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I acknowledge people’s concerns about the delays that have resulted from issues with the water supply and the ventilation system. If anything, though, the fact that those issues have been picked up demonstrates that lessons have been learned. The NHS assure service now has to sign off and approve a capital facility of that nature before it can be declared fit for use, and it has identified deficiencies and addressed those with the board. There are perhaps some lessons for the board with regard to how such a capital project should be managed and how it could possibly have avoided what happened, but the check system that we have in place has caught and identified the issue, and the appropriate measures will have to be taken.

As I have said, if anything, that demonstrates that we have learned lessons from previous experience of facilities that were about to be opened and problems that were identified. In this situation, the problems have been identified at an earlier stage in order to be addressed. Of course, that has resulted in some delay, and it would have been better if that had not happened in the first place. I expect us to look at what we can learn from NHS Grampian’s experience in taking the project forward, but I am reassured that the NHS assure process has captured and identified the problem to prevent its being embedded even further at a later stage in the project.

Increasing training opportunities is one part of managing the challenges. Stephen, do you want to say more about the workforce and what we are doing to recruit people?

Our individual health boards have to meet a recurring 3 per cent saving target in order to try to free up resource to invest in other parts of the health service provision and to ensure that they are using their resources as efficiently as possible. I should add that they retain that money.

We could do many things with additional financial support. I recognise that I hold the biggest part of the public sector’s budget but, as we have already heard, some boards are facing extreme pressures across a range of services. Choosing to put extra funding into the provision of mental health workers in GP practices involves taking money away from somewhere else. There is not a spare pot of cash to draw on—money has to be taken away from another service. Very few people ever say to me that I should cut money from this service and put it into that one instead because it is more valuable—all services are valuable and important.

We have committed to increasing the health service budget by 20 per cent this parliamentary session. We will continue to try to make as much use as we can of the investment that is available to us in order to maximise the benefits. I hope that if inflation comes down—although it looks as if it will not come down as quickly as we would want it to—and energy costs come down, we will see some of the financial strain that we are facing ease over the next couple of years, which will allow us to consider how we can flex some of that resource into other areas and front-line services in a way that we are not able to do at present. I hope that we will be in a position to do so, but we are also going through a period of public sector austerity, which is having an impact on our budgets.

No, that is led by boards directly, as they are close to the issues. For example, with the institute of neurological sciences at the Queen Elizabeth hospital, which you mentioned, the health board would be responsible for putting together a business case for additional capital investment in that facility. The business case would come to our capital allocations team, which looks at such issues and all the demands that come in from different boards. Again, the lead on such matters is taken by the boards, which know what their estates need and what the challenges are, and any business cases then come to the national health infrastructure board for consideration. Therefore, there is a mechanism for boards to utilise, as and when required.

On your second point about the challenges at Edinburgh royal infirmary, they reflect the fact that the hospital is now more than 20 years old and that a significant demographic shift is taking place in the country, with the population shift that we are seeing from the west to the east putting additional pressures on public services in the east of the country. That has happened over the past 10 to 15 years, and it is putting pressure on hospitals such as Edinburgh royal infirmary at the front end. Again, the board has the opportunity to look at putting together a business case for investment to expand that facility, and it would be for the board to lead on that and to submit a proposal for consideration alongside all the other health capital expenditure proposals.

Okay. Let us try to deal with some of the facts around those issues. In terms of safe staffing limits, work is being taken forward just now through workforce planning, engaging our trade unions, stakeholders and health boards around planning for that. Right now, we are on track to take that forward and deliver it within the next year. It is a complex piece of work, but the working groups around some of that are already progressing.

I wholly and fully recognise the financial pressures and the stress and anxiety that staff are experiencing. A big part of that has been because we have come through a pandemic, which has placed huge pressure on our NHS in a way that it has never experienced in the 75 years of its existence. We all need to recognise and acknowledge that.

If your focus on my predecessor is your intention, and if you want to look for examples of taking very direct and clear action to help to support and reward staff, I cannot think of anything that does that more than the significant improvement that we made in their pay and conditions through the agenda for change. The 14.5 per cent that was provided to staff was the largest uplift for healthcare staff in the UK, and more than was provided by the Secretary of State for Health and Social Care in England. That demonstrates my predecessor’s determination to provide financial reward and support to NHS Scotland staff, recognising the enormous contribution that they made during the pandemic. That is a very practical example of his taking clear action and showing clear leadership in delivering such a significant improvement in pay and conditions.

It does not stop there, because the agenda for change is being reformed as a part of that. Again, that was a direct request from the trade union groups. The working groups that are responsible for taking that forward have already started. For example, the nursing and midwifery task force that I mentioned is already up and running. It is due to have its second meeting, which I will chair. The working groups to look at the reform of different parts of the agenda for change are also being taken forward.

You mentioned terms and conditions as an example of demonstrating our commitment to supporting staff. In what was agreed and provided through the agenda for change, my predecessor demonstrated that commitment in a way that was not done in other parts of the UK, where other health secretaries took a different route and provided less. In my view, that is a clear signal of where our priorities are and how we value staff.

I do not pretend that our NHS does not face significant challenges. We are still recovering from the pandemic and its legacy. We are going through a period of austerity in the whole of the UK, which is having a significant impact on public finances. We have been dealing with record levels of inflation. Households are having to manage a cost of living crisis, which impacts on the health and wellbeing of staff. We are dealing with significant increases in fuel costs, which have an impact on public finances. Construction costs and maintenance costs are all up significantly. All of those have an impact on our NHS.

You can be absolutely assured that I will continue with the approach that was taken by my predecessor in valuing and recognising the staff and the important role that they play in our NHS, and maximising the level of investment that we put into NHS Scotland—as demonstrated by the £730 million that we have put in this year and the further £200 million on top of that, as I mentioned earlier. We are ahead of trajectory on the 20 per cent increase during this parliamentary session. Again, that shows clear leadership in putting finance into the health service where we can.

All those factors will play their part but, equally, we do what we can to support our staff and to recognise the important value—the critical role—that they have within NHS Scotland.

No single action alone would help to address issues around population shift and make our rural and island communities attractive for people to live and work; rather, a range of actions will have to be taken. You will be aware, for instance, of actions that have been taken in some rural areas on housing, as well of measures that we are planning to take to free up housing capacity in our rural and island areas. There is a combination of factors to consider, including transport infrastructure, housing, digital infrastructure, good-quality and sustainable health services, access to education and so on. They all play key roles in helping to make our rural and island communities attractive places for people to live and stay in. They cut across all Government portfolios, and some of the work that we are taking forward in Government is on trying to ensure that we take a consistent approach to delivering them and that we are prioritising them.

The scheme was designed on that basis. However, the much more deep-rooted issue—the committee has covered it previously—is the way in which companies, particularly suppliers, have been able to enter into the market without the necessary financial protections in place, and how that led to all the problems that we have had with higher costs and energy prices during the past 18 months in particular.

Ofgem is working on how it can put further protections in place to reduce the risk of companies falling out of the market so quickly and on greater financial protections for them because, in the end, the consumer ends up picking up all the associated costs. The threshold will help to make sure that the mutualisation process operates more fairly, which means that those who meet their obligations are not unfairly penalised because of other operators who do not meet their obligations.

That makes a change.

There are broadly three reasons for companies defaulting. Alongside greater volatility, greater competition in the marketplace results in suppliers dropping out of the market. We have discussed that at committee previously. The proportionate size of the mutualisation level has also failed to keep pace with the scale of the way in which the industry has developed. There are also aspects around the way in which companies pay into the scheme. For example, as it stands, some of the default comes about because the companies pay only on an annual basis, and that is sometimes after the end of the financial year. Ofgem is looking to move that payment to a quarterly basis where the money is ring-fenced during the year and, if the company goes out of business at the end of the year, that money can be recovered.

A variety of factors therefore result in companies dropping out of the marketplace and that then contributes to the overall cost of the mutualisation process and the defaulting on mutualisation, and that is why, given the volatility and greater competition of the past five years, we have seen a significant increase in the need for mutualisation to be exercised.

Thank you, convener, and good morning.

The draft order under consideration is a minor amendment to the Renewables Obligation (Scotland) Order 2009. Before I move on to the amendment, it might be helpful to provide some background information on the scheme.

The renewables obligation scheme was introduced in 2002 to support renewable electricity generation projects. Equivalent schemes are in place in England and Wales and Northern Ireland, and are managed under separate legislation. All three United Kingdom schemes are administered by the Office of Gas and Electricity Markets. Throughout its existence, the Scottish obligations scheme has remained largely aligned with the England and Wales scheme.

The scheme closed to new generation capacity across the UK in 2017, but it will remain operational until 2037. Some 565 existing generators are accredited under it. That accounts for 8.8GW of renewables capacity in Scotland.

The obligation requires electricity suppliers to source a percentage of the electricity that they supply from renewable sources. Accredited renewable generators are awarded certificates according to their output per megawatt hour. They are then sold to suppliers. That incentivises renewable generation by providing projects with revenue in addition to the wholesale energy price.

Electricity suppliers fulfil their obligation by providing the required number of certificates to Ofgem in proportion to the amount of electricity that they have sold. Alternatively, they can make a fixed payment into a buy-out fund at a higher price than procuring certificates typically requires. That fund is then recycled back to suppliers that provided certificates to Ofgem. However, when some suppliers fail to meet their obligations, a shortfall in the fund is created, which reduces the value of any recycled payments. A mutualisation mechanism exists within the scheme to prevent excessive shortfalls. If the shortfall exceeds a certain threshold, existing suppliers are required to pay the unmet obligations of suppliers that did not meet their obligations. In each of the past five years, mutualisation has been triggered due to an increasing number of suppliers defaulting on their obligations.

The amendment order under consideration will alter how the mutualisation threshold is determined under article 48 of the Renewables Obligation (Scotland) Order 2009. The mutualisation threshold has failed to keep pace with the growth in the scheme and proportionality. It is now considerably smaller than it was when it was first introduced.

The aim of the amendment is to better protect customers by restoring the balance of risk between generators and suppliers. As the cost of the scheme to suppliers is passed on to consumers in their energy bills, any increased costs associated with mutualisation are also passed on.

The amendment will alter the mutualisation threshold for Scotland from a fixed value of £1.54 million to 0.1 per cent of the forecast costs of the scheme across the UK. It will also restore alignment with the scheme in England and Wales regarding mutualisation as the UK Government made a parallel amendment in 2021 to move to a variable level of scheme costs. Critically, the amendment will ensure that suppliers and, in turn, their customers are not more likely to face the costs of mutualisation in Scotland than they are in England and Wales.

Finally, a further provision is included in the proposed Scottish statutory instrument, allowing Ofgem to publish the mutualisation threshold for the 2023-24 obligation period as soon as reasonably practicable after 1 April. Ordinarily, Ofgem must publish the threshold before the new obligation period starts but, given that the SSI will not come into force until 31 March, it is allowed to publish the threshold later than that.

For the reasons that I have set out, I believe that the proposed amendment is necessary and proportionate, and I am more than happy to answer any questions before we move on to the debate.