Chamber and committees

Let me finish my point, Mr Kerr.

We must look at the facts of the matter. Fuel poverty is greater in Scotland, because the household cost of using fuel in Scotland is greater than it is in other parts of the UK, as a result of our weather and our rural environment. A household in Scotland will spend more of its budget on fuel costs—in Scotland, the percentage is about 4.8 per cent, compared with about 3.9 per cent for England.

Not only do we spend more of our budgets on heating our homes in Scotland, but a greater percentage of our households are off grid and use off-mains systems that are more costly to operate. I think that the figure is about 17 per cent, compared with about 12 per cent in England—those are rough figures, not specific ones. Such factors influence the cost of energy and impact on energy bills.

What is the Scottish Government doing? We have our warmer homes Scotland programme, which is about energy efficiency and insulating properties. As I have mentioned, over the course of the parliamentary session, record investment of £1.8 billion will go into our heat in buildings programme. We have been expanding our area-based scheme, the households involved and the amount that they can get to support them with energy efficiency measures, and we have also expanded and, indeed, intend to increase the investment in the benefits that we control.

A practical example is the winter fuel payment, which we will become responsible for and which families or households will receive automatically, instead of having to wait to see whether the weather gets cold enough. I think that that will amount to the provision to households of about £20 million a year, from which in the region of 400,000 additional homes will benefit. Last winter, the UK Government’s cold weather payment system was triggered on only six occasions, with four of the weather stations in Scotland being triggered. The overall amount paid out by the Department for Work and Pensions in support of low-income households was under £400,000. We should compare that figure with the £20 million that will automatically be invested by the Scottish Government in its winter fuel payment scheme.

With our energy efficiency programmes and the benefits that we control, we are seeking to make a difference. However, the UK Government controls aspects of the market that have a direct impact on energy costs, including the regulation of off-grid provision and the operation of the warm home discount scheme. All those things have an impact on fuel poverty here in Scotland, and we believe that they need to be addressed to ensure that we are moving in the right direction.

My final point is that, although we are taking action through the benefits and the welfare provisions that we have to reduce poverty, whether fuel poverty or child poverty, those efforts are not being aided by the UK Government cutting people’s benefits at the same time. If we increase our benefits by £20 per household but the UK Government cuts its benefits by £20, there will be no net gain for that investment in reducing poverty.

The reality is that many of the levers that have a direct impact on driving fuel poverty in Scotland are held by the UK Government, and that has a negative impact on too many households across the country. That is why action needs to be taken by the UK Government, alongside the bold action that the Scottish Government is taking, to address some of the issues that have affected too many households for too long.

Yes, I do, and it was a positive move to start doing it every two years rather than every year. CFD is not specific to the UK. The Netherlands, Germany and some other countries all use CFD processes. It is not, therefore, unique to the UK. It is a mechanism that helps to get things to the market.

The point that I was making about hydro, however, was that there is no mechanism for hydro. If you wanted to build Cruachan 2 today, you would not have a route to market because BEIS has to create such a mechanism. There are projects that could be developed and go forward with billions of pounds of investment to produce several gigawatts of capacity and create thousands of jobs, but they are waiting for a mechanism to be created that will allow them to start moving.

That is frustrating, if we are clear—and I believe that the UK Government is clear—that we will have to deal with the energy crisis in the long term by decarbonising our energy system and putting a greater focus on renewables. The UK energy secretary said that and I completely agree with him. However, when your renewables projects are quite literally fossilising because they cannot get a route to market, there is something wrong. That is why we have been raising the issue with the UK Government. Those projects could create energy capacity, renewable capacity, jobs and economic benefit, and we should be getting on with them now. That is the kind of action that needs to be accelerated.

Our approach will involve a combination of factors. First of all, we are trying to find mechanisms to reduce energy bills for those who are most vulnerable, so my first priority would be a targeted programme to support the most vulnerable households with their energy costs, whether it be through the welfare mechanisms or some other mechanism.

My second priority relates to energy efficiency. The cheapest form of energy that you can use is the energy that you do not use, if you like—I know that that sounds a bit contradictory, but what it means is that we need to help ramp up energy efficiency programmes, which is what we are seeking to do with the £1.8 billion investment over this parliamentary session that I have already mentioned. That is a record level of investment, but we would, of course, always look to do more within that.

The third priority is advice to and information for householders about what they can do and what their options are. We want to support individuals who are looking for information and advice.

Those are the three areas that I would prioritise with any investment that will be made available over the next couple of months to help households through this particularly challenging period.

Potentially, yes. We can look at other ways of doing that, including the use of what I think are referred to as touch points, where people can engage with a range of public agencies. Is there a way, through those agencies, that we can make information available to the public about what they can do to meet some of the cost of living challenges? I think that such an approach could play a part.

The Home Energy Scotland programme was never designed to deal with a crisis of this scale, but it is a valuable part of the advice landscape in Scotland, because it gives independent, impartial advice on energy efficiency measures and provides some financial support for those who want to implement some of them. It has an important part to play, but it is not the only answer and we should not view it as being the only approach. We can look at bringing in a broader programme, part of which might involve providing people with advice and information on measures that can be taken.

The International Energy Agency has set out a range of actions that households and Governments can take to help reduce energy consumption, and some of that can be distilled to a local level in the form of advice to households on measures that they, too, can take to reduce consumption. There are other ways in which such advice and information can be put across, and we in Government are looking at that just now as part of a future programme of work.

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.

We used to have gas storage capacity, but when the sector was privatised, it was all got rid of. Interestingly, some European countries are putting in gas storage capacity. Germany is doing that, and the Netherlands might be doing the same, with a view to future proofing in relation to hydrogen.

As things stand, as I understand it, gas production in the UK basins is already at capacity. There is no residual or spare capacity to produce more, and it would probably take several years to bring additional capacity in from other fields. That would not help us in the here and now.

Even though there is additional gas in the UK sector at the moment, gas is traded on the international markets and it is those markets that determine the price. At times, we bring in gas from Norway and we also export some to mainland Europe. It is all traded—-it is a commodity that is traded internationally. The price of gas is set by the international wholesale price.

Even if we could bring on 50 per cent extra capacity in the UK sector, that would not have much of an effect on the international markets, because the UK sector is too small a part of the international sector. At the same time, the price will be determined by the international markets that trade in it.

We are not seeing the benefit of the additional gas that we have in the UK at the moment because gas is a commodity that is traded internationally, and the price is set by the international wholesale price.

I am happy to take the matter away and look at whether there is a way of capturing that information. We have the rurality aspect, so we know that those in rural communities are at greater risk, but as I have said, I am happy to take the issue away and see whether we can do something.

I can assure you that we are not experiencing underspends in my portfolio budget, and there is certainly no underspend as far as the Scottish Government itself is concerned. We ensure that we utilise every aspect of our resource to our maximum ability.

Of course, we have a fixed budget, and we do not have borrowing powers or the ability to implement, say, a windfall tax to bring in additional resource to meet the crisis that households are facing. If we take money from one area and put it into another, we have to stop doing things. With a fixed budget, we have to shift money around in the same way that most households have to.

The UK Government benefits from having many more levers to bring in the level of money and funding that is necessary to deal with this crisis, including the ability to introduce a windfall tax to tackle issues such as fuel poverty and to provide the Scottish Government with funding that would allow us to make even faster progress in tackling these matters. If we had greater financial flexibility, we would have much more effective means of tackling those issues than we have.

On your first question, however, I am more than happy to come back to you with a more detailed explanation if you give me the details.