Tuesday 28th November 2017
(6 years, 11 months ago)
Public Bill CommitteesSmart Meters Act 2018 View all Smart Meters Act 2018 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 28 November 2017 - (28 Nov 2017)
The Committee divided: - Ayes: 8 / Noes: 9 - Question accordingly negatived.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Thank you, Mr Gapes. I wondered whether you were looking for someone else to stand. I thought that perhaps there had been a reshuffle without my being told, or something like that.
Richard Harrington
It is beyond most of our powers, but I am delighted still to be in position to try to resist the amendment—in a civilised way, I hope—and to reassure the hon. Member for Southampton, Test. As ever, I accept fully the nature and tone of his amendment, because he means exactly what he says. I take a similar approach in reading his amendment and trying my best to consider whether it is practical to agree with what he says or whether there is a way I can accept what he says so that he accepts what I am trying to say. I am conscious that hon. Members are itching to make a lot of progress on the Bill, but I will try to answer his points.
I think that the hon. Gentleman would accept, despite the fact that we are trying to do this in different ways, that the Government are trying to protect the interests of energy consumers in this whole programme. The only current licensable activity is the provision of a smart meter roll-out communication service, so the situation is comparatively simple. Like a lot of things in legislation, it is really more complicated than that, but that is what it boils down to. We have done this to ensure that we have a communications and data system that supports secure, reliable and interoperable services for smart meters. The Government would not remove this service without putting in place an alternative. We currently consider that doing so would not be in line with the Secretary of State’s principal objective, for which he or she must use their discretion.
Let me explain the concern from the Government’s point of view. In future, the whole smart meter system will expand and become, we hope, exponentially greater than it is now—not just because everyone will have one, but because it will be able to do so many other things that we all want. I am thinking of operations with apps. Perhaps water meters or other devices in people’s homes could be applied to it. The current licensable activity may then be redundant, because things will have developed beyond that. In such circumstances, it would not be appropriate, or indeed in line with better regulation principles, to leave in place a licensable activity that is not required in the future.
I hope that everyone accepts that the DCC has a fundamental role in driving the smart meter benefits. I do not currently consider that we would exercise the power to remove licensable activities, but I feel that it is necessary for the Secretary of State to keep that, given that principal objective. I hope that the hon. Gentleman will consider our concerns, just as I have tried to consider his, and agree to withdraw the amendment.
Dr Whitehead
I am not quite sure what that meant. I understand that at present, as the memorandum indicates, there is only one licensable activity that could be removed, and that is indeed the DCC service. The Minister rightly puts it to us that it is difficult to conceive of circumstances in which the Government would decide to remove that licensable activity, but that is not what legislation is about. Legislation is not about whether, on the balance of probability and taking all things into account, including the bona fides of the Government, something that one might legislate on should not be legislated on because it is unlikely to happen; legislation is supposed to ensure that, in all circumstances we can think of, those things that we do not want to happen should not happen.
Although I take on board what the Minister has said—I do not doubt for one moment his bona fides—I do not think that he has added anything to the debate this morning, other than to repeat what was in the Department’s memorandum.
Richard Harrington
The hon. Gentleman has been gracious in his comments about me personally, about the Secretary of State and, I hope, about most people who would do the job, but should there one day be an evil Secretary of State who, in the middle of the night, while plotting the destruction of society, realised that they could use this power, which in the scale of things is pretty tiny, how would they use it in so destructive a way that a future Parliament might think, “Oh, I wish we had been stronger in this Bill and that we had the power suggested by the then hon. Gentleman”? I hasten to add that I am not hoping that he will have gone to the great energy supplier in the sky, as we all will at some stage. The serious point is this: were that to happen, what is the bad way in which this power could be used?
Dr Whitehead
A future Secretary of State does not necessarily have to have quite the intents suggested by the Members making non-verbal interventions. I can easily envisage such circumstances. For example, bearing in mind that the present DCC is set up as the subsidiary of a private company—
Richard Harrington
I do not know whether to thank the hon. Gentleman for giving way or not.
The Chair
I think you are responding to the amendment. It makes it a bit more procedural. You are allowed to speak more than once, and we have not yet got to the summing-up speech from Dr Whitehead.
Richard Harrington
I was going to thank the hon. Gentleman for giving way, but I will not now. I am grateful that I am not abusing the system, which I was going to.
I think we have to agree to disagree on this point, because I believe that, given the restrictions in the Bill and everything else, it is a minor point. I accept that the hon. Gentleman is not doing it to bring down the Government or anything like that, because opposition is opposition. I respect him not just for his position but, much more than that, for the person he is. If he wishes to press the amendment to a vote, then I understand that I have not persuaded him. If he wishes me to ponder the matter further, or even to meet him and talk about it, I am perfectly prepared to do so. I think it is making a mountain out of a molehill.
He thinks changing the licensable activity is quite an important thing that needs to be brought before Parliament. Any decision to remove a licensable activity would still be subject to parliamentary scrutiny through the affirmative procedure, but it is ultimately a question of what discretion a Secretary of State should have in the consumer’s interest. We could politely agree to disagree on that, but if the hon. Gentleman would like to discuss this further and withdraw his amendment for that purpose, I would respect both things. At the moment, I disagree with him not because we are the Government and he is the Opposition but because I do not see the significance of the points he is making.
Dr Whitehead
This is not a cosmically important thing, and I agree with the Minister that it is unlikely to change the course of the roll-out, but I say gently that that is not necessarily what we are supposed to do in Committee. We are not supposed just to grade the importance of the things in the Bill and then decide to act on them according to their relative importance; we are supposed to examine the Bill line by line and, between us, suggest ways that it can be strengthened so that it is as good as we can make it when it returns on Report and Third Reading. That means that things may be added to the Bill that are not in themselves important but could be regarded, in the context of the work we are supposed to do in Committee, as a result of our discharging our responsibilities properly.
I am in a bit of a dilemma. I agree with the Minister that this is not a really important thing, but I cannot see for the life of me why it cannot be placed in the Bill so that at the end of its passage it is as good as we, between us, can make it and that it contains things that, although they may not be that important, add to its overall strength. I simply have not heard any reason why that cannot be done. I have heard reasons why the amendment is not that important. The Minister might suggest—and he might be right—that if we put it to a vote we would over-emphasise its importance. However, I am—“annoyed” is not quite the right word—a little concerned that something that can be seen as reasonably obvious, if not as significantly strengthening the Bill, regardless of our party positions or of the position we take on the Bill overall, is rejected in this way. For that reason, I seek to divide the Committee.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss new clause 4—Conditions of extension of time for exercise of powers—
‘(1) Prior to making any directions during the extended time period provided for in section 1, the Secretary of State shall commission a review which shall consider—
(a) data access and privacy issues arising from the smart meter rollout,
(b) the benefits realised during the smart meter rollout and the scope for greater benefits to be realised,
(c) the effectiveness of the policy framework for future smart metering operations.
(2) The Secretary shall lay the report of the review in subsection (1) before each House of Parliament.’
This new clause requires the Secretary of State to carry out a review of matters relating to the current status of the smart meter rollout.
Richard Harrington
The new clause would make it a condition of primary powers being extended that the Secretary of State carry out a review of smart meter roll-out, and that the review cover the data access and privacy issues, the benefits realised during the roll-out and the scope for greater benefits to be realised, and the effectiveness of the policy framework for future smart metering operations. I will now turn to each area that it is suggested be covered in the review in turn.
In 2012, the Government established a data access and privacy framework to ensure consumers’ interests are protected. This framework applies to domestic consumers and micro-businesses. It seeks to strike a balance so that consumer privacy is protected while enabling the proportionate access to data necessary to deliver energy system-wide benefits. For example, the framework determines the level of access that energy suppliers, networks and authorised third parties can have to energy consumption data. It also establishes the purpose for which data can be collected and the choices that consumers have about that. The central principle is that consumers have control over who can access their detailed energy consumption information, except when it is required for regulated purposes, a good example of which is billing.
The framework was welcomed when it was established, and the Information Commissioner’s Office, which is the data protection regulator, commented that it felt the framework offered a good level of control and protection for consumers. We publicly committed to carrying out a review of the framework, and intend to do that in 2018. Subject to the extension of the relevant powers, we will then be able to act quickly if there is any evidence that the framework is not delivering against its objectives.
On the second area, the Government are focused on the delivery of benefits and have regularly updated the cost-benefit analysis for the smart metering programme to reflect the latest available evidence. We are also very keen to ensure that even greater benefits can be achieved than forecast. For example, that is why we published our clean growth strategy and made a commitment in it to undertake further research and to trial approaches to using the data from smart meters to provide tailored post-installation energy efficiency advice on heating—the largest part of domestic energy bills—so that consumers will be able to make further changes to reduce consumption while maintaining comfort levels. That will further increase benefits.
We are looking at innovations that build on the smart metering infrastructure more widely, for example through the use of consumer access devices, which will enable greater home automation. I think that that is critical for the future and know that hon. Members on both sides of the Committee will agree—the nirvana is everybody having an app on their phones, knowing exactly what is going on in their house or flat and being able to adjust accordingly their patterns of usage, not just of heating but when they want to put on a washing machine or any other device, to save electricity. In fact, that may be done automatically in the future through algorithms and things. I could not possibly understand how they work, but I know they will transform people’s lives. As we know, the whole smart meter system is to provide the building blocks for that to happen.
In terms of policy framework—the third area that was suggested for review—we have made a public commitment to undertake a post-implementation review of the smart metering programme, drawing on evidence from the roll-out itself and a period after its completion during which smart metering systems will have been operating in steady state. The review will evaluate the overall programme, the realisation of the benefits and the overall effectiveness of the policy and regulatory framework.
Dr Whitehead
There is not too much more to say on clause 1 stand part, inasmuch as we have undertaken a good examination of the clause. We have made a number of suggestions to strengthen it. Although we had a little fall-out just recently, in general the discussion has proceeded in such a way that we are satisfied that the points we have raised have either been taken into account, explained properly, or given rise to some undertakings about how matters might proceed not within the context of the clause, but perhaps administratively in backing up the clause. Therefore we would not want to oppose clause 1 stand part.
New clause 4 has been grouped with the clause 1 stand part debate. That is sort of the wrong way around, because the Minister has given his assurances about new clause 4 before I had the opportunity to say what I wished to have assurances about, but we will let that one pass and proceed as if it was the other way around. Just to explain to the Committee, new clause 4 is drafted very specifically, again, in the context of the memorandum in which the Department set out the Delegated Powers and Regulatory Reform Committee, where the Department states its justification for taking powers in clause 1. It says:
“We consider this extension was necessary so that the Government can remove any barriers to the roll-out of smart meters which emerged and ensure that benefits for consumers are maximised in the continuing operating of smart meters following completion of the roll-out”.
It then states:
“The Government has made public commitments to undertake reviews in the following areas of the smart meter roll-out…data access and privacy to ensure the regulatory framework remains fit for purpose in 2018…benefits realised during the roll-out to assess whether we can do anything to encourage greater benefits in 2019…overall effectiveness of the policy framework post-implementation for future smart metering operations in 2021”.
As hon. Members will observe, that is exactly what has been set out in subsection (1)(a), (b) and (c) of our new clause. The commitments to reviews that the Department has already undertaken in principle for the extended period of the roll-out are transferred to the Bill. The Minister has already mentioned this morning his commitment to undertake an annual review that, I assume, would incorporate these particular concerns and considerations.
Richard Harrington
That is a perfectly fair assumption —that is our intention.
Dr Whitehead
I thank the Minister for that clarification. A commitment to an annual report to be laid before both Houses goes a long way towards satisfying our concerns about whether these particular wider commitments should be placed in the Bill. I thank the Minister for his commitment and will not press new clause 4 to a vote.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I want briefly to add my voice and that of my party on new clause 4. I know that the Minister will agree that we need continually to reassure consumers that their data are securely and robustly protected in the course of this roll-out. I know that he will agree how important it is to ensure that meters currently installed are always to the highest specification of function and data security.
The Minister will also be concerned—like, I am sure, everybody else in the room—about the evidence that was taken that the smart meter network is being installed before its requirements as an internet-connected energy system have been fully determined. We would expect—I know that the Minister will feel this—that the Minister would do everything in his power to ensure that consumers are best protected amid this roll-out.
I impress on the Minister and remind him of the concerns raised in March 2016 in the Financial Times that GCHQ had intervened in smart meter security, claiming that the agency had discovered glaring loopholes in meter design. As we move forward with these considerations, I want to impress those concerns on the Minister.
Richard Harrington
I thank the hon. Lady for her comments and am very pleased that GCHQ did that, because it shows how it was included in the process of getting to the security stage that we are at today.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Smart meter communication licensee administration orders
Question proposed, That the clause stand part of the Bill.
Dr Whitehead
We have talked about the extension period; the second part of the Bill is about administration orders. These might be made in the context of the DCC’s failure to operate either because it has gone bankrupt or because its supply of funds dries up or is diluted for any reason and it can no longer continue—it is entirely dependent on the resources it receives from suppliers to operate. A number of clauses in the Bill relate to setting up a procedure to enable the roll-out to continue by recovering the DCC’s procedures, if and when in administration, in such a way that the flow of the roll-out is not interrupted. At this stage of the legislation, therefore, we need to concentrate on whether the things put forward—what can and should be done by Government to make that change while at the same time continuing with the roll-out in the unlikely event of administration—are good enough to ensure the roll-out continues and we achieve the purpose of ensuring a smooth passage.
I want to make two brief points, to which the Minister may want to respond. The first is about provisions in the Bill relating to what are unlikely events that probably will not happen, but conceivably could. It might be prudent to legislate to ensure that we are in a position to do something in the unlikely event of that happening. We had a debate about that recently in this Committee. What we are doing in considering the second part of the legislation is roughly what we were doing in the first part to try and strengthen the Bill. We did not succeed in doing that, but we will not be churlish or childish about that. We will go along with the idea that this is an unlikely event, for which we have to make prudent legislation to ensure that catastrophe does not take place as far as the roll-out is concerned.
The second point is that we are legislating this morning for an event that could occur to an organisation that has been in operation for several years already without this legislation being on the statute book. One might ask, therefore, what was happening in the meantime. Were we operating over a period of time where there was no protection for the smart meter roll-out programme from the possible bankruptcy or administration of the organisation that was essential to the running of the whole operation? That seems to me to be a considerable omission on the Government’s part.
Dr Whitehead
My hon. Friend is right. That is the situation at the moment, and that is what the Bill, very late in the day, seeks to rectify. I am not saying that one should not take part in the rectification of that problem. Clearly it should be rectified, and we need legislation that protects us in those circumstances.
I wonder if, as a gateway into this part of the Bill, the Minister might share some thoughts with the Committee on why this has not happened before and why we have had these circumstances for several years. I appreciate that it was before the DCC went live, which was only relatively recently, but the DCC was set up and a lot of money was put into it. All the various arrangements went through, and it was by no means impossible for that problem to arise to date. I am pleased that we are taking this step, but slightly alarmed that we have not done it previously. Can the Minister shed any light on why that was the case? Did the Government simply forget? Was the legislation so difficult to undertake that it has not been drafted until now, or was it not thought necessary to have this protection prior to the DCC being in its present position? It would be useful to have some guidance on what thinking went on before the legislation appeared.
Richard Harrington
Before making a few brief comments, I will try to answer the two very reasonable questions raised by the hon. Members for Southampton, Test and for Birmingham, Selly Oak.
I will deal with the unlikely event point first. The Government have to try to gauge how unlikely an unlikely event is. I hope the hon. Member for Southampton, Test accepts that it is a question of judgment. We have to draw the line somewhere on the level of unlikeliness, and we drew it on the wrong side of what he thinks is unlikely.
Richard Harrington
Yes, that is very good. I wondered what the hon. Gentleman did his doctoral thesis on, and now I have discovered it.
It is a judgment call. I hope I made it clear in my previous comments that I do not think his amendment is unreasonable, mad or anything like that; it is just that we have to try to make a judgment, and it is on a different side of the line to his.
The question of why we have not done this before is, like many of the hon. Gentleman’s points, very valid. It is one of the first questions I asked officials when considering this. I have been given a note, which I have not read; I will answer from what I think, rather than what I have been told. I asked that very question. I understand that this was consulted on in 2011 by the Department. The official reason—genuinely—is that there is a lot of competition for parliamentary time, and this is the first opportunity we have had to deal with something that is reasonable, but at the highest level of unlikeliness on the unlikely-o-meter, if there were such a thing. There must be an unlikeliness app to gauge the level of unlikeliness.
I personally think this should have been done before. It was probably less important than it is now and going forward, simply because of the scale of use and the containability of unlikeliness. This was the first opportunity I had to introduce the clause on what to do in the event of these unlikely circumstances, and it is important. It is to stop other interested parties putting in administrators. There are always commercial administrators—for example, companies that have not been paid. There is a normal system to do this that still exists, but it does not have the level of control that the Department or Ofgem would have.
This is important. I could spend 10, 15 or 20 minutes of the Committee’s time going through the reasons why it is important, but those reasons will be debated later on in the Bill’s passage. I hope I have answered the points raised to the best of my ability.
Steve McCabe
I do not want to dwell on this, but I am genuinely curious. When the Minister says that the Department consulted on this and decided that there was no need for this sort of protection or safeguard because of parliamentary time, or whatever reason, who did they consult? Presumably not the customers, who would have been the first to say, “Hang on, we don’t like the sound of this.”
Richard Harrington
I thank the hon. Gentleman for that comment. Those consulted were stakeholders and so on. I would remind the hon. Gentleman and the shadow Minister that the DCC only went live in 2016. I accept that there would have been a point between 2016 and now that would have been ideal. It is not uncommon to have special administrative regimes in this kind of world—this is the first one for this particular administrator—and it seems obvious for Government or the regulator to have powers basically to override the normal administration system. Given the millions of smart meters around, and given in particular the system whereby they are all electronically talking to each other—which we all want—it would have been negligent for the Government to leave this for another four or five years. It is quite reasonable for this to be the first legislative slot since it went live.
Having said that, I accept that there has been no unreasonable comment in the points made by the hon. Gentleman. There is plenty to discuss in this Bill, and everyone would agree that a special administration regime guards against a risk that the licensee might go into normal insolvency proceedings, which is a standard process within the Companies Act 2006 and something that companies do. The reason that this is a level of unlikeliness that makes it really unlikely is that the income side is more or less guaranteed, as we heard in the evidence from the experts. It is prudent, given that these risks could be there, to have safeguards in place. That is what the clause does. These measures all have precedents in other special administration regimes for energy networks and suppliers. The clause is a sensible measure and I commend that this clause stand part of the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Objectives of a smart meter communication licensee administration
Steve McCabe
I beg to move amendment 8, in clause 3, page 2, line 34, after “efficiently”, insert “, transparently”.
This amendment would make it an objective of the smart meter communication licensee administration to operate in a way which would allow the general public to be aware of his functions.
It is probably quite fortunate that this debate follows the discussion that just took place, because the purpose of amendment 8 is to make it an objective of the smart meter communication licensee administration to operate in a way that would allow the general public to be aware of its functions.
We are talking about a situation that is clearly about accountability, albeit one that people think is unlikely. This is a situation in which a massive investment goes wrong and the Minister is forced to set up a special administration regime. In those circumstances, it makes sense for people to know what is going on. It is a matter of accountability for the public, who, as I have said a number of times, are paying for this programme through their bills. It is therefore right that if ever a situation arises in which a smart meter communication licensee administration is in place as a result of a failure of the DCC, that administration should operate in a way that is transparent, open and obvious to Members in all parts of the House and, most importantly, obvious and transparent to members of the public.
Dr Whitehead
My hon. Friend underlines the importance of putting the word “transparently” somewhere in clause 3. An event may happen that the public would properly be interested in; they may be concerned about what might happen to them as far as administrative processes are concerned or about the effect on their bills of an event that caused substantial additional money to be spent over and above what had already been set aside. We must emphasise that all the costs that have been set out for the smart meter roll-out—be that the cost of the smart meter, the cost of the advertising campaign or the cost of the DCC itself—will, one way or another, be recovered from customers’ bills.
With that in mind, putting in the Bill a requirement for processes to be fully transparent would serve the consumer positively. I support the addition of that single word—“transparently”—to the Bill. I cannot see any downsides to that. It would not in any way impede the process of administration. All the objectives and procedures in clause 3 to ensure that the DCC runs as effectively as possible and protects the roll-out are sound. Inserting the word “transparently” would add to that protection and do nothing to undermine it, so I hope that the Minister will seriously consider doing so.
Richard Harrington
I understand the purpose of the amendment well. On the surface, it seems to be a good thing. Transparency is good anyway, and I will argue that the provision would lead to transparency. It is reasonable to argue that this is an important matter and that we want everyone to know what is going on. We are all here because we are part of a democratic process; I do not think anyone could disagree with that principle.
However, I cannot agree with the hon. Members for Southampton, Test and for Birmingham, Selly Oak because of what the amendment would mean in practice for the administration. Thankfully, none of us have experience of this kind of public, as opposed to commercial, administration—I know that is not quite the technical word—and I accept that. By the way, there will be plenty of legal requirements on the administration, which I will come to in a minute. It is just totally unrealistic for an administrator, given those requirements and all the complexities that it will have to deal with, unlikely though it might be, to spend hours ensuring that the public—I think this is what the amendment would mean—are kept informed of all the administrator’s moves, given that administrators have to meet plenty of requirements. I ask the Committee to bear that in mind; I cannot accept what the hon. Gentlemen said. That is not because we are secretly against transparency or anything like that.
Clive Lewis
It is not so much that the administrator would need to keep the public informed of every step they were taking, but that if the public, MPs or parliamentarians or others were interested, they would have access to the information to ensure that lessons could be learned in the future, if they felt that that was a requirement. Rather than the administrator giving out the information, it would be for the public or others to access the information; they would be able to access it.
Richard Harrington
I thank the hon. Gentleman for that intervention. I can see that afterwards, but not in the course of an administration, when there are very complex duties for the administrator to learn, be instructed to learn, and so on. I find this proposal quite difficult in practice; I am quite concerned about the effects of it. I am not concerned about the purposes of it, which I think are very noble. Perhaps I will answer the hon. Gentleman’s question in my remarks in a way that is more satisfactory to him; I hope so, anyway. Perhaps it is a victory of hope over logic; I do not know, but we will see.
I confirm for the record that the object in clause 3 is to ensure that the DCC’s functions under its relevant licences are performed efficiently and economically, pending the rescue of the company or transfer of its business. However unlikely that might be, as we know its revenues are guaranteed, we are on the Government’s side, rather than the shadow Minister’s side, of the line on unlikeliness. The intention behind the clause is to ensure the continuity of the smart metering service while minimising the costs incurred. In providing for continuity of services, the benefits of smart meter services are maintained and the costs—financial costs, but also the huge inconvenience that would come from any interruption to smart meter services—are avoided. I do not mean an interruption to the supply of electricity; I am talking about the gauging of how much people are using and, I hope, in the future, more fancy tricks, to allow them to control their costs, supply and everything that we have mentioned before.
Under the Insolvency Act 1986, as modified by this Bill, there is already an obligation for the name of the smart meter communication administrator to be stated on the DCC website; it should also be stated that the affairs, business and property of the company are being managed by that administrator. There are clear provisions setting out the functions of a smart meter communication administrator, including its powers.
As with the energy network operator and energy supplier special administration regimes—the nearest comparable regimes—we would expect the smart meter communication licensee SAR rules to require the smart meter communication administrator to file various documents at Companies House. That would include, for example, a copy of the administrator’s proposals for achieving the objective of the smart meter communication licensee administration, which would contain information about the administration. The administrator has to submit regular progress reports. Once filed at Companies House, those documents would be available to the public and would keep them informed about the administration and its progress in the way that I hope the hon. Member for Norwich South meant in his question.
I hope that hon. Members will recognise that information would already be available to the public and other interested parties through the existing procedures to ensure transparency about the administration. I hope that they will consider the points that I have made, because they are important. This proposal implies that the administration process could be helped dramatically by the public’s having access to information and knowing what is going on all the way through. I think that it is very important that the public experience no interruption whatever and that the administration is carried out quickly and efficiently. We must not forget that the whole reason for the SAR is to reassure consumers and other stakeholders that their smart meter services and the benefits that arise will be protected, and not interrupted in any way.
I state again that the administrator would be under a duty to manage the company efficiently and economically. When companies such as KPMG, PwC and other big companies act as insolvency practitioners, they do so as part of a regulated profession. All normal insolvencies, and not just special administration regimes, are covered by that. I therefore ask the shadow Minister and the hon. Members for Birmingham, Selly Oak and for Warwick and Leamington to consider what I have said and to withdraw this very reasonable amendment. I fully commend the purpose behind the amendment, but I think we are already fulfilling that purpose in this provision and with the existing rules on administration.
Steve McCabe
It is a devastating blow to hear that the Minister cannot bring himself to accept the word “transparent”, but in the circumstances I do not think that we would gain very much by pressing this to a vote. I hope that the Minister will seriously reflect on what has been said, because the circumstances in which he would have to exercise this power would be a massive failure and, almost certainly, a massive loss to the public, and I do not think anyone would be comfortable thinking that there had been any attempt to hush that up or push it to one side. I hope that he will reflect very seriously on why it has been raised. I do not wish such a failure to occur at all, but I am very clear that if it did, I would be one of the first at the front of the queue saying, “What on earth went on here?” I do not think there would be any gain in pushing it, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Richard Harrington
As with the last amendment, I perfectly understand this amendment’s purpose: to require that any regulations that the Secretary of State lays down about prioritisation of DCC activities following administration
“would have to take into account the context of the full services offered by the DCC.”
I understand the purpose, but I will do my best in the next few minutes to argue that there would be no effect on the policy. The precise intention of the proposed regulations is to specify the activities carried out by the DCC to which the smart meter communication administrator must give priority, and how that should be done, taking account of the full range of activities that the DCC is carrying out under its licences at that time. That is exactly what we are trying to do; we are just trying to ensure that the functions of the DCC under its licences are performed efficiently and economically, as I said before.
The administrator may face a judgment on which DCC services to prioritise; it is quite normal for an administrator to do that. The most appropriate judgment will depend on the circumstances, but that may not be clear to the administrator on the day that they take over the administration, and there may be a trade-off, as there are in administrations, between prioritising different services.
The clause to which the amendment relates gives the Secretary of State the power to make the regulations specifying which activities carried out by the DCC under its licences must be prioritised by the administrator, and how that should be done. As the smart metering programme develops beyond the foundation stage—the stage we are fundamentally preoccupied with as the purpose of the roll-out—we expect the number of services provided by the licensee to increase. The licensee can, for example, offer bespoke services for suppliers and others, building on the smart metering programme. I know that is what we all want. As part of that, consumers may be able to choose to give third parties permission to access their data, allowing a much wider range of energy-related services to be developed: products, advice, switching suppliers, tariff choices and all that sort of thing.
Smart metering data may also be used, where the consumer so chooses, as part of taking that service—for example, in supporting home energy management services and even for non-energy-related services, such as smart washing machines that do the laundry at different times so it costs less. That is not directly to do with the supply of energy but with the consequences that matter to most people: “How much will it cost and how can I save money?” I suppose it could be used to identify faulty or inefficient appliances, or to support carers, through a service that allows family members to be updated about changes in routine. That sounds futuristic, but there are many interesting things that could come from the programme if we take the big picture for the future.
It might be in the interests of consumers and the wider energy market for the administrator, if that day comes—I do not think it will—to prioritise core services. If we keep smart metering working, the other stuff is all very nice, but for a time it could not be a priority, in order to keep the core system going. I believe it must be the role of Government to guide the administrator in that respect, because of the speed that must be taken into consideration within an administration. The precise aim of the regulations is to provide future flexibility to ensure the full range of activities carried out by the DCC at that point can be taken into account. That prioritisation will support the continuation of services in the overall interests of the public.
I believe the Bill delivers the noble aims of the hon. Gentleman’s amendment. I hope he will consider what I have said and the explanations I have given, and will agree to withdraw the amendment.
Dr Whitehead
In the context of the fact that what is set out in Hansard has some legal bearing, the Minister has this morning set out in terms fairly similar to the amendment the scope of clause 3 and the Government’s intention in regulations made under subsection (6). I do not want to press the amendment. I think it is agreed that we aim to ensure that the DCC’s circumstances prior to administration should be repeated as closely as possible post-administration for the general good of the roll-out. That is what I understood the Minister to say, and I hope he will confirm that.
Richard Harrington
I confirm that what the hon. Gentleman just said is precisely the case. I tried to be as clear as possible, and I am glad that he, like me, respects that things in Hansard are meant to be as they are said. I can clear that one up.
Dr Whitehead
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Richard Harrington
Thank you, Mr Gapes. I am sure Opposition and Government alike will take your warning on a Division. I hope it is not necessary because I hope to explain in the time allowed, as I have done with other amendments—some successfully and some less than successfully.
I can see clearly that this amendment would mean that in the unlikely event of insolvency—we all agree it is unlikely—any regulations that we will need to bring forward about the administrator’s priorities, which we have discussed before, would need to be approved by a resolution of both Houses. I can see the principle behind that, and it is a noble one, but I would argue that because of the speed required and the technical nature of these regulations, it is appropriate to use the negative procedure, which the hon. Member for Southampton, Test does not like.
I made points in the debates on the previous amendments about the choices that the administrator has to make and the speed with which they have to make them. It is considered reasonable—and I know the hon. Gentleman would agree—that the Government should guide the administrator in respect of this. That is why we are asking for these powers, so that the Secretary of State can make regulations specifying which activities carried out by DCC must be prioritised by the administrator and how this should be done. The question boils down to the nature of these provisions, which I argue are technical and therefore suitable for this kind of procedure.
The DCC has core services that provide energy suppliers and others with around 110 service requests. Again, I would ask both Mr Gapes and the Committee to consider the practicality of the affirmative system. This covers a range of areas, for example the provision of pre-payment services, the management of security credentials, changes of supplier events, the technical configuration of devices, access to network—I could go on, there are 110 of them. It would be necessary to review these services and prioritise them against new services, which I have mentioned before and which may be offered.
I argue that the regulations made under clause 2 would be largely administrative and technical in nature, focused on the specifics of implementation and acting to narrow rather than add to policy scope, entirely to protect consumers’ interests. We need to act promptly to achieve this, so that the administrator has appropriate direction. I believe that the procedure proposed will provide Parliament with sufficient oversight for supporting this ambition. I hope, not just because of time constraints but because I think it is the right thing, that the hon. Gentleman will understand our concerns and agree to withdraw his amendment.
Patricia Gibson
I want to speak to this amendment in relation to parliamentary scrutiny. In my party, we would welcome any enhancement of parliamentary scrutiny, but I need to draw the Minister’s attention to a number of concerns, and I am worried about time.
I am speaking about the need for enhanced scrutiny because I do not believe that the amendments allow for sufficient scrutiny, for reasons I will go on to discuss. Energy UK and Ofcom both state that aggressive selling is wrong. I am sure we would all concur with that, but that is little comfort until aggressive selling is properly addressed. That is going on and that is why more and enhanced scrutiny is so important.
It is my understanding that Ofgem has the power to fine energy companies up to 10% of their annual turnover if they fail to meet their licence conditions.
Richard Harrington
I am happy to talk to the hon. Lady about her consumer concerns, but I agree with your ruling, Mr Gapes, that what she has said is not relevant to this amendment, which is about technical considerations, and parliamentary scrutiny of those, in the event of the demise of the DCC and a special administration regime being put in. The point is not relevant to the amendment, but it is a valid concern. I am happy to discuss it with her informally, if not formally now.
Dr Whitehead
The Minister has alluded to a particular point about regulations under this clause, which relates to the speed that would be necessary to act under the circumstances of administration. That is a defence of the idea that there should be a negative resolution; presumably, the fact that Parliament at that time did not want to proceed to an annulment would allow things to be done speedily. I understand that, so on that narrow point we will not press the amendment to a vote this afternoon.
I draw the Minister’s attention to our next debate about a similar set of circumstances that concern a negative resolution, and to which that defence cannot be mounted. I hope that he will take his own words from this morning into account when we return this afternoon to debate the relevant clause. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Mike Freer.)