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Chamber and committees

Net Zero, Energy and Transport Committee

Meeting date: Tuesday, May 17, 2022

Agenda: Decision on Taking Business in Private, Role of Local Government in Delivering Net Zero, Energy Price Rises, European Union (Withdrawal) Act 2018


Contents


Energy Price Rises

The Convener

Welcome back. The next agenda item is our last evidence session of our inquiry into energy price increases. The inquiry is looking at the steep rise in energy prices—what is driving it, what impact it is having and what can be done to alleviate it.

We will hear from Michael Matheson MSP, the Cabinet Secretary for Net Zero, Energy and Transport. He is joined by Neil Ritchie, the head of energy services and consumer policy at the Scottish Government. Elena Whitham MSP also joins us for the evidence session. Good morning and welcome to you all.

We have around 70 minutes for the evidence session. Cabinet secretary, I believe that you would like to make a brief opening statement, so I will hand over to you.

The Cabinet Secretary for Net Zero, Energy and Transport (Michael Matheson)

Thank you, convener. Good morning. Households across the country are struggling to cope with the cumulative pressures of the cost of living crisis, and energy costs lie at the heart of that crisis. Record-high inflation, which is in large part being driven by energy price increases, has forced thousands of people to choose between heating and eating and to experience the worst decline in living standards in the past few decades. The tragic events in Ukraine have exacerbated the already elevated fuel prices, which have risen to unprecedented levels, and the impacts are felt by domestic and business consumers in Scotland. We have also seen the standing charges in fuel bills double, which means that reducing consumption does not save as much as would have been the case previously.

Scotland is a forerunner in renewable energy generation and has the potential to expand our renewable capacity and reduce energy bills. However, investment is being held back due to unfair network charges, which is a missed opportunity in the current energy crisis. A significant number of Scottish households are off the mains gas grid and, due to the interconnected nature of the energy market, natural gas price increases have had a knock-on effect on electricity, heating oil and liquefied petroleum gas prices.

This year, the Scottish Government is set to invest almost £770 million in helping to tackle the cost of living pressures, which includes a £150 cost of living award to support households with higher energy costs, and there is a further investment of £10 million to continue our fuel insecurity fund. Crucially, we are also committed to investing at least £1.8 billion over the next five years in heating and insulating Scotland’s homes and buildings.

We have repeatedly called for urgent and targeted support from the UK Government in the immediate and longer term, such as: a one-off windfall tax on companies that are benefiting from significantly higher profits during the pandemic and energy crisis; direct financial support for low-income households; improvements to the warm homes discount scheme; and a temporary removal of VAT on energy bills.

Sadly, in the March budget, in the energy security strategy and, last week, in the Queen’s speech, the UK Government repeatedly failed to deliver anything to match the scale and urgency of what is required. However, we continue to engage with the UK Government on those matters. We are also engaging with stakeholders and the sector to explore what more we can do and how we can work on a four-nations basis to help to address what is a growing crisis for many households.

Convener, I am happy to respond to the committee’s questions.

The Convener

Thank you for your opening remarks, cabinet secretary. My first question relates to evidence that the committee received from Citizens Advice Scotland when it appeared before us a couple of weeks ago. It expressed concern about the co-ordination of information to tackle fuel poverty. Its concern was that the people most in need are not getting the information when and where they need it. It also expressed a general concern about the confused level of information that is available to people most in need.

Will you address those concerns? What more can the Scottish Government do to ensure that those most in need get immediate access to relevant information?

Michael Matheson

The principal source of advice for energy efficiency and energy issues in Scotland that the Scottish Government supports is Home Energy Scotland. It provides advice and guidance, as well as loans for certain programmes around energy efficiency and renewable energy schemes for people’s properties. It is the principal source of advice and information for assistance in Scotland. Alongside that, we have the warmer homes Scotland programme, which is taken forward in partnership with our colleagues in local government.

At present, there is an increasing demand for information on energy efficiency programmes and advice around heating bills. That is why we have increased the scope of the Home Energy Scotland programme by 20 per cent. There is also a bespoke programme for the most vulnerable people, which has been doubled in size to help support the provision of advice and information.

There is a clear existing arrangement for people to get impartial advice and information. However, I am always willing to look at whether there are ways to improve that arrangement or whether we should further expand it. If there are specific examples of people being left confused or unclear about where they should go to, we can look at how we ensure that we are communicating much more effectively. As I said, there is a bespoke service to which people can turn for advice and information.

The Convener

My second question relates to the resources that are available to third sector organisations to provide the support and advice that you mentioned. When Citizens Advice Scotland appeared before the committee, it expressed concern about a mismatch between the resources that are available to it and other third sector organisations and the need for their services. As you said, there has been an exponential increase in the demand for services in recent months, but third sector organisations are working with budgets, staffing and resources that are static or sometimes being cut. Do you recognise those concerns as expressed by the third sector? What more can the Scottish Government do to support those organisations?

Michael Matheson

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.

Thank you for that response. I will bring in other members of the committee.

Fiona Hyslop

With the governor of the Bank of England stating that “apocalyptic” food price increases, along with global food supply shortages, will increase inflation further, the current cost of living crisis will get worse and energy prices are expected to increase again in October. Do you acknowledge the view of some energy and poverty advice bodies that neither the UK Government nor the Scottish Government is treating the situation as a real crisis?

11:15  

Michael Matheson

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.

Fiona Hyslop

The measures that both Governments are taking are welcome, but as we heard last week from Greg Hands MP, the UK Minister for Energy, Clean Growth and Climate Change, the UK Government is adopting a wait-and-see approach. It has not brought forward an emergency budget, and it is clear that it sees the challenge of energy price increases as a welfare issue. What is your view? Do you see it as a welfare issue, an energy issue or both? With your insight given your energy responsibilities, what measures on energy could be delivered? Keith Anderson from Scottish Power has proposed a social tariff of £1,000 so that there is a cut in bills. What is your view on that?

Michael Matheson

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.

Fiona Hyslop

You said that the market regulation has failed. What changes do you want to be made to improve matters?

We have heard that Ofgem is saying that, in the short term, if anybody is in trouble, they should just go to their supplier. Should there be some requirement for independent advice to be provided, rather than reference to suppliers?

You have also been outspoken about the unfair transmission charges. We have heard that those could have consequences. I am interested in your views on that. What changes does Ofgem need to make?

Do you agree with the consumer expert Martin Lewis that the potential move to changing the energy price cap four times a year suits energy companies rather than consumers?

Give me your views on Ofgem, please.

Michael Matheson

The fact that such a large number of companies—largely unhedged companies—has exited the market during the crisis demonstrates the gamble that they have taken in the energy market. They have been gambling with a business model that is based on low wholesale gas prices and it has gone wrong for them. They simply move out of the market and the costs of that are picked up by consumers, because of the way in which the supplier of last resort system operates.

We should not tolerate companies operating in the energy markets that do not have the capital and the capacity to manage volatility in those markets. They gambled when the prices were low and it worked for them. Then, when the price went up, they decided to get out of the market because the business model no longer worked.

I think that the regulator should have addressed the issue at an earlier stage, because there was always the potential for that to happen. It is okay to say, with hindsight, that we should have moved at an earlier stage, but the regulator is there to model potential risks and to protect the customer. In this case, I think that it has failed, that the system has failed for consumers and that, as a result, we will pick up the costs for many years to come, given the billions of pounds that are involved.

There is a need for the regulator to recognise the failure on its part. The UK Government should also be looking at why the situation has been allowed to arise and at how we can make sure, through the introduction of regulatory changes by Ofgem, that it does not happen again in the future.

That brings me to the announcement that Ofgem intends to move to a system that involves a quarterly, rather than a twice yearly, price cap mechanism. I do not think that that will change anything. It will not change people’s household bills, unless the cost of fuel starts to drop significantly. All that it will mean is that people might get a drop in price at an earlier stage, so that, instead of waiting six months for it, they might have to wait only three months. Although that is a positive, I do not think that the proposed change to the system will change anything in the present market, given where we expect energy prices to go over the course of the next year to 18 months, according to the intelligence that I am getting about the sector.

I also think that the proposed change risks putting people in difficulty. With the price cap increase in October last year, which resulted in a significant rise in prices over the winter, when people’s demand for energy consumption was at its peak, people at least knew that they had some respite until April, when the next price cap review would be implemented. If we had had a quarterly system, there would have been another increase in January, right at the peak of demand, when folks’ energy use is at its highest level. That could have resulted in more people being put into financial difficulty. There are potential unintended consequences of moving to a system of four price cap changes a year. It has potential benefits, as I mentioned, but there are also potential downsides.

In addition, I do not think that that change amounts to the fundamental reform that is necessary to make sure that we have an energy market that protects consumers’ interests. The very fact that so many companies exited the market for the reasons that I outlined demonstrates that consumers’ interests were not sufficiently front and centre in the way that the system was being regulated.

As regards Ofgem’s view that people should go to their energy company first if they have concerns, I think that that is, by and large, probably still good advice. Some energy companies have hardship funds and payment plans that they can use to assist people who are having difficulty. It is important that the regulator scrutinises the way in which suppliers provide that advice and information, that the information is appropriate and that they also provide advice on where customers can go for independent advice, over and above what they have been told by their energy supplier.

Transmission charges continue to act as a barrier to the roll-out of renewables in Scotland. We know that they make renewable energy, both onshore and offshore, more expensive in Scotland than in other parts of the UK, because we still have a system that is based on geography. Ofgem brought forward its proposal on locational marginal pricing without consulting the Scottish Government and without us knowing anything about it. That came completely out of the blue, despite the fact that Ofgem had apparently been working on its proposal for more than a year, and despite the fact that I meet Ofgem on an almost quarterly basis. There was no intelligence about it whatsoever.

Our early analysis of locational marginal pricing is that it could still have a negative impact on Scottish projects; indeed, it could potentially have even more of a negative impact that the current arrangements. We are doing further work on that. We have discussed the matter with National Grid to express our frustration and unhappiness at the lack of engagement with the Scottish Government on such an important issue.

We are also feeding into a consultation exercise that the Department for Business, Energy and Industrial Strategy is taking forward as part of its transmission charging arrangements. Locational marginal pricing is one option—it is not necessarily the only option. It will be interesting to see what other options BEIS chooses to bring forward.

11:30  

The reality is that the transmission charging mechanism that we have has been designed on the basis of closeness to population centres. However, as the vast majority of renewable energy that we will have in future will come from locations away from population centres, we need a transmission charging scheme that recognises that, that is fair to consumers and developers, and which does not become a barrier to the type of investment that is absolutely critical to driving down energy costs—in other words, investment that ramps up renewable energy capacity.

Liam Kerr has a supplementary in this area.

Liam Kerr

Earlier, you called for targeted support from the UK Government, but, of course, the VAT cut or the windfall tax that you mentioned would not be targeted. The committee has heard that fuel poverty and domestic policy in this area are devolved, and your solution is to get money into people’s pockets. In 2021, you had a fiscal transfer of £12 billion, which is about £2,210 extra per person in Scotland. Given that you disagree with a wait-and-see approach, what is your Government doing with that extra money to get money into people’s pockets?

You are right to say that tackling fuel poverty is a devolved matter, but many of the factors that influence it are reserved—

But what are you doing?

Michael Matheson

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.

I will come back on those points later.

The Convener

Cabinet secretary, a number of members have questions in this important area. I fully understand that you want to provide comprehensive answers, but given the timetable that we are up against, it would be very welcome if you could make your answers slightly more concise.

Monica Lennon is next.

Monica Lennon

Good morning, cabinet secretary. As well as supporting a windfall tax on oil and gas producer profits, do you agree that the UK Government needs to introduce an emergency budget? Also, is the Scottish Government considering an emergency budget of its own to ensure that the cost of living crisis and energy costs are being treated with the right level of priority in Scotland?

Michael Matheson

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.

Monica Lennon

That was helpful.

A few weeks ago, we took evidence from some of the fuel energy charities and had a discussion about your Government’s fuel insecurity fund. I believe that the fund is in its third round, and that roughly £10 million has been allocated in each of the rounds. There is some concern—from Citizens Advice Scotland, in particular—that that money might not last the full three months this time around. Have you had any advice on how long it will last, and do you have any plans to increase the pot?

Michael Matheson

We are due to receive data from the third sector organisations that distribute that fund for us so that we can look at where we at with distribution and whether we need to add resources to it. Those measures are part of what we are considering in the Government’s wider response in trying to support people.

The fund is specific and targeted at those who are experiencing particular distress and who are at risk of self-disconnecting because of energy costs. We expect to get data from third sector organisations in the coming weeks on how the overall amount of the fund is being utilised at the moment, and we will then be able to assess whether we need to do more to help support and sustain the fund in future. We are very open to considering whether we can provide further support through that fund, if necessary.

Monica Lennon

It would be helpful if you could keep the committee updated on that, because we have heard concerns about an increase in the number of people self-disconnecting. It is a real concern.

Earlier, we talked about the need for both the UK Government and the Scottish Government to do more as part of a four-nations approach, and you said that you were in regular discussion with Ofgem, the energy regulator. When did you last have a discussion with the UK minister, Greg Hands, from whom the committee heard last week? How often are ministers in Scotland in dialogue with the UK Government about these really important matters, which are affecting everyone in the country?

Michael Matheson

In January, my colleague Shona Robison and I wrote a letter to the UK Government in which we proposed a four-nations approach to tackling the increasing cost of living crisis. I, along with Kate Forbes, wrote again in March, again looking for a four-nations approach to these matters. To date, the UK Government has not taken up that offer.

Does that mean that you have not had a response, or has the UK Government declined the offer?

Michael Matheson

The response that I got from Kwasi Kwarteng largely said that these matters could be discussed at the four nations net zero joint ministerial group—if I recall correctly. I might be wrong, but I think that that is what was said. We also asked the UK Government to work with us on creating a joint ministerial group back in January this year. It has not taken up that offer, and it has not engaged with us specifically on tackling the cost of living crisis.

Monica Lennon

That is worrying. In evidence that it took from experts from various charities that have advisers on the front line speaking to people across Scotland, the committee heard that unless both the UK Government and the Scottish Government do more, there will be

“a catastrophic loss of life”—[Official Report, Net Zero, Energy and Transport Committee, 26 April 2022; c 23.]

this winter. Do you recognise those concerns? Are you willing to do more to work with the UK Government and others to try to save lives this year?

Michael Matheson

You ask me whether I recognise the situation. We actually recognised it back in January, which is why we suggested a four-nations approach to tackling the issue as well as a four nations joint ministerial group in much the same way that we worked on a four-nations basis on issues around the pandemic. However, the UK Government has not taken up that offer.

Will we work with the UK Government? Of course we will. We will work with it where we can and highlight the actions that we think should be taken. However, we can work with parties only if they are prepared to work with us. We have not yet had a positive response to the suggestion of all four nations working on a joint ministerial basis, which I think, given the nature of the crisis, would be the right thing to do.

Monica Lennon

Again, it would be helpful for the committee to see any relevant correspondence, because we want to make our own recommendations.

I have one last question—in fact, two quick last questions. You talked about taking “bold action”. Is a publicly owned energy company something that you are keeping under review? I know that that was previously a commitment from the Scottish National Party and—I think—from the Scottish Greens. Is that being looked at as part of the Bute house agreement?

Michael Matheson

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.

11:45  

Monica Lennon

I have no doubt that we will come back to the role of the agency and what more can be done on public ownership.

My last question is on a very topical issue. I think that a decision on this is expected soon, but should the UK Government regulator give consent to the proposed Jackdaw oil field? The Scottish Government is opposed to the Cambo oil field. Does it also oppose consent for Jackdaw?

Michael Matheson

The Jackdaw oil field is at a different stage. I saw the motion that you lodged in Parliament on the matter; our position on Jackdaw is the same as our position on Cambo, and that position has been reinforced by the Scottish and UK Governments’ independent adviser on climate change, the Climate Change Committee, which said that there should be a compatibility checkpoint not just for new projects but for consented developments that are not yet in production. Our view on Jackdaw is exactly the same as our view on Cambo with regard to the compatibility checkpoints, and it has now been reinforced by the review and recommendation of the Climate Change Committee.

I call Mark Ruskell, to be followed by Liam Kerr.

Mark Ruskell

On the possibility of a windfall tax, it now looks as though it is a matter of when rather than if. What would your priorities be for spending that money? Would they include, say, a deficit fund or funding for front-line energy efficiency advice? How should any reinvestment in this area be deployed in order to benefit people who are struggling?

Michael Matheson

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.

Mark Ruskell

You mentioned the 20 per cent uplift in funding for Home Energy Scotland, but is that model of individual advice—telephone advice, detailed renewables reports, on-going engagement and so on—really cutting it? Is it getting through to the maximum number of people or do we need to think differently about how that advice is delivered? Could that be done through other agencies? Could it be done through, say, the national health service or other areas that engage with people who are struggling with the cost of living crisis?

Michael Matheson

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.

Mark Ruskell

As you will be aware, Greg Hands came before the committee last week, and he gave quite wide-ranging evidence on all sorts of things, including our nuclear energy. He described the Scottish Government’s opposition to nuclear as “ideological”. How do you respond to that? Is there a role for nuclear in reducing energy bills?

Michael Matheson

Nuclear will not be reducing energy bills any time soon. For a start, such projects take a long time to be developed. You just have to look at Hinkley Point C, which is behind schedule and about £5 billion over budget. Given the subsidy costs that nuclear requires, it is likely to force up bills—I think that the estimate is an extra £40 on folks’ bills.

Nuclear energy is one of the most expensive forms of energy that can be produced. Just last week, Kwasi Kwarteng, the energy secretary in the UK Government, acknowledged that there is a risk of nuclear pushing up bills, even in the short term. Therefore, I think that it is the wrong approach. In fact, we can see other countries in Europe moving out of nuclear. For example, Germany will be closing its last reactor this year, and it is very clear that its strategy is to focus on renewables.

Our approach to nuclear energy is not ideological. Greg Hands has said that to me before, and it has been pointed out to him that that is wrong. In our energy strategy back in 2017, we set out the principles of why we do not support nuclear energy. In Scotland, we think that the best approach is to focus on renewables and that pump storage, hydro and battery storage capacity are the ways in which we can tackle our future energy needs.

We know that onshore and offshore wind are significantly cheaper and produce significantly lower-cost energy, and we also know that, by and large, hydro produces more lower-cost energy. In Scotland, we have a number of schemes that could be taken forward; however, there are frustrations in that respect. I would highlight as an example the 600MW facility Cruachan 2, which is being planned by Drax and which I visited last year. The problem is that Drax cannot take it to the market, because the UK Government has not provided the market mechanism to get it into the grid. It is an investment of more than £1.5 billion, potentially involving about 900 jobs, and it would also have the on-going benefit of being a renewable energy source, but it does not have a route to market.

The same applies to SSE and some of its plans around hydro. Just a fortnight ago, I visited the scheme at Sloy, which SSE is looking to expand and develop. Again, there are limitations due to the lack of a market mechanism from the UK Government, and the situation is quite frustrating.

If you look at the countries with the lowest energy costs in the world—Norway and Canada—their biggest energy source is hydro and pump storage. More than 90 per cent of Norway’s energy comes from that source, while, in Canada, the figure is 60 per cent. Our view is that the best approach for delivering energy security and lower-cost energy supplies in Scotland in the future is through renewable energy projects, whether they be onshore, offshore, solar, hydro, pump storage or battery storage. We should focus on them for our future energy needs. The UK Government has got it seriously wrong in its energy security strategy, because it focuses too much on nuclear, which could actually maintain energy prices at higher levels than they should be at or could potentially increase them.

Mark Ruskell

My final question is about domestic consumers, particularly in rural areas, where the price of oil and liquefied petroleum gas is very volatile. Indeed, the price has been spiking recently, which is causing great concern. Do you support better regulation of the oil and LPG markets, including the introduction of a price cap on those supplies?

Michael Matheson

Again, because of the interconnected nature of the energy sector, wholesale gas prices are forcing up the price of LPG and oil gas heating. Our view is that there is a need for regulation in this sector, and we have raised that with the UK Government on a number of occasions. However, it is very clear that it has no plans to do so.

The sector is engaging with BEIS on what it can do to meet some of the spiralling costs that off-grid properties are now facing. Given the fact that 17 per cent of our population in Scotland is off-grid, it is an area that should have some regulation in order to manage some of the potential cost impacts that big price spikes can have on households. At about 12 per cent, the off-grid sector in England might not be as big, but it is still a sizeable percentage. There is a need for some market intervention, and there is a variety of different models that we could look at, but at the very least there should be some sort of engagement on different options for regulating the sector, given its impact on so many fuel-poor households in rural parts of Scotland.

The Convener

Cabinet secretary, on the point that you made to Mark Ruskell about supporting more renewables projects, I assume that you recognise the importance of the UK Government’s contract for difference mechanism as a means for leveraging in private investment, including into offshore renewables.

Michael Matheson

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.

The Convener

I appreciate that. Liam Kerr raised a point about financing and where the money will come from. Perhaps there will be a couple of questions on budget later in the meeting. I will bring Liam Kerr in at this point for a couple of additional questions.

Liam Kerr

Cabinet secretary, you said that nuclear generation takes a long time to produce and needs a subsidy. The convener has pointed out the contract for difference regime and its importance. When do you expect the ScotWind programme to be providing 25GW of electricity?

If the grid capacity is there, it could be by 2030.

You are talking about 25GW by 2030.

Potentially, yes.

Thank you.

Michael Matheson

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.

12:00  

I will ask a precise question. I understand the point that you make, but when do you expect the ScotWind projects to generate 25GW of electricity?

Michael Matheson

If National Grid provides the capacity, including the planning capacity, for all the projects to be delivered by 2030, that is when the generation will happen by. If National Grid does not provide the capacity by then, the projects will not be able to be connected by that point. You do not build a wind farm without a connection.

Indeed.

Why would a developer build a wind farm pre-2030 if National Grid said that it could not be connected until 2035?

Liam Kerr

You have thrown the question back to me; I throw back to you the point that you have rejected nuclear generation without knowing whether you can deliver 25GW of wind power.

To move on, you said in response to Mark Ruskell that demand reduction through energy efficiency measures will offer the greatest opportunity to alleviate the effect of increased energy bills. Will the Scottish Government programmes that you are running deliver improvements at the necessary scale and pace to have an impact on consumers by this winter?

Michael Matheson

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.

Liam Kerr

To reflect that back, I think that that means that the current programmes will not deliver consumer savings to the ambition that is required by this winter. You can come back on that point if you want, cabinet secretary.

Michael Matheson

I have a question so that I am clear about what you mean. Our investment in energy efficiency measures such as area-based programmes is largely modelled on what can be delivered in the sector, what we can take forward and what can be expanded where there are reasonable grounds to do that. You said that that means that we will not be able to meet what we intend by the end of this year—what exactly are you referring to?

My question was whether there will be the required impact on consumers by this winter, which is when we need the impact.

Michael Matheson

If someone is having insulation installed in their property now, then yes, it will. People who are already getting insulation or are planning to put in insulation or other energy efficiency measures later this year will, of course, get the benefit of that.

You suggested that we will not meet a target for the end of this year. What target are you referring to? I am not clear about what target you mean.

Liam Kerr

I actually talked about “the Scottish Government programmes”. However, I think that you have answered the question, and I am aware that we are tight for time, so I will move on to ask about a similar programme.

The UK Government, which you have mentioned several times, is looking to expand and extend its warm home discount scheme, which would help 280,000 Scottish households with their energy bills. The UK Government is going to put an extra £13 million into that. Is the Scottish Government doing something similar to help Scottish people with their energy bills?

Michael Matheson

The warm home discount scheme is a UK-based scheme. We proposed that it should be devolved, and it was agreed that it would be devolved. We proposed combining the energy company obligation and warm home discount schemes to create a more flexible and better scheme that would also increase the pot of money available to support low-income households. Despite spending probably about a year plus in trying to get the UK Government to agree to that, in February this year it finally said that it was not going to agree. We wanted to expand and invest more money in the warm home discount scheme if it was devolved to us. Our plan was to do that, but we were denied the opportunity by the UK Government.

As I mentioned, during this session of Parliament, we are putting record investment of £1.8 billion into energy efficiency and heat programmes. We have also increased the eligibility for and scope of our area-based programmes to support local authorities and low-income households. We are putting in a significant level of investment, but we remain frustrated that the UK Government did not take up the offer and opportunity to do something even better with the warm home discount scheme here in Scotland that would have benefited more households to a better level.

We should bash on, as we are up against the clock. I will bring in Jackie Dunbar.

Jackie Dunbar

Good afternoon, cabinet secretary. In a previous evidence session, we heard from Keith Anderson, the chief executive officer of Scottish Power, who gave compelling evidence. He said:

“The more that we invest as a country in the future of wind ... and in solar power, the more we will bring down the cost of energy and the better and stronger we will make the energy source and security.”—[Official Report, Net Zero, Energy and Transport Committee, 26 April 2022; c 37.]

What plans does the Scottish Government have to increase offshore wind, and what role does it have to play in our transition to net zero? How does that issue relate to the current energy price crisis?

Michael Matheson

I agree with Keith Anderson on that. Offshore wind energy is one of the cheapest forms of electricity production, and it could be tied closely to renewable or green hydrogen production, which could play an important part in decarbonising our natural gas networks. Again, we need clarity on the potential timescale for that.

On offshore wind, we have just completed round 1 of ScotWind, which has come in at potentially 25GW of offshore wind capacity between now and 2030. That will involve about £1 billion of investment in the supply chain for each gigawatt that is delivered. To put that in context, if we were to deliver 25GW tomorrow, which clearly Mr Kerr would like us to do, that would double Europe’s offshore wind capacity. Therefore, it is massive. I think that 11 of the 17 projects are floating offshore wind projects, which gives us the first-mover advantage in that area of technology.

It is a massive level of ambition. Just to give you more context, I point out that the USA is taking forward a programme of 30GW, for the entire USA. The fact that Scotland, with 5 million people, has a programme involving 25GW—in round 1—demonstrates the level of our ambition.

Secondly, our onshore wind policy statement sets out that we want up to an extra 12GW of onshore wind capacity to be delivered. That will help to drive down energy costs because it is a cheaper form of energy. Those projects can also be taken forward more quickly, because of the technical nature of onshore compared with offshore wind. If we can get more of our renewables online, that can help to reduce energy costs, which would directly benefit people’s energy bills. Our view is a bit like Keith Anderson’s—and in fairness, it is also the UK Government’s view—that renewables are critical to delivering energy security in future, meeting our climate change targets and helping to reduce energy costs.

Are you saying that wind power is already the cheapest form of power?

Michael Matheson

Yes, onshore wind is the cheapest form of electricity production. The solar and hydro industries might argue with that, but I think that it is broadly in that sphere. The reality is that renewables are the cheapest form of energy production. Even folk that are for nuclear recognise that nuclear electricity is more expensive to produce. Renewable electricity is much cheaper to produce. That is why it is our view that that is where the focus should be, because it will help to reduce energy bills in the future.

My final question is about carbon capture. Could you provide an update on any discussions that you have had with the UK Government regarding the Scottish cluster of the carbon capture and storage project?

Michael Matheson

We still do not have clarity about the track 2 process for carbon capture, utilisation and storage. We have had extensive discussions with the UK Government about that, and it is rare that I do not raise the issue when I meet UK energy ministers. Their view is that the Scottish cluster has to be considered in track 2, but we do not have clarity on when that process will take place. However, the UK Government has recently said that it expects that it will require four CCUS projects to be in operation by 2030. The problem is that we do not know what the track 2 process will be for the other two projects that will be taken forward, and I would think that the Scottish cluster would be one of them. We need clarity on that timeline and a clear understanding of the timescale for decision making on track 2 to make sure that those projects can be delivered later this decade.

I will bring in Natalie Don, who is joining us remotely.

Natalie Don

I will focus on international examples, some of which have already been touched on. Cabinet secretary, you referred earlier to Canada and Norway, which are dominated by hydroelectric plants and have the lowest electricity prices in the Organisation for Economic Co-operation and Development. Other countries, such as Switzerland, Austria and Sweden, also rely on hydro, and consumers pay less in those countries. We have seen Governments across Europe roll out more generous packages of support for households.

We can see limitations through privatisation in network costs and the ability to cap prices. You have also touched on the public energy agency company. As you have already laid out, many of the levers are still reserved to the UK Government, but what lessons do you feel can be learnt from looking at other countries’ energy policies and how they compare with the UK’s response so far?

Michael Matheson

There is quite a lot in there and you have covered a wide range of issues. At an international, and particularly a European, level, there is much greater focus on decarbonisation of the energy sectors and there is a clear determination to move towards renewable energy at a much faster pace than anticipated.

We need only look at the comments that the European Commission has made and the approach that it has taken—Commissioner Timmermans has highlighted the importance of renewables, and Europe’s largest economy, Germany, has set out its stall very clearly when it comes to the focus on renewables and hydrogen as its future approach—to see that there is a real step up in pace and in the desire, at European level, to decarbonise energy markets, reduce dependency on imports, particularly from Russia, to meet climate change targets, and to deliver security of supply.

12:15  

In recent months, it has been interesting to see how countries in other parts of Europe are recognising that they will not be able to meet all their renewable energy challenges themselves, so they are looking at the potential of other countries to provide markets and support. I have had engagements with ministers and representatives from different parts of Europe who are looking at Scotland as a potential exporter of renewable energy, particularly in the context of green hydrogen. Scotland is seen as a potential main source of green hydrogen to support the European economy.

Let me put that in context. Germany has said that it wants a big focus on hydrogen to decarbonise industrial processes. Germany will require to import about 70 per cent—the vast majority—of its hydrogen, so it is looking for import markets in the countries that are in a position to support that activity, including Scotland.

We are talking about faster decarbonisation, a greater focus on renewable energy, and countries that are looking for import markets and export opportunities because of the focus on greater energy security at European level.

On actions that can be taken, countries that have introduced windfall taxes include Germany, Italy and Spain. I hear people making the argument that, if we introduce a windfall tax, we will not see investment in renewables, but Shell was looking to invest in offshore renewables in Scotland, in a partnership with Scottish Power, before it was making record profits. That interest is not going to change. Renewables investment is increasing in Italy, Germany and Spain despite the introduction of windfall taxes. The argument is a red herring: the reality is that investors are still moving into those markets because they want to be there, and they can see that that is how security of supply will be delivered.

The UK Government needs to act quickly. It needs to look at introducing a windfall tax and using the proceeds to support people during the cost of living crisis that millions of households are facing across the UK, and which is only going to get worse.

Natalie Don

Thank you for your helpful response.

We touched on the fact that prepayment customers pay more, which is unfair, and so run the risk of losing their energy supply completely for periods of time. No one should have to experience that. Potentially, there will be elderly people, pregnant women and young children in homes that have no heating at all. More action is needed to protect such people. There have been calls for a social tariff, but the UK Government seems to have dismissed the idea. Do you have thoughts on what more can be done to protect people?

Michael Matheson

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.

Absolutely. I will pass back to the convener.

I invite Elena Whitham to ask some questions.

Elena Whitham (Carrick, Cumnock and Doon Valley) (SNP)

Thank you for allowing me to appear at the committee with my Social Justice and Social Security Committee hat on.

We have already heard about the Canadian model of hydroelectricity. As someone who grew up in Canada, I could not fail to understand that. The Galloway hydroelectric scheme in my constituency is fed in part by Loch Doon. It was built back in 1930 and has been happily supplying environmentally friendly electricity—

Did you say 1930?

Elena Whitham

Yes—that scheme has been operational for 90 years.

I want to contrast that with the very complex system that we have in the UK, which relies heavily on gas. Today, Sky News has reported that we are in the perverse situation of having a glut of gas in the UK, because we cannot get it to market. The pipes to supply liquid gas to Europe are at full capacity and we have no storage in the system. We have infrastructure and pipeline issues.

Given that the wholesale price has bottomed out, it seems perverse that people are going to be paying huge amounts for their electricity and their gas during the coming months. It seems as though the system is not responding in real time to what we are seeing on the ground. How would you respond to that?

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?

Yes. We have the ports and the pipelines to get the liquid gas to where it needs to be, but the system is operating at full capacity and we have no storage capacity.

Michael Matheson

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.

Elena Whitham

The fact that the glut of gas that we have at the moment is not reflected in the prices being paid by people who cannot afford to top up their meters must be very hard for them to swallow.

My final question, which is one that I have asked previous witnesses in the past few weeks, is about disaggregated gender data. I recognise that you might not be able to provide an answer. The likes of Engender and Close the Gap have said in evidence to the Social Justice and Social Security Committee that fuel poverty is very much a gendered issue.

Women who are predominantly lone parents, carers or in precarious employment are facing the worst consequences of the cost of fuel crisis. What data does the Scottish Government hold on gender, and how is it being used to create the policy in response to fuel poverty? I understand that you might not be able to answer that question today, but the committee would certainly be keen to hear your response.

Michael Matheson

I do not think that we have disaggregated the data on fuel poverty, and I do not know whether we have disaggregated the broader poverty data, either. I suspect that we have, and I would broadly expect the fuel poverty data to mirror the broader poverty data in its disaggregation. If the disaggregated poverty data were to show that women are experiencing greater levels of poverty, which I believe it does, I would expect that to be mirrored in the fuel poverty element, too. However, I do not think that we have disaggregated data on a gender basis with regard to fuel poverty.

It might be very helpful for the committee.

Michael Matheson

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.

Thank you, cabinet secretary.

The Convener

We have covered a number of topics, cabinet secretary, but I want to come back to fuel poverty. You have said a few times that, because it has a fixed budget, the Scottish Government cannot increase spending on fuel poverty, but I see from the Scottish budget that it has not yet spent £500 million of Covid funding from the UK Government. As you will know, that money is not ring fenced and is free to be spent on Scottish Government priorities, so why has the Government not used that money to help those in fuel poverty?

Michael Matheson

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.

Right. The figures are very much in the public domain, but I am happy to share the information with you.

If you can do so, I will ensure that we take the matter up with the finance secretary.

The question, then, is: if fuel poverty is a priority, which I am sure it is, why has that underspend not been spent on helping those in fuel poverty?

Michael Matheson

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.

The Convener

That would be very useful, cabinet secretary. As you will know, last year’s funding from the UK Government to the Scottish Government was the highest in the history of devolution. I am sure that there will be interesting discussions with the finance secretary on how that money should be spent.

I believe that Liam Kerr has a final supplementary.

Liam Kerr

Cabinet secretary, you said right at the start of this evidence session that cross-departmental work is being done to recognise the crisis. I have recently seen reports of a number of civil servants in the Scottish Government being assigned to specific projects. Can you tell the committee how many civil servants have been specifically assigned to fuel poverty alleviation?

Are you talking about fuel poverty in the Scottish Government?

Yes. How many civil servants in the Scottish Government have been specifically assigned to fuel poverty alleviation?

Michael Matheson

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.

The Convener

That brings us to the end of our allocated time. We have run slightly over schedule, but I appreciate your taking the time to have what I think was a wide-ranging discussion with the committee. I thank you and your officials for joining us.

I will briefly suspend the meeting for about five minutes before we move on to our next item of business, which is consideration of a statutory instrument.

12:31 Meeting suspended.  

12:35 On resuming—