CONTENTS

politics first | Corridors
September / October 2016 | www.politicsfirst.org.uk
Will Brexit affect
the energy sector?
Leadership elections:
lessons for PR practitioners
Carl Thomson, Director, The Whitehouse Consultancy
Francis Ingham, Director General of the Public Relations Consultants Association
The theme of politics following the European Union
referendum has been that of “uncertainty”. As a result
of the decision to leave the EU, the future direction of
energy policy in the UK is ambiguous and unclear.
“Not Flash. Just Gordon.” Who remembers that slogan?
That attempt to make a virtue of an apparently unshowy
character? The contrast with the showmanship of his
predecessor, in much the same way as John Major
achieved following Margaret Thatcher, and having
beaten Michael Heseltine.
There is no guarantee that Britain will
continue to participate in many of the
agreements which have sought to ensure
security of supply and a competitive energy
market, while the composition of a new
government could herald an overhaul of the
current regulatory environment.
During the campaign, the Remain side
warned that leaving the EU could see bills
increase by £20 per household per year, and
suggested the UK would face additional costs
when importing gas from abroad. The Energy
Institute’s annual barometer, published a week
before the referendum, showed that industry
feared the UK would be “less secure and less
green” outside the EU.
Yet those fears may be overstated. Ongoing
concerns about the stability of Russia as a
gas supplier, and a desire to diversify away
from imported gas, means the EU will be keen
to keep barriers to energy transit low, rather
than building new ones. The UK has been a
strong advocate for a cross-border energy
market and has championed key aspects
of the Third Energy Package – a legislative
programme with the agenda of liberalising
the EU’s gas and electricity market – such as
ownership unbundling and market coupling. It
is inconceivable that we will move away from
that approach after Brexit.
Indeed, given the UK’s commitment to an
open energy market, negotiations may allow
our continued involvement in the Energy Union,
which is being pushed by Member States such
as Poland and Estonia who will be looking
for a commitment to European security from
Britain, even after we leave the EU. While the
UK will have less ability to shape the rules,
many commentators expect that we will remain
tied to the emissions trading market and could
even retain membership of the institutions that
coordinate pan-European energy regulation,
such as the Agency for Cooperation of Energy
Regulators (ACER) or ENTSO-E and ENTSO-G.
Similarly, it is questionable whether
withdrawal from the EU will see a rollback from
the UK’s commitment to meet international
climate change targets. In previous
negotiations, Britain was an enthusiastic
proponent of tougher targets, rather than a
reluctant participant. The current emissions
reduction targets are enshrined in law under
the Climate Change Act 2008, while the
fourth carbon budget, and its requirement to
reduce emissions by 50 per cent by 2025, has
already been approved by parliament. Neither
the Conservatives nor Labour have shown
willingness to revisit that legislation.
One area where we could see divergence
between the UK and the EU is in the energy mix. In
the last few years, there has been a shift towards
non-renewables, with some technologies, such
as onshore wind, falling out of favour. Theresa
May is likely to seek greater autonomy over
how the UK chooses to decarbonise, with
the emphasis on replacing coal with shale
gas alongside a new nuclear programme – in
contrast to countries like Germany which still
consider nuclear taboo.
There are two potential impacts for investors.
The first is whether Brexit will affect projects
which expect to receive EU grants or loans.
European Investment Bank funding in the UK
energy sector reached €3.5 billion in 2014. It
is not clear what alternative sources of finance
might be available or whether the Government
will plug the gap.
Secondly, there is uncertainty about the
future of state aid rules. Some have argued that
leaving the EU will give the Government more
leeway to direct subsidies to technologies such
as small scale nuclear or fracking. However, if
the UK opts for the EEA model for a post-Brexit
relationship with the EU, state aid restrictions
will still apply. Even under a “hard Brexit”, World
Trade Organisation regulations will hamper
the ability of the Government to pump-prime
innovation and infrastructure development.
Brexit will not have catastrophic
consequences for the energy sector. Investment
will continue. Britain will continue to be a global
player, whose market is influenced by global
factors. Alongside the risk and uncertainty, there
is a world of opportunities. The key to realising
those opportunities will be the extent to which
the energy sector can offer a compelling
post-EU solution to the trilemma of security,
affordability and sustainability.
It worked for a while, but then it failed.
Maybe in different circumstances it would
have triumphed. Maybe the political
fundamentals were just set too heavily against
Gordon Brown. Maybe the political cycle had
just come to a natural end. Who knows.
The memory of it came back to me as
a result of watching the surprisingly rapid
turnaround in leadership which has been
seen in our country over the past two months.
Politically, a different era, yet only an historical
blink in time.
Very few in my industry predicted a
Brexit vote. Even fewer (anybody?) predicted
a Theresa May Premiership, and the
defenestration not just of the then PM but also
of the man who had turned the referendum
campaign on its head. Who had, arguably,
changed its result, and the course of British
history with it.
Combine that with what is going on in
Labour, and contrast it with the daily tumult
that is the US contest, and surely there
are lessons to be drawn for and from PR
practitioners? Well, I have identified a few.
Firstly, communications do not have to
be flashy to be successful. Boris Johnson
is a fantastic communicator. In a debating
school competition, you would back him
over Theresa May pretty much every time.
But he is not the Prime Minister. And she is.
Sometimes, the ability to conjure up lucid
and compelling images and narratives is not
enough. The strength of the message, as well
as its clothing, matters, too. And, after all,
as the biographer of Winston Churchill, the
Foreign Secretary should know this – Clement
Attlee won, Churchill lost. At least on two out
of their three fights.
Secondly, sometimes, silence truly is
golden. Theresa May was vilified for keeping
almost entirely silent in the European Union
Referendum debate. Plenty of people said
that that silence had dammed her in the eyes
of both camps. That she was through. On
the morning of the result, there were plenty,
too, who said that Boris’ boldness had won
him the keys to Number 10. Not quite, eh?
Because sometimes, not saying something is
as good a plan as being a megaphone.
Thirdly, authenticity matters. Labour’s
leader looks set to be re-elected - against
all of the odds, and against the wishes of
virtually all of the PLP. Why? Because to
the people who vote, he is authentic. And
authenticity matters more than ever in this
age of transparency - this period of revulsion
against the manufactured soundbite and the
contrived image.
Fourthly, narratives can be hard to
change. Having said that, it would be a bold
communications professional who took
Jeremy Corbyn as his client. The narrative
has been set, and the mood music has been
created. Political leaders’ reputation is defined
in the first few months of their assuming
office. And as William Hague found before
him, they sometimes simply never shift.
Fifthly, the loudest voices are not the only
ones. Words that every pollster should stick
onto their desk and repeat every day. It is
becoming more and more difficult to divine
public opinion, which is ironic in a social
media era.
Sixthly, people are talking to their minimes.
Witness the shock of many Remainers:
“but I do not know anybody who voted to
Leave.” The same shock that many Labour
voters experienced: “Who on earth votes
Tory?” Successful communicators talk to
people who disagree with them. And that
certainly means they follow people on Twitter
who are on the other side.
And finally, claims have to be
believable. Perhaps the biggest one of all.
Communication works best when it is
measured, reasonable and credible. My
view - and one I expressed in the weeks
before the referendum result - was that Project
Fear was self-destructive. It was just too
much. People are not fools, and politicians
who wish to lead them, and communications
professionals who wish to speak to them,
need always to bear that simple fact in mind.
If you are going to lie, lie big, might have been
the insight of the past. It is not the ethos of
the future.
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