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Paula Barker (in the Chair)
We begin with the Select Committee statement. Mr Angus MacDonald will speak on the publication of the first report of the Scottish Affairs Committee, “Clean Power by 2023: A fair deal for Scotland?” for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to put questions on the subject of the statement—questions should be brief, and Members may ask only one each—and call Mr MacDonald to respond to them in turn.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
It is a privilege to serve under your chairship, Mrs Barker. I am grateful to the Backbench Business Committee for affording me the opportunity to make a statement on the publication of the Scottish Affairs Committee’s first report of the Session, on the Government’s clean power 2030 mission. It is a pleasure to speak on behalf of the Committee.
This is the Committee’s second report on our inquiry into Great British Energy and the net zero transition. We launched the inquiry in November 2024, and it has been our longest-running piece of work to date. We have received more than 50 pieces of written evidence, held 11 oral evidence sessions and carried out numerous visits, both in Scotland and internationally. I thank all the stakeholders who have engaged with the inquiry. Last autumn, we published an interim report for the inquiry on the future of North sea oil and gas, and I commend that report to all hon. Members.
The report before us today—our second and final report for this inquiry—explores a wide range of issues. We cover the achievability of the clean power by 2030 mission, the role of GB Energy in delivering it, the urgent need for grid upgrades, and the community ownership of clean power. However, I will focus in my brief remarks on the issue of community benefits.
Community benefits are key to ensuring the fairness of the Government’s clean power mission, particularly for the communities of the highlands and islands, many of which I represent in my Inverness, Skye and West Ross-shire constituency. It was declared that Scotland had the potential to become the Saudi Arabia of renewables, and there has been massive investment in onshore wind. However, those wind farm developments are seldom owned locally and offer few local jobs. In 2024, only £7 million of community benefit was generated in the highlands, and less than £30 million across Scotland, from that billion-pound industry. That was a disappointing outcome from a potentially transformative opportunity.
Throughout our inquiry, we had a clear consensus that the communities in Scotland that shoulder the greatest impact of the energy transition by hosting renewable energy infrastructure must also share in its benefits. As one of our expert witnesses put it, highland communities see that
“the turbines are generating lots of revenue for somebody but not for them.”
That presents an acute problem of fairness. The communities across Scotland that host industrial-scale renewable infrastructure in their backyards are the very same communities that pay among the highest prices for energy. Although fuel poverty rates across the UK cannot be directly compared, it is also clear that those same communities are enduring among the highest levels of fuel poverty. Indeed, many will be among the 34% of Scottish households that are classified as fuel poor while looking on at the massive wind turbines generating renewable electricity nearby—that cannot be just.
As our report highlights, that disconnect is a key driver of the sense of unfairness felt by communities across rural Scotland. It is for that reason that our report welcomes the UK Government’s commitment to introduce a mandatory community benefit scheme for new-generation infrastructure. The scheme, which is expected to be introduced by the end of 2027 at the earliest, could be key to ensuring that Scotland’s rural communities are adequately compensated for the disadvantages that come with enabling the whole of the UK to meet the Government’s clean power mission. However, that raises the thorny issue of what fair compensation looks like.
As the report highlights, the Scottish Government were widely regarded as leaders in this area. In 2015, they introduced voluntary community benefits guidance for onshore renewable developers, which recommended community benefits of £5,000 per megawatt, with inflationary increases. They have recently proposed increasing that to £6,000. However, the UK Government have, in their policy paper on how their mandatory scheme will work, proposed a benchmark contribution of only £5,000 per megawatt. Our report finds that that sum is insufficient and does not reflect fair compensation for rural Scotland. A £5,000 contribution may have been an appropriate amount in 2015, when the Scottish Government adopted it, but it is now worth around 40% less in real terms.
Our report makes it clear that the UK Government must be bolder. The Committee recommends that a figure in the region of £10,000 to £12,000 per megawatt would be more appropriate. The report also calls on the Government to consider carefully the Highland council’s view that £12,500, the upper end of that scale, is a fair figure. That proposal reflects the Highland council’s first-hand experience of supporting communities that bear the brunt of clean energy development.
The Committee’s report also highlights that, no matter what figure the Government adopt, it is equally important that a mechanism is included to maintain that value over time—otherwise, Scotland’s communities will eventually find themselves short-changed as the real-terms value of the figure is eroded. Financial payments will be an essential part of a fair deal for Scotland, but they are not the whole story.
Our report makes it clear that meaningful community benefit extends beyond financial payments, and that housing availability, access to skills training and the creation of long-term local jobs are just as important. If delivered successfully, the influx of vast amounts of renewable energy could provide an opportunity to leave a transformative legacy of housing, skills and quality employment. That would be especially valuable for communities in remote rural Scotland, which have seen little private or public sector investment.
The Committee calls on the Government to seize this opportunity and ensure that their mandatory community benefit scheme is significant enough to reflect the needs and priorities of Scotland’s rural communities. Our report recommends one specific way in which the Government could achieve that: their scheme should include a requirement on energy companies building projects in rural areas to construct legacy worker accommodation to a standard suitable for permanent community housing, rather than temporary modular buildings. That would go some way towards addressing the acute housing shortage in the highlands, which requires an extra 24,000 homes to meet the demand of the next decade, according to Highland council.
With that, I will conclude my statement. The Scottish Affairs Committee looks forward to the Government’s response, which I hope will reflect serious consideration of our recommendations on delivering a fair deal for rural communities across Scotland.
Paula Barker (in the Chair)
I remind Members to bob if they wish to be called to ask a question.
Several hon. Members rose—
Patricia Ferguson (Glasgow West) (Lab)
I thank my Committee colleague for the way in which he presented the Committee’s findings and recommendations. It was a very interesting piece of work. One issue that came up time and again was curtailment costs—the payments made to electricity producers when turbines are not operational. Does he agree that the changes being made to the grid must happen as quickly as possible? One benefit would be a reduction in the curtailment costs, which would help bill payers across the country.
Mr MacDonald
I thank the hon. Lady for chairing the Committee—she was the driving force behind the report. The curtailment costs demonstrate quite how meagre the community benefits are. I do not have the curtailment cost figures to hand, but hundreds of millions of pounds are often being paid to utilities and infrastructure funds that own the wind farms but are not local—they are neither highlands-based nor Scotland-based. Basically, we are rewarding people for something they have not done to help the area. I could not agree more that the transmission lines, and the speed of getting them in, are crucial.
Jim Shannon (Strangford) (DUP)
I thank the Scottish Affairs Committee for the report and the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for outlining the factual case. I also thank hon. Members who commit their time and energy to coming forward with ideas—there are many ideas in the report. Am I allowed to ask two questions, Mrs Barker?
Jim Shannon
I will try to combine two issues in one question, then—my apologies for being overambitious. On green energy issues, does the Committee intend to share its ideas with the Northern Ireland Assembly? In Northern Ireland, green energy is not as advanced as in Scotland, and we are looking towards the energy connection between Scotland and Northern Ireland. Did the Committee consider that connection, and if not, will it do so at some point in the future?
Mr MacDonald
That is a bit of a curveball. That is not something I know anything about. If the Minister is better informed, maybe he can answer.
Douglas McAllister (West Dunbartonshire) (Lab)
I was interested to hear the hon. Member say that the Scottish Government have proposed increasing the recommended voluntary community benefit for onshore wind projects to £6,000 per megawatt. That seems a derisory uplift given that, as he pointed out, it was £5,000 per megawatt in 2015—an uplift of only £1,000 after 11 years. Campaigners and local authorities across Scotland suggest that the figure of £12,500 per megawatt would be more appropriate. How should the UK Government respond to that? Is the Committee suggesting that the UK Government intervene, perhaps with a legal mandate to introduce a fairer and more realistic community benefit figure?
Mr MacDonald
It would have been helpful if the Conservative Government had made it mandatory 12 years ago, but they did not. Although I applaud the Scottish Government for doing so, they should have increased the benefit every year, rather than leaving it at £5,000. The £6,000 figure that they have now come up is completely ridiculous, because, with inflationary increases, the 2015 contract figure should be £8,500, so they have effectively reduced the community benefit. Two years ago, I wrote to the Scottish Energy Minister and the First Minister to make my case. Indeed, I met the Energy Minister about it. I am afraid that, by making it £6,000, they have taken the easy option.
Jim Shannon
On a point of order, Mrs Barker. For clarification, I asked the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) about the interconnector between Scotland and Northern Ireland, but as the Minister is in the Chamber, perhaps he might answer.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
indicated assent.