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Chancellor Rachel Reeves has declared that using public money to address soaring heating oil prices is “not the solution”.
Around 1.5 million UK homes, approximately 5 per cent of the total, rely on domestic heating oil, and have experienced dramatic price increases amid the Middle East crisis.
Fears of lengthy supply disruption emerged after Iran launched strikes across the region in response to actions by the US and Israel.
Unlike gas and electricity, which benefit from regulator Ofgem’s price cap, heating oil users are uniquely vulnerable to such market shocks, lacking similar cost limits.
The Chancellor acknowledged the “unique issues” surrounding heating oil, noting its particular impact on rural communities and Northern Ireland, where 60 per cent of households depend on it.
Treasury minister Lord Livermore is scheduled to meet with MPs on Wednesday to discuss these challenges.
Meanwhile, Ms Reeves has asked the Competition and Markets Authority (CMA) to look at the cost of heating oil, as well as fuel pump prices, to prevent price gouging.
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Ms Reeves has asked the Competition and Markets Authority (CMA) to look at the cost of heating oil, as well as fuel pump prices, to prevent price gouging. (AFP/Getty)
But Ms Reeves has indicated that she will not be providing any relief to heating oil customers with public funds.
Her comments came after Liberal Democrat energy spokesperson Pippa Heylings called on the Government to introduce three months of zero rating for VAT on heating oil.
During Treasury questions in the Commons, Ms Heylings said: “In my constituency of South Cambridgeshire, as we’ve heard from constituencies around the chamber, there are many rural and semi-rural households who have to use oil for heating and over the last week have seen those prices double.
“I’ve heard the Chancellor is considering potential measures to support them.
“Will she support the Liberal Democrats’ three months zero rating for VAT on heating oil for all of those residential homes, and other measures to protect them from these just massive spikes and impact on their bills?”
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The Chancellor acknowledged the “unique issues” surrounding heating oil, noting its particular impact on rural communities and Northern Ireland, where 60 per cent of households depend on it. (PA)
Responding, the Chancellor said: “There’s two things going on in terms of heating oil.
“First of all, you’ve got the conflict in the Middle East, which we’re trying to de-escalate.
“And second, you’ve got price gouging, and the way to deal with that is to ensure that customers are treated fairly and that companies are not ripping off their customers.
“That is why we’ve asked the CMA to look at the issues around heating oil.
“But we’ve got to get to the root of the problem, which is that vessels aren’t flowing through the Strait of Hormuz and some businesses are using this crisis as an opportunity to rip off consumers.
“Let’s deal with that, rather than throwing public money at something which is not the solution – price gouging and getting oil flowing is.”