How the on and off history of standalone energy departments reflects crises faced by the UK

Business

So farewell, then, Department for Business, Energy and Industrial Strategy (BEIS).

This pantomime horse of a government department was created by Theresa May in 2016 on the premise that it would deliver the industrial strategy the last prime minister-but-two declared the UK had been so lacking when she assumed office in 2016.

However, when Mrs May was replaced by Boris Johnson, the architect of that industrial strategy – Greg Clark – was replaced by Andrea Leadsom and his industrial strategy was similarly dumped.

BEIS has effectively been broken into three and, happily, that break-up has resulted in energy once again having its own stand-alone government department.

Given the challenges that soaring energy prices are having on both households and businesses, many will welcome that.

Same old?

The newly-created Department for Energy Security and Net Zero, to be headed by Grant Shapps, looks eerily similar to the old Department of Energy and Climate Change created by Gordon Brown in October 2008 and which was headed, with little distinction, for its first two years by Ed Miliband.

More on Energy

When the coalition government came to power in 2010, it became very much a bailiwick of the Liberal Democrats, headed firstly by Chris Huhne – the secretary of state for energy most respected by the energy industry – and then by Ed Davey.

Amber Rudd then assumed office once the Conservatives, under David Cameron, unexpectedly formed a government in their own right in 2015.

Those hoping for a coherent energy strategy for the UK will hope that, unlike last time, the Department for Energy Security and Net Zero enjoys real clout, not only in addressing soaring energy costs but also overseeing the decarbonisation of the UK’s energy system and its transition to net zero.

The trend of separating energy in an energy crisis

The new department is at least the fourth time that energy has been hived off from the broader business department to enjoy its own stand-alone Whitehall department. It is no coincidence that, on previous occasions, the UK was also in a grip of an energy crisis.

The first was when, in July 1942 and at the height of the second world war, the Ministry for Fuel and Power was created to oversee policies governing coal production and petrol rationing.

However, it gained an unfortunate reputation for ministerial incompetence under Labour’s Manny Shinwell, who had overseen the nationalisation of the UK’s coal industry.

The newly-nationalised industry proved incapable of maintaining adequate coal supplies during a particularly vicious cold snap in early 1947 and, as a result, the UK economy effectively ground to a halt. It was eventually subsumed into what later became the Department for Trade & Industry (DTI) – of which more later.

Energy was given a department in its own right for a second time by former-prime minister Edward Heath in January 1974 when, again, the sector was in crisis.

At the time, the UK – like many other western economies – was buckling with soaring energy prices in the wake of the 1973 oil shock, sparked by the attack by Egypt and Syria on Israel in October that year.

Western countries, including the US, the UK, the then West Germany, France and Japan, rallied behind Israel and, as a result, the Opec cartel of oil producers punished them with an oil embargo.

All five were pushed into recession as a result.

The other challenge for the UK at that time was a miners strike called by the National Union of Mineworkers (NUM) to maximise its leverage at a time of energy shortages.

The fourth time energy has been a standalone department

When Heath was defeated by Labour shortly afterwards, the incoming prime minister, Harold Wilson, saw fit to maintain the arrangement under two secretaries of state, firstly Eric Varley and then Tony Benn, the latter of whom proved a doughty champion of the UK’s nuclear power sector (he later became a critic of the industry).

Under them, there was also a growing focus on exploiting the UK’s recently discovered oil wealth in the North Sea, which continued after Margaret Thatcher defeated James Callaghan in 1979.

Under her first energy minister, David Howell, the government made a priority of conserving energy supplies at a time when the oil price had again been sent into the stratosphere by the Iranian revolution that propelled Ayatollah Khomeini to power.

Both he and his successor, Nigel Lawson, both championed the expansion of nuclear power but never quite delivered on the targets they had set. The department then assumed huge political importance when, under Peter Walker, it was at the heart of one of the UK’s most agonising post-war episodes – the year-long pit strike from 1984-85.

Mr Walker’s careful stewardship of the UK’s coal stocks was a major reason why the NUM, under left-wing firebrand Arthur Scargill, was defeated. The department later oversaw the privatisation of British Gas and, later, the electricity industry before being subsumed into the DTI under John Major’s government.

So the new department is the fourth occasion on which energy has had its own department.

Historical recreations

It is not the only department effectively being recreated. The new Department for Business and Trade, headed by Kemi Badenoch, looks like a recreation of the old DTI – again a department created by Mr Heath.

Formed in 1970 from a merger of the old Board of Trade and Ministry for Technology, it was broken up by Mr Wilson in 1974, only to be put back together again by Mrs Thatcher in 1983.

It was a department that enjoyed varying degrees of success, partly because an interventionist approach to business and the economy did not chime with Mrs Thatcher’s free-market instincts.

Accordingly, she installed a series of secretaries of state who shared her approach, including Cecil Parkinson and David Young. The latter, who died recently, rebranded it the Department for Enterprise in an energetic advertising campaign and, under his stewardship, red tape was cut and small business creation increased.

But the DTI’s dirigiste approach was increasingly at odds with late Thatcherism, as epitomised by Nicholas Ridley, one of her last secretaries of state at the department: “What is the DTI for? I’ve got bugger all to do and 14,000 civil servants to help me do it.”

That question hung over the DTI for many years subsequently.

It was briefly rebranded, under Tony Blair in 2005, the Department for Productivity, Energy & Industry (DPEI) until both the unions and the Confederation of British Industry began referring to it with acronyms that included ‘dippy’ and even ‘penis’.

The DTI name was quickly reintroduced and the department limped on until Brown, in June 2007, split it into the Department for Business, Enterprise and Regulatory Reform and the Department for Innovation, Universities and Skills (DIUS). Then, in 2016, came BEIS.

Another familiar face

Today’s shake-up, then, recreates a one department first created in 1942 and another first created in 1970.

The third department created today, the Department for Science, Innovation and Technology under Michelle Donelan, also looks like an attempt to recreate DIUS.

Indeed, the entire reorganisation feels rather reminiscent of what Brown did back in 2007.

The old curmudgeon may even be allowing himself a smile of satisfaction as he surveys the work of his successor-but-four today.

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