 Fy views on the first meeting of the next zero energy and transport committee for 2023. I welcome Jim Felly who has come here as a substitute and I believe Sarah Boyack is going to be attending the meeting at some stage. Gender item one is a decision in taking business in private. We have considerations whether to take item six, seven and eight in private. Item six is to consider yw'r letter pwysiadau bwysig, 8-bwysig yw'r 만�ig yw'n tro pryd yn eu defnyddio, yn ydi i'n gwneud'r hyn yn 4 ar 5. A ydych chi'n mynd i'w'r gwneud'r gwneud? Ac mae arferwad rymian gennerau i bottom 2 yn unrhyw dechiswyddiad yw'r hynny o'r pryd yn eich hunain, yr hynny'n cymaint nesaf, darth gwrsusid, ynglynledd pwysiadiau Llyframenigant 2023. A bleif iddynt rwy'n cofrifent Patrick Harvey, Yn Argynni Ffanet Zero, carbon buildings, active travel and tenants rights. I also welcome James Hemphill, the head of Heat Networks policy unit for the Scottish Government. I'm probably going to get this wrong, but I'll try hard. Suzanne Lamere, I hope I've got that right. Good. Of Heat Networks policy team Scottish Government. Thank you for joining us today. The instrument is laid under the affirmative procedure, which means that it cannot come into force unless the Parliament approves it. Following this evidence session, the committee will be invited at the next agenda item to consider a motion for the committee to recommend the instrument be approved. I remind everyone that officials can speak under this item, but not in the debate that follows. I believe that the minister wants to make a brief opening statement. Thank you very much, convener, and my sincere apologies for the short delay. That's more than I got from the train announcement as we were held outside Waverley, but I'm sorry to take a few minutes longer than expected to get here. I'm grateful for the chance to speak to this instrument. It supports our ambition to grow the number and scale of Heat Networks in Scotland. I know that it's widely recognised that Heat Networks should and will be an increasingly significant part of our transition from fossil fuels for heating our homes, workplaces and buildings to clean heat. The Heat Networks Act of 2021 requires that we set a target for 2035, but as well as that requirement, the target is in and of itself useful. It will send a clear signal to the heat network sector that this Government and indeed future Scottish Governments are committed to the growth of heat networks. The proposed target of seven terawatt hours is one of the three options that we proposed in our consultation. Each of those was evidence-based, developed using data from the first national assessment of potential heat network zones report, but as we set out in the Government's response to that consultation, the data that we have about the sector is limited at the moment. We have to continue to use the powers that we have in the act to obtain more and more accurate and reliable information so that we can report on the progress that we are making against all the statutory targets. Recognising that, the Government's response is also committed to keeping this and other targets under review, as further evidence emerges on the potential for heat networks across Scotland, for example, as local authorities produce their local heat and energy efficiency strategies. Setting that target is just one of the things that we are doing to help to grow the sector. There is a range of other concerted actions that we are taking to meet the targets that have been set and that we are proposing now to allow the heat network sector to flourish. We are resourcing and providing technical support to local authorities to develop their LHEs, which are identifying opportunities across Scotland for heat network development. In February 2022, we launched the heat network support unit, which is providing skills, capacity and other resources to local authorities to help them through the pre-capital stages of heat network development. We have launched Scotland's heat networks fund, which makes £300 million available to large-scale district and communal heating projects across Scotland. In May this year, we also commenced legislation that requires Scottish public buildings to produce building assessment reports as soon as practical. Collectively, those actions will help us to achieve our proposed target and increase the likelihood that consumers will want to connect into heat networks. Based on the analytics that we have done in combination with the broad support that we received in response to the consultation, I am very happy to be here to move the motion and ask the committee to agree to set a new target for heat network deployment in Scotland of at least seven terawatt hours by 2035. Thank you very much, convener. Thank you very much, minister. I have got some questions that I made to start with. I think that we are currently producing about 1.18 terawatt hours of heat through this means. What are the targets to get us to 2035, i.e. the seven terawatt hours that you are looking to achieve? Well, as we set out in the consultation, we derived the three proposed targets based on not only the information from the first assessment report looking at where heat network zones will be, but also on a range of scenarios about the viability of heat networks. A high and low scenario means that you might see more or fewer heat networks come forward in those areas that have been found to be suitable for them. Then assumptions about a 50 per cent connection rate. As we go forward, we are going to have to address some of the issues around demand assurance so that those who are developing and investing in heat networks have confidence that there will be consumers connecting to them. However, we made that 50 per cent assumption in the short period ahead before those demand assurance measures are in place. Those three factors derived from the three proposals of 6.7 terawatt hours, and 12.5 terawatt hours was the other stretch target, if you like. While a case can be made for any of them, it was felt pretty clearly that the seven terawatt hours target was both stretching in terms of significant growth within the sector, but also achievable. So what are the targets between now and 2035? That is the question that I asked. Or do you just go to 7 terawatt hours by 2035? The new target that we are setting is for 2035. We do not have annual targets in between those. The specific targets are 2.6 terawatt hours to 2027 and 6 terawatt hours to 2030. One of the other things that we considered as part of the consultation was the advice from the Committee on Climate Change. That UK should be looking to achieve around 20 per cent of the heat demand through heat networks. You have effectively got to more than double what we are doing at the moment in three years. Is that achievable? Well, those are the existing targets under the act. The 2035 target is for what goes beyond that. That might well be what goes beyond the current one, but the target at the moment that I'm told I've just been told by Suzanne is 2.6 by 2027. So I'm asking, is it possible to double what we're producing at the moment in less than three years? The committee in the previous session debated the targets that should be set in the act in the last session of Parliament. I think that the 2030 target was a result of a committee amendment rather than a Government proposal at the time, but I think that the Climate Change Committee view as the independent adviser is that the 2030 target is a bit of a stretch target, it's a bit of an outlier. We are committed to doing everything that we can to meet it, and that includes the range of actions that we've set out, including the Heat Network Support Unit, the Heat Network Fund, and trying to help to make sure that heat networks that come forward are investable propositions that are attractive for non-government investors as well. The range of actions that we're taking already in order to meet the initial targets that were set under the act that I've set out, what we're proposing today is the 2035 target and the act does require us to set a 2035 target. I completely understand that. I'm trying to work out of my brain whether the 2035 target that you put forward is remotely achievable. We believe that it is. Okay, so what's it going to cost? The overall investment will come partly from public funds and partly from institutional investors. Heat networks, of course, unlike something like decarbonisation through energy efficiency, generate a revenue stream, and that makes them potentially attractive for institutional investors. It's not possible at this point to produce an individual costing for every network that will be built between now and 2035. That's why local authorities are undertaking the local heat and energy efficiency strategies in order to identify the most likely sites, an area like Glasgow, for example, has huge potential for heat networks, probably significantly more than some less densely built parts of the country, but it will be for them to take forward individual propositions for specific networks. So you're setting a target before they've reported the local councils and without an clear idea of what this will cost? As I've said, the act requires us to set a 2035 target. That's what we're doing to comply with the act, but we believe that setting the target is helpful in itself as the clearest signal to the sector. It's a little bit like the wider heat and buildings agenda that we've been discussing recently and on which we'll consult shortly. The setting of a clear direction of travel by government is the clear signal, the industry needs that Scotland is serious about getting this work done, and that, indeed, is what can focus not only minds but investment capacity in order to achieve those targets. In many ways, that's what happened with renewable electricity generation. Scotland, successive Scottish Governments, set a very clear direction of travel, very clear market signals that Scotland was serious about renewable electricity. If we hadn't done that, then setting targets alone wouldn't have been possible, but by the range of actions that I've set out Scotland, I think, is demonstrating not only the well but the focus necessary to achieve the targets that we're setting today. I'm going to go to the next question, but just an observation that if people see there's an aspirational direction of travel, it might inspire them to do it, but at the end of the day, if they don't see a return for the capital that they've got invested in the project, you could set the target whatever you like. You could make it as aspirational as you like, but it won't necessarily mean very much. What I've not heard from you, Minister, is giving me confidence that the seven terawatt hours are achievable. That's my concern. I'm sorry, Mark. I'll come to you and then anyone else. Thanks, convener. I very much welcome a target being brought forward for 2035. I think it was maybe on the back of one of my amendments. Yes, James is nodding one of my amendments to the heat networks bill that the provision to set a 2035 target was put into the bill, although I remember at the time it was difficult to put a figure on that. There was a lot of discussion with the minister at the time about that. It's good to see an actual figure coming forward and the actual work being done to construct a figure. Can I ask, then, how that relates to the LHEs? Because it appears that the LHEs are on track. There's been a lot of very granular work being done at local authorities to work at exactly where district heating schemes can be put in place. Do we have enough of a picture now through that work that's been done by 32 local authorities to build out that certainty that industry wants and to enable us to peg a target to 2035, which is obviously still some way off? It is developing. As I mentioned, some local authorities are further ahead than others. Some have higher heat network potential than others. Glasgow was, I think, earlier in the process, was already beginning to take forward some of the work on LHEs. I think that before it was a legal requirement that it already begun to undertake that work. It's clearly one of the areas that has very significant potential for heat networks, which is necessary, given that there's a high density of homes that will be difficult to decarbonise in other ways. The picture that's emerging, local authority by local authority, and I think that a significant number have completed their LHEs and others are due to complete that work by the end of the year, I think that it does demonstrate that we have a handle on where heat networks are likely to be coming forward, as well as just to address, once again, the community's concern, the confidence of knowing that they will generate a return on investment. Those are developments that will generate an income stream, and that is one of the things that will make them attractive for investment. Do you still see opportunities for municipal ownership of heat networks? Is that a model that could flourish? We've been exploring a range of different models of operation. That may involve direct municipal ownership. It may involve joint ventures between local authorities and other partners. The opportunity exists not only to ensure that the heat decarbonisation is achievable for people, but that householders and businesses feel that there is a service that's going to be available to them and that it's going to provide them with long-term certainty about the consumer protection that's being built in, about low-carbon and affordable heat, but that they have trust that it's being operated to a large extent in the public interest. If you look at the experience of a country like Denmark, which has been advising us, as I think Mark Ruskell knows for a number of years, on the development of the act and the implementation of it, very generously sharing their expertise, they've been doing this for 50 years. They're still rolling out heat networks because the third or of the country or so that doesn't yet have access to them has a high demand. They want to be connected because they know more than ever in a cost of living crisis that that's the affordable way to meet their heating needs. They know that the operation of those systems in the public interest is something that the public has a high degree of trust in. If we can emulate that in as much of Scotland as possible, then we'll not only achieve that decarbonisation, not only do it affordably, but also hopefully achieve the same degree of high public trust that our neighbours in Denmark have achieved. Thanks Mark, Douglas and Jim, did you want to... Okay, Douglas first, thank you Jim. Thanks, convener. I'm a big fan of heat networks, and it's back to the convener's point, setting a target is one thing. When do we actually see a plan of how we're going to achieve that? Also, as you mentioned, it might be easier in places like Glasgow, but then we have rural areas and rural local authorities. Can you give us assurance that they're not going to be penalised for maybe not moving forward as quickly as everyone else because it's obviously a lot harder to do a rural area than a place like Glasgow? Yes, the range of networks that exist at the moment, some of them district networks serving multiple buildings, others common networks serving multiple customers within a single building, they do exist in a range of urban and rural settings, including some island communities as well. I think it's very clear that there will be high level of potential in dense urban environments like Glasgow. That should, in no way, inhibit the development of networks, where they're the most suitable approach to decarbonisation in other parts of Scotland, and that's why we're asking each local authority to lead on the development of the LHEs that are under development at the moment. I think it would be wrong, for example, if central government did this and simply decided we're going to decide what's appropriate in each local area. That's why local leadership is so necessary in achieving that. What's the next steps? Is there going to be an overall plan that's going to come back? When should we start seeing money in the government's capital plan, for example, to assist with some of those heat networks? As I mentioned in my opening remarks, we already have the heat network support fund, support unit and heat network fund, which is providing the support unit pre-capital support and the fund itself capital support. The question about when is already happening. Local authorities are producing their LHEs. We've, some time ago, completed the first national assessment report. The local work that's developing LHEs is coming in local authority by local authority. I think that they're all expected due in by the end of the year. The picture that's already emerging is going to continue to develop. We have other powers in the act to continue to improve data collection on a richer understanding of the heat networks that are in development and in operation. Will you expect an overall plan from all those local authorities to be presented back to Parliament so that we can get assurance that the target for 35 is going to be met? What would happen if that target isn't met? Is there anything—what happens? Each local authority produces their LHEs and provides that to government. I think that they're all going to be provided to the committee as well. They'll all be made public. Yeah, they'll all be made public. We've got six or seven out to draft at the minute, which is good progress. We are also undertaking an independent collation of those 32 strategies so that we've got something that we can go out and present to the likes of yourselves and others with an interest that maps those opportunity areas across the country and gives us an aggregate total. Based on some of the drafts that we've seen so far, I think that local authorities are quite rightly applying some stringent scenarios and some less stringent scenarios, so we will see quite a range in the potential. On your point, I'm sorry to go back to that collation work should complete next year, and I'm sure that we'll be able to share that with the committee. The other thing that we do have, and will have to do again, is that we published the heat network delivery plan that we were required to do under the act. I think that it was your own amendment, Mr Russell. We published that in March 2022, and we're under a duty to review that and report on progress every two years, as well as the impact that our own policies and programmes have had, and to keep that continually updated every two years. Just following up every two years, so when would be the first one at the time that we'd come back? The review will be March 2024. I think that we'll need to speak to Clarks about where that goes to, but presumably it'll be to yourselves to review that. Can I just check the other question that I raised about not meeting targets? Is local authorities going to be set targets as well, or is it just going to be an overall target? It's a national target, yes. If that's not met, any— Well, the act does allow us to continue to review the target. I think that it's at least a fair possibility that we'll be reviewing the target upwards rather than downwards, but if at some point in the future a future government decides that heat networks have not been the success that I believe they will be, it would be for a future government to come back to committee, back to Parliament and ask to review the target in the other direction. I think that there's a stronger likelihood that we might see greater progress on that, and I think that we should be throwing our weight behind the development of heat networks as one of the most effective ways to decarbonise Scotland. You mentioned institutional investors. Can you give us any more details on what discussions have been held so far and how likely that is to take place? There's a range of discussions that have taken place not only with individual potential investors. The Scottish Government has an investor panel that advises it, but also through the green heat finance task force, which, as you know, has been meeting for some significant time now, and its first report will be due out very soon, alongside the imminent consultation on the heat and buildings proposals more generally. I think that the expectation is that the first phase of that task force report will focus on individual approaches and the second phase report will look at the more common area-based approaches, which might include a greater focus on heat networks. However, there's a significant amount of work happening in that area. There must be a lot of regulation that would go on behind the scenes as well, because I would imagine if you had a heat network, whether you want competition or not, whether you don't get somebody just increasing the prices to a huge amount, there must be a huge amount of work that would have to go behind that in legislation to make sure that it works for everyone. The legislation that was passed in the last session of the Scottish Parliament to get this work under way was done before we knew that the UK Energy Act was coming, so we've taken account of some of the changes that took place in that. There were some areas where the Scottish and UK Governments were able to work together on useful changes to that energy legislation. In particular, it deals with some of the consumer protection issues, but there are some other changes as well, which require us to reconsider perhaps some aspects of how we approach the implementation of the Scottish Heat Networks Act. In light of the UK legislative changes, we'll consider, for example, our approach to permitting and consenting and make sure that we've got the balance right. Over the course of time, there will no doubt be other legislative changes. One of the critical things that we're still awaiting from the UK Government is the rebalancing of electricity and gas prices, whether the current UK Government makes good on that commitment or has to wait for a successor Government. We know that that's one of the critical things that will spur not only the viability of decarbonisation of heat but also the attractiveness of it. For example, as we decarbonise existing heat networks, some of them will shift over to using devices such as heat pumps as one of their energy sources. If those are using electricity rather than using gas, that's great to decarbonise existing networks, but the rebalancing of prices is going to be one of the things that's critical to making that viable and attractive for customers. As yet, you're open to whether that's private companies putting in heat networks or whether it's local authorities running the heat networks, that's still up in there. As I said, we've been exploring a number of different models for the development and operation. We think that it will be an attractive area for private investment, but we also know that there's a need for the public sector to give leadership, particularly at local level, where local authorities understand the building stock and the energy resources that they can bring to bear. That's why they're leading on the development of LHEs. As I said, we've looked at a range of models, including direct municipal ownership and joint ventures. I'll try to be very quick, minister. If I ask Daft Ladi questions, I do apologise. I'm just catching up with what this is. Some of the briefing papers here says that the strategies will identify potential heating system changes that may occur in a local area following extensive analysis and consultation. I really don't know where Douglas Lums was a minute ago, but I want to just get clear on my head. How is this heat actually going to be used? How do you physically get it into the consumer? I would encourage the member and others in the committee, if they haven't taken the chance, to visit some of the heat networks that are already in operation, others that are being expanded or redeveloped. Essentially, those are highly insulated pipes that go under the ground coming from a central heat source. That might be the generation of heat deliberately for the network. It might be a waste heat source. There are industrial waste heat sources that are letting valuable warmth just go to waste at the moment. Heat networks can bring that to the consumer. An individual business or household would not need to have their own boiler, except potentially as an emergency backup. They might choose to have something in reserve, but their main heating and, in some circumstances, potentially cooling needs would be met via the network. If I am right, you are effectively pumping heat into a building via a pipe network. That will have to be paid for, the heat that is being distributed into that property. That is correct. That kind of comes back to a revenue stream for the network, which is what makes it an attractive proposition for investors. The experience of heat networks in this country, and in Denmark as well, where they are the most extensive of any European country, is that they tend to be an affordable and attractive for that reason, compared with individual consumption of gas or other. Leads me to the regulatory side of energy. Will you foresee yourself coming up against the UK Government in terms of how you regulate the price of that heat going into properties? The aspiration is always to try and work together on issues that are set between devolved and reserved powers. Sometimes we are more successful at achieving that co-operation than at other times. As I mentioned, some of the changes that took place at the Energy Act at Westminster recently were agreeable. We made good progress on some of those issues, not necessarily everything, but we will continue to do that. My preference, of course, would be that we were able to make those regulatory changes here in Scotland. We have to work with the situation that we are in as we continue to, as the member knows, make the case for Scotland at some point, taking those powers to itself. That certainly shouldn't prevent us from rolling out heat networks urgently, because they are one of the most obvious ways to decarbonise Scotland, particularly urban Scotland. However, there are things that we would need to negotiate going forward, but we don't stop going forward on the basis that we hope that we will find agreement. Yes, and the appointment of off-gem as the regulator is one example of that. We need to ensure that there is consumer protection, and the appointment of off-gem in that capacity will help to achieve that. Okay, one very final question. Going back to the point that the convener was talking about earlier on, how you go from 1.5 terawatt hours at the moment to 1.6 terawatt hours just now to 7 terawatt hours in 2035, will that not require a huge workforce to be able to actually modify and change the existing infrastructure that we have? Do we have that workforce and do we have the skill base? That's a question that's relevant to the whole heat and buildings agenda. We know that we need to scale up and scale up. I've been working closely with Mr Day on the skills and education side of things. The supply chain delivery plan is also working with those voices from an industry who see this as an opportunity. I genuinely think that there's a huge potential for us to see this as an economic opportunity for Scotland. There's work to be had, there's high quality careers to be had doing this work, decarbarising not just between now and 2045, but out beyond that as well in maintaining and operating those systems. I think that James just wanted to come in on your previous point as well. It was just on the work with the UK Government, so we do have colleagues who join the various forums that UK Government colleagues have in designing these consumer and technical standards, so we do have a route into informing that. The other thing that I was going to say on the current question is, just to add to what the minister says, we do know that we have some of the big energy companies that we have here in Scotland at the minute are getting increasingly, and some are actively involved in heat networks at the minute and are increasingly interested in it, so we know that there's interest there. There are some other questions. I've just got one quick one, and you've made the point that it is used in Denmark and is very attractive in Glasgow. We're talking about, in most cases, in Denmark and Glasgow, urban conurbations or larger conurbations. The biggest price for heat pumps is surely the piping and the insulating of the piping in rural areas where houses are spread out. Is it ever going to become attractive? I think that it will depend on the specific settings of each area, and that's why these health use are being taken forward at a local level. If the committee hasn't had the chance to learn about the heat network in Chetland, for example, I think that that would be instructive. It's been in operation for 25 years and they're now looking to expand and extend it, including to potential customers who are not right in the town centre. There are some energy losses that come from extensive heat networks, but the experience of Denmark is that you can do this over a very wide area. It's not just in the inner core of a city where this has value. We'd like to make sure that there are many parts of Scotland that can benefit from heat networks. Of course, in less densely populated areas, other approaches to decarbonisation, including individual heat pumps and other technologies, will be and already are extremely successful. I will avoid the temptation to talk about heat pumps in old houses. Douglas, you want to ask a question, and I'm going to go to Mornica. If there's no other questions from the committee, I'll go to Sarah. Thanks, convener. Just to come back in. Minister, you mentioned gas boilers being used as an emergency backup. Do you still feel that there's going to be a market and a demand for gas boilers going forward, even though people might be part of a heat network? The proposals that we're about to consult on heat and buildings set out how the heat standard will work and recognise that fossil fuel systems for emergency backup might continue to be necessary. I think that it's probably more likely that those would be portable systems rather than an installed gas boiler. The opportunity is to make sure that the vast majority of the heat that's consumed is coming from sustainable sources is non-polluting. I think that the opportunity is also to ensure that we can achieve that in a way that's consistent with affordability, tackling fuel poverty and other objectives. The potential ban on gas boilers, so would that then be relaxed for emergency backup purposes, or how would that work? As I said, we'll be consulting on the wider heat and buildings proposals very soon, so the detail will be published in that. It doesn't affect the setting of the target for heat networks. I can't remember the year that the Scottish Government was saying that then. Is that going to be met or not? Sorry. That's slightly off the topic. I'm sure that I'd encourage the minister to respond to you afterwards on a separate subject, but I want to try and keep on the instrument that we're looking at. I think that you've pushed that as far as you can at the moment. Monica. Thank you, convener, and good morning, minister and your officials. Just a brief question from me. In terms of meeting these important targets that have been said, can you clarify what role energy from waste facilities will have? For example, how depend— I didn't quite catch that, sorry. Oh, sorry, just check my mix on properly. In terms of the targets that have been set, how reliant will Government be on the existing use of energy from waste facilities incinerators just to clarify what contribution they will make to the achievement of the targets? Yeah, I mean the use of waste heat from any source, if it's a facility that already exists, I see no reason why we shouldn't be using waste heat from a facility that already exists. That's a resource that at the moment is going to waste. Separately, quite unconnected to the specific policy of heat network targets, obviously the Government has an approach on incineration, which wants to move away from the development of new incinerators. But any source of waste heat from an existing facility, whether it's an energy from waste plant, whether it's a data centre, whether it's an industrial site, I think is a valuable contribution to putting heat onto a heat network. Okay, that's helpful and again good to hear about the moratorium proposal on incineration. What I wanted to ask around that is we've obviously got the circular economy bill, so we want to see a reduction in consumption overall. If somebody's existing facilities become less viable and less feasible as business opportunities and they start to close down or decommission early, would that have an impact on your targets? Heat networks are particularly viable and effective when they have a range of different heat consumers, not all domestic but some commercial, some industrial, large public buildings for example, and also a range of heat sources. There will be some networks that have a very heavy reliance on a single or a very small number of heat sources. Those existing networks will be under a duty to bring forward a plan to decarbonise if they have a polluting heat source. But I think over time and as we see the development of heat networks on an extensive basis, we're likely to see that viability, an incentive for any operator to diversify their heat sources. That might be banks of heat pumps. It might be using, particularly in areas like Glasgow, it might be using as Queen's Quay does the River Clyde as a heat source, but it would also include potentially industrial sources of heat, waste heat and other options. I think that diversification of both heat producers and heat consumers is one of the things that will make those networks more viable for the long term. Jim, very quickly, and then I'm going to go to Sarah. Then we're going to move on to the next item of business. It's going back to the point. I'm sorry, questions keep getting sparked by other people asking questions. Monica is asking about energy from waste and there is presumption against building any new incinerator plants. I'm also right in saying that there is a ban on municipal waste for landfill. Is there not value in continuing to get better technology into incinerator plants if we're going to develop these energy from waste systems? I think that that's probably a question that's best directed at colleagues who work on the waste side. There are many reasons why there's an environmental desire to move away from burning our waste to put it simply, even with modern technology. It essentially requires, as I think Monica Lennon's question was hinting at, it essentially requires a continual feed of waste material going into it, and it's not consistent with a circular economy approach. However, the approach on heat networks is to say where you have an existing facility that's got waste heat that's going into the air that's not benefiting anyone, you might as well plug that into a heat network and actually get some value and some use out of it. Yeah, absolute value, and I completely agree. We do want to move to a circular economy, but that doesn't mean to say that we're going to be—are we genuinely going to reduce the amount of waste where we don't need landfill, where we don't need—we're still going to have waste and probably considerable amounts of it. You're stretching that, Mr Fairlie, but I mean, if you want to answer that briefly, Minister. It's not a trick question, it's just a few notes. No, no, no. I'm sure it's a sincere question, but I think it is one for colleagues whose remit and portfolio is around circular economy and waste management, rather than necessarily one that's about the setting of a heat network target. It's a question about accountability and consumer protection because we are getting heat networks developed. I've visited ones in Clydebank, Midlothian, where they are partly owned by the council but operated through a private partnership approach. So there's accountability for the residents. In Edinburgh, by contrast, we've got dozens of heat networks. They're not run by the council, but they're also not for residential properties as a rule. So as you roll out this approach, there's a critical issue here about accountability and consumer protection, not just in the short term, but when the source of energy shifts, again you need that accountability in terms of the costings. So how is that feeding into those regulations in terms of consumer protection? It kind of goes back to Mark Ruskell's initial point about municipal ownership, because councils are absolutely critical to the planning process. Joining up in terms of housing, whether it's new or old, as you say, they've got the knowledge, isn't there an accountability issue here that we should actually be focusing on those council leadership approaches? If there's a public-private approach, then you've got accountability, rather than just going down a private route that you've mentioned. I'm absolutely interested in the answer. The problem is that we're talking about setting a target of seven terawatt hours by 2035. So I'd be delighted if the minister would respond briefly to that and shape it as much as you can to the target that you're hoping to set, minister. I would like to see ambition coming from local authorities and from other bodies, for example social landlords, who would see connection to a heat network as something that's in the interests of their tenants and their business model. If we see that level of ambition coming from public bodies, including local authorities, that will contribute substantially to meeting the seven terawatt hour target. Some of the consumer protection issues that Sarah Boyack quite rightly raises. As we're all aware, those are reserved, but the recent legislation and the appointment of off-gem in its role goes a significant way toward addressing those issues. I very much wish that we were able to legislate for those matters here. As things stand, we're not, and we need to work with the UK Government, and that's what we've been doing. The reason I was asking it, convener, is because it is about how you supply these new heat networks and the critical role of local authorities in planning leadership, as has been mentioned, but also accountability. That's why I was keen. It also gets income generation to local communities if it's done properly and low bills for people. The feedback that I have had from local authorities is there under massive financial pressure to take that forward. That's back to your £300 million fund. It'll be very interesting to see how that's going to be spent. If there's no other questions, we'll move on to agenda item 3, which is the formal consideration of the motion calling for the committee to recommend approval of the draft heat networks supply target Scotland regulations 2023. I remind everyone that only the minister and members of the committee may speak in this debate, and I'd invite the minister to speak to and move the motion. Happy to move the motion. Thank you. Are there any comments from the committee? I have a comment, but I'm happy to take any others first. Okay, can I just say, minister, I'm taken by the need of achieving a target and setting a target. I understand the need for that. The problem is the target that you set based on a current production of 1.18 terawatt hours now, and targets go to 2.6 in 2027 and 2035 of seven terawatt hours, whilst they may be aspirational. I have no idea whether they're achievable, and you haven't convinced me they are, and you haven't given me an indication of cost. I'm stuck, whereas I would like to agree a target. I don't see the current target as being correctly justified. Could you set my mind at rest or have one more time doing that, please minister? As we discussed in the evidence session that we just held, the Scottish Government has consulted widely on a number of options for this target. It's not only a legal requirement that we set a 2035 target. I believe that it is a very positive signal to the industry that we're serious about seeing the development of heat networks. We could have set a very stretching, much more aspirational target. What I think we've set is a more achievable target is still an aspiration to grow heat networks significantly in Scotland, but it's an achievable one. It's consistent with the advice that we've had from the UK climate change committee, and it's consistent with a position that was widely supported in the consultation. Can I also mention the Business and Regulatory Impact Assessment that's been provided? It suggests that the cost of meeting the target set in the SSI could be up to £6.2 billion, and it's likely that that cost will be shared, as I said earlier, between public support that's already been made available and private investment. So £6.2 billion of which, at the moment, you've put up £300 million, is that right? Of public funding, yes. Yes, so the rest will come from the private sector. From a range of sources. Okay, I remain skeptical. Is there any other people with any questions? Sorry, Mark. Just a comment, convener. I think the approach that the Government has taken, perhaps justified not putting a target for the 2035 into legislation originally because it's clear that a lot of work is needed to take place, particularly at local level, particularly with councils, to really understand in a granular way how this target can be met and indeed what the target should be. So I'm pleased that that groundwork has been done, and I think what we have now is a target that's really going to drive that private investment, which is going to be so critical to meeting the gap and ensuring that we've got real projects on the ground that are well regulated that do protect consumers and that, within that, hopefully there'll be opportunities for municipal ownership and public benefit as well. So good to see the stretching target brought forward, but good to see that it's going to be based on the reality of what is possible and what is going to be investable and bankable. I'm actually more concerned now that I've heard the £6.2 billion figure because I don't think we've, Mark Ruskell said a lot of the groundwork's been done. I don't think it has been done. I haven't seen anything here that says that we haven't got any idea how we'd get to that target. As much as I would like to get to that target, I have no idea how we'd get there. I don't know where the £6.2 billion figure, but I only know where £300 million figure is going to come from, so I don't know where the other £5.9 billion figure is going to come from. I'm really a bit concerned that we're setting a target here without knowing how on earth we're going to get there. Minister, if there's no other comments, I don't invite you to sum up and respond to the debate that you've heard. Once again, I would say that we've consulted widely on a range of targets that are evidence-based, widely supported, and the consultation is the target that we're setting. It sets out for a strong growth within the heat network sector, which we believe not only sends the signal about what we intend to achieve and will build confidence amongst investors, but is an achievable target that will help to decarbonise Scotland. I genuinely hope that, as we develop policy and the wider heat and buildings approach, members across the chamber will recognise not only the opportunity but also the necessity of decarbonising Scotland's heat. We moved to the formal question that motion S6M-10778, in the name of Patrick Harvey, be agreed. Are we all agreed? We're not all agreed. We'll move to a division. So, there are three options. As I understand it, there's yes, no and abstain. So, I'm going to start off by asking those who vote in favour to raise their hands so I can clearly see, please. Sorry, just keep them there. It would be so much easier if we had electronic voting and we could do it, but we don't. Okay, those who are against the motion, please raise their hands. And those who wish to abstain, please raise their hands. So, the voting is five votes in favour of the motion. There are two abstentions, therefore the motion is agreed to. The committee will report on the outcome of this instrument in due course and I invite the committee to delegate authority to me as convener to finalise the report for publication. Are we happy as a committee to do that? No one said no, so that I'm going to take that as a yes. Thank you committee and thank you minister and your officials for attending. I'm now briefly going to suspend the meeting before our next item. Welcome back and this is gender item four on our agenda, which is an evidence session with Scotland's water industry regulators, Consumer Scotland and the Water Industry Commission for Scotland. Today's evidence session follows on from our meeting last week when we heard from the Scottish Water on its latest annual report and accounts and the main challenges for the water industry in Scotland. We'll continue to explore those issues with today's panel and I'm pleased to welcome Emmer Ash from Water Policy, the water policy sea manager from Consumer Scotland, Tracy Riley, the head of policy markets from Consumer Scotland, Fraser Stewart, the research manager for Consumer Scotland and Alan Sutherland, the chief executive for water industry commission for Scotland. Thank you for joining us today, I'm sorry we're a little bit behind in time wise, but before I move on to the many questions that we've had, I think there's a brief opening statements firstly from Emma and then from Alan, so Emma if you'd like to start away please. Thank you for having us to today's session for Scottish Water and giving me the opportunity for this opening statement. Consumer Scotland was set up by the Scottish Parliament under the Consumer Scotland Act 2020 as a non-ministerial office. As the statutory body for consumers in Scotland our core purpose is to improve the lives of current and future consumers. Our strategic objectives, which are relevant to the water industry as well as other markets we work in, include enhancing understanding and awareness of consumer issues through our research and analysis and using our findings to inspire and influence the public, private and third sectors to put consumer interests at the heart of what they do. We also want to enable the active participation of consumers in a fairer economy by improving access to information and support. Throughout we take a partnership approach, collaborating closely with other organisations with interests and expertise in consumer issues. Our core funding comes from the Scottish Government's annual budget but we also receive levy funding for our work relating to water. Our current levy funding for this year is £358,000. In our current work programme for the water sector we focus on four key themes, climate change adaptation, equitable investment, fair markets and affordable services. As part of our statutory role we work with the Scottish Government, sector regulators and Scottish Water to ensure that the needs and interests of consumers are represented in the design and delivery of the Scottish Water's capital investment strategy. Our work includes producing research that promotes positive outcomes for consumers in key areas such as water and wastewater services to ensure that they remain affordable and are resilient to climate change and that they also meet the needs of current and future consumers. We are developing evidence to promote a non-domestic market that is fair and operates in a way that protects the interests of its customers as well as the wider good of the market. Recent consumer Scotland research already shared with the committee includes a report on the importance of blue-green infrastructure in helping to reduce flooding caused by climate change and a survey on consumer attitudes towards the transition to net zero. Once again I would like to thank you for inviting us to give evidence and we look forward to your questions. Thanks very much Emma Allan. I think you'd like to do a brief opening statement or so on. Thank you convener. Good morning everyone. Thanks for inviting me. It's always good to hear your questions. As you know, the Water Industry Commission is the economic regulator for the water industry in Scotland. Our strategy duty is to promote the interests of customers, both today's customers and future customers, which is important. At the end of 2020, we published our strategic review. This is a bit of context to hopefully help you in understanding what we are doing. That review is the mechanism by which we establish the lowest reasonable overall cost for Scottish Water to deliver the objectives of the Scottish ministers within the principles of charging of the Scottish ministers. As we were going through that review, it became clear that Scottish Water would need to increase its maintenance and replacement expenditure by a factor of about three if it were to stop asset deterioration continuing, which is what we are currently seeing. Why is that important? Asset deterioration might not always be seen, in fact, probably rarely is until it is too late, but it puts a significant upward pressure on operating costs. It puts a significant upward pressure on carbon emissions, and it also makes it much more difficult to adapt to climate change. At the end of a process of very substantial engagement with stakeholders and with input from OECD, we concluded that this investment could and should be phased, but that we needed to get there to get to a more sustainable level by about 2040, which was a date that coincided with Scottish Water's net zero target. In that review, we saw improved operating and capital expenditure efficiency, but even with that, that still meant that there had to be substantial increases in charges, which again we concluded should be phased. That was before we knew inflation was going to be the sort of issue it is. Obviously, no one wants a higher bill, right? None of us want a higher bill, but we do want to be able to rely on a sustainable water, wastewater and drainage services. There were steps taken at the beginning of the period to protect vulnerable customers through the council tax reduction scheme, but more is going to be required, quite frankly. The committee heard evidence last week from Scottish Water that said that because the board had opted for lower charge limits than we set in the determination that they would have £500 million less to invest in this period. What they did not go on to tell you is that if charges were to increase in line with inflation over this period, and at the moment they are increasing by about four and a half per cent less than inflation, then in future regulatory periods from 2027 onwards, Scottish Water would have £200 million less every year to invest in the maintenance and replacement of its infrastructure, and that impacts levels of service, and that impacts the ability to adapt to climate change. To me, it is obvious that we need to be in a position to have a proper response to climate change, but if we look at what is currently happening in England and Wales, investment levels in England and Wales have been 40 per cent lower in the years since Scottish Water was formed in 2002 than they have been in Scotland. We are now seeing huge increases being put forward by companies in England and huge price increases following that. Just in the next five years, companies on average in England are asking for a 30 per cent real increase in their tariffs, and the average of the companies that have produced sensible answers—I am taking away the higher outliers—are doubling their charges in real terms by 2040, so that compares with the 40 per cent that we had in our strategic review. What they are not doing is addressing the replacement and refurbishment of assets in the way that we are trying to do in Scotland. Our focus over the past two or three years has been to get much more clarity into what is being invested, why it is being invested and how it is being invested. It is much more challenging than it used to be, because we have moved away from very discreet improvements to meet European standards, and we are focusing more and more on investments in replacing and refurbishing assets, which tend to be much smaller, much more discreet projects that are harder to see. Even more challenging than that is the green-blue solutions. Here are two things. First, can we get the incentives right for people to pursue those green-blue solutions in the right way? It is not always easy, and then monitoring that sufficient progress is actually happening in that is quite a challenge. That is what we are looking for in terms of prioritisation. There has been some progress in the past year, but it is not as fast as I would like to be frank. We are now beginning the preparations for the next strategic review, which starts in 2027. What we will be looking for at that time is for Scottish Water to do evidence in a way that is genuinely compelling to its customers and to Scotland more broadly, what it needs to invest and why. We are expecting to publish a methodology for that review by February next year. There are lots of questions. Jackie, you are going to start us off today. Thank you, convener, and good morning, panel. Thank you very much for coming along. My first question, I am just going to ask quite a broad question. What is your broad assessment of Scottish Water's performance over the last year? We work on a regular basis as our statutory role with stakeholders, including Scottish Water. We attend various statutory meetings with them, and we engage with them on a regular basis to represent the consumer interest. We have found that process to be very collaborative as a new organisation. They are keen to see the research that we develop and to let that help to inform some of their decision making, which is very welcome. Can you go into some depth as to what you think they have performed well in the past year? The Scottish Water monitor their customer experience and their customer service level themselves, and there has been an improvement in that, which is good. What we are seeing is that, when we speak to consumers about the—there are a few opportunities that we have had this year through research to speak with consumers—they are generally quite happy with Scottish Water as a brand and as a product, the water that they receive. On particular issues, there is an opportunity for perhaps more information when it comes to things such as climate adaptation and what the opportunities are and what the scale of the problem is. I think that their performance over the last year has been broadly similar to that of the previous year. Their capital programme is running between six and 12 months behind on latest estimates and forecasts. Customer service levels, as measured by our overall performance assessment, are broadly flat year on year. It would be nicer to be seeing more demonstrable improvement in efficiency than we have seen. They have a target to improve their underlying operating cost efficiency and their capital expenditure efficiency. I think that the jury is out as to whether they are achieving that. It is unfair to look at it on the basis of one year. We have to look at it over a period, but I think that the jury is out as to whether they are going to achieve that in this regular period. Have you seen any evidence that Scottish Water is getting back on track? I know that you said that there is still a six-month slippage, but are you confident that you are seeing some movement and getting back on track? I know that you are not there yet. I think that there has been an improvement over the last year, particularly over the last six or eight months in their level of engagement in terms of what they are delivering and how they are delivering it, but there is still some way to go. Can you maybe expand a little bit on what the impact is to the project delays? In regard to the project delays, what is the impact on the quality of service that Scottish Water is providing? Scottish Water runs an absolutely massive asset base. In price levels of five years ago, we have had capital inflation of 25 or 30 per cent over that period, and its asset base would have been valued at around £70 billion. When you are talking about maybe £100 to £200 million worth of slippage and investment, you are not necessarily going to see it, but it is happening and it is making things a little bit more challenging and a little bit more difficult than the otherwise would be. Should it be managed? When you see the quality of the operational responses that Scottish Water generates to issues, they are very good at managing things, so we probably do not experience it. That does not mean that it is being done as well as it could be being done, and it is certainly not being done as cost effectively. Responses are always much more expensive than proactive intervention to stop the issue happening first. I think that you are going to come in with some questions now, are you? Alan, you just said that stopping the problem happening before it happens is probably a better solution. That takes me on to the area that convener might try and stop me to talk about, which is a local constituency issue. However, the point that I am raising is that it was brought up in the minutes of your meeting on 21 September 2022 about Glenfarg. The Glenfarg project is clearly one that has been developed. There is a lot of money being spent on it, but it is putting four storage tanks or three storage tanks in at the source for a system that is supposed to supply Glenrothes, which is 17 miles away. The piping to that system in Glenrothes has got various leakages that are known about, but they are putting their storage tanks in at the source rather than at the end. My question was going to be to you that you have raised issues in the past about the completeness of the information that you provide and the information that you get from Scottish Water to allow you to perform your regulatory role. What are you not getting from it? Do you have any oversight of the operational side of that? David Satie had made a comment in one of your previous meetings that there was £799 million worth of funding that had gone into Scottish Water, which could not determine whether or not there had been any great improvements or not. I am hearing a project where they are putting in several million pounds worth of investment, but putting the storage in at the source rather than at the place where it will be consumed. If the leak or something happens in the 17-mile piping system from the source to the consumer, what is the point of putting a storage system in when the storage system could quite easily be put in at the consumer end? It makes no sense whatsoever. Are you able to answer that at all? I wish I could. I am not an engineer and I could not sensitively comment on the specific design of a particular project. What I would expect, though, is that there is a full proper appraisal that should be able to explain why they have done what they have done. The convener was probably right to not allow me to ask that question, but I have it now on the record. Jim, I have given up trying to stop you. You are just as tenacious as they come. Hold on, Jim. I will put the question on the record now. I am sure that Scottish Water will be listening to this. I am no doubt that it will want to respond if I can get you to move on to the next one, though I would appreciate it. The committee is aware that the WICS has raised concerns about the quality and completeness of the information that Scottish Water provides. I am going to refer back again to the meeting of September 2022. Some of the things that were said in here bear with me, Alan Sutherland, noted that it is difficult to understand the consequences of Scottish Water's decisions for future investment needs. He asked how Scottish Water would report any disconnect between maintenance and asset replacement in terms of the long-term position. Are you getting the kind of information that you now require? There are a whole range of other things within these minutes. I am not going to take up the committee's time to go over, where, quite clearly, WICS has not been getting the information, or the information was not put to them in such a way that it could allow them to make any sort of determination. Has that been improved? It is starting to improve, but it has not improved anything like to the level that it needs to get to. I think that Jackie Dunbar's initial questions touched on general performance and general perception of the public in the Scottish Water. I just wanted to ask about the perception around sewage pollution, because that is an issue that we raised with Scottish Water last week. That is an area of concern to both communities and environmental groups. I am keen to hear from the panel what impact those local concerns and media reports are having on consumer perceptions and importantly trust in Scottish Water. We are in the middle, at the moment, of quite a large piece of research with consumers that is taking place with them over a couple of months, looking at some of the big issues in terms of the water sector and how it adapts to climate change. Part of that is looking at CSOs and what consumers think about that. The conversations are quite broad. They are the same participants that come along to the research every week, so they are getting a real sense of the issues at hand and then getting it an opportunity to discuss those in more detail. On CSOs, what we are getting a sense of at the moment is that research is still on-going, but we are getting a sense of consumers. It is an issue that they are concerned about, but at the same time they understand that they are a function of the drainage system. However, it can feel quite unpalatable as a concept. They are really interested in discussing the solutions that exist. That is coming across quite strongly. Across the whole range of issues in terms of adaptation is how people can be involved in the solutions as much as the investment that will be required in order to make sure that they are not operating when they should not be and that improvements are made where they can be. However, there are other opportunities and that is something that consumers are quite keen to learn more about. They are not aware of a lot of those options, whether that might be just reducing blockages or thinking about blue-green infrastructure, which has been mentioned. The opportunity that presents in terms of removing rainwater from the system. I think that we would be good to hear more about the research. I am sure that you would not want to get into particular examples of particular communities, but some of the reports, some of the emails and letters that we get, people are very concerned about the impact on human health, the impact on nature and the environment. What we have heard from Scottish Water is that they do not accept how things are being characterised in the media and by some consumers and community interests. Is there a gap in research? I do not know Fraser in your role if you can maybe speak to that, but is there a gap in research? How could we address that? If we have this division where we have Scottish Water saying we do not recognise these concerns and people getting more and more vocal, how could we resolve that? Thanks for the question. We are a new organisation. We are building our evidence base as well, but we are very mindful of the messages that are coming back from some of the campaigning organisations and people on this committee getting constituency cases. We are very mindful that it is a live issue that people feel quite strongly about and quite rightly. We have started to explore this issue in amongst many. The piece of work that I just mentioned is a deliberative piece of research. It has quite a lot of breadth around climate change adaptation as a whole and part of that is going to be looking at CSOs, trying to understand how consumers feel about that as an issue for the country as a whole, but also how it impacts them in their communities and for them as individuals, concerns around public health, as you mentioned. We see that this is probably the first stage in building our evidence base. What we are finding with the deliberative methodology is what allows us to dig deep into exploring the issue. We can get away from the immediate responses. If you ask a survey question of people around sewage spillages on the local beach, you will get the immediate reaction to that. Most of us will be horrified by the idea of that happening. By looking at the issue in a bit more detail, by using some of these more qualitative approaches, it allows us to dig a bit deeper. The messages that are coming through from that piece of research so far—this is a word of caution, it is pre-analysis, we do not have the final report yet—is that people see it as something that they want to have a say in terms of what the solutions might look like. What they are looking for is also leadership from the company and from Scottish Government, so we just do not accept it as a factor of the system. There must be ways of dealing with it in the future so that we can live in nicer places. That is a really important piece of work, so thank you for explaining that phrase earlier. Before I come to Alan to get his perspective, will that research look at not just those overflow events but the dry spill incidents as well? The piece of research is probably at a higher level than looking at the very specifics around wet and dry spills. However, where we are moving towards is thinking that we are probably going to have to do a bespoke piece of work in the future that will look specifically at that issue, because it is coming up as important when we are talking to consumers and also campaigning organisations. The media coverage is quite extensive. That is really informative. Alan, your perspective on that? I think that, probably like all of you, when you read or hear people's experience, you go, it is pretty horrible. I do have some sympathy for Scottish Water because some of the characterisations that you will read in the media, that raw sewerage or something, was pumped in tour of our well, it was not pumped and it is not raw sewerage, it is very heavily diluted. It is not to excuse it, I am just saying that the media characterisation and the actuality are a bit different one to another. We get our information from the media right, so we respond to the presented answer rather than the actual answer. I think that there are things that we as society have to think very hard about and there are potential roles for the Parliament. For example, the fact that we allow gardens to be paved over so that people can park their cars in their gardens increases the amount of hard standing and therefore increases the amount of rainwater that does not drain away naturally but finds its way into the source. When the sewer systems are designed, we do not do that. That is a new problem and you have got to deal with it. I talked in my introductory remarks about the levels of maintenance that we have been engaging in and we have been seeking to minimise costs and bills and good reasons for doing that, but that means that we have not been maintaining sewer systems with quite the diligence that they might have done. The odd brick or two out of place, just like a brick in your sister, means you use less water. There is less room for the water to go through, so it is more likely to spill than it would have been if the sewer was in absolutely perfect neck. When we look at solving this, I think that we have got to ask ourselves a really serious question and here I would differ from what Defra in England is saying. Defra in England appears to be suggesting that one can build one's way out of this. I do not accept that. If you look at the Thames Tideway tunnel that was encouraged by European legislation to be built in year 2000, it is going to be finished remover too shortly. The latest forecast is going to be full a year or two years after it was built. Why did we build it a bit bigger? We did not know. When you look forward and look at potential rainfall patterns in 30, 40 or 50 years time, you see that there is no realistic way that you are going to build an infrastructure that could cope that amount of water coming that quickly. We are going to have to do it very differently. That is where your green blue, your Spanish city, your reopening of culverted water courses to become natural streams, rivers and cities is going to be critically important. If we do not do that, we are just not going to manage the levels of surface water that we will see in 30 or 40 years. At one level, we should be looking at this as a really important learning experience for ourselves. We have got to do things differently. If we do not, we are going to have a big problem on our hands, because it would get an awful lot worse if we try and stick our heads in the sand and pretend that we have just got to fix a few CSOs. That is not the issue. Thank you, Aileen, for very eloquently taking through some of the big challenges and the possible solutions. I will not draw into that too much, because I know that we do not have time. However, just to bring it back to Scottish Water, notwithstanding some of the wider challenges that are not all within the control of Scottish Water, if we have potentially grown problem around CSOs, people concerned about human waste ending up in our water courses, impact on public health and environment, Scottish Water is saying that they are not getting their lawyers on to the media. I did ask them that last week. Are these stories so wildly exaggerated that you are going to get your lawyers involved? They are not doing that. However, what advice would you give to Scottish Water? We do not want to have a breakdown in public trust and confidence. It is good that it has all that research. I am sure that the team at Consumer Scotland has probably got other things that they would rather be researching. What advice would you give to Scottish Water to try and speak to communities? Do that piece of education work, but ultimately do better, because we need better outcomes? I think that Scottish Water does a lot of valuable work, including in paid media on TV, trying to tell us about not flushing wipes and all the rest of it. That is good. The reason I gave you that future look on investment as to what happens in the future because of charged decisions now is because that is one of the things that I would like to see Scottish Water do a lot better. If you are going to have a proper discussion with your customers, you have to explain what the medium and long-term effects are. My experience when you do sit down with a community is that they really want to talk about those things over the medium and long-term. They accept that things will go wrong in the short term. They might not like it, but they want to know how we are going to get out of it. The more that we can future look, the more that we can explain why building something new is not going to solve things and why we have to think differently. It is quite amazing when you look at differences in the intensity of rainfall that you are going to get in 40 or 50 years' time. It is actually quite difficult to believe at first. You look back at history and you see what has happened in the past five or ten years, and you say, I get it, but you have to be exposed to that in order to do it. That is where I think Scottish Water could do more. One of the points that you made earlier, as Pete Gyms has a further question from Gyms, I will come to him. You talked about replacing a brick in a sewer and potentially maybe not doing as much of that, but we have all received a briefing from Unison on Scottish Water's privatisation by stealth and union bursting. It is making the claim that Scottish Water is being hollowed out. If you talk about the relationship between Scottish Water and consumers, Scottish Water and its workforce, there are clearly issues there that are going to have to be addressed. I am going to get into specifics, but the reason I am raising that is that I wanted to come back to the point that I was asking you earlier on. When you are getting information from Scottish Water, do you have sufficient powers to compel them to come to give you the necessary information that you require so that we can avoid those kinds of situations happening in the first place? We have plenty of powers to ask for the information and to require its receipt. What quality it is is something that, unfortunately, we do not have any particular powers over, so other than asking again, which is what we do. That sounds to me like what you get is obfuscation for questions that you are asking for a legitimate answer to. I am not. I think obfuscation is a rather strong word. I would say that it is just not as good as it should be. Let me give you a concrete example. We ask for a very comprehensive annual return every year. It is based on something that Ofwalt adapted from Treasury back in the 1980s. It has been going for yonks. If you go back about 10 years, we would have been in a situation where we would have had six, seven, eight sort of number of queries on the information that we got from Scottish Water. Last year, we had well over 100. That is essentially just people who are either new in role or less experienced or less diligent than the predecessor. I do not know which one it is, but the fact is that it is the same return, many more queries today than it was before. I will give you a clear indication as to why we are frustrated. Alan, those questions from me are to you. You raised your money in 2021-22, £4.5 million from Levy. Is that right? Yes, about that. Three million of it goes in staff costs in 2021-22, £2.9, but let us say three million, which allowed you to have a surplus of 600,000 in that year to offset the £600,000 loss the previous year. It seems quite big fluctuations between profit and loss. Is the Levy right or are you getting too much money in? That is a good question, is not it? I am sure that there are others who have a worse revenue income level than we have, but in the period of 2021-27, our income from Scottish Water goes up 1 per cent a year. That is 1 per cent nominal, not 1 per cent real. Our revenue from licence providers goes up 3 per cent nominal per year. One of the things that we have started doing increasingly actively is to support the Scottish Government's hydro-nation initiative, and that has meant that we have done very substantial projects in Romania and in New Zealand and have brought in a very substantial amount of money. The reason that we have a surplus is because last year we had something over £1.1 million that came in from the New Zealand Government for our time and services advice. It seems quite a large amount of money, and in quite a small budget. With 26 employees on average, a £3 million wage packet is on average, and of course no-one's average, some will get paid more than others, Alan. On average, it's £100,000 per employee before you add on the pension. Is that about right? The salary cost that you have in the accounts is the base salary of people, the pension and the employer on costs. All of those go into that salary number, but the basic math is correct. If you were to take the fully loaded cost of an employee, take the total salary cost and divide by the number of employees. The top end of the salary is £185,000 in that year. It seems quite big salaries for 26 people. One has to ask the question, as it's raised from Levy and the surplus in the year, whether we've got those figures right. Are you convinced that we have? All I can tell you, convener, is that it would be impossible for me to go out and recruit the analytical talent that I need in the market. I have to develop and train my own analytical talent, so of the three directors who work for me who are analytical in their bend, each of them started their career with me at some point in the last 24 years. One has been with me consistently for 11 or 12 years. The other two were with me for a period left to get more experience somewhere else but came back. Both of the ones who came back earned less now than they would have done had they not come back. They are coming back for reasons of public service. I am not suggesting that we are not well paid. We are well paid, convener. There is no question about that, but we are paid less than the market rate for the job if that matters. I think that my concern is that I want to know that the taxpayers are getting value for money. Having looked last week with bonuses at a salary that could top 430,000 seemed a huge amount of money. It would be improper of me not to ask the questions that we have to. Just to be clear for the committee, there are no bonuses. In my case, there is no pension contribution because I am not eligible for one. I saw that as well. I have read the accounts with interest. Douglas, you have some questions. As I can mean it, I am going to go back to customer charging now. It is a question for Alan first of all. I was going to ask, do you think that Scottish Water is striking the right balance in delivering on its investment commitments and keeping bills low for customers? You have touched on that in your opening remarks. Do you think that the charges should be increased more to the level that they could go to? I think that it is incredibly difficult when you have inflation running in double digits to try to get more money from a number of many income levels within society. To go to the convener's point, should I pay more? I can afford to pay more. I am not typical. Probably none of us in this room are that typical in that sense. The real question for us is, how are we going to protect those who genuinely cannot pay? In Scotland, we are better at that than elsewhere in GBA because we charge a lot of council tax, and at least that has some forms of relief available and asks people who are in wealthier houses to pay a bit more. However, I am not sure that that is enough, to be quite honest with you. If we are going to have the sort of revenue adjustment for the industry that is required, then more is going to probably need to be done. However, that essentially is a political decision. I can advise and I do try to explain that raising revenues and increasing levels of indebtedness is not a way forward. It is only a sustainable increase if people can actually pay it. Do you think that the overall pot, how we slice it might be different, should go back up to the CPI plus 2 per cent? As you suggested earlier, if we do not go back to that level, we are just going to store up problems for future generations, are we not? I think that you have to look at it in the context of what inflation is and what wage growth is and that sort of thing. You have to look at how much you are trying to raise and what else could you do to protect those who cannot pay. I think that there are things that could be being done. I think that there is a sort of in-the-round solution that might be possible. Hopefully, inflation starts to come down. I am not as optimistic as I would like to be on that front, but hopefully inflation comes down more quickly than some suggest. There is going to be a challenge. You cannot increase total revenues by, in our case, 40 to 50 per cent in the cases south of the border 100 per cent and not have some people struggle to pay. The question is how you are going to balance that and how you are going to make it possible. You might have some suggestions to the Government. What would your suggestions be then to the Government how they could raise that money but maybe not impact on those in the lowest standards? To give you one example, one of the things that I have in the past suggested is that the rate of council tax relief, at the moment it is 35 per cent for someone on 100 per cent council tax benefit, I have suggested that 35 per cent could be increased very marginally every year and that would mean that you could have a nominal, not real, nominal freeze in that household's bill year on year. That would mean that you would go from say 35 to something like 36.8 or something and it is a very spuriously accurate number, excuse me, I cannot do spuriously accurate numbers, but you go from 35 to 36.8 you go to 38.5 or something and that would mean that first people who are on 100 per cent council tax benefit, those who test as being the most vulnerable would not see any increase. That to me would be quite a good thing to do. The cost of doing that is relatively trivial to the rest of us. It is a rounding error to the rest of us so that to me would be something that we could do and we could look at but again it is a political decision. Do you think that it is right for customers to be paying more when you have mentioned earlier about there are still problems with efficiencies at Scottish Water, there are still issues with the quality of information that you are getting, there still seems to be issues about how they are spending, there are issues about spending money on bonuses for example. Do you think that it is right to be asking customers to pay more when there are still those underlying issues with Scottish Water? I think that there are two things that we have to try and keep separate. The first is that we have a need to invest for the medium and longer term and the reason that I am suggesting people pay more is to be able to address those investment needs that we have going forward. I agree with you that there are steps that could and should be being taken in operating costs and that those should be trending down in real terms and at the moment they are not. I would like to see that but to be absolutely clear when we set our price caps we are assuming that that efficiency happens. If it does not happen then we will be asking questions when we have got to the point of analytical confidence that it is not happening and we will be exploring why it has not happened and what is going to be done about it. Do you think that it is right to pay those bonuses when efficiencies are not being met? It is not for me to comment on the level of bonuses. In terms of customers being asked to pay more, maybe you have not done any research on that yet. Is there an appetite for customers to pay more if more is going to be spent on the service and whether that means better quality or more value for money? I suppose that there are two pieces of research that might help there. We have our overall piece that we are looking at in terms of speaking to consumers about how we adapt to climate change and the investment. We will have a sense of what consumers think once we have more findings from that in terms of the costs that that might have on them. We have also done some internal analysis as a piece of research looking at affordability for consumers in terms of the bills. Just coming back at thinking about the water charge reduction scheme and those sorts of schemes that are available, our research on that is not published yet, but we will share it when we do. At the moment, the team has developed that piece of research that we are engaging with stakeholders. It is showing as an analysis that water poverty has fallen in the last couple of years, likely as a result of the lower-than-inflation increases in bills, the water charge reduction scheme that went from 25 to 35 per cent. However, we are likely to see that unwind if bills are to go up. That is where we are looking to develop some policy around the modelling and looking at the different impact of bill increases and where we can make policy recommendations in terms of how we can support certain consumer groups, particularly those low-income ones. As we develop that, we will certainly share it with the committee, but we are aware that that any increase will have an impact. We do need to think about the pace of bills and the communication to consumers that is really important as to how it is being spent and why we need to do it. From what I gather, you have not really completed any of that research work. People understand that, yes, they are paying more, but it is needed for the future. That has not been done yet, has it? Our research. It is an on-going, two-month workshop with consumers, so we are still in the middle of those workshops. Should the Scottish Government be doing more to help to ease the pressure on increases in water charges? Some of the decisions around water charge reduction scheme are something that the Government will have to think about, but we are conscious that when people who are eligible for that scheme can sometimes often fall into debt because they do not know that they are liable to pay it. We asked the Government a few months ago to consider asking local authorities to do a bit more in terms of supporting consumers who fall into debt because they have not paid their water charge, so that 35 per cent reduction, they still have to pay some of their water charges, but they are exempt from council tax so that sometimes that can cause confusion and they do not pay, so we see consumers falling into debt there. We have asked the Government to ask local authorities to consider carrying out ability to pay assessments when somebody falls into debt there, to try to stop the issue that is becoming bigger than it already is for those particular households. I think that the next question is coming from Mark. If I could just ask a question on the back of that last question. I am interested to get a sense of whether the consumer research shows whether those consumers who can afford to pay may be prepared to pay more if it is linked to tangible environmental improvements. I suppose that the question crudely might be whether you should be prepared to pay an extra 30p if you are to get that improvement in that river or clean a beach or whatever. Is there a sense of that kind of thinking coming through? I think that it might be a bit early. I do not know if you have any comments, Fraser. It is very difficult for us to be able to say it in that way with that piece of deliberative research that we are doing. The piece of work is not around how much extra are you willing to pay to see projects around trying to adapt climate change or reduce emissions. However, there is previous work that the previous customer forum did around prices. This is pre-pandemic and pre-costal living crisis, but that piece of work showed that consumers were willing to absorb a small increase in price for doing things around improving infrastructure for climate change purposes. However, it is probably somewhat out of date now, so there is probably an argument for revisiting that as an issue. Given that we are in a different situation, things have moved on slightly. There have been a few large crises that, as a country, we have had to face. It is not our willingness to pay piece that we are doing at the moment, so it is difficult to say exactly what the risk appetite is for people. It is certainly worth us exploring further. However, we get a sense that people recognise as a problem with the system and where we want to get to as a country, but we have not got as far at the moment in trying to put a figure on that from our consumer research. It will certainly be interesting to see what that kind of research throws up, because, as you said, things have moved on, not just with a pandemic but also as a different narrative around how we use our water resources and the impact on that in terms of sewage and everything else. I will turn to Alan on the role of the WICS and whether your regulatory approach is having to evolve given the challenges of climate change. I am mindful of the fact that we have seen that with Audit Scotland starting to push its public audit approach now much more into counting carbon, much more into looking at how the public sector is delivering those long-term changes that are needed. What does that look like for WICS? You are set up with a very specific remit under the Act 2005. You are an economic regulator, predominantly, but we are in quite a different world now to where we were in 2005. How are you adjusting your regulatory approach to meet the challenge that we now face? That is a great question. We are having to do things differently. We want to do things differently. There is a sort of hidden nuance in your question, which suggests that us economists are only interested in pounds, shillings and pens. I do not think that that is quite right. It is certainly not in my case or the people that I work with. We are very interested in externality costs, whether those be carbon, social benefits or others. To give you a couple of examples of how things are different, one of the ways in which we have already taken a step in the last price review, we ring-fenced an amount of money that said, all right, sometimes there are going to be investment solutions, which would be cheaper in cash terms if you do them the environmentally friendly way. Sometimes those solutions might be more expensive in cash terms, but if the carbon or other societal benefits outweigh that difference in cash, we will give you extra cash to do the more expensive solution that is more environmentally friendly. That has been an open offer that has been out there for Scottish Water to take advantage of. They have not taken advantage of it yet, but that promise was there that they could have the money. We would give them the money if they took those steps. If I switch attention to things such as green, blue and natural solutions, one of the things that we are trying to encourage is to take an appropriate timescale in considering the costs and benefits of solutions. If you take a standard engineering appraisal, you might look at something over a 20 or a 25-year time horizon. What that does not show you are the upgrades in concrete and future rebuilds that will be required beyond the time horizon of your analysis. If I switch to opening culverts and having a natural river flow, once I have done it, I might have to cut the grass occasionally around it, but I do not have to do anything else. If you use a 50 or 60-year time horizon, that solution is going to become cheaper than the standard grey solution quite often. The way in which you go about analysing the project is going to have to be different. That is why the need for long-term strategic thinking is as important as it is. That is what we are trying to do. We are trying to give them as much flexibility as possible, but what has happened is that they have taken the flexibility, but they have been rather less good about the accountability of what they are doing specifically. That is what we have got to try and rein back and get a degree of proper control over. Thank you for that as a good, clear example of the challenges. I recognise your work in ensuring that externalities are internalised over a number of years, so please do not read anything else into what I am saying here, but I will ask a question around the role of Wix. We are heading towards new legislation coming forward on water and sewage specifically, but do you see the role and the way that Wix is set up that is fit for purpose for where we are now? Is there a need to perhaps look again at the role of Wix and the duties that you have, or are you unable to comment on that, or do you not feel that there is anything worth commenting on? My perspective is that the Parliament was pretty clever in terms of what it asked us to do. Much as I would like to think that I value sustainable development, a climate friendly Scotland, as important things, I do not really think that it is for the water industry commission to set policy. In fact, I know that it is not for us to set policy. The thing that is going to be increasingly important is that the objectives that come to us to be cost-stayed need to think in that sort of broader space. I think that the Scottish Government has been moving in that general direction, but there is probably more that could be done. I think that the consideration of thinking about charging separately for drainage and sewerage and that sort of thing, that is probably a really sensible thing to be doing because it will create incentives to harvest rainwater, to manage the surface area, to dump porous surfaces rather than hard surfaces, all of those good things. But people will only do it if there is a, I think that the convener said earlier, is there going to be a return on my money? Interesting concept. It would require a massive amount of work on most properties and buildings to separate, in many cases, wastewater from dirty water. Well, in some cases, it depends on what you are talking about, convener, right? So, if you are talking about the internal plumbing, right, yes, right, very difficult. If you are talking, say, roof water and where that roof water goes from the drains and goes through your guttering and down, right, that probably could be done much more easily than something internal. So, there are things that could be being done. Every little bit helps here. I agree. I am just thinking about all the buildings I see around Edinburgh, where their gutters disappear under the ground and I am not sure anyone probably knows where they are connected into. Well, I think that goes into the same category as the gardens that are all paved over in Central Edinburgh as well. They go to the same effect. Okay, thank you. Are there any more questions on this section before we move on to the next bit? Sarah, Monica, I was wondering if you had a question you were thinking about on project delivery. Are you happy that that has been answered on this section? Yeah, it was just a broad question. I had about net zero delivery. It was around whether Scottish Water's assessment remains on track to deliver as net zero commitments, whether the panel agrees with that assessment. So, are you happy that it has been answered or would you like to, Alan, to have an answer? Maybe a yes or no answer would be the ultimate answer, but if there is nothing to be added, it's the jury's out, perhaps. On a net zero progress, there's always more that can be being done, and I guess the day that, as a regulator, you're going to be satisfied that enough is being done is probably the day that you're not a regulator anymore. And Sarah, did you want to come in on anything on that? It was only to comment that last week I'd asked about the income generation. Scottish Water did, in terms of using their infrastructure for renewables, and it's kind of interesting to see to what extent that gives them additional income that can keep households bills down, a very short issue, but quite complex. Yeah, this is quite a complicated issue, but the way in which household bills would ultimately be kept down is if Scottish Water is earning a return above its cost of capital on whatever non-core activities it engages in, because its only source of funding—seed to capital, if you like—for those are the profits that it makes within its core business, all the profits already made. That's money that gets reinvested, so we as customers are contributing to all those. Hopefully, they're all going around returns and they will bring bills down, but it's not just about bringing bills down, it's about what contribution are they making to the net zero challenge that Scottish Water has ahead of it. That bit's got to get monetised as well, or at least considered if you don't want to monetise it. You've got to consider it in the same breath as the cost. That brings an end to this session, although we're going to keep some of the witnesses on. Alan and Emma, you are going to slip away, so I'm going to briefly suspend the meeting to allow you to slip away. I'd say to committee members, could we be back here at 25 past, please? Welcome back. This is our next item of business, gender item five, which is an evidence session with Consumer Scotland, part of our stage one scrutiny of the circular economy bill. I'm pleased to welcome back Tracy Riley, head of policy and markets for Consumer Scotland and Fraser Stewart, research manager. Thank you very much for providing a written submission to the committee. I'm going to start off with a couple of questions on that, if I may. Let's see if I've got them right. What you said in your evidence is that consumers were very much bought into the fact of the requirement for circular measures within the bill, but there was some confusion or dubiety between consumption and sustainability. I want to know if you feel whether the bill deals with those two things, which may butt up against each other a bit. Tracy, do you want to start off on that? I think it's important to say that we welcome the bill. The bill will support consumers and businesses to reduce consumption and use resources more efficiently. Broad terms, we know that consumers are concerned about climate change. We know that they want to do more. We know that sometimes they don't know what the thing they need to do is. We are concerned that we want to see the bill and the strategy that will be developed under the bill focusing on those actions that have the highest impact on sustainability. I wonder if Fraser might want to speak a little bit about our recent research in a moment. We found that two-thirds of consumers did not know or were not sure what they needed to do to help Scotland to reach its net zero targets. That is an issue of concern to us. On the back of that research, there remains significant scope to help to build consumer understanding on what they might do and what actions they might need to take and to look at the specific role that consumers have in helping us to meet our climate targets. We really want to ensure that consumers are at the heart of that transition and that the impacts on both small businesses and consumers are considered when assessing net zero and climate-related policies. Framework bills and seeing what is behind that are you saying that it is as important to see what is behind it as what it enables? The bill is very much a framework measure, so it sets a broad suite of measures that the Government may then bring forward further measures to implement those things, whether by regulation or by strategies. I think that strategy is a desirable thing. I know that in preparing for the Bill Zero where Scotland undertook international research on comparisons and it showed that having statutory measures rather than voluntary measures did help to prioritise the key measures to adopt, provided a framework for interrelated policies. There are a lot of policies that need to work together in this space, and a strategy is one way of ensuring that they do so, whether that be the national performance framework, the climate change plan, the sector plans that underlie that, packaging regulations or price marking orders, all of those things need to operate in alignment for consumers to get the best out of this. Although it is a framework bill, we think that the things that come under that as your alluded will be just as important as the bill itself. Thank you. As Tracy says, our research and we have shared the report with the committee for the survey work that we have just recently completed. What it is showing is that consumers are concerned about climate change. They see it as one of the big challenges for us as a society and a country, but what is coming through from that work is that there is a lot of confusion as well. They do not know what it is that they need to be doing to be able to make a contribution to achieving the targets. What makes that more complex is that it depends on the market that you are talking about. It depends on the level of interest and the level of engagement around what people are being asked to do. At the moment, our evidence is showing that there can be a lack of information. We often hear from local authorities that we provide information on how to take part in recycling or reuse schemes, but when we then speak to our consumers, that is not always the message that is coming back from them. There is probably a need for simplifying things and making sure that the core message is getting across. We would see the bill as an opportunity for getting some of that stuff done. One of the things that you suggested was that targets are going to be a way of helping people buy into this and inspiring them to be part of the solution. Will you give me some areas where you think that targets would be particularly helpful in a bill that appears to be quite frameworky? I know that you had quite a detailed session with, for example, Zero West Scotland last week. Recycling is one of those areas in which quite a lot of progress has been made, but progress is now beginning to plateau, which is one of the reasons we think that legislation is necessary rather than just leaving it to a voluntary approach. I think that some targets in that area will continue to need to be met, particularly on the percentages of waste going to various ways of disposing of it, whether it be, as we talked about earlier, incineration or landfill or recycling. One way in which the bill can help to drive sustainable changes is to help to increase the degree to which we are focusing, not just on recycling but on moving things further up the waste hierarchy, so that we are talking about reusing things, repairing things and extracting the value from those resources more effectively and keeping them in use longer. I think that targets around those types of measures quite strictly related to the waste hierarchy—I cannot say that phrase today, clearly—would be of definite benefit. Fraser, are there any areas in which you think that targets might on top of those, or are you happy with those? I think that targets are useful in terms of getting over the message that we are trying to head somewhere. We need to also be realistic, though, that when it comes to people making decisions at home on a day-to-day basis, a Government target probably is not what is at the front of people's minds. It is probably that I have all this stuff and I do not know what to do with it. Getting clearer messaging is useful, but it also needs to be the correct infrastructure and the facility to be able to do it in a way that is simple to do and fits in with the rhythm of people's everyday lives when we have lots of competing things to be achieving on a day-to-day basis. I will move on to Monica. What you are saying is that, if there is a target that is easy to achieve because it becomes second nature, that is the target that we should be aiming for rather than something aspirational that says that we are going to have 100 per cent of waste recycled. Is that what you are saying? If I am being too broad in what I am saying here, I think that the two areas that come strongly through our research when we ask consumers why they are not making more sustainable choices are convenience and cost. There needs to be affordable alternatives to things that are not sustainable at the moment. As far as I said, there needs to be things that people can fit into their everyday lives, which is why we have probably made reasonable progress on recycling because it does not require as much effort as seeking out a repair shop and physically taking something to a repair shop, whether that be a small electrical item or a piece of clothing. There are some great initiatives out there, places like the Edinburgh remakeery, the tool library, a lot of things in the deputy convener's constituency, but we would like those things to be second nature, not just to people living in that area but across the rest of the country in terms of buying new things constantly. Maybe you could approach a consumption decision differently by looking at whether the thing that you will buy will last longer or could be repaired rather than just buying the newest shiniest version of that thing every time the newest shiniest version is available. There are all sorts of ways in which we need consumers to be able to change those kinds of consumption patterns. In fairness to other members of the committee, I must say that there are other great places outside Ben's constituency area that do recycling Monica. I do not want to get in the middle of that to be, but thank you for your written submission, your written evidence and on powers for single-use charges. Your written submission emphasises the need to consider impacts on people, on lower incomes and vulnerable people in relation to single-use charges. My question is how should single-use charges be introduced and how should they be balanced with other measures or supports, ensure that they are fair? I think that the two earliest single-use charges are probably most effective whether there are accessible and affordable and sustainable alternatives available to the product that you are charging for or looking at banning. So, for example, we saw with plastic carrier bags, there were alternatives that were available and that were relatively affordable. Whether or not consumers in vulnerable circumstances such as low-income households will be disproportionately impacted by charges like that will depend on how that system is designed and we know that that again will come through secondary legislation. Certainly the Fairer Scotland duty assessment suggests that measures might be needed to support households to purchase longer-lasting goods. While those are cost-effective in the long term, those could be initially unaffordable unless there is targeted support. In the case of more expensive items, it is possible that more targeted financial support might be needed to be provided there. Again, as you alluded to, charges are only part of the solution. We need to look at how we can improve consumer awareness about the impacts of choosing single-use items. We also need to work with manufacturers to develop more sustainable products, using alternative materials and exploiting the technological advances that are now available. There are a range of measures at one end of working with manufacturers and at the other end of working with consumers. That type of action will need to be done at both ends of that spectrum. When you say targeted support, do you mean, for example, grants that would be funded by central local government, or something else? It could be about working with existing community organisations to supply alternative products to people that they are working with, and that is particularly important if you are looking at things in hygiene settings with groups that have health needs or in food-related settings. We know that it is often easier to get those types of initiatives to be successful if you are working in environments where people are already going. If you are working with community groups where people are already visiting them, whether that be food banks or other support sources out there, it is easier to get things done and to make those products accessible to consumers to provide them if you are looking at where people are already going, whether that be libraries, community centres or any other community-based organisations. In order to achieve a just transition for consumers, are there any other changes to the bill that you would like to see or could suggest? I think that, as the convener says, that is very much a framework bill. At this stage, it is difficult to identify any issues of that nature. We would be more likely to be able to identify them as where, for example, the strategy is brought forward for consultation, and we can look at developing, looking at importing then, or whether there are regulations on single-use charging. We are in touch with the Government team that are working on single-use charging and we would be very happy to work with them. On that framework approach, as the convener called it, is there a disadvantage in that approach or are you happy that the strategy will pick up a lot of the operational stuff? It is always valent. If you put too much in private legislation, it can have the effect of fossilising that meaning that you only need to go back and introduce more private legislation to amend what you have just brought in. At a time when there are a lot of technological advances, it probably makes sense to leave some flexibility to the implementation. The challenge that arises, as you heard from the hospitality and food and drink panel, is that businesses, including small businesses, want clarity and consistency and need to have a long enough time frame to be able to adapt to those changes coming in. Ultimately, that is probably a question for the committee as to whether that balance is right. It is always a discussion for this committee. I want to pick up on the disposal of unsold goods. Can you maybe talk us through what are the possible risks and opportunities for consumers and business of introducing restrictions on disposal of unsold goods? Have you looked at other examples of food or other goods redistribution schemes from any other countries to better understand some of the impacts? I have not had a chance to do that research yet. As others mentioned earlier, we are only in our second full year of operation. That is something that we may consider doing in future years, as we are looking at more international comparisons of what has and has not worked. I note that there was some discussion at previous panel regarding the definition of consumer goods and the width of that. It is fair to say that it is a very broad definition. Different considerations might apply to different types of goods. For example, textiles or electronics, which are longer life, will have different considerations to food or beauty products, which might have shorter shelf-life. It is important that businesses and retailers are able to understand exactly what will be caught by the definition of consumer goods. On the plus side, I would say that those measures can probably help to reduce overproduction and encourage more sustainable stock control measures. Once they are in place and businesses have had a chance to adapt to those measures, if they are delivered effectively, it should be able to help to reduce raw material usage and ensure that we get a maximum usage of the materials where those have been brought into life. It might also, as other panels alluded to, allow for development of new economic opportunities to connect up different parts of the supply chain in terms of distributing those goods that will no longer be able to be destroyed for onward use. One of the risks that we would like to see addressed is the risk that goods that are subject to recall or that are unsafe or counterfeit might be at risk of entering the supply chain again. The provision will need to be constructed in a way that ensures that that does not happen. We would recommend that trading standards bodies be brought into those discussions because they have considerable expertise, along with OPSSs that work on product recalls. Those would be my headlines and thoughts on that. I am happy to answer them. Building on what has already been said in response to colleagues, I just wanted to give you the chance to answer whether there are other areas of the bill, such as proposed powers for waste and surplus reporting by business, which could be used to support those sustainable consumer choices that you talked about. For example, by making information about environmental impacts more transparent and accessible. In general, what information do consumers need to make sustainable choices? To what extent is that information currently available? The questioner in reporting surpluses is not one that has previously heard to me. It is probably one that ZeroWay Scotland would be better equipped to answer. At a very broad level, yes, having that type of information available would help identify where surpluses were and where the further action needed to be taken. I am sure that your previous panels would also tell you that you needed to be mindful of the burden of reporting requirements as well. However, we would probably defer to any thoughts that ZeroWay Scotland might have. In that respect, I am sorry, you asked me if there was a second limb to the question that you asked me. What information do consumers need to make sustainable choices? I mean, feeding into what Mr Stewart also said about, you know, people are busy, they have got other things on their mind, you know, let's put ourselves in the shoes of the consumer. What information do they need and to what extent is information currently available that can be highlighted? It's difficult and I think that it's confusing in all honesty. Many of us want to make the right decisions but it's very difficult to judge green claims and I know that the competition and markets authority and the advertising standards agency is continuing to work on the issue of greenwashing to ensure that consumers can expect transparent and accurate information. Generally, consumers need reliable and trustworthy information. You need to be able to have a sense of how long something is going to last and whether that has value for money, a sense of whether, if you're buying a longer life item, that item is able to be repaired or not. You need to be able to understand labelling. So, if you're buying textiles and it says something about sustainability, what metrics are employed in that, are those metrics trustworthy? And also information about repairing, recycling labels on themselves can be quite confusing. It can be difficult to know whether something is able to be recycled particularly when there are different arrangements in place across different local authorities. So, those are the types of information that I can think of that would help consumers in the moment to make a more sustainable choice. I don't know whether there's anything else from our report, Fraser. You'd want to highlight? Yes, so what is coming through in our research is that consumers tell us that they want the information but it needs to be understandable information and it needs to be something that they can put into action. So, it's not a case of, on the back of all products, there's just been an extensive list of unfathomable information that has no bearing into what facilities are available in the local community. The message that we are getting is that people want to know more but it needs to be simple and information that they can then put into practice that fits in with their family life. So, it's not just about trying to get across to them. It's not just about providing huge amounts of information to people and then leaving it to them to make up their mind about whether it's something that they can do or how do they go about it. It needs to be appropriate information delivered in the right way at the right time and then that allows people to then see themselves as part of the solution. Building on that, you said in your written evidence that the new consumer duty will likely be relevant to measures under the circular economy bill, including strategic decisions on waste infrastructure and targets. I'd just be grateful if you could expand on that and how the new duty could interact with the new circular economy regulation if passed and how can the guidance support best practice in that situation? The consumer duty will come into force at the end of this year. We do have a statutory power to issue guidance to public authorities under that and that guidance has to be improved by Scottish ministers. Regulations designating the bodies that it will apply to will also be laid by the Scottish Government nearer to that time. We are working on that guidance at the moment but it will effectively require public bodies to consider consumer interests when they take strategic decisions. That might apply, for example, to provision of recycling schemes. It might apply to considerations about local businesses and how they support local businesses and what the priorities are in that respect. Until we have that guidance, which is still being worked on, it's difficult to know in practice. There will be a one-year period of implementation before that begins to be enforced. There are opportunities to bring consumer needs closer to the top of that agenda, if you like, to ensure that the needs of consumers are considered more as part of that decision-making rather than just the convenience or the operational nature of those decisions. We think that there are opportunities to help just against streamlined things so that consumers aren't the last thing to be thought of at the end of those processes and that that's built in much more from the start. We are also talking to the Government about how, for example, that consumer duty approach will integrate with some of the impact assessments that are already being made and with some of the business impact assessments as well. We would hope that we can begin to develop just a more coherent approach to all of those things through integrating those different sources of information. Are there any other comments that you would like to make on the bill that you haven't had the opportunity to state or emphasise through answers to all our questions today? I think that the things that I believe would be for consumers to be thought about as part of those processes and for consumer needs to be thought about, that involves having consistent messaging, that involves thinking about whether there are accessible and affordable alternatives and how those alternatives can be delivered particularly to those consumers who might be vulnerable. Those are the things that we would really like to highlight to the committee at this stage. We do think that the bill will provide a significant opportunity for dealing with some of those issues, but the strategy will be crucial in aligning what is a very complicated landscape and in trying to ensure that the different layers within that landscape are sitting in harmony. I think that such important points are not just in affordability, which is of course a significant pertinent, but accessibility being able to transport yourself to where alternatives are available and facilities are available is certainly something that is on my mind. I think that we need to learn lessons from previous things that have been done, particularly when it comes to single-use plastics and charging and banning, in that we have examples of things like single-use cutlery being banned. We know that, for example, that caused in its initial stages some applications for disability groups in terms of having unintended consequences and those were addressed and were dealt with. Again, we know that we have a relatively successful introduction of the plastic area by charging and we have lessons that can be learned from that in terms of communities understanding why this charge is being brought in, what effect it will have and also what is being done with the money that is being generated under those schemes. There are some really good lessons that are out there that can be drawn on from previous things that we have done. It is just about taking those into account and the design of any new schemes. It is taking people with you effectively. In paragraph 21 of your report, you talked about the need for or a suggestion for legal targets on the transportation and packaging of goods. If you want to comment on that, there is obviously a huge amount of Scotland that is rural, with a huge increase in packages being delivered during the pandemic. How would you see those targets? You are saying mandatory reporting of transport emissions. That would obviously raise awareness, but how would you do that or how should the Government do that? It is a difficult one because, as consumers, we have all become very accustomed to being able to hit the yes next day delivery at no extra cost, but when we order goods, I think that there will be some work to do to test consumer perceptions of whether they are willing to consider different alternatives, whether that be grouping deliveries into batches, whether that be using parcel lockers, whether that be looking at aggregating deliveries and potentially looking at things like integrating parcel deliveries with other things that are already in them. We know that that happens in the Highlands, for example. We will be doing some research and I do not know whether there is anything Fraser can add on that in relation to looking at consumer attitudes to decarbonisation later this year. That is one of the issues that we would want to test out, is that that kind of delivery charging model and how consumers feel about that and what potential there is for change in the sustainable sense? I do not have much to add on that other than that our post policy team is commissioning a attitude survey this year that we will be looking at, as Tracey said, decarbonisation of the parcel sector to try and get on top of in a bit more detail than we were able to do in our survey work. Get on top of the detail in relation to the issues specifically around decarbonisation in the parcel market. That is useful. The timing is that the bill is on going now, so you would be moving towards a potential amendment stage that would be useful for the committee to be kept updated with that issue. If there are now other questions, I have just got one at the end. As advocates on behalf of consumers and representing consumer interests, in your written evidence you said that it would be beneficial for strategies to be aligned as much as possible with strategies from other UK nations. One of the things that we have got to understand when it comes to this bill is whether there are going to be any problems with the internal market and what happens. What are your views? Is it all clear, simple, no conflict, or are there potential areas that we should be looking out at? The office of internal markets is relatively useful, so it is still challenging to ascertain what the implications of that office will be. We know that trade between the UK nations is certainly important in economic terms, and we know that in carrying out that trade, businesses are going to be looking for certainty, clarity and consistency. Generally speaking, businesses are still reporting that trade is working well within the UK nations. If you look at the recent annual report from the Office of Internal Markets, it is important to recognise that it is only a minority of UK businesses that do trade within the nations. Where requests under the Internal Markets Act to put forward probably the key factor that we think can influence the success or otherwise of those measures is very early engagement. I think that all we would want to say is that we would urge the implications of any decisions for consumers and small businesses are identified at quite an early stage during those intergovernmental discussions. I consider that as part of the assessment process. It just strikes me that if targets and regulations are placed on products up here and not south the border, it is not that inconvenient to make sure that you do not have to pay the extra costs that may be incurred by buying them in Scotland. Do you think that that is a realistic issue? I think that it is too early for us to tell what business behaviour will be as a result of the operation of the Internal Markets Office at this stage. It may be that the Office of Internal Markets itself is in a better position to answer that. We would not have any evidence either way. You would encourage early dialogue? We would encourage early dialogue and we would encourage identification of the implications for consumers and small businesses, both financial and otherwise. I was going to say that that was a perfect point to end, but Mark is going to trump me on that. Mark. I just inspired a further question. From your view, as regulatory innovation from devolved administrations, has that been useful in this space? You talked to earlier on about single use plastics, carrier bag charges. There is the issue about the operation of an Internal Market, but what is your assessment of policy innovation? It has been a bad thing to have some nations taking the lead. The legislation recognises that there are times when Governments might want to diverge in order to reflect more local needs or in order to reflect different strategic priorities within the nations. There are certainly things that have been done by one nation that have been adopted by other nations once they have seen how it works. I am thinking that there were measures that Wales put forward, for example, that have been adopted and that have been peat-free compost and other such detailed things, as the OIAB has been considering. It can certainly lead to the development of later more UK-wide solutions that are based on seeing how things have worked in practice in one of the nations, or at least to ensure that where divergence is developing, it is based on an evidence-based... Is that that way any potential confusion from consumers where they may go to Wales and go, I didn't realise that this wasn't on sale, because it has been banned or whatever. Is that... A difficult to speculate on at a more general level, I think that you would have to be looking at an individual measure to be able to say how much confusion or otherwise that would cause... It is probably more difficult for businesses. If they are operating on a UK-wide level, they need to be able to plan and they need certainty to encourage that planning. However, as we know, not every business is going to trade either within Europe or within the UK. It's difficult to give a very broad answer in that respect. Thank you. A very useful session and we're now at the end of it. Thank you very much for coming along today and sitting through both the sessions and answering more questions I think in the last session. It's very helpful for us. I'm going to suspend the meeting. Well, in fact, we're not. I think we're moving into... Yeah, we're going into a private session, so I'm not suspending it. We're just going to move into private session. Thank you very much.