Enterprise, Trade and Investment (ETI) Committee Report 

3rd Report, 2011

Annual Report 2010-2011

Remit and Membership

Remit:

The Committee for Enterprise, Trade & Investment (ETI) is a Statutory Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Assembly Standing Order 48. The Committee has a scrutiny, policy development and consultation role with respect to the Department for Enterprise, Trade & Investment (DETI or the “Department”) and has a role in the initiation of legislation.

The Committee has power to:

• Consider and advise on Departmental Budgets and Annual Plans in the context of the overall budget allocation;
• Approve relevant secondary legislation and take the Committee stage of relevant primary legislation;
• Call for persons and papers;
• Initiate inquiries and make reports; and
• Consider and advise on matters brought to the Committee by the Minister for Enterprise, Trade & Investment.

Membership:

Alliance : Sean Neeson
DUP: Paul Frew, Paul Givan, William Irwin
Independent: Gerry McHugh
SDLP: Alban Maginness (Chairperson), Alasdair McDonnell
Sinn Fein: Paul Butler (Deputy Chairperson), Jennifer McCann, Claire McGill
UUP: Leslie Cree

On 13 September 2010, Mr Paul Givan was appointed as a member of the Committee for Enterprise, Trade and Investment.
With effect from 13 September 2010, Mr William Irwin replaced Mr Gregory Campbell.
With effect from 13 September 2010, Ms Claire McGill replaced Mr Daithí McKay.

Annual Report 2010-2011

1. This report covers the work of the Committee during the Assembly year 2010-2011, from 1 September, 2010 to 24 March 2010.

2. During the Assembly year session the Committee met 23 times including 11 times in partly closed session. The reason for most of the closed session was to consider the draft report on the Committee’s Renewable Energy Inquiry.

Primary Legislation

3. The Committee has responsibility to consider primary legislation that originates from the Department. In the 2010-2011 session, the Committee considered following two Bills:

i. The Tourism (Amendment) Bill, in which the main principles were:

• To change the frequency of the statutory inspections of tourism accommodation (“certification”);
• To change the mechanism for appointing the chairperson of the Tourist Board; and
• To make provision for the potential transfer of tourist accommodation grant from Invest NI to the NITB.

ii. The Energy Bill, in which the main principles were:

• To safeguard the interests of customers through the provision of guaranteed standards of performance applicable to gas licence holders;

• To provide a sound and binding basis upon which suppliers will supply customers where supplies of gas are taken without the customer having first agreed contractual terms with the supplier, through the provision of deemed contracts;
• To extend the powers of entry into premises for gas companies so that they broadly align with the powers available to electricity companies; and
• To help ensure the uninterrupted operation of gas and electricity networks through the introduction of a special administration regime relating to network companies which are threatened with insolvency or become insolvent.

4. The Committee recommended amendments to clauses in the Energy Bill that related to reasons for power of entry, reasons for meter approval (to include repair) and provisions for meter tampering. The recommendations for changes to the latter two were accepted by the Department and the Bill was amended to reflect the recommendations. In relation to the suggestion to remove the phrase “culpable negligence” (relating to power of entry), the Department proposed an alternative amendment during the consideration stage of the Bill to replace the term “or by culpable negligence” with the term “or recklessly.” This was passed by the Assembly.

5. The original policy relating to the Tourism (Amendment) Bill included a proposal to include the frequency of statutory inspections in the primary legislation. The Committee believed that this could result in difficulties in changing the frequency if, in the future the proposed frequency of every four years was considered too lengthy or too short. During pre-legislative scrutiny, the Committee suggested that powers to change the frequency of statutory inspections be allowed by way of subordinate legislation. The Department agreed that this approach would be preferable and, when it was introduced to the Assembly, the Bill was drafted so as to allow the frequency of statutory inspections to be changed by way of subordinate legislation.

6. The Committee stages of both bills were completed during the 2010-2011 session and Committee reports laid in the Business Office.

Subordinate Legislation

7. The Committee has responsibility to consider subordinate legislation that originates from the Department. The topics of the legislation vary from business legislation (e.g. insolvency, administration, employment) to energy and electricity, tourism and health & safety. The Committee considered and supported the approval of 14 items of subordinate legislation in the aforementioned categories.

Inquiries

8. During 2009-2010, the Committee commenced a renewable energy inquiry entitled, “Barriers to the Development of Renewable Energy Production and its Associated Contribution to the Northern Ireland Economy” and continued the main body of work in the 2010-2011 session.

9. The Committee’s purpose for the inquiry was to critically examine the current level of support and assistance made by key stakeholders in the renewable energy sector to the development and growth of renewable energy production.

10. Specifically, the Committee’s inquiry sought to:

• Consider the current mechanisms at national, regional and local level to support and assist renewable energy production;
• Compare the mechanisms for support and assistance in Northern Ireland with those in other EU member states considered to be in the forefront of renewable energy development;
• Examine the support and assistance available to SMEs in the renewable energy sector to develop renewable energy technologies;
• Examine the support and assistance available to SMEs in the renewable energy sector to grow and develop their businesses;
• Assess the appropriateness of current mechanisms to develop and grow both local renewable energy markets and export markets;
• Assess which EU member states are considered to be in the forefront of renewable energy development both overall and for each type of renewable energy; and
• Report to the Assembly with full findings, conclusions and recommendations for overcoming the barriers to the development of renewable energy production and its associated contribution to both the energy mix and the Northern Ireland economy.

11. By the closing date for submissions approximately 53 substantive responses were received covering a range of issues of concern to businesses, renewable energy support organisations, public sector bodies, other statutory committees of the Assembly and individuals. The Committee took both oral and written evidence and published the report into the findings of the inquiry on 14 February 2011, when the report was debated in the Assembly.

12. Key conclusions and recommendations from the report surrounded issues around Government vision and policy, Government communications, incentives for renewable energy production, support for the development of renewable energy technologies, support for businesses, electricity grid connection, electricity grid infrastructure, planning and consents and public buildings and renewable energy. As the report was published so close to the end of the mandate, the Committee was content for the incoming Minister to respond to the new Committee in the new mandate.

Budget Scrutiny

13. The Committee regularly scrutinises and advises on DETI’s budget in relation to allocation, expenditure and reductions. The Department also briefs the Committee whenever their quarterly monitoring rounds are completed. Monitoring rounds include the entire breakdown of the Department’s budget, reduced requirements in any project or section within the Department, any new monies becoming available. During the last fiscal year, the Department had to readjust the budget (reclassification, reallocations, and reduced requirements), due to reductions in public spending. The Committee closely examined these budgets and reclassifications.

14. In the 2010-2011 session, the Committee specifically scrutinised the Department’s input into the Comprehensive Spending Review (CSR) 2011-2015 and subsequently, the Department’s spending and savings plan for the next budgetary period. The Committee received oral briefings from the Department and Invest NI, along with those organisations that submitted their views on the implications of the 2011-2015 draft budget. Following these briefings, the Committee expressed concerns regarding the significant reduction in Invest NI’s budget, reduction in capital expenditure and the existence of spending and savings proposals in the absence of a strategy for economic development or an investment strategy. The Committee also welcomed the DETI Minister’s intentions to prepare a case to improve on the proposed allocation.

Performance Scrutiny

15. The Committee regularly receives written briefings from the Department on its performance against the Public Service Agreement (PSA) targets set by the Programme for Government (PfG). The Performance Monitoring Framework for the PSA targets comes in three parts: Productivity and Growth; Tourism; and key goals and commitments not adequately covered within PSA targets.

16. Most of DETI’s PSA targets have been met. However, there are approximately half of targets under Tourism that have been categorised as in danger of not being met. The Committee has queried the Department several times regarding these tourism targets and the Department and NITB officials advised the Committee that red ratings are due to the current economic climate but that they remain confident for the longer term projections up to 2020. The Department informed the Committee that the Head of the Civil Service wrote to the DETI Permanent Secretary outlining the need for urgent action to maximise progress towards achieving these targets. The Permanent Secretary has agreed to address the concern and take remedial action. DETI has agreed to finalise a cross departmental action plan for Tourism covering specific actions for 2010-2011 and providing an action plan for the first phase of the new Tourism Strategy for NI from 2011-2014.

17. The Committee regularly receives updates of the Department’s performance on various action plans such as the Social Economy Strategy, the Business Tourism Strategy and Invest NI’s performance.

Policy Scrutiny

Economic Strategy

18. In January 2011, the Committee considered a consultation document for the NI Executive’s Priorities for Sustainable Growth, which is one part of formulating a new economic strategy for Northern Ireland. This arose as a result of the Independent Review of Economic Policy. The Committee collated responses from the relevant committees and submitted them to the Department.

Strategic Energy Framework (SEF)

19. The SEF aims to set out the policy direction on energy for the energy industry and consumers, and establishes the Department’s key milestones and targets. The SEF is Northern Ireland’s main strategy for energy for the next 10 years. The Committee will also have a key role in monitoring its implementation over the coming years and advising the Department on the direction the SEF is taking. Department officials have briefed the Committee several times on the development of the SEF.

20. Key issues explored by the Committee included sustainability and security of supply along with associated cost implications, renewable energy, the environment and the Single Electricity Market. It was the renewable energy element of the SEF that prompted the Committee to consider how Northern Ireland could further develop in this field. This led to the Committee visit to Europe and to the Committee’s inquiry into renewable energy.

21. In September 2010, DETI published the final SEF. Following publication, the Committee tabled a motion and called on the Assembly to take note of the document (detailed later in this report under the heading “Committee Motions”). In the next session, the Committee will continue to scrutinise the Department’s work on the SEF and that the recommendations in the Committee’s renewable energy inquiry are incorporated into a future SEF.

Northern Ireland Renewable Obligations (NIRO)

22. The NIRO is the main financial support mechanism for encouraging the development of renewable electricity generation in Northern Ireland. It places a legal requirement on electricity suppliers to obtain a proportion of their supply from renewable energy sources. It is based on a system of Renewable Obligation Certificates (ROCs) that are provided to renewable generators by Government, and then are issued to suppliers. The number of ROCs are dependent on MegaWatt Hours (MWh) produced, and vary depending on the technology that is used to produce the electricity.

23. In the 2009-2010 session, members were dissatisfied at the number of ROCs assigned to energy produced by anaerobic digestion in the 2010 NIRO and urged the Department to increase this for the 2011 NIRO. Consequently, in July 2010, the Department released its consultation on the NIRO 2011and an increase for ROCs under anaerobic digestion was one of its main proposals.

24. In the 2010-2011 session, members considered the consultation responses on the Department’s proposed changes for NIRO 2011. Almost all of the respondents were in favour of the increased support for anaerobic digestion. In the same consultation, there was a proposal to set the greenhouse gas (GHG) emission reduction requirement at 60% rather than the 35% required by the EU (for biomass and biogas installations). Members were concerned with this proposal, as key stakeholders did not agree with the proposal. Therefore, the Committee received oral briefings from the Agri-Food and Biosciences Institute (AFBI) and the Department for their views on the proposal. Following these briefings, the Committee recommended that the requirement remain at 35% rather than 60%. The Department subsequently removed this proposal from the NIRO 2011.

Draft Tourism Strategy

25. In the 2010-2011 session, the Committee considered the summary of the responses to the consultation on the NI Tourism Strategy. The final strategy is due to be considered in the next session.

Social Economy Enterprise (SEE) Strategy

26. The vision for the Social Economy Enterprise (SEE) Strategy is to have an enterprise environment which encourages greater social entrepreneurial activity and is supportive of those SEEs that want to grow.

27. In the 2009-2010 session, the Committee agreed to endorse the strategy subject to the inclusion of financial commitments and clear targets for its implementation. Members also considered the 2010/2011 SEE Operating Plan and agreed to receive updates on the implementation of each of the targets every 6 months and ask for more detailed information on the dates for the implementation targets.

28. In 2010-2011 session, the Committee once again received an oral update on the implementation of the SEE Strategy and the action plan. Members welcomed the funds and resources that Invest NI and the Department have dedicated to the Strategy.

Engagement

29. The Committee hosted an event in the Long Gallery on 17 February for the launch of its report into the Renewable Energy Inquiry. Delegates included those organisations that submitted written and oral evidence to the Inquiry. There were speeches from representatives from the approximately 60 guests that attended and a question and answer session with committee members.

Committee Motions

30. The Committee brought forward 2 motions for debate in Plenary; a take note debate for the Strategic Energy Framework and the debate for the Renewable Energy Inquiry report.

31. The take note debate for the Strategic Energy Framework was welcomed by the Assembly. Many MLAs shared the Committee’s concerns regarding diversity of renewable energy supply, collective responsibility of government, infrastructure issues, development of competition and the contribution of the renewable energy sector to the overall economy.

32. The Committee brought forward a motion for debate on the Inquiry into Renewable Energy. The Recommendations in the report were supported by the assembly.