Cost of Heating Oil

Pippa Heylings Excerpts

Wednesday 15th April 2026 Westminster Hall

[Pippa Heylings (South Cambridgeshire) (LD)]

It is a pleasure to serve under your chairship, Dr Allin-Khan. As many have done, I thank my hon. Friend the Member for North Norfolk (Steff Aquarone) for securing this hugely subscribed and important debate and for representing rural constituencies across the country.

As we have heard, people in rural areas already face higher living costs, higher levels of fuel poverty and poorer energy efficiency compared to urban homes, and those areas also have many vulnerable elderly people. The Liberal Democrats are deeply concerned that, once again, we are debating urgent support to rural, off-grid households facing immediate and unaffordable cost increases who are uniquely exposed to volatile global fossil fuel markets.

Clearly, we have not learnt the lessons from the very recent past. In the current energy crisis resulting from Trump’s dangerous, reckless and illegal war in Iran, heating oil is not covered by Ofgem’s price cap, just as during Putin’s illegal invasion of Ukraine in 2022 it was not covered by the energy price guarantee. We must not allow rural households to be left behind again. As the UK and Ireland Fuel Distributors Association points out, the situation is exacerbated by the fact that the price of imported jet fuel is the largest component in the retail price of a litre of heating oil, and it is far more volatile than Brent crude oil. The association has reported prices jumping from 44p per litre in January to 100p litre this week and, as we have heard, the final price landing on consumers is way above that.

In my constituency, 2,954 households—35%—are reliant on heating oil. That is much higher than any other Cambridgeshire constituency. As soon as the conflict began, I heard directly from constituents in the villages of Fowlmere, Barrington, Litlington, Weston Colville, the Abingtons and Heydon, who, despite having agreed a price, were being told that neither that price, nor even the date of delivery, could any longer be guaranteed. One vulnerable elderly resident had only two days of heating oil left in their home. Some bought heating oil from a different provider at double the price because they could not wait.

It is questionable that the UK and Ireland Fuel Distributors Association justifies that kind of action as acceptable and appropriate because it is approved by the Competition and Markets Authority. I was the first to demand directly of the Chancellor, when I talked to her in the Chamber, that she not leave households exposed once again, as they were in 2022. Her response was that public money would not be spent and that she would focus exclusively on price gouging and complaints to the Competition and Markets Authority.

As Liberal Democrats, while we welcomed the Government’s U-turn to channel £53 million of funding through the newly launched crisis and resilience fund through county councils—Cambridgeshire county council was one of the first councils to get that up and running—we have heard that it is not enough. As other Members have said, it is averaging around £30 to £35 per household, and I have already been told that many struggling households are now complaining that they do not meet the criteria from the fund. As I have mentioned repeatedly to Ministers—and as highlighted by research from Energy UK—improved data sharing from Government Departments—that goes beyond the Department for Work and Pensions—is critical for the funds to be fair and effectively target and reach those who really need them. We need to look closely at price gouging and at whether this unregulated market for heating oil is fit for purpose in serving and protecting rural households.

Will the Minister respond to our Liberal Democrat proposal for a three-month zero rating of VAT on heating oil; for a better regulated sector, with a proper price cap that shields households not only on heating oil but on LPG; and for improved consumer protection? Will he also look at the regulation we probably need on improved data sharing, so we can ensure that this help reaches those who need it most?

As many have said today, the long-term solution is not to leave rural households on the rollercoaster of volatile fossil fuels. We need to increase the transition to home-grown clean energy, insulate homes and ensure that the warm homes plan works for rural and off-grid homes.

--- Later in debate ---

[Martin McCluskey]

Well, the hon. Member was a Member of the party that was last in government, let me say that, and I find it difficult to listen to him tell us about the lessons that we should have learned. We should never have been in this position, and we should not be in a position again where we are facing higher energy prices because of an international situation, and where we are having to deal with an unregulated market in heating oil. I argue that the then Government should have looked at this in 2022 and determined what action needed to be taken.

I will explain what we have done so far. The CMA is conducting an investigation at speed. These investigations normally take around a year, but it is going to conduct this one within 12 weeks. It has already completed the evidence-gathering stage, and it is now in the process of examining that evidence. I hope that it will come forward with the report in June. The Prime Minister has been clear that we will look at what comes forward from the CMA and examine the case for regulation.

Hon. Members across the Chamber have spoken about a price cap, but I do not want to prejudge the work of the CMA. There have also been suggestions about minimum orders and price guarantees—there a number of different proposals on the table—but we have to ensure that we make the right decision, and do not end up with unintended consequences that could make the situation worse. In a market with a large number of players, many of which are quite small rural businesses, it is especially important that we do not make the situation any worse. We are looking at a range of options.

The Chancellor has written to the CMA to ask that it remains vigilant across heating oil prices and tackles any unjustified increases that it might find. The Government are also in daily contact with industry to understand the drivers of recent price movements. We have reminded heating oil distributors of their commitments under the trade association code of practice.

[Pippa Heylings]

Does the Minister have a timescale for when he expects the review of the market and any recommendations to come back from the CMA? When will the Government enact them? Will they be part of the energy independence Bill, or is there another way in which they could come into effect quite quickly?

[Martin McCluskey]

I hope the report will come back to us some time in June, and then we will examine it to determine what may be required in terms of further action. I want us to move as quickly as possible. I have another meeting with the chief executive of the CMA tomorrow to discuss progress on the market investigation and ensure that work is carrying on at the pace that we want. We are not moving slowly. We have already accelerated this process—it was a year, and it is now 12 weeks. That is significant, but we obviously want it to move as quickly as possible.

Let me turn to the wider structural issues that we face in the energy sector. We recognise that the heating oil sector is under-regulated. Unlike gas and electricity, heating oil is not regulated by Ofgem, and we will put that right by exploring what regulations are needed to protect consumers and get them a better deal.

Taking a step back, ongoing events provide us with yet another clear reminder that we must get off the rollercoaster of global fossil fuel markets and on to the path of clean, home-grown energy that we control. We will learn the correct lessons from the crisis, unlike the previous Government, who went through the situation in 2022 and did not. In our mission to make the UK a clean energy superpower, we have already brought in £90 billion of investment in clean British energy. In the light of spiking oil and gas prices, we intend to go further and faster in the pursuit of national energy security.

We are bringing forward the next renewables auction, just months after the most successful auction that we have ever had, which secured enough power for the equivalent of 16 million homes. We are making plug-in solar available for the first time in Britain so that families can buy a low-cost panel straight from a supermarket and set it up on their balcony or in their garden.

We are speeding up delivery of the £15 billion warm homes plan. I heard what many Members said about the fabric of housing. There is obviously support within the £5 billion that we have set aside for low-income schemes, but there is also work going on about low interest and no interest consumer loans. I am trying to accelerate that work so that we can get that to people as soon as possible.

[Pippa Heylings]

We welcome the publication of the warm homes plan, but we have not received details of what will replace the energy company obligation 4 programme, which was run through local authorities. Can the Minister tell us when he expects that detail to be available? Will it be published ahead of the winter so that it can be applied and homes can be upgraded?

[Martin McCluskey]

As the hon. Lady knows, the Department runs a range of programmes. We took the decision to abolish ECO4 because it was not working effectively. In some cases, it was costing more to find people who needed the measures than it was to deploy the measures. The Department has been provided with an additional £1.5 billion, which took the total up to £15 billion for this financial year. That money is being deployed through the local government schemes—the warm homes social housing fund and the warm homes local grant. That is enhancing what has already been provided to low-income households through the Department.

As I say, £2.7 billion of capital is being deployed to provide low interest or no interest consumer loans. We need to accelerate that. At the moment, we are probably looking at early next year, but I would like to see that come forward so that we can use those consumer loans as a response to the current situation. We know that there is significant demand for home upgrades, including solar, battery and heat pumps, but we have to give people the support they need to take up those options.

We will speed up the delivery of the £15 billion warm homes plan—the largest home upgrade programme in British history—and we are reforming nuclear regulations following the Fingleton review so that we can fast-track new nuclear power stations.