How business savvy is DECC's new permanent secretary?

  • 08 Jan 2013, 16:00
  • Mat Hope

Source: Tax Credits

Stephen Lovegrove has been appointed Permanent Secretary for the UK's Department of Energy and Climate Change (DECC) after the Prime Minister intervened to block the Secretary of State's preferred candidate, David Kennedy. But does Lovegrove possess the background to help accelerate investment from the private sector to get new energy initiatives off the ground, as the PM hopes? We compare the two candidates' credentials.

Comparing credentials

One of the permanent secretary's main tasks will be to try and attract investment in the UK's energy sector, while ensuring the government gets a good deal. The Prime Minister blocked Kennedy's appointment because he was looking for someone with  "commercial experience and the ability to do deals" - something he felt Kennedy lacked. So is Lovegrove a better candidate?

Lovegrove does have some experience working in the private sector and of looking after government assets. Lovegrove has been Chief Executive of the Shareholder Executive within the Department for Business, Innovation and Skills since 2007. The Shareholder Executive is tasked with managing the government's interventions in the private sector, including looking after the businesses that the government has a stake in like Royal Mail and the Post Office. Prior to that, he worked as a Head of the European Media team at Deutsche Bank for a decade and spent five years as a strategic consultant.

On the energy front, Lovegrove was briefly in charge of British Nuclear Fuels before the government announced its disbandment in 2010. He was also in charge of selling the government's stake in British Energy to EDF for £4.4 billion in January 2010. This was actually 10 per cent more than his Shareholder Executive had valued it and represented good business for the government. This seems to be the extent of his experience in the energy sector - though the EDF deal is no small point in his favour.

Kennedy, meanwhile, was a World Bank economist specialising in energy strategy and investment prior to becoming Chief Executive of the Committee on Climate Change (CCC). Before that he worked at the European Bank for Reconstruction and Development where he worked with central Asian and eastern European countries. He also holds a PhD in economics from the London School of Economics.

When it comes to green credentials, Kennedy is well-known within environmental circles as Chief Executive of the CCC, under which he is tasked with advising the government on how best to achieve the Climate Change Act's legally binding goals. Kennedy's opinions on the role of natural gas in the UK's energy mix seem to diverge from some sectors of the government, however. The PM recently told a parliamentary committee he wanted the UK to be part of the unconventional gas "revolution" he said is taking place across the world. But Kennedy has said that the government should resist large investment in gas power, saying a new dash for gas would bust the UK's carbon budgets.

Kennedy may also have made himself unpopular with some Conservative MPs due to his general support for renewable technologies, including windfarms. Some commentators believe that Kennedy's views on the UK's energy strategy were the most significant obstacle to his appointment as permanent secretary.

So is it all about business experience?

On reflection, it doesn't appear that Lovegrove has significantly more commercial experience than Kennedy does, and Kennedy appears to have the edge when it comes to times spent in the energy industry. But while influential Conservative MP Tim Yeo praised Kennedy for the way "his intellectual rigour has won the support of both industry and the green lobby", Kennedy's views on the UK energy mix may have garnered opposition from the Conservative party.  

In contrast, Lovegrove represents a safer choice in a department seemingly fractured along party lines.  Mending these rifts looks set to be one of the new secretary's biggest challenges - just as much, in fact, as securing the investment needed to enact the revamp of the energy sector that the energy bill requires.

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