Green services in firing line in first wave of budget cuts

The government departments and agencies tasked with driving the development of a low carbon economy will face immediate and in some cases significant budget cuts as part of the £6.25bn deficit reduction plan unveiled today by Chancellor George Osborne. The Treasury today confirmed the Department of Energy and Climate Change (DECC) will have its budget for 2010/11 cut by £85m, equivalent to around 2.5 per cent of its total budget, while the Department of Food, Environment and Rural Affairs (DEFRA) will see its budget cut by 5.5 per cent, equating to cuts of £162m.

Osborne vowed the £6.25bn of cuts would not impact "frontline services" and were necessary as a first step towards tackling the UK's £156bn budget deficit.

But both DECC and Defra confirmed they would not be able to deliver the savings through cuts to administrative, travel and staffing costs alone and as a result related delivery bodies would also see their budget cuts.

"It will be challenging for DECC as it already has low administrative spend, so we will have to look at some of our programme work," said a spokesman for the department, adding that any budget cuts would be made to as yet unallocated funds and no existing programmes would be hit.

He confirmed the department's three largest delivery bodies, the Nuclear Decommissioning Agency, the Carbon Trust and the Energy Saving Trust, would see budgets cut by an average of one per cent this year saving £20m for the department.

The Environmental Transformation Fund, which invests in emerging low carbon technologies, will also see its budget for this year cut by 22 per cent to £120m, although the DECC spokesman was quick to point out that some of these cuts would be compensated by the formation of the government's proposed low carbon infrastructure bank.

In addition, DECC confirmed the Low Carbon Building Programme (LCBP), which provides grants to households and businesses installing renewable energy technologies, will officially end today and will not be extended.

Around £60m funds already allocated through the programme will still be delivered, but there will be no further awards. The LCBP grant scheme has been replaced by the launch last month of the feed in tariff incentive scheme for microgeneration technologies. But with a similar scheme for renewable heat technologies not set to be launched until next year parts of the industry could be left without any form of government subsidy over the coming months.

The DECC spokesman said that the cuts imposed on the department were less severe than those faced by many other departments, adding that it was " important that DECC plays its part" in tackling the deficit.

Meanwhile, Defra provided less detail as to how it will cope with a swingeing 5.5 per cent budget cut, revealing only that the cuts would be delivered through limiting recruitment, operational savings, improved efficiencies in flood management, and a reduction in funding for Regional Development Agencies and other selected programmes.

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