Shapps appointed BEIS secretary; Coffey returns to Defra

Grant Shapps has been appointed as the new secretary of state for business, energy and industrial strategy (BEIS), while Thérèse Coffey has been named environment secretary.

It is the third Cabinet position Shapps has held in the past two months, having been sacked as transport secretary by Liz Truss on 6 September, only to be brought back into her government as home secretary last week. In Rishi Sunak’s reshuffle on Tuesday (25 October), Suella Braverman was re-appointed to that role, with Shapps moving to BEIS. He has also previously served as housing minister and co-chairman of the Conservative party.

Coffey has also held a number of Cabinet role since the start of September, having been work and pensions secretary under Boris Johnson before filling the positions of health secretary and deputy prime minister during the short premiership of her close political ally, Liz Truss. She returns to the Department for Environment, Food and Rural Affairs (Defra) where she worked as parliamentary under secretary of state and then minister between 2016 and 2019.

The resignations of Jacob Rees-Mogg and Ranil Jayawardena as secretaries of state for BEIS and Defra respectively were submitted shortly after Sunak was appointed as prime minister, with both having served for less than two months.

Despite his short term in office, Rees-Mogg made his impact felt, sparking concerns across the energy sector over the “extensive new powers” he sought as part of the Energy Prices Bill. These would give the secretary of state a right to intervene in areas such as the price cap and in modifying licences.

The Bill, which also includes a revenue cap on low-carbon generators, will be debated again this week having been savaged by peers last week. Yesterday, a group of energy company chief executives and Energy UK warned of “catastrophic consequences” if such a “de facto windfall tax” was implemented and urged the new administration to pause the work to consult on the design of the scheme.

While less high profile, Jayawardena also sought to make his presence felt with a headline-grabbing pledge to increase the maximum civil fines the Environment Agency can levy 1,000-fold, to £250 million. His resignation letter cited his tough stance on water companies including meeting chief executives to “give them their report card” on his first day in office.

Comment by Utility Week editor James Wallin

Since the 2050 net-zero target was enshrined into law in June 2019, there have been six secretaries of state for BEIS.

While Greg Clark only just managed to reach this landmark moment, he had by far the longest tenure – heading the department for three years. Kwasi Kwarteng’s 18 months was also a respectable innings (coming on the back of a similar amount of time as energy minister) but Andrea Leadsom and Alok Sharma both lasted less than a year and Rees-Mogg didn’t even make two months.

Given the mantra throughout this time has been for clarity on policy direction, this constant shuffling of the pack and the need to provide endless platforms for political ambition can only be detrimental to progress.

Rees-Mogg, while gone in the blink behind a monocle, certainly left his mark, managing to alienate an impressive swathe of the energy sector with a rushed and ill-conceived proposal for capping the revenues of low-carbon generators.

The Energy Prices Bill, and the potential for unintended consequences on the investability of the renewables sector, should be top of the in-tray for Grant Shapps. The legislation received just three hours of Parliamentary time in its first passage through the House of Commons – woefully inadequate given its complexity and reach. The Cost-Plus Revenue Cap must be reconsidered so that it can be implemented in a way that does not penalise investment in low-carbon generation in favour of oil and gas – a perverse stance in 2022. Meanwhile, the powers the Bill casually transfers to the secretary of state, which would undermine a regulatory system praised throughout the world, need to be rescinded before the Bill progresses any further.

The choice of Shapps to replace Rees-Mogg seems on the face of it to be a sensible one. He has spoken of our responsibility to future generations to drive forward the energy transition, and has been quoted as saying: “For decarbonisation, we want to be the pilots, not the passengers.” These are all laudable statements but Shapps will be judged by how he delivers on them.

Meanwhile, the civil servants at Defra will be welcoming back a familiar figure in Thérèse Coffey, who spent three years in the department. It seems unlikely that there will be any softening in the stance towards water companies so expect more promises of big sticks and stretching targets. But hopefully with a clear understanding of the issues and the people involved, Coffey can put aside some of rhetoric to have a grown-up conversation with the sector about how industry, government and regulators can work together to tackle common challenges.

At Utility Week Forum on 8-9 November, we will debate the message the sector wants to send to the new government. Find out how to join the discussion here.