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UTILITY WEEK | 20TH - 26TH NOVEMBER 2015 | 13 Policy & Regulation Analysis T he Department of Energy and Climate Change (Decc) has been no stranger to pressure from the Treasury in recent years. But the government's Comprehensive Spending Review, due 25 November, is set to squeeze an already small and beleaguered government department even further. The same shadow falls over much of Whitehall, but unlike most other depart- ments, Decc faces an existential crisis too. For years speculation has swirled over its future. Many say it could outsource its responsibilities to the Department of Busi- ness, Innovation and Skills (for energy) and the Department for Environment, Food and Rural Affairs (for climate change). Now, the new National Infrastructure Commission (NIC) could take on the more strategically important challenges facing the energy sector. There has never been a worse time to feel redundant. And with the UN climate talks due to begin in Paris five days aer the review, there has never been a worse time for the government to drop the axe. Decc may get a reprieve if it can prove to the Treasury that it can cut spending in two key areas: first through staff cuts and secondments; second by reducing the gov- ernment's spending on the regulatory bodies surrounding it. Trimming the fat Decc faces an uphill battle in cutting costs, given that almost 90 per cent of its budget is used to cover legacy nuclear costs. But with High noon for Decc? The imminent Comprehensive Spending Review could be curtains for Decc unless the department can come up with its own radical cost-cutting measures. Jillian Ambrose reports. Chancellor George Osborne asked all non-protected departments including Decc and Defra to produce plans of potential cuts by October in a bid to eliminate the UK deficit. The final plans will be announced on 25 November. 25% The minimum spending cut modelling required of each department 30% The cuts agreed by four departments, including Defra 40% The highest expected cuts to be made to any single department 2019/20 The date by which cuts need to take effect £20 billion The expected savings needed through the review to allow Osborne to "finish the job" of eliminating the UK's deficit WHERE TO FIND AN EXTRA £20 BILLION? Electricity Market Reform (EMR) now com- plete and early renewables support regimes winding down, staff cuts are inevitable. Decc's permanent secretary, Stephen Lovegrove, told MPs on the Energy and Cli- mate Change Committee that 200 staff would leave through "voluntary exit", a sharp dent in the relatively small 1,600 staff base. In addition, Decc is expected to lose staff through secondment to the NIC, which has Treasury backing to oversee £100 billion in spending. But to recover further value for the Treas- ury, right-leaning think-tank Policy Exchange says Decc should look beyond 3 Whitehall Place. A recent report says the department could cut £135 million of internal costs, but half a billion pounds from energy regulation quangos. There are more than 30 bodies respon- sible for the delivery of energy policy, the management of industry codes of practice and the operation of the energy system, oen with overlapping functions. While some are consumer funded others are backed through taxation. Part of the problem is that such bodies have sprung up in recent years to aid the rollout of government policies. "While the Spending Review requires a focus on Decc and the administrative bodies connected to it, it is important to think about how these bodies interact with the rest of the industry to ensure that reforms result in a more coherent delivery landscape," says Policy Exchange. Breakdown of spending on energy governance, excluding Decc Breakdown of Decc expenditure, 2013/14 (£ millions) £62m Other *Green Deal Finance Co **Environment Agency ***Energy Saving Trust £120m National Grid £103m Smart Metering DCC £51m Ofgem £46m Carbon Trust £37m Elexon £32m Ofgem E-Serve £30m Xoserve £20m Smart Energy GB £20m Green Investment Bank £12m - Gemserv £12m - LCCC £7m * ** *** £6m £5m £6,938m Managing energy legacy (including NDA and nuclear pension schemes) i Green Deal and support to vulnerable consumers. ii Deliver Decc capability. iii Deliver secure energy. iv Renewable Heat Incentive. v Coal Authority. vi Other (£7m) £372m Ambitious action on climate change £135m i £135m ii £66m iv £30mv vi £128m iii