Enterprise and Culture Committee, 14 Nov 2006

Meeting date: Tuesday, November 14, 2006

Official Report 121KB pdf

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Subordinate Legislation

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Scotland Act 1998<br />(Transfer of Functions to the Scottish Ministers etc) (No 3) Order 2006 (draft)

I welcome Allan Wilson, the Deputy Minister for Enterprise and Lifelong Learning, to move motion S2M-5038.

Thank you, convener. It is good to be back.

The draft order will enable us to propose important changes to the renewables obligation Scotland—ROS for short. The Electricity Act 1989 functions that the draft order will transfer will help small renewable generators to benefit from the financial rewards that are available under the renewables obligation Scotland.

In effect, householders with rooftop wind turbines or solar panels will be able to amalgamate their output, making it easier for them to qualify for renewable obligation certificates, which can then be sold to electricity suppliers, with the income going back to the generators. The draft order will also transfer functions that will enable such generators to appoint agents to act on their behalf, thereby greatly reducing the administrative burden that some small generators experience.

Subject to consultation and the agreement of the Scottish Parliament, the changes will be introduced in April 2007 via amendments to the renewables obligation Scotland.

The second function of the order relates to the healthy start scheme. The current welfare food scheme was first introduced in Britain to combat food shortages during the second world war. It offered milk and infant formula to low-income families. Following a Department of Health led review, section 13 of the Social Security Act 1988 was substituted by the Health and Social Care (Community Health and Standards) Act 2003 to enable the welfare food scheme to be replaced by the healthy start scheme.

The new scheme, which will be operational throughout the United Kingdom from 27 November 2006, offers vouchers to exchange for milk, fresh fruit and vegetables and for infant formula to pregnant women and children under the age of four in low-income families. The vouchers can be used in a wide range of participating shops and pharmacies. Under the welfare food scheme, tokens could be exchanged only for milk and infant formula—the new scheme will offer much more flexibility and choice.

Although, like the welfare food scheme, healthy start is based primarily on social security benefits and is therefore a reserved matter, the range of foods and matters that are relevant to the national health service link closely to devolved health policy. Therefore, the draft order will transfer to the Scottish ministers the functions of prescribing the description of foods to be made available under healthy start in Scotland in the future and of issuing directions to health boards that will administer parts of the scheme in Scotland.

The draft order also provides for the transfer to the Scottish ministers of payment and reimbursement functions in relation to the healthy start food vouchers and vitamins that are provided to beneficiaries in Scotland. The functions are similar to those that are currently carried out by the Scottish ministers in the welfare food scheme reimbursement.

Those are all appropriate functions to be exercised in Scotland by the Scottish ministers—I am sure that you will agree, convener—and I hope that the committee will approve the transfer of the functions to the Scottish ministers as set out in the draft order.

I move,

I point out that the order is subject to the affirmative procedure, and that the Subordinate Legislation Committee raised no points about it.

The draft order is welcome, especially the measures that it contains on renewable energy and encouraging the development of small and microgeneration schemes. The Executive note that is attached to the order talks about generators appointing agents to act on their behalf, which will allow the energy from different small-scale sources to be amalgamated—the minister mentioned that. Are there people who operate in that field who could undertake the role of agents or will a new stream of people have to be brought into play?

I do not know; we do not seem to know whether any such people yet exist in a formal sense. The securing of accreditation from the Office of Gas and Electricity Markets would be a simple matter of signing the appropriate form.

Basically, the measure is designed to smooth the administration of the scheme and to ensure that everyone can benefit from it. Someone whose output was less than 0.5MWh could get together with their neighbour to pool their outputs. Either of them could be appointed as an agent and could apply to Ofgem for the ROCs, the proceeds from which could be distributed accordingly. It will be a relatively simple process.

The proposal could lead to the creation of agents who will have a much wider remit—I suppose that they could work for housing associations or other groups of people—but our aim is to ensure that everyone has the opportunity to benefit from the ROCs, regardless of where they live. Not everyone who has a rooftop turbine will necessarily generate 0.5MWh of energy, but if they combined their output with that of others, they would be eligible to apply for the accrued financial benefit of the ROCs. That will act as an incentive for the wider spread of microgeneration.

I, too, welcome the order. I have two questions, one of which relates to what you said in response to Murdo Fraser, which was that there are not many agents at the moment. Do you think that the order will give people who might wish to install renewable energy devices in their homes the confidence of knowing that in the future they will be able to sell their surplus to the grid? Is the measure confined to householders or could it benefit a community centre that put in a renewable heating system that produced excess energy that could be sold?

I regard the measure as an incentive. It could be an administrative burden for an individual householder to apply directly to Ofgem, so there is a market opportunity for people to move into the renewable obligation certificate agent business and to smooth the administrative process. Communities and individuals could benefit. The proposal is meant to help to stimulate growth in the microgeneration market—I am sure that it will. The process will be incentivised because microgenerators can accrue fairly substantial financial benefit by accessing the ROCs.

I should have asked whether the measure will apply to small businesses as well as to community organisations.

It will.

My question is about the part of the order that deals with the healthy start initiative. I welcome what is being proposed. What evaluation of the scheme will the Executive conduct to examine the scheme's impact on breastfeeding, for example, now that breastfeeding mothers will be able to buy fresh fruit and will not be disadvantaged because they do not buy formula milk?

Part of the rationale for the proposal is to ensure that mothers who choose to breastfeed have access to the financial benefits that accrue to those who buy formula milk. Mothers who do not use formula milk will be able to use their benefits entitlement to buy fresh fruit and vegetables, which is a good thing. We will assume powers to designate what the vouchers could be spent on. We will monitor closely the introduction of the scheme, which has been piloted in Devon and Cornwall. As Karen Gillon said, extension of it to Scotland is a good thing. In the future, ministers may choose to extend the range of products on which people can spend their benefits entitlement.

The object of the exercise is to reduce the number of people who are entitled to the vouchers, because it is a benefit for people on low incomes. We want to raise the standard of living of mothers and their families so that they are not reliant on benefits. We hope, over the years, to see the number of recipients of the vouchers reduce.

I would like to clarify a point on the renewables obligation aspect of the draft order. My understanding, from what I read and from your comments, is that the draft order merely introduces flexibility. My point follows the one that Christine May and Murdo Fraser were getting at, which is that there is still plenty of opportunity for individuals, businesses or whoever to apply for ROCs. My understanding is that the draft order provides an enabling function for people to come together if they so desire, but it does not rule out their applying themselves.

No—it will depend on what they generate. Current provision is that generation of 0.5MWh is the basis for entitlement. Individual householders may not generate 0.5MWh, but if they combine with others they certainly could. Therefore, the financial benefit that will accrue from trading in the certificates could be spread around householders as well as small businesses and larger generators. That will incentivise microgeneration.

I take it that the committee is minded to recommend that Parliament approve the draft order.

Members indicated agreement.

That is agreed unanimously. We look forward to the day when the whole of schedule 5 to the Scotland Act 1998 gets transferred.

That day will be a long time coming.

I thank the minister and his officials.