Madam Deputy Speaker (Dawn Primarolo)
Before I call the hon. Member for Harlow (Robert Halfon) to move the motion, I must inform Members that there will be a five-minute limit on all Back-Bench speeches. Depending on progress, it may be necessary to review that limit during the debate, but we will begin with a five-minute limit. I hope that the mover of the motion will bear that in mind.
Robert Halfon (Harlow) (Con)
I beg to move,
That this House notes the call for evidence by the Office of Fair Trading (OFT) on competition in the UK petrol and diesel market; however, believes that the OFT and Financial Services Authority should launch a full investigation into oil firms active in the UK; calls on the Government to consider the emergency steps being taken in other G20 countries to reduce fuel prices; notes, for example, the announcement by President Obama to strengthen federal supervision of the US oil market and to increase penalties for market manipulation, and the move by Germany and Austria to establish a new oil regulator with a remit to help stabilise the price of petrol in those countries; and further urges the OFT to note that the Federal Cartel Office in Germany is now investigating oil firms who are active in the UK following allegations of price fixing.
I want to make three points today. First, petrol and diesel have never been more expensive in real terms; secondly, oil companies are uncompetitive, and are not passing on cheaper fuel to motorists; and, thirdly, there is increasing evidence that dodgy speculators are rigging the market and forcing up the international price of oil.
I should begin by saying that today’s debate is happening partly because of the work of FairFuel UK, the hard work of Peter Carroll and Quentin Willson in giving a voice to thousands of motorists across the country—in the space of two weeks, they secured 27,000 signatures—The Sun’s Keep It Down campaign, and the work of the independent Petrol Retailers Association, led by Brian Madderson. Above all, however, it is happening thanks to the Backbench Business Committee, which has found time for fuel debates that have had a significant influence on Government policy, and the many Back Benchers who are here today and who have supported me, particularly my hon. Friend the Member for Cleethorpes (Martin Vickers), the hon. Member for Strangford (Jim Shannon), the leaders of Plaid Cymru and the Social Democratic and Labour party, and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). [Hon. Members: “Western Isles!”] I did practise saying “Na h-Eileanan an Iar” in my office before the debate.
I also thank my hon. Friend the Member for Hexham (Guy Opperman), and many other Members who have been very active. As can be seen on the Order Paper, the motion was signed by more than 80 Members from all parties: this is not a party political issue, but an issue that affects every single one of us and every single one of our constituents.
First, let me say something about the cost of fuel. Of course, much of that cost is tax. We have had many debates on the subject, and I am pleased that the Government not only cut fuel tax last year, but cancelled two planned fuel duty rises. The price of petrol is 10p lower than it would have been if the last Government’s plans had been implemented. However, despite the fuel tax freeze, prices are still rising, and the Department for Energy and Climate Change says that in real terms fuel has never been more expensive.
Mr John Baron (Basildon and Billericay) (Con)
Will my hon. Friend give way?
Heather Wheeler
I thank my hon. Friend, and congratulate him and the Backbench Business Committee on securing the debate.
My constituents do not understand why fuel prices are still going up, given that we hear so often that the actual quote price has gone down enormously. Perhaps my hon. Friend will say something about that later in his speech.
Robert Halfon
My hon. Friend is a great campaigner against high petrol and diesel prices. Her constituents are very lucky indeed. She will hear me make exactly the same observations later.
Mr Baron
I congratulate my hon. Friend, and support his motion. He mentioned the freezing of fuel tax. May I suggest that the Government should think more about extending the freeze for the foreseeable future and, if necessary, taking funds from areas in which money is being spent unwisely? I am thinking of, for example, aid for India, a country that has its own aid programme. That would help many hard-pressed families and businesses up and down the country.
Robert Halfon
While I strongly believe that we should cut fuel duty as much as possible, I have to say that I am a passionate believer in overseas aid, and I am very proud that we have the overseas aid policies that we have.
Fiona O’Donnell (East Lothian) (Lab)
On a point of order, Madam Deputy Speaker. This is a vital debate, but the Minister was not present at the beginning of it. I wonder whether you could rule on whether or not that showed a lack of respect for Members and for the public at large.
Madam Deputy Speaker (Dawn Primarolo)
Fortunately the Minister is now present to hear the debate, so no further comment is required from me.
Robert Halfon
I must say that I was disappointed by the hon. Lady’s point of order. I made it clear at the outset that this was not a party political issue, and the Minister could not have done more—in his present post, and when he was the Minister responsible for apprenticeships—to show that he cares deeply about issues of this kind.
Madam Deputy Speaker (Dawn Primarolo)
I am sorry, but I could not see who the hon. Gentleman was in order to call him, because he had turned his back to me. May I remind Members that it is important for them to face the Chair? I could not recognise him from the back of his head, but I can now call Mr Lee Scott.
Mr Scott
I apologise, Madam Deputy Speaker, although some people do feel that that is my best side.
I congratulate my hon. Friend on securing the debate. Last weekend, I happened to have to drive up to Manchester, and I noticed on the M1 that there was a difference of some 12p between the price of petrol in Manchester and the price in London, although the dealership was the same. Surely there can be no explanation for that. Does my hon. Friend share my concern?
Robert Halfon
My hon. Friend is right, and I hope that he will agree with what I shall say later.
I believe that we need to cut taxes on fuel, but given that the oil market makes up nearly half the pump price, oil companies must bear their share of the responsibility. If Members do not believe me, they should listen to what was said by the former head of Tesco, Sir Terry Leahy:
“Filling up the family car has gone up 70% in two years, causing what was a steady recovery to go sideways.”
Yes, the eurozone is a problem, and so is the overhang of debt, but it is expensive energy that is really hurting people on low incomes and crushing our economic recovery.
Secondly, turning to the oil companies, data from the Department of Energy and Climate Change quarterly energy prices release show that there is now a three-week delay between a fall in oil prices and a drop in petrol prices at the pump. However, even accounting for that, a dossier from the website I founded, petrolpromise.com, proves that cheaper oil was not passed on to UK motorists for most of the last two years. That is true of April, July, September, October, November and December 2011, and March, April, and May 2012. That is nine out of the last 18 months.
Robert Halfon
I shall give way to both my hon. Friends in a moment.
In July 2011, oil prices fell by 5%, but petrol prices were unchanged. Then, in March this year, oil prices fell again by 5%, but petrol prices rose by 10%. Why? I shall now give way to my hon. Friend the Member for Mid Bedfordshire (Nadine Dorries).
Nadine Dorries
I shall allow my hon. Friend to answer that, as he is doing so well so far. In my constituency, there are students who cannot take their places at Bedford college, in part because their families used to be two-car families so there was a second car to transport them around, whereas now lots of families are going down to having just one car, because the cost of petrol has increased so much. That is having a huge negative impact on families.
Robert Halfon
My hon. Friend is right, and I shall make the point in my concluding remarks that this issue is not just about economics. Although the economics of it is important, I have sought a debate on this subject because I believe it is about social justice, too, as high petrol prices are hurting the poorest far more than the rich.
Claire Perry
I am grateful to my hon. Friend for giving way again. May I point out that in rural constituencies such as mine the situation is particularly difficult because there is not sufficient competition among petrol stations to drive prices down, and we are very dependent on our cars as we do not have public transport options?
Robert Halfon
My hon. Friend hits the nail on the head. She is absolutely right, and that is why we need an Office of Fair Trading inquiry.
Robert Halfon
I shall make a little progress, if I may.
Returning to the point I was making, when the oil price rises, it is a different story. In December last year, oil prices rose by a fraction, and the fuel price at the pumps instantly rose faster and higher. No market is perfect, but the question for oil wholesalers to answer is this: why are they always benefiting, rather than smaller forecourts or the consumer? It is not just motorists who are being crushed; small retailers are being crushed, too.
In January, independent retailers gave the OFT evidence proving that there is anticompetitive pricing, and that 300 smaller forecourts are being forced out of business every year, leading to petrol deserts in some towns. The fact is that most smaller petrol stations are forced to buy from just a few large oil companies, and at massively higher prices than their “own brand” stations down the road.
Mr Marcus Jones
My hon. Friend is making an important point. Does he agree that it is telling that whereas in 1991 there were 19,247 petrol forecourts in this country, as of last year that figure had fallen to 8,480, despite the fact that the number of cars on British roads had risen by 10 million?
Robert Halfon
The situation my hon. Friend describes is tragic, because when rural communities in particular lose their petrol station, they do not just lose a petrol station: they lose a vital community asset. May I give special thanks to my hon. Friend, too, as were it not for him and the Backbench Business Committee, of which he is a member, we would not be debating this issue today?
John Thurso
On two occasions, the OFT has looked into garages in Caithness for precisely the reasons my hon. Friend has set out. On both occasions, it found that it is not the small local garages that are at fault; rather, it is the distribution centre and the link between them and the oil companies. I am therefore delighted that my hon. Friend has secured this debate, and I hope we will now finally get to the heart of the problem.
Robert Halfon
I entirely agree with my hon. Friend. The point he makes highlights why it is so important that all of us give evidence to the OFT in order to try to force an inquiry.
Mr Jim Cunningham (Coventry South) (Lab)
I am one of the signatories to the hon. Gentleman’s motion. Indeed, last year I raised the oil price issue as I had been down in Cornwall the year before and I noticed that oil tankers were lined up. I am glad we are going to look into these cartels—if there are cartels—and the fixing of oil prices. More importantly, high oil prices feed through in that they lead to people’s cost of living rising, such as through increased bus fares or food prices because of higher transport costs.
Robert Halfon
I am grateful to the hon. Gentleman for that intervention, and for supporting the motion. As he rightly says, this affects every man and woman in the country. Those who do not use cars may well travel on buses, and bus fares have gone up because the price of diesel has gone up. He is precisely right, therefore.
Robert Halfon
I am going to make a little more progress.
Returning to the point I was making, slowly the smaller firms are squeezed out of business. Then, the “own brand” stations put their prices up. This is exactly the same kind of anticompetitive stranglehold that breweries have over pubs, as we have heard in this House.
In my constituency of Harlow, some garages are charging 140p for petrol and 144p for diesel, which is a full 10p more expensive than the cheapest forecourts in the UK. The same complaint was made in Germany about five oil wholesalers who are active in the UK. Germany’s Federal Cartel Office—Bundeskartellamt—acted quickly, and opened a criminal investigation. Why cannot we do that here in Britain, too? Austria has actively started regulating its fuel markets, and the AA has noted the impact of that in respect of keeping fuel prices down. If the oil companies have nothing to hide, they could opt for open-book accounting, and be much more transparent.
Duncan Hames (Chippenham) (LD)
I congratulate the hon. Gentleman on securing the debate. Has he noticed the practice of retail outlets to offer cut-price fuel two days a week, which they sometimes do while also offering fuel at a higher price than only a week ago? This kind of excessive volatility in oil prices seems deliberately designed to confuse motorists so as to make it as hard as possible for them to shop around for the cheapest fuel.
Madam Deputy Speaker (Dawn Primarolo)
Order. Many Members are trying to intervene, and many of them are not on the list of speakers. There are also lots of Members on that list, however, and they may not get to speak if this opening contribution takes too long. I hope the hon. Member for Harlow bears that in mind.
Robert Halfon
May I therefore ask those who want to intervene but who are not on the list of speakers to make brief interventions, and those who are due to speak not to intervene?
We have established that fuel is more expensive than ever, and not only because of tax, but because of anticompetitiveness in the oil market, and we have seen that cheaper oil is not being passed on to motorists. Thirdly, there is the allegation of price-fixing. This means that, even if oil companies were doing the right thing, hedge funds and speculators are rigging the price of oil to keep it artificially high.
Many academics and financial journalists have said that is happening. In a groundbreaking article in The Daily Telegraph, Rowena Mason showed how oil price “benchmarks” are unregulated and—like LIBOR—are vulnerable to manipulation. The petrolpromise.com dossier shows that the Consumer Federation of America has raised the same concerns, as have Deutsche Bank, professors at the Massachusetts Institute of Technology, Maryland university and the London School of Economics. Bloomberg has investigated how banks are buying up strategic stocks of oil and hoarding them on ships at sea, or in underground silos.
A whistleblower who trades the oil futures market has contacted petrolpromise.com and given us a detailed statement about how the market is rigged. He says:
“I trade the oil market on a daily basis, and every day the price is manipulated—not just the daily benchmark price but the calendar spreads that make up a large part of the daily volume. All through July, for example, there has been a massive buying-pressure on oil futures for August and September 2012. Both were trading at around a $0.5c to $1 dollar premium. This gives a false impression of the market and inflates the price of the nearby oil price”.
He goes on to say:
“One part of the problem is a lack of market transparency. In the oil futures market, huge volumes are offered and then withdrawn without trading…There is no reason for this behaviour other than to distort market prices.”
He also says that
“unlike stocks and shares where large holdings have to be declared, in the oil market nobody knows where the money is coming from”.
He continues:
“Prices are particularly manipulated at the close of business, when ‘markers’ are set on an average of trades in the last three minutes of the trading session. Every day, around these times, I see that the structure of the market is being moved to bring prices in line with the trading books of whoever is manipulating the market…This is in order to fix the price and make sure a profit is shown on their books.”
It is a long statement, but I wanted to put the key parts of it on the record.
Robert Halfon
Given what Madam Deputy Speaker said, I will take one more intervention.
Mr Robert Buckland (South Swindon) (Con)
I pay tribute to my hon. Friend for his long campaign, which I fully support. Residents and businesses in my constituency are bemused by a system that is not a free market, because it is not open and transparent. Until we get that transparency that he is so clearly adumbrating, we will not genuinely achieve success for those we represent.
Robert Halfon
My hon. Friend is exactly right; the key issue is transparency. That is why I am asking, as are all the MPs who have signed today’s motion, for an investigation not just by the OFT, but by the Financial Services Authority as well. Last year, President Obama saw the same problems in America and he took action against rogue traders and banks, bringing in tough penalties, including prison, for people convicted of illegal market manipulation. We should do that in Britain, too.
In conclusion, it would be churlish of me not to welcome the modest steps taken by the OFT. I am grateful that it has agreed to hold an inquiry into whether there should be an inquiry, although I note that when I first wrote to the OFT earlier in the year it was less interested. Its chief executive wrote to me saying that
“even where we are able to investigate an issue, we may not necessarily do so, as we prioritise our work according to available resources”.
That was Sir Humphrey’s way of saying no. However, I am pleased that the OFT is inching towards a full investigation. My hope is that this debate will allow MPs to tell the OFT what is happening in their patch and what problems residents are facing. The FSA has agreed to meet the whistleblowers, so that will happen in due course, and I urge it to take further action.
My questions to the Minister are as follows: will he write to the OFT and the FSA setting out his concerns and reflecting what Members say this afternoon? Will he investigate the issue of anticompetitive pricing and how oil wholesalers are bankrupting retailers? Will he look at why some towns, such as Harlow, seem to be stuck with stubbornly higher fuel prices than everywhere else? Some of this debate is technical, but we should not forget that this is not about the economy; I am here today because I believe in social justice and I believe that the high petrol and diesel prices hurt the poor far more than they do the rich.
Robert Halfon
I am sorry but I am not going to give way, as I have almost come to the end of my remarks.
Ours is a great car economy, but high petrol prices are creating a poverty trap, adding to Britain’s dole queues. The Office for National Statistics says that fuel prices are regressive, hitting the poorest Brits the hardest. RAC figures show that an ordinary Harlow worker is paying a tenth of their income just to fill up the family car. The Government define fuel poverty as applying to someone who spends a tenth of their income on fuel, so motorists in Harlow and across the country are facing fuel poverty. I urge the House to support the motion, and I shall end by saying that in my constituency, and no doubt across the country, the question is not whether someone can afford to have a car, but whether they can afford not to have one.
Naomi Long (Belfast East) (Alliance)
I am pleased to be able to participate in today’s debate on this important issue affecting all our constituents. From my perspective it is also timely, because recent reports have confirmed, again, that petrol and diesel prices in Northern Ireland are the highest in the UK and among the highest in Europe. The impact of this on Northern Ireland’s consumers, families and businesses is compounded by the fact that Northern Ireland has a greater dependence on road travel than other regions, because of its high level of rurality—35% compared with the 12% average for the rest of the UK as a whole—and restricted access to public transport outside urban centres. That factor was mentioned by the hon. Member for Devizes (Claire Perry).
The high prices have a significant impact on local households, on businesses and on our national competitiveness. In addition, high prices and high differentials in the level of duty on fuel between the Republic of Ireland and Northern Ireland, in particular, provide an additional incentive for fuel laundering, smuggling and stretching, which deny the Exchequer income and carry significant enforcement and policing costs. Therefore, having affordable and transparent fuel pricing is a vital component of tackling those issues.
On the impact on business and growth, I had the opportunity during the recess to meet representatives of the Freight Transport Association in Northern Ireland, and I was able again to hear at first hand about the detrimental impact that the high and rising cost of fuel is having on its members and on the wider economy. One plant hire company in my constituency told me that it was keen to expand its business and take on new staff, and could see opportunities for doing so even in this difficult economic climate, but the effect of inflated fuel prices on its business has meant that fuel has now overtaken wages as a proportion of business costs and that its ability to expand has been constrained.
Jake Berry (Rossendale and Darwen) (Con)
One of my constituents is following this debate and has just tweeted me to say that they spend £4,600 a year on diesel, £1,000 on insurance and £240 on road tax, so going to work costs them £5,840. She is considering giving up work because of the excessive price of fuel. The lady’s Twitter handle is “knot_weed”. Does the hon. Lady accept that that is difficult both for businesses and their employees?
Naomi Long
It is incredibly difficult and it is one of the stumbling blocks we will face as we try to get people out of unemployment and back into work. The cost of travel to work is a significant factor. In Northern Ireland, where the cost of car insurance is also higher than in the rest of the UK, the problem is further compounded.
I hope that the OFT investigation will particularly examine the elevated price of fuel in Northern Ireland and the reasons behind that, as it is hurting business and families, and it is hindering growth.
Mark Pawsey (Rugby) (Con)
The hon. Lady refers to the OFT investigation. Will she praise its chief executive for his courage in taking on the might of the oil companies in dealing with this very important issue?
Naomi Long
Courage is always commendable, wherever it is found, and I hope that the OFT is not only courageous but successful in its investigations.
In the limited time available to me today I do not wish to reiterate points that have already been made. I concur with most of what I have heard today, not least what has been said about the immediate response at the pumps when oil prices rise but the tardy response when they fall. That is a matter that frustrates. However, I wish to focus my attention on particular aspects of the market: supermarket pricing policy and its impact on consumers. I wish to state at the outset that my focus on this issue is not to suggest that supermarkets are responsible for all the ills of the market. They are not the worst retailers in all cases; many offer lower prices to consumers than other petrol and diesel retailers. However, the variation in supermarket pricing strategy and the prices on the forecourts are further examples of the lack of transparency in pricing more generally.
Mr William Cash (Stone) (Con)
Does the hon. Lady also agree with FairFuelUK’s central campaign that the 3p fuel duty rise, which was deferred from August, should not come into effect on 1 January 2013 as planned? Some of us voted recently for such an approach during consideration of the Finance Bill.
Naomi Long
I do agree with that. I also wish to point out that the price variation between petrol stations in a single constituency can sometimes completely outstrip the fuel duty, yet it often gets less attention. I wish to focus on that in my next remarks.
Over the past year, I have been monitoring the price of fuel in my constituency and in the adjoining constituencies of Strangford and North Down. I have become increasingly concerned that people in my constituency get a poor deal on petrol prices compared with those in surrounding towns such as Newtownards and Bangor, where the price of petrol and diesel can be 6p a litre cheaper. One of the reasons for that differential is the impact of supermarkets on local pricing. Although they account for only 4% of Northern Ireland forecourts, their market share is about 25%. Supermarkets such as Asda operate a quasi-national pricing policy, but others do not and that can lead to significant anomalies in the pricing between stores in the same chain, and also in the prices offered at other local retailers as a consequence.
Naomi Long
No, because I want to finish my point, if I may. Asda does not have a national price policy, but it does have a national cap on prices, with the flexibility to reduce the price by 2p where competition is particularly fierce. However, many of the other supermarket retailers have no such constraint. Although people assume that if they purchase petrol at any Tesco or Sainsbury’s petrol station they will get the same deal—they therefore fail to shop around—that is simply not the case.
I will cite one example. At the Tesco petrol station in east Belfast, the price of petrol can be anything from 4p to 6p a litre more than at a Tesco petrol station in Bangor or Newtownards, which are about 9 miles away. In both those towns, the reduced price offered is almost certainly due to the fact that the Asda supermarkets in those towns offer petrol forecourt services, which Tesco responds to. Tesco competes with the local prices in the area but feels under no obligation to offer consumers the best value price for the commodity they are trying to purchase, which I think is wrong. The price differential is significant and has been monitored by the Consumer Council for Northern Ireland, following a meeting between my colleagues and the council earlier this year. Two petrol stations owned by the same supermarket chain and less than 9 miles apart, when monitored over four months, showed a variation of 4p to 5p a litre for petrol and 5p to 6p a litre for diesel.
The justification that the petrol stations are responding to local competition is no comfort whatsoever to consumers who might have to pay £3 more to fill up at one when they could fill up for much less at another site owned by the same supermarket down the road, but they would not necessarily be aware of that. I reiterate that the focus on supermarkets is not simply to suggest that they are responsible for the problem, but it shows the lack of transparency—the opaqueness—in how petrol prices on the forecourts are reached and the lack of choice that consumers then have in making their decisions. I want transparency and openness, I support the motion, and I commend the hon. Member for Harlow (Robert Halfon) for bringing the matter before the House.
Roger Williams (Brecon and Radnorshire) (LD)
I hope to speak in the dairy industry debate in Westminster Hall later and so apologise to hon. Members if I have to leave this debate early. I would like to say a few words on behalf of rural areas, and, indeed, very rural areas, where fuel prices are of the utmost importance, because not only is there a lack of public transport but access to retail services, health services and education is over long distances and takes a great deal of fuel. I congratulate my hon. Friend the hon. Member for Harlow (Robert Halfon) on securing the debate. He has given me some information indicating that in my constituency petrol is sold at up to 142p a litre and diesel is sold at up to 149p a litre. I am not surprised, because some of our independent retailers operate in very remote areas, and we are very pleased that they have persisted in doing so.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
My hon. Friend’s constituency is very close to mine. Does he share my concern about the pace of closures of small outlets that service local villages, which is obviously putting pressure on local constituents?
Roger Williams
My hon. Friend is quite right, and I will come to that point in a moment. Certainly, petrol stations such as the community shop and petrol station in Llanbadarn Fynydd, which is at least 10 miles away from any other facility, and the one operated by Mr Tay in Ystradfellte are important facilities for very rural communities. A number of supermarkets have recently opened in my constituency; we were Tesco-free for many years, but Tesco has now come to Llandrindod Wells and to Ystradgynlais.
Glyn Davies (Montgomeryshire) (Con)
I thank my hon. Friend and colleague from Powys for giving way and allowing me to associate myself with the fantastic speech made by my hon. Friend the Member for Harlow (Robert Halfon) and the work he has done. I hope that my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) will agree that this has a particular resonance for rural areas not only because of the points he has raised about higher prices and the difficulty in reaching services, but because they are low-wage areas and so the part of the weekly budget that has to go on fuel is much higher. We are talking about social justice, and we want social justice for rural areas as well.
Roger Williams
My hon. Friend makes an important point about the affordability of fuel in rural areas. Indeed, Morrisons has just opened a supermarket and petrol forecourt in Brecon; it has reduced prices, and my constituents welcome that. My main purpose in speaking today is to make the point that we still need independent retailers, because it is only their presence that keeps the supermarkets honest. If the supermarkets had a monopoly in rural areas, they would certainly increase their prices.
Roger Williams
I am sorry, but I do not have time to give way.
I am kept informed of issues relating to petrol distribution, and indeed to retail, by Mr Skinner from Glanusk services in Sennybridge. He is an independent supplier of fuel to his community, and he is fiercely independent. He has provided huge service to his area. I remember that the winter before last, during the very cold period, when tankers were unable to access houses, Mr Skinner was selling heating oil in drums. He is really a saviour for the area. He tells me that the distributors who supply him with petrol and diesel are declining in number as one operator takes over another, which is taking competition out of the distribution system. In those circumstances, the independent supplier of petrol and diesel finds it very hard to get a competitive price so that he can remain in business. When this inquiry takes place, my representations will be on behalf of those independent retailers in very remote areas, because we need them in the countryside in order to maintain competition and ensure that the supermarkets do not take advantage of a monopoly position and make fuel unaffordable for my constituents and those in other rural areas.
Madam Deputy Speaker (Dawn Primarolo)
Order. A large number of Members still wish to participate in the debate, which is due to end at 3.30 pm. I am therefore reducing the time limit to four minutes, and if necessary I will reduce it further. The more interventions there are, the slower progress we make. Those wishing to speak who intervene will find themselves moving down the list. I hope that Members will bear that in mind.
Fiona O’Donnell (East Lothian) (Lab)
I will bear that in mind, Madam Deputy Speaker. I want to begin by thanking the hon. Member for Harlow (Robert Halfon) for giving everyone in the Chamber, on both sides, the opportunity to stand up for hard-pressed motorists in our constituencies who are struggling with the increase in fuel prices at the pumps. It is clear to all that there are people who are gaining by manipulating markets and that consumers are not seeing the benefit when oil prices fall. We must also be clear that the OFT has announced not an inquiry at this stage, but a call for evidence. I am sure that everyone in the House will want their constituents and local businesses to get in touch with the OFT and present an overwhelming case for an inquiry so that we can see some progress.
The hon. Member for Harlow said that this is not a party political issue, but I have to say that I do not think we see the issue in isolation. Thanks to the opportunity he has given us today, a large number of my constituents have been in touch, and not many of them said, “The only problem in my life is the price of fuel at the pumps.” We also have the problem of rising food prices.
Fiona O'Donnell
I will not, because I want as many Members as possible to be able to contribute to the debate, as you have suggested, Madam Deputy Speaker.
It is also about rising food prices, which rose by 4.6% between March last year and March this year, and rising energy prices. The Prime Minister promised to take action to stop excessive rises in energy prices. I have asked him questions about both food inflation and energy prices, but we have not seen any action from the Government, so I hope that the hon. Gentleman will be more successful in convincing the Prime Minister to do something to bring down petrol prices.
Today’s debate is not just about the speculators and the oil companies that are making money off the backs of our constituents; it is about those individuals who are struggling to find work and, increasingly, having to travel further to do so. I want to talk about one of my constituents who has been in touch, a 40-year-old single man. He has been in work all his days, apart from a 16-week period when he could not find work. He is currently having to make a 48-mile round trip each day to get to work. That is taking a third of his salary, which leaves him unable to buy clothes; he told me that he has not bought any new clothes for at least three years. It also means that he is struggling even to put food on the table. The Government have to take some responsibility because their economic policy is hurting people and making it much more difficult to cope with rising prices.
I want to touch briefly on a policy that is also impacting on poorer motorists, who, as the hon. Member for Harlow rightly said, are suffering more than anyone else. I understand why we incentivise people to buy more environmentally friendly cars—that is absolutely the right thing to do—but the poorest motorists struggle to come up with the money to buy a car that allows them to benefit from the policy.
In conclusion, I again congratulate the hon. Gentleman. I hope he will be able to convince the Government to act on fixed pricing.
Andrew Bingham (High Peak) (Con)
Chancellors of all persuasions have increased tax on fuel for many years, and that is why we have the highest fuel taxes in Europe and the second highest in the world. The last Government embraced that tendency with enthusiasm by introducing 12 increases in fuel duty. This Government, however, have done more than any other to help the motorist, by voiding two years’ worth of the last Government’s tax increases. I also welcome the Chancellor’s deferral of the August rise earlier this year, which many of us wanted.
Across the country, businesses and individuals have been hit by fuel costs. When the price of oil goes up time after time, so does the petrol price, yet when the oil price comes down, the petrol price remains steadfastly where it is. This weekend, prices came within about 3p of a record high.
On top of that, there is a discrepancy between rural and urban areas. Fuel is about 133p a litre at the pumps this week; in High Peak, it is as much as 144p a litre—a 10% premium.
Julian Sturdy
I thank my hon. Friend for giving way. Do not oil companies and supermarkets often sell fuel at inflated prices in rural areas to offset the cost of production and the lower prices in urban areas? That is having a huge impact on retailers as well.
Andrew Bingham
Absolutely. Unfortunately, rural residents like me have been beaten into submission and pay high fuel prices.
Furthermore, cars are more vital to people living in rural areas than to those living in urban areas. Many Members will not know the small village of Edale in my constituency, although the walkers and ramblers among them will. My hon. Friend the Member for Hexham (Guy Opperman) set off from Edale on his charity walk of the Pennine way earlier this year.
Mr Rob Wilson
Is my hon. Friend as disappointed as I am about the contribution of the hon. Member for East Lothian (Fiona O’Donnell)? She complained about the Minister being late, yet few of her colleagues have bothered to turn up for what she described as a very important debate.
Andrew Bingham
I completely agree. A couple of days ago, I was in the Chamber for the Opposition day debate about universal credit. The Opposition made great play of the fact that there were more Members on their Benches than ours, so let us turn it back on them: many Government Members are here because we care about the motorist and the cost of fuel.
I return to the people in the rural areas of High Peak. The residents of Edale face a 14-mile round trip to a post office. They have to go 10 miles for a doctor or dentist. All those journeys have to be made using their own transport. In rural areas, a car is a necessity, not a luxury. If we add all those journeys together over a year, the extra fuel costs can amount to as much as £400 to do the 2,000 miles that people in urban areas do not have to do. Those rural residents travel further and pay higher prices at the pumps.
Andrew Percy (Brigg and Goole) (Con)
Is it not also true that in rural northern England the problem is compounded by the fact that our average salaries are so much lower?
Andrew Bingham
My hon. Friend makes an excellent point with brevity, and I appreciate that.
We hear about deprivation in different parts of society. There is a thing called rural deprivation. Yes, I am lucky to represent and live in a beautiful area, but we pay for that through higher fuel costs and our increased reliance on fuel. Lots of other rural communities up and down the country suffer the same misfortune.
We are lucky that our Government are in power, because we are 10p a litre better off than we would be if the Labour party were still in government. However, we pay more in rural areas. The difference goes to the oil companies, not necessarily the Chancellor of the Exchequer. I believe that the Government are doing everything they can to keep fuel prices down, but it is time that the oil companies started to play their part and did what they could. We need to make motoring affordable. I welcome the call by the Office of Fair Trading for information on the UK petrol and diesel market; I hope that it will shed enough light to inspire a full investigation. We need open and transparent oil trading.
Graham Jones (Hyndburn) (Lab)
Is the hon. Gentleman suggesting that markets do not work?
Andrew Bingham
Far from it; the market would work perfectly if we could see a little more of how it works. The issue is about ensuring that there are fair petrol prices and that when the oil price comes down, so does the petrol price.
Mrs Bingham complains that I do not take her anywhere expensive any more, but last week I took her to a petrol station in High Peak. [Laughter.] I spoil her.
In the interests of brevity, I will conclude. I hope that the action of the OFT will lead to an investigation into fuel prices. I hope that it will do it quickly and fairly and that the oil companies will react and do what we are doing as a Government to help to get the prices down. They should do that quickly to help hard-working families in High Peak and across the country and to help get the economy going, enabling people to put fuel in their cars and live their lives as they wish.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
We are facing higher fuel prices in real terms, as the hon. Member for Harro—sorry, the hon. Member for Harlow (Robert Halfon) said; I have as much difficulty in pronouncing the name of his constituency as he does in pronouncing the name of mine.
I draw the Chamber’s attention to a debate here on 7 February 2011, when I said that prices in my constituency were a shocking £1.45 a litre. Now they are between £1.52 and £1.59 for diesel, with petrol typically about 4p a litre less. Those prices take into account the 5p rural fuel derogation. I make this plea to the Government: in the modern day, a 5p derogation is not enough. We might have to go to Europe and ask for a larger one.
I point out to the hon. Member for East Lothian (Fiona O'Donnell), who was particularly partisan, that when I asked for a larger derogation in the last Parliament, I was told by the Labour Government that the introduction of such a derogation would mean that people travelled to the islands to buy fuel that would still have been more expensive. I did not follow the logic then and I do not now.
Mr Alan Reid (Argyll and Bute) (LD)
The hon. Gentleman is right. We raised the rural fuel issue with the last Government, but nothing was done. This Government have introduced the rural fuel derogation. Like the hon. Gentleman, I would like it to increase. Will he support a campaign to see the derogation extended to remote parts of the mainland, such as the Kintyre peninsula?
Mr MacNeil
The hon. Gentleman makes a great point, and a serious one, about rural places in mainland Scotland. Places such as Argyll, Caithness, Sutherland and Lochaber, which I must not forget as I worked there, would benefit from the extension and increase of the derogation.
It is interesting that, as the motion states, other countries, from the United States of America to Austria and Germany, are regulating. Ultimately, we will have to do the same in the United Kingdom before the economy is totally strangled. Whether it is the fault of the companies, the distributors, the speculators or the retailers, we need to get the issue sorted for the good of the economy. Indeed, retailers would be quite pleased to have greater regulation or transparency, especially as they are sometimes tied to long-term contracts with distributors, which makes it difficult for them to shop around and means that the price of fuel cannot be brought down in marginal areas.
Transparency might be the answer, but we must bear it in mind that in some areas and markets prices can go up if the seller is reluctant to give discounts to certain buyers. For that reason, regulation must be taken seriously before the economy is strangled. We cannot leave the foot pressing harder and harder on the jugular in the neck of the economy.
John McDonnell (Hayes and Harlington) (Lab)
I apologise for intervening and then leaving, but I am going to meet a group of people with disabilities. This is not just about fuel in the tank but about meeting people’s heating costs. The heating costs of someone who is elderly or has disabilities are always higher. Now, yet again, many people are having to choose between heating and eating. That is why we need to control these prices.
Mr MacNeil
My constituency has the highest rate of fuel poverty in the UK, so I know that the hon. Gentleman is absolutely correct, and I am grateful for his intervention. People are having to make these choices when they get up on a winter’s day, especially the elderly and vulnerable.
This is a poll tax on jobs and on economic activity. The TaxPayers Alliance has produced work that shows that in many places, of £30 paid at the till, £18 goes in tax. That is in line with my own research. In the case of a litre costing £1.50, 58p is tax and 28p is VAT. A total of 83p was paid in tax, but it will be more, and my constituency has the highest tax per litre in the UK.
We must look at what is happening in the supply chain when fuel goes from the refinery to the distributors and then leaves the depot and arrives at the retail forecourts. The best estimate that I can work out from rumours is that in my area, having left the depots, it is going to retailers at about £1.20 or £1.25 per litre excluding VAT. With VAT, it comes to about £1.50, and the rest is the retailer’s margin, which is usually 5p, 6p or 7p. My figures are approximate but they give an idea of what is going on. I can best ascertain that the pre-tax cost of a litre is about 65p.
The Government have promised to bring in a fuel duty stabiliser, and I encourage them to do so. That is what the Scottish National party called it; they could call it a fair fuel regulator, or whatever. That would control spikes in fuel prices, alleviating uncertainty and helping businesses to plan in an uncertain world.
High fuel prices hit the poorest most, and they hit jobs and families. They hit rural constituencies and island constituencies. We cannot constantly come back to this Chamber with the same complaints year after year, Government after Government. I could not tell the House how many speeches I have made about this, but there have been many over the past seven years. There has been some progress in recent years with the rural fuel derogation, and I am thankful for that, but more has to be done. It is the job of Parliament and of Government to solve the country’s problems. We need regulation and we need to bring in the fair fuel stabiliser for the hard-pressed motorists, workers and families of this country.
George Freeman (Mid Norfolk) (Con)
I shall follow your strictures, Madam Deputy Speaker, by keeping my foot to the pedal and not taking interventions.
I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on his dogged, determined and diligent campaigning on social justice issues. Harlow is lucky to have him, and so are we in this House. This is a key issue because it goes to the heart of the cost of living, it undermines growth and economic recovery, and it raises important issues to do with market failure and regulation. I welcome the news that the review will look into the lack of competition at the pumps and strongly support my hon. Friend’s call for an investigation into the oil market.
I want to focus my comments on the pressures facing my constituents and the rural economy generally. Some garages in Mid Norfolk are currently charging £1.40 for fuel, and in the past that has risen to £1.45. The cheapest fuel in Britain today is £1.32 and the average is £1.38. Rural communities are paying more for their fuel. As others have said more eloquently, rural communities are dependent on cars for travel; there is little or no alternative. A car is not a luxury. Many of my constituents, whose average income is £18,000, have to run two cars to maintain a family. This affects the whole community—not only families and commuters but pensioners, those who depend on public transport and have to recoup the cost, and the public sector. As my hon. Friend said, this goes to the heart of social justice in serving the most vulnerable in rural and marginal areas.
Inflation is another factor. The market is not working, and that is deeply inflationary. The rural economy, particularly food and farming—our biggest manufacturing sector—is being damaged, and that is hugely significant in terms of our economic recovery. I draw Members’ attention to the Norfolk food and farming festival that is taking place here today. For anyone who has not had a chance to pop over and celebrate our produce, I ask them please to do so.
Recent data show that when the last fuel rise took place, traffic levels generally fell by 1% while in rural areas they fell by 5%. That highlights the degree to which rural areas are particularly sensitive to, and dependent on, fuel prices. There is nothing progressive socially about condemning poor families to live in isolated rural communities unable to play their part in society, and nothing progressive economically about penalising the car usage of those in rural and marginal areas. The rural economy, particularly in East Anglia, has the opportunity to drive and lead a more sustainable model of economic growth, with small businesses back in the countryside and less commuting, but that will not happen unless we support the oil of the economy, which is fuel.
I welcome the many measures that the Government have taken. They have frozen fuel duty, invested more than £4.5 billion in relief and petrol is now 10p cheaper, saving families more than £159 on average every year. I also welcome the fair fuel stabiliser. There are no simple answers. The truth is that the previous Government bequeathed us a horrible legacy of debt and a dependency on the fuel levy, and pennies at the pump in relief cost the Treasury billions, which undermines our effort on the deficit and puts at risk our low interest rates.
I hope that the Minister will acknowledge the real impact of this pernicious tax on the most vulnerable, particularly in rural and isolated areas; explore all and any options for targeting relief at those who need it most; take this opportunity to confirm the excellent initiative on the fair fuel stabiliser; and put the Government’s and his formidable political weight behind this call for an inquiry into the serious allegations of market rigging that have been highlighted, commendably, by my hon. Friend.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I also congratulate the hon. Member for Harlow (Robert Halfon) on securing this debate and will begin where he finished—on the issue of fuel poverty. When we talk about fuel poverty in this House—we have done so for many years—we usually consider it in terms of household energy bills, but from what I have heard this afternoon, many are facing the same problems as those experienced in my constituency, where a low-wage economy in a rural area means that people are having to spend more on fuel for their family car. As has been said, people who have to use their car in a rural area such as mine and elsewhere are being driven into fuel poverty. People are even being driven to the point of wondering—we have heard this once already—whether they can continue to go to work and afford to run their car, because they have a 30, 40 or 50-mile round trip every day to work. That is becoming less viable for some households.
There is no doubt that something is happening in the marketplace. I, like Members from all parties in this House, wrote to the Chancellor to say, “Please do not impose the 3p fuel duty in August,” but what did we witness anyway? A standard note produced by the House of Commons Library shows that the price of fuel at the pumps increased by 3p. Something is happening. No matter what we do—if we reduce the duty, for example—something happens. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) mentioned the rural fuel derogation. I strongly suspect that, despite the 5p reduction, prices still went up, so the 5p fall was wiped out entirely. Manipulation is going on in the marketplace.
Mr MacNeil
I am grateful to the hon. Gentleman for raising that point. The price of fuel went down and up in a certain way, as if to disguise what was happening, so it was difficult to get to the bottom of what was going on because fuel is not tied to a regulator.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. On interventions, it is not fair for Members who have already spoken to use up the time of others. A lot of Members want to get in and we ought not to be so generous.
Mr Brown
Thank you, Mr Deputy Speaker—I will not let the hon. Member for Na h-Eileanan an Iar get back in again. The door is closed. He is right, however: whether something is disguised or manipulated, it is happening.
I do not want to have a go at the hon. Member for High Peak (Andrew Bingham)—he is a decent guy—but let me put the record straight for him. On 11 occasions over nine years, the previous Government either froze or cancelled the fuel duty increase that had been in the Budget. We are all battling to put this right.
As oil prices increase, so do the costs of heating oil and liquefied petroleum gas. The last peak in pump prices was back in the summer of 2008, and at that time the price of fuel at the pumps was driven by crude oil at a price of $140 per barrel. Last week, according to The Daily Telegraph—not my favourite read—the price of crude oil was $113.49 per barrel, so we are a long way off the $140 per barrel that resulted in the peak in prices during the summer of 2008. There is manipulation. I do not think that there is any doubt about that.
I say again to the hon. Member for Harlow and others that I want VAT to be reduced from 20% back to 17.5%. The increase to 20% put fuel prices up by 3p or 3.5p a litre, which is the highest increase under the coalition Government. A reduction in VAT would help, but we must be wary to ensure that the oil companies do not try to squeeze the prices a little more and recover that money.
I am delighted that the Office of Fair Trading will look into this matter. I was surprised when it wrote to me two weeks ago to say that it would do so because of the representations that I and others had made. I say to colleagues in this House, let us not hold our breath, because the OFT’s previous work, especially in the more rural locations in Scotland, came up with nothing. We need answers about what is going on in our communities and about what consumers and our constituents are being faced with. We therefore need the evidence to go to the OFT and for it to have a robust inquiry to put the matter right.
George Eustice (Camborne and Redruth) (Con)
I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing this debate and on his tireless work on this subject.
This matter is incredibly important to many of our constituents, not least in areas such as Cornwall. Many people have spoken about the problems that rural areas face, but the problem is not just the rurality of such areas, but the fact that they are peripheral and a long way from the markets. Cornish businesses have to transport their goods some 300 miles just to get to London, which involves a huge additional cost. The 38% increase in the fuel price since 2007 has had a massive impact.
I associate myself with the comments of my hon. Friend the Member for High Peak (Andrew Bingham) in which he congratulated the Government on what they have done on this issue. They have not introduced any of the tax rises that had been planned and, as a result, fuel prices are supposedly 10p lower than they would have been. However, there is no point in cutting taxes if the money that is saved ends up not in the pockets of our constituents, but in the pockets of the people who are rigging the fuel market.
Penny Mordaunt (Portsmouth North) (Con)
As well as the practical hardships that my hon. Friend has touched on, does he agree that what gets up our constituents’ noses is that while they have been working harder, making sacrifices and helping each other out to get the economy back on track, these people might have set out to rip them off?
George Eustice
That is absolutely right. I was going to say that one of the great indictments is that prices are always quick to rise, but very slow to fall when the markets go the other way, as my hon. Friend the Member for Harlow pointed out in his opening remarks.
I was interested in the proposal of the former Secretary of State for Transport, my right hon. Friend the Member for Putney (Justine Greening), for a transparent wholesale price tracking system, through which the major fuel distributors would voluntarily make clear the basis on which they calculate their prices and demonstrate the link between the prices that they charge at the pump and the wholesale market price.
I am concerned about the impact of supermarkets dominating the market in local areas by reducing their prices to snuff out other retailers and, once they have the pitch to themselves, putting the prices back up. Hon. Members have spoken about the disparities between different areas. Cornwall has lost all its Jet garages, which have been taken over by Texaco. The already limited choice of retailers has become more limited.
The biggest scandal is the allegation of price fixing. I welcome the OFT’s call for evidence. It should follow that through with an investigation. As a Conservative, I have no problem with markets when they work properly. In fact, I think that speculation has a role to play. The futures markets have a role to play in helping businesses manage risk. However, my hon. Friend the Member for Harlow gave evidence that there might be significant rigging of the market, with certain futures being placed and then withdrawn for no reason and a total lack of transparency about who holds those futures, which is a real problem. As Conservatives, we will object if there has been market rigging in the way that we saw with LIBOR. For that reason, I believe that the OFT should follow through its call for evidence with a full-scale investigation.
Mr Iain McKenzie (Inverclyde) (Lab)
I congratulate the hon. Member for Harlow (Robert Halfon) on securing this important debate. Many of my constituents have contacted me on the subject of fuel prices over the past few months, and they are extremely concerned, because there is no doubt that high fuel prices are hitting them hard at a time when their families are being squeezed by higher food, gas and electricity prices.
In fact the situation is even worse in my constituency, because one large retail outlet has a near-monopoly, which means that petrol can cost drivers in my area an average of between 3p and 5p a litre more than it does people in our neighbouring constituencies. That is tending to drive business and customers out of Inverclyde and into neighbouring areas in search of cheaper fuel to fill up their tanks.
Bizarrely, that large retail outlet, Tesco, tells my constituents that if they spend between £80 and £100 in the store they will receive a voucher giving them between 3p and 5p off a litre of petrol. How generous of it, and how astute at the same time—it is winning both ways. How is it that someone can shop in the store and get 5p off at the pump, but not pull into the petrol station and receive the same price? It makes me wonder at what price Tesco is receiving its petrol. We have to examine the whole supply chain by which fuel reaches our pumps, because at each step of the way people are making large profits.
Inverclyde could not be described as a rural constituency, but as far as such retailers are concerned we are a captive constituency. When the oil prices go up we see an almost instant increase at the pumps, but when oil prices go down it seems to take for ever for the price to get lower, if it does at all. Along with my constituents, I therefore welcome the debate so that we can hold the fuel retailers to account and have them justify not only the high price of fuel but their sluggish reductions to fuel prices.
I must point out that it is not only the big, bad oil companies and fuel retailers that are hiking up the price of petrol. The Government are also adding to the cost. They hiked up VAT to 20% and applied it to fuel, and we know that high fuel tax hits the poorest in our society who need their cars the most, either to get to work or to visit people. It is not big businesses but hard-working families who pay that money, and those families are finding it increasingly expensive to fill up their cars. High fuel prices are having a devastating effect on my community, and a cut in fuel duty would stimulate growth and create jobs.
Only the other day I was told that a staggering 30% of lorries carrying goods from Scotland to the south-east are from outside the UK, and so have the privilege of being able to fill up with cheap diesel and petrol from the continent. If the Government are really serious about making an instant impact at the pumps, they should take the first step and cut VAT on fuel.
Jake Berry (Rossendale and Darwen) (Con)
I start by paying tribute to my hon. Friend the Member for Harlow (Robert Halfon) for securing the debate. It is my privilege to speak in it. I read his allegations in The Sun today about the manipulation of oil prices. A lot of us have been outraged by the alleged manipulation of LIBOR, but the manipulation of fuel prices will have much more of an effect on our constituents. They feel the pain that it causes every single week when they fill up their car.
I want to focus on the local market in my constituency of Rossendale and Darwen. I spoke about it last June and in my view it was then and remains a broken market. Rossendale is near the town of Bury and Darwen is near the town of Bolton, so, to provide a comparison, I visited petrol stations in both places. At its peak, there was a 5p difference in fuel costs between Bury and Rossendale and between Bolton and Darwen. Rossendale and Darwen are both ribbon developments, like so many of the Lancashire industrial towns along the river valley, so someone who lives in either place is forced to commute long distances because of the nature of our community.
At this point, I want to pay special tribute to my local paper, the Rossendale Free Press—I hope it will publicise this speech, of course. With me, earlier this summer, it launched a “Rip off at the pumps” campaign. This is a positive example I can give to colleagues of where they can lead and affect the price of petrol or diesel in their own patch. We took the price at our local Tesco and compared it with the price at the Asda in Bury, and, as I said, there was a 5p difference. We called on people who lived locally not to buy their fuel at Tesco until that price was brought down. I personally met representatives of Tesco here in Westminster and asked how they arrived at that price. They told me that they drew a 3 mile geographical line around the Tesco store in Rawtenstall and used prices in that area as a comparison and basis for theirs, but what they did not say was that the only other major petrol retailer with which they were comparing their prices was also Tesco. They were both fixing and making the price in one market, which is why I think that the market is broken.
Earlier today, I checked the price difference again following the campaign run by me and the Rossendale Free Press. Petrol in Asda is Pilsworth is now £1.37.7 a litre, whereas at the Tesco in Rawtenstall it is £1.37.9. We have taken the difference down from 5p to less than half a pence. That is something positive that we can all do as Members of this House. We should not suffer discrimination at our petrol pumps for living in a rural community and we should do something about it. I hope that by running their own “Rip off at the pumps” campaigns, hon. Members can bring prices down in their area.
Jake Berry
I am sorry, but I will not.
The Government have taken action. People who have to put fuel in their van to go to work or in their car to go to school feel the squeeze at the pumps and I pay tribute to my right hon. Friend the Chancellor for freezing the fuel duty rise and saving everyone 10p a litre, putting the fuel back in our economy so that people can go to work.
Justin Tomlinson (North Swindon) (Con)
I congratulate my hon. Friend the Member for Harlow (Robert Halfon), who has a fantastic track record of leading on this extremely important issue. This is yet another debate in which I am pleased to support him. I am also proud to be a member of the FairFuel UK and PetrolPromise campaigns, which are bringing this issue to the forefront.
Petrol prices have been increasing for decades under the twin pressure of rises in fuel duty and oil prices. The previous Labour Government hiked fuel duty 12 times in 13 years and it always amazes me that the Opposition are in such denial about that. They were very quick to take credit when they increased spending on public services, so they should also take credit for how they paid for it. With uncertainty in the middle east and limited resources, global oil prices will continue to rise. Together, those factors have stretched motorists to breaking point, so that many of them are priced out of their cars and businesses struggle with additional costs.
I welcome the Government’s move to scrap Labour’s further six planned rises and the modest but welcome 1p cut in fuel duty. Fuel is about 10p cheaper than it would have been had the former plans gone through, which more than covers any changes under VAT.
I accept that the wrecked economy we inherited means that money is tight and that we cannot just wave a magic wand. I surveyed the good people of my constituency, however, and asked them what their priority would be if they were Chancellor and suddenly inherited some money to play with. The choices were VAT, income tax, inheritance tax, capital gains tax, corporation tax or fuel duty. Fuel duty was by far the most popular, by a significant distance. I asked residents why that was the case, and I will use the Government’s changes to income tax thresholds to illustrate my point. The changes to income tax were welcomed because they took 2 million people out of paying tax altogether and benefited 24 million others. However, people could not say how much they had benefited personally, but the one tax they could describe was the cost of fuel, which is a clearly displayed, tangible cost. If we do one thing to kick-start and boost consumer confidence, it should be to cut fuel duty. My plea to the Chancellor is this: as and when he finds the money, a cut in fuel duty should be the No. 1 priority to boost the economy.
Duncan Hames
My constituent, Michael Hudston, campaigns assertively on this issue and he is acutely aware of how much tax he pays. When he fills up at the pump, he pays an effective rate of tax of 146%. Interestingly, three years ago it was as high as 200%, which demonstrates the point my hon. Friend was making, which is that, so far, tax changes have not made the situation worse in the way alleged by Labour Members.
Justin Tomlinson
I thank my hon. Friend and agree with his comments. I remember that on the day of the 1997 general election—not a particularly happy memory for the Conservative party—I paid 57p a litre to fill my car.
My hon. Friend the Member for Harlow presented evidence about how the oil industry is acting, and how it is quick to pass on any rise in oil prices but slow to pass on cuts, and all parties are united in the belief that much needs to be done. The statistic given was that for every 10p fall in the wholesale price, an average of 7p is passed on to the consumer. I therefore welcome the decision by the Office of Fair Trading to investigate the actions of the oil market. All local residents will be keen to know whether they are being defrauded and ripped off, which I think we all suspect is the case.
We must accept that we will not see cuts to fuel duty in the short term, and that world oil prices will continue to rise. As demand grows and resources are limited, pressure will increase and we must look at the alternatives. I welcome the fact that in my constituency, Honda UK, in conjunction with BOC, has taken advantage of Government grants and created the first open-access hydrogen refuelling station. My hon. Friend the Member for South Swindon (Mr Buckland) and I lobbied hard to ensure that that remains in place. The key for those alternatives is the availability of refuelling infrastructure for all the different resources. We must invest in those alternatives so that we can deal with the pressures that I have mentioned.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am going to drop the time limit to three minutes in order to get everybody in. If anybody intervenes again, somebody will drop off the end of the list, and I am trying not to let that happen.
David Mowat (Warrington South) (Con)
I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing this debate; he has been redoubtable on this important subject. Fuel prices are indeed regressive, and it is therefore important to look at the evidence for the issues that the OFT is to consider. I am pleased that the OFT will consider this matter, and that the previous Secretary of State for Transport asked for more transparency in the wholesale market. Markets need to be seen to be working by being transparent.
Let me return to the previous OFT review on this issue in 1998. It concluded that the market was not rigged, with the possible exception of the Scottish highlands and islands, which have particular issues about clear market share and so on. Since the 1998 report, the structure of the market has changed and oil companies have become much less dominant. The retail market is now 40% supermarkets, 30% oil companies, and 30% independent—the oil companies have left the retail market. There are seven refineries in this country—possibly now six because the one at Coryton has closed—and the oil industry, as understood in this debate, owns two of them.
Let us look at the evidence. We have heard about postcode pricing, and it is true that there are differences in prices. Hon. Members have also said that the fact that oil prices are the same demonstrates that the market is rigged, and we must choose which of those two problems is greater. If prices are the same, it is arguably a perfect market. Perhaps it is true that prices go up more quickly than they come down, but the OFT must look at the evidence.
The counter-evidence on the cartel is that oil companies are leaving UK. If there is a cartel, it is not a very good one—it does not appear to have been done well. Further counter-evidence is that the refinery and retail margin in the UK is among the lowest in Europe. That is odd. Hon. Members have mentioned regulation in Germany, but Germany has a higher retail and refinery margin than the UK, as have Spain, Sweden, Italy and others.
If Members have evidence of a cartel, they must put it before the criminal authorities. A cartel is a criminal offence and directors can go to prison. We should not use the word lightly.
Mr Marcus Jones (Nuneaton) (Con)
I congratulate my hon. Friend the Member for Harlow (Robert Halfon), who is a doughty campaigner on fuel prices. He should be thanked by the general public throughout the country for that. The problem is dear to many of my constituents’ hearts for a number of reasons, and like most right hon. and hon. Members I have had postbags full of correspondence from my constituents—not just in the last few weeks, but for many months.
I wholeheartedly support the motion and concur with many of the views that hon. Members have expressed today. We urgently need an investigation by the Financial Services Authority and the Office of Fair Trading. That is the will not only of hon. Members who have signed the motion, but of the public, so strongly do they feel. Oil companies and traders come up with all sorts of reasons why what hon. Members have said today is not true, and say that they are urban myths, but neither hon. Members nor the public are convinced by their arguments.
I should like to mention one or two unanswered questions that hon. Members have not mentioned. They mentioned the differential. In my constituency, which is probably one of the most urban county constituencies in the country, there is a differential of between 9p and 10p from one side to the other—a distance of five or six miles—which is astounding.
Twenty years ago, many of us chose to buy diesel cars because diesel was far cheaper than petrol. All of a sudden, the cost of diesel seems to have accelerated and outstripped the cost of petrol—on average, diesel is currently about 5p a litre more expensive. There must be a reason for that, and we need an answer.
I am short of time and have not mentioned most of the things I wanted to mention, but I implore the Minister to continue to pursue this issue. Please do not let the regulators off the hook, and please urge them to put a solution in place. We need a proper investigation—with teeth—that has an outcome for our constituents.
Richard Fuller (Bedford) (Con)
My hon. Friend the Member for Harlow (Robert Halfon) is the driver’s friend. For many years, people who drive cars doubted whether any Member of the House—particularly Labour Members—favoured what they did in their daily lives, so it must be a tremendous joy for them to have my hon. Friend in the House. He is not just the driver’s friend: as we have seen today, he is a friend of families on low incomes, of business, of growth, and of people who live in towns and the country alike. This issue affects us all, so I add my voice to his, and to those who have congratulated him on securing this debate.
Like my hon. Friend the Member for Rossendale and Darwen (Jake Berry), who mentioned his local newspaper, I would like to congratulate my local newspaper, Times and Citizen, in Bedfordshire, which has been running a campaign supporting fairer fuel prices in my local town since the beginning of this year. People are incredulous that local petrol prices can vary so much between communities. One of my constituents, Tipu Zaman, said:
“I travel to Stevenage every day and have not bought petrol in Bedford for around seven months. On the way there and back I pass about four or five petrol stations and all of them charge less than the stations in Bedford.”
How can that be true?
It is important to recognise that the campaign of my hon. Friend the Member for Harlow has already made progress by having the OFT start to look for evidence to support an investigation. There has been much speculation about the potential manipulation of the markets. I would be shocked if those markets had been rigged, but let us not forget that only a few months ago we were all shocked at allegations of rigging in the LIBOR market. To restore people’s trust in markets, it is important that the OFT investigates.
I ask the Minister to talk with his colleagues about another matter that my hon. Friend the Member for Warrington South (David Mowat) mentioned. The issue of competition has changed since 1998. One of the issues, seen in groceries as well, is a shift in power from retail choice to logistics strength—large supermarket chains using their logistics strength to move into new markets and reduce competition. That is an important issue for the OFT to investigate.
Finally, will the Minister also learn lessons from the US experience? The Federal Trade Commission writes on its website:
“Oil and gasoline are commodities that are critical to American consumers, so the Federal Trade Commission devotes significant resources to make sure that these markets remain competitive, using all the powers at its disposal to protect consumers from anticompetitive conduct”.
Will he ensure that the Government show that they understand the importance of this issue?
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to take part in a debate on an issue that is important to motorists, families and businesses across the country, as the hon. Member for Bedford (Richard Fuller) just said. I congratulate the hon. Member for Harlow (Robert Halfon), who has worked assiduously on this issue and, as he said, built enough support across the House to get this debate through the Backbench Business Committee, and I congratulate the latter on allowing it to happen. I also welcome the Minister to his place. This is, I think, his first appearance at the Dispatch Box in his new role, although we have faced each other three times in a different capacity over the past week or so.
Families’ and businesses’ budgets are facing unprecedented pressures, as set out by the hon. Members for Harlow and for Bedford, but, as my hon. Friend the Member for East Lothian (Fiona O'Donnell) said, other issues, such as energy bills and rail fares, are also adding to them. As a result, people are struggling to keep their head above the water. The cost of fuel is one such pressure. As the hon. Member for Mid Norfolk (George Freeman) pointed out, that has an effect on the wider economy too.
For all those reasons, the OFT’s decision to issue a call for information on the UK petrol and diesel sector is welcome. I pay tribute to the hon. Member for Harlow, because he made the point, as too did my hon. Friend the Member for Dumfries and Galloway (Mr Brown), that were it not for the continual representation here, we probably would not have got to that stage—it certainly was not the message the hon. Gentleman was getting from the OFT earlier in the year.
There is a sense that when the price of oil rises, the cost of fuel is not far behind, but when the price of oil falls, reductions in fuel costs do not appear to follow on so quickly. As the OFT said,
“pump price may be failing to rise and fall in a way that reflects the underlying movements in crude oil prices”.
That is at the centre of this debate and explains the level of concern expressed across the House.
As the hon. Member for Harlow detailed, the media reported this morning that a City whistleblower has alleged that the oil market is rigged with daily price manipulations. The hon. Member for Rossendale and Darwen (Jake Berry) made the point very well that the alleged manipulation, if true, would have had a much greater direct impact on our constituents than some other instances of manipulation that quite rightly caused concern. We need a fuel market that works in the interests of motorists, small businesses and local communities, but there are genuine concerns that that is not what we have.
The OFT’s announcement is welcome, although I note that it is not the announcement of an inquiry. As the hon. Member for High Peak (Andrew Bingham) made clear, what has been announced is a pre-inquiry inquiry, which probably should lead to inquiry, as I hope it will, because there is a good case for one. The OFT has committed to publishing a summary of its findings in 2013 and will outline the next steps at that point. As hon. Members will know, if a full inquiry is to be held, it may take many months if not years, with no firm conclusions necessarily reached until that point. We have to face the fact that there is a widespread feeling that in the meantime motorists will continue to get a raw deal and face mounting pressure at the pump.
The hon. Members for Camborne and Redruth (George Eustice) and for Warrington South (David Mowat) referred to the previous Transport Secretary saying that she wanted to look at tracking the price that oil companies pay and how the reductions are passed on at the pump. That is something she said in her previous role, but when the Library contacted the Department for Transport yesterday to see what progress had been made, it was advised that nothing would happen until the OFT had reported its findings at the very earliest. If an OFT inquiry does flow from the call for evidence, that could take a considerable time, so perhaps the Minister can enlighten us as to why the Department cannot do that work now. Indeed, I am not clear why that should be the case, because those issues could be tracked now. I therefore hope that the Minister will respond to that point, which is a matter of concern for Members in all parts of the House.
As the hon. Member for Belfast East (Naomi Long) and my hon. Friend the Member for Dumfries and Galloway made clear, along with many Government Members, those living in remote areas face particular pressures. By and large, prices in remote parts of the country are higher than in urban areas, as the OFT reports. There is also less choice, leading to less competition and difficult decisions being made. As my hon. Friend said, in some cases people may be deciding that it is not even worth going to work, because of the costs associated with making those journeys. Rural motorists often have far further to travel to fill up their tanks. High prices in remote areas also have a severe impact on the road haulage industry. The OFT noted the generally detrimental impact of high fuel costs on the standard of living in remote areas.
In November last year, the Chief Secretary to the Treasury announced a pilot scheme to cut the price of fuel for some of the UK’s island communities in the Northern and Western Isles of Scotland, to come into effect in March this year. Although that might be welcome—even though it came into effect 18 months after the Chief Secretary had said it would happen within a few months—towards the end of February, shortly before the scheme was to be introduced, the price at the pumps on Orkney and Shetland increased by 5p per litre. I know that the right hon. Member for Orkney and Shetland (Mr Carmichael) is unable to take part in these debates because of his Government position, but at the time he made it clear through his local newspapers that it was a strange coincidence that prices should go up shortly before the scheme was introduced. That adds weight to the concerns expressed about the possible level of manipulation. It is vital that the OFT gets to the bottom of that, because those concerns are deep-seated, particularly at a time of economic pressure for so many people.
The hon. Member for Brecon and Radnorshire (Roger Williams) made some points about independent retailers—I will not attempt to pronounce the name of the village where the filling station he referred to is. That is also an issue in urban areas, as I know from my constituency. Unlike the hon. Member for High Peak, I have not quite reached the point of taking my wife out to a petrol station—I am not sure I am that brave—but over a year ago I was contacted by an independent retailer operating in my constituency. The company’s main concern was that it was unable to compete with large supermarkets, which have the ability to use petrol prices as loss leaders and, further, manipulate prices in those areas. My hon. Friend the Member for Inverclyde (Mr McKenzie) made that point in relation to the situation in his constituency, as opposed to neighbouring constituencies, as did the hon. Member for Rossendale and Darwen.
A further complaint by that company was about the practices of oil firms and the impact on smaller retailers. That complaint has in large part been supported by the findings of the International Organisation of Securities Commissions, a body that has, as the OFT noted, highlighted many areas of concern, including the way in which oil prices are reported. The OFT expressed its concern that if oil prices are being inflated, that could be
“leading to higher pump prices because wholesale road fuels prices may be based on the prices reported by oil price reporting agencies.”
That is another important aspect of this debate.
I am sorry to have to report that the local petrol retailer in my constituency that contacted me a year ago is no longer operating, and its situation is not unique. That is happening to many others as well. My constituency is largely urban and suburban, and the number of empty petrol retail outlets has increased massively. Some, ironically, are now being used as car-washes. There has also been a reduction in the opportunities available to people and an increase in the dominance of some of the big companies. All those factors underline the importance of making the case to the OFT that it needs to get to grips with this issue as quickly as possible. It must collect and analyse the evidence in order to make a decision on whether there should be a full inquiry.
Earlier this week, the president of the AA, Edmund King, expressed his concern about the high price of petrol at this time of year. He made the point that although increases are normally lower and pump prices come down at this time of year, we have seen an increase of about 10p since July even though there has been no appreciable increase in the price of oil. That is despite the Government’s introducing a fair fuel stabiliser. My reading of the Red Book tells me that it was introduced at a level of $75 a barrel equivalent. If that is correct, it has not made a difference, and the suggestion that the stabiliser was the answer to the problem has not been borne out. Perhaps this is because of other market manipulations that have been at the heart of the debate, and if so, that too lends weight to the case for the inquiry to happen as soon as possible. We need to get to the bottom of these issues, so that other Government interventions that could make a difference can be introduced rather than being offset by other changes and behaviours that are inherent in the market.
We have had an informed and interesting debate this afternoon. Members on both sides of the House have expressed the concerns raised by their constituents. This vital issue has a significant impact on their standard of living, and even on their ability to go about their daily business. The information in Members’ speeches showed the strength of feeling across the House. Motorists are feeling the squeeze. Families and businesses are feeling the pinch. That is why it is essential that any manipulation, collusion or shady practices in the market are properly exposed, and the OFT has a duty to get on and do that as soon as possible.
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
The House has long known that I am energy personified, and I am delighted that the Prime Minister has now recognised that fact and given me this important new role. I am equally delighted to speak on these matters from the Dispatch Box for the first time, although, as the shadow Minister, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), said, he and I have already met in debates in Westminster Hall and in Committee.
Several hon. Members have rightly paid tribute to my hon. Friend the Member for Harlow (Robert Halfon). My hon. Friends the Members for Bedford (Richard Fuller), for Nuneaton (Mr Jones) and for Camborne and Redruth (George Eustice) have all made the point that he has done the House a great service in allowing us to have an important debate on an important issue, which affects so many of our constituents.
Fuel is of fundamental significance to consumers, and it is in our mutual interest to ensure that motorists and businesses are confident that they are being treated fairly and that, when the cost of crude oil comes down, reductions are passed on transparently and without unnecessary delay. This Government have eased the burden on motorists by £5.5 billion by not implementing the policies of the previous Government. I do not want to make this debate an unnecessarily partisan one—although my emphasis is on the word “unnecessarily”. The truth is that, had we put in place the previous Government’s plans, prices would be higher.
The shadow Minister pointed out, with typical decency, that we have also put in place the rural fuel duty rebate scheme, which is cutting the price of fuel in very remote communities by 5p a litre. The Government will continue to monitor the effectiveness of that scheme and, obviously, if there is more to say on that matter, I will come to the House and say it.
Hon. Members on both sides of the House have pointed out that the retail price of fuel is affected by a wide range of factors, including crude prices, tax and duty, the exchange rate, and the cost of refining and bringing the product to market. In the end, the effect on consumers is a profound one, and it is because I share the view of my hon. Friend the Member for Harlow and others that this is a matter of social justice that I am delighted that we shall have eased the burden on motorists by approximately £5.5 billion between 2011 and 2013. Average pump prices could be approximately 10p a litre lower than if we had implemented the previous Government’s so-called fuel duty escalator in 2011-12.
The petrol and diesel retail market in the UK is subject to the same legal constraints and the same framework governing competition and trading standards that relate to businesses in general. Price differences in different areas are likely to reflect local supply and demand, and may differ depending on fuel transportation costs and different retail business models, as my hon. Friend the Member for Bedford, among others, has said.
Oil prices rose this year owing to international developments such as uncertainty in the middle east and north Africa, and continued growth in demand. The Wheatley review and the International Organisation of Securities Commissions are looking at these matters, as the House will know. The House will also know that the UK works with the G20 to enhance transparency in the oil market, as recommended by many contributors to the debate. In the end, as my hon. Friend the Member for Warrington South (David Mowat) said, this is at least as much—and arguably more—about retail practice as it is about the oil industry. The oil price is, of course, set by global markets. The key causes of high prices this year are well understood.
Steve Baker (Wycombe) (Con)
Many Members have talked about the volatility of oil prices and the functioning of the markets. There is a correlation between the volatility of oil prices and US Federal Reserve monetary policy. Before the end of Bretton Woods, there was hardly any volatility in the oil price; it has been introduced only subsequently. If there is a secular trend in oil prices at all—priced in, say, gold, which happens to be a scarce commodity—it is downwards. I do not think we are paying enough attention to the US exporting both inflation and volatility through US Federal Reserve monetary policy.
Mr Hayes
That is a typically incisive and insightful contribution from my hon. Friend. I will say a little more about volatility, but the House will have heard his argument. It seems to me to be as impressive as his arguments usually are, and I shall certainly give further consideration to the matter.
In the spirit of being open-minded—this is, of course, an immensely open-minded Government—let me mention the Wheatley review into LIBOR, which is considering whether benchmarks or indices in other markets also need to be looked at. It will, of course, include this market and it aims to publish its conclusions by the end of September. I look forward, too, to the recommendations from the International Organisation of Securities Commissions, and the Government will consider how to take those forward in the G20 and how to implement them in the UK to ensure oil price benchmarks are not open to manipulation. As a result of this debate, however, and of the arguments made by my hon. Friends and others, I will write to the Financial Services Authority about the concerns raised here today. There is no point in our having these sorts of debates if they do not inform and inspire Government policy. In the case of this Minister, they will do just that.
It is absolutely right that we enhance transparency in the oil and commodity markets. The Government continue work to improve the functioning of the global market and to reduce price volatility through engaging with key oil-producing countries to promote investment in oil production and responsible behaviour in the market—the matter raised by my hon. Friend the Member for Wycombe (Steve Baker) a few moments ago. To that end, we have also championed a new charter for the International Energy Forum, and we will continue to monitor closely the impact of initiatives being taken in several other G20 countries, including Germany and Austria, to improve fuel price transparency.
Demand is another issue, and reducing the UK’s long-term dependency on oil and petroleum products is a Government priority. This includes developing ultra-low-carbon vehicles, high-speed rail networks and renewable heat incentives. We are working within the G20 to reduce oil demand globally—for example, through the work to reduce fossil fuel subsidies. At the same time, it is important to ensure that the market is well supplied, and we are working with the International Energy Agency, including on post-Libya stock release.
The Office of Fair Trading call for evidence is central to our considerations today. I encourage all Members to submit evidence to the OFT, and I know that many who have spoken in the debate will do just that. Of course we must not intervene until that call for evidence is complete. My Department believes that changes in the price of crude are indeed passed on to the pumps, although, as is clear from the data, there is a considerable time lag. There is certainly a case for greater transparency, about which, as my hon. Friend the Member for Harlow will know, the OFT has specifically asked for evidence.
In summary—this is not my final summary, Mr Deputy Speaker, but merely my preliminary summary: I did not want to dampen the enthusiasm with which my speech was being met—I strongly welcome the OFT’s decision to call for more information about the way in which the petrol retail market works.
As has been said, the OFT has said that it will consider whether reductions in the price of crude oil are being reflected in falling pump prices; whether the practices of supermarkets, which have been mentioned by a number of Members today, and major oil companies may be making it more difficult for independent retailers to compete with them—I shall say more about that in a moment; whether there is a lack of competition between fuel retailers in some remote communities in the UK; and whether the concern about price co-ordination and the structure of road fuels markets that has been expressed by other national competition authorities is relevant in the UK. That is a first step, and reflects the fact that, to date—as was pointed out by my hon. Friend the Member for Warrington South—no clear evidence has yet been provided to demonstrate that there is reason for concern about competition in the market. Nevertheless, the inquiry is welcome: I want to make that absolutely clear.
I ask my hon. Friend the Member for Harlow, and other Members with an interest in the subject, to engage with the OFT’s study—I have no doubt that my hon. Friend was going to do so anyway, but I wanted to place that on the record—and to participate fully, as my Department will: I commit myself today to ensuring that that happens. What is important at this stage is for Members or their constituents who have evidence relevant to the scope of the OFT's call for information to make it available before 17 October.
As I have said, my Department’s analysis shows that changes in the wholesale price of crude, both increases and decreases, are passed on, but I shall nevertheless ask my officials to look at the matter again and revisit their analysis, as a direct result of the debate and my hon. Friend’s wider contribution to discussions on this subject.
The important issue of what might be called “fuel deserts” was also raised today. The OFT is seeking evidence relating to the decline in the number of independent petrol stations and the rise of hypermarkets. That too has been mentioned by a number of Members, including my hon. Friend the Member for Warrington South and my hon. Friend the Member for Bedford. The Government have taken tough action in the past to address the potential of local monopolies. For example, this summer, following an OFT investigation, Shell gave undertakings to sell a number of its petrol stations because of concerns of this kind.
Some Members mentioned the problems of rurality. The hon. Member for Inverclyde (Mr McKenzie) and my hon. Friend the Member for Camborne and Redruth (George Eustice) represent rural constituencies, and I am quite deeply affected by the problems myself. I know from my own experience in Lincolnshire that rural communities can be disadvantaged when the number of petrol retailers falls and journeys to obtain petrol and diesel become longer. I will also ask my officials to look at the relationship between storage capacity and the declining number of retailers; the picture is mixed because of the size of tanks that are kept in different places, but I am interested in the issue.
Independent petrol stations are often located in more rural areas, and can provide a valuable service for local communities. As was mentioned by the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), there is concern about the effect on rural resilience in the event of further closures of such petrol stations. As I said earlier, the OFT has signalled that it is seeking evidence relating to the decline in the number of independent petrol stations and the rise of the hypermarket retailers, to which the hon. Gentleman and others referred. I particularly thank my hon. Friend the Member for High Peak (Andrew Bingham) for emphasising the effect that that has on his constituents. I must make it clear again that the Government have not been reluctant to take action in the past, and would be happy to do so again if the evidence legitimised such action.
Earlier this year, my Department commissioned a study of the retail market for road fuels, to develop further our evidence base on the size and shape of the market and our knowledge of the impact of the structural change to the market over recent years. I will write to interested Members with details of the findings in due course and share them with the OFT. That is what it says in my script, but I will do more than that: I will write to all Members of the House, because I know that all Members are interested in these matters. We will keep the whole House fully informed of the steps the Government are taking.
As a result of the arguments my hon. Friend the Member for Harlow has made today, I will also instruct my officials to ensure that this study should include detailed analysis of how far people have to travel to reach their nearest petrol station, and how this has changed over time. He may count that as a significant victory for him and a tribute to the work he has done.
In conclusion—
Tom Greatrex
While the Minister is in the mood to instruct his officials to do various things in response to this debate, may I reiterate my point about the work the previous Transport Secretary said would happen, but which it appears the Department is now saying will not happen until after an OFT inquiry? Will the Minister look into that, and see whether it could happen sooner rather than later?
Mr Hayes
I thought that was the best point among many that the shadow Minister made in his speech. The OFT plans to report in January 2013. As the hon. Gentleman knows, it is looking specifically at the issue of transparency, and we want to feed its findings into our work. I will certainly take a look at the timing issue he describes, however, to make sure we are acting in a coherent and consistent way.
Mr MacNeil
I am grateful to the hon. Gentleman. Will he consider increasing the rural fuel derogation and extending the rural areas that are covered by it, not only in Scotland but in Wales and England?
Mr Hayes
Given what I have said about my credentials in respect of rurality, the hon. Gentleman can be absolutely convinced that my concern for rural areas in England, Scotland and the rest of our United Kingdom will be at the very heart of all I do.
I again thank my hon. Friend the Member for Harlow for securing this debate, and in response to his three core points I say the following. First, petrol prices are high, but had we implemented the previous Government’s policies, they could have been 10p per litre higher, and we have taken location-specific action through the rural duty rebate scheme.
Secondly, DECC analysis shows that changes in the price of crude are passed on at the pump—although there is a significant time delay. The Government are keen to establish whether there is evidence to the contrary, however, and we will revisit our analysis. The OFT will also look at this, and I encourage those with evidence to give to submit it before the due date.
Thirdly, price transparency is important to build consumer confidence. In the call for information, the OFT noted that DECC and the Department for Transport have been in discussions with the fuel industry on possible ways to improve information on fuel prices, and we have agreed to await publication of the OFT’s findings before taking further steps. Let there be no mistake, however: I shall make sure that coherence informs our approach to that cross-departmental work.
The Government take seriously the potential for manipulation of reported price benchmarks and look forward to the International Organisation of Securities Commissions recommendations. We will consider how to take them forward in the G20 and how to implement them in the UK, to ensure that oil price benchmarks are not open to manipulation. As I have said, I will write to the Financial Services Authority to express Members’ concerns. I encourage my hon. Friend and others in this House to work constructively with the OFT and await the result of its call for information. As has been said, at this stage the OFT has not ruled out a more detailed market study. This first step of the call for information will enable the OFT to take a view on potential market concerns and the need for further work. The OFT will publish early next year, alongside recommendations for action by others to support fair and open competition in the market.
Let me end by saying that energy is vital for growth, as fuel provides the power for our economy. However, this is also about the effect on consumers—it is indeed about social justice. In my job, as the people’s Minister from the people’s party—the party of Wilberforce, Shaftesbury and Disraeli—the people’s concerns for social justice will motivate, inspire and inform all I do, in this matter and in others.
Martin Vickers (Cleethorpes) (Con)
I am not sure whether I can match the excitement generated by the Minister but, in concluding this debate, I, too, join in the congratulations to my hon. Friend the Member for Harlow (Robert Halfon), who has certainly made his name—he is now known nationwide as “Mr Fair Fuel”. It is a pleasure to serve as his deputy on the all-party group on fair fuel for motorists and hauliers.
This has been a good debate, with every speaker highlighting the impact on their constituents. Without doubt, the cost of living is, along with the other economic issues of jobs and growth, the No. 1 concern of our constituents. There is a widespread view that the tax and duty on petrol is way too high, and that it is unfair, particularly as it falls disproportionately on hard-working families, especially in rural areas, as has frequently been mentioned. People know that the Government are particularly keen to help and support them and, having heard the Minister’s comments, I am confident that that is the case. As my hon. Friend the Member for Camborne and Redruth (George Eustice) and others have said, the Government are particularly alert to the problems affecting hard-working families. It has been said numerous times but it cannot be said too often that petrol is 10p a litre cheaper now than it would have been had the Chancellor not acted.
It is worth mentioning that in my constituency many hundreds of people work in the oil industry at the refineries in Immingham and along the Humber bank, and the industry is vital to the local economy. Nevertheless, the public remain understandably cynical about, and suspicious of, what they see: vast profits; volatility in markets; and the results of falls in oil prices not being quite as dramatic as those of increases. My hon. Friend the Member for Rossendale and Darwen (Jake Berry) referred to a broken market, and my constituents, who live within walking distance of a refinery and often find that they get a better deal by driving many miles to save a few pence a litre, can testify to that.
It is a long time—14 years, I believe—since the OFT last investigated the sector, and I thank the Petrol Retailers Association for bringing that to my attention. Clearly, another investigation is urgently needed. As my hon. Friend the Member for Harlow has pointed out on a number of occasions, other G20 nations are taking regulatory action and we need to ask ourselves why we are so far behind. While we push for a full investigation, I also want to give my support to the call for evidence. I encourage, as the Minister did, all Members to submit evidence.
Our constituents rightly expect the discrepancies in costs that flow from oilfields and platforms to be immediately reflected at the pump. While we are seeking the how and why, what should concern us more than anything—we have heard evidence of this in the debate—is the burden that this cost places on the average person and on the average business, and on their ability to contribute positively to the economy.
Jason McCartney
As one of the signatories to the motion, I praise my hon. Friend the Member for Harlow (Robert Halfon) for securing the debate. Does my hon. Friend the Member for Cleethorpes (Martin Vickers) agree with me, and with many of our fair fuel and petrol price campaigners, that Governments can do nothing more at the moment to help hard-pressed families, commuters and small businesses than cutting fuel duty and that oil companies can do nothing more to support our economy at this tough time than acting fairly and transparently in the way they price their products?
Martin Vickers
I agree entirely. My hon. Friend, as always, gets right to the heart of the matter.
My hon. Friend the Member for Mid Norfolk (George Freeman) gave a particularly good analysis of the impact on rural economies. As other hon. Members have said, many of our constituents in rural areas now have to drive much further to fill up as a result of the drastic reduction in the number of petrol forecourts, particularly in the independent sector. It is worth pointing out that we should not blame the independent operators. They are local businessmen seeking to make a decent living. These fuel prices are affecting the average person every day of their lives in a negative way. The more that goes in tax, the less there is to spend and boost the local economy. I was pleased to hear the Minister speak about being robust and that he is not reluctant to take further action and would be prepared to revisit the many issues raised if new evidence is brought forward, which is encouraging.
We have had an exceptionally good debate. The root cause of the problem might be market manipulation, and it might not. Despite allegations one way or the other, our constituents deserve the real answers. In summary, I fully support the OFT’s moves so far but believe that, along with the FSA, a full, independent and transparent investigation is needed. As I have said, the unfair price of fuel at the pumps is not the fault of the independent forecourts, which have seen high rates of closure over the years; it is possibly the outcome of price fixing by the people involved in the oil market. Our country cannot survive these continued price hikes. They damage individuals and business. It is good to see cross-party support for the motion.
Question put and agreed to.
Resolved,
That this House notes the call for evidence by the Office of Fair Trading (OFT) on competition in the UK petrol and diesel market; however, believes that the OFT and Financial Services Authority should launch a full investigation into oil firms active in the UK; calls on the Government to consider the emergency steps being taken in other G20 countries to reduce fuel prices; notes, for example, the announcement by President Obama to strengthen federal supervision of the US oil market and to increase penalties for market manipulation, and the move by Germany and Austria to establish a new oil regulator with a remit to help stabilise the price of petrol in those countries; and further urges the OFT to note that the Federal Cartel Office in Germany is now investigating oil firms who are active in the UK following allegations of price fixing.