Energy Rebates: Highlands and Islands

Ian Blackford Excerpts

Wednesday 6th March 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is a pleasure to serve with you in the Chair, Mr Paisley. I warmly congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) on acquiring this time for a debate on a subject that matters to his constituents, my constituents and the constituents of my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the right hon. Member for Ross, Skye and Lochaber (Ian Blackford).

As the hon. Member for Inverness, Nairn, Badenoch and Strathspey said, this issue goes right across the highlands and islands, where we have longer, darker and colder winters. We have more houses that are older and therefore more difficult to insulate and heat, and we have virtually no access to the gas grid. Those things all contribute to the perfect storm that he rightly outlined, which is the exceptionally high incidence of fuel poverty. I know that because one of the less laudable claims to fame that the northern isles have, along with the Western Isles—Na h-Eileanan an Iar—is higher rates of fuel poverty than anywhere else in the country.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Much is often said about the colder temperatures and dark winters that we have in the highlands. However, we also need to give consideration to the fact that it is about not just temperature, but about the driving wind and rain that make it feel colder. There are times when the rain is horizontal, certainly in places such as the Isle of Skye and others. Let us remember that these communities are often very isolated. We are talking about single homes. Little protection is provided, so the impact of bad, cold, windy or wet weather on these communities is enormous, which just increases the need to have the heating on to give some protection from the climate.

[Mr Carmichael]

The right hon. Gentleman is absolutely right. We have to be a little careful about how we describe that to people in other parts of the world: doubtless, in a week or two, we will all be back here telling everybody they should come and have their holidays in the highlands and islands. However, we are by no means unfamiliar with the phenomenon of the rain that comes straight at you. Certainly, it is always the surest sign of somebody who has just recently moved to Orkney or Shetland, or who is visiting, that on a rainy day they go out with an umbrella, which is a spectacularly useless piece of equipment in the communities that we are blessed to call home.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey brings us the interesting and constructive proposal of a standing charge rebate. When it comes to the question of energy costs, I have long taken the view that every little helps. Frankly, it does not really matter whether it is a silver bullet: when families are facing the choice not of heating or eating but of starving or freezing, which might be a better characterisation of the situation in the highlands and islands, if there is some benefit to be had, we should take it. That was the view I took on the alternative fuel payment brought forward by the Government last year: it helped a bit, and a bit of help is better than nothing.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey would probably agree that standing charges are a small part of the equation when it comes to the question of energy costs and the actual cost involved in heating people’s homes. The unit price is where the real action is to be found, and it is there that I would like to focus some attention, not least because I understand that Ofgem is carrying out a consultation on a social tariff. That is an interesting idea, and one that I think would command a fair degree of support across the whole House. I therefore hope Ofgem gets on with it—and quickly. Within that social tariff, there surely has to be some mechanism for geographical variation, because social is not just on the basis of income. It has to bring in other factors as well, such as the fact that we live in places that have longer, darker and colder winters.

--- Later in debate ---

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Paisley. I thank my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for securing this important debate and for his contribution on the absolutely urgent need to get recompense for those who live in the highlands and islands. I also thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for his remarks.

If I may, let me put this is in a slightly broader context. We stand on the cusp of an energy production revolution. David Skilling, in his 2022 report, “The Economic Opportunity for Scotland from Renewable Energy & Green Technology”, talks of a potentially fivefold increase in green energy production from the current 12 GW to 80 GW by 2050, transforming the landscape in Scotland, and of course the economic opportunity there for investment and jobs as well. Scotland is therefore playing its part through green energy production, and we must also play our part to deliver on climate change and net zero. An energy-rich Scotland could be the powerhouse of green energy production, with the highlands and islands a key driver in increased onshore and offshore production, and a green energy bonanza driving investment and financial returns for investors, who will benefit from what are, after all, our natural resources.

However, there has to be fairness, and there has to be equity for those who live in the highlands and islands. There is an expression, spoken originally in Gaelic for many generations of Gaels: you do not own the land; you belong to the land. There is sense of responsibility that comes from that to look after the land, to protect it, and to use opportunities wisely. That the highlands and islands is a source of green energy production is something we can take pride in. But what does that mean for those who live there? As has been outlined, the harsh reality is that so many in the highlands and islands are living in fuel poverty. People who live in the region can see the energy production and the transmission lines exporting energy while too many are facing fuel poverty. That is a disgrace.

Let us examine the facts. Even before the cost of energy spiralled over the last two years, too many households in the highlands and islands were already living in fuel poverty. In 2022, it was estimated that 31% of Scottish households were in fuel poverty, with an extraordinary 18.5% already in extreme fuel poverty. That was before the energy price increases we have seen over the last couple of years. The fuel poverty rate of rural households was 35%, and for remote rural areas it was a staggering 47%—nearly half of all households in the rural parts of the highlands and islands living in fuel poverty. We are supposed to be a civilised society. Compassion is supposed to be at our core. How can that be right? How can we tolerate so many of our citizens living in fuel poverty?

My constituency is largely a remote rural constituency. We have talked about the impact of weather—not just temperature, but the wind and the rain. Think about that. Yes, of course we can enjoy, and we encourage people to come and visit, our beautiful areas in the summer, but think about having to endure a highland winter—that driving wind and rain. Many people simply cannot afford to turn the heating on, given the costs that they face.

Let us not forget that much of this is a political choice. Much has been said about the standing charge, and since 2022 it has increased by 138% in Scotland. How on earth can the Government—how could anyone—justify such an increase at a time when so many people are suffering from the cost of living? How can anyone look my constituents in the eye and tell them it is right that we should be increasing the standing charge by 138%?

Today, we have the Budget, and the Tories are fixating on tax cuts. Tax cuts—my goodness. I’ll tell you what people in the highlands and islands want: they want help with their energy bills. They want the ability to turn the heating on. They want the ability to put food on the table. What a distraction this Tory fixation on tax cuts is. Let us deal with the fundamentals.

Going back to what has happened with the standing charge, let us be clear that consumers are being ripped off in the middle of a cost of living crisis by a policy decision that heaps costs on those who face difficult choices, such as whether they can turn their heating on. Of course, whether people can turn their heating on or not, they still have to pay the standing charge. They still have to pay that daily bill. Where is the fairness? Where is the equity? Not only that, but we get penalised in the highlands and islands by higher transmission and distribution charges. That is, after all, a financial penalty imposed on people who live in the highlands and islands by this Government. That is what it is—no ifs, no buts. It is a charge for living in the area in which many people were brought up. Yet, when those living in houses there are having to consider whether to put the heating on, they can look out their windows and see the wind turbines and transmission lines. What kind of country do we live in that we allow that to happen?

As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey mentioned, the vast Highland Council area has 0.36% of the UK’s population, yet we produce 5.5% of the UK’s installed capacity for renewable energy. Where is the direct benefit for communities producing energy that the rest of us, in other parts of the United Kingdom, benefit from? Why is it not mandatory in legislation for compensation to be paid by producers to local communities, from whom they need consent to produce that energy? It comes back to that point: you do not own the land; you belong to the land. There ought to be a commitment written into legislation that the communities affected by that should benefit from it. Why is it not mandatory for the transmission companies to recognise the rights of communities to compensation for transmission rights? I want companies to invest in the highlands and islands and for those companies that come and invest to prosper and be a part of our future. I want the highlands and islands to be at the forefront of green energy production. I want investment in green energy to lead to a green industrial renaissance for the highlands, but I want fairness for our communities.

The Chancellor has talked about those living near transmission lines benefiting from up to £1,000 off their energy bills for a decade. Why has that not yet happened? That much-needed investment in the national grid to meet the increase in energy production is with us now. It is very much a live issue in the constituency that I represent. To a greater extent, Scottish and Southern Energy is at the forefront of much of that investment. I stress that we should all work with companies such as SSE, which I know shares a vision of a just energy transition for the highlands and islands. I want to see that economic renaissance in the highlands, and I recognise the scale of investment that SSE will be making over the coming years in transmission and production, not least in the Coire Glas pump storage scheme. There is, in essence, a £20 billion investment programme for the north of Scotland, and it is important that we ensure the legacy for jobs and wider infrastructural improvements. That is £20 billion just from SSE. We should think about that and about what should be a modest—because that is all we are asking for—community benefit.

To expand on Coire Glas, there will likely be 500 full- time jobs in its construction. That will require housing for the workforce. It is vital that such projects have a lasting legacy and investment in housing, which is critical for the future of the highlands, linking what happens in energy policy to our industrial development and the need for homes. We also need that offer of financial compensation right now for our communities. If we can greenlight that much-needed investment, where is the benefit for those affected and, as my hon. Friend said, the recompense for those who have existing transmission lines?

[Drew Hendry]

My right hon. Friend is making a clear point about the fact that, as generation is happening, the people of the highlands and islands are losing out. As I underlined in my speech, it is a direct slap in the face when we look at what they have to endure. There is also the matter of the electricity generator levy, which is deducted from those generating electricity in the highlands and goes straight to the Treasury. That is another fund that could be used to pay some of that money back to the people generating it.

[Ian Blackford]

My hon. Friend makes an important and fair point. In my constituency and home island of the Isle of Skye, a number of planning applications are coming forward. Of course, there is always a range of views on these things across all our communities, but if I look back over the past few years and, indeed, at the debate taking place today, on balance, people are generally favourably disposed towards those developments. They understand the importance of getting to net zero. My goodness, the communities that we all represent feel the impact of climate change—we can see it. There has to be that fairness, and the fact is that so many people are living in fuel poverty—the 47% of households that I referred to that live in rural areas. I see it when I am out and about.

If we think about us here in London going about our jobs, many people are dressed, as we are, in their working garb—suits or whatever it might be—but when we see people in remote rural areas, they often work outdoors, in the fishing industry or as crofters or farmers. It is largely an outdoor life, so people wear layers of clothes. They need those layers because of the climate they face outside, but—here is the “but”—in too many cases, they are still wearing those layers when they come back inside because they simply cannot afford the heating. That is the reality. When we give our consent—because it is about our consent—to that increase in energy production, where is the benefit?

I mentioned the increase in energy production that we will see in Scotland between now and 2050. We welcome it, but how can we have our people living in fuel poverty? How can we accept that? Where is the fairness? We are being charged higher transmission costs to transmit that energy into the grid, and being charged again to get the energy back. That energy is produced in our communities. Can somebody explain where the fairness is in that? How does that look for those living in these communities?

[Jamie Stone]

None of us should be under any illusion; the fact that so few of us are here today does not reflect or minimise the nature of the problem. It is fundamentally unfair that many other aspects of government would command a higher attendance of Members. There is something basically wrong here. Part of the UK is being ripped off when it comes to energy.

When the Chancellor and his civil servants were drawing up the Budget, I am sure they took into account what was fair, what was right and what was not, but has this issue been factored in? We await today with interest. It is apposite that the debate is precisely at this hour, because shortly we will know whether the Chancellor cares about a fundamental unfairness or not.

[Ian Blackford]

I thank the hon. Member, my constituency neighbour, for that contribution. I agree with the sentiment; it is a pity that more Members are not present. Having said that, the Members who represent the four most northerly constituencies are here. We four represent the communities most exposed to this issue. We have four of the most rural constituencies in the whole United Kingdom, although we could add Na h-Eileanan an Iar or Argyll and Bute to that. It is our constituents who are feeling this. It is our constituents in the main who are facing fuel poverty to such an extent. I wonder whether those in government actually recognise what it is like to live in those communities and face the kind of pressures that we face.

I have talked about the community benefiting from transmission, but it is important that the community should benefit from production as well. Again, those on the production side are encouraged to engage in community benefit, but we simply cannot leave it to the developers to determine community benefit at a whim. It must be mandatory. It must be in legislation. The highlands and islands produce enough energy to power nearly six times as many homes as there are in the highlands, even before the scale investment that we are talking about. Of course, being a windy and wet region makes us an attractive option for developers, but there must be payback for communities.

In the highlands and islands, we are exposed to the effects of climate change. In general, it is an outdoor lifestyle. Crofting and fishing still provide the backbone to economic activity, and those exposed to such activities are exposed to what climate change is bringing. Anyone who has engaged in crofting can say how difficult it is over the winter months with, from personal experience, crofters increasingly sinking into the mud because it is just so relentlessly wet. That is the effect that climate change is having on us.

It is therefore unsurprising that, in general, those who live in such places as Ross, Skye and Lochaber support green energy initiatives, but there is an increasing concern that rising production produces little direct benefit for communities for that right to produce. That is why we have a broken UK energy market. Let us not forget that the increase in pricing over the last two years is largely because electricity prices are tied to gas prices. However, we have talked about the fact that in the main, people who live in the highlands and islands are off grid. We do not consume gas as part of our energy mix, yet highlanders are paying the price for others’ dependence on gas.

It is simply unfair that Scotland, which produces enough affordable renewable energy for all domestic consumption, must pay higher prices because other parts of the United Kingdom are more reliant on more expensive gas. In energy-rich Scotland, consumers are in fuel poverty because of the broken UK energy market. Those in Scotland are paying a price for being in the United Kingdom—so much for the broad shoulders of the United kingdom; so much for the “Union dividend”. There is no Union dividend; it is a financial penalty, and we in Scotland all pay the price. To put that in a wider context, the value in today’s prices of tax from North sea oil to the UK Exchequer is more than £400 billion. Our legacy from the bounty of North sea oil has been squandered, and we have now been locked out of the benefit of Scotland’s green energy production.

The phrase “Scotland has the energy, but we don’t have the power” is often used. It is an absolute scandal that we produce the energy and yet so many of our people are living in fuel poverty. That is the price of Westminster’s control of Scotland’s natural resources: highlanders and islanders suffering fuel poverty from a broken energy market. The blame lies fairly and squarely in this place, and its inability to act in the appropriate manner to defend the interests of our constituents.

--- Later in debate ---

[Amanda Solloway]

The point I am making is that we are looking at the standing charges, which are the one thread that has run through everybody’s speeches and comments today. We need to ensure that the standing charges are fair. We do not know what the findings will be, but I suspect that among the 40,000 responses— I think it is probably nearer to 44,000—there will be a lot to take into account, including looking at how we adjust the standing charges.

[Ian Blackford]

I say respectfully to the Minister that this is about fairness, and it is about what should be a universal market. We cannot have people being penalised to this extent. It is simply a matter of the Government saying to Ofgem that this is not right. There should be a universal market; people should not be penalised on the basis of where they live. It is a simple question, and the Government ought to provide leadership.

[Amanda Solloway]

To give assurance again, that is exactly what I am saying: I have been tasking Ofgem with looking at the issue. We are waiting for the consultation results to come through.

[Ian Blackford]

Change it. Change it!

[Ian Paisley (in the Chair)]

Order.