PARLIAMENTARY DEBATE
Road Fuel Prices - 3 July 2023 (Commons/Commons Chamber)

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on road fuel prices.

From rural hamlets to coastal communities, it is a properly functioning market that ensures fair prices for motorists, but for that market to function customers need transparent data to find the best price. On that basis, when we saw fuel prices rising last summer we asked the Competition and Markets Authority to investigate whether the market was working for customers as it should. Today, the CMA published its final market study report and I am shocked by its findings: rising fuel retail margins, and clear evidence of a rocket upwards and a feather downwards in the pricing pattern for diesel.

It is completely unacceptable that consumers have been paying more. The financial impact of the 6p per litre increase, just in the fuel margin, from 2019 to 2022, cost customers of the four supermarket fuel retailers £900 million last year alone. Asda’s fuel margin target was three times higher for this year than in 2019 and Morrisons doubled over the same period. It is wrong that in a cost of living crisis drivers do not get a fair deal on fuel and end up being overcharged.

Motorists should not be used as cash cows by the fuel industry. The Government will not stand for it and I know this House will not stand for it. Therefore, we accept the CMA’s recommendations in full. We will create a statutory open data scheme for retail fuel prices and an ongoing road fuel prices monitoring function for the UK market. We will consult on the design of the open data scheme and monitoring function as soon as possible this autumn, but that is not enough. I have asked the CMA to have a voluntary scheme up and running by next month and I fully expect fuel retailers to share accurate, up-to-date road fuel prices. The CMA will also continue to monitor fuel prices.

I demand that fuel retail bosses stop ripping off consumers, by making prices available so that the market can operate as it should. Transparency is vital for competition and to keep prices down.

I am extremely grateful to the Minister for Energy Security and Net Zero and am delighted to see him, but I am disappointed not to see the Chancellor of the Exchequer. I would have thought that this was something that he cared about.

The problem is that the Government have stood for this over the past year. This morning, right under the Government’s nose, greedy petrol retailers imposed an additional cost of more than £900 million on people filling up their cars. Retailers swiftly passed on price increases in the wholesale market to drivers, and the prices rocketed. Yet when the wholesale prices dropped, prices were lowered only very slowly. I think we could all see that for ourselves. The RAC called this

“nothing short of astounding in a cost-of-living crisis”,

which confirmed that

“supermarkets haven’t been treating drivers fairly at the pumps”.

This affects not just the cost of driving. Higher road fuel prices have a knock-on effect on inflation across the economy, pushing up prices in every sector of our country.

The CMA makes it clear that rural areas still face the highest prices. Where supermarket pumps are fewer and further between, such as in Cumbria and Somerset, fuel retailers are likely to have costs that are higher still. The CMA found that fuel prices in rural places, such as my own in Westmorland and Lonsdale and in Somerton and Frome, are on average 1.2p per litre higher than those in urban areas. Of course, in rural communities with poor public transport links, people have no choice but to drive and the distances to travel are so much greater, affecting, in particular, people who work in the care sector. Once again, rural communities feel taken for granted by this Government.

One solution should be to expand the 5p per litre fuel duty relief scheme to those many isolated parts of Cumbria that are not currently covered by it, so that families in Cumbria are not left at the mercy of the most expensive fuel prices.

Why did the Government fail to stop greedy retailers hitting families with an almost £1 billion excess fuel bill in the first place? Will the Chancellor and the Prime Minister summon those company bosses to Downing Street and press them to return those unfair profits by lowering their prices? Will the Government expand the rural fuel duty relief scheme to more areas, to support communities such as mine that are struggling with the highest petrol prices?

I thank the hon. Gentleman for his question. He and the RAC are right to highlight the particular issue in rural communities such as those that he and, indeed, I represent, and the particular pressures on consumers there. He will understand that rural fuel duty relief is a matter for the Chancellor and that what we need is a properly functioning market. That is why we are implementing the findings of the CMA in full and putting in place an interim regime, starting next month.

I call the Chair of the Transport Committee.

Towards the end of last year, the local radio station in Milton Keynes, MKFM, published research showing that, although there was considerable competition in Milton Keynes, petrol and diesel prices were substantially higher across the board than those in equivalent urban areas. I very much welcome the proposal for a real-time fuel price comparator, but will my right hon. Friend assure me that the Government will keep an eye on price differentials between different urban areas and intervene if necessary?

As ever, my hon. Friend champions his constituency in this House. I completely agree. That is why the monitoring function is so important in tandem with transparency. We have to make sure that people can see the prices. We know that consumers are prepared to travel but, if they do not know that there is a cheaper price available 2 or 3 miles down the road, they will not access it. That is something that we aim to put right.

I call the shadow Minister.

The hon. Lady is right to highlight the cost of living crisis and the level of taxes. That, of course, is why her party getting into power would be such a disaster for ordinary consumers and motorists throughout the country. We have come through the pandemic and made sure we have kept the country afloat; for instance, the Government supported paying nearly half of everyone’s energy bills through the last winter. A Labour Government would be a threat to markets such as this, which we need to function properly, not in the way they would under Labour.

As for why this has taken so long, the hon. Lady ought to know, having seen the disaster of her £28 billion energy borrowing package, which dematerialised: it was a great announcement, but it did not survive contact with reality.

Order. I think we need to help the Minister. The subject of the urgent question is road fuel prices and I think we should stick to that. I call the Chair of the Treasury Committee.

When the Chancellor announced that he was cutting fuel duty by 5p a litre, which cost the Exchequer billions of pounds, little did he expect that, as outlined so persuasively today by the CMA, it would feed through immediately into the profits of fuel retailers—although cynical British motorists may not be surprised, because they observed it themselves on a day-to-day basis. I welcome the steps that the Minister has announced, and urge him to act with greater speed in implementing them, but is he as surprised as I am that he has been asked this urgent question by the Liberal Democrats, who voted at their conference to hike fuel duty sharply?

I would like to say I was shocked or surprised, but I am not because—as everyone in the House knows, except the tiny number who sit on the Liberal Democrat Bench—hypocrisy is their main method of behaviour. The initial Government cut in fuel duty of 5p per litre represented savings for consumers worth about £2.4 billion. We on the Conservative Benches are on the side of the motorist. We are going to make sure that the market works and motorists are properly served by it.

I call the Scottish National party spokesperson.

The Minister says he will not stand for motorists’ being ripped off, but that is exactly what Ministers have done. The Government have been complacent the whole time, following the 5p fuel duty cut.

Why has it taken the CMA so long to establish that motorists are being gouged by 6p per litre compared with 2019? It reported that diesel prices are an astonishing 13p per litre higher this year alone than they should have been. That is symptomatic of the “cost of greed” crisis. Asda received a fine for not complying with the CMA investigation. That shows an astonishing level of arrogance on the part of supermarkets that are ripping off their own customers. It is estimated that we are paying nearly £l billion a year in additional fuel costs due to the lack of competition. How does imposing an initial fine of £30,000 on Asda work as a deterrent when it is making so much money?

I am all for an open data fuel finder scheme, but really, is that it? I already use an app to shop around for cheaper fuel prices, so this open data will not necessarily bring competition in all areas of the UK, and reliance on an app obviously will not help those who are digitally excluded. What are the Government’s actual plans to ensure competition and reduced fuel prices, especially at motorway service stations, which are between 20p to 30p per litre more expensive? When will we see these fuel prices come down?

That is the closest I have ever seen the hon. Gentleman come to welcoming a Government response, so I shall take that with me. I do not mean to try your patience any more than I already do, Mr Speaker, but, as I said to the hon. Member for Bristol East (Kerry McCarthy), whether it is major energy packages or shipbuilding, we find that doing the work first leads to better long-term outcomes.

Given corporation tax, carbon taxes, the windfall tax, fuel duties and VAT, is not the bulk of the price at the pump, and of other fuels, now tax-based? Will my right hon. Friend remind us of how much is tax and urge the Chancellor to reduce some of those taxes to cut the cost of living?

I thank my right hon. Friend for championing the consumer, as he always does. As he will be well aware, tax is a matter for the Chancellor, but the whole House will have heard his passionate call to make sure that taxes are held down to the lowest amount they possibly can be. That is one more reason why we cannot have the Labour party taking control of the country.

In March, the RAC revealed that retailers are making a three times bigger margin on diesel than they were at the beginning of last year, and motorists are seeing absolutely no benefit from the Chancellor’s fuel duty cut. Given the Government’s dither and delay on taking any sort of action, how does the Minister feel when the Government’s flagship policy to help motorists is having little to no impact?

We are furious that these price cuts have not been passed on to consumers. That is why we asked the CMA to investigate and to get further into the detail, and it is why we will implement its findings in full.

As my right hon. Friend is aware, I have been campaigning on the issue of fuel prices in west Berkshire for about a year and a half. One thing that has been particularly disappointing is the fact that fuel prices in every single neighbouring constituency are 5% to 8% lower. I wrote to the CMA and I am pretty disappointed to read its response today, which tells us a lot.

I welcome the introduction of a real-time fuel price comparator, but such a tool already exists, albeit in a slightly clunky form. I draw the Minister’s attention to the fact that it is not enough just to tell people what the prices are at different pumps in their local area. It must be transparent to consumers whether they are in a general area that has higher or lower prices, so that their MP can make representations on what the supermarkets may be doing in that area and the CMA can intervene properly.

My hon. Friend has been assiduous and, as she has shown with her question, focused and detailed in trying to rectify a problem that the CMA has fully displayed today. It is an unusual way round, but I would be happy to meet her to discuss the matter further to make sure we put in place all the right elements, so that this transparency genuinely gets through to the consumer.

There is no doubt that fuel costs are driving up inflation, especially in rural areas. I think the fuel price checker has had a dampening effect in Northern Ireland because the supermarkets are always aware that that they are being looked on. However, does the Minister accept that his Government also have a responsibility? Net zero policies, with all their associated taxes—whether it is the emissions trading scheme, green levies or fuel duties—drive up prices, too. The Government have a role to play in reducing inflation as well as in transparency on supermarket prices.

The right hon. Gentleman is drawing the wrong conclusion from the sky-high prices of the past year or two. It is sky-high international fossil fuel prices that caused the enormous squeeze. The faster we can move to cleaner and cheaper sources of energy, the sooner we can ensure that our constituents save money and contribute to dealing with what is an ever more serious threat.

Having brought a ten-minute rule motion on this subject some eight years ago, I am delighted that patience has finally paid off. One issue I was raising at that time was the inequality between the prices in towns and those on motorways, which the Scottish National party spokesman has mentioned. Is my right hon. Friend confident that the measures being brought in today will reduce those 15p or 20p premiums on road fuel prices at motorway service stations compared with normal areas?

As so often, my hon. Friend has been ahead of me. The issue he raises is part of the picture; like him, I have observed that the captive market along motorways is subject to higher prices than elsewhere. I hope that can be part of our consideration to make sure we have a system that works at its best for everybody.

May I respectfully point out to the Minister that this is not a town versus country or urban versus rural issue? The RAC has identified that some retailers are grossly profiteering, taking a three times bigger margin than they were at the beginning of last year, particularly on diesel sales. For the avoidance of doubt, will he confirm that the Government scheme he has outlined today will apply to all fuel retailers, not just those at supermarkets?

I will write to the hon. Gentleman with the precise details of everybody who will be included. He is right to highlight that this is not just an issue in urban areas. However, in those areas there tends to be more competition and easier transparency than there can be in rural and coastal areas.

A couple of weeks ago, I drew the House’s attention to the fact that the same supermarket tanker would unload fuel at 10p a litre cheaper in one place than it would if it came 10 to 15 miles up the road to my constituency. If today’s report does not fix that, it will not have been good enough and the Government will have more work to do. I hope that my right hon. Friend will give me some reassurance on that point.

We have to make sure the market works. Transparency is our biggest single weapon, and we need to be doing this in a way that reaches people, be they digitally enabled or not; we are wrestling with those details. Let us look at the alternative to a market-based system—other countries have tried it, as it is a populist measure. It does not work, it leads to a shortage of supply and it ends up creating the very dominance that we seek to ensure is not exploited in systems such as we have seen in this CMA report.

The hon. Member for South West Bedfordshire (Andrew Selous) asked a good and apposite question. In February, I wrote to all the major supermarkets that have outlets in Chesterfield asking them why they were retailing petrol for 10p more a litre there than they were selling it for just 10 miles up the road in Sheffield. They were very transparent and honest about this, saying, “ It’s a market where we think we can make more money out of Chesterfield residents than we do out of Sheffield residents. That’s why we charge you more.” That is despite the fact that there is no additional cost to getting the fuel there. Although I welcome the greater transparency, making it easier for consumers, what they will see in Chesterfield is that they are paying more than they would up the road in Sheffield. Is there anything in what the Minister is announcing today that will empower people in Chesterfield to bring their prices down?

Transparency.

The good people of Bridport and Dorchester in West Dorset have had to pay up to 20p a litre more than those in towns not far away. The Liberal Democrats have been silent about that throughout the entire duration, so it is somewhat hypocritical of them to bring this matter to the House today, particularly given that they voted to increase the price per litre. Although I welcome what the CMA has had to say in its report today, it does not really deal with the issue we are seeing of rigorous yield management by supermarkets with their petrol prices. That is not a matter of competition; that is where they believe they can get more money out of a particular group people or community. I would be very pleased if the Minister would meet me to look at how we can take this forward and grasp that issue.

I would be delighted to do so.

Now that we know that competition on fuel prices has weakened in recent years and that that has led to inflated prices, particularly in my constituency where, despite a campaign for fair prices led by Stuart McMillan MSP, we have been paying over the odds for years, may I seek a guarantee that supermarket food prices are not following the same pattern?

Following this report, the CMA has decided to look into the supermarkets and will report back as soon as next month.

I thank the CMA for its report and the Government for accepting the recommendations, although I think we are putting too much faith in price transparency to solve the market problem. I was interested to see in the trend profit margins for supermarket retailers and non-supermarket retailers that supermarkets are consistently increasing their margins while non-supermarket retailers are not. Will the Minister follow up with retailers, in the light of this report, to make sure that we check that the margins come down next year and in the following year?

I thank my hon. Friend for his typically penetrating question. As I said, one of the recommendations is to maintain a monitoring function, which will help to give us the market intelligence so that if further intervention is required, we will have the data on which to base it.

Patchy public transport contributes to high costs for rural households, as many people have no choice but to use their cars for essential journeys. Despite this, the rural fuel duty relief scheme does not apply to a single area in Wales. Will the Minister commit to pressing the Treasury to reconsider the scheme to take into account access to local public transport networks, as well as providing a guarantee of inclusion for Welsh areas?

I thank the right hon. Lady for her question and will ensure that His Majesty’s Treasury is aware of it.

The good people of Scunthorpe spotted this issue some time ago, so I thank my right hon. Friend for his work on it and the measures he is recommending. Has the similar open-data scheme that has been trialled in Germany resulted in a boost in competitiveness? If so, when does my right hon. Friend think we will start to see the results at the pumps here?

I hope from as soon as next month, under a voluntary scheme. My hon. Friend gives me the perfect opportunity to repeat how determined I am to see the companies provide the data so that we have something far less clunky, as it has been called, and far more comprehensive than what we have today, and so that that can lead to the benefits that have been found elsewhere.

I am not certain that the seriousness of the situation that faces rural constituencies is being taken appropriately into account. My Angus constituents live in towns and landward areas that are miles away from supermarket fuels. They pay the highest prices for fuel, they have no public transport to speak of so have to use their cars and vehicles, they pay the highest delivery prices and they are often on the lowest wages. If the Minister thinks that greater transparency over fuel prices is going to help, he is stretching the point. My constituents in Angus know how expensive their fuel is and they know how far they have to travel to get cheaper fuel. This announcement will not fix the situation. We need the Treasury to get its act together and intervene in what is essentially critical national infrastructure, which is what road fuel is.

I will take that as a further representation to His Majesty’s Treasury.

Motorists in and around Kettering have long suspected that petrol and diesel forecourt retailers have been inflating prices well above where they should be. Prices go up far too quickly and come down far too slowly. Given the fact that the petrol and diesel forecourt retailers effectively ignored the letter from the Business Secretary in May 2022, will the Minister assure my constituents that the Competition and Markets Authority will continue to monitor the market closely to ensure that does not happen again?

My hon. Friend is quite right. Urging them to behave properly is not enough, which is why we will not only put in place a mandatory system to ensure that the data is there but ensure ongoing monitoring so that, as I said to our hon. Friend the Member for North East Bedfordshire (Richard Fuller), we have the data on which to base further intervention should that be required.

This is a very welcome announcement, especially in respect of the information on fuel-price competition that will allow drivers to look for fuel at petrol stations that are closer and have better prices, thereby enabling them to save money. On any potential fuel fund offers, there is an older generation—I am probably one of them—who perhaps do not use apps and therefore do not understand how they work; what steps will the Minister take to ensure that they have access to information on fuel funding that is accessible for them and easily understood so that they, too, can take advantage of what is on offer?

I thank the hon. Gentleman for his question. I would not want to finish without mentioning that, as of Monday 26 June, unleaded petrol is 143.43p per litre, and that has reduced, on average, by 47.5p from June last year, and diesel is 145.6p per litre, and that has reduced by 53.3p per litre on the previous year. I will write to the hon. Gentleman to make sure that I can properly inform him in answer to his question.

This report clearly shows that residents in Burnley and Padiham and our villages have been overcharged for their fuel for too long. Does my right hon. Friend think that the Competition and Markets Authority now needs to relook at the ownership changes at Asda?

As the Minister for Energy Security and Net Zero, that perhaps stretches slightly beyond my brief, but, as those on Treasury Bench will have heard my hon. Friend’s question, I am sure that he will be able follow up with others who have direct responsibility.