§ Mr. Malcolm BruceI beg to move amendment No. 111, in page 32, line 35, leave out 'maximum prices' and insert 'a maximum price'.
§ Madam Deputy Speaker (Miss Betty Boothroyd)With this it will be convenient to take the following amendments: No. 112, in page 32, line 39, leave out subsection (3).
No. 113, in page 32, line 46, at end, insert—
'(4) Nothing in this section shall be used by private or other landlords to enable a profit to be made from reselling electricity to tenants.'.
§ Mr. BruceI shall speak only briefly because this matter was raised in Committee. We feel that the issue is worth raising again at this stage to see whether the Government are prepared to acknowledge the nature of the problem. The purpose of these amendments is to prevent landlords 637 from making a profit out of the resale of electricity. In Committee, I said that the agreement between the landlord and tenant relates to rent, and that it is wrong that people who are given a rent that they accept as the basis on which they are to pay then have to pay a high rate for electricity as a means of the landlord supplementing the rent that he charges. This applies to a variety of accommodation, but particularly to furnished accommodation on both short and long-term lets and to holiday homes. I make no distinction; in all cases, the resale of electricity at a profit is a means of getting additional revenue from tenants, and we wish to prevent that.
In Committee, the Government raised practical objections to our proposal, saying that it was difficult to determine what was profit as opposed to genuine cost. The amendments make clear our intention to ensure that if a landlord incurs costs associated with the provision of electricity over and above the straight cost that he is paying to the supply company, he should be entitled to cover them. Nobody is suggesting that he should not. However, he should not be entitled to add a profit margin, particularly when such charging is inadequately controlled. There have been frequent rip-offs, and substantial premiums have been charged.
The purpose of these amendments is straightforward. It is to ensure that it would be made an offence to sell electricity on to a tenant at a profit over and above the cost of buying it. That is a reasonable proposition. When a landlord wants more money from a tenant, that should be incorporated in the rent. That is particularly true given the liberalisation of the rent laws promoted by the Government. In the past, over-charging on electricity was one way that landlords got round the Rent Acts. Those Acts no longer apply, so there is no justification for this practice continuing.
The only people who should be making a profit are the supply companies. Introduce a middleman and consumers are ripped off. Often, they are those who are the most disadvantaged and weak. I hope that the Minister will accept that that is undesirable. If he cannot agree to the amendments, perhaps he can tell us how such a provision could be incorporated into the codes of practice or how our aim could be achieved by some other method.
§ Mr. Eric Illsley (Barnsley, Central)As the hon. Member for Gordon (Mr. Bruce) has pointed out, the arguments on the resale of electricity by landlords were extensively rehearsed in Committee, but the Government appear to have chosen to ignore the points that were made then. I support the amendments, in particular as they relate to the ability of the landlord to profit from the resale of electricity through overcharging. The provisions of the Electricity Act 1957 have simply been restated in this Bill. They allow a maximum resale price for electricity, but there is an abuse of that and evidence of overcharging and profiteering by landlords.
The resale of electricity mainly affects people in the lower income brackets, people who may be less able to pay such profiteering prices. They are people who live in caravans and mobile homes, short-term accommodation or private rented accommodation. As a result of other recent legislation, tenancies have been altered, and we must bear in mind that a tenant who complains about being overcharged for electricity may be on an assured 638 shorthold tenancy that lasts for six months. Naturally, he will be reluctant to upset his landlord by complaining that he is being overcharged for electricity.
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The methods by which electricity can be sold by a landlord to a tenant are extensive, and are set out in a document produced in 1985 by the Director General of Fair Trading. The document draws attention to the resale of electricity by landlords and points out that overcharging occurred to a great extent, but the Government have ignored that report. As the document says, these methods include:
The basic point is that the tenant often does not have access to the meter to determine how much electricity he has used, although the landlord does have access to the meter. The tenant has no way of measuring the amount of electricity that he has used or of comparing that to the price that he is being charged.
- "(a) The rent may be inclusive of electricity, the actual amount charged for it not being stated.
- (b) There may be a separate charge made for electricity in addition to the rent, on the basis of an agreed fixed amount, which may however be subject to variations in electricity costs or consumption.
- (c) The landlord may supply two or more tenancies with electricity and apportion the total charge among them (eg two 'bed-sits' in one house).
- (d) The tenant may obtain electricity by inserting coins into a sub-meter which is either owned by the landlord or owned by the Electricity Board, but allocated to the landlord's account.
- (e) The tenant may pay for electricity in accordance with the amount used (which may be based on the readings on the landlord's credit meter)."
As I pointed out, under the Electricity Act 1957, area boards set a maximum charge for the resale of electricity, but the Act did not set out powers to enforce the maximum charge. Again, the Bill has no clause to enable the enforcement of the maximum charge. All that there is in the Bill is a simple carry-over of the provisions of the 1957 Act, which the director general's report shows to be unsatisfactory.
For the tenant who feels that he is being overcharged for electricity, the only avenue for redress is to make an application in the county court. This can be a daunting task, particularly if the tenant is unsure of his tenancy or does not wish to embroil himself in a dispute with his landlord that would involve him in taking his landlord to court. He is also faced with the difficulty of finding out in the first instance whether he is being overcharged or whether the landlord is merely conforming to the maximum resale price. Without such information, it will be difficult to challenge the charges.
The sale of other fuels is subject to the criminal law, but it is not a criminal offence to overcharge for electricity when it is resold. The Government should have addressed themselves to this anomaly when drafting the Bill. The Weights and Measures Act 1963 makes it a criminal offence to overcharge for coal, smokeless fuel, petrol, paraffin and liquid gas. Unfortunately, that Act does not apply to the resale of electricity. That can be compared with what happens when a consumer is late in paying his bill or cannot pay because of financial difficulties. In that case, the law is imposed with some force, the supply is disconnected and the person is sued for that amount by the area board or the supplier.
The first recommendation should be that the resale of electricity for a profit be prohibited. Overcharging by 639 landlords should be made a criminal offence as that would act as a deterrent. There is the argument that charging for electricity should be brought into line with charging for other fuels and within the remit of the 1963 Act. It is important to note that within the next few days the Government will be supporting a private Member's Bill that seeks substantially to amend the 1963 Act.
The burden should be taken from the tenant when it comes to taking action. There are considerable difficulties facing a tenant when he tries to ascertain whether he has been overcharged. If he takes that course and finds that he has been overcharged, he faces further difficulties in trying to find a remedy. The recommendations of the director general should be accepted and implemented.
§ Mr. BarronThe Minister will probably remember the debate in Committee during which we discussed the issues to which my hon. Friend the Member for Barnsley, Central (Mr. Illsley) has referred. We discussed whether the reselling of electricity at rates that could be assumed to be higher than normal should be a criminal offence. The Minister said in reply that under the Consumer Protection Act 1987 the Department of Trade and Industry was about to issue new regulations for the metering of gas and electricity. That debate took place in February, and we should like to know whether the regulations to which the Minister referred are likely to be introduced before the Bill complete its passage through Parliament.
Will the regulations require a landlord to itemise electricity bills? If he is reselling electricity, will he have to itemise the bills that he submits to a tenant? We were told that it would be a criminal offence if a landlord did not set out the price of the electricity in the bill that he submitted to the tenant or in the rent hook. We need to know exactly what the Department of Trade and Industry is proposing. We must see the regulations before the Bill completes its passage through the House. I hope that the House will excuse the pun when I say that we are in the dark.
Amendments have been tabled that seek to protect tenants from the criminal acts of some landlords who resell electricity. We do not know whether the DTI regulations will be as effective as the introduction of a criminal offence so that those who infringed the law could be taken before a court and punished. I hope that the Minister will tell us when we can expect the new regulations to be introduced. There must be protection from excessive charges for the reselling of electricity.
§ Mr. LangI understand the anxieties that led to the tabling of the amendment by the hon. Member for Gordon (Mr. Bruce). I understand also the anxieties expressed by the hon. Members for Barnsley, Central (Mr. Illsley) and for Rother Valley (Mr. Barron). However, I do not accept the implication behind the amendment that all landlords are rogues and exploiters. At the same time, I understand that the amendment refers to an area of sensitivity about which there are legitimate concerns. This group of amendments would have the effect of permitting the director to fix only one maximum price at which electricity might be resold. It would prohibit a landlord from making a profit when selling electricity to his tenants. There are practical reasons, apart from any others, that make it impossible to accept the amendments.
Amendments Nos. 111 and 112 would severely disadvantage many consumers. It is essential that the director's power to fix maximum prices at which electricity 640 may be resold should enable him to fix different prices to suit different circumstances and types of supply. The area boards' current system of tariffs identifies a number of different classes of consumer. The prices charged to the different classes reflect the different characteristics of supply for each class and the cost incurred in providing different supplies. We expect the system to continue in future.
The power given to the director by clause 40 will enable him to set a different maximum resale price for each tariff class if he considers it necessary to do so. He will be able to set a maximum resale price that will apply for domestic supplies. He will be able also to set a maximum price for commercial and industrial consumers.
I thought that the hon. Member for Gordon might draw an analogy with British Gas. In the event, he did not. The Director General of Gas Supply can set only one maximum retail price for gas because there is only one gas tariff. To permit the director to set only one maximum resale price for electricity would mean that if he were adequately to cover all classes he would have to set the price at a level that corresponded to the highest tariff rate. That would clearly be inequitable for those purchasing electricity from a landlord who was supplied at a lower rate. Perhaps the hon. Gentleman identified this problem himself. Having tabled amendments Nos. 111 and 112, he tabled amendment No. 113, which would introduce a new subsection (4). That would prevent a landlord making a profit from reselling electricity. In a sense, amendment No. 113 is designed to counter the effect of amendments Nos. 111 and 112. As I think I have demonstrated, the first two amendments are unacceptable and the third would not be necessary. It is in the interests of consumers that the director should have the powers that are given to him under clause 40. I understand also, of course, the anxiety about possible exploitation of tenants by landlords.
It is fair to say that landlords incur costs in the supplly of electricity. Those costs could include the provision, installation and maintenance of a meter, the installation and maintenance of electric wiring and meter reading, billing and collection. Some landlords may make a small loss in reselling electricity while others may make a profit. These are all factors that the director will need to take into account in setting the maxim um retail price. It would be impossible to examine every landlord's costs. The complexities and subjectivity of identifying the costs would make enforcement extremely difficult.
I can offer the hon. Member for Gordon some consolation and respond to the issues raised by the hon. Members for Barnsley, Central and Rother Valley. We are concerned, as are hon. Members, with the need to protect consumers. We cannot prevent some landlords from making a small profit, but we have taken steps to ensure that a landlord cannot recover from a tenant more than he is entitled to charge.
The regulations which were mentioned in Committee and to which the hon. Member for Rother Valley referred are to be introduced by the Department of Trade and Industry later this year under the Consumer Protection Act 1987. They will relate specifically to the resale of gas and electricity and will require landlords who resell electricity or gas to tenants for domestic use other than through a fixed charge in the rent to provide itemised bills that show the number of units charged for, the rate at which the electricity has been supplied, and the statutory maximum rate. A landlord who fails to provide this 641 information adequately will be committing an offence and will be liable to prosecution by a trading standards officer. It will be an additional offence to that of giving a misleading indication of price, which is provided for already in the Consumer Protection Act.
The proposals, which have already been circulated in draft, have been welcomed by the Electricity Consumers Council, other consumer bodies and local authority trading standards organisations. We believe that they are the right way forward to deal with a possible abuse of the system. I hope that, in the light of my comments, the hon. Member for Gordon will withdraw the amendment.
§ Mr. Malcolm BruceI am grateful to the Minister for his comments. I accepted in my opening remarks that there are some practical difficulties. I am pleased that the Minister has acknowledged that the abuse that has existed should be removed from the system. It was never defensible when the industry was in the public sector and it would be even less defensible following the transfer of the industry to the private sector.
I am encouraged by what the Minister says about the regulations that are coming forward. I acknowledge that clause 40, even without the amendments, allows the director to fix maximum prices. In a sense, the purpose of tabling the amendments and initiating this short debate is to give to the director a clear sign of the feeling within the House and to highlight the abuses that we are anxious to have removed. I hope, therefore, that the Director General of Electricity Supply, reinforced by the regulations about which the Minister talked, will ensure that, apart from minor adjustments on a technical basis, the practice of selling electricity to sitting tenants at a substantial profit and as a means of supplementing the rent will not continue in any worthwhile commercial sense. That will not happen automatically because of the measures that have been tabled, but there is unanimity on both sides of the House about the desirability of ending that practice. In those circumstances, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
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