Chamber and committees

There is a lot in that, and I will unpick some of it. I disagree with the wait-and-see approach. Customers on direct debits saw an £693 increase in their default tariff and pre-payment customers saw a £708 increase in their default tariff. We do not have to wait to see what to do, because people are already experiencing significant financial challenge. That is why I do not agree with the UK Government’s wait-and-see approach. The measures that have been taken do not go far enough—we need to go much further.

Should we deal with it as a welfare issue or as an energy issue? It should be a combination of both, not one or the other. We need to make sure that we take action through the welfare provisions that are available, and reinstating the £20 uplift in universal credit would be a step in the right direction in addressing the crisis. That was introduced because of the pandemic but has been removed at the very peak—or potentially at the very peak—of a cost of living crisis, so that was the wrong thing to do.

We have sought to use the welfare powers that we have to help to manage the cost of living crisis that households face. For example, we have doubled the child payment and increased it by a further £5, and we have increased the eight benefits that we are responsible for by 6 per cent. We are trying to uplift them in line with the rise in the cost of living.

We are seeking to use the welfare powers that we have to help to meet some of those costs, but I recognise that that is not sufficient in itself. Action needs to be taken in the energy markets. Some of that will be short term and some of it will be medium term.

In the short term, Keith Anderson’s proposal on the deficit fund is one option that could be considered. There is a range of other things that we could do as well—for example, removing VAT and examining some of the social and environmental costs that are attached to energy bills could save households another £140 to £150 on their bills. There are other measures that could be removed.

There are aspects to energy that could be addressed in the short term. In the medium term, we need to keep in mind that energy bills are going up also because of failures in the market. Many retail companies have withdrawn from the energy market, which has resulted in costs being added to household bills to address those company failures. That says to me that there has been clear, systemic regulatory failure in the sector.

The companies broadly fall into two categories: those that are hedged and those that are unhedged. The ones that are largely left to the retail market are unhedged companies. They did not have a business plan or structure to be able to absorb big spikes in energy costs. They have withdrawn from the market and, because of the supplier of last resort arrangements, the costs have been transferred to other companies and socialised across the rest of our energy costs.

That indicates that there is a systemic failure in the sector. That needs to be addressed, but I am not convinced that the Office of Gas and Electricity Markets has yet set out actions that will address that in future. Ofgem needs to do more on that. I am more than happy to expand on and explore that aspect as well.

Given that many of the costs are directly attributable to the big spike in energy costs that are driven by wholesale gas prices, we need to speed up decarbonisation. I welcome the fact that the UK Government has also acknowledged that. The priority now needs to be moving towards renewables at a faster pace. That will give us energy security. Furthermore, as renewables are lower in cost, that will also help to drive down bills in the longer term.

It is not a case of doing one thing or the other; it must be a combination of the two. Where we can take action, we are trying to do so, but there is no doubt in my mind that much more needs to be done.

I do not accept that on the part of the Scottish Government, because we recognise that it is a crisis, and a considerable amount of cross-departmental work is already taking place across Government to address some of those issues. Our internal processes and mechanisms for dealing with the situation reflect that it is a crisis.

I accept that the level of intervention that has taken place so far has not reflected that it is a crisis. There is absolutely no doubt in my mind that a key priority must be either to reduce household bills or to get money into people’s pockets.

Given that the UK Government has cut benefits—it has removed the £20 a week universal credit uplift, for example—and it has increased national insurance, it feels as though it is not recognising the situation as a crisis. Its failure to take action in the recently published UK energy security strategy, in the March budget and in the Queen’s speech last week does not reflect what I believe is the necessary action that is required at UK level to tackle the spiralling crisis that households face as a result of the increase in energy costs.

We are doing what we can to martial our fixed resources in a way that provides assistance where we can, and we are looking internally to see where there is more that we could do. The UK Government needs to take a much more concerted crisis-type approach by intervening in the market or by providing financial support that would help to address the increasing costs that households face.

Thank you, convener, and good morning, everyone. The Scottish statutory instrument that you are considering is routine. It concerns the application of the Scotland-specific equalities duties to the new environmental governance body, Environmental Standards Scotland.

As ESS is established as a non-ministerial body—it is part of the Scottish Government Administration, albeit independent of ministers—it is automatically covered by the public sector equality duty in the Equality Act 2010 and there is no need for a separate order to add ESS to the scope of that duty.

The Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2022 will apply the Scotland-specific equality duties to Environmental Standards Scotland by adding it to the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012. Those will require ESS to publish equality outcomes and report on progress towards achieving those; report on the mainstreaming of equality; and publish information on the gender pay gap and equal pay. It is important that ESS is included in the full range of equality duties that are expected of Scottish public bodies.

Committee members will be aware that the Scotland-specific duties are currently under review and that a consultation is on-going on proposed changes to the 2012 regulations. However, it is not reasonable to delay the inclusion of ESS in those duties. ESS will be included with other public bodies in the scope of amendments to the 2012 regulations.

I hope that that provides a useful overview, and I am happy to respond to any questions that the committee may have on the matter.

Given that ScotRail is about to come into public ownership, it will be part of the Scottish Administration and will be covered by the 2010 act. The Minister for Transport is considering any further changes that we might make.

I agree about the importance of the twin crises that we face—nature loss alongside climate change. Of course, climate change drives a significant part of nature loss.

Our budget line for biodiversity and natural infrastructure has increased significantly over recent years—there has been a 55 per cent increase overall. It includes £55 million of new funding to extend the nature restoration fund to £65 million.

As you rightly said, that is a multiyear fund. It will work across Scotland, and its objective is to help to create green jobs, to reinvigorate local communities, to reinforce Scotland’s green recovery, and to support large-scale multiyear, multipartner projects that can deliver transformative change. Part of the reason for its being a multiyear funding package is to give the sector reassurance of the level of funding that will be available in future years, to allow some of the long-term projects to be taken forward. Many nature-based projects are long-term ones, so we have sought to provide a funding profile that gives assurance about that.

I do not have to hand further breakdowns of how the nature restoration fund will be utilised at a lower level. However, I would be more than happy to take that away, and I will try to provide more detail, if that would be helpful.

There is.

You raise an important point. There is a capacity issue in the peatland restoration sector. It is a fairly new sector, and a limited number of companies or businesses operate in it. There is also a very small window in which peatland restoration can take place each year, which means that businesses that are involved in peatland restoration often do that work as an add-on to other things that they are involved in, because it is not sustainable in its own right. I think that the work has to be carried out in the September to October period. The sector is growing, and there are limitations in the skills that are available in it. Peatland restoration work is not viable on its own, given the very short timeframe in which it can be carried out.

There are capacity issues in the industry. I am not sure whether that is to do with people not being willing to take up the opportunity to restore peatland. I am not saying that that is not an issue, but I am not sure that it is one of the main issues. I suspect that a big part of that is access to skills and businesses being able to flex to doing peatland restoration work for a short period of time each year. That means taking their equipment away from the other things that they would normally do for the short window of time in which the work can be carried out.

You will be aware that we withdrew the proposed bill because it was criticised on the basis that it was not ambitious enough and would not drive forward the circular economy sufficiently. We decided to withdraw it and reintroduce a different piece of legislation. That is part of the background to the bill.

I expect that bill to come in the early part of this parliamentary session. I cannot say much more than that, because we have to go through a process in Government of agreeing landing slots for bills coming into Parliament and our future programme for government.

I assure you that the bill is viewed as one of the priority bills in this parliamentary session. Given the importance of making progress on the issue, I am of the view that it needs to be one of the earlier bills in the session. I will not go much further than that, but I hope that I can reassure you that it will be in, I would say, the first half of this parliamentary session.

This is partly tied up with the warm home discount scheme. For some time now—indeed, over the past year—we have been pursuing with the UK Government issues such as the future of the scheme and how it should operate, and we have only started to get a response from it. I hope that in the next couple of weeks we will be able to give a clearer indication to the sector about what will happen post-April, but, as I have said, the issue is partly tied up with some of the work that we have been doing on the UK Government’s warm home discount scheme and the reforms that it is planning to make in England and Wales. We want the system to be much more aligned with Scotland’s needs, but it appears that the UK Government is not prepared to allow that to happen.

Our capital budget reflects the cut that we have experienced in our overall capital spend; it is a cut of more than 9 per cent in our capital expenditure from the UK Government, so there has to be give somewhere and we have to reprioritise. I hope that you can see that we are pivoting our capital investment into the areas that can support the green recovery in a much more significant way. We have sought to protect and invest in those areas; I go back to the capital investment that we are making in the circular economy and the investment of £1.8 billion that we are making in the decarbonisation of properties. We are also investing in active travel infrastructure and decarbonising our rail network.

As well as having to sustain a cut in our capital budget, we are pivoting our capital investment to the areas that will help us to deliver our climate change agenda. It has an impact when capital is restricted, but we are trying to balance it out in a way that helps us to deliver our climate change ambitions. I firmly believe that the priorities that we have set out in the budget demonstrate that very clearly and highlight the Government’s intent to make sure that that is the direction of travel.