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11 September 2000

Britain, the cheater’s champion

For the sake of business, as much as for consumers, we need a Ralph Nader, argues Anthony Browne

By Anthony Browne

First he went for the car industry, then the baby-food manufacturers, the chemical companies, the banks and insurers. Now he’s going for the presidency.

Ralph Nader, the inspiration behind the US consumer advocacy movement, is both popular and controversial. His nurturing of the “consumer economy” has put an end to countless consumer abuses and corporate gravy trains. When, many years ago, I spent a summer canvassing door to door for one of the many consumer groups set up by Nader, I was never confronted by indifference.

Not even Nader thinks he is going to win. The best – and the worst – the Green Party’s candidate could do is take votes from Al Gore, handing the world’s most powerful job to a scion of the oil industry. But Nader’s transformation from consumer champion to presidential candidate highlights the importance attached to consumer advocacy in the world’s most successful economy.

In Rip-off Britain, we have no Nader and a runt of a consumer advocacy sector. Compared to industry, British consumers are powerless, their voices and frustrations rarely heard. They have little input into policy-making, and virtually no one to champion their cause effectively.

The consumer policies of successive governments have been little more than reactions to media outrages – such as forcing the the car companies to offer private customers the same prices they offer their fleet buyers.

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This helps, but nothing will fundamentally change for consumers while there is such a substantial imbalance of power between them and producers. Business has thousands of well-funded and well-lawyered lobby groups, trade and professional associations, all persuasively pushing its cause. Business people spend tens of millions of their profits on lobbying, not out of charity to lobbyists, but because they know it is a good investment: effective lobbying boosts profits in the short run.

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Get work done on the house, and your builders will have the Federation of Master Builders, the Construction Confederation, the House Builders Federation, the League of Professional Craftsmen, the Guild of Master Craftsmen, and so on, on their side. But there is no Homeowners’ Association.

Consumers do have some champions but, with one or two exceptions, they are remarkably ineffective. The sloping playing field between consumers and producer starts at the top. There is no consumer affairs ministry – only a Department of Trade and Industry, whose priorities are stated in its title. The consumer affairs minister is a junior minister nowhere near the Cabinet.

Politicians and civil servants may insist that they can take tough decisions but, ultimately, they prefer the line of least resistance. If they propose a consumer-friendly measure that meets a storm of opposition from business, it is easier to drop it: the cries from consumers will be too quiet to hear. The Utilities and Financial Services bills are two recent examples of consumer-friendly legislation that was watered down after lobbying.

Then there are the statutory watchdogs, for water, gas, electricity, telecoms, air and rail. Funded and appointed by industry and government, they are far too frightened of rocking the boat to have much effect.

The media are natural consumer champions, and have been largely driving the whole “rip-off Britain” campaign. Newspapers, radio and television programmes have won many minor victories in specific cases, the most spectacular being the BBC’s Panorama, which forced the complacent Office of Fair Trading to find Volvo guilty of price fixing.

The media have their limitations, however. Journalists don’t have the time and resources to develop the specialist knowledge on the more arcane aspects of consumer issues. Many rip-offs are too subtle or simply not sexy enough for journalists to cover.

So what about the independent consumer advocates? The National Consumer Council is fairly independent, given that it is almost exclusively funded by the DTI. However, its remit is to help disadvantaged consumers, rather than consumers in general, and its small staff can be the victims of political whim. The Conservative government cut the council’s funding for three years in a row, hitting its effectiveness.

The DTI also funds the National Federation of Consumer Groups, a grass-roots organisation whose influence is reflected in virtually no one having heard of it. It takes money from big business, and writes letters to newspapers telling them to call off their whistle-blowing campaigns, because it harms, er, big business.

At the top of the consumer advocacy tree is the Consumers’ Association. Independently financed by Which? magazine, it does a lot of product testing and monitoring of market developments. It is the most high-profile and effective consumer champion in Britain, but it is one David tackling an army of Goliaths.

As a result, consumers have to rely on themselves. Caveat emptor – and, if you do get bitten, take your custom elsewhere. This is the operation of the free market, the beneficial effects of competition. It’s a great theory that works less than perfectly in the real world.

Frequently, consumers have too little information to make an informed choice – when your car has been serviced, do you know if your spark plugs were really replaced? People’s lives are too short to get to grips with the small print of every financial dealing they have. Consumers venture into some markets – such as buying a house – so rarely that they never get a chance to be on a level playing field with professional sellers who do it every day.

The weakness of consumers has led to a culture and legislative framework in which businesses try to maximise profits not by better meeting the needs of their customers, but by working out new ways to rip them off. They prefer to do it in such a way that their customers will not realise what is happening. That way, they can do it again.

Yet enhancing consumer advocacy is pro-business in the long run. In the current environment, whole industries become debased, to the extent that otherwise decent people see lying and defrauding customers as standard business practice. Estate agents, builders and car dealers are just a few examples of traders whom people have come to shun – because they don’t trust them.

Some businesses are so addicted to cheating consumers that they don’t see there is big money in not cheating them. Richard Branson became one of Britain’s most successful businessmen by promising his customers, in industry after industry, that he would deal with them straight. He hasn’t always succeeded in helping them – think of Virgin Trains – but his anti-rip-off entrepreneurial flair has shamed countless crooked competitors in other sectors into cleaning up their act.

The government might dare to introduce a few consumer-protection laws, but it will probably deal only with widely publicised and long-perpetrated abuses; and reforms are likely to be watered-down versions of what is really needed.

To end rip-off Britain permanently, Britain needs a strong, independent consumer advocacy sector, to keep up the pressure on businesses and government alike. When Ralph Nader fails to become president, he should come to Britain. His country may decide it doesn’t need him, but the UK certainly does.

Anthony Browne writes for the Observer. This article is based on his chapter for the book Consuming Affairs, published by the Social Market Foundation

Bonnets, boots and Y-fronts, page 38