Furore deepens over winter fuel cut that shows limits of devolution

The furore over the winter fuel payment is deepening as energy prices rise. Pensioners - many of whom live in fuel poverty - fear that they won’t be able to afford to heat their homes. 

Charities such as Age Scotland have highlighted the stark choices facing those who have to choose between heating and eating, wear layers of outdoor clothing in the house, or retire to bed in the early evening in an effort to stay warm. Labour's own research, published when in opposition, says that a cut to the Winter Fuel Allowance (WFA) could kill 4,000 pensioners. The report called the (later abandoned) Tory idea of cutting the WFA the ‘single biggest attack on pensioners in a generation’. This is the only time we've found ourselves in full agreement with Starmer's Labour party.

When the new Labour Chancellor Rachel Reeves announced without warning that it was axing the funding for this benefit, the Scottish government said it could not make up the difference out of its fixed budget which has already been allocated. 

This highlights the limits of devolution because Scotland is very rich in renewable energy - but because it is part of the UK, Scots are made to pay an artificially high tariff for electricity. That is the real root of the problem which is forcing 39% of Scots pensioners into fuel poverty. 

Unlike similar energy-rich countries like Sweden and Iceland, Scots pensioners pay one of the highest energy bills in Europe. But the Scottish government has no control over how energy is regulated or priced, or the way its energy infrastructure is being used.  

New super highway - but Scots still have to pay an artificially high tariff

Labour has greenlit plans for a new energy superhighway to transmit power from Scotland to the south of England - but Scotland won’t benefit from that in the way it would as an independent country. Of course, if Scotland were independent like Scandinavian countries this would be a lucrative transaction that could allow Scotland to reduce the electricity tariff. That is what other energy-rich countries like Sweden, Denmark and Iceland do. The north of Sweden is experiencing a boom as businesses set up shop there to harness cheap energy. 

Energy pricing is unfair to Scots

But Scots pensioners don’t see similar benefits from Scotland’s vast energy resources. Instead they pay the highest electricity bills in Europe. They are actually higher here than in England because it is colder, standing charges are higher, and much of Scotland is not connected to the gas network (it is much more expensive to heat your home with electricity in the UK). 

Greg Jackson, the Chief Executive Officer of Octopus Energy said recently Scotland could have the cheapest electricity in Europe.  And so much more of the available energy resource could be harnessed. If the right pricing structure was in place, Scotland could attract businesses and innovation. At the moment, renewable power like wind and solar has to wait decades for connection to the weak and privatised National Grid - the only customer for its energy. 

Offering a lower energy price close to where there is the most potential to produce it, would help Scotland to attract businesses that need a lot of power. Data centres which store huge amounts of the world’s data are moving to be sited in areas where they can make use of cheap wind and tidal energy. For example, Meta has opened one in northern Sweden. Data centres can become part of local heating networks, making use of the heat they produce from their operations. 

Ofgem’s double standards are anti-Scottish

Standing charges are higher in Scotland because of a decision by Ofgem. They say it is fair for energy companies to charge consumers in Scotland more to be connected to the privatised National Grid because they are further from England's major population centres. At the same time, they argue it would not be fair to offer Scots lower bills for the energy that is produced close to them.

Because of the one-nation British energy tariff, public money is regularly thrown away on paying wind turbines to turn off while more expensive energy is imported from Europe and Scandinavia. - Vested interests in the south of England make a lot of money from these interconnectors. 

A huge number of pensioners in fuel poverty

Age Scotland estimates 39% of pensioners in Scotland – a total of 397,000 people – were living in fuel poverty last year. The figure is based on more up-to-date research than the 2022 percentage of 36% often cited by the Scottish Government. Of that group, 270,000 are not eligible for pension credit and losing the winter fuel payment may make their situation catastrophic. So two-thirds of those already in fuel poverty will lose the benefit. These are people who already can’t afford to keep their homes warm. Pensioners do suffer cold-related illness and even die in cold houses - and this policy will drive that number up this winter.

The payment of the winter fuel allowance was in the process of being transferred to the Scottish government, as the Pension Age Winter Heating Payment (PAWHP). This process will now not go ahead. It cannot because the Scottish government is getting no more funding from Westminster to pay for this and its fixed budget is already allocated

Conclusion

The decision to remove with little warning a benefit that many rely on to heat their homes in the face of such high energy costs was a stark declaration of priorities by the UK Labour government. Virtually all of Scotland’s 37 Labour MPs voted for it in Westminster last month (two abstained). 

If one policy could be said to highlight the weakness of devolution it is this. An independent Scotland could reasonably hope to create similar amounts of renewable energy to the Scandinavian countries. Instead of paying the some of the highest energy bills in Europe, if Scotland was independent, it could sell its renewable energy to other countries including England.

The devolved Scottish government can’t challenge the UK energy policies that force Scots to pay amongst the highest bills in Europe. Now Scotland can do nothing about the UK’s decision to take away even the £100 to £300 winter fuel credit from our pensioners - who suffer unfair levels of hardship.

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