Fuel Prices

Angus Brendan MacNeil Excerpts

Thursday 13th September 2012 Commons Chamber

[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.

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[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.

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[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]

rose—

[Mr Hayes]

I shall give way, but these interventions are slightly Wagnerian, as they serve to add to the expectation in advance of my exciting peroration.

--- Later in debate ---

[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.