Fuel Poverty

Roger Williams Excerpts

Wednesday 19th January 2011 Westminster Hall

[Guy Opperman]

I would: the simple truth is that customers, wherever they are and whatever problems they face, need to shop around. If they do not, they will face the problem that the hon. Gentleman describes, which I and others in Hexham have come across. They will be deprived of the ability to buy fuel on an ongoing basis.

[Roger Williams (Brecon and Radnorshire) (LD)]

The hon. Gentleman raises an important point that affects rural users of heating oil. He will not be surprised to hear that all the companies on a price comparator website were owned by one company—DCC. It is hardly surprising that there is no differential in the prices that they offer, and that customers are unable to make an informed decision.

[Guy Opperman]

A number of independent organisations in Hexham provide fuel—WCF, Wallace, Par Petroleum and Johnson Oil. Those four are the last independents that supply the area. It is amazing to chart how such companies have been bought up over the years.

What worries me most is that, without a strong local and competitive market, it is a lot easier for companies to hike up prices, delay things and move people on, explaining that they will produce a fair price at some stage or the right price only when they turn up. I am in negotiations with the Office of Fair Trading to ensure that it does investigate these matters. However, the reality is that it needs information from those whom we represent. I therefore urge individual constituents to write to the OFT, bringing such information to its attention, and I am doing so for people in my area that have complained.

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[Albert Owen]

I will certainly bring the debate back to fuel poverty, because petrol is a fuel, people are in poverty and the VAT hike is compounding the problem of the increase in their daily household bills, because they have to pay extra fuel duty on top of paying extra money for the off-mains supply of gas. It is a big issue in my area; people who are already paying additional money for their fuel also have to pay extra for their travelling costs, and as a result their household budgets have been squeezed considerably. That is the point that I am making. It is a serious point about fuel poverty and not just a political point about the VAT rise, although in my opinion that rise could have been avoided. It was a political decision and on top of the duty escalator it has hurt periphery areas the hardest.

I support the Government in looking for a stabiliser mechanism, because the peaks and troughs in prices are too great. I want to see some stability in prices, so that we can hold household bills down. I also welcome the proposals for a freeze on duty when there is hardship. I lobbied for that for a long time, and we achieved limited success under the previous Government. However, we need some stability because of the volatility of the prices. I want to see some sort of stabiliser mechanism, and I also want to see periphery areas receiving some benefit from that mechanism, which is an issue that the Government propose to re-examine. The pilot schemes that the Government are talking about for diesel and petrol are limited to the Western Isles and to St Ives and other parts of Cornwall. I want to see a Welsh and Northern Irish dimension to that programme, to include periphery areas in those regions.

[Roger Williams]

West Wales.

[Albert Owen]

And west Wales. I am calling for that extension, because those of us in those periphery areas are paying so much extra for fuel. The argument that we hear about petrol and diesel delivery is the same one that off-grid providers use; they say that they pay an extra amount to deliver fuel to those periphery areas. I do not think that we should be paying that extra amount for fuel in periphery areas.

I hope that the Minister will take that point on board. I am supportive in principle of a stabilising mechanism, although I would like to see how it works in practice. I also want to see area rebates extended to Wales and Northern Ireland in addition to England and Scotland, because they will help to alleviate poverty.

The differences between us on this subject are small, although I do not agree with scrapping the Warm Front programme, which was a success. I am not sure about the details of the green deal, but I will support those measures that help to alleviate poverty. As I have said, it was wrong to raise the VAT on petrol and diesel, just as it was wrong of a previous Government to try to introduce VAT on domestic fuel. Governments can disinherit some of these measures. I hear the Government saying now that they have to go ahead with the fuel duty price rise because they inherited it. However, the previous Labour Government disinherited the plans to put additional VAT on domestic fuel, and we are all comfortable with that move now. It was wrong to propose such a rise, which is why we should re-examine VAT and fuel costings.

We need to have a proper regulatory system, and we need to bring Ofgem and the OFT together in a single body when it comes to off-grid supply. That point is important, and I hope that the Minister will take it seriously. I believe in the retention of the winter fuel payment, which is a universal benefit that helps to alleviate fuel poverty. I also want to see an extension to the gas mains, whereby we have a proper, clear way of moving forward and a mechanism that allows people to choose whether to connect to the gas mains.

I am conscious of the time, so I will leave it at that. We have a common endeavour here to alleviate poverty. I know that the Minister, as a member of the previous Energy and Climate Change Committee, is at one with me on that issue, and I look forward to hearing his responses to my points. Finally, I again thank my hon. Friend the Member for Islwyn for securing this important debate.

--- Later in debate ---

[Roger Williams (Brecon and Radnorshire) (LD)]

I apologise, Mr Gray, for not being here at the beginning of the debate because of other duties in the House. I shall take two minutes to mark up some other unfair practices that I believe take place among domestic heating oil suppliers, and which I have tried, unsuccessfully, to address in my constituency.

The Christmas before last, a couple who were moving into a new house and had never used heating oil, found the tank empty. They rang up a supplier and were given a price, which, because they had no understanding or no experience of oil, they accepted. It turned out to be exactly twice the going rate. I tried to take the matter up with trading standards officials, but they felt that they could not intervene. That is an example of unfair trading practices, and I have another from this Christmas when a couple in a very isolated house were asked to pay a £200 delivery charge on top of a very high price for the oil.

To give an example of my own—although I am not suffering—I ordered 2,300 litres of heating oil in October, but when I looked at the delivery note, I saw that only 1,600 litres had been delivered, at a price of about 40p a litre. To my surprise, in December, the company delivered another 1,000 litres of heating oil of its own volition, but this time at a price of about 65p a litre. My area still has the independent suppliers Calor and Watson, but the other four main suppliers are now owned by DCC. The Office of Fair Trading needs to look into that. I have written to the OFT before, and it has said that it cannot take on the issue, but I have now written again, as it appears that DCC has a substantial share of the market and might be in danger of abusing that position.

--- Later in debate ---

[Charles Hendry]

If the hon. Gentleman looks at some of the speeches that I made when I was the Opposition spokesman, he will see that I raised those exact issues. It has been argued that there are many competitive companies in this area. We have heard about some of the challenges to the market in this morning’s contributions. The matter is so important—it is such an enormous part of so many people’s household budgets—that we are determined to ensure that we get the policy right. We will consider how the market is working and the role that the OFT can take, which is primarily independent in its ability to assess these matters. We will also look at the role of Ofgem, as we reform its role as a regulator. It is critical that we learn a great deal from the lessons of this winter.

[Roger Williams]

I am encouraged by the Minister’s commitment to engage with the Office of Fair Trading in these issues. The OFT did eventually relent and conduct an inquiry into liquefied petroleum gas supplies. Customers now have greater power to shop around for better supplies of LPG, but they often do not understand what they can achieve by doing so. A publicity campaign could result in real savings for those customers.

[Charles Hendry]

There is a great deal in what the hon. Gentleman says not just about the benefits of shopping around, but about people understanding the benefits of buying early. The price increase happened extremely quickly. It rose from 40p at the beginning of December to 70p within two or three weeks. More people should be ordering in October and November. I hope that they will not have the experience that the hon. Gentleman had of only getting a partial delivery. We need to ensure that people understand that issue more fully.

The most important change that we need to consider is whether to take a fundamentally different approach to energy efficiency. In this country, we have some of the least energy efficient housing in Europe. From 2012, the green deal, which is part of Energy Bill, will provide the opportunity for householders to take action to improve the energy efficiency of their homes and to protect themselves against energy price rises through greater energy efficiency. We are also introducing a new energy company obligation to replace both the carbon emissions reduction target and the community energy saving programme. That will do more to help the poorest and the most vulnerable consumers and it will offer basic heating alongside insulation.

The key to the green deal is that the consumer should receive the benefit before they have to pay for it. We also hope that it will be of benefit to people who are in private rented accommodation, which is often the most difficult area to deal with. The landlord will no longer have to pay up front to cover the costs because they will be recovered over time from the people living in that property, as a result of a small addition to the Energy Bill. We hope that the landlords will decide to do that work voluntarily, but the Energy Bill will provide powers to require that work to be done, including a new power for local authorities from 2015 to require action to improve the worst performing homes. As the Energy Bill goes through the other place and, ultimately, the House of Commons, we are keen to discuss much of the detail and to ensure that we deal with the matter in the most effective way possible.