Energy Prices and Inflation (Impact on Businesses and Jobs)

– in the Scottish Parliament on 21st September 2022.

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Photo of Pauline McNeill Pauline McNeill Labour

1. To ask the Scottish Government what assessment it has made of the impact of energy price and inflation increases on businesses and jobs. (S6O-01356)

Photo of Ivan McKee Ivan McKee Scottish National Party

We monitor closely the impact and we know that the effects are felt by traditionally energy-intensive industries and small businesses. We have engaged extensively with businesses and we support their calls for measures on energy prices, VAT reduction, staff shortages and handling business loans, which all fall within the reserved powers of the United Kingdom Government. Although the UK Government’s long-anticipated announcement this morning is welcome, it comes too late for many businesses across Scotland that are already struggling to pay bills. The UK Government needs to do more, and we have written to it to request an urgent quadrilateral meeting.

Photo of Pauline McNeill Pauline McNeill Labour

Businesses feel that they are lurching from one overwhelming crisis to another, despite the UK Government’s intervention today. I agree with the minister that it has come a bit too late, although I am sure that it is welcome.

Hospitality businesses were here last week, and I put on record my thanks to Ivan McKee for coming along to listen to them. The businesses described the current financial situation in Scotland as being worse than it was during the coronavirus period. Many fear that they will not be able to continue trading through this winter, but they have indicated that business rates relief would make a sizeable difference to many companies. What are the detailed plans to support businesses this winter? I know that the minister is only too aware that businesses have said that they are really scared that if they do not survive this winter, they will not survive at all.

Photo of Ivan McKee Ivan McKee Scottish National Party

I thank Pauline McNeill for organising the recent event with hospitality businesses, which reinforced my understanding of the difficulties that businesses in that sector and others are facing, due not only to the price rises but to the uncertainty as a consequence of them.

We have seen from the UK Government a six-month-only price cap, which is clearly not as helpful as it could be to businesses that are looking to the future. I fully appreciate the difficulties caused to businesses as a consequence of that. The Scottish Government is looking at all the options for taking measures to support businesses; however, as we all know, many of the levers are controlled by the UK Government. My colleague the Deputy First Minister will be introducing measures through the budget, once we have seen the UK Government’s budget action in that regard and fully understand the fiscal scope within which we can operate. Rest assured that we understand and appreciate the impact of the current crisis on businesses.

Photo of Paul McLennan Paul McLennan Scottish National Party

Given that the UK Government holds the key levers to support businesses and jobs during the crisis, what engagement has the Scottish Government had with the UK Government on the matter, and what action does the minister think that the UK Government should be taking now to support businesses and people?

Photo of Ivan McKee Ivan McKee Scottish National Party

The response from the UK Government on the issue and more broadly has been unacceptable. With key policy levers currently being reserved, as the member rightly points out, we will continue to press the UK Government across a range of measures, including the expansion of the shortage occupation list, VAT reduction on small and medium-sized enterprises’ energy bills, and an extension of the coronavirus business interruption loan scheme.

The long-awaited business energy cap is welcome, but it must be funded in part by targeting windfall gains in the energy sector and by companies that have benefited from significantly higher profits during the pandemic and the energy crisis. We have written to the UK Government several times on those issues, most recently on 16 September, when we requested an urgent quadrilateral meeting. We will continue to press it urgently on those matters.

Photo of Beatrice Wishart Beatrice Wishart Liberal Democrat

Energy projections for the Shetland community bike project show unit price increases of more than 300 per cent, while the impact of energy price and inflation increases puts in question the viability of even long-established businesses in my constituency and makes planning for the future difficult. Does the minister agree that that demonstrates that we need longer-term solutions rather than the temporary sticking plaster that the UK Government is offering?

Photo of Ivan McKee Ivan McKee Scottish National Party

Yes, I do. It is one of the very cruel paradoxes of the current situation that, in Scotland, which is self-sufficient in energy, we are seeing rises in costs that are outwith our control, particularly in energy-rich Shetland, where, as Beatrice Wishart knows only too well, in many instances the impact is even more severe than it is across the rest of Scotland.

Beatrice Wishart is absolutely right: we need long-term solutions to the crisis. That is why Scotland must have full control over the economic and energy levers. Solutions can be delivered only if Scotland is a normal independent country that enjoys those full powers.

Photo of Douglas Lumsden Douglas Lumsden Conservative

In

The Scotsman this morning, the head of the Confederation of British Industry said that there is not enough dialogue with Scottish ministers, and he declared that freezing business rates is the CBI’s “top ask” of the Scottish Government. Business rates are a lever that the minster has, so will he listen to business?

Photo of Ivan McKee Ivan McKee Scottish National Party

I also saw Tony Danker’s comments, and he was very complimentary about his engagement with the First Minister.

The Deputy First Minister, other ministers and I engage extensively and very regularly with the CBI and other business organisations in Scotland. My door is always open to any business organisation or business that feels that it is not being listened to—please come and arrange a meeting with me to discuss those or other matters.

On the steps that the Scottish Government can take, the member will be well aware that, because Scotland is not an independent country, we do not have control of our borrowing powers. Therefore, we are operating within fiscal—[

Interruption

.] Well, we can fund things only with the finite resources that we have because we are not able to borrow to support emergency measures in the way that the UK Government does. Therefore, we call on the UK Government to take more measures to support businesses and to give us more fiscal headroom to take the measures that the member mentioned. As I have said, the Deputy First Minister will bring forward an emergency budget as soon as we are clear what the fiscal landscape looks like.

The Deputy Presiding Officer:

Question 2 is from Neil Bibby, who joins us remotely.