Interview: Richard Lloyd, Executive Director, Which?

“Energy UK would do better to pipe down and get off the telly.”

As the 35th minute struck, Richard Lloyd’s heart sank. The executive director of Which? was making a mystery shopping call on behalf of an elderly couple and the supplier in question had lived up to all his worst expectations, keeping him hanging on hold.

To top that off, once he’d finally got through to a call handler, he was faced with 23 minutes of box-ticking and being read terms and conditions.

Lloyd wasn’t surprised. His opinion of suppliers is low – though not as bad as his view of their representative, Energy UK, with whom he has clashed numerous times. He also has harsh words for the Department of Energy and Climate Change (“rudderless”), energy secretary Ed Davey (“singularly unable to win trust”) and Energy UK’s chief executive Angela Knight (“pipe down and get off the telly”).

However, always the optimist (his term), Lloyd believes the coming Competition and Markets Authority (CMA) inquiry could fix the market, and has helpfully set out a blueprint with Which’s “Fix the Big Six” campaign.

This calls for: increased competition in the energy market; transparent wholesale energy trading, accomplished via the separation of the generation and retail arms of the vertically integrated companies; simpler pricing and swifter switching; a control of additional costs being added to bills due to government policies; the rebuilding of consumer trust; and warmer homes via an effective energy efficiency scheme.

The campaign includes a petition, which was launched in February, which aims to get more than 60,000 signatures. Once that target has been achieved – it currently has more than 46,000 – it will be presented to Decc, Ofgem, the CMA, and the major suppliers.

The mystery shopping call was part of Which’s work as a consumer advocate. Being the main customer representative now that Consumer Futures has been “swallowed up” by Citizens Advice is something that Lloyd takes great pride in, even if he cannot escape that tag after office hours.

“I quite often get asked who should I bank with, what dishwasher should I buy, what should I do about this energy company,” he says. “I spend quite a lot of time pointing people in the right direction. I’m quite boring at parties in that way!”

Before we get into the criticisms of the market, Lloyd is keen to pay tribute to the individuals working within the suppliers, for whom he claims “great respect”. He says: “You have well meaning and clever people trying to do the right thing for their customers, with legacy systems that should have been replaced a decade ago.”

The troubles the suppliers – most notably Npower, but also British Gas and most recently Scottish Power – have had with their billing systems is only the first of myriad problems facing the staff of energy suppliers, according to Lloyd.

He acknowledges that the suppliers have whole teams “whose job it is to do the right thing,” but says these good intentions often get lost.

The customer-supplier relationship has been hamstrung by underinvestment, and the need to modernise and consolidate antiquated, multiple systems from the pre-privatisation days is over-riding. “It’s what they have to do to modernise the business,” Lloyd declares, “however painful that may be at times.”

These concerns echo comments made by Ofgem chairman David Gray at Utility Week’s Great Debate in London last month. Gray claimed that suppliers “had not made the necessary investment” and that their systems were “creaking at the seams”.

While Lloyd claims Ofgem’s Retail Market Review (RMR) reforms are “half-baked” and “a damp squib”, he has welcomed the new management of chairman Gray and chief executive, Dermot Nolan.

“In Dermot Nolan, they now have a breath of fresh air,” he says. “They have someone who recognises the dire state of confidence in Ofgem and the market.”

Lloyd thinks the pair “offer a chance to turnaround the perception of Ofgem as a failing regulator”.

Lloyd says he was “pleased” with the proposals made by Ofgem to refer the market to the CMA. Less pleasing was the “defensive reaction” from the industry and threats of the lights going out. Lloyd, who began the interview fairly mild in his attacks on the industry, returns to form with a harrumphing put-down of trade body Energy UK. He says they are “bad representatives” for the industry.

He goes as far as to say that by defending the industry’s failings, the trade association is “destroying the credibility” of the companies in the sector. “Energy UK would do better to pipe down and get off the telly,” Lloyd says, fresh from his most recent clash with Angela Knight.

Showing there is no love loss between the pair, Lloyd accuses Knight of trying to “blame everyone else and drag everyone else into what has been a series of failings”, in particular around how renewable energy sources are going to be paid for.

He draws on his cross-sector experience and compares Energy UK to the much-maligned British Bankers’ Association (BBA) (Knight’s former employer), claiming they have both been “defending the indefensible”. Energy UK, according to Lloyd, needs to take a leaf out of the BBA’s book and decide it needs to keep quiet and spend “more time doing helpful behind-the-scenes co-ordination”.

With the energy industry struggling to get to grips with its problems and being tainted by association with its trade association, he says consumers often look to those in government to “sort out the energy problem”.

However, Lloyd tells Utility Week that while the suppliers are “grappling with how to restore consumer trust”, they are being let down by politicians who are “utterly failing to explain in a coherent way” what they are doing to keep costs under control.

The prime example of this is the “rolling back” of the green levies, which the government announced in December and resulted in £50 being knocked off the typical energy bill. A £50 reduction is a “good start”, Lloyd says, but much more needs to be done.

More generally, the line from energy secretary Ed Davey that government policies have resulted in bills being lower than they otherwise would have been is just “waffle” and “complete nonsense”, which means nothing to consumers who are struggling to pay their energy bills every month.

And he thinks that telling consumers the energy sector will voluntarily keep costs down on the delivery of government mandated programmes, such as Eco and smart meters, is a “joke”.

“What we’ve had over the past six months demonstrates that you can’t just write blank cheques for millions of people and tell them it will all be fine,” he says.

While Lloyd doesn’t sugar coat his criticism of Decc, he does concede that the department has been more focused of late, and that the government more widely has acknowledged that there are problems.

Yet he still feels that Decc has failed to deliver on its promises. Lloyd says: “You have a secretary of state who seems singularly unable to win consumer or industry trust in what Decc is trying to do.

“There is a sense of rudderlessness at Decc.”

The lack of direction derives from Decc not taking responsibility for how its policies are implemented, leaving them to be introduced in a “patchwork” fashion by suppliers. These are the very players who are distrusted by many consumers – and MPs.

Despite the wasted good intentions by the government, Lloyd is relieved that the government is now giving attention to the issues, and trying to do something about it. “Although some of the solutions are small beer, single sector, and not joined up, at least there is now a sense of political focus on what the government needs to do,” he says.

“All the interventions – from all the political parties – have helped focus attention, and what I’m hoping we see is more coherent, longer-term policies so we have a clearer idea what the next five years will look like.”

This is where Lloyd’s self-proclaimed optimism comes to the fore.

He states confidently that a day will come (“and I think it will come soon”) where the industry goes beyond “the minimum requirement” and “works hard to restore consumer trust”. As to when this day will arrive, it will depend on how soon all the underperforming parties raise their game and start making the reforms that move the energy sector up the table for consumer trust.

If the sector is able to do this, maybe Lloyd won’t have to spend more than half an hour of his next mystery shopping call listening to Greensleeves.