Enterprise and Culture Committee, 27 Jan 2004

Meeting date: Tuesday, January 27, 2004

Official Report 273KB pdf

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Energy Bill

Good afternoon, ladies and gentlemen. I welcome everyone to the fourth meeting this year of the Enterprise and Culture Committee.

Our first item of business is the United Kingdom Energy Bill, on which the Parliament will shortly consider a Sewel motion. Giving evidence this afternoon are the Deputy Minister for Enterprise and Lifelong Learning, Lewis Macdonald, and the acting Minister for Environment and Rural Development, Allan Wilson. I believe that both ministers will address us briefly on the bill.

Members will have seen the Scottish Executive memorandum, which explains that the Sewel motion seeks the Scottish Parliament's consent for the UK Parliament to deal with the Energy Bill where it touches on matters that are either devolved or executively devolved. I will return to that distinction in a moment. The committee is getting two ministers for the price for one, so I will keep my comments short by focusing on the devolved areas that are covered by paragraphs 8 to 12 of the memorandum and which fall within my responsibility.

Although some of the bill's proposals are clearly important to Scotland, they relate entirely to reserved matters. For example, the British electricity trading and transmission arrangements—or BETTA—will be important for Scotland because they seek to replace the existing arrangements, which treat England and Wales separately from Scotland, with a single market for electricity in Great Britain. That issue is important, but it is a reserved matter and, as I have said, I will focus this afternoon on devolved matters.

Paragraph 8 of the memorandum sets out the provisions that relate to the establishment of offshore renewable energy zones. Those zones are important to the ambition that is held by the Scottish Parliament and the UK Government to increase renewable energy's contribution by maximising our marine energy resources. Part 2, chapter 1 of the bill will permit Government to license and regulate the development of renewable energy resources in those parts of the UK continental shelf that lie beyond territorial waters.

We expect that, in the short to medium term, those developments will be primarily offshore wind farms. In the short term, we expect to see relatively few such developments off Scotland's coasts—although, as members know, one has already been approved within territorial waters. However, as a matter of policy, we intend to change that position over the coming years, because it is important that we develop the technologies for deepwater wind farms and for tidal, wave power and other offshore sources of renewable energy. As I made clear in responding to Christine May's members' business debate, the Executive is keen to follow through that policy.

In legislative terms, responsibility for the Electricity Act 1989, which covers matters such as regulation, is reserved to Westminster; however, executive responsibility for the process of consenting or refusing applications either onshore or within territorial waters is devolved. The Energy Bill will extend that executive devolution further offshore to the Scottish part of the renewable energy zone.

I move to paragraph 9 of the memorandum. The convener and other members will remember that consideration of the Robin Rigg Offshore Wind Farm (Navigation and Fishing) (Scotland) Bill, which was a private bill, confirmed that offshore developments had implications for a wide range of issues, including policing and law enforcement, as well as maritime transport and safety. The Energy Bill will extend provisions on those matters throughout the Scottish renewable energy zone. In the case of maritime transport and safety, we are keen to ensure that a strong legal regime exists to secure maritime safety around offshore installations. We share the objectives of the UK Government in seeking to establish common arrangements around the United Kingdom's coasts. The memorandum explains how the bill's proposals for safety zones and rights of navigation will work and the consultation with the Scottish ministers that would be involved. The bill also makes provision for the extension of the powers of the police to investigate alleged offences on or around renewable energy installations that might be built either within territorial waters or in waters within the renewable energy zone.

In relation to the REZ, paragraph 10 of the memorandum points out that the bill provides for ministers to require renewable energy developers to put in place schemes to ensure that offshore installations are decommissioned at the end of their useful life. The provisions ensure that the Scottish ministers will be fully consulted as part of that process, as it affects installations in Scottish waters.

I have two other matters to mention briefly. First, paragraph 11 of the memorandum mentions renewable sources in Northern Ireland. To enable a wider market in renewable energy, the white paper made a commitment to enable trading in renewables obligation certificates throughout the United Kingdom. The bill lays down the legislative framework for that. If the bill is passed in its present form, we would need to amend the Renewables Obligation (Scotland) Order 2002, which at present does not refer to renewables obligation certificates for Northern Ireland. The bill seeks to include Northern Ireland in the existing system of trading renewables obligation certificates in the United Kingdom.

Paragraph 12 of the memorandum refers to the provision for the Scottish ministers to direct the Office of Gas and Electricity Markets—the electricity regulator—to pay into the Scottish consolidated fund moneys from funds that it has received from the auctioning of Scottish renewables obligation contracts. I draw attention to the corresponding duty that the bill places on the Scottish ministers to include provision in budget proposals to the Scottish Parliament that the moneys raised by that means should be used to promote the use of energy from renewable resources. The bill will ensure that that is the only purpose for which that money can be applied. I cannot give a firm figure, but Ofgem estimates that the amount of money that has accumulated since 1 April 2002 by that means is of the order of £8 million. Ofgem expects that money to continue to accumulate for the lifetime of the installations that were constructed using those contracts, which means that we may receive something of the order of £4 million or £5 million a year for a number of years, which will go into a dedicated fund for us to spend on the promotion of renewable energy.

The bill as it stands supports our objectives on renewable energy in a number of ways, which I have described. On that basis, I seek members' support for the Sewel motion.

I clarify that I am, and remain, the Deputy Minister for Environment and Rural Development.

I never doubted it.

I am deputising temporarily for the minister, which, put simply, means that there is considerably more work for no more pay—as a former local government employee, convener, you will be familiar with the concept.

I add my thanks to the committee for giving us the opportunity to discuss the devolved provisions in the Energy Bill, as set out in the memorandum that is before members. As my colleague said, I will deal with the provisions that concern nuclear decommissioning.

In part 1 of the bill, chapter 1 sets out arrangements for the establishment of the nuclear decommissioning authority, chapter 3 contains arrangements for the creation of the new civil nuclear constabulary, and chapter 4 seeks to amend the Radioactive Substances Act 1993.

The introduction of the provisions in the Energy Bill follows extensive consultation. The proposals were first put forward in the white paper "Managing the Nuclear Legacy: A strategy for action" back in 2002 and were published for further public consultation in the draft Nuclear Sites and Radioactive Substances Bill in June 2003, both of which were, of course, sent to the committees responsible for enterprise and for the environment in this Parliament. Throughout that process, it has been made clear that some of the proposals would impact on both devolved and reserved matters and the Executive continues to work closely with the UK Government to ensure that devolved responsibilities are fully recognised.

The Scottish Parliament is now invited to agree, by means of a Sewel motion, that the UK Parliament should consider the devolved provisions in the Energy Bill, including those on the NDA and the CNC, as well as the proposed amendments to the Radioactive Substances Act 1993—the subject matter of which is an exception to the reservation of nuclear energy and nuclear installations under schedule 5 to the Scotland Act 1998 and is therefore devolved.

On the creation of the NDA, for the first time we will have a single UK-wide body to oversee the lengthy and complicated task of cleaning up our civil nuclear legacy. The NDA's primary purpose will be to ensure a long-term, strategic and consistent approach to decommissioning throughout the public sector nuclear industry. The authority will require to have full regard to environmental protection, safety, security, value for money and the promotion of public confidence through openness and transparency.

Once the NDA is established, it will take ownership of, and assume financial responsibility for, sites that are currently owned by the United Kingdom Atomic Energy Authority and British Nuclear Fuels Ltd, including the sites in Scotland at Dounreay, Hunterston A and Chapelcross. As the memorandum makes clear, the bill provides for a substantial role for Scottish ministers and the Scottish Parliament in the governance of the NDA and its activities. That represents a significant change in our relationship with the nuclear industry in Scotland as we move towards greater involvement in the decommissioning of major Scottish sites.

We will be directly involved in designating the sites in Scotland for which the NDA will have responsibility and the activities that it will undertake there. We will also be involved in the approvals process for appointments to the NDA and for its strategy and annual plans and we will present the NDA's annual report and its accounts, as well as those directions to the NDA in which we have acted jointly with the UK Government, to the Parliament. In addition, we will be able to call on the NDA for advice on those aspects that are devolved to us.

For its part, the NDA will be obliged to have particular regard to relevant policy of the Scottish Executive and the UK Government. It will be required to establish common purpose with the nuclear regulators, including the Scottish Environment Protection Agency; to develop and ensure the consistent application of best practice on clean-up across its sites; to have performance targets set on its strategy and annual work plan; to advise the Scottish Executive and the UK Government on policy relevant to clean-up management; to promote and, where necessary, fund generic research relevant to nuclear clean-up; to develop and maintain long-term nuclear clean-up supply chain skills and knowledge base; and, through its actions, to inspire public confidence in those arrangements for better managing public sector civil nuclear clean-up.

On that last point, we have stressed that the NDA must operate in an open and transparent manner. We are all aware of the reputation for secrecy that the nuclear industry has had over the years; some people may still hold to that view. We are determined that the NDA must engage with all stakeholders and, most important, with the wider community, if it is to succeed and to win public confidence in any of its activities. I am sure that the committee would share that aspiration.

Some work has already been undertaken to engage people in those areas in which the NDA will operate. There have been stakeholder events in places throughout the UK, including Thurso, Prestwick and Ayr, and such events will continue throughout the coming year. Once it is operational, the NDA will be required to plan and publicise a programme of consultation. That will be on-going in the ensuing period.

We want to ensure that public sector civil nuclear sites in Scotland are cleaned up safely, securely, cost-effectively and in ways that protect our environment for the benefit of current and future generations. We believe that that can best be achieved through the establishment of the NDA and that, in the provisions of the Energy Bill, we have secured a vital role for ourselves in the operation of the NDA.

On the civil nuclear constabulary—

Minister, I wonder whether I could interrupt you. Have you much more to say on this issue?

Not a hell of a lot, no—if that is parliamentary language.

I do not know that I recognise that term. I ask you to be brief, as members have a lot of questions and our time is fairly constricted.

Okay.

Basically, the bill sets up an independent statutory civil nuclear police authority. The authority will oversee a new civil nuclear constabulary, which will also be set up by the bill and will be reconstituted from the present UK Atomic Energy Authority constabulary. The primary role of that body will be just as it was before. The bill provides for a modern statutory framework that is appropriate to the needs of a modern police force. No practical change is proposed to the constabulary's basic role, the conditions of employees or the nuclear security regime, and the matter has been fully discussed with the relevant authorities, which have been consulted.

On amendments being made to the Radioactive Substances Act 1993, the NDA will use incentivised contracts with site licensee companies to deliver its clean-up plans for sites. To ease the administrative burden on SEPA, part 1, chapter 4 provides for transfers of authorisations when there is a new operator of a nuclear site, but there is otherwise no need for the existing limitations and conditions of authorisations to change. I stress that that in no way erodes or changes SEPA's regulatory role. The NDA will not become a regulator, as opposed to an authorising authority.

I end my comments at that point, having rushed them to accommodate your timescale. I will be happy to answer any questions that may arise.

Thank you, minister.

I will start with a question on the NDA and its designations relating to Scotland. In section 6(2), there is a list of responsibilities that are exercised jointly by the secretary of state and Scottish ministers. In section 6(3), there are other areas in which directions are given on which, although the directions are not exercised jointly, the secretary of state has to consult Scottish ministers first. Why is there a difference between those two sections?

The principal reason is that the role of Scottish ministers and the Scottish Parliament reflects the devolution settlement under schedule 5 to the Scotland Act 1998, in so far as nuclear energy installations, safety, security and safeguards, liabilities for nuclear occurrences, and the transport of radioactive material are all reserved matters. However, the subject matter of part 1 of the Environmental Protection Act 1990 and the Radioactive Substances Act 1993 is excepted from the reservation and is, as a consequence, devolved. The provisions in the bill afford a greater role for the Scottish Executive and the Parliament in the governance and activities of the industry than is currently the case. The distinction between acting jointly and acting in consultation with Westminster ministers is a direct consequence of the division between devolved and reserved responsibilities. That is the best way in which I can explain it.

Okay.

In relation to section 6, the Executive memorandum makes it clear that there is a third category of decisions—relating to the processing or reprocessing of spent or irradiated fuel—on which the secretary of state does not even have to consult Scottish ministers. Is that correct? If so, why was it felt necessary to have that third category?

Consultation would not apply when the facility to be operated was for the processing or reprocessing of spent or irradiated nuclear fuel. In practice, of course, no reprocessing is currently undertaken in Scotland. The processing of fuel is on-going at Dounreay, but only to fulfil existing contracts. No future processing or reprocessing of fuel is planned for any site in Scotland, but it is regulated for and provided for within the activities of the Westminster Government.

Many people might find it strange that the precise operation that they find most objectionable—the reprocessing of fuel—is the specific one from which Scottish ministers are totally excluded. Why was it felt necessary to write that exclusion into the bill? Why not include consultation on everything?

We are working at the margins of what is devolved and what is reserved, what it is appropriate for Westminster to determine and what it is appropriate for the Scottish Parliament to determine, and at the margins of the limitations of the law in that regard. The proposition includes joint working with Westminster colleagues and consultation between the parties in appropriate areas. The areas in which consultation would be appropriate and in which it would be inappropriate have all been subject to intense scrutiny by the parties to the proposal that is before the committee. We think that the option in the bill is the optimum in the circumstances.

So, the difference between consultation and taking a joint decision is the difference between reserved and devolved. In a legalistic sense I can accept that, but that still does not explain why you have chosen to leave out reprocessing from both categories. Reprocessing may not be going on in Scotland at the moment—with the exception of what is happening at Dounreay—but surely that is all the more reason to provide for it to be consulted on if it is ever proposed in the future, rather than exclude it from consultation.

Perhaps I was not explicit enough. The processing or reprocessing of spent or irradiated nuclear fuel is a reserved matter. The areas in which we have secured consultation—hitherto there was no such provision—are those in which, for example, the storage of nuclear waste would impact on our environmental, planning or other powers. No such implication is inherent in the provisions on the processing or reprocessing of spent or irradiated nuclear fuel.

When you say that you have managed to secure consultation, are you suggesting that there was any reluctance on the part of your Westminster colleagues to grant that consultation?

I would not say reluctance. As I said, we are working at the margins of devolved and reserved responsibilities. Inevitably, in such circumstances, discussions take place between the parties as to what responsibilities ought to be determined here and what should be determined at Westminster. As I said, we secured provision for joint working, as appropriate, in those areas that are devolved to us, and consultation in those areas in which decisions that are taken by Westminster might impact on our devolved responsibilities, and we left alone those areas, such as reprocessing, that properly are reserved to Westminster.

As ministers have indicated, and as we all recognise, this area spans a complex range of interrelationships between reserved and devolved matters. The convener's question was about consultation with Scottish ministers, as provided for in the bill and post-legislation. I will take a step back and ask the ministers to give us a sense of the nature of the relationship between the Executive and Whitehall in getting the bill to this stage. Specifically, what was the extent of the Executive's involvement at ministerial and/or official level in developing the bill, particularly in the areas that involve devolved powers, but also in expressing Scottish interests in and perspectives on reserved aspects?

The process of discussion with Westminster and Whitehall goes back some distance as far as electricity generation is concerned. Interestingly, the process has involved us in engagement on entirely reserved matters, as well as on matters that are on the boundary between being devolved and being reserved, because it is clearly not possible to have an approach to renewable energy that does not involve some discussion of the British electricity transmission and trading arrangements. Equally, it is clear that responsibility for that policy lies with the UK Government, and so the extent to which we have discussions with the Government is a function of our continuing relationship with it on energy policy as a whole rather than specifically on the bill.

The bill, and two ministers, come to you partly because three potential pieces of legislation—the draft Nuclear Sites and Radioactive Substances Bill, to which Allan Wilson referred; BETTA, to which I referred; and last year's energy white paper, which included some other aspects—were in genesis. The decision to roll them together, which is entirely sensible and which I support, was made by the UK Government rather than by the Executive, but discussion of how we resolve some of the interesting areas on the margin between reserved and devolved matters has gone on bilaterally between me and my department on the Executive side and the Department of Trade and Industry on the UK Government side. Ownership of the bill—the fact that it has been introduced in the UK Parliament—is with the UK Government, but there has been extensive contact in the process.

The ministers and committee members share an interest in the many policy issues that are raised in the bill. I am sure that the ministers are aware that the Convention of Scottish Local Authorities and other witnesses to the committee have expressed the view that the time is now right to develop a Scottish energy policy. In the light of your experience of making an input to the bill, what is your view on that proposal? How satisfactory are the arrangements that are being taken forward in relation to the bill in dealing with the development of energy policy?

I am confident that we have in place a robust and clear energy policy on the essentials that we can address—we address energy in terms of the promotion of renewables, and there are economic and environmental benefits to that promotion. My answer to the question would have been the same a year ago, but the process of consultation that has brought us to where we are today has strengthened my view that we have a robust energy policy, as is appropriate for the Scottish Executive, and that we have clear understandings with Stephen Timms, the UK minister with responsibility for energy, and his team, on what is in our interest and where our interests are in tandem or in line with the UK Government's interests. The UK Government has set targets for renewable energy and we have set different targets; Stephen Timms recognises that, for him to achieve his objectives, we need to achieve ours, and it is clearly in our interest that the UK Government should also work towards that end.

In resolving all the issues that are in the bill, we have taken a step forward. Of course, there are things in the bill that will bring specific direct benefits to Scotland by widening our access to the market in England and Wales or, in the case of renewables obligation certificates, to Northern Ireland. That is how we derive benefits from having a single Great British framework within which to operate.

I find the remarks made by Mr Wilson a little intriguing to say the least. He suggested that, according to the terms of the Scotland Act 1998, reprocessing did not have any implications for Scotland. As an environmental issue, surely it is very much of interest to us in relation to devolved matters. Perhaps the minister could comment on that.

On the point that you were making, convener, perhaps the ministers would like to tell us exactly what role the Scottish Parliament will play. As I see it, Scottish ministers must lay before the Scottish Parliament a copy of every direction. Will that merely mean stuff going to the Subordinate Legislation Committee or will it mean the involvement of the Parliament in policy issues? There are wide policy implications across the range of devolved matters that the bill will impinge on. Where will the Scottish Parliament's engagement with the policy issues be? Will that happen only in relation to directions given by ministers?

Our policy directions extend across the entire range of our devolved responsibilities. What I did not say—and, with respect, you should not put words into my mouth—is that the reprocessing or processing of spent or irradiated nuclear fuel does not impact on Scotland. In terms of our regulatory function, such activity is regulated properly by Westminster, which is quite—

If that is the case, why is the matter specifically excluded from the scope of Scottish ministers either making a joint decision or being consulted over it?

Like other functions, that function is reserved to Westminster. In terms of policy making and policy direction, we have succeeded in ensuring that the NDA's strategy and annual plans will be subject not only to consultation but to approval by Scottish ministers as well as the secretary of state. In addition, we will be consulted on the treatment and storage of radioactive substances and waste on licensed nuclear sites or on Crown nuclear research sites in Scotland, provisions for which previously did not apply.

The consent of Scottish ministers will be sought if there is an intention to make an order to modify any of the functions of the NDA. As I said, there is a clear distinction between, on the one hand, the areas that are grey in relation to devolved responsibilities—and the impact of reserved functions on those responsibilities and, critically, their regulation—and, on the other, the areas that are properly reserved to Westminster and are regulated by the Westminster Government, over which we have no regulatory function.

Perhaps you could explain to me, then, the Scottish Parliament's role, and not just the role of Scottish ministers. Would I be right in characterising our involvement as being only in dealing with material that is put before the Subordinate Legislation Committee, or will the Parliament be able to engage with any policy issues?

Again, I would make the distinction between what we propose with regard to the bill and what we may or may not wish to do in relation to the Radioactive Substances Act 1993, which is, of course, a devolved matter. Provisions on accountability to this Parliament, including directions made by Scottish ministers and the secretary of state acting jointly, will be laid before the Scottish Parliament. The NDA's annual report and accounts will be presented by Scottish ministers to the Scottish Parliament, as well as to Westminster, when they cover those aspects in which Scottish ministers have had a role. As a consequence, the NDA will have the same status as a cross-border public authority with regard to the powers of the Parliament in relation to any prospective maladministration or calling of witnesses. Those are extensive provisions, which hitherto did not, in large part, apply. They will now apply as a consequence of the motion.

The provisions under BETTA are obviously reserved. Indeed, the Scottish Executive memorandum on the bill entirely ignores BETTA, despite the fact that it spends a considerable amount of time discussing the extension of ROCs to Northern Ireland, which will have less effect on our renewables industry than the BETTA provisions of the bill will have.

The ministers will no doubt be aware that Scottish Power and other generators in Scotland have lobbied us and have told us that they will be disadvantaged by the bill. The Scottish Renewables Forum has said that the proposals will

"Frustrate achievement of Scottish Executive targets on renewables, including the development of wave and tidal energy".

What is your response to that?

I say, with respect, that I began by stating that the memorandum deals with devolved matters, which is as it should be.

The bill will have a considerable effect on our renewables industry.

Of course. That is why the memorandum does not address BETTA issues. The second and more important point in response to your question is that, although the bill puts in place the British electricity trading and transmission arrangements, it does not go into the detail of those arrangements, which many people in the renewables industry are concerned about.

Since the committee heard evidence on BETTA last week, developments have continued. We are represented on the transmission issues working group, along with the DTI and Ofgem. That group deals with the regulation that should be made under BETTA to reflect the arrangements in a detailed way. At its meeting last Thursday, the transmission issues working group decided that it wanted to revisit some of the issues that have caused concern in Scotland. As members know, last June we won the case that no zonal transmission loss charges should operate under BETTA. The Scottish electricity industry and consumers welcomed that.

Another matter is the definition of the 132kV lines.

Our officials continue to discuss distribution charges and 132kV lines with other officials and to consider the best way of mitigating the effects of what has been proposed to ensure that Scottish renewables producers are not disadvantaged. Those discussions continue, but I reassure the committee that Stephen Timms and the DTI are as apprised as we are of the importance of ensuring that the detail of the implementation of BETTA does not disadvantage renewables producers. On that basis, we continue to work towards an outcome.

I do not want to go too far down the road of matters that are outwith the Sewel motion, especially as we have an opportunity to raise such issues as part of our renewable energy inquiry.

Indeed. I just want to ask whether the minister accepts that all the Scottish generators oppose the bill and feel disadvantaged.

The answer is no, because the points about which those people are concerned are not in the bill. Those concerns relate to the bill, but they do not concern provisions in the bill. The bill could accommodate a favourable or unfavourable outcome for Scottish producers. That is a slightly separate process, with which we are fully engaged.

I will move on to nuclear decommissioning at Dounreay. I understand that the UKAEA wants permission to transport low-level waste from Dounreay's decommissioning programme to Drigg near Sellafield, which would require a lorry-load on the A9 every fortnight for the next 10 years. I also understand that, in its early stages, the NDA will consider that matter.

In July 2001, Brian Wilson said:

"No clear preference emerged from UKAEA's assessment of the options, or the public consultation"

on whether fuel would be stored at Dounreay or transported, although all the local authorities in the Highlands, the Liberals, the Scottish National Party, local environmental groups and the neighbouring nordic countries all favour long-term storage at Dounreay. In March last year, the Radioactive Waste Management Advisory Committee's "Advice to Ministers on Management of Low Activity Solid Radioactive Wastes within the United Kingdom" said that the proposals raise

"fundamental issues for longer-term policy"

and give

"the impression of policy being made ‘on the hoof' by the regulators".

Do you agree with that assessment? How will the NDA take into account the wishes of local people when it makes its decision?

I think that you are in danger of confusing the role of making policy with the role of regulating policy. The two are correctly separated in the proposals that we have put before you.

The specific instance to which you refer is clearly a matter for SEPA. I understand that SEPA has now issued the application for such public consultation and I obviously do not want to comment further while that consultation is going on.

We welcome what is currently the UKAEA's policy of consulting on individual projects in the Dounreay site restoration plan. Obviously I am not in a position to comment formally on what might or might not arise from either consultation.

In a reply to an oral question on 11 December, you admitted that the Executive had failed to respond to the consultation exercise on the draft Nuclear Sites and Radioactive Substances Bill and said that Lewis Macdonald had written to the conveners of the relevant committees to apologise for the fact that the Executive had omitted to notice that a Sewel motion would be necessary in relation to the Energy Bill. How much consultation has there been? To what extent have the Executive's opinions on the bill been taken into account by the Westminster Government?

We have been wholly involved in the process. We have not formally responded to the UKAEA's public consultation on the site restoration plans, but we have been invited to comment on drafts prior to their publication. Any final options that are selected will obviously be subject to SEPA's assessment procedures in relation to the best practicable environmental option. Subsequent authorisation would be required for any resultant radioactive discharges under the legislation that we are discussing. Of course, Scottish ministers retain powers of direction and call-in should we consider that the regulatory bodies' proposals do not conform to our policy direction. The regulation of what is proposed is entirely and properly a matter for the independent regulators, such as SEPA, and the NDA, when it takes on the responsibility that the UKAEA previously exercised.

Dounreay is in my constituency and I am interested in probing ministers about the principle of setting up the NDA. Ministers will be aware that decommissioning is proceeding at Dounreay. As far as it has gone, decommissioning has been regarded as successful and as providing a vital cash injection into the local economy—I am talking about local working, local solutions, local research and the involvement of local businesses that grow on the back of the industry's jobs.

We have also talked in the far north about creating a department of the environment on the back of the UHI Millennium Institute, which would teach environmental studies and, perhaps, robotics. What bothers me and others is that it would be sad if the establishment of the NDA stood in the face of local working—devolution, almost—at Dounreay and in any way stymied what is good practice at the moment and could be even better. I hope that ministers recognise that and will perhaps give an assurance that the NDA will be flexible. Different solutions might apply in different places—what people do in Drigg might be very different—and the importance of local research and local companies to the local economy must be recognised. It would be worrying if the NDA were to be a centralising organisation. I do not know whether the minister can give me that assurance, but I am interested in his thoughts on the matter.

I would probably have been able to reassure you more if I had been permitted to stick to my original script, as I was about to emphasise the importance that we attach to the NDA's engagement with local authorities and other socioeconomic developers where it takes over responsibilities from British Nuclear Fuels Ltd or the UKAEA. We expect the NDA not only to develop and maintain long-term nuclear clean-up in its activities relating to the supply chain, skills and the knowledge base, but to encourage and support socioeconomic regeneration of the type that you describe in areas where it owns sites in Scotland. I am familiar with such matters from my constituency, the convener will be familiar with them from his former constituency and you obviously have a particular constituency interest. In each of those areas, we expect the NDA to engage at a local level with local communities and economic development agencies.

Will you go a little further and give a commitment that Scottish ministers will exhort the NDA to work with the academic sector on cutting-edge techniques and technologies? Imagine if a department of robotics was based in Thurso. I am talking about a new and developing science. We could really do something for Scotland. It would be tremendously helpful if you guys could get in there and get the NDA to consider and discuss such things and meet people from the UHI.

I entirely endorse what you say. The UKAEA's work at Dounreay, through working in partnership with Caithness and Sutherland Enterprise and the UHI to develop strategies for furthering skills in using international expertise in engineering and related nuclear technology, is unmatched—it can be argued that it is unmatched globally. We expect the NDA, in taking up responsibilities from the UKAEA, to explore fully and to develop further such synergies so that the benefits of the skills base that has been amassed in Scotland as a result of the industry's presence can be maximised.

I should point out that witnesses were asked to give a five-minute presentation, but I appreciate that the minister's understandable enthusiasm for his subject led him to expand slightly.

Good afternoon, ministers. I hope that you both recognise that not only is robotics important for the nuclear industry but it has great potential in respect of offshore industries and wave generation.

Both my questions are for Lewis Macdonald and relate to part 3 of the bill, or clause 105 onwards, on electricity trading and transmissions. In your previous response, you seemed to suggest that the ability to vary the arrangements that are outlined in clause 105(1) would lie somewhere else. However, clause 105(1) seems to make it fairly clear that there will be a single market and a single set of arrangements. If you are suggesting that there will be flexibility to take account of distance from the grid and the proportionately higher loss of electricity that is transmitted from smaller generators, from where in the bill would power for that be taken?

The matter is reserved and I am not as familiar with the detail of the bill as my colleagues in the Westminster Parliament are. However, the lead responsibility for the development of BETTA and the process of reaching conclusions around, for instance, the 132kV lines or generator-charging issues lies with Ofgem, although Ofgem should work with the DTI and the Scottish Executive to reach conclusions. If I may stick to a short answer, I will say that it is primarily up to the regulator to put in place the regulations to implement the substance of the bill.

You referred to the payment into the Scottish consolidated fund of moneys that are collected under the Scottish renewables obligation. How widely do you expect the parameters that are used to support the generation or production of renewable energy to be drawn? Could they be used, for example, to support manufacturing infrastructure?

The bill is helpful in that it simply says that the Scottish ministers should bring forward proposals that will lead to the promotion of energy from renewable sources. That leaves the matter up to ministers. To go back to Brian Adam's question on parliamentary scrutiny, whatever we propose will be in the form of a budget proposal, which will be presented in the usual way. That will allow Parliament the opportunity to comment.

There is a whole range of areas where having access to additional funds to promote renewable energy will be helpful. Those funds will go on areas ranging from the promotion of opportunities for communities to invest in renewable energy to work with the academic cutting edge here in Scotland to ensure that the sector has an even greater potential in the future.

I could probably come forward with proposals to spend the lot in my constituency, but I thank you for those answers in any case.

You would not be alone in that.

In your memorandum, you state:

"The Scottish Executive understands … that the current total surplus in the Fund is likely to be of the order of £8-10 million."

That is the UK surplus. Do you have any idea what the Scottish share of that would be?

That is the Scottish surplus. It is around £8 million.

I was remiss not to welcome Rob Gibson MSP to the committee earlier. He is here as reporter for the Environment and Rural Development Committee.

Thank you, convener. I put on record the apologies of Roseanna Cunningham, who would have attended had she been able to, but has had to go to a funeral.

I have a couple of questions to ask on behalf of the Environment and Rural Development Committee, although I think that one of them, on the extent of the expansion of the grid and the impact that that will have on Scottish consumers, has been dealt with. I do not think that we need to revisit that.

The UK Energy Bill includes a provision for a nuclear decommissioning authority. Is the minister aware that no environmental principles for the NDA to operate under are in place? Is he aware that, if the bill goes through as it stands, there might be a significant impact on Scotland's environment with regard to radioactive waste and pollution?

I think that to an extent I answered that question in reply to Chris Ballance, using the example of Dounreay. I sought to distinguish—and I do so again—between powers of regulation that are exercised independently of us and powers of direction and policy that are determined by Scottish ministers for the NDA. Where we believe there to be a disparity between the two, we will retain particular powers of call-in and direction, which we would utilise in support of the environmental principles to which we adhere and to which you refer.

Thank you—I just wanted to have that on record. I also have a couple of questions about the Scottish Executive's point of view on the transfer of responsibility for the regulation of waste storage. Have you thought about removing that responsibility from HM nuclear installations inspectorate to SEPA?

As I said in response to questions from the convener, we have established a commitment to consult on future decisions about storage. Directions can be made on the cleaning up, decommissioning, treatment and storage of hazardous materials on certain principal nuclear sites in Scotland. That is a significant change in direction from what was applicable previously.

I refer Rob Gibson to clause 9 of the bill, which deals with the general duties and powers of the NDA when carrying out its functions. It stipulates:

"It shall be the duty of the NDA, in carrying out its functions, to have particular regard to each of the following—

(a) relevant Government policy;

(b) the need to safeguard the environment;

(c) the need to protect persons from risks to their health and safety".

Those provisions are therefore laid out in statutory terms in the proposal that we have put before you.

Under clause 38 of the bill, will the authorisations to discharge radioactive waste reside with the site licensee company and, if so, why is it necessary to give SEPA powers under chapter 4 of the bill to fast-track the transfer of authorisations?

It is necessary to provide for a smooth transfer between the parties in the event of a contractor either failing to adhere to their contractual obligations or ceasing to function. The fast-tracked authorisations are designed to ensure safety and to protect the environment in those circumstances.

My first question is to Lewis Macdonald. The Executive has welcomed proposals to share the higher transmission costs for the north of Scotland with the rest of the UK. Those proposals will replace the previous hydro-benefits scheme, which protected consumers in the north from paying for higher transmission costs. That will be significant, because I think that the scheme took 15 per cent off some bills. Are you reassured that the new scheme will make provision for the old benefit to be fully compensated for?

Yes. The matter is reserved, but we expect that the DTI will table an amendment that will satisfy fully our ambitions in relation to the replacement of the hydro-benefit scheme. As you suggest, were no scheme put in place, there would be a significant impact on bills in the north of Scotland. The DTI's announced intention to amend the bill so that the cost of the subsidy to hydro customers in the north of Scotland is spread across all customers in the British electricity network will mean that the impact on bills will be negligible and shared equally up and down the land.

I have a couple of questions for Allan Wilson as well. I am happy to hear that the NDA annual accounts will come before the Parliament. On the transfer of licences and the fact that new companies will come in to supervise the clean-up processes on sites, will the Executive have any role in the tendering process for the contracts or any say in which companies are awarded the contracts?

That is an operational matter for the NDA.

My final question is on the transfer of pensions and other entitlements when employees move to the new companies. Do we know whether there has been adequate consultation with trade unions about the transfer of such contracts? Is there a role for the Executive in ensuring that appropriate liaison takes place with the trade unions when the transfers occur?

As you can imagine, knowing my background, I am assured that those commitments have been given and that the relevant consultations have been undertaken with the employees and their representatives. Their terms and conditions will be protected on transfer.

Paragraph 81 of the explanatory notes says:

"Where the NDA is required to provide advice to Scottish Ministers without the agreement of the Secretary of State the NDA can charge them for the advice given."

Is that not a rather odd arrangement to agree to? Why should the NDA be able to do that when the secretary of state disagrees? Can the NDA charge the secretary of state if the Scottish ministers do not agree, given that some of the decisions are co-decisions?

The paragraph relates to a commercial decision that would apply in the event that we sought advice outwith the norm of the advice that we would expect to be given. In those circumstances, the commercial arrangements would normally apply and charges would be appropriate—I am sure that you will agree.

Will you give us an example of the sort of circumstances in which that might arise?

That goes to the heart of the NDA's role in relation to devolved and reserved functions. As you might imagine, there could be an obligation to consult Scottish ministers on matters that are our devolved responsibility but not on matters that are reserved to Westminster. If we were to seek the authority's advice on any proposition that might impact on our devolved responsibilities, the circumstances as outlined might prevail. However, I think that we are talking about the occasional circumstance rather than the norm.

Given that someone has gone out of their way to insert that strange provision into the explanatory notes, they must have had a specific circumstance in mind. Otherwise, why would the provision be necessary at all?

Having been in the Parliament over the past four years, Brian Adam has experience of why such provisions are inserted into legislation. Arguably, that is not always due to a conspiracy or because there is an ulterior motive. The explanatory notes simply reflect the belt-and-braces approach that is often adopted by legislators to ensure that arrangements that would not otherwise be provided for can be paid for.

There is an issue about the time that has been allotted to our consideration of the bill. I have various questions, but I will content myself with asking only one.

Given that the bill allows for the costs of decommissioning to be met by the public purse in certain circumstances, will the minister assure us that the cost of decommissioning a Scottish nuclear power plant operated by a Scottish company in Scotland will be met by the UK Exchequer rather than by the Scottish Executive?

I am not sure what motivates the question about that potential scenario—

It is motivated by Lord Whitty's reply in the House of Lords. On decommissioning costs, he said:

"in certain circumstances, it is inevitable that the operator will not have sufficient funds to cover those costs … Ultimately there may be some liability to be borne by government".—[Official Report, House of Lords, Grand Committee on the Energy Bill [HL], 15 January 2004; c GC172.]

Which Government would bear that liability?

In the circumstances that you describe, Westminster would do so.

I think that that is an instance of a minister giving a spending commitment on behalf of the Chancellor of the Exchequer.

You will find that Lord Whitty himself did that.

That brings us to the end of the question-and-answer part of item 1, so I thank the ministers and their officials for their attendance.

We must now reach a decision, if we wish to do so, on whether to do anything in relation to the bill. The Sewel motion will probably come before the Parliament on 4 or 5 February. Various options are open to us, including doing nothing, so I want to take soundings from members.

Will you spell out what options are available to the committee?

If we had some concerns about the bill, we could prepare a report to the Parliament. However, such a report would have to be circulated either by e-mail or by having a brief meeting at short notice on, say, Thursday. Alternatively, we could lodge a reasoned amendment to the Sewel motion on behalf of the committee. Obviously, it would be up to the Presiding Officer whether to accept it. Alternatively, we could do both of the above, or we could do nothing. Of course, that would not preclude individual members lodging whatever amendments to the Sewel motion that they wish.

Given the wide-ranging and detailed questioning of the ministers by committee members, it would be helpful for the Parliament to have at least a record of the questions and answers by way of a formal report instead of just relying on the Official Report. I cannot think of an amendment that I would lodge to the Sewel motion. Perhaps other members have given the matter some thought.

The Official Report of our meetings is usually available by the Friday following each meeting, so it will certainly be available before the debate. Do you envisage that, in addition to reciting what happened in today's meeting, the proposed committee report would come to any conclusions?

I am not sure that any of the issues that were raised were of sufficient constitutional importance to draw conclusions that the Parliament necessarily need concern itself with. I suppose that my answer is no.

Because of the importance of the bill, which establishes how nuclear decommissioning is to be carried out in Scotland for the foreseeable future until another bill is introduced, it is entirely insufficient to give the bill about an hour's time in committee. We ought to prepare a report for the Parliament to ask for more time in which to take more detailed evidence. If that means that we have to lodge a reasoned amendment to the Sewel motion asking the Parliament not to agree to it in order to give us more time to consider the bill, so be it. Otherwise, we should prepare a report to the Parliament to say that the bill is so wide-ranging and important that we feel that we have not had enough time to consider it.

I see where Chris Ballance is coming from, but I do not agree with him. All of us have read the bill and we have taken soundings on it. I do not think that we are going to get much more out of it than we got today. We may get a little bit more, but that is all.

I support Christine May's idea that we should put our views and the questions and answers that we got, possibly together with a short synopsis from the clerk, to other members of the Parliament. That would be instructive. We should do that soon, before the Sewel motion comes before the Parliament.

I did not catch the last remark.

We should do something soon, along the lines that Christine May set out. I assume that her intention was for us to circulate such a report to the wider membership of the Parliament.

Yes.

It would be quite instructive for colleagues to look at Sewel motions a bit more closely.

I am not sure what would be achieved by the circulation of a report or the Official Report. If we were to circulate a memorandum today to all members, it would draw the matter to their attention, but I am not sure that it would be noticed in the plethora of e-mails that members receive.

Can I help?

I will come back to Christine May when Brian Adam is finished and after I have brought in Susan Deacon.

It is open to individual members or parties to lodge amendments to Sewel motions. As Chris Ballance said, I do not know whether we have had enough time to consider the bill, given its importance and the significant ramifications that it will have across a range of subjects. Ministers told us that there were plans for three separate bills. It would appear from the evidence that we were given both today and previously that the Executive was rather late in engaging in the process. I am not convinced that the Enterprise and Culture Committee or the Parliament should rush to accept what is proposed in the bill.

If the committee were to lodge a reasoned amendment that sought to defer consideration of the Sewel motion to allow more time for evidence gathering, I might be willing to support that amendment. I seek guidance from the convener on the timescales. When does the Executive plan to bring the Sewel motion before the Parliament?

Sewel motions have caused a lot of distress in the Parliament. At times, they have brought the Parliament almost into disrepute. At the last minute, we are given an hour, half an hour or even just a few minutes to rubber-stamp what has come out of Westminster. The issues involved are so important that we should give a little more time to the matter.

I will say a word about Sewel motions. Although the discussion has been reasoned and measured, there is a danger that—as often happens on these occasions—when we go into the chamber we end up in a sterile debate about whether we are for or against Sewel motions. The reality is that constitutional politics enters into those debates. For what it is worth, my view is that Sewel motions have their place, and it could be argued that this is one such instance.

However, as the previous Procedures Committee identified in its report—I was involved in that discussion—there is a need to improve greatly the amount of consideration that the Parliament can give to issues that are dealt with under the Sewel motion procedure. I am not sure that we have got it right yet. It is not just about the time that we have to consider issues in the Parliament; it is about the depth and breadth of the Parliament's and the Executive's involvement in the process. Again, I do not think that we are there yet, as has been acknowledged today.

The die is cast, to an extent, in procedural terms. I do not agree with Chris Ballance that we should seek more time and go further into the matter. We are too far down the procedural track, aside from anything else. I look to the clerks for guidance, but I would be surprised if the parliamentary timetable allowed us to take that approach. In any event, I am not sure that that is the right way forward. Nonetheless, it would be legitimate for the committee to comment—in, I hope, a constructively critical way—on the fact that we have not yet developed practices that give us sufficient Scottish input, via the Parliament and/or the Executive, into an issue of this import. If we can inject that note into the debate, I hope that it would not become just a part of the pretty crude political football that is the Sewel motion debate. It is a matter of growing and evolving the devolutionary process.

I asked a further question today on the issue of energy policy in general. As members know, I have asked similar questions elsewhere and different witnesses have also raised the issue. The only other thing that I would like the committee to do at this stage—in a pretty non-committal way—is to raise the issue of recognising both the complexity and the importance of energy policy. It is a bit like the Sewel motion point that I made. We are all learning as we go how to deal with the relationship between devolved and reserved matters, and I sense that ministers are learning, too. Once we go further into our renewables inquiry, we are bound to get further into such areas, given the fact that we have a distinct set renewables targets in Scotland but not a distinct energy policy. It would be appropriate for us to flag up our sense of the complexity of the area without committing ourselves on where we should go.

In essence, I disagree with what Chris Ballance has said. I also question the distinction that Christine May draws between an Official Report and a report. Although I am not necessarily against Christine's proposal, I would like us to add to the questions and the substantive report of our meeting today some observations about the wider processes and interrelationships that exist north and south of the border, which underpin all this, and the need for further movement towards a developed policy in this area.

I will clarify the timescale. The Sewel motion is likely to come before the Parliament next week. The bill is a House of Lords bill and is at its committee stage in the House of Lords. After its third reading, it will go to the House of Commons. I suspect that the Executive will be keen to get the Scottish Parliament's rubber stamp—or imprimatur—for the bill to continue, as it contains significant devolved issues.

I do not sense that a majority of members want to issue a report that is significantly different from a simple résumé of the evidence. I wonder whether that would be worth while, given the fact that the verbatim evidence will be available in the Official Report on Friday morning, if previous timetables hold good.

I have had time to sit and clarify my thoughts on that. The one difference between the Official Report and something that set out the issues that were covered by the committee in its questioning is that whereas the verbatim report moves from point to point—as we did here, touching on BETTA a number of times, touching on the nuclear decommissioning issue a number of times, then touching on miscellaneous issues—something that set out those issues together and gave a clearer indication of what we had covered and the answers that had been given on the specific parts of the bill would be more helpful to our parliamentary colleagues.

I very much agreed with what Susan Deacon was saying until she came to the bit where she said, "I do not agree with Chris Ballance." I wonder whether the way forward might be to lodge a reasoned amendment to say that we regret the lack of time that we have had to debate the issue. I am not sure what Susan Deacon might like to add about the procedures for Sewel motions.

My view is that that would not be an amendment; that is a comment or view.

I think that "reasoned amendment" is the official name for it.

Given the points that Chris Ballance has raised, we could write to the minister or ministers involved to express some of the matters that we have discussed. That does not preclude any member moving their own amendment or opposing the Sewel motion next week, if that is what they wish to do. The things that we are discussing now would perhaps best be summarised in a letter to the minister. It might be difficult to put together a themed synopsis of what we have been discussing until we get the Official Report to see what was said.

That is part of the whole problem. It is entirely unacceptable for something to be rushed through like this, with only an hour in which to discuss the future of radioactive waste management in Scotland and no time for us to produce a report and say what we think of the subject before the Sewel motion is put to Parliament. I really do not like the way in which the bill is being rushed through.

You may well be right about that. I suppose that, equally, we could be criticised. It was open to us to launch an investigation some time ago into the Energy Bill, which has been published for some time, and—

Except that the Executive forgot—or appears to have forgotten—that the bill involves devolved matters and did not lodge a Sewel motion until rather late on. I believe that it has already apologised for that.

We know what the Sewel motion would say, however, so it is not as if the content of the Sewel motion will surprise anyone. Anyone who looks through the bill would realise that it impacts on Scotland in relation to devolved matters. There is no surprise there; you did not need to be a political scientist to work that out.

I endorse Susan Deacon's remarks about the process. The relatively short time between the matter appearing before the committee and the Parliament having to make its decision is driven by someone else's timetable, and not by ours. I suggest that, as there are concerns about the process, the committee refer the matter to the Procedures Committee for its consideration, so that it can consider Sewel motions and the Scottish Parliament's view of the process. That committee could also invite the Executive to come along and give its view, so the whole process could be examined.

We should not be obsessed by the process, however. There are real issues to consider that are of concern. I am quite happy to engage with those issues by writing to the minister, and I am happy to participate in discussions within my own party as to how we will deal with the Sewel motion next week. I am not convinced about Christine May's idea of a synopsis, although it is fair to argue that that would allow us the opportunity to express a view as a committee—that would be the big difference. However, I do not think that there is unanimity around that, and I do not—

If we are going to—

I propose that we write a letter to the ministers involved and either bring that back to the committee next week so that members have sight of it or circulate it by e-mail. We can also write a letter to the convener of the Procedures Committee, expressing some of the concerns that we have raised. I will bring that letter back to the committee. Clearly, individual members may do what they will next week, when the Sewel motion comes before the Parliament.