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

Baroness Hayter of Kentish Town Excerpts

Tuesday 11th March 2014 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

As an amendment to the above Motion, at end insert “but this House regrets that the draft Order fails to produce a coherent framework or single voice to protect consumers; fails to harmonise redress for estate and letting agents; and fails to produce adequate parliamentary or ministerial accountability for the new framework”.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, contrary to what has been said, the decision to abolish the NCC was taken to implement the coalition’s promise in the coalition agreement to,

“reduce the number and cost of quangos”.

It was not taken in the interest of consumers, nor after any criticism of the NCC. Indeed, the NCC’s work has been widely recognised in the UK and beyond.

The Government said that they wanted to “simplify” the architecture of consumer representation; but they set about dismantling the NCC, and merging the OFT with the Competition Commission, before looking at the full range of responsibilities of each of those bodies. In fact, there was precious little overlap between the work of Citizens Advice and the NCC, while some of the OFT’s work—particularly on codes, anti-money laundering and redress—really does not sit happily with the Competition Commission.

The Government have now discovered this. They have replaced the NCC and the OFT with the CMA, CA, CAS, CCNI, SCOTSS, TSI, NTSB, PCC, CPP and HMRC. To help Hansard and others, that alphabetical soup stands for: Competition and Markets Authority; Citizens Advice; Citizens Advice Scotland; Consumer Council for Northern Ireland; Trading Standards in Scotland; Trading Standards Institute; National Trading Standards Board; Powys County Council; Consumer Protection Partnership; and HM Revenue and Customs. For some code approval there may also be the PSA—the Professional Standards Authority. That is hardly a clear and coherent system, either for business or for consumers. Our own Secondary Legislation Scrutiny Committee actually called for greater clarity for consumers about this new landscape. This mish-mash is not clarity.

Furthermore, none of those bodies has any direct representation from consumers. None of them has a consumer panel, nor any requirement to include someone with a background in consumer representation, despite our endeavours to ensure that for the CMA during the passage of the Bill. My concern might be driven by the need for any organisation funded to protect consumers to have some accountability to consumers; but I know that this House, quite rightly, has a broader concern about accountability to Parliament and to Ministers. Indeed, the test of the Public Bodies Act 2011 is that measures should lead to a more efficient, effective and appropriate level of accountability to Ministers. This order fails that test.

I will take the example of estate agents, which has been mentioned already. For some years they have had to belong to a redress scheme. The OFT approved such redress schemes and could ban estate agents who broke the rules. This responsibility for redress schemes—and through them for 25,000 estate agents across England and Wales—will move to Powys County Council, which is an authority responsible to its Welsh electorate. However, for estate agents in England and Wales the elected authority of Powys will be accountable to BIS; it will report to the National Trading Standards Board in its role as co-ordinator; and it will be responsible to the Trading Standards Institute for the administration of its grant. Our Secondary Legislation Scrutiny Committee raised serious concerns about how Powys could reconcile its accountability to several different bodies. The Government have yet to answer those concerns.

Furthermore, as the House may recall and as the Minister mentioned, the ERR Act now also requires letting agents to belong to a redress scheme. Obviously, the two existing OFT-approved estate agent redress schemes will apply to be approved for letting agents. Will it be the same body—namely, Powys—that will approve redress schemes for letting agents? No—that would be far too simple. The Department for Communities and Local Government is keeping that to itself and it will be handled quite differently, even if lessons are learnt.

Not only that, but there is a risk that Scotland, Wales and individual local authorities in England will all have different approval schemes for redress schemes for the rental sector, with a consequent lack of consistency for landlords and tenants. Landlords and agents with property in more than one area could have varying rules to apply in different parts of the country. That does not just sound like madness; it is madness. At the moment we have just two redress schemes handling estate agent complaints. It would have been so sensible for them to handle letting agent complaints, given that virtually every estate agent is also a letting agent.

Instead of that, the two existing schemes will have to seek authorisations from two or more different bodies, no doubt on slightly different criteria and over slightly different timescales, and report back annually to any number of different authorising bodies. Is this getting rid of red tape for redress schemes? Will it help consumers if there are different arrangements for handling complaints about buying as opposed to renting property, or if they are dependent on where people happen to live? The answers are, I think, obvious. Why on earth can these two almost identical redress mechanisms not be harmonised?

--- Later in debate ---

[Viscount Younger of Leckie]

I will write to the noble Lord. The noble Baroness, Lady Hayter, suggests that the provisions in the order do not provide adequate parliamentary or ministerial accountability. However, I dispute that, as the noble Baroness will know. In making an order under the Public Bodies Act, a Minister must have regard to a number of tests, including the requirement to secure appropriate accountability to Ministers. The Secondary Legislation Scrutiny Committee considers compliance with all these tests. I remind the noble Baroness that in the case of this order the committee concluded that it was content to apply the 40-day affirmative procedure rather than the more stringent 60-day process. However, I will again set out the measures that we have put in place to ensure clear lines of accountability, and I will do that in a separate letter on grounds of time.

I conclude by addressing the comments made by the noble Baroness, Lady Hayter, and the noble Lord, Lord Whitty, at the beginning concerning quango-cutting. On the one hand, we are being accused of having too many bodies; on the other hand, we are accused of being forced by the Cabinet Office to cull quangos. We think that our redesign of the consumer landscape strikes the right balance, including representation across all parts of the UK. The changes brought about by this order will deliver more effective consumer advocacy and more joined-up supervision of the estate agency regime.

[Baroness Hayter of Kentish Town]

First, I thank the Minister for doing as good a job as he could with the material at hand. I think that we know that he is batting on a sticky wicket but he did his best. I also thank the noble Baroness, Lady Oppenheim-Barnes, the noble Lord, Lord Berkeley, and my noble friends Lord Borrie, Lord Whitty and Lord Harris for their contributions to my regret Motion. I particularly thank the noble Baroness, Lady Oppenheim-Barnes. She called herself the “great-grandmother”. I think I would have to say “godmother”, because it sprinkles a bit of gold dust whence it goes. Consumers have an awful lot to thank her for.

I also express thanks to my noble friend Lord Stevenson, who, as we have been going along, has managed to find for me the debates that the noble Baroness referred to concerning her attempts to halt the merger. I am afraid that my memory is perhaps not as acute as it should be but we have looked quite carefully at them and it looks as though we were trying—maybe we took the wrong call—to improve what was being proposed. With our Amendment 24ZB, which I have just looked up, and another amendment, we were trying to get the CMA to take on and strengthen the consumer protection, enforcement and guidance role. We noted the comment that the noble Baroness made at that time about the possible lack of independence brought about by bringing the two organisations together. That is slightly different from our amendment but the call that we took was to try to improve what we thought was going to happen. However, looking through the speeches, it appears that we were on the same page for quite a lot of the time.

I shall try to be brief because it is now time to draw this to a close. There are questions remaining. We get a letter saying that Anglesey has no role; now we find, if I have understood it correctly, that someone is going to be put into Powys to sit there and do the job, but that person will presumably be answerable to employers in Anglesey. We need some clarity on this. We are told that elected councillors will have no role but it is their staff to whom they have a duty of care and other employment responsibilities. It would be extraordinary if elected councillors had no say on what was going on in their premises. Nor have we had a serious answer to why we are not using the same mechanism to approve redress schemes. I did not say “the same redress schemes”; we were talking about the same mechanism to approve them.

Contrary to what the noble Viscount said, I think that this is about getting rid of quangos. This happened under the Public Bodies Act and that was referred to in the coalition agreement. My noble friend Lord Harris of Haringey is right: this is not about improving the consumer offer, much as I would have liked it to be. I remain doubtful about whether delivering national functions via local trading standards is the most effective way of promoting consumer interests.

I also still have some concerns about the independence of Citizens Advice. I gather that there are still some discussions about whether it is going to be a public body, with all that that means with regard to procurement and the organisation’s way of working. Some clarification on that is necessary. I have no doubt about the role that Citizens Advice has in helping consumers who have detriment today. We have never questioned that. Our concern is about whether influencing today’s providers, regulators, the Government and Europe can be done by the same body which, every day, answers phone calls and e-mails and has visits from hard-pressed consumers.

I should say that I am known now as Lady Hayter of Kentish Town. I was, until my last relative died there, going to be Lady Hayter of Ystradgynlais. However, I thought that it would be a bit too much of a challenge to Hansard writers—hence Kentish Town. I also lived in Bodedern in Anglesey. Therefore, I am aware of the strength of those bodies but whether they are the rights ones to take this on, I remain doubtful.

Having said all that, we can only wish all these new organisations well for the sake of consumers, for the sake of the people whom the noble Baroness has looked after for so many years and for the sake of people whom my noble friends Lord Borrie, Lord Harris and Lord Whitty have done so much for. We can only wish them well. I know that what they need at the moment is speed. For those reasons, I beg leave to withdraw my amendment.

Amendment to the Motion withdrawn.