HC Deb 10 March 1983 vol 38 cc1050-4

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]

11.4 pm

Mr. Donald Anderson (Swansea, East)

I welcome the opportunity provided by the Adjournment debate to set out some of the problems that occur in the resale of gas and electricity by landlords to their tenants. I am confident that the Minister will be glad of the opportunity to set out clearly why the Government felt it necessary to object to the Bill that would have had its Second Reading on 18 February. They have effectively killed it, although it remains in a sort of life support system until it eventually dies.

I shall define the nature of the problem. First, landlords can resell gas and electricity to their tenants either by including the price of energy in the rent or by submeters. Secondly, dealing with the scale of the problem, as many as 250,000 people buy energy in this way. The maximum price must not exceed that laid down in section 29 of the Electricity Act 1957. It is difficult for tenants to establish that landlords are exceeding the maximum statutory price.

The tenant must take action in his own name against the landlord in the local county court. The tenants affected by what in a number of cases is gross cheating and overcharging are private tenants, students in short lets, those in holiday homes and, particularly, those on caravan sites.

The current remedies are inadequate, and it is clear from the volume of evidence available to consumer councils that tenants are trapped by the state of the law. Tenants are frightened of taking landlords to the county court. There is a fear of losing their accommodation or at least of being harassed by the landlord. There are considerable problems in providing adequate evidence, often because tenants are dealing with uncertified old meters that have perhaps been removed by the various area boards from registered consumers. Old meters often do not register accurately.

As the Minister is aware, there is a brisk market in secondhand meters that have been disposed of by area boards and not sold for scrap. Such meters may calibrate inaccurately. The Minister will be aware that many consumer councils recognise the need for change. The National Consumer Council, the Consumers Association, the Institute of Trading Standards Administration and, in particular, the Electricity Consumers Council and area councils, have long campaigned against the anomalies in the current system. A change would be welcomed by Members of all parties.

Consumer councils recognise how powerless they are to enforce the maximum statutory price. The Bill would have made over-charging a criminal rather than a civil matter. Trading standards officers would have been able to take up the problems of tenants who find themselves over-charged and make clear to landlords, who may be unaware that they are over-charging, that they are in breach of the law.

A number of landlords have written to me to say how dissatisfied they are with the current state of the law, and that they would prefer the boards to accept tenants as registered customers which would avoid all the hassle to which landlords are subject when applying the present law.

After my Bill was published, I received a large volume of mail. From the style of the letters it was clear that many of them were from people who would not normally put pen to paper and write to Members. Some of them, however, were eloquent. I received a letter which stated: We are paying almost double the legal maximum rate at which unit charges are fixed … We shall be lucky to get a penny back—even if we take the landlord through the civil court to reclaim the excess we have paid, it is still apparently only his word against ours as separate individuals … On the front of the meter, where he is actually charging 50p for 4.8 units of electricity, he cleverly only displays the final 8, carefully concealing the 4 and the decimal point. Others say that in many holiday homes and caravans they know that they are being grossly over-charged but feel that they cannot, for the small amount involved—it may be a large amount to the landlord over the season—take the landlord to the county court. As the Minister will know, there are special problems in mobile homes. I suggest that there might be incorporated in the agreements between mobile home owners and their tenants a duty, first, to provide a regular supply and, secondly, to ensure that that supply is at a price no greater than the statutory maximum.

I shall seek to anticipate the Minister's possible objections and provide him with some material to which he can refer. One objection may be that it is sufficient to advertise the maximum resale prices. Of course, there is a role for greater advertisement both on television and on radio and possibly for the incorporation of the landlord's duty in the standard rent book. However, ultimately the enforcement of the law will rely on the civil remedy, which, as I hope I have shown, is totally ineffective in the vast majority of cases for evidential reasons and because of the nature of the landlord-tenant relationship.

The Minister may say that even the suggestion of criminalising the conduct will not solve the problems for many tenants, who will be afraid to take their landlords to court. I concede that there will still be a minority of tenants who will be afraid of harassment, but my Bill would be a giant advance. If the matter were dealt with at the local magistrates court, the tenant need not be directly involved because the trading standards officer would have the action brought in his name. The evidence for the prosecution could be provided by the trading standards officer setting out the result of a visit to the landlord, the discussions that he had with the landlord as proof that the landlord is knowingly over-charging and a second visit to show that the landlord had not mended his ways. The tenant need play no direct part in the prosecution case.

Another objection may be the greater work load on magistrates courts. I would not expect a flood of cases, as only extreme cases are likely to be brought to the magistrates courts after clear evidence and warning by the trading standards officers.

What about the greater pressure on the work load of the trading standards officers? The Bill that I had proposed is formally supported by the relevant professional organisation, the Institute of Trading Standards Administration, which does not anticipate problems and said that a Bill on those lines would be helpful.

What about the objection that the Englishman's home is his castle and that there is a clear objection in principle to the rights of entry set out in the Bill? I stress that that was a negotiable formula. We would have done our best to meet any objections in that area.

What about the objection that the Office of Fair Trading is now considering that matter? I would need convincing that that is not another bureaucratic kick for touch. One would want to know the terms of reference of the OFT inquiry and the time scale, though I am assured that it is likely to report fairly soon. As the Minister knows, the OFT has been considering the matter for some time—certainly since 1979. I would need to he assured that not only has the inquiry taken a long time but that it is thorough.

Perhaps the key objection is that my Bill would have extended the criminal law in an objectionable way, and that that is wrong in principle. This category of criminal activity is analogous to those areas where the consumer is already protected, such as the food and drugs and trade descriptions legislation. That would constitute a proper extension of the criminal law into an area which would make this activity ineffective.

Will the Minister give an assurance that the Government recognise the problem? Are the Government content for the present unsatisfactory position to continue? If they are not, what do they propose to do about it?

The Minister's predecessor, the right hon. Member for Gloucester (Mrs. Oppenheim), in a letter to the chairman of the Electricity Consumers Council dated 17 September 1979, said that she was aware that this problem had long been the subject of discussions and discontent. She went on to say that the question of new legislation was not one on which she could give a commitment at that stage. I trust that the Minister will not play for time in that way, but will overcome official inertia, which should not be allowed to block attempts to protect a vulnerable section of the population who are living in short lets, holiday homes, and student accommodation from being cheated by an unscrupulous minority of landlords.

11.13 pm
The Minister for Consumer Affairs (Dr. Gerard Vaughan)

I am pleased that the hon. Member for Swansea, East (Mr. Anderson) has brought this matter before the House. It is an important problem. The Government recognise the seriousness of the problem, and they are not satisfied with the present position. The hon. Gentleman stated the position clearly. He will know from our discussions that I have great sympathy with him in this matter.

The problem arises in accommodation such as bedsitters, holiday flats, mobile homes and caravans. The problem the hon. Gentleman has described does not apply to the majority of tenants who obtain their gas or electricity direct from the respective boards in the normal way.

The Government do not know the size of the problem, but the Electricity Consumers' Council estimates that probably 250,000 people are involved. That group, inevitably, includes many people whose housing security is the least safe and those who are least able to argue for their rights.

The vast majority of landlords and site operators deal with gas and electricity charges in a straightforward and honest manner. However, there are exceptions. I recognise the problems that have worried consumer organisations for many years.

The hon. Gentleman has mentioned that arrangements exist to deal with over-charging by landlords and site owners. Facilities exist whereby occupants can recover any excess charges by action in the civil courts, including using the small claims procedures.

The hon. Gentleman's Bill urges the Government to use criminal sanctions to enforce those people's rights. I do not agree with that. This is a civil matter. The Government must think carefully before extending the criminal law in the way in which the hon. Gentleman has urged.

Under the Electricity Act 1957 and the Gas Act 1972, maximum resale prices are fixed by the gas boards and the area electricity boards. Those prices are set slightly higher than the rates for normal domestic supply in order to cover some of the special additional costs that a landlord may incur in providing the service. If an overcharge is made, the Acts specifically provide for occupants to recover the excess above the maximum resale price through actions in the civil courts. Those arrangements are supplemented by the area electricity or gas consultative councils, which are very willing to take up and look into complaints about overcharging, to advise consumers of their legal rights and to publicise the resale arrangements.

Any occupant, landlord or site-owner who is unsure of the position or is doubtful of the accuracy of his charges can, therefore, get in touch with his area consultative council, and I urge those who have doubts to do so. However, as I have said, we accept that in some cases those arrangements have not prevented overcharging and that those overcharged are often extremely reluctant to use, or perhaps incapable of using, the remedies open to them to recover their money through the courts. Of course, there are several reasons for that. Sometimes people do not know of the arrangements. In some cases, there is insufficient evidence of the amount being charged. The hon. Gentleman has also spoken about old and faulty meters, and the problems of proving the exact amount of electricity or gas. Sadly, there is also an understandable reluctance on the part of tenants to pursue actions against their landlords, because they are afraid of some reprisal. We recognise that.

Given the efforts made to publicise the arrangements, it is perhaps surprising that many of those on both sides—both tenants and landlords—appear to be quite unaware of the maximum resale prices and of the civil law remedies if there has been overcharging. If more occupiers were aware of their rights and were prepared to take them up with their landlords—perhaps after consulting the area consultative council—there would no doubt be a significant reduction in the number of cases of overcharging.

There could well be scope for further action to draw attention to the arrangements and to make tenants and owners of mobile homes more aware of their existing rights. I shall certainly look into that. I hope that this debate will also help to give greater publicity to the subject. I shall do what I can to encourage a wider understanding of the existing arrangements.

The reluctance of tenants to pursue actions against their landlords and to take them to court has already been mentioned as the main reason why the existing arrangements are inadequate. I well understand why that occurs. As the hon. Gentleman has explained, for example, in very short-let accommodation, such as holiday flats or caravans, the amount by which a tenant has been overcharged may be relatively small, and the tenant will not think it worth his while to go to court about it. Of course he is quite right. If the landlord is doing this regularly throughout the holiday period for tenant after tenant, however, he may have quite a lot of money. I shall be arranging consultations with colleagues and with the tourist authorities to see whether it is practicable to take further steps on that aspect of the problem.

However, it must be borne in mind that a substantial number of tenants have their tenure protected by the rent Acts. I therefore advise anyone who hesitates through fear to claim his rights to consult his local rent officer. The Mobile Homes Bill [Lords] contains proposals which will make the tenure of many more residents of mobile homes much more secure, and will improve the take-up of statutory agreements and provide greater security in them. I know that the hon. Gentleman recognises that. The Bill will provide that agreements will set out in writing the sums to be paid under them and will also cover the provision of services. These provisions should mean that residents who are being overcharged will feel much more free to claim their rights under civil law.

I have discussed the problem, but, as the hon. Gentleman will realise, it is difficult to know the extent of abuse. It is possible that even those 250,000 cases are only the tip of the iceberg. Because people are reluctant to come forward, it is difficult to know how great the problem is. One of the main reasons why the Government do not wish to pursue this at present is that the Office of Fair Trading is conducting a further review. The hon. Gentleman appeared to imply that it had been reviewing the matter ever since 1974. That is not the case. In 1977 that body concluded that the evidence did not justify any change in the law. It recommended that consultative councils and electricity boards should give more publicity to the maximum prices and the need to keep proper records, and that tariffs should be simplified. A great deal of action has followed along those lines.

In 1981 we were so concerned about this that the Office of Fair Trading agreed to review the situation again. I assure the hon. Gentleman that it is a very thorough review. Evidence is being collected to discover whether any further action against overcharging is necessary.

I understand that the Director General of Fair Trading hopes to publish his findings in the very near future, and I of course undertake to consider the results and recommendations very carefully. I hope that this will give us some really up-to-date information on the size of the problem and what, if anything, needs to be done about it now.

To sum up, I do not for one moment condone the action of any landlord who knowingly overcharges his tenants for gas or electricity. I hope that I have made it clear that we recognise that there is a serious problem and one with which we have great sympathy. There are, however, arrangements intended to tackle it at present through the civil law and the inquiry has been undertaken by the Office of Fair Trading. I think that we should wait to see the results of the inquiry and the recommendations made to see what action can be taken as a result.

Nevertheless, I am glad that the matter has been raised and I congratulate the hon. Gentleman on bringing it before the House today.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Eleven o'clock.