Thu, 30 June 2022

Newsletter sign-up

Subscribe now
The House Live All
Economy
By Tom Sasse
Environment
Environment
Energy
Energy
Press releases

Greg Hands – a man for a crisis

Greg Hands – a man for a crisis
Tom Sasse

Tom Sasse

9 min read

Greg Hands has been appointed energy minister during the biggest global energy crisis of the last fifty years. But as he tells Tom Sasse, he’s not daunted by the challenge.

Greg Hands isn’t the only former burger-flipper in Parliament. “There’s at least 4 or 5 MPs who worked for McDonald’s… me, Tracey Crouch, John Leech, who’s not here any more…” he tells The House when we meet in his 7th floor Westminster office overlooking Parliament Square. Hands is surely alone, however, in having served his time at the grill at the Bahnhof Zoo branch in West Berlin in the late 1980s - where he moved as a 20-year-old student seeking adventure.

While he’s “not used [his] burger skills much since”, he credits McDonald’s with teaching him about “how business works, teamwork, automation, efficiency, customer service” – as well as understanding Germany and helping with his language skills. The only downside was that the job was “not very varied”.

That’s not a problem in his current role. Hands was appointed energy minister in September last year, at the beginning of the worst energy crisis since the 1970s. Oil and gas prices surged last year, driven by a “perfect storm” of factors which resulted in booming demand and limited supply. Russia’s invasion of Ukraine deepened the crisis, prompting searching questions about energy security across Europe.

The squeeze on prices – when we speak in May, Hands notes gas is still “three or four times the 25-year historic average” – has been so extraordinary that it has become the dominant fact in our politics, spurring inflation and a wider cost-of-living crisis. And it shows little sign of easing. While his department is “not in the business of producing forecasts”, Hands admits “sustained high energy prices is a likely scenario.”

The immediate pressure is rising bills. On the morning of our interview, the CBI and TUC have warned the Chancellor he “must help the hardest hit now”. A £22 billion package from March has quickly been swallowed up, and there are ongoing debates within government about how quickly and generously to act, with rumours about tax cuts and extra support through the Warm Homes Discount.

At the time of our interview, Labour has focussed on pushing a windfall tax on the huge profits made by oil and gas companies – and around a week later, Rishi Sunak implements it. While he says the companies’ profits have been “very large” this year, Hands argues the key lesson from Ukraine is that we need investment in UK gas and renewables, and points out George Osborne reversed his windfall tax after a year due to the impact on investment.

The reference to his former boss is a reminder that Hands is something of a political survivor. The MP for Fulham and Chelsea, one of the wealthiest constituencies in country, he was an Osborne protégé whose rapid rise through government was knocked off track by the Brexit vote (he was a prominent Remainer). Following stints in the Treasury and the Whips’ Office, Hands had been promoted to the key cabinet role of Chief Secretary to the Treasury after the 2015 election. In an alternate political universe, he was in line to become a big beast in an Osborne ministry.

He is an atypical minister in Boris Johnson’s post-Brexit government. A Europhile since his West Berlin days, he speaks five languages, has a German wife and is unapologetically intellectual in his references, drawing on a background as a historian. Following his demotion under Theresa May (and some time on the backbenches after a principled resignation over a planned third runway at Heathrow), he’s kept his head down and found his way back to one of the most interesting briefs in government.

“It’s a massive job… I basically do what used to be DECC, which had four ministers in it,” he says – though he is helped by the fact that Kwasi Kwarteng, his boss, held his role previously. “The challenge is that it’s a combination of thinking very long-term, big and strategically but then there’s also lots of very short-term things coming at you like the crunch in retail petrol prices, the gas price spike, Storm Arwen. You have to be on top of both at once”.

He calls net zero the “biggest long-term issue” facing the country, arguing that governments don’t typically set (or meet) such long-term targets: "JFK wanted to put a man on the moon by the end of the decade … Britain started planning to build up… the Royal Air Force for World War Two in 1935... here we’re looking [at] 30 years, I will be 85 in 2050."

BEIS is at the heart of this agenda. It is responsible for the energy system and engineering a transition to renewables that will allow the whole economy to decarbonise, including huge issues like switching heating and transport away from fossil fuels. It also has a broader responsibility for coordinating net zero action across government.

The government is bullishly ambitious on renewables – in the British Energy Security Strategy, published following Russia’s invasion of Ukraine, it upped its target to 95% of electricity from low-carbon sources by 2030. Offshore wind has been a notable success story, but even there the UK faces a steep challenge to meet very rapid deployment targets as countries around the world are looking to buy turbines.

There was some criticism for appearing to shelve proposals to rapidly expand onshore wind following opposition from backbenchers. Hands insists it is a big part of the government’s plans, citing polling which shows “people support onshore wind… often even when they’ve had it near them,” though he admits this “isn’t universal”. “We want to take communities with us”, he says, and the government will be looking to develop local partnerships with enthusiastic communities, which could see them sharing in the benefits through lower bills – an approach which appears to align with Michael Gove’s thinking on planning reform.

There is also a big shift towards nuclear. The UK has historically struggled to get plants built since moving away from nuclear in the 1980s, but the government wants to turn this around and build “the equivalent of one nuclear reactor a year instead of one a decade”. It has positioned nuclear as a key part of Britain’s energy future, calling for it to meet a quarter of demand by 2050. But there are questions about how the current government will succeed where previous governments have failed.

Hands is known for enjoying going on the political attack, and here he hits out “a lost decade on nuclear under New Labour” and the Lib Dems’ “unreasonable opposition to nuclear, which made life hard during the Coalition”. He also complains about current opposition – the Lib Dems and the SNP both opposed the second reading of the Nuclear Energy (Financing) Bill – calling on Ed Davey to reconsider his party’s position if its serious about tackling climate change.

Nevertheless, he’s optimistic the current government will succeed in “getting on with it” and points to the role of a new delivery company (Great British Nuclear) in “moving things along more quickly”. The challenge will be securing sufficient domestic investment – the government has spent months unpicking Chinese investment in projects like Hinkley, Sizewell and Bradwell after Boris Johnson’s decision to ban it on national security grounds. Asked whether the UK was perhaps too relaxed about Chinese investment, he replies it’s “good that Hinkley is being built”.

Previous governments focused on “big Gigawatt plants” – which have often proved hard to approve, finance and build– but the current government wants to major on new technologies like Small Modular Reactors (SMRs) and Advanced Modular Reactors (AMRs). Hands won't be drawn on whether more than the one site already promised could be approved by the end of the current parliament, but he namechecks Wylfa as an interesting site for SMRs and AMRs as the government looks to secure variety and diversity in its energy strategy.The battles to come are likely to be over the level of taxpayer funding for nuclear and getting business cases approved – questions BEIS hopes the financing act will help with.

While the government appears intent on driving ahead with the renewables transition, there is an underlying question about whether critics will weaken the PM’s – or any potential successor’s – enthusiasm for net zero. A vocal group of backbenchers including self-styled rebel whip Steve Baker has established a Net Zero Scrutiny Group, arguing that the costs the transition are too high. They have gathered support in some parts of the media. But on this Hands – who says he meets Baker’s group, as well as pro-net zero groups – appears relaxed, saying he is “pleased to have energy and climate policies tested from all sides”.   

Beyond the domestic agenda, Ukraine looms large. Hands his been heavily involved in what he calls “energy diplomacy”, which has included sending more than 500 generators to Ukraine to support the war effort. He’s been “speaking with friends and allies, including Poland and Bulgaria – which have had their energy cut off by Russia – to support them in whatever way we can… sharing UK energy and climate expertise… supporting UK companies like Rolls Royce Small Modular Reactors as long-term way of weaning countries of Russian energy”.

He clearly enjoys this international side to the role, listing countries he’s visited and namechecking key players reshaping Western energy policy in the wake of Putin’s invasion.

Hands has also been spending lots of time back in Germany – not, this time, flipping burgers but “speaking with counterparts like Robert Halbeck at the Bundesministerium für Wirtschaft und Klimaschutz”, the Green party co-leader and secretary of state at the powerful new energy and climate department established by the new Coalition government (Hands says it “looks a lot like BEIS”). He probably couldn’t have imagined thirty years ago how his stint at McDonald’s would help prepare him.

PoliticsHome Newsletters

Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.

Read the most recent article written by Tom Sasse - Why can't BEIS and the Treasury get on?

Categories

Energy
Podcast
Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now