New Department for Business, Energy and Industrial Strategy swallows up DECC and BIS — full details and reaction

The new prime minister Theresa May has triggered a major overhaul of Whitehall. CSW has full the details on what the merger of the energy and business departments will mean for staff and policy

By Matt Foster

14 Jul 2016

The Department for Energy and Climate Change has been folded into the Department for Business, as Britain’s new prime minister Theresa May triggered the biggest reorganisation of Whitehall since 2010.

May has appointed Greg Clark, the former communities secretary,, to lead the new Department for Business, Energy and Industrial Strategy, a move that sees DECC effectively cease to exist, and some of the key responsibilities of BIS hived off to other departments.

Civil Service World has seen a letter sent by DECC’s permanent secretary Alex Chisholm to staff in his department on Thursday afternoon, confirming that all of the energy and climate change ministry’s responsibilties have been rolled into BIS with “immediate effect”. 

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Chisholm also confirms that BIS’s higher and further education and apprenticeships responsibilities are being transferred from the former BIS department to a beefed-up Department for Education, while BIS also loses its responsibility for trade and investment policy to a newly-created Department for International Trade. 

That department will be led by former defence secretary Liam Fox, who has been brought back into the Cabinet.

Chisholm — who only started his new role at the head of DECC this month — says there is a “clear and strong rationale from the prime minister for this change”, which will allow “a united focus on markets, investors and consumers”.

He writes: “We can make sure we have the 21st century infrastructure we need. Business will have a strong champion in government. Energy and climate change will continue in a single department ensuring efficient paths to carbon reduction.”

The DECC perm sec confirms that secretary of state Greg Clark’s new department, BEIS, will be based at BIS’s current Victoria Street HQ in central London, in order to accommodate the full ministerial team. 

“We can make sure we have the 21st century infrastructure we need. Business will have a strong champion in government. Energy and climate change will continue in a single department ensuring efficient paths to carbon reduction.” - Energy and Climate Change permanent secretary Alex Chisholm

For the time being, the most senior DECC civil servants will work between the current DECC office and the new home of the merged department to support the new ministers.

Chisholm says that both he and the current BIS permanent secretary Martin Donnelly are “committed” to supporting staff through the change.

“We will build on our shared values of teamwork and support for diversity as we do so,” he adds. “And I know we will all support Greg Clark to deliver his responsibilities as secretary of state.”

The two perm secs were due to meet on Thursday evening to discuss next steps, with a series of further staff meetings planned for Friday morning. The merger raises questions over which of the two departmental chiefs will formally lead the new organisation.

Meanwhile CSW understands that DECC’s current Whitehall Place headquarters, once vacated, could become the home of the new Department for Exiting the European Union, announced on Wednesday by May and to be led by longstanding eurosceptic David Davis. 

That department will be taksed with negotiating Britain’s withdrawal from the EU after last month’s historic referendum.

“Costly upheavals”

The overhaul marks the biggest change to the machinery of government since the previous coalition govenrment took office in 2010. David Cameron took a cautious approach to scrapping and rebranding departments, with his sole major change being to return the Department of Children, Schools and Families to its more traditional name of the Department for Education.

He also moved responsibility for constitutional affairs from the Ministry of Justice to the Deputy Prime Minister’s Office, and shifted oversight of equalities policy between various departments.

But the scale of May’s merger has already been questioned by the Institute for Government, a think tank looking at effective administration, and which warned that the “costly upheavals” of departmental reorganisations “rarely achieve their initial objectives”.

IfG deputy director Julian McCrae said: “The PM has clearly indicated how her government will proceed and given it the political leadership to move its agenda forward. 

“However, she has created a series of distractions with other departmental changes, which only add to the burden on Whitehall. It remains to be seen whether these changes are more successful than previous attempts at shuffling around of departmental boundaries.”

Both the PCS and FDA unions have also urged ministers to try and calm the fears of officials during the transition.

"May has created a series of distractions with other departmental changes, which only add to the burden on Whitehall" - the Institute for Government

In a statement, PCS general secretary Mark Serwotka said: “Big changes in the civil service are not unusual under new governments but they are still incredibly unsettling for staff. 

He added: “We would oppose any attempt by Theresa May’s government to use this as an excuse for more cuts and closures, and we believe the Brexit vote means the civil service will need massive resources in the coming years.”

The FDA’s Dave Penman stressed the need to reassure staff, and pointed out that departments now faced the prospect of working to a whole new set of policy priorities while stll working to spending totals set by ousted chancellor George Osborne.

“This [reorganisation] will of course raise questions and uncertainties for civil servants working in merged or re-organised departments and the government should move quickly to reassure staff,” he said.

“More fundamentally, it raises the question of whether the civil service has the right resources in the right places in order to deal with the consequences of the referendum and the new structure of government. 

“Decisions are being taken daily in departments to implement priorities decided upon in 2015, but the challenge now facing the civil service is a very different one to that imagined by George Osborne last December. 

Penman added: “The new chancellor needs to quickly reassess those priorities and undertake a new comprehensive spending review, recognising the additional capacity and capability that the civil service needs to make a success of the disengagement from the EU, on top of the day-to-day-business of delivering world-class public services across the UK.”

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