Pat Glass
Main Page: Pat Glass (Labour - North West Durham)Domestic Heating Oil
Pat Glass Excerpts(13 years, 8 months ago)
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Pat Glass (North West Durham) (Lab)
Mine is a large constituency. I have urban areas to the north-east and a very large rural area running right up to the Cumbrian border. It includes two areas of outstanding natural beauty and many areas of special scientific interest. Very many of my constituents are “off gas” and rely on heating oil and bottled gas, and some of these would be classified as the rural poor or living in fuel poverty.
I have been made aware in recent months that there are issues in the domestic oil fuel market—rising prices and a lack of regulation and competition—but it has become clear from the level of constituency contact and from the level of desperation expressed that a crisis has been building up since summer last year.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that in a constituency such as mine, which is a rural constituency next door to hers, many people do not have a choice about whether to use oil, because there is no access to gas or another alternative fuel?
Pat Glass
I agree, and that is true in many constituencies.
When I contacted the office of the Secretary of State for Energy and Climate Change on this issue in early December, I was told that it did not believe that there was a problem and that it did not intend to do anything about it. This contrasts sharply with the experience of my constituents. Mr Kimber, who contacted me on 6 December, told me that the price of heating oil back in early October was 44p a litre. He said:
“Yesterday I obtained a quote online and was shocked to see the price had risen to 65 pence per litre. Today I obtained another quote from the same company and the price has gone up to 79 pence a litre today. How can this be now that the roads are free of snow and passable in nearly all areas locally?”
Mark Tami (Alyn and Deeside) (Lab)
My constituency is similar to my hon. Friend’s and also has a rural part to it. People have told me not only that the price has gone up, but that an extra transport cost is loaded on if people want delivery within a short period of time.
Pat Glass
Absolutely. Indeed, another constituent, Mrs Green, told me:
“The cost of heating oil is now nearly 100% higher than just two months ago yet oil prices have increased by just 10%. How can this be justified?”
The answer is that it simply cannot be justified. Indeed, when I and other Members started to ask questions about this issue, I was contacted by a number of people working in the heating oil industry who told me that their employers were telling them to refuse to accept orders of less than 1,000 litres. That meant that members of the public were being refused deliveries unless they were prepared to pay £800, plus the cost of delivery, and let us remember that this was just before Christmas.
Tessa Munt (Wells) (LD)
I am grateful to the hon. Lady for giving way. Does she agree that that also applies in rural Somerset? We even have oil co-operatives in rural Somerset, members of which were running out of heating fuel as the winter months came on and the weather got bad, yet they were being charged the same excessively high prices when they were taking the trouble to drive on snowy roads to collect the oil, in containers that they had to purchase for £6 or £7 a piece. Therefore, even people who were not paying delivery charges were paying the equivalent sum, which did not include delivery.
Mr Mark Williams (Ceredigion) (LD)
. I also congratulate the hon. Lady on securing this debate and on reiterating how important it is to rural areas. The problem that she described, where oil companies deliver much larger quantities, was compounded by the fact that a lot of them were not telling the customers that they were doing so until the invoice arrived. People who were expecting bills of £200, which is bad enough, were then hit with bills of £800.
Pat Glass
Absolutely, and I am happy to give way to hon. Members from across the House, because this debate is about an issue that affects all our constituencies.
When I first started to investigate the domestic heating oil industry, it became clear to me that it operates in a completely unregulated market, where suppliers can do exactly what they choose. A number of takeovers and mergers in recent years have led to the supply industry being owned by two or three companies. All that has happened quietly, without reference to the Office of Fair Trading or the Competition Commission. Prices are being driven up not by world shortages or global increases in the price of oil, although there is some of that. Rather, prices in this country have gone up by 100% in a very short space of time largely because suppliers have been clearly taking advantage of people in desperate need during the coldest winter in a generation.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I am grateful to the hon. Lady not only for allowing me to intervene, but for bringing this issue to the House. Does she agree that one of the fundamental issues in this debate is the fact that people in rural areas often do not have a choice? The problem with the market is that people do not have a choice over either the oil that they use or the suppliers available to them.
Madam Deputy Speaker (Dawn Primarolo)
Order. The hon. Member for North West Durham (Pat Glass) should get a word in edgeways before she gives way to another Member, if only to help me remember whose Adjournment debate this actually is.
Sarah Newton
I appreciate the hon. Lady’s generosity in giving way to so many of us, because this debate is clearly about a huge problem across the country. I represent a part of Cornwall where, just as the hon. Member for Banff and Buchan (Dr Whiteford) said, there is no choice for people who are off gas. There is no choice of distributors, given what has been happening in the market.
Pat Glass
I am happy that the Minister will be able to speak for himself when the time comes. No doubt he will give us his wisdom on that.
Customers are in the worst possible situation; it is a perfect storm. The market is completely unregulated. Added to that is a lack of competition in the market, where many suppliers are owned by just one or two companies, and suppliers are prepared to charge exorbitant prices simply because they can. On top of all that is the fact that we have just had the coldest winter in living memory.
The biggest supplier is DCC Energy, an Irish company that says it supplies a quarter of this country’s domestic market. It owns 41 heating and oil distribution companies and five price comparison websites. The websites of those 41 wholly DCC-owned companies state that they are independent, and none discloses the extent of DCC’s hold on the British market. DCC has recently been on a spending spree, buying up regional companies. It owns five price comparison websites, including BoilerJuice.
When I and others first raised this issue in the House, The Sunday Times carried out an investigation. It found that BoilerJuice, which is owned by DCC, only compared prices between DCC-owned companies, and that its so-called best deals were up to 65% higher than those of genuine independents. If that is not a deliberate intention to mislead customers, I am not sure what is. Since The Sunday Times outed BoilerJuice, prices have dropped by as much as 63%, which DCC has said was due to “fluctuating market prices”, but neither The Sunday Times nor I could find anything fluctuating in the market other than DCC’s panic.
Energy experts have advised me that DCC might actually control up to 50% of this country’s domestic heating oil market. GB Oils, another big company that is seemingly independent, is in fact a subsidiary of DCC Energy. NWF Fuels is another big player. It markets 14 different brands, including Pace, Fuelcare and WCF Fuels. On the surface, this looks like a market in which there are many suppliers and in which competition will work to keep down prices, but it is quite the opposite.
Jim Shannon (Strangford) (DUP)
The hon. Lady has been very generous in giving way to Members on both sides of the Chamber. She said that she wanted to get input from right across the House and across the United Kingdom, and I should like to give her an example from Northern Ireland. Oil comes through the port of Belfast and is then farmed out to all the different areas across the Province. It is the same oil, yet the price fluctuates between £20 and £30 per 800 litres. Does she agree that that is another example of why regulation is much needed?
Roberta Blackman-Woods (City of Durham) (Lab)
The whole House will be concerned by the points that my hon. Friend is making, not only about prices and the way in which these companies operate, but about the fact that they seem not to have been considered at all by the Competition Commission? Does she intend to refer the matter to the commission?
Pat Glass
I want to hear what the Minister has to say. Then I will make a decision on that.
In its recent investigation, The Sunday Times found that, on any given day, those price comparison sites quoted exactly the same price, right down to two decimal points. DCC and the other companies that control large parts of the market deny that they are exploiting their market share unfairly to raise prices, or that a cartel is operating to fix prices, but I suggest that the Minister look at the evidence. If he does, he will be able to draw his own conclusions, as I did.
As a new Member, I have been really pleased that we can come to the House and raise issues such as these, when we see a clear injustice in the market, and that they are taken up by the press. These debates are a really powerful tool. Once I and other hon. Members started to raise this issue and the press picked up on it, I was contacted by many people from all across the country. Their interest is echoed by the interest shown here tonight. People were contacting me from places as far apart as south Kent and Northern Ireland. This is not just about my constituency; it is about all our constituencies.
I am grateful that the Government have finally agreed that there is a problem with this market. They have reluctantly and, I have to say, tardily referred these matters to the Office of Fair Trading. There are several questions that I would like the Minister to answer today. When I and others contacted the Department in early December to ask what it intended to do about this, why were we told that the Department did not believe there was a problem and that it did not intend to do anything about it? Why did it take a crisis and investigation by the press before the Minister was prepared to refer this to the Office of Fair Trading? Will he ensure that I and other hon. Members who have raised these issues are able to feed into the OFT investigation? When does he intend to regulate this market either by extending the role of Ofgem or by creating a regulator for the domestic oil and gas industry? Finally, what messages can I give to the many people who have contacted me and other MPs about the actions that the Government intend to take now and in the future to ensure that they are exploited no further?