[Un-allotted Half Day] — Cost of Living

Part of Opposition Day – in the House of Commons at 3:38 pm on 9th July 2008.

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Photo of Mark Oaten Mark Oaten Liberal Democrat, Winchester 3:38 pm, 9th July 2008

I am not sure that I can agree with the final comment made by Mr. Bone. In many ways, I do not believe that the cost of living should be such a party political issue because, as the Minister and others have said, there are many matters that are out of the control of Westminster politicians.

A lot has been said about the problems of poverty connected to the current change of economic pace, especially for the hardest-hit families. We have talked a lot about fuel poverty, but I want to say something about a group of people, the middle classes, who are often ignored these days. Quite rightly, they are not a political priority, and they are not usually affected by changes to the economy, but my judgment is that the current downturn—or beginning of recession, whatever one may wish to call it—is starting to impact on a new group of people. I am talking about those hard-working couples—they often have two children, and often both parents are working—who risk being ignored by politicians. Suddenly, and for the first time, they are finding that they are being hit very hard indeed by the cost of living. Of course, it is absolutely right that the Government, with their winter fuel allowance and various tax credit schemes, focus on the poorest in society, but let us not ignore those others—the many hard-working individuals—who fall outside the schemes and are suffering and finding things tough. I want to link that point to the groups in rural communities who, given their dependency on vehicles and on certain forms of energy, are finding things particularly tough.

To try to find out what was going on in my own constituency, I created a non-political survey that was advertised in the local newspaper and did not mention any political parties. I do not for a minute suggest that it is a scientific survey, and I hope that the questions were not leading. I can see that the Minister is cynical about the prospect of any politician being able to put in a newspaper anything without a political word in it, but the survey is totally non-political. I am genuinely interested in finding out some information, and to be perfectly honest, I am not standing at the next election, so there is no political gain from my doing so.

The responses so far have been quite alarming. They show that the groups being hit by the changing economic climate are not those who are usually hit. The figures suggest that 90 per cent. of people who filled in the survey believe that they are going to be worse off this time next year, and in line with the some of the more respected surveys from various think tanks and groups, there is certainly doom and pessimism about where the situation is heading.

In the survey, we looked at four indicators: people's attitudes towards food prices, fuel, energy and housing. On each, there was pessimism and concern about what might happen. Petrol is a particular concern for Members who represent large rural constituencies. Often, families are dependent not on one car but on two, and people said to me in the survey that it now costs them about £20 a week more to fill up their cars. I suspect that, anecdotally, we could all say the same. I can remember when it cost me £50 to fill my car up about a year and a half ago; it certainly costs me £70 now. It is the same for my wife, which means that it costs £40 a week extra to fill our car up, and although I was off the day we did maths at school, that to me is a lot of money each month—about £160 a month extra just to fill up the car for many couples living in rural communities.

That is an awful lot of extra income to find and to absorb, and when the Government and others say, "Yes, but there could be a hidden benefit, in that it might persuade people to use alternative transport," I must say that I would be laughed at in the 56 villages in my constituency if I told people to try to take a bus, a train or another form of transport. For couples with children, trying to do school runs or having to take complicated routes, there is just no rural transport network that can act as a realistic alternative. Some respondents to the survey said that where there had been the opportunity to walk to a post office or to a shop as an alternative, those rural post offices have now disappeared—even more requirement, therefore, to get into the car and absorb those increased petrol costs.

The second indicator was energy prices, and the survey shows that individuals' electricity, gas and fuel costs have been increased by about 20 per cent. However, owing to the focus on rural areas, I want to talk about those individuals who are not able to obtain gas but are dependent on oil to heat their homes and to provide their fuel. They have faced an enormous increase in costs. I declare an interest, because my monthly direct debit for oil is £225 and has gone up enormously over the past two or three years. If one gathers together any group of individuals in villages or communities that cannot obtain gas, they first talk about trying to find a different oil provider in their area. The figures are enormous, and they are hitting rural communities very hard, because there is just no alternative for them. They cannot switch suppliers as one might do with gas; they are dependent on oil.

The regulation of gas and electricity would help enormously; I hope that the Minister will pick up on that point in her response. Ofgem and Energywatch are legally required to act as the consumers' champion, to make sure that something at least is done on prices. However, oil for heating one's house and liquefied petroleum gas fall outside the regulatory system. The Minister may or may not be aware that changes to the regulation of energy are due to be made in October and November. It would be enormously helpful to the millions of people who are dependent on oil if that form of fuel were also regulated, and if Ofgem looked at the matter, just as it does in relation to gas and electricity. My fear is that because that form of fuel has not been regulated, companies were able to get away with prices that would not have been acceptable in the gas and electricity markets.

Democratic Unionist party Members touched on energy prices and on the fact that individuals who pay by pre-pay meters lose out enormously. I am lucky enough to be on the Business, Enterprise and Regulatory Reform Committee, which has just concluded a study of energy prices. When the big six suppliers came to give evidence, I asked them to justify the fact that customers who use pre-pay meters pay 17 per cent. more than those who pay by direct debit. They struggled to do so. They claimed that a meter scheme was more expensive to administer. Of course there will be more administration costs for people who have meters than for people who pay by direct debit, but the increased costs are not equal to the increase in prices. It would help enormously if the Government could speed things up and look at ways of changing the market. The Government could do something about introducing smart meters, as opposed to pre-pay meters; they could help in that respect. Finally on energy, I asked one of the big six to try to give me an indication of how people were coping with increased bills. One of the representatives said that their company's bad debt had doubled in the past 12 months. That graphic statistic shows how difficult individuals are finding it to pay those bills.

The Minister did not really answer the question that I put to her in an intervention about the comparison between our energy prices and those in mainland Europe. It is my understanding, from the evidence that the Select Committee received, that owing to the way in which our market is constructed, we as consumers pay more for gas and electricity than our colleagues in mainland Europe. They, of course, face the same global economic problems that we do. We need to look at how the market is constructed in this country, because it is adding to our problems.

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