Fuel Prices

George Eustice Excerpts

Thursday 13th September 2012 Commons Chamber

[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.