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Regulation is at risk

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We have a talent for choosing snappy names for our laws. The Consumer Protection from Unfair Trading Regulations came into force on 26 May 2008, implementing an EU Directive. The CPR introduced a general duty upon traders not to trade unfairly and backed that with the criminal law.

They also criminalised a variety of business practices that have been irritants for years - such as continuing ‘closing down sales’, pyramid schemes, miracle cures, ways of winning lotteries, persistent sales calls and callers, and so on.

The regulations have begun to bite. Local Authority Trading Standards Departments have prosecuted miscreants in home improvements, car servicing and car clocking. They are taking two currently contested matters involving the sale of junk to tourists and season tickets to football fans. The OFT has taken cases that cross local borders including one on pyramid selling and another on prize draw scratch cards.

Governments with money centralise and claim the credit. Governments without cash decentralise and spread the blame

Nick Robinson, BBC

But we have a new government. They have an ‘agreed programme’. In as far as it touches upon consumer protection they may place limits on bank interest rates, seek to enhance customer service, improve food labelling, and households’ control over energy costs - even introduce an Ombudsman into the Office of Fair Trading. But so much more is to come - not least the abolition of that same Office of Fair Trading.

There have been two key policy steps taken.

  • First was the ‘bonfire of the quangos’. They are to be cut from 901 to 648. The Commons Public Administration Select Committee (dominated by Conservatives) noted the absence of any ‘meaningful consultation’ and pointed out that most of the quangos to be abolished will see their work and their staff submerged into government departments or taken over by other quangos. Only 29 agencies are to be scrapped and their work discontinued. In the consumer protection world, Citizens Advice will take responsibility for consumer advice, education and advocacy and Trading Standards will take on all of the responsibility for enforcement.
  • The second step is cutting central funding to local authorities by 28% over four years. More than devolving the ability to make decisions, this is a way of also devolving the blame for taking harsh decisions about service reductions and job losses.

The BBC’s Nick Robinson wrote: ‘Governments with money centralise and claim the credit. Governments without cash decentralise and spread the blame.’

There will indeed be blame to be spread. Manchester City Council has announced £110m in savings. Birmingham says that 7,000 jobs must go in a bid to save £300m. Leeds will cut 3,000 jobs.

The link between cutbacks in general and cutbacks in consumer protection are clearly visible in Lincolnshire. The Trading Standards budget will be cut by about 50% with staff reduced from 72 to 29. There will be some central funding for fighting ‘consumer detriment’ that arises across local authority borders, but within their areas they must fund as best they can. This detriment has been assessed (by the NAO - with a place on the bonfire) at £6.6 billion. 73% of this arises cross-border. Thus 27% does not.

Local Authorities must fight local detriment of £1.8bn, whilst swallowing cuts of 28%. Just when we thought the new law was working.

Peter Shears is Professor of Consumer Law and Policy at the University of Plymouth.

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