POLITICS

Scottish Independence 'Would Hit Energy Sector', Warns Ed Davey

09/04/2014 09:11 BST | Updated 09/04/2014 09:59 BST
Danny Lawson/PA Archive
Energy and Climate Change Secretary Ed Davey adresses the Liberal Democrats' autumn conference at The Clyde Auditorium in Glasgow, Scotland.

Energy secretary Ed Davey has warned that the "uncertainty and disruption" of Scottish independence would seriously affect progress in the economy and energy sector.

Davey will be in Edinburgh today to launch the British government's latest Scotland Analysis paper, focusing on energy and following on from a range of other papers which have presented the arguments for keeping Scotland in the UK.

The paper looks in detail at how the United Kingdom can maximise energy investment to support thousands of jobs and keep bills as low as possible.

The UK government said its analysis shows that people in an independent Scotland would have to pay £3,800 per person to match the £20 billion the UK Government has committed towards decommissioning in the North Sea.

It said that its support for North Sea oil and gas has already started to unlock billions of pounds of investment and will guarantee its value for decades into the future, securing thousands of jobs in Scotland and across the rest of the UK.

Davey said: "The energy sector in Scotland is booming and growing, with more and more jobs and attracting more investment.

"I fear the economic and energy progress will be seriously affected by the uncertainty and disruption of independence, as investors will hold on to their cash rather than risk it."

The paper also says Britain's integrated energy market gives unrestricted access to around 30 million homes and businesses rather than just three million in Scotland alone, and that Scottish energy generators have unrestricted access to UK-wide financial incentives,

Davey has already clashed with Scottish first minister Alex Salmond about the impact independence could have on the energy sector.

The Liberal Democrat coalition minister claimed a Yes vote in September's referendum would lead to the country investing less in renewables, while the loss of UK subsidies would mean bills for consumers would "rocket".

But Salmond believes Scotland can become a global "intellectual powerhouse of green energy" with the development of new technology which could help provide power across the world.

Scottish Energy Minister Fergus Ewing has written to Ofgem to urge a swift conclusion to its proposed energy market investigation "to secure much-needed energy bill savings for households and avoid worsening the UK's energy supply crisis".

Ewing said: "Complacency and confusion on UK energy policy has brought us to the brink of shortages as households power bills remain on an upward trend.

"I welcomed Ofgem's intention to refer the UK energy market to the Competition and Markets Authority but in the interests of consumers we must have a swift conclusion to the review and effective implementation of the Competition and Markets Authority's conclusions.

"We believe that the longer the report takes, the greater the risk that it contributes to increasing consumer electricity prices, because until the outcome of the report is known, there will continue to be lack of clarity on pricing. Together with the risk to the security of energy supply highlighted earlier this week, which will also act to drive prices up, it is an imperative that the report is concluded swiftly.

"It needs to be completed within a year if at all possible, but we understand that Ofgem believe it may take 18 months to two years for this report to be concluded - and if so that would risk causing in itself severe problems.

"Scotland's huge natural resources mean that we can supply electricity - reliably and affordably - and can help the UK keep the lights on and the bills down. Scotland exports electricity to England and Wales every year - in 2012 a quarter of the electricity generated here helped keep lights on across the rest of the UK.

"With the powers of independence we will deliver a permanent, ongoing annual cut in energy bills of £70 - by removing the Energy Company Obligation and the Warm Homes Discount from consumer bills.

"Westminster desperately need to take steps to sort out their energy policy and to stop driving away investment, or consumers will feel the impacts."