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Vince Cable: ‘Getting the fair deal you deserve’

In his second guest post for our site, Business Secretary Vince Cable reviews how the Government is tackling regulation to improve the rail networks, the energy market and shopping at your local supermarket…

The Government has made some important changes to the competition regime and the consumer landscape over the last year. Together with the Consumer Rights Bill, which is currently before Parliament, we are working to build consumer confidence by making sure that consumers know their rights, and that businesses are clear about what is expected of them. Clarity and fairness sit at the very heart of our approach.

One result is the new Competition and Markets Authority (CMA) which started in full a month ago today. The CMA has enhanced powers, faster decision making processes, and will be able to work better with sectoral regulations to revitalise competition in markets and deliver greater benefits for consumers.

Building consumer confidence

Consumers are not really interested in the detail of competition law or regulatory processes. What matters most to them are lower bills, good customer service and having their complaints dealt with quickly and efficiently. That is why we are tackling these important issues.

Gas and electricity prices are good examples of problems caused by consumer confusion – consumers are faced with more than 350 tariffs and mind boggling bills. There is plenty going on in this area. The joint CMA and Ofgem review into the state of competition in the energy market has identified five areas that need to be looked at. This includes the rising profits for the Big Six that don’t appear to be based on greater efficiency and what barriers there are to market entry and expansion for new companies. This would not have happened without the new collaborative approach that we have been championing.

Ofgem is now consulting on whether it refers these issues to the CMA for a full market investigation.

Reducing regulated rail fair rises

As well as stimulating competition we are also helping consumers in other key areas such as winter fuel payments, rail fares and the relationship between supermarkets and their suppliers.

In addition, we have pledged over £16bn for the rail industry to improve capacity and the quality of the network. As a regular train commuter from my home in Twickenham I am well aware of the frustration about the continued rise in fares and the impact on family budgets. That is why for 2014 we have reduced regulated fair rises to RPI.

Finally, we have introduced the Groceries Supply Code of Practice which is overseen by an adjudicator – Christine Tacon. Her role is to arbitrate in disputes between the 10 largest supermarket chains and their suppliers. She will also have the power to impose fines and to name and shame supermarkets that breach the code.

Together these steps are going to make a real difference for consumers and make sure they are getting the fair deal they deserve.

Which? Conversation provides guest spots to external contributors. This is from Vince Cable, Secretary of State for Business, Innovation and Skills – all opinions expressed here are Vince’s own, not necessarily those of Which?.

Comments

It is all very well Vince Cable saying the government will limit regulated rail fares to RPI all this means is that train operators will simply put up unregulated fares by even more to make up for it. Bring back British Rail!

Looking for fairness in rail fares opens a can of worms because of the different subsidy regimes across the different categories of passenger. Government’s share of rail’s total income has now fallen to around 30%, and as a result of government policies, regulated and unregulated fares are now seriously out of balance. Season ticket commuters are the most heavily subsidised yet the services provided for them are the most uneconomical because of the extra capacity required only in the Monday – Friday peaks, but such is their influence that any above-inflation fare rises are politically unfeasible [and I notice that the Labour Party are now taking the commuters’ corner]. There is, though, a powerful economic case for maintaining subsidies for commuter services because all major cities depend on the efficient mass movement of workers and the alternatives are impractical. Unregulated fares have been rising exponentially for some time, and this will no doubt continue on an upward curve because the income makes up a high proportion of passenger fare revenue; these fares are effectively subsidising the regulated fares even though many of the people making irregular off-peak train journeys, possibly as much as half of them, are the least able to afford them, certainly at full-fare levels. Advance-purchase tickets are the best value for that category but they require considerable forward planning and are quite restrictive. Off- peak ‘walk on’ fares are relatively OK, but ‘anytime’ fares are very expensive in comparison with the other categories. Unless there is a big rise in the taxpayer contribution to redress the imbalance, the only way to level the pitch is to put up regulated fares by more than inflation and to lower, or at least to stop increasing, unregulated fares. No signs of that train coming any time soon it seems.

John, peak travel is a problem we have never tackled – whether road or rail. It is time we looked at staggering working hours – even by an hour or less either side of the peak. It would help both relieve the pressure on capacity of road and rail and speed journeys. I am not in favour of subsidised rail travel – otherwise road commuters would also feel entitiled to help from the taxpayer. I think we should be looking to live nearer work – or put work nearer where we live – to cut down travelling distance, particularly in the southeast. Encouraging business, civil service, and new enterprises to locate in less-stressed parts of the country would be part of a solution.

I totally agree with you Malcolm. We have towns and cities within an hour or so’s travel time of London that are dying on their feet for the want of some good employment opportunities. Personally I think there has to be a degree of government push and some practical and economic incentives for the relocation of businesses to the regions. Norwich – and lots of other cities too I should think – has lots of empty office blocks just waiting for business and government operations to relocate; it also has plenty of good value housing in pleasant surroundings to attract the workers, shorten their travelling time, and enhance the quality of their lives. I have read that planners in the Office of the Mayor of London are thinking of a network of underground toll roads around the capital in order to cope with the predicted rise in population as more and more people cram into less and less space with every terraced house split into two dwellings and the rail and Undeground networks creaking at the seams. Madness.

And there’s more …

Supermarkets should be prevented from constantly moving things around the store. Their excuse of promoting seasonal goods is just laughable. As we all know they do it to get you and I to walk round more of the store where they’ll be tempting the unwary here there and everywhere. And maybe then staff would have time to make sure there are prices listed for all goods, or better still spot obvious pricing mistakes, like the classic 59p each or 2 for £1.50, when it should have been either 2 for £1.00 or 3 for £1.50

…………………as long as the rail fare situation doesn’t develop into another confusing energy tariff debacle where consumers have trouble determining the wood for the trees – currently 350 tariffs! Heaven forbid!!!

I have long since lost faith in any Government Regulator or similar being able to deal with companies overcharging effectively. Problem too many friends in parliament for a lot of our big businesses to care how much the ordinary public pay for goods and services. The only reason it has now reached discussion point can be summed up in three words General Election 2015.