Hit the DECC

Reports are coming in that the Energy Secretary has submitted and agreed her department’s level of spending cuts as part of the Chancellor’s Comprehensive Spending Review. The final details will be set out on 25th November. But the fact that spending plans have been agreed and that the ‘reset’ speech will take place later this week means a revised energy policy is starting to take shape.

Ultimately spending reductions will result in job cuts at a department that has always felt under-resourced at the best of times. 200 voluntary redundancies are already planned for the department. Meanwhile similar level cuts at the Department for Business, Innovation and Skills (BIS) will continue to fuel rumours that both departments may be rolled into one. The benefits of such a move are still up for debate. One former DECC civil servant has said that from his experience, it would a bit like moving the deck chairs around on the Titanic. With Amber Rudd stating her focus is energy security, there may be a better time to focus on civil service reorganisation.

The level of cuts that DECC has to make will be disproportionally tougher than many other departments have to bear. The reason being that nearly three quarters of the DECC budget is ring-fenced for legacy issues, such as nuclear decommissioning. The fact that such a large proportion of the DECC budget cannot be touched puts immense pressure on the remaining budget. Green Alliance analysis suggests that DECC’s non-ring fenced budget could fall by as much as 90% by 2018-19. This is why serious questions remain over the future of CCS, energy efficiency and smart meters. Although some commentators err on the side of caution, insisting that this will not result in radical change, just a reorganisation. An example of this is being the responsibility of CCS being moved into the Oil and Gas Authority (OGA). Nonetheless, there is no denying the sheer economics and ultimately there have to be some losers and some winners. It seems that the Energy Secretary has made her mind up.

Douglas McIlroy

Hill & Knowlton Strategies Search