David Cameron’s former energy minister has called on David Cameron to get a grip of Britain’s energy policy and put an end to the increasingly fraught coalition row over green power.
Charles Hendry, who held the position until September’s reshuffle, warned that unless Downing Street achieved a ceasefire there was a risk that “even if the lights don’t actually go out” the cost of energy bills for consumers and industry will “go through the roof”.
Mr Hendry told the Financial Times that investors in low-carbon energy are finding it more expensive to raise money against a backdrop of such acute political uncertainty. “The crunch is getting uncomfortably close,” he said.
Ahead of the prime minister’s keynote speech to the CBI on Monday, Mr Hendry urged him to use his speech to “re-emphasise that low-carbon is an integral part of energy security” and reassure investors concerned by the lack of clarity.
“Nothing drives investors away as much as uncertainty. If they have to factor in a cost for political risk, then at the least, it will drive up the costs to consumers, as it will cost more to finance the projects,” Mr Hendry said.
“At worst, it will drive investors away, denying the UK a once in a generation opportunity to build a new industrial base.”
The intervention follows a warning by Lord Heseltine the uncertainty was preventing a “wall of money” from investing in Britain.
Mr Hendry’s comments are likely to be seen as a criticism of John Hayes, the new energy minister, who has taken a strong stance against onshore wind farms.
Mr Cameron and his Lib Dem deputy Nick Clegg are trying to bury party differences in order to publish an energy bill that will lay the foundations for years of future industry investment.
But last Thursday they delayed their latest attempt to use the coalition “quad” to thrash out an agreement.
Mr Hendry said the prime minister was “brilliant” at dealing with investors and had personally intervened to secure long-term gas deals withQatarandNorway. Not only did Mr Cameron understand the role of “energy diplomacy” but he also appreciated the importance of energy policy to the UK economy overall, he added.
“The prime minister needs to take control of energy policy, to ensure that there is one settled policy agreed across the whole of government,” said Mr Hendry. “The detail of the policy is less important than the need for all departments to be able to sign up to it.”
It was frustrating that relatively small differences between coalition partners had been exaggerated into massive differences of principle, he added. In reality both parties believed in a mix of new nuclear, renewable, clean coal and gas.
Mr Hendry, who was well-regarded by the energy industry while in government, said he had been told by one “major investor” that its cost of capital had jumped from 6 per cent to 7 per cent in recent weeks.
“If that applies to the £100 billion of new investment we need in our electricity infrastructure alone, then the added cost to consumers is £1 billion a year – a totally unnecessary extra cost,” he said.
Mr Hendry warned that if investors chose to build infrastructure elsewhere it would be an “economic disaster” for the UK.
“It means that we will miss out on the supply chain opportunities which promise thousands of jobs in some of the most disadvantaged parts of the UK. Consumers would rightly be furious, as it means they will be paying more for their electricity for years to come.”
Hr Hendry said some people believed that he had not been “sufficiently political” in the role of energy minister but he argued that his non-partisan approach had created stability for investors.
“Investors want us to take energy policy out of politics. They are making investments which will last for decades, and they need to see long-term policy stability,” he said. “Otherwise their investments will go to countries which are hungrier for it.”