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Publication - Minutes

Parcel delivery charges ministerial roundtable minutes: June 2018

Published
24 August 2018
Directorate
Energy and Climate Change Directorate
Date of meeting
27 June 2018
Location
Victoria Quay, Edinburgh

Minutes of the ministerial roundtable regarding parcel delivery charges that took place on 27 June 2018.

Attendees and apologies

  • Paul Wheelhouse MSP – Minister for Energy, Connectivity and the Islands (Chair)
  • Paul Allum, DPD
  • Emma Bailey, Citizens Advice
  • Justin Blackie, The DX
  • Amanda Burgauer, Scottish Rural Action
  • Richard Currie, UPS
  • John French, Northern Ireland Consumer Council
  • Robert Gwyn, Hermes
  • Jenny Hall, Royal Mail
  • Kristen Hartman, Citizens Advice Scotland
  • Martyn James, Resolver
  • Zoe Laird, Highlands and Islands Enterprise
  • Richard Lochhead, MSP Moray
  • Shabnum Mustapha, Advertising Standards Authority
  • David MacKenzie, Highland Council Trading Standards
  • Fraser MacLean, Menzies Distribution
  • Kellin McCloskey, Northern Ireland Consumer Council
  • Gareth Moran, Office of MSP Moray
  • Trudy Morris, Scottish Chambers of Commerce
  • Sandra Patterson, Kids Bee Happy
  • Julian Pace, Scottish Enterprise
  • David Richardson, FSB Scotland
  • Fiona Richardson, Trading Standards Scotland
  • Jonathan Ruff, OfCom Scotland
  • Cris Sowden, Consumer Protection Partnership
  • Allan Walker, DPD
  • Sean Jamieson – Scottish Government
  • Lorraine King - Scottish Government
  • Wendy McCutcheon – Scottish Government (Secretariat)
  • Kevin West – Scottish Government

Items and actions

The meeting was held under Chatham House rules.
 

1. Welcome and introductions

The Minister welcomed everyone to the roundtable and explained that in light of the recent Ministerial reshuffle, he was keen to see through this roundtable due to its importance; and he now also had responsibility for Islands. The Minister stated that although much of the focus on parcel delivery charges has been on the remote northern parts of Scotland, many areas of Scotland are affected by high charges, refusal to deliver, misleading use of the term ‘free mainland delivery’ and consumers only finding out about these at the end of their transaction. Reports from Citizens Advice Scotland (CAS) and the Competition and Markets Authority (CMA) highlight these issues especially in rural areas.

The Minister thanked organisations such as CAS, CMA and Highland Council Trading Standards for their excellent work in highlighting these issues and attempting to improve services. He also highlighted that the Scottish Government has long called for an end to unfair delivery charges but was frustrated with the limited action that can be taken as this is a reserved area. It is only the UK Government that has the power to regulate parcel deliveries and only they can compel meaningful change.

It was also acknowledged that many of Scotland’s SMEs, especially in the far north, do not charge for the extra delivery charges they incur to send parcels as this would make them uncompetitive with larger organisations. Many businesses are also not e-commerce enabled – there needs to be a new business model to allow High Streets to thrive along with meeting consumer needs.

The Minister said that this meeting would be held under Chatham House Rules. The issue of the Lobbying register was raised. Scottish Government officials would check and advise attendees.

The Minister introduced the format of the meeting highlighting the need for everyone to participate and that he hoped we would all leave today’s meeting with a commitment to focus on solutions and to work together to provide these solutions. There then followed a roundtable introduction before the Minister introduced agenda item 2

2. Advertising Standards Authority

Shabnum Mustapha introduced herself as media and public affairs manager of ASA; along with carrying out ASA Scottish affairs work. ASA has recently undertaken work on parcel delivery enforcement notices and is the UK’s independent regulator of advertising across all media. ASA apply the advertising codes which are written by the Committees of Advertising Practice and is also a member of the Consumer Protection Panel (CPP). Shabnum gave an update on what ASA regulates. This includes claims made on an organisation’s own website and social media which are misleading, can cause harm or offence. To date, ASA has banned one advertisement for a misleading claim. Shabnum stated that ASA cannot look at parcel delivery charges – that is outwith their remit.
 
Richard Lochhead had previously provided ASA with a dossier of over 100 complaints and ASA issued all these companies with enforcement notices along with compliance guidance. Richard advised that he had another 50 complaints that he would send to ASA.
 
During discussion some attendees cited examples that they have received from the public about excess delivery charges. Shabnum advised that they should forward this information direct to her. The scale of the problem is possibly larger than expected as consumers are not responding to official channels such as ASA or the new portal – instead liaising direct with the online retailer; or are in fact accepting the excess charges.
 
Shabnum stated that clarity is important and that any exemptions to an absolute claim need to be made clear right beside this claim and not elsewhere on the website – otherwise that could be seen as a misleading claim.
 

3. Consumer Protection Partnership

Cris Sowden is project lead for the parcel surcharging project at CPP. The CPP brings together key partners within the consumer landscape, including the Scottish Government, to identify, prioritise and co-ordinate collective action to tackle those issues causing greatest consumer harm. In 2017, key partners (including non-CPP members) were brought together to look at parcel surcharging on a UK-wide basis and two broad concerns were identified:

  • Transparency and accuracy – this was where some retailers were failing to explain exceptions to their UK delivery claims and / or failing to provide up-front details on where delivery surcharging and other restrictions apply.
  • Level and fairness of parcel surcharges – various pieces of research found delivery costs of parcels to varying degrees are higher in certain areas of Scotland and Northern Ireland.
To combat these concerns a number of measures have been agreed and put in place by CPP partners, including:
 
  • Revised business guidance and communications
  • Launch of new website – a one stop portal for consumers, businesses and practitioners launched on 22 June 2018 – www.deliverylaw.uk. Trading Standards Scotland funded this and it is hosted by Highland Council.
  • Highland Trading Standards, as CPP members, engaged with over 200 companies to ensure compliance as part of co-ordinated enforcement and compliance action.
  • Consumer advice was also reviewed in June 2018.

It was noted that as the majority of the businesses are based in England and Wales Trading Standards Services across the UK need to consider the complaints as part of their prioritisation of work. One aim of the portal is to help support consumers with advice, templates to complain and provides a complaint reporting functionality which will be used by consumer protection organisations to inform compliance and enforcement approaches. Cris urged all attendees to refer all their contacts to this database as this would allow robust data gathering.

There is still a challenge to understanding why some Scottish and Northern Irish consumers pay higher delivery costs. As part of their future work, CPP will produce revised guidelines for online retailers and consider options for industry to develop industry solutions for Scotland and Northern Ireland.

4. Open discussion

Lorraine King of the Scottish Government’s Consumer and Competition Policy Unit led the discussions on all the themes. The focus of each theme was on practical ways in which we could move the discussion on from identifying the issues towards practical solutions.


Theme 1 – Using consumer powers for awareness raising

The issue for discussion one was the continued existence of unfair delivery charges for consumers in remote and rural areas in Scotland and non-compliance from a number of retailers. The options presented for discussion were:
 
  • the development of an annual statement on the Scottish Government website highlighting good and bad practices especially amongst retailers along with case studies.
  • the commissioning and publishing of a full independent economic analysis of what constitutes “fair” delivery prices, which will provide transparency to the public, retailers and delivery companies. This should include research on excessive or hidden delivery charges.
  • Fair Delivery Day on Cyber Monday (26 November 2018) – this day could be used for consumers to share their experience of parcel delivery services; highlighting good practices; making consumers aware of their rights along with ensuring they are aware of why surcharging exists; and the difference between surcharging and excessive / hidden charges.
There were mixed views on the viability of these options especially bullet points one and three as it was felt that consumers need to be made aware of what is best practice; and that they do not develop unrealistic expectations of delivery charges. If retailers improved their websites to make them more transparent / provide more information about parcel delivery charges this would allow consumers to make informed choices.
 
Other points raised included having to be aware of the whole supply chain and associated costs such as overheads and the flip side of the coin being that consumers do not always have a choice in which delivery company they use when ordering online. Also, small rural companies are competitively disadvantaged when competing against larger UK companies.
 
It was agreed that bullet point two would be helpful as long as the economic analysis did remain independent of the Scottish Government and looks at how retailers calculate their surcharge costs.
 
Overall, the roundtable agreed to Scottish Government officials pursuing these options and providing assistance where required.

Theme 2 – Fair and transparent costs for consumers and businesses in rural locations

The issue for discussion two is that across the UK, many smaller businesses cannot, or choose not to, deliver to rural locations in Scotland resulting in consumers and businesses unable to receive and send their parcels at a fair price with all the costs known upfront. The Scottish Government proposal for discussion was the development of a database / online portal that would hold real-time information on where parcel delivery companies are delivering to, that smaller businesses / consumers can utilise.
 
Lorraine cited peer to peer platforms such as Nimber and Carrymates as examples of what Scottish Government envisioned the online portal / database could achieve. There was a lot of discussion around this proposed portal with the thought that this was already being implemented in the Highlands and Islands but not elsewhere in Scotland.
 
However there are economies of scale to consider and that it shouldn’t be forgotten that it does cost more to deliver to rural / remote areas.
 
There was then a discussion on postcodes and the use of e-commerce systems that automatically decide whether a postcode is in a rural/remote area. The development of a bespoke package / piece of software that could look at the postcode issue may go some way to alleviate some of the surcharge / non delivery issues.
 
In the first instance, Scottish Government officials will look further into postcode software to determine if there are any challenge funds such as CIVtech, CAN DO, etc that could look at this.
 

Theme 3 – Greater collaboration between retailers and delivery companies

The issue for discussion three was a community / island distribution hub or network of hubs based in the Highlands that could be a solution if industry supported it.

Lorraine started of this discussion by stating that this was early stage thinking however we need to find ways of ensuring that parcels, once received in rural locations, are delivered locally in a timely manner – the “final mile consolidations”.
 
Retailers and delivery companies need to work more collaboratively to help alleviate this problem, particularly given the growing importance of online shopping.
 
Recent research has been carried out by Citizens Advice on Pick Up and Drop Off (PUDO) points. CAS are doing the analysis of PUDO provision in the surcharged areas and they will share this information with Scottish Government when it has been finalised.
 
There was a wide ranging discussion on what is currently offered to customers and how we ensure that these services are maintained or expanded. This included the role of the post office network and whether it could be expanded; the use of microsites, and if there was scope to investigate whether retail bank closures could be seen as an opportunity to utilise as PUDO points. The post office network is reserved to the UK Government and discussions would need to be held with them before any relevant options could be explored further.
 
There was also discussion around how this distribution centre would be funded, how businesses would use this space, times of operation, would this be on a voluntary or commercial basis and who would be in overall control.
 
It was suggested that what may be required is an ‘old fashioned community centre’ that does more than offer somewhere to pick up and drop off a parcel, regardless if you were a business or a consumer.
 
The retail industry is going through tremendous change as it deals with the challenges of the changing habits of consumers / online shoppers and they are also looking at various solutions. It may be beneficial, therefore, to meet with them.
 
Menzies Distribution Hub currently provide a final mile consolidation in one van for the majority of major parcel delivery companies. However, there is nothing similar elsewhere in rural locations in Scotland such as Dumfries and Galloway.
 
Scottish Government officials will consider the comments from attendees and consider the next steps to progress this theme.

General

It was noted that the retail industry body was not at this roundtable as they had been unable to accept their invite due to diary clashes.

5. Richard Lochhead MSP Moray

Richard Lochhead stated that there was a good calibre of attendees at the meeting and that he had worked with many of those round the table. He then provided an update on why he has been so involved in this area of work highlighting that this is not a problem in England therefore we have to convince the UK Government that they need to take action.
 
He had sent a dossier of letters of complaint to ASA in the past and has now gathered further complaints which he will forward on to ASA.
 
Although customers are complaining, Richard cited a Scottish Parliament SPICE report  highlighting that surcharges in Scotland cost over £36m a year and affects one million people in Scotland. It is not just rural areas that are affected – it is also areas such as Paisley and Dundee. There is a difference between fair charges and excessive charging and that is one of the main areas that Richard stated that we need to focus on understanding. Richard was supportive of the themes that had been discussed and urged all attendees to participate as work goes forward.

6. Round up and next steps

The Minister thanked everyone for their contribution and for their willingness to work with the Scottish Government. It was re-iterated that attendees circulate the http://www.deliverylaw.uk/ around their wider networks / membership. Raising awareness will help consumers and could ensure further action by UK Government. If anyone had any confidential points to raise or had any further reflections they should speak to Lorraine King. The draft note of the meeting would be circulated round the attendees before it is published on the Scottish Government website. The presentations would also be circulated to attendees.
 

Contact

Email: consumerandcompetition@gov.scot

Telephone: 0300 244 4000

Post:
Scottish Government
Consumer and Competition Policy Unit
4th Floor
5 Atlantic Quay
150 Broomielaw
Glasgow
G2 8LU

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