Smart Meters Bill (Second sitting)

Steve McCabe Excerpts

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

[Dr Whitehead]

If, as we have heard, SMETS 1 can be made fully interoperable with software upgrades, what is the purpose of SMETS 2 meters?

Derek Lickorish: What is the purpose of SMETS 2 meters if we can make SMETS 1 interoperable? To be able to answer that question, you would need to have a review and some evidence on which to base that decision. At the moment, it is beyond my sphere of full knowledge on everything to give a clear-cut answer to that question.

Richard Wiles: SMETS 1 and SMETS 2 need to run in coexistence. I believe that some clients are in prepayments mode, and prepayment is available in SMETS 1 now. I am talking about some specific instances where SMETS 2 is required: for aspects such as high-rise buildings or dual band comms hubs, when that comes into effect, when greater interoperability is required. Certainly from our position, we believe that we can deploy a larger volume of SMETS 1 meters and still help the Government meet the 2020 deadline.

As to SMETS 2, there are specific advantages around interoperability that have been touched on. While each individual SMETS 1 provider creates mini DCCs, as Derek mentioned earlier on, that will be avoided with SMETS 2. However, with enrolment and adoption, we are working with DCC at the moment, and that will allow the interoperability of our estate to be absorbed into the wider continued operation of the smart meter system through DCC.

Derek Lickorish: Can I add to my answer to Alan’s question and build on a point Richard made about interoperability? Although SMETS 2 has some advantages on the one hand, it is not at the data level. If you take mobile phones, they can keep on being produced because they are data interoperable with the network. SMETS 2 meters have to be identical not only for the meter installed today but for those in 15 years’ time as well. This backwards compatibility requirement is built into what we have. SMETS 1 meters are data interoperable, which is why we can make SMETS 1 interoperable relatively easily from the mini DCC position.

I know that all these things are grindingly complicated. We are trying to explain them in a way that I hope is straightforward.

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

Q After this morning’s witnesses, I was left with the impression that the DCC programme is absolutely fine, on target and all is going well. Has the DCC programme been delayed? If so, what have the problems been?

Richard Wiles: There have been publicised delays within the go-live period. The go-live date of November last year was when we had a release of DCC that allowed devices to be installed and to be made interoperable. A statement was made this morning that there are 215 meters on the system. It was envisaged that there would be a considerably higher volume than that now.

[Steve McCabe]

Q What would you have expected? What was the figure meant to be?

Richard Wiles: For the initial programme, by this stage, the figure was meant to be in the millions.

[Steve McCabe]

Q So 215 was the success figure, but it should have been millions. Is that right?

Richard Wiles: Yes.

[Steve McCabe]

Thank you.

[The Chair]

Have you anything to add on that, Mr Lickorish?

Derek Lickorish: Quickly, yes. Do not forget that the go-live date of November 2016 was a year late anyway. If you look at the original plan, as put together in the business plan by the DCC, the idea was that six months after go-live it would be ready at scale and six months after that the system would be stabilised. It went live last year, in November 2016, and as we all now know, clearly, from the horse’s mouth, it has 215 devices on it now.

[Steve McCabe]

Q That is the DCC; it does not sound quite as rosy to me as it perhaps sounded a couple of hours ago, but let me ask about the existing smart meters in operation. To your knowledge, how many of them, and what proportion of those that have been installed, are currently running in dumb or dummy mode?

Derek Lickorish: When they all go in initially, of course they are not in dumb mode. The percentages vary. I am told that at some stages 20% or more of them are being operated in dumb mode. That occurs for a variety of reasons—for commercial and technical reasons. The way in which the market is evolving is that meter asset providers—MAPs, as they are known—fund these assets that are going on the wall and they will also fund SMETS 2 assets. All the time, there is uncertainty about how long these assets are going to endure and whether the market is going to endure. When are SMETS 2 meters going to be ready?

There is an issue called deemed rentals. What does that mean? It means that if the acquiring supplier does not have the same sort of contract that is with the asset coming in, it gets asked to pay a very high deemed rental, which it will not pay because it renders the customer unprofitable. That means that it faces two choices: putting the meter into dumb mode, or going out and taking out that meter, even if it is the same meter, and putting in one of its own, funded by another meter asset provider.

There is quite a complex set of issues, which only we in this room and others—interested observers—understand to any degree. There is the deemed rental issue and then there is the technical issue, as we have heard. I do not criticise anyone, because everyone is breaking their back to get this programme running. Everyone is working hard, so I do not decry what anyone is doing, but the way it is set up—and it is driven by political milestones—is going to cause perverse behaviour from time to time. I will come back to that.

My final point—I need to shut up—is that we need to get to a situation in which the interim interoperability model can be made to work. It can be made to work because most of the big six have a system called instant energy—a number of them—and we could have some interoperability there, whereby they could take over the asset and resolve this commercial issue. That would deal with consumers’ meters going into dumb mode on change of supplier. It would stop all the stories that the Daily Mail keeps printing about all the problems with SMETS 1 meters. It is not a technical issue, and the SMETS 1 meters are not inferior. Sorry, Mrs Gillan.

[The Chair]

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

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

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

--- Later in debate ---

[The Chair]

We aim to finish this session at 3.15 pm, and I have two colleagues who want to speak, Mr McCabe and Mr Kerr. I call Mr McCabe.

[Steve McCabe]

Q I have two quick questions for Sacha. First, looking at the funnel, it looks as if you need 10 expressions of interest in order to get one smart meter installed. How does that compare with other products? That bit of information does not tell me anything, but if I knew how many people did that to buy a mobile phone or similar, I could put it in some context. Is there an answer to that?

Sacha Deshmukh: As ever, there is a health warning on an answer—there is no direct comparator between the supply and demand in different sectors—but there is actually a very healthy level of demand for the current level of supply. At the moment, I think it is fair to say that consumer enthusiasm is very strong, but supply has not yet been able to meet that enthusiasm on the timescale on which those consumers would ideally have liked that product.

That is today’s funnel—or, rather, this year’s funnel, as the analysis by the energy suppliers has shown. Looking at next year, you see it at more like 5.5 to one. That is a more normal ratio for a new product, but clearly the goals of this roll-out, and for this country in terms of the benefits brought by it, need us to go much farther than products that are just happy to sell in market, but only reach a small number of consumers who want it. The ambitions clearly have to be comprehensive as well.

[Steve McCabe]

Q Thank you. It is a supply issue, mostly. The other thing I wondered is this. Obviously, your job is to promote smart meters, so your performance management framework is about identifying how to motivate and enthuse people to have them, and that is what your research is about, but have you done any research, or has anyone else, on how people’s enthusiasm and motivation change if they have a smart meter, and then change supplier six months later and discover that they no longer have a smart meter? My guess is that their enthusiasm might decrease. Is there any research to tell us what is really going on?

Sacha Deshmukh: The best research that I am aware of in this area is being conducted by Populus, although there is other research as well. As I said, the context is that the vast majority of smart meter consumers are very content and feel significantly better served than they were in the analogue market, but there is no doubt that for those consumers who are less satisfied, it is linked to a customer service issue. Dhara has talked about some of those issues with the legacy of dumb meters: maybe not getting accurate bills for years, and then getting them.

There has been lots of debate, and indeed some regulation has been put in place, about consumer protections in those situations. Citizens Advice also work carefully on that. Indeed, we funded training for Citizens Advice advisers, because they are a very important port of call for people who find themselves in such situations. No doubt some other areas in which there has not been satisfaction have been linked to those customer service issues.

Dhara Vyas: I just want to expand on the customer service breakdowns of what consumers experience with smart meters. We have been collecting consumer data on smart meters from customers who contact our consumer service since 2011. Since then, we have done monthly analysis of what people are contacting us about. Contacts with us have risen in proportion with the number of meters on walls, as you would expect. It is a bit of a canary in the coalmine, with them pointing out and drawing attention to issues with the Department for Business, Energy and Industrial Strategy and Ofgem—so with the Government and Ofgem—and directly with the suppliers.

We hold bilaterals and try to address issues before they become more widespread, and we talk about systemic issues with the entire industry and industry body. They mostly break down into seven categories, including billing and tariff, as you would expect, and as I have touched on. We get quite a few information and sales calls as well, with people asking, “Are they compulsory? Do I have to have one?” We have seen a spike in those recently, with deemed appointments that Ofgem has recently allowed suppliers to—

[Steve McCabe]

Q Do you think that is because people are getting calls saying, “You’ve got to have one”?

Dhara Vyas: Yes, and some letters from suppliers have been parsimonious with the truth, saying things like, “Your meter is at the end of its life. We are going to come and install a smart meter.” There is a lack of clarity about the fact that it is not mandatory. You do have a choice. When I was looking through the stats, I saw that in one case last month, someone felt very strongly that they were being blackmailed into having one, and they did not want one. They felt like they were being bullied. That has recently become an issue, and I know that trading standards are concerned about that. The communication needs to be more refined.

Other contacts include those relating to faulty metering equipment, and people who cannot top up make up a big proportion of those. There are people who are unable to switch, who have switching-related issues or who just have an issue related to installation. For example, an engineer coming in has meant that their boiler has been condemned because the engineer could not relight it, so there are things to do with appliances in people’s homes.

The issues are wide-ranging, but they have a huge impact on people’s lives and how they use energy in their home—as long as they can continue to use it. It is important to be aware of those things in order to address them and not let them proliferate.

[The Chair]

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

--- Later in debate ---

[Douglas Ross]

Q So you could accept that as being a reason in some cases to accelerate, if possible, without compromising the other elements?

Dr Sarah Darby: Yes—without compromising the programme as a whole.

[Steve McCabe]

Q Do you know what happens to all the old meters? How are they disposed of when we put in these new smart meters, and what happens to the smart meters when they come to the end of their life? Has BEIS issued any guidance on how those should be recycled? I guess I am wondering whether there is a landfill somewhere full of old smart meters or old non-smart meters.

Dr Sarah Darby: You would have to ask BEIS about that.

Dr Richard Fitton: I remember seeing in the trade press that some consideration is being made of recycling existing meters, but I do not know. Again, it is an excellent sustainability—

[Steve McCabe]

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

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

[Stephen Kerr]

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

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

Smart Meters Bill (First sitting)

Steve McCabe Excerpts

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

[The Chair]

The deadline for amendments to be considered at the Committee’s first sitting for line-by-line consideration of the Bill was the rise of the House yesterday. The next deadline will be the rise of the House on Thursday, for the Committee’s sitting a week today.

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

On a point of order, Mr Gapes. I understand what you have just said, but what happens if something comes up in the evidence-taking sitting that would lend itself to an amendment, given that the sitting is happening after the deadline?

[The Chair]

That, unfortunately, is not a matter for the Chair. Tabling deadlines are set out in Standing Orders. If the hon. Gentleman would like to make a change to the tabling deadlines, I recommend that he writes to the Procedure Committee. It may be helpful if I make it clear that if oral evidence introduces a completely novel idea on the issues in the Bill—something that we did not expect to hear—and Members could not have had the foresight to enable them to table relevant amendments, I would take that into consideration in selection and grouping.

[Steve McCabe]

Thank you, Mr Gapes.

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Richard Harrington.)

[The Chair]

Copies of written evidence that the Committee receives will be made available in the Committee Room.

Resolved,

That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Richard Harrington.)

--- Later in debate ---

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Steve McCabe]

Q I have three quick questions. If I have this right, the programme is behind schedule, the cost is escalating and the Minister now wants to increase the timescale and take extra powers. What needs to be done to ensure that this thing stays on track and within cost and does not become an albatross for the consumer?

Bill Bullen: That is difficult. We are already a long way down the track of delays and cost escalations. Consumers already pay a significant chunk of their bill towards the Government’s smart meter programme.

[Steve McCabe]

Q Do you know how much?

Bill Bullen: It is going to go up to, I think, £13 per customer from 1 April. That is something like £8 higher than it was a year ago. Once you multiply that by 27 million households, it is a lot of money.

The Government have spent something like more than £1 billion—I think £1.3 billion—on the Data and Communications Company. To put that in perspective, I think the competitive suppliers providing similar services for SMETS 1 generation meters have not spent 10% of that money. They are already out there working, and have been since 2013, so I think there are some real issues.

Clearly, consumers have already seen massive delays and are being stopped from getting the benefits of smart meters because of the Government programme. One of my key concerns, as I said earlier on, is how we will be able to carry on in business over the next couple of years, because of some of the intricate rules about what type of meters we can install when.

We desperately need a lot more flexibility to carry on rolling out smart prepayment meters without any kind of significant hiatus. It is not in the consumer’s interest to have a hiatus, and it is certainly not in the interest of the economy generally to have potentially a lot of qualified meter installers, vans, and warehouses, but no ability to install meters. That is a big problem.

Those problems are with us right now and we have to solve them very soon, because the sheer logistics of managing supply chains—not only ours, but the supply chain to the meter manufacturer, all the component purchases and so on, which stretch out a year in advance—mean that we are already right up against the buffers of maintaining a smooth roll-out programme, given that the SMETS 1 end date is currently stated to be in July next year. That is a really big issue. We are heading at the moment for a massive hiatus in the roll-out of smart meters.

Audrey Gallacher: It would be a huge mistake to underestimate the size of the challenge here with the smart meter roll-out. It is a massive logistical infrastructure programme—53 million meters—so it will be tough. As Bill said, we have already seen some issues around delays and costs overrunning. There is an impact assessment out there—a business case that says there is a net benefit to customers of nearly £6 billion. It is critical that we protect that business case, regardless of how difficult it becomes.

It may well be that the Department for Business, Energy and Industrial Strategy should look at a re-run of that against what we are seeing currently—a new impact assessment to ensure that the benefits case is still alive. There is also a lot of engagement with the Government and energy suppliers on the programme, because we are all working on it together to get it done. You could argue, though, that we might want to see a wee bit more of that. Is there more that we could do to understand what constitutes best practice, within competition rules obviously, and make sure that everybody is doing it as best they possibly can?

[Steve McCabe]

Q Are you suggesting a new cost-benefit analysis?

Audrey Gallacher: I am suggesting a re-run of what we have done. One analysis was done in 2014; the most recent one is from 2016. Going into next year, it is important that we understand that that benefits case remains intact. Also, we are here today to discuss whether we have to change the regulatory framework to make sure that those benefits are delivered, around the nature of the programme being opt-in versus opt-out, the cost control over the DCC, and the transparency across the control on those costs. There are many things that we need to keep under tight scrutiny.

Bill Bullen: I do not think it is really feasible to re-run the cost-benefit analysis simply because of time. Everybody understands a lot more about smart meters now—the logistics, the costs and the benefits. I think that businesses are in a much better place to just get on and do the job, rather than have another round of consultations wondering what we are going to do. That would soak up most of the next 12 months if we were not careful—a critical time for delivering this benefit to consumers. I differ with Audrey on that point.

[Steve McCabe]

Q Thanks. May I ask about the interoperability issue again? If I understood correctly, Mr Bullen was saying that part of the problem was that some suppliers choose not to help people who switch have a functional smart meter. Is one of the other problems the role of the smart meter asset providers who, if I understood correctly, are a bit like the energy businesses’ equivalent of a football manager? They are the middle people who provide the meters. It might not be in the interest of energy suppliers that get their meters from one asset provider to switch when a customer switches supplier. Is that how it works?

Bill Bullen: I would not agree with that.

[Steve McCabe]

Q Is that because you have an interest, Mr Bullen?

Bill Bullen: No. There is a set of commercial arrangements around rolling out smart meters. As I say, different suppliers have chosen to engage or not in that. All I can say is that we have built business from scratch that has now got—

[Steve McCabe]

Q Tell me what a smart meter asset provider is. What is the function and role?

Bill Bullen: They are merely providing a funding arrangement to provide the capital, so that suppliers can get meters installed without absorbing that massive hit on their cash flow, or having to charge customers for it. Nobody wants to charge the customer for it, so the meter asset provider will simply provide that capital and then rent that meter to whoever the supplier is over the course of that meter’s life.

[Steve McCabe]

A middle man.

[The Chair]

We are short of time. I am going to take Bill Grant and then we are unlikely to have further time. This will probably be the last question.

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[Richard Harrington]

Q Thanks to both of you for coming this morning. May I ask Ofgem, in particular, what you are doing to ensure energy suppliers deliver their obligations?

Rob Salter-Church: I might first explain the role of Ofgem and the Government in the roll-out, because that sets out the context for answering that question. To be clear, the roll-out of smart metering is Government policy. The Government have powers, and one of the parts of the Bill we are considering today is to extend their power to put in place the licence arrangements around smart metering. Ofgem’s role is to oversee suppliers and DCC compliance with the policy framework that the Government have put in place.

We are hugely supportive of smart metering, and we think it has real potential to improve consumers’ outcomes. Through regular engagement with suppliers, we are overseeing their compliance with their licence obligations. We do that through regular bilateral engagements, gathering significant information from suppliers and working in partnership with Citizens Advice and the energy ombudsman to gather information about consumers’ experience of smart metering.

We use the data we gather to hold suppliers to account, challenge them and make sure they are doing what they are required to do in terms of installing smart metering—adhering to their roll-out plans and, perhaps more importantly, delivering a good-quality installation, providing energy-efficiency advice to consumers when they do that and making sure consumers are aware of how they can realise the benefits of smart metering.

We have a range of tools in our toolkit that we can use to secure supplier compliance. Ultimately, if we feel that a supplier is not doing what they need to do to stick to the rules and make the programme a success, we can take enforcement action against them—a process that enables us to levy a fine against that organisation if it is failing to meet what is required of them.

[Steve McCabe]

Q I notice that it says in your written evidence that you see a significant benefit for consumers, and you have repeated that. How will the benefit be realised? What are the practicalities? How will it be realised for the most vulnerable customers—the elderly and the most disadvantaged? How will we see that, and what kind of timescale are we talking about?

Rob Salter-Church: There is a whole range of benefits that consumers—including vulnerable consumers and those on prepayment meters—can get. One of the key ways in which consumers can benefit from smart meters is through being in control and having access to real-time information about their energy usage and what it is costing them. Many people, including vulnerable people, are often worried about getting an unexpected bill—having a bill shock that they are unable to meet—and falling into debt. One of the great things about smart meters is that they give real-time information so people are in control and can manage their energy usage to prevent those kinds of issues from arising.

Another benefit that will accrue to all people, but may well have particular relevance for more vulnerable customers, is the end to estimated billing. They will know exactly what they are being billed and will be able to make sure they are not being over-billed by their supplier.

The last thing I will say is about prepayment meters. Smart metering has the potential to absolutely transform the realities of energy for prepayment customers. People will no longer have to go out in the rain to go down to the shop to put credit on their meter; they will be able to very simply and easily top up the meter when they need to. The functionality also enables suppliers to help customers manage their energy usage. For example, rather than running out of credit overnight, the smart meter technology allows the supplier to offer services to customers that enable them to have a small amount of energy to ensure that the heating and lights are still on in the morning. Those kind of quality of service benefits are huge, and they should accrue to customers through the point at which they get a meter installed.

[Steve McCabe]

Q Am I right in thinking that you are responsible for enforcing the code of practice?

Rob Salter-Church: Are you referring to the smart meter installation code of practice?

[Steve McCabe]

Yes.

Rob Salter-Church: That is correct. Suppliers have a licence obligation to have that code of practice.

[Steve McCabe]

Q So how is it that people can receive a cold call telling them that it is a legal obligation to have a smart meter?

Rob Salter-Church: It is very troubling when we hear things like that, because, as the Committee knows, that is not the case. We are clear to suppliers that they need to try very hard to explain the benefits of smart meters. I struggle to see why someone would not want a smart meter, given the benefits that they offer to consumers. Suppliers do need to be clear that if a customer does not want one, they do not have to have one.

[Steve McCabe]

Q But it is wrong for anyone to phone up and say, “You are legally obliged to have one.” That person is clearly breaching the code of practice.

Rob Salter-Church: That is right. We gather data on a regular basis on suppliers’ compliance with the code of practice. If we saw a systematic problem, then we would take action against a supplier.

[Patricia Gibson]

Q I want to probe this a little further; I raised it with the previous witness and I would be interested in your thoughts, given that you are in charge of the code of practice. Trading standards have raised concerns that there are potential offences being committed under the misleading actions provision of the Consumer Protection from Unfair Trading Regulations Act 2008. They have said that these infractions may be being committed because some energy suppliers are giving the impression that smart meter installation is compulsory. What are your thoughts on that? Have you had any contact or dialogue with trading standards on their very serious concerns?

Rob Salter-Church: The first thing I would do is to reiterate what I said earlier: we expect suppliers to be very clear that there is no compulsion on consumers to have a smart meter. We are driving suppliers to be as clear as they can on what the benefits are, so that customers want to have a smart meter.

In answer to your point about trading standards, we engage with a range of organisations, including Citizen’s Advice, and we do from time to time talk to trading standards to gather information about where there are potential licence breaches. We would take action. I do not believe that I have had a discussion with trading standards, but I can check whether there has been one between the organisations and write in, if that is helpful.

Oral Answers to Questions

Steve McCabe Excerpts

Tuesday 7th November 2017 Commons Chamber

[Claire Perry]

I commend my hon. Friend for her tireless advocacy and leadership in the Conservative Environment Network and for the work she does on behalf of her constituents—Taunton Deane is very lucky. She and I share the aspiration to continue our global leadership role; indeed, the headline objective for the conference is about making everyone aware that there is no rowing back on the Paris agreement—in fact, we want momentum to accelerate. I will be using the conference to announce further investments and further approaches the UK is taking to push our world leadership position forward. If my hon. Friend can just be patient for a few more days, I am sure she will join me in celebrating those when we announce them.

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

The Committee on Climate Change and a range of respected experts all point out that the existing clean growth strategy will fail on the fifth carbon budget and on the Paris commitments. The Minister must have some additional measures in mind. What are they?

[Claire Perry]

The Committee on Climate Change said this set of policies was one of the most wide-ranging that had ever been put forward. As the hon. Gentleman knows, the budgets end in 10 and 15 years’ time, and we are currently on track to achieve 94% and 93% of the things we need to do, a decade out. I think it is pretty good odds that we will achieve them.

Smart Meters Bill

Steve McCabe Excerpts

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

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

I do not argue with plans for a special administration regime in the event of a failure of the DCC, but I have a number of questions about the programme’s roll-out, extension, monitoring and costs. The current smart meter programme is at stage 2, alternatively referred to as the main roll-out, and that is scheduled to end in 2020.

As we have heard, the vast majority of energy companies are still installing the earlier generation of smart meters rather than the more efficient, cheaper and longer-lasting second generation. The Government have announced that, as of July 2018, SMETS 1 will no longer count towards the 2020 target. As that phase was due to be completed in 2016, what are the reasons for allowing the installation of those less efficient meters until 2018? Has the Minister received any representations from energy companies urging it and, if so, what reasons have they given?

Lord Bourne told the Energy and Climate Change Committee that there were 2 million smart meters in store. Could that have anything to do with the decision? If so, is there a risk that the Minister might be accused of massaging the figures with what is essentially an inferior meter?

I know from information supplied in answer to parliamentary questions that by December 2016 some 330,000 smart meters were operating in dumb mode—not operating as smart meters—and that by March 2017, that figure had risen to 460,000, involving a cost of between £30 million and £50 million. Who is responsible for keeping tabs on the costs of this programme?

I asked in a parliamentary question how much had been spent on the installation of SMETS 1 meters to date, and the answer was

“the Government does not hold data on expenditure on smart meter installations”.

EDF Energy has also questioned the extension proposed in the Bill and argues that

“if these powers are to be extended a clearer rationale should be provided for the need, and length, of any extension.”

The Minister will be aware that the Energy and Climate Change Committee raised questions about the 2020 target, and he will know that both the Institute of Directors and some in the industry have suggested that the purpose of the extension might be to give the Government wriggle room.

The Minister will also be aware that, in May 2015, the Energy and Climate Change Committee warned that problems with smart meters are

“symptomatic of a national programme that the Government has left largely to suppliers and failed to drive forward effectively.”

The Committee also warned that, without significant changes,

“it could prove to be a costly failure.”

Part of the justification for this programme is that it should mean that consumers benefit because they are able to shop around for the best deals, but if a SMETS 1 meter can no longer function as a smart meter when a customer switches, is that not a barrier to switching rather than an encouragement? As this is a voluntary programme, would someone not be well advised to wait until they are offered a SMETS 2 meter, or indeed to demand one? MoneySavingExpert.com, the UK’s biggest consumer website, is advising its readers to do just that.

As we have heard, the Government’s cost-benefit analysis estimates that by 2030 smart meters will have delivered £5.8 billion of net benefits. Those benefits, which are to energy suppliers, networks and consumers, are offset by a cost of £11 billion paid for by consumers. According to answers to parliamentary questions I submitted, the net benefit was reduced by a further £1.5 billion between 2014 and 2016. Can the Minister explain that reduction? Although the Government have said in answer to a parliamentary question that there is no link between this reduction and the issue of the interoperability of SMETS 1 meters, they also say that the 2016 cost-benefit analysis has already made allowance for the plan to enrol and adopt SEMTS 1 into the DCC. I understand that the cost of the DCC has already risen by a further half a billion pounds since it was first proposed. Who is responsible for monitoring and containing these costs?

In September 2016, the House of Commons Science and Technology Committee suggested that the essential aims of the smart meter programme are likely to fail without

“a programme of user engagement before, during and after installation.”

It is becoming clear that there is a lack of consumer trust and confidence in, and understanding of, the smart meter roll-out. As we have heard, the Department for Business, Energy and Industrial Strategy’s most recent public attitudes tracker found that people were less than convinced about smart meters, and a recent article in The Daily Telegraph claimed that only one in five consumers is accepting the offer of a smart meter. I know the Minister is eager to promote customer satisfaction, but without a renewed campaign to increase public awareness and improve perceptions of smart meters, there must be a concern that the benefits will not be realised.

I also want to ask about evidence that has emerged about the behaviour of energy suppliers and those they engage to promote their plans. They are required to take reasonable steps to offer smart meters, so why are people receiving cold calls claiming that accepting one is a legal requirement? I understand that the Minister might have already referred this to Ofgem, but can he confirm that that is the case? If so, will he indicate when we might expect to hear some response? There are also some safety concerns, as highlighted by—

[Caroline Flint]

On that last point about what happens when our constituents hit those sort of buffers—when they are faced with inaccurate information—they say to me that they just do not know who to approach to complain about it. That is a fundamental weakness in the system—where should people go?

[Steve McCabe]

I absolutely agree. I understand that there is a code of practice, but who is making sure that it is being enforced?

I understand that there are also some question marks about the safety of the installations, as was highlighted in a BBC “Watchdog” programme, which showed that some gas and electricity meters have led to safety issues in homes. So what I really want to ask the Minister is: what checks are carried out on the behaviour of energy suppliers to ensure that they are complying with the smart metering installation code of practice? As my right hon. Friend asks, what redress do the public have when they are clearly being misled by people who are supposed to be giving them the best possible information?

--- Later in debate ---

[Alan Brown]

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

[Steve McCabe]

Surely, if the hon. Member for Stirling (Stephen Kerr) was right in his assertion, he was making a perfect argument for not installing any more of these inferior meters.

[Alan Brown]

I thank the hon. Gentleman for his point. I know that that was alluded to in the previous intervention. Yes, if there is better technology, it makes sense to work towards installing that better functionality. There is another consideration when it comes to extending the deadline. If we are going to be honest about things, extending the deadline will actually make the installation process much more efficient. How much will it cost to ramp up and supply the additional labour that is needed to go from 350,000 meters a month to 1.25 million meters a month? It will take extra labour, extra training, a massive recruitment exercise, and then, lo and behold, all these people are out of a job because the installation period has gone by. There is actually some merit in considering doing this over a longer period, as it could work better for consumers in the long run.

Taylor Review: Working Practices

Steve McCabe Excerpts

Tuesday 11th July 2017 Commons Chamber

[Margot James]

To correct the record, I was not saying that flexibility was always a one-way street in favour of the employer; I said that this was, in exceptional cases, a real problem that needs addressing, but that is not necessarily the norm. In response to the other matters the hon. Lady has raised, I urge her to contribute her views as we go through the consultation.

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

When the Minister is considering how to respond to the review, will she talk to her colleagues in the Department for Digital, Culture, Media and Sport about the youth full-time social action review, which is considering the question of long-time volunteering? I realise that these are slightly different issues, but there is still a considerable overlap. The question of safeguards and protections is the same in some cases, so it seems sensible to wrap the two together.

[Margot James]

The hon. Gentleman makes good points about volunteering and the framework that governs it, and I hope that he will make them during our consultation.

Business, Energy and Industrial Strategy

Steve McCabe Excerpts

Wednesday 15th March 2017 Ministerial Corrections

The following is the response by the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Hereford and South Herefordshire (Jesse Norman), to a topical question asked by the hon. Member for Birmingham, Selly Oak (Steve McCabe) on 14 March 2017.

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

I thought the Minister was a touch complacent in his earlier answer on smart meters given that this will cost the taxpayer £11 billion by the end of the Parliament. What is he going to do about the fact that they do not work when a customer switches supplier?

[Jesse Norman]

The smart meter programme should be judged on its long-term effect. It will save £47 billion by the end of that decade.

[Official Report, 14 March 2017, Vol. 623, c. 178.]

Letter of correction from Jesse Norman:

An error has been identified in a response I gave to the hon. Member for Birmingham, Selly Oak (Steve McCabe) during topical questions.

The correct answer should have been:

Oral Answers to Questions

Steve McCabe Excerpts

Tuesday 14th March 2017 Commons Chamber

[Greg Clark]

One of the things that we have done to support the nuclear supply chain is to have a continuing commitment to nuclear power in this country, and that will benefit my hon. Friend’s constituents. Through our network of training colleges, we will make sure that we grow the nuclear skills that we need for this industry.

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

I thought the Minister was a touch complacent in his earlier answer on smart meters given that this will cost the taxpayer £11 billion by the end of the Parliament. What is he going to do about the fact that they do not work when a customer switches supplier?

[Jesse Norman]

The smart meter programme should be judged on its long-term effect. It will save £47 billion by the end of that decade.[Official Report, 15 March 2017, Vol. 623, c. 5-6MC.]