Why the government should include a Competition and Consumer Bill in this year's Queen's Speech
John Penrose MP and Rocio Concha
| Which?
With a cost of living crisis looming, the government can support households and businesses with legislation that puts consumers at the forefront.
Energy bills are surging, inflation is spiking and, for households and businesses who were hoping for a spot of peace and quiet after the hurly-burly of Brexit and then a pandemic, 2022 won’t offer much rest.
It’s likely to be painful for Ministers as well, because all the short-term forecasts are pointing the wrong way: the Chancellor has already had to dip his hand into taxpayers’ pockets to fund temporary help with energy bills, plus the new 1.25% social care levy starts in April, interest rates and mortgages are expected to rise during 2022 and the energy price cap will be reset at least twice too. A cost of living crisis can make or break Governments as well as individual political careers, and the Bank of England says this could be the worst squeeze on households’ disposable incomes for over 30 years.
But what if energy prices don’t come down again, or interest rates stay high? What if these problems aren’t just short-term blips, but the start of a ‘new normal’ instead? The nightmare scenario for the Chancellor is a permanent queue of Ministers lining up outside his office with endless, indefinite, expensive demands to bail out this industry, that key local employer, or the other group of deserving and vulnerable consumers.
So Ministers will need a plan to change the ‘new normal’ to one that’s more affordable for households and businesses, and which doesn’t fleece taxpayers either. A fundamental reform that creates permanent, long-term downward pressure on prices, and which shows they’re on the side of the man or woman in the street, instead of big businesses, bosses or bureaucrats either.
Fortunately for a free-market Conservative Government, there’s a readily-made answer to the problem. Stronger, better competition and consumer laws are a simple and cheap way to make sure households and businesses can all get the best deal in the first place, without being left at the mercy of rip-off merchants, rogue traders or smugly-sleepy and expensively-bureaucratic companies that can take them for granted because they haven’t got anywhere else to go.
And our rules are due an upgrade. Britain’s last Competition Act was in 1998, before the internet, Google, Facebook and Amazon existed, when most mail went in paper envelopes rather than electronically, and smartphones were as big and heavy as bricks. We’ve trying to use analogue rules in a digital age, so we shouldn’t be surprised if consumers are feeling short-changed.
Which? investigations keep finding awful examples. At the moment, if our main competition and consumer regulator, the Competition and Markets Authority (CMA) tries to hold rip-off merchants to account, it often finds it hasn’t got the right legal powers. Even when rule-breakers promise ever-so-faithfully to change their ways, the CMA can’t always hold them to their pledges.
When Ticketmaster and StubHub fell foul of Canada’s equivalent of CMA, they were instantly slapped with hefty fines, but in the UK it took CMA nearly six years of legal contortions to get a similar firm (Viagogo) to change its ways. And that’s before anyone starts looking at what the huge internet giants like Google and Facebook are doing to drive out or buy up competitors, so we’re faced with a take-it-or-leave-it non-choice in ever-larger parts of our online world.
We think it’s a golden opportunity for Ministers to fix several pounding political and economic headaches at once
There are lots more examples too. For example customer reviews influence £23 billion of consumer spending, but a few rogue firms have exploited a gap in our analogue rules to create a thriving ‘fake reviews’ industry, which means we don’t know whether it’s safe to trust the information we see online anymore. This can mean anything from a good restaurant losing trade unfairly to a worse one that’s using fake reviews, to – in the worst cases – people buying dodgy smoke alarms that could endanger their lives. Or there are ‘subscription traps’ where, like an online Hotel California, people end up paying for services they stopped using long ago because they can never leave.
Faster, cheaper and more convenient courts and ombudsmen, and much stronger local Trading Standards teams would help too. No-one wants to have to use them but, if push comes to shove, we all want to know there’s an effective route to get something replaced or fixed which won’t cost an arm or a leg or take years of expensive lawyers to use. In a world when we can buy groceries with a few clicks at 3am if we want to, why should fixing the – with any luck very infrequent – problems or getting out of an unwanted contract be any more complicated or less convenient than getting into it in the first place? Or, in another sector, why should Ryanair be able to refuse to pay compensation for thousands of cancelled flights after an Ombudsman’s verdict said they should?
But if we update our rules, so households and companies have the same protections and choices when they buy something online or offline, then we won’t just tackle online rip-offs, fraud and scams: we will make our economy more efficient, internationally-competitive and successful, and affordable too. Our exports will grow, and the spiralling cost of living will come under control as well.
As the UK’s consumer champion and the author of the Government-commissioned Penrose Review into post-Brexit competition policy, we think it’s a golden opportunity for Ministers to fix several pounding political and economic headaches at once. Let’s make 2022 the year of a new Consumer and Competition Bill, to show everyone whose side this Government is really on.
John Penrose is MP for Weston-super-Mare and the government’s Anti-Corruption Champion
Rocio Concha is Director of Policy and Advocacy at Which?
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