Rishi Sunak divides BEIS, creates new Department for Energy Security and Net-Zero

Ahead of a reported Cabinet Reshuffle later this week, the Prime Minister confirmed the changes on Tuesday morning (7 February) following a flurry of media reports and a refusal from 10 Downing Street to provide comments to media representatives.

Sunak has opted to split up BEIS, creating a new dedicated energy department as he promised to do during his campaign for Conservative Party leadership against Liz Truss. He has also rolled some of the business-related work of BEIS into a merged Department for Business and Trade and other parts into a new Department for Science, Innovation and Technology.

The new Department for Energy Security and Net-Zero is being headed up by Grant Shapps, its first Secretary of State. Shapps was given the Secretary role by Sunak at BEIS shortly after the Prime Minister’s appointment last October. Prior to this, Shapps, who has been an MP since 2015, has held Ministerial roles at the  Department for International Development and, more recently, the Department for Transport (DfT).

Sunak has also selected Jeremy Pocklington as Permanent Secretary. He is moving across from the Permanent Secretary post at the Department for Levelling Up, Housing and Communities. Pocklington has also previously held roles at BEIS, DECC and HM Treasury. Climate Change Committee chief executive Chris Stark has welcomed this selection, stating that Pocklington “knows the energy issues very well indeed”.

A Government statement says that the new Department has been tasked with “securing our long-term energy supply, bringing down bills and halving inflation”.

The statement continues: “The move recognises the significant impact rising prices have had on households across the country as a result of Putin’s illegal war in Ukraine, and the need to secure more energy from domestic nuclear and renewable sources as we seize the opportunities of net zero.”

There is little information on how, exactly, the Department will do this at this stage. However, the language in the final sentence implies that Sunak may well be heeding the warnings made by Chris Skidmore MP through his Net-Zero Review, which concluded that the UK Government’s current approach is neither sufficient to deliver steep enough emissions cuts not laid out well to reap and share the social and economic benefits of the transition. The UK Government is legally required to update its flagship Net-Zero Strategy by the end of March.

Sunak has also faced mounting calls in recent weeks to ensure that the UK remains competitive on the international cleantech stage, with net-zero targets from regions and nations now covering 91% of global GDP and with the US and EU in a green subsidy race. These calls have hailed from the Confederation of British Industry (CBI), the Energy and Climate Intelligence Unit (ECIU) and trade bodies representing 750+ clean energy businesses, among others.

UPDATE: Sunak has now confirmed junior Ministers for the new Department. Working for the Department will be Graham Stuart, who was selected as Climate Minister within BEIS by Liz Truss and retained in this post by Sunak. Andrew Bowie will be the Parliamentary Under-Secretary of State for the Department. Scottish MP Bowie has been Parliamentary Under-Secretary for Exports since last October.

The ‘B’ in BEIS

It is clear where the ‘Energy’ part of BEIS is going under the new structure. Where the ‘Business’ and ‘Industrial Strategy’ components will fall is more complicated.

Sunak has merged parts of the Department for International Trade with parts of BEIS relating to business, creating a new Department for Business and Trade. Kemi Badenoch will be the Secretary of State for this new entity. She will also retain her roles as Minister for Women and Equalities and as President of the Board of Trade.

The Government has stated that the change is intended to join up work on “backing British businesses at home and abroad”.

Other parts of BEIS’s business function and industrial strategy function will be rolled into a new Department for Science, Innovation and Technology. Michelle Donelan has been appointed Secretary of State here. She has previously held Ministerial roles relating to higher and further education, and has had brief stints as Secretary of State for Education and then for Digital, Culture, Media and Sport (DCMS).

Speaking of DCMS, Sunak is stripping out the ‘Digital’ element and has created a new Department for Culture, Media and Sport. Lucy Frazer has been chosen for the Secretary of State job – her first Secretary role adter several brief Ministerial stints since 2019, in fields ranging from transport, to housing, to finance, to justice.

A full Cabinet Reshuffle is reportedly set to be completed this week, partly with the aim of filling the Conservative Party Chair position following the sacking of Nadhim Zahawi and to draw a line under bullying investigations into Deputy Prime Minister Dominic Raab.

Read how the green economy is reacting to the announcement here.

In any case, the changes do create a setup which mirrors the departmental hierarchy pre-Therea-May, when the Department for Energy and Climate Change (DECC) existed. They also mirror the Labour Party’s setup in some ways. The Party has separate Shadow Ministers for business and industrial strategy (Jonathan Reynolds) and climate and net-zero (Ed Miliband).

The changes come ahead of this year’s Budget, due to be delivered in mid-March by Chancellor Jeremy Hunt. Hunt has notably stated that the Budget will include measures to encourage innovation in cleantech and to address looming green skills gaps.