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Oil Prices

Volume 523: debated on Thursday 10 February 2011

Oil is an internationally traded commodity with prices derived from the global market and, as such, the Government cannot control fuel prices. Within the UK, we have an open market for oil, which we believe provides the best long-term guarantee of competitive prices for the consumer. We are encouraging more energy-efficient cars and homes, and we have asked the Office of Fair Trading to report on the heating oil market. Internationally we are working to improve the functioning of the global oil market, and we are reinforcing the work of the international energy forum, especially by increasing transparency. The key is speeding up the shift to the low-carbon economy by getting us off the oil price hook.

On 17 November, one of my constituents paid £490 for 1,000 litres of kerosene heating oil. By 18 December, they were forced to pay £745 for 1,000 litres of heating oil. Although fuel price is an issue for everyone across the UK, does the Secretary of State recognise the particular plight of people who live in rural areas and who do not have the option of mains gas and other sources of energy?

My hon. Friend is absolutely right; this is a key issue in rural areas to which the ministerial team have given a lot of attention. The Energy Minister, my hon. Friend the Member for Wealden (Charles Hendry), has suffered the effects of this in his own home and feels strongly, as we all do, that we need to get a grip on this. That is precisely why we asked the Office of Fair Trading to look at the heating oil market. We want to be absolutely assured that there is no exploitation and that the market is open and fair, which in the long run is the best guarantee. But we are also concerned about these off-gas-grid homes, and in the longer term we want to ensure that they have the best benefits from the green deal.

Back in December, Age UK expressed concern about the rise in heating fuel cost. What response has my right hon. Friend had to his announcement on the investigation into the heating oil and liquefied petroleum gas market?

There has been cross-party support for the investigation and we await the outcome with interest. There is a genuine concern throughout the House that we need to be confident that people in this position can secure the best possible deal in the marketplace.

Tomorrow is suggested as national fuel poverty awareness day. What steps are the Government taking to ensure that people have access to better environmental enhancements, particularly to their homes, for the sake of the environment and the economy?

The key part of the green deal, which is the centrepiece of the Energy Bill making its way through the Lords at the moment and shortly to come here, is an emphasis on being able to tackle fuel poverty. If we get to the roots of fuel poverty, which is often not low income per se, but people relying immensely on energy because they have poorly insulated homes, we can tackle the problem at its core, rather than merely stick on plasters.

The renewable heat incentive is one way to mitigate this. My constituents, who are early adopters of ground-source heat pumps and other renewable sources, are disappointed that it appears they will not be able to access the RHI as they will not have installed their equipment before the launch of the incentive. Will the Secretary of State therefore please clarify the position on RHI in relation to individuals who have not installed equipment before the initiative is launched, as it appears that not only is the current uncertainty about new installations confusing constituents, but it is affecting the renewables industry?

Obviously, we are trying to eliminate uncertainty as rapidly as we can and trying to be as clear as possible about the policy framework. As can be seen from the announcement of the review of feed-in tariffs, it is important to get these policy details right. We cannot have a situation in which the budgeting is so badly miscalculated that there simply will not be the money to support it. We are determined to go ahead with this. Individuals will be supported under the renewable heat incentive and the details will be forthcoming.

May I ask the Secretary of State to face the House when speaking and not look behind him with his back to the Chair?

The Secretary of State mentioned that the Office of Fair Trading was looking at off-grid gas customers who have been ripped off in the way the hon. Member for Vale of Glamorgan (Alun Cairns) explained. Will the Secretary of State consider extending the scope of Ofgem to look at both on-grid and off-grid energy supplies so that there is a level playing field? The OFT takes an awfully long time and looks only at competition, whereas Ofgem has a wider responsibility.

Ofgem of course keeps the market under review and is looking at it at the moment, and there would be a possibility of referral if it decided that that was appropriate. Clearly, it is crucial that we have competitive markets, because that is the best guarantee that consumers will get the best possible deal.

It has been mentioned that these issues affect those living in rural areas, but of course they also hit people living in urban areas. One in five homes are now affected by fuel poverty, which is the highest rate in 15 years. Will the Secretary of State tell us how the various other measures that the Government have introduced, such as the housing benefit changes and the VAT rise, will help those living in urban areas such as my constituency to deal with high and rising energy prices?

The hon. Gentleman will be aware that we have announced the Warm Homes discount, which will ensure, through legislation, that the particularly high fuel bills suffered by those in fuel poverty are tackled, which is a considerable advance on the voluntary arrangements that we have had until now. I come back to the point I made in response to my hon. Friend the Member for Crawley (Henry Smith), which is that we must tackle the roots of the problem. The energy bills of people on low incomes can vary by a factor of six. If they are lucky enough to be in decent home standard social housing, they will have low energy bills, but if they are in private rented housing they may have very high energy bills. That is what we have to tackle and that is what we will do with the green deal.

I am delighted about the investigation into domestic fuel prices, which my hon. Friend the Member for North West Durham (Pat Glass) and the official Opposition have been calling for, and glad that the Government have finally acted. Rising oil prices, as my hon. Friend the Member for Streatham (Mr Umunna) and others have indicated, are only part of the problem. The Government’s record on standing up for consumers is, frankly, very poor. In recent months, we have seen price rises of between 2% and more than 9% from all the main energy suppliers, yet Ministers sit back and refuse to intervene. We have seen Consumer Focus abolished, with insouciance from the Secretary of State on what that means for consumers. At the same time, we have seen mis-billing and doorstep selling investigations showing that not all is well with the big six energy companies. The Government’s response is that we must leave them alone or they will not invest. Does he understand that that investment is customers’ money? Can he tell the House that he is entirely confident that customers are getting a fair deal?

The hon. Lady will know that it is precisely because we are not confident that customers are getting a fair deal that we have, for example, asked the OFT to look at the heating oil market and why procedures are under way to investigate doorstep selling. In all markets we must be ever-vigilant, which is precisely what the Government have been. We have put the consumer’s interests first.