Robert Smith
Main Page: Robert Smith (Liberal Democrat - West Aberdeenshire and Kincardine)Delivery Surcharges (Transparency for Consumers) Bill
Robert Smith Excerpts(11 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I beg to move, That the Bill be now read a Second time.
I thank the hon. Member for Woking (Jonathan Lord) for his kind words, and I congratulate him on getting his Bill through to the next stage.
There has long been a frustration about additional charges for delivery to certain parts of the United Kingdom. This Bill is designed to shine a spotlight on the issue, highlight it and come up with some remedy to help move us in the direction of a fairer and more sensible system. The Bill requires
“online retailers to declare to consumers at the start of the retail process the existence of surcharges for delivery to certain addresses in the UK; and for connected purposes.”
In respect of this frustration in many parts of the UK, there are three concerns: the excessive charges for delivery to certain parts of the UK; the lack of transparency about those charges; and the often arbitrary nature of how those charges are calculated. There is a long-standing campaign by many in Scotland to try and tackle the issue. I am following in the footsteps of many others who have highlighted it, especially my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) who has a classic example of the arbitrary nature of this problem. Although his constituency is in mainland Scotland, it has the KW postcode—Kirkwall, in Orkney—so most websites classify him as coming from an island, and treat him as such for delivery purposes. Retailers need to look more carefully at how their systems allocate charges and identify areas that will be more expensive to deliver to.
Another issue is the excessiveness and lack of transparency of the charges. Citizens Advice Scotland, in an excellent research paper entitled “The Postcode Penalty”, published in December 2012, made it quite clear that 1 million Scots face surcharges, late delivery or are refused delivery shopping online. The Bill would tackle the issue in relation to online shopping by ensuring that people have a clear and concise idea of what they face before starting the shopping process.
On the website fairerdeliverycharges.net, which is part of the campaign, one person commented:
“About time this discrimination was dealt with as well as over charging by couriers, was once quoted £275.00 to the island but £45.00 to Ullapool. Complained and it was dropped to £75 to island, saying that was what the courier quoted them before they asked for reprice”.
The shopper online is shopping with the retailer, which then negotiates the delivery contracts. We want to encourage the retailer to think more carefully about the needs of the shopper and to make a better attempt at negotiation. As the example shows, the shopper just had to intervene and the charged dropped from £275 to £75, so the initial charge was clearly excessive and not thought out.
On the lack of transparency, I visited a constituent recently who went online to buy radiators for their house. The usual delivery cost was £20, but when they got to the end of the process, the cost increased to £60 for delivery to anywhere in the north-east and north of Scotland. The north-east of Scotland is not remote rural. It is the Aberdeen postcode—a major city, the oil and gas capital of Europe, and a major, thriving part of the UK economy.
Mel Stride (Central Devon) (Con)
May I clarify that there is nothing interventionist in the Bill that the hon. Gentleman proposes? I presume that there is no attempt to intervene in the amounts that those selling products on the internet are charging to those receiving them, but that the intention is to ensure transparency so that when shoppers go online they are aware up-front of the amount being sought by way of carriage, before they click to complete the purchase.
Sir Robert Smith
The hon. Gentleman has summed up extremely well the nature and purpose of the Bill. It is about transparency, so that shoppers do not have to spend ages shopping online only to discover at the end of the process, having put in all that effort, that they will have to face excessive charges, and then have to shop around elsewhere. The other benefit of early notification will be to encourage retailers to think more carefully about how they calculate those charges and about the nature of those charges.
Mr Mike Weir (Angus) (SNP)
In parts of Scotland, postcodes cover a huge area. For example, the DD8 to DD11 postcodes cover my constituency. I live in DD9. Brechin, the town in which I live, is just off the main road between Dundee and Aberdeen, but the postcode covers the whole area of the Glens. That is part of the problem.
Sir Robert Smith
It is indeed. Postcodes exist for Royal Mail’s purposes, to allocate addresses, but many people piggy-back on to them and then do not recognise the need to be more sophisticated and break them down further in order to establish the true nature of deliveries. Citizens Advice Scotland noted that it was possible for a delivery van to travel from a retailer in England to Edinburgh via the borders, passing houses whose occupants would end up paying excessive charges because they were further away from Edinburgh, although the van was passing their front doors and could have dropped the stuff off without having to go to Edinburgh. A resident of Inverness had to pay a £25 delivery charge despite living just two miles from the Inverness postal depot. Another highlands resident was shocked to discover when ordering a gift certificate from an electronics and camera retailer that there was a £15 charge for delivery, although the certificate was simply a postal card for which the normal rate could have been charged. That is another classic example of the failure of retailers to think when shopping around for delivery purposes.
The purpose of the Bill is to introduce more transparency and clarity. It requires the making of regulations, but does not introduce them itself; it allows the Government a year following its enactment in which to negotiate, consult and present the regulations to the House, which would then prescribe an early declaration of the charges for regional delivery so that shoppers could decide immediately whether or not to use a business advertised on a certain website.
Mel Stride
What penalty does the hon. Gentleman envisage for a business using the internet which failed to comply with the requirements that he is seeking?
Sir Robert Smith
The Bill requires the Government to state in the regulations the penalties that would be applied. They would obviously have to consult on that during the process of drawing up the regulations. One penalty might be a requirement to comply, and to place the details of the charges on the website so that they are established and clear.
Members will be reassured to learn that I have opted for the affirmative process. Any regulations that are produced as a result of the Bill will have to be debated and voted on in the House, so that Members can scrutinise them in detail. We do not want to impose excessive regulation or unnecessary burdens on industry. When the market is failing, giving more information to consumers can help it to become more focused and effective and to deliver a better deal to consumers, while also ensuring that retailers can sell their products in a competitive market.
Mr Christopher Chope (Christchurch) (Con)
The Bill is confined to online retailers. What about ordinary retailers? If someone goes into, say, John Lewis and orders some goods, the shop assistant will not say at the outset “Where do you live? If you live in X it will cost you Y.” The transaction will continue, and at the end of it the assistant will ask for the customer’s name and address, and will say “If you live in the highlands and islands, there will be a delivery surcharge.” Why should an online retailer have to say in advance what the costs will be?
Sir Robert Smith
Because it is much easier to ask about delivery in the shop. The nature of the exchange is more fluid. The customer can set the agenda and get the information they want before purchasing, whereas online, the information is not available until the end of the transaction. The online customer will have put in a lot of effort to get to that point of the maze and, having been led all that way, will feel immense frustration and anger at being clobbered at the end of the process. This problem has also been dealt with for airline bookings and credit card charges. They were being whacked on at the very end of the process, but now airlines have to be more upfront and be realistic about the charges.
I want to thank the Members who have supported the Bill: my right hon. Friends the Members for Gordon (Sir Malcolm Bruce) and for Ross, Skye and Lochaber (Mr Kennedy), my hon. Friends the Members for Caithness, Sutherland and Easter Ross and for Argyll and Bute (Mr Reid) and the hon. Members for Aberdeen North (Mr Doran), for Aberdeen South (Dame Anne Begg), for Angus (Mr Weir), for Na h-Eileanan an Iar (Mr MacNeil), for Isle of Wight (Mr Turner) and for Banff and Buchan (Dr Whiteford). This is an extensive problem affecting large parts of the United Kingdom, mainly in the highlands and the north of Scotland but also extending down to the borders and the islands of England—the Isle of Wight, the Channel Islands, the Isles of Scilly.
The Bill must be part of a wider awareness-raising process, because the retailers need to be more focused. They are thinking of the vast majority of their customers when they think of a delivery system, and they are not shopping around for one that will deal with those at the margins. Many retailers should consider using Royal Mail’s universal service delivery products for those areas that cannot be served by couriers. Bringing retailers together and shining a spotlight on this issue will help them to understand the frustration that is felt. The Bill would end that frustration and I commend it to the House.
Ian Murray (Edinburgh South) (Lab)
It is a great pleasure again to be in the House with the Minister, and to be going through this important Bill. I pay tribute to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) for introducing it. I know he has been running this campaign for some time, and it is becoming a major issue that deserves the respect of the House. The Opposition certainly welcome his Bill, which brings attention to an area of consumer policy that has, particularly since the advent of online shopping, brought difficulties for individuals and businesses in most parts of rural UK, but especially the highlands and islands of Scotland, where his constituency is located.
The hon. Gentleman and other Members representing rural constituencies have heard from their constituents about some of the problems that have arisen with the delivery charges of online retailers. The growth in internet sales over recent years has been considerable and a report by IMRG found that the estimated value of UK online shopping in 2012 was £78 billion. There was 300% growth in mobile commerce last year alone. In 2012 the estimated value of global business in customer e-commerce was €825 billion. The annual cost of failed UK online deliveries is about £800 million, which is a considerable sum.
This is a major industry for the UK’s economy. It is not only the economy as a whole that benefits; there are significant savings for consumers in online shopping, and that should be spread around the entire economy regardless of whereabouts in the UK people live. We know confident consumers are key drivers of the economy, creating the demand for goods and services that provides jobs, stimulates innovation, creates wealth and contributes to the Exchequer. In a well-functioning economy, knowledgeable, informed and empowered consumers can drive up standards and drive down prices. We have seen that with online retailing.
However, despite the economic benefits of access to the internet and the potential savings for the consumer, people in rural and remote parts of the UK report that high delivery costs are a strong disincentive to online shopping. We discussed some of those issues just last week in the Backbench Business Committee debate on the impact of postal services in rural areas. Consumer Focus—now the aptly named Consumer Futures—found that consumers are unclear as to how parcel delivery charges are established. The hon. Member for West Aberdeenshire and Kincardine mentioned minor changes to postcodes that allow people just outside Aberdeen to be charged as if they lived on the islands of Scotland. It is reasonable, therefore, that parcel delivery operators should do their utmost to provide a clearer rationale for their pricing structure at the outset. Retailers and parcel delivery operators should ensure that pricing mechanisms do not arbitrarily give customers surcharges because they live in a particular area, for example by having one charge for all customers in a large geographical postcode area.
In some cases, consumers find out that an item will not be delivered to them only once they have completed their online purchase, and indeed, sometimes after that. Again, that goes against some customer regulations already in place. We should be clearer about all the regulations in the draft Consumer Rights Bill, which the Minister has introduced as an attempt to deal with this problem. We look forward to working with her on that Bill.
We must also remember that it is the interests of a business to make delivery charges transparent for customers, because people who are treated well when they use online retail and find that the charges are reasonable and transparent will go back to the same business. So this is also incredibly important to businesses, and the Bill will provide help there too.
I am slightly struggling with the next part of my speech because I gave it to my hon. Friend the Member for Caerphilly (Wayne David) when I had to disappear for an urgent meeting at 12 o’clock; he was going to deal with the Bill on my behalf, so I handed him my speech. He has written on it, “This speech is appalling.” I do not know whether he wanted me to add that comment to my speech, but I thank him for the annotation to this particular page.
We have to be clear not only about delivery charges that cause problems, but other particular issues, so let me reflect for a few moments on yesterday’s announcement of the privatisation of Royal Mail and the intended stock exchange flotation. The Bill does not mention this, but I know that the campaign by the hon. Member for West Aberdeenshire and Kincardine for fairer pricing includes a compulsory referral to Royal Mail because it has the one-price-goes-anywhere, six-day service—although it is a five-day service for parcels.
Sir Robert Smith
I think a compulsory approach would fall foul of European regulations; we are encouraging and raising awareness of the products available from Royal Mail under the universal service.
Ian Murray
I agree that my language was probably a bit strong, because the hon. Gentleman’s campaign calls on retailers that charge surcharges to offer delivery by Royal Mail as an alternative. He is right to highlight that point. However, one of the key contradictions is that there are concerns about the universal service obligation being difficult to deliver and maintain in a privatised Royal Mail. If his intention is to offer the Royal Mail as an alternative, that demonstrates the power of the universal service obligation in rural areas. It is important that we highlight those concerns when the flotation of the Royal Mail is undergoing its passage through this House, because it will have a significant impact on his constituents in rural areas if the USO is under threat.
Sir Robert Smith
The hon. Gentleman has to recognise that the USO is enshrined in law, so the only threat to it is this Parliament deciding that it does not want to protect and keep the service. What is crucial is making sure that Parliament honours the legislation. Bringing more investment into Royal Mail should help it to compete more effectively with those whom his Government brought in far too quickly and too deeply to compete against it.
Ian Murray
I do not want to drift into discussing Royal Mail, because you would frown on that, Madam Deputy Speaker, and because we want this Bill to get through—we support it. However, may I just make one comment in response to that intervention? Laws can be changed; that is what this House is for. They can be changed at any point. As the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon) told us yesterday, many of the laws relating to the USO can be altered by statutory instrument in this House, and that can be done fairly quickly. I understand and fully support the fact that the USO is written in law, but the law can be changed at any time.
If this Bill does not get the proper passage that it deserves, will the hon. Member for West Aberdeenshire and Kincardine table amendments when the draft Consumer Rights Bill comes before the House? If this Bill does not get on to the statute book, I am sure that this Minister would certainly welcome such amendments. We would certainly support them in Committee in order to make this slightly more transparent, and I hope that he would be able to table them.
Online retail is a huge industry, and I congratulate the hon. Gentleman on bringing this Bill to us. I know that many colleagues in rural Scotland share the same concerns, and it is not acceptable not to have transparency of charges. All I would do is encourage customers who feel that they are not getting transparent charges to use an alternative, if there is one. The Bill deserves to get its passage through the House.
Jo Swinson
I intend to come on to that point. Legislation already protects consumers in many ways, but there is clearly an issue about how well it is enforced and about what more we can do to ensure that it is enforced. I am certainly committed to working with my hon. Friend the Member for West Aberdeenshire and Kincardine and others to ensure that we deal with the problem through existing channels, as well as to see whether we can do more. We want to make sure that consumers are not disadvantaged by suddenly being notified of delivery charges late in the buying process.
Citizens Advice Scotland reported on the issue last year. It found that consumers encounter a range of problems. One is obviously that of additional delivery charges, but delivery performance can also often be a difficulty: as well as extra charges for the location, there is sometimes an outright refusal to deliver to a particular address or an unfair categorisation of a location as more remote than it actually is. Hon. Members have raised the problem of postcode areas that are quite large and cover places that are remote as well as others that are not.
Delivery charges and arrangements need to be made available early in the ordering process, because they are particularly important for some consumers; if not, that can add to the problems faced by those consumers in researching and investing time in sourcing the products that they want to buy. Underpinning all that is a recognition that the more confident consumers are about what they are buying and about having those products delivered in a reasonable way and at a reasonable price, the more confident they will be to buy, which is helpful for our economy. Creating confident consumers is absolutely what we want.
Let us consider what the law already does in this area. It is clear in requiring traders to provide all consumers, wherever they live, with information on freight, delivery or postal charges when inviting consumers to purchase products. That wording is particularly relevant. The invitation to purchase is the key point. There may be a difference in how some people define that point in the process, or some retailers may just be thoughtless, as my hon. Friend outlined. But if some retailers think that invitation to purchase occurs only at the very end of the process when the consumer clicks “Pay”, they might think that that is an acceptable time to give the information about the delivery charges. Clearly, others might interpret invitation to purchase as occurring at a much earlier point, when the consumer is browsing the website or the shopping app and is implicitly invited to purchase.
Specific requirements are set down for contracts concluded via electronic means. The consumer rights directive that the Government intend to implement by next summer will require traders to ensure that their website indicates clearly, at the very latest at the beginning of the ordering process, whether any delivery restrictions apply. I emphasise that that is at the very latest. The best practice would be for that information to be made available much earlier in the process.
Sir Robert Smith
Would it be in scope for my hon. Friend to issue guidance to industry about best practice and about the possibility of implementing it on a voluntary basis?
Jo Swinson
I thank my hon. Friend for that intervention. I would be delighted to do that. With the consumer rights directive and the consumer bill of rights that will come before the House later in the year, we will be publishing not just regulations and legislation, but guidance to go alongside that. It would be an excellent idea to include in that guidance information about how retailers might best serve their consumers and comply with the spirit of the regulations about giving that information and making it clear for consumers.
It is therefore important, as the hon. Member for Edinburgh South said, that businesses are made aware of the extent of customer dissatisfaction with the current situation, and of the potential loss of business arising from delivery policies that may be fit for purpose for some parts of the country but not for others. When businesses are made aware of the situation, there can sometimes be success. Consumer Focus Scotland last year reported a case where a consumer queried the high surcharge for delivery and the retailer happily agreed to use another parcel delivery operator who charged much less to deliver the items.
My hon. Friend mentioned the rather excessive £235 courier charge that one of his constituents encountered, which was dropped to as low as £75 when it was challenged. That is still a significant cost but, as a proportion of the original price charged, it was significantly less. I was rather shocked by my hon. Friend’s example of someone who was charged £15 for the delivery of a simple gift certificate, which does not need to go by courier service. An item of that size could go in the normal post. Such examples need to be highlighted.
It is reasonable for consumers to ask for items to be sent via Royal Mail under the universal service obligation, which may not be as cheap as a courier company can offer for delivery to high population density areas, but in most cases will be substantially cheaper. Businesses should recognise that they can offer that, or alternative courier services or parcel delivery services. The first message is that consumers should be aware that it is certainly worth contacting the retailer and challenging a surcharge that they are unhappy about.
Good work has been undertaken by Citizens Advice Scotland, Consumer Futures and others to highlight the issue so that more consumers will feel that they can stand up and challenge a ridiculously high delivery charge. The Citizens Advice research was very specific. It acknowledged that many companies already provide a good service that customers appreciate, but it also identified that some do less well and that their customers feel rather let down. Trading Standards in Scotland has done a huge amount of work, particularly in the highlands, to highlight the issue to businesses and to help them understand and comply with consumer law.
Obviously, consumers with complaints about a retailer’s delivery policy should first ask the retailer for an explanation. If they are dissatisfied with the explanation and think that there is still a problem, I encourage them to contact Citizens Advice, which can then alert the relevant enforcement authority so that there can be an investigation. Encouragement and help to businesses—but ultimately with that enforcement as well—can ensure that consumers feel empowered and confident.
Jo Swinson
I thank the hon. Gentleman for that intervention. If I may add an anecdote, I was discussing the issue a few days ago in the Tea Room with my hon. Friend the Member for Argyll and Bute (Mr Reid), whose constituency is rather further south than West Aberdeenshire. He reported the frustration of some of his constituents in Dunoon when they telephone to ask why something could not be delivered or why it was so expensive. Dunoon, of course, is most often reached by ferry, and that information is clearly in a system somewhere, so the customer service assistant would explain to the customers that it was because they live on an island, which of course they do not, even if a ferry is often the most efficient way to reach it. That could create quite a lot of customer dissatisfaction. The important point for businesses to remember is that an unhappy customer is far more likely to tell other people that they are unhappy than a happy customer is likely to tell them that they are happy, so it is not necessarily in businesses’ interests for that to happen.
Sir Robert Smith
With regard to the Isle of Wight, it is notable that the hon. Member for Isle of Wight (Mr Turner) is one of the Bill’s supporters.
Jo Swinson
Indeed, and I suspect that is the result of experiences that the hon. Gentleman’s constituents have had.
I share the desire that my hon. Friend the Member for West Aberdeenshire and Kincardine has for the legislation protecting consumers to be clear, simple and transparent. Those are absolutely the qualities that underpin the consumer law reforms that we have set out and that the House is considering in draft. The draft Consumer Rights Bill is a fundamental reform of consumer legislation that will ensure that consumers’ and businesses’ key rights and responsibilities are clear, easily understood and updated to take account of purchases involving digital content. They are modern rights for a digital age. The Bill that we will introduce, once it has been scrutinised, will contain new protections for consumers, alongside measures to lower regulatory burdens for business. The aim is to make markets work better, which is good for consumers, good for business and good for growth.
I will just outline some of the core rights that our reforms will give consumers. I think that it is important that they are straightforward and in plain English. They are the right to clear and honest information before you buy; the right to get what you pay for; the right that goods and digital content are fit for purpose and that services are provided with reasonable care and skill; and the right that any faults in what you buy will be put right free of charge or that a refund or replacement will be provided. The first of those is central to our reforms, as well as to my hon. Friend’s Bill. I absolutely support the aim of transparency of information for consumers. The existing law and the reforms we are taking forward through the consumer bill of rights will continue to make sure that businesses cannot hide the charges they are levying on delivery costs and that they are made clear when the trader invites the consumer to buy. There is already a lot of good work on supporting compliance with existing law. That is positive, but more can be done.
Under our reform of the consumer landscape, more enforcement work is being done by local authority trading standards services, with a great deal being done in the highlands. In Scotland, the Convention of Scottish Local Authorities is responsible for co-ordinating the delivery of significant national and regional cases that cut across local authority boundaries. Of course, this issue does cut across local authority boundaries, and across the entire United Kingdom, as hon. Members have said. It might be worth involving the National Trading Standards Board and the Consumer Protection Partnership, which aims to get together all the enforcement agencies from different parts of the country, to see whether these problems can also be addressed at that level.
The Government significantly fund much of the work on this issue and have allocated more than £1 million to enforcement in Scotland in 2013-14. As I said, trading standards services in the highlands have done significant work, with some success, because some businesses have eliminated or reduced surcharges for the highlands as a result. Others have made changes to their websites to ensure that any surcharges that they may have concluded were unavoidable are at least indicated early in the buying process, so that no false claims are made. That was all achieved under the existing legislative framework.
A consumer will need to consider many factors, apart from delivery costs, when making a purchase. As required by the new directive, information will need to be provided to consumers on price, payment arrangements, delivery times, complaint-handling policy, rights to cancel, return costs, after-sales services and assistance, and duration of contract, to name but a few. All those factors, or in some cases only some, might be crucial for a consumer to know, depending on the person and their circumstances.
I support my hon. Friend’s work on promoting clarity and fairness for consumers, but I am not convinced that extra legislation is necessary or the best option for us to pursue. What should we do if this Bill is not the answer? I have been considering what more we can do to help enhance transparency as much as possible, because he has raised genuine concerns highlighting a specific problem that his constituents and others are experiencing. There are limitations on what can be specified in regulations about the timing of information provided to consumers, because some of the legislation derives from EU law and needs to be the same across Europe. However, we can play a part in highlighting good practice and drawing it to the attention of businesses. The work done by Citizens Advice and trading standards services has shown that this can have some success.
I am glad that my hon. Friend suggested publishing guidance alongside the new regulations that will implement the consumer rights directive in the UK towards the end of the year, because that will draw businesses’ attention to how important it is to alert consumers to extra supplementary charges early in the purchasing process. Some are already effective in this regard. In 2012, a study by Citizens Advice found that two thirds of retailers made delivery information very easy to find on their website. We need to use the opportunity provided by the consumer rights directive not only to draw attention to the good practice of those businesses but to draw attention to those that do less well. Two thirds is good, but it also means that a third of businesses are not making the information easy to find.
I would like to give my hon. Friend a couple of examples of where we could take action to help improve the situation for consumers. First, I would like to draw the issue to the attention of the British Retail Consortium, which, as a trade body, has members that include, I am sure, many of the companies that are causing some consternation to my hon. Friend’s constituents. It would be helpful if the BRC considered whether it can encourage its members to consider what hon. Members have said and what it could do to address the problems. I would be happy to bring retailers to a summit to discuss the problem with my hon. Friend. It would be good to have a mix of attendees, including exemplars—businesses that provide information at an early point and that give alternative delivery options to customers. Perhaps we could also invite businesses that were not doing well but that have improved their game and made the situation better for consumers as a result of the work of Citizens Advice and trading standards. We also need to include offenders—those that do not give consumers the right information and for which the detriment exists. We could then have a discussion on how businesses can solve the problem and recognise their responsibilities.
Sir Robert Smith
I welcome the idea of the summit. Bringing together best practice and those that need to learn and understand how to proceed will be welcome. My hon. Friend reinforces the point that online retailers need to be more aware of the need to shop around to ensure they get the best deal for their customers.