Two allies of George Osborne have been appointed as ministers in the Department of Energy and Climate Change, prompting suggestions the Treasury is seeking to tighten its grip on green energy spending.
Matt Hancock, the Chancellor’s former chief of staff, and Amber Rudd, Mr Osborne’s former parliamentary aide, join the department after it was heavily criticised by the National Audit Office for handing out too much money to subsidise new renewable electricity projects.
The Treasury sets a finite budget for such green subsidies and has clashed with DECC previously in an attempt to drive down costs to consumers and industry.
Mr Hancock replaces Michael Fallon in the multiple roles of minister of state for Business, Innovation and Skills, for Energy and also for Portsmouth, as Mr Fallon is promoted to Defence Secretary.
Amber Rudd becomes Parliamentary Under Secretary of State for Climate Change, inheriting substantially the same portfolio as had been held by Greg Barker as Minister of State.
Mr Barker, a key Cameron ally who was seen as one of the greenest voices in government, is to step down at the next election.
Peter Atherton, utilities analyst at Liberum Capital, said the appointments suggested that the Treasury would “tighten their over-sight of DECC”.
“There is likely to be a suspicion that these two appointments represent a move by Mr Osborne to place his supporters into a key ministry. Mr Osborne has raised concerns over the pace of the decarbonisation agenda and the resulting costs,” he said.
Mr Hancock is the fourth holder of the energy minister brief in the Coalition, following stints by Charles Hendry and John Hayes, leading to accusations from Labour’s shadow minister Tom Greatrex of a “revolving door” at DECC.
Mr Hancock’s wide-ranging responsibilities include North Sea oil and gas, just days after the Treasury announced a review of the fiscal regime, and overseeing a crucial shale gas and oil licensing round to offer companies fracking rights, which is expected imminently.
Malcolm Webb, chief executive of Oil & Gas UK, which represents the North Sea industry, said that the appointment of “the fourth Energy Minister in less than two years” came at “a critical time” and called on ministers to minimise disruption.
Mr Hancock is also responsible for nuclear policy, as Britain awaits state aid clearance for the planned Hinkley Point plant, and for renewable energy deployment, amid growing concern about the scale of the government’s spending.
The NAO criticised DECC for using up the majority of the Treasury-set ‘Levy Control Framework’ budget for new green energy subsidies on eight projects that were awarded without competition.
Like his predecessor, who pledged to end onshore wind farm subsidies under a Conservative government, Mr Hancock is a critic of wind turbines on land.
He was one of 101 Conservative MPs to sign a 2012 letter declaring that “in these financially straitened times, we think it is unwise to make consumers pay, through taxpayer subsidy, for inefficient and intermittent energy production that typifies onshore wind turbines”.
He has opposed wind farms in his own West Suffolk constituency, saying he was “in favour of renewable energy but not when it destroys the very environment we are trying to save”.
Ms Rudd, a former venture capitalist, is the sister of Roland Rudd, founder of PR agency RLM Finsbury, and ex-wife of A.A. Gill, the writer and restaurant critic.
Her responsibilities include the embattled Green Deal and other energy efficiency schemes such as the Energy Company Obligation, which is in the process of being overhauled.
Mark McAlear, director of energy efficiency company EUM Group, said: "The reshuffle at DECC comes at a critical time for energy policy, particularly with crucial details still being determined and the long-awaited results of the Energy Company Obligation consultation yet to be published.
"We are concerned at the implication of these changes on policy and hope that both Angela Rudd and Matt Hancock move swiftly to help deliver the changes required and eradicate uncertainty in the industry."
Ed Davey, the Lib Dem Energy Secretary, said: "I was particularly grateful to Greg for his support on my battles on climate and to Michael, for his backing for my pro-competition approach to the Big Six.”
