My Lords, I am grateful to my noble friend Lord Hodgson for his amendment and for bringing up an issue that matters for the grey haired and the vulnerable. It is a very House of Lords issue, I have to say, so we must try to get to the right conclusion for the population at large.
For some, there is something comforting and reassuring about holding a bill or a statement. As others have hinted, it can engender a feeling of greater control over your finances. Equally, not everyone can manage with quarterly bills, which are mentioned in my noble friend’s amendment. We must not forget those who need to budget carefully when considering these issues—those who struggle to make ends meet.
There are a couple of elements in the amendment, as well as others for the debate that we will probably have on Monday on a similar issue: first, whether there should be a requirement for quarterly bills and, secondly, whether the customer should be able to choose the way in which they receive bills and statements. I turn to the frequency of bills first. It is common in most service supply contracts to receive a minimum of four quarterly statements of account, which reflects the historical habit of four quarterly payments. Other arrangements have grown up more suited for the circumstances of today—a mortgage customer may need only an annual statement, while for current accounts or credit cards a monthly statement would, in my view, be essential. For these, the benefits of moving to a system of quarterly statements upon request are not immediately obvious and could have the unintended consequence of increasing costs or restricting flexibility in the frequency of information.
The appropriate arrangements are set out at the time of the original contract, and I agree that these details should be clear and transparent at the time of
purchase or engagement so that the customer knows how his or her bills and statements are to be provided. This is what the current law requires. So what is the case for change? The amendment requires that, notwithstanding the original terms of the contract, a customer can request at least four statements a year in written form, at any time of their choice, which could introduce a randomness into the billing process that would add to the administrative costs and could have undesirable side effects. That is probably not my noble friend’s intention.
Paper bills have never been free. Historically, there was just one way to pay and the fee for processing them was always included, obscured in the administrative costs of the utility and the charge spread across the customer base. However, of late, charges have been more transparent—partly due to advances in consumer law—and have been linked to specific costs and customer categories. Now cheaper to administer payment methods are available and utilities are seeking to incentivise their use by separating out costs and allocating them accordingly. The uncertainty that this amendment would introduce would be of disadvantage to online customers, for whom statements are readily available and can be printed if necessary. Many hard-pressed households welcome the opportunity to save money that paperless bills offer. Paying monthly by direct debit can also enable people to budget more effectively, rather than being faced with quarterly or lump sum bills. For them, the proposed statutory requirement set out in these amendments adds little but extra costs.
I agree, looking at the bill format, that the choice to have paper bills should be generally available, but when we consider the utility providers we can see that the choice is widely available. It is true that not all tariffs offer this option, but customers can and do choose to receive paper bills from their suppliers. So what is the objection? The issue lies with differential pricing, to which my noble friend Lord Hodgson referred—and on this I am afraid I must disagree. It is reasonable for a supplier to take the cost of processing bills into consideration when setting the price of its tariffs. Such decisions go to the heart of running a business and encouraging efficiency in the economy. It is undoubtedly more expensive for a business to print out and post bills to its customers than it is to deliver them electronically online.
It is not for the Government to dictate that certain costs cannot be accounted for and that the consequent burden instead should be placed on all the customers. It is surely reasonable for a business to incentivise its customers to use the cheaper processing mechanism by sharing the savings with customers. This amendment would outlaw that and almost certainly drive up the charges to online customers and perhaps to customers more widely. What does that do to our efforts to encourage more people online within the economy?
The noble Baroness, Lady Hayter, rightly mentioned how useful paper bills were as proof of identity. But, of course, that is not a primary function of utility bills. Other more reliable forms of identity are available to many people, such as passports and driving licences. Going forward, the Government Digital Service is leading work on the development of the ID assurance
programme, which will enable people to prove their identity and access government services in a digital world. Bills can always be printed out from an account if they are needed. I thank the noble Lord, Lord Harris, for his comments on ID cards but that may be a debate for another day.
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