Consumer Rights Bill

Lord Harris of Haringey Excerpts

Wednesday 22nd October 2014 Grand Committee

[Baroness Neville-Rolfe]

I thank the noble Baroness, Lady Crawley, for her intervention and for bringing the whole issue to life to an even greater extent. While I am waiting for a bit of advice, I would say that there are different business models. I used to go abroad on business and I got quite frustrated when I could not print out my boarding pass. Some airlines allow you just to show the boarding pass on your phone or your iPad. That has obviously been a great step forward.

On fairness, airlines are a competitive industry. If consumers do not like the deal that the airlines are giving then, to some extent, we vote with our feet. I have explained the frustration that I have had and how I dealt with it. It is not obvious to me how you could resolve this under the general heading of fairness. There are advantages and disadvantages to the way that services are supplied, and this is perhaps something for us to contemplate.

[Lord Harris of Haringey (Lab)]

My Lords, I hesitate to intervene. This may be the first time that I have intervened on the Bill, for a variety of reasons. I should declare my interest as chair of the National Trading Standards Board. I am now confused. I thought that I understood what this debate was about, but the Minister has raised the interesting topic of how people can understand what they are entering into. She has talked of the fact that different companies have different business models. That is all very well and good, but it is surely incumbent on them to ensure that those business models are transparent to people who might enter into a contract with them.

As we seem to be hung up about airlines and booking airline tickets, there is a particular issue about price comparison sites. That applies not just to airlines but to other services. The price comparison site will try to identify the headline figure for the cost of a particular service. That is where suppliers who operate a business model which adds in a series of extra charges further down the line can score. People say, “I will go for the cheapest”—the one which seems to be the cheapest—and then discover that they are being hit for all sorts of extra charges. I would be grateful if the Minister could tell us how she feels that the Bill addresses that problem.

[Baroness Neville-Rolfe]

I am grateful to the noble Lord, Lord Harris, for his intervention. It is great to have the trading standards voice joining in our debate, because we have referred to that several times already in Committee. I reiterate my point that the consumer must have agreed to the additional payment before entering into a contract. If the contract is not clear that the consumer has to pay but he or she pays, they can seek reimbursement. That is a basic principle. Of course, the law has been much strengthened by the contract regulations that we have been discussing. They require certain information for transparency, and making online sales requires information about extra costs to be given in advance. Obviously, I cannot comment on particular circumstances, but one would have to ask how the situation on boarding passes is described in the terms and conditions of that airline.

[Lord Harris of Haringey]

My Lords, my question was: how do the Government anticipate that the regulations that they are introducing, whether amended or not, will deal with the issues about price comparison sites and the headline price? It was because these are hidden costs, which are not automatically picked up.

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[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I support Amendment 50. I have an elderly father who is 91 and who has recently been extremely ill. While looking through his paperwork, I found a number of bills that needed paying. We discussed this and I said, “Why don’t you set up a direct debit?”. He definitely did not want to do that. He felt that he would lose control of what was going on in his life and his finances. He liked the security of filling out a cheque and sending it in the post, with a copy of the bill or the counterfoil on the bottom of it. He felt that that was the way that he could make sure that his money stretched, that he had money at the end of the month and was able to pay all his bills. He is not a man who did not want to enter the technological age. He bought a computer—much to my utter amazement—because Lidl had them on special offer. He loves Lidl. He joined a course to teach him how to use to the computer, and my husband and son went over to help him to set the computer up and get to grips with it. However, he did not use it often enough to be able to use the skills that he had been taught in his computer classes, so he was never going to be able to pay all his bills from the internet. My father is not on his own. Lots of people want the security of a paper bill and of being able to pay by cheque or a direct debit—because my father has direct debits for some things, such as council tax. They want that security, and I think that they ought to be able to have that.

[Lord Harris of Haringey]

My Lords, Members of the Committee have highlighted a number of categories of people for whom this is a necessity. We should also be clear why it remains a necessity for virtually every citizen. That is a consequence of the approach of both the current Government and their predecessor in not enabling the citizens of this country to have a readily available means of identity proof and assurance. Had proposals gone forward on identity cards, it would no longer be necessary to prove your identity by turning up with a paper copy of a utility bill, which is one of the two elements that you nearly always have to have to demonstrate and prove who you are. I think that the failure of successive Governments to provide a proper system of identity assurance is lamentable, but that is for a separate debate.

We are left in a position where most citizens need to be able to produce a hard copy of a paper bill for a utility or similar service; otherwise, they cannot prove their identity to their banks, to apply for certain documents and for all sorts of other purposes. Under those circumstances, the Government need to look favourably on this group of amendments.

[Baroness Neville-Rolfe]

My Lords, I am grateful to my noble friend Lord Hodgson for his amendment and for bringing up an issue that matters for the grey haired and the vulnerable. It is a very House of Lords issue, I have to say, so we must try to get to the right conclusion for the population at large.

For some, there is something comforting and reassuring about holding a bill or a statement. As others have hinted, it can engender a feeling of greater control over your finances. Equally, not everyone can manage with quarterly bills, which are mentioned in my noble friend’s amendment. We must not forget those who need to budget carefully when considering these issues—those who struggle to make ends meet.

There are a couple of elements in the amendment, as well as others for the debate that we will probably have on Monday on a similar issue: first, whether there should be a requirement for quarterly bills and, secondly, whether the customer should be able to choose the way in which they receive bills and statements. I turn to the frequency of bills first. It is common in most service supply contracts to receive a minimum of four quarterly statements of account, which reflects the historical habit of four quarterly payments. Other arrangements have grown up more suited for the circumstances of today—a mortgage customer may need only an annual statement, while for current accounts or credit cards a monthly statement would, in my view, be essential. For these, the benefits of moving to a system of quarterly statements upon request are not immediately obvious and could have the unintended consequence of increasing costs or restricting flexibility in the frequency of information.

The appropriate arrangements are set out at the time of the original contract, and I agree that these details should be clear and transparent at the time of purchase or engagement so that the customer knows how his or her bills and statements are to be provided. This is what the current law requires. So what is the case for change? The amendment requires that, notwithstanding the original terms of the contract, a customer can request at least four statements a year in written form, at any time of their choice, which could introduce a randomness into the billing process that would add to the administrative costs and could have undesirable side effects. That is probably not my noble friend’s intention.

Paper bills have never been free. Historically, there was just one way to pay and the fee for processing them was always included, obscured in the administrative costs of the utility and the charge spread across the customer base. However, of late, charges have been more transparent—partly due to advances in consumer law—and have been linked to specific costs and customer categories. Now cheaper to administer payment methods are available and utilities are seeking to incentivise their use by separating out costs and allocating them accordingly. The uncertainty that this amendment would introduce would be of disadvantage to online customers, for whom statements are readily available and can be printed if necessary. Many hard-pressed households welcome the opportunity to save money that paperless bills offer. Paying monthly by direct debit can also enable people to budget more effectively, rather than being faced with quarterly or lump sum bills. For them, the proposed statutory requirement set out in these amendments adds little but extra costs.

I agree, looking at the bill format, that the choice to have paper bills should be generally available, but when we consider the utility providers we can see that the choice is widely available. It is true that not all tariffs offer this option, but customers can and do choose to receive paper bills from their suppliers. So what is the objection? The issue lies with differential pricing, to which my noble friend Lord Hodgson referred—and on this I am afraid I must disagree. It is reasonable for a supplier to take the cost of processing bills into consideration when setting the price of its tariffs. Such decisions go to the heart of running a business and encouraging efficiency in the economy. It is undoubtedly more expensive for a business to print out and post bills to its customers than it is to deliver them electronically online.

It is not for the Government to dictate that certain costs cannot be accounted for and that the consequent burden instead should be placed on all the customers. It is surely reasonable for a business to incentivise its customers to use the cheaper processing mechanism by sharing the savings with customers. This amendment would outlaw that and almost certainly drive up the charges to online customers and perhaps to customers more widely. What does that do to our efforts to encourage more people online within the economy?

The noble Baroness, Lady Hayter, rightly mentioned how useful paper bills were as proof of identity. But, of course, that is not a primary function of utility bills. Other more reliable forms of identity are available to many people, such as passports and driving licences. Going forward, the Government Digital Service is leading work on the development of the ID assurance programme, which will enable people to prove their identity and access government services in a digital world. Bills can always be printed out from an account if they are needed. I thank the noble Lord, Lord Harris, for his comments on ID cards but that may be a debate for another day.

[Lord Harris of Haringey]

It is not entirely a debate for another day. I understand the arguments but the Minister is saying that to drive down costs is an unnecessary burden on the businesses concerned. If the requirement is for citizens to be able to prove who they are—and in most instances that is the case—they need as a second form of back-up a utility bill that gives their address. That is a problem that needs to be met. Are the Government arguing that that is not a fair cost on either the utilities, the companies concerned, or on the generality of consumers? As the Government are requiring that information and have created a situation in which we all need to prove our identity, the logic of the Minister’s argument is that the Government ought to be paying the utilities to provide us all with paper bills.

[Baroness Neville-Rolfe]

I note what the noble Lord said. That is fair but difficult logic. His points are well made. Perhaps we can come back to that question on another occasion, but I did emphasise that work is in hand on the ID assurance programme, which is very important if we are going to have a digital economy. We say that we are leading in Europe, so we should be doing this sort of thing as well.

What is being done to help people and businesses go online? A lot of work is going on across the public, private and voluntary sectors to help people and organisations get online, but digital exclusion is a huge issue. The digital inclusion strategy was published alongside the digital inclusion charter in April. It sets out 10 actions that government and partners from the public, private and voluntary sectors will take to reduce digital exclusion. There is quite a lot of good practice for the vulnerable and disabled that we may end up discussing in a little more detail.

Before I conclude, I return to the first point made by my noble friend Lord Hodgson concerning his experience of getting copies of BT bills. That is an experience I entirely empathise with, having had exactly the same issue when trying to prepare my expenses in the old days. The only thought I can add is that, like all sector regulators, Ofcom requires any charges to be cost-reflective. If a customer feels that a charge is excessive—I am not sure whether that was what my noble friend was saying—they can complain to Ofcom. Ofcom does listen to complaints. I believe it receives an average of only five complaints a month about paper bills, so not a huge amount of writing to Ofcom seems to be going on. That is obviously another avenue of public debate.