Lord Whitty
Main Page: Lord Whitty (Labour - Life peer)
Lord Whitty
“( ) Within six months of the coming into force of this section, the Secretary of State shall, following consultation, propose regulations that provide for collective redress by consumers of gas or electricity.”
Lord Whitty (Lab)
My Lords, this amendment relates to the redress element of Part 6. I approve of the increase in protection for consumers in the redress provisions in the Bill and have supported them throughout. However, there is a dimension that is not there, and there is one that has been discussed with successive Governments but has never been fully put into operation. The present Government, in their consultation through BIS on consumer rights and protection in general, mentioned the possibility of moving to a system of collective redress.
In the energy situation, the whole structure of the market and the whole history of the scandals in relation to consumers underline the need to have some collective resolution of these matters. If you look, company by company, at most of the mis-selling and misrepresentation, the overcharging, the failure in billing and the wrong billing, right up until the very recent case where Ofgem fined ScottishPower, you will see that thousands, and in some cases tens of thousands, of consumers have effectively suffered from exactly the same mistake-cum-misdemeanour by the relevant energy companies.
At the moment, complaints against energy companies are running at an all-time high—you have only to look at the ombudsman’s figures and facts. The need for redress systems is very important, but if every individual consumer has to take that case either through the ombudsman or through the courts, the ombudsman’s agenda is going to get cluttered up and the courts are going to lead to individual decisions, which may be different in different parts of the country. A form of collective redress for everybody who has suffered from what the regulator will have found to be a mistake, or an error, or a breach of the licence or other regulations, affecting tens of thousands of consumers, needs to be treated in a somewhat different way.
I am not stipulating here precisely what way. There have been a number of formulations for collective redress in different sectors. The best of these was never put into legislation, but was dropped during the wash-up at the end of the last Parliament, because the Treasury was proposing very effective collective redress systems within the financial services sector.
The Government, in their draft Consumer Rights Bill, which is now being considered in pre-legislative procedures, have not followed up on what was in their consultation paper, which had a different formulation. In relation to gas and electricity, the degree to which there are large numbers of people suffering from the same act of a company, the fact that there are licence conditions attached to that and the fact that there is a whole structure of regulatory ombudsmen in that area, make it a relatively easy sector, in principle, for which to produce a system of collective redress.
My amendment requires the Secretary of State to come forward with regulations to that effect within six months of the passage of this Bill, so I am leaving the Minister and her colleagues a bit of time to do this, but I think the principle will be recognised. This would be pretty much well supported by, I think, all the consumer groups and many of those who have dealt with individual cases of consumer detriment which have arisen within this sector. I hope that the Government will consider this and, at least, give me some encouragement, if not tonight then in the future, that they will be looking in this direction. The way in which this industry has treated its consumers; the degree of mistrust among them and the level of redress that individual consumers have achieved in this sector show the need for something more systematic. I hope that the Minister and her colleagues will use this amendment to have another look at the issue. I beg to move.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I thank the noble Lord, Lord Whitty, for this amendment. Amendment 104B would require the Secretary of State to consult on and then bring forward regulations to allow collective redress for energy consumers. I agree with the noble Lord that consumers need to get the redress that they are due by the most straightforward means available. I fear, however, that the introduction of collective redress in the energy sector would not achieve these aims. My concerns centre mainly on the time and cost of bringing such cases.
The noble Lord has said previously that collective redress offered a quicker and cheaper solution for cases than if cases were pursued by individuals either through the ombudsman, Ofgem or the courts. This presupposes that action through the courts is the only option available where an issue affects more than one consumer. That is not the case. One of the reasons we have introduced the consumer redress order powers in this Bill is to provide consumers with the means of redress without the need to initiate individual complaints.
Lord Whitty
My Lords, I am disappointed by that reply because I do not think that the Minister is right in the description of consumer law. You could write the regulations so that you would have to go to the ombudsman before going to such a system. The cost to consumers of starting a process in the court is prohibitive but, were it a collective provision and the ombudsman had found in a certain way, that cost would fall on no one.
If you take the equivalent of the PPI scandal in the financial sector, there is not a collective redress but there is a collective problem. If anything, the banks probably have paid out more money than they otherwise would have done had they offered a collective form of redress right at the beginning of the process. They have been obliged to try to find all sorts of people who may or may not have been aware that they had been mischarged.
However, it is clear that the Government are not prepared to pursue this issue in that context, which is disappointing. I also think that the briefing that the Minister has is not entirely in parallel with what is being discussed in BIS and in the consultation on consumer protection in other arenas. This is an area where common problems arise much more frequently than in the normal buying and selling and contractual arrangements throughout the economy. That is because everyone has similar Bills and similar charges whereas in other places there are differentiations to be made. Therefore, this is a prime potential sector for collective redress. However, for tonight, I accept the Minister’s rebuff and I will say no more. I beg leave to withdraw the amendment.
Lord Whitty
“(2A) The Secretary of State shall set further targets beyond 2030 in line with the 2008 Climate Change Act to reduce greenhouse gas emissions by 80 per cent by 2050.”
Lord Whitty
My Lords, had this Bill and the procedure taken a slightly different course, I would have pursued this amendment. It was debated earlier. Normally, the vote would come up at this point.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, perhaps I may interrupt the noble Lord. If he is proposing to speak to this amendment, he should move it first.
Lord Whitty
My Lords, I am referring to Amendment 104C, which was debated earlier. I am not going to move it. I am just registering with the Minister that, had it fallen differently, this amendment would have been the most important one in the first group and I would have called a vote. I therefore hope that the Minister and her colleagues will have another look at it.
Lord Whitty
“( ) For the purposes of allowing a comparative assessment of progress in addressing fuel poverty, assessments under this section must include, until at least 2018, the extent of fuel poverty as measured according to the definition set pursuant to the Warm Homes and Energy Conservation Act 2000.
( ) Reports under subsection (5) shall also include an assessment by the Secretary of State of the impact and projected impact of implementation of the strategy on—
(a) the mortality rates and health needs of persons living in fuel poverty;(b) the cost of cold-related illness to the National Health Service and wider economy;(c) the level of debt as a result of energy bills, and the number of unpaid bills;(d) any change in the number of jobs created and supported as a result of implementing the strategy; and(e) emissions of carbon dioxide and other greenhouse gases from fuel poor households.”
Lord Whitty
My Lords, these amendments relate to the strategy which will be required under Clause 136. As I indicated earlier, the clause itself should be beefed up. At the moment the Government clearly think it can all be done by secondary legislation. But whatever the substantive content of the strategy, and whatever definition of fuel poverty is adopted, careful and regular reporting and monitoring of progress on improving the energy efficiency of the houses in which low-income households live, and on reducing the total numbers of the fuel poor in our economy, are important to hold the Government and the supply companies to account. This reporting would also ensure that the policies the Government intend are pursued, whether they are the current ones via the ECO or, to some extent, the Green Deal, or whether they are new policies that the Government come up with at a later stage.
Noble Lords earlier argued for it to be a taxpayer-resourced intervention in improving energy efficiency. As my noble friend Lord O’Neill said earlier, we need to measure the success of that policy in terms of the energy efficiency of buildings, and to look year by year—and in particular to set target years—at how the energy efficiency of our dwellings is improving, as other noble Lords have acknowledged. Even now, after nearly 20 years of activity in trying to improve the quality of our buildings, we fall far short of the northern European standard in terms of insulation and warmth retention. We are therefore far more afflicted by the resultant fuel poverty than other equivalent countries.
One problem is consistency of reporting. We need to report on the achievement of the objectives: on energy efficiency, and on reductions of the number of the fuel poor; but we also need to report on the effects of fuel poverty, and how we are managing to reduce those. Some of those are set out in the amendment. There are references to mortality rates due to fuel poverty; to the cost of fuel poverty-related diseases to the NHS; to debt; and to emissions of carbon dioxide, because this is an energy efficiency and carbon reduction policy as well as a fuel poverty and social policy. These should all be monitored and reported on, and checked against the milestone targets which I hope the Minister will eventually come up with in the strategy.
The other point is consistency with past data. There is a problem here because there is some cynicism that a change of definition of fuel poverty has statistically got rid of nearly 2 million homes without anybody actually being any better off. Some people should have been excluded from the total, but most people would regard that the majority of those are still fuel poor, and the run of statistics we have had from the year 2000 or even earlier onwards would be discontinued if the change of definition also led to an end of those historic statistics. We also have the complication that in Scotland, Northern Ireland and, I think, Wales, the old definition is to be retained. Therefore, when we look at UK numbers for the fuel poor, there will be an inconsistency between the adoption of Professor Hills’s definition and the government monitoring and tracking that, and what is happening in the devolved Administrations, which would mean that we could not have an overall UK figure.
That may change over time, but all I am suggesting is that for a few years we mandate that the old series should continue so that the old definition—as I say, we already have a 15-year run with it—should be extended at least to 2018 and be reviewed at that point. For the first few years of the strategy, the two criteria could be judged. There would be the new definition, which will have a starting point in, say, 2014 or 2015 and is the Government’s preferred definition—for the moment I accept that—and a comparison with the old, historic trend. We would then be able to see whether the change in definition led to a change in outcome statistically and whether that change actually meant something real on the ground. In some ways, the two might diverge significantly, because while the criticism of the old definition was that it was too price sensitive, the criticism against the new definition is that it is not quite sensitive enough. In the end, the judgment of poverty is that someone cannot afford something because the price is too high. I fear that the Government will find that even if they have a relatively successful policy on energy efficiency, if prices continue to go up, that will not show in the figures. It is my subjective judgment that that will be a problem.
All I am saying tonight is that the Government should accept, for a limited period, that we should run the two series together to see if they diverge and whether there are any policy or future monitoring conclusions to be drawn from that. I hope that the Government can accept that, and that there should be systematic reporting of the level of fuel poverty, the success of energy efficiency activity, and of its outcomes and impacts in the terms of these provisions. I beg to move.
Lord Jenkin of Roding (Con)
My Lords, the noble Lord, Lord Whitty, has made a sophisticated case for his amendment. When I read it, my first reaction was to say, “We have all agreed that the Hills proposed definition is likely to be more effective in dealing with real fuel poverty than the existing one that was suggested under the Warm Homes and Energy Conservation Act”. Indeed, as I said earlier today, having reread the debate on this subject that we had in Committee, I had the impression that there was very little disagreement that the new would be a good deal more effective than the old.
The noble Lord has now given two reasons for running on. One is to be able to have a continuous process whereby the old one goes on while the new one is being introduced so that there is no gap, and with that I have some sympathy. But if he is saying that the second reason for running the two in parallel is so that you can compare one with the other, I would find that more difficult. I am not sure how the officials would manage to do that. If the old definition has been established by Professor Hills’s report as really not being an effective measurement of fuel poverty and therefore providing the basis for annual reports, it would seem that the less one relies on it the better, and the quicker one can go on to the new one the better. However, it may be that I have misunderstood the noble Lord. I do not think it can be used to compare; the only possible reason should be for continuity, which I am sure could be achieved in other ways.
Baroness Verma
My Lords, I would like to thank the noble Lord, Lord Whitty, for his amendment. It sets out the issues that must be contained within the strategy that will set out how we are going to meet the target. As I mentioned earlier, we will publish the strategy for consultation next year and intend to use this opportunity to set out our plans for how we will tackle fuel poverty. I agree with noble Lords that there are clear links between fuel poverty and health, and a clear health benefit to the NHS by acting in this area. That is why we already include excess winter death rates as part of the annual statistics we publish on fuel poverty. We are working to better understand the costs and benefits to the NHS and we will be building on this within the strategy.
The proposed amendment also suggests that the strategy covers a number of other issues such as debt, the depth of fuel poverty and the number of children who are living in fuel-poor households. These are all very important concerns. It is for this reason that we already report widely within the annual fuel poverty statistics and these issues are included. In reference to the noble Lord’s query about the old and the new definitions, I confirm that we will continue to include fuel poverty numbers under the 10% definition. This is something to which we are already committed, and it will continue to appear in the annual fuel poverty statistics. I hope that the noble Lord, Lord Whitty, is reassured that the fuel poverty strategy will be a comprehensive one and that it is not necessary or appropriate to set out the issues that it will cover within the primary legislation. I trust that he will feel reassured enough to withdraw his amendment.
Lord Whitty
I am very grateful to the Minister. If she is saying that the method of reporting and the issues which we cover in those reports will continue, I certainly welcome that. On the issue of the measurement, I should say to the noble Lord, Lord Jenkin, and to the House that I do not think Professor Hills’s definition is necessarily a better one. I agree that there are defects in the old one but I think there are also defects in the new one. Professor Hills’s proposal of measuring the depth of fuel poverty as well as the absolute numbers of fuel poverty is a very useful tool and I strongly support it, but time will tell as to whether or not his definition is better than the old one.
I am gratified that the Minister is saying that the series will be continued, at least for some time. By implication she may have meant for longer than is provided for in this amendment. That will give continuity and time for the new series to build up because the new definition will start from next year. We will not have much of a series for very long. That will greatly help those who have campaigned long on the basis of the 10% definition to understand how the policies are impacting that, and to see whether or not the new definition is robust. I am reasonably assured by the Minister, rather more than I expected to be, and so I beg leave to withdraw the amendment.
Lord Lang of Monkton (Con)
My Lords, I had not intended to speak in this debate; I know that the hour is late, so I will be brief. However, when I saw that my noble friend Lord Forsyth had tabled an amendment that seemed to be almost in diametric opposition to the preceding amendment—we have not yet reached my noble friend’s amendment—it seemed that there was probably something of interest to be debated. Having heard what has been said, I am glad that I was here to hear it, and I am appalled at what I have heard. However, I am greatly reassured by the views of my noble and learned friend Lord Mackay.
My own views on windmills, which I first made clear in this House some 12 years ago, is of strong opposition to them. They are an appalling waste of time and money; they ruin the environment and damage wildlife; they do not deliver power when the wind is too strong or when there is no wind at all; and when they do deliver power, there is so little of it that it is completely worthless and has to be backed up by other forms of energy. I will not repeat all those views again to the House tonight.
What is at issue is not a matter of energy generation but of the rule of law. I am aghast to hear that the Scottish Government are now cheerfully setting aside a judgment in the High Court in anticipation of an appeal, which may or may not go in their favour. My noble friend referred to his time in the Scottish Office, and my noble and learned friend Lord Mackay referred to his experience many years back. I was present at the opening of the Torness power station, although I had no hand in its design or in the legalities behind it. However, I served in the Scottish Office for nine years, ahead of my noble friend, so between us we did about 12 years.
At no time, then or before, when I was the Scottish Whip for five years, do I ever recall any contemplation of defying the will of the courts. That is the fundamental issue that we are addressing underneath these two amendments. The issue of the licence is fundamental, and this amendment seems to set aside one of the few controls that are in place to try to impose some kind of discipline and proper judgment on the relevant importance of windmills in Scotland. We read every day of how the country is being covered with them like a rash, ruining the environment and all attraction to tourism, with no regard to the future or to the value of these excrescences. Therefore, setting aside my strong views on windmills, this rule of law issue has to be addressed very seriously indeed.
Baroness Verma
My Lords, I thank my noble friends Lord Teverson and Lord Roper for tabling this amendment and my other noble friends for their contributions, especially my noble and learned friend Lord Mackay of Clashfern, as he laid out very clearly the position of the law without referring to windmills or any other type of energy source. The judgment referring to planning consent under Section 36 of the Electricity Act 1989 can be made only when the applicant, at the time of making the application, holds a licence to generate electricity under the Act or holds an exemption from this requirement, as my noble friend Lord Teverson pointed out. This judgment is being appealed and we are monitoring the position carefully. Given that the appeal is under way it would be premature, and indeed inappropriate, at this stage to adopt a legislative amendment without knowing what the outcomes were. Any legislative change would need to be considered in the full light of the outcomes of this case and it would be a mistake to assume that the judgment of the Outer House, if upheld, would be decided upon in exactly the same terms in the Inner House.
If we legislate now, we may find that the amendment does not deal with the final interpretation of the legislation, taking into account the arguments that are being developed as part of the judicial review hearings. In the event that this decision is upheld in terms equivalent to the original opinion of the noble and learned Baroness, Lady Clark of Calton, we will of course work with the Scottish Government to review the situation. For those reasons, I ask my noble friend Lord Teverson to withdraw his amendment.