Yesterday saw the publication of a very individual report by the original political “blonde bombshell” Michael Heseltine. The title was ‘No stone unturned in pursuit of growth’. Which said it all really. Amongst the 87 recommendations in the Report were some that concerned energy. Having got passed the cartoon of Lord Heseltine lifting a stone and shining a torch under it (surely the only example of this in a serious Government commissioned report) and the portrait of Joseph Chamberlain the recommendations began to emerge. The veteran Tory heavyweight said that greater energy policy certainty was needed. Ironically this came on the same day that Energy Minister John Hayes was reputed to be throwing doubt on Government energy policy certainty.
On energy Lord Heseltine said that “as recently as three years ago, it was predicted that the lights would have gone out by now as energy suppliers struggled to meet the needs of the country. This proved a false prophecy as our gas supplies continued and the economic crisis reduced demand”. He warned that “this has not, however, avoided the problem. It has simply delayed it”.
Focusing on the key to the energy infrastructure conundrum he said that whilst “we have relied in the UK for many decades on private sector funding for our energy infrastructure – nothing I say changes that. But investment planning periods in the energy industry are particularly long. Without real certainty about the UK’s long term energy policy, private investors simply will not risk the enormous sums of capital required to build our energy infrastructure. These problems will not go away. Just as with major infrastructure projects, clear decisions are needed now.”
The Report recommended that “the Government needs to set out a definitive and unambiguous energy policy, including the supporting financial regime, to give the sector the certainty to invest.” He added to this that “the Government should initiate discussions through the Bank of England and, in cooperation with the appropriate regulators, seek one or more solutions to enable UK pension funds to invest in UK infrastructure assets. The Government should ensure that best practice applies to both public and private sector pension fund investments.”
Responding to the Report the Chancellor George Osborne said that a number of the recommendations would become Government policy. Watch this space.
The Full Report (with cartoon) can be read here.