Thumbs up, down for UK spending

In its Spending Review announced today, the UK government outlined a programme of deep and wide-ranging budget cuts across every department, including those dealing with energy and climate change, environment, transport and business and innovation.

So do these slashed budgets spell doom for Britain’s aspirations of becoming a world-leading low-carbon economy? The assessments from different green and cleantech sectors vary considerably:

“(D)elighted that the coalition politicians who understand … the unfolding global solar revolution have maintained course with the feed-in tariff,” declared Jeremy Leggett, executive chairman of the solar energy firm Solarcentury.

Will “ensure that the CRC (Carbon Reduction Commitment) will cost the wider business community almost £3.5 billion more than it would have,” warned Liz Peace, chief executive of the British Property Federation.

“We … welcome the creation of a Green Investment Bank,” cheered James Cameron, vice chairman of Climate Change Capital.

Will “have investors running to the hills rather than committing the massive sums of money that are needed to drive the UK towards it climate targets,” complained Andrew Horstead, risk analyst at the energy and carbon management specialist firm Utilyx.

“(C)ontinues to promote a firm support for renewable energy,” affirmed Michelle Thomas, partner and head of the Clean Energy and Sustainability Group at the international law firm Eversheds.

“(C)redible and considered,” weighed in RenewableUK, although, with the proposed £1 billion in startup cash, the new Green Investment Bank “will not have sufficient funding to support the hundreds of billions of pounds of investment necessary to construct the energy infrastructure the UK will require over the next two decades,” noted Gordon Edge, the agency’s director of policy.

The Spending Review unveiled today by Chancellor George Osborne affects environment- and energy-focussed departments as follows:

Department of Energy and Climate Change:

• An 18 per cent reduction in resource spending, a 41 per cent increase in capital spending and a 33 per cent cut in the administration budget.
• Up to £1 billion to create one of the world’s first commercial-scale carbon capture and storage demonstration plants.
• £860 million funding for the Renewable Heat Incentive to be introduced from 2011-12. The incentive is aimed at driving a more-than-tenfold increase of renewable heat over the coming decade.
• £200 million for low-carbon technologies, including offshore wind technology and manufacturing infrastructure at port sites.
• Revenue raised from the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme will be used to support the public finances (including spending on the environment), rather than recycled to participants.
• Feed-In Tariffs (FITs) will be refocussed on the most cost-effective technologies with the goal of saving £40 million in 2014-15. Changes are to be implemented at the first scheduled review of tariffs unless higher than expected deployment requires an early review.

Department for Environment, Food and Rural Affairs:

• A 29 per cent reduction in resource spending, and a 34 per cent cut in capital spending, with an administration budget reduction of 33 per cent.
• Planned efficiency savings of 15 per cent in the procurement strategy for flood and coastal defences. Savings will be reinvested into enhanced flood defences with the aim of providing better levels of protection for 145,000 English households by March 2015.
• Reducing the number of quangos DEFRA funds from 92 to 39.

Department for Business, Innovation and Skills:

• A resource budget reduction of 25 per cent, and an administration budget cut of 40 per cent. Taking into account anticipated receipts, the cut to capital spending by 2014-15 will be 44 per cent.
• Maintained spending on science research, with a resource budget of £4.6 billion a year by 2014-15.
• A £250 million per year boost in spending on adult apprenticeships, providing up to an additional 75,000 apprenticeship places every year by the end of the Spending Review period.

Department for Transport:

• A 21 per cent reduction in resource spending over the course of the Spending Review period, and an 11 per cent cut in real-term capital spending, with an administration budget reduction of 33 per cent.
• Over £10 billion in funding for the national and local road networks, and public transport schemes in Britain’s major cities.
• A national charging infrastructure for electric vehicles and an incentive of up to £5000 for the purchase of ultra-low carbon cars.
• Subject to consultation, the government is proceeding with plans to deliver a new high-speed rail network, and will bring forward legislation during this Parliament to allow construction to proceed.