Wanted. Permanent Secretary for the UK’s Department of Energy and Climate Change. Key attributes – a thick skin, a blind eye and the ability to wield a sharp knife.
The speed with which the appointment process has moved since the resignation of Moira Wallace was announced at the unusual hour of 8pm on the evening of July 19th and the direct involvement of Sir Bob Kerslake, the head of the home civil service, are signs of the concern felt at the top end of Whitehall about what is happening in DECC and the way in which the Department has lost its way. Putting things right, however, will need something more than a change of personnel.
The quality of the interviewing panel which includes Sir David Normington, the senior Civil Service Commissioner and Lord Stern as well as Sir Bob is unlikely to be matched by the list of applicants. Whitehall’s brightest and best see the job as one to avoid. Relationships between civil servants and ministers are poor and range from the trivial – the minister who brings his dog to work – to the rather more serious issues which forced Ms Wallace to use her authority as the accounting officer for the department to rein in ministerial actions. The department has a board but it is not clear when the board was told about Ms Wallace’s departure. Civil servants don’t like to work in departments which are laughed at, or where trust has broken down. Other job vacancies across Whitehall are seen as far more attractive.
Why? Energy is an important and complex policy area. The Department has some excellent and very committed staff. What is the problem ?
The root cause of what has gone wrong is two fold.
First the strategic purpose of the department is confused. Does DECC exist to prevent or mitigate climate change, or to maintain secure supplies of energy for the UK, or to ensure that the energy supplied to households and business users is competitively priced. ?
Many departments live with a tension between different objectives and struggle to find the right point of balance. The DECC’s problem is that the objectives are contradictory and no amount of “strategy” documents and bland statements of intent can synthesize them into one workable policy.
The judgment on which of the objectives should be paramount has varied over time. When the department was established in 2008, ahead of the Copenhagen conference on climate change, global warming was all important. Now climate change, however strong the evidence, is not even fashionable enough to be feature in Danny Boyle’s Olympic extravaganza. Fashions change.
Energy security becomes important whenever Russia threatens to reduce supplies to anyone in eastern Europe or when prices start to rise dramatically. At other times, especially when supplies are plentiful, the concern recedes.
At the moment the issue dominating policy across government is the state of the economy. Energy costs are a significant part of personal and corporate spending. Across the world oil and gas prices are down and in most countries those reductions are feeding through to consumers. But not in the UK, where energy costs particularly for electricity are set to keep rising. The increases are unpopular and there is a limit to the degree of blame which can be attached to the utilities and energy suppliers. Bills are rising because of government policy. Reducing carbon emissions comes at a cost.
This is where the different objectives of DECC become incompatible.
No department can work without clarity of purpose and in this case that can only be defined at cabinet level. Without that, we will continue to have the ludicrous spectacle of a Tom and Jerry style conflict with the Treasury and a blizzard of briefings to journalists. Seen from the other side of Whitehall, the DECC has become an extension of the renewables lobby. Seen from the boardrooms of companies – including several major international businesses, waiting to invest in gas fired power generation, or nuclear, or offshore wind – the frustration about the indecision on policy is turning to indifference. Some have already walked away.
The second strand of the department’s problem is that it lacks the depth of skills to perform all its required tasks. The DECC is both a regulator and a policy making department. It has to deal with well funded energy businesses, aggressive lobby groups and of course the rest of Whitehall. Within the department far too much is being asked of a tiny number of people.
Now, under the terms of the Treasury review of spending for 2013/14, the department is being asked to identify more savings, which stretch on the worse case to a reduction of 15 to 20 per cent. DECC is not unique in this but unlike other departments it has almost no fat left. Because the regulatory functions can only be removed by repealing existing legislation, the burden of any cuts will fall on the policy makers.
At some point, if the cuts continue, the question of whether the DECC is really a viable entity will have to be raised.
Neither of these fundamental issues are solved by Ms Wallace’s departure. To blame her for the department’s problems, as some ministers are doing, is both insulting and trivial. The issues are more serious. Those brave enough to apply should seek from Sir Bob some detailed and definitive statements on the department’s role and its future.