I invite members who are leaving the chamber to do so as quickly and quietly as possible. The final item of business is a members’ business debate on motion S6M-11927, in the name of Gordon MacDonald, on gas and electricity standing charges. The debate will be concluded without any question being put.
Motion debated,
That the Parliament understands that standing charges are the fixed component of customers’ energy bills, and that Ofgem, the energy regulator for Great Britain, has set the maximum standing charge that a supplier can charge a customer at 29.6 pence per day for gas, 62.08 pence per day for electricity in southern Scotland, and 59.38 pence per day for electricity in northern Scotland; further understands that Scottish consumers using both fuels, including those in the Edinburgh Pentlands constituency, could be paying up to £335 per year before they use any power to heat or light their home; believes that Scottish energy users could be paying 61% more in electricity standing charges than people in London, despite Scotland being what it sees as an energy-rich nation and reportedly generating far more electricity than is used domestically; further believes that Scottish customers are being penalised by a complex and unfair charging system, and notes the calls for the UK Government to scrap standing charges and institute a more equitable price structure.
17:06
I thank the members who supported my motion so that the debate could take place. It is about an important subject that impacts on virtually every family in Scotland. After mortgage or rent payments and council tax, energy costs are among the highest items of household expenditure that my constituents in Edinburgh Pentlands face. It is therefore disappointing that no Conservative, Labour or Liberal Democrat MSP supported the motion.
In principle, electricity standing charges are there to cover the cost of the energy infrastructure, which is divided among consumers equally. However, that policy does not work in practice for those who pay the bills, as the standing charge also covers network investment, maintenance, supplier failure support and net zero targets.
In its recent consultation document, which is dated October last year, the Office of Gas and Electricity Markets highlighted that the electricity standing charge for Edinburgh residents is £221 per annum, which is higher than the United Kingdom national average and 60 per cent higher than the London standing charge of £138. The result is that the 2.5 million households in Scotland are paying £212 million more than would be paid if their standing charge was comparable to London’s.
In comparison, the gas standing charge is—surprisingly—a fixed rate across the whole UK of £101 per annum. In total, my constituents have to pay £335 every year before they turn on a light, heat their home or cook a meal.
The higher electricity standing charge might have been acceptable if Scottish consumers, who live in a country that exports electricity to the rest of the UK, were compensated by a substantially lower unit charge—but they are not. The difference between the London and Edinburgh unit rates is an average of 1.5p.
Standing charges unfairly penalise households that are on low incomes. High standing charges mean that it is proportionately more difficult for low-volume users to make substantial savings by reducing their usage. Those who are on prepayment meters accrue the daily standing charge even if they have no credit on their meter. When they top up, they must pay back all the standing charges that are outstanding before they can use any electricity.
When I recently met Centrica, it highlighted that it would support the removal of the fixed standing charge and support national pricing. Back in April 2000, Centrica removed standing charges from its gas and electricity tariffs. Then, in 2013, Ofgem conducted its retail market review, when it proposed to have tariffs with a simple two-part structure—a standing charge and a unit rate. The UK Government accepted the recommendations and standing charges were reintroduced.
In their briefings, Advice Direct Scotland and Centrica highlighted the need for a progressive social tariff so that those who most need additional support because of health issues, for example, can receive it. Three quarters of the public supported that proposal.
Another option that could be considered to replace standing charges is block pricing, whereby initial usage of energy is at a lower price per unit. The rate would step up incrementally as more units were used. That would encourage home owners to invest in insulation, save money in the long term and help to achieve our environmental targets.
Scotland is a net exporter of electricity, having exported 20.3 million megawatt hours and imported only 1.5 million megawatt hours in 2022. Normal rules of supply and demand should mean that the cost of electricity is lower, as there is an oversupply in Scotland, but that is not the case. We do not get that benefit, although we help to keep the lights on south of the border, to an estimated wholesale value of £4 billion.
Northern Ireland, which is not part of the UK energy market, has its own utility regulator. Because Northern Ireland is not part of the internal market, its average unit price for electricity is among the cheapest in Europe and is significantly below the median cost in Britain and Ireland. If only we could have our own utility regulator, as Northern Ireland does, we could all benefit from Scotland’s energy surplus and have a lower electricity unit cost.
There are yet more stings in the tail for Scottish consumers in that, in the 2022 autumn statement, the UK Government introduced the 45 per cent electricity generator levy. That levy is a tax on the ordinary profits of electricity generators resulting from high wholesale prices caused by unique geopolitical events, and it will remain in force until 31 March 2028.
The levy became applicable from 1 January 2023 and is expected to raise an extra £14 billion for the UK Exchequer over the five years to March 2028. It is on top of the energy profits levy on oil and gas companies, which was introduced in May 2022 in response to exceptional profits. That brings the combined headline rate for taxing the sector to 75 per cent, and the Office for Budget Responsibility forecasts that that levy alone could raise more than £40 billion over the next five years. If those forecasts are right, the UK Treasury will benefit to the tune of £54 billion by March 2028.
Would the member like the energy profits levy to be increased so that companies would pay more into the Treasury?
I am happy that the levy has been introduced because of the exceptional profits, but my point is that we do not benefit from it. Much of the oil, gas and electricity that generates the additional taxation will have emanated from Scotland. On a population share alone, we would expect additional funding of £4.5 billion to provide additional targeted support to consumers and help to maintain services in Scotland.
Ofgem is consulting on energy standing charges at the same time as industry experts are indicating that standing charges might rise by 15 per cent from 1 April 2024. I hope that Ofgem identifies a way forward that provides a more equitable price structure and removes the high standing charges from Scottish consumers. However, given that Ofgem reintroduced standing charges in 2013 in a way that penalises Scottish consumers, the signs do not look promising. Only independence will give us the power to shape an electricity market that is fit for the 21st century and provide targeted support for those who need it.
17:15
I thank Gordon MacDonald for bringing the motion to the chamber for debate. The topic is hugely important on a number of levels. Energy costs are a hugely significant component of household bills, and anything that can be done to address those costs during this cost of living crisis, particularly for those with more challenged budgets, would be greatly welcome.
Energy use is a significant driver of climate change, so that needs to be addressed in relation to Scotland’s net zero ambitions. In addition, we should not forget that energy prices are a significant factor in economic activity and that higher energy prices constrain economic activity across the whole economy. It was useful to have the information highlighted, but it is unfortunate to hear that we have higher energy charges in Scotland although we are such a significant and increasing exporter of energy south of the border and beyond.
It is important to recognise that standing charges are regressive and that those who can least afford to pay end up paying proportionately more because so much of the cost is loaded on to standing charges before people even turn on the lights. I have long thought that that should be addressed to help with the cost of living and to make the energy market fairer and more equitable. I am delighted that the issue is on the agenda to the extent that it is, and I hope that we will start to see progress as the Ofgem consultation moves forward.
The cost of energy can have a positive impact on our move towards net zero, because, if the cost per unit is higher, that incentivises people to use less energy. At the moment, because people can afford that, they are not so focused on that aspect. I have no doubt that the new approach, if implemented correctly, will have an impact on reducing total energy usage by encouraging people to invest in energy-saving measures.
It is important to recognise the impact on small enterprises. I know that the Federation of Small Businesses has been concerned about energy costs, and it has issued information and analysis on that. Kevin Stewart has already lodged a motion to highlight the impact on small businesses. The same economic logic applies. When smaller businesses with lower energy usage are hit with high up-front standing charges, that is a drag on their economic activity. That issue needs to be addressed, as it has a disproportionate impact on them in comparison with larger businesses that can better afford such charges.
Prepayment meters have been mentioned. It is hugely unfair that customers who find themselves on prepayment meters pay more for their standing charges and their usage. It is good that standing charges have been levelled to some extent, but it is important that levelisation continues, as people who find themselves on prepayment meters should not be paying more for their standing charge or for their per-unit usage.
It is good that the issue of standing charges has been raised and that Ofgem is—I hope—taking it seriously. I am struggling to understand what some of its reasoning has been for not addressing the issue. If the argument is that individuals who use significant amounts of energy and are economically challenged would find meeting payments more difficult, removing the standing charge completely would put them in a much more advantageous position. I am sure that, if individuals and families who are in special circumstances found themselves in difficulty, exceptional support could be arranged through some mechanism to deal with that.
I welcome, as a mechanism to move forward, the progressive approach to how we charge for energy. I would really like Ofgem to conclude its consultation and move forward with the changes as quickly as possible. It is encouraging that electricity companies are not opposed in principle to making the changes and that some have already taken steps in that direction. I thank Gordon MacDonald for lodging the motion and I look forward to seeing progress in the market.
17:19
The motion is classic nationalism and is designed to pit one group of people against another. It is unhelpful, unwarranted and founded in ignorance.
Will the member take an intervention on that point?
I would like to make some progress, but I will happily give way later.
At the heart of the SNP’s policy is the removal of cost reflectivity from Ofgem’s licence conditions, which—let me be clear—would increase costs. That is at least consistent with the outcome, if not the rhetoric, of SNP policy, which is, in fact, to increase consumer bills. I will give two examples of that before I move on to standing charges.
Maurice Golden accuses my colleague of pure nationalism and says some other unpleasant things about him, but he fails to realise that the motion is standing up for many people who are disproportionately affected by high standing charges, which are also a problem for other parts of the UK—Scotland’s standing charges are actually the third highest in the United Kingdom, given that those in Merseyside and north Wales are higher.
I did not refer to the member at all; I referred to the motion—that needs to be made clear.
I will give two examples of where the SNP policy is to increase charges. First, on transmission network use of system—TNUOS—the SNP has consistently argued that Scottish consumers should pay more in order to subsidise energy generators in Scotland, which are primarily multinational companies. Moreover, Ofgem’s latest targeted charging review of the transmission demand residual charge means that every Scottish consumer will pay more. A floor approach to the forward-looking charge would result in an overall decrease in TNUOS charges for typical domestic customers, apart from those in Scotland. For north Scotland, in particular, Ofgem notes that charges will increase compared with current charges, given the policy of assistance for areas with high electricity distribution costs. Therefore, Scottish consumers pay more—that is SNP policy.
We see more of that in today’s motion, with the call to scrap standing charges. Those standing charges help to cover the cost of the network and ensure cost reflectivity. Therefore, the revenue lost from scrapping them would need to be made up from elsewhere. However, the SNP’s motion does not explain that part, probably because the costs would almost certainly be transferred to unit charges—that is, the charge for actually using electricity. In other words, those with high usage—for example, households in remote areas such as the Highlands, poorly insulated households, those reliant on medical equipment and so on—would pay more. Further, while the vulnerable were paying more, the SNP’s policy would benefit affluent households.
In my speech, I highlighted that Advice Direct Scotland and Centrica are calling for a social tariff, so that individuals who have to use a lot of electricity for health reasons could be supported. Does the member accept that we have tried to address the issue of people using a lot of electricity because of their health conditions?
My position is clear: there is work to be done to develop specific measures for those who are most deprived or who are on prepayment meters. There is also a case to be made for a derogation in our remote areas, which is something that Ofgem has previously considered.
Citizens Advice points out that households that are able to afford solar and battery storage systems can reduce their energy use and their overall unit cost. If there were no standing charges, which the SNP demands, those households could avoid paying their fair share of network upkeep.
The bottom line is that this is not the black-and-white issue that the SNP wants to portray it as. No doubt, the SNP thought that scrapping standing charges would be an easy way to pick a fight with the UK Government, but it is a simplistic policy that risks harming the very people in society who need the most help. If the SNP cares about lowering Scottish household bills, it should abandon its ill-considered policy and bring forward cogent, cohesive and researched motions.
17:25
I thank Gordon MacDonald for bringing such an important debate to the chamber. It is a shocking statistic, but a third of households in Scotland are living in fuel poverty. It is a grim reality that many people are going without heating in order to save money and to eat. Meanwhile, British Gas has seen a profit explosion, raking in £751 million last year, which equates to £85,000 an hour. That profit is being made at the expense of our citizens.
Customers who use less energy see a greater proportionate impact of standing charges on their bills, and those charges are having a real detrimental effect on those who ration their energy use. Forth Housing Association, in my constituency, contacted me to highlight how that is affecting its tenants. Some of the households—like many others—did not use gas for most of the year, but, when sub-zero temperatures led them to turn on their heating, they found that they were already in debt. Standing charges that they had not known about had built up through the milder months.
Because of that accumulation of debt, the landlord was unable to carry out important gas safety inspections, which led to meters having to be capped. Let me show what that means in reality. Gas prepayment meter standing charges are around 40p a day. If the gas is not used for nine months of the year, that adds up to around £108. A payment of £45 is then required to uncap the meter, which means that the household needs to find £150 just to turn on the heating. The situation is ludicrous.
Forth Housing Association was fortunate enough to find funding through the fuel insecurity fund to uncap and top up meters. The Scottish Government home heating support fund was also used to pay off debts. However, that solution is not sustainable. Although the debt is now cleared, the tenants were left with no heating during the coldest period of the year, which is completely unacceptable. It is even more worrying that Forth Housing Association has told me that we are going to find ourselves in exactly the same situation next winter.
We have already heard about the disproportionate sums that Scots are paying in standing charges. We also have a disproportionate number of households on prepayment meters compared with the rest of the UK. Described as the poverty premium, prepayment meters are one of the ways in which those who have the least end up paying the most for essential goods and services. That is wrong on so many levels, especially during a cost of living crisis, when so many people are struggling financially.
Historically, energy costs more when it is paid per unit than when it is paid by direct debit. The energy price guarantee is currently subsidising the cost of energy for those who are on prepayment meters, but that support will expire at the end of March, and bigger and longer-term changes are needed. However, careful thought must go into that. Although those who ration their energy use might benefit from a change to volumetric standing charges, Ofgem has said that vulnerable people with high energy use would see an enormous detrimental impact. That could include those who require medical equipment and those who live in poorly insulated houses.
Ofgem recently carried out a consultation on standing charges, and I eagerly await its results. I hope that Ofgem is taking the issue seriously. In the meantime, I ask the Government whether it can take any steps to support those households. We need an equitable solution that will avoid further harm to vulnerable people, especially during a cost of living crisis.
17:29
I thank Mr MacDonald for bringing this debate to the chamber. Standing charges are a regressive tax on ordinary folk. The ability to pay does not matter. It does not matter if someone is as rich as Rishi Sunak, has as many jobs as Douglas Ross or has no money and no job—everyone pays the same. That sounds awfully like Thatcher’s poll tax in my opinion. Indeed, they are birds of a feather: the standing charge is the modern community charge.
Just like the poll tax, the standing charge needs to be replaced by a system that charges on the basis of what people use. With that, there should, of course, be a social tariff and discounts for those who are in need. When establishing that social tariff, we should take into account other aspects, including rurality. That is the logical thing to do.
A progressive per-unit charging system not only would be fairer but would encourage folk to use less power. Right now, no matter how much energy people save, the standing charge does not change. Someone can be at their lowest ebb, having switched off both their gas and electricity, and be sitting in the cold and the dark, but the charge still ticks away day by day. That is not just a maybe; it is the lived experience of thousands trapped in the cold and dark, unable to escape the charge, no matter how little energy they use.
It is not just domestic customers who are hit by the standing charge, as small businesses get the same raw deal. Recently, the Federation of Small Businesses raised that exact problem, with some small businesses in Scotland having seen their standing charges go up twelvefold in a year. How are we supposed to create a modern, vibrant and innovation-based economy when small businesses are hammered at every turn?
Is it still the Scottish National Party’s intention to create a state-owned utility company, and would that be able to address the charges that the member describes?
I hope that, with independence, we will create our own energy company and the profits from it will be invested back into that energy company and in public services.
Will the member give way on that point?
I have taken the member’s intervention.
I was talking about small businesses being hammered at every turn. Do not just take my word for it. Here are the UK Department for Energy Security and Net Zero’s latest figures. All in, before VAT, the smallest businesses pay 24p a unit for electricity, which is similar to domestic customers, but a large company pays only 20p. It is the same situation in relation to gas: the smallest businesses pay 7.4p a unit and the bigger companies pay 5p a unit.
Two weeks ago, I wrote to the UK Government, and here is what it said in response:
“The standing charge is a commercial matter for suppliers, although Ofgem, the energy regulator, regulates it”.
That is always the standard response—it is a typical pass-the-buck response. In my opinion, Ofgem is not fit for purpose either. Last month, it put up the domestic energy cap for a unit of gas by 7.7 per cent and kept the standing charge steady. That was despite the wholesale cost of natural gas having fallen by 740p per therm over the past 18 months. It is not as if the power companies are up against it and need a bail-out. British Gas just announced a bumper £799 million profit, which is entirely from buying natural gas cheaply but charging customers through the nose for the exact same gas.
It is time for the UK Government to step up to the plate and intervene. It is time for Ofgem to do its job to protect consumers rather than shareholders. Beyond all that, it is time for Scotland, which has the energy but not the power, to become an independent nation so that we can create a fairer country.
17:34
I thank Gordon MacDonald for bringing the debate to the chamber. We cannot speak about gas, electricity, energy and power without acknowledging the enormous power imbalance between the provider and the consumer, which members—in particular, Ivan McKee—have mentioned. It is well documented and universally acknowledged that there is a power imbalance.
I think that we all agree that how we purchase energy is not easy to understand. The system is weighted against some of our most vulnerable citizens and does not have a fair deal for users at its heart. The tariffs across the UK are unacceptable. The motion speaks about the rates in Scotland, but members will know now, because the minister spoke about it, that the tariffs are enormously high and enormously variable across the UK. I had a quick look earlier, and Gillian Martin was absolutely right to say that north Wales and Liverpool have the highest tariffs in the UK.
This is an inequality issue across the UK. We need to find solutions for fellow citizens in Scotland and across the UK, wherever we can. Citizens Advice Scotland is deeply concerned about the current affordability challenges in the energy market. It feels that consumers who struggled with rising costs and accrued energy debt last year will continue to struggle, even as we go into the fairer months.
Members have mentioned the Citizens Advice Scotland data. From July to September 2023, the Citizens Advice Scotland network provided 18,546 pieces of advice related to regulated fuels, which relates to the point about how complicated it is for people who are in a vulnerable situation. Demand for energy debt advice increased by 34 per cent, and the average energy debt for people who sought complex debt advice from the network in Scotland was more than £2,000.
It is difficult to cover everything in a short debate, but, when we talk about energy, we need to talk about Scotland’s energy potential in relation to both climate change and who should benefit from the development of our energy potential. Members have spoken about Scotland being potentially a provider of very large amounts of energy.
An important element of the debate on energy for me, Scottish Labour and the trade union movement is the just transition. It is, of course, a transition that will help our planet, but it must have ordinary people, ordinary families and ordinary workers at its core. How do we make that transition fair?
The on-going cost of living crisis has shown how deeply the climate emergency and poverty are linked. Fuel costs, in particular, have spiralled, as we have heard from members across the chamber, and we have heard that things such as inefficient houses and expensive transport exacerbate poverty while causing carbon to be emitted into our atmosphere.
The brunt of the crisis has been felt disproportionately by people who are living on the lowest incomes—most members agree with that. Fuel poverty is a major concern, and we must address it whenever we can. We know that energy tariffs are a reserved matter, but I agree that the Scottish Parliament should discuss such matters to ensure that we have an understanding of the consequences for our constituents and to allow us to look at what we can do, within our devolved responsibilities, to help those who are most affected.
We need a clear plan that helps us to sprint towards clean power. That will reduce energy bills for all—including, of course, our most vulnerable people.
I am very aware of the time, but one other thing that I want to talk about is my wish to see us move to community-owned sources of energy. I hope that we might get another chance to discuss that in the chamber, because it is such an important matter.
I thank all the members who have contributed tonight.
17:39
I welcome the debate, and I congratulate my colleague Gordon MacDonald on securing it. He rehearsed well the arguments that show the inequity in electricity standing charges across Scotland and many other parts of the UK.
In particular, Gordon MacDonald’s motion shows how my South Scotland constituents in Dumfries and Galloway and the Scottish Borders pay higher electricity standing charges than are paid by people in many other parts of the UK. At 5.20, when Gordon MacDonald was on his feet, I checked the Ofgem website, which shows that people in the north of Scotland pay a 59.36p standing charge, whereas my constituents in the southern part of Scotland pay 62.06p, which is 23.56p more than is paid in London. So, the inequity is quite striking—and that is before folk even use electricity.
Given that Scotland is an energy-rich nation, that plainly obvious inequality simply serves to demonstrate why the UK energy system is outdated and, of course, how Scotland could do much better with the powers of independence, which would give us the control that we need.
Scotland has recorded the best figures so far for electricity that is generated by renewable sources—it has generated more than enough to power the entire country. For years, Dumfries and Galloway has, through renewables, generated amounts of electricity that are well beyond what is needed for its own use. In 2022, the region generated 2,127.4GW, which was 8 per cent of the total renewable energy that was generated in Scotland. However, my constituents in Dumfries and Galloway, many of whom have renewable energy sites—mainly wind farms—in their communities, see absolutely no benefit from such projects in terms of a reduction in the cost of their energy bills. Many people tell me that they object to wind farms and more turbines because they do not see the benefits in their own energy bills.
Does Emma Harper recognise that consumers in Scotland, including her constituents, pay less in transmission charges, to which she referred, as a result of the generation of electricity, because charges are based on location?
I am coming to that. There are issues around generation, transmission and distribution, but that is only part of the inequity that is demonstrated. As other members have said, we need a fairer approach to people paying their bills, including social tariffs for people who have medical needs and might need, for example, sleep apnoea devices, electric beds or other electrical equipment. As part of Ofgem’s energy review, we need to lobby it and recommend that the whole system be made fairer and more equitable for people all across these islands.
The cost to homes and businesses of ever-rising prices has meant that stark choices are being made: householders are choosing between eating and heating. That is the reality for many people and for businesses, some of which simply cannot afford to keep going.
I am conscious of the time. Short debates do not allow us to delve into the issues.
I am a member of the British-Irish Parliamentary Assembly’s economy committee—Committee C—which is producing a report on energy and how the market works across these islands—or, in effect, how it does not work. The work is highlighting what we are experiencing in Scotland compared with the experience in other places, including Ireland and Northern Ireland, as Gordon MacDonald described.
Citizens Advice Scotland has made statements about its concerns regarding the removal of, reduction in, or alteration of standing charges.
I support the calls for changes in the way in which consumers are charged for energy. We need to make the system fairer for people across Scotland and the rest of the UK.
17:44
I thank Gordon MacDonald not just for his excellent speech but for lodging his very important motion. Pretty much every contribution has included something with which I whole-heartedly agree, but I will single out some particular points that members have made.
I thank Carol Mochan for a considered speech in which she talked about the inequality—because it is inequality—that is associated with the issue. I am glad that she picked up on my point about other parts of the UK also suffering from that inequality. Since I became energy minister, the thing that I have heard most often, across the whole of Scotland, is that people out there in civic Scotland cannot understand why, when we are a large energy producer that plays host to a lot of energy infrastructure, as Emma Harper mentioned, they are in extreme fuel poverty. They cannot square that circle. It does not matter that it is a complex landscape; it is the unfairness of it that gets to people. Carol Mochan made some excellent points in her speech.
Ivan McKee mentioned how higher energy prices constrain economic activity. That is a very powerful point. Obviously, high users of energy have borne the brunt of high energy prices, but having the same standing charges for smaller users is not fair. Those small businesses are the fabric of our high streets and the economic engines of our towns, villages and cities. That very good point was well made.
Kevin Stewart mentioned that people are switching off their gas and electricity. I want to say one thing that I hope that anybody who is struggling with their bills will hear: there are agencies in Scotland that can help people in that situation. Gordon MacDonald mentioned Advice Direct Scotland. The Government gives Advice Direct Scotland funding so that it can give advice to people and help them to manage debt, as well as be a conduit to the utilities companies. No one should ever have to switch off their gas and electricity. There is always help.
I am very pleased that the minister has given the message that nobody should have to switch off their gas and electricity, but the reality is that we all come across folks in our constituencies who have been forced, or who feel that they have been forced, to do so. One of the key messages that the likes of Ofgem could help to get across is that, in some parts of the country, particularly in Scotland, there is help out there. It does not do that to the degree that it should.
Kevin Stewart makes an excellent point. It is incumbent on all of us to advertise that fact on our social media outreach to our constituents, but perhaps the regulator has a part to play in that as well.
The past three winters have been far from easy for the vast majority of households and businesses in Scotland. I do not need to rehearse the price spikes, but the Scottish Government estimates that, under the current price cap, 840,000 Scottish households are in fuel poverty, which is a staggering 34 per cent of all households. We are expecting Ofgem’s announcement on the April energy price cap later this week, and experts predict a slight decrease from the current level, although it will still be much higher than in the pre-crisis situation. The on-going energy crisis has driven home the urgent need for market reforms. It is painfully obvious that our energy system is not designed to absorb global price shocks and is not adequately protecting consumers. As members have said, it is about not just people living at home but the employers who are the lifeblood of our communities.
Last year, in reaction to the energy crisis, I chaired three energy consumers working groups, which focused on the challenges that vulnerable, rural and business consumers—three separate groups—are facing. The work of those groups informed my letter to the UK Government with a package of asks in relation to consumer protection. In that letter, I argued for the urgent introduction of a social tariff mechanism for vulnerable and low-income households—I am grateful to all the members who joined me in that call today—for support for off-grid consumers in rural and remote areas and for extra support for small businesses and high-using businesses. It is disappointing that, despite my many cordial meetings with UK Government counterparts, the UK Government has, so far, chosen not to deliver any support, either in the autumn statement or beyond, and there is no sign of a forthcoming plan of action.
I want to talk about standing charges.
Will the minister give way?
No, I will not give way to Douglas Lumsden—he did not contribute to the debate.
The crisis drew attention to the UK energy market, and one thing is obvious: the way in which the current system is designed and regulated creates significant disparities across the country. So many members mentioned that. The statistics mentioned in Gordon MacDonald’s motion are absolutely correct. People in the south of Scotland pay £335 more a year even for just putting the kettle on. For many households, especially those that use pre-payment meters, that is simply unaffordable and it is inequitable.
I mentioned that I have regular engagement with my UK Government counterparts, and I have repeatedly highlighted the extremely high standing charges and their impact on Scottish consumers. Geography cannot be helped, but it feels as though people in Scotland are being penalised for living so far away from London, even though a great deal of energy production takes place here. Again, many members have mentioned that.
However, very recently, I engaged with Ofgem and received assurances—[Interruption.]. This is a very important point and I would like to make it. I received assurances that the regulator understands the inequities and is exploring ways to improve affordability and bring about whole-system changes. I will continue to make the case that members have also made.
I agree, to a certain extent, with Maurice Golden that it is a complex system. We do not want to have a situation in which removing standing charges has unintended consequences, so it will take time. However, surely we agree across the chamber that reform is needed, because there are people who are not using their heating but are still paying standing charges that are so much higher in the south of Scotland, for example, than they are in the south of England.
We have all suffered from the impacts of the energy crisis, but some people have been disproportionately hit. A sticking plaster will not fix the problem. The Scottish Government has repeatedly put funds in place to help people at their most vulnerable and precarious points, but those are not sustainable long-term solutions. We need a root-and-branch review of what is going on in the energy market.
Will the minister give way?
I am coming to a close.
I appreciate the contribution of anyone who has taken part in the debate. This is not about political point scoring, but about making sure that people have the right to a warm home, the right to be able to put the lights on and the right to have hot food on the table for their children. We should not be point scoring on that, though that is what I have heard repeatedly from the Tory benches. We should all get together, stand shoulder to shoulder and ask the UK Government to consider introducing a social tariff—which, I have to say, I almost heard Maurice Golden making the case for. There are people out there who are vulnerable and who have medical equipment. Those people should not be subject to the same standing charges and costs as other people. I will leave it there, Presiding Officer.
Thank you, minister. That concludes the debate.
Meeting closed at 17:52.Previous
Decision Time