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Contingent Liability: Microgeneration Certification Scheme

Volume 627: debated on Wednesday 19 July 2017

The microgeneration certification scheme (MCS) is a scheme that certifies products and installers of renewable technologies to provide assurance to consumers about the quality and standard of their installation.

My Department is going through the process of transferring the assets comprising the MCS to the MCS charitable foundation, as part of establishing the MCS as independent of Government. This will help contribute to a renewable technology market that is sustainable in the long term, and will limit the Government’s liabilities in relation to the scheme.

The operation of the MCS brings with it an existing contingent liability which has been previously covered under the annually disclosed overarching BEIS contingent liability for potential liabilities relating to claims from suppliers and third parties.

In relation to this, I wish to inform Parliament of a departmental minute which will be presented to Parliament today, giving notice of the Department retaining this contingent liability for which we would issue indemnity provisions to the MCS charitable foundation and the MCS service company. This contingent liability relates to the risk of potential complaints from affected parties regarding events which occurred during the period prior to the transfer, when BEIS held a position of responsibility for the MCS.

We believe it is appropriate to retain this existing contingent liability, even as we transfer the assets to the MCS charitable foundation. By offering this indemnity and enabling the transfer to proceed, the Department benefits from ceasing to take on further liabilities from the point of transfer onwards. The indemnity would be uncapped and last for a period of six years from the date of transfer.

We believe that the risk of any successful claim is low in relation to this contingent liability.