Comment: Bonfire of the quangos is not trivial
The government’s plans must take account of the important work quangos perform – and must not let their functions slip through the gaps.
By Adam Scorer
Government has decided to transfer some of Consumer Focus functions to the charities, Citizens Advice Bureau and Citizens Advice Scotland. As public servants it is our job to make the transition work. But as consumer advocates it is our job to make sure that consumers don’t lose out in the process.
It’s worth repeating that it does not matter too much what institution or sector delivers the function as long as it is delivered well. Consumers must feel the benefit of expert and forceful representation, especially in the most difficult and complex markets.
Two years into the life of Consumer Focus we are able, with some satisfaction to reflect on real successes. This month we recovered £70 million for 1.8 million customers of npower who had overpaid for their energy. In the summer we achieved changes to the cash ISA market that will make savers £15 million better off each year. Over the past two years we have contributed to a £500 million saving for consumers including £1.5 million for vulnerable energy consumers at serious risk of being cut off from their energy supply.
Transferring powers and responsibilities to another body, in this case to charities, involves risks which must be mitigated and challenges which must be met. Consumer Focus already works closely with Citizens Advice and Citizens Advice Scotland and we will do so even more closely over the eighteen months it is likely to take Parliament to pass the necessary legislation.
The biggest challenge is to preserve the best of both worlds in the process, i.e. to blend the local on-the-ground experience of Citizens Advice with the expertise of Consumer Focus in complex regulated markets; to achieve the coalition government’s ambition of greater accountability through quango abolition while maintaining the vital independence of a charity; to reduce public expenditure while still maintaining the functions and responsibilities of Consumer Focus in the voluntary sector.
It is no state secret to reveal that we will have to do much of the detailed planning to make the transfer work. But we will not be the only public body charged with organising its own wake and there will be lessons across government.
The biggest challenges however are not those concerned with managing institutional change. The biggest changes are the ones about protecting consumers during the storm of market transformation and austerity.
Energy companies plan to invest £200 billion over the next decade in order to decarbonise the electricity generation market- all to be recovered through consumer bills. Government intends to implement an ambitious Green Deal to make all of our homes more energy efficient. Smart meters are to be introduced into each and every household – the biggest infrastructure change since natural gas began to be piped into our homes. The chairman of Centrica, which owns British Gas, says these measures kill the current business models for our energy suppliers. Consumers could face a very different market with very different consumer protection challenges.
Royal Mail is to be part privatised and part mutualised and the very character of the 6 day a week, standard price postal service is being questioned. The post office network is to be moved away from Royal Mail and may also end up as a mutual business. In the meantime the future of the 11,900 strong post office network is not settled with changes to the size and shape of the service provided to local people and businesses not to be taken for granted. The impetus for these changes is not the drive for better value and service to the consumer. The interests of investors, managers, workforce and government are well known. The interests of consumers must not come in a poor second.
There are also major changes afoot in financial services with the biggest changes to regulation in decades. The Financial Services Authority is set to be replaced by the Prudential Regulatory Authority and the Consumer Protection and Markets Authority. This is a sector which consumers feel let down by, not only because they had to bail out its mistakes, but by its continued failure to address their needs – such as effective transfer of cash ISA accounts – unless they are pressured into action. As Angela Knight, chief executive of the British Bankers’ Association told the Treasury select committee recently, there needs to be a strong independent consumer champion fighting customers’ corner in this market.
If we do not get the transfer of consumer protection right, consumer interests will fall through the gaps. The risks are not trivial. An orderly transfer of skills, powers and resources is necessary to manage them. That must be our new focus.
Adam Scorer is director of external affairs for Consumer Focus, which will have its functions absorbed into the Citizen’s Advice Bureau under government plans.
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