A standalone Department for Energy could be re-introduced for the first time since 1992 under a government reshuffle expected to start today.
Prime Minister Rishi Sunak is reported to be preparing a small Cabinet reshuffle today, as he seeks to fill the gap of Conservative Party Chairman vacated by the sacking of Nadhim Zahawi last week.
It is also thought the responsibilities of some government departments may be changed, with a reorganisation of what is currently the Department for Business, Energy and Industrial Strategy expected by some.
The prime minister promised last summer - when he was campaigning for the job - to re-establish a standalone Department for Energy to focus its efforts on the current crisis in gas and electricity prices.
30-year absence
The department was originally established in January 1974, when the responsibility for energy production was transferred away from the Department of Trade and Industry in the wake of the 1973 oil crisis and with the importance of North Sea oil increasing.
Following the privatisation of the energy industries in the United Kingdom, which had begun some ten years earlier, the department was abolished in 1992.
Many of its functions were abandoned, with the remainder being absorbed into other bodies or departments. The Office of Gas Supply (Ofgas) and the Office of Electricity Regulation (OFFER) took over market regulation, the Energy Efficiency Office was transferred to the Department of the Environment, and various media-related functions were transferred to the Department of National Heritage. The core activities relating to UK energy policy were transferred back to the Department of Trade and Industry (DTI).
'New focus needed'
A standalone Department for Energy is one of a range of measures called for by business leaders today, amid fears that Britain must shift to economic “war footing” with a wave of reform or risk being left behind by President Joe Biden's massive programme of subsidies.
In a letter to the Prime Minister Rishi Sunak, published in today's Daily Telegraph, the chief executives of Virgin Atlantic, Coutts, Heathrow Airport and Rolls-Royce’s nuclear power project will demand a UK plan to counter the US Inflation Reduction Act.
It comes as Nissan separately said that Britain is becoming “more and more challenging” as a home for manufacturing.
The letter – signed by members of the Global Britain Commission, a business group chaired by the senior Tory MP Liam Fox – calls for tax credits for exporters and a radical overhaul of the relationship between business and government.
It advocates a merger between the Business Department and the Department for International Trade, as well as carving out a new Department for Energy to focus its efforts on the current crisis in gas and electricity prices.
The business leaders argue that the UK must rapidly exploit its existing advantage in energy industries connected to nuclear, wind, hydrogen and biofuels.
It comes amid fears that Mr Biden's act, a $369bn (£307bn) package of green tax breaks, has already tempted investment away from the UK and Europe.