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10.55 pm
The Minister for Energy and Industry (Mr. John Battle): I thank my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) for raising his
constituent's case. Although some may say that it is inappropriate to deal with individuals' problems in the House, I do not agree with them. Quite often, we discover in our constituency cases and surgeries how laws, Budgets and the practices of private companies impact on individuals. It is certainly appropriate that we should stand up in the House for those whom we feel have been treated unjustly, speak out for them and raise their cases. I therefore welcome the fact that my hon. Friend has dealt with his constituent's case, and the way in which he has done so.
My hon. Friend said that his constituent kept careful accounts and old bills. How often do people do so? Nevertheless, I should say that generally--I shall comment in a moment on the individual case--many of our constituents do their homework, have been conscientious in dealing with matters and deserve to be treated with the utmost respect and seriousness. If the word "customer" is to mean anything, customers have to be treated with absolute respect and be treated as companies' first priority.
The purpose of the Government's proposals in our fair deal for consumers is to renew and refresh regulation and to put consumers at the heart of the process, so that they really do come first. The law states that not people but establishing competition should be the first priority, but competition should benefit people. If it does not work for people, why have it?
I cannot go into the details of the individual case raised by my hon. Friend. It would be inappropriate for me to do so, especially as the case between the parties is unresolved. The case went to the Gas Consumers Council, which did not refer it--as, perhaps, it should have--to Ofgas, as the case was to go to court. The council perhaps felt that it should not act further on the matter.
Mr. Purchase:
The case did not get to court.
Mr. Battle:
Perhaps the appropriate course would have been for the Gas Consumers Council to have referred the case to Ofgas. Those at Ofgas were seemingly unaware of the case until my officials alerted them to it, because of this debate. It does seem a bit odd that, before Ofgas would take the case seriously, my hon. Friend had to go to the effort of writing to Madam Speaker to request an Adjournment debate. There seems to be a gap in the system.
We shall fill that gap by giving power to the Gas Consumers Council to be the sole point of contact when we change the regulatory rules, so that people know clearly where to go, and so that the council will champion cases right the way through the system and take on the companies.
I hope that the case will be resolved by a revised offer by the supplier. I have been informed that the parties will be meeting, when the matter can perhaps be resolved. Ofgas can use its formal powers to resolve such disputes. Gas companies and suppliers are obligated to use their licences to ensure that customers' domestic properties are supplied with gas. Should Ofgas--having considered the evidence from all parties in a dispute--decide that a disconnection is unjustified, the Director General of Gas Supply, the regulator of Ofgas, can use enforcement powers to require a reconnection. Mr. Bailey could have asked--he still could ask--Ofgas to use those legal powers.
Gas competition was opened up under the previous Administration and the process was completed on 23 May. There has now been a roll-out of 10 other suppliers which compete with British Gas. In the past year, that has resulted in consumer-related problems, including doorstep selling. I raised the matter with the Director General of Gas Supply last year, soon after taking office, and insisted on the introduction of a marketing licence condition that regulates the practices of companies involved in doorstep selling.
There is now a clear code of conduct and companies risk losing their licences and being fined if they abuse their customers--our constituents--in that way. We consider improper marketing tactics and doorstep sales unacceptable and we will not tolerate them. The Department is currently consulting on modifications to strengthen the Consumer Protection (Cancellation of Contracts Concluded Away from Business Premises) 1987 Regulations.
It is clear that some consumers continue to experience problems when they switch gas supplier. In that respect, some gas suppliers are proving worse than others. Problems can range from delays in transferring to a new supplier to disputes about billing. We should be aware of the distress caused to consumers, particularly the elderly and disadvantaged, if they are billed wrongly and suddenly receive a huge bill. They are then told that they are in dispute with their supplier. When they dealt with one nationalised company, consumers did not face the difficulties that inevitably arise now that there are more than 20 companies. Ofgas is aware of the switching problems and is working with the industry to get it right.
Customers are also experiencing erroneous transfer because of doorstep selling or administrative problems. They can be switched to a new supplier without having requested a transfer. That is unacceptable and Ofgas is tightening up the transfer procedures.
Since April 1996, the number of competing suppliers has doubled to about 20 and some 3 million out of 19 million households have switched supplier. There is great turmoil in the marketplace. The introduction of competition on such a scale and in such a time scale has been a considerable achievement and problems were inevitable.
Following my expressions of concern, the Association of Energy Suppliers has put together a code of practice revising the practice of doorstep selling so that companies have to hand over clear written information about their tariffs--they can no longer sign up people on the doorstep. We hope that the practice will now be jettisoned. All members of the association have signed up to the revised code and I have made it clear to the gas and electricity regulators that I expect them to take action in respect of companies that do not adhere to the new code.
All gas suppliers have a duty to establish procedures to handle disconnection complaints. If a consumer cannot resolve a problem with a gas supplier, the first port of call should be the Gas Consumers Council. If the GCC cannot resolve a problem on behalf of a consumer, it should be referred to Ofgas for arbitration.
It would be wrong and misleading to pretend that the regulatory framework was perfect when we took office. The hon. Member for Daventry (Mr. Boswell), the shadow spokesman on energy issues, is in his place and he would concede that.
Our Green Paper "A Fair Deal for Consumers: Modernising the Framework for Utility Regulation" proposes changes to utility regulation. We want to put consumers at the heart of regulation. We set out many proposals, including the merger of Offer and Ofgas, new powers for Ministers to issue statutory guidance on social obligations and environmental objectives and measures to improve the transparency of regulation of the energy industries and decisions to replace energy and telecoms regulators with small boards. We propose a new primary duty on regulators to protect and promote the interests of consumers wherever possible, through promoting competition but ensuring that the Government establish consumer councils for each of the utilities. A consumer council for energy will be established on a fully independent and statutory basis, backed up by resources. We envisage that consumer council playing a key role in articulating a strategic and independent view of consumer interests to the regulators, companies, Parliament and the media. It will be the single point of contact for people and it will have to take action.
We also want to strengthen the position of consumers by ensuring that all the regulators have the powers already held by some to impose financial penalties on companies for breaches of overall and individual customer service standards. Companies will be fined in retrospect if they get it wrong. That should strengthen the system.
We plan to encourage stronger links between customer service standards and the price caps on energy and directors' pay, to tie it in more rigorously than has been the case. We did not inherit a perfect system. We have had to overhaul the regulatory framework. We have put forward proposals on that and are looking for support to take those proposals that require legislation through the House. The new regulator will be the first energy regulator to bring together gas and electricity and build in our new guidelines.
The independent regulator will have a statutory duty to investigate and take enforcement action to prevent licence breaches. Ofgas is already working closely with the industry to solve the problems that consumers are experiencing and to tighten up the codes of practice and the licence conditions. The Gas Consumers Council, which is an independent statutory body set up to deal with consumer complaints, will be strengthened as the first point of contact. We are also reviewing utility regulation with the key aim of building into law that the consumer should be at the heart of the regulatory framework and should take precedence. The law that we inherited says that setting competition in train should be the primary duty of the regulators. That will be changed to make the primary duty protecting the consumer. If consumers do not like the service that they receive, they can and should demonstrate their concerns. They can change to other suppliers, but it is important that their supplier delivers the right quality of service.
Price is important in regulation and people naturally want lower bills, but they deserve quality and back-up in their service. That is paramount. If gas companies talk about consumer service, they ought to take their customers seriously and treat them with ultimate respect. We shall ensure that the law backs that up.
There will be a single point of contact. There is a competitive market for energy, but we shall ensure that the marketplace is regulated. We shall ensure that the poor are not priced out--that is imperative--that
environmental responsibilities are taken seriously and that when there are breaches of licence conditions, action is taken against the companies concerned.
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