§ 10.16 p.m.
§ Mr. Joseph Ashton (Bassetlaw)
I beg to move,That an humble Address be presented to Her Majesty, praying that the Paraffin (Maximum Retail Prices) (Revocation) Order 1979 (S.I. 1979, No. 797), dated 10th July 1979, a copy of which was laid before this House on 11th July, be annulled.At first glance, it would seem that this order was a legacy of the Labour Government, who controlled the price of paraffin. Curiously, the first paraffin price control was brought in by the Conservative Government in December 1973. Perhaps that Conservative Government had more compassion than the current one. The control was very well received throughout the country at that time, when the price of paraffin was fixed at 21p per gallon.
Let us not imagine that the Labour Government froze the price of paraffin, that we were unfair to retailers or that we refused to allow them a fair profit. By last July the price had risen to 53p a gallon, over a period of five years. That was well over double the fixed price of 21p. Since controls have been removed the retail price has shot up to near 75p. That is a massive increase for the poorest section of the population.
We are talking about a very small part of the oil market—about 0.6 per cent. That is peanuts in oil terms. However, in poverty terms it is a very important factor, which affects the 1 million poorest households in the country. We will hear from the Tories tonight, in defence of that increase, the usual free market economy argument that prices must be left to find their own level, that the poor must pay and that oil economies must be effected by making people do without it. That will be the first argument.
The second argument will be that supplies were drying up, that the big oil companies were refusing to produce the oil and that retailers were refusing to stock it unless there were higher profit margins. That inadequate defence is not good enough. The big oil companies are now making massive profits. Everyone accepts that. To say that those companies 562 could not be leaned on to keep down the price of paraffin—0.6 per cent. of their output—means that the Government are running away from their responsibilities in refusing to stand up to the oil companies and in not demanding that supplies be kept up, as they were for 5½ years during price controls.
The two giants in the market, Esso and BP, managed, during a very severe winter which somewhat distorted the picture, to keep up supplies while controls were in operation.
The second argument advanced by the Conservatives for removing the controls was that the retailer in the corner shop could not make a decent profit and that consequently fewer of them were stocking the fuel. However, there were other reasons for the decline. I telephoned one of the biggest London distributors of paraffin yesterday to talk about the problem of retailers ceasing to stock the fuel. Curiously, since controls were removed in July there has been no increase in the number of retailers stocking paraffin, even though there is now more profit in it, with the retail price having shot up by about 40 per cent.
One of the reasons has been that the insurance companies have been demanding higher premiums from greengrocers and grocers in the corner shops because of the fire risk. Many were deterred from stocking the fuel when they found they had to install proper tanks and take proper safeguards in respect of fire.
Another reason has been the increased sale of portable gas appliances. At one time poor people used paraffin to provide background heat in their bedrooms, their halls and their living rooms. There is, however, a fire hazard with paraffin and that received a great deal of publicity—quite rightly so—which caused people to switch to portable gas heaters. With such heaters a bottle of gas is clipped to the back of a gas fire and the whole appliance can be moved around the house. It is much safer than paraffin. If it tips over it extinguishes itself, and the fuel cannot be spilt.
Paraffin therefore commanded a shrinking market for reasons related to factors other than profit. The tonnage sold has fallen from about 700,000 tons to about 500,000 over the last few years. It is not therefore the case that less paraffin is 563 being sold because the profit margin is inadequate or non-existent. There is a profit margin.
Many of the people who bought gas appliances, however, are finding that local authorities are banning them in council flats. The authorities are afraid of a repetition of the Ronan Point disaster where a gas explosion blew out a section of a multi-storey tower block, causing a collapse. I do not say that these gas heaters are dangerous or that they could cause a similar type of explosion. The authorities are afraid that such a thing might happen, however, in multi-storey, all-electric flats. This means that tenants will probably switch back to paraffin.
We are concerned here with the poorest section of the population—pensioners who live in all-electric flats with underfloor or warm-air heating and who cannot afford to switch it on. It is cheaper for them to pay 50p or 70p for a gallon of paraffin to provide background heat for a week than to turn on the underfloor or warm-air heating. This option is being taken from them by this week's price increase.
In addition, many people will cease to use the electricity this winter because of the abolition of the discount scheme. I believe that 3,108,000 people claimed the discount last year. On the Minister's figures, that is now down to a couple of hundred thousand, which means that some 3 million households are not now getting the discount scheme and may be returning to using the old paraffin stove. However, the price has rocketed from 53p a gallon to 70p, which may not be a fortune by the standards of any hon. Member but which matters a great deal to pensioners.
Let us now consider the question of scarcity of supply. There was a bad period last February when it was difficult to get paraffin. There were several reasons. One was that the snow created a much greater demand. In fact, demand increased by 23 per cent. That was because February was a cold month. It was much more difficult to distribute supplies because of the snow. The lorry drivers' strike took place during the previous month.
It was difficult to obtain paraffin in February. The difficulty arose not because 564 there was an insufficient profit margin. During the time that paraffin was controlled we, the Labour Government, increased the price by 15 per cent. at a time when inflation was only 8 per cent. to build in a better profit margin for retailers. In our opinion, it was totally unnecessary entirely to remove the controls and to go for a market economy in a tiny sector that would make no difference to the economy.
The inconsistency of Government policy is clear. We now have a free economy for oil supplies plus the 10p that the Chancellor added to the price of every gallon. We have a free market price for paraffin and electricity. However, gas, which is sold at a free market price and is making a large profit, is the subject of continual leaks to the effect that the Government will create an artificial price.
The Government want it both ways. They want a free market economy for certain fuels but not for others. There is a total inconsistency. A few months ago the Government took the callous action of removing price controls on paraffin. That action was immediately denounced by all 26 welfare organisations that constitute the National Fuel Poverty Forum, ranging from Help the Aged to the Child Poverty Action Group. It was denounced despite the fact that all those organisations accept that paraffin is a health hazard. They would like to see no one using it and every pensioner getting some other form of heating. It causes condensation and fungus. It is dangerous if children are in the house. It is not good for one's chest. That is accepted by the organisations, but they are adamant that it is a form of warmth that should be given to the very poor families at the bottom of the list.
There is no real fuel rebate system. The Government do not have one. We believe that keeping warm in winter is as essential as having food or accommodation. It is just as essential as having a rent rebate system to provide a roof over people's heads.
§ Mr. David Knox (Leek)
Does the hon. Gentleman agree that many more people in need would be keeping warm this winter if the Labour Government had not been so dilatory and miserly in introducing an insulation scheme that is now totally inadequate and has been applied 565 to only a small proportion of the houses that need it?
§ Mr. Ashton
I accept that we should be spending more on conservation. We should be spending much more on it from the profits of North Sea oil. However, we are talking about paraffin and about the Government's wish to have a free market economy with no subsidies and to let the market find its own level.
We read more and more that the Chancellor of the Exchequer can find the cash not to tax the cars of executives. If a man who earns less than £8,000 a year is given a car by his company and that costs less than £8,000 a year, and it is given as a free perk, he does not pay the income tax on that form of cash or wages that it should attract. The subsidies that executives receive by being given a car are costing the Chancellor about £200 million a year in uncollected tax. However, at the same time the right hon. and learned Gentleman is cutting back drastically the subsidies given to poor people to keep warm in winter and is introducing a free market economy to let the devil take the hindmost. The hindmost will really suffer.
I believe that this winter the public will demand a planned economy on fuel pricing. They will demand that planning is brought into the cost of fuel so that everybody has the right to keep warm. Alternatively, some form of subsidy must be introduced into the market economy to help those at the bottom. That is why the Opposition move the motion. I hope that it will have the support of the House.
§ 10.29 p.m.
§ The Minister of State, Department of Energy (Mr. Hamish Gray)
The hon. Member for Bassetlaw (Mr. Ashton) has moved the prayer in a reasonable fashion. I am grateful to the hon. Gentleman for giving the House the opportunity of discussing the matter at some length.
The hon. Gentleman began by giving us some correct statistics. For example, he said that an order controlling the maximum retail price of premium paraffin was first introduced on 23 December 1973 by the Conservative Administration. The powers were contained in the Fuel and Electricity (Control) Act 1973. Price controls on petrol were taken 566 at the same time, but when the latter control was dropped in December 1974 the control over paraffin was kept. Paraffin remained in the anomalous position of being the only oil product subject to price control until this Government took office in May this year.
As the House is aware, the order decontrolling paraffin prices, which we are debating this evening, was made on 11 July and came into effect the next day.
The Opposition may ask why paraffin price control cannot remain. After more than five years, why should paraffin prices be suddenly set free to reflect market conditions? The hon. Gentleman dealt with this point at some length. The Government's belief is that this control has long since outlived its original and quite legitimate purpose, that its retention over the past five years has been damaging to the paraffin market, and that supplies have thereby been threatened. Indeed, the hon. Gentleman confirmed this when he referred to the situation earlier this year. We were, in other words, at risk of denying paraffin supplies to the very people whom price controls were intended to help.
Let me now briefly review the situation when the Government took office in May. Demand for premium paraffin had been dropping steadily for many years. As the hon. Gentleman rightly said, it now accounts for only 0.6 per cent. of the oil market. Nevertheless, paraffin is of great importance to old people and low-income households. In view of this, the Government have a particular obligation to ensure, as far as possible, that their policies do not threaten supplies to those consumers. But the danger was that the price control policy, and the inevitable market distortions that it implied, was threatening to do just that.
The United Kingdom paraffin market is supplied by two main United Kingdom manufacturers. These oil companies supply mainly through authorised distributors, who in turn distribute to three different types of outlet—to the hardware shops, filling stations and mobile distributors. I should like to describe the effects of price control on those sections of the supply and distribution network.
Premium paraffin is manufactured from regular kerosene. The process of upgrading kerosene, and subsequently 567 storing and distributing the produced premium paraffin, costs money. However, during the years of price control the price differential of premium paraffin steadily decreased. In December 1973 this differential was about 8 per cent.; in December 1975 it was 3 per cent.; in December 1978 it was zero; and it subsequently fell to -8 per cent. in June, just before the price control was lifted. That negative differential posed a serious threat to the long-term future of premium paraffin manufactured in this country.
It is not reasonable to believe that a company, no matter how socially responsible, could commit itself to maintaining the capital investment necessary to upgrade kerosene against the background of the substanital negative price differential of premium paraffin over regular kerosene. We were very lucky that price control did not in fact have that effect. One major refiner, Shell, did pull out of the market, but for reasons unconnected with price control. The other refiners, notably BP and Esso, are still in the market. It is most important that they so remain.
It is symptomatic of the effects of price control that advertising and promotion by the oil companies steadily dwindled over the years to only about 10 per cent. of the levels in 1973. Price control took the form of control over retail prices, and as such it naturally bit severely on the retailers. These are of three types. Typically, an oil company supplies paraffin to an authorised distributor, who, in turn, supplies it to a garage, a mobile distributor, or a hardware shop. Price control affected those three types of outlet in varying degrees. Since 1976 the price control orders have not specified a maximum delivery charge. Since then, the mobile distributors have accordingly been free to charge a reasonable amount for their delivery service on top of the controlled maximum retail price. While garages have been relatively little affected by price control, there has been strong evidence that price control has bitten disproportionately severely on the hardware shop, where overheads tend to be higher than for garages.
The British Hardware Federation, which represents some 5,000 retailers, has made strong representations to my Department concerning the effect of price control. It has pointed to the reduction in 568 members' gross margins in recent years. Before the introduction of price control in December 1973, these were typically about 30 per cent., whereas just before the end of price control, earlier this year, gross margins were below 20 per cent., while against gross margins we must set operating costs.
The hon. Member should bear in mind that in March 1977 the British Hardware Federation estimated that costs had risen by 121 per cent. since 1973—a much sharper increase than the retailers had seen in their cash margins for paraffin. Since then, costs have risen even further, and in some cases fire insurance premiums, which the hon. Gentleman mentioned, have virtually doubled to those ironmongers who stock paraffin. This year, before price control was ended, the British Hardware Federation told the Department of Energy that it had no option in its function as a management consultant but to advise members to invest any capital involved in paraffin distribution in some other section of their business.
§ Mr. Ashton
We are not saying that retailers should not have had a sufficient profit margin or that the price should not have gone up. We are saying that the poorest part of the community should not be left to the free market or to the vagaries of OPEC.
§ Mr. Gray
If the hon. Gentleman will bear with me, I shall deal with these points in due course.
Against this background, it is hardly surprising that the number of retailers of premium paraffin has fallen steadily during the period of price control. A 1977 survey of the British Hardware Federation members revealed that no fewer than 19.3 per cent. of them had stopped selling paraffin over the previous five years. A further 23 per cent. indicated their intention to stop selling paraffin. There is evidence that the number of retail outlets continued to fall after the survey.
In the period 1973–79, overall demand for premium paraffin fell by almost 30 per cent., yet the fall in the number of hardware shops stocking it in the same period was approximately 40 per cent. That is a very alarming figure. Many such retailers are in rural and inner city 569 areas, where the number of garages—which are an alternative source of premium paraffin supply—has also been declining. No Government who genuinely have at heart the needs of those who rely on premium paraffin could allow this position to continue.
It is significant that the Paraffin Heaters Advisory Council, which represents the manufacturers of paraffin appliances, has also expressed concern at the decline in the number of hardware shops willing to sell paraffin. Retailers who give up paraffin also tend to stop selling paraffin heaters. Heater sales have experienced a sharp drop over the last five years.
§ Mr. Gwilym Roberts (Cannock)
The Minister said that over a five-year period there had been a 19.3 per cent. decline in the number of hardware shops dealing in paraffin. Is it not the fact that the number of hardware shops had declined, for other reasons, by approximately the same extent during the same period?
§ Mr. Gray
I have not the exact figure for the number of hardware shops which vanished altogether. I am quite sure that, in relation to the term of the last Government, the hon. Gentleman's point is correct. But I am saying that a further 23 per cent. had said that they intended to stop selling paraffin.
I have dwelt so far on the distortions which price control introduced into the supply side of the supply-demand equation for premium paraffin. Yet it would be wrong to suppose that the distortions have been limited to the supply side. Premium paraffin is upgraded kerosene. As such, it can be used in all those applications where regular kerosene is used. A recent danger, resulting from the artificially depressed price of premium paraffin, has been that users of regular kerosene for central heating might have switched to premium because it was cheaper. In a harsh winter bulk purchases of this type might have led to deficiencies in premium supply which the oil companies would have found it difficult to make good because of their limited production capacity. So small retailers especially might have been unable to obtain premium paraffin supplies for those who really needed it. Health also would have been at stake. Users of premium paraffin, unable to obtain it, might have attempted to substi- 570 tute regular kerosene which is harmful to health because it produces sulphur fumes.
It would have been ironic indeed if a policy intended to enable those who rely on premium paraffin to buy it cheaply had resulted in their being unable to buy it at all at whatever price. We were certainly heading very fast in that direction.
The controlled price of premium paraffin was last increased in February. Since then crude oil prices have risen sharply. The increase this year is in fact about 60 per cent. A further increase in the price of premium paraffin was therefore inevitable. Opposition Members may ask: could the Government not have ensured supplies by further increasing the controlled price rather than by removing price controls altogether? My reply is that price control had outlived its purpose; that it is inflexible and administratively cumbersome; and that, as I have demonstrated, it introduces market distortions which threaten the very consumers it is intended to help. Price control is, furthermore, an inefficient way of helping the poor and the old, for many paraffin users who have benefited from low prices are neither poor nor old.
§ Dr. David Owen (Plymouth, Devon-port)
Does the Minister recognise that one of our concerns is that allowing free market forces to operate has already resulted in the price of petrol in this country being higher than in any other EEC country by a very large factor? A gallon of regular grade petrol in this country can cost 63.5p compared with 55p in Germany and 53p in France. We are afraid that the same free market forces will have a similar effect on paraffin.
§ Mr. Gray
If in July we had listened to representations by right hon. and hon. Members opposite, we might well have had petrol rationing at this stage. But my right hon. Friend refused to panic—he kept his head when others around him were losing theirs—and overcame the situation. We were being warned of the terrors of a shortage of petrol throughout the holiday season. Yet, because of the action and firm stand that we took, the harvest was gathered without any trouble and we had not problems with the farmers. [HON. MEMBERS: "Tourism."] The early part of the tourist season was disastrous, because Opposition Members 571 built it up to a situation which did not exist. That is why the tourist areas suffered.
The Government therefore decided that the proper course was to abolish price control, not merely to raise the controlled price. We did not take this decision lightly. Before doing so we sought and obtained assurances from the refining companies that they would continue to supply premium paraffin for as long as it was economic to do so and that future wholesale prices of premium paraffin would reflect no more than the additional cost of supplying the regular grade. That is the background to the Government's decision to abolish price control as from 12 July.
§ Mr. Robert Maclennan (Caithness and Sutherland)
The Minister has spoken about difficulties on the supply side. Can he say anything about reported difficulties on the consumer side? Is there any evidence of the sort of shortages that he has been adumbrating flowing from the continuance of price control? He has twitted my right hon. and hon. Friends for stirring up anxieties about petrol. Is he not doing precisely the same thing himself in respect of paraffin? What evidence is there in his Department that there has been a shortage of supply? The mere contraction of the number of outlets does not necessarily support the view that there will be any shortage at all.
§ Mr. Gray
That is a perfectly fair point. However, the question of the shortage of paraffin was pointed out by the hon. Member for Bassetlaw. Of course, it is common knowledge that there was a genuine shortage of paraffin in the early part of this year. If the hon. Gentleman is asking whether I have any evidence of a shortage of paraffin at this time, the answer is that of course I have not. There is no evidence at present. But I imagine that the amount of paraffin now being used is relatively small. Certainly there was a shortage at the time when it was needed most.
Although the industry has given my Department assurances about the overall adequacy of supplies, this does not mean that local supply difficulties cannot or will not arise. But this will not be due to any general shortage of supplies. If in- 572 stances of real difficulty arise, my Department stands ready to do what it can to help, just as it did during the summer when instances of petrol shortage were reported to it.
The price of paraffin has naturally increased substantially as a result of the removal of price control—typically, to between 65p and 70p per gallon, although there will naturally be some variation in the price from place to place. For example, a consumer who uses two gallons per week will, therefore, be paying around an extra 35p. While regrettable, this price increase is, as I have argued, absolutely necessary if supplies are to be safeguarded, and even at 70p per gallon, premium paraffin remains a cheap and efficient fuel. Incidentally, the duty on it is a mere 1p per gallon, and it was kept at that level in the Budget in June.
On Monday, the House heard from my right hon. Friend the Secretary of State for Social Services of the Government's proposals for helping poor families with their fuel bills this winter, and our determination to ensure that such help is directed to those in greatest need.
In conclusion, may I remind the House of what my right hon. Friend the Secretary of State for Energy said in July when he announced the end of price control? He said that price control was being lifted in order to ensure continuity of supply. This is the essential point, and the Government's firm view is that it is better that supplies should be available, even at a higher price, than not at all. I commend to the House the Paraffin (Maximum Retail Prices) (Revocation) Order, and I beg leave to oppose the Prayer in the name of Labour Members.
§ 10.48 p.m.
§ Mr. Robin F. Cook (Edinburgh, Central)
During his speech, the Minister twice used the phrase that price controls on paraffin had "outlived their original purpose". He said that at the beginning of his address and also towards the end. It would help the House if he would indicate what he understands to have been the original purpose of the price controls on paraffin. The fact is that they were introduced in December 1973 in the wake of the then hike in OPEC prices, which was feeding its way 573 through into paraffin as into all other oil products.
We now have a situation in which there has been another hike in OPEC prices, and the Government are responding by abolishing those same price controls that were introduced by the previous Conservative Government to deal with exactly this type of situation five years ago. The Minister cannot escape that contrast between the action of the previous Conservative Government, who brought in these price controls, and the action of the present Government, whose response has been to abolish them. That is the measure of how much more reactionary they are now than they were in 1973, and God knows, some of us thought that they were bad enough then.
My hon. Friend the Member for Bassetlaw (Mr. Ashton) made an excellent speech. If I may fault him on one point, I believe that he rather underestimated the extent of the price increase. He referred to a figure last winter of 53p per gallon, but that was the price in February. This time last year the price per gallon was 47p. The Minister referred to a price of 65p to 70p per gallon being common, but today I spoke on the telephone to distributors in Edinburgh, and the average price there is somewhere between 70p and 78p a gallon. A rise within 12 months from 47p to between 70p and 78p is an increase of 60 per cent. For those who use two gallons of paraffin a week that increase is not 35p but 46p. It is four times the general rate of inflation and more than three times the rate of increase in welfare benefits, which we shall be asked to debate next month.
That contrast is relevant. Many of those who depend on paraffin also depend on welfare benefits. They are the elderly, sick and disabled. These are people who require heating for health purposes and who for reasons of economy use paraffin because they cannot afford other forms of heating. They cannot cope with an increase of 60 per cent.
My constituency is in an inner city area and like other such areas has a high proportion of elderly residents. It is a staggering fact that 25 per cent. of my electors are over 65, and I know the hardship that will result from these price increases for many of my constituents.
574 I do not consider the Minister to be hard-hearted but rather do I consider him to be one of the more reasonable members of the Government, if I may say so without damaging his prospects in that Government. If, however, he is in any doubt about that hardship, I invite him to come with me to any of the pensioners' clubs in my constituency. He will there meet people who are frankly appalled when considering how to meet their heating bills in the coming winter.
In case he cannot come, I shall give the figures that I obtained only this afternoon from the largest distributor in my constituency. He tells me that last October he sold over 2,000 gallons of paraffin. So far this October he has not sold 1,000 gallons.
§ Mr. Cook
With respect to the Minister, it is at this time of the year that typically most paraffin users are topping up their stocks. One has only to compare the sales over the years to demonstrate that. I do not know where the Minister has been in the past two weeks, but if he had been in Edinburgh he will know that it has not been warm during the past fortnight.
The distributor to whom I refer has 85 old-age pensioners to whom last winter he supplied paraffin on delivery. These people are housebound and most likely to be affected by hypothermia. This month not one of them has placed an order for paraffin to be delivered.
I frankly concede that last winter the price of paraffin was unrealistic. I have spoken to the British Hardware Federation and to the distributors, and no one who has done that would be prepared to defend the price obtaining last winter. But the House must live with the consequences of that low price. The major consequence is that a large number of low-income households came to depend on paraffin for their heating because they could not afford electricity. If we kick the price controls away at one blow, without a transitional period and without offering help to meet that increase or cope with alternative forms of heating, undoubtedly they will face real hardship. The irony is that we are debating the issue only 48 hours after we learnt in this Chamber that the electricity discount scheme, which could be the only possible 575 alternative hope for these people, has come to an end.
I have no great pleasure or enthusiasm in demanding that we have a subsidy for energy. It would be preferable to put our money towards providing insulation. We should be channelling money into the conservation of energy rather than subsidising its consumption. That will happen between now and January. We have a short-term crisis to which the Government have a duty to respond, in which low-income households have been hit by inflation and will not be able to buy the fuel they will need to see them through the winter. It is beyond belief that the Government should respond to that crisis on Monday by announcing the removal of subsidy of electricity and on Wednesday by asking us to approve the removal of price controls on paraffin.
The House was not asked its opinion on the ending of the electricity discount scheme—indeed, it was not even given a statement about it. We do at least have an opportunity now to voice our opinion on the ending of price control on paraffin, and I believe that we should take that opportunity in the Division Lobby.
§ 10.55 p.m.
§ Mr. Peter Mills (Devon, West)
I welcome the opportunity to say a few words on this important matter, because it highlights a genuine problem in the towns and particularly the rural areas. Oil heating is of particular importance to many people in the rural areas. I find it amazing, especially when I travel round the South-West, to see the number of people still using these heaters. Elderly people get very fond of, even affectionate towards, this type of heating, although it is probably unhealthly and probably not very safe. But they prefer it, they have got used to it.
Frankly, I only just accept what the Minister has said, because there is here a genuine problem, and unless one has actually seen it for oneself one does not realise how difficult this situation will be for many elderly people. I am concerned about it, and I want my hon. Friend to know that, because a very large number of people still depend upon this form of heating.
There have also been problems of delivery—there is no question about that. In the old days, the travelling salesman 576 would go round the rural areas selling all sorts of things, including paraffin, which he delivered in small quantities to elderly people. That is all finished because of the cost of motor transportation. As I say, I only just accept what my hon. Friend has said. I hope that it works, but it means that a big responsibility rests on the companies that supply this heating fuel. Freedom means responsibility, and I hope that the companies will realise their responsibilities as regards both price and supply. After all, they have been supplying these people for many years.
It is not only in the supply of paraffin that the companies have to act responsibly. The closure of many small garages by the same companies because of the failure to deliver petrol is a very serious matter in rural areas and will contribute to further depopulation. These big companies with monopolies have a great responsibility in this matter, and I hope that my hon. Friend will mention that fact to them. It is a responsibility that they must bear.
There is also the problem of storage. Fire prevention officers have been checking up on storage of fuel in ironmongers' shops. Admittedly, such places are probably not very safe. This aspect also has created problems, resulting in a dwindling number of places where people can purchase oil supplies.
I hope that the Minister will watch the situation carefully. I believe that the problem is dwindling—and I do not mean to be funny—as more and more of these elderly people, particularly in the remoter rural areas, die and other people change to Calor gas or other more modern heating appliances. In the meantime, however, while so many elderly people continue to rely on this type of heating for their homes, I hope that the Minister will keep the situation under review very carefully and try to point out to these big companies their social responsibilities in this matter. I repeat that freedom means responsibility.
§ 10.59 p.m.
§ Mr. David Penhaligon (Truro)
It is a pleasure, as always, to follow the hon. Member for Devon, West (Mr. Mills). We both realise the importance of paraffin supplies in rural parts of Britain and, in the case of the hon. Member for Devon, West, the very rural parts of Britain. I 577 have constituents living in isolated conditions whose sole form of heating is paraffin. They did not reject electricity as being too expensive. Their only alternative is a rather antiquated and worn-out Cornish range in the corner of the room. I am amazed that a number of these cases still exist.
The Minister made out a better case than I had thought existed for a substantial price increase in paraffin, but not a good enough case to justify the sort of price increases that have taken place. Neither do I believe that he made out a case for arguing that all controls over the price should be ended. I regard the control of paraffin prices—a minority supply situation—as a long-stop measure to prevent a company or a supplier from exploiting the sort of monopoly that exists in some communities. Paraffin is supplied for areas that are far bigger than most of the constituencies represented by Opposition Members.
As the Minister knows, I believe that it is time that we put a statutory obligation on the fuel companies to supply petrol and, indeed, paraffin to those outlets that want to buy it. There is a case for charging more where long distances are involved, but I do not believe that the petrol companies have any moral case for arguing that, in their judgment, another man's business or garage is not viable. That is not and never has been their concern. If someone is prepared to sell paraffin or petrol in Cornwall or Devon at a ludicrous rate of return, that is his privilege and not the business, of Esso, Shell or the others.
Even at this late moment, I ask the Minister to pledge that he will bear the reintroduction of price control in mind if clear evidence can be produced by hon. Members of persons exploiting the market. I shall vote against the Minister tonight but, knowing the arithmetic of the House, I suspect that he will win the Division. However, if evidence of exploitation of this minor market can be produced I ask him to pledge to bring back price control as a long-stop safeguard against the exploitation of the monopoly.
§ 11.3 p.m.
§ Mr. Peter Viggers (Gosport)
This short debate gives us the world of politics in microcosm. It is all very well for 578 Labour and Liberal Members to demand freedom of supply for paraffin. I was here when the Secretary of State for Energy faced a barrage of demands from Devon, Edinburgh and other parts of the country to do something about the fuel supply. He has done just that and actions speak louder than words. Through the Secretary of State for Energy, the Conservative Party has provided the energy that people were demanding. There is no via media, no compromise, between controls on the one hand and free market forces on the other.
Energy is the most international of resources. Supply and demand will always match, given a free market. The other side of the coin is that fuel will flow to the area where it receives the best price and it will not be made available unless a market price is paid for it. Customers will switch to cheaper fuels but those fuels will not be available unless the price is right for the supplier. Between oil, gas, coal, electricity and, indeed, paraffin there is a great deal of interchangeability. Paraffin is one of the most easy fuels to switch to because of the small capital cost of the equipment for burning it. Paraffin can easily be switched into and out of.
If the price is right, paraffin will be available. If the price is not right, paraffin will not be available. If it is not available, how can we try to make it available? We can have controls, which make sense for a short period. The Conservative Government instituted controls in December 1973 and such controls can have validity for a short period to show a Government's determination to control prices and supplies. However, on a long-term basis, controls do not make sense.
The hon. Member for Bassetlaw (Mr. Ashton) talked about "leaning on" the oil companies. I do not know, and I am not sure that the hon. Gentleman knows, what that means. If we use Government pressure to control supply we must have a rigid system of inspection, search powers and the risk of rationing, black market operations, and the sort of shortage of supply that we saw earlier this year and averted only by allowing prices to go up.
It is even worse than that. The whole panopoly of State inspection and control would not be enough. The price of paraffin would be so unattractive that it would 579 not be worth turning kerosene into paraffin. It would be necessary for the Government to use powers to force companies to make paraffin.
What should we be doing to make sure that people have the fuel that they need? We care about that and we want them to have the fuel. First, we should free paraffin to find its market price. Freeing the price of paraffin has meant that it has increased from about 52.5p a gallon to about 73p a gallon. That is a massive increase, but it is the fault of the previous Government for holding down the price. It is not the fault of those who have allowed the price to equate with the market.
§ Mr. Allen McKay (Penistone)
It is evident that there is an oil interest somewhere here. In the past two weeks I have spoken to officials of oil companies in America and they have admitted that the petrol and oil price increases have been the biggest rip-off that they have ever had. They are looking forward to the next price increase because it all goes in their back pockets.
§ Mr. Viggers
The hon. Gentleman may seek to join any group that he wishes. There are many in the United States who feel that the international oil crisis is a figment of the imagination of the oil companies which have created it to make large profits. That is a by-product of the increase and diminution of prices. There may be benefits for companies in the increases in oil prices, in the same way as there will be a loss for them if prices go down. However, that is incidental and should not distract us from the main issue.
§ Mr. Bob Cryer (Keighley)
Will the hon. Gentleman remind the House whether he has a financial interest in any oil companies so that pensioners and others who read the debate may decide for themselves—on information provided in the debate and not on an interest declared months ago—what his position is?
§ Mr. Viggers
I am always delighted to see the hon. Member for Keighley (Mr. Cryer), who jumps up and always reminds me—I do not know whether this is a parliamentary expression—of a sewer rat jumping up to try to—
§ Mr. Russell Kerr (Feltham and Heston)
The hon. Member for Gosport (Mr. Viggers) reminds me of a skunk.
§ Mr. Cryer
I raised a perfectly legitimate point. Hon. Members who have a financial interest in the subject under discussion should declare that interest. That is a well-known rule and it is a resolution of the House that such an interest should be declared.
In response to that, the hon. Member for Gosport (Mr. Viggers) declared my request to be that of a sewer rat. I believe that to be an unparliamentary expression and I shall be grateful for your comments, Mr. Deputy Speaker. I ask that the remark be withdrawn. I was merely pursuing my duty as an hon. Member and I intend to see that all hon. Members declare their financial interests so that people outside know whether those hon. Members are trying to further their own position or the position of the nation at large.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
It is certainly clear that an hon. Member should declare his own interest. The expression would appear to be unparliamentary.
§ Mr. Viggers
I stated, Mr. Deputy Speaker, what the hon. Gentleman reminded me of. I did not call him anything in particular. I certainly apologise if the hon. Gentleman is upset by the impression that he makes upon me during a debate. I apologise for that, and withdraw it unhesitatingly.
I also declare, in response to the hon. Gentleman's request, that I have an interest in this debate. I want people in my constituency and in the country to have proper fuel supplies made available to them. I have absolutely no financial interest in the subject of this debate.
The Government should help those in real need, and this is what the Government are doing. Benefits will rise by between 17 and 19½ per cent. this year. This will more than keep pace with fuel prices. The discretionary heating addition paid by the Supplementary Benefits Commission will go up from 85p, £1.70 and £2.55 to 95p, £1.90 and £2.85. Most importantly, as the Secretary of State for Social Services announced recently, householders with children under 5 and pensioner householders over 75 will have 581 a heating addition which, in some cases, will be as high as £50 per year. This kind of benefit will be of use to those in real need.
We believe that the consumer should have freedom to choose. I do not see any justification for subsidising the use of paraffin which, as stated from the Labour side, is smelly, unhealthy and, in some cases, dangerous. There is no justification for subsidising that fuel. I can understand those who wish to safeguard the supplies of their own constituents but hon. Members on the Opposition Benches should know better than to promise unrealisable dreams of cheap fuel and to trade in delusions.
§ 11.13 p.m.
§ Mr. Gwilym Roberts (Cannock)
I am glad that the Minister dealt with the British Hardware Federation and some of the difficulties, as he saw them, for small hardware retailers. One of my main reasons for intervening in the debate is to put forward some representations made to me by a small hardware retailer in my constituency who deals in paraffin.
As my hon. Friend the Member for Bassetlaw (Mr. Ashton) has pointed out, we are all theorists. This is not a fuel the price of which will affect hon. Members. The dealer to whom I refer knows the problems of the people who buy paraffin. His experience is fully in line with the remarks made by my hon. Friend. The people he supplies with paraffin are almost invariably very low-paid families, the old and the disabled. Other people have been able to convert to another fuel. Those left are the residue of the unprotected in our society.
This hardware retailer approached me in late February this year over difficulties of supplies. I contacted both distributors and wholesalers. None of them suggested to me that the problem was associated with price. They suggested that the problem was simply due to the difficulties of the winter and the complexities that arose at that time.
This retailer delivers in a wide area. But he still believes, with the price increases that have been granted, that there is an adequate margin attached to the job.
I am sure that it is not suggested that, because this retailer is a staunch member of the Labour Party, compassion lies only 582 with retailers who are members of the Labour Party. That retailer believes that the margin is adequate. He is worried about what will happen if prices are allowed to explode. He does not believe assurances such as those which have been given today. He fears the worst.
Even if the Government want to apply market forces generally, if there is an area to which those forces should not apply, it is this area. Those affected have already been battered by the present Government proposals. They face the prospect of the disappearance of the electricity discount scheme. Allowing paraffin prices to explode will be the final blow to many people. I urge the House to express its opposition to the proposal.
§ 11.16 p.m.
§ Mr. Gray
With the leave of the House, I shall try to answer some of the matters raised in this short debate. I congratulate hon. Members for their constructive contributions. Debates such as this are of great value since they take place in a more relaxed atmosphere than that which prevails during the day.
The hon. Member for Edinburgh, Central (Mr. Cook) and some of my hon. Friends expressed their anxiety about the elderly and most needy families. Perhaps the hon. Member for Edinburgh, Central did not appreciate that the 1977 family expenditure survey showed that the poorest 33 per cent. of total households accounted for 40 per cent. of paraffin use. Paraffin is certainly important, but we should not forget that 60 per cent. of paraffin is used by households which are not poor.
The Government have decided to provide more help for those who are in most need—the very old and families with young children. Under the last Government's scheme the average payment was less than £8 per beneficiary. We shall be providing up to £50 for those who are really vulnerable.
§ Mr. Cook
The hon. Gentleman must concede that the £50 is not an increase. It is simply an extension of a benefit which has always been available at the discretion of supplementary benefit officers. I am prepared to bet the Minister a fiver that the code advises officers to use their discretion when dealing with people over 75 and mothers of children under five.
§ Mr. Gray
I shall not enter into rash bets with the hon. Gentleman. The Government's purpose is to direct the greatest help to those most in need. Many of the hon. Gentleman's constituents will benefit.
My hon. Friend the Member for Devon, West (Mr. Mills) expressed his anxiety. He suggested that companies should take the responsibility for ensuring supplies. I said earlier that we have had talks with the companies to ensure that there is no scarcity of supply. I said that if genuine difficulties arise my Department will try to help as it did with the petrol shortages.
My hon. Friend the Member for Devon, West also touched on the point about small garages. I am greatly concerned about this aspect. As he knows, I represent a rural constituency, and therefore the point has been emphasised to me. We have had considerable consultation with the companies on this point and I hope on another occasion to explain it to my hon. Friend in greater detail.
The hon. Member for Truro (Mr. Penhaligon) also drew attention to small garages. I refer him to the remarks I have addressed to my hon. Friend. I have written to him on the subject. He also said that he hoped that the Government might consider the reintroduction of price control if genuine cases of hardship could be shown. I cannot give him that assurance, but I can assure him that if there are any cases where supply is affected my Department will certainly do its utmost to help.
§ Mr. Penhaligon
Is the Minister saying that if I can produce for him evidence of paraffin being sold in my constituency for £1 a gallon he will do nothing about it?
§ Mr. Gray
No, that is not what I said. I must ask the hon. Gentleman to be reasonable. Price control has been removed. I said that if there was evidence of anyone having difficulty in obtaining supplies my Department would do anything it could to help. But we believe that if someone is selling at £1 a gallon in the competitive market it is highly likely that he will not sell very much paraffin.
My hon. Friend the Member for Gosport (Mr. Viggers) made a very helpful contribution to the debate. He took a realistic view. He pointed out the difficulties that exist for the oil companies 584 from time to time. He highlighted the problem of having price control in any petroleum products.
The hon. Member for Penistone (Mr. McKay) who interrupted my hon. Friend the Member for Gosport with the point about a rip-off by the oil companies has overlooked one point which I have made before. When we talk about oil company profits we should not forget that in the North Sea there is, in a stable political climate, a situation that makes exploration most attractive to oil companies. We should encourage the oil companies to reinvest large amounts of the profits they make in the North Sea for the benefit of the country.
§ Mr. Gray
The hon. Gentleman must be fair about this. If I commented on the progress which the Corporation is now making I should be ruled out of order by Mr. Deputy Speaker. But the opportunity will shortly arise when we shall be able to describe our future plans and just how we see the Corporation as a flourishing concern in its new direction.
Let me deal now with the comments of the hon. Member for Cannock (Mr. Roberts) and this solitary member of the Labour Party who also happens to be a small business man. It is interesting to hear that there are some small business men who are sufficiently public spirited to subsidise the community by accepting that the price they were charging for paraffin earlier this year was sufficient. Even Labour Members accepted that the differential was unacceptable at that time. Nevertheless, the hon. Gentleman fairly said that the retailer was satisfied. He also said that he was worried about the unprotected in our society. When I referred to the remarks of the hon. Member for Edinburgh, Central I highlighted the Government's same concern. I firmly believe that the measures introduced by my right hon. Friend the Secretary of State for Social Services meets the point.
§ Mr. Gwilym Roberts
Surely the hon. Gentleman accepts that although the measures introduced by his right hon. Friend may be helpful to a small proportion of the unprotected, the great majority of them will be completely unprotected, whereas previously they had some protection. That is the direct result of his right hon. Friend's measures.
§ Mr. Gray
I do not accept that. That is a view that obviously will be expressed by Opposition Members. It is right and proper that they should examine the proposals carefully. However, I take a different view. The proposals outlined by my right hon. Friend will be of considerable benefit to those who are most in need. There will be some who take the view that they are not protected, but that applies to any measure. That applied to the measures taken by the previous Administration. There are always those who feel that they are not adequately protected. In this instance I believe that my right hon. Friend has taken the right action.
I have tried to deal with the arguments advanced by Opposition Members. I realise that the Prayer was tabled in July and that perhaps some of the heat has gone out of the subject since then. We are grateful to the Opposition for the constructive attitude that they have adopted.
§ Mr. Cryer
On a point of order, Mr. Deputy Speaker. I raised earlier the fact that an hon. Member who contributed to the debate has an interest. The hon. Gentleman has declared previously an interest as a director of an oil company. He said tonight that he did not have a direct interest in the debate. Presumably that is because the oil company of which he is a director, according to the most recent published list—Premier Consolidated Oil Fields Limited—does not have an involvement in the supply of paraffin. I ask you, Mr. Deputy Speaker, to make it clear that where hon. Members have a general interest, not a specific interest—surely the Prayer is much involved with the position of oil companies in general and not specifically with paraffin—they should declare that general interest.
§ Mr. Deputy Speaker
The hon. Member for Gosport (Mr. Viggers) made a 586 clear declaration of his position. This is not the moment when we can pursue the matter as there are only two minutes of time allotted to the debate remaining.
The Question is as on the Order Paper. As many as are of that opinion say "Aye".
§ Mr. Viggers
On a point of order, Mr. Deputy Speaker. The oil company of which I am a director does not buy or sell petroleum or petroleum products in the United Kingdom.
§ Mr. Deputy Speaker
The Question is as on the Order Paper. As many as are of that opinion say "Aye".
That an humble Address be presented to Her Majesty, praying that the Paraffin (Maximum Retail Prices) (Revocation) Order 1979 (S.I., 1979, No. 797), dated 10th July 1979, a copy of which was laid before this House on 11th July, be annulled.
§ To be presented by Privy Councillors or Members of Her Majesty's Household.
§ Mr. Deputy Speaker
We were on a point of order at the time I put the Question. I came to the conclusion that the time had come to put the Question. There was a certain amount of confusion at the end of that time and I am therefore putting the Question again so that there can be no confusion whatever.
§ Dr. Owen
Further to that point of order, Mr. Deputy Speaker. It was in the hearing of the whole House that the Question was put in the normal way and you said that the Ayes had it. The decision was taken. I realise that an error may have been made. The Government will have to lay another order and another debate will take place. I do ask you to consult your advisers. The motion was put, the voices were heard, and you said that the Ayes had it. That is the issue and that was said in this House. That must stand.
§ Mr. Deputy Speaker
In view of what the right hon. Gentleman has said I must agree that that is the position.
§ Mr. Michael Neubert (Romford)
Further to that point of order, Mr. Deputy Speaker. It was in my hearing, and I am sure in yours, that there was a cry of "No" from the Labour Benches which creates, to say the least, a certain doubt in most people's minds as to what the view of the House is. I put it to you that it would be entirely within the spirit of the House if a Division were to be called and the confusion reconciled by the results of that Division.
§ Mr. Gray
Further to that point of order, Mr. Deputy Speaker. It was clearly the case on the Government Benches that cries of "No" were heard. It is not unusual for Mr. Speaker to say "The Ayes have it" and, when the Noes are vehement in their calls, for him to call a Division. I put it to you that the will of the House is that a Division should take place on this matter.
§ Mr. Deputy Speaker
I had announced that the Ayes had it and if there were any cries of "No" that reached my ears it was after I had come to that decision. I am afraid that I cannot change that decision.
§ Mr. Gray
Further to that point of order, Mr. Deputy Speaker. In the event of a dispute of this sort, where Mr. Speaker or Mr. Deputy Speaker has not heard the Noes, surely, in the interests of the House, it is only right that the Question should be put again. There undoubtedly will be precedent on this matter.
§ Mr. Roger Moate (Faversham)
Further to that point of order, Mr. Deputy Speaker. May I confirm that I, too, distinctly heard Noes expressed from both sides of the House? You then clearly made a ruling from the Chair that, to clarify the situation, you were putting the Question again. That ruling was then challenged by the Opposition Front Bench. May I suggest that the challenge to your ruling was quite improper and that your earlier ruling should stand and that the Question should be put once more to clarify the situation?
§ Mr. James Hill (Southampton, Test)
Further to that point of order, Mr. Deputy Speaker. I have been here throughout the debate, I have clearly said "No" several times and I like my "No" recognised by the Chair.
§ Mr. Deputy Speaker
I had called for the voices and at that time I was of the opinion that the Ayes had it. After that time, when I had declared that the Ayes had it, I did hear sonic further noise. But that was too late.
§ Mr. Gerald Kaufman (Manchester, Ardwick)
On a point of order, Mr. Deputy Speaker. The Government are seeking to overturn your ruling by indulging in this synthetic indignation. May I have an assurance that the Adjournment of the House has not been moved and that this synthetic indignation will not disadvantage the children of Manchester?
§ Mr. Deputy Speaker
I was about to say that the time had come for somebody to move the Adjournment of the House.