Consumer Rights Bill

Gordon Marsden Excerpts

Tuesday 28th January 2014 Commons Chamber

[Vince Cable]

I will elaborate on that when I discuss digital measures. The hon. Gentleman is quite right: there are different consumer protection arrangements for the DVD—the physical equipment—and for content. The measures in the Bill specifically relate to how we strengthen protection on content.

The Bill was published in draft last summer and, as I have acknowledged, we are grateful for the feedback we received as a result of scrutiny, particularly by the Select Committee on Business, Innovation and Skills. Many of its recommendations are reflected in the Bill before the House, and I believe that it has been improved as a consequence of that scrutiny.

The first main measure in the Bill deals with goods, which are a critical part of the economy. There are roughly 350,000 retail businesses, but much of the law pertaining to this area is 30 to 40 years old. We have tackled the complexity that makes compliance burdensome for companies and confusing for consumers by setting out in one place the standards that have to be met. For example, we have defined a 30-day period within which goods have to be inspected. We have made it clear that, where consumers have a faulty item repaired or replaced, that repair or replacement must remedy the problem the first time round, or they can insist on some money back. Survey data show that all but 6% of faulty goods can be remedied the first time round, but we have embedded that in a clear set of rules.

We often hear, for example, about consumers trapped in a cycle of repairs that fail to fix a fault. Which? recently reported a case of a car owner who had fault after fault after fault, but he was consistently fobbed off with further repairs that failed each time to fix the fault. Under the Bill, that will not arise, as we will narrow down the obligations.

The hon. Member for Stoke-on-Trent South (Robert Flello) asked about digital content. There is a good deal of legal uncertainty about consumer rights in relation to digital content, which is unacceptable in a rapidly growing segment of the economy with a turnover of around £200 billion. That is why we have introduced a new category of digital content with a set of quality rights. As I said, we need a distinction between the way in which we protect content, which is intangible, and the way in which we protect goods, such as DVDs, which are tangible and are dealt with under the goods provision.

For example, many people now download music albums, but if one of the tracks is corrupted and will not play, it is not clear what they are entitled to. Under the Bill, they are entitled to a repair or replacement of the digital content and, if that does not fix the problem, they will get their money back. This is a complex matter, and we recognise that, in relation to complex software, for example, there are flaws—that is the nature of the business—but we have tried as far as possible to narrow down the areas of fault and consumer obligation. Clear digital rights are good, not just for consumers but for responsive businesses, particularly new market entrants—a key part of the industry—which will find it easier to attract customers, even if they are not an established brand, because they can establish a track record in consumer service underpinned by the legislation.

Another part of the Bill deals with consumer protection in relation to services. We know from reviews by the Law Commission that the law governing the provision of services is difficult to understand and, when things go wrong, there is no statutory redress regime to put them right. However, we are talking about 75% of the British economy. That is why the Bill provides new statutory rights and introduces new statutory remedies when things go wrong. There is a great deal of debate about the specifics: the Business, Innovation and Skills Committee has suggested a statutory quality right, which we looked at, but we found it too complex. We considered the evidence from Australia, and we are certainly happy to engage in further debate on the matter.

As an example of how the new rights would apply, we can look at the case of cowboy builders. Almost all of us have dealt with such cases in our constituencies, and they cause particular anger. A cowboy builder is doing domestic work and altering someone’s bathroom. They start the work, but there are problems, with debris strewn around the house and disruptions to the water supply. Currently, it is unclear what the householder is entitled to, and a lot of frustration flows from that. Under the Bill, there will be a statutory right to ask for a poorly performed service to be redone if possible. If it cannot be redone within a reasonable time or without significant inconvenience there is a right to money back. I stress the example of cowboy builders, as I think that the hon. Member for Walthamstow (Stella Creasy), who may well want to discuss this, issued a press release this morning in which she singled out cowboy builders and said that there was no reference to them in the Bill. In fact, these measures will improve significantly consumer protection in that area.

Another area in which the Bill introduces reform is unfair contract terms—essentially the small-print problem. Legal ambiguity arises from recent landmark court cases—the so-called banks case in particular—and our reforms endeavour to protect consumers from the small print while making it easier for businesses to understand how they can prevent contract terms from being challenged in court. In a typical example, someone joins a gym in January with a lot of enthusiasm, but they have not read or fully understood the details of the small print. When they cancel the contract in March, as many people do—I seem to remember cancelling my gym contract rather earlier in the year—they have to pay for a full year’s membership. Currently, it is not clear whether a court would find that unfair. Under our proposals, it is clear: a court can find it unfair, and if it is unfair the consumer is not bound by it.

The reforms endeavour to make clear what the courts can and cannot consider in assessing fairness. In particular, we make it a key test that price and subject matter in a contract need to be transparent and prominent—the operative word is “prominent”—to ensure that it cannot be challenged for fairness in court.

[Mr Gordon Marsden (Blackpool South) (Lab)]

I am interested and encouraged to hear that proposal, because I dealt with a constituency case in which a young man found himself with precisely the sort of problems that the Secretary of State has described. Does he agree that there is a role for local councils, if it is a local gym or other local body, and their consumer protection departments, which should intervene in these issues? Will he encourage local authorities to use their public protection departments in that way?

[Vince Cable]

Trading standards at a local level are extremely important. It is not a statutory obligation, and councils vary in their support for it, but it is absolutely crucial. This is where much of the enforcement action will be eventually taken. At national level, as the hon. Gentleman will know, we put £13 million a year into the National Trading Standards Board, which provides training support, for example, and helps trading standards authorities to co-ordinate activities. That is often required, because an abuse can occur across borough boundaries. He is absolutely right: local trading standards officers are crucial in implementing much of this legislation.

--- Later in debate ---

[Stella Creasy]

I hope that the hon. Gentleman is on the Public Bill Committee, because I would enjoy many such conversations with him. His interest in how widely consumer rights can be applied is legendary in this House and in the country. We need a fundamental understanding of where rights for consumers make a difference to our economy. We believe that the Bill needs to meet such a test, and I shall set that out today. I hope that I can make clear and compelling arguments about why the Bill should make a real change to people’s lives and redress the balance of power for consumers.

[Mr Marsden]

My hon. Friend has already proved herself to be a superb champion of consumer rights since entering the House in 2010. I am following what she is saying about the need for the Bill to go further. Does she agree that one real issue, particularly in my constituency of Blackpool South, is the amount of counterfeit goods that are regularly sold—worth tens of millions of pounds every year—and the crucial role of trading standards? Many trading standards bodies have been affected by the cuts in funding to local government. Does she agree that the Government need to look at supporting such bodies more centrally, especially in their role in relation to counterfeit goods?

[Stella Creasy]

I want to come on to precisely my hon. Friend’s question about trading standards, and about how to have stronger powers for consumers at local level, which is one issue that the Bill does not seem to understand or to address.

I am honoured that the Secretary of State made time this morning to read my article for PoliticsHome. I, too, took the time to read his speech last night, and I very much enjoyed his attempt to use Jedi mind tricks on the Government. In particular, he paraphrased one of my personal heroes, Obi-Wan Kenobi, in his attempt to claim that “This is not the recovery you are looking for”, which is recognition that consumers are bearing the burden of this Government’s economic policy as a result of their lopsided attempt to balance the budget. I am therefore glad that the Secretary of State has acknowledged that growth is being driven only by consumer spending, because many of us are concerned about the impact of that.

Although the Secretary of State celebrates the idea that consumers have dipped into savings that they hold for a rainy day, I have to tell him that he is mistaken to presume that they have done so only for long-term investments. His own Money Advice Service shows that a third of British people have no money put aside for rainy days, due to the everyday costs of living, and that those who have such savings have been forced to dip into them to cover those costs, with three quarters of the people surveyed having been hit by a bill that threw them off-budget in the course of the past year. Indeed, a third of people in our country who now have no savings at all have said that not having a high enough income is the problem causing them not to save. We agree that we should be extremely worried about an economy in which, every day, people get further and further into personal debt. We are also worried that when the Government are presented with an opportunity to do something about that, they stand aside. They talk strongly about national debt, but say nothing about personal debt.

I know that the Secretary of State will want to blame the Treasury for the National Audit Office’s damning indictment that Government failure to assess the impact on consumers of investment in infrastructure might lead to consumers facing financial hardship and unplanned taxpayer support being required. That damning report shows that Whitehall Departments are forgetting the needs of consumers, and therefore the cumulative impact of household bills. I know that some in the Government want to cast the Public Accounts Committee as the dark side, but I fear that consumers will feel the Sith inhabit the Treasury, not Committee Room 16. Why does the Secretary of State therefore not use the Bill to address that gap and to help such hard-pressed households, as well as to show that he gets the need to tackle the rip-off charges and broken markets in goods and services that they face?