My Lords, first, I thank my noble friend Lady Oppenheim-Barnes for her amendment, for her previous two amendments and for providing us with a useful and constructive discussion. She was not here for what I was going to describe as a gallop, but my noble friend Lord Hodgson rightly described as a canter, around this issue in our previous session. I shall not, in the interests of time, repeat everything I said on that occasion. For example, we had a good discussion about the point that the noble Lord, Lord Harris, made about ID. While I have the floor, I also pay tribute to everything that my noble friend Lady Oppenheim-Barnes has done for the consumer over many years. Things have improved as a result of things done recently, from domestic and EU sources. This Bill, if we can get it through, will make further improvements.
I was also glad to hear of my noble friend Lady Maddock’s experience, which I shall come back to in a minute. I am well aware of the Keep Me Posted campaign, which the noble Lord, Lord Harris, mentioned, and have indeed talked to some of the campaigners about their plans. It is good for the postal angle to have been articulated by the noble Lord, Lord Clarke of Hampstead, whom I thank. I also understand that this amendment is talking about the regulated areas, not everything in general; that point is well made.
We are returning to an issue that has been debated in the House on a number of occasions. It is very much a House of Lords issue and I therefore thank everyone for their thoughtful contributions. The amendment is addressed to utility suppliers but my noble friend Lord Hodgson mentioned banking, which is not in the amendment but, no doubt, similar
considerations apply. All these sectors have regulators to ensure that consumers are treated fairly, in accordance with licensing rules and wider consumer protection law, including those intended to protect the more vulnerable in our society—a point that I am going to come back to.
Customers may take queries or complaints to the relevant regulator and receive some form of assurance on their position—for example, should a business seem to be charging excessively for supplying a paper statement or for processing a cheque payment. I believe that we have already established a consensus that some individuals value retaining the option of paper transactions. We are all clear that the terms of the contract must be set out at the outset, at the time of agreeing the contract, and that they must be clear and transparent. In particular, consumers need to be clear and agree if there is to be a change in the way in which they receive and pay their bills. In this way, the customer knows how bills and statements are to be provided and on what terms. As I mentioned in our previous debate, paper bills and cheque payments have never been free. The fee for processing them was always borne by the consumer but was tied up in the administrative costs of the utility, and the charge was spread across the customer base. Thankfully, today these charges are more transparent and linked to costs.
This amendment would be of particular disadvantage to online customers, for whom statements are readily available and can be printed if necessary, especially by the young but increasingly by our digitally aware “silver surfers”, because many people are embracing the internet at every age in a very surprising way. I welcome the opportunity to save money that paperless bills offer, and so do many people. Paying by direct debit, which was condemned by my noble friend Lord Blencathra, can also enable people—some of them vulnerable and elderly—to budget more effectively than being faced with quarterly or lump-sum bills. There can be some value there. For them, the proposed statutory requirement set out in these amendments adds little but the possibility of extra costs.
It is undoubtedly more expensive for a regulated 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 with the consequent burden instead being potentially passed on to all customers. It is surely reasonable to incentivise customers to use the cheapest processing mechanism by sharing savings with them. This amendment would outlaw that and almost certainly drive up the charges to online customers.
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I take an example. Following concerns raised earlier in the year, Ofcom reviewed the payment differentials charged by suppliers and published new analysis in May. Its analysis found no evidence to suggest that costs were being unjustifiably added to the bills of typical prepayment and standard customers—although I appreciate that that is only one area. That links to the question asked by my noble friend Lady Oppenheim-Barnes about why the charges for processing do not generally reflect the cost to suppliers. She mentioned quite a small charge. But obviously not only printing
and postage are involved in costs. Regulators already require charging differences to reflect costs only. That is a point that has not come out sufficiently in this important debate.
The noble Lord, Lord Berkeley, rightly talked about the problems of getting to grips with filing utility bills online. That is something that I saw personally when I retired and came here and was on the Back Benches for a while; in learning to file utility bills online, one became a digital citizen. That experience is increasing for people, and there are advantages to it, so we should try to encourage people in that direction, obviously with the safeguard of the paper bill in certain circumstances. My noble friend Lady Wilcox rightly said that there would be an element of cross-subsidy if you required, as this amendment does, paper to be provided free of charge. I shall come back to that later.
Vulnerable customers have been mentioned in passing but without anything very specific. The regulators in each sector have a duty to protect consumers and consider the issue of affordability in their market when setting out their licence rules. This has meant that special provisions have developed in each sector. I can give a couple of examples. There are home phone provisions for those on certain benefits through BT Basic, and the Government’s warm home discounts scheme provides 1.7 million pensioners with a discount—and there are others that I shall not go into.
My noble friend Lady Maddock said that this issue was more serious for some old people. I agree with her that there is a transitional issue in this important debate. However, I agree with the noble Lord, Lord Stoneham, that you need to take account of the changes taking place—and he rightly spoke about how some quite old people are using Skype and getting their news online, rather than reading newspapers as they used to. I am trying to make the point that there is a changing world out there that we need to have in the background when we look at this.
Citizens Advice, for which I have a huge amount of time, advises on special arrangements for disabled people or people who struggle to choose between tariffs. I suspect that it will also help in the circumstances described so graphically by the noble Baroness, Lady Hayter.
The noble Lord, Lord Harris, talked about the importance of paper bills as proof of identity. I repeat what I said last time—that that is not the primary function of utility bills. You have other reliable forms, such as passports or driving licences. 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. However, I accept that this will take time and that there is a transitional point there, too.
I should mention payment by cheque as it is a subject of the important amendment of my noble friend Lady Oppenheim-Barnes. The amendment would introduce a new statutory requirement on utilities: one that, for example, does not even apply to retailers. The Government consider that the form of payment a regulated business agrees to accept is a commercial one that has considerable bearing on administrative
processes and costs. In practice, I think that utilities do take cheques. The principle of cost-reflective charging is widely accepted in EU and UK consumer law, and therefore included in sector-licensing conditions.
That is not to say that cheque payment has had its day. Somebody mentioned that if you are on a charitable trust, often two different people sign. The Government are taking action to make payments by cheque faster, more convenient and efficient, using technology as appropriate. I think that tells us something about cheques. However, we want to encourage competition. Often new entrants will build their models around online provision to save on the costs of setting up a new business and that can be an important stimulus to the market.
I am grateful to my noble friends for refocusing attention on the needs of charities and those sharing apartments, particularly those who are housebound or ill and need a friend, family member or other helper to transact their bills. Some simply do not want to pay online or over the telephone by ongoing direct debit. That is their prerogative but it is an arguable point as to whether the costs of their exercising this choice should be clear to them or obscured in general costs to the business concerned.
My noble friend Lady Maddock raised the question of dealing with the affairs of a deceased person—a sad circumstance. It is true that, if they can be found, paper bills can help in those circumstances, although they are not necessarily always reliable. They may not always reflect recent changes and the digital world is responding. Businesses are developing digital vaults such as Barclays “Cloud it” where details of service suppliers and key documents can be stored and accessed in the sort of emergencies that the noble Baroness mentioned. That is an interesting development.