Energy Costs and Charges

Sarah Dyke Excerpts

Tuesday 21st November 2023 Westminster Hall

[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?