Energy and environment departments are to share back office functions with their quangos to achieve cuts announced today by chancellor George Osborne's in his autumn statement.
Under the plans, Defra's budget will be 15% lower in real terms by 2019/20. Osborne claimed the department would become more efficient by sharing IT, human resources and finance with its departmental bodies, which include the Environment agency.
Flood defence funding will be protected, and includes a £2.3 billion six-year capital investment programme, which will help protect more than 300,000 homes, according to the Treasury's document. Defra will work with the Environment agency to identify a further 10% of savings in the flood defence budget by 2019/20, which will be reinvested to protect another 4,000 homes.
More than £350 million will be available to 2020/21 for public forests, national parks and areas of outstanding natural beauty. Eleven million trees will be planted over the course of the parliament, the document said.
Decc, meanwhile, will have to save £220 million - equivalent to 22% of its budget - by 2019/20 through pooling back office and corporate services, and reducing the costs of contracts to manage historic coal and nuclear liabilities.
The budget for the department's innovation programme will double to £500 million over the next five years, which the Treasury says will go towards reducing the costs of decarbonising electricity generation. The programme will aim to revive the UK's expertise in nuclear technology and to become a world-leader in small modular nuclear reactors. It will also provide seed funding for new renewable energy technologies and smart grids.
Energy efficiency in schools, hospitals and other public sector buildings will be improved over five years from a £295 million fund, while more than £300 million will be available for funding up to 200 heat networks to generate, which the Treasury says is enough energy for over 400,000 homes and help to secure up to £2 billion of private capital investment.
The renewable heat incentive will be reformed to save £700 million, while its funding pot will increase to £1.15 billion in 2021, Osborne said.
Energy-intensive industries will be exempt from the costs of renewables policies including the renewables obligation and feed-in tariffs, which Osborne said would "keep their bills down, keep them competitive and keep them here".
The Treasury also effectively cancelled the carbon capture and storage competition by removing its £1 billion funding. The move, which was announced to the London Stock Exchange, comes as the four-year competition is about to end. The announcement enraged the Carbon Capture and Storage Association, whose chief executive Luke Warren described it as "devastating" and an "appalling way to do business".
Claire Jakobsson, head of climate and environment policy at manufacturers' body EEF, called the move extremely disappointing.
Other points from the autumn statement include:
- The three percentage point differential between diesel cars and petrol cars will be retained until April 2021 in light of the slower than expected introduction of more rigorous EU emissions testing.
- A transitional period for electricity suppliers to apply the climate change levy exemption on renewably sourced electricity generated before 1 August 2015 will end on 31 March 2018.
- The Environment agency will receive £20 million to fight waste crime over the next five years. The money will come from extra revenue from landfill tax. Currently landfill operators are allowed to transfer a proportion of the landfill tax up to 5.7% to a community fund, but this cap will be lowered to 4.2%. The extra income will go to the Treasury, which will in turn fund the agency's work on waste crime.
- The Energy Company Obligation will be replaced by a cheaper scheme, which will run for five years and upgrade more than 200,000 homes a year.
- A response to the consultation on changes to the renewables obligation and feed-in tariff schemes will be published "shortly", said Osborne. The proposals will cut £6 a year from household energy bills and over £500 from those of small businesses by 2020-21.
- More than 100 roads schemes worth at least £15 billion will be funded to 2020/21, while £55.7 billion has been confirmed for the HS2 high-speed rail project.
Sepi Golzari-Munro, head of the UK programme for the climate policy think tank E3G said that the cuts to renewables and energy efficiency investment, and elimination of CCS funding will make it almost impossible for the UK to meet its carbon budgets.
IEMA's policy and practice lead Josh Fothergill said: "The question our members would ask is 'is there realistically enough resource to deliver a sustainable future?' If the government is aiming to rebuild Britain, it needs to be aligned to long term sustainability trends beyond just the economy or single term parliaments."
