Assembly needs to address issue of VAT on heating oil if they are to tackle the scourge of fuel poverty
letter of the day: Price hikes
Regarding your recent article (September 2) concerning rising heating oil prices, Northern Ireland has the highest ratio of domestic users of heating oil in the UK and Western Europe and the highest number of consumers experiencing fuel poverty since the 2008 credit crunch.
Unlike gas and electricity, heating oil prices are not regulated relative to the actual crude oil price, currently around $45 per barrel. The rest of the UK has an extensive gas network, unlike Northern Ireland, hence heating oil suppliers have a captive market in Northern Ireland.
In addition it was the Thatcher Conservative government which added VAT on domestic fuel which has never been repealed by successive Labour and Conservative governments due to EU rules. This is because domestic fuel is on a special list of pre-approved goods and services that are subject to lower VAT rates and it would require the agreement of all other EU members to reduce it further. Now that Brexit has actually happened, VAT on domestic fuel could easily be abolished by the government in the near future.
To address fuel poverty in Northern Ireland, the Assembly needs to address the issue of VAT on domestic fuel as well as the regulation of heating oil prices, linking it to crude oil prices, rather than to demand.
Currently prices fall during summer months and increase in autumn and winter, regardless of the crude oil price. Suppliers suggest the increase is due to the sterling/dollar currency exchange rate. This is a very weak argument as crude oil prices have reached rock bottom.
The big question is will the Assembly address this issue effectively? Their track record has not been very impressive to consumers to date.