Consulting engineering firm Encraft’s managing director Matthew Rhodes on the steps Ed Davey should take as the new energy secretary
In any organisation, change at the top creates opportunities for at least a few tweaks to strategy. So here are suggestions for three things the new secretary of state could do to increase the effectiveness and impact of DECC.
1. Start small, if you want to deliver on green economic growth
DECC faces massive challenges. It is tasked with transforming and modernising the UK energy system, increasing security of supply and securing Britain’s future in the emerging low carbon global economy, all while maintaining the quality of our environment.
Unfortunately DECC has a history of over-reliance on the big six utilities, and designing policies which lock government into this market structure. This slows down the pace of change and results in higher energy prices and fewer jobs created.
I hope Ed Davey will encourage a dynamic, open marketplace for thousands of smaller integrated construction and energy businesses, close to their customer base. Small businesses grow faster, innovate and adapt more quickly, and also create more wealth, spread more equitably across the economy and country.
If he really wants to deliver on the government’s green agenda, DECC needs an immediate review of the Green Deal and ECO with a view to making sure they will genuinely create a competitive and innovative marketplace populated by many thousands of SMEs.
2. Introduce more imaginative approaches to consumer protection
The challenge when markets have large numbers of small businesses, all innovating and desperate to compete and survive, is that it’s much harder to control.
The key here is to be more imaginative, promoting consumer empowerment rather than protection. With more incentives for individuals to take responsibility for making sure they get quality work, DECC can refocus its time on helping educate people as strong and informed investors. Thankfully, Ed Davey arrives at DECC straight from his previous role as Consumer Minister, so I think he gets this.
I hope he drops the word ‘consumer’ altogether in all DECC policies and communications. We are asking individuals and organisations to invest in energy efficiency measures, and the country to invest in a transformed energy system, so we should treat them and think of them as we wish them to behave, as investors.
I hope he will also replace excessive focus on accrediting methods and products, with a much stronger emphasis on accrediting individuals’ skills and competence in construction and energy advice.
3. Support the establishment of a local financial infrastructure
The pace at which we can transform the energy system and economy will be set by access to competitive finance. As I discovered when I was part of the team who set up the Birmingham Energy Savers project, it is very hard to sustain a model intended to support the development of local businesses when the only finance available comes from the City in minimum tranches of £100 million and with strings attached – usually to the effect that this must be spent with larger “proven and low risk” corporations.
Instead, DECC needs to lobby actively for institutions such as the Green Investment Bank to allocate significant funding (and borrowing powers) to local green financial institutions, specialising in lending and investing only in transformational energy and environmental projects locally.
My message to Ed Davey is to embrace a vision that turns the green economy on its head, and drives change from the bottom-up – from local people, local enterprises, and local communities. It’s a vision whose time has come.