Rural Areas in Scotland: Additional Delivery Charges

– in Westminster Hall am 4:29 pm ar 2 Gorffennaf 2019.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Scotland), Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence) 4:29, 2 Gorffennaf 2019

I beg to move,

That this House
has considered additional delivery charges in rural areas in Scotland.

In the time-honoured phrase, Mr Hollobone, it is a pleasure to serve under your chairmanship. This is a huge issue for my constituents and many others living in remote parts of Scotland and elsewhere in the UK. It has been around for a long time and, despite the best of intentions and sympathetic hearings in the past, it is hard for me, as a constituency MP, to see light at the end of the tunnel.

Let me set the scene, which I am sure will be familiar to hon. Members, by giving two examples. First, I will quote Mr Charles Macfarlane living in Shinness near Lairg in Sutherland, who gave written evidence to the House of Commons Select Committee on Scottish Affairs. He referred to

“the behaviour of businesses, most particularly couriers, in either refusing to deliver to the Highlands and Islands, or else doing so charging rates so grossly inflated as to be completely unrealistic.”

He gave two examples. The first was that delivery for an eBay item costing £10 would cost £4.80 if delivery was in the UK, but when the business hears that it is for the postcode IV27 in Sutherland, the cost goes up to £15.47. Mr Macfarlane also quoted, rather charmingly, the cost of four chair castors being delivered. The cost was £11.41 to buy the four chair castors, and the cost of UK delivery was £6, but when the business heard that it was to the highlands of Scotland, the cost went up to £15. As Mr Macfarlane says,

“click ‘Buy’ on a product on the web, put in a Highland postcode, and at a guess about 75% of the time a significant delivery surcharge will be applied, very often even when the product was advertised as ‘free UK delivery’…Then, to add injury to insult, the overcharged service from such couriers is slow and unreliable—often two or three times slower than sending it by second class post, and during this time the product may have been jolting around the Highlands in a van for up to a week before finally being delivered—I’ve had a computer hard drive be Dead On Arrival as a result, and had to wait a further time for it to be returned and replaced.”

Considering the number of emails and letters that I have received about this issue since being elected as an MP, I could fill up the entirety of my allotted time quoting, but I shall give just one more example, which particularly stands out to me. A constituent has written to me about ordering a sheet of perspex from a London company. My constituent says:

“They wanted £16 for delivery, until I told them the postcode, when the charge was revised to £212.”

That absolutely stopped me in my tracks.

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

I congratulate the hon. Gentleman on securing this important debate. I know that this issue affects his constituency more than that of most of us here. The Scottish Affairs Committee looked at the issue in, I think, December 2017 and we found lots of examples of just what he has been referring to, including people placing orders and then being contacted after the fact, when the order had already been accepted, to be asked to pay an exorbitant delivery charge. Do we not have to address the issue so that when people go online to buy a product, the delivery charge is there for all to see, and the website does not say “Free mainland delivery” if that is not the case?

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Scotland), Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence)

I thank the hon. Gentleman for his intervention. I want to take this opportunity to thank all hon. Members from both sides of the House who take this issue seriously. The fact that it is taken seriously means a lot to my constituents.

Surely, if a consumer sees delivery advertised as to the “UK”, it should be to the UK. Surely these companies are failing to realise that the highlands are every bit as much part of the UK as Wales or Yorkshire. It could be suggested that delivery to the highlands might be cheaper were the goods going only as far as Inverness, at which point the buyer could drive down to get them, but when we consider that for many of my constituents the return journey to and from Inverness is 200 miles and we think about the cost of petrol and the wear and tear on the vehicle, we see that these extra costs are most unwelcome.

I want to touch on Amazon, because there is a worrying new development. In the past, Amazon has, very honourably, had most of its retailers advertise a set rate for delivery to all parts of the UK, and it had a good reputation for that. However, Amazon has recently suggested intentions to move away from standard charges and allow marketplace sellers to surcharge for the first time. That would be seriously bad news and yet another financial burden on my constituents.

As I said at the outset, this issue has been around for a long time. Many of my constituents say to me that the charges are nothing more than a geography tax—one that they can ill afford. Living in my remote part of the UK already entails a high cost of living that simply cannot be avoided. I am sure that everyone has heard now and again that Altnaharra, in the middle of Sutherland, is the coldest place in the UK. There is, in particular, the cost of winter heating, while the cost of the distance of unavoidable transport is a burden on families and sadly the prices in our national supermarkets are often slightly higher in my constituency than they would be in other parts of the UK. Of course, the latter point will have to wait for another day, because supermarket pricing per se is a separate issue and nothing to do with delivery charges.

The lion’s share of my contributions in this Chamber and the main Chamber during my two years in this place have been about sustaining local people in local jobs and local enterprises. As hon. Members will know only too well—and as will anyone who has studied Scottish history—depopulation has been the curse of the highlands for hundreds of years. If we want to enable people to live and prosper in the highlands, we have to ensure that the economic climate in which they live is on the same level playing field as other parts of the UK. What we know about delivery charges means that that is not at all the case. To put it simply, people on basic incomes are having to pay far more for many consumer items than their friends and relations have to in Glasgow, Birmingham or London. That is not fair and it means a stark warning for us this afternoon. I will put it this way: if this inequality is not addressed, many local people might simply decide that life to the south would be a lot easier and move away. It would be a tragedy to return to the bad old times of the past. Those empty schools are a sight that none of us wants to see again.

There is a good historical example. When the penny post was introduced in 1839, it was based on the fundamental principle that a letter or parcel would cost the same to be delivered to an address in, say, Ealing or Westminster, or Wick or Durness in Caithness and Sutherland. That is why the Post Office and the Royal Mail are so dear to our hearts and why this is as popular an institution today as it ever was. It was seen to be fair, and that was seen to be good. I put it to hon. Members that today, alas, we have moved rather far from that early 19th-century concept of what was basically a right of ordinary people.

If people read, as I am sure Douglas Ross has, today’s edition of the Aberdeen Press and Journal, they will see my erstwhile colleague and former member of the Scottish Government, Mr Richard Lochhead, talking about this issue. In particular, he mentions something called, an initiative launched a couple of months ago. It offers free advice on delivery law and urges shoppers to report misleading practices, and it tells companies what would be best practice for them. I applaud Mr Lochhead. He speaks of “rip-off” delivery charges and I commend his words.

However, there is a hitch, and that is really why I am making this speech. The Scottish Government are indeed to be praised for grasping the issue, and so too is the Highland Council, which I am bound to mention—I was a member until two years ago. The Highland Council certainly understands the issue of delivery charges in the highlands. However, the awkward truth remains that although there is a mechanism whereby complaints are logged and best practice is suggested to retail companies, there is no power, with teeth, to change the way that the companies operate. That, for all the best intentions of the Scottish Government, the Highland Council and others, means that we are not going to get to the nub of the problem.

It is my deeply held belief that with this Government or, indeed, a future Government, we do not know what is ahead of us; we are peering into a dark glass at the moment. I think that all of us, on both sides of the Chamber of the House of Commons, would agree with that, but I do think that the Government in the future, whoever they may be, would do well to look at putting in place proper legislation to bring the system into some sort of order whereby fairness is built in for people.

I am bound to put it on the record also that members of the UK Government and this Minister herself have given me a sympathetic hearing in the past and that that is appreciated. There is food for thought here, and if we could come to a constructive dialogue about how we could put in place some sort of legislation, that would be helpful.

There is a second and final warning—I think I have taken up my allotted time. If we fail to tackle this issue, which makes my constituents and many others living in remote parts of Scotland and elsewhere in the UK slightly second-class citizens, we will be failing them. There is an example from history. In the 1960s, the then Labour Government recognised the needs of the highlands and islands, recognised that the highlands and islands, in the phrase of the time, were on the UK’s conscience, and took the bold step of establishing the Highlands and Islands Development Board. That altruistic move brought great good to the highlands and islands. It was very much to the credit of that Government. I very much hope that a similar generosity of spirit and attention will be taken up by the leaders of our nation today and tomorrow. We have waited a very long time for real action. If something can be done and serious consideration given to this issue, on a personal level that would mean a great deal to my constituents.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray 4:40, 2 Gorffennaf 2019

It is a pleasure to serve under your chairmanship, Mr Hollobone. I give my genuine and heartfelt thanks to Jamie Stone for securing this debate. I am both delighted and frustrated that we are here again to debate this matter—delighted because a Minister will respond to the concerns of MPs representing their constituencies across much of the north of Scotland, and frustrated because it is not the first time the hon. Gentleman has raised this issue, nor is it the first time I have raised it.

Since mentioning this matter in my maiden speech two years ago, I have mentioned it at Prime Minister’s questions, held a 90-minute Westminster Hall debate, raised it at Business questions and suggested that the Scottish Affairs Committee hold an inquiry into it, which it did. This matter has been raised many times, on the Floor of the House, in Westminster Hall and in our Committee Rooms. I have also met with the Minister a number of times to discuss this matter.

The issue of excessive and rip-off delivery charges affects not just the highlands of Scotland, but the whole of my Moray constituency. It is absolutely incredible that in 2019—in this day and age—couriers and companies still say that Moray and the highlands are not part of mainland United Kingdom. I do not know how many times we have to say this to get the message through, but they seem blind to the fact that Moray, the highlands, the north-east and other parts of Scotland are part of the mainland United Kingdom. One does not need to take a plane to get to Elgin or Caithness; it is all joined together as part of mainland UK and it should be treated the same.

Photo of Hugh Gaffney Hugh Gaffney Llafur, Coatbridge, Chryston and Bellshill

At this point I want to congratulate the postmen and parcel people who work for Royal Mail and deliver six days a week to all areas, in all kinds of weather. All we are asking for in Royal Mail is a level playing field. Some of these couriers are charging ridiculous prices. We can do it; all we ask for is a level playing field for everyone. I congratulate all the postmen who do their work there.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

I am not sure whether the hon. Gentleman might need to correct the record. As a former postman, he should have declared his interest to the House. He is clearly still a part of that, as twice in a short intervention he said “we”. I say that in jest, because he brings great experience as a postman from before he was elected to this place. It is useful to have his contribution, because those workers undoubtedly do a service. However, we are really challenging the couriers’ add-on prices, as the hon. Member for Caithness, Sutherland and Easter Ross set out clearly in his opening remarks. Someone might go online, view a product, decide that they want it and agree the price, only to find an additional cost on top of that simply because the company believes that they live too far away to deliver the product easily.

Photo of David Duguid David Duguid Ceidwadwyr, Banff and Buchan

As a fellow Member of Parliament for the north-east of Scotland, I thank our friend, Jamie Stone for raising this important issue. I share my hon. Friend’s frustration at having to bring this issue up again. On the point that he has just made, I wonder whether he has had the same experience that I and others have had at the final check- out point online. I was ordering a sofa, which happened to be for my flat in London, but at the last minute the website said, “Not available for delivery in Scotland”—nowhere in Scotland, never mind AB or IV postcodes. I nearly refused to order it on principle, but I needed a sofa. There are great frustrations with getting deliveries to the north of Scotland, for example to Moray. I received an email last week from a constituent with a business in Peterhead, in my constituency. He was concerned that deliveries are going to Elgin and Aberdeen, but they are missing out what seems to be thought of as the extreme north-east corner.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

I am grateful to my hon. Friend for raising that issue. He did not cancel his sofa on principle, but if he ever invites me round to his flat, I will not sit on the sofa on principle, such is the extent to which—

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

That is even worse! In all seriousness, my hon. Friend raises a valid point. He can get something delivered to London, but not to his constituency of Banff and Buchan. I will mention some examples that have been raised with me since I last held a debate on this matter, because there are some anomalies with the practice that these companies use. It is frustrating that the charge is added on at the end of the purchase.

I want to give a couple of examples. The first one was really remarkable. A constituent of mine in Fochabers went online and found the product they wanted. Their postcode for Fochabers in Moray is IV, like the rest of the highlands. When they put their postcode in, they immediately incurred a greater charge. He phoned up the company, which said, “We put this charge on all IV postcodes, but not AB postcodes.” My constituent happens to have another address in Clochan, which is three or four miles from Fochabers, but has an AB postcode. When he put in that address, there was no delivery charge.

What makes this even more remarkable is that the product was delivered by Parcelforce from its depot in Inverness, and to get from Inverness to Clochan, one has to go through Fochabers, to go further down the road to Clochan. There my constituent had free delivery, but had he wanted the product delivered closer to the Parcelforce depot, he would be charged extra simply because of his postcode. Not only do the couriers not understand that Moray and the highlands are part of mainland Scotland; they do not even understand the local geography and will deliver something further away at no cost, as compared with delivering something to a different postcode.

A constituent has emailed me another example, which I have written to the Advertising Standards Authority about. This constituent is a charity fundraiser. She wanted to purchase five tins to collect money for her charity. The tins cost £2.98 each. She was happy with that price and was going to purchase them for the charity. However, there was a £10.50 charge to deliver those five tins, because the charity, Outfit Moray, is based in Moray and has an IV postcode for its headquarters in Lossiemouth. The price to deliver the product was equivalent to the cost of three and half charity tins. It is simply wrong that charities, individuals, consumers and constituents are being punished in this way.

I want to give some examples of action taken in response to the hon. Member for Caithness, Sutherland and Easter Ross and other Members from all parties having raised this matter. Every time I get a case regarding this—I get many—I write to the Minister, with whom I am in regular correspondence, and I write to the Advertising Standards Authority, because it is wrong and unacceptable that the charge is added only after the purchase is made.

I have had two examples in the last couple of months where the Advertising Standards Authority has written back to say that it agrees. The first case involved, which said it was offering free standard UK delivery for orders over £50. However, when the ASA received my complaint it investigated and agreed that IV postcodes appear to be charged a delivery fee. As well as that, “The delivery information section of the website states that there is a standard postage fee for the UK mainland and that is clearly not the case.” The ASA continues: “The delivery information on the company’s website looks like it is misleading and our compliance team are taking action by sending an enforcement notice.” Another case came up last month, this time involving The ASA said that it agreed there was a problem with its delivery claims, and it too will be sent an enforcement notice.

I use those examples not because I condone what was happening, but to show what happens when we raise the matter and get in touch with the companies—I always write to the company and say that I am reporting it to the Advertising Standards Authority. It is encouraging that the ASA is now taking enforcement action to deal with this. However, we are only picking at the surface. Of all the constituents who contact me and those in the hon. Gentleman’s geographically vast constituency, which is punished in the same way as Moray, many will just give up, move on and buy something elsewhere. They should not be forced to do that. They should be able to purchase a product that anyone else in Scotland or across the UK could purchase for the same delivery price.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Scotland), Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence)

May I start my intervention with an anecdote? Many years ago, a letter from the United States of America arrived in my home town, addressed to “The representative of the Lord Jesus Christ, Tain”, and some wag in the post office wrote “Try Jamie Stone” on it.

The point about delivery companies is that they do not always leave the parcel where they should. I have heard too many examples of old ladies finding their parcel months later in the garden shed or some other completely inappropriate place.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

As the Leader of the House sometimes says at business questions, that is an excellent topic for an Adjournment debate. The hon. Gentleman rightly raises an important issue that we could debate for many hours and links it to the important issue of excessive, rip-off delivery charges.

I support the hon. Gentleman’s efforts to support what MPs across the parties are trying to do on the issue. Considerable work has been done in the Scottish Parliament, both by the Scottish Government and on a cross-party basis. The Scottish Government have launched an excessive parcel delivery charges map, and they want constituents to contact their MSPs so that they can put their information on it—they say that that will highlight where the problem exists. However, although there are some examples outwith the north-east of Scotland, the highlands and islands, and Moray, I think that we can comfortably say that those are the areas most affected. I am sure that the map will tell us what we already know, but what we need is solutions.

It is right that the Advertising Standards Authority should take action when cases are raised, but we need it to be proactive rather than reactive. I am pleased to have been invited to join a new body that it has set up for MPs to work with it on the issue. Ultimately, we have to get a simple message across to the companies and the couriers. First, it is not acceptable for the companies to say, “That is a charge that our courier puts on.” They should change their courier. If a courier cannot tell the difference between mainland UK and the islands, or if it thinks that Moray and the highlands are an island, it does not deserve to be a courier. Secondly, the couriers need to wise up. Inflicting these charges on people in Moray, in the highlands and across the north-east of Scotland is unacceptable, inappropriate and damaging to their reputations and to the reputations of the companies that they pretend to serve.

I know that the Minister takes the issue seriously. She has met me and we have done some good work on the issue, but we need to do more. It is unacceptable that this practice continues in this day and age—we need to stop it once and for all.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs) 4:52, 2 Gorffennaf 2019

I thank Jamie Stone for securing this important debate. I am delighted to participate in it, although I wish it were not necessary, because it has a pressing relevance not just to people in the north-east, but to my constituents—particularly those who have the great pleasure of living on the islands of Arran and Cumbrae. Like a million other consumers across Scotland, they face the challenges of coping with unfair delivery surcharges and late deliveries, or are even excluded from delivery services altogether when shopping online.

We must be under no illusion, because this is more than an inconvenience; it has a genuinely negative impact on rural businesses as well as consumers. Citizens Advice research tells us that the UK parcels market has grown by more than 50% since 2010, and much of that growth has been driven by parcels sent to consumers who shop online. The Scottish Parliament information centre has costed additional parcel delivery surcharges for Scottish consumers, in comparison with the rest of the UK, at approximately £38 million per year, which is completely unacceptable. A shocking £11.4 million of that is spent by consumers over the Christmas period, simply because of where they live.

Despite a fair delivery charges campaign, the figures are rising, and at a time when more and more of us are shopping online, for a variety of reasons. That is self-evidently and necessarily the case for those who live in rural areas. Some of us pay what can only be described as a postcode tax, which is often imposed randomly by some retailers, although not all. Such charges are discriminatory and hit consumers and rural businesses in fragile areas very hard indeed. The problem is deeply concerning for my constituents and other rural constituents. The penalising of the delivery of goods bought online and the consumer exclusion are such that 10.9% of retailers exclude some Scottish islands from a delivery service altogether.

The statement of principles on parcel deliveries has had little effect on the problem. The UK statement of principles is designed to assist retailers in their policies on the delivery of goods purchased over the internet by individual consumers. It sets out best practice principles for how retailers can ensure that their delivery services meet the needs of consumers. The UK-wide statement of principles builds on the Scottish guidelines that were launched in November 2013. The principles have arisen following agreement between representatives of the UK and Scottish Governments, online retailers, parcel delivery operators and consumer organisations. The logic is that having companies follow the course of actions outlined in the principles is helpful in ensuring that the UK parcels delivery market works in the interests of consumers and businesses. However, the last time I checked—perhaps the Minister has more recent figures—only four out of 449 businesses had even heard of the principles.

There is no doubt that the UK Government need to use the Consumer Rights Act 2015 to support education for businesses about the requirements under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. There also needs to be support for education for consumers about the information that they should be provided with and the minimum standards defined in the regulations. The principles were designed to secure a better, fairer deal for consumers in our rural areas, but not enough work has been done to increase delivery operator and retailer buy-in to the principles with a plan of action to promote the scheme.

There is no doubt that the Scottish Government’s road equivalent tariff ferry fare structure should have helped to reduce the costs of delivering goods to islands such as Arran and Cumbrae, but I am afraid that the reductions seem not to have been passed on to consumers. More work must be undertaken with delivery operators for our rural and island consumers across Scotland. We need to ensure that customers on islands and in rural areas can access a full range of delivery options to their local post office, local shop or any other place that is convenient to them and may reduce costs.

The Scottish Government have done all they can about the issue with the very limited powers they have, as the hon. Member for Caithness, Sutherland and Easter Ross pointed out, but not a great deal has changed in reality. The Scottish Government have unveiled the “Fairer Deliveries For All” plan to protect rural consumers and businesses and empower online shoppers to recognise and act on unfair and misleading delivery costs. The Scottish Government’s work on a voluntary code is also important, but the real power to put the matter right lies with the UK Government, who need to act. Our rural consumers and businesses need them to use their powers to regulate and do the right thing, so that they can access a fair deal.

I want a better deal for my island constituents on Arran and Cumbrae, and for rural constituents across Scotland and the UK. That is why I support a people’s delivery guarantee to pull together all aspects of delivery charges and guarantees, and to ensure that consumers are getting the fair deal that they deserve—not being misled by claims that delivery will be free, only to be told during or after purchase that that is not the case. The Minister may tell us that the Advertising Standards Authority launched a crackdown last year on misleading claims about rural delivery charges to consumers, but that has not really delivered the change that rural communities need.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

I understand the hon. Lady’s argument and her point that more could be done, but I have given concrete examples of the ASA taking action. We should at least recognise that companies are now receiving enforcement notices, which was not happening in recent months and years.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

I am aware that the hon. Gentleman mentioned that the Advertising Standards Authority has been launching initiatives to crack down on such practices, but my point is that the kind of real change that he and I hope for has not come about.

A million consumers in rural Scotland face punitive surcharges. That has to stop. There needs to be better and greater dialogue between the UK Government and the delivery operators. The UK Government can and should regulate charges. Concrete and decisive action is needed to ensure that consumers in large areas of Scotland do not face higher delivery charges or even have their orders refused.

I first spoke out on this issue four years ago, weeks after first being elected as an MP, and in that time I have seen the Scottish Government do what they can to improve a bad situation over which they have no real power. This Parliament and this Government have the power to deliver the fairness and the inclusion that is needed. I urge the Minister to use her good offices to deliver change at long last. For the most part, self-regulation has failed. I really hope that we will not still be debating this injustice four years from now. We know what the issue is and we know that it can be remedied, so I hope that we can stop endlessly debating it and instead act. It really is time that my constituents on Arran and Cumbrae, and rural consumers right across Scotland and the UK, are no longer disadvantaged by this postcode tax.

Photo of Gill Furniss Gill Furniss Shadow Minister (Business, Energy and Industrial Strategy) (Steel, Postal Affairs and Consumer Protection) 5:00, 2 Gorffennaf 2019

It is a pleasure to serve under your chairpersonship, Mr Hollobone. I congratulate Jamie Stone on securing this important debate. I recall his excellent contribution in a debate on broadly similar themes that was secured by Douglas Ross around 18 months ago.

However, it is disappointing to see that there has been so little progress in tackling this unfairness since that previous debate. The Minister responsible at the time, Margot James, assured us that the consumer Green Paper would be the start of the process of finding an answer, but the Green Paper did not mention the issue at all. We are still awaiting the response to the Green Paper consultation, and by later this week we will have been waiting for one year. Can the Minister here today say when we can expect the response?

It has been valuable today to learn about not only the problems that consumers continue to face, but the actions that have been taken since the previous debate. The hon. Member for Caithness, Sutherland and Easter Ross has already referred to the Scottish Parliament’s actions, and hopefully there will soon be some clarity on many of these issues, including misleading delivery charges. However, I take on board both his comments and those of Patricia Gibson, who also issued a plea to the UK Government to assist them in this matter, because it is Government action that is needed. I was interested to hear the hon. Lady talk about the people’s delivery guarantee, which I think is an excellent idea. I hope that the Minister will take that up and tell us more about it later. There should be more work with delivery companies, and more information and reporting, but those things are useful only up to a point. The evidence that we have heard today has shown that the core problem—the hugely inflated delivery prices that many people face—still exists.

The universal service obligation ensures that firms that use the Royal Mail for deliveries are able to charge precisely the same amount for the highlands as for any other UK address. Regrettably, however, many UK online retailers have moved away from using the Royal Mail. The Government must consider how, in the deregulated postal market, the universal service obligation protects consumers in rural Scotland. Will the Minister examine and assess the effectiveness of the universal service when it comes to protecting rural customers?

The Postal Services Act 2011 sets out the universal service obligation as a service that must simply be available, rather than guaranteeing a consumer the right to access a universal service when a third party, such as an online retailer, is contracting the delivery. The obligation means that for anyone sending post below 20 kg, there is a fixed price to any UK address. That is all well and good in protecting citizens’ rights when people send items themselves, but the majority of online deliveries are by retailers that operate across the UK.

A retailer’s commercial motive will lead it towards wanting to offer incredibly cheap or free delivery to the majority of its customers. In recent years we have seen nearly every online retailer splash an offer of free delivery on their homepage. In fact, led by Amazon, same-day delivery is being pushed as the new ultimate convenience. However, Members will know that not only is that promise rarely universally available, but the desire of online sites to offer delivery leads them to move away from the somewhat higher price of the universal service offered by Royal Mail and towards competitors who can offer cheaper services. Clearly, that is at the cost of consumers in the highlands and islands, who have to pay the exorbitant rates that we have heard about today.

In the previous debate, I said that Ofcom needs to be empowered to take action to ensure that this geographic discrimination is tackled. The then Minister disagreed, on the basis that some delivery firms do not charge additional rates in Scotland. That is true, and I encourage all retailers to choose one of these firms to deliver their goods, if they do not use Royal Mail. However, the Government’s position completely misses the point that consumer choice should naturally be about choosing the best quality and value products. Other than by using a few select retailers, consumers cannot choose to go with Royal Mail as an option, so in this environment a universal service does not really exist.

Ofcom continues to report a fall in the cost of parcel postage, due to increased competition. That is good news for the majority of UK consumers, but with margins becoming tighter it represents quite the opposite for consumers in rural locations, as it makes it increasingly unlikely that the highlands and islands will be included at equal rates. I fear that without genuine action the outlook for many Scottish families is bleak. The market is moving at pace towards a low-cost convenience model, and it is difficult to imagine that rural Scotland will be a beneficiary of the change.

It is clear that there is a market failure that must be corrected. I believe that Ofcom can make that correction, if it is correctly instructed. There are two approaches that the Government should consider. First, when there is an option to select Royal Mail delivery, there is a degree of protection available to consumers. The Government should consider how they can ensure that as large a part of the delivery market as possible has an option for Royal Mail delivery, either by a voluntary agreement or, if necessary, by regulation.

Secondly, Ofcom could add geographic delivery to its list of regulated prices. That could certainly curb the worst examples of overcharging faced by rural Scottish communities. Ofcom has used its regulatory powers to cap broadband and phone prices. Therefore, given the evidence of overcharging for delivery, it is logical to cap parcel delivery costs too.

In conclusion, will the Minister recognise that the Government must move beyond guidance and warm words, and instead take real action to ensure that hundreds of thousands of people do not continue to suffer this unfair penalty?

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 5:06, 2 Gorffennaf 2019

It is a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate Jamie Stone on securing this important debate on an issue that continues to be important for his constituents and those of other Members. I thank all hon. Members for their contributions and the passion with which they represent consumers in their communities.

As the hon. Gentleman will remember, we met last November to discuss his concerns about this issue and we have since corresponded, including my recent responses to the parliamentary questions that he has tabled. I understand the concerns that he and others who are here today have raised that consumers in some parts of Scotland are being charged more for delivery than those in other parts of the UK. I also recognise that similar issues exist for consumers in Northern Ireland.

I am pleased to take part in the debate and to outline the progress that has been made since this issue was last debated in Westminster Hall in a debate responded to by a previous Minister, my hon. Friend Margot James, back in December 2017. The Government are committed to promoting growth in the UK economy. The growth in online shopping is increasingly important in achieving that and it is of particular importance to rural communities, where access to physical retail outlets is limited. As hon. Members have said, it is crucial that retailers are up front about their delivery charges, including where they deliver to, what they charge and when premiums apply. Consumers will then know where they stand and can make an informed decision before they purchase. That is what the law requires.

The Government strongly encourage businesses to provide consumers, as far as possible, with a range of affordable delivery options. To help to achieve that, the Government have ensured that everybody, including retailers, has access to an affordable postal service for deliveries across the UK under the universal service obligation, which has been mentioned in the debate. Through the universal service obligation, Royal Mail delivers parcels up to 20 kg, five days a week, at uniform rates throughout the UK. Let me make it clear that it is up to businesses themselves to determine the most appropriate delivery option for the consumers of their products. There are no rules to prevent differential charging between businesses for deliveries, and I do not believe that, for example, imposing a price cap is a practical answer. We should not seek to force retailers to use a specific supplier, such as Royal Mail, because competition in the delivery market is an important driver of efficiency. A competitive market should be a sufficient incentive to put pressure on charges applied by retailers and delivery operators.

There are positive signs that things are changing and businesses are listening. Wayfair took the decision earlier this year to scrap delivery charges for orders over £40 to anywhere in the UK and to charge a standard rate of £4.99 for orders below that threshold. That type of commercial decision will set the company apart from its competitors, drive competition and lead to lower costs. On the delivery side, Menzies Parcels launched a highland parcels service last year, which enables delivery to a virtual address for onward delivery at a fixed price.

Provided that consumers have the information they need at the point of purchase and the ability to shop around, shopping around is effective. Research from December 2017 shows that 59% of those faced with a surcharge often, or always, find the item elsewhere online. However, I can reassure hon. Members that the Government are not complacent. The Consumer Protection Partnership, or CPP, chaired by my officials in the Department, has recognised the issue as a priority that needs to be addressed.

As hon. Members know, the CPP has been looking over the past year to improve online retailers’ compliance with consumer protection law and considering concerns raised about the level and fairness of parcel surcharging. Its work has involved partners including Citizens Advice Scotland, the Consumer Council for Northern Ireland, the Advertising Standards Authority, or ASA, and the Competition and Markets Authority, or CMA. The partners have been working with both the parcel and retail industries and other external organisations, including Ofcom. The work has included liaising with bodies representing both operators and retailers to try to understand the pricing models and structures that influence pricing decisions. The aim is to help industry—both parcel operators and retailers—to find a solution that works for all parties, including consumers.

We have also been liaising with officials in the Scottish Government, who launched a fair delivery action plan last November that maps both delivery hotspots in Scotland and what might constitute a fair charge. The CPP work will be informed by the outcomes and conclusions of that action. The CPP also worked with highland trading standards, the Citizens Advice consumer service and Advice Direct Scotland to launch the delivery law portal last year, which will gather information about delivery charges and parcel surcharging to inform the work and support enforcement. In the past year, the portal has received up to 1,000 hits per day. Referring potential breaches and unfair practices to the site will help enforcement agencies to ensure that retailers meet their legal obligations.

Significant work has been undertaken by the ASA and the CMA to ensure that businesses comply with the legislation, and both have acted swiftly where that has not happened. The ASA, which is responsible for ensuring compliance with the British code of advertising, sales promotion and direct marketing, has issued more than 200 enforcement notices to online retailers regarding their parcel surcharging practices and has achieved a compliance rate of more than 95%.

The CMA has issued a number of advisory notices to major retail platforms and, as a result, eBay and Amazon have reviewed and improved their policies and guidance for retailers who sell via their platforms. However, on the back of this debate, and the intelligence mentioned by the hon. Member for Caithness, Sutherland and Easter Ross that suggests that Amazon may be taking a retrograde step in what it allows its online retailers to do with delivery charges, I would be happy to raise the matter directly with Amazon. I would be very grateful for any information that could be provided to me as the Minister, and I thank the hon. Gentleman for raising the issue.

I reiterate that the advisory notices are making companies such as eBay and other online platforms look at their practices and review them. The CMA continues to work through primary authorities to ensure continued improvement in this area. On the legal compliance side, significant progress has been made and our enforcement partners will continue to monitor and take action where necessary.

I want to touch on a few of the issues hon. Members have raised, beginning with the hon. Member for Caithness, Sutherland and Easter Ross. He is right to highlight that we expect more of our online retailers and that they should be up front and transparent with their consumers. Applying large surcharges after a purchase has taken place is therefore something we take seriously on the enforcement side. I concur with what my hon. Friend Douglas Ross said about when he has had issues and has been able to get the ASA involved to carry out enforcement. That is highlighted by the number of enforcement notices the ASA has levied over the past year.

I highlight again that the CMA has issued, and will continue to issue, advisory notices where it sees fit. My hon. Friend the Member for Moray was absolutely right to raise a concern about postcodes. Such issues need to be raised directly with retailers. I co-chair the Retail Sector Council with Richard Pennycook and, although this is not a workstream within the council, I commit here today to mention it at the next meeting as an issue that particularly affects Scottish consumers. At least then we can ensure that from a knowledge and a lobbying point of view those retailers understand that there are problems for their Scottish customers.

Companies are missing out on business when they choose to employ couriers that charge large surcharges for deliveries into the highlands. If the information is transparent, the consumer has the opportunity to shop around, and we have seen from research that 60% of consumers will do that and will find a cheaper price or a different supplier. Retailers need to understand that they are potentially missing out on a very valuable market by being restrictive with the Scottish market. Patricia Gibson is absolutely right about Scottish consumers. The evidence suggests that people in Scotland pay 30% more for their deliveries, and in the highlands the figure can go up to 50%. That is why the CPP’s work has yet to be finished; we are still monitoring the matter and will continue to engage with the industry and retailers.

I am not sure whether I have stood with Gill Furniss and spoken about Scottish surcharges, but we have spoken about most things consumer. She is absolutely right to challenge me on when the potential White Paper will be launched. I can assure her that I have been particularly interested in and working on the enforcement side and, although I cannot guarantee a date today, we hope to introduce it as soon as possible. She is right to highlight the beauty of our universal service, which offers 20 kg at a fixed price to anywhere in the UK, and it is a shame that some retailers have moved away from using it.

We can never forget that Hugh Gaffney, who is no longer in his place, is a postman. Every opportunity he gets, he bangs the drum on behalf of Royal Mail, our posties and the great service they provide. It is correct that businesses can choose to use different couriers. Some businesses will argue that in certain cases, further costs are incurred for delivering within Scotland and the highlands, which need to be passed on to the consumer. However, we are committed to continue working on that.

Photo of Douglas Ross Douglas Ross Ceidwadwyr, Moray

On the point that the Minister has made about further costs sometimes being involved, I take her back to my example, in which companies are not looking at the costs involved; they are simply looking at a postcode. In Moray, when they deliver further because the address has a different postcode, some companies charge no more for delivery than they do for an address that is closer to the depot. If companies were looking at it strategically, based on their costs, I could maybe understand it, but they are not; they are taking a blanket approach for any IV postcodes, and that is not right.

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I agree; my hon. Friend has highlighted a particular example. Since he has been elected, he has spoken with me many times, and he is known as a champion in this area. He has been pushing me as much as any constituency MP to take action. He has raised the issue of postcodes with me, and he is right that in that particular circumstance, there seems to be an absolute unfairness for the Scottish consumer. That is why one of the most important things is that we are working with couriers and highlighting the unfairness of that example.

We are putting pressure on businesses to make sure that when they instruct a courier with a contract, they do so with the best interests of their Scottish and Northern Irish consumers at heart. In some cases, we are talking about large retailers that have buying power, and they have the ability to go into negotiation with those couriers and negotiate better prices and services. I am particularly concerned about the small online retailers that do not have buying power with the couriers and, because of the number of parcels they send out in a day, cannot negotiate with them to perhaps get those surcharges reduced. My hon. Friend the Member for Moray is absolutely right: we need to continue to move forward and get more transparency.

I welcome the work that the Scottish Government have been doing on this, because they are close to this area. We in the Department for Business, Energy and Industrial Strategy and the CPP will keep engaged with the Scottish Government, and a lot of their work and its results will inform what we are doing with the CPP. I understand hon. Members’ frustration about what they perceive as a lack of progress, but I believe we have made progress, although it may not have been along the lines they would have liked to see. We have taken enforcement action; we are looking at this area, and it is being monitored. It is also right that we continue to do our best to make retailers consider their consumers who are being disadvantaged, because in not being able to supply products to those Scottish consumers, those retailers are ultimately the ones that are missing out. I congratulate the CPP on its work to ensure that when consumers purchase goods online, information is up front and transparent, and to take action swiftly when that is not the case.

Although there might be no quick fix on this issue, and although I am unconvinced at this moment about the need for further legislation, that does not mean that the issue is being ignored. I look forward to hearing about further progress through the CPP’s work and the Scottish Government’s initiatives. I am happy to update Members about progress as that work continues, and I thank the hon. Member for Caithness, Sutherland and Easter Ross for having secured the debate.

I understand the concerns of Members. After the next meeting of the Retail Sector Council, I commit that I will write to Members present today to outline what I was able to raise there. This is about a two-pronged attack: dealing with the couriers, but also making the retailers recognise that their decision making has an impact on consumers in Scotland and Northern Ireland. As the consumer Minister, I of course want there to be fairness and transparency for consumers throughout the United Kingdom, including those in the Scottish highlands and mainland Scotland.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Scotland), Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence) 5:24, 2 Gorffennaf 2019

It falls to me to thank each and every one of the hon. Members who have taken part in the debate. In contrast to Westminster 25 or 30 years ago, a lot of people these days watch these events, thanks to the internet and the televising of Parliament. I know my constituents will be pleased that such thought has been given to an issue that matters greatly to them.

Secondly, I will spare the blushes of Hugh Gaffney—who is no longer with us—but it is true that the Royal Mail is held in very high esteem. If we look at the level of esteem of various professions, I am afraid that postmen and postladies are held in much higher esteem than politicians.

The answer, when we reach it, has to be thorough and to work for consumers, and I very much hope that it will involve the Royal Mail. I do not want to over-dramatise the issue, because using language that is too strong will not help the cause. The Minister has taken on board the points made, and I am grateful for that. In brief, it seems to me that it would be a terrible thing if the sheer cost of living for people who live in remote straths and glens in the highlands led to their considering moving away. People moving south was the old curse of the highlands, so I hope we will never see that day. When the public good is in all of our hearts, I am sure we can avoid that situation.

Question put and agreed to.


That this House
has considered additional delivery charges in rural areas in Scotland.

Sitting adjourned.