Who will get burnt in the Boris bonfire?

The new prime minister’s unassailable hold over parliament and his party is likely to pave the way for a dramatic policy overhaul. An impending reshuffle - which could spell the end of BEIS - will be followed by a flagship Budget, where the government could unleash a torrent of infrastructure spending. David Blackman examines where decarbonisation is likely to sit within these plans and how the sector may be affected.

It is hard to recall a time when a prime minister had as much political leeway as Boris Johnson possesses now.

Having already dispatched his internal Conservative critics before the election by stripping the whip from those who defied his Brexit stance, the prime minister’s Parliamentary opposition has been emasculated by December’s poll.

And unlike in the days of even Tony Blair or Margaret Thatcher, it is hard to see any rival sources of power within the government, including the Treasury, which traditionally forms the main counter-weight to No 10 Downing Street.

“There’s never been a chancellor who has been owned to this degree politically,” says Giles Wilkes, former special adviser to prime minister Theresa May on business and energy issues.

“The bodies of his enemies are strewn across the battlefield.”

He was speaking at an event at Energy UK’s headquarters, one of two held last week that explored the implications of this dramatically altered political landscape for the energy sector. The other, held at the Institute for Government thinktank, focused on the case for reviving DECC (Department of Energy and Climate Change).

Dominic Cummings, Johnson’s most senior advisor, would clearly like to use December’s thumping election victory to carry out the wide-ranging overhaul of government that he has dreamt about for years.

Post-Christmas Whitehall briefing suggested that this would involve a reorganisation of the department for business, energy and industrial strategy (BEIS) department, which could see energy and climate split off once again into its own ministry.

The prospect of a reborn DECC clearly excited its former secretary of state, Sir Ed Davey, at the IfG event.

Keeping BEIS intact runs the risk of decarbonisation being underplayed by its own sponsoring department if and when conflicts around shorter-term business issues crop up during the upcoming EU trade deal negotiations, he says:

“This year will be all about the battles and trade-offs within BEIS because BEIS will be worried about getting the trade deal over the line, so the trade-offs will be within a government department and will not be transparent.”

Joined-up thinking

An advantage of creating a dedicated net-zero department – as Davey suggests it should be called – would be that it could take over those responsibilities for climate change adaptation, such as flood defences, which the department for environment, food and rural affairs (Defra) currently has control over.

“It would have more credibility if the department also had some hefty delivery and change responsibilities itself,” says Moira Wallace, who was the first permanent secretary at DECC.

But Guy Newey, who advised both Sir Ed’s successor Amber Rudd and ex-BEIS secretary of state Greg Clark, disagrees with reviving DECC.

He warns that the disturbance resulting from a departmental shake-up risks “handicapping” the drive to tackle climate change just at the time when the political circumstances for delivering it have never been better.

“There is a risk that it gets worse by changing the nameplates and focus.”

Angela Francis chief advisor of economics and economic development at WWF, told the IfG event that political will matters more than departmental structures.

“You shouldn’t put too much store on structures and put more on who is in charge.”

Angela Hepworth, lead on energy policy and regulation of EDF Energy, says bringing energy and industrial strategy together has resulted in benefits.

While previously the transition to a lower carbon future had been largely viewed in terms of costs, it is now increasingly seen as a source of business opportunities.

“Too often people had only talked about the costs of climate change. We saw with BEIS a new narrative which is something we need to preserve.”

And the need for strong co-ordination from the centre of government on those issues that sit outside BEIS, like transport and housing, mustn’t be ignored, according to Hepworth. “Tackling climate change is an economy wide issue. You need something with a strong driving force in the centre of government holding other departments to account and sorting out some of the tricky issues that cross departmental boundaries.”

The enormity of the change required to deal with climate change means that some form of cross government working will be required, acknowledges Wilkes, who has become a specialist partner with consultancy Flint.

“Let’s hope they find ways of working together.”

Spending taps turned on

Once the mooted reshuffle, attention will swiftly turn to next month’s Budget, the first since the government adopted its 2050 net zero target last summer.

Initial signs have not been hopeful. Decarbonisation was not included on the list of spending priorities in a letter circulated around government by chancellor Sajid Javid last week, in which he asked departments for ideas on how they could make five per cent savings.

The key will be for spending to match the new government’s priorities, such as science and infrastructure investment to “level up” the divides between the south and the less economically buoyant parts of the UK, Mo Hussein, director of public affairs at agency PLMR told the Energy UK event.

“The spending taps have been turned on but only if you are a new MP north of Birmingham.

“2050 is a long way away. The focus will be the next four years and it is infrastructure spending that will take the priority,” says Hussein, who advised Rudd when she was at DECC.

However, efforts to cut emissions can be aligned with the government’s regional development agenda. Johnson personally trumpeted wind turbine manufacturing taking place on the Humber in his speech at this week’s launch event for the COP 26 summit.

Investment in regional transport improvements could also tick boxes for the net-zero agenda, insists Sam Hall, director of the Conservative Environment Network

“Provided transport improvements are made with net zero in mind that is a big opportunity as well.”

He argues that climate change policies can be tailored to appeal to those new and less affluent Tory voters, who tend to be more worried about the cost of living than saving the planet.

Energy efficiency is an example of one such policy, Hall says: “It will require government support to bring those costs down but there is potential for being bullish on energy bill arguments that will hopefully appeal to those northern voters the party needs to keep.”

Similarly, allowing onshore renewables back into the contracts for difference auction process could also help to cut electricity bills.

But not all decarbonisation efforts will fit into this “win win” box, Wilkes warns, pointing to the hard spending choices that the government will face if it wants to get the next phase of the civil nuclear programme off the ground.

“It (nuclear) tends to get built with state support. You need to do either extremely different things like the regulated asset base model or you need state support.”

But here he said the recent change of the guard from Phillip Hammond to Javid, who is more favourable to infrastructure spending, could be “absolutely crucial”.

While the “immediate” response from the Treasury to any proposal for extra support for nuclear had been to identify savings elsewhere, Wilkes expresses optimism that there is a “more open minded” approach now.

And the opportunity exists in the run up to the COP26 climate conference, especially after this week’s faltering summit launch, to hopefully deal with some of these “long running gaps” in policy,

Hall says: “The government recognises that its record on climate is under significant scrutiny.”