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The Minister will know that the cost of carbon is a very important consideration when the value of smart meters and other technology is being worked out. In the further consultation that will be held, I hope that he will work through the calculations based on different carbon costs. I hope too that he will consider the benefits of smart meters in respect of the feed-in tariffs
that will be vital in promoting microgeneration. I know that we will deal with that point shortly, and I look forward to hearing his views.
Malcolm Wicks: As the hon. Gentleman says, we will discuss feed-in tariffs later, but I thank him for his congratulations. My endeavour now is to answer a question that even he has not yet formulated in his mind.
I turn now to Government new clauses 8, 9 and 10, and the consequential amendments Nos. 50, 58 and 59. I want to explain why we believe that they provide the most appropriate legislative route forward, given the context that I have just outlined.
New clause 8 allows the Secretary of State to modify relevant electricity and gas licences, or other documents made under licence conditions, to require or facilitate the installation of smart meters. As I have indicated, our intention is that this power will underpin the roll-out of smart meters to medium-sized business in the first instance.
As is common practice with technical issues in the energy sector, the intention is to specify the detail of the requirements being placed on licensees, and other relevant arrangements, through modifications of licence conditions or other relevant industry documents rather than including that detail on the face of the enabling legislation. Examples of the type of detail that I am referring to would include the specification of the meter, or the speed of a roll-out.
At this stage, we need to maintain flexibility in defining those details, as they could have significant cost implications. Small changes to the assumptions that we make can have significant impacts on the overall costs, as well as on the potential benefits. We need the flexibility to specify these issues in modifications so that we can identify the optimum, most cost-effective roll-out.
The new clause also recognises that smart metering is an issue of significant interest to Parliament. It is also potentially one of major national importance, with direct implications for business and consumers. Usually, the Secretary of State would make this type of modification without further recourse to Parliament. The new clause proposes going further by providing a mechanism for additional parliamentary scrutiny.
More specifically—in addition to the usual requirements for the Secretary of State to consult relevant licensees, Ofgem and any other appropriate persons—new clause 9 requires the Secretary of State to lay the draft modifications in Parliament and allow a period of 40 days in which either House of Parliament may reject them. I believe that that additional parliamentary scrutiny is appropriate and that it will be welcomed.
Our amendments will allow the Government to move forward now with smart metering for medium-sized business and, subject to further analysis and informal consultation, to be in a position to act as quickly as possible to roll out smart meters to the small business and domestic sectors, should our final analysis support that. That is the most sensible approach, given the inherent flexibility needed in developing and implementing the licensing and other arrangements in this evolving regulatory area.
Paddy Tipping: I suspect that the Minister is coming to the end of his speech, and I have been waiting for the answer to the question that I have wanted to ask. Will he say something about visual display units? There has been a lot of discussion about VDUs, and some parts of Government are very keen on them, but it makes no sense to introduce them if domestic customers are going to have access to smart metering in the relatively near future. What is the present view on VDUs?
Malcolm Wicks: I thank my hon. Friend for that question. We have listened to many people outside the House, and they believe that the main thrust must be the development of the more sophisticated smart meter technology. However, there will be voluntary agreements with the supply companies in respect of VDUs.
It is also worth noting that, as part of finalising our decision on a roll-out to domestic consumers, we would also like the opportunity to take account of the smart metering trials that will produce initial results later this year. I believe that these amendments will successfully enable the roll-out of smart meters. They are an important step forward in fulfilling our ambition, set out in the 2007 energy White Paper, to improve the information that energy customers receive about their energy use.
I therefore hope that colleagues in the House will lend their support to these Government amendments.
Charles Hendry: I thank the Minister for bringing forward these amendments. They are not everything that we asked for, but they show progress from where we were in Committee. We welcome with great enthusiasm any sinner who repents.
The case for smart meters is as strong as ever. Their introduction is supported by the industry, and overwhelmingly by consumer groups, as smart meters will get rid of prepayment meters and estimates forever. There is also great support from the environmental groups, thanks to the important contribution that smart meters can make to tackling energy inefficiency.
We think that the Government should have gone further. We would have liked them to insert a specified time scale of 10 years for the introduction of smart meters across the whole country. However, the fall-back position adopted in Committee was that the Government should table an amendment with permissive powers to avoid the need for primary legislation in due course. They have done that, so perhaps we should give the Minister not three cheers, or two, but one and a half cheers for what he has achieved.
One day in Committee, the Minister told us that he would be going home to fit his own electronic display device. He said that the EDD was in its box in the cupboard, and that we had shamed him into going home and fitting it that very weekend. We expressed our concern that he might electrocute himself in the process, and we are obviously delighted that he did not do so. Nevertheless, did he summon up the courage to fit it, and has he found the device useful? Many of us share the concern of the hon. Member for Sherwood (Paddy Tipping) that VDUs are often almost worse than useless and that they distract from what is a very important debate.
Our view that the Government should have gone further and put in place a time scale is supported by many others. The Energy Saving Trust’s briefing to us states:
“We welcome the amendments put down by the Government to facilitate this, but believe the Government needs to go further. Without Government mandating of full smart metering, the carbon saving potential of these devices will not be fully realised.”
The Government’s policy has changed. In Committee, the Minister made it clear that he was not persuaded that the overall benefits of smart meters outweighed the disadvantages, as he saw them. He could not tell us whether primary or secondary legislation would be required. It is thus clear that there has been a change in the Government’s thinking, which we are pleased about.
In November 2007, the Prime Minister said:
“For every household over the next decade there will be the offer of a smart meter that will allow two-way communication between the supplier and customer, giving more accurate bills of course and making it easier for people to generate their own energy through micro generation and sell it on to the grid.”
That is not what the Minister is talking about today. That was clearly not the EDD, because that does not allow two-way communication. What did the Prime Minister mean when he made that statement? The Minister seems to be rowing back from the 10-year commitment.
It is clear from those in the industry and others that if this is going to happen, there must be a clear mandate from the Government. The Energy Retail Association’s advice to us stated:
“If the ambition to have all homes in Britain fitted with smart meters is to be achieved, the process of planning needs to begin sooner rather than later. In order to achieve the Government’s stated expectation that smart meters will be rolled out to every British home within ten years, the industry needs a mandate...It must commit now to a clear timetable and ensure that a decision is made quickly to grant the mandate.”
There is concern about the Government’s lack of leadership. This morning, about an hour or so before we entered the Chamber, we received the response to the consultation document—I suppose it is better to have it at that stage than not at all. There are areas in the response where we would have looked for more leadership from the Government, rather than just suggestions about a need for further consultation. Indeed, the opening paragraphs of the document suggest that the Government have moved the goalposts since the Prime Minister’s suggestion last November, because they say:
“Views were also invited on the Government’s expectation that over the next ten years, all domestic gas and electricity customers will be given smart meters with visual displays and on how smart metering could be delivered to smaller businesses.”
That was not what the Prime Minister said. He said that this would be delivered to domestic consumers within 10 years.
Lembit Öpik:
Does the hon. Gentleman agree that the industry wants leadership, a mandate and clarity from the Government so that it can implement the introduction of smart meters on a level playing field and ensure that the meters are usable by all suppliers, and thus do not act as a barrier to the market? He might have heard that the industry estimates that this
could save domestic consumers about £4 billion a year. Does he agree it is important that the industry is heard and provided with the direction that it requests from the Government, which would be at no cost to the Government but of great benefit to consumers and the environment?
Charles Hendry: I agree with the hon. Gentleman. Not only the industry but consumer groups believe that there could be big savings for consumers. Environmental groups believe that smart metering would represent good environmental practice. There is overwhelming support for smart metering as the right way forward, so we need greater leadership from the Government.
The consultation document shows that there was overwhelming support for introducing smart metering for larger and medium-sized businesses. The Government have taken on board that support and say, under the heading “Next steps”:
“The Government intends to...undertake a further short consultation in May”.
Having got overwhelming support, they will consult further on the detail.
As we know, there was strong support among smaller businesses and domestic users. The Government say:
“Exercising these powers in relation to small businesses and the domestic sector will be dependent on the outcome of further analysis and impact assessment work.”
That was what we thought this process was about, and we need further progress.
“Further discussions with stakeholders on the consultation impact assessment and in the areas identified above will take place over the next few months to further refine the impact assessment and define the policy options moving forward.”
Ministers do not seem to understand that we do not have time on our side. If we have to wait until the end of this year, a further year will have been lost during which a range of households could have benefited and reductions in carbon emissions could have been brought about through better informed household choices. It is disappointing that the programme is being put off.
2.15 pm
Dr. Alan Whitehead (Southampton, Test) (Lab): Does the hon. Gentleman accept that smart meters could play an important role in dealing with fuel poverty, for example by ending overcharging because of prepayment meters and dealing with back-charging through changing tariffs because of the way in which smart meters work? Perhaps that is a further imperative in support of early adoption.
Will the hon. Gentleman comment on the sunset provision in new clause 8 that requires changes under subsection (1) of the new clause to take place before five years are up? Will he suggest to the Minister that that could be considered as some sort of time scale for ensuring that consultations on the implementation of such a programme end urgently and early?
Charles Hendry: I said earlier that one of the great advantages of the programme was that it could lead to the end of prepayment meters. One of the reasons that it is so strongly supported by Energywatch is that it could make a massive improvement to the service offered to domestic consumers, especially those in fuel poverty. I should say, as an aside, that it is very sad that the Bill does not address fuel poverty. Although the Bill gives us the perfect opportunity to do so, fuel poverty has been excluded completely.
The hon. Gentleman refers to a sunset provision. We need progress within those five years. That is not the time scale in which we will see action, but that in which the Government need to make a decision, and that is an enormous way off. We do not have time on our side, if we are to stand any chance of meeting our 2020 commitments, so we need the programme to move forward more quickly. That is why we support the view of the industry and others that 10 years would have been a sensible time scale. The Government are giving us the smack of firm consultation, but we need decision making and progress. We accept that the new clause represents movement in the right direction, but it is still disappointing that the Minister has not gone further.
New clause 16 is one of several measures that we tabled—sadly, it was the only one selected—that would give consumers more information so that they were able to make better choices. I am certain that consumers want to do more.
Malcolm Wicks: I was rather hoping that the hon. Gentleman was going to address the costs of smart meters. It is not unreasonable for the Government, when faced with the indubitable advantages and benefits of smart meters, nevertheless to address costs seriously. As I said, we need to refine the costs, and we will discuss them with the industry, which will have different ideas. This is clearly a costly national project, so does he not agree that it would be irresponsible for the Government not to pay heed to the costs, not least at a time when our constituents are worried about rising energy bills?
Charles Hendry: Of course we have to pay heed to the costs, but what is frustrating is the speed at which that is being done. The issue has been addressed in the House on many occasions. On Second Reading, I think that every single Member who spoke talked about smart meters and the need for progress. We find that the next consultation will not conclude until the end of the year, but we simply do not have time on our side.
Yes, there is a debate to be had. Centrica’s submission to us cited research carried out by Frontier Economics showing that there was a positive cost-benefit to the consumer through the roll-out of smart meters of £3.5 billion by 2020 owing to the energy savings that would be made. The figures are out there and views have been formed. It should now be quite simple for the Minister, in a short space of time, to reach a decision rather than simply knock the issue into the long grass. That is why the frustration arises. I would not wish to disappoint the Minister by not addressing issues that he would like me to consider, but it behoves the Government to speed up the process.
The purpose of new clause 16 is to help consumers to make better informed choices. They want to do more, but they often feel disempowered because they do not know enough and do not have enough information on which to base decisions. We have argued that they should have more information about how much of their energy bill goes on environmental taxes and charges, so that they know what proportion of their bill relates to renewables obligation certificates, the carbon emissions reduction target and the European emissions trading scheme. The Government blocked an amendment that would have allowed that, and we remain disappointed that they do not seem to want consumers to have more information.
New clause 16 is on a separate issue: it would require energy companies to state on people’s energy bills the volume of CO2 emitted in generating the energy for the consumer in the period in question. If the consumer bought green electricity only, the figure would be zero, but if the electricity was generated from coal-fired power stations or came from elsewhere, a much higher figure would be given. That would enable the consumer to say to their supplier, “I want to switch to a company that will produce less CO2.” The figure will, almost by definition, be a bit of an approximation, as we cannot expect the amount to be worked out to the hour for every consumer, but it would mean that suppliers consulted the people who generated the energy, and looked at the sources from which the power was generated over a period. They would then produce a total figure, which could be divided by the number of consumers. That would give the consumer information enabling them to make an informed choice.
Of course, if the measure were taken forward, there are issues that would need to be addressed. For example, how would nuclear be assessed? Would the whole lifetime carbon costs of any construction be considered, or would we consider only the carbon produced in the course of generation? How would energy transported to this country through the French interconnector be assessed? However, those questions do not detract from the valuable contribution that the measure would make to enabling people to make informed choices. We want people to tackle waste and improve the energy efficiency of their homes. We should actively seek to make people do more in those respects, and to make them switch to less polluting electricity suppliers, but at the moment, unless they have a purely green supplier, they simply have no idea of how that is to be done. New clause 16 is a simple measure that would make such a switch possible.
We should not say that the measure is too complicated, because Tesco announced yesterday that it would set out the carbon footprint for 30 of its products as a prelude to doing so much more widely. If that can be done for a packet of beans, a punnet of strawberries or whatever is on the Minister’s shopping list for when he sits down to watch the football match tonight, it can be done for electricity bills, too. I hope that the Minister takes that point. On smart meters, I give him one and a half cheers for recognising that a provision addressing the issue should be included in the Bill, but there is still disappointment about the fact that he has not gone further.
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