Thatcher’s legacy and the Energy Bill

Looking back to another age for energy policy was evoked last week by the death of Lady Thatcher. In all the discussions about her long premiership, the key theme was change and one of the main examples given was the transfer into private ownership of our gas and electricity industry. How long ago does it seem that we were implored to "tell Sid"? When our infrastructure was state owned and run by "Boards".

It was a time when energy ministers had the major say in how our gas and electricity industry was run. It was a time of certainty and high investment to be sure. It was also a time of massive research and development. It was an industry with a public service ethos. Perhaps where things weren't so rosy was in terms of the efficiency. When the purse strings were loose, home produced coal plentiful and North Sea gas coming on stream; the only issue was ensuring the workforce in the supply chain kept on going.

The issue was really around stopping strikes. That was what energy security meant to an energy minister. Indeed the first Energy Minister, Patrick Jenkin (now Rt Hon Lord Jenkin of Roding), was brought into the Cabinet just as the miners were signing the death warrant of his Government under Prime Minister Ted Heath. Ironically it was this area of energy that precipitated the arrival of Margaret Thatcher as Heath's power ebbed away.

It remained the key feature of energy policy well into the 1980s but other ideas were brewing. A new energy policy was about to emerge. What Ed Milliband was to call the "Lawsonian consensus" (after Lady Thatcher's second Energy Minister Nigel Lawson). This consensus announced the end of state ownership of gas and electricity infrastructure and assets. They were to be "let free". The result a decade or so later was a denationalised industry and within a few more years the structure we have today.

But that is all about to change. Electricity Market Reform (EMR) coming via the Energy Bill (currently before Parliament) will make a few dents into that free market. The primary reason being to deal with climate change by reducing carbon emissions but the political imperative is the same as it has always been - energy security. It was what kept Patrick Jenkin awake at night all those years ago and kept Peter Walker (Energy Minister during the famous 1980s miner’s strike) very busy in the mid-1980s.

Then it all changed and by the time the new Labour Government came in under Tony Blair energy policy was no longer at the heart of affairs. The Cabinet post had already gone with John Wakeham, its last holder. He was mainly focused on cross-government Prime Ministerial policy enforcement under John Major. The energy part had diminished.

So under Labour successive energy ministers left energy to the market as overseen by Ofgem. All the time North Sea gas kept running through the pipes and led one distinguished Energy Minister, the late Malcolm Wicks, to observe that we were "awash with gas". It was Wicks along with John Hutton (the then Trade and Industry Secretary) who got energy back on the agenda and at the forefront of the Prime Ministers mind. The first time that this had really happened since Lady Thatcher’s leadership.

The result was a succession of Energy Bills and Ministers. The then Shadow Energy Minister Charles Hendry used to observe that he had seen at least five ministers come and go in his time. He also said that a bit of certainty and continuity would come with a Conservative government. He came to office and then came the EMR and now the Energy Bill to deliver it. However, the churn of energy ministers so criticised by Mr Hendry seems to have got started again.

After a period of certainty all was unsettled last September as the Energy Bill got under way. Mr Hendry left and was replaced by the right winger John Hayes. The speedy stallion that was energy policy at a moment of change made changing horses a bit awkward and Mr Hayes may have slipped a little in the transfer. Things certainly got a bit heated in DECC.

Then a couple of weeks ago a little Easter present was bestowed on the energy industry with Mr Hayes going off to do a role not unlike Mr Wakeham's two decades earlier. He has become the Prime Ministers ‘Mr Fix It’ man, particularly with his unruly Party colleagues. The new Energy Minister is another political heavyweight Michael Fallon. This time he will be keeping an eye on two portfolios in two departments, DECC and BIS. A difficult job. Mr Fallon has great political skills having played a major role in defending the Conservatives in the media as Mr Cameron's Party Deputy Chairman. This new cross-government position is a reward. It is perhaps not an accident that he has two Lib Dem departmental bosses Ed Davey and Vince Cable. However, his real boss is the Prime Minister himself. This and a clear understanding of the importance and business opportunity of innovation are our consolation for the continuing change.

So have things really changed in terms of energy policy since the days of Lady T? Certainly in many ways they have but in terms of the political imperative guiding it they haven't. That is, as it has always been, energy security. Now it is about diverse sources, something that means the networks become ever more vital. Before it was about stopping strikes and keeping the coal supplied to power stations. So in real terms as Dame Shirley Bassey once sung "it's all just a little bit of history repeating".


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