 30—relate to warranties, but they do not seem to cover that point.

In that case, I took up the issue with both the company and my local trading standards office. The trading standards office was very sympathetic, but the long and short of it is that such practices are entirely legal, and there is nothing it can do other than to advise people to be more aware next time. That will not be much comfort for someone who has spent a significant amount of money on something that does not meet their expectations or provide the protection to which they think they are entitled. I of course understand that this problem is not new—it was raised several times in Committee as well as previously in the House—but the implementation group should be charged with ensuring that it is dealt with, and the new clause presents an opportunity for that to happen.

My new clause also addresses the management of deposits. I tabled it after a local small business approached me about an account held with a telecommunications firm— TalkTalk. As many hon. Members will be aware from their constituents, telecommunications contracts for small businesses often require quite sizeable deposits. My constituent was asked to provide a bond of some £900.

The size of such deposits has been a subject of interest for the regulator. I draw the House’s attention to the outcome of a dispute between Apple Telecom Europe Ltd and BT on the level of security deposit required for services, in which Ofcom stated that it was unwilling to determine what an appropriate deposit might be. In the light of that, it is clear that the regulator is not currently prepared to step into that space, but the size of some deposits places a clear responsibility on policy makers to ensure that the rights of the consumer or service user are protected.

After terminating the contract, two issues arose for my local business: first, TalkTalk was in no hurry to return the deposit; and, secondly, when it did return the deposit, it did so without any interest. On the first point, TalkTalk made it clear that it would hold on to the bond beyond the end of the agreed three-year contract. Effectively, it intended to hold on to the bond or deposit until my constituent ceased to be a customer, at which point the onus was on my constituent to write to TalkTalk to request the return of the money. My sense is that the responsibility in that scenario is the wrong way round. It places all the obligation on the consumer, and all the potential benefit of not meeting the obligation on the retailer. Because the retailer was not required to return a bond in a timely fashion, it is clear that my constituent missed out on substantial interest payments on the £900. Given that such contracts may well be for significant lengths of time and may then be renewed, the money amounts to a significant figure over time, particularly for small businesses; it is far from trivial.

My new clause addresses both concerns by requiring the implementation group to report on the length of time for which a retailer may retain a bond after the termination of a contract and on the payment of interest on the money. It would not be unduly burdensome for the company to be required to place bonds in a separate account, the interest on which could be returned to the consumer at the end of the contracted term. I am sure that the Minister is aware of the significant precedents for interest to be paid on money that is held. For example, solicitors are required to place moneys they hold on trust for a client in separate interest-bearing accounts, as is made clear in the professional code of ethics given in the Solicitors Regulation Authority handbook. Equivalent provisions cover other professions in which businesses hold money on trust—for example, an accountant who holds funds for a client to settle a forthcoming tax bill. Beyond such examples, it is clear that there is a substantial licence for abuse. There have recently been concerns in the energy market about moneys retained from excessive direct debit payments. One of the Minister’s colleagues in another Department described it as unacceptable, and said that something needed to be done about it, and the same case can be made in relation to my concerns.

I am conscious that the guidance and regulation arising from the work of the implementation group will not apply retrospectively, and so will not be of direct benefit to those involved in the two cases that I have outlined. However, their experience carries important lessons for all of us to bear in mind, and their cases might and probably will be repeated along the same lines. For that reason, I implore the Minister to look sympathetically at new clause 4. I hope that she will see that it is about enhancing the rights of consumers who, in many regards, have been and are being given poor advice and are not getting the service that I am sure she and all other hon. Members would expect.

The work of the implementation group will obviously be significant, given the number of times that the Minister has referred to it in Committee, and I am sure that she will mention it again this afternoon. It is important that the implementation group get on and deliver something, as the many people who have been following the progress of the Bill will expect. The new clause represents just one way in which there is a very clear path for the implementation group to follow in taking some action to benefit consumers and small businesses across the whole of the UK.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

We have had quite a wide-ranging debate, which has been the case during many of the discussions on the Bill, because it covers so many issues. It is telling that the Opposition have tabled very few amendments; today, we are mainly discussing new clauses that attempt to add provisions to the Bill.

I want first to pause for a moment to reflect on the Bill, which has generally been accepted across the House as a good piece of legislation. It will benefit consumers—all consumers—and by setting out key consumer rights in one place, it will empower consumers. As we discussed several times in Committee, well-informed and confident consumers can experiment and shop around, which drives innovation, boosts competition and creates growth. The entire suite of consumer law reforms are estimated to be worth more than £4 billion to the UK economy over 10 years. Including the impact on consumers, business and the public sector, the Bill will generate £1.5 billion and the associated secondary legislation will generate more than £2.7 billion of benefit.

Some public services will attract rights and remedies under the Bill, as we discussed at length in Committee. That will be the case if there is a contract between the consumer and a public body for the provision of products that are within its scope, because the definition of a trader is wide enough to capture the activities of any Department and local or public authority. Consumers of public services provided under a contract will therefore benefit from clearer rights, clearer remedies and, ultimately, better outcomes. I think that we would probably all agree that that is a good thing.

What we are not doing—in a moment, I will explain why it is right and proper not to do it—is to change which public services are covered by consumer law. Public services that are currently subject to the Supply of Goods and Services Act 1982 and the Sale of Goods Act 1979 will be covered by the Bill. I will now turn to public services that are not covered by its provisions because such services are not provided under contract to a consumer. They include most NHS care, state-funded education and law enforcement services.

Let me be very clear: those consumers are nevertheless protected, and in a way that will often provide more tailored, specific and appropriate safeguards, designed to fit the particular service. Many of the tailored regimes already incorporate just the sort of protections that Opposition Members are pressing for—independent advocacy, regular reporting and established ombudsman schemes. In some cases, the protections already in place are similar to those provided by the Bill. For example, the rights that are consolidated in the NHS constitution are very similar to those in general consumer law, but are tailored for the provision of health care.

--- Later in debate ---

[Mr Steve Reed]

Does the Minister believe that public library users in Croydon should have a right to know why the council chose to sell the libraries off to one bidder rather than another, and that it should have taken that decision publicly, rather than in private?

[Jenny Willott]

Obviously, I cannot comment on the situation in Croydon because I do not know the details. However, the Government are committed to freedom of information and, in a moment, I will talk about the access to data and information that we are supporting in the private and public sectors.

We fully recognise that sometimes more intensive support is needed, above and beyond the advice that is given by Citizens Advice. That is why the patient advice and liaison service offers confidential advice, support and information on health-related matters. There are already independent third-party adjudicators in the public sector, for example at HMRC. Those systems exist to support consumers, often the most vulnerable, in making a complaint and having their voice heard.

There is a serious danger that mandating others to provide a service that overlaps what is in place will confuse, rather than strengthen, the landscape. We need to continue to make public services more responsive to end users, not dilute the central role of Citizens Advice and hinder its ability to act as a key advice agency by creating bureaucracy. We all share the vision of public services provided to a high standard, where consumer feedback and consumer choice work to push up standards. However, we do not need to bring them all within the ambit of the Bill to achieve that.

The transparency of data in the public sector, which has been raised by hon. Members, is a priority for the Government. In many areas, transparency is much more advanced in the public sector than in the private sector. Consumers of public services have access to a wealth of data, such as crime statistics and educational standards. Those all work to empower consumers, promote choice and accountability, and, ultimately, raise standards.

Let me make it clear that the Government support the principle that the public should have access to the data that are held on them. That is in line with our open data policies and activities, and with the approach that we are taking to the negotiations on the European data protection regulations. We embrace the principle that where social benefits can be obtained from anonymised data sets—so-called “big data”—that should be supported. That is why, alongside the midata programme, which is concerned with commercially held data, we are exploring how the data that are held on individuals by Departments might be made available to those individuals in a useful way. That work is in its early stages, but it is designed to address just the sort of issues that we have been discussing today.

As the hon. Member for Walthamstow said, we have been reviewing the progress with the voluntary approach that has been taken to the midata programme so far. I plan to announce the results of the review shortly, but in the meantime I can report that there was an encouraging development in March. In the personal current accounts sector, which was raised by the hon. Member for East Hampshire (Damian Hinds), we have secured a commitment from the big banks to provide customers’ transaction records—their midata—as downloadable files with a consistent format. That has been called for by Which? and the comparison sites. It is encouraging that by the end of the year the vast majority of current account holders in the UK will have access to their midata files. I hope that that reassures the hon. Gentleman on the points that he has raised.

We are working with all the parties involved to ensure that tools are available to use those files. We are confident that this approach will help consumers to compare more easily what is on offer in terms of price and service. As was highlighted by the hon. Member for East Hampshire, there is clearly a lot more to be done to encourage consumers to switch. We hope that by providing the information and working with comparison sites, we can ensure that that happens more often.

Our central objective is that the Bill should deliver rights that are much easier for consumers to understand and use. It is a vast improvement in terms of the simplicity of the language and the consistency of approach. However, we recognise that traders need to know their forthcoming responsibilities in good time before the Bill comes into force, and consumers need practical guidance with real-life examples of how the legislation works. Achieving that quality of communication is a significant challenge and requires planning, which we have been doing.

As hon. Members have highlighted and as we discussed many times in Committee, we have been working with an implementation group to develop appropriate guidance and effective channels of communication. The group is making progress and we will publish a timetable later this year setting out when the parts of the work will be done. We intend to have guidance for businesses available soon after Royal Assent, and it will be available for consumers when the legislation comes into force to ensure that people are able to access and understand their rights.

[Tom Greatrex]

Will the Minister confirm whether the implementation group is looking at the specific issues that I raised: the retention of bonds and interest payments for small businesses, and additional warranties that are sold by retailers that do not provide any additional benefit to the consumer?

[Jenny Willott]

If the hon. Gentleman will bear with me, I will come to those matters later in my speech and address the points that he raised.

[Fiona O’Donnell (East Lothian) (Lab)]

With an increasing number of consumers shopping online, will online traders have any duties under the Bill to provide information about consumers’ rights?

[Jenny Willott]

I am sorry; could the hon. Lady repeat the question?

[Fiona O’Donnell]

I am happy to repeat the question—it might even be better this time. Will the Minister say whether, with an increasing number of people shopping online, there will be a duty on online traders to provide consumer rights information to their consumers?

[Jenny Willott]

I apologise to the hon. Lady. That was a very sensible question. That is being looked at. As she says, more and more people are buying online, so this is an important outlook for retailers. We need to ensure that consumers are aware of their rights, whether they are buying things on the high street or online. As we discussed in Committee, some requirements are being introduced in June that will provide more information and safeguards for consumers who purchase items online. The implementation group is looking at all the ways in which consumers buy goods and services to ensure that they are protected and know what their rights are.

The hon. Member for Nottingham South (Lilian Greenwood) asked a number of questions about rail conditions of carriage, but such questions would be much more properly put to the Department for Transport. If I may, I will direct her points to Ministers in that Department and ask them to write to her with details of how the conditions of carriage are being reviewed. That is not a matter for the Bill but it is being considered by the Department for Transport, and I will ensure that her points are raised.

[Lilian Greenwood]

In Committee the Minister said that although rail services are excluded from the Bill, it was intended that any rights introduced by the Bill be incorporated in the rail conditions of carriage to ensure that consumers were no worse off as a result of that exclusion. How will she ensure that that is implemented?

[Jenny Willott]

I understand that rail conditions of carriage are more detailed and already go further than the fundamental backstop rights in the Bill. However, the Department for Transport is reviewing them, and I will ensure that her questions are passed to Ministers so that she receives a more detailed answer. We will ensure that the Bill is not confused with the rail conditions of carriage, and that they take primacy.

The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) raised an important constituency case, and I understand why he wished to do that. It concerned a business that had to pay a deposit for a telecoms contract, but the Bill does not affect business-to-business rights; it is about consumer rights and affects consumer-to-business rather than business-to-business contracts. I cannot comment specifically on the case, but it would probably not be covered by the Bill since it is a business case. Generally, however, we are doing more to protect deposits that are paid under contract.

Under the Bill, if a consumer enters into a contract for services and pays a deposit but then cancels, the trader does not have a free hand to retain that deposit. Any term in a contract that allows a trader to retain a deposit must be transparent and prominent to avoid challenge in the courts on grounds of fairness. Where such terms do not also provide equivalent compensation for the consumer when the trader dissolves the contract, they are liable to be challenged as unfair, even if they are transparent and prominent.

Our reforms also include clearer cancellation rights in consumer contracts regulations for consumers who buy at a distance or at home. Consumers must be informed that they have 14 days to change their mind and cancel such contracts, and a trader must reimburse them within 14 days of being informed by the consumer about a cancellation of the services. Those regulations will come into force in June, which will give consumers additional protection.

[Fiona O’Donnell]

The Minister is generous in giving way again. Is she not missing the point that my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) made, which was that the Government missed an opportunity to protect small businesses in the Bill, to treat them as consumers and give them those rights? That £900 can be the difference between a business sinking or swimming.

[Jenny Willott]

As the hon. Lady will remember, we discussed this issue at length in Committee. The Government consulted on whether small businesses should be covered by consumer legislation in 2008 and 2012, and on both occasions the result of that consultation was that they should not be. Recent work by the Federation of Small Businesses considered whether micro-businesses should be covered by consumer law, and it too came to the conclusion that they should not be. There is work to be done on the protection of micro-businesses, and some regulators are considering treating them in a similar way. However, the Government consultation on consumer law resolved that it was far more complicated to include micro-businesses as consumers, and that was not the response to the consultation.

The hon. Member for Rutherglen and Hamilton West raised the issue of guarantees being sold with products. Consumer protection regulations already prohibit traders from presenting statutory rights as a distinctive feature of their offer, so a guarantee that offered no more than a consumer’s statutory rights would already be prohibited. We have now made it easier for consumers to get their money back when they have been mis-sold something to which they already have a legal right.

--- Later in debate ---

[Yvonne Fovargue]

Will the Minister elaborate on how that would affect customers of organisations such as BrightHouse and PerfectHome, where the cost of an extended warranty is included in the price of the goods and is compulsory? What rights do those customers have to cancel and get some money back, apart from giving back the goods?

[Jenny Willott]

The issue is whether extended warrantees provide anything over and above the statutory rights provided under the law. If companies charge more just to provide statutory protection, that would be prohibited under consumer protection regulations. A purchase that somebody would make, such as a hire purchase or whatever, would depend on the terms of their contract. If the contract contains terms that are unfair, they may well be on the grey list—we will come to that in future discussions on the Bill—and such terms may be challengeable in the courts on grounds of fairness. If the hon. Lady is concerned about specific terms in the Bill, she might raise them at that specific point in our debate to see whether they would be covered.

[Tom Greatrex]

I am grateful to the Minister for giving way again but I raised another point, to which she did not respond. It concerns what happens if a consumer buys a product with a manufacturer’s warranty and is then sold a supplementary warranty by a retailer, which does nothing more than the manufacturer’s warranty. Is that an issue on which the implementation group will be able to provide information for consumers?

[Jenny Willott]

That is the point I just made. If a warranty provides no more than the statutory rights and there is a charge associated with it, whoever is selling the warranty may well be in breach of consumer protection regulations. When shops sell goods and the warranty is purchased at the same time, the full cost must be disclosed and consumers must be informed of their statutory rights. Consumers also have the right to cancel the extended warranty within a set period, and those rights must be made known to the consumers when they purchase the warranty. That is covered under consumer protection regulations, and there are also rights in this Bill. The circumstances that the hon. Gentleman highlights would be covered.

The other issue raised today is nuisance calls, which is a priority for the Government. I am sure that all hon. Members have had constituency casework on that, but there is no silver bullet to eradicate the problem. That is why in our action plan of 30 March we set out a range of measures to address the issue. They included work that is already under way to improve call tracing, making it easier to disclose information between Ofcom and the Information Commissioner’s Office, and setting up a taskforce led by Which? to review consumer consent issues. We will also consult on making it easier for the Information Commissioner’s Office to tackle nuisance calls as part of amending the Privacy and Electronic Communications (EC Directive) Regulations 2003. Although I understand the intention behind the new clause, the Government are taking a lot of action in this area. Changes will be introduced in the next months, and we are consulting on more actions. I hope that I have covered the issues raised by hon. Members, and I therefore ask the hon. Member for Walthamstow to withdraw her new clause.

[Stella Creasy]

The Minister expressed surprise that some of these issues should have been the subject of new clauses. I am sad about that. In her responses, she is missing some of the debates that we had in Committee on just these issues—not just on implementation but on the impact of the Bill on the public sector. I am saddened that she has not answered what I call the Graham Norton question about the licence fee. We will take that as a yes, meaning that licence fee payers will be entitled to these rights.

The Minister said that a review of complaints is ongoing and talked about the role of the public sector ombudsman. This is what is causing so much concern and has prompted the new clauses. That is happening at the same time as this legislation is making progress, so a whole series of new legal methods of redress will be open to licence fee payers, personal care budget holders and students paying tuition fees. At the same time, a secondary process is being undertaken in government. The situation is confusing.

I am pleased that the Minister’s understanding of consumer rights in the public sector—and what they can offer—is evolving. In that sense, I am happy to give her the benefit of the doubt in what she says about new clause 2 and the implementation group. I am sure that the Lords will want to hear about its further progress. I am also happy to give her the benefit of the doubt about advocacy. Her conversion to the importance of advocacy is welcome: it was not clear in Committee, but it is wonderful to hear her talking about it now. She has been dragged kicking and screaming to the debate, and I refer to the comments made by my hon. Friends the Members for Croydon North (Mr Reed), for Makerfield (Yvonne Fovargue) and for Rutherglen and Hamilton West (Tom Greatrex), and even the hon. Member for East Hampshire (Damian Hinds) about the importance of advocacy and what more should be done in the Bill.

On that basis, I am happy not to press new clause 5 to a vote, but I will press new clause 3 and new schedule 1, given what the Minister said about information. I have to point out to the hon. Member for East Hampshire that the Government have admitted that the midata project has stalled. The look on his face spoke volumes about the problems of getting access to those data. The Minister said that the Government thought that people should have access to the data they create within the public sector: the Opposition think that people should own their own data. It is a clear dividing line.

New clause 3 and new schedule 1 set out some clear rights for people. On nuisance calls, the Minister said the Government are already doing something. Why does she oppose paragraph 5 of new schedule 1, which would place sanctions on those people who do not have consent, to send a clear message to the companies that are abusing the information that they have? It is beyond me. The issue of ownership of data is key, so we will press new clause 3, which would bring in new schedule 1, to a vote. The British public should not just have access to their data; they should own it. It is a clear division between the two parties on consumer and citizen rights, and an increasingly important debate for this country. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 3

Access to data

‘Schedule [Access to data] has effect.’.—(Stella Creasy.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Jenny Willott]

I welcome you, Mr Deputy Speaker, to our exciting debate this afternoon. The hon. Member for Walthamstow (Stella Creasy) opened the debate by saying that we had an opportunity to take action on these issues. I completely agree, so I am sure she is absolutely delighted to see how much the Government have done to protect consumers and take action in these areas.

We have debated a number of issues, and I shall run through them in turn. First, on the issue of high-cost or payday lenders, hon. Members will know—certainly the hon. Lady knows this, as we have discussed it before—that the Government have taken robust action to curb the harm these lenders can cause. On 1 April, responsibility for regulating payday lenders, along with all other consumer credit firms, transferred from the Office of Fair Trading to the Financial Conduct Authority, as mentioned by a number of Members. The Government strongly welcome the FCA’s new, tough rules for regulating payday lending. The FCA requires robust affordability checks, limits the number of times that a payday loan can be rolled over to two, and places tough restrictions on lenders’ use of continuous payment authorities. As highlighted by a number of Members, the Government have also legislated to require the FCA to introduce a cap on the cost of payday loans to protect consumers from unfair costs. The FCA will consult on its proposals for the cap in the summer, and it will be in force no later than 2 January 2015.

In addition, the FCA will thoroughly assess every payday lender’s fitness to trade as part of the authorisation process. Given the risks to consumers, the FCA has said that those firms will be in the first phase of firms and will be required to be fully authorised from October this year. The Government believe that the tough and decisive action the FCA is taking, including the cap on the cost of payday loans, will ensure that consumers are far better protected than they have been.

[Justin Tomlinson]

The welcome news is that the measures are already making a difference, because a number of lenders have already withdrawn from the market, which is a bonus for the vulnerable consumer.

[Jenny Willott]

The hon. Gentleman is absolutely correct. We only have anecdotal evidence at the moment, but it is clear that a significant number of lenders have already withdrawn from the market because they know they will not be able to comply with the rules, which are extremely tough. As he said, that is absolutely as it should be. People who cannot comply with the rules are withdrawing, and consumers are being protected as a result.

Free debt advice is currently funded by a levy on lenders channelled via the Money Advice Service. As payday lenders are now regulated by the FCA, they too will contribute to the levy. The new clause tabled by the hon. Member for Walthamstow would duplicate the existing funding arrangements for debt advice. It is important that we put on the record the fact that payday lenders will be contributing to money advice services via the levy.

It is also important to note that the FCA is taking steps to ensure that vulnerable consumers are aware of the free debt advice available to them. It requires all high-cost, short-term lenders to signpost their customers to free debt advice at the point at which a loan is rolled over, and all payday lending adverts must include a risk warning and information about where to get free debt advice.

[Yvonne Fovargue]

Will the Minister confirm that the amount raised by the levy will increase as the payday lenders are brought into it and that the amount paid will remain the same and will not simply be spread more thinly among the lenders?

[Jenny Willott]

To be totally honest, I do not know the answer to that question, but I will write to the hon. Lady to clarify that point.

Similarly, the levy will duplicate the Government’s existing support for credit unions. The Government are already investing £38 million to support the sustainable growth of credit unions to help them meet borrowers’ needs, as highlighted by the hon. Member for East Hampshire (Damian Hinds). Through that expansion, credit unions could save people on low incomes up to £1 billion in interest repayments, compared with going to a payday lender.

The Government therefore firmly believe that consumer choice and protection will be substantially strengthened by the new FCA regime and the ongoing Government support for credit unions. For the first time, payday lenders and other consumer credit firms will start paying their fair share towards funding free debt advice through the Money Advice Service, so the Government are already dealing with many of the issues that have been raised today.

Turning to debt management companies, the Government share the concerns about the potential for detriment to occur to consumers who take out debt management plans. There has been increasing media attention and people are becoming increasingly aware of the problems affecting some consumers. I also recognise the importance of protecting that particularly vulnerable group of consumers. The Government’s focus is on comprehensively reforming regulation in this sector. Responsibility for regulating debt management firms, as with all other consumer credit firms, has been transferred from the OFT to the FCA. As with customers of payday lenders, those participating in debt management plans will be far better protected under the new FCA regime.

The FCA has stated publicly that debt management firms must start putting consumers first and that it is unacceptable that people who are struggling to make ends meet are being talked into unsuitable plans. The Government have made sure that the FCA has robust powers to protect consumers who use debt management firms. The FCA is proactively monitoring the market and has a broad range of enforcement tools that it can use to punish breaches of the rules. There is no limit on the fines it can levy. Crucially, it can force firms to pay redress to consumers. The FCA will thoroughly assess every debt management firm’s fitness to trade as part of the authorisation process—the same process that applies to payday lenders.

Given the risk to consumers, the FCA has said that debt management firms will be in the first phase of credit firms that are required to be fully authorised. Its rules make it clear that the fees charged for debt management plans should not undermine the customer’s ability to make significant repayments to their lenders throughout the duration of the debt management plan. Concerns have been raised, including by the hon. Member for Walthamstow, about the huge proportion of somebody’s payment that, in some cases, goes to the debt management firm rather than the creditors. That is a matter of significant concern.

--- Later in debate ---

[Mrs Main]

Does the Minister think there is any merit in making people aware, potentially at school age, of exactly what they can afford and how they can manage their personal finances? People often get themselves into a mess before they approach some of these loan sharks and high-interest places. It might be good if we started this off at an earlier age.

[Jenny Willott]

The hon. Lady makes an extremely important point. There are some really good schemes in schools across the country, but provision can be a bit patchy. I have worked in schools in my constituency that are doing exactly that. Such matters can be extremely complex for people to understand, and learning about them as part of the school curriculum before they get into debt can be extremely helpful.

[Justin Tomlinson]

I reassure the Minister that, as of September, that will be in the national curriculum, so all is under control.

[Jenny Willott]

I am very grateful to the hon. Gentleman for highlighting that.

[Damian Hinds]

To complete the set, may I use this opportunity to mention the important work done by credit unions that operate junior savers clubs in schools in the constituencies of many hon. Members? It would be great to have them in many more schools in many more places, so that young people get into a savings habit before they reach the first point at which they might take on consumer credit.

[Jenny Willott]

Perhaps the hon. Gentleman would like to speak to the hon. Member for North Swindon (Justin Tomlinson) about that. He raises a very important point: the more we can help young people to understand some of these complex financial systems and how to manage money, hopefully, fewer people will end up in debt—particularly unaffordable debt—in the future.

Returning to the FCA rules on hire-purchase contracts for household goods and what has been called the “BrightHouse clause,” the FCA’s new rules will require firms to provide pre-contractual explanations and information in line with European requirements. I hope that answers the point made by a number of Members on both sides of the House. The information will include the cash price of the goods being financed and the total amount payable. The FCA rules will require that information to be provided to consumers before they sign up. I hope that will ensure greater transparency for customers.

The rules also mean that firms have to adhere to debt-collection rules—a point raised by the hon. Member for Makerfield—including treating customers who are in default or arrears with forbearance and due consideration. They also require firms to assess credit worthiness and affordability, including the potential to impact adversely on the consumer’s financial situation and their ability to make repayments as they fall due. There are, therefore, broad requirements on firms to try to tackle some of the hon. Lady’s concerns about consumer detriment.

When firms sell associated insurance products, they must do so in line with the FCA’s requirements for assessing a consumer’s eligibility to claim on a product and the high-level principle of treating customers fairly. Those are new requirements to ensure that we try to tackle consumer detriment. The Government believe that the tough and decisive action taken by the FCA will ensure that customers are better protected as a result.

Finally, we discussed the issue of logbook loans at some length in Committee and I completely understand the concern about the potential for consumer detriment as a result of these products. The Government believe that people should be free to borrow and have the tools to make an informed decision about which credit product is right for them, but consumers should be confident that they will be treated fairly and that the regulator will step in when things go wrong.

As the hon. Member for Walthamstow will be aware, logbook lenders now also fall under the responsibility of the FCA. As I have said with regard to other credit firms, I believe that consumers will be far better protected under the FCA regime than they have been in the past. The FCA has been very clear that logbook lenders are among the firms that it considers pose the greatest risk to consumers, and they will be in the first phase of firms that have to be fully authorised from October. Logbook loans are defined by the FCA as higher risk activities and, as such, lenders face closer supervision and higher regulatory costs.

Logbook loan providers are now also required to meet the standards the FCA expects of lenders in making thorough affordability checks and providing the adequate pre-contractual explanations to consumers. They are also subject to the high-level principle of treating customers fairly. Indeed, the FCA considers this area to be a particular concern. It has said that it is

“putting logbook lenders on notice”,

and that its new rules give it

“the power to tackle any firm found not putting customers’ interests first.”

It is therefore taking its new responsibilities very seriously.

In addition to the FCA’s robust action, Treasury Ministers have asked the Law Commission to look at how best to reform the Bills of Sale Act—as we know, the legislation underpinning logbook loans is old, lengthy and incredibly complex—and, as the hon. Member for Gainsborough (Sir Edward Leigh) highlighted, the Government believe that the Law Commission is best placed to undertake a thorough assessment of how we can bring the legislation up to date. It has responded favourably to the Treasury request, and it will confirm its upcoming work programme soon.

The hon. Member for Walthamstow raised concerns about people buying cars with outstanding loans against them and about the impact on customers. She said that a large proportion of second-hand cars are sold with pre-existing charges. The Bill, like the existing law, is clear that there is a legal obligation on the seller to notify the buyer of any outstanding charges. The Bill covers business-to-consumer sales, and sales between individual consumers have the same level of protection under the Sale of Goods Act 1979, which provides that the seller must have the right to sell the goods. That applies to all contracts for the sale of goods, so it covers private sales, in addition to purchases of goods from a shop or a business. Goods must be free from any undisclosed charge or encumbrance, which applies to hire-purchase terms for goods sold on, as well as to logbook loans. The private seller is in breach of contract if they do not have the right to sell, or if there are undisclosed charges on the goods, which means that the buyer can get their money back from the private seller.

The Government are concerned about the impact of unscrupulous traders in all these areas. That is why we have taken so much action and given such strong powers to the Financial Conduct Authority, and I do not believe that the Opposition’s new clauses are the right way forward. The Government’s approach is the right one for protecting consumers, particularly the most vulnerable, and I hope the hon. Member for Walthamstow will withdraw new clause 6.

[Stella Creasy]

We have had an interesting debate. I acknowledge that there is interest in this issue, as well as experience and expertise, on both sides of the House, which has been reflected in most of the speeches. I pay particular tribute to my hon. Friend the Member for Makerfield (Yvonne Fovargue) who, for all of us, is a touchstone on issues involving the consumer credit market.

I put on the record my support for the work of the hon. Member for East Hampshire (Damian Hinds) on the credit union movement. However, I must say that I brook no argument from him when Government Members have had three chances—not one, not two, but three chances, or an almost biblical opportunity—to deal with payday lending and the cost of credit, but voted against it.

In 140 characters, the hon. Member for St Albans (Mrs Main), like Shelley’s grandmother, shed much heat but not a lot of light on what Government Members will do about the issues that are to come. Our new clauses are about the new forms of legal loan sharking and the new nightmares experienced by many of our constituents. The hon. Lady is making a tapping noise. Is that her calculating the amount of money people have to pay out to the debt management and logbook loan companies?

--- Later in debate ---

The Government are going to have to grasp the nettle at some point and for me that point needs to come sooner rather than later. I look forward to hearing what the Minister has to say.

[Jenny Willott]

We have had a varied and wide-ranging debate this afternoon, so I shall do my best to cover as many of the issues that Members have raised as I can. First, however, I want to explain the Government amendments, which are designed to protect consumers from a delay in receiving a refund. We discussed the issue in Committee and although delay might arise only in a minority of cases, the Government are persuaded that the potential detriment means that this is a sensible change to make. We are ensuring that any refund must be made without undue delay and always within 14 days of the trader agreeing that the consumer is entitled to a refund. Since we discussed that in Committee my Department has been consulting business organisations and consumer groups to identify the best way to make the change without disadvantaging either consumers or businesses. I am glad that the Opposition support the change.

The Government agree that consumers should be protected from fraudulent, counterfeit and misleading ticket sales. I think that everybody in the House would agree with that. However, we also need to allow the market to operate for the benefit of consumers who would miss out on events without it. We have made new regulations that will come into force this year to empower and inform consumers. From June, traders will have to ensure that consumers have all the information they need before they buy. We published detailed guidance when the regulations were made in December 2013, but since then the Trading Standards Institute has been working on additional guidance. We have today updated our guidance on those regulations to make it clear what that means for ticket sales. That went live on our website this morning. It includes clarification that if the ticket is for a specific seat that information must be given, that the total cost, including delivery costs and other charges, must be given and that, depending on the circumstances, the face value may also need to be given.

In addition, from October of this year we are making it easier for consumers who have been misled by a trader to take their own action to get their money back and, if appropriate, to get damages as well. Armed with that information and access to redress, consumers will be empowered to make use of the market for their benefit and hopefully not fall victim to fraudulent, counterfeit or misleading ticket sales. There are also rules in place to protect consumers, and when a marketplace is aware of illegitimate activity on its site it might be in breach of the Consumer Protection from Unfair Trading Regulations 2008.

As for new clause 12, when there are concerns about the secondary ticketing market the first port of call should be for the industry to source a solution. Some of the larger event organisers, as has already been mentioned, already have refund procedures in place and we welcome that. However others, including smaller players, have chosen not to, for very good commercial reasons in many cases.

The hon. Member for Shipley (Philip Davies) highlighted the importance of industry-led action, and we agree with that. The hon. Member for Walthamstow (Stella Creasy) and a number of other Members mentioned the rugby world cup in 2015, and that is a great example of industry-led action. The organisers’ 10-point plan lists many of the actions suggested by the hon. Member for Shipley, including the release of tickets in batches and the late issue of tickets.

All that is being industry-led. I hope that what I have said has reassured members of the all-party group that we share the concerns that they have highlighted and that we have looked carefully at the best way to take on board the group’s recommendations to try to protect consumers. I hope that they are reassured by what I have explained about the information on the website and in the guidance.

On halal meat—a completely different subject—we want people to have the information that they need to make informed choices about the food that they buy. Many retailers or restaurants and fast food outlets already voluntarily provide information on whether meat is halal or kosher. As we have seen from the debate today, this is a complex and sensitive area. There is no single clear definition of halal meat. The majority of halal meat produced in this country comes from animals that are stunned before slaughter, whereas kosher meat all comes from unstunned animals. That is just part of what consumers want to know, as we have heard in the debate today. We already have powers under the Food Safety Act 1990 to make domestic regulations to introduce a requirement to label with the method of slaughter. However, we do not consider at this stage that regulation is the best approach. Primarily, food businesses should provide consumers with the information that they want and need. If there is to be compulsory labelling, we believe that this would best be done at a European level. That would be best for consumers and also ensure that we do not put our food industry at a competitive disadvantage.

[Philip Davies]

Will the Minister give way?

[Jenny Willott]

I will not give way, I am afraid. I have no time.

My hon. Friend the Member for Shipley said that there was widespread customer demand for labelling of the kind that has been suggested. An EU study is currently being undertaken on precisely that question, so we are waiting with interest the publication of the study so that we have full information on what consumers want. We will review all our options at that point.

We had a good debate about product safety in Committee and we have discussed it recently in the Chamber. There is already legislation on product safety recalls, which places strict duties on producers and distributors to ensure the safety of products. These regulations also provide trading standards with comprehensive powers to enforce them. As the hon. Member for Foyle (Mark Durkan) said, we need to improve the effectiveness of product recalls. The traceability of products after sale is a real challenge, as he said, but I do not believe that introducing new reporting requirements or a new overarching agency is the right approach. The vast majority of businesses take the safety of their customers very seriously and I believe that the best approach is therefore for us to continue to work with representatives from industry, consumer groups and enforcement agencies to ensure that the system is as effective as possible.

The issue of lettings has also excited people this afternoon. Most letting agents offer a good service. A blanket ban on fees, as new clause 22 proposes, cannot therefore be the answer to tackle a minority of irresponsible agents. In addition, banning fees will not make it cheaper for tenants, because tenants will just end up paying through higher rents rather than upfront fees. The hon. Member for Walthamstow highlighted the example of Scotland. My understanding is that in the first quarter after the change was introduced rents rose significantly in Edinburgh and Aberdeen, and in the year to March rents rose by more in Scotland than in England and in Wales. In fact, the rate of increase in rents was double that in Wales. So it is not quite as simple a picture as the hon. Lady highlighted.

We are already changing the law to require all letting and managing agents to belong to an approved redress scheme, which will give tenants an effective way to make complaints. Last month the Housing Minister approved three redress schemes that all letting and property management agents will be required to join later this year. This will ensure that tenants and leaseholders have a straightforward way of holding their agents to account. The three compulsory schemes, which are the property ombudsman, ombudsman services: property and the property redress scheme, will offer independent investigation of complaints about hidden fees or poor service. Where a complaint is upheld, tenants and leaseholders could get compensation.

We are going further. Today, in a move that ensures a fair deal for landlords and tenants, I am pleased to announce that we will be amending the Bill to require letting agents to publish full details of the fees that they charge. Currently the Advertising Standards Authority requires letting agents only to list charges to the tenant up front in their advertisements. Those letting agents who are found to have imposed hidden charges face little more than being named and shamed on the authority’s website. We want to go further to require all letting agents to publish a full tariff of their fees both on their website and prominently in their offices. Anyone who does not comply with those new rules will face a fine that is a much stricter penalty than currently exists. While every business remains free to set its own fees it has to be transparent, so competition will ensure that letting agents will have to justify those fees to tenants.

Today’s plans add to the work that the Government have already done to offer stronger protections for landlords and tenants in the private rented sector while avoiding excessive regulation, which would force up rents and reduce choice. We intend to review the requirement for greater transparency after 12 months of operation to confirm that it is delivering the expected benefits. If not, the Government will consider whether the proposals need to go further.

We have discussed micro-businesses in an earlier debate, so I will briefly state that we do not support extending the consumer protections in the Bill to smaller businesses. The provisions in the Bill have been designed for consumers, and we cannot and should not assume that they can be applied as successfully to small businesses as they can to consumers. As the Select Committee on Business, Innovation and Skills acknowledged, all business groups that responded to the Government’s 2008 consultation preferred to retain the clarity of the current distinction between business and consumer.

Finally, on Government amendment 14 and Opposition amendment 5, I am happy to change the process from a requirement for the negative to the affirmative procedure, and have tabled a Government amendment to that effect. I therefore hope that the hon. Member for Walthamstow will not press her amendment.

[Philip Davies]

I did not hear the Minister make any remarks about new clause 14, which appeared to have cross-party support. Will the Government support it too?

[Jenny Willott]

Given the time restrictions, I shall say that we support the intention behind the new clause but not its wording, as there are a number of problems with it. I am happy to discuss with the hon. Gentleman after the debate the points that he has made to see if there is a way forward. With those remarks, I hope that hon. Members are happy that I have covered all the issues that were raised in the debate.

[Stella Creasy]

A number of issues have been raised. I am conscious of the time so I shall be brief and discuss the two new clauses that we want to push to a vote because we are not satisfied with what the Government have said. First, on new clause 22, which deals with letting fees, the Government should realise that it is not a small minority of letting agents charging fees. Indeed, good landlords do not want to lose tenants who cannot afford those fees.

The hon. Member for St Albans (Mrs Main) was disrespectful about the idea that tweeting in the Chamber was a good idea. Let me tell her that in the past hour we have had an example of a fee of £1,300 to change the names of two tenants on a tenancy agreement. Those are the sorts of fees that we are talking about. Shelter disputes the evidence that the Minister gave about there being no impact on rent inflation in Scotland since the measure was introduced. Members have to make a decision about whether they are on the side of the consumer or on the side of business. We are firmly of the view that we need to be on the side of the consumer in this instance in changing the way in which the rental market works. Rental fees are anti-competitive, and there is a conflict between who acts for the landlord and who acts for the agent. We need to change that, so we want to push new clause 22 to a vote.

We also want to push new clause 16 to a vote, because it is clear that Members across the House want to see action on ticket touting. New clause 16 puts into practice the amendments that the Government proposed on consumer information and consumer evidence. The Minister discussed the rugby world cup, but it is clear that tickets are already being sold on secondary sites, so the measures that she discussed have not had an impact. We need to make progress on that too.

We are happy to take advice on amendments on businesses, and we are happy to accept the Minister’s assurances about refunds. We are seeking more Government U-turns, but on letting agent fees and ticket touting it is time for action, and that is exactly what the Opposition seek in the amendments. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 13

Goods to be as described: meat products

‘(1) All products containing halal and kosher meat shall be labelled as such at the point of sale by retail and food outlets.

(2) A food outlet is anywhere where food is served to the public.’.—(Philip Davies.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Hull Official Receiver’s Office

Jenny Willott Excerpts

Tuesday 13th May 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I trust that we will not detain you for too much longer, Madam Deputy Speaker.

I thank the hon. Member for Kingston upon Hull North (Diana Johnson) for securing the debate. I recognise the interest that she has shown in the relocation of the Insolvency Service’s office in Hull. As she said, we met last week to discuss the issue, along with other Hull Members, and I entirely understand why she is concerned about the potential impact on her constituents and is representing their views this evening.

Let me put the position in context. The Insolvency Service is an executive agency of the Department for Business, Innovation and Skills. It has about 1,800 employees, who operate from locations throughout the country. They deal with a wide range of insolvency matters, such as administering bankruptcies and liquidations —which includes realising assets and distributing them to creditors—dealing with corporate malpractice and misconduct by investigating companies and individuals abusing the system, and managing payments to employees who are made redundant. The administering of insolvencies is funded by fees charged against the assets of insolvents. It is obviously very important to the creditors involved for the costs to be kept as low as possible, while still providing for an effective and fair service.

As the hon. Lady acknowledged, the past five years have seen a sharp drop in the number of insolvencies handled by official receivers’ offices, from about 80,000 cases in 2009 to nearer 25,000 today. That is largely because of a sharp fall in the number of debtor petition bankruptcy cases following the winding back of high levels of lending. To date, it has led to a reduction of about a third in the staff of the Insolvency Service, which has been achieved through a programme of voluntary exits.

As for the question of where offices need to be, for the purposes of official receiver work in particular, the Insolvency Service needs to be able to interview insolvents within a reasonable distance of their homes. We would therefore usually choose city or town centre locations close to transport hubs. The Insolvency Service reviewed its network of local offices in the context of customer demand and the reduced number of employees, and estimated that the estate was about a third too large. It therefore embarked on a programme of estate rationalisation, which also accords with the Government’s wider agenda of minimising the costs of their own estate.

The hon. Lady asked about the estate in London and the south-east. In the past two years the Insolvency Service has been looking at its estate across the country, and in London it has relocated to cheaper buildings in surplus Government estate in both London and Croydon. It decided to close its Watford and St Albans offices as well. It has therefore made such decisions across the UK, including in London and the south-east; it has not targeted other areas.

Individual offices need to be of sufficient size to be sustainable both as a management unit and to provide development opportunities for staff, as well as to be able to offer the necessary flexibility as workloads change. The skills needed for the different areas of work in the Insolvency Service are often similar, so in the last few years several hundred staff transferred from working on bankruptcies to investigation work as the number of cases dropped. This type of work is especially located in the larger metropolitan areas.

As a result of the review, five relocations and five closures took place in 2013-14 and a further 10 closures will take place over the coming financial year. The Insolvency Service has worked closely with the trade unions throughout this process. All employees in the affected offices have been offered the opportunity to relocate to another office or take voluntary exit terms. The Insolvency Service offers excess fares to staff for a three-year period after a move. It also discusses flexible working arrangements to try and find ways to make a move possible for employees.

The Insolvency Service is proud of its customer service, recently coming second out of 53 Government Departments and agencies, with customer satisfaction levels of 96%, which is extremely high. Around 250 face-to-face interviews arise from cases in the Hull office. That is not a large number in the context of the total number of bankruptcy interviews across the country, but in order to maintain high levels of customer service, interview facilities will be set up in other Government buildings in Hull, at minimal cost and with flexible arrangements, to be available for meetings. Replacing an office with an interview facility makes no difference from the point of view of customer experience.

Turning to the specific concerns with respect to the Insolvency Service in Hull, there are 43 permanent employees in the Hull office and the prime purpose of the office is to carry out the duties of the official receiver. Case numbers in the area served by the Hull office have seen an even greater decline than the fall in caseload nationally, with a drop in workload of 79% since 2009, which is a huge drop. Staffing levels in Hull, however, have only fallen by 43%, so there is a mismatch there.

The office was kept busy over the last two years by taking cases in from other offices. The Insolvency Service prefers each official receiver’s office to deal with the cases that arise within its area. As the hon. Lady said, that local knowledge is important. Also, with the general declining workload there is less surplus work to be transferred between offices. As a result, the Hull office is increasingly difficult to sustain from an operational perspective.

The hon. Lady mentioned the number of company director disqualifications achieved in Hull. The total number of disqualifications in 2013-14 was 27, and that was a great result by the staff in Hull and reflects very well upon their commitment and expertise. To put the figure in context, there were 1,273 company director disqualifications in 2013-14. There is significant value in disqualifications, but the disqualification work carried out by Hull will not be lost, but will be transferred to other locations, including Leeds, so disqualifications will continue.

On 27 March the Insolvency Service announced that its office in Hull would close, with its work and employees being relocated to Leeds in November 2014. This decision will both help the service reduce the number of offices and also improve long-term resilience in the face of reduced case numbers. Consolidating in Leeds allows the Insolvency Service to use its work force more flexibly, and in the longer term to offer a wider range of career opportunities to staff.

[Diana Johnson]

I am listening carefully to the Minister’s remarks, but the coalition Government said that they wanted to rebalance the economy and ensure that all the regions benefited. Taking away the limited number of Government jobs in Hull, an area that is blighted by terrible unemployment, flies in the face of what the Deputy Prime Minister said just this morning in the House.

[Jenny Willott]

We recognise that rebalancing the economy geographically is important, and I will come on to some of the work that the Government are doing in that area. We are not talking here about taking work out of the north of England and centralising it in London: we are talking about ensuring that the estate of the Insolvency Service is sensibly spread across the country and that the offices are where the work is. That is an important part of having an effective and efficient operation.

I appreciate that the decision to close the office is not what Hull employees want and I know that the Insolvency Service board did not take the decision lightly. I am aware that the board fully considered the option of moving to cheaper Government property in Hull, as well as closing its Leeds office and moving those operations to Hull. The business case put forward did not just include accommodation costs: it also looked at other benefits, such as efficiency savings stemming from combining teams, the ability to be flexible in how the Insolvency Service deploys its employees and the greater potential for personal development provided by moving between different roles in a larger office.

The business case calculated that a move from Leeds to Hull would have a net present cost of £535,000 over five years, against a net present value saving of £289,000 for a move from Hull to Leeds. Costs would have been higher for a move from Leeds to Hull because the lease on the Leeds building runs until 2018, whereas the Hull lease only runs until 2016. That is a significant difference.

[Diana Johnson]

I am interested to hear about the leases, and we discussed that issue when we met last week. Have there been any discussions or consideration—it was not in the business plan that I saw—of whether the office space in Leeds could be sub-let? Rent is much more expensive in Leeds than it is in Hull.

[Jenny Willott]

At the meeting last week we also pointed out that it is not physically possible to fit all the employees from the Leeds office into the Hull office, so we would need to find a new office in Hull and bear all the costs of refurbishing that. That option was looked at in detail, but it simply was not a financially viable alternative.

The business case took into account that not all the staff would wish to move from Hull to Leeds, although the hon. Lady said that it did not. The estimate was that about half would move and half would take voluntary redundancy. The costs associated with that were built into the business case for both scenarios. The Insolvency Service board considered that the business case for moving from Hull to Leeds was persuasive. Those employees who wish to relocate will have a job in the Leeds office, and the Insolvency Service will pay excess fares for three years. The Insolvency Service has been having one-to-one meetings with its employees as well as keeping closely in touch with their representatives about the implications of the relocation and the impact on individuals. For those who do not want to move office, the option of voluntary redundancy is available, but that is clearly the last resort for most people.

The hon. Lady also raised concerns about employment in the Hull area. I reiterate the Government’s commitment to supporting the Hull area. This issue was raised in Deputy Prime Minister’s questions earlier, and it is a real commitment on the part of the Government. The Humber local enterprise partnership predicts that the city deal for Hull and Humber will deliver more than 4,000 jobs in offshore wind-related industries; at least 1,100 unemployed young people supported into work; 3,400 construction jobs; an expected £460 million of private sector development on the Humber; engagement with more than 3,000 businesses; and the provision of extensive support to 500 businesses, creating approximately 400 jobs. Significant effort and work are therefore going into the area, and the Government are committed to ensuring that we invest in other regions of the UK, and that we are not focused centrally on London and the south-east.

In conclusion, I appreciate that this is a very difficult time for the Insolvency Service and its employees. I hope that the hon. Lady is reassured that the Insolvency Service is aware of the issues that she has raised, that her questions have been considered and that the service is supporting affected employees during the transition period.

The Insolvency Service wants to maintain and improve its already high levels of service delivery. It is making its services more efficient to improve returns to creditors. I appreciate that this is a challenging time for staff, but I congratulate them on maintaining high levels of performance throughout a very difficult programme of change. I hope that I have reassured the hon. Lady that the proposal has been well thought through, that the alternatives have been considered, and that staff and trade unions have been involved and consulted throughout.

Question put and agreed to.