With permission, Mr Speaker, I would like to make a statement on petrol prices and the cost of living.
This Government are deeply concerned by any allegation that prices for consumers could have been artificially or unnecessarily driven up. The UK Government and regulators will provide any assistance necessary to the European investigators, and we expect the companies concerned to fully comply with these investigations. However, these investigations are at an early stage and the Commission has made it clear that investigations do not imply guilt. Until the facts are clear, it would be inappropriate to comment further on this investigation. I should also be clear to the House that these investigations are not directly linked to the allegations of market manipulation in the gas markets, which Ofgem and the Financial Services Authority are continuing to review.
This Government believe strongly that it is in our mutual interest for motorists and businesses to be confident that they are being treated fairly, and that when wholesale costs come down, these reductions are passed on transparently and without unnecessary delay. That is why we welcomed the Office of Fair Trading’s decision to look into the market for road fuels in late 2012. At that time, the OFT did not receive evidence on the impact on pump prices of potential manipulation of derivatives markets and the accuracy of reported prices of crude and wholesale road fuel that built the case for such an investigation. However, it did set out that it believes such manipulation is possible and encouraged market participants to approach the OFT and FSA, as appropriate, if they had evidence of such practices.
In a case such as this, where there are potentially cross-border issues, it is more appropriate for the Commission to lead the investigation. The OFT has and will continue to co-operate fully with the Commission.
This Government have taken direct action to ease the burden on motorists. Due to action taken in this year’s Budget, fuel duty will have been frozen for nearly three and a half years, the longest duty freeze for over 20 years. That builds on previous action to cut fuel duty, abolish the previous Government’s fuel duty escalator, introduce a fair fuel stabiliser and scrap two increases planned by the previous Government. As a result of Government actions, average pump prices are 13p per litre lower than if the Government had implemented the fuel duty escalator, and they are forecast to be 18p per litre lower by the end of the Parliament. Furthermore, as reported by the OFT, the UK consistently has among the lowest pre-tax petrol and diesel prices in Europe.
In the OFT’s investigation it identified an absence of pricing information on motorways as a concern and did not rule out taking action in some local markets if there is persuasive evidence of anticompetitive behaviour. The Government are now acting on this recommendation and increasing transparency of motorway fuel prices.
More widely, this Government’s reform of the competition regime will improve the speed, robustness and independence of decision making in UK competition enforcement. Creating a single Competition and Markets Authority and modernising its competition toolkit will improve markets and help consumers and businesses by providing greater coherence in competition practice and a more streamlined approach to decision making. The Government are also publishing a draft consumer rights Bill to give consumers clearer rights in law and to ensure that consumer rights keep pace with technological advances. That will give consumers greater confidence to take up new products, switch suppliers and make online purchases.
Although we cannot control volatile world energy prices, we can still help people get their bills down. The easiest ways to get energy bills down quickly are to get consumers paying the lowest possible tariffs and to reduce the amount of energy that is wasted.
We are ensuring that all households get the best deal for their gas and electricity by using the Energy Bill to give statutory backing to Ofgem’s retail market review proposals. Those proposals require energy suppliers to move consumers on poor value dead tariffs to the cheapest standard variable rate tariff, so that no customers are left behind on a poor value, out-of-date tariff. They will also create a new tariffs framework to reduce the number of tariffs that suppliers can offer to four per payment method and simplify tariffs so that the market is much more manageable for consumers. Customers will have personalised information from their supplier on their bills about the cheapest tariff that the supplier offers and any savings that they could make by moving to it.
These proposals will put consumers in the driving seat, giving them clearer choices and incentivising companies to compete hard for their custom. We hope that Ofgem can keep to its projected timetable, which could see measures begin to be implemented from summer 2013, with full implementation expected by March 2014.
Through the green deal and the roll-out of smart meters, we are helping people to reduce the amount of energy that they use so that they can have warmer homes for less and lower bills than otherwise. We know that the poorest and the most vulnerable often struggle to pay their energy bills. Through direct payments, such as the winter fuel payment and the cold weather payment, we are helping them directly to manage their bills.
We are also determined to ensure that Ofgem has the necessary powers so that consumers do not lose out when energy companies break the rules. Although Ofgem can fine energy companies up to 10% of their annual turnover for breaking the rules, unless it can agree compensation for consumers with energy companies, such fines are currently paid into the Consolidated Fund. That is why we are legislating, through the Energy
Bill, to give Ofgem consumer redress order powers. Those powers will fill the gap and give Ofgem a powerful weapon to ensure that consumers are treated fairly.
We take very seriously any allegations of price manipulation. The Government are determined to ensure that consumers and motorists get the best possible value for money. We will continue to take the necessary action to deliver value to the consumer.
With the greatest respect, I say to the Secretary of State that no amount of tariff simplification or sorting out retail at the pump will deal with the problem that we face today, which is allegations about how energy and petrol are bought and sold, and the way in which the market works.
The allegations that have been made about the three oil companies, BP, Royal Dutch Shell and Statoil, as well as the price reporting agency, Platts, are extremely concerning. They suggest that those companies have both colluded in reporting distorted prices and prevented others from participating in the price assessment process, with a view to distorting the published price. If the allegations are true, there has been shocking behaviour in the oil market which should be dealt with strongly. I therefore have three questions for the Secretary of State.
First, the Secretary of State will know that the OFT inquiry concluded at the end of January that the UK fuel market was operating fairly, and that a Competition Commission inquiry was not needed. Given the amendment that has been tabled for debate later today, it will not be lost on hon. Members that it is the European Commission, not any British authority, that is investigating this situation. In light of today’s allegations, will the Secretary of State say whether any British authorities have plans to revisit their own investigations? If the EU investigation uncovers any wrongdoing, it will raise serious questions about the effectiveness of our authorities.
Secondly, last year we tabled amendments calling for commodities such as oil and gas to be part of the Financial Conduct Authority’s regulatory net, but Ministers refused to act. We argued that the regulatory perimeter needed to be explicitly set out in the Financial Services Act 2012, and that it was insufficient just to add references to LIBOR. Does the Secretary of State now accept that the Office of Fair Trading and the FCA should be explicitly equipped to tackle attempts at rigging commodities trading, whether spot trading, forward contracts, futures contracts hedging or benchmark pricing indices?
Thirdly, when the allegations of price fixing in the gas market were made last year, we warned that opaque over-the-counter deals and a reliance on price reporting agencies left the market vulnerable to abuse. The latest allegations of price fixing in the oil market raise similar questions. I tabled a parliamentary question in February asking for an update on the earlier investigations, but the Government were unable to provide any more information. Can the Secretary of State give us any assurance that progress is being made, and that we will not need another EU investigation to get to the bottom of what is happening in the gas market?
As we all know, LIBOR was a massive scandal, but global commodity markets include a vast range of products, including grains, fibre, other food, precious metals and energy, affecting every household. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders. I hope that the Secretary of State will assure the House that no stone will be left unturned to establish the truth behind the allegations.
I thank the right hon. Lady for her reply. May I make it absolutely clear to her and the House that we take the allegations extremely seriously? If it turns out that hard-pressed motorists and consumers have been hit in the pocket by the manipulation of markets, the full force of the law should come down upon those responsible. Let there be no doubt about that.
However, I am surprised that the right hon. Lady wishes the Government to interfere directly in competition investigations. It was her Government who rightly moved competition authorities on to an independent basis. We believe it is very important to have independent competition authorities, because that strengthens their ability to act. [Interruption.] She asks from a sedentary position what they are doing, but arguably we could ask what they were doing under the Labour Government. I hope that we can get cross-party consensus that competition authorities should be independent.
It is good news that the European Commission directorate-general for competition has acted, and I would have thought that the right hon. Lady would welcome that. When there are cross-border allegations, it is important that the European Union can act.
The right hon. Lady asked whether we would act on the effectiveness of competition authorities. We have. Indeed, I was the Competition Minister who proposed the changes to the competition regime inherited from the previous Government, which are strengthening it. Bringing in the Competition and Markets Authority will make our competition bodies and regime far more robust, so we have a very good record on the issue.
The right hon. Lady asked whether there should be wider powers to deal with commodities trading. An issue to be considered—we have seen it with LIBOR and the gas market manipulation allegations and now we see it today—is how price reporting agencies operate. They are unregulated bodies, as they were under the previous Government. She will know that the International Organisation of Securities Commissions has been looking into both price reporting agencies in general and oil markets specifically. It reported to the G20 last November, stating that it had potential concerns about the operation of the global market. It did not refer to any particular allegations of manipulation, but there is an ongoing debate, globally as well as in this country, about how we deal with price reporting agencies given that there have been instances of market manipulation. We are taking action; the previous Government did not.
The right hon. Lady’s final question was what was the state of play with respect to the Ofgem review of gas market manipulation. She described it as an investigation, but I clarify that it is a review of the allegations. She will also know that Ofgem is independent. We do not expect an independent investigator or regulator to give the Government day-by-day reports as that would go against its independent nature and reduce its power. I would be surprised if the Labour party wanted to reduce the power of our independent regulators. These are serious allegations, and we stand behind our independent competition authorities and believe they will take action on behalf of the consumer, as they should.
Despite the fact that the Government have cut and frozen fuel duty, prices at the pump have gone up by 60% since 2009. Last year a motion for a full OFT inquiry into price fixing by oil companies was passed unanimously in the House. We were approached by a whistleblower who suggested that the things we have seen over the past two days had been going on. Does my right hon. Friend agree that the OFT carried out a limp-wristed, lettuce-like inquiry, when it should have made a full 18-month inquiry into what has been going on? Does he also agree that if proved true, this is a national scandal for the oil companies concerned, and the Government should look at changing the law and put people in prison for fixing oil prices? This has caused misery for millions of motorists up and down the country. Finally, if the accusations are proved, will he impose harsh penalties on all oil companies involved and give the billions of pounds in penalties back to the motorist?
I have been generous with the hon. Gentleman, which I hope the House will realise, but I cannot help but feel that his appetite would be satisfied only by a full day’s debate on the matter. He will have to make do with what he has had so far.
I am grateful for my hon. Friend’s questions, and I pay tribute to the way he has campaigned on this issue. He has made a big impact in the House and we have reacted to his campaigns with respect to fuel duty—something the Labour party never did. The OFT is a strong, independent body. It has powers and carried out its investigation. It received a call for information and it is responding to that. It made some warnings. As my hon. Friend knows, it was concerned about a number of areas, not least the transparency of petrol and diesel prices at motorway service stations, which I referred to in my statement. I know that as a result of that, my hon. Friend—indeed, the whole House—will be concerned to ensure that any evidence is put before the European Commission and the UK competition authorities. If any Members of the House or members of the public have such information, I call on them to pass it to the competition authorities.
My constituents in the Hebrides have felt ripped off by the highest fuel prices in the UK for years, and shockingly we now hear of raids associated with suspected price fixing on huge oil companies—household names. Will the Secretary of State ensure that if there are any fines, they are passed on to hard-pressed motorists who might have been ripped off, so that my constituents in Lewis, Harris, Uist and Barra, and everybody else’s constituents, can feel the benefits of any justice? Do these events not call for a review of the OFT’s methodology?
It is important for the hon. Gentleman, and all right hon. and hon. Members, to realise that these are very early days in the investigation. These are allegations only and we should not jump the gun. As he knows, because the allegations are so serious, both UK and European law allows competition authorities to levy serious fines—dependent, obviously, on the particular transgression—should a company be found guilty. The hon. Gentleman will have to wait, but he can be reassured that there are powers to levy heavy fines.
I welcome my right hon. Friend’s robustness regarding such manipulation—if, indeed, the raids produce evidence of such manipulation—but will he tell the House how long he thinks it will be before the European Commission is able to report on the issue? In line with those of my hon. Friend Robert Halfon, and others, my constituents in South East Cambridgeshire cannot accept that the market is working fairly. In our area we pay a higher price for petrol and diesel than in most other parts of mainland England, yet only 20 miles away, the same retailers and supermarkets are selling road fuel for 1p, 2p, 3p, or in some cases 5p, a litre less. That cannot be a fair marketplace.
I am grateful for my right hon. Friend’s question and his support for the robust action that we propose to take, supporting our competition authorities. He asked how long it will take, but I am afraid it is impossible to give a straight answer to that. We have seen with the Ofgem and FSA review into allegations of gas market inflation that such things can take some time, in order to ensure that the allegations are looked into seriously and robustly, as consumers and markets should expect. Equally, I cannot give a timetable for the conclusion of the European Commission’s investigations.
My right hon. Friend and other colleagues are concerned that the OFT did not find problems in the market, and I have heard that point. It is worth remembering, however, that not only did it mention the absence of price information on motorways, as I mentioned earlier, but it said that it did not rule out taking action in some local markets if there is persuasive evidence of anticompetitive behaviour. The OFT is ready to act, but we need the evidence.
We heard about the raid of these companies’ offices late yesterday evening. We have seen the OFT’s statement and know that it was accompanying European Commission officials, and we will no doubt find out more as the day goes on. The hon. Lady must remember that these competition bodies are independent, and I hope she will reject the idea that we should get ourselves into these investigations. We will seek more information, but we will not be interfering in the investigations.
This is an issue of parliamentary sovereignty as much as anything else. One thing people say, and one of the most pernicious opinions in the wider electorate, is that the Government only look after big business and not ordinary working families, and—most importantly—that quangos are non-accountable. When will the Secretary of State look hard at the efficacy and accountability of the Office of Fair Trading and, if necessary given its lamentable performance, ensure that heads will roll?
Although I strongly support the sovereignty of this Parliament, for some matters the outcome for consumers can be improved when they are given to an independent or European body. We give authority to the independent central Bank—the Bank of England—because evidence and theory has shown that an independent body can set interest rates in a more effective way. The analysis, not just in this country and Europe but in America, is that an independent competition body is the most effective way. When I was Minister responsible for competition in the Department for Business, Innovation and Skills, I looked thoroughly across the whole competition regime and made proposals that have gone through the House to bring together the OFT and the Competition Commission into a more robust, speedy and effective regime. I hope that reassures my hon. Friend, Members of the House and the public that this Government are determined to have the most effective competition regime in the world.
As the Secretary of State will be aware, there has been a long-term disconnect between the price of oil on the market and the price at the pump. He will also know that over the decades, numerous inquiries have been made by the OFT and other competition authorities into the oil and petrol market, but not one has uncovered what is now alleged to have happened. The other issue for the consumer is the LIBOR market, which my right hon. Friend Caroline Flint mentioned. Fines were paid by shareholders and customers in extra charges, but the men responsible walked away free. We do not want the same thing to happen in the oil and gas industry, and the Secretary of State is in danger of being complacent in relying simply on the competition authorities.
We are not complacent at all. We stand by the independent bodies. If it was not for them taking action, we would not have had this statement. They are acting, and we should support them. It is good that the European Commission competition DG has looked not only at the UK, but across Europe. Many of those markets are integrated, cross-border markets, so it is vital we take that view. People should not rush to judgment. We must wait for the outcome of the investigations, but the fact they are happening shows that the public authorities do not treat those matters with complacency.
Order. I gently point out to the House that there is a lot of interest in this important statement, which I am keen to accommodate, but, in the final day of the debate on the Gracious Speech, there are literally dozens of colleagues wishing to contribute, so some self-discipline from Back and Front Benches alike is urgently required.
The allegations are serious, and yet the EU energy portal told me this morning that the pre-tax and duty prices of diesel and petrol in the UK are among the cheapest in Europe—indeed, they are cheaper than in Germany, France and Holland. Given that, will the Secretary of State tell us whether the focus of the inquiry is the UK market or the cross-border European market, which, on the facts, would appear to have bigger problems?
My hon. Friend is right that pre-tax petrol and diesel prices in the UK are among the lowest in the EU. Nevertheless, we cannot be complacent, and it is right that there are investigations—I am sure he was not suggesting that the competition authorities should not investigate. He will know that, as I said in my statement, one issue surrounding the investigation is the reports made by different companies to a price reporting agency. We must wait to find out whether that affects domestic or European markets, but it is the reporting agencies and the prices they report that concern our competition authorities.
One aspect of the industry we need to consider is the massive number of refineries that have closed throughout Europe recently. Will the Secretary of State ensure he does all he can to work with companies who are investing in our refining capacity to ensure there is more competition in that part of the market?
The hon. Gentleman is right to mention the impact of the refining industry on the wider market. My Department is working with the refining industry and various operators in the sector to ensure we have a healthy refining industry in this country. The margins for refineries have been seriously squeezed in recent times. It is critical that we ensure fuel security, which means we need a healthy refining industry.
In supporting the comments of my hon. Friend Robert Halfon, I commend the Secretary of State for making changes to the legislation he inherited from the Leader of the Opposition to ensure that fines levied in the UK are returned to consumers rather than to companies. However, I urge him to make urgent representations to the European Commission to ensure that, if the investigation leads to fines, the detriment to UK consumers, taxpayers and motorists is returned to those UK consumers, taxpayers and motorists.
My hon. Friend makes an interesting point. He is right that the Government are legislating to ensure that, when Ofgem finds misdemeanours by companies, fines go to the consumer and not to the Consolidated Fund. That is an extra tooth for the independent regulator, and puts consumers’ rights ahead, where they should be. He asks me to make representations to the European Commission to see whether European law can be amended to mirror the change we have just made. Clearly, there is a case for that, but I may need to speak to my colleagues in the Department for Business, Innovation and Skills before I make unilateral representations.
The general public will have two things in mind: open competition and cheaper prices at the pump. Beyond the European Commission ruling—the Secretary of
State has said that we do not know the timing of it—what steps will the Government and the OFT take to ensure that prices come down, that people see openness and transparency, and that the Government reduce fuel duty rather than put increases on hold?
Like every right hon. and hon. Member, the hon. Gentleman is concerned about the price of fuel and the impact that that has on household budgets. I know from speaking to right hon. and hon. Members who represent rural constituencies how the price of fuel impacts on them. That is one reason why my right hon. Friend the Chief Secretary to the Treasury has paid such attention to the matter since he entered Her Majesty’s Treasury. The Government’s record on bearing down on fuel duty, which is one thing we can directly influence, is exemplary. We have had the longest freeze in fuel duty for 20 years—that is us playing our part.
The allegations of price rigging that are being investigated by the European Commission directorate-general for competition stretch over nearly a decade—they go back over years under the Secretary of State’s Government and over even more years under the previous one. At 8p a litre on the price of fuel, the scale of the price distortions is potentially vast. Given the scale of the impact on consumers’ expenditure and on our economies, how can fines compensate consumers in Britain and on the continent?
My hon. Friend is right to ask that question, but I remind him and the House that we are talking about allegations, and that we are at the early stage of investigations. It is important that people remember that.
One benefit of the investigations by our independent competition authorities is that we can try to ensure that our markets work more effectively. If manipulation is proved, and if it is proved that the manipulation led to higher prices, we could see lower prices, which would be welcomed by many outside the House.
I have not seen that specific evidence, but I know that it was very small and that the OFT felt that the evidence was unable to lead it to a further investigation. However, it was clear that the OFT announced a call for information—the Government supported that. The OFT wants people to bring forward information, which is exactly what they should do.
Commuters from my constituency to Leeds, Manchester and beyond who have been suffering the nightmare of the M62 roadworks will welcome the fact that fuel duty is 13p per litre lower under this Government than it would have been under the previous one. However, I echo the suggestion that fines, if they are levied on oil companies found guilty of price fixing, should be passed on to consumers and hard-pressed commuters.
I believe that the law does not currently allow fines levied by the European Commission to be passed on directly to consumers, but consumers will benefit from any lower prices that result from freer and fairer markets, which Government Members are determined to see.
What is the Secretary of State doing to prevent another rip-off by Électricité de France, which has an atrocious record in cost overruns and delays, and which demands a 40-year guarantee of twice the current price for building Hinkley Point, at a time when abundant sources of energy are being discovered throughout the world? Will he guarantee that the House debates that before a deal is done with EDF?
I congratulate the hon. Gentleman on getting the subject of nuclear power into this statement. Some of the tests in our negotiations with EDF on a contract for difference in relation to the proposed nuclear reactor at Hinkley Point C are to ensure that we get value for money and that the proposal is affordable.
While the European Commission’s involvement is welcome, will my right hon. Friend outline what more UK authorities, such as the Competition Commission and the OFT, can do to ensure that fuel duty cuts made by the Government end up in the pockets of motorists rather than in the coffers of oil companies?
My hon. Friend makes a good point. UK authorities are working extremely closely with European competition authorities. Indeed, they accompanied them on their raids of various companies’ offices. They are active in this investigation, and I hope he takes reassurance from that.
The Minister constantly congratulates his Government on keeping the price of petrol down. Why then, when I travel to America, do I find that consumers there pay half the price for their fuel than we pay in the United Kingdom? Why is the price of fuel in the Irish Republic 10p less than it is over the border in Northern Ireland?
The difference in the tax levied in the United States on petrol and diesel might be one of the main explanations. I have not made a study on the difference in price between Northern Ireland and the Republic of Ireland either, but that might also have something to do with duty differentials.
My constituents will be very concerned about the price-fixing allegations and will want the oil company executives, if found guilty, to go to prison. Today’s findings have come about as a result of unannounced inspections by the European Commission. To what extent does the Secretary of State believe that the OFT, Ofgem and the Financial Services Authority are undertaking unannounced inspections in their inquiries? If they are not, should they not be encouraged to do so?
It is interesting that my hon. Friend supports the use of these powers by the European Commission competition directorate-general. I am grateful that he recognises that it is important to have an independent, strong competition body at European level. I think people will have noticed his support for that, and I am grateful for it. He asked whether the OFT, Ofgem and other regulators involved in enforcing competition have those powers. I believe that they do. If I am wrong, I will write to them. He will recognise, as I hope everyone does, that it is not for the Government to tell an independent regulatory body to go and do dawn raids. It is up to them to decide to do that, based on the evidence. We strongly support them when they use those powers, and we strongly support them in the powers they need to gather the information ahead of such raids. If the OFT and Ofgem were to make such raids based on proper information, we would support them.
I found out about it late last night. We do not know on what evidence the Commission decided to launch the raids. Apparently, there were suspicions that companies had been giving a price reporting agency false information about prices in the market. We need to know more about what information it had. The question is whether the UK competition authorities had similar information. To date, my understanding is that they did not.
I remind the House of my entry in the Register of Members’ Financial Interests. The hard-pressed motorists of the north-east of Scotland—for whom a car is an essential, not a luxury—will want to be confident that they are paying the best price possible for their fuel at the pump. To that end, I welcome my right hon. Friend’s commitment to help the European Commission and to encourage the companies to co-operate fully with the inquiry. Will he take forward to the Commission the need to co-operate with the G20 if there is any evidence that the alleged price fixing extends beyond EU borders?
My hon. Friend has been a doughty defender of motorists in north-east Scotland, making the point, with other hon. Members, that people in rural areas often depend on their car and therefore have no choice but to use it. The G20 received the report from the International Organisation of Securities Commissions in November and I believe it is being looked at carefully. The issue of price reporting agencies and price benchmarks is one that both UK and global regulators are paying much greater attention to. One might ask the question: why were they not being paid attention to before?
My right hon. Friend Caroline Flint made the point that if this is happening in energy, there is every reason to believe that it could well apply to other commodities. What are the Government going to do, with the EU if necessary, to be proactive and to ensure that there is no price fixing in other areas of international trade? We do not want to come back in a few years’ time and wonder how we are going to compensate consumers in other fields.
I am afraid that the hon. Gentleman is behind the times. We are already acting at both a global and a European level to support work that looks into how benchmarks and price reporting agencies operate, and to check that there is no danger of price manipulation or of rigging the markets in another way. The Government are taking this very seriously. We are working with a number of bodies, including the International Organisation of Securities Commissions, and are operating at EU and G20 level. We are very proactive on this issue.
My constituents are concerned about why they pay more for a gallon of petrol than those in other parts of the country, so they will welcome the investigation. What is the Secretary of State doing at a European level to ensure that the European Commission does not cut off this country’s access to Canadian oil sands, which has the potential to bring down prices at the pump for everybody?
The Under-Secretary of State for Transport, my hon. Friend Norman Baker is actively engaged at the European Council on this. It is a rather more complicated question than my hon. Friend Andrew Percy implies. It is not so much about access to our markets, but how those tar oil sands and any fuel produced from them are rated in terms of their carbon content. The debate is complicated, but the UK and my hon. Friend in the Department for Transport are pushing hard to obtain a fair outcome.
The Centre for Economics and Business Research reported in March 2013 that the average weekly spend on vehicle fuel is higher in Northern Ireland than in comparable regions in Britain, and takes up a significantly larger proportion of consumers’ net income. What further action will the Government take to lower fuel duty to provide equality for all consumers?
As the hon. Lady will know, my right hon. Friend the Chancellor keeps these issues under constant review. He has an extremely strong record of delivering fuel duty freezes and not proceeding with rises proposed by the previous Government. I am sure that he will consider her question and early representation for next year’s Budget.
If there has been market manipulation by big companies in the oil market, then as well as consumers suffering, small independent suppliers and retailers who were not part of the scam will also have suffered. Independents are important in rural areas, as they are often the only supplier. While the Secretary of State will not want to intervene directly with the regulatory bodies he mentioned, I hope he will give them the hurry-up, because we want to ensure that no more damage is done to independent suppliers in this country.
I pay tribute to my hon. Friend for raising the issue of businesses, in particular small and medium-sized enterprises. If the allegations are proved to be correct, and petrol and diesel prices have been higher than they otherwise should have been in a fair market, then they will have been hit as well. He will know from previous debates on petrol and diesel prices the impact that fuel prices have on the wider haulage industry. It is vital that we get to the bottom of this not just for consumers, but for our whole economy.
If anything untoward is discovered at the end of this process, it will not show the OFT in a good light. While price is important, the quality of fuel that people purchase is also an issue. I find that more and more of my constituents complain about poor mileage from cheaper fuel. I put to the Secretary of State a quick calculation: 2p a litre extra and two miles per gallon is far better than cheaper fuel. I have asked Which? to conduct a survey on fuel quality. Does the Secretary of State agree that we should be looking at that too, and will he support an investigation into the quality of the fuel that people are purchasing at the pumps?
That is an extremely interesting point. I hope the hon. Gentleman is liaising with his local trading standards department, in case there are any serious problems, but I shall certainly ask my officials to look into it. It is not just the quality of the fuel, however, but fuel efficiency that matters: we need far more fuel efficient cars and we need standards that send a signal to the industry that we want it to make its cars more fuel efficient. The Government have a proud record of supporting the electric motor industry, and the UK is beginning to be a real producer of electric cars.
Daventry residents will be unsurprised by the Commission’s raids on oil companies last night. In fact, they are fed up to the back teeth with paying way more than other consumers nearby. I was interested in what the Secretary of State said about anti-competitive actions and how the OFT might be looking at local markets in the future. Could it not look for evidence simply by going to a price comparison website, where straightaway it would be able to see prices and demonstrate such behaviour historically? Furthermore, does he recognise the concern about such European Commission investigations, which can limp on for decades?
I hope that the hon. Gentleman supports the fact that the European Commission is investigating the market. It is important that it gets our full support. On the OFT and its finding of possible problems in local markets, I am sure that the OFT does exactly what he says, but it might well need more information to prove manipulation. Again, I call on hon. Members and members of the public to provide such information, if they have it, to the competition authorities.
Last year, Labour called for commodities such as oil to come under the Financial Conduct Authority’s regulatory net, but Ministers refused to act. Not only are people in rural areas hit by high fuel prices, but many of them rely on oil for heating. What assurances can the Secretary of State give them that he will now strengthen the OFT and the FCA by giving them the power to deal with commodity price rigging?
We certainly are strengthening the competition authorities in this country, as I explained earlier. We are looking at a range of issues that have come to light as a result of the LIBOR scandal, the allegations of gas market manipulation and so on. As I explained to Mark Lazarowicz, we are working not just nationally, but at a European level and globally to ensure that these commodity markets are fair and not being manipulated. Our record on this stands in stark contrast to the inaction of the last Government.
People in the north-east welcome the three-year fuel duty freeze, but we have concerns that the OFT, despite having had repeated evidence, particularly in rural Northumberland, of a lack of competition, has still failed to act. Does the Secretary of State agree that a way forward would be to summon the OFT to the House so that all MPs can make representations in his presence and get some action from it? No one has any faith in the OFT.
I am sorry to hear that my hon. Friend does not have faith in the independent competition authorities. According to the empirical evidence of how they compare to other competition authorities around the world, they actually score extremely highly. Nevertheless, even though I saw those findings when I was competition Minister, I wanted to strengthen them still further, because there is no room for complacency. I hope he realises that the Government will ensure that the competition authorities have the powers they need.
My constituents are now paying more for petrol and diesel at the pumps not least thanks to the VAT increase of 2.5p on every litre which the Secretary of State and his Government introduced. He boasted in his statement that he was going to give Ofgem extra powers and responsibilities. In light of these allegations, will he seriously consider giving the OFT similar powers and extending its remit, so that we can prevent this from happening again in this country, instead of relying on the European Commission?
Some of the information and allegations of market manipulation are cross-border, so it might well turn out that these allegations required a European competition authority. It is important that we have a strong European competition regulator, and I hope the hon. Gentleman would accept that, but of course we keep under review the powers of the regulators and competition authorities in general. The Government have acted strongly to strengthen them.
Businesses that we have long known to be profiteers now stand suspected of being racketeers. While the allegation of price manipulation and derivatives distortion might take some time to investigate, does the Secretary of State accept that the wider question of commodity price indices speculation needs to be addressed at the G8, particularly in order to limit the degree to which financial institutions can pass off such speculation as legitimate areas of investment?
I agree with the hon. Gentleman’s main point: there are concerns that these price benchmarks have been manipulated, and some of the evidence suggests, if they prove true, that they have been manipulated for many years. I am proud that the Government are taking action. We cannot be complacent. Too many consumers and businesses could be hit if these sorts of allegations prove true. We have to wait for the investigations to be completed, but if any company is found to have breached the rules, the full force of the law will be used.