Business Secretary To Address Scottish Power Scandal

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Prime Minister David Cameron has intervened in the growing scandal about Scottish Power’s outstanding £79 million that it allegedly owes customers.

Pressure has been growing on the energy provider, one of the Big Six utility companies in the United Kingdom, to give the money back to customers who were promised cashback on items purchased from its stores over a decade ago. And the pressure is bound to be even greater now as David Cameron has promised to set a meeting between the business secretary Vince Cable and disgruntled MPs. He hopes that it will allow the government to “get to the truth of the matter”.

The scandal apparently took place between 1997 and 2001. It involved warranties sold on items like toasters, fridges and washing machines in its high street stores which closed down some years later. Customers were promised that, if they had not made a claim on an item within a set number of years, they could get cash back. Around 625,000 people went out of pocket when some of the companies involved went bust.

Originally, the matter was believed to be settled when liquidators chased money from the companies that went out of business. However, new information suggests that Scottish Power “deliberately evaded” paying more than it should. The energy provider denies the allegations.

David Cameron made the promise at Prime Minister’s Questions on Wednesday. The question was raised by the former consumer minister for the Labour Party, Mr. Gerry Sutcliffe. He asked:

Does it concern him as much as it concerns me that one of the UK’s largest utility companies has allegedly tried to evade paying back money to 625,000 people, many of whom are the poorest in our society?

Scottish Power continued to defend itself against the allegations by MPs following Prime Minister’s Questions. In a response to David Cameron, the company said:

The Power Plan extended warranty scheme, which was one of a number of similar extended warranty products offered by retailers across the industry, did not involve any wrongdoing by Scottish Power.

The warranty scheme was transferred over to the retailer Powerhouse in 2001 when it bought a handful of Scottish Power’s shops, but it went into liquidation two years later. Powerhouse secured an indemnity of up to £75 million from the Big Six utility provider in order to protect it from cashback claims. This is why Scottish Power later argued that it could not be called upon for responsibility in this scandal.

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