Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014

Viscount Younger of Leckie Excerpts

Monday 24th February 2014 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments, 26th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, with much to cover I hope that the Committee will forgive me if I set out the prospective changes in some detail.

The purpose of this order is: first, to abolish the National Consumer Council and transfer its relevant functions to Citizens Advice, Citizens Advice Scotland and the General Consumer Council for Northern Ireland; secondly, to transfer the Office of Fair Trading’s estate agency functions to the Commissioners of Her Majesty’s Revenue and Customs and Powys Trading Standards; and, finally, to transfer residual OFT functions relating to its former consumer advice scheme to Citizens Advice and Citizens Advice Scotland. The scheme itself was transferred to the citizens advice services on 1 April 2012.

This order will complete a programme of consumer landscape improvements that the Government first embarked upon in 2011. The National Audit Office report Protecting Consumers, published in June 2011, and the Public Accounts Committee report on the same issue both highlighted the fact that the existing consumer landscape was confusing, duplicative and therefore inefficient. To address that, in April 2012, following consultation, the Government announced a series of reforms to the landscape of consumer bodies. Over the past two years, we have streamlined the landscape of Government-funded consumer organisations to make it easier for consumers to understand where they need to go to get help. The reforms will deliver a better deal overall for consumers by making it clearer who is responsible for what and by facilitating better co-ordination between consumer bodies and enforcers.

The improvements that we have made so far include: focusing the new Competition and Markets Authority, which will replace the Office of Fair Trading from 1 April, on identifying problem markets and developing effective solutions to competition issues; establishing the National Trading Standards Board and Trading Standards Scotland in 2012 to prioritise national and cross-local authority boundary consumer enforcement; moving responsibility for consumer-facing education and general consumer advocacy to Citizens Advice and Citizens Advice Scotland; moving responsibility for approval of consumer codes to the Trading Standards Institute; and launching Consumer Futures in May 2013 to represent consumer interests in gas, electricity, postal services and—in Scotland—water services. These organisations work together as part of the Consumer Protection Partnership—the CPP—to collectively identify issues causing consumer detriment, and agree priorities for collaborative action.

Let me turn now to the specifics of this order. The order will abolish the National Consumer Council and transfer relevant functions to the umbrella bodies Citizens Advice, Citizens Advice Scotland and the Consumer Council for Northern Ireland. The function will be based in the head offices of Citizens Advice, not within the local bureaux on our high streets. This change will bring together the technical expertise of Consumer Futures with evidence from consumers across the country from the citizens advice service bureaux and the national consumer advice helpline. This combination of technical expertise and intelligence gathering will enable the Citizens Advice service to act as a robust advocate for consumers, influencing policy development on general issues and on the complex energy and postal services markets. Careful analysis of emerging trends in consumer complaints will enable Citizens Advice to speak out on behalf of consumers on areas of particular concern and to lobby policymakers to improve consumer welfare.

Alongside the Consumer Futures function, anyone needing impartial help or advice on a consumer issue will, as now, be able to phone the national helpline, contact their local bureau or use the interactive help on the Citizens Advice web pages. This means that the customer journey for the consumer who has a complaint is clear and simple.

Complaints data will not be the only intelligence-gathering mechanism available to the Citizens Advice service. It will also receive the National Consumer Council’s information-requesting powers, a move overwhelmingly supported by respondents to the government consultation in 2011. Although those powers are not used regularly, the threat of their use makes it easier to obtain key information necessary for effective advocacy. I will elaborate on this point for a moment, if I may. When this order was debated in the other place, there was some concern that the Government were intending to curb Citizens Advice’s access to those information-gathering powers. I stress that the Government have no plans whatever to diminish the ability of the Citizens Advice service to fulfil the role of consumer advocate by restricting that essential power.

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The order implements an overhasty, ill thought-out change. It is simply about the Government wanting to abolish a quango. It is not about protecting consumer interests or about transferring the tool that is needed to a legitimate and single strong body. I fear that by splitting the system in this way, the order is diluting the powers to help consumers to get a fair deal out of the market. It is for that reason that we regret that the order has come here.

[Viscount Younger of Leckie]

I thank noble Lords for their valuable and detailed comments on an issue that I recognise holds some sensitivities in terms of these changes for certain members of the Committee. I thank the noble Lord, Lord Harris, for his broad support and some reassurances on the estate agency part of the changes.

I start by paying tribute to the work and experience of the noble Lord, Lord Whitty, over many years and indeed decades. I listened with some care to his comments but he will not be surprised to hear that I do not agree with much of his general analysis of the consumer landscape. We believe that these changes are beneficial. I shall start by addressing some of his overall comments, and I hope that that he will forgive me if I duplicate what has been said already.

He started by saying that the reform landscape and the changes set out under the order do not achieve the clarity that he had hoped for. We firmly believe that the reforms we are making are a great improvement. Consumers will have a single port of call for Government-funded information, advice and guidance. The Citizens Advice service will be well placed to use its expertise to direct its advocacy and speak up on behalf of consumers. I recognise that some of the detail of the order is complicated, but that is the nature of legislation. It is the outcome that is important.

The noble Lord and the noble Baroness, Lady Hayter, expressed sadness at the abolition of the NCC. I will say, if I have not said it in the past, that I personally recognise the great contribution that the National Consumer Council has made to consumer issues over the years, and the no small part that a number of noble Lords have played in contributing to that. I believe that I said this earlier, but the NCC’s strong track record of consumer advocacy was one of the key reasons for the body being folded into Consumer Focus when it was created by powers under the Consumers, Estate Agents and Redress Act 2007. The great track record of the NCC was enhanced and expanded when it joined with Energywatch and Postwatch to form Consumer Focus in 2008. It will be further enhanced when it joins the Citizens Advice service as a result of this order.

The noble Lord, Lord Whitty, asked how the consumer journey will work under the new arrangements. He cited the word “confusion” relating to other regulated issues. We believe that the consumer journey will not change significantly under these new arrangements. We are simply joining up the policy-making and regulatory oversight expertise of Consumer Futures with the existing consumer complaint-handling abilities of the Citizens Advice service. As a result of these changes, anyone needing impartial help or advice on a consumer issue, whether that is a general matter or on a regulated issue in a sector, will be able to phone the national helpline, contact their local bureau or use the interactive help on the Citizens Advice web pages.

The noble Lord, Lord Whitty, raised the issue of the failure, as he put it, to bring other related sectors within Consumer Futures. The order is more about better working and not simply about moving bodies around, which may have been the expression he used. Citizens Advice will work closely with other consumer panels, joining up on regulated issues of common interest and concern.

The noble Lord also raised an issue about the citizens advice bureaux and whether they had the expertise to deal with the work. I can reassure him that the Citizens Advice service is already fully engaged on policy and research across a very wide range of consumer issues. It has both the experience and expertise to provide a highly effective voice for consumers, and this capability will be bolstered by the expert staff transferring from Consumer Futures. The Citizens Advice service will benefit from its close connection to the citizens advice bureaux and its management of the new consumer advice helpline that is replacing Consumer Direct.

The noble Lord, Lord Whitty, also raised the issue of the funding of the citizens advice bureaux, and stated that it had been cut. I refute that by saying that the Government have not cut Citizens Advice funding. In 2014-15 we will maintain the core grant funding to the Citizens Advice service, which is a combined total of £21.8 million, at a time when other public bodies are seeing their funding cut. That will ensure that the vital central services provided by the umbrella bodies to the bureaux network are maintained. Funding to the service to deliver advocacy on energy—

[Lord Whitty]

My Lords, my question was slightly different. It concerned the addition of what was the Consumer Focus function, particularly the function that was not funded by industry, which has been handed over to Citizens Advice. Has the amount of money that was previously spent by Consumer Focus on that area of its work prior to 2010 been reflected in a proportionate increase in the funding of Citizens Advice? My impression is that it has not, and that while the aggregate amount for Citizens Advice may have been maintained in difficult times, the full reflection of what was previously done elsewhere is not reflected in that total figure. It would be useful to have the figures.

[Viscount Younger of Leckie]

Absolutely. I was going to say that I will be more than happy to write to the noble Lord to confirm the precise figures. I reiterate that it is not our intent to cut the funding. The funding to the service to deliver advocacy on energy and postal matters will be maintained as currently allocated to Consumer Futures, at £8.7 million, with an additional £220,000 allocated to the general Consumer Council for Northern Ireland to deliver postal advocacy. This funding will be recouped via the levy from the energy and postal industries.

The noble Lord, Lord Whitty, also asked whether I would ensure that the lead local authority is properly resourced to undertake this work. This is to do with the estate agency functions. The baseline costs of policing the UK estate agency market will transfer, as he knows, from the OFT into the NTSB’s enforcement grant. This amount will be ring-fenced from the main portion of the grant to ensure that the full funding will be used for the purpose intended.

The noble Lord, Lord Harris, spent some time speaking about Powys and the transfer of the OFT estate agency function. In thanking him for his support, I want to clarify—perhaps for the noble Baroness, Lady Hayter—that we believe that the role of Powys is very important within the new national enforcement regime, and I re-emphasise the national element of that for the avoidance of doubt. The noble Lord and the noble Baroness asked why the Government were not harmonising letting agencies in addition to the changes that we are making to estate agents. The noble Baroness will be aware that letting agents are already subject to consumer protection legislation. The Government do not believe in excessive regulation. The amendment of the Estate Agents Act to include letting agents would lead to overregulation of the market, which would run a real risk of reducing supply in the rented sector, which in turn would drive up rents and reduce the choice for hard-working tenants.

[Baroness Hayter of Kentish Town]

I am sorry that I was not clear. I absolutely understand that—I may not go along with it but I completely understand it. I asked about a different issue. At the moment, a redress scheme for estate agents has been approved by the OFT. Approval for that redress scheme will now go to Powys. I understand that. There will then be redress schemes for letting agents—I think they will be the same schemes, but that is neither here nor there. In order for a letting agent to be approved by the redress scheme, they will not be able to go to Powys to get a tick; I understand that they will have to go through the DCLG. That is the same issue mentioned earlier by my noble friend about two departments not quite co-operating. My question is not about the letting agents themselves but the approval of a redress scheme for letting agents. It is extraordinary that it is not being done in the same way as for estate agents.

[Viscount Younger of Leckie]

I have listened carefully to the noble Baroness, and I believe that she is correct. She mentioned the DCLG, and I can say that the reforms will create a new requirement for letting agents to join an approved redress scheme. It will be implemented through the Enterprise and Regulatory Reform Act 2013, which she was very much a part of, with my good self. The order simply transfers existing enforcement arrangements from one body to another rather than creating a new redress scheme. I do not know whether that answers the noble Baroness’s question.

[Baroness Hayter of Kentish Town]

We will exchange letters.

[Viscount Younger of Leckie]

Indeed, a further exchange of letters would certainly clarify the matter.

The noble Baroness raised an important point about Citizens Advice being able to answer only about 45% of calls—to paraphrase her question. I am not clear where those figures come from because Citizens Advice is now reporting very high levels of satisfaction on the use of its national call line. Perhaps the noble Baroness can advise me on where she got those figures. They may, dare I say, be slightly outdated, but I would be very pleased to speak to her offline, as it were, about that.

The noble Baroness also raised the important issue of accountability relating to Powys County Council. She said that it is convoluted and unclear, but we believe that that is not true. Ultimately Powys County Council will be accountable to BIS, as I explained in my opening speech. As she knows, Powys will report to the National Trading Standards Board in its role as co-ordinator, and the NTSB is accountable to BIS. I am not entirely sure why she is concerned about that because we believe that there is actually quite a short direct reporting line to BIS. Again, I am extremely happy to speak to her outside this Room to clarify what I mean by that. At the same time, the noble Baroness raised the issue of Anglesey. I can confirm that Anglesey’s licensing committee will play no role in appeals against Powys’s warning and prohibition orders. These will be made first to the First-tier Tribunal.

The noble Baroness also asked how the Government will ensure that Citizens Advice will deliver on the work that it has been given and how its work will be monitored. We will hold annual performance reviews with the Citizens Advice service to ensure that the new arrangements are effective and that the successor bodies are delivering on behalf of consumers. We will also make a review of the full suite of statutory provisions within five years of the order coming into force.

The noble Baroness also raised the question of whether Section 24—in other words, the information-gathering powers—would be underused. I reassure her that Citizens Advice will have full access to these powers should it require them. She also asked when Powys and HMRC would receive the list of estate agents from the OFT. HMRC is already in an information-sharing agreement with the OFT as a supervisor under the Money Laundering Regulations 2007. The order provides an information-sharing gateway for Powys that will come into force as soon as the order is made.

The noble Baroness also asked how the consumer will be represented in Europe. The CMA will be responsible for acting as the UK’s single liaison officer in ensuring compliance with the consumer protection co-operation regulation. It will forward individual enforcement actions to the NTSB unless they relate to problems where it takes the lead. However, Citizens Advice will continue to work closely with its European counterparts, as Consumer Focus does now.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. I hope that I have answered all the questions that were raised. If I have not—there were quite a few questions—I will be more than delighted to expand the letters that I have already committed to writing to the noble Baroness, Lady Hayter, and any other Peer. The Government conclude that the order meets the requirements of the Act, and I commend it to the Committee.

Motion agreed.