Energy Prices

Guy Opperman Excerpts

Wednesday 19th October 2011 Commons Chamber

[Caroline Flint]

I am afraid that Edwina Currie was in the news again only last week, when she said that she was not aware of anyone who could not afford to eat. People up and down the country are, however, facing the choice between keeping warm and having a hot meal. The sad thing is that many older people often make such sacrifices and keep quiet about them; they suffer on their own. In the voluntary sector, we are also seeing cuts to the services that support those people and help them to get access to their rights and to the deals that they deserve. This is a sorry tale of a sorry Government.

[Guy Opperman (Hexham) (Con)]

May I draw the attention of my right hon. Friend to the report on fuel poverty by the Office of Fair Trading, which was published this week? She asks what is being done. The report described the stopping of practices by BoilerJuice—something that was set up on her watch—which allowed only one company to be in a position to market its products, namely DCC. Will she “go compare” that?

[Caroline Flint]

Whatever we do in public policy, the important thing is always to see whether it is hitting the mark and working as best it can. Does that mean that policies always stay the same? No, it does not.

I thank the hon. Gentleman for calling me his right hon. Friend, but I must challenge him and the Secretary of State over Labour’s record on supporting families coping with their energy needs. I challenge the Secretary of State to deny that the Decent Homes programme, which involved the modernisation of 1.5 million homes, reduced energy consumption. I defy him to say that the code for sustainable homes did not improve the energy efficiency of new properties. I defy him to say that Warm Front did not reduce energy bills for more than 2 million households. I also defy him to say that the car scrappage scheme did not remove hundreds of thousands of old cars from Britain’s roads and replace them with more fuel-efficient vehicles with lower emissions. I challenge him to own up to the House today to the fact that the regulations that his Government are introducing, seven months after they were required, arise from the third energy package agreed by my right hon. Friend the Member for Doncaster North when he was Secretary of State for Energy and Climate Change. Yes, it was Labour that agreed the legal agreement across the European Union to make the gas and electricity markets more competitive, to give new powers to the regulator, to reveal the financial records of the energy giants and to put in place a more competitive market that new suppliers could enter. The role of this Government, 18 months into office, is to delay the process of implementation.

Perhaps the Secretary of State is not just the Prime Minister’s meerkat; perhaps he is also the Chancellor’s poodle. Following the Osborne doctrine, which states, “We are going to cut our carbon emissions no slower, but no faster, than other countries in Europe”, perhaps he now believes that, as the Chancellor said,

“a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.”

Perhaps that is why, this week, the Secretary of State failed to stand up to companies over pricing, why he failed to express the anger that the public feel towards the energy giants, and why he meekly agreed to let the energy giants pledge not to raise their prices over the winter only after they had already increased them.

People expect, and deserve, a Government with the courage to stand up to powerful vested interests. This Government cannot even stand up to their own Back Benchers. A survey last year showed that, in spite of the overwhelming scientific consensus, one third of Tory MPs are climate change deniers who doubt the existence of climate change and its link to human activity. As ever, we are particularly grateful to the hon. Member for Mid Bedfordshire (Nadine Dorries) for the expertise that she brings to all matters scientific. On Monday, she solved an issue that has evaded scientists for generations when she told Radio 5:

“You can’t put solar panels on children’s shoes.”

I am glad that that thorny issue has been resolved once and for all, but this is all part of the background to the comments of the Chancellor at the Tory party conference, when he openly attacked low-carbon businesses to get cheap applause from Tory delegates. The truth is that this Government are not only out of touch but wedded to an out-of-date orthodoxy which, for too long, has allowed the City and companies such as the privatised electricity suppliers to do what they want at the expense of everyone else.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

I genuinely believe that this winter there will be choices between heating and eating for individual families up and down the country. The fuel poverty rate in the north-east is approximately 24%; we have the second highest rate in the country. Clearly, that applies in relation to the big six, but I particularly want to speak about it in relation to heating oil and liquefied petroleum gas. I pay tribute to the hon. Member for Ynys Môn (Albert Owen). Over the past year, he and I have debated, very much with common cause, the issues of fuel poverty and heating oil, and I am delighted to follow his eloquent and well-made speech.

My constituency is the second biggest constituency in the country, at 1,150 square miles, and it does not just face problems of rural fuel poverty. The town of West Wylam, which is a suburban part of Prudhoe, is in an area that has fundamental problems of fuel poverty, and it has perfectly normal residential housing: this is not just about a farm way out west. It is not simply a problem for rural dwellings. One and a half million dwellings are dependent on heating oil. On top of that, significant amounts of LPG are used. We are talking not about a small number of people but a very significant number who are greatly affected by this, which is an important problem throughout the north-east.

I will focus on the role of the Office of Fair Trading, which I believe has done good work. Its report of September this year on Boilerjuice was a success. The report published only yesterday on off-grid energy, about which I met the OFT at approximately 12 o’clock today, is well worth reading. It is a doughty read at 352 pages, and it would be a lie if I said that I had read every single page, but I am working my way through, and none of my copy will go for fuel at the end of the day.

The OFT’s investigation into off-grid energy is a market study. Those who analyse what the OFT does need to understand that a market study does not necessarily lead to a formal investigation. As a first point I invite the ministerial team to consider that, although clearly it is not fundamentally within their remit.

[Karl Turner]

The hon. Gentleman is making a powerful speech on behalf of his constituents. I wonder whether he will support the Opposition motion.

[Guy Opperman]

The hon. Gentleman obviously did not hear what the ministerial team said earlier, which addressed that exact point.

The OFT report is a market study, but I seek a formal investigation where there is a reasonable suspicion that the law has been breached in relation to the Consumer Protection from Unfair Trading Regulations 2008. I suggest that that applies to pricing practices, particularly when there is a varying price after a customer has placed an order. In my constituency, there is ample evidence that that has happened.

[Sarah Newton]

I apologise that I was not here for the first part of my hon. Friend’s speech, but an urgent matter called me out of the Chamber. The experience that he so vividly describes in his constituency is echoed in Cornwall and across the south-west. I, too, welcome yesterday’s OFT report. It says specifically that there is an opportunity for us to go back to the OFT and make the case for a referral to the Competition Commission to look further at the issue of pricing, which he has raised. Will he join me in suggesting that Members whose constituents are affected by this should join together to make representations to the OFT for such a referral?

[Guy Opperman]

I totally endorse that point, particularly in relation to pricing practices and the considerably enhanced prices charged by many heating oil suppliers. I have done quite a lot of research into this matter. In Hexham constituency the price of oil rose from 41p to 71p per litre between September and December last year. In that time, the wholesale price of oil went up only by about 10%.

In my constituency there are roughly 16 to 18 heating oil providers. However, 11 or 12 of those are controlled by one company. DCC Energy, an Irish-based company, has bought up many of the individual suppliers throughout the country. It operates heavily in west Wales and has been prosecuted there in relation to a trading standards case. It also operates to a considerable extent in Scotland. In Northumberland and throughout the north-east it has a substantial presence. I accept that there is competition in the sense that there are about five genuinely independent companies providing heating oil. However, the other dozen or so are providing heating oil from one global source. There is nothing wrong with that, but when one adds up the figures, it means that one company has 69% of the providers and the multitude of other companies represent 31% of the providers. That should be investigated by the OFT, and it should result in a competition inquiry. If that case does not give the suspicion of price fixing, I do not know what does.

[Andrew George]

The hon. Gentleman is absolutely right on that point. Across the country as a whole, a little under 30% of those who depend on oil for central heating are in fuel poverty, and they are primarily in rural areas.

With regard to the OFT’s report published yesterday, does the hon. Gentleman recognise that it found that the terms of contracts may not be entirely consistent with existing consumer protection? The OFT states that it will examine the

“clarity and fairness of termination rights”

and engage with suppliers to discuss how to proceed. Does he think that regulation is required, or should the OFT continue to pursue some sort of voluntary agreement ?

[Guy Opperman]

With respect, I would say that the answer is somewhere in between. There cannot be regulation without submissions being made and investigations taking place. It is incumbent upon us not just to get upset about how our constituents are being affected by heating oil prices but to make representations to organisations such as the OFT. We must also invite the Energy and Climate Change Committee to investigate off-grid energy, which I very much hope it will do.

[Albert Owen]

I am pleased to help the hon. Gentleman by saying that we are going to have a further inquiry into the retail market, in which we will examine off-grid energy.

[Guy Opperman]

I am most grateful, and I hope that as part of that inquiry the Committee will examine the weighty report that the OFT has provided, as well as specific submissions from individuals and organisations that, like the previous three speakers, can give specific examples of price fixing or the appearance of price fixing. That is in the context of DCC, the company that I am particularly concerned about and have to deal with, recording operating profits of approximately 19.9% on an ongoing basis. I find that figure hard to square with the one given by the managing director, who when questioned in The Sunday Times said that the operating profit was only 2%—but I have taken my figure from the published accounts.

In Hexham five independents operate—WCF, Par Petroleum, Wallace Oils, GB Fuels Ltd and Rix Petroleum. I urge individual Members to draw to their constituents’ attention by every possible means, as I do for each and every constituent who is faced by heating oil problems, which independents operate in the constituency, so that they are in a better position to get a fair price.

I want to trumpet the great success of the way in which certain communities, such as Tarset, Allendale and Humshaugh, have come together and produced their own price comparison sites. For example, there is Humshaugh village shop, which is run as a co-operative. It was set up by the local community and is financed and run by the 60 people of Humshaugh. Every Monday they publish the prices available from all the genuinely independent local heating oil suppliers. Individuals can either go to the shop’s website or—this addresses the point that was raised about people who do not have internet access—see the prices in the village shop throughout the week. Everybody in the village can then assess who is providing oil locally. Such ideas need to be taken forward.

I welcome the fact that the OFT report indicates that there are problems. However, I would ask the OFT to go further, not least because the report shows that when a company is one of a multitude owned by a larger company, it is obliged to give people who telephone it specific information about who its ultimate owner is. That needs to be monitored, because it is not necessarily taking place. My researcher phoned one of those only yesterday and was not given that information, as should have happened according to the OFT report. I urge the various Committees involved to examine that point.

There is also tremendous difficulty for those who wish to compare prices themselves, because heating companies have no obligation to tell people the price that they are offering. Unless people ask to buy, they are not necessarily given the price. With respect, the Government can do something about that, and I invite them to sit down with individual suppliers, particularly the larger suppliers, and make that point very clear to them. If people ring up and ask for a price, they should be told it rather than the company withholding it.

[Pat Glass]

I am very grateful to my constituency neighbour for giving way, as we have very similar constituencies and face similar issues. Is it not also true that the price quoted when someone rings up is not necessarily the price that they are charged when the oil is delivered two weeks later? Last winter, as the hon. Gentleman pointed out, the cost of heating oil almost doubled in the space of a few weeks. Someone could order heating oil and be quoted 40p a litre, yet get a bill for 71p a litre two weeks later.

[Guy Opperman]

The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) is not the only one who has been carrying out research on websites. Let me cite the interesting efforts to prove the hon. Lady’s exact point undertaken by the hon. Member for Brecon and Radnorshire (Roger Williams), who ordered more than 2,000 litres of heating oil at a price of 40p a litre—again, from DCC—and received only some of the delivery, at the outset, at that price. Later that December, when the remainder was delivered, the price was 65p per litre—an increase of 25p per litre. I applaud his efforts in this House to publicise that, and previous efforts to deal with the problem, as well as the work of The Sunday Times.

I conclude by saying that I endorse much of the motion.

[Sarah Newton]

One of the next steps identified by the OFT was for the Government to take, because it acknowledged that people who use heating oil or LPG—or microgeneration, which the report also covers—cannot get dual fuel deals because they are off the grid, and furthermore, they are not eligible for the excellent new £125 warm home discount. This group of people, even if they are in absolute fuel poverty, cannot access some of the very good measures that the Government are introducing. May we ask the Government to consider that specific group of people, and see what could be done to help them?

[Guy Opperman]

I am most grateful for my hon. Friend’s intervention, and I endorse her point.

It is incumbent on us all to go back to our constituencies—not, as was once said, to prepare for government, but to prepare our constituents for the winter.