Heating Oil Support

Before we come to the statement on heating oil support, I must note my disappointment about briefings to the media before important announcements are brought to this House. It shows a deep discourtesy to this House and its Members and a worrying pattern of behaviour from the Government. As the Public Administration and Constitutional Affairs Committee has stated,

“making the most important statements in the first instance to Parliament means doing so before they are made to the media and not at the first available opportunity thereafter”.

The requirement to come to this House is set out in the Government’s own rules, in their ministerial code, and they must do better. Furthermore, a statement of this importance ought to have been made by the Secretary of State, and I am sorry that the Minister has been put in this position.

Thank you, Madam Deputy Speaker. I take my responsibilities under the ministerial code very seriously and will make sure that that message is communicated.

With permission, I wish to make a statement on the action we are taking to protect British people from the soaring costs of heating oil due to events in the middle east. It is now more than two weeks since the conflict in the middle east began. My thoughts and the thoughts of the whole House will be with the millions of people affected, including the British citizens in the region and the troops serving there, but just as we saw four years ago when Putin invaded Ukraine, the impact of this conflict is being felt far beyond the battlefield. With Iran continuing to target energy infrastructure and shutting off the strait of Hormuz, the price of crude oil on the international market has rocketed, and I know that the 1.5 million UK households that use heating oil to heat their homes will be understandably concerned. Indeed, some customers have already reported prices doubling or being unable to secure a delivery at all. Let me be clear that this Government will not stand by and let British families suffer. Let me set out the direct action that we are taking today.

First, we will always stand up for the most vulnerable in our society, and I can confirm to Parliament that we are committing over £50 million to help low-income families who use heating oil. We are allocating this funding where the greatest need is, based on census data, and it will go directly to the devolved Governments with the expectation that it will be used to support vulnerable households. We know that this is a particular issue in Northern Ireland, where almost two thirds of homes rely on heating oil, and we have allocated £17 million to support them. We will continue to work closely with the Northern Ireland Executive on all our plans that I will outline in this statement, given the particular circumstances that exist there and the reliance on heating oil.

In England, funding will be distributed by local authorities via the crisis and resilience fund, which comes into effect from 1 April, and £3.8 million will be passed to the Welsh Government and £4.6 million to the Scottish Government to deliver to affected households through existing programmes. I am today calling for the Scottish Government to ensure that this money is passed to Scottish families as quickly as possible.

Secondly, as well as providing direct support for consumers, we are working with the sector to ensure that pricing is always fair, transparent and justified. This Government will not tolerate profiteering or unfair practices, so we are in daily contact with industry to understand the drivers of recent price movements and have reminded heating oil distributors of their commitments under the trade association code of practice. The Chancellor has also written to the Competition and Markets Authority to ask it to remain vigilant across heating oil prices and to tackle unjustified increases, and we urge customers to share any evidence of price manipulation with the CMA.

I call the shadow Minister.

I thank the Minister for giving me advance sight of the statement, although I really have to take issue with the Prime Minister’s earlier comments, taking credit for Ofgem’s decision to lower the energy price cap. That decision was taken not by the Government, but by Ofgem using a Conservative mechanism, and it was in fact taken weeks before the current crisis began. But why let the facts get in the way of this Government’s spin?

I am glad to see that the Government have today taken steps to support those households across Great Britain and Northern Ireland that rely on heating oil—steps that those of us on this side of the House called for when prices began to rise weeks ago. Those households are, as the Minister has highlighted, acutely exposed to price shocks, and the stories we have heard from consumers across the country are very concerning indeed. Just this morning, I heard from a constituent who faces a lump sum bill of over £1,000. These consumers are often served by a single local supplier, meaning that there is no realistic competition.

Let us be under no illusions: this announcement has come about only after the pressure put on the Government by the Opposition. The Leader of the Opposition and my right hon. Friend the Member for East Surrey (Claire Coutinho) called for these actions almost two weeks ago. Like everything with this Government, they end up doing the right thing only after weeks of dither, delay and inaction—but today’s announcement will be welcome news for rural households, and nowhere is that more apparent than in Northern Ireland, where over 60% of homes rely on oil for heat.

Although I welcome the announcement, I would be grateful if the Minister could provide some clarification. First, can he explain what, if any, support will be made available to those who heat their homes with liquid petroleum gas? Furthermore, it appears that the allocation of funding for Scotland, Wales and Northern Ireland is to go directly to the devolved Administrations and not directly to local authorities. Considering that the Minister represents a Scottish constituency, he understands just as well as I that handing over a cheque to the Scottish Government does not guarantee that money will be spent where it was intended to be spent. Can he therefore outline how this Government will ensure that those in Scotland, Wales and Northern Ireland get the support they need, and that this funding is not siphoned off for other priorities determined by devolved Ministers? Why was this money not awarded directly to local authorities in those nations as it is being delivered across England?

Dear, oh dear! Where to begin? I will do my best to wade through the many points that hon. Gentleman raised.

First, the energy price cap is reducing on 1 April because of actions that this Government took to take £150 out of energy costs. That will see every bill in this country reduced. People listening should hear that their bill will go down in April, and that is protected to the end of June. The hon. Gentleman appears to be criticising us for a lack of speed. If he would like to volunteer how many days it took for the last Conservative Government to provide support for people on heating oil, I am all ears. How long did it take his party in government? It took them nearly 200 days. We are around three weeks into this conflict in the middle east, and we have come forward with support today.

LPG will be eligible in so far as the English schemes that we have funded additionally today through these actions, and we are making that clear to local authorities in a letter that has been sent from Ministry of Housing, Communities and Local Government Ministers today. It will be for the devolved Administrations—Wales, Scotland and Northern Ireland—to determine how they distribute the funds. I hope that they will work at the same speed as this Government to ensure that they are available on 1 April, but all nations already have crisis funds available that they could be deploying for this purpose, just as we will be deploying them for this purpose in England from today; if there are people in crisis now applying to the existing household support fund, they will be eligible for support from today, and the additional funding will come after 1 April.

The hon. Gentleman talked about the funds being Barnettised, but the funds are not being Barnettised; Scotland is not being, in his words, short-changed. The funds are being allocated based on census data on how many heating oil-fuelled households there are in each individual nation. That is why Northern Ireland comes out with £17 million, Scotland with £4.6 million and Wales with less. It is not a Barnett share; it is based on the number of households that use heating oil.

I call the Chair of the Energy Security and Net Zero Committee.

Unlike the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), I give an unqualified welcome to today’s announcement, which will support some of the most vulnerable people in the United Kingdom—some of those in greatest fuel poverty. I have to say to the Minister, though, that we invited him to join us at our Committee session tomorrow afternoon to discuss the warm homes plan, following last week’s excellent evidence session. So far he has not been available. It is not too late for him to change his mind if he wants to, but for now I will ask him one question. Given that people on heating oil are at the sharp end of the impact of the spike in oil and gas prices, will he consider giving them preferential treatment when it comes to the warm homes plan so they can benefit from the range of measures, including on energy efficiency, and the reduced costs that it can deliver for them?

I am always happy to come to the Committee; I understand that discussions are ongoing about a longer evidence session just on the warm homes plan to give it the attention that I am sure my hon. Friend agrees it is due. I agree that the warm homes plan should target some of the lowest-income people in our country. That is why we have allocated well over £1 billion for some of the low-income schemes in the warm homes plan, and why we have also focused on how we target rural households, many of whom will be affected by the heating oil situation.

I call the Liberal Democrat spokesperson.

We welcome the Government finally taking action to protect households from soaring energy costs due to the middle east crisis, following calls from those on the Liberal Democrat Benches and MPs of all parties. However, today’s intervention is a sticking-plaster solution, with too many households potentially falling through the cracks and not receiving support. We have heard that those families who must use oil for heating are the most exposed and defenceless, caught in the crossfire of Russia’s war in Ukraine and now the volatility in the middle east.

The heating oil market needs regulating. The Liberal Democrats are calling for the immediate introduction of a three-month VAT holiday on heating oil, as well as a proper price cap, because these households deserve the same protection as those that use gas and electricity. The real way to protect households and businesses is not by parroting Trump’s “Drill, baby, drill” mantra and buckling in for more roller-coaster rides that burn a hole in people’s pockets but by accelerating the transition to secure, home-grown clean energy that we control and extending preferential treatment to the warm homes plan, to help those homes that use heating oil to electrify and get off volatile fuel that we do not control.

Will the Government agree with the Liberal Democrats and set a price cap for heating oil to shield off-grid households? Also, if the Government want to provide targeted support, will they learn the lessons from the covid pandemic and the 2022 energy crisis and immediately enact a data-sharing scheme between Departments, including the Department for Work and Pensions and the NHS, and devolve this to local authorities to enable them to deliver targeted support to those who need it the most through, right now, the crisis and resilience fund that they want to be adopted on 1 April?

I thank the hon. Lady for her constructive tone, for working together on some of this, and in particular for her comments on the need to move towards a transition to ensure our energy security and, ultimately, to lower bills.

On the hon. Lady’s point about a cap, the market for heating oil, as she will know, is very different from the market for electricity and gas. The reason that the price cap was introduced many years ago was the potential loyalty penalty that existed, whereby consumers who were with an individual company for a long time were penalised for that. Heating oil, by contrast, is supplied through a highly competitive market. That is why we have asked the CMA to look at this in more detail and we will examine its findings to establish what regulation may be required.

On the hon. Lady’s comments regarding the warm homes plan, the low income fund will target many of those people. She may also be interested to know that about 50% of the grants given out under the boiler upgrade scheme are to rural homes, many of which will be in this situation, that are transitioning from oil heating to electrified heating through a heat pump.

I am very grateful to my hon. Friend for his statement. Giving support to people who are off grid is vital; however, Thanet Earth, which is near my constituency and employs a number of my constituents, actually grows 20% of the tomatoes that are sold in this country. The business is profoundly energy intensive and is doing all the right things on decarbonising its energy supply, yet it is still profoundly affected by such fossil fuel spikes as those we are experiencing today. Will the Minister look at what is possible to support such energy-intensive industries through this energy crisis?

I know that my hon. Friend has been a champion for such industries in her constituency, including Thanet Earth. The Minister for Industry, my hon. Friend the Member for Stockton North (Chris McDonald), is working through the implications of this crisis for such businesses as we speak, and will come forward with plans in due course.

I thank the Minister for his statement. One characteristic of volatile energy markets is that when wholesale prices rise, consumer prices tend to rise like a rocket, and when the wholesale price stabilises the consumer price tends to fall like a feather. Can the Minister assure me and my constituents that in the conversations that he is having with the Competition and Markets Authority he is also looking at whether, when the market returns to normality, prices will fall as quickly as they have risen in this volatile moment?

The hon. Member makes an important point. I know Ministers in my Department have been discussing that with the CMA and will carry on doing so. The CMA has started its work looking at the heating oil market and will, I hope, come forward soon with proposals that we can examine, to determine whether further regulation is required.

I welcome the Minister’s statement, which will reassure a lot of families in Northamptonshire. Could he give us a bit more detail on the timeline under which this will be brought in, and assure people across Northamptonshire that the process will be easy to access, without bureaucracy?