Hansard

Thank you very much, Presiding Officer. I thank all members for their contributions to today’s debate and getting the bill to this point. I will try to cover as many of the points that have been raised as I can and to provide clarity to the members who raised them.

Alexander Burnett was right to raise the issue of the importance to heat network customers of the role of Ofgem, which I will come on to when I talk more formally about our engagement with UK ministers. He also mentioned the existing schemes and the importance of them being covered by the bill.

I recognise that, as Mr Burnett mentioned, the bill creates a large number of delegated powers. That reflects the fact that the bill is regulating a market from scratch; I know that Mr Burnett appreciates that. The Delegated Powers and Law Reform Committee scrutinised the bill on 11 August, and it has had the opportunity to scrutinise the amendments that we put forward at stages 2 and 3. I believe that it is comfortable with the use of delegated powers in the bill, and it raised only one question with us, which I hope has been addressed.

We will certainly try to give Parliament as much early sight of subordinate legislation as possible, as it comes forward. We have not had draft orders ready to present to committee during the passage of the bill, but I can confirm that we will be ready to consult on regulations later this year and to get moving on that. We will, of course, continue to use the experience and knowledge of our heat networks regulation working group, and others, as regulations are developed. I hope that members find that helpful.

Sarah Boyack raised the issue of non-domestic rates. I am grateful to her for the engagement that she has had on that in relation to other legislation. We have introduced a district heating relief, which provides a discount of up to 50 per cent on rates bills for premises that are used for district heating. That relief is unique to Scotland—it is not offered anywhere else in the UK. To provide certainty, this year we will introduce regulations that will extend that relief out to 2032.

In addition, we have committed to laying regulations that will provide 90 per cent relief for renewable heat networks, as well as those running on waste heat or energy from waste, which a number of members mentioned. That will begin on 1 April. That will incentivise clean heat networks prior to the implementation of the bill. The business growth accelerator, which applies to a number of types of business, already provides 100 per cent relief for new-build premises for up to 12 months after they are first occupied. That goes for heat networks, too. It also guarantees no rates increase on building improvements for 12 months. Therefore, a district heating scheme that was built after 1 April 2018 can already claim 100 per cent relief for the first year, and 50 per cent relief thereafter. We are obviously looking to implement the other change that I mentioned—90 per cent relief—through regulations. I hope that that is helpful in addressing the points that Sarah Boyack raised.

Alex Rowley made many fair comments, including on the importance of heat networks for the economy. I was particularly struck by his point about how important good-quality, warm homes are for people in relation to their health and their education. We know how debilitating a cold home can be for people’s health and wellbeing, and Mr Rowley was right to make that point.

Alex Rowley also made an important point about the supply chain opportunities, which is an issue that Claudia Beamish—who cannot be here today—has previously raised. I agree. It is clear that there are economic opportunities, and it is right to mention that. For example, in 2020 the heat networks industry council found that, on a UK-wide basis, the heat networks sector could grow to support between 20,000 and 35,000 new direct jobs in the sector by 2050, as well as additional, indirect and induced jobs in the economy, and investment of up to £50 billion into the market by the same year. Scotland would like to get a large share of that, and because we are moving quickly on legislation, we are giving ourselves the best possible chance to have early sight of the pipeline and an early opportunity to capitalise on the job opportunities that come from that, whether in manufacturing equipment or the installation and maintenance of heat networks.

Alex Rowley also raised the issue of skills, which is already on the radar of Skills Development Scotland. SDS, along with the green jobs academy and the Energy Skills Alliance, is looking at the potential for heat network development to stimulate job opportunities for young people, in particular, and, in the context of a just transition, to provide new opportunities for those who move out of industries such as oil and gas. I hope that that is welcome.

In addition, Alex Rowley rightly highlighted the role of the trade unions. From the Government’s perspective, I give an undertaking that we want to work closely with trade unions to make sure that we seize the opportunities as they arise.

I thank Alex Rowley and Mark Ruskell for their kind words about the bill team, which has done a sterling piece of work. Other colleagues mentioned that, too.

Mark Ruskell made important points about a transition in technology and the need, in the context of the energy quadrilemma, to look at the use of hydrogen. We are already actively thinking about that, and I give an undertaking that we will do whatever we can to maximise the opportunities and to look for the low-hanging fruit and the win-wins that he described.

Willie Coffey rightly raised Denmark, which gives me an opportunity to thank the Danish Government for the solid support that it has provided in giving the Scottish Government the benefit of its experience. Colleagues in Norway have also done that. We can learn something from the way that Denmark implemented heat networks and then switched the heat engines to lower-carbon alternatives as it went along. We will have to short-circuit that process and move straight to low-carbon and zero-carbon heating systems, but we can also learn from the way that that has proved to be less painful for consumers. I also thank Willie Coffey for raising some good examples in his constituency, such as the one in Galston.

In the remainder of the time available to me, I will cover the next steps. It seems to me that we have arrived at a point where the bill has broad support and consensus among members and we can now look forward to the work that lies ahead of us, as Alex Rowley said. The process of turning the legal framework in the bill into a fully functioning regulatory system will require a series of implementing regulations that will shape precisely how each element will work in practice—licensing, consenting, permitting, zoning and so forth. I thank Mark Ruskell for recognising that we have gone as far as we can without going to the Delegated Powers and Law Reform Committee to take that work forward.

The bill contains a large number of delegated powers and we must be realistic in our expectations on timing, but I anticipate that the new system will be in place by 2023. We are already working towards implementation. The introduction to the bill of a delivery plan through an amendment at stage 2 was a welcome development. The plan will drive the work forward and we aim to have it in place by April 2022. As I said earlier, I expect the first of a number of detailed consultations on the regulations to take place later this year.

I believe that we will continue to move forward in the collaborative way that has been demonstrated today. We intend to relaunch our stakeholder working group to maintain close co-operation with the heat networks and housing sectors. I take this opportunity to thank all those who are involved with the working group for the fantastic input that we have had, which has helped to inform the detail of what is a technical bill.

The UK Government has announced that it intends to introduce consumer standards to the heat networks market, which goes a long way towards addressing some of the issues that colleagues have raised today. I will briefly update Parliament on our collaboration on that front.

Lord Callanan, Parliamentary Under Secretary of State at the Department for Business, Energy and Industrial Strategy, wrote to me last week in reply to my earlier correspondence and reaffirmed the UK Government’s commitment to working with Scottish ministers and Scottish Government officials in the development of the UK Government’s primary legislation to introduce consumer standards, which will apply across Great Britain.

I welcome that commitment, although not necessarily for the same reasons that Gordon Lindhurst did so. We want to ensure that we have the power to appoint the consumer standards body for Scotland. It is still our intention to appoint Ofgem, which a number of members have praised today. The consumer standards body and the licensing body that is created by the bill can be one and the same, which will reduce costs and confusion for consumers and the industry alike.

We should not forget that Ofgem already has a 300-strong team in Glasgow that provides an excellent service in relation to the electricity and gas markets. There will be opportunities in due course to look at different energy sources and, for example, dual-fuel billing between heat networks and electricity.

The nature of heat networks means that local authorities will be vital if we are to make such systems work in practice. We will invite local government representatives to work in partnership with us to help to ensure that we end up with processes and regulations that are manageable and affordable for everyone. We have worked with Parliament to augment the role of local authorities in the regulatory system.

I am enormously grateful for the enthusiastic and constructive role that members in the chamber and particularly the Economy, Energy and Fair Work Committee have played in getting the bill to this point in such a strong shape. I believe that it has shown the Parliament in its best light. I hope that the rest of the work that needs to be done will benefit from the same spirit of co-operation and consensus. As many of the regulations that will flow from the bill will be subject to the affirmative procedure, Parliament will have direct oversight of them. I look forward to full implementation of the act in due course—like Alex Rowley, I hope that I will be here after the election to see that.

The targets that are now embedded in the bill are undoubtedly challenging. They will require the equivalent of approximately 650,000 domestic premises to be connected to heat networks by 2030. The fact that just over 32,000 homes are connected today shows the scale of the task that is ahead of us.

The bill will be fundamental to that, but it will not act alone. The 2020-21 programme for government committed us to invest £1.6 billion over the next five years to get things rolling. A recent estimate indicated that the total cost of transforming our homes and buildings is likely to be in excess of £33 billion.

I thank members once again for their contributions to the debate today and throughout the passage of the bill over the past 11 months, and I thank my exceptional bill team for all that they have done. I hope that all members feel that they can get behind and be proud of the bill and that they will vote in favour of it. I urge them to support the Heat Networks (Scotland) Bill and I am proud to have moved the motion.