Consuming Issues: Swinging axe at every quango will not pay off
Saturday 23 October 2010
Hands up if you're getting a refund from Npower? OK, not that many – just 1.8 million people.
But if you're one of the 17.5 million with a cash ISA, you're in line for a few extra quid, too. New rules will force providers to divulge annually the interest rate they're paying, make transfers within 15 days and pay interest on new accounts after two days, rather than five. This will hand back about £15m a year.
A group called Consumer Focus is behind both refunds. In the case of Npower, getting the cash was like pulling teeth. After a retired arts teacher (Robert Bramwell take a bow) spotted Npower's bill changes were to the detriment of customers, the firm grudgingly refunded £1.2m to 200,000 people. Consumer Focus took up the case and spent a year going sifting the paperwork, ultimately threatening court action before Npower paid up.
Consumer Focus came into being two years ago, taking over the work of three disbanded organisations – Energywatch, Postwatch and the National Consumer Council. To be frank, it got off to a slow start. Sometimes I wondered if I would do a better job on my own if I was sat in an office with a computer and a landline. But this year it's picked up speed and is doing some good work. Big changes are afoot in two areas it monitors: energy, where £200bn investment is required in low-carbon generation; and post, where Royal Mail is being sold off and the Post Office network turned into a co-op.
Just as it's getting going, though, Consumer Focus faces the chop in the Government's "bonfire of the quangos". Its consumer advocacy and policy role will be passed to Citizens Advice Bureau.
Now I'm a fan of CAB, but its specialism is neighbourhood advice rather than national policy. Given that Consumer Focus' work and most of its staff will be transferred, one wonders whether its abolition will save any money. It will, though, allow David Cameron to stand up at next year's Conservative Party conference and include in his list of achievements: "192 quangos abolished" (one, Food From Britain, actually shut last March).
Admittedly, there is some quango bureaucracy to be cut. Merging the Office of Fair Trading and the Competition Commission will save back office costs and should speed up their investigations. Handing the OFT's national enforcement action to trading standards departments, however, is odd; it will take a brave local authority trading standards officer to launch a multi-billion pound legal challenge to banks over current account charges, as the OFT did.
Ditching Consumer Focus is downright peculiar. Moneysavinexpert's Martin Lewis described it as a "bonkers move". He protested: "To remove an organisation that over the last year has found its feet and has made consumers over £80 million in the last couple of months alone, leaves us without any state-funded body focused on fighting for consumers. The focus and power it had to ask questions of big business and big government were integral to supporting consumers."
This is the point: who would have dug in against Npower or ISA providers? The Government could create a stronger watchdog while abolishing more quangos. The Air Transport Users Council, Passenger Focus and Consumer Council for Water could be merged into a bigger Consumer Focus focusing on energy, post, water, rail and air travel – funded by levies on those industries. This would save £20m more than Cabinet axeman Francis Maude's plan and provide proper scrutiny of corporations which occasionally rip off the public, as Npower did.
Even if firms passed on the cost in higher prices, the public would still benefit because of the scale of the likely refunds – as the £5m-a-year-taxpayer-funded Consumer Focus has proved.
If the Government presses ahead with abolishing a good organisation for no good reason, it will reveal it was based on ideology, not practicality.
Heroes and villians
Thirst for self-improvement not matched by banks
PepsiCo plans to cut water usage and carbon emissions by 50 per cent in five years. Cambridge University will help UK farmers growing crops for Walkers, Copella and Quaker calculate their water use and impact on the climate. Pepsi says: "Few companies have made such ambitious pledges and in such a small time frame." It's right about that.
Villain: Lloyds Bank
Bizarrely, Lloyds Banking Group has not yet signed a code of conduct on taxation, which would commit it to not engaging in tax avoidance schemes for itself or its clients. Labour drew up the code after supporting banking with £850bn of taxpayers' money. We now own 41 per cent of Lloyds. It makes one wonder whether we're getting a good deal.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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