It has been reported that Energy Secretary Amber Rudd didn't support the reappointment of McDonagh, which has prompted industry concerns.
The UK's smart meter scheme has been heavily criticised and many fear that the multi-year, multi-billion pound project could end up a costly failure, despite persistent claims from the government that the programme is on track and the benefits gained will be substantial.
The smart meter rollout is set to cost the government £10.9 billion and aims to get around 50 million smart meters fitted in over 26 million households across England, Scotland and Wales by 2020. It has been estimated that the meters could bring energy savings of £17 billion.
With a number of large public sector project failures under the government's belt, stakeholders are watching closely for any warning signs that things could be derailed.
Calls for a private sector lead
Baroness McDonagh has lost her position just a few weeks after she called for the government to appoint a chief executive from the private sector to run the smart meter rollout, claiming that she feared that the programme would not be completed on budget or on time.
McDonagh said that the government was “not good” at delivering projects of this size and suggested that a private sector appointment would keep things on track. She said:
As we know from experience, governments are not good at big infrastructure projects because it's not their business.
To do these things well, you need to be doing them all the time. When a body can focus on these things with a date in mind - like the Olympic delivery - they can achieve it on time and on budget.
The government quickly rejected the call, referring to an independent review of the smart meter programme, which backed the current delivery model. However, the UK's Energy and Climate Change parliamentary committee has itself raised concerns about the project and said that it could be headed for “costly failure”.
The latest annual report by the Major Projects Authority gave the smart metre rollout an Amber rating – meaning that its delivery is feasible, but there are problems that exist.
According to the BBC, Energy Secretary Amber Rudd called Baroness McDonagh on Monday afternoon and told her that she would not be continuing in her position. However, despite the timing, McDonagh has denied she was given the sack.
In a statement on the Department of Energy and Climate Change's website, Secretary of State Amber Rudd said:
I thank Baroness McDonagh for her service and contribution to Smart Energy GB, she’s played an important role to build the organisation from its inception.
I look forward to working closely with a new Chair on the delivery of this programme, which will bring the benefits of smart meters to British households and businesses
McDonagh said in a statement:
Setting up Smart Energy GB has been an exciting and fulfilling project, and I am proud that the organisation is now firmly established and able to support millions of consumers who want to take greater control of their energy use and energy bills.
We now have a dynamic Board in place bringing together the energy and not-for-profit sectors, and I would like to thank the Board for their support as we set the strategic direction for how this important technology is made available to consumers.
We also have an extremely talented executive team in place - one of the best I’ve worked with. Already we have been able to simplify and bring creativity to a subject that the public finds deeply frustrating.
I know that together the Board and executive team will continue to build on these foundations so that the public increase their understanding of how they can use smart meters to reduce their consumption of gas and electricity, and their bills. Smart Energy GB will also help us as a country understand how we can more efficiently manage the supply of gas and electricity to homes through digitalisation.
However, despite the public niceties, a director at a Big Six energy firm told the BBC that it doesn't bodewell that two weeks after the Baroness raises concerns about the project she gets “fired”. The source said: “What does that mean for people who raise questions about the smart meter programme?”.
The latest developments build on growing fears in the industry that the government's smart meter plans face problems. Earlier this year the scheme was also slammed by the Institute of Directors (IoD), which released a detailed outline with its concerns and said that the programme should be “halted, altered or scrapped”.
Dan Lewis, senior infrastructure advisor at the IoD, said at the time that the cross-political backing for the project in Whitehall was a “conspiracy of silence” among politicians in thrall to “big ideas and even bigger budgets”. He said:
The professed aims of the Smart Meter programme are laudable, and we all recognise the benefits of reducing consumption and increasing energy awareness. But there is little credible evidence to suggest that a scheme of this size and complexity will achieve those goals.
This scheme is far from smart. The dishonourable roll call of government IT projects that have haemorrhaged vast amounts of taxpayers’ money to no discernible effect needs no further additions. Consumers will not forgive the already unpopular energy companies for a costly programme which fails to deliver and ends up making them poorer.
Without a change of direction, whoever wins the general election is at risk of overseeing a spectacular failure in the next parliament. They would be well-advised to consider a fresh start.
Experience tells me that there is no smoke without fire when it comes to these large government projects – as soon as people start pointing to problems, whilst the public sector leaders start claiming 'everything is fine', I start to get worried.