Smart Meters Bill

Stephen Kerr Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 5th February 2018 Commons Chamber

[Stephen Kerr (Stirling) (Con)]

The hon. Gentleman raises an important point about public confidence. Is there not a danger that when people with SMETS 1 meters switch energy supplier and lose their smart meter’s smartness, they will lose their confidence in the whole programme?

[Dr Whitehead]

Like me, the hon. Gentleman sat through many of the evidence sessions during the Committee stage, so he will know that an advanced programme is in place to ensure that SMETS 1 meters are compatible and interoperable, and indeed can work online, to ensure that that problem does not occur. That is a recent development. I agree that if it turns out that many SMETS 1 meters become completely dumb, that might be a problem for the overall roll-out. Perhaps the Minister will have something to say about that later, because it is important that we get this right.

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[Dr Whitehead]

My hon. Friend gives a very important qualification to that figure of 250. I must admit that when I heard that figure from the head of the DCC, it struck me as being pretty shocking in its own right. It is interesting, to say the least, to hear that the 250 figure is on the optimistic side, and that the number that are actually on the wall and working—in the homes of friends and family, as my hon. Friend says—is only about a third of that figure.

The slippage is reflected in the latest cost-benefit analysis, which is from last year. It shows the cost-benefit gap narrowing, at least in part because of the SMETS 1 and 2 hiatus. The analysis indicated a high spike in proposed installations at the end of 2019, with some 15 million meters needing to be installed at that point. That is a substantial shift in the predicted curve of installations, and an enormous increase in the rate of installations since the time of the 2014 cost-benefit analysis. Sticking by the timetable under these circumstances becomes fairly heroic. Perhaps it can be done, but it is clearly a daunting task.

That is the context in which the change in the date for Government oversight is important—the process of changing the date by which licensable activities will have ceased from 2018 to 2023. Whether or not it was a wholly wise idea, the 2004 and 2008 Energy Acts and subsequent regulations specified a date for licensable activities to end, which means that as things stand at the moment, the Government will have no control over what goes on after 2018. Everybody knows that we will still be at a relatively early stage of the roll-out in 2018, so it is impossible to conceive that it would be wise to continue with the original timetable. We therefore support the idea of specifying a more satisfactory date in the statute book.

The Bill specifies a date of 2023, but that does not appear to coincide with the Government’s publicly stated ambition for the end of the roll-out. I say that with caution, because while their statements about the roll-out have changed over time, they have always revolved around the idea of ending it in 2020, and there has been a lot of talk from the Government about the installation of 53 million smart meters by then. Indeed, the frequently asked questions page of the Smart Energy GB website states:

“By the end of 2020, around 53 million smart meters will be fitted in over 30 million premises (households and businesses) across Wales, Scotland and England.”

That is also the basis on which Ofgem is working in terms of its licence enforcement. However, the Government have changed their position, as they now saying that, by the end of 2020, 53 million customers

“will have been offered a smart meter”.

That is a very different proposition. We could interpret that as 53 million people being offered a smart meter by 2020, but only 10 million having them installed, although I assume that that is not what the Government mean. The statement might be meaningless or meaningful, depending on what happens before the end of 2020 and a variety of issues that will appear along the road. I hope that the Minister will be able to clarify those matters today. We surely cannot mean that the whole obligation for the roll-out would be discharged by doors being knocked on and someone saying something. If the smart meter installation programme is pursued on the basis of just making a desultory offer, the result will be way below the critical mass necessary for the overall aggregate data to work properly and lead to decent decisions. At that point, £11 billion or some such amount would have been wasted on nothing much.

The smart meter installation programme is voluntary. But, at the same time, we need a proportion—not 100%, but getting close to it—of smart meters installed in order to make the programme work by having worthwhile aggregated data. Some people have said that we need 70% of smart meters installed and others have said 80%; we need something to make the overall aggregated data significant. We clearly need to put a lot of effort into ensuring that the benefits of the programme are explained to the public.

The evidence suggests that the public overwhelmingly like smart meters when they are introduced and they want to have them in their homes. We therefore need to make a lot of effort over the given period to ensure that the two ends—the voluntary nature of the programme and the need for substantial roll-out—can be reconciled. What do we need to do that has perhaps not yet been done to ensure that the roll-out programme gets its output properly organised and smart meters installed? That is the purpose of new clause 4, which would require the Secretary of State to publish a report to keep us firmly on track. But, of course, much of the progress towards the target at the end of 2020 now depends on how SMETS 2 meters can be rolled out and how the DCC performs.

It was always necessary for the DCC to start its roll-out to enable smart meters that have been installed and those that will be installed to connect with it, and therefore to go live at the earliest possible date. However, the DCC systematically failed to go live when it should have done. It repeatedly announced delays and eventually went live in autumn last year under circumstances in which eyebrows were raised substantially by most of the industry. That was because it went live just before the point at which it would have faced penalties for not going live. It also only went live in part of the country and did not go live with some of its peripheral activities. Indeed, it is still having problems as far as its liveness is concerned. However, the DCC is not a stand-alone company. It was set up in order to run all these things and was then successfully auctioned out to a company that could drive it. And that successful bidder was Capita plc. As far as running the system is concerned, the DCC is effectively a subsidiary of Capita plc. The rest of the smart meter programme now crucially depends on this company. If we look at the timeline of what was supposed to have happened, we see that it presents a really sorry picture.

According to the joint industry level 1 plan, the start of the mass installation of SMETS 2 meters was supposed to be in October 2014, and the DCC was supposed to go live in December 2015. The then Secretary of State approved the DCC re-plan to go live on 1 April 2016, but received a contingency request from the DCC to delay going live until July 2016, and even then to split into core functionality and remaining functionality, which was not supposed to go live on the new date. A further contingency request was made by the DCC for a delay until August 2016, and there were even further contingency requests for delays. The DCC finally went live, in the way I have described, in October 2016. But it was actually only live for central and south England in November 2016 and went live for the north of the country later that month. The remaining functionality eventually went live, but not until 20 July 2017.

I looked at the plans that were put forward when the DCC went live, and they were accompanied by pages and pages of so-called workarounds—that is, things that did not really work. That is still a problem today. A lot of the industry is saying that the DCC is not really live to the extent that it had anticipated, which remains a considerable problem for the end-to-end testing of SMETS 2 meters. That is why, among other reasons, there are currently only 250 or 80 on the wall, depending on whose figures are right.

[Stephen Kerr]

Is it the hon. Gentleman’s understanding that the DCC is operating—not fully live—for only 80 SMETS 2 meter customers? The SMETS 1 meters do not connect to the DCC.

[Dr Whitehead]

That is the unfortunate truth, yes. The total number of SMETS 2 meters to which the DCC is connected is 80—or 250, for those who are a little more optimistic. That means that there is rather a long way to go to connect up the rest of the SMETS 2 meters, assuming that they can be end-to-end tested in order to get the right circumstances in the different parts of the country to allow the testing to take place.

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[Dr Whitehead]

Thank you, Madam Deputy Speaker. I accept that we are dealing with difficult and rather technical issues, and so I thought it was necessary to try to set out for the benefit of the House how these matters might work, but I will of course be very mindful of your guidance to try to make sure, within the restraints of not getting too over-simplified, that I do indeed bring my remarks to a close.

New clause 2, in essence, asks the Minister to consider a specific review to get these arrangements properly under way.

My final question concerns the meters that have been removed as a result of smart meter installation or will be removed because they are SMETS 1 meters replaced by fully interoperable SMETS 2 meters. This problem is not just theoretical; it is happening now. It has several aspects. What about malfunctioning and existing smart meters that are no longer installed and are now redundant? What about the huge number of existing meters that will be removed and need to be disposed of as smart meters are installed? Those meters are not owned by installers but by meter asset providers that finance and ultimately own the meters that are put in. It has been a long-standing arrangement in the industry that meters are not owned by the suppliers but merely read by the suppliers. That means that when a programme is pursued of removing old meters, whether dumb meters or previous generation smart meters, there is a problem in identifying whose meters they are.

The difficulty that we are facing right now—it is not a problem for the future—is that we might see meter mountains arising in this country because the people who are removing the meters do not know who their owners are or who is going to take them away and recycle and dispose of them. I do not want to see, as a result of this roll-out programme, meter mountains, or alps, appearing across the country. We need to be clear about what method of disposal is going to be the most appropriate and workable. If we are not careful, the issue will overwhelm the roll-out, or at least have a significant negative effect on its overall atmosphere. In Committee, the Minister, encouragingly, agreed to set up a roundtable to consider this issue further. New clause 3 now addresses the issue, and I hope that it will be a way of taking it forward.

I have dealt with a number of important questions that have arisen as the smart meter roll-out has progressed. I hope that the roll-out can proceed to a successful and timely conclusion, because that will be important for the future of our energy systems as well as for the future sustainability of people’s electricity and gas supplies, and their ownership of what their bills will look like in future. However, we should not shirk from addressing the real problems that stand in the way of realising that. It is not sufficient to state that all is for the best in the best of possible worlds, and proceed on that assumption. I know that the Minister is working hard to get this right, as are his team in BEIS. The addition of these amendments would give them greater authority and support in making the roll-out work.

[Stephen Kerr]

I compliment the Minister and the Opposition Front Benchers for the way in which I have witnessed, as a relatively new Member of Parliament, how a public Bill is progressed through the legislative process. I have learned from observing the Bill Committee that for legislation to have durability and solidity, it is vital that there is strong collaboration between those on both sides of the House. It is in all our interests to make sure that legislation is well constructed and well meaning.

I support the Bill on the basis of a considered view that the roll-out of smart meters is a vital national infrastructure project that will bring benefits to consumers and businesses and to the whole country. I am not entirely convinced that we have done a good enough job so far in selling the proposition to the whole country, and I have concerns about our readiness to meet the Government’s objective. In fact, in the evidence that we heard in Committee, very few of the people we spoke to seem to believe that at the current rate of progress it is possible to complete the roll-out of smart meters by the perceived target of 2020. I want to come back to the target in relation to new clause 4.

None of this sort of work is ever going to be easy, as was highlighted in the evidence that we heard in Committee, but the trick is not to make it harder for ourselves than it would be otherwise. How do we get the job done—the deployment of these smart meters into nearly 60 million premises—in the most cost-effective way? There are still questions that should be asked and considered. We should not lose sight of the total cost of the programme—northwards of at least £10 billion. I think that £1.3 billion has been spent, or is earmarked to be spent, on the DCC alone. We are talking about 50 million-plus—nearly 60 million—separate installations of smart meters.

I have a lot of sympathy for the amendments tabled by the Opposition, because they do tackle issues that are pertinent and relevant to the purposes of the Bill. However, I will not support them if they are pressed to a vote, because I very much hope that the Minister will be able to provide such reassurance that the issues raised will be covered off in some other way than by making changes to the Bill, so there will be no purpose in calling a vote. I am very confident that that will be the case, because that has been the spirit of the process so far.

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[Steve McCabe]

Both the Government’s and Ofgem’s justification for the smart meter programme is that it is meant to save customers money. If we reach the stage where it is actually costing customers rather than saving them money, will the hon. Gentleman regard that as a failure of the programme?

[Stephen Kerr]

The hon. Gentleman makes a valid point. The purpose of the Bill, in facilitating the roll-out of smart meters, is to create a more energy-efficient economy, which should be reflected in cost savings for families, individuals and businesses. If that was not to be realised through the smart grid, that would be very disappointing.

There is so much in the future in terms of the changes we are seeing in the economy. I think of ultra-low emission vehicles, where there will be a necessity for smart meters and the smart grid for us to cope with the increased load on the grid. In response to the hon. Gentleman, I hope that somewhere in the not-too-distant future is the promise of an energy market that is more competitive and more responsive to its customers’ energy requirements.

Mass usage of ultra-low emission electric vehicles is inevitable. We will get to a tipping point with those vehicles, on account of the cost per unit, improvements in battery technology and the visible availability of the necessary infrastructure for charging at home and recharging away from home. All those things will create new demands on the grid, and all the flexibilities we will need to meet those demands depend on the smart grid and smart meters. Things such as new tariffs, variable tariffs and smart devices that can interact on the basis of the smart grid will all be a feature of the future.

However, there are things referenced in the new clauses and amendments that concern me. We heard evidence in the Public Bill Committee from Dr Richard Fitton of the University of Salford, who is responsible for a task group for the International Energy Agency on the use of smart meter data for determining the energy efficiency of properties. He made the point that for consumers to be fully engaged with smart meters, they need to be able to log on to the smart meter and connect it to smart devices in and around the home. He described the frustration that he and his team of experts have had in being able to make that connection happen. He said:

“a magic black box called the consumer access device…streams real-time data to things such as smart appliances and smart heating systems for homes.”––[Official Report, Smart Meters Public Bill Committee, 21 November 2017; c. 48, Q94.]

He went on to say that neither he nor any of his colleagues had ever been successful at connecting SMETS 2 meters to those devices. That is a concern, but it is not directly related to the amendments, so I will return to them.

There is evidence about the impact of smart meters on consumer behaviour. The literature produced by the Department talks about how these meters will facilitate switching. In fact, all the evidence that the Business, Energy and Industrial Strategy Committee and the Public Bill Committee received suggests that smart meters probably will not have a direct impact on the rate of switching in the energy market. It should change consumers’ behaviour by piquing natural curiosity. When we first get a smart meter and have an in-home display, we can see how the energy usage in our home is affected by using different appliances around the house. That is very interesting and makes us aware of which appliances are the most energy-greedy, which could lead to a change of behaviour.

I would like to make some other points on energy awareness and my concerns that relate to new clause 4, with which I am broadly sympathetic but will not vote for. Even though I have sat through the Public Bill Committee and all the Bill’s stages, I am still not clear exactly what the Government’s objective ultimately is. They say they will make an offer of a smart meter to every consumer by 2020. That seems a rather fuzzy objective. How do we define what it means to make an offer? We could say that by sending out an email, letter or brochure to every household, every energy retailer has fulfilled its obligation to make the offer. I do not think that is really what the Government intend. Given the importance of smart meter installation to the creation of a smart grid, I would think the Government’s objective is in fact to get smart meters into a very high percentage of the total number of properties by 2020, but that is unstated, as far as I am aware. I would be delighted to be put right by the Minister on that.

I am aware, as a listener of commercial radio and television and a reader of the press, that there is currently a high-intensity programme going on to raise awareness among consumers about the availability of smart meters upon request. However, I question whether the case for the importance of smart meters has been well made.

Despite the fact that this subject could sound quite boring, it is actually very interesting, because this infrastructure is the basis for the fourth industrial revolution that will be seen in the homes of our countrymen and women. Given the current level of roll-out and the state of readiness of installation teams, it is highly likely that the Government can achieve their objective of offering smart meters to everyone, but it is highly unlikely that we will achieve anything like 100% installation of smart meters in all possible premises.

So far, somewhere between 8 million and 10 million SMETS 1 meters have been installed. I mention that estimated range because I am not sure what the recent figure is, and the update we received did not have a specific number. I think that it has been proved beyond any doubt that, as things stand, SMETS 1 meters are not interoperable. In other words, they do not communicate with any other supplier than the one that installed them; nor are they capable of sending data to the DCC at present. That is my understanding.

In the Public Bill Committee, we heard evidence about whether SMETS 1 meters could be made interoperable. The burden of evidence seems to be that without some sort of adjustment or update, SMETS 1 meters are not interoperable. That is my experience, which I have related before in a variety of settings, as someone who installed a smart meter and then tried to switch.

I have questions about SMETS 1 meters. How easy will it be to upgrade them at the appropriate time, so that we have the functionality of the new SMETS 2 meters? If they can be upgraded to the same functionality and interoperability, do we need to have SMETS 2 meters? How will SMETS 1 meters be upgraded and when?

There are many interesting points that have been covered by the hon. Member for Southampton, Test and that I have tried to make in relation to the Bill. There are questions that, if answered by the Minister, will facilitate this programme, which I completely acknowledge is of vital strategic importance to the future economy that the Government are trying to build.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

I call Steve McCabe.

Nuclear Safeguards Bill

Stephen Kerr Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 23rd January 2018 Commons Chamber

[Dr Whitehead]

The proposed new clauses and amendments appear in my name and those of my hon. Friends the Members for Salford and Eccles (Rebecca Long Bailey), who is the shadow Secretary of State, and for Sheffield Central (Paul Blomfield) and others.

First and foremost, I want to set down a marker on new clause 2, because it represents the dividing line between us and the Government on membership, associate or otherwise, of Euratom. This purpose clause makes explicit that this is a contingency Bill. In other words, it is being enacted to deal with circumstances that may never arise—namely, that we as a country have no future association or membership with Euratom that would enable us to continue to reap the benefits of association or membership in a way that I think is almost universally agreed.

I think that it is agreed—the Minister has stated as much during the passage of this Bill—that Euratom has served well our purposes as a nuclear nation over the past 40 years, and nuclear safeguarding has worked very well in inspecting and representing our obligations to international agencies such as the International Atomic Energy Authority.

It is clear that our interests as a country would be best served by continuing our membership of Euratom, which was founded by a different treaty from that which brought about the EU. Indeed, during evidence to the Public Bill Committee, we heard strong arguments along those lines from eminent lawyers who had been called as witnesses. However, we appear to be in the position of assuming that our future membership of Euratom is not possible, because essentially the Prime Minister, as a matter of choice, included exit from Euratom in her letter to the Commission informing it that we were invoking article 50.

[Stephen Kerr (Stirling) (Con)]

The treaty on Euratom membership is part of the set of treaties described in the treaty of Lisbon. Therefore, as we leave the European Union, we will, de facto, leave our membership of Euratom. It is as simple as that.

[Dr Whitehead]

I am afraid that it is not as simple as that. A considerable body of legal opinion states that, because Euratom was founded by a treaty other than the treaty of Rome—it was, in fact, founded before the EU came together—it can and should be dealt with separately. Although arrangements relating to association with and membership of various EU bodies have changed over time as a result of changes in EU regulations, that has not been the case with Euratom. The articles relating to associate membership and arrangements are identical to those that were in place when Euratom was founded. There is no case to answer as far as separate arrangements for Euratom are concerned.

--- Later in debate ---

[Trudy Harrison]

New clause 1 concerns me, because it seems to me to be a delaying tactic. As I have mentioned, Euratom and the IAEA were really formed in 1957, when Calder Hall was built in my constituency. There are now 70-something businesses operating in the nuclear industry in my constituency alone. I have spoken to each and every one of them, as well as to Sellafield, the Low Level Waste Repository and the National Nuclear Laboratory. They all say that it is absolutely critical that we get on with the job swiftly and provide certainty so that when we leave the European Union on 29 March 2019, we know exactly where we are.

I come back to the point that Euratom was formed in 1957, and I find it somewhat disappointing that Opposition Members are not crediting our country with the ability to do what is necessary. I have been reassured by the Minister on several occasions about the timescales, and about the process that is already in place for recruiting new safeguards inspectors to the Office for Nuclear Regulation. There are clear synergies inherent in having the ONR, which is the overarching umbrella organisation, working on safeguarding, security and safety.

When it comes to the transition, the Prime Minister has already said that there will be a transition arrangement after we leave the European Union on 29 March 2019. Therefore, the most important thing is to get on with the job, and the Bill enables us to do just that.

[Stephen Kerr]

Does my hon. Friend agree that in the new clause, great uncertainty is built into the very thing—the contingency—that was intended to give certainty to people such as those in her constituency?

[Trudy Harrison]

That is exactly my point. This is about certainty and getting on with the job. Not having the Bill in place would be absolutely catastrophic for my constituency and the whole county of Cumbria.

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[Albert Owen]

I want to speak briefly in support of new clause 1. We have debated whether there will be negotiations during the transition period, but I hope that the Minister will respond to this question when he winds up: does he intend to negotiate associate membership of Euratom? We are asking for associate membership, but we have been given no clear idea of whether he intends to seek such membership. We all want the safeguards to be in place from day one. Negotiating over Euratom standards is not in our gift, but we now have in place the highest standards in the world and co-operation with other world leaders.

[Stephen Kerr]

Having sat through a number of evidence sessions with me, as a fellow member of the Business, Energy and Industrial Strategy Committee, the hon. Gentleman well knows that there is no such thing as associate membership of Euratom. The Minister has repeatedly said that the Government intend to seek some form of close association with Euratom—I do not want to dwell on the semantics, but that is obviously a different thing—and to maintain a continuity of relationship with it. The new clause is therefore totally unnecessary, given the Prime Minister’s commitment to a two-year implementation period.

[Albert Owen]

I often agreed with the hon. Gentleman in Committee, but I think that he is completely wrong on that point. There is such a thing as associate membership—of Euratom, and of the European Union—and there are different levels of membership.

[Stephen Kerr]

indicated dissent.

[Albert Owen]

Yes, there is. We need to negotiate from a position of clarity and strength, and I do not see us doing so. Without the proposed commitment in the Bill, I do not see the Government saying that they intend to go for third-party or associate membership of Euratom. We have not even seen the legal opinion that the Government were given about the need to leave Euratom in the first place. I support the need for nuclear safeguarding, and I will support the Bill on Third Reading, but new clause 1 is sensible, because it suggests that the Government should approach Euratom members and ask for associate membership, to give us the continuity and certainty that we want.

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[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am delighted to be here with the Minister, who is a genial and hard-working man. I know that he will try to answer some of my questions, and I hope his answers are clear.

When the Secretary of State launched the Bill, he said it was “straightforward”, but the amendments are required because there is nothing straightforward about leaving Euratom. The Scottish National party is concerned about the whole process. The hon. Member for Copeland (Trudy Harrison) talked about us being “there or thereabouts”, but that is not good enough when it comes to nuclear safeguards. As it stands, the Bill is a safeguards Bill without any safeguards; there is no contingency for anything going wrong, yet Ministers have failed to convince not just hon. Members in this Chamber, but industry and the people. Leaving Euratom will result in more cost and less value, and the opinion of many in the industry is that it will be impossible to set up an equivalent UK authority within the timescales outlined. That is the view of industry, the Office for Nuclear Regulation, the Nuclear Industry Association and the Nuclear Decommissioning Authority, all of which gave evidence to the BEIS Committee. I was delighted to hear the Chair of that Committee, the hon. Member for Leeds West (Rachel Reeves), point out the great concern about the Government’s ability to do as they propose. All the nuclear industry and all those bodies do not want us to leave Euratom; either they see no benefit in our doing so, or they are actively concerned about the consequences.

Ministers have simply ignored the difficulties and the overwhelming evidence before them. They have plodded ahead, and when asked “How?” they use their favourite word: hope. They hope that things will be in place—that agreements, funding and people will be available. Despite the impending loss of influence in developing policy in Europe on future nuclear decisions, the unanswered questions about cost, the difficulties in training or even recruiting replacement inspectors, they plod ahead. As the Minister said in response to questions on these matters in the Select Committee, “They don’t really know and we don’t really know.”

There are a lot of unknowns in the Bill, which is why it is imperative to amend it. The ONR says plainly that it might need more than a two-year transition period after 2019, yet the Government still provide no assurance.

[Stephen Kerr]

The hon. Gentleman says the Government give no assurance, but the Prime Minister, in her Florence speech, was explicit about the Government’s agenda in respect of a two-year implementation period. I cannot help concluding that the reason the hon. Gentleman advances this line of argument is that he has a destructive attitude toward the whole process, and his ultimate aim is to create a constitutional and ongoing sense of crisis. In fact, the Bill guarantees some continuity, including the two-year period.

[Drew Hendry]

The hon. Gentleman, like many of his colleagues in Scotland, likes to try to go to a happy place when faced with harsh realities. The fact is that a two-year transition period is viewed by virtually nobody as a responsible timescale in which to get up and running.

[Stephen Kerr]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to make some progress.

The UK, as it presses ahead with the folly of Hinckley C, will need thousands of workers, many skilled in the nuclear industries.

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[Ben Bradley]

I am again a bit disappointed to hear wildly misleading statements from those on the Opposition Benches, including the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), about medical isotopes, which are nothing to do with this Bill.

[Stephen Kerr]

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) accused Government Members, and Scottish Conservatives in particular, of seeking to find a happy place. Does my hon. Friend agree that that could never be said of the hon. Member for Inverness, Nairn, Badenoch and Strathspey? He is more inclined to find a depressing place, which I do not recognise in my native land of Scotland.

[Ben Bradley]

I thank my hon. Friend, who will know much more than me about SNP Members and their outlook on life.

Our relationship with Euratom is a subject for negotiation. The Government have been clear that they will seek continuity, and they obviously want standards to remain as high as possible. How that connects directly with Euratom is not for this Bill; it is for negotiation directly with the EU. The exact nature of the relationship will of course be closely connected to trade, customs and countless other arrangements.

In Committee, we saw Labour’s attempts to get either a commitment to Euratom, which cannot be given in this Bill, or associate membership, which does not exist and this Bill cannot create. We need to build our own framework so that we are prepared to incorporate whatever kind of relationship with Euratom results from the negotiation. The Government have been clear that that is the most helpful and connected relationship that we can have, so we cannot lay out in this forum what that will look like. We need certainty and structure and to have our own plans in place—not just on paper, but well developed and physically in place—so that we can have continuity regardless of what happens further down the line, meaning that we need to crack on with things now to be ready in time. We heard evidence in Committee about the time needed to put things in place, so we need to crack on now.

I do not understand where the hon. Member for Ynys Môn (Albert Owen) was coming from in his speech. While very eloquent, he did not seem to grasp that we cannot write into the Bill things that have not yet happened or are not yet agreed. We cannot include a transitional period, and the Government cannot accept an amendment that foresees a future negotiation with another party, the result of which we just do not know. We need to be ready on exit day. We need to ensure that we cannot be taken by surprise and that continuity is ensured.

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Finally, I will say a brief word on amendment 6, which has been tabled essentially to remind the Secretary of State that at the time of writing, no draft regulations relating to Bill had appeared. I would have expected that to happen as an essential part of enabling proper scrutiny of a Bill to take place. However, after the amendment was tabled, as if by magic, the draft regulations were published at 4.30 pm last Friday—30 minutes before the close of play for the admissibility of amendments for this stage of the Bill. Happily I can report, having scrutinised them in record time, that they appear to be uncontroversial in their application, so I thank the Minister for finally arranging for them to be produced. It is not his fault that he was under such time constraints to slot the Bill into the legislative process when it was not really ready for examination, but I note, in finishing, that that is really not the way to do good legislation in this place.

[Stephen Kerr]

I begin by paying tribute to the hon. Member for Southampton, Test (Dr Whitehead). I still consider myself to be a relatively new Member, but I had the privilege to serve on the Public Bill Committee. It was a masterclass in how to oppose constructively, so I pay tribute to him and the skillset that he undoubtedly brings to his portfolio and to the added value that he brings to the legislative process. I am glad to say that because it is meant genuinely and sincerely. I understand from his comments that he will not press amendment 6 to a vote. On amendment 1, however, we have heard it repeated ad nauseam that there will be no reduction in or diminution of standards for the inspection criteria on nuclear safeguards. I am disposed to believe these commitments, which have been given in all manner of forums and contexts.

Amendment 4 deals with the allocation of resources to ensure that the ONR can meet its extra responsibilities for nuclear safeguarding in the UK. I believe, having listened to the Minister’s undertakings and to the witnesses from the ONR both in Committee and before the BEIS Select Committee, that there is more than adequate evidence of the Government’s commitment to ensuring that the inspectorate is appropriately resourced and has the required staffing levels and so forth.

[Trudy Harrison]

Does my hon. Friend know that the ONR has already begun the process of recruiting safeguarding inspectors?

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[Stephen Kerr]

I am grateful for that information.

One of the many highlights of the first three months I have enjoyed as a member of the Select Committee was our visit to the Hinkley Point C project, an immensely impressive project that I would encourage Members on both sides to witness. It is an incredible undertaking—nothing short of a feat of modern engineering—and something we should all take great pride in. I was disappointed to hear the rather flippant comments about it from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). It is a vital strategic project that will safeguard our nuclear security, so it was disappointing to hear him dismiss it, although I understand that SNP Members, as committed nationalists, are against all things nuclear, which is much to be regretted, particularly from a Scottish viewpoint.

One of the highlights of the trip was our visit to Bridgwater and Taunton College to see the partnering there on nuclear skills, whether nuclear construction or engineering. It was immensely encouraging to see so many young workers—men and women—preparing through apprenticeships for a career in nuclear. One of the most upsetting things about hearing Members speak negatively about such a vital and strategically important industry is the impact it has on young people. We had an excellent debate in the House just over a week ago on space. We talked about the space programme in the UK being recognised and understood—we learned it was worth about £16 billion and that 6% of the global spend on space was in the UK—and what a spaceport in Scotland, in Ayrshire, would do to excite the imaginations of our young men and women in relation to the possibilities of a career in that area.

The same is true of nuclear. We need young men and women to see nuclear as a viable career, and there, at Bridgwater and Taunton College, we saw the evidence of the investment in skills and capabilities that is essential for the future of the UK’s nuclear industry. There are very exciting career prospects for those who commit themselves to a career in the nuclear industry, and that is to be encouraged; we need those skills. I am confident that the immediate provisions are being made, in the short term but also in the intermediate term, to ensure that those skills and capabilities will exist, and we shall be able to staff the ONR with an inspectorate and all the other skilled specialists we will need over time, although, on the basis of the evidence we received, I admit that that would not be completely in place by the date of departure.

--- Later in debate ---

[Drew Hendry]

I am delighted to have given the hon. Gentleman so much material today. He seems to be fascinated by my words. He will concede, however, that I was talking in the context of our being foolish and reckless enough to leave both the EU and Euratom.

[Stephen Kerr]

That is interesting editing. I cannot recall word for word exactly what was said before and immediately after what the hon. Gentleman said, but I think that I clearly heard him say that it was possible, in these new circumstances, to negotiate new arrangements. We must indeed accept that we will need new arrangements, and that they will need to be negotiated. As was said earlier, we cannot take something like associate membership off the shelf—I think Members will have to accept that such an arrangement does not currently exist—but I agree with him that anything is negotiable. I come from a background of sales negotiation, and that was one of the mantras by which we lived: “everything is negotiable”.

I think that when wise adult heads are brought to bear, definite win-win outcomes are possible, as they are in the context of the Bill and its subject matter. I hope very much that the Government will use their powers under the European Union (Withdrawal) Bill and the powers that this Bill will confer on them to bring the appropriate measures to life at the right time, so that we can secure the continuity and the prosperity of the UK’s nuclear energy business.

[Drew Hendry]

As we have heard many times, and as the evidence has borne out, the industry is clearly desperate for the standards that we currently enjoy through Euratom to be maintained. We have heard time and again that the industry would prefer us to remain in Euratom or to have associate membership, but if that does not happen, which seems to be the direction in which we are going today, it has said that it would like the new standards to be the same as those of Euratom.

It is vital for us to secure a commitment that the UK agency will be able not only to cope with the new work but to obtain the necessary resources, at the levels that are required through Euratom. However, as I said earlier, I do not believe that that is achievable, given the challenges. Crucially, there are still not enough people with enough experience. No matter how much the hon. Member for Stirling (Stephen Kerr) wants to persuade children that science is a good idea, I do not think we have yet found a way to compress five years into two, and it will not be possible in that period to gain the experience nuclear inspectors require.

Two requirements still need to be met: one is for complete transparency in the process, so that those who have expressed concern and the industry can know what is happening; the other is, through the amendments, to get a guarantee that arrangements will be in place that ensure that nuclear safeguards are operated to the same standards as now. I am anti-nuclear and proud that my party is, too, but we have to protect people’s interests where the nuclear industry is concerned. Too many of us in the highlands remember the mess left at Dounreay. Anyone who wants to know what can go wrong in the nuclear industry should go up there and learn about what was left on the beaches and the radioactive material moved about in welly boots because the equipment had rusted, before the correct standards were put in place through Euratom.

--- Later in debate ---

[Stephen Kerr]

I shall make just a few brief comments. I paid my compliments earlier to the hon. Member for Southampton, Test (Dr Whitehead), and I also want to pay tribute to the Minister, who has conducted the passage of this Bill with great aplomb, dignity and good humour. That has been much appreciated. Like the hon. Member for Oxford West and Abingdon (Layla Moran), I have attended all the debates on the Bill in the Chamber and in Committee. As a member of the Business, Energy and Industrial Strategy Committee, under the very able chairmanship of the hon. Member for Leeds West (Rachel Reeves), I have also had the benefit of attending several hearings at which we received evidence on this subject.

Leaving Euratom is actually a matter of some regret for me and probably for many Members on both sides of the House. I am not one of those people who supports the Government’s programme of leaving the European Union without appreciating that some aspects of being part of the EU have been intensely beneficial to the United Kingdom, and nuclear safeguarding is without question one of those areas. I therefore hope that Members will recognise that the Bill is a plan B in case we are unable to remain in some way associated with Euratom.

Euratom is at the heart of our nuclear industry and has not only the skills and expertise but the experience to be of service to our nuclear industry, which is a complex field. Nuclear energy is a vital part of our energy mix, offering baseload capacity for the energy market. As such, the Bill is vital to ensure that we meet our international obligations as we leave the EU. Although such things form a vital part of the reasoning behind safeguarding in this industry, it is not a luxury; nor is it simply a health and safety matter. Our international obligations under non-proliferation treaties make our leadership in this area as a world power a significant issue, and as a leader, the UK must meet its obligations. We secure the moral authority to stand up to rogue states and to nations that have a different view of non-proliferation through our safeguarding regime. We must not forget just how much safety concerns matter in this sector. The consequences of getting something wrong would have ramifications not only for us, but perhaps for generations to come. Having a strong safeguarding regime in place, which is what the Bill provides, is absolutely vital for the health and prosperity of the industry and of our economy. I therefore unreservedly support the Bill on Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill (Programme) (No. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill for the purpose of supplementing the Order of 10 July 2017 (Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill (Programme)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement at today's sitting.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Jo Churchill.)

Question agreed to.

Oral Answers to Questions

Stephen Kerr Excerpts

Tuesday 12th December 2017 Commons Chamber

[Richard Harrington]

Like the hon. Lady, I commend what the European Investment Bank has done, but the Government are totally committed to renewables and to our own investment in getting a carbon free environment in the way that has been very successful over the last few years.

[Stephen Kerr (Stirling) (Con)]

Can the Minister confirm that up to £557 million will be made available for less established renewable electricity projects as part of the clean growth strategy, and that projects in Scotland will be able to compete for their share of that fund?

[Richard Harrington]

My hon. Friend is absolutely right, and that is very much an important part of the industrial strategy.

Smart Meters Bill (Sixth sitting)

Stephen Kerr Excerpts

Committee Debate: 6th sitting: House of Commons
Tuesday 28th November 2017 Public Bill Committees

[Richard Harrington]

I must formally apologise and hope that the Hansard writers are able to expunge the fact that I got the wrong Henry in the wrong country at the wrong time. In no way was it meant as any form of insinuation, implication or anything improper about the historical knowledge, or indeed, any knowledge, that the hon. Gentleman has. I must apologise for any offence caused. If this were outside in the world where one gets sued, I would have to make a donation to the charity of his choice, but I do not think the difference in Henrys is quite the point he was making.

It is a true and interesting point, which is relevant to so much legislation in this place—many things far more politically contentious than what we are discussing here today. Where it is appropriate for Government to have powers that are delegated is a big issue. I know that in the European Union (Withdrawal) Bill that is going through at the moment this has become quite a big cause célèbre, and it is one with which I have a lot of sympathy. I will try before you rule me completely out of order, Mrs Gillan, to talk about the specifics of this particular Bill, which, by powers of the Henrys, is quite limited in the powers it asks for.

The powers we need are of two types: first, as the hon. Gentleman gracefully and properly conceded, in some cases there is the need for urgency; a Secretary of State of whichever political complexion may need to be able to act quickly. Secondly, there is the question of the general type of statutory instruments, which are dealt with in the affirmative or negative way.

[Stephen Kerr (Stirling) (Con)]

Is there any precedent for using negative resolutions in relation to non-UK companies that have been awarded licences in any facet of our economy?

[Richard Harrington]

I cannot tell him about companies generally, but I know within energy, which is my field, that there are precedents within the Energy Act 2004. My hon. Friend the Member for Finchley and Golders Green next to me has told me the actual point—in fact he has not, he has told me exactly what I have just said. I was trying to be clever and remember the clauses, but I know it was the Energy Act 2011, which set up other special administrative regimes. This is a common system for SARs. There is ample precedent for that and it would seem very strange, for no particular reason, to give this special administrative regime a different rule to others. I hope that the hon. Gentleman will take that point into consideration.

The SAR has largely been formulated with GB-registered companies in mind, since a GB company is the current Smart Meter Communications Licence holder; that is true. However, there is a possibility that at some point in the future the licence holder could be a non-British company. He is right to say that the earliest the licence is expected to be re-tendered is September 2025. I know that delegated legislation moves slowly, but I accept his point that this is not a speed matter. I could not even try to argue in front of him or yourself, Mrs Gillan, that this was the case.

Although a number of adaptations to the special administration regime catering for non-GB companies have already been made by the Energy Act 2004 applied by this Bill, we may find that further modifications are needed to account for a non-British company becoming active in the provision of smart meter communications services.

--- Later in debate ---

[Steve McCabe]

The Minister made a very helpful offer at the end. He says that every single consumer is making a saving, but I repeat that that is not true if the smart meter is in dumb mode. People are not making a saving in those circumstances.

[Stephen Kerr]

The consumer with a dumb meter may very possibly make a saving; I give myself as an exhibit. I changed suppliers. My meter is no longer smart—I grant the hon. Gentleman that—but I have made a saving, because I had a smart meter in the first place.

[Steve McCabe]

I congratulate the hon. Gentleman on his wisdom and semantics. Clearly, in those circumstances, the saving he is making is not to do with the smart meter, but with his judgment in switching supplier—that is the saving he has made.

[Stephen Kerr]

It is because I had a smart meter that I was able to make the saving in the first place.

[Steve McCabe]

As I do not live anywhere near Stirling, I concede that up there, the canny wisdom of the inhabitants is such that they almost certainly have found a way of screwing the best possible deal out of the system. Unfortunately, as somebody who represents the humble folk of Selly Oak, I encounter the people who do not do quite as well out of the programme—hence my desire to represent their interests.

The essence of the amendment is to try to shed light and ensure that the public have a greater understanding of what is going on. I feel that that is absent. If the Minister says that he is going to share the information, that is good enough for me. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

The position we have at the moment is that two amendments are potentially in scope because they change the long title. However, they have not yet changed the long title because they have not been agreed.

[Stephen Kerr]

I am also a new Member and a bit confused. The hon. Gentleman’s objection seems to be not about the substance of what the Minister has brought forward, but that he does not like the way in which it has been done. On that basis, surely the shadow Minister is not prepared to sacrifice the substance of what is being proposed, on the basis of a procedural question of how many angels are dancing on the head of a pin.

[Dr Whitehead]

Forgive me, Mrs Gillan. It is not about angels dancing on the head of a pin; it is an important issue about the procedures of the House. I can see that the hon. Gentleman is puzzling over whether we would “sacrifice the good” of what is before us because of concern about a procedure. That is not a position that the Opposition have put ourselves in; it is a position that we are all in because these amendments have all been grouped together when they refer to two different things, one of which is a procedure and the other of which is substance.

As far as the substance is concerned, the hon. Gentleman may rest assured that we think the substance is good and we do not wish the Bill to be sabotaged because we have concerns about how those good things came to be, but I think the hon. Gentleman will clearly understand that if that procedure is taken as a usual state of affairs in this House, without anybody drawing attention to it for the future, there may in future be circumstances in which someone wishes to introduce a much worse series of amendments than the one that we have today. We know, because the Minister was clear about it, that another Bill was effectively grafted on to this Bill. I can understand the reasons why the Minister wanted to do that.

--- Later in debate ---

[Patricia Gibson]

I shall be brief. I agree with everything that the hon. Member for Birmingham, Selly Oak said—I fear that this is turning into a bit of a mutual admiration society. I will say no more, except that, alongside the public awareness for which the new clause calls, we would expect public confidence and transparency. The Minister has talked a great deal today about transparency. What I would like, but suspect I will not get, is an assurance from the Minister on public awareness and the confidence we would expect to come with it. Customers have raised the issue with me, and I know that it has also been raised in other arenas. They fear that when their energy usage is known in such detail, it will be used, at some point in the future, as a lever to smooth out demand by having different price bands.

Peak times such as 4 o’clock to 7 o’clock are a real worry for families who are already struggling with energy bills—indeed, with all their bills. We have talked about nudging, and people are concerned that this might be used as a way of nudging their behaviour and when they use their energy, and about what they should do during peak times to avoid using energy as much as they possibly can—that is not entirely possible for everybody. The fear is that this measure may be used to raise charges.

[Stephen Kerr]

I wonder whether that is entirely a bad thing, given that there will potentially be quite rich savings for people who are prepared to change their behaviour and their use of appliances—especially energy-heavy ones—during peak times.

[Patricia Gibson]

It may not be a bad thing for certain people who are in a position to do that, but when kids come in from school and they need to have their dinner—people cannot really work around that and say “You need to wait until 8 o’clock to get your dinner because energy is cheaper then.” There are people for whom that might yield great benefits, but some are trapped in that peak period and cannot work around it. That is a real concern for a lot of consumers, as I am sure the Minister will understand.

Smart Meters Bill (Fifth sitting)

Stephen Kerr Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 28th November 2017 Public Bill Committees

[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.

[Stephen Kerr (Stirling) (Con)]

How does the hon. Gentleman envisage there being such an event without it being transparent to Members of Parliament and to the public? In what scenario would that be possible?

[Steve McCabe]

That is a good question, but unless I have misunderstood its wording, the Bill gives the Minister the power to set up this regime but does not impose any requirement to disclose to the wider public, or indeed to someone like the hon. Gentleman, exactly what the Minister is about. That is the very essence of this amendment. Maybe it will help the hon. Gentleman if I give the wider context to why the public needs, at this stage, a transparently operated smart meter communication licensee administration.

The thing we cannot escape, and should not try to, is the huge cost of this programme. It is enormous. In recent correspondence, the Government are on record as saying that the average household is expected to save £11 a year on its energy bills in 2020, rising to £47 by 2030. If I have the figures right, that equates to £300 million off domestic energy bills in 2020, rising to about £1.2 billion by 2030.

The Minister told us earlier that the cost-benefit analysis is regularly updated. I am not sure that is strictly true. It is probably fair to say that the cost-benefit analysis is modified, but to the best of my knowledge there have been two to date. The figures that I am quoting are based on the cost-benefit analysis conducted in 2016, which some of the expert witnesses called into question, as Members will remember. It is possible that the figures were accurate at the time of publication, and the benefits quoted would be welcome, were it not for the fact that the increasing cost of the roll-out falls to the consumer.

If Members recall, Mr Bullen told us that the cost of the smart meter roll-out per household was £13 a year, up from £5 only the year before, when the cost-benefit analysis was conducted. On that basis, the net benefit to the average household lucky enough to have a functioning smart meter that is not in dumb mode is actually minus £2, while those who have not even had a smart meter installed at this stage are paying £13 for the roll-out without deriving any benefit at all. Centrica—the people who own the gas—claimed last week that the costs of subsidising the £11 billion smart meter roll-out programme are just included in their customer bills. They said that, presently, large suppliers see these rising costs as among the main reasons for customer bills going up.

[Stephen Kerr]

I appreciate the points that the hon. Gentleman is making, but I am not entirely clear how this pertains to his amendment, which concerns an administrative arrangement, should we get into that scenario, which we can hardly envisage, where power companies are failing and so forth. I am not sure I understand the relevance of his comments about those costs to the amendment.

[The Chair]

Order. I ask for interventions to be brief if possible. Secondly, before the hon. Member for Birmingham, Selly Oak responds to that intervention, I am not sure whether this is the appropriate place to have this debate. We will be discussing the cost-benefit analysis issue in later clauses, and this amendment is about the objective of the smart meter communication licensee administration. Please can we try to have a narrowly focused debate about the amendment before us, not a general debate that we can have later?

--- Later in debate ---

[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.

[Stephen Kerr]

I am a little confused about the hon. Lady’s line of approach because I cannot see the relevance of what she is saying. It no doubt has lots of merit—I do not dispute that—but I cannot see its relevance to the amendment.

[Patricia Gibson]

I draw attention to these points because the amendment is about enhanced parliamentary scrutiny. I am simply pointing out the need for further enhancement of such scrutiny, and I wonder what the Minister thinks about that—he is looking at me bewildered.

Smart Meters Bill (Third sitting)

Stephen Kerr Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 23rd November 2017 Public Bill Committees

[Steve McCabe]

Good morning. It is a pleasure to serve under your chairmanship, Mr Gapes. I should probably confess to you that this morning in the railway station, as I discovered that the 8.30 and 8.50 trains had both been cancelled, I wondered about phoning you to ask whether I could be the first Back Bencher to make it into Hansard by moving the amendment on Skype. I was intrigued to know what your ruling on that might be. However, as I am sure the Minister and his colleagues are relieved to hear, at the 11th hour a train arrived. It was an interesting journey, but I made it here.

The amendment seeks to reduce the period for which the extension of the licence would apply. Amendments 2 to 5 are consequential. To be clear, I am in favour of smart metering. I believe that it is a technological advance with the potential to save energy use and to reduce customer bills, and it may have wider, long-term and beneficial applications. I assure the Minister that these are not wrecking amendments. Rather, the purpose is to probe, to uncover the explanation for what has gone so wrong with the roll-out so far. What assurances can he give the Committee that an extension of the deadline will result in a satisfactory outcome, not simply allow an extension of the delays and spiralling costs, which have been a feature of the programme to date?

It is the Government’s wish that by 2020 more than 50 million new energy smart meters will have been rolled out to 30 million homes and smaller non-domestic sites. The programme is currently in the main roll-out stage, which is due to end in 2020. However, as I said, it has faced persistent delays. As a result, SMETS 1, the early version of meters that we heard about in the oral evidence sessions, is still being rolled out, and that is scheduled to continue until July 2018.

As I have indicated, there are real benefits from the programme. Smart meters coupled with a functioning in-home display—an IHD, as it is referred to in most of the documentation—can make energy usage and cost visible to customers in near real-time, enabling consumers to change their patterns of consumption. That in turn can help with demand management for the energy supply across the country.

The scale of what remains of the smart meter roll-out programme is immense. Only 8 million meters have been installed so far out of a target of approximately 53 million. That is about 15% coverage, with only three years left of the main roll-out stage.

[Stephen Kerr (Stirling) (Con)]

I am not clear about what would be achieved by a move of date. If, as the hon. Gentleman says, and I agree with him, it is a stiff target to install the remaining balance of meters by 2020, why change the date when the purpose of the Bill is to allow the Secretary of State that flexibility?

[Steve McCabe]

As I said at the outset, the purpose of the amendment is to probe the Minister to explain what has happened so far and why he is so confident that in the future he will be able to stick to deadlines that have not been kept to so far. We could simply settle on the date of 2023 as currently specified in the Bill, but it would be remiss of us both as constituency Members of Parliament and legislators to let that go through without being clear about what we have voted for and what the likely implications are. Hence I suggest we look at the date.

[Steve McCabe]

There is a new clause to be considered later that would provide for a fresh cost-benefit analysis, partly on the basis that with the most recent one there was a significant downward revision of the benefits identified. Clearly, to let the programme trundle on, without any idea of the costs and benefits, might mean that we are doing constituents and customers a severe disservice.

As I was saying, the roll-out has reached the stage of about 15% coverage, with three years to go. The Government are on record as saying, only last month, that nearly 350,000 meters are being installed each month; but to reach 100% coverage by 2020 more than 40,000 meters a day need to be installed. That is a 70% increase in the installation rate.

[Stephen Kerr]

I am a little confused; perhaps the hon. Gentleman can help me. Is the objective to offer smart meters to every one of the 53 million establishments by 2020, or to complete installations? Currently an offer is being made, and there is no mandate on consumers to install a smart meter. I am not sure that it is possible to have a target of 100% completion by 2020 on the basis of an offer to consumers.

--- Later in debate ---

[Dr Whitehead]

My understanding of my role, with regard to the amendments, is that I am not summing up on behalf of the Opposition but speaking in support of the amendment put very ably by my hon. Friend the Member for Birmingham, Selly Oak just a moment ago. Before I say anything else, I need to emphasise, as my hon. Friend did, what the Opposition think about the Bill as a whole and what we think about smart meters and their roll-out.

We need to be clear from the start that we are certainly not opposed to the Bill overall and we are certainly not opposed to smart meters. We think that smart meters are not only a desirable but a necessary part of the process of smartening up our energy systems as a whole, and that they will have considerable benefits for both consumers and the energy system as a whole when they are rolled out.

We are also anxious to see that that roll-out proceeds in a timely fashion and that we have a substantial coverage of smart meters at the earliest possible stage, so that those benefits can start to be realised. Indeed, as we heard in oral evidence, there are quite a few issues relating to how many smart meters need to be installed in order for those benefits to start rolling out. Getting those numbers in is an important part of the process of realising benefits for the future.

The amendments we are talking about, and indeed clause 1, are about the process of changing the date by which time licensable activities will have ceased from 2020 to 2023. Whether or not it was a wholly wise idea, the 2004 and 2008 Energy Acts and subsequent regulations specified a date for those licensable activities to end, so after 2018 the Government will have no control over what goes on. Everybody knows that in 2018 we will still be at a relatively early stage of the roll-out. It is impossible to conceive that it would be wise to continue with the original timetable, so we support the idea of specifying a more satisfactory date in the statute book.

The date specified in the Bill is 2023, but as my hon. Friend the Member for Birmingham, Selly Oak pointed out, that does not appear to coincide with the Government’s publicly stated ambition for the end of the roll-out. I say that with caution, because their statements about the roll-out have changed over time, but they have always revolved around the idea of ending it in 2020. There has been a lot of talk from the Government about 53 million smart meters being installed in homes by then. Indeed, the “frequently asked questions” page of the Smart Energy GB website states:

“By the end of 2020, around 53 million smart meters will be fitted in over 30 million premises (households and businesses) across Wales, Scotland and England.”

However, the Government have changed their position; they are now saying that by the end of 2020, 53 million customers

“will have been offered a smart meter”—

a very different proposition. We could interpret that as 53 million people being offered a smart meter by 2020, but only 10 million having them installed, although I assume that that is not what the Government mean. That statement may be meaningless or meaningful, depending on what happens before the end of 2020 and on a variety of issues that will appear along the road, many of which the Committee will examine in its consideration of the Bill.

[Stephen Kerr]

Does the hon. Gentleman agree that if the word “offering” really suggests something voluntary on the part of the consumer, any targets set beyond that level are fairly redundant?

[Dr Whitehead]

Not entirely. That is one interpretation of the word “offering”. If we adopt that theoretically interesting but practically difficult interpretation, what are we doing here, worrying about the roll-out? Provided that we can ensure that the chosen vehicles for the roll-out—the energy supply companies—can at some stage up to the end of 2020 tick a box showing that they have contacted Mrs Miggins of Acacia Avenue and Mr Bloggins of somewhere else, and asked them “Do you want a smart meter: yes or no?” and those people answered, “Hmm, I don’t know,” that is the end of it. Presumably we could end up at the end of 2020 with 20% coverage and a small number of meters rolled out.

--- Later in debate ---

[Richard Harrington]

Let us get back to business straight away. I was tempted by the hon. Gentleman.

This is a precursor to a smart grid through which everyone—poorer people, richer people, businesses, houses—will be able to make real choices all the time. They might have computer programmes or apps to do it for them. Our children and grandchildren will not talk about SMETS 1 and SMETS 2, as the shadow Minister does in day-to-day conversation over breakfast. They will just look at what they are paying for their power every half hour or whatever, and they will know. That is why we are bringing forward the Bill.

We are committed to ensuring that every home and small business has been offered a smart meter by 2020; I believe that was in the Conservative party manifesto, so it must be true. That is our clear policy, and it is what we are going to do.

[Stephen Kerr]

Will the Minister say exactly what “offer” means in that context? There is an issue over whether “offer” equals mandate, but we have clearly said that there is not a mandate or a requirement for consumers to have a smart meter.

[Richard Harrington]

It is precisely that: it is not compulsory, it is an offer, which is deemed to be people being told by phone or in writing that they can have a smart meter, as indeed I have been and am arranging for. I am sure many hon. Members in this room will be doing the same.

The extension of the powers proposed in the Bill will enable us to drive progress to the 2020 deadline, act on evidence to remove any emerging barriers to the roll-out and then—this is the important thing for the 2023 extension—to respond to the findings of a post-roll-out review, to ensure that the benefits for consumers are fully realised over the long term. Industry and consumer groups have made it clear that they see a need for Government leadership on this, which we hope we are providing.

Smart Meters Bill (Second sitting)

Stephen Kerr Excerpts

Committee Debate: 2nd Sitting: House of Commons
Tuesday 21st November 2017 Public Bill Committees

[The Chair]

Not at all. Mr Wiles, have you anything to add?

Richard Wiles: We have the ability to transmit data into the system that Derek has just referred to, to keep it live. On the point about how many units are kept in dumb mode, or put into dumb mode or non-smart mode, we do not get to see those figures. That is between the energy supply companies; it is not a direct result of the service that we offer, so I cannot give you a definite figure.

However, we can make sure that any unit put in the non-smart mode can be retained live and be reactivated at a later date, and that can be part of the enrolment and adoption figures. Even for smaller suppliers, if they inherit a smart meter system and do not wish to keep it running, or have a separate service until enrolment and adoption goes live, it can be reactivated at a later date.

[Stephen Kerr (Stirling) (Con)]

Q Thank you for the clarity with which you are answering our questions, by the way. This morning we heard evidence that suggested that SMETS 1 meters were in fact interoperable and you are confirming to us that they are not. You described a status of interim interoperability. Can you revisit what you meant when you said that?

Derek Lickorish: I heard Mr Bullen talk about interoperability, but it is not interoperable unless you have the interim interoperability, which I discussed. Suppose these three cups in front of me here were Secure Meters’ mini DCC, CGI’s mini DCC and Trilliant’s mini DCC. If I had five million cups, I would line them all up, and each one of these three would be talking to a whole pack of cups. We have been able to get these boxes to talk to this box and this box. That is where the interoperability occurs.

[The Chair]

Mr Lickorish, that is a very good example, but I have to tell you that for the Hansard reporters—[Laughter.]

Derek Lickorish: Then you will have access to more cups than I do. For the benefit of Hansard, we are saying that we have mini communication systems—each manufacturer has its own mini communication system—to talk to meters, whereas DCC will talk to the whole estate in one go. In Secure Meters’ case we have invested in it ourselves, for our consumers’ benefit, not just our customers’. It will talk to these other systems, and we have even demonstrated it to BEIS earlier this year, to show that it works.

[Stephen Kerr]

Q And it is on the basis of this status of interim interoperability that you believe that we should put the pedal to the floor towards the 2020 deadline. Is that what you said?

Derek Lickorish: That is an option you could take, but as currently structured, no one knows quite what will happen to them, as far as July 2018 is concerned, if they keep on doing this. I understand all the reasons and I want us to get the right outcome for the consumers and for the industry, but all the time we have uncertainty built into everything we are doing. For example, when is July 2018 coming to an end? A lot of other people who have not started on this are all waiting for SMETS 2, because it is always just round the corner. How big is the corner?

[Stephen Kerr]

Q We have 7 million of these SMETS 1 meters on walls, 20% of which you estimated are now in dumb mode. Many of these meters will be unplugged. If people have changed supplier, they have probably unplugged it because it is not providing any functional service to the consumer anymore. How do we update the SMETS 1 meters to make them SMETS 2 compatible?

Richard Wiles: The whole point of enrolment and adoption, which we are working on now, is to make sure that our estate will be able to go into DCC world and provide a similar level of functionality that SMETS offer. We are addressing that right now. It is an active programme that is underway. That will provide true interoperability, not just for the energy supply companies, but for any licensed holder of DCC, energy supply network operators and licensed third parties as well.

[Stephen Kerr]

Q How do you update them, though?

Derek Lickorish: You can update them. This is a very detailed discussion and I am happy to talk to you separately about it. This term “unplugged” means that they may not be looking at the IHD. The system is still connected and has not been unplugged. If a secure meter has gone dumb, we can still talk to it, so it is not an issue.

[Stephen Kerr]

Q So the visual data might be—

Richard Wiles: For our estates, part of the process is to make sure that when the initial releases come out, there is an upgrade path to ensure that the firmware on the devices is SMETS 1 compliant. We have had extremely high percentages—in the high 90s—over the upgrade paths to make sure that the firmware is compliant with the meters to ensure that they can be enrolled and adopted. We have excellent, proven records to show that we can do OTAs at scale, throughout the entire programme that we have been deploying SMETS 1. I do not believe that there is any issue with the product not meeting the standards.

Derek Lickorish: Similarly, we have had huge numbers of over the air firmware upgrades, which is where I think the rubber will start to hit the road for DCC when it starts doing that. Not only have we done that in this country in the way that Richard spoke about, we have been heavily involved in Australia—over a million meters, using silver springs technology, silver springs embedded in our meters.

Out there, we will have done millions of over the air firmware upgrades. It is not until you start that part of the journey that you really begin to understand the issues. That is why I say that this is the moment when the industry should be galvanised to start solving all these problems, and agree that the 2020 date should not be altered now, but that it is part of the journey to find out what else needs to be done, because there are so many world firsts and they take time to solve.

[The Chair]

For the convenience of the Committee, I have four indications of questions that have to be asked before 2.45 pm, so moving on now to Mr Pawsey.

--- Later in debate ---

[The Chair]

Three colleagues now wish to ask questions—Mr Kerr, Mr Lewis and Mr Morris—and we are aiming to finish at 3.15 pm.

[Stephen Kerr]

Q I will be brief. My question is about engagement and awareness. We are talking about this smart meter roll-out in the context of the fourth industrial revolution and about what should be a centrepiece of national infrastructure renewal in that revolution. My concern is that there is not a lot of public awareness of the total picture of smart meters in the context of the smart grid and the smart economy. I do not think that there is a lot, but what is your experience? Is enough being done to raise awareness? What more can be done?

Sacha Deshmukh: You raise a good point. I am very enthusiastic about the smart British future. Consumer experience in terms of public engagement, particularly with nationally led projects, always teaches you to be very balanced and clear about the benefits available now, what they are building towards, when they will be available and the reality of that. It is about wanting to ensure that people can continue to trust the promise. Not least, all our communications through different channels are regulated by the Advertising Standards Authority, the Committee of Advertising Practice, the broadcast codes and so on. We need to be accurate in the promise to consumers today and give accurate expectations, but I very much take on board what you say.

For a number of our areas of activity, talking about why this matters for the bigger picture will be increasingly important. A consumer spoke to me recently in a focus group. Apropos of nothing, without any information, they essentially summed up an entire sustainable, reliable energy vision that really was a 60 to 100-page BEIS document. They got it and summed it up instantly, so you are right that the consumer appetite is strong. We just need to balance that with the accuracy of the promise to the consumer in the immediate term as well.

Dhara Vyas: I agree with Sacha. The only thing I would add is that I think we have to remember that not all consumers will either want, or be able to, engage. Customers and consumers need varying levels of support to engage with the benefit of not just smart meters but, as you say, the whole wider agenda. Smart meters may be the first internet-enabled thing in the home and it is really important that all consumers are supported to interact with it as much as they want to, or might not want to. There are always going to be some consumers who don’t want to and they should not be penalised for that.

[Clive Lewis (Norwich South) (Lab)]

Q My question follows on from that. In terms of your own organisation, when does your contract run out for what you are doing?

Sacha Deshmukh: Our organisation exists to support the roll-out, so our lifespan will be that of the roll-out.

--- Later in debate ---

[Steve McCabe]

Q So you do not know what will happen to the old ones, or what will happen to smart meters when they come to the end of their lives?

Dr Richard Fitton: Or indeed to some of the smart meters being installed today. I have swapped suppliers and they have taken away new smart meters, four or five months after. I do not know; sorry.

[Stephen Kerr]

Q I was interested in your comment about consumer access devices, following up on your comment that you have never had one that connected to a smart appliance or device. Is that because the SMETS 1 meter does not have adequate functionality to do so? If so, does that mean that we have an estate of some 7 million SMETS 1 meters in this country that are not future-proofed to allow us to take full advantage of the potential of a smart grid/smart economy?

Dr Richard Fitton: I believe, as the Minister has mentioned, that SMETS 1 are to be upgraded to SMETS 2 starting at some point next year. There is no particular technological challenge in connecting consumer access devices to SMETS 1 meters, but you can sympathise with some people who might be waiting for the full SMETS 2 systems to be installed. That seems commercially obvious to me.

[Stephen Kerr]

Q Are you seeing evidence to suggest that the SMETS 2 meters will be easier?

Dr Richard Fitton: We have been told.

[Stephen Kerr]

Q Then that will be the case.

Dr Richard Fitton: Absolutely.

[Stephen Kerr]

Q To this point, is there any evidence that smart meters change consumer behaviour across the board, other than people looking at the visual display?

Dr Sarah Darby: There is evidence that people are making alterations in their everyday behaviour and that over time, from how the figures are going, they are thinking more about investing in energy efficiency. I say that because the evidence is that the energy-saving effect, compared with people who do not have smart meters, rises gently over time. You would think that people might be very keen at first to go around switching off all the lights and so on, but would then get a bit bored with it, and the effect would fall off, but that does not seem to happen. If you look at the large numbers of people we have data for over a long period of time—a few years—you see a gradual learning effect.

It is quite a small effect in aggregate. After the first year of roll-out, I think it was 1.5% or 2% for gas and electricity. The last I heard, which was May 2016, British Gas was talking 3% to 4% after a few years, on the basis of several hundred thousand customers. So there is a gradual learning effect. That is, of course, an average, and it will vary a lot between people. For some people, you may get quite a substantial effect; for some people, none at all.

Smart Meters Bill (First sitting)

Stephen Kerr Excerpts

Committee Debate: 1st Sitting: House of Commons
Tuesday 21st November 2017 Public Bill Committees

[Grahame Morris (Easington) (Lab)]

Q Good morning. Why has there been such slippage in the programme from the original scheduled roll-out date of 2020? I read in the brief that there is 74% satisfaction among customers when it comes to the existing meters. Is it public perception? Is it lack of advertising? Why has take-up not been as good as originally anticipated?

Audrey Gallacher: We currently have the foundation stage for the smart meter roll-out with first generation meters. That was always the intention, as it is important that a programme of this nature and size is properly trialled and tested, so that when we move on to the mass roll-out that can be done as cost effectively and efficiently as possible, and with the best possible customer experience.

It is probably fair to say that the foundation stage has continued longer than we originally envisaged because there have been some delays around the enduring infrastructure to support the second generation meters. While that was really important, and there are already 8 million of those meters already, a lot of learnings have been taken, which means that we have a delay in the real ramp up. Until we see that ramp up, it might be difficult to understand the consumer appetite and attitude to smart meters, because we have not yet really started in earnest.

Bill Bullen: Obviously I have some difference of opinion about that. Certainly, in the market where we operate there has been great engagement with smart meters. In terms of the roll-out, one of the big issues has been the delays around the central systems for the second generation of meters. Personally, I think it was possibly not the best decision to go down that route in the first place. We would not be where we are, with 8 million meters already installed, if we did not have the first generation going out there.

My key concern, without wanting to rake over the coals of the past, is what is going to happen in the next two or three years. That will clearly be critical to the continued roll-out of smart meters, and particularly to delivering benefits to low-income prepayment households. That will be to do with the rules around the cut-over between SMETS 1 and SMETS 2 and whether continued roll-out of smart meters is going to be financially viable, because of the pre-pay price cap and changes to environmental levies that are going to have an impact on that going forward.

[Stephen Kerr (Stirling) (Con)]

Q I am interested to hear about the proposition to consumers. How do you package smart meters up? What are the benefits that you talk of when you talk to consumers about smart meters? In relation to your answer to that question, why are we where we are? Why are we only 7 million in?

Bill Bullen: You have to realise that there is a completely different benefits case for prepayment customers versus normal credit customers. We are completely focused on prepayment.

As I have said already, the benefits to prepay customers are huge—the convenience alone is worth a considerable amount to somebody who may otherwise suffer an interruption to their power supply at a critical moment. With a smart meter, they can get the supply back on immediately; with a dumb meter, they cannot. Frankly, that is the biggest selling point right now, not least because, with the price cap at the level it is, there is no differential in price anymore. But customers are still buying smart prepay, so our growth rate has slowed down since 1 April, but it has not stopped. Customers do still get the benefits.

Audrey Gallacher: For consumers more generally, there are lots of benefits around an end to estimated balances. There should be improvements in the accuracy of bills and consumers should have more control over their energy because they can see it in pounds and pence in real time, so they can reduce consumption and save money. There is more information available to facilitate easier switching, so you can change to another supplier with more confidence.

Lots of the stats that Smart Energy GB, the communications and marketing company, is providing from its research show that this is starting to bear fruit. People are much more confident that their bill is accurate—83% compared with 61% of the non-smart population. There is a lot of satisfaction with the smart process. About 80% of people like their smart meter and thought it was a good process, 75% would recommend them to friends and family, and 80% have already taken action to reduce their energy consumption. There are lots of real benefits. We have also seen a reduction in complaints and an increase in satisfaction.

But the real prize is much longer term. Smart meters are an enabler for a much smarter and more flexible future. They are going to allow us to have much more control over the networks so that we can not only reduce demand and hopefully reduce the need for ever more energy generation, but use the networks more flexibly. They are an enabler for electric vehicles and storage, and all the other things that we anticipate for the future, so it is really critical that we get this done. To Bill’s point, we want to do it as effectively as possible at the least possible cost to consumers and with minimal interruption, but it is an absolutely essential component of the energy system of the future.

[Stephen Kerr]

Q Do you think smart meters are encouraging the market to act more competitively?

Audrey Gallacher: At the moment, one of the things that we are looking at for the roll-out of smart meters is that they will enable a lot more innovative products. We have seen the obvious customer service benefits for prepayment meter customers, but there are longer-term issues around what kinds of products and innovations can come out there, such as time of use, free weekend use—there are lots and lots of things. We are just starting to see the beginnings of that. It is not yet in place, but that is one of the things that smart will hopefully deliver.

[Stephen Kerr]

Q Has the lack of interoperability in the SMETS 1 meter been a drag?

Audrey Gallacher: It has probably been a bigger issue in the newspapers than for customers. That is one thing that we should bear in mind. Last month, 572,000 smart meters were put in and about 200 people contacted Citizens Advice with complaints or questions, so thankfully the customer experience and research looks a lot better than if you are just reading the news clippings.

Bill Bullen: I would make the case even more strongly than that: I do not think there really is an interoperability problem. The companies out there rolling out SMETS 1 generation meters have gone to great lengths to ensure that that is not a problem. We certainly exchange customers with smart meters with other suppliers all the time, and there is not a problem with interoperability. I think the issue has been massively overplayed, frankly.

[Mark Pawsey (Rugby) (Con)]

Q May I follow that up? I have a constituent—

--- Later in debate ---

[The Chair]

Mr Kerr, you were in the middle of a string of questions. I will give you one more and then move on to someone else.

[Stephen Kerr]

Q I am not clear about the whole issue of interoperability. My personal experience is that when I switched supplier, my smart meter did not continue to be very smart. Frankly, I could not see the value of using the information to make a switch and then losing the meter. Are you saying that is not the case? Should I have asked my new supplier for another meter?

Bill Bullen: No, I am simply saying that I cannot govern all energy suppliers. If you switched to an energy supplier that decided for its own reasons not to support a smart service—

[Stephen Kerr]

No, it does.

Bill Bullen: As I said, there is interoperability between SMETS 1 meters. In fact, there are only two or three types of meter out there, so actually the same headings are operating all of those meters. The interoperability problems of SMETS 1 is an issue that has been massively overplayed. Frankly, it is also giving some suppliers an easy excuse not to support a SMETS 1 product, saying that interoperability is difficult. It is not difficult. At the end of the day, you are talking about very few electronic messages that you need to exchange with a smart meter system, and it is not difficult. It really is not.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Q Like probably most people in this room, I can see that there are benefits to smart meters, but I wonder whether I could put to you a number of concerns that have been raised specifically with me about the roll-out. Perhaps they might explain the difficulty in penetrating the market as quickly and deeply as we would like at this stage, and indeed by 2020.

Would you like to comment on concerns, raised by trading standards, that not enough of the energy companies are making it clear to consumers that they can refuse a smart meter if they wish? There are real concerns that some energy companies may be guilty of breaching the Consumer Protection from Unfair Trading Regulations 2008.

What do you think about the idea that consumers are being sold the meters—by “sold” I am talking about the idea—as free, when we all know that in fact they are not free? The other thing is that, as far as I am aware, some of the models rely quite heavily on a wi-fi signal, which may or may not be available to all consumers. I may have got that wrong, because I am not terribly technically minded.

One of my concerns is what we do with the information when we have it. If we imagine a future where everybody has a smart meter, will that be used to charge a higher rate for electricity usage during peak times, when families cannot avoid using it? Will the need to use electricity at specific times be used to increase the price in the market?

I realise I am throwing a list at you, and I apologise for that. The idea that you pay for what you use is attractive to consumers, but the fact is that when a smart meter is installed on your property, as I know from my own experience, your direct debit bill stays exactly the same, because they spread it over the year. Yes, you are paying for what you use, but when you reduce your usage, your monthly or quarterly bill does not necessarily go down. What are your thoughts on that, given that it is sold comprehensively as, “You only pay for what you use”? You do, but not necessarily at the time when you use it. You will also know that there are concerns about the security of the data. I know that I have given you a long list, but I would be very interested to hear your thoughts.

Audrey Gallacher: I will run through it as quickly as possible. The questions you have raised are all legitimate ones, which are discussed on an ongoing basis through the programme. There is a lot of scrutiny and oversight of the programme, and everybody is working hard to get it right, so your questions are the right ones.

Loads of stuff has been done on security. This will not be happening over the internet, and GCHQ has been all over it. There are really strict security protocols; you will probably have experts in later today who will know more about it than I do, but if there is anything that we should be worried about in the programme, it is not security. A lot has been done there, for obvious reasons. It is a critical national infrastructure, not to mention the impact on individual consumers in their own home if something goes wrong. I would take some comfort that we have that.

The question of deemed appointments is a tricky one. This is an opt-in programme. The Government’s manifesto commitment is that customers should be offered a smart meter, but suppliers have an obligation to install them by 2020, so it is already quite a complex policy environment. Companies have to go out there and sell the benefits of smart meters and encourage consumers to take them. We are working hard to do that. We have also had some feedback from Ofgem, the regulator, that companies should be taking a much more assertive approach, because we have heard reports that they are really struggling to get people to take a day off work to stay in the house and get the smart meter installed.

We need to sell the benefits and we also have to try to encourage people. Clearly, there is a line there that should not be crossed, because it is not currently a mandatory programme. At some point in the future, we might want to think about the policy framework to ensure that we get as many meters out there as possible, and not just for the individual consumer benefits they would bring—a whole business case around the programme is predicated on as many people as possible having meters. We need to be really careful on communications: sell the benefits and encourage people to get meters, but do not cross that line. That is really important.

Thirdly, you currently pay for metering equipment. It is free at the point of installation, so there should be no charge. Let us be quite clear that nobody will be charged up front, but, like everything else in the energy system, there is an associated cost, whether it is the pipes and wires getting the gas and electricity to users or the metering equipment, right down to the customer service. The key is to make sure that it is done as efficiently as possible. It is a competitive market and it is really important that costs are kept down.

I have a lot of sympathy with the point about direct debits and budgets, but we know from research that people like to spread the cost of their energy over the year. They do not want to see big spikes on their bills—high bills in the winter when they are using loads and nothing in the summer when the gas central heating is off. Smart meters should allow customers to move to an option where they can pay monthly as they go, but for a lot of people direct debit is a budgeting tool and has been very popular.

As for the future, Bill spoke about what he is doing for prepayment meter customers. Some analysis suggests that when everybody has smart meters, up to 50% will not be paying by direct debit, but on a pay-as-you-go basis, as with mobile phones. You will probably see the market and how people engage with their energy supply and pay for it radically changing as we roll this out. That will be good, if there are innovations and benefits. Obviously, we need to make sure that people are adequately protected and know what they are doing from a trading standards perspective.

Finally, on data, a lot of protocols are in place to make sure that we are quite clear that it is customers’ data coming out of the meters. People can opt out of more granular data collection. If you do not want information to be taken daily, you can opt out of that. Right now, it is taken monthly. If the supplier wants to take data from the smart meter every half hour, the customer has to provide consent. A lot of rules have been put in place to ensure that data use and privacy are at the forefront of the programme.

Bill Bullen: A couple of points are relevant to us. First, on customers accepting meters, until the prepay price cap came in we were typically saving customers something like £100 compared with the big six, if they switched to a prepay meter. Whether that counts as being free or not, I do not know, but they were clearly making significant financial savings from switching to smart prepay. That is one of the reasons customers do it, in addition to the other benefits.

Clearly, we are a competitive company. Customers could always refuse to take our product; if they want to stick with a dumb meter, they are entitled to. Something like 80% of the prepay market still has not switched to smart, but 20% has, so more and more are doing so.

Audrey has already answered the point about direct debits. People are going to switch more to pay-as-you-go and be totally in control of the balance. We think that is going to be much more important going forward. Basically, people can take total control over their budget.

Oral Answers to Questions

Stephen Kerr Excerpts

Tuesday 7th November 2017 Commons Chamber

[Claire Perry]

The hon. Lady is a great advocate for this and we discussed this matter during the recent urgent question. We want to do all we can to support the manufacturing future of that entire company, which is why we are focusing so much on trying to help it to get the overseas orders it needs.

[Stephen Kerr (Stirling) (Con)]

When does the Minister plan to respond to the Matthew Taylor review of employment practices in the modern economy?

[Margot James]

We are working on our response to the Taylor review’s recommendations now, and we will publish that response before the year’s end.

Smart Meters Bill

Stephen Kerr Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Tuesday 24th October 2017 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out earlier, the SNP welcomes the progress on smart meters. The Scottish Government have set out developments for the roll-out in their Scottish energy strategy, which will obviously encourage uptake.

As we have heard from many Members, the benefits of smart metering technology are more accurate bills, more convenience and better energy. The technology can enable customers to better manage their energy, so consumers will be able to get a better deal, and could help consumers with more competitive tariffs. There are, though, serious concerns that must be dealt with before we can welcome everything in the Bill or, indeed, the whole roll-out of smart meters.

The first concern is on data and privacy. As we heard from my hon. Friend the Member for North Ayrshire and Arran, GCHQ did some work on the vulnerability of smart meters and found “glaring loopholes” that would allow access to meters. There is not only the potential for the abuse of customer information, but a security concern. If smart meters can be accessed in that way, it is potentially dangerous for national security. It is incumbent on the Government to ensure that proper controls are in place to make sure that that cannot happen.

It is important that consumers know that their data will be safe. I urge the Government to look into measures that allow the consumer to have more control over and ownership of their own data. They should have the right to look after their own information. There are clearly issues of connectivity and reliability, particularly with respect to customers’ concerns about whether units will work when they switch energy suppliers.

[Stephen Kerr (Stirling) (Con)]

Does the hon. Gentleman agree that the issues with the first generation of smart meters could easily give rise to frustration among consumers? They are encouraged to monitor their energy usage and costs and to shop around, but when they do shop around, they discover that their smart meter is no more and has deceased.

[Drew Hendry]

The hon. Gentleman makes a pertinent point. The Government need to put the consumer confidence issue front and centre and deal with it.

We must consider the costs and the potential increase in bills to pay for those costs. The right hon. Member for Don Valley (Caroline Flint) mentioned the fact that the consumer is not necessarily put first in the process. Surely, it would be appropriate for the outcome of a cheaper bill—a better deal for the consumer—to be put right at the heart of the delivery of the smart meter programme. I am not convinced that it is currently, so I suggest the Minister come back with some reassurances on how it will be.

With respect to the serious problems with consumers’ bills, the smart meter roll-out does not deliver on some of the big elephants in the room. My hon. Friend the Member for North Ayrshire and Arran mentioned Hinkley Point, one of the biggest white elephants around. The cost-benefits will be negated by the costs of Hinkley and the strike price that has been agreed, which nearly doubles the cost to consumers.

Smart metering does not tackle other issues for consumers in the different parts of the nations of the UK. For example, in my constituency and others in the highlands, we still have the inequity of consumers paying up to 6p more per unit than consumers in other parts of the UK. That cannot be right. When the Minister looks into measures to reduce costs for people in their homes, I urge him to consider some of the more pressing issues that are adding to fuel poverty.

There is, perhaps, one issue that the Minister could consider in taking forward smart meters, particularly when we get to the next generation of smart meters. We have talked a lot about the ability to switch tariffs and to monitor how much is being spent, but how easy would it be to allow consumers the ability to switch suppliers at the touch of a button in the next generation of smart meters? That is within the gift of the technology. Why is it not within the scope of the measures that we are taking forward?

I will not take up the full time that is available to me. I will just finish with a few questions. Will the Minister come back and state clearly, today and in future meetings as the roll-out goes forward, what will be done in practical terms to ensure that vulnerable people will not miss out in the roll-out of the smart meters programme? When will we see details on the next generation of meters, and will the Government consider those payment and switching options that I mentioned? When will we see the detailed roll-out of the strategy to understand how everyone will be included in this by 2020?

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I start with a slight confession: I sometimes wonder whether I am easily confused. I ask that because I have been looking at the information that the Government have put out in the briefings associated with this Bill. I have to ask myself, “Are the Government easily confused, or are the Government trying to confuse us?” I want to highlight some of the issues that I have picked up.

First, it is claimed that the extension of the Secretary of State’s powers to intervene until 2023 does not extend the actual period of the smart meter roll-out beyond the 2020 target date. The Government claim that they are on target to hit their deadline, but analysis shows that 53 million smart meters need to be installed but that only 7.7 million meters have been installed since 2011. That leaves 45 million smart meters to be installed in just a three-year period.

[Stephen Kerr]

Is there not an upside to this? The meters that have been installed so far have fairly limited functionality and interoperability. The upside is that the second generation of meters, which will be fully functional, will allow the Government to put their foot to the floor and move ahead with these meters.

[Alan Brown]

I understand the hon. Gentleman’s point, and I thank him for it. It is a bit like saying that the long-drawn-out introduction of universal credit is good, when the roll-out was a shambles. It is not enough to say, well, this roll-out is a shambles but that is good because better technology is coming further down the line.

--- Later in debate ---

[Stephen Kerr]

The other issue is connectivity. There is not the broadband or mobile telephony coverage that these rural areas need to sustain the functionality of the meters.

[Alan Brown]

I agree. There is an issue with connectivity, and a problem with gas meters on external walls. Flats and tenements quite often have banks of meters installed in communal areas, and there is not yet a solution for the installation of smart meters in those cases. Frankly, the 2020 deadline is dead in the water.

As I said, the consumer pays for any increase in labour costs and recruitment to try to hit a deadline, so that is an additional cost that eats into savings and is probably not yet projected. I am a wee bit unsure about the Government’s estimate of the financial benefits of the smart meter roll-out. I am not saying that the roll-out is not a good thing, but I do question some of the figures attributed to it. The only guarantee that consumers have is that they will have to pay for the £11 billion installation costs. As we have already heard, those costs are increasing.

There is an estimated direct consumption saving of £5.3 billion, which is only half the installation cost. There is also an assumption about long-term behaviour—that customers will continue to operate a reduced energy usage. I have a concern about human behaviour. It may be the natural instinct of many customers to modify their behaviour and turn down their electricity usage when they get smart meters, but bad habits may creep in over a long period and the savings might not be realised at the same level.

There are other estimated savings in the Government’s cost-benefit analysis that are, frankly, quite spurious. The Government estimate £8 billion of supplier benefits, but there is absolutely no guarantee that the £8 billion that suppliers are predicted to save will be passed on to consumers. The Secretary of State intervened earlier to suggest that the market will dictate that these savings will rightly be passed on to consumers, but I draw the Minister’s attention to the fact that market failure is the whole reason that we agree on energy price caps. There is no way that we can guarantee that future savings for suppliers will be passed on to consumers.

Other spurious savings estimates include carbon-related benefits of £1.3 billion and £98 million in air quality savings. Now, reducing carbon emissions is a good thing, but I question how we can quantify those reductions as savings that will go direct to the consumer. The Government estimate savings for each household of £11 per annum by 2020 and £47 per annum by 2030, and £16 billion of savings were estimated overall. However, as my colleagues have touched on, the bottom line is that these estimated savings of £16 million are completely dwarfed by the £30 billion project that is called Hinkley Point C. That wipes out any projected savings from this programme.

Other hon. Members have mentioned that all consumers are paying for this programme, so surely the fuel poor and prepayment customers should be targeted first and given assistance. We should ensure that these vulnerable customers get the smart meters they deserve. Smart meters are supposed to end estimated billing, but it is acknowledged in the Government’s own factsheet that accompanied some briefings that if somebody with a first generation meter changes supplier, it is quite possible that they will lose the functionality of the smart meter. Even if they retain some functionality, they will end up back with estimated meter readings. That is counter- productive and the opposite of what the smart meter roll-out is supposed to achieve.

It was said that the second generation roll-out will start in July 2018. Well, we need the Minister to confirm how certain that is. Will the energy suppliers be forced to move on to the second generation meters, or will they be able to use up the backlog of 2 million first generation meters or whatever the number is? What if the initial companies are doing cheap deals on the first generation meters to get them out the door? Are we still going to be stuck with them?