Smart Meters Bill

Alan Whitehead Excerpts

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

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 2—Review: Use of powers to support technical development—

“(1) Within 12 months of this Act coming into force, the Secretary of State shall commission a review which shall consider how the extended use of powers provided for in section 1 will support the technical development of smart meters, with reference to—

(a) alternative solutions for Home Area Network connections where premises are not able to access the HAN using existing connection arrangements,

(b) hard to reach premises.

(2) The Secretary shall lay the report of the review in subsection (1) before each House of Parliament.”

This new clause would require the Secretary of State to review how the extension of powers will support technical development of smart meters.

New clause 3—Review: Use of powers to support rollout of smart meters—

“(1) Within 12 months of this Act coming into force, the Secretary of State shall commission a review which shall consider how the extended use of powers provided for in section 1 will support the rollout of smart meters, with reference to—

(a) providing for efficient removal and disposal of old meters,

(b) reviewing the exemptions for smaller suppliers from a legally binding requirement to roll out smart meters.

(2) The Secretary of State shall lay the report of the review in subsection (1) before each House of Parliament.”

This new clause would require the Secretary of State to review how the extension of powers supports the rollout of smart meters.

New clause 4—Review of smart meter rollout targets—

“(1) Within 3 months of this Act coming into force, the Secretary of State must prepare and publish a report and a cost benefit analysis relating to the Smart Meter Implementation programme and lay a copy of the report before Parliament.

(2) The report under subsection (1) shall consider—

(a) progress towards the 2020 completion target;

(b) smart meter installation cost;

(c) the number of meters operating in dummy mode;

(d) the overall cost to date of the DCC;

(e) the projected cost of the DCC; and

(f) such other matters as the Secretary of State considers appropriate.”

This new clause would require the Secretary of State to publish details about the cost and progress of the smart meter rollout with reference to the 2020 deadline.

New clause 5—Requirement on suppliers to provide information on cost of smart meter programme to consumers—

“(1) The Energy Act 2008 is amended as follows.

(2) At the end of section 88(3) (power to amend licence conditions etc: smart meters), insert—

‘(m) provision requiring the holder of a supply licence to include information with consumer bills on the cost to consumers of the Smart Meter Implementation Programme.’”

This new clause would allow the Secretary of State by order to amend licence conditions so that energy suppliers are required to include the cost to the customer of the Smart Meter Programme in all customer energy bills for the period covered by the energy bill.

New clause 6—Smart Meter Implementation Programme: review of cost to consumers—

“(1) Within 3 months of this Act coming into force, the Secretary of State shall commission an independent review of the cost to the consumer of the Smart Meter Implementation Programme.

(2) The review under subsection (1) shall include—

(a) a breakdown of the costs to consumers of component parts of the Smart Meters Implementation Programme including the cost of the DCC;

(b) the potential benefits to consumers of information on the cost of the Smart Meter Implementation Programme being included on energy bills and statements;

(c) a longitudinal estimate of the cost to consumers to date and the projected future cost of the Programme; and

(d) such other matters as the Secretary of State considers appropriate.

(3) The Secretary of State must lay a report of this review before both Houses of Parliament as soon as practicable after its completion.”

This new clause would require the Secretary of State to commission an independent review of the cost to the consumer of the Smart Meter Implementation Programme that must consider the potential benefits to consumers of including a summary of the cost on their energy bills and statements.

Amendment 2, in clause 1, page 1, line 12, at end insert—

“(c) in section 56FA(3) after “including” insert “the supply of such meters to energy companies and”

This amendment would allow the Secretary of State by order to add “the supplying of smart meters to energy companies” to the list of licensable activities.

Amendment 3, page 1, line 19, at end insert—

“(c) in section 41HA(3) after “including” insert “the supply of such meters to energy companies and”

This amendment would allow the Secretary of State by order to add “the supplying of smart meters to energy companies” to the list of licensable activities.

Amendment 1, in clause 6, page 6, line 27, at end insert—

“(15) Prior to making modifications under this section the Secretary of State shall commission an independent evaluation on the potential impact the modifications available to the Secretary of State to secure funding of smcl administration could have on consumer energy prices and shall lay the report of the evaluation before each House of Parliament.”

This amendment would require that, before considering modifications to ensure funding of smcl administration, the Secretary of State must seek independent evaluation of the impact such modifications would have on consumer energy prices.

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[Dr Whitehead]

As all the new clauses and amendments are grouped together, I intend to address them in turn. I promise that I will not say anything after this speech, but will instead make all my points in one go.

When the Bill went into Committee, it did two things. However, as the Minister himself agrees, an opportunity was taken in Committee to add to it what is effectively another small Bill, so it now does three things. First, it extends to 2023 the period during which the Secretary of State has powers over the roll-out to organise and command licensable activities. It does so in part because the end date for such control was set out in previous legislation as 2018. It is now apparent that the roll-out will go on until at least 2020 and, depending on progress, perhaps even later. It is therefore not only prudent to change the date but important, because as things stand the power over the roll-out will be lost halfway through its implementation.

Secondly, the Bill provides for the circumstances under which the functioning of the Data Communications Company, which has been set up to manage and co-ordinate all the communications necessary to make smart maters work—the data they are collecting and sending; and the communications within and around the home, and on a wider network—can be maintained in the event that that company goes into administration. That is important because the functioning of the DCC is central to the whole operation of the roll-out and what happens afterwards, and a hiatus in that function while any administration was being processed would be disastrous—so much so that we might question, as we did in Committee, why such a provision was not in the original legislation that set up the procedures for smart meter roll-out, and why it has taken several years of the DCC’s operation, albeit not live, to get around to implementing such a crucial measure.

Thirdly, the Bill now provides for arrangements to bring about the half-hourly settlement of domestic bills, which was hitherto not possible, but has been facilitated by the smart meter roll-out. We welcome this potentially enormous benefit of smart meters, in that it eliminates estimated bills and allows for accurate billing on the basis of what has been supplied each half hour, thereby allowing households to pitch their use at times of best value. The provisions inserted by the Government allow such a system to be organised and regulated.

Altogether, we have a set of proposals relating to the existing smart meter roll-out, which has been under way since 2016, that are uncontentious in the main and, indeed, strengthen the fabric of the roll-out. The Opposition support the objectives of the smart meter roll-out and believe that smart meters will lead to considerable benefits, not only for billing and the use of energy by householders, but for the future operation of the whole system. We share the aim of ensuring that as many as possible of Britain’s 30 million households have a smart meter installed by the end of the roll-out target date, albeit on the clear understanding that this is a voluntary programme and that no one will have a smart meter forced on them if they do not want one to be installed.

Why, then, have we tabled the new clauses and amendments? I assure the House that it is not because we want to derail the roll-out process or to place obstacles in its path. Some real questions are emerging from the roll-out process, and our prime aim is to ensure that those questions are addressed, and that the roll-out takes account of them and their potential solutions.

I have identified six major questions that have appeared as the roll-out has progressed. First, what is the actual progress of the smart meter roll-out, and is it realistically on target to ensure that everyone who wants a smart meter can have one installed by the end of 2020?

Secondly, bearing in mind that the huge cost of installing smart meters now falls on the consumer, what assurances can we have that the cost-benefit ratio of the whole programme remains positive? How can the costs of the programme be properly managed so that it remains positive for consumers in the end?

Thirdly, why have millions of first generation SMETS—smart metering equipment technical specifications—meters been installed to date and virtually no SMETS 2 meters? SMETS 1 meters were supposed to be a small proving mode and SMETS 2 meters were supposed to be the backbone of the roll-out, originally from 2014 onwards.

Fourthly, why has the DCC taken so long to get up and running, and how much of an impediment to the full roll-out of smart meters will that prove to be? If the DCC does go into administration, for whatever reason, what guarantees are there that it will be subsequently owned by a body that has the security and integrity of the programme at its heart?

Fifthly, will everyone be covered by the communications network that is being put in place? Will people who live in blocks of flats, for example, have home-area networks that are fully able to reach them? Will those who live in remote areas enjoy the wide-area coverage that will enable their meters to work reliably?

Finally, what will happen to all the old meters, and indeed to a considerable number of SMETS 1 meters that will be replaced by SMETS 2 meters? Will they be recycled or reused in a suitable way?

[Dr David Drew (Stroud) (Lab/Co-op)]

I refer to my declaration in the Register of Members’ Financial Interests.

Does my hon. Friend accept that another problem—I have just had a response to a written question on this issue—is that when some people, particularly in rural areas, have a smart meter installed, their boilers are condemned because they are not compatible? There is no scheme or funding to help those people to put heating back into their houses. Does he agree that that is a significant problem?

[Dr Whitehead]

I agree that when that occurs, it is a problem, but I am not sure that it is just related to smart meters, so a combination of issues needs to be addressed. We need to ensure that such occurrences happen as little as possible and can be overcome.

Our new clauses and amendments seek to address the six questions that I have identified in the context of the Bill. By doing so, they would considerably strengthen the Bill. After all, as I am sure that all hon. Members will agree, it is important in such a large project that requires public confidence that questions are properly anticipated and addressed, and that assurances are given, otherwise we will have a roll-out that eventually rolls out to not many people, and that fails to achieve the aggregate coverage that will enable the sort of benefits that we would want from the roll-out as a whole.

[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.

[Jim Shannon (Strangford) (DUP)]

Following on from the previous intervention, does the hon. Gentleman believe that consumers’ concerns about their ability to switch energy suppliers smoothly to keep costs down, and about keeping the system going and keeping providers “on their toes”, are adequately addressed in the Bill, because some people say that they are not?

[Dr Whitehead]

I will come on to talk about how far more SMETS 1 meters have been installed than was ever intended, which was due to various reasons. The hon. Gentleman is certainly right that if a substantial number of installations eventually give rise to non-smooth transfers when people want to switch, that will be deleterious to the roll-out as a whole. Indeed, that is something that needs to be very carefully and urgently addressed so that we ensure that such switchovers can be as smooth as possible.

When we think about the roll-out, we do not need to look very far into the timescale to conclude that, whatever might be said about the numbers already installed, it is not going well. We are more than halfway through the period originally specified for the mass installation of smart meters, but we are far below halfway towards the target of installing smart meters in 30 million homes. In fact, the latest quarterly installation figures show that only 8.6 million domestic and non-domestic meters have been installed to date. That issue has been exacerbated by the transition from SMETS 1 to SMETS 2 meters. SMETS 1 meters were supposed to be essentially proving meters that would have very little role to play in the overall process. However, the DCC—the body required to set up and implement all the communications systems to allow meters to talk to the system—is now two and a half years behind in going live, and is still not really functioning as intended. Millions of SMETS 1 meters have therefore been installed to make up the gap before SMETS 2 meters can come on stream, and we are still in a precarious position with regard to the new meters, because end-to-end testing of them is still not really available. A programme that should by now have seen the installation of a few SMETS 1 meters and millions of SMETS 2 meters now has the opposite position. To be precise, when I asked the head of the DCC how many SMETS 2 meters had been installed, the figure he gave was 250.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

As I recall, that figure of 250 was given to the Committee by the DCC’s chief executive. My hon. Friend will be aware that the Department initially announced last week that it did not know the figure, but then admitted that it was 80, and that most of those meters actually belonged to company officers, not members of the public. Does that not suggest that this programme is woefully off track compared with what was planned?

[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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[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I hesitate to interrupt the hon. Gentleman, and I appreciate that he is dealing with some complex issues that require explanation, but it may have escaped his notice that he has been at the Dispatch Box for almost half an hour. He might not be aware, but I am, that there are other people who wish to take part in this debate, so he might like to consider bringing his remarks on this particular part of the Bill to a conclusion quite soon.

[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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[Richard Harrington]

I totally give that undertaking to the hon. Gentleman, and I apologise for saying that I would take his intervention and then forgetting to do so. I hope he will forgive me.

I said during previous debates that we would update our analysis if there were new and substantive evidence or changes in policy design. As a result of the representations that have been made in Committee and today, I am prepared to go further by committing to publishing an update of the programme cost-benefit analysis in 2019. As hon. Members know, 2018 marks a significant programme transition, with the shift from first to second-generation smart meters, so I think that 2019 really is the time to assess this.

As for new clauses 5 and 6, I do not believe that it is sensible to establish powers that enable the Government to require the provision of information on the costs of the programme in consumers’ energy bills, because I do not understand what benefit such a move would have for consumers. However, it is important that consumers understand the information that smart meters and in-house displays give them, because in that way, they understand the cost of their energy usage in pounds and pence—or as my hon. Friend the Member for Erewash (Maggie Throup) would say, pounds, shillings and pence, and probably farthings. She is a lady after my own heart. That will empower them either to change how they use energy, or to get a better tariff.

The hon. Member for Birmingham, Selly Oak has raised concerns, as he did in Committee, about the MAPs—not pictures of the world, but meter asset providers—because he believes that the provider market is not working to deliver the programme objectives. I remain of the view, however, as I have clearly stated to him before—we will have to agree to disagree, I think—that the market is operating competitively and that there is no need for regulatory intervention. There are currently two typical rental arrangements available: churn contracts and deemed contracts, which he mentioned. Churn contracts are often similar to the original rental agreements, including with the presence of an early-repayment charge in the event that a supplier chooses to remove the meter from the wall early. Deemed contracts do not include that charge, but carry the added risk for a MAP that they can involve higher rental charges. The important point is that the DCC has published its detailed plan for the enrolment of SMETS meters from late 2018, and as progress is made, I fully expect energy suppliers’ confidence in choosing churn contracts over deemed rentals to increase. Initial indications support that expectation.

I turn briefly to the amendment on the draft licence modifications envisaged under a power in the Bill to allow the costs of smart meter communication administration to be recouped from the industry, in so far as there is a shortfall. The potential scale of the costs will depend on a number of factors, including the timing and reason for the DCC licensee entering special administration, and costs arising from any legal and technical expertise appointed by the administrator in support of the execution of its duties. As I committed to doing in Committee, we have formally agreed to consult on these licence modifications. We will consider and set out an assessment of the estimated potential costs that need to be recouped from the industry.

I would like to reflect on the points made about the DCC’s parent company, Capita, and to emphasise that Smart DCC Ltd is required to operate at arm’s length from Capita. Provisions in the licence prevent Capita from taking working capital out of Smart DCC Ltd. Furthermore, the DCC’s financial arrangements are constructed so as to make the risk of insolvency low. Putting in place a special administration regime is entirely precautionary and, I believe, the prudent thing to do.

The smart metering programme will secure an overall net benefit to the nation of £5.7 billion. The Bill is important to ensuring that this vital platform for our smart energy future is rolled out effectively, allowing the Government to respond to developments as the roll-out continues. I hope that these arguments will persuade Opposition Members not to press their new clauses and amendments.

[Dr Whitehead]

I am disappointed that the Minister did not give us a better explanation and understanding of what “offer” means as far as smart meter roll-out is concerned. Indeed, that question was raised from the Conservative Benches. It might be that the Secretary of State can better illuminate us on Third Reading. Strictly speaking, however, that does not relate to the new clauses and amendments, on which we have had a good debate. If necessary, there will be further such debate in another place. This evening, however, it would not be wise to divide the House, so I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Third Reading