Fuel Prices

Naomi Long Excerpts

Thursday 13th September 2012 Commons Chamber

[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?

--- Later in debate ---

[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.

[David Mowat (Warrington South) (Con)]

Will the hon. Lady give way?

[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.