The day before Utility Week was scheduled to meet former energy minister Charles Hendry, the news broke that he would not be standing at the 2015 general election. Time to rethink what I was going to ask.
After negotiating the airport-style security at Portcullis House and being led through a rabbit run of parliamentary offices, I finally find myself sat opposite energy’s Mr Nice Guy. He warmly welcomed me into his third floor office and I ask the question that has been burning away for the previous 24 hours: why is he leaving Parliament?
Hendry says: “Do I want to be doing this when I’m 61 ? I thought actually there is a lot of things I’d like to do instead.” He adds: “I think Parliament is changing. You are going to get many more people who have a business background who come into politics for 15 to 20 years and then go off and do something else afterwards.”
What will Hendry do next? There is likely to be a long queue of potential suitors at the door of the Wealden MP when he leaves Westminster for the final time. “I love energy,” says Hendry, “once you’ve got it in your blood, it’s quite hard to get it out.”
When pressed, Hendry won’t be drawn on specifics. “I’m certainly keen to stay in the sector,” he confirms. “I can now be clear to people – know I’m leaving Parliament in two years’ time and therefore it gives me time to plan that transition.”
Transition. Hendry is a man who knows about transition. When he entered the Whitehall offices of the Department of Energy and Climate Change (Decc) back in May 2010, he was given the task of plotting the energy sector’s transition from one stuck in the 1960s to one fit for the 21st century – via the Energy Bill. However, the passage of this “transformative” piece of legislation has not been as smooth as he had hoped.
“I wish we could have moved faster,” Hendry laments. “If somebody had told me back in May 2010 having just being appointed as minister that the Energy Bill would not be through Parliament three-and-a-half years later, I would not have believed it. I would have said it would have been through in two.”
This, Hendry ponders, has affected investment despite Decc’s reassurance. He adds that industry fears need to be calmed with legislation rather than more rhetoric: “What industry needs is to be absolutely clear this is going to be the formula and the structure moving forward, and that’s what they now want
finality on.”
Hendry says a consensus on the Energy Bill would provide confidence for investors, but it will be reached only once the Bill has made its way through the report stage in the House of Commons. The key topic for debate among MPs is the decarbonisation target. As it stands, the Energy Bill will allow the energy secretary to set a decarbonisation target for 2030 no earlier than 2016, but some MPs want this to be set by 2014.
Energy and Climate Change Select Committee chairman and Conservative MP Tim Yeo has tabled an amendment to the Bill which would force the government to set a target by 2014. Some within Westminster believe Hendry backs the change, despite declaring he is not going to sign any amendments to the Bill. He says: “I think that having been involved in drafting it, I don’t think that feels right.”
As to whether he would vote in favour of Yeo’s amendment, a simple yes or no is not forthcoming. Hendry says he is “undecided”, although he hints he leans towards a “no” vote unless there are substantial technological developments. “Targets that don’t have roadmaps are pretty pointless,” he says. “The challenge for decarbonisation is that we don’t know what the main drivers can yet deliver. We are at a point where we are trying to set a target without knowing how we get there, and I don’t think that’s good.”
However, Hendry warns his former colleagues in Decc: “Government needs to make stronger statements about how industry is going to look post-2020 if we are going to get the investment needed. Otherwise a decarbonisation target becomes quite important.”
That investment is all the more important for a section of society that Hendry does his part to champion – the fuel poor – because he is the president of the National Energy Action (NEA) charity. Insulation and energy efficiency are king in this arena. “It’s not just about paying bills, it’s physically cutting the size of the bills every year,” he says.
Decc estimates that the number of households in fuel poverty will hit 8.1 million by 2016 despite the current energy efficiency measures in place. This rankles with Hendry, who again says he wishes Decc could have moved faster to encourage investment, adding that having new plant in place would help to reduce energy costs. “I think the only way you’re pro consumer is by creating an environment which makes business want to invest here,” he says.
Despite these figures, Hendry say the UK energy model has “delivered the cheapest electricity and gas prices for a couple of decades across Europe”. Almost as an aside, he adds that he wants to see more competition from independent players, but Ofgem’s work on tariff simplification and transparency should help deliver this.
For consumers to benefit from the low unit price of energy, more needs to be done to boost British housing stock’s energy efficiency, because previous policies have bewildered people. “The way we have now developed things like the Energy Company Obligation (Eco) makes it clear to industry what their obligation is,” says Hendry. “The development of the Green Deal again shows how you can have a programme you can roll out across the housing stock in a more understandable and predictable way.”
The energy efficiency advocate then springs to the defence of the levy all electricity bill payers face to fund Eco. “Although much of this is about heat rather than electricity, everybody has electricity. So if you want to give help to people who are off the gas grid – which is some millions of people – then doing something on gas doesn’t help them. Doing things through the Eco was the better way of giving help to those who need it most.”
Finally, Hendry ponders what his energy legacy will be. After a pause, he says: “The ultimate legacy is if the lights stay on.”
This article first appeared in Utility Week’s print edition of 12th April March 2013.
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