Public Bodies Bill [HL]

Lord Whitty Excerpts

Tuesday 11th January 2011 Lords Chamber

[Lord Whitty]

My Lords, I strongly support my noble friend’s amendment. The way in which she has constructed her argument in terms of six precise questions behoves the Government to give a clear answer, either tonight or in writing, as to how they see the future for consumer protection in the regime they are proposing here.

I declare a past interest in that up until last month I was the chair of Consumer Focus. I am now much freer to say what I think. It was a great experience, both there and at the NCC. I am extremely pleased to see that the Minister replying is one of my predecessors and that one of her predecessors is also with us—the noble Baroness, Lady Oppenheim-Barnes. I am pleased to see them because they will know what we are talking about. I am sorry for the Minister, however, because the part that will suffer most from the loss of Consumer Focus is the part that was covered by the old NCC. The energy and post will have to survive in some form or other. Politically, it is not possible for the Government entirely to retreat from those areas. What will go will be the more general work on consumer protection, consumer law, the international dimension, as my noble friend mentioned, and looking at markets which are not necessarily at the top of the Government’s agenda but which are at the heart of the experience of the average consumer and the most vulnerable consumer.

The bit of paper which the Government have provided as justification for this—I am grateful that we have a piece of paper—is deeply misleading. It says that the headline decision is to,

“Abolish, transfer functions to Citizens Advice and Citizens Advice Scotland”,

and that aim of the reform is to,

“rationalise the consumer protection landscape and reduce the number of bodies”.

Actually, the Bill does none of that. It does not provide for any transfer, nor does it provide for any rationalisation. I appreciate that the department conducted a major consultation in relation to the consumer landscape and was considering several propositions in terms of rationalisation. I agree with the view of the previous Government and the current Government that some rationalisation was necessary but this Bill does not provide it. Instead, it confuses the position, as I shall go on to argue.

My noble friend outlined the recent history of the construction of Consumer Focus out of the National Consumer Council, Energywatch and Postwatch. There is, of course, a much longer history to which she also alluded. The late Lord Young—by whom I do not mean my noble friend on the Front Bench but Lord Young of Dartington—was a progenitor of so much in the consumer field and in 1975 he argued not only for the establishment of a membership organisation, now Which?, but also for the National Consumer Council and for a consumer congress. That was the high noon of the corporate state and he and others saw that a representation of consumers alongside employers and representatives of workers in trade unions was an important part of that structure. But the NCC has developed through changes in government policy and institutions and through the disappearance of the nationalised industries. It has survived through all this. The regime of the noble Baroness, Lady Thatcher, quite rightly looked at the possibility of dropping the NCC but backed away from it. It is not a route which this Government, in an attempt to create the big society and to engage with groups such as consumers, ought to be going down today unless there is more to the story than we have yet seen.

What happened in the intervening years since 1975 is that we had a whole construction of different consumer bodies as well as the NCC. The privatisation and liberalisation of nationalised industries led to consumer bodies being set up in different sectors, on a different basis and in many cases with different forms of funding. There was a confusing picture and the previous Government quite correctly decided that they needed to address that and bring a lot of those bodies together in Consumer Focus. The previous Government did not go as far as they intended, partly because of internal Whitehall barriers and partly because there was some resistance from some of the industries. But they took a significant step in the right direction. It is clear that Consumer Focus made the best of a bad job in the sense that we were covering only part of the consumer representation that was laid down in statute and paid for, in part at least, by taxpayers or by statutorily laid down levies in one form or another on the other sectors.

Rationalisation, therefore, was sensible. At one point I thought that the Government would come up with a rationalised body, pulling together several of the institutions that existed into something like Consumer Focus. They need not have kept the name but could have created a new and wider body. Had that happened I would have been a strong supporter. I do not necessarily think that the status quo is defensible or the best possible representation of consumer interests in the best possible world. But they did not do that. Instead, they seem to have backed off the rationalisation, and this Bill has different bits of consumer interest representation in different schedules. For example, whereas Consumer Focus is in Schedule 1 for abolition, the Consumer Council for Water is in Schedule 7 for limbo and Passenger Focus is in Schedule 3 and Schedule 5. I am not entirely clear what will happen to that. There has been some threat about what will happen to the consumer panels within regulators, including the one that my noble friend chairs in the legal services area. There is no clarity on how any rationalisation will take place. What is stated here as the main aim of this reform, rationalisation, is not provided for within the Bill. Instead, further confusion is provided for.

Consumer Focus has carried out functions on behalf of vulnerable consumers and the average consumer—because average consumers and even quite well-off consumers are often vulnerable in certain circumstances. I am always pretty vulnerable when I am dealing with a garage mechanic. Most people of my age and technological illiteracy are pretty vulnerable to people arguing on intellectual property or new technology, and I know that that is also an interest of the noble Baroness. It is not just the most vulnerable who we represent but the most vulnerable are probably likely to lose out most from these changes.

However, I will not argue with the Government that this body should always be in the public sector. There are arguments for moving it into the third sector. I am reinforced in that view by the attitude that the Government have taken to quangos in general—by not distinguishing between the role of quangos. Quangos are not allowed to lobby the Government and make public statements that are critical of government policy. It is difficult to do that when you are in the tradition of the NCC and Consumer Focus. You are always criticising or trying to improve government policy, the policy of regulators as well as the policy of public service providers. Therefore, it is quite difficult to maintain a degree of silence in that context. In that sense, it might be more sensible to move it into the third sector. It would still require significant public support and the Government recognise that. Unfortunately, they are not providing that support.

What is likely to happen is that two-thirds of the activity of Consumer Focus will be in energy and post. Legislation going through Parliament reinforces that role. In the Energy Bill—particularly in relation to the Green Deal—which had its Second Reading in this House just before Christmas, there are functions for Consumer Focus inherited from Energy Watch and a recognition by DECC and Ofgem that there is a huge role for a consumer representative body within this area. I do not think any government would be allowed by their supporters in the Commons let alone by the opposition to get rid of the energy role. I think that will largely survive. The post role will probably also survive because of the present propositions for the future of the postal service and Post Office network. I do not expect the Government to be hugely generous in providing for consumer representation in those areas but I believe it would be politically difficult for them drastically to cut the support they give to consumer representation, whether the body is in the public sector or in the third sector.

That leaves the rest of the economy. Consumer Focus, inheriting this from the NCC, looks at consumer protection, customer service, consumer law, the general principles of regulation in this area, the EU level representation to which my noble friend referred and the international dimension of it. The reputation that Consumer Focus and its predecessors have in this area is an important asset. My noble friend referred to cuts in the budget here. The previous year’s budget for consumers in the rest of the economy, outside energy and post, is just over £5 million. That is going to be cut this year by about 30 per cent and indications are that next year it will be cut by something close to 80 per cent.

If it is intended to do that, and to switch this to Citizens Advice, we would expect some concomitant increase in the allocation to Citizens Advice—a partial if not a full one. There has been no such compensating allocation to Citizens Advice which, as my noble friend said, is under severe financial pressure itself because of the cutbacks by local authorities. There is no increase in the central government grant to Citizens Advice. It is not a transfer in terms of money because the money is simply being cut. The note we have been provided with says that the full transfer will not take place until 2013. By 2013, the budget will be less than 20 per cent of what it was last year. In terms of resources, what is there to transfer?

There is also the question of transfer of powers, which are significant in relation to information. It is not clear which powers the Government intend to transfer or which powers Citizens Advice could accept in view of its charitable status and its need primarily to act in pursuit of its charitable objectives. Nor is it clear that the Government can allocate powers of that nature to what is after all a private body without at least some degree of tendering process or whatever. The Government’s intentions here have always been unclear. I have heard it said that there are bodies other than Citizens Advice which could take these powers. I do not see them queuing up but maybe that is what is behind the Government’s intentions. At the moment it is not clear that the powers would be transferred or that any of the expertise represented by the staff would be transferred. It has not been clarified whether TUPE applies. My Amendment 105A deals with that aspect more generally. If the budgets are cut significantly then there will not be any staff left to transfer. That intellectual asset would disappear with the staff.

None of this is a criticism of Citizens Advice, which does a fantastic job in many respects under growing constraints and pressure for its services. There is little that Citizens Advice does that duplicates the work of Consumer Focus, despite what has been said. I would be surprised if 10 per cent of the non-energy, non-post budget is in any sense duplicated. Even in the sectors where we both work, we do different things. A savings rationalisation to avoid duplication is not a reasonable justification for this.

Citizens Advice will find it difficult to take on these roles. Nothing in the experience of Citizens Advice relates to the intense relationship that we have on energy and post with the regulators, with the energy companies and with Royal Mail or the degree of knowledge of those markets that has been established over the years. I therefore think that Citizens Advice would have to create a whole new division if it was to take on the energy and post functions. It will be necessary for the Government to provide for that in some form.