Draft Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018

Debate between Stephen Kerr and Alan Whitehead

Monday 14th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Sharma. It is sort of a pleasure to continue with our most cordial debate about the process of nuclear safeguards as they concern exiting the European Union, and what sort of regime we should have in place if we are no longer a member of Euratom.

We clearly need to put several things in place relating to nuclear safeguards. I will not repeat what the Minister said about the scope and coverage of nuclear safeguards, of which we became fully aware during the passage of the Bill, other than to say that we may both have become a little proof to the acronyms and obscure sayings that peppered that Bill Committee, so I apologise if any hon. Members who were not present have no idea what I am talking about—we got well into the legislation.

The statutory instrument is pretty simple. As the Minister said, it sets the stage for the wider statutory instrument that will be considered tomorrow. I am pleased that they are being considered the right way round; we could not do one without having done the other. This statutory instrument puts into legislation two important terms, about which it will be vital to be clear when we discuss the statutory instrument tomorrow afternoon.

The first term, as the Minister said, is fissionable material. Although it has quite a long definition attached, as far as I can see, it is a pretty straight transposition of what was previously the case as part of our membership of Euratom and what we had to deal with there, and therefore, what will be applicable for the discussion that should proceed afterwards.

The second definition concerns a relevant international agreement. We had some discussion during the passage of the Bill about relevant international agreements and what had to be done. As the Minister has outlined, a number of treaties were made with third party countries and the IAEA through Euratom, of which we were a member, on our behalf. Therefore, if we leave Euratom and we are still technically dealing with what was treated in the Bill as a contingency, but which we are now close to, we will no longer be covered by those international treaties and we will effectively have to negotiate them anew.

At the time of the Bill Committee, I thought that would be quite a task, and I think the Minister concurred that there was a fair amount of work to be done, but I see in October’s “Report to Parliament on the Government’s Progress on the UK’s Exit from the Euratom Treaty” that we have negotiated those international treaties with Australia, Canada and the United States, and that the voluntary agreement with the IAEA is in place. It is on the record that those agreements were laid before Parliament and ratified on 17 December, so they are done and dusted.

What is missing, however, is a possible treaty with Japan. That is puzzling, because during the passage of the Bill, the Minister said to me:

“The Government have the power to conclude international treaties under their prerogative powers. Of course, that cannot automatically change domestic law or rights and cannot make major changes to the UK’s constitutional arrangements without parliamentary authority. That remains the case for international agreements relating to safeguards that are currently under negotiation—for example, the nuclear co-operation agreements currently being negotiated with the US, Canada, Japan and Australia, and the new safeguards agreements with the IAEA. Parliament will therefore have the opportunity to consider those agreements before they come into force.”––[Official Report, Nuclear Safeguards Public Bill Committee, 2 November 2017; c. 56.]

I think the progress document came about as a result of an amendment that was agreed to the Bill, so I am grateful for that. It says:

“Good progress has also been made in discussions with Canada and Japan…The UK has had”—

I emphasise the tense—

“a bilateral NCA in place with Japan since 1998. The UK and Japan have had detailed discussions on this, and have now commenced negotiations formally to put in place arrangements to ensure that this NCA remains operable following the UK’s withdrawal from Euratom. Given this progress, we are confident that all priority NCA arrangements will be in place to enable international cooperation in the civil nuclear sector.”

Although there appears to have been an NCA in place with Japan, it is clear, both from what the Minister said at the time of the Nuclear Safeguards Act 2018 and from what has been said in the progress document, that there are negotiations and that those negotiations are intended to end in arrangements being in place so that this NCA remains operable. There may be a very good reason why the NCA that was originally in place, but has been a subject of negotiations, is not before us now and has not gone through the process that, as I just mentioned, has now been completed for those other agreements, but it is certainly the case that there is no new treaty with Japan in place at the time of this SI discussion. Therefore, in principle, the definition of international agreements is not fully completed in time for the discussion tomorrow.

[Stephen Kerr (Stirling) (Con)]

Given the fact that the Minister has fulfilled every single one of the commitments he has given to the House and to the Business, Energy and Industrial Strategy Committee, of which I am grateful to be a member, should we not put some trust in the stated intentions that the Minister has given us in his speech in this Committee?

[Dr Whitehead]

Yes, I fully concur with the hon. Gentleman’s point; in overall terms, what was said would be done, has been done. I appreciate that it was quite a difficult effort to get that done, but it has been done and I am delighted to see that it is all there in the very obscure Journal Office book of treaties that I had to go and find in a corner somewhere to ensure that they were there.

I do not for a moment want to say that this is a dereliction by the Minister or that the sky will fall in because this is not complete, but I want to draw attention to the fact that there appears to be some doubt about whether the NCA we previously had in place with Japan is sufficient to get us over the line, or whether a new treaty needs to be sorted out in time for these new arrangements to come into place and to be within the definition of international treaties. I merely want to hear from the Minister which of those positions is the correct one, or whether there is some ambiguity between the two.

I do not intend to delay the Committee to any great extent—I think I have spoken beyond five minutes, but I have tried my hardest not to—nor do I think we need to divide the Committee on this particular point, but I want to hear clearly what the position is on Japan, why it is not there and what the circumstances are under which we can reasonably safely proceed, assuming that the previous NCA is good enough for our future purposes, or, if it is not good enough, what is being done to make it better.

Draft Nuclear Safeguards (Fissionable Material and Relevent International Agreements) (EU Exit) Regulations 2018

Debate between Stephen Kerr and Alan Whitehead

Monday 14th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Sharma. It is sort of a pleasure to continue with our most cordial debate about the process of nuclear safeguards as they concern exiting the European Union, and what sort of regime we should have in place if we are no longer members of Euratom.

We clearly need to put several things in place relating to nuclear safeguards. I will not repeat what the Minister said about the scope and coverage of nuclear safeguards, of which we became fully aware during the passage of the Bill, other than to say that we may both have become a little proof to the acronyms and obscure sayings that peppered that Bill Committee, so I apologise if any hon. Members who were not present have no idea what I am talking about—we got well into the legislation.

The statutory instrument is pretty simple. As the Minister said, it sets the stage for the wider statutory instrument that will be considered tomorrow. I am pleased that they are being considered the right way round; we could not do one without having done the other. This statutory instrument puts into legislation two important terms, about which it will be vital to be clear when we discuss the statutory instrument tomorrow afternoon.

The first term, as the Minister said, is fissionable material. Although it has quite a long definition attached, as far as I can see, it is a pretty straight transposition of what was previously the case as part of our membership of Euratom and what we had to deal with there, and therefore, what will be applicable for the discussion that should proceed afterwards.

The second definition concerns a relevant international agreement. We had some discussion during the passage of the Bill about relevant international agreements and what had to be done. As the Minister has outlined, a number of treaties were made with third party countries and the IAEA through Euratom, of which we were a member, on our behalf. Therefore, if we leave Euratom and we are still dealing with what was treated in the Bill as a contingency, but which we are now close to, we will no longer be covered by those international treaties and we will effectively have to negotiate them anew.

At the time of the Bill Committee, I thought that would be quite a task, and I think the Minister concurred that there was a fair amount of work to be done, but I see in October’s “Report to Parliament on the Government’s Progress on the UK’s Exit from the Euratom Treaty” that we have negotiated those international treaties with Australia, Canada and the United States, and that the voluntary agreement with the IAEA is in place. It is on the record that those agreements were laid before Parliament and ratified on 17 December, so they are done and dusted.

What is missing, however, is a possible treaty with Japan. That is puzzling, because during the passage of the Bill, the Minister said to me:

“The Government have the power to conclude international treaties under their prerogative powers. Of course, that cannot automatically change domestic law or rights and cannot make major changes to the UK’s constitutional arrangements without parliamentary authority. That remains the case for international agreements relating to safeguards that are currently under negotiation—for example, the nuclear co-operation agreements currently being negotiated with the US, Canada, Japan and Australia, and the new safeguards agreements with the IAEA. Parliament will therefore have the opportunity to consider those agreements before they come into force.”––[Official Report, Nuclear Safeguards Public Bill Committee, 2 November 2017; c. 56.]

I think the progress document came about as a result of an amendment that was agreed to the Bill, so I am grateful for that. It says:

“Good progress has also been made in discussions with Canada and Japan…The UK has had”—

I emphasise the tense—

“a bilateral NCA in place with Japan since 1998. The UK and Japan have had detailed discussions on this, and have now commenced negotiations formally to put in place arrangements to ensure that this NCA remains operable following the UK’s withdrawal from Euratom. Given this progress, we are confident that all priority NCA arrangements will be in place to enable international cooperation in the civil nuclear sector.”

Although there appears to have been an NCA in place with Japan, it is clear, both from what the Minister said at the time of the Nuclear Safeguards Act 2018 and from what has been said in the progress document, that there are negotiations and that those negotiations are intended to end in arrangements being in place so that this NCA remains operable. There may be a very good reason why the NCA that was originally in place, but has been a subject of negotiations, is not before us now and has not gone through the process that, as I just mentioned, has now been completed for those other agreements, but it is certainly the case that there is no new treaty with Japan in place at the time of this SI discussion. Therefore, in principle, the definition of international agreements is not fully completed in time for the discussion tomorrow.

[Stephen Kerr (Stirling) (Con)]

Given the fact that the Minister has fulfilled every single one of the commitments he has given to the House and to the Business, Energy and Industrial Strategy Committee, of which I am grateful to be a member, should we not put some trust in the stated intentions that the Minister has given us in his speech in this Committee?

[Dr Whitehead]

Yes, I fully concur with the hon. Gentleman’s point; in overall terms, what was said would be done, has been done. I appreciate that it was quite a difficult effort to get that done, but it has been done and I am delighted to see that it is all there in the very obscure Journal Office book of treaties that I had to go and find in a corner somewhere to ensure that they were there.

I do not for a moment want to say that this is a dereliction by the Minister or that the sky will fall in because this is not complete, but I want to draw attention to the fact that there appears to be some doubt about whether the NCA we previously had in place with Japan is sufficient to get us over the line, or whether a new treaty needs to be sorted out in time for these new arrangements to come into place and to be within the definition of international treaties. I merely want to hear from the Minister which of those positions is the correct one, or whether there is some ambiguity between the two.

I do not intend to delay the Committee to any great extent—I think I have spoken beyond five minutes, but I have tried my hardest not to—nor do I think we need to divide the Committee on this particular point, but I want to hear clearly what the position is on Japan, why it is not there and what the circumstances are under which we can reasonably safely proceed, assuming that the previous NCA is good enough for our future purposes, or, if it is not good enough, what is being done to make it better.

Nuclear Safeguards Bill

Debate between Stephen Kerr and Alan Whitehead

Ping Pong: House of Commons
Tuesday 8th May 2018 Commons Chamber

[Stephen Kerr]

Does the hon. Gentleman welcome the progress that the Government are evidently making towards the conclusion of these agreements? That is good news, is it not?

[Dr Whitehead]

I think the hon. Gentleman has slightly anticipated what I was about to say. It is indeed good news that progress is being made in that regard, but there is not much time left between now and March 2019, and there are still a number of treaties to go.

Lords amendment 3 addresses what is perhaps the most central point of the whole exercise. If those treaties are not securely in place before the date of withdrawal, we must have mechanisms for extending the period of coverage of Euratom, as it were—which means not just an extension during the implementation period, but an extension in its own right—until they are in place. We were told earlier in the Bill’s passage that all this was unnecessary, because everything would be put in hand before March 2019, and we have discussed the progress that has been made, but we have heard nothing about a plan B to be deployed in the event of its not being concluded. It may be that all the treaties will be in place, and we heard today that one of the bilaterals had been signed with the United States, but there are three more to be signed with major civil nuclear countries, and there is also the voluntary arrangement to be established with the IAEA. The Lords amendment gives us that fall-back protection, and a clear route towards obtaining it.

--- Later in debate ---

[Dr Whitehead]

I am not sure that the term “inflexible decision” can be accurately addressed to this set of circumstances, because we have a very inflexible date by which these decisions will have to be made. If we have a provision that is based on the Secretary of State deciding whether things are going better or worse, and if the House then does not have time to apply to the European Commission for an extension, an objective judgment will be made about whether to make an application to the European Commission for an extension of Euratom’s overview, particularly in relation to nuclear safeguarding activities.

That is another reason why we seek to preserve the original clause and ensure that it goes into the final Bill. My hon. Friend the Member for Barrow and Furness (John Woodcock) mentioned nit-picking in respect of some of the wording of the amendment. It would have been possible, I think, to fix that wording without diluting the effect of the clause in the way the Government have done through their amendment in lieu. It still has the flaw in it that there is a period when the Secretary of State has the option to decide whether he thinks something is going to be done, as opposed to the absolute guarantee that it will have been done at the point of departure. For that reason, we seek to preserve the original clause, if necessary by means of a vote. Depending on the result of that vote, we might then offer the amendment in lieu back to the other place for it to decide whether it thinks it comes close enough to its intention not to be sent back to this House once more.

[Stephen Kerr]

I do not intend to detain the House with a long speech, but I want to commend the Minister on the way in which he has guided the Bill to this point and to assure him of my support for the amendment that he has tabled. He has been, and is being, attentive and responsive to the concerns he has heard; he has listened and responded, and I believe that that is what makes for good legislation. I also wish to add to his compliments to the hon. Member for Southampton, Test (Dr Whitehead), whose positive contribution to the progress of this Bill has been greatly appreciated by us all.

To be clear, we need this Bill. Leaving the European Union creates the necessary, even if unwanted, step of leaving Euratom. The Government’s stated preference is for Euratom to continue to provide safeguarding functions in the UK. That is a laudable example of the pragmatic approach that the Government, and in particular the Prime Minister, are taking to issues surrounding our departure from the European Union. I like to think that my conservatism is based not on ideology but on pragmatism, and it is pragmatism that is going to see us through the process by which we leave the European Union. This Bill is a vital contingency plan, because if it transpires that we cannot agree with Euratom to continue with the civil nuclear safeguarding, we will need to have the regulatory framework, the infrastructure and the capabilities in place to maintain our international obligations and responsibilities as an independent and responsible nuclear state.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Stephen Kerr and Alan Whitehead

3rd reading: House of Commons & Report stage: House of Commons
Monday 30th April 2018 Commons Chamber

[Dr Whitehead]

Indeed, the hon. Gentleman has a point, which is why now—on Report—the amendment would put a maximum number of months, not a specific date, in the Bill. One might say that hon. Members listened to each other in Committee regarding possible future amendments, which is why I tabled amendment 5 in this manner. However, the fundamental point of the amendment is still to get the Bill working, so that the cap is in place before the winter. Ofgem has said that it thinks it can have a cap up and running in five months, as we have suggested in the amendment. We therefore want the maximum timeframe of five months to be reflected in the Bill, so that the cap is guaranteed at around the time when people get their winter fuel allowance, not when winter returns, as it seems to do these days, in the middle of next spring.

Amendment 6 seeks to quantify the saving that customers might expect as a result of the cap, but we do not wish to make up a figure in so doing. We want to take the Prime Minister’s word on this, when she specified that customers would save £100 as a result of the price cap that her Government were about to introduce. To be precise, The Sun of 27 February this year had the splendid headline “Millions of Brits in line for £100 as Theresa May delivers on energy price cap promise”. This was just one of a number of sources reporting the Prime Minister’s price save promise, but The Sun went further, stating:

“Government insiders say the cap should save at least £100, potentially rising to £300 a year with increased competition and faster switching.”

Now, I do not know whether there are any Government insiders in the Chamber—or, indeed, whether the Minister is one of those cited—but we can assure them that we will take the conservative route on this occasion and propose only that the Bill will do what the Prime Minister says it will.

[Stephen Kerr (Stirling) (Con)]

I am slightly perturbed that the hon. Gentleman is quoting The Sun as the authority by which we make legislation in this House.

[Dr Whitehead]

On reflection, I can join the hon. Gentleman in being slightly perturbed that I am quoting The Sun in this context. I assure him that although I quoted The Sun, a range of authorities from the Daily Mail —getting better?—up to the BBC’s website suggested that the Prime Minister did actually say that people would save £100. If the hon. Gentleman thinks that quoting The Sun was not entirely appropriate under all the other circumstances, I can do nothing other than agree with him.

Amendment 7 would ensure that vulnerable customers, including those already protected by a tariff cap, do not lose that protection as a result of the overall cap being introduced.

Dieter Helm Energy Review

Debate between Stephen Kerr and Alan Whitehead

Tuesday 24th April 2018 Westminster Hall

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

I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing this debate. He is well ahead of the Government in having the first response to the Helm review—as he rightly said, a response from the Government who commissioned the report in the first place is currently conspicuous by its absence. Given how these things proceed, it is a little odd that the Government’s initial response to the Helm review into the costs of energy was essentially to call for evidence on the cost of energy. I am not quite sure where we are with the Government response to the report they commissioned, although I am sure we will hear about that from the Minister. Because we have no indication of what the Government intend to do with the Helm review, we are slightly at sea in terms of how best to respond to it at this stage. Should we consider the commissioning of the report, its terms of reference, the recommendations within it, or, indeed, what the Government will do with it?

[Stephen Kerr (Stirling) (Con)]

A good place to start would be Dieter Helm’s conclusion that there is apparently nobody in government or any other sphere who can explain all the interventions being made in the energy market, such is the clutter of interventions in that market.

[Dr Whitehead]

The hon. Gentleman makes a strong point. That point is also made strongly in the Helm report, which has a list of the various interventions in play. Indeed, I think we can add a few more to those in the report, some of which have appeared more recently, such as energy intensive industry, underwriting and so on. What the Helm report says is right: we have vastly over-complicated many of the areas that we consider necessary as policy levers. Indeed the temptation, not just for the current Government but for successive Governments, has been than when they see a shed that is slightly leaning, they build another outhouse on the side to stop the shed leaning. They subsequently have to do something with the outhouse, and then we get the current extraordinary complexity of the whole process.

To get a feel for exactly how complex the market is, I refer hon. Members to a recent chart produced by the University of Exeter about the various interactions that the energy market now undertakes. Helm makes that point strongly. The question is this: if we are simplifying the market and how it works, how do we do that? How do we dismantle the complexity as we simplify the market, and what will be the consequences of that simplification?

All other things apart, this review was a hospital pass for Dieter Helm, and, as the hon. Member for North Ayrshire and Arran (Patricia Gibson) emphasised, it was, frankly, an unbelievably rushed job. It was commissioned on 6 August last year, and concluded on 25 October last year. Not only was it commissioned on 6 August, but it had terms of reference that ran to one and a half pages. If hon. Members read them, they will see that not only do they greatly curtail what the review could have covered, but they are internally contradictory regarding what they ask the review to do. For example, the review states that the Government have

“the ambition for the UK to have the lowest energy costs in Europe”,

but, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) emphasised, the review merely talks about power. Although we are supposed to have the lowest energy costs, the review is only supposed to consider power, and not heat or energy efficiency; that point was made by the hon. Member for Wells (James Heappey). The review has apparently wide ambition, but in practice it covers a constrained area of examination. It is essentially a review of the cost of electricity, and that is what it concentrates on.

Given where energy is now, if we talked properly about its overall cost we would have to mention that, as the Helm review lays out in some circumstances, the cost of energy is higher in a number of other European countries but the cost to consumers is much lower. That is because of the difference in energy efficiency in those countries, and the interaction between different forms of energy—what happens to heat, for example—and the power sector. If we take the lowest energy costs in Europe as our theme, it is not immediately clear what we are talking about. What will those lowest energy costs be compared with? If we restrict ourselves to the power sector, how can we complete that examination in terms of overall energy costs? That is a bit of a theme of the report, hospital pass that it is, although given the short time span and the terms of reference given to Professor Helm he has done a tremendous job.

Nevertheless, we should be clear that the report in essence represents an extended opinion piece: the opinions of Professor Dieter Helm on how the energy market and the electricity market in particular will work in future. He has been expressing those opinions—I am familiar with a number of them—forcefully for a considerable period. I strongly agree with some of his opinions and I do not agree as much with some, but they are mostly there in the report, one way or another.

The question we have to ask about the recommendations that Professor Helm makes in the report is, how are they backed up with evidence? Having read the recommendations or even the executive summary, we might confidently assume that in the report we would find not only evidence to back up the recommendations, but talk of their consequences. However, we do not find that. What we find is material to back up why Dieter Helm’s opinions are right. As a satisfactory answer to the question asked, the report falls rather short of what one wishes might have been achieved. That is a problem in responding to it fully.

I strongly agree with some of Professor Helm’s conclusions, but some I do not agree with at all. However, I would have liked to see in the report what informs his conclusions, what the consequences of those conclusions are, and how they will be worked through. Professor Helm, for example, talks about the legacy costs of energy and of interventions by Government. As the hon. Member for Stirling (Stephen Kerr) intimated in his intervention, the extent of those potential legacy costs is laid out for us in the Helm report.

The solution provided is that those legacy costs should be discontinued as something that goes on people’s bills, as they do at the moment, but that they should be all bundled up and put somewhere else. Where are they put? There is nothing in the report to tell us that, except that they will be socialised across consumers and not across to industry. One way or another, the bundle of legacy will reach back on consumers’ bills, in just the way that the social and environmental costs that appear on bills now are also borne by customers. Not only that, that cost will land on customers’ bills in a more concentrated way because, according to Professor Helm’s recommendation, industry will be exempted from the impact of the legacy costs. That means that customers’ bills will go up considerably and not down considerably over the period, as I assume is the intention of that particular proposal.

Similarly, one suggestion is that generators that produce power intermittently might be required to back that up by commissioning their own power resources to ensure that the intermittency is not spilled across the rest of the market. That sounds like a good idea except that if we do that, with each of those power generators independently commissioning their own power back-ups, that is a recipe for extreme inefficiency in the market over time. The market would have a series of near-redundant back-up power stations, not socialised across the piece but responsible only to those people who commission them and, therefore, in the market as a whole probably substantially increasing rather than decreasing the cost of energy.

There are a number of things in the report—the question of who runs the distributed energy service, how that is best run in the public interest, the simplification of the system over the period, and how the carbon price can be used in future to manage the transition to a low-carbon economy—but I am not convinced that it is much other than a good talking point as far as future energy policy is concerned. The report is a good, elegant and well-constructed talking point, but nevertheless it is a starting point and not a conclusion by any means.

I hope that that is how we see the report in future, because there is a long way to go before we get to the conclusions necessary to back up what the hon. Member for Wells described as the difference between the caterpillar turning into the pupa but still ending up as a caterpillar, or the caterpillar turning into a butterfly. As I think I have already mentioned to the hon. Gentleman, I personally prefer the example of the axolotl, which is a Mexican salamander. As I am sure hon. Members know, unlike other salamanders, it does not undergo the metamorphosis necessary to become a land-living amphibian; it stays for the whole of its life unmetamorphosed, with gills, under water. We do not want the energy market to end up like the axolotl. We are in a process of rapid transition—

Domestic Gas and Electricity (Tariff Cap) Bill (Second sitting)

Debate between Stephen Kerr and Alan Whitehead

Committee Debate: 2nd sitting: House of Commons
Tuesday 13th March 2018 Public Bill Committees

[Dr Whitehead]

I thank my right hon. Friend for that intervention underlining the thrust of what I have to say. Although we may take serious account of Ofgem’s earnest intentions, which we heard about this morning, we are not legislating for the good side of earnest intentions, but for what we want to happen in the end with the Bill. To put in the Bill what we actually want to happen clarifies matters for the future, rather than spreading confusion. We will have declared—I use that word because we cannot entirely proof ourselves against the possibility of an unexpected legal challenge, although, if I can be congratulatory to the Bill’s constructors for a moment, they have done a good job of ensuring that it is as legally unchallengeable as it can be—

[Stephen Kerr (Stirling) (Con)]

I perfectly understand where the hon. Gentleman is coming from, because Ofgem’s performance over the last few years has been less than inspiring. Having said that, both sides of the House have said, and we heard it again from Ofgem today, that we know what our destination is with the Bill. I cannot understand what we gain by putting a date in it, beyond what we have already amassed in terms of collective evidence and collective will that we have to see this enacted before next winter.

[Dr Whitehead]

I fully accept that there are different interpretations of the best way forward within the overall agreed framework of where we want to go. Perhaps hon. Members take the perfectly reasonable, honourable and thought-out view that we have got what we want to say in the Bill, we have heard what Ofgem thinks it can do and we are happy to leave it there. My view is that it would be helpful to properly encapsulate our position on the Bill by saying in it what we want to happen—by setting an out-date for the considerations that Ofgem has to undertake before the cap becomes real.

Although I do not doubt for a moment the bona fides of Ofgem, or the sincerity of what Dermot Nolan said this morning, nevertheless, if we are not as clear as we can be about what we want to put forward in the Bill, it is conceivable—no more than conceivable—that someone could say, “Actually, we said five months, but some unexpected circumstances have cropped up—not a legal challenge, but other things—so we can push that further down the line. We’ll have to say that we are a bit sorry about that, but that’s how it is.” I do not want that circumstance to be even remotely in the minds of anyone at Ofgem over the next few months.

--- Later in debate ---

[Stephen Kerr]

indicated dissent.

[Dr Whitehead]

The hon. Gentleman shakes his head. I cannot possibly comment on that. I got this on the internet, by the way. The headline was “Millions of Brits in line for £100 as Theresa May delivers on energy price cap promise”. Underneath, it said:

“The price cap on 11 million gas and electricity bills is to come in by end of the year as The Sun’s Power to the People campaign pays off”.

“It was The Sun wot done it”—not us, by the way.

--- Later in debate ---

[Dr Whitehead]

The hon. Gentleman makes an important point about what could happen prior to the cap coming in. Energy companies could be gaming ahead of the game with their prices, so what would savings look like after that? I am not sure that we can do anything about that right now. As Ofgem mentioned, if energy companies are too blatant in their price rises over the next period, they will be in breach of their obligations to Ofgem anyway.

We have seen several instances of small price rises recently. We heard about one—a comparative gas price—this morning. Bulb, one of the witnesses this morning, put up its rate by £24 just a few weeks ago. That was for particular purposes, but one could argue that it was a gaming price rise ahead of the legislation. Bulb was very clear that it was not, and that it was for other purposes, but we clearly have to be alert to that possibility.

If that does happen, what anyone has said about what savings would result from this price cap would have to be taken relative to whatever that price was at the point when the price cap was introduced. It would be possible for consumers to say at that point, “Actually, we were promised a £100 price saving. It does not look like a £100 saving to me, because it is a saving against a price rise that will end up increasing my bills.” In wishing to place this in the legislation, I am indicating that we in this Committee do not wish to let the public down regarding what might happen with this price cap.

The Prime Minister has already said that there will be a £100 saving. Indeed, I do not know whether this applies to anyone present, but interestingly The Sun article states:

“Government insiders say the cap should save at least £100, potentially rising to £300 a year with increased competition and faster switching.”

Government insiders, whoever they are, are suggesting that the £100 is a minimum and it could be considerably more.

[Stephen Kerr]

More important than any quotation from The Sun, the number that really counts is the £1.4 billion of detriment that was identified in the CMA report. That is the number we should be going on. Confusing the issue by coming up with arbitrary numbers in the Bill means taking our eye off the ball of the £1.4 billion.

[Dr Whitehead]

The hon. Gentleman is right to draw attention to the CMA figure. Customers were, in effect, being overcharged by that over a considerable period. Indeed, that was a substantial precursor to the idea that there should be a price cap in legislation in the first place. A regime was in place that allowed overcharging by a variety of devices, a number of which were identified by CMA in its report. We want not only to cap the price for a certain period of time, but to ensure that the behaviour that allowed more than £1 billion to be overcharged is not repeated. We do not want to be back here in a few years’ time, saying “That is terrible—now we have to implement another price cap.”

The issue is not just about the price cap, but about what happens afterwards. We need to do what we can, both during the passage of the Bill and during the price cap, to ensure that circumstances in the market prevent such overcharging from happening again. One of the underlying aims of the Prime Minister’s statement about the savings that would arise was that the price cap should be more than just a temporary punishment for certain energy companies; it should be an attempt to reset the market so that things work differently. The proposal for the £100 saving derives from that.

In May 2017, the BBC site—I do watch the BBC—reported that the

“Prime Minister…said 17 million households would benefit by up to £100 from the cap on poor value standard variable tariffs.”

What has been in the papers recently is slightly different, but it is clear that the original plan was a £100 saving for customers paying standard variable tariffs. That is the public’s expectation, as franked by the Prime Minister, of the consequences of the price cap; committing to it in the Bill would show that our intention is in line with the results they expect. Including the £100 saving as a consideration for Ofgem would complete the circle. As I say, it was a suggestion not from any Opposition Member, but from the Prime Minister, about how the Bill should work. We merely seek to enshrine her words in the Bill.

Our other amendments serve essentially the same purpose but relate to later clauses, especially clause 8, which sets out a clear mechanism for the circumstances in which the cap can be terminated, describing subsection by subsection what will happen at the end of each year from 2020 until 2023, when the sunset clause has effect. In each year, the trigger for rolling over the tariff cap conditions for another year is that

“the statement published by the Secretary of State in that year under section 7 is to the effect that the conditions are not yet in place for effective competition for domestic supply contracts”.

Our amendments would insert an additional condition for effective competition in each year, based on whether the Secretary of State thinks that

“effective competition does not exist for vulnerable or disabled domestic customers”.

--- Later in debate ---

[Dr Whitehead]

I would say that the essential point is how far up the beach and close to the walls the greenwashing actually goes. Can we conversely say that we can put greenwashing into a particular box and say “That looks like greenwashing”, but as we move up the scale of more and more renewables in the system, the greenwashing ceases and therefore can we say that this really is a renewable product and is something we can apply special exemption arrangements to? That is the nub of the debate.

[Stephen Kerr]

I would like to share with the hon. Gentleman the very words of Dermot Nolan in relation to this issue. In evidence to the Select Committee, he said in answer to a question about how it is decided whether energy is green or not:

“There are ways to determine the source of energy as to whether the generation of energy by that company has occurred in a sufficiently green fashion, which we have a definition for already, although not a perfect one. We would make specific requirements of companies on that. We would audit them and we would police it. If they were not compliant, we would tell them they must immediately withdraw the tariff or face enforcement action.”

That answer and the agenda that Ofgem is following make the amendment redundant.

[Dr Whitehead]

That is a reasonable and honestly held opinion about the extent to which it is possible easily to distinguish when greenwash is not greenwash and the point at which an energy company, even with a partially green tariff, puts in something that is honestly green and not something that they have just cooked up because they happen to have purchased something that has an element of traceable green energy in it.

Even under the circumstances that the hon. Gentleman mentions, it would be fairly difficult for Ofgem to make easy distinctions when it came to what it was doing about tariffs that could be jumbled up with a lot of brown energy but nevertheless be claimed to be at least partially green.

I have tried to think this through and consider how we might be able to make honest citizens of those companies under such circumstances. It is possible to argue that even if a company accidentally buys green energy, if it is genuine green energy, then yes, it has sourced green energy. However, the bar needs to be set rather higher.

Smart Meters Bill

Debate between Stephen Kerr and Alan Whitehead

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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Nuclear Safeguards Bill

Debate between Stephen Kerr and Alan Whitehead

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.

Smart Meters Bill (Sixth sitting)

Debate between Stephen Kerr and Alan Whitehead

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

[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.

Smart Meters Bill (Third sitting)

Debate between Stephen Kerr and Alan Whitehead

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

[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.