Business, Energy and Industrial Strategy: Departmental Spending

Alan Brown Excerpts

Tuesday 7th July 2020 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

A few minutes cannot cover a Department that has responsibility for business recovery, energy, industrial strategy, climate change, net zero, getting the carbon budgets back on track and leading on COP26. It is not credible that one Secretary of State has all those responsibilities under his belt, as well as leading in the Cabinet on climate change.

If we look at covid business support, we are supposed to believe that only by being in the UK was Scotland able to access support for businesses. It is an absurd proposition that if Scotland were an independent country, somehow it would be the only independent country that could not access borrowing and fund support schemes to support its businesses.

It is no wonder that the Higgins report concluded that additional borrowing is required, rather than the financial straitjacket that Scotland is currently held in. Scotland can only borrow a maximum of £450 million of capital a year, limited to £3 billion overall, yet not that long ago we were hearing the Prime Minister promise us a £20 billion bridge to Ireland—a bridge that we do not want or need. We would far rather have control and have an £8 billion stimulus package for a green industrial recovery.

The business loans that have been administered by BEIS were welcomed initially. They were a good move at the start of the covid outbreak, but more needs to be done. Some of the loans need to be converted to grants, because businesses will not be able to afford to repay the loans, especially when the interest-free period ends. The Chancellor said that up to £330 billion would be available, but only £43 billion of loans have been accessed. That tells us that the scheme has not worked as it was designed to and some major rethinks are needed. The Government could use the outstanding moneys to further the green recovery.

A green recovery will need investment and commitments on a greater scale than anything we have seen to date, and it is shocking to think that BEIS only spends £1 billion a year on tackling climate change, yet spends £2 billion a year on nuclear waste at Sellafield. The nuclear waste liability is estimated to be £131 billion. What a legacy that is, yet the Government and BEIS are still infatuated with nuclear, despite the failing business models. Hinkley has a strike price of £92.50 per MWh for a 35-year concession, yet offshore wind is now at less than £40 per MWh for a mere 15-year concession. It is crazy, and it is time to abandon the nuclear sector deal, which is sucking another £190 million out of the Department’s budget. The nuclear fallout needs to be ended and there needs to be greater investment in renewables. If the Government are still arguing that we need a baseload, I would argue that they should be finding a route to market for pumped hydro storage, which would give the required baseload, rather than nuclear energy.

The contracts for difference scheme operated by BEIS has been welcome and has helped drive down the cost of onshore and offshore wind and solar. To make up for the period when the Government reneged on allowing those technologies to bid in the CfD process, I suggest they look at annual auctions. They also must remove the capacity cap on auctions going forward.

I also suggest that the Government should provide a ring fence for early-stage technologies within the CfD mechanism, to support Scotland’s wave, tidal and floating offshore wind sectors. That would allow Scotland and the UK to become true world leaders. We all know that the UK lost out in the manufacturing of onshore wind because of a lack of Westminster support, so lessons must be learned. Such technologies really do offer a green industrial revolution.

The same is true carbon capture and storage and hydrogen production: the funding of such projects at scale is required in order for us to become world leading. It is critical that funding is provided for the Acorn CCS and hydrogen-production project at St Fergus. The Committee on Climate Change recommends that a funding mechanism must be in place this year.

Support is also required for the oil and gas industry so that it can have a just transition to renewables and the net zero target for 2050. When are we going to see some of the £350 billion of Treasury revenues that came from oil and gas coming back to Scotland to support the sector?

To assist the green recovery, the CfD process should also be refined to incentivise the use of UK supply chains. It is ridiculous that BiFab has made redundancies when so much work could be fabricated at its yards. CS Wind in Campbeltown should also see greater benefits from the UK Government procurement system.

Another simple ask on which the Government have dithered is the installation of energy efficiency measures. It is cost-effective and can transform housing, both inside and out. It creates jobs and could reduce future energy demand up to 25%. The required funding has to be a minimum of at least the £9 billion that was pledged in the Conservative manifesto. We really need to see a programme and it needs to be greater than the rumoured £3 billion.

On facilitating green investment in infrastructure, there also need to be upgrades to national grid pinch points and a resetting of transmission charging, which right now punishes renewable projects in Scotland. We need greater investment in electric vehicle infrastructure, and to have a coherent strategy for a green recovery, we need to see the energy White Paper. We need a national infrastructure strategy to come forward. The heating building strategy, transport decarbonisation plan and net zero review all have to align and come together. The options for investment are massive; if the UK Government will not grasp them, they should give Scotland the powers so that we can continue on our green journey.