Consumers: Paper Billing

Viscount Younger of Leckie Excerpts

Monday 25th November 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I first extend my gratitude to my noble friend Lady Oppenheim-Barnes for securing this debate. As my noble friend Lady Maddock has mentioned, I am aware that my noble friend Lady Oppenheim-Barnes asked a supplementary question in this Chamber on a similar subject during an Oral PQ raised initially by the noble Baroness, Lady Deech. My response to her question, and my response to some other questions, clearly did not strike a chord in this House. I recognise this and have had a few weeks to reflect on the subject further.

In replying, I congratulate the noble and learned Lord, Lord Judge on his maiden speech, on sharing his passion for this issue with the House today and on speaking up for those who are concerned about the advances of the digital age and the so-called generational issue.

I say at the outset that I fully recognise and understand that there are those in this House and elsewhere in the country who, as individuals or for business purposes, may wish to continue to receive statements, bills and other documents through the post. I also recognise that some people may never wish to go online, nor indeed even use a computer, let alone other modern gadgets such as iPads or smartphones. The noble Lord, Lord Lipsey, and the noble Baroness, Lady Hayter, both made the good point that some people cannot afford a computer. Again, I respect this. However, noble Lords cannot fail to notice that, whether we like it or not, the movement towards a fast-paced and rapidly changing digital age is inexorable; indeed, my noble friend Lady Oppenheim-Barnes alluded to this very fact. For example, some 60% of the UK population now have a smartphone, and we are responding to the huge demand for a comprehensive rollout of broadband.

The backdrop to this debate is therefore rather complex. The pace of change is fast. If we press the rewind button—if I may be allowed to use that term—e-mail only really became widespread during the late 1990s. Some noble Lords may recall the first cordless phones, as big as a brick and almost as heavy. Now we manage our lives using mobile phones, and even more, from having health gadgets on our wrists to writing e-mails using voice recognition. Doing all sorts of things on the move, be it checking on the weather or traffic, paying bills, even finding places and locating friends using satellite tracking, is becoming the norm. I hasten to add that I need to be brought up to date with all these gadgets myself.

The focus of the debate today is on how we help those facing difficulties or charges when wishing to retain the option of receiving traditional bills and statements through the post. I am the first to say that I have some sympathy with the traditional approach, but if I tried to hold back the tide of change I could on the other hand be accused of being a latter-day King Canute. The sons, daughters and grandchildren of many noble Lords here today do not feel the same need for paper. In exactly one month’s time, many will be sending Christmas e-cards to friends and relatives. Some people lack the space or inclination to store reams of bills. They want information at their digital fingertips, not buried somewhere in a pile on the coffee table. I recognise some of the statistics that have been adduced this evening about people being less efficient if they receive bills online.

The challenge to service providers is therefore to cater for the full spectrum of their customers, providing options and reassurance on billing and prices for the digital and non-digitally minded alike. The questions before us are, first, whether there should be an ongoing, default right to receive documentation through the post by request; secondly, if so, who should foot the cost; and, finally, how it might be underpinned by legislation. I reassure noble Lords that there are already several protections in place for the vulnerable, including the elderly. The Equality and Human Rights Act ensures that the rights of those physically unable to access material online are protected. More generally, the Consumer Rights (Payment Surcharges) Regulations 2012 prohibit excessive charges being applied to specific ways of paying, such as paying over the counter at the Post Office. Regulators such as Ofwat and Ofcom ensure that protections are in place, in their sectors, for the most vulnerable. As was mentioned by the noble Lord, Lord Lipsey, blind or visually impaired people can get their bills in an accessible format such as Braille. In the energy sector, for example, suppliers are not able to levy an additional charge for sending paper bills, but they may still offer a discount to those paying online. In so doing, I make it clear that they are not penalising the paper bill recipient but sharing genuine cost savings with the online customer.

Business is responding. For example, special tariffs for telephones, such as BT Basic, are available to those on low incomes, providing paper bills at no additional charge. In banking, thanks to the Parliamentary Commission on Banking Standards, access to transactional accounts is being broadened so that more people can use electronic payments.

I hope that this provides some reassurance but, as I said before, the digital age is moving rapidly upon us and much of it is driven by demand for efficiency and savings. According to the Digital Efficiency Report in 2011, the cost of an online transaction is 20 times lower than a phone one, and 30 times lower than a postal one. Companies cannot ignore such figures and the Government also need to consider savings.

However, there are wider drivers for change facing all of us that I might also mention. I mentioned earlier that it was a complex picture. Banks, councils and utilities, and the Government too, know that there is an increasing demand from their customers or citizens to go green and cut paper. People want to receive bills, receipts and statements online, reducing their impact on the use of natural resources. One can understand why. I might ask how many of your Lordships—I might ask myself this question—spend the weekend sorting through the post and seeking the right recycling bin to throw out those statements, receipts and circulars which you judge you will never read again. While doing so, you may well also wonder at the number of trees cut down to create all that paper. As a result, the specific question for us here is whether government should focus its efforts on controlling how business responds to customers—reflecting nominal and justifiable charges to certain bills—or on making markets more competitive to the benefit of all customers. Our stance remains to leave operational decisions to companies to act within the commercial spirit while putting in place the appropriate regime to ensure competition and protect the most vulnerable in our society.

It may be that in 20 years’ time, when I am approaching my eighties, this will be a largely paperless world. However, as the Government have committed, those not online will not be left behind. The Government’s approach to assisted digital exemplifies best practice in helping people access digital services and the benefits that going online can bring. Business should be looking to provide similar assistance. This House may recognise that, with advancing technology, the number of people feeling disfranchised by online billing is likely to diminish over time. That does not mean that we ignore the needs of the older generation. Options are there for those who wish to choose paper, but businesses should continue to meet the needs of their customers, both young and old.

In the time available I will address a number of questions that were raised.

[Baroness Hayter of Kentish Town]

Before the noble Viscount does so, let us be absolutely clear. Is he saying that the Government will do nothing about the issues that have been raised, or did I misunderstand him?

[Viscount Younger of Leckie]

I can reassure the noble Baroness that that is not the case. We are encouraging businesses to bring in processes that will help more the vulnerable—I have already spelt out what we are doing. The Government, of course, provide the framework, but we believe that it is very much for companies to decide to put themselves in a position to help people in this respect.

[Lord Lipsey]

I am sorry to interrupt the noble Viscount again but, to press the point, why is it in the interests of companies to help the vulnerable?

[Viscount Younger of Leckie]

It is in the interest of companies to look after all their customers, otherwise they will go away. That includes all those people who are vulnerable and, as I mentioned earlier, all those across the spectrum who require the service. As I mentioned earlier, looking at the generational issues the picture is complex in terms of the current needs of customers.

My noble friend Lady Oppenheim-Barnes raised the issue of some companies not being up front about the charges, which is a very fair point. In the communications sector regulations are in place that prescribe that such charges must be set out in a clear, comprehensive and easily accessible form so that consumers can make informed decisions. The consumer rights directive will mean that suppliers should obtain consumers’ express consent to any extra charges and that they should not use a tick-box approach that requires consumers to un-tick boxes in order to avoid charges. The directive must come into force by June 2014.

The noble Baroness also raised the issue of charging premium-call rates. In April, Ofcom announced plans to simplify the pricing of telephone numbers such as 0800 numbers. Under its proposals, calls to 0800 numbers from mobile phones will be free. Ofcom will publish the final proposals shortly. The noble Baroness also raised the issue of payment by cheques. There may be a legitimate charge for paying by cheques rather than paying electronically, but this charge is not levied as a norm. Any such charge would need to have been justified by relation to the additional cost. That is underpinned by the Consumer Rights (Payment Surcharges) Regulations 2012, to which I alluded earlier.

The noble Lord, Lord Lipsey, raised the issue of the response that he received from Ofcom about his question regarding a charge from a bill from his service provider. I repeat that what companies charge for their services is a commercial decision. In a competitive market consumers have choice and can move to a different provider. On the role of regulators, more widely, the Government have announced a number of reviews that look at competition and consumer issues. That may help to address the comments raised earlier by the noble Baroness, Lady Hayter. For example, the PM has asked the regulators to instigate an annual review of the state of competition in the energy market. Ofcom published telecoms proposals in the summer and the Government have called on the industry to provide greater price transparency, particularly in communications with customers at the point of contract renewal.

The noble Lord, Lord Lipsey, raised the generational issue of those aged over 65 who are offline. The Government are committed to helping people access the benefits of digital services. The Government Digital Service Digital Inclusion Team is working closely with the noble Baroness, Lady Lane-Fox, to ensure that we protect the vulnerable.

My noble friend Lady Maddock made a good point about security online. Trust and security are major concerns and the Government are working with the online security industry to make it simpler and easier to protect individuals online. My noble friend also asked about charges for telecoms paper bills. Recipients of paper bills are not generally charged extra, even though they are being charged more than the discounted price. Should companies wish to charge for a paper bill or make a reduction for a digital bill or digital payment, they must ensure that the charge reflects only the different processing costs incurred.

This House may recognise that, with advancing technology, the number of people feeling disfranchised by online billing is likely to diminish over time. I fully accept that there remain those who continue to wish for, and, indeed, need, paper through the post in the form of receipts, bills and statements, but we do not believe that legislating further on charging for paper bills is necessary when options are available and protections are already in place for the most vulnerable.