Consumer Rights Bill

Yvonne Fovargue Excerpts

Tuesday 28th January 2014 Commons Chamber

[Vince Cable]

Many of these issues are dealt with through small claims courts. I recognise that there is often a difficulty in enforcing claims in the small claims courts. I am not sure that legal aid is the central issue there. It is a question of ensuring that, when court remedies are imposed by the courts, they enforce them and there are proper fines on companies that do not yield at that point.

The measures on the civil courts seek to ensure that there are properly specified rights aimed at giving consumers their money back, giving them more information and increasing business compliance. We must try to ensure that the measures are reasonable and proportionate, and that there is flexibility. Let me give a concrete example, because this is a slightly abstract and legalistic issue. Under a more flexible regime, a furniture retailer that has made false promises on delivery dates may not only have to give consumers their money back, but have to advertise in the press or social media what they are doing to put the situation right. They may also be required to change their internal systems to ensure that there is no repeat of the breach of the law. Essentially, the changes will enable enforcement to take place in a much more flexible way that reflects the circumstances of particular companies and customers.

[Yvonne Fovargue (Makerfield) (Lab)]

How will the Bill address the issue of companies going into liquidation and what happens to their creditors? We have all seen what happened with the Farepak scandal. Consumers do not understand the difference between part-payments, deposits and prepayments. Will that be clarified in the Bill?

--- Later in debate ---

[George Freeman]

Perhaps the hon. Lady could explain that to the hon. Gentleman. I pay tribute to her commitment to the subject. We heard all too little of such commitment during the 13 years of the Labour Government. Her commitment is all the more welcome for that.

I strongly welcome the Bill. It is deregulatory, pro-consumer and pro-business. After saying something about some of the measures in it, I will turn to one or two points it is appropriate to think about on Second Reading, such as the changing pace of technology and how it is changing the landscape, and the way in which the debt crisis and the model of broken public finances we inherited from the previous Government demand that we embrace a more radical model of consumer empowerment and citizenship to drive the recovery all hon. Members want.

The truth is that consumer law is currently not clear enough. It is often out of date, and it is confusing and incomplete. The Bill sets out a simple modern framework of consumer rights. Twelve pieces of legislation currently govern them, and I welcome the fact that there will now be only one.

[Yvonne Fovargue]

Will the hon. Gentleman give way?

[George Freeman]

I will not take interventions because of the instruction from Madam Deputy Speaker to keep moving.

[George Freeman]

Thank you, Madam Deputy Speaker, for that very helpful clarification. If I can finish my point, I will happily take an intervention.

I welcome the fact that there will be one simple Act to govern what has hitherto been covered by 12. I also welcome that, underpinning the Bill, are core consumer principles. People will have the right to get what they pay for; for goods and digital content to be fit for purpose; and for services to be provided with reasonable care and skill. We will also have the right to have faults in purchases put right free of charge, or to be provided with a refund or replacement. The reforms will enhance measures to protect consumers when appropriate.

I welcome the deregulation to reduce business burdens and costs. I also welcome the modernisation of the legal framework to ensure that consumer law keeps pace with technology. It clarifies the law when it is written in legal jargon and streamlines consumer rights, remedies and enforcement powers.

[Yvonne Fovargue]

The hon. Gentleman mentions the modernisation of consumer rights. Does he agree that it is time to change the bill of sale legislation, which was introduced in the 1800s, but which is now used to create log book loans—people give their log books for loans and can have their cars repossessed if they miss so much as one small payment? The legislation obviously does not intend to allow that, and it is time to modernise it.

[George Freeman]

The hon. Lady makes an interesting point, some of which is dealt with in the Bill. It will be interesting to see whether it is picked up in Committee.

Consumers spend more than 59 million hours a year dealing with goods and services problems, which costs an estimated £3 billion a year to the British economy. The Bill is deregulatory by nature, which means that consumers and businesses will find it easier to resolve problems with faulty goods and substandard services, and, for the first time, corrupted digital downloads. I noted with great interest that the executive director of Which?, Richard Lloyd, has said that the Bill

“brings consumer law into the 21st century, extending rights into digital content for the first time, and making it easier for people to understand their rights and challenge bad practice.”

The House will agree that that is a welcome step.

I welcome the fact that underpinning the Bill is the principle of fairness and helping customers when things go wrong, as they sometimes do. The measures will provide a firm foundation for empowering consumers, which will benefit businesses that treat consumers fairly.

Many businesses provide their customers with enhanced rights, but the truth is that even the best businesses still spend significant time and resources—more than they should have to spend—understanding the law and training their staff to apply it. The Bill will benefit businesses by reducing many of the burdens they face because of complicated consumer law. I particularly welcome the competition affairs tribunal.

My support for the Bill is genuine, but I wanted to mention one or two aspects of it that reveal, within our society, a view of consumer rights that is, at times, rather too narrow and that does not embrace broadly enough a concept of true consumer and citizen empowerment on the scale we need to drive a sustainable recovery and to reform how we deliver public services and put this country back on its feet. There are three specific areas in which the challenge of unleashing citizen and consumer power are urgent.

First, some markets—banking, utilities and telecoms—are holding back our recovery. Secondly, I am struck that the consumer rights conversation is framed around consumables, point-of-purchase rights and commercial rights in the commercial market. Many of those concepts could and should apply equally in the public sector and public services. Thirdly, it is also important to have active and empowered consumers in supply chains to drive them. That subject may not entertain all hon. Members, but I know that the Secretary of State feels particularly strongly about it.

In the bigger markets—banking, utilities and telecoms —we inherited from the previous Government an extraordinary concentration of power. One or two institutions had a very unhealthy predominance in each of those key markets, which are vital to the proper functioning of a free market economy. What we need as we try to recover from that toxic legacy of debt and dysfunctional markets is an insurgency of empowered consumer citizens to drive a new paradigm of choice, and to demand and insist that that which is available in so many fields of public life is available in banking, utilities and telecoms.

In banking, why is it still so difficult for bank customers to take their accounts to different banks? I would like to see consumer power, and consumer frustration with some banks, driving much more insurgency and the creation of new banks. First Direct appeared nearly 20 years ago, which was a stunning moment for our generation, who had never seen an online bank. We tapped the mouse and wondered whether it could be trusted and whether it would work. It turns out that First Direct was a stunning new entrant that catalysed all sorts of reforms in banking market. Why not have more now? Our banking sector is dominated by too few big banks, which were propped up by a very unhealthy burst of crony capitalism under the previous Government and shored up in the crisis that that incubated. We need to release customers to drive that insurgency in banking.

I would argue that the same is true with some of the utilities. Following privatisation in the ’80s, we saw those markets consolidate under the previous Government. For 13 years, we did not see or hear very much about that. We have inherited, particularly in energy, a small number of big companies that now pass on substantial global commodity price rises to customers, who have all too little real choice and power to drive across the market. To a lesser extent, the same is true for telecoms and broadband. We still see a very powerful monopoly provider in BT. Of course, other providers are able to operate on the railway tracks, but I do not think that in the telecoms market, given the extraordinary empowering impact of the underlying core technology, we have seen a parallel opening up of consumer power. Going the final mile to get broadband into deep rural areas to drive a rural renaissance, in my constituency and in East Anglia more generally, will require us to support consumers through some sort of voucher mechanism—I welcome the steps the Government are taking on this—to be more empowered to choose satellite, digital or any one of the insurgent broadband providers appearing on the market.

On public services, as important as the measures in the Bill are and as important as this subject is, they are still framed, as is the wider public debate on consumer rights, within the notion of point-of-purchase and consumerist trade descriptions legislation. It is principally concerned with the rights of the consumer at the point at which they buy a consumable. However, the concepts, ideas and rights enshrined in this useful Bill could and should go further. In fact, a number of the reforms that the Government are rightly unlocking in other areas of government will demand that they do. For example, why can patients in the health service, parents in the education system, or even pupils—possibly not young pupils, but sixth-form pupils—not have greater choice, transparency and consumer rights in the public services they receive? I would argue that a sixth former in a failing school who is receiving a bad education has just as many rights as the consumer of faulty electronic goods at a supermarket checkout. We need to extend this principle more broadly across public services.