Select Committee on Constitution Minutes of Evidence

Examination of Witness (Questions 480-497)



  480. What about Scottish Power? They both generate and they operate the transmission lines, do they not—or so they tell me anyway?
  (Ms Davies) They do, but when competition was introduced for electricity, using the Utilities Act 2000, it required the creation of quite separate companies within a group, structured to ensure that there was a real separation of activities. I think that all of the accountability issues were taken into account and were part and parcel of what was quite an intensive piece of work at the time of the whole process, called "business separation". Part and parcel of that, for example, was having compliance officers and all of that sort of thing. In terms of consumers and competition, there really is a distinction between how they interact with the competitive supply market and in terms of the regulation that is there to govern the protection, and so on, versus the degree of protection that there is in terms of the provision of a secure network, making sure that your lights stay on, and so on. That whole remit is very heavily regulated by Ofgem, through quite a robust and consumer-focussed set of licence conditions. So consumers really do have quite a degree of protection there, because it is well recognised that that is a natural monopoly and should be separate from the issues Ann has raised about competition in the retail market and competition for wholesale electricity.

  481. So the problem which I suggested to you does not really arise?
  (Ms Davies) It does arise in that there are supply failures, but there are different mechanisms for dealing with it.

  482. Finally, in your paper you point to Ofgem's consultations. It appears from the documents we have seen that the scope of Ofgem's work has reduced by about 70 per cent over the years. However, we are told that the running costs are now up, it is either 200 or 300 per cent—a huge increase. Is it your impression that you are being deluged with papers from Ofgem, some of which no doubt are extremely interesting and important, some of which are perhaps not quite so important? And, if not, how have the running costs escalated to such an extent?
  (Ms Robinson) I do not really want to comment on Ofgem's running costs. I do not think that it would be reasonable or fair, and I do not think that I am in a position to do so. One of the things that is quite nice, I have to say, is that the number of consultation papers that have been coming out of Ofgem over the last 12 months or so has been reduced.
  (Ms Davies) A little!
  (Ms Robinson) We are not a large organisation. We do not have a lot of people to comment on things. Lesley and her team are very few in number. So we are very selective and only focus on the things that we know are going to have a big customer impact, and the rest we do not touch. There have been times when the regulator has been just a touch fed-up with that, because they would like us to comment on everything; but I do not see any point. We have to use our resources wisely, and we have to be focussed in what we do.

Lord Elton

  483. Can you, without embarrassment, perhaps elaborate a bit on your reluctance to comment on Ofgem's running costs?
  (Ms Robinson) I am embarrassed about it. I feel a bit awkward. Let me put it this way. We represent the consumer. We have a lot of information about what matters to consumers and we do talk to Ofgem. I think that we are in a very strong position to say what the impact is likely to be. However, we have a policy team within our organisation of only eight people. I think that Ofgem, and I may be wrong in this—and they will kill me, I am not going to live beyond the night if I carry on at this rate!—have about 40 people who deal with just the social aspects of regulation. [1]That is almost as big as my headquarters in total, including my communications and everybody—including me, for that matter.

  484. So they are a very powerful organisation and you feel that you perhaps should not risk your arm against them unnecessarily?
  (Ms Robinson) Oh, I would not say that! I definitely would not say that! We may not have the numbers, but we certainly have the muscle.

  485. That is very helpful and gives me a little more background to my next question. I have seen you, or thought I saw you, as an organisation which achieved results by jumping up and down and making a lot of noise, drawing attention to things in public. You say in your report, however, that the way you achieved the success you did, in securing first the introduction and then the retention of licence conditions to protect consumers from mis-selling, was because of the statistical and anecdotal evidence that you presented of mis-selling. What I really want to know is what do you regard as your most effective activity?
  (Ms Robinson) I will tell you it as it really was. Before we started our mis-selling campaign, we were getting noises from Ofgem that they were thinking about not replacing the licence condition that was running out six months later. We made it very clear that we were going to start a campaign on this, and campaign in a heavy way. As a result of that, I think that we did have some success. In fairness to Ofgem—and I have to be absolutely fair to Ofgem—as soon as we started making big noises about it, Ofgem came on board with the new licence condition and, almost for the first time, they used their fining power. It was against London Electricity. I have no doubt in my mind at all that it was that activity, plus our campaign—plus the Minister's strong backing against mis-selling—that persuaded the industry that they had better go in for some self-regulation. So that has been a success so far. The next one that I am looking forward to is doing exactly what we are setting out to do now, which is to make sure that bills arrive when they are meant to arrive, that they are accurate, and that people understand them. That is the next thing I am going for.

  486. Your modus operandi, presumably, will not be drawing attention to the people who sent the bill out. Ofgem do not send the bill out, but do you find it necessary to send them copies of bills? I am trying to get into my head what you see yourself as, as a campaigning animal. Are you out on the streets and on the television screens, or are you researching and making suggestions behind the scenes, or are you giving advice to government, or are you doing all three?
  (Ms Robinson) I think that we are doing all three. We obviously do get a lot of evidence all the time from the complaints that come in. We also conduct surveys, as we did for the billing campaign. We went out to over 2,000 people to find out what the actual experience was. Because there are a lot of people who do not know about us, we feel that we have to go that extra mile to gather the opinion in, which is what we did. Having done that, I am a lobbyist and I am a campaigner, therefore I do talk to government and to ministers and, I am lucky, I usually get them on my side. We talk to Ofgem but, in the meantime, we are needed to start the ball rolling for change—to get that campaign for change. If we did not do it, everything would probably rumble on and on. It might get there eventually, but might take several years to do so.

  487. What could Parliament do to make this a better system?
  (Ms Robinson) What I would like to suggest is what Clare was coming up with. I believe that what we need is a select committee on regulation. When you think about it, regulation covers so much of people's lives, not just in the utilities but there is a need more generally. That committee has to be very effective; it has to be able to challenge and look into how decisions are made. There will be transparency. The other thing that I feel quite desperately about is that I look at what is happening across the whole regulatory scene and I sometimes try to make a bit of sense of it, but I cannot make any sense of it. I look at it and think—in simple terms, because I am not an economist—what is in the mind of the Competition Commission when they are making a judgment about what is or is not consumer benefit? I would like to know that. I think that should be a guiding principle. If I knew that, I would be able to make a big difference in terms of whether competition is really working in our market. I think that there are some really clear things that ought to come out of a very different approach—one which looks across the whole of regulation, looks for the best practices, and also looks for some common principles. In fact, I would like a regulatory committee something like the PAC—something with real teeth that can carry out investigations.

Baroness Gould of Potternewton

  488. You have talked a lot about being a campaigning organisation which, it seems to me, many of the other consumer bodies are not, and therefore your role is somewhat different—which personally I welcome. You also mention that you have brought together other consumer bodies to look at the Energy White Paper. In your document you refer to getting support from other consumer bodies. Perhaps you could elaborate a little more on which consumer bodies, the response to them, and how you might then be putting forward a collective response to government or to the various organisations that you work with?
  (Ms Robinson) The organisations that we have been involved with on this—and we have had several meetings so far—are an organisation which represents large industrial and commercial users, the CBI, representatives of small business, the Federation of Small Businesses, the Consumers Association, people representing poverty groups. So it has been a range of people. One of the most helpful things during the whole development process of the Energy White Paper was getting the consumer groups—and everybody signed up to this, it was not just me trying to pressurise people—to sign up to some key principles relating to what we expect of an energy policy into the future. We all agreed that we were not into energy at the cheapest possible price. We wanted sustainability. We were looking for affordable energy that was secure, where the lights would stay on, and where we also had a say. We quickly arrived at some guiding principles, some key points. All the way through the process—and I have been bringing people together—we have been elaborating on those. Just recently, since the Energy White Paper came out, we have said, with all the consumer groups, "Okay, the Government needs to introduce some indicators so that it can see whether the energy policy is on track", because there is a strong sense of direction in the White Paper but it is a bit flaky on targets and so on, and we want to make sure that there are some clear indicators. We have worked quite hard as a group, identifying what those indicators might be, so that judgments could be made about whether or not the energy policy was on track. For example, in the White Paper there is a fairly heroic assumption about energy efficiency and how far that will extend. What we wanted was an indicator to find out the extent to which energy efficiency was being introduced and by whom; whether there were any groups which were missing out on this, so that we would be better placed to make judgments and to influence, as necessary, to get changes in the policy as it developed.

Baroness Howells of St Davids

  489. You began by saying that you were not reaching disadvantaged groups. People tend to refer to minority groups as all being disadvantaged. Do you feel that in any way you are reaching the advantaged minority groups—those in retail business and suchlike?
  (Ms Robinson) I really do not think that we do enough there either. That is why I think that small businesses are a very important part. Small businesses seem to lose out in so many different directions. We did a piece of work and we went to small businesses, asking them certain things. We discovered, for example, that 60 per cent of small businesses do not understand their bills. There are lots of issues, and tremendous difficulty about access to energy efficiency measures. We think that should change. I would like to do two things. I would like to do more work with small businesses, in terms of providing better service, and even small things, like leaflets and so on, which will help and support small businesses. I would also like to get together the kind of agenda that I now have for large businesses and have a similar agenda for small business, in order to try to get some very important changes made which will help them. The answer is that it is small business as well as vulnerable people.

  490. You mentioned that you hoped to get some more money from government. Have you any plans for using some of that money to reach the minority groups? Because black and ethnic minority businesses feel that Energywatch is not even considering them, not even through their voluntary groups. I wondered how you proposed to do that.
  (Ms Robinson) We are expecting some more money. To be perfectly honest, most of that additional money will still have to go to deal with the numbers of complaints we have, because there is a lot to do. There have been serious worries in the last 12 months about whether we are maintaining the quality of our work, and I have to be careful to make sure that we are providing a consistent quality service. The short answer to your question, however, is yes, we are planning a much more ambitious, what we call "reach out" programme, that goes out and meets people in ethnic minority communities, that goes out to small businesses, perhaps through chambers of commerce or in other ways, in locations—and we will do our best to achieve that.

  491. Is that part of your application to the Government? Is that mentioned in the paper?
  (Ms Robinson) Yes, it is. I will not get as much as I asked for. You never do, do you? But part of my case was not just to be paid for the existing workload but also to do more in terms of information and education. Part of my case was very much to do more of the kind of work that we are talking about, to work with particular groups that do require support and help. It depends finally on what I do get. There will be some extra going, but it will not be enough. I know that. It will not be enough to do what I would want to do.

Lord Acton

  492. Ms Spottiswoode and you have both advocated a select committee. Ms Spottiswoode wanted it to be in the House of Lords. You are a campaigner and you are somebody who wants more money. Where would you advocate it would be?
  (Ms Robinson) I was actually quite attracted to Clare's arguments for it being in the House of Lords, from the point of view of objectivity. To be perfectly honest, however, put that way, I think that it probably ought to be in the House of Commons. I am more likely to get a bit more pressure put on various ministers if it is in the House of Commons.


  493. Can I pursue two questions with you? It is to pick up on points that have variously been raised already, because you have been developing, in answer to questions, the relationship you have with Ofgem. You have mentioned, as did Ofgem in their submission to us, that you have a memorandum of understanding to cover the relationship, how you contact one another. To a large extent the stress this afternoon is on responding to consultations, when Ofgem consult you—as, on a number of issues, they are required to do anyway. In their evidence to us they also volunteered that sometimes they consult on issues even when they are not required to. One might read into their evidence that they thought they were in effect doing you a favour. From your evidence this afternoon, in terms of your limited resources, perhaps you feel that they are not doing you a favour in actually consulting you. What I am interested in, however, is getting a feel for, if not the actual nature of the contact, the volume of it. To what extent are you proactive in contacting Ofgem and what form does it take? Is it a highly formalistic relationship or is it more informal, where you can simply pick up the phone, go round and have meetings?
  (Ms Robinson) Increasingly, it has become more and more informal, and that is a lot better because it works better that way. There are things that Ofgem do consult on, but I take the view—and always have done—that you are better influencing before a consultation document is written, because once a consultation document is written it is probably a bit difficult to get certain things changed. We are talking to Ofgem. The more we have an agreed agenda, and we talk about things that we disagree on, the more likely we are to be happy with what comes out of that process as a document. The answer is that we do have some formal mechanisms; a great deal is informal. I doubt if there is a day that passes when Lesley does not talk to somebody in Ofgem. Every time I walk to her desk, there is a fifty-fifty chance that she is with Ofgem anyway or meeting them somewhere. So it happens at all levels, and that is very good. On the form of consultation process itself, there is one personal matter about which I feel fairly strongly. I do not think that we are just any other organisation. We are the consumer advocates. We are the people who are close to consumers, and I do think that we deserve to be listened to. I do think that we deserve to have a proper response if anything that we have said has been overturned or ignored. Quite frankly, I have not always been satisfied with the responses I have had. Sometimes I have had no response. The relationship with Ofgem is changing; it is improving. But I will not sit here and pretend that I am totally happy with it, because I am not. I think that we could take it even further.

  494. That leads into my more general question. It is clear from your paper to us what you expect from Ofgem, not least in greater transparency and a proper period of consultation. We know what you expect from Ofgem. Are you clear what Ofgem expects from you? I was going to ask you what your view of the relationship is, but you have to a certain extent answered that.
  (Ms Robinson) I will be perfectly honest. When we inherited the work that we had, we also inherited, to put it bluntly, awful statistics about what was actually happening in the market. Our complaint statistics were all over the place, and they had no credibility at all. So we have had to work quite hard to get them right. Ofgem, for very good reasons, became increasingly irritated with us, because they expect us to provide the evidence that leads to investigation. So they have to be certain that what we provide them with is strong and good enough for that. It is less than 12 months since we had a new database and new statistics. So I would argue that for the first year or so of our existence—and there is no point in saying it in any other way—we failed Ofgem. It was not our fault. We inherited the problem. Nevertheless, we were not able to give Ofgem what they wanted. Now I think that there is a better working-together. We are understanding their need a bit better; they are understanding our need a bit better. Occasionally we have a bit of a debate, when they make a request for information of us, in terms of what is reasonable or unreasonable, and over what period of time; but you would expect that anyway. We do talk civilly about it, however. We are not falling out any more—I do not think so, anyway.

  495. So the relations are improving and, in so far as there is a continuing problem, then, from what you have said earlier, the root of that is now resources rather than a stance on the part of Ofgem itself?
  (Ms Robinson) I do not think that the resources give us much of a problem with Ofgem as such. Our resources are more to do with going out and providing a service.

  496. I was thinking in terms of, if you had the resources, you would be able to provide the accurate data and so on, which they expect you to produce for them.
  (Ms Robinson) If we had the resources, yes. And if Lesley could double her team, then it would be very different—which would probably double my workload as well, so I am not quite sure about that!

  497. So if I said that Ofgem expected of you that your advice to consumers will be timely and accurate, resulting in a high level of satisfaction rating for users and that, when adopting an advocacy role on behalf of consumers, Energywatch's arguments will be well founded in fact and analysis, that would be a fair assumption on their part?
  (Ms Robinson) That would be fair. I have to say that we have just completed yet another NOP survey, which is customer satisfaction with us, because we think that we ought to do that every six months, so that we check on what people are thinking about us. We got an overall satisfaction rate of 84 per cent. I personally do not think that is good enough. It has to be up to 95 per cent plus, which is what I am hoping for and I hope to be there in six months. We must measure ourselves all the time against what consumers think of us.

  Chairman: I am sure if a parliamentary committee were set up and achieved that level of satisfaction, we would be very satisfied indeed. Ms Robinson and Ms Davies, I am very grateful to you for being with us today, for the paper that Energywatch put in, and for your answering our questions. It has been extremely valuable for us, and we are very grateful indeed.

1   Note by the Witness: Ofgem have subsequently confirmed that they have 3 staff working exclusively on social aspects of regulation. Back

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