Chamber and committees

I want to be clear—are you referring to the fact that there is additional capacity in the UK to produce gas, but the domestic price has not dropped to reflect that?

However, the biggest constraint on that will be grid capacity. If you want to build an offshore wind farm, you require a date to be set by National Grid for when you will be able to connect to the grid to supply it with electricity. The biggest risk for ScotWind is National Grid not having put in place the right plans—although I welcome the fact that it is doing its holistic network review at the moment—which could stop a project that could be delivered by 2030 from being delivered until 2035 because it cannot get the grid connection until, say, 2034.

For the delivery of such projects, grid capacity needs to be in place. National Grid is taking forward that bit of work. Our view is that that should be delivered by 2030, and National Grid is planning how to deliver that.

Energy efficiency has an important role to play in the short, medium and long term, but it would be unrealistic to expect energy efficiency programmes to be rolled out on the scale that would be needed to deal with the potential crisis that we face in 2022 and into 2023 as a result of how the energy markets are. I will give an example of why there are challenges.

The sector has challenges in accessing labour to do energy efficiency work. I met a company that is involved in our area-based programme for local authorities, which targets properties where people could be fuel poor by providing greater energy efficiency and in some cases district heating systems. The company’s managing director told me that, even if we doubled the money that we offer for such projects, his company could not deliver them because it does not have access to labour. He said that his company used to have a lot of eastern European labour but no longer has access to that because we are no longer part of the European Union. I did not throw that up just for a Brexit-related reason, but that company was pointed about the fact that it does not have the same access to labour as it had pre-Brexit, which has constrained its capacity and ability to ramp up programmes that we would like it to deliver.

That issue does not apply to every company, but it happened to be the case for the company that I met. One constraint is access to labour and skills to deliver programmes, so programmes need to be taken forward in a way that ensures that the sector can deliver and which will expand the skills that are necessary to develop such programmes in future years. There are constraints and limitations.

Energy efficiency will play an important part in the short, medium and long term, and it is clearly an important part of meeting our climate change target of reducing energy consumption. However, it is wrong to think that the sector could easily double the number of homes that we insulate under the energy efficiency programme tomorrow, because the sector faces constraints.

I cannot give you a figure off the top of my head for the number of civil servants who are involved in tackling fuel poverty, but I am more than happy to provide you with that information. Of course, many of them will be involved not just in fuel poverty but in wider social policy areas such as child poverty and household poverty. In other words, they will work not just on one specific bit of poverty but across a range of areas, because they are all interlinked. The households that are experiencing child poverty are often the same households that are experiencing fuel poverty, and those who are experiencing poverty in general often experience fuel poverty, too.

The danger in a governmental sense lies in taking a silo-thinking approach to this rather than a cross-departmental approach. However, I am more than happy to come back to you with the number of civil servants who are employed in tackling poverty, including fuel poverty.

Potentially, yes.

I am not aware of the £500 million that you are referring to, but if you can provide more information, I am more than happy to take the matter away and get clarification on it. As I have not been sighted on that, I would prefer to get some details on it and then clarify things with the finance secretary.

I do not believe that there should be a windfall tax only on energy companies; our view is that there should be a windfall tax on companies that have made a significant profit during the pandemic, including the oil and gas sector—in other words, the energy sector itself. That would expand the range of any windfall tax and, potentially, increase the pot available to the UK Government to create measures to address the cost of living crisis. I sense that the chancellor’s position on that changed during the weekend in a way that suggests that he is starting to think about the possibility of introducing a windfall tax on the energy sector.

Presently, we are not looking at an emergency budget. That is because we have a fixed budget, which means that we would not be able to draw in extra resource. We are looking at the present allocation of funding across different portfolios to see whether we can target more of it at people who are experiencing particular difficulty during the cost of living crisis. That work is being done now. However, given that we have a fixed budget, there are no plans for an emergency budget at the present time.

I recognise that they are under greater pressure because of the cost of living crisis. We have taken specific measures. As I mentioned, we have expanded the Home Energy Scotland programme by 20 per cent and doubled the bit that is specifically for those who are most vulnerable. We have also put another £10 million into the fuel insecurity fund, which is administered by third sector organisations on our behalf, to provide financial resource.

Some third sector organisations have faced challenges because of concerns about future funding. I suspect that most of that is linked to UK Government delays in taking forward the warm home discount scheme, which has created points of vulnerability for third sector organisations in relation to whether they will have funding going into the new financial year. I believe that the UK Government has now sought to address that in the regulations that it set out in February to roll forward the programme.

We are trying to provide resource to third sector organisations to support them where we can. I am also very conscious that this is about more than energy—some third sector organisations that provide advice and information are dealing with other aspects of the cost of living crisis. We are considering whether we can do further work to support third sector organisations, given the increasing demand that they are facing over and above the additional support that we have already provided. I fully recognise and acknowledge that they are under considerable pressure and demands, given the cost of living crisis that many households are facing.

As I have said previously at committee, our priority is to move towards a public energy agency company in Scotland, which is a piece of work that we are taking forward at present. That has not changed. Nonetheless, it remains our view—and my view—that, in order to operate an effective public energy agency company, we would require to be able to enter not only the retail market but the energy generation market, and to control aspects of the grid network. As it stands, we do not have that power.

My view is that the best way in which we can deliver a public energy agency company in Scotland that can do all those things is through Scotland being a normal independent country. That would involve our taking responsibility for these matters and being able to borrow the capital needed to invest in those types of projects, in the exact same way that many other countries in the Scandinavian region of Europe have been able to do in recent years. Some of those countries are now investing in Scottish renewable energy projects, because they have been able to secure the capital necessary to enable them to do so.

The proposal still has merit, but to do it effectively and properly, we would require all the powers that we need with regard to energy. We also need the borrowing powers that are necessary to deliver the type of investment required to create renewable energy projects. Beyond that, our priority is the agency, as I have set out previously.

One of the purposes of the energy insecurity fund is to support some of the most vulnerable households, particularly those that are on prepayment meters. We provide some of that funding to the Fuel Bank Foundation, which supports vulnerable people on prepayment meters, I think, to reduce the risk, including by making available same-day money to stop people from self-disconnecting. There is no doubt in my mind that, across the UK, thousands if not millions of households on prepayment meters will find themselves thinking about self-disconnecting because they just cannot load up their meters. For that reason, we need to do more throughout the UK to meet the needs of people who are experiencing fuel insecurity.

Our £10 million fund is designed specifically to help to meet the needs of those households, but there is no doubt that households across the whole of the UK face the same problems. Much more needs to be done to meet the challenges that those households face.