Household Energy Debt

Kenny MacAskill Excerpts

Tuesday 23rd April 2024 Westminster Hall

[Kenny MacAskill (East Lothian) (Alba)]

I beg to move,

That this House has considered levels of household energy debt.

It is a pleasure to serve under your chairmanship, Sir George. It may seem strange to be debating energy debt with summer fast approaching. However, although the weather has largely improved, the energy debt situation most certainly has not. Millions have not bright sunshine, but black clouds hanging over them. Growing numbers in Scotland and across the UK are struggling, and many are drowning, as debts mount but energy needs remain constant. Ofgem has found that energy debt levels now stand at a staggering £3.1 billion—billion, not million—and that the average debt has increased by about 50% over the last 12 months, with the number of households in debt increasing by about 20%.

The situation is worsening. National Energy Action, a fuel poverty charity, estimates that even with new price cap levels, about 6 million households in the UK will be in fuel poverty. The situation in Scotland, with its more northerly latitude and harsher climate, is even more bleak. Energy Action Scotland suggests, based on the Scottish Government’s house condition survey, that fuel poverty afflicted 31% of households in 2022. That is almost one third of people in an energy-rich land that powers the UK economy living in fuel poverty—and that was two years ago. In northern areas and the islands, the figure was almost, or even over, 50%. Those are the parts closest to the oil and gas fields, yet they are denied access to affordable fuel.

The new bounty of renewable energy adds to the perversity. Scotland is providing 124 billion kWh to be cabled south. That is enough to power Scotland’s homes 12 and a half times over, yet many Scots cannot afford to heat their own home. What an absurdity for a country to be energy rich, yet its people fuel poor.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this issue forward. He is right to highlight fuel poverty. In England, the fuel poverty figure—the proportion of households where more than 10% of wages go to pay for fuel—is about 13%, and he mentioned that in Scotland it is 31%. In Northern Ireland, it stands at 22%. Does he agree that people need help? As he rightly said, just because the summer months are coming and it will get better does not mean that the problem is disappearing. We must take more effective steps right now, and we look to the Minister for the answers.

[Kenny MacAskill]

I fully accept the hon. Member’s intervention. This is an issue across the United Kingdom, including Northern Ireland. Climatic matters are worsening the situation in Scotland, but other factors affect other areas. As I will go on to say, the days of the summer months being some protection are long passing.

What does this mean for those in debt? They are real people, not statistics. Citizens Advice Scotland states that the average fuel debt for someone seeking its help is about £2,300. That is just the average—for some, it will be worse—and it is only for fuel; people may have other debts as they juggle their finances trying to manage. During 2023, the disability charity Scope received 7,422 referrals to its disability energy support service. Of those referred, 364 were in debt. Disabled households require an additional £975 per month simply to have the standard of living of a non-disabled household, yet their average debt is more than £1,100.

According to Age Scotland, older people have been massively impacted. Its research highlights that the majority of over-50s in Scotland feel financially squeezed and are cutting back on essentials, yet pensioners in Scotland have the highest rates of fuel poverty, with 36% in fuel poverty according to the most recent data. Worryingly, 24%—more than any other household group—are classified as living in extreme fuel poverty. All those statistics will have worsened as energy prices have risen and the general cost of living increased. The perversity of having to choose between heating and eating is growing, not diminishing. These are not just numbers or statistics; they are human beings, some of them even children.

While spring is usually a season for looking forward with anticipation, this spring has seen the heaviest rainfall ever recorded in many parts of Scotland, and with that rain come damp and cold. The days may be getting longer, but the need to heat homes remains as vital as when the nights were longer. Climate change is making our climate more changeable, but that simply makes it more challenging. As inclement weather straddles even supposedly moderate months, heating is often a year-round requirement, and not just for those who are unwell or housebound. The seasons turn and summer will be followed by autumn and then winter, exacerbating an already difficult situation. The thought of the colder months to come will send a shiver through many—from fear, not cold.

Energy is about access to not just heat but power. It allows the mother to power the washing machine to keep her kids clean and tidy; the parent to power the school laptop, ensuring that those children can achieve their educational potential; and individuals to charge their phones in order to access employment opportunities, benefiting not just themselves but society collectively. Rather than berating and punishing people for not being in work, maybe the Prime Minister would be better advised to assist them in achieving it.

The need for power even applies to those who need life-saving equipment. Ill health not only often keeps people housebound but makes them more susceptible to the cold. Being able to keep warm is essential for recovery. Similarly, dialysis and oxygen are not luxuries to prettify someone’s home; they are essential for their very existence. That is why the debate is urgent. The time to act is now, not when winter is upon us. By then the situation will be even worse for many, and tragically it may even be too late for some.

National Energy Action advised that not only are more people falling into debt but those already in debt are seeing their situation worsen. Only about one third of the overall debt figure of £3.1 billion consists of debt where there is an arrangement to pay. That arrangement may be manageable for many, but for some it might prove too much, as energy and other costs increase. What happens then? Two thirds of that debt—over £2 billion—consists of “arrears”, which is defined as debt without a repayment arrangement. If someone has no plan for how to repay, and is struggling to meet their current bills without even considering meeting arrears that have accrued, how will they get through spring, let alone winter? Many people see no way out of the morass facing them.

Action is needed to address energy debt every bit as much as the continuing crisis of energy costs. Ofgem has called for inputs on debt and affordability, with submissions closing on 13 May. However, Ofgem is a creature of statute; it can only do what it is authorised to do, and the parameters and the final decision remain with Government. That is another reason why this debate is apposite: it is not just that the situation is worsening, but that the decisions must be made now.

Those facing this crisis with the burden weighing them down are not the feckless or ne’er-do-wells who never seek to pay their way, but the poorest and most vulnerable in our society. It is not a “won’t pay” campaign, as I once ran in Scotland against Thatcher’s poll tax, but simply a “can’t pay” situation for those who just do not have the cash or wherewithal.

Another cruelty of our energy market is that those with the least pay the most, hence they face the highest risk of debt, not just difficulty in paying their bills. Energy costs have increased for all, but the proportion paid by the poorest and most vulnerable is greatest. As National Energy Action pointed out, standing charges have almost doubled over the past five years, with households now paying over £300 regardless of payment method. It is an energy poll tax that hits the poorest hardest. The billionaire with his swimming pool pays the same as the widow with her kids in a council flat. Charges vary across the country, with those in colder Scotland paying a higher rate than those here in London.

Tariff prices are also highest for those least able to pay. Standard credit is far more expensive than direct debit, but for some no other method is available. They are left paying more from a smaller budget. Prepayment has seen tariff costs belatedly reduced and is now the cheapest tariff, but it can have other issues for those forced to pay by that means. Let us recall that the moratorium on forced installation of prepayment meters has ended. Warrants are now being obtained to force them on even those who do not want them, for they obviously suit suppliers, who can monitor and even restrict consumption, even if more people will be afflicted by that perverse euphemism, “self-disconnection”—a benign phrase, but a wicked outcome. It is not a voluntary choice, but imposed by financial circumstances. Lacking the funds to buy the card or pay for more credit, people simply go without.

Let us also remember that putting people on to prepayment meters has other significant consequences. As Citizens Advice Scotland points out, it results in debt repayments being added to consumption charges—folk pay more but get less, with debt, not just standing charges, to be met before they even get a flicker—and people may not be able to switch supplier even if lower tariffs are available.

The Government will claim that energy prices have fallen and, of course, over the recent period that is most certainly true; however, the baseline is not last year, but when the energy crisis arose. Prices are far higher than they were then, and the supposed global issue of energy costs, whether due to the war in Ukraine or other international pressures, has seen prices in the UK rise far higher than in other lands. Everyone is suffering as a result—business and domestic customers—but it is the poorest and most vulnerable feeling the most pain.

Moreover, while the energy price guarantee has dropped, let us not forget that there has been sleight of hand. Not only is the guarantee predicated on average costs, hence it takes no account of differing circumstances—climatic issues in northern parts, personal needs such as ill health, and so on—but the average energy consumption used in formulating it was reduced, as it was stated that household insulation had improved. Of course, that is the case for many well-insulated new homes, but in all likelihood it will not apply to someone in an older property, whether they own it or live in a council house, are a housing association tenant or have a private landlord, yet their needs remain the same.

National Energy Action states that if it was calculated on the former assessment, the price cap would be £1,769, not £1,690, for the typical dual fuel household. That is almost an additional £100 for those in the poorest housing stock to find. Prior to the crisis, the price cap for the typical dual fuel household paying by direct debit was £1,138. It is now 56% higher, but costs have risen even more for those in harder-to-heat households or on higher tariff payment methods.

Ofgem acknowledges that there is £3 billion of debt in the energy market. The End Fuel Poverty Coalition calculates that there are allowances in the energy price cap to service that debt amounting to £1.5 billion per annum. That just pays for servicing the debt, not for reducing it. Can the Minister confirm whether that is the case? If that is happening, how is it being calculated, collected and distributed? Where is the transparency? Are consumers paying for their suppliers’ accrued debt? Surely we are entitled to know what we are paying for and what the big corporates are getting from us.

We know that there is a crisis at the moment and that the winter to come could be harsh and cruel, so what is to be done? First, a social tariff, once alluded to by Ministers and standard in many lands—even those without the exorbitant prices we face—should be introduced. That would provide solace for the poorest and most vulnerable. Secondly, we should restore the moratorium on the forced installation of prepayment meters, which is iniquitous and cruel.

Thirdly, the warm home discount scheme needs to be reviewed and enhanced. Rather than being issued arbitrarily to second home owners—never mind to those not requiring them, as was once done—payments should be centred on those most in need, addressing hardship and mitigating existing and even increasing debt. The current support of £150 is simply inadequate and too many are missing out entirely, even though they are entitled and in need. The payment was £140 before the energy crisis arose and prices rocketed; it badly needs to be increased to reflect that. The Social Market Foundation has made proposals that the Government would do well to adopt.

Finally, we need a debt write-off scheme, as suggested by National Energy Action. The amount owed and the number in debt are such that many can never make full repayment. The only way to achieve much reduction is to provide support through matching payments. The details of the scheme can be discussed, but the principle should be non-negotiable. It need not be a blank cheque for others simply to cease paying; it could be time limited to debt incurred during the fuel crisis, and other criteria could be applied. Banks were bailed out. Wastage of personal protective equipment, if not fraud, has been written off. It seems that there are unlimited funds for weapons of war, but not for a war on poverty. If assistance can be given to the few, similar support should be provided for the many.

Energy debt levels are rising and, with winter looming, fears for access to warmth and power, as well as for people’s ability simply to keep body and soul together, are increasing. Those are basic human needs and should be human rights. Action needs to be taken to ease the cost of energy and reduce the burden of debt for the poorest and most vulnerable. Will the Minister meet me and representatives of National Energy Action to discuss the crisis? Even more importantly, will she address the perversity of fuel poverty in an energy-rich land?

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

It is a great pleasure to serve under your chairmanship, Sir George.

I thank the hon. Member for East Lothian (Kenny MacAskill) for securing this debate on such an important issue, which I care deeply about. He mentioned what it is like to live in fuel poverty. I assure him that I personally understand exactly what that is like, having known the difficulty as a child of using something as simple as a washing machine, and latterly having a mother with chronic obstructive pulmonary disease and having to make decisions about using oxygen. I reiterate that I fully understand the situation that we are talking about, which is why I take this matter incredibly seriously as the Minister for Affordability.

As the hon. Member for East Lothian pointed out, levels of consumer energy debt have risen in recent years, which the Government recognise as an important and growing problem. Energy debt can harm consumers in several ways. It can encourage them to self-ration energy, leading to cold or damp homes, or cause households to cut back in other ways. The Government expect suppliers to do all they can to support customers in debt, particularly vulnerable customers. I encourage anyone who is concerned about keeping up with bills to contact their supplier. They should also contact organisations such as Citizens Advice, which may be able to provide support.

Last year, I met energy suppliers to outline our expectation that they do all they can to support those in debt and to help other consumers avoid falling into debt. I also meet regularly with stakeholders such as Citizens Advice to discuss how we can work together to best support consumers. I welcome Ofgem’s ongoing call for input on affordability and debt. For the reasons that the hon. Member for East Lothian set out, it is right that Ofgem takes a detailed look at the issue. I look forward to understanding its next steps to ensure that consumers can be better protected and that the debt burden does not leave us in an unsustainable position.

Despite high levels of consumer debt, energy prices have fallen significantly since last year. The price cap has fallen by nearly 60% since it peaked last year, including by £238 in April. Over the last two years, the Government have demonstrated a commitment to supporting vulnerable people with one of the largest support packages in Europe. Taken together, the total support provided between 2022 and 2025 to help house- holds with the cost of living will be worth more than £108 billion—an average of £3,800 per UK household.

Millions of vulnerable households have received up to £900 in further cost of living payments, with an extra £150 to those eligible for disability benefits. These payments are in addition to the established financial support available to low-income and vulnerable households through the winter fuel payment and the cold weather payment, which provides £25 during very cold weather. An extra cost of living payment of up to £300 was paid to pensioners’ households through the winter fuel payment, while the Government continue to provide support through the warm home discount, which provides low-income households with a £150 rebate off their energy bill every winter.

Although the Government are doing a lot to help households, I am concerned that some customers remain in energy debt. Suppliers should do all they can to support these households and ensure that consumers do not fall into debt. Last year, Energy UK announced a voluntary debt commitment with 14 energy suppliers, which collectively committed to go above and beyond current licensing conditions to help households with energy bill debt over winter. Those energy suppliers committed to providing immediate assistance to those in debt, as well as arming people with knowledge and resources to empower them to manage bills more efficiently. However, this is an ongoing issue, and it is also important that suppliers provide quality customer service to support consumers before they fall into debt, and quickly help those who are already in debt.

The hon. Member for East Lothian raised the issue of prepayment meters, which, of course, can be a useful tool for some consumers and their energy suppliers to manage their debt. It is important, however, that the rules around their use are sufficient to protect consumers and are enforced properly. Involuntary installations should be used only as a very last resort. Ofgem has strengthened its licensing conditions for suppliers to conduct involuntary prepayment meter installations, with exemptions in place for households with vulnerable individuals, such as people who are 75 or older.

The hon. Gentleman’s constituents will also have been in contact about standing charges, which, as he will know, remain a matter for Ofgem. Ofgem launched a call for input on standing charges, which ended in January and received just over 30,000 individual responses. It looks at how standing charges are applied to energy bills, and at the alternatives that can be considered. Ofgem is currently analysing those responses and will publish its response in due course. In March, the Secretary of State and I wrote to Ofgem to outline the Government’s expectation that standing charges should be kept as low as possible, or reformed if necessary, to make them fairer for consumers.

The Government have already committed to further support for households. In the autumn statement, we announced the biggest increase in the national living wage, which is worth around £1,800 for a full-time worker and will benefit around 2.7 million workers. We also announced the next generation of welfare reforms, with benefit payments increasing by 6.7% and pensions by 8.5%. In the spring Budget, we also cut national insurance by a further 2%, meaning that someone on an average wage has the lowest personal effective tax rate since 1975. We have also extended the household support fund until September 2024, with an additional £500 million in funding, and we have been working across Government and with Ofgem and suppliers to better identify customers who are getting into problem debt and to ensure that households are properly supported. I understand that this is a complex matter, and one that is very important to the hon. Gentleman.

[Kenny MacAskill]

Would the Minister clarify whether there is an element in an individual’s bill that is factored in by Ofgem that relates to the debt servicing of suppliers?

[Amanda Solloway]

The hon. Gentleman makes a good point. He will know that there was an announcement of a one-off price cap adjustment of £28 per household for direct debit and standard credit customers. As I mentioned earlier, we are looking at the standard charges system as a whole and whether it should be reformed.

I am happy to meet the hon. Gentleman. I am always very keen to meet hon. Members across parties, to work across Departments—for example, with the Department for Work and Pensions—and to meet stakeholders, because we can only really tackle this issue together. To reiterate, we must remember that we are talking about individual people and their individual lives, so I am incredibly happy to meet and discuss it further.

This is a complex matter, which is important to the hon. Member for East Lothian and other hon. Members. I hope that I have provided some reassurance about the action that is being taken by the Government, Ofgem and suppliers to help all consumers. I give my assurance that, as the Minister for Energy Consumers and Affordability, it is uppermost in my mind that we should never be making vulnerable people more vulnerable. I thank the hon. Member for East Lothian again for bringing forward this debate.

Question put and agreed to.

Offshore Petroleum Licensing Bill

Kenny MacAskill Excerpts

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[Barry Gardiner]

The hon. Gentleman is absolutely right to say that we must manage the decline, but we must manage the decline in the community’s livelihood, which is not necessarily the same thing. If we make sure that we have a just transition, and introducing support for retraining and gaining skills, as outlined in the amendments that I am supporting, he will find that his constituents and many others around the country will much better weather that decline and prepare for the sort of future that we want.

The Bill, unfortunately, does the opposite. It ignores the 30,000 hard-working people directly employed in today’s oil and gas industry, and the further 100,000 individuals supported by the supply chain. It provides false hope. It sends confusing signals to energy companies, to investors, to the global community, and indeed to unions and the workers they represent. It pretends that nothing needs to change—that business can continue as usual, and that jobs in oil and gas are safe. The Government are acting as if maxing out the North sea can happen indefinitely, or at least until they are no longer in office and therefore do not have to pick up the pieces.

Amendment 14 sets out the need for formalised collective agreements with unions and the workforce to create just transition plans. In Spain, we have seen what can be achieved when Governments, businesses, workers and unions come together. The just transition agreement that the Spanish Government have negotiated with affected workers, unions and businesses is popular, economically responsible and environmentally sound. It is a settlement for all involved. That is the approach that ought to be taken in the North sea. The region needs a new settlement, in which: there is an increase in domestic manufacturing; a new generation of renewables, such as green hydrogen, turbocharges employment in energy-intensive industries; the technology of carbon capture, usage and storage and the UK’s unique storage capacity for sequestering carbon can provide a new service that is exportable to the world; the benefits of the energy system are shared fairly; jobs are truly safe and secure; and, above all, those communities who were once the proud purveyors of our fossil fuel energy become our proud sequesterers of the world’s emissions and the champions of the renewable powerhouse of the future.

Before I conclude, I want to mention one further spurious reason that the Government have put forward to justify the Bill: that it stops us from being dependent on oil and gas from dictatorial regimes such as Russia. Yesterday in the House, my right hon. Friend the Member for Barking (Dame Margaret Hodge) pointed out that a loophole in our sanctions regime means that countries such as China and India import Russian crude oil, process it and then sell it to the UK as refined oil. In 2023, we imported 5.2 million barrels of that oil. That means we sent something like £141 million in tax revenue to the Kremlin’s war chest. Britain is also the biggest insurer of Russian oil moved by sea, most of which is sold at prices well above the price cap, again violating sanctions. If the Government really wanted to stop such dependence, they could tighten the sanctions regime—they know how to do so, but they do not.

I will not vote for this piece of 20th-century legislation that instructs the House to look backwards and not forwards. I will not vote to make Britain colder and poorer. I will not vote to increase flooding. I will not vote to leave communities and workers behind. I will not vote to lock volatile fossil fuels into our already broken energy system. Sadly, we must wait for a future Parliament—and, I trust, a future Government. I look forward to working with Members from across the House in pursuit of those goals.

[Kenny MacAskill (East Lothian) (Alba)]

I rise to support amendment 15 in the name of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Neale Hanvey), and in particular subsection (b) to proposed new section (1ZA), which relates to Grangemouth. There is something perverse and absurd about using Scottish oil if Scotland’s refinery is to close.

We have to transition. It has to be a just transition, which cannot just be a glib phrase. It must also be paced, because we cannot get there overnight. In my constituency of East Lothian, we can see the turbines on the Lammermuirs, and we can see them growing in number daily, and the growth in the number of columns, as offshore wind capacity comes. But we require fossil fuels to deliver that renewable capacity. We require diesel for the trucks, and marine diesel for the ships, out setting the columns and turbines. We also require the plastics that go with much of that. So we need to continue using and exploiting oil to get to a renewable future. We have to do so at a pace that is appropriate, but also ensure that our country benefits. That is why subsection (b) is so important.

There is something perverse in the fact that Scotland is energy-rich, yet people face fuel poverty. In my constituency, we are not seeing the benefits in employment that should come from being in a county that is so energy-rich. The county faces the same problem as Scotland: it is energy-rich, yet people can only look wistfully at the turbines offshore, while they are unable to pay their bills. We must ensure that we get jobs and work here. The refinery at Grangemouth is pivotal to that.

I grew up not in East Lothian but in West Lothian. The Grangemouth refinery has been there for a century—since 1924—not for North sea oil but for its precursor: the shale industry, which was centred in West Lothian, from which came BP, Paraffin Young and others. BP was the centrepiece, along with Imperial Chemical Industries in its various iterations; it is now Petroineos. The refinery initially dealt with the shale industry, but, once North sea oil was discovered, we used it for that oil.

The Forties pipeline comes ashore from the North sea at Cruden Bay, and oil is piped down to Grangemouth because it was meant to be refined there. Grangemouth is also capable of refining oil from elsewhere: a pipeline runs from Finnart in Argyll through to Grangemouth, which allows oil imported from abroad to be refined in Scotland. Yet we face a situation where unless we support the amendment, Grangemouth refinery will likely close. Although a spat has been going on between the SNP, Labour and the Tories about the North sea and its oil, little has been said about what is happening at Grangemouth. The threat has been growing, and action from the Government both here and in Scotland has been in inverse proportion to that.

[Dave Doogan]

I am sure that the hon. Gentleman will have heard me reference Grangemouth and its future in my contribution. I support his ambition to maintain our hydrocarbon future at Grangemouth, as long as it can be sustained economically and environmentally. Does he agree that if we are to prevent the jeopardy that workers at Grangemouth face from ever re-emerging, we need to make sure that sustainable aviation fuel, biofuels and hydrogen are an integral part of Grangemouth’s output? We need to ensure that they overlap with hydrocarbons and leave them behind.

[Kenny MacAskill]

I have had discussions with the shop stewards and unions, whom the Scottish Government may wish to follow and not brush off with cursory meetings. We want a biofuel strategy for Grangemouth, but that is for some significant time in the future. Unless we act now, the refinery could close in 2025. Biofuels will not be refined in Grangemouth or anywhere else in 2025. The shop stewards and the unions wish us to get to biofuels, and Grangemouth must be declared a hub for that, but if it is to survive until then, we must ensure that it is a refinery, not simply a terminal, and that we maintain those skills.

It is absurd that we will continue to exploit Scotland’s oil, yet its refinery will close. There is something perverse about that. Scotland will be the only major oil-producing nation in the world—we are ranked No. 21 along with the UK in the top 25 oil producers—that does not have a refinery capacity. That will put us with large developing countries that produce less oil. We will join a club hosted by the likes of the Republic of Congo and Trinidad and Tobago. I am sure that they are lovely countries—I have never visited—but they are not developed nations with an industrial economy. The danger is that we will become a developing nation, in terms of our industrial base.

Offshore Petroleum Licensing Bill

Kenny MacAskill Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Kenny MacAskill (East Lothian) (Alba)]

I agree with a lot of what the hon. Member for Banff and Buchan (David Duguid) said, even though I disagree with the purpose of the Bill, which seems to me to be political grandstanding indicative only of it being an election year. It entirely fails to meet the significant needs of those who are currently struggling to heat their homes in Scotland, of the Scottish economy, which should be basking in all the glory and wealth that has been created through oil and gas, or of our wider planet.

We need to transition; that is self-evident. It is not simply about the global warming that Members have been talking about. Trains in my constituency were cancelled today and the A1 was closed because a lorry had overturned. It was a heavy goods vehicle, but not a high-sided one. The strength of the winds that battered the communities in my constituency and elsewhere did that. We have serious problems coming down the line, and we require to change, but it requires to be a just transition, at a pace that allows us to change, because we have to ensure that we keep the skills. We cannot do to those in the oil and gas sector what was done by Thatcher to the miners and simply close them down and throw them to the wolves.

We have to ensure that we transition to renewables, but oil and gas are required for us to make that journey. I can see it in the hills of the Lammermuirs, and I see it on a daily basis as increasing numbers of wind turbines go into the firth of Forth. At the end of the day, the ships putting in the columns for the turbines run on marine diesel. A lot of the turbines require plastics to be constructed, and we also need the vehicles simply to get them there.

We have to get to that renewable future. The tragedy in Scotland is that we are already there, as we produce almost as much energy as we require. Our people just do not get the benefit of it, because it is transmitted south and charged at an appalling rate when it should be almost free, given that people can see it from their homes, on their hills and off their shores. There has to be a change.

There is also a perversity. Although I agree with new licensing, Rosebank will be operated and owned by Equinor, the state energy company of Norway, so the profits will go to Oslo. Scotland and Norway discovered oil at the same time, because we share access to the North sea basin. Those in Norway have a standard of living and an economy that those in Scotland can only look at and weep with envy. They also have a futures fund, because they put the money away rather than allowing the super-rich to get even richer and invest in foreign bank accounts or highland estates. Norway has a futures fund and Scotland has precisely nothing.

We have to continue to build and to continue extracting oil and gas. That has to be at a significant pace for Scotland, while taking into account the need to meet the requirements of the planet. Two particular aspects are needed. First, as per the amendment in my name and that of my group leader, my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Neale Hanvey), we must have a commitment to a net zero carbon footprint.

In particular, that means taking into account the needs of carbon capture. Scotland has had the bounty of North sea oil and we need to ensure we continue to get benefit from it. We have coming the bounty of renewables, and we see that with offshore wind, both floating and fixed, but we also have huge potential with carbon capture, because the geology of the North sea provides something like 30% of the opportunities in Europe. Yes, carbon capture is untested, but our society and our planet need it.

More importantly, we must have a commitment to retain a refinery at Grangemouth. It is absurd, as others have said today, that the oil from the North sea is shipped abroad in the main to be refined, and then we import from supertankers coming in. Those ships pass on the high seas, and that is simply absurd. As we have a worsening planet crisis, it is perverse. It is not good enough to say, “It’s the wrong type of oil,” just as we would not accept a rail operating company saying that it was the wrong type of leaves on the tracks.

Yes, our refineries are not at the capacity for the engineering or technical skills to refine it, but that should be done. The first place to do that is Grangemouth. Why? Because the Forties pipeline comes into Grangemouth. As the hon. Member for Banff and Buchan knows, it lands at Cruden bay in his constituency, but it is piped down to Grangemouth. It is absurd that Grangemouth should be closing when the oil—both past and present, and indeed future—is coming in from the North sea. So if there is to be the continued extraction of Scotland’s need, which we have not benefited from because we do not have the wealth or savings of Norway, we must at least ensure that we save Grangemouth.

I call on the UK Government first to ensure that they provide the funds for the hydrocracker that will increase the profitability of the existing site threefold. If that is done—that would cost a fraction of the billions the UK has got from North Sea oil over the years, and a fraction of what it will continue to take in petroleum revenue tax and other benefits in coming years—we must ensure that we get the profitability up. Then, in a couple of years, we must take the engineering, the skills and the technology so that the oil from the North sea can be refined in Grangemouth. It is absurd and perverse that that is not done.

[Sammy Wilson]

Does the hon. Member accept that one of the reasons why we have not had investment in the refining industry in the United Kingdom for decades is precisely because the net zero policies that are being followed, with the costs and charges for carbon, the emissions trading scheme and other carbon taxes, discourage any investment in the very production facilities we use to process the oil that we bring out?

[Kenny MacAskill]

I think there are a variety of factors, and I have no doubt that some of those factors are there. There has also been a failure to invest. Where the blame does not lie is with a workforce who are skilled and who presently have to work with a refinery that is past its sell by date and requires to be invested in. Even the union and the workforce recognise that investment is required to get the hydrocracker going and to get the technology to ensure that we refine the oil there. It is probably not the current owner Petroineos but previous owners who have taken the benefit for themselves and invested it in their shareholders rather than putting it back into either the workforce or, indeed, capacity at the refinery. Tragically, that happens across so much of UK industry, whether the shipyards, the steelworks or whatever else.

We see a Government who will benefit from North sea oil’s continued extraction, so the least that Scotland is entitled to expect is its refinery to be at the heart of that. Especially when the oil will flow down that golden thread in the Forties pipeline down to Grangemouth, we require to ensure that Grangemouth will refine it. Yes, that requires technical changes, and yes, that will come at a cost, but that is a small fraction of what the UK will take from the benefit of that North sea oil. That is why the Alba party’s support is conditional on carbon capture and the net zero footprint, and also conditional on Grangemouth being at its heart.

It is absurd that Scotland is not getting the wealth from the oil off its shores. It is absurd that while countries have seen their desert redeveloped and bloom because of the oil they have had, what we have seen with North sea oil is an industrial desert created. Having been brought up only 10 or 15 miles from Grangemouth, I know the devastation that will come to that community unless there are the changes required to ensure that Grangemouth does the refining for North sea oil. We cannot afford to have Grangemouth thrown to the wolves. As I said in last week’s debate, we cannot have “Grangemouth no more”; we require to ensure a refinery capacity.

It would be absurd for Scotland in the UK to have in Grangemouth no refinery capacity. Scotland would be ranked 21st in the nations that produce oil, and the only one in the top 25 without a refinery capacity. The only other countries that tend not to have refinery capacity are the likes of the Republic of Congo and Trinidad and Tobago. I wish those countries no ill—I am sure they are fine countries—but they do not produce the same level of oil, and they are not developed industrial economies. The fact of the matter is that Scotland should not be in that same position of being an oil-producing nation without a refinery capacity. On that basis, Grangemouth must be retained. I call on the Government to do that.

My only additional point is that the Scottish Government, too, require to step up to the plate. The fact that the business and economy Secretary in Scotland appears to be accepting the closure of Grangemouth as something that just will happen and is maybe a matter of regret is simply unacceptable. He may be in coalition with the Greens, but he cannot have them wagging the SNP dog. It is simply unacceptable that we see Grangemouth close without a fight. The Scottish Government should be leading the demands that the refinery is changed, that we do ensure the hydrocracker, that we do provide the changes to refine in Scotland, and that we do move towards biofuels. What they should not be doing is wringing their hands and selling out the Grangemouth workforce. We require a refinery capacity in Scotland. The UK Government have had the benefits of Scotland’s oil and should pay for it, and it is about time that the Scottish Government stood up for industrial Scotland and the workers who at one point put their trust and faith in them.

Grangemouth Oil Refinery: Energy Security

Kenny MacAskill Excerpts

Tuesday 9th January 2024 Commons Chamber

[Kenny MacAskill (East Lothian) (Alba)]

“Bathgate no more, Linwood no more, Methil no more, Irvine no more” sang the Proclaimers as they detailed the devastation caused by industrial closures and the hardship and emigration that followed. That was in the 1980s as Thatcher mercilessly shut the pits, decimating Scottish industry. Not just the many individuals who lost their jobs, but entire communities and the whole country suffered as de-industrialisation took root. The country has recovered but much has still been lost and for some it is irrecoverable, irreplaceable, or both. Scars remain and pain runs deep. The devastation will neither be forgotten nor forgiven. But is there now to be a new line of “Grangemouth no more”?

Scotland’s oil refinery stands threatened. Its closure would result in the perversity of an oil-producing nation lacking refinery capacity. I asked the House of Commons Library for research on oil-producing nations and refinery capacity. There are few nations which are oil producers yet lack refinery capacity. Norway has two refineries, and of those nations which lack a refinery capacity none are in the top 25 oil producers, as Scotland is. Instead, they are countries which neither produce as much oil as Scotland nor even have a developed economy. They are largely developing nations such as the Congo or Trinidad and Tobago, not a developed and industrial land like Scotland, which now faces the absurdity of being a major oil producer yet lacking refinery capacity.

If closure proceeds, Scotland will be getting treated like a developing nation: its raw product taken for a song and then sold back as a refined product, but at a premium to people and nation. Exploitation is what it is called. The Rosebank field and the North sea are to be the saviours of the UK economy, yet Scotland is to lose its refinery and face social and economic hardship as a result. Exploitation is what it is. That is what we will inherit if action is not taken.

Oil was first discovered in the 1960s and it would have made Scotland one of the wealthiest countries in Europe, but it was deliberately hidden from the Scottish people. That was to downplay expectations and diminish ambitions. Norway across the North sea has been transformed socially and economically by its oil resource, with a standard of living that Scots can only look at with envy and a sovereign wealth fund that Scotland can only dream of. Yet Scots have continually been told that the resource would soon be gone, and in 2014 at the referendum it was not just running out but even an impediment, a drain on an independent Scotland. Yet now it is at the heart of the UK’s economic recovery.

Although it has been rediscovered, what is in it for Scotland? As has been said, some nations discovered oil and made the desert bloom, but Scotland discovered oil and is seeing an industrial desert created in so many of its communities, and one could well now be Grangemouth. It is not just absurd but perverse that an oil-producing nation should have no oil refinery capacity. It is more than an economic argument; it is vital for economic security. War in Ukraine and conflicts in the middle east have shown the consequences. In the world in which we live, energy is essential and securing all aspects of the supply chain is common sense.

Let us look at the economic arguments and consequences of any closure. The loss and hardship would be significant for thousands, not just hundreds, sending shockwaves through industrial Scotland. The plant’s workforce is 500 but there are also some 2,000 contractors attached to it. Moreover, they are skilled jobs and their loss, as with past industry closures, will impact on future generations. Not only have current and past generations benefited from working there, but numerous apprentices were trained there, even if ultimately plying their trade elsewhere. We already have a skills gap; this would worsen it considerably.

Job losses would be significantly higher than those simply at the site. Closure would reverberate across industries clustered nearby because of the refinery. If it closes, many of them will also be lost. They are in a variety of sectors, whether chemicals, plastics or other fields. That is without even considering the huge number of individuals who depend on the site whether for their corner shop, as drivers or in other trades, both locally and from more distant parts. There is always a multiplier effect in any redundancy but, given the pivotal nature of the industry to the country’s economy and its impact across a swathe of sectors, it would be huge. Both the town of Grangemouth and all of Scotland would suffer. The knock-on effect would echo across the entire country as industrial closures did decades ago, whether the pits or car plants.

Grangemouth’s refinery is a national asset upon which our energy security and industrial economy depends. That is why it must be retained. There has been a refinery there for a century. It currently provides 70% of Scottish filling stations, as well as many in northern England. It is also the primary supplier of aviation fuel for Scotland’s airports—not an insignificant issue for an island nation with many remote island communities. As I have stated, energy security demands it.

We are seeking to transition from a carbon economy, but it must be a just transition and at a pace allowing our economy and society to adapt. The cumulative impact of closure might not be the 4% loss of GDP suggested by Petroineos, but even the 0.25% or 0.3% loss of GDP suggested by the Fraser of Allander Institute would be damaging enough. Where is the outrage and anger? Where is the ministerial statement here at Westminster or the call to action at Holyrood? Instead, there has been silence or sanguinity, hope that it just might not happen or, even more disgracefully, quiet resignation to its fate.

Thankfully, Unite the Union and the workforce are strenuously making the case, and I am grateful for their assistance and input. Closure is still only potential rather than actual, but the threat is real, and there has to be a balance between causing unnecessary alarm and taking urgent action. Unless action is taken now, disaster will befall Grangemouth refinery and the impact will be grave upon all—workers, the wider community and the entire nation.

What needs done? Ownership has changed over the years, and profitability has been affected by under-investment. No blame can be attached to the current or past workforce. Responsibility may also rest with previous owners other than PetroChina and INEOS, currently in charge. Steps can and must be taken to address the current profitability and buy time so that a transition can take place both at the site and across our economy. Moreover, there are also actions that will increase capacity and thus profitability and productivity. That means linking Scotland’s oil refinery with Scotland’s oil production. Finally, there is the just transition and the need to prepare for the new world. That can and must be done at this site.

Let us examine those three aspects that must be done. First, there is the need to fix the hydrocracker at the refinery. Its current inoperability is impacting on profitability. Restarting it would increase profitability threefold. That is significant, and would allow an extension of life at the plant, even without any additional steps being taken. It is estimated that it would cost between £60 million to £80 million to do so, but it must be done. The money must be found, whether from Westminster, Holyrood or the existing business. Surely, from all three, finance can be found. It is a small cost for such a huge asset that is essential to not just our economy but our society. After all, there is a moral as well as a financial economy. The price must not be paid by the individuals and communities who would suffer from its loss.

As well as restarting the hydrocracker, there should be an increase in capacity and in what is refined. It will surprise many that North sea oil is not refined at the Grangemouth refinery, despite the pipeline for the Forties field coming ashore at Cruden bay and being pipelined on to Grangemouth. Almost all the product refined at the plant is brought in on tankers from elsewhere. It comes in on ships and goes away in trucks. Meanwhile, North sea oil is transported to other refineries, whether in the UK or abroad. That must end. It has always been absurd, but now it is criminal. Oil from the Forties field pipeline, which last year moved approximately 40% of the UK’s oil from the North sea, must be refined at Grangemouth. It requires technological and engineering changes, but they must be made. As Rosebank comes on stream, and as the Forties continues to flow, refining must be at Grangemouth. Scotland is entitled to expect no less from its resource.

The Prime Minister has trumpeted the necessity of continuing to exploit North sea oil, and while I can take issue with the extent and pace of it, I agree with the logic. It is absurd to import oil when we have our own resource. Not only is it economic self-harm, but it is environmentally daft to transport it across the seas when it is off our shores. Why spew out the significant fumes of a supertanker by the hundreds of thousands when we can pipe the oil ashore? To achieve that requires ensuring that the oil is refined here, which it currently is not.

The hypocrisy of the Prime Minister’s position has been exposed by those who oppose development. Their arguments have legitimacy unless steps are taken to ensure that the resource is refined here, rather than having the environmental double whammy of transporting our product far away for refining and then having those ships cross with others importing refined product from elsewhere. The Forties field oil supply must be refined at the site, and the technical and engineering work to achieve that must be done. It is bad enough that ownership of the Rosebank field lies with the Norwegian state energy company, but to have that product refined abroad compounds the agony and the absurdity.

Finally, there needs to be preparation for the transition from fossil fuels to renewables. Steps must be taken to prepare the site for biofuels, which will be required in the future. The sites to refine them need to be established. It makes sense to secure the short-term future of the site by restarting the hydrocracker. Similarly, extending the refinery’s capacity by ensuring that North sea oil is processed there is essential. Steps need to be taken towards that transition, which humanity is required to make for the sake of life itself, not just the planet. But it must be more than just warm words and empty rhetoric; it requires preparation and action. Making Grangemouth a future site for biofuels refining must be part of that.

In summary, securing the refinery is essential for Scotland, not just Grangemouth. The arguments for it are social, economic and environmental, and the case is overwhelming. It is simply perverse that an oil-producing nation should have no refinery capacity, or that an industrial desert be created where a natural bounty should see a country and its communities bloom. It is for those reasons that I ask the Minister to meet me and workers’ representatives from the site. Additionally, and most essentially, will he ensure that these three steps are taken? First, will he ensure that funds are found to restart the hydrocracker? Secondly, will he ensure that oil from the Forties field that is piped to Grangemouth is refined there, and that oil from new developments such as Rosebank will also be refined there, negating the environmental harm of the trans-shipment inward and outward of oil?

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this debate forward. Does he agree that the East Lothian oil refinery at Grangemouth is a necessity not only for Scotland, but for all the United Kingdom? It must stay open not in opposition to renewable targets, but in partnership with them.

[Kenny MacAskill]

Yes, I agree with that.

My final point is that as we transition, we must ensure that actions are taken at the site for that new future by ensuring a biofuels capacity there. We simply cannot have the absurdity of an oil-producing nation lacking a refinery capacity, never mind the perversity of the oil it produces being shipped across the seas for refining.

Oral Answers to Questions

Kenny MacAskill Excerpts

Tuesday 28th November 2023 Commons Chamber

[Andrew Bowie]

I thank my hon. Friend for that question. As he knows from when we met to discuss this in June, the Electricity System Operator is responsible for planning the design and location of grid reinforcement, while transmission owners develop individual projects. I understand that Bradwell had been assessed but was not deemed appropriate for this project. However, I cannot comment on specific projects, in order to avoid prejudicing planning decisions. I would be very happy to meet my hon. Friend again to discuss this in further detail.

[Kenny MacAskill (East Lothian) (Alba)]

12. What recent discussions she has had with Cabinet colleagues on support for workers in the offshore wind sector.

[The Minister for Energy Security and Net Zero (Graham Stuart)]

This Government are proud to have made the UK a global leader in offshore wind, and the industry believes that UK jobs in the sector will rise from the current 30,000-plus to 100,000-plus by 2030—if, of course, Conservative stewardship continues.

[Kenny MacAskill]

Jobs for whom? That is the question. We have already seen the shameful situation of UK seafarers who work in the offshore wind sector being laid off, to be replaced by low-wage, exploited migrant labour. As the sector develops, as we see people go out to work on the turbines for longer and as we see the building of floating accommodation for them to stay on, there is a huge risk that those workers—not just those on the supply ships—will also face exploitation. Will the Minister work with Cabinet colleagues to ensure that the national minimum wage applies in the offshore sector beyond the 12-mile territorial limit? That is the solution to protect our workers, and those from abroad, from being exploited.

Energy Costs and Charges

Kenny MacAskill Excerpts

Tuesday 21st November 2023 Westminster Hall

[Kenny MacAskill (East Lothian) (Alba)]

I beg to move,

That this House has considered the cost of energy and energy charges.

It is a pleasure to serve under your chairmanship, Mr Davies. I thank the Minister for her courtesy and consideration in our discussion yesterday.

Scots were told in 2014 that the benefit of being in the UK was the pooling and sharing that it afforded: assets and resources were pooled and then shared out across the nations, with the broad shoulders of the Union supposedly providing fairly for all. But how is that working out?

The King’s Speech had at its heart Scottish oil and gas, the extent of which was hidden from the Scottish people when it was discovered, as the McCrone report detailed. Ever since then its demise has been predicted and foretold. By 2014, it was apparently all gone, and Scotland left with only a burden. Now, Scottish oil is to save the UK economy. Scots can only look with envy at Norway, with its society and economy transformed by a resource the benefit of which has been denied us. Some nations discovered oil and saw the desert bloom; Scotland discovered oil and saw huge parts of her land turned into an industrial desert. Pooling and sharing? I don’t think so.

Now another natural bounty has blessed our land. Renewable energy is clean, infinite and what our world, not just our land, needs as part of a just transition from fossil fuels. Let us consider the scale of the bounty. Scotland produces one quarter of the UK’s renewable energy and has the potential to produce much, much more—offshore wind, as well as other forms of energy, including tidal, wave and onshore wind, ensures that. Scotland’s share of Europe’s offshore wind capacity has reduced because of improved technologies and opportunities in other countries, but Scotland is still the envy of other nations.

Naysayers who talk that bounty down are the same ones who predicted the demise of our oil. In 2009, only 27% of Scotland’s electricity came from renewables; by 2020, the equivalent of 97.4% of Scotland’s gross electricity consumption came from them. Three years on, the figure will be even greater, and that is before offshore wind, which is still minimal, comes on stream at scale.

The scale of what is coming from offshore wind is massive. That was confirmed by the then Department for Business, Energy and Industrial Strategy, which estimated that in 2021 Scotland exported south 35 TWh hours of electricity. That is to increase to 124 TWh by 2030. I struggled to understand what a terawatt was. For those similarly afflicted, let me clarify that 1 TW is 1 billion kW. Let us put that in context: the average Scottish household uses just over 3,200 kWh per annum. And let us remind ourselves that it is anticipated that by 2030 Scotland will be sending south 124 TWh, or 124 billion kWh. That is enough to power 37.6 million homes—the equivalent of powering Scotland’s 2.5 million homes almost 15 times over. That is year on year, and the figure is growing. That is the scale of Scotland’s resource.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this debate forward. He is making a compelling case for Scotland. May I suggest to the Minister that there is also a compelling case for Northern Ireland? We have not had the opportunity to advance to the same level as Scotland, but we wish to do so. Does the hon. Member for East Lothian (Kenny MacAskill) agree that if we are to move forward, there has to be a joint strategy for all of the United Kingdom of Great Britain and Northern Ireland, because we can and must all play our part? I envy what Scotland has done. We in Northern Ireland want to do the same.

[Kenny MacAskill]

Well, I prefer an independent strategy, similar to what Norway and Denmark are doing, but I concede that Northern Ireland is frequently ignored because so much of the gas grid is pan-Great Britain, rather than across the Irish sea.

Let us look at how Scotland’s resource is pooled and shared. I have detailed the 35 TWh rising to 124 TWh, but I have not explained that no payment is received for that resource. The energy is sent south, but there is no financial return to Scotland. Besides nothing being paid for it, there are now efforts to take it directly south with neither a bawbee nor a pretty please being given for it. Off south it is to go, and for no payment.

The Eastern HVDC—high voltage direct current sub-sea—transmission cables, also referred to as the Eastern Green Link projects, are the longest HVDC cables to be laid in the UK and will run from Peterhead to Redcar and from Torness to Drax. It is estimated that those links will take 5 TWh, or 5 billion kWh, of Scotland’s renewable energy source south, again with no payment. Additionally, the proposed Berwick Bank offshore wind farm in the firth of Forth will alone produce sufficient energy to supply more households than Scotland possesses, but a cable is proposed to be laid to take 40% of its energy directly south, again with no payment.

What about the sharing? Where is the benefit from the supposed broad shoulders of the Union? Where is the return for what we contribute? A recent question to the now Department for Energy Security and Net Zero asked whether consideration would be given to crediting domestic energy users in the localities where energy is produced and landed. After all, it is being produced onshore or offshore in Scotland, so we might have thought that some credit or benefit would accrue to Scotland, and it might even be cheaper there. But no—the answer was simply that it is a matter for Ofgem, which we know is a creature of statute and can act only within its set powers or as directed by Ministers. No such rules exist and no direction has been given. The energy is not only to go south for no payment, but no benefit is to accrue to Scotland from it.

There is talk of payments to those facing having pylons placed near them, but what about those who live in the land where the energy is being produced? Winter will soon be upon us. The weather is changing and the temperature is falling. The cold is being felt and the need to heat homes is increasing, but it is not simply heat but power that is required. Energy, and especially electricity, is needed not just to keep the cold at bay. It is required by the mother to wash her children’s clothes, keep them clean and uphold the standards she seeks to maintain. It is required by the parent seeking to power up an iPad or laptop to help their child’s education and advance their life chances. It is required by the worker charging their phone to allow them to find employment or do the additional hours that the Government want, or simply to keep body and soul together. More shamefully, it is also required by the sick, including those on dialysis and those recovering from cancer, whose immune systems are weakened and for whom warmth and power are a necessity for life, not a luxury for living.

Despite the fact that Scotland is energy rich, our people are fuel poor. Already more than a third of Scots have been assessed as being in fuel poverty. Even more shamefully, almost a quarter are in extreme fuel poverty.

[Sarah Dyke (Somerton and Frome) (LD)]

I thank the hon. Gentleman very much for securing the debate. Households in rural areas have the highest fuel poverty rate—15.9% in 2022—and I am concerned that that will continue into 2024 if the Government do not act. Somerton and Frome has an estimated 13,060 homes off the gas grid that rely on alternative sources of fuel. Does the hon. Gentleman agree that we should accelerate the deployment of renewable power, provide more funding and remove the Government restrictions on solar and wind?

[Kenny MacAskill]

I certainly agree that there is a prejudice against those off the gas grid. It is not simply about those in rural areas, whether that means the hon. Lady’s constituents or my own in the lee of the Lammermuirs, but about those in urban areas—often urban deprived areas, in multi-storey flats, where gas is not available and the heating system is expensive.

The numbers I was given are historical, and they will only rise—if they have not already risen. After all, the statistics from the Scottish Ambulance Service for last winter’s hypothermic call-outs were shameful, but that is likely to be the baseline, and worse could follow. Energy prices may have fallen along with the energy price cap, but according to National Energy Action the average household is still paying £800 more for heat and power than before the energy crisis started, at a time when the cost of living crisis has subsumed the energy price crisis. Costs will be higher this year than last, when support was given to reduce bills. It is not just the big energy companies making money out of others’ misery; the Treasury made money though VAT on increased bills, which amounted to £1.1 billion in the UK and £96 million in Scotland. The cash is there. It is who has got it, or not got it, that is the issue.

Scotland is geographically further north and our climate is colder and damper than that in other parts of the UK, which makes access to heat and power even more essential. Winters can be cruel and the hardship in northern parts extreme. Let us examine the sharing—after all, we are told pooling and sharing is a benefit of the Union. When there is so much renewable energy being produced in Scotland, why are costs so high? Where is the social tariff alluded to by Government that even many suppliers support? It could be paid for out of general taxation—shared, that is. But no, the vulnerable are again left to struggle this winter.

Where is the credit, or reduced costs more generally, as I have mentioned? In my constituency, people can see the turbines turning or the towers rising from their doors, but they are unable to heat their homes. Moreover, why are costs greater in Scotland, the nation providing more energy than it has households? I wrote to Ofgem, asking them to detail the standing charges for electricity imposed on consumers in Scotland and in England. They have provided the answer for the costs imposed up until this December, but there is no sign of any variation coming. This will run and run, and so will the injustice—with the consultation not closing until January when winter has passed.

Scotland is divided into two zones: northern and southern, SSE and ScottishPower Energy Networks—that is, roughly the highlands and the lowlands. England is divided into north-west, southern and London. Ofgem’s answer disclosed that both Scottish zones were charged more, and often substantially more, than regions south of the border. That differential runs across all forms of charging, whether that is whether standard credit, direct debit or prepayment meter.

Let me detail the situation for those on prepayment meters. After all, they should be benefiting most from Scotland’s energy, which is being pooled. Their needs are invariably greatest and this bounty should be prioritised towards them, although similar benefits should apply equally across Scotland irrespective of payment method and could also be applied across the UK. Many are now counting their ability to access heat and power in pounds, if not pence. It is not 50p or £1 for the meter, but what they calculate that they can afford to use. It is why we have the weasel phrase of “self-disconnection”. That is not personal choice but imposed cruelty.

Let us look at standing charges for electricity. Including VAT, it is 69p a day in southern Scotland and 66p in northern Scotland, yet it is lower in England and only 46p in London. Per annum, it means that the standing charges for those on prepayment meters are, on average, £251.75 in southern Scotland, £241.92 in northern Scotland, yet only £166.10 in London. Those are not my figures—they are Ofgem’s.

We have seen the pooling and now we are seeing the sharing. We are giving, but not receiving. We produce the energy and our people, especially the poorest Scots, are charged more for it. The broad shoulders of the Union is the claim, but sleight of hand is the reality—as the bounty is taken, yet higher costs are imposed. As I begin to conclude on the costs of energy and energy charges—with the perversity of energy-rich Scotland and fuel-poor Scots—I make my first remarks to the Scottish Government. They have sold off ScotWind cheap and failed to stand up for Scotland. I am reminded of the words from the Proclaimers song “Cap in Hand”,

“We fight, when they ask us

We boast, then we cower

We beg

For a piece of

What’s already ours”.

As the song says,

“I can’t understand why we let someone else rule our land, Cap in Hand”.

It is time they stood up for our land on energy and electricity prices.

Meanwhile, I ask the Minister: if energy policy is reserved to the UK, where is the pooling and sharing? There is talk of payments to those having pylons nearby, but what about those where the energy is produced? Will there be a social tariff for the vulnerable this year? Ofgem is appointed by this Government and accountable to them. It is carrying out a welcome, if long overdue, review on standing charges. As I said, submissions do not close until late January—too late for this winter. Will the Minister direct Ofgem that standing charges should be abolished, as many suppliers argue? As National Energy Action states:

“How can it be right that someone who can’t afford any energy pays”

the same as

“someone in a mansion?”

It is an energy poll tax and equally unjust. Failing that, will the Minister ensure that standing charges are at least equalised across the UK, rather than seeing Scotland pool its energy, yet share higher charges? In summary, will she end the perversity of the land that produces the energy seeing its people and its poorest paying the most for that energy?

Offshore Wind: Public Ownership

Kenny MacAskill Excerpts

Tuesday 12th September 2023 Westminster Hall

[Kenny MacAskill (East Lothian) (Alba)]

I beg to move,

That this House has considered the level of public ownership in the offshore wind sector.

It is a pleasure to serve under your chairmanship, Mr Dowd. When a natural bounty is discovered, it is only right that a nation and its people should benefit from it, not simply corporations and investors. The fruits of land and sea should benefit all, not just the few. Scotland has been fortunate, blessed first with North sea oil and now renewable energy, in particular offshore wind, a further natural resource offering great opportunities and at such an extent that it should be transformative. A recent Prime Minister even used the phrase, the “Saudi Arabia of wind”.

Other nations have shown what can and should be done. Scotland discovered oil at the same time as Norway, but now Scots can look only with envy, not just at the standard of living of their Nordic counterparts but at the Norwegian oil fund. Now valued at $1.4 trillion, it is suggested that it owns, on average, 1.5% of every listed company in the world. The British National Oil Corporation was sold off, while Equinor, owned by the Norwegian state, goes from strength to strength. Funds that should have seen Scotland bloom were instead used by Thatcher to smash organised labour and by New Labour to wage illegal wars. That must not happen with offshore wind. The people of Scotland must benefit, not just multinationals.

Norway has shown what should be done with oil and gas. Denmark is showing what can be done with offshore wind by taking a 20% stake in every new offshore wind development—this is not North Korea, but a European democracy. It has not seen investors flee. This also shows that public ownership does not have to be just a state energy company operating sites, desirable as that is, but can include actions such as this, which ensure that people and their nation gain from their natural resources—benefits for the many, not exploitation by the few.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for securing the debate. The private sector will invest some £60.8 billion across the UK over the next five years in developing and operating offshore wind projects. Does the hon. Member agree—from the way he is talking, I think he does—that whether investment is public or private, all devolved nations of the United Kingdom of Great Britain and Northern Ireland must benefit from any potential funding and that that would ensure a boost in jobs and increased sustainability for the renewable energy sector?

[Kenny MacAskill]

Of course; this should benefit our people. As I said, it is not just down to state energy companies, desirable though that is. This has to be done through the private sector, but as Denmark and Norway have shown, the state can take a share and state companies can be involved. That should be happening here, but the UK Government remain wedded to a privatisation route that has created a dysfunctional energy sector that we are all now paying for.

A Scottish energy company was promised by the Scottish National party and then shamefully abandoned. It must be delivered. Publicly owned and state companies are operating in the UK and the Scottish offshore wind sector. The absurdity is that they are neither Scottish nor from the UK. They are foreign state firms operating in Scottish and UK waters, delivering profits not for Governments in Edinburgh or London, but furth of these shores and with the wealth benefiting lands far from here.

Let me narrate the situation at the Neart na Gaoithe offshore wind farm. Despite the Gaelic name, it is located in the firth of Forth, between my constituency and that of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Neale Hanvey). Pillars and turbines are now visible, and the energy is coming ashore at Innerwick, just along from where I reside in Dunbar. That is all good, we might think, but who owns it? It is operated by two state-owned companies. One is EDF Energy, the French state-owned energy company that also happens to own Torness nuclear power station just along the road and adjacent to where the energy comes ashore. State ownership is not opposed, it seems, so long as it is someone else’s.

The other organisation is the Electricity Supply Board, or ESB, which is the majority publicly owned energy company of the Republic of Ireland. The Irish consul general in Edinburgh tells me that ESB’s investment in the firth of Forth is that state company’s largest ever investment outwith Ireland. We have the perversity that the wealth and profits that are generated will not come to Edinburgh or London and will not benefit Scottish or UK citizens. Instead, they will flow to Paris and Dublin, and the citizens of Ireland and France will reap the benefit that nature bestowed upon us.

Of course, big energy multinationals are also involved: SSE, Scottish Power, which in fact is owned by Iberdrola from Spain, and BP, among many others. However, state-owned firms from other lands are also there and many of them are significantly bigger than the Irish Electricity Supply Board—I do not intend to denigrate ESB—which has done well to provide for Ireland’s people. It is a lesson that Scotland must learn. As in so many other aspects, our Irish cousins, although blessed with less, have delivered so much more.

Neart na Gaoithe is not alone in this charade, where a Government opposed to state-owned energy companies allows foreign state-owned energy companies to profit and perhaps even plunder with abandon. It is a dereliction of duty and the price is paid not just in the loss of profits, but in the scandalously high prices paid by struggling families who are trying to power their homes. Many of them live in places where they can see the turbines off their shores or where they are in the lea of those turbines that operate on the land—energy-rich Scotland, fuel-poor Scots, indeed.

It is not only France and Ireland that receive a warm welcome, despite the Government’s political antipathy towards a nationalised energy sector. Research by the House of Commons Library has disclosed that in UK offshore waters, the state-controlled Danish company Ørsted and the Norwegian state operator Equinor own the largest shares of UK offshore wind, at 20.4% and 9.2% respectively. UK public entities own 0.03%.

--- Later in debate ---

[Beth Winter]

Okay. In terms of the future of wind energy and renewable energy in my country of Wales, does the hon. Gentleman agree that now is the time that the Crown Estate and its administration is devolved to Wales, as it is in Scotland, so that we can disburse the moneys as we see fit?

[Kenny MacAskill]

I think that where Scotland goes, Wales should follow. It is remiss that Wales does not have control over the money coming from the Crown Estate, and I certainly hope that Wales follows Scotland in that regard, as indeed the UK should in the establishment of a state energy company. The hon. Lady’s point is well made and correct.

I am concentrating on Scottish waters, where the Scottish Government’s ScotWind auction sold offshore wind farms at absurdly low prices, compounding the perversity of failing to deliver a state energy company, yet Scotland’s offshore wind resource has six state companies operating within it.

Along the A1 from Innerwick in Cockenzie, in my East Lothian constituency, energy will land from the Inchcape wind farm, which, again, is in the firth of Forth. Inchcape is owned by Red Rock Power, which is a European subsidiary of SDIC Power from Beijing. SDIC Power Holdings Co. Ltd is a listed company on the Shanghai stock exchange, but it is a state-controlled enterprise, with the Chinese Government holding more than 49% of its shares. The UK Government frown not just on public ownership, but on communism, yet it is fine for a state-owned company from communist China to benefit from Scotland’s offshore resource. You couldn’t make it up!

There are three more. Further north, Aberdeen offshore windfarm, off the Aberdeenshire coast, has 58 turbines turning and is owned by Vattenfall, thus generating wealth for the Swedish people. Vattenfall is 100% owned by the Swedish state. That shows that not just communist countries, but even ones with conservative Governments benefit from state ownership.

Sited further north of Peterhead is Hywind, a development in which Masdar holds a 25% stake, with 75% held by Equinor. Equinor is a Norwegian state energy company that benefits its people through the gas and oil resources in Norwegian waters, but adds to that through expansion into Scotland’s offshore wind. Again, Hywind is a joint enterprise, with two state-owned companies co-operating to exploit Scotland’s natural resource. Masdar, also known as the Abu Dhabi Future Energy Company, is a UAE Government-owned company, which is securing Abu Dhabi’s future, not Scotland’s.

In those fields—some already operating and others being developed—we have the absurdity of foreign state ownership of Scotland’s natural resource, and it is costing us. The organisation Common Wealth, in its paper “Power to the People: The Case for a Publicly Owned Generation Company” noted in 2021 that

“our energy bills combined with Contracts for Difference payments contributed £2.56 billion in payments to offshore wind generators owned by foreign state entities.”

Meanwhile, we are told that ownership does not matter, although it matters to the Governments of Sweden, Norway, France, Ireland, China and the UAE. They seem to see the benefit of not just managing their but our natural resource. Why? Because it underpins energy security, provides affordable energy for households and businesses, supports a just transition from fossil fuel to renewables, and allows for investment in technologies. All that helps hard-pressed households, boosts indigenous business and creates a more vibrant and competitive economy. It need not be outright ownership, welcome though that would be; as Denmark shows, a stake can be taken, allowing the nation and its people to benefit and prosper from their natural bounty.

It is about not just slippage of profits and wealth to foreign shores, but loss of control and influence over our natural resource. The evidence shows that we are losing out in more ways than simply the profit. Scotland is losing the turbine manufacturing. A few turbines are to be built at Nigg, but meanwhile hundreds of commissioned orders are going elsewhere. Yards such as Arnish and BiFab lie empty, even when proximate to the site. Not one turbine for a Forth field will be constructed in Scotland. Assembly is a poor substitute for manufacture, seeing lower profit and requiring less skilled labour. Every firth in Scotland should be manufacturing turbines and expanding to meet growing need, yet other than at Nigg, they lie idle and our folk face unemployment and our land a loss of skills.

Benefits from the supply chain is a mantra from the UK Government, shamefully echoed by their Scottish counterparts, but it is not borne out in practice. In my constituency, where the turbines offshore are visible and the horizon will change irrevocably, no work is being generated. What should benefit current and future generations instead sees folk unable to heat their homes and youngsters struggling to access skilled employment. Local business have not benefited and new businesses in the sector are not being created, either to deal with the offshore work, or to provide onshore opportunities through long duration battery storage or hydrogen production.

Let us look one of the sites owned by foreign state companies to confirm that. Neart na Gaoithe, which is owned by EDF from France and ESB from Ireland, is seeing the work go elsewhere. The turbines are being produced at Siemens in Humberside, albeit assembled in Dundee, with the foundations laid by Saipem from Italy. They are being taken out to the field by Fred. Olsen Renewables, and the cabling is being done by DEME Offshore from Belgium. Where are the contracts for Scottish businesses and the work for local folk?

There should be a Scottish state energy company and it should operate and take a share in all the fields that are being developed. Other nations do it and, as I have shown, are doing it in our waters. Denmark, with both its company and its public stake, is showing what can be done, just as Norway showed what could be achieved with an oil and gas bounty. Scotland has lost out on the former but must not do so with the latter. The bounty from the energy off our shores must benefit our people, not just corporations or even state companies from other lands.

The great Scottish comedian Billy Connolly penned a song, “Sergeant, Where’s Mine?”, describing the plight of a soldier with life-changing wounds reflecting on the prospectus the recruiting sergeant had first given him. Lying in his hospital bed he says:

“Oh Sergeant, is this the adventure you meant

When I put my name down on the line

All that talk of computers and sunshine and skis

Oh, I’m askin’ you, Sergeant, where’s mine”.

Well, all I’m askin’ you Minister, where’s ours? All that talk of the “Saudi Arabia of wind” and the work and the jobs, where are they? And when other nations, whether they are Ireland or France, Denmark, Sweden, Norway or China, have a share of our natural bounty, oh Minister, where’s ours?

I conclude by asking the Minister to confirm that his Government will neither oppose a state energy company nor Scotland seeking to take a share in its natural wealth. The absurdity of an energy-rich Scotland yet fuel-poor Scots must end. We demand a share and a stake in our natural bounty.

[The Minister for Energy Security and Net Zero (Graham Stuart)]

It is a pleasure to serve under your—as ever—sartorially elegant chairmanship, Mr Dowd. I congratulate the hon. Member for East Lothian (Kenny MacAskill) on securing this important debate, and the hon. Members who have taken part in it.

The hon. Gentleman gave a well-constructed, well-researched and thoughtful speech from the particular political perspective from which he hails, and I thank him for it. He will be aware of the important role that offshore wind and other renewables play in delivering secure, domestically generated energy, and the boost that provides for economic growth across the UK. He is right that we must harness the opportunities of offshore wind for Scotland and maximise the benefits for our nations—whether that is Wales, Scotland, England or Northern Ireland.

Where the hon. Gentleman and I differ is on how best to exploit that opportunity from where we start. This Government believe that a state-owned model is not the best approach. I am sure that, if we had allowed some new state company to come in and dominate our offshore wind sector, we would never have seen the 70% reduction in the cost of offshore wind that we have seen over recent years. It was the contracts for difference framework that we created, which allowed companies from all over the world, state or non-state, to come in, that transformed the economics of offshore wind and opened up the potential for not only the UK but the whole world of this important technology in tackling net zero.

The UK market is open to offshore wind investment, whether from state-backed or privately owned developers, and it has been extremely effective. The success of CfD has been in leveraging private capital to support wider public benefits. Our market-friendly approach has transformed the economics, as I said.

The UK encouraged an estimated £50 billion of new investment in low-carbon sectors in 2021 and 2022 alone. We currently have 14.2 GW of installed offshore wind capacity, the most of any nation in Europe. The hon. Gentleman made many references to different countries, but we have more of it than anybody else, and we drove its changing economics by taking a competitive approach rather than a protectionist, state-run approach that would never have delivered such a transformation.

We are committed to our ambition of reaching 50 GW by 2030, including up to 5 GW of floating offshore wind. We have not only the world’s largest operational wind farm project—Hornsea 2 off the Yorkshire coast, which is named after a town in my constituency—but the second, third and fourth largest projects.

[Kenny MacAskill]

Will the Minister give way?

[Graham Stuart]

I will make a little more progress, if I may.

Properly regulated markets that incentivise private capital—or indeed state capital—to invest in the energy system provide the best outcomes for consumers. Market competition is the most effective driver of efficiency, innovation and value. Private ownership of energy assets improves performance and reliability, and offers consumers greater choice and higher standards of products and services.

Our free market approach means that we have a highly competitive offshore wind market, which benefits from the expertise and experience of developers from all over the globe. It has enabled significant decarbonisation of our energy system, with dramatic drops in the cost of renewables. In 2010, when Labour left power, this country had a paltry 6.7% of its electricity coming from renewables. That was shameful. In the first quarter of this year, nearly 48% of our electricity came from renewables. Ten or 11 years ago, nearly 40% of our electricity came from coal. Next year, that will be zero, again because of our market-friendly policies, which would be at risk were His Majesty’s Opposition to have their ideas for state-run energy companies wrecking one of the most successful markets in the world. All over the country people are benefiting from the growth of the sector, and the cheap, secure, low-carbon electricity it produces.

Scotland has already benefited from the opportunities in offshore wind. It is a shame the hon. Member for East Lothian could not bring himself to recognise any of that. With its strong winds and plentiful coastline, it has made a significant contribution towards our offshore wind ambitions: so far, 3 GW is operational or under construction, and more than 40 GW of capacity is in the pipeline. The opportunity is enormous. The Scottish taxpayer already benefits from the Crown Estate Scotland seabed leasing. All net profit from offshore wind leasing rounds and rent is passed on to the Scottish Government for public spending.

We welcomed the recent announcement of a potential £200 million investment in high-voltage direct current manufacturing in the highlands by Sumitomo of Japan, which could create up to 150 jobs. The offshore wind industry has also supported the revitalisation of ports from Wick to Dundee. A huge range of diverse companies in Scotland already benefit from the offshore wind industry’s growth: crane manufacturers, consultants, underwater operations experts, turbine maintenance specialists and more. We know that opportunity will only expand as we grow the industry further.

The UK, as I have said, leads the world in floating offshore wind, a new technology that opens up access to new, deeper areas of seabed. The Hywind Scotland project was the world’s first floating windfarm. Combined with the Kincardine project, also in Scotland, it has given the UK one of the largest amounts of operational floating capacity anywhere in the world, at 80 MW. The UK has the world’s largest floating wind pipeline, with around 25 GW already identified, including through the ScotWind leasing round and INTOG processes. That represents a huge opportunity for the Scottish economy, especially from installation and lifetime maintenance activities, which are best undertaken locally.

I suggest to the hon. Member for East Lothian that, if he is as passionately committed as he suggests to jobs and benefits for Scotland, he should not be sending a message that we want to deter foreign investment, but signalling that we welcome it.

[Kenny MacAskill]

Will the Minister give way?

[Graham Stuart]

I will in a moment, if time allows.

To achieve our deployment ambitions and secure high-quality local jobs, we must continue to build a robust and competitive UK offshore wind supply chain. We are focused on maximising the economic opportunity arising from our transition to clean energy. Our significant strengths, including in wind energy and innovation, mean we have an essential role in building those supply chains, as demonstrated by this Government’s investment to date.

Through the offshore wind manufacturing investment scheme, the UK Government have made available funding to support investment in major port and manufacturing infrastructure. We have seen more than £500 million invested by SeAH Wind and JDR Cable Systems in manufacturing facilities, which will create or safeguard up to 1,200 jobs. I want to see similar investments in Scotland. That is why we continue to work with industry as it develops a long-term industrial growth plan for the sector, following the publication of Tim Pick’s recommendations.

Government backing attracts the private investment needed to deliver net zero. That includes research and development, where we are supporting innovation in floating wind technology through the floating offshore wind demonstration programme. That uses £31 million of Government funding, alongside £30 million from industry, to keep the UK at the cutting edge of offshore wind innovation. We are not stopping there. Just two weeks ago, applications closed for the Government’s floating offshore wind manufacturing investment scheme, which will provide up to £160 million to kick-start investment in port infrastructure projects needed to deliver our floating offshore wind ambitions.

The hon. Member for East Lothian gave a passionate speech effectively opposing the world’s investing in our renewable energy, and in offshore wind in particular. I caution him to think again, send out a more positive line to the world and recognise the huge investment opportunities here.

[Kenny MacAskill]

Does the Minister recognise that everything that he has said about private sector investment can and does happen in Denmark, but Denmark has taken a 20% stake on behalf of the Danish people, as Norway has done for oil and gas? None of what the Minister has suggested is impossible in Denmark, and it is happening. Does he accept that?

[Graham Stuart]

Denmark’s situation, size and industrial history are very different from the UK’s. What I am saying is that the UK is a European and, indeed, a world leader. We have decarbonised more than any other major economy on earth, and we believe that it is making us the best possible investment environment. We do not see the advantages of taking the state stakes that the hon. Gentleman suggests.

It remains essential that communities most affected by offshore wind and its associated infrastructure can benefit from its deployment. We recognise, for example, that regional distribution charges particularly impact the north of Scotland. That is why our cross-subsidy scheme provides more than £100 million annually to protect electricity consumers in the far north. It is worth £60 a year to every household in the north of Scotland.

We also want communities and individual families that are not involved directly in the industry to see benefits. That is why we have recently consulted on proposals for community benefits for transmission network infrastructure, including in Scotland, because we are essentially rewiring the whole UK economy as we make this transition. We must do it at speed, but in a way that has community support and in which we recognise the impact on host communities. Developing transmission infrastructure, particularly between Scotland and England, will be key for unlocking the full potential of renewable energy, and offshore wind in particular. It will mean that we can get electricity from where it is generated to where it is needed.

Hon. Members will have seen that the first annual contracts for difference auction completed last week. I am delighted that it delivered a total of 3.7 GW of renewable electricity. Contracts have gone to geothermal projects for the first time. There are record numbers of tidal stream projects, in which Scotland is a major player; I was delighted to visit the European Marine Energy Centre in Orkney and see so much of the significant work going on there. We also saw a doubling of onshore wind from last year’s record auction, and new solar. We hoped that offshore wind would be successful in this round, but we recognise that the challenging macroeconomic pressures felt by the industry around the world impacted its ability to come through the round successfully.

We are reflecting carefully on the results of allocation round 5 so that we make appropriate adjustments for AR6. That is how it works: we get data by trying to understand supply chain costs and commissioning research, but the most valuable data of all is actual behaviour in real auctions. That information will come into adjustments for AR6 to ensure that our evidence base reflects the true market environment. At the same time, value for money for the consumer through a competitive process remains an important feature of the CfD scheme, and I make no apology for always prioritising protecting the consumer. With annual auctions now in place, the allocation round is due to open in about six months, meaning that there is an opportunity to gain a contract with minimal delay to deployment for projects that were not successful this time.

This Government have made real progress in delivering the ambitions set out in the British energy security strategy and our “Powering up Britain” plan. We are committed to achieving our ambition of 50 GW of offshore wind by 2030. It has a vital role to play in delivering a decarbonised power system by 2035, subject to security of supply, and achieving our legally binding 2050 net zero commitments. We need to celebrate what we have done to date and recognise that most of the growth is not in the past, but in the future. The opportunities for Scotland, Wales, Northern Ireland and England are immense, and we should work collectively to ensure that we attract investment and create as many jobs as possible in this country supporting the transformation of our energy system and our spearheading of the global move to net zero, which is so important to us and future generations.

Question put and agreed to.

Oral Answers to Questions

Kenny MacAskill Excerpts

Tuesday 4th July 2023 Commons Chamber

[Graham Stuart]

As my hon. Friend knows, the Prime Minister is absolutely determined to bring net migration down to sustainable levels. I would also point out to him that the UK does not set decarbonisation targets per capita, because all countries need to reduce emissions in absolute terms. We are determined to play our part in doing that—to move to net zero, but in a pro-growth, pro-business manner.

[Kenny MacAskill (East Lothian) (Alba)]

It is not simply about empowering future generations, but those that exist. That is why the roll-out of smart metering is important. The latest quarterly statistics claim that 57% of UK households have smart meters, but that masks the fact that only four out of 32 Scottish local authorities are above 50% in the roll-out of smart metering, five are below 30%, and three island councils are below 10%. All those are also the areas with the highest fuel poverty. As we approach March 2024, when radio teleswitching will go off, how will we ensure that people have access to smart metering, enabling them to get off-peak tariffs?

[Graham Stuart]

The hon. Gentleman is right, both to enthuse about the importance of smart metering and the benefits it can bring—even more so as we move forward in the coming years—and to highlight the importance of ensuring, as ever, that something so important is equitably distributed. I, or colleagues, would be happy to meet him to discuss how we make sure that the issues he has rightly raised are addressed.