Interview: BEIS perm sec Alex Chisholm on merging DECC and BIS, the Industrial Strategy, and the Brexit challenge
Nine days after his appointment as permanent secretary of the Department of Energy & Climate Change, Alex Chisholm suddenly found himself running the newly-formed Department for Business, Energy and Industrial Strategy. Here he talks merging ministries, Brexit and championing both business and consumers with Sam Macrory
Governments rise and fall, but some lucky Whitehall departments bask in the knowledge that, whoever is running the country, they will survive.
The Foreign and Commonwealth Office, for example, is about to clock up a half century of existence in its modern form, while the Home Office, give or take the occasional reallocation of responsibilities, has been around since 1782. Then there’s the Treasury, with the Whitehall veteran able to trace its existence right back to the eleventh century and a mention in the Domesday book.
So spare a thought for what is now the Department for Business, Energy and Industrial Strategy. Emerging from an alphabet soup of past acronyms, BEIS, formed when Theresa May became prime minister last July, has shape-shifted repeatedly over the last 50 years. In its most recent incarnations BEIS was BIS: no Energy or Industrial Strategy here, but rather Innovation and Skills. Before that it was BERR, which allowed a brief cameo for Enterprise and Regulatory Reform. Parts of it were briefly DIUS – that was the Department for Innovation, Universities and Skills – while its most longstanding predecessor was the DTI, the Department for Trade and Industry. And so it goes on. This regularly restructured corner of Whitehall could be forgiven if it were suffering from a permanent identity crisis.
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The latest model has seen BIS merge with the Department for Energy and Climate Change (DECC), a process being overseen by BEIS’s permanent secretary Alex Chisholm. Purely on an HR level, managing a coming together of two government departments, and securing enthusiastic buy-in from the thousands of civil servants who work for both, would be a full-time task, but Chisholm’s to-do list is eye-wateringly complex.
He must also ready BEIS for the challenge of leaving the European Union and reshape a department which has traditionally been enthusiastic about the benefits of EU membership (two of the more recent business secretaries were the decidedly Europhilic Peter Mandelson and Vince Cable). BEIS is also the department leading on the new industrial strategy, a centrepiece of Mrs May’s government which will be further fleshed out this year in the form of a white paper due in the second half of 2017. The workload has clearly increased, but at the same time Chisholm must also continue to trim budgets and identify efficiencies.
The most experienced of permanent secretaries might baulk at the challenge. Chisholm, 49, had just nine days’ experience at the highest Whitehall level to call on, having barely moved into the perm sec’s office at DECC before news of the restructuring came through. It was, he dryly recalls, “quite a shock… but that’s what it’s like in the civil service, isn’t it? You need to be prepared for the unexpected and be ready to deal with that.”
Following his musical chairs experience at DECC, Chisholm became BEIS’s first sole permanent secretary after briefly sharing the role with BIS’s outgoing perm sec Martin Donnelly. We meet during a short parliamentary recess, but while MPs may have returned to their constituencies or escaped for a half term break, a whiteboard outside Chisholm’s office maps out a packed day ahead for the department’s top civil servant.
Up on the eighth floor, the room is sparsely decorated but comes with views of the Houses of Parliament and Westminster Abbey. It’s the type of vista which could easily distract from the tasks at hand. Chisholm, however, is clearly focused on the challenge ahead for a department which he says has a “more significant role” than in its previous form.
His LinkedIn profile pitches him as a “highly analytical individual” – as an interviewee that describes him nicely: words aren’t wasted, and answers are carefully thought out – with a decade’s experience of “leading organisations through change”. Such credentials will, one imagines, be rather useful given the task at hand.
The old DECC offices are still occupied, with 1,600 staff due to be relocated to BEIS’s 1 Victoria Street HQ. The latter building is covered in reminders of the mammoth merger task underway: a video outlining the benefits of bringing BIS and DECC together plays in the lift, and posters for new passes and printers are dotted around the building.
“It was actually quite an exciting and, in a way, cathartic moment because it brought out, I would say, the best in the civil service: people taking that real kind of let’s-make-it-work attitude,” says Chisholm of his reaction to the news of the merger. What does he mean by cathartic? “For quite a number of people working both in DECC, as it was then, and BIS, there was a sense of a kind of almost a reunification. I’m not comparing it to the Berlin Wall… but quite a lot of people, including myself many years ago, had worked in the Department of Trade and Industry which included energy, so there was a sense in which there was a recombination or reunification.”
"We moved pretty rapidly to develop a vision"
Fortunately, Chisholm is no stranger to managing mergers. A varied career has taken in stints at the old DTI, time in the private sector and even as an entrepreneur, with Chisholm, a trained horticulturist, starting up his own company selling rare and historical bulbs of the gardening variety. More recently he was chief executive of the Competition and Markets Authority, a role which saw him oversee the merger of the Competition Commission with some functions of the Office of Fair Trading. Having led a “number of mergers, both in the public and private sector”, Chisholm says the biggest challenge “is really managing people through that process and making sure that you handle all the logistical challenges in terms of IT systems and office space and HR policies”, while also giving people “a clear sense of what the new department is for and what their role is within that”.
So presumably he can’t be happy that the latest Civil Service People Survey showed BEIS scoring way down on “organisational objectives and purpose” when compared to what DECC and BIS registered as standalone departments?
“I think it’s mainly to do with the timing,” Chisholm argues. “It was done in October and we were in the process of bringing the department together, chiefly in August and September. It’s pretty inevitable that at that time you’re going to have a group of people who were reasonably well-focused on what their previous departments did, which they’ve been doing most of the year, to then [be] coming to terms with what the new department would do. It’s also the case that although we moved pretty rapidly to develop a departmental vision and priorities and how we want to work together and all of that, that was actually launched in November.”
“It’s very important that as we transition into the new department, people see there’s an opportunity to build something better and bigger and stronger here” – BEIS
So what would happen if the survey were conducted today? “It would show a much better result,” he replies, pointing out that his goal to complete the transition phase of the merger by the end of the financial year remains “absolutely” on track.
But it hasn’t been easy, with Chisholm pointing to the “particular challenge” of a government restructuring: a lack of any pre-existing plan. “When I’ve worked in business and you’ve been doing a merger there has always been a plan – a very clear sense of what the gain is that you’ve sought to the top line and, usually, where you have identified scope for efficiencies. But obviously machinery of government changes don’t really work like that, so you have to improvise a plan.
"It’s very important that as we transition into the new department… that people don’t just see themselves as having a change of location and leadership and name to the department, but they also see there’s an opportunity to build something better and bigger and stronger here. And that in the sum of the parts in adding DECC and BIS together, or most of BIS, we actually get something which is one plus one makes three, rather than a number less than two.”
"Sources of pressure"
With the lack of plan comes uncertainty of spending power. BEIS has “effectively inherited” the budgets from BIS and DECC, which Chisholm bluntly describes as “demanding in a number of respects”. The “quite recent” 2015 spending round announced resource spending cuts of 17% for BIS, and 22% for DECC, and Chisholm admits that the plans for “reducing the numbers of staff” across central government and BEIS’s 48 partner organisations – the most arm’s-length bodies of any Whitehall department – is “going to be a challenge”.
On top of that, he adds, “We understand that there are going to be further efficiency savings expected of us, and a plan for doing that to be ready for later this year.” It’s not a task to relish, but Chisholm, clearly well-versed in the art of diplomatic language, settles on “sources of pressure… but some important opportunities too” when asked to summarise BEIS’s efficiency drive.
One symbolic victim of the merger was “climate change” – front and centre in DECC’s title but no longer part of the BEIS acronym. It’s a decision which Ed Miliband, a former DECC secretary, described as “plain stupid”, but Chisholm insists that climate change is “still a core part of what we do”. As if to demonstrate the department’s credentials, his office lights automatically switch off halfway through the interview, requiring BEIS’s top civil servant to wave his arms in the air in an attempt to counter the admirably energy-saving circuitry. And no, he adds, climate change doesn’t need to feature in the department’s name, because “if you tried to take all the different bits that we are responsible for it would make for a very long title”.
Instead we are left with business, energy and industrial strategy. So who does Chisholm believe BEIS is working for? John Kingman, a former second permanent secretary at the Treasury, recently used a speech to complain that BEIS is “institutionally conflicted by its natural role as the advocate for big business incumbents”. Chisholm dismisses what he calls “backward-looking remarks” and, while he agrees that BEIS is “as it is in the name, the business department”, he insists that “one thing I keep firmly in my mind is that business in is not only the FTSE100 companies or the big inward investors, it’s the 5.5 million firms that operate right across the UK”.
Having spent time in the private sector, notably at Pearson and the Financial Times, and having grown his historical bulb business, Chisholm says that he has a “natural empathy” towards business, understands the needs of “entrepreneurs and disruptive businesses” and recognises that “a lot of the industries of the future which we want to encourage have not yet identified themselves”. Beyond business needs, he adds, BEIS is also looking out for consumers, for workers and for taxpayers, a remit which, in normal times, would be considered full-time.
Instead, Chisholm must juggle his resources towards making the government’s industrial strategy a success, while also working out what Britain’s departure from the EU means for BEIS. Will other parts of the BEIS brief inevitably suffer? Chisholm replies that “we’ve done a degree of reprioritising by reallocating staff resources into, particularly, work to prepare for the exit from the EU, and the industrial strategy” – but says a “strong secondment programme” from the private sector has helped to provide cover.
Inevitably, however, Brexit will dominate the months and years to come. “Brexit is going to be a central preoccupation and piece of work for us as a department because we’re responsible for the business community as a whole and for the frameworks in which business has to operate,” Chisholm admits, pointing to the labyrinth of corporate codes, competition law, consumer protection and employment legislation that will require “a great deal of work”.
Putting together an industrial strategy calls on BEIS’s obvious institutional know-how, but can the same be said for the mammoth Brexit task? Chisholm accepts there is a need for “both expertise and training”, and makes clear that “over time, we will need to strengthen the resources we put in for working alongside the Department for International Trade to negotiate the new free trade agreements with countries outside the EU”.
Two decades ago, he says, the then DTI had a large trade policy division – a 200-strong talent pool whose responsibilities have since passed to Brussels. To a certain degree, both the international trade department and BEIS will have to “rebuild some of that expertise in the specifics of free trade negotiations,” Chisholm says. But he insists that core civil service policy skills and his own department’s “deep understanding of the requirements of individual sectors” will see it “rise to the challenge”.
For BEIS, there is also the need to reshape thinking about the benefits of EU membership. For example, in the last five years BIS has published reports setting out the benefits of Single Market membership and of “access to migrant workers”, with the first now ruled out by the government and the second far from guaranteed. Chisholm treads carefully when discussing post-Brexit Britain, explaining that BEIS is “very focused in making sure that we allow sufficient time and planning for business to be able to adapt” and that the department provides “not only reassurance about the transition to this new state, but also that we’re very clear on identifying what are the upsides… the opportunities”.
The upsides of leaving the single market, perhaps? Again, Chisholm’s answer is carefully worded. It’s true, he says, that established BEIS thinking will have to change, but he adds that “the prime minister… has been clear that we want to have as full access as we possibly can and with a minimum level of friction, so we want to make sure that we continue to benefit from those undoubted advantages that come from being able to trade as freely as possible with our important neighbouring continental market".
“Brexit is going to be a central piece of work for us because we’re responsible for the business community as a whole and for the frameworks in which business has to operate” – BEIS permanent secretary Alex Chisholm
On migration, Chisholm points out that BEIS is responsible for the scientific sector and a number of engineering trades, who “have been very clear that to continue to make sure that the UK is able to access the best that the world has to offer is very important to the their futures”.
“Home-grown talent will undoubtedly have more opportunities… but we need to make sure that we continue to add to that, where appropriate, the numbers and types of people, of skills, available from around the world,” he says.
A case in point would be Alex Chisholm himself. Until recently he commuted from Ireland to London, a work-life balance which he insists was manageable as his three sons grew up. He’s excited to have returned to live in London, even if he clearly misses aspects of living in Ireland. “There’s a certain informality you get from living in a smaller community which is great: very much reach for the phone, meet up for a coffee,” he recalls. “That slight cosiness which can come with that is something I do miss, but the opportunities are much bigger here as the scale in which one is able to operate is greater.”
Over the next few years life in the civil service will be far from cosy but, reflecting on the EU referendum, the referendum on Scottish independence, the election of Donald Trump in America, and the upcoming elections across Europe, Chisholm is delighted to be back at the very heart of Whitehall, proclaiming a “great time to take stock of ourselves as a country and to reset ourselves for the challenges ahead – and this department will, I think, be right in the midst of that”.
Alex Chisholm is clearly set for the long haul. After so many years of change, and countless acronyms, civil servants at BEIS will be hoping their department is too.
THE INDUSTRIAL STRATEGY
“The balance of it is, overall, on what we call those horizontal measures that you can take, which are of broad benefit across the economy: skills is key there, a big emphasis on technical skills, science and innovation, infrastructure, business investment. [And] we do recognise that there are some sectoral focuses: the great benefits we’ve had from industries like aerospace, on automotive, and life sciences, where industry getting together with government – small companies as well as big – has been enormously productive in giving more of a strategic sense in what the long term opportunities are.”
THE PRODUCTIVITY CHALLENGE
“We’re absolutely set on continuing to support the growth of London and the South East, but we recognise that in order to deliver on the prime minister’s vision of an economy that works for all we need to lean in hard to help other parts of the UK to be more successful. Trying to get the less-strong – the followers so to speak – to catch up, or at least close the gap between themselves and the leaders, is a big part of our industrial strategy and will make a strong contribution to productivity.”
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