Energy Prices Bill

– in the Scottish Parliament on 25 October 2022.

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Photo of Alison Johnstone Alison Johnstone Green

The next item of business is a debate on motion S6M-06443, in the name of Patrick Harvie, on the Energy Prices Bill, which is United Kingdom legislation.

Photo of Patrick Harvie Patrick Harvie Green

I thank members for their consideration of the legislative consent memorandum in relation to the UK Government’s emergency Energy Prices Bill. As ever, when discussing reserved energy legislation, we must remind ourselves once again of the many vital actions that the Scottish Parliament could choose to take directly if the powers to do so were not reserved. That frustration is heightened today by the challenging timescales within which we have had to work in order to allow Parliament the time needed to consider the implications for Scotland.

Given the focus of the LCM on supporting people through the most acute energy prices pressures in living memory, I absolutely understand the speed with which the bill is progressing through the UK Parliament. Indeed, just before the recess, I oversaw our emergency legislation on support for tenants during the cost crisis, so I recognise—and I hope that members across the chamber will recognise—the very constrained circumstances in which we are considering the motion today.

Before turning to the specific issues requiring consideration, I want to emphasise just how much the urgent need for the intervention in prices, which the bill provides for, is driven by our vulnerability to gas prices. This crisis continues to highlight our reliance—indeed, our overreliance—on gas as a means of heating so many of our homes and buildings, which leaves our energy prices at the mercy of a hugely volatile market. Therefore, as we do everything that we can to support people through the crisis in the immediate term, it remains essential that we accelerate our transition away from fossil fuels for heat.

Meanwhile, no sooner had the UK Government introduced the emergency bill, which it seeks to pass at breakneck speed, than it cut short its flagship policy on energy support. The curtailing of the energy price guarantee by the Chancellor of the Exchequer last week has plunged households back into uncertainty about their bills and finances. Many households are already faced with making stark choices between providing food or warmth for themselves and their families. That is why we have called repeatedly for additional targeted support for vulnerable consumers. The chancellor’s reversal of what had been a two-year energy price guarantee makes the need for such support all the more urgent. We estimate that 860,000 households in Scotland now live in fuel poverty, with 600,000 households living in extreme fuel poverty. Therefore, although we have committed to doubling our fuel insecurity fund to £20 million as part of our emergency budget review that we are progressing, much more needs to be done with the powers and resources that exist at UK level.

I will move on to the issues in the bill that the Parliament needs to consider today. We have identified five clauses that require the Parliament’s consent. Those provisions cover the reduction of domestic energy bills, the reduction of non-domestic energy bills, support for meeting energy costs and the regulation of energy markets. The first four of the five clauses—clauses 13, 14, 15 and 19—relate to support for consumers in meeting energy costs.

As set out in the draft memorandum, the powers exercised under clause 13 could be used in a way that relates to devolved competence. The example that is used in the draft LCM is the use of the power to provide financial assistance to meet or reduce expenses for heating in cold weather. Based on the urgent need for people across Scotland to receive financial assistance to mitigate the impact of the crisis, the Scottish Government recommends that the Parliament consents to clause 13 and the related clause 14.

Clauses 15 and 19 will enable the delivery of support, such as the equivalent to the £400 delivered through the energy bills support scheme, to those who were previously not eligible. Examples of consumers who are eligible for that equivalent support are park home owners and students living in rented accommodation. Last week, the Cabinet Secretary for Net Zero, Energy and Transport wrote to the secretary of state to seek urgent assurance that everyone in Scotland who is entitled to it will now receive the £400 rebate.

Earlier this year, the Scottish Parliament raised concerns about second home owners benefiting from the energy bills support scheme discount. Our limited powers meant that we could not prevent second home owners from benefiting twice from the £400 energy rebate in the way that we would have wanted to. The cabinet secretary did, of course, formally request an amendment to the Energy Prices Bill to prevent such an outcome, but such an amendment has not been accepted.

Although that remains deeply disappointing, we have been given an explicit understanding that the forthcoming equivalent support will be awarded via an application process and will apply only to primary addresses.

Clause 22 gives power to the secretary of state to give directions to energy licence holders in response to the energy crisis, and is not limited to activities in reserved areas. Therefore, the Cabinet Secretary for Net Zero, Energy and Transport wrote to the Secretary of State for Business, Energy and Industrial Strategy to request that the bill be amended to require the Scottish ministers’ consent before any direction is given that affects a devolved area.

In coming to a conclusion, I express the hope that the latest forced regeneration at the top of the UK Government might also compel a reappraisal of some of the glaring gaps in its energy policies. A prime example of a step in the right direction would be an immediate commitment to require and fund a major programme of energy efficiency measures and improvements. That would not only make homes more comfortable and affordable to heat but improve our environment and security of supply, by reducing our dependence on fossil fuels and reducing the power that is exercised at the whim of countries such as Russia and its current leader.

Although I again reflect that the UK Energy Prices Bill is far less than it might be were the powers behind its creation available to the Scottish Parliament, it remains better than nothing. Consenting to the motion will allow the people of Scotland who are currently struggling to pay their energy bills and heat their homes to receive desperately needed financial assistance as quickly as possible. I therefore must recommend that the Parliament consents to the UK Energy Prices Bill as it stands.

I move,

That the Parliament agrees that the relevant provisions of the Energy Prices Bill, introduced in the House of Commons on 12 October 2022, so far as these matters fall within the legislative competence of the Scottish Parliament, should be considered by the UK Parliament.

Photo of Liam Kerr Liam Kerr Conservative

I am grateful for the opportunity to speak in this debate on whether Parliament should agree to the legislative consent motion on the Energy Prices Bill. I should say that I join with the minister in supporting the suspension of rule 9B.3.5 in the standing orders in relation to the LCM on the bill. As I have made clear in previous debates, I am rarely comfortable with suspending standing orders to move bills or LCMs through without full process and, particularly, without consideration by the relevant committee.

On that note, it bears mentioning that the Net Zero, Energy and Transport Committee, within the remit of which the LCM falls, has, in my view—I declare an interest as a member of that committee—shown itself to be an effective and non-partisan scrutiny body that adds significant value to LCM considerations. However, in this case, as the minister did earlier, I note that the Energy Prices Bill is going through as emergency legislation and that it will complete its final amending stage today, which is also the day that Net Zero, Energy and Transport Committee meets, and that royal assent is expected tomorrow, which is 26 October.

Further, in relation to the processes, I understand that, following consultation, the convener of the Net Zero, Energy and Transport Committee is content with the suspension of standing orders and that a lead committee report is not required in this case. Therefore, in the circumstances, the Scottish Conservatives are content to support the expedited process.

I turn to the substantive LCM. The Scottish Conservatives welcome the Energy Prices Bill. By providing the legislative framework to deliver the UK Government’s energy price guarantee and energy bill relief scheme, the bill will provide much-needed support to households and businesses right across the UK. No one has been unaffected by the eye-watering rise in wholesale prices of gas and oil in the past couple of years. That has resulted from a range of global factors, including countries recovering from the Covid-19 pandemic and of course the reduction in Russian supplies to Europe following the appalling invasion of Ukraine. That is why I agree with Patrick Harvie that energy security is so important in this country, which is yet another reason why we should support our North Sea oil and gas industry.

It is our understanding that the bill will cap the cost per unit of electricity and gas for domestic customers for a period of six months, until 1 April 2023. The purpose is that the average household, which is a defined term, will have annual energy bills of £2,500 rather than £3,549, which was, otherwise, projected. Furthermore, the bill appears to write in an equivalent price guarantee for businesses, charities and public sector organisations for the duration of that six months. It is only six months, but, unlike Mr Harvie, I feel that that is the right length of time. It will get us through the winter and then we can have a review, which will ensure that the mechanism can be stress-tested against what was projected, what was intended and what we have seen in practice by that point, during the winter months. Then we can decide what is the best and most productive mechanism going forward.

I think that the Energy Prices Bill is the right way forward, but, as ever, where an action of the UK Government would make changes in Scotland it is absolutely right that the Scottish Parliament considers whether to agree to it. I have listened to the minister propose that this Parliament should give its consent to the Scottish provisions of the Energy Prices Bill and on that I agree with him.

Interestingly, the minister suggested in his peroration that this Parliament does not have the powers to do all that it wants to, but I remind him of my speech right before recess, which he conveniently appears to have forgotten, in which I pointed out that this Parliament has all the powers that he needs and, indeed, thanks to the largest-ever budget settlement in devolution history, it also has the funds to do what it needs to.

The UK Government is doing the right thing to help consumers, businesses, charities and the like during this difficult time and it is important that the Scottish Parliament both acknowledges and welcomes that. The Energy Prices Bill and the attendant LCM will provide a lifeline to households and businesses this winter. Therefore, the bill should not be delayed and should be added to the statute book as soon as practically possible. Accordingly, I have no hesitation in confirming that the Scottish Conservatives intend to support the motion consenting to the UK Parliament legislating on devolved matters in the bill.

Photo of Colin Smyth Colin Smyth Labour

Labour has called for support for families and businesses through an energy price freeze since August, setting out detailed costed plans, so we support the passage of the bill through the UK Parliament, even if it was described as a “landmark” two-year price guarantee but has now been shredded to a six-month freeze.

The devolved provisions that require Scottish Parliament consent are likely to be limited in practice and we welcome the efforts of the Scottish Government to seek assurances that the direction-giving powers will not be used to cut across devolved competences such as planning. We also recognise the time-limited nature of most of the powers in the bill.

Given the urgency of the matter and the dire cost of living crisis that we face, we share the Scottish Government’s view that seeking to carve out certain aspects of the support for separate provision from the Scottish Government is not appropriate or practical and therefore we support giving consent through the LCM.

These are urgent, desperate times for far too many families, who are having to choose between heating and eating, and far too many businesses and organisations that are left wondering whether they will soon have to switch off the lights for the final time. Although we support the help with energy costs that the bill enables, we still have concerns over substantial parts of the legislation and Labour members in the UK Parliament have been seeking to amend the bill.

There is a contrast between the UK Government’s proposals and what was proposed by Labour in August. Labour proposed a real freeze; the UK Government has allowed a rise, albeit one that is capped. There also remain concerns over off-grid households and, of course, we have a profound disagreement over how the support will be funded. It is no secret that Labour wants to see the package of support funded not by more Government borrowing—which ordinary families will ultimately have to pay back—and a limited windfall tax, but primarily through a substantial windfall tax on the excess profits of the big oil and gas firms and by closing loopholes in the support that is provided for fossil fuel companies.

The Energy (Oil and Gas) Profits Levy Act 2022 included a significant loophole for oil and gas companies that invest more in oil and gas exploration and production. According to the Treasury, the allowance will mean that businesses will receive a 91p tax saving for every £1 invested, nearly doubling the tax relief that is available to oil and gas companies and tilting the pitch in favour of fossil-fuel investment over renewable investment. Labour would like to see that loophole closed, which would bring more than £5 billion to the table, and we have been seeking to pursue that through amendments in the UK Parliament, while recognising the limited scope of the bill itself.

There is, of course, far more that the Scottish Government can do to support families, businesses and organisations at this time, including cancelling school-meals debt, increasing funding for money advice services and topping up the welfare fund. That will be the focus of Labour’s business in the chamber tomorrow.

The focus of the bill and the LCM highlights why we need to recognise the lessons of the energy crisis. Those lessons do not suggest that we need to drive forward with fracking, which was the plan of last week’s Prime Minister—I am not sure what the view is of this week’s Prime Minister. The lessons are that there is a need for a sprint for clean energy—solar, wind and nuclear—for energy efficiency and for a publicly owned energy fund, which the next Labour Government will deliver where others have failed to do so. There is also a need to de-link electricity and gas prices within a clear timetable so that we do not find ourselves facing the requirement for another piece of legislation in this area in the near future.

In the meantime, this bill is necessary, urgent and overdue; therefore, Labour is content to support the LCM.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I echo the bulk of what Colin Smyth has just said in his criticism of the Energy Prices Bill and the package that has been put forward—its extent, duration and the way in which the funds are to be provided. An extension to the windfall tax on oil and gas companies’ profits was the obvious way of extending the package, instead of saddling taxpayers for years to come with additional debt.

Colin Smyth and the minister were both right to point to the fact that the UK Government’s approach appears to provide greater latitude for the development of oil and gas, which risks curbing the development of renewables. Everybody accepts that, in the current circumstances, acting with urgency is absolutely what the public expect, but at the same time—as always with emergency legislation—we must be alive to the potential unintended consequences of what has been proposed. It is in relation to one of those unintended consequences that I will focus my brief remarks.

On the cap on profits that are made by renewables developments under renewables obligation certificates and the feed-in tariffs—FIT—scheme, Community Energy Scotland highlighted to the cabinet secretary and party spokespeople earlier this week that there is potential for local communities to be inadvertently and unnecessarily hurt through the way in which the Energy Prices Bill is currently framed. Community Energy Scotland, along with its sister organisations in England and Wales, has sought an exemption for community-owned wind farms, solar farms and hydro schemes that reinvest their surplus back into communities. It seems to be a legitimately made appeal and, whatever the rationale for capping the profits of older renewable developments, the cap does not seem to serve any useful public purpose.

There is an example in my constituency that perfectly illustrates the argument. Last week, I met the chair of Hoy Energy Ltd, which runs a 900kW wind turbine generator on behalf of its parent organisation, the Island of Hoy Development Trust, which is a registered charity. HEL remits all its net profits to the development trust, which uses the income to support a community bus service, a community centre and a welfare officer, and to provide grant support for a range of other community projects. On an occasional basis, it supports education, training, school trips and so on. It is considering providing support through a separate charity for a domestic electricity generation and storage scheme, to help to reduce fuel poverty in a part of the country that endures the highest level of fuel poverty and extreme fuel poverty anywhere in Scotland or the UK.

Whatever the merits of the approach that is being taken, it seems highly unlikely that the intention is to cut across the profits of community-based developments such as on Hoy. They do not provide dividends for shareholders or profits for profits’ sake; they simply reinvest profits back into community projects for the benefit of the community or invest in repowering initiatives that prolong the life of renewables projects, providing sustained income for the community.

I hope that, even at this late stage, the minister will take the issue up with his UK counterparts on behalf of Community Energy Scotland to see whether, even at the 11th hour, some progress can be made on securing the exemption.

On the same basis that other members have already stated, the Scottish Liberal Democrats will support the LCM.

Photo of Patrick Harvie Patrick Harvie Green

To begin by picking up on that last point, I say to Liam McArthur that I will take his comments on board and discuss them with officials. If possible, I will update him in writing on the Government’s position.

I thank members for their contributions to this relatively short discussion of what we have all acknowledged is an urgent matter that must be considered quickly. It is widely acknowledged across the chamber that the process is not ideal, but it is clearly necessary; I welcome the fact that that has been recognised. Although it has been a short debate, it has been a helpful one, especially when we consider the very little time that we have available to consider the bill and its implications for devolved areas.

If we agree to the LCM, we will at least ensure that the money that is available can be provided to those who need it as soon as possible. The Scottish Government will continue to do what is within our powers to support people here in Scotland, but let us be clear that we need UK Government action, too—to ensure not only that all consumers can afford to heat their homes this winter, but that the UK Government tackles fuel poverty well beyond that timeframe and businesses can stay afloat.

Photo of Liam Kerr Liam Kerr Conservative

On his point about the Scottish Government doing what it can, the minister can correct me if I am wrong, but the Scottish Government underspent its budget by £650 million last year. Scottish Conservatives have proposed a cost of living support fund. Why is the minister not proposing to use that £650 million underspend to put a support fund in place?

Photo of Patrick Harvie Patrick Harvie Green

We do not need a remedial lesson in how Scottish Government finances work. Mr Kerr can take that up with his finance colleagues if he needs a lesson.

I reiterate our call on the UK Government to provide additional support to vulnerable consumers ahead of, during and beyond this winter, and I seek urgent clarity about the protection that consumers will have in the face of forthcoming price rises beyond April. Those consumers include many people living in rural communities across Scotland, who face higher living costs than others in more central areas.

Let us remind ourselves again that the devastating impacts of skyrocketing energy prices on consumers are caused by overdependency on natural gas. That is dependency that we must break, although Mr Kerr would suggest that we should keep locking ourselves into dependency on fossil fuels. Although our actions today can help to ensure that consumers are given vital support, we must also keep in mind the need to accelerate our transition to net zero heating and a decarbonised energy system.

It is now necessary, given the reversal of the commitment to a two-year price cap, to consider what the options might be after the first six months. I remind Mr Kerr that when the Scottish Conservatives were not busy promoting the UK Government’s disastrous tax plans, they were happy to welcome that two-year commitment when it was first made. It does not cut it to say now that six months is the right timescale or that this Parliament has all the powers that it needs.

This Parliament can do nothing yet to regulate energy prices or to break the link between gas and electricity prices that Labour colleagues rightly point out. The UK Government has been giving that commitment for a long time but it is hanging there, amid uncertainty about which minister will even be responsible for progressing it or when it might be progressed. We can do nothing in this Parliament yet to give people in Scotland the financial benefit of the cheap, clean, abundant, renewable electricity that is being generated in this country. This Parliament should be able to take much greater action to give people in Scotland the benefit of that renewable electricity and to tackle fuel poverty.

For the time being, until we have those greater powers, I ask members to agree to the LCM to ensure that people get the emergency support that they need and deserve.

The Presiding Officer:

That concludes the debate.

We move straight to the question on the motion. The question is, that motion S6M-06443, in the name of Patrick Harvie, on the Energy Prices Bill, which is UK legislation, be agreed to.

Motion agreed to,

That the Parliament agrees that the relevant provisions of the Energy Prices Bill, introduced in the House of Commons on 12 October 2022, so far as these matters fall within the legislative competence of the Scottish Parliament, should be considered by the UK Parliament.