Who is keeping Britain’s lights on?

During the run-up to privatising Britain’s electricity industry in 1986, Lord Marshall, then chairman of the Central Electricity Generating Board, went to see Margaret Thatcher hoping to persuade her that the CEGB should be kept as one unitary body. Thatcher refused, arguing instead that the CEGB should be broken up. In no uncertain terms, Lord Marshall told her this would be a grave mistake, asking her: “Who will keep the lights on?” After his meeting with Thatcher, Lord Marshall went on to dinner at British Coal, telling the directors present about how frustrated he was, repeating his warning that without a unitary company in charge of energy supplies, there would be no one in control of either supply or security. At that point the CEGB was responsible for electricity generation, transmission, distribution and supply. 

And so it has turned out to be. This Thatcher story is one of many important ones which Sir John Parker – who was on the board of British Coal and at the dinner when Lord Marshall expressed his anger – records in his autobiography, The View From the Bridge. 

As Sir John writes in the book, the current energy crisis facing Britain can be traced back to that decision to break-up the CEGB into many pieces, leaving no one person or body in charge. More pertinently, Sir John goes on to add that  successive governments have all been hopeless at handling energy policy. This is what he writes: “I would say that there is no single area of government and regulatory policy in recent years which has been more mishandled by successive administrations.

“I am no alarmist but the result of the policy flaws is that the UK today faces a potential crisis in power supply whose magnitude is still largely unrealised by the public.”

He adds: “There is now a genuine question whether we can continue to meet consumer demand from secure and quality supply of electricity in the coming years.” 

Anyone who has met Sir John, one of Britain’s most brilliant industrialists, will know, he is not one for hyperbole. 

Quite the reverse. A naval engineer by training, he is thoughtful, analytical and realistic and, over an extraordinary career, chaired some of the world’s powerful companies including Airbus, Babcock International, National Grid, British Gas and Anglo-American.

And he knows a thing or two about energy, particularly from his years as President of the Royal Academy of Engineering where he oversaw some of the most intensive research into the UK’s energy needs because of a simple problem: as coal-fired stations were being phased out to meet emission targets, the UK was losing capacity and not replacing it with other sources, such as gas-fired and nuclear.

What’s more, Sir John and his colleagues warned the government that the country was dangerously close to what is known as “brown-out” territory – power shortages if one or two power stations were to go down.

As a member of the Prime Minister’s Committee for Science and Technology, Sir John and fellow members were so concerned about margin capacity that they went in the winter of 2014 to see David Cameron to express their fears for supply. At the heart of their concerns was the narrowing margin between supply and demand, which was at wafer thin levels of about 2%, compared to the usual margin of around 15% to 18%. 

Sir John offered to set up for the PM a working group to study the situation, and report back to him. The group duly reported back – I remember writing up the results – and recommended that mothballed gas-fired stations be brought back on stream and available on standby should winter demand rise to unsustainable levels. To his credit, the PM did as they suggested.

The Academy went on to submit a wider paper on future energy policy, but few of its recommendations have since seen the light of day. Instead, various governments have fiddled around the fringes, allowed two attempts at building new nuclear plants at Wylfa and Moorside to fall by the wayside because of rows over finance, let gas storage depots disappear and stopped all new oil and gas exploration.

Put simply, the problem remains that no one is in charge of determining how much electricity the UK will need in the next year, let alone over the next few decades, or indeed where it should come from.  

There is no one Mr or Mrs Power who can be called on when the lights start flickering in Boris Johnson’s office at No 10 to provide an account of how much margin capacity there is left in the UK’s electricity supplies, a particularly poignant issue made all the more vivid with the latest tensions between Russia and Ukraine. 

You can’t count on the politicians: there have been at least 30 different business and energy secretaries of state responsible either directly or indirectly overlooking energy policy since the 1980s. 

Nor can you count on the regulators at Ofgem, created post-privatisation as the industry watchdog, to oversee policy. They have neither been given the responsibility for being accountable nor are they trained for such a role.  

Sadly, most of the ministers in charge of energy policy have either been more interested in a short-term sticking plaster approach to future needs or looked to the ballot box to gauge the latest fashion and whether it was green enough.

Look back over the last few decades and you see a constant flip-flopping of policy: switching in and out of nuclear, in and out of fossil fuels, pouring billions into subsidies for wind-farm landowners, enticing consumers with solar subsidies and then withdrawing them. Even on the fuel front, we have had relentless changes in fashion – one minute diesel is good and subsidised, then diesel is bad and drivers are penalised. Now gas boilers – clean energy – are to be banned and homeowners to be penalised for not buying expensive heat pumps which, ironically, have to run on electricity.

All these contradictions were then compounded by the inconsistencies and paradoxes inherent in the net zero carbon ambition. Indeed, Britain’s energy problems were made worse when the then Energy Secretary, Ed Miliband, introduced the Climate Change Act of 2008, which legally committed Britain to cut carbon emissions by 80 per cent by 2050.

Prime Minister Theresa May went even more reckless, increasing the target to going net-zero by 2050. Boris Johnson kept to the goal.

Yet if you look at the devastation caused to the environment and communities by the mining of all the rare minerals required to make wind turbines, batteries and electric cars, the carbon emissions and carbon footprint gobbled up in the making of this equipment can be every bit as bad as burning fossil fuels. 

Going green – while laudable – is not simple but more of a rainbow colour: complex and costly with unintended consequences. Whether it be the conditions in which young children are made to work in the cobalt mines in the Congo for batteries or what to do with the waste from old turbine blades, there is no such thing as cost-free energy. 

But few people dare say this, which is why the energy debate has become so juvenile and fraught with hysteria. 

In short, energy policy on every front is chaotic, some might say treasonable, at a time when a growing population has an insatiable appetite for electric power. 

What’s often missed in this debate is that the demand for electric power will increase hugely over the next few decades as we switch to electric cars and depend ever more on computing power. Some estimates suggest demand will grow by at least a quarter over the next year.   

Where will this extra electricity come from, particularly now, when the UK’s generation capacity has fallen by several percentage points?

Well, for starters it would be worth looking close to home. According to the Oil and Gas Authority, there are “proven and probable” reserves of oil and gas under the North Sea equivalent to 5.2 billion barrels of oil – about 70 per cent is oil and 30 per cent gas. If developed, this is enough to keep UK production at current levels for 20 years. Despite these huge oil reserves which lie untapped, we continue to import from Norway, the US, the Netherlands and, yes, Russia.

While coal is being phased out, we still use coal fired stations when wind and other renewables fail. But even though we have enough coal deposits to keep us supplied for 500 years, nearly half of our coal requirements are imported. Guess from where? Yes, Russia, as well as the US and Venezuela.  

Although the UK produces just under half of our domestic gas supplies, we import the rest from Norway, Qatar, the US and Russia. 

Another source of electricity is via undersea cables, with power coming from France and Belgium. At the end of Europe’s gas grid though, is Russia again.

While it’s taken an energy crisis to open people’s eyes to the looming catastrophe, the latest gas price hikes may have finally shaken ministers out of their torpor and into action. Kwasi Kwarteng, the business secretary, is one who appears to be seeing more clearly, having moved quickly recently to speed up the licenses for exploration of six oil and gas deposits in the North Sea and off the west coast of Scotland.

But this is merely scratching the surface. As they say, it’s never too late to do the right thing, to correct Thatcher’s original sin all those years ago. 

What Britain needs is an independent energy supremo – with a small secretariat backed by a specialist advisory board – to look at the UK’s energy mix, the sources of energy and future needs. It should work closely alongside the National Grid – the nearest we have to a centralised electricity company – which can forecast a day and a year ahead, and report back to the government with varying scenarios and options for the next few decades.

Sir John would of course be the perfect choice to head up such a body but the 79-year-old is too busy chairing Pennon, the south western water company and Laing O’Rourke, the UK’s biggest private construction group. But he’s bound to know someone who would do the job well. The PM should get on the phone to him pronto before the lights at No 10 start dimming.