Delivery Charges (Scotland)

Margot James Excerpts

Wednesday 20th December 2017 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to this important debate. I congratulate my hon. Friend the Member for Moray (Douglas Ross) on securing it and echo the comments of the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) about his eloquent speech. I know that he first raised the issue at Prime Minister’s questions two weeks ago and that he met my right hon. Friend the Secretary of State earlier this week to reiterate his concerns.

Let me start by reminding hon. Members of the Government’s general approach. We are committed to promoting growth in the UK economy, and empowered consumers are vital to that. Consumers who demand quality products and services, and are prepared to take their custom elsewhere if their needs are not being met, drive competition, innovation and productivity. The industrial strategy we published last month reminds us that consumer choices are key to a productive and efficient business base. It also recognises the importance of the local economy and infrastructure.

If consumers feel that they are being unfairly treated because of their location, they can challenge retailers, particularly if they are aware of a particular courier or delivery company that is known to deliver to it more cheaply. It is not unreasonable for businesses to seek to cover the legitimate costs of delivery, but customers in remote areas all too often face charges that go beyond a reasonable rate of return.

[Drew Hendry]

The Minister says that consumers can complain, but often when they do, nothing is done and they have absolutely no recourse. As we have heard today, the companies offering to deliver can just say, “Well, I won’t deliver to you.” How does she answer that? What will she do about that unfairness?

[Margot James]

I will come on to the rights that consumers have, but from the strength of feeling that has been expressed in the debate, I recognise that things are clearly not working for consumers in certain parts of our United Kingdom. I have great sympathy for the case made by my hon. Friend the Member for Moray, because it is unfair that consumers in some parts of Scotland and Northern Ireland should be treated so very differently from consumers in other parts of the UK.

I would like to take this opportunity to state that the Government welcome the ongoing activity to address the problem. The work of parliamentary colleagues and consumer bodies to consider local public and private sector solutions, as outlined in the Citizens Advice Scotland report, could result in ideas suitable for all parts of the UK.

[Douglas Ross]

The Minister mentions ongoing activity on this campaign. We have heard some passionate speeches from SNP Members, presumably about the work of their Scottish Government. Will she confirm what contact her Department has had with the SNP Scottish Government on the issue and what actions they have asked about?

[Margot James]

I am not aware of any contact. My office has not had any, but I will find out whether any other offices in my Department have had any contact and write to my hon. Friend with the answer. Obviously this is not a devolved matter, but since he has asked, I will give him the answer.

Online shopping is an increasingly important part of our economy.

[Christine Jardine (Edinburgh West) (LD)]

rose—

[Margot James]

I will give way in a minute, but I want to cover a lot of points made in the debate and I have only 10 minutes or so.

Retailers have legal obligations to be up-front about their delivery charges—where they deliver to, what they charge, and any premiums that apply—before an order is placed, so that consumers at least have the information they need under consumer law and can make informed decisions before purchasing online.

[Christine Jardine]

Does the Minister agree that it is frustrating that Sir Robert Smith, the then MP for West Aberdeenshire and Kincardine, introduced a private Member’s Bill to address this very issue back in 2013—yet here we are, four years down the line, and no progress has been made?

[Margot James]

I certainly understand the hon. Lady’s frustration, and the frustration felt and expressed by other Members of Parliament this afternoon. I was not aware of that, although I was a Member at the time. I missed that private Member’s Bill, but clearly this issue has a lot of history, and is all the more frustrating for that, as the hon. Lady says.

Consumers must have the information needed under consumer law. At the same time, if retailers are to exploit fully the vast market potential of online business, they will need to listen to and respond to the needs of consumers in all parts of the country, developing effective delivery solutions throughout the United Kingdom.

The Government strongly encourage businesses to provide consumers as far as possible with a range of affordable delivery options. It is really up to businesses to determine the most appropriate delivery options for their products.

[Angus Brendan MacNeil]

rose—

[Jamie Stone]

rose—

[Margot James]

I will give way one last time to the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil).

[Angus Brendan MacNeil]

I understand from my colleague, the hon. Member for Strangford (Jim Shannon), that the situation in the Republic of Ireland is not the same as in Northern Ireland or Scotland. Would our Government perhaps take the time to look, as they are responsible for this matter, at what the situation is in the Republic of Ireland, and to perhaps learn from Ireland?

--- Later in debate ---

[Margot James]

I did hear the intervention from the hon. Member for Strangford (Jim Shannon), and I will look into that.

Businesses have a choice through the universal service obligation, which the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) reminded us about. Royal Mail can deliver parcels up to 20 kg, five days a week, at uniform rates throughout the United Kingdom. Regrettably, some businesses and retailers choose not to use that option, and the Government are not in a position to oblige business to choose a particular delivery supplier. There are no regulations that prevent differential charging for deliveries by companies other than Royal Mail. A competitive market should be a sufficient incentive to put pressure on charges applied by retailers and delivery operators, and consumer law requires traders not to mislead consumers or partake in unfair practices.

[Mr Carmichael]

The Minister comes to the nub of the matter: a competitive market should provide the solution. In fact, the way this market is operating now is the problem; competition will not be the solution. Will she look at the issue of market failure, on the basis that courier companies are now a quite different and discrete market from Royal Mail?

[Margot James]

If the right hon. Gentleman will allow me, I will come on to what I propose to do before I close.

We already have legislation in place under the general Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which apply to online purchases. They make it clear that information given by traders to consumers regarding delivery costs must be up front and transparent before a transaction is entered into. Any consumer who believes those rules are being breached should report it to trading standards through the Citizens Advice consumer service.

If misleading advertising about the cost of delivery is an issue, the Advertising Standards Authority, which has responsibility for ensuring compliance with the code of advertising sales, promotion and direct marketing, will act to ban or amend advertisements that have the potential to harm or mislead the public. Decisions on complaints are made public, and where necessary the ASA will report persistent offenders to trading standards for further enforcement action.

The Government’s view is that regulating prices, or intervening in how businesses and retailers establish their pricing structures, would not overall be in consumers’ best interests, because they are commercial matters. The market is highly competitive and innovative, with many different types of companies being selected by online retailers to provide delivery solutions. That has given rise to new ways of receiving packages, such as collecting them from more secure and more convenient locations and post offices.

The issues involve a three-way relationship between consumers, online retailers and delivery companies. As Members stated in the debate, the postal sector regulator, Ofcom, has just concluded a two-year study of parcel delivery surcharges that reflect the cost to operators and go beyond them. It found that some retailers apply a surcharge to consumers for delivery to certain locations, while others do not. It is therefore not clear that surcharges applied by parcel operators to online retailers are automatically passed on to consumers in all cases. The Government will consult Ofcom further on what might be done to improve competition. As highlighted by my hon. Friend the Member for Moray, the Consumer Protection Partnership, which brings together enforcement bodies and advice providers and is chaired by my Department, recognises that this is a priority that requires further work. It brings together a number of important bodies with an interest in this vexatious matter.

A number of Consumer Protection Partnership members, including Citizens Advice Scotland, the Consumer Council for Northern Ireland, the ASA and other enforcement bodies, along with Ofcom, are working together to undertake a review of parcel surcharging. That review is looking at the existing research, evidence and legislative framework, with the aim of improving compliance by online retailers with consumer protection law. It will also consider further proposals relating to concerns about the level and fairness of parcel surcharging, about which we have heard so much this afternoon.

[Jamie Stone]

I appreciate the Minister’s sincerity. Could she please add to the list she has just outlined the petition from Rebecca in John O’Groats? It is heartfelt, genuine and has masses of support, and a moral imperative behind it.

[Margot James]

I will certainly ask the partnership to take into consideration the petition to which the hon. Gentleman refers.

Recommendations will be considered by the Consumer Protection Partnership in early 2018, with the intention of agreeing a co-ordinated package of activities for organisations across the UK. I look forward very much to receiving that advice, and considering its recommendations as to what further action we can take to enforce the law and ensure fairer treatment of consumers—something which we have heard so much about this afternoon.

I am convinced by the strength of feeling expressed by hon. Members that some action is required, so the Government will publish a consumer Green Paper next year that will look at issues such as transparency and fairness across a range of markets. I expect that those responding to that paper will want to comment on how business treats customers, including in respect of delivery charges, and how it reacts to their complaints. That, too, will inform the Government’s approach.

I thank my hon. Friend the Member for Moray for dramatically raising the profile of this issue, and I will be interested in further input from him and other colleagues across the House in the future. I end by adding my thanks and Christmas wishes to all staff at Royal Mail, as mentioned by the hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney). We wish all our posties a very merry Christmas. I thank hon. Members and, as it is my last debate of the year, I will also say that I have enjoyed debating with the hon. Member for Sheffield, Brightside and Hillsborough, and I wish her a merry Christmas as well.