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There is a lot in that, and I will unpick some of it. I disagree with the wait-and-see approach. Customers on direct debits saw an £693 increase in their default tariff and pre-payment customers saw a £708 increase in their default tariff. We do not have to wait to see what to do, because people are already experiencing significant financial challenge. That is why I do not agree with the UK Government’s wait-and-see approach. The measures that have been taken do not go far enough—we need to go much further.

Should we deal with it as a welfare issue or as an energy issue? It should be a combination of both, not one or the other. We need to make sure that we take action through the welfare provisions that are available, and reinstating the £20 uplift in universal credit would be a step in the right direction in addressing the crisis. That was introduced because of the pandemic but has been removed at the very peak—or potentially at the very peak—of a cost of living crisis, so that was the wrong thing to do.

We have sought to use the welfare powers that we have to help to manage the cost of living crisis that households face. For example, we have doubled the child payment and increased it by a further £5, and we have increased the eight benefits that we are responsible for by 6 per cent. We are trying to uplift them in line with the rise in the cost of living.

We are seeking to use the welfare powers that we have to help to meet some of those costs, but I recognise that that is not sufficient in itself. Action needs to be taken in the energy markets. Some of that will be short term and some of it will be medium term.

In the short term, Keith Anderson’s proposal on the deficit fund is one option that could be considered. There is a range of other things that we could do as well—for example, removing VAT and examining some of the social and environmental costs that are attached to energy bills could save households another £140 to £150 on their bills. There are other measures that could be removed.

There are aspects to energy that could be addressed in the short term. In the medium term, we need to keep in mind that energy bills are going up also because of failures in the market. Many retail companies have withdrawn from the energy market, which has resulted in costs being added to household bills to address those company failures. That says to me that there has been clear, systemic regulatory failure in the sector.

The companies broadly fall into two categories: those that are hedged and those that are unhedged. The ones that are largely left to the retail market are unhedged companies. They did not have a business plan or structure to be able to absorb big spikes in energy costs. They have withdrawn from the market and, because of the supplier of last resort arrangements, the costs have been transferred to other companies and socialised across the rest of our energy costs.

That indicates that there is a systemic failure in the sector. That needs to be addressed, but I am not convinced that the Office of Gas and Electricity Markets has yet set out actions that will address that in future. Ofgem needs to do more on that. I am more than happy to expand on and explore that aspect as well.

Given that many of the costs are directly attributable to the big spike in energy costs that are driven by wholesale gas prices, we need to speed up decarbonisation. I welcome the fact that the UK Government has also acknowledged that. The priority now needs to be moving towards renewables at a faster pace. That will give us energy security. Furthermore, as renewables are lower in cost, that will also help to drive down bills in the longer term.

It is not a case of doing one thing or the other; it must be a combination of the two. Where we can take action, we are trying to do so, but there is no doubt in my mind that much more needs to be done.

I do not accept that on the part of the Scottish Government, because we recognise that it is a crisis, and a considerable amount of cross-departmental work is already taking place across Government to address some of those issues. Our internal processes and mechanisms for dealing with the situation reflect that it is a crisis.

I accept that the level of intervention that has taken place so far has not reflected that it is a crisis. There is absolutely no doubt in my mind that a key priority must be either to reduce household bills or to get money into people’s pockets.

Given that the UK Government has cut benefits—it has removed the £20 a week universal credit uplift, for example—and it has increased national insurance, it feels as though it is not recognising the situation as a crisis. Its failure to take action in the recently published UK energy security strategy, in the March budget and in the Queen’s speech last week does not reflect what I believe is the necessary action that is required at UK level to tackle the spiralling crisis that households face as a result of the increase in energy costs.

We are doing what we can to martial our fixed resources in a way that provides assistance where we can, and we are looking internally to see where there is more that we could do. The UK Government needs to take a much more concerted crisis-type approach by intervening in the market or by providing financial support that would help to address the increasing costs that households face.

I have a question so that I am clear about what you mean. Our investment in energy efficiency measures such as area-based programmes is largely modelled on what can be delivered in the sector, what we can take forward and what can be expanded where there are reasonable grounds to do that. You said that that means that we will not be able to meet what we intend by the end of this year—what exactly are you referring to?

I agree with Keith Anderson on that. Offshore wind energy is one of the cheapest forms of electricity production, and it could be tied closely to renewable or green hydrogen production, which could play an important part in decarbonising our natural gas networks. Again, we need clarity on the potential timescale for that.

On offshore wind, we have just completed round 1 of ScotWind, which has come in at potentially 25GW of offshore wind capacity between now and 2030. That will involve about £1 billion of investment in the supply chain for each gigawatt that is delivered. To put that in context, if we were to deliver 25GW tomorrow, which clearly Mr Kerr would like us to do, that would double Europe’s offshore wind capacity. Therefore, it is massive. I think that 11 of the 17 projects are floating offshore wind projects, which gives us the first-mover advantage in that area of technology.

It is a massive level of ambition. Just to give you more context, I point out that the USA is taking forward a programme of 30GW, for the entire USA. The fact that Scotland, with 5 million people, has a programme involving 25GW—in round 1—demonstrates the level of our ambition.

Secondly, our onshore wind policy statement sets out that we want up to an extra 12GW of onshore wind capacity to be delivered. That will help to drive down energy costs because it is a cheaper form of energy. Those projects can also be taken forward more quickly, because of the technical nature of onshore compared with offshore wind. If we can get more of our renewables online, that can help to reduce energy costs, which would directly benefit people’s energy bills. Our view is a bit like Keith Anderson’s—and in fairness, it is also the UK Government’s view—that renewables are critical to delivering energy security in future, meeting our climate change targets and helping to reduce energy costs.

Yes, onshore wind is the cheapest form of electricity production. The solar and hydro industries might argue with that, but I think that it is broadly in that sphere. The reality is that renewables are the cheapest form of energy production. Even folk that are for nuclear recognise that nuclear electricity is more expensive to produce. Renewable electricity is much cheaper to produce. That is why it is our view that that is where the focus should be, because it will help to reduce energy bills in the future.

The warm home discount scheme is a UK-based scheme. We proposed that it should be devolved, and it was agreed that it would be devolved. We proposed combining the energy company obligation and warm home discount schemes to create a more flexible and better scheme that would also increase the pot of money available to support low-income households. Despite spending probably about a year plus in trying to get the UK Government to agree to that, in February this year it finally said that it was not going to agree. We wanted to expand and invest more money in the warm home discount scheme if it was devolved to us. Our plan was to do that, but we were denied the opportunity by the UK Government.

As I mentioned, during this session of Parliament, we are putting record investment of £1.8 billion into energy efficiency and heat programmes. We have also increased the eligibility for and scope of our area-based programmes to support local authorities and low-income households. We are putting in a significant level of investment, but we remain frustrated that the UK Government did not take up the offer and opportunity to do something even better with the warm home discount scheme here in Scotland that would have benefited more households to a better level.

If someone is having insulation installed in their property now, then yes, it will. People who are already getting insulation or are planning to put in insulation or other energy efficiency measures later this year will, of course, get the benefit of that.

You suggested that we will not meet a target for the end of this year. What target are you referring to? I am not clear about what target you mean.

The response that I got from Kwasi Kwarteng largely said that these matters could be discussed at the four nations net zero joint ministerial group—if I recall correctly. I might be wrong, but I think that that is what was said. We also asked the UK Government to work with us on creating a joint ministerial group back in January this year. It has not taken up that offer, and it has not engaged with us specifically on tackling the cost of living crisis.

However, the biggest constraint on that will be grid capacity. If you want to build an offshore wind farm, you require a date to be set by National Grid for when you will be able to connect to the grid to supply it with electricity. The biggest risk for ScotWind is National Grid not having put in place the right plans—although I welcome the fact that it is doing its holistic network review at the moment—which could stop a project that could be delivered by 2030 from being delivered until 2035 because it cannot get the grid connection until, say, 2034.

For the delivery of such projects, grid capacity needs to be in place. National Grid is taking forward that bit of work. Our view is that that should be delivered by 2030, and National Grid is planning how to deliver that.

Energy efficiency has an important role to play in the short, medium and long term, but it would be unrealistic to expect energy efficiency programmes to be rolled out on the scale that would be needed to deal with the potential crisis that we face in 2022 and into 2023 as a result of how the energy markets are. I will give an example of why there are challenges.

The sector has challenges in accessing labour to do energy efficiency work. I met a company that is involved in our area-based programme for local authorities, which targets properties where people could be fuel poor by providing greater energy efficiency and in some cases district heating systems. The company’s managing director told me that, even if we doubled the money that we offer for such projects, his company could not deliver them because it does not have access to labour. He said that his company used to have a lot of eastern European labour but no longer has access to that because we are no longer part of the European Union. I did not throw that up just for a Brexit-related reason, but that company was pointed about the fact that it does not have the same access to labour as it had pre-Brexit, which has constrained its capacity and ability to ramp up programmes that we would like it to deliver.

That issue does not apply to every company, but it happened to be the case for the company that I met. One constraint is access to labour and skills to deliver programmes, so programmes need to be taken forward in a way that ensures that the sector can deliver and which will expand the skills that are necessary to develop such programmes in future years. There are constraints and limitations.

Energy efficiency will play an important part in the short, medium and long term, and it is clearly an important part of meeting our climate change target of reducing energy consumption. However, it is wrong to think that the sector could easily double the number of homes that we insulate under the energy efficiency programme tomorrow, because the sector faces constraints.