Exorcising the ghosts of BEIS

The formation of a new energy security and net zero department has been welcomed by the utilities sector but will it actually prove to be an improvement on its sprawling and ineffective predecessor? David Blackman asks whether a standalone energy department risks being sidelined and if net zero really will be at the heart of its mandate.

Since the Department for Energy Security & Net Zero was unveiled last week, the main point of contention on social media has been about how to shorten its title.

The sheer volume of consonants in the straight acronym DESNZ sounds like a small town in Poland, making DESNEZ a likelier option.

However, outside of industry Twitter circles, the big question about the new department is whether it will be a more effective vehicle than the sprawling Department of Business, Energy & Industrial Strategy (BEIS), which is being broken up.

Instead of being subsumed into a larger department, energy and net zero will once again have a dedicated ministry, essentially the Department for Energy and Climate Change (DECC) that existed from 2008 to 2016.

The creation of the new department fulfils a commitment by prime minister Rishi Sunak, when he was running to become Conservative Party leader last summer, to set up a dedicated ministry to focus on energy matters.

Who’s in and who’s out?

One of the big downsides of any Whitehall reorganisation is the time and energy inevitably diverted into getting the new organisation up and running.

Adam Bell, former head of energy strategy at BEIS, says: “Having been through the machinery of government change, they soak up an awful lot of departmental energy and resources. You have to change the phone systems, you have to restructure and figure out who’s getting which job, especially at the senior levels.”

However many of the key personnel in the new look department will be the same.

Grant Shapps has moved across being secretary of state for BEIS to taking the same role at the new department. Two key lieutenants at BEIS will transfer across, junior ministers Graham Stuart and junior minister Lord Callanan.

In addition, all of the key energy and net zero directors-general in the new departments will be moving across, as well as BEIS’ second permanent secretary Clive Maxwell.

Josh Buckland, who worked as a government special advisor in both DECC and BEIS as well as in No 10 Downing Street during Theresa May’s premiership, says: “The same secretary of state will be leading it and the same officials will be involved, which should therefore create less disruption. People know where they stand and responsibilities are clearly allocated.

“It’s great that you’ve got a secretary of state who’s already quite experienced with advisory teams: that will hopefully also really help in terms of delivery.”

The one big new appointment, Jeremy Pocklington as permanent secretary, gets thumbs up across the board.

He was director general, energy and security at BEIS for nearly two years until 2018, prior to which he was director general of the markets and infrastructure group at DECC.

Noting Pocklington’s “long experience” in the energy sector, Buckland says: “He understands the industry well and has kind of deep experience in some of the nitty gritty, which will be really beneficial.”

Bell, who is now head of policy for consultancy Stonegate, agrees: “To have someone like that, who has significant experience of the brief, will give him a lot of credibility with the civil servants in the department.”

Ex-Tory MP Laura Sandys, who has conducted reviews for BEIS, hails Pocklington as “super intelligent” and believes that re-establishing a dedicated energy department is a “very good” move.

‘Everything was getting out of hand’

Both the stand-alone and merged set ups had advantages, says Buckland: “The big benefit of a single department is you have a wider set of ministers and the single secretaries of state focused on their agenda on an ongoing basis. That gives them hopefully a bit more time and space, given the complexity of the issues, to really focus on delivery.”

The upside of the new structure is that Shapps’ attention will be more tightly focused than it ever could be in the sprawling BEIS empire.

Ed Matthew, campaigns director at climate change think tank E3G, says: “BEIS was such a massive department that trying to get the secretary of state and the ministers to really focus on the net zero and energy agenda was harder.

“This is no criticism of the minister, it’s just kind of the reality of managing a Herculean department, which is so broad and dealing with so much different policies.”

Buckland agrees: “Grant has been dealing with all the strikes and all the labour issues that obviously distracts from the energy and climate agenda.”

“They’ll be able to get more coordination in a smaller department: everything was getting very out of hand,” says Sandys.

Bell says: “It enables the new department to be much more mission focused than the previous one. BEIS was big and clunky: it was doing an awful lot of things at once. With the best will in the world, it’s very difficult for any individual secretary of state to be across all the things that BEIS was doing, which meant that you’ve got fewer decisions.”

Chris Rumfitt, chief executive of public affairs firm Field Consulting, quips that the recent focus on energy issues means BEIS had become an “an energy department with some business policy on the side”.

“Nothing else was getting a look in, which was causing all sorts of problems. There’s lots of other business issues, controversial legislation like the EU revocation bill, that wasn’t getting proper attention.”

However across its seven-year existence, BEIS has not passed a single “significant” piece of energy legislation, says Bell: “Brexit was a factor but having a department for energy that can actually pass an energy bill will be great for the sector.”

Just having two more dedicated ministers means a greater likelihood that decisions, especially the lower profile ones, will be taken more rapidly, he says: “Just getting more decisions done more quickly is a definite plus side of the structure.”

This focus will be especially important now when energy policy is moving from the grand ambitions sketched out by May’s successor Boris Johnson to delivery, says Buckland, who is now a director at public affairs company Flint Global.

The five priorities identified for the new department provide a “very clear mandate”, says Buckland, highlighting electricity market reform and accelerating infrastructure delivery including grid connections specifically.

“It can’t be detrimental because they’re so complex, difficult and long term. Having a dedicated department that is able to focus on them a little bit more will be beneficial.”

Right call to focus on bills

Sunak’s first-year priority for the new department to tackle bills is also right, he says: “You’ve got to start making these decisions or thinking and consulting on the options relatively quickly because the time will tick down to April 2024.

“If they’re going to do something more structured like the introduction of social tariff, that will take time and we can’t just do that overnight.”

But Sandys is worried that even within a slimmed down department, net zero will get less attention than it deserves. “It’s called energy security and net zero but when you look at all the press statements, net zero seems to have less of an emphasis.”

Advocates of BEIS also argue that it was a good idea to have energy policy integrated with business in the same department.

Matthew says: “Being amalgamated with business and industrial strategy was good in that everything was being was being brought together. If you split business and industrial policy from energy, then you’re fragmenting the ability to have the joined-up policy that you need to get to net zero.”

Breaking up BEIS also risks reawakening tensions between the business and energy departments that sometimes emerged before it was established, says Bell: “There was a time under the old arrangement when BIS (the Business, Innovation and Skills department) was actively briefing against DECC.

“That might make a comeback, especially given that (new business and trade secretary of state) Kemi Badenoch was the last of the leadership candidates to commit to net zero during the Tory race.”

Buckland agrees that it will be “slightly more complex” now to manage debates about the costs of climate reduction policies on businesses.

Another lesson for many from DECC’s demise was that the department was a minnow in the Whitehall jungle.

However the way both energy and net zero has risen up the agenda means that there is less risk that the new department will lack clout, says Buckland: “Now that net zero is a core government priority across the board and there is a really consistent focus on it, it feels less of a risk than it has been in the past. It will be something that has to be navigated but feels manageable.”

The policy context has changed since the government’s 2020 adoption of the 2050 net zero emissions target, he says: “That’s really critical and I think that whoever is secretary of state has a stronger voice.”

Rumfitt agrees that the context has changed fundamentally since 2016.

“The war in Ukraine massively pushed energy security up the agenda where it should have been anyway.”

“Energy security, and the climate emergency are now two of the biggest public policy priorities so I don’t worry about it not being a heavy hitter,” he says, adding this was not the case when DECC was created by Labour and that it subsequently suffered as a result of being under Liberal Democrat leadership during the coalition government.

“It will be stronger at the Cabinet table: the issues are too big.”

The new secretary of state will add to the new department’s clout, Bell says: “Grant Shapps is one of the few big beasts left in the Tory government.”

Sandys agrees: “It’s now politically more important and Grant is quite a big voice in government so I don’t think he’s going to get marginalised.”

Taking on the Treasury

There is though a risk that splitting up BEIS will make it easier for the Treasury to handle the successor departments, says Matthew: “It makes the secretary state for each one of those departments weaker than the original secretary state for BEIS so it’s not such a big beast and as a result strengthens the hand of the Treasury.”

The flipside of this coin though is the potential to create a strong and dedicated champion for net zero within government, he says.

Having a minister with net zero in their job title at the cabinet table should also make it easier to coordination action in this area across departments, says Buckland.

In addition, the Treasury itself now has a much bigger team working on net zero issues, he says: “That will hopefully ensure there is an alignment between what they can do and how they can support a more emboldened department.

“There’s still a big job for Number 10 and the Cabinet Office, obviously in coordination with the Treasury, to help with that coordination in other departments.”

And having a co-ordinating department won’t overcome some of the “fundamental governance challenges” around delivering decarbonisation where different departments’ objectives point in different ways, says Bell.

The nature of the highly centralised British state means this co-ordination will only work if there is leadership from the top of government, argues Sam Richards, CEO of recently established growth campaign group Britain Remade.

“The most important things are underlying policy changes and whether the centre is firmly behind them,” he says.

Matthew agrees. “That is only going to work if there is leadership from Number 10 and Rishi Sunak to absolutely ensure that net zero is built into the genetic structure of the entire government machine.”

Despite last week’s shake-up, concerns linger that climate change is not a top priority for Sunak, says Matthew: “When he laid out his people’s priorities at the beginning this year, it didn’t involve taking climate action and building a net zero economy: it’s not top of his mind.”

But Richards, who is heartened to hear that chancellor of the exchequer Jeremy Hunt is looking at moves to speed up planning for offshore wind and nuclear ahead of next month’s Budget, says: “Fundamentally, what really matters is if you’ve got the centre firmly behind getting something done.”

Delivering on policies like these will ultimately be more important than the exact makeup of Whitehall departments, he says: “If you’ve got a prime minister who’s willing to spend political capital on it and a chancellor willing to spend political capital, but ideally actual capital, then that really is what’s fundamental rather than the names of the doors on different departments.”