Cutting by 40%… but these campaigners wanted to cut emissions, not spending
I’m at the Labour party conference in Manchester this week, doing the rounds of the climate fringe events and asking whether ‘Red Ed’ will rediscover his previous persona as ‘Green Ed’. Expect a number of posts reporting back over the next few days.
First up, the future of the Department of Energy and Climate Change (DECC) itself. This emerged as a key concern at this morning’s Fabians discussion on green jobs, with speakers Emily Thornberry MP (Shadow Energy & Climate team), Michael Jacobs (former environment advisor to Gordon Brown), Alan Whitehead MP, and Tony Hawkhead (CEO of environmental charity Groundwork).
The panel expressed great disquiet about the impact of the looming spending cuts on DECC. The department’s current budget is some £3.2bn; cutting its spend by 40% – as the Treasury asked all departments to model earlier this year – would leave it with just £1.92bn to spearhead the low-carbon transition. But it was pointed out that £1.7bn of DECC’s existing budget is spent on nuclear clean-up: liabilities that have to be taken care of and that Government can hardly divest themselves of. Assuming DECC would still be saddled with this responsibility, a 40% budget cut would leave the department with a paltry £220m to support renewables, energy efficiency, low-carbon cars and all the rest. DECC would effectively cease to function as a meaningful department – and it’s understood that DECC officials have said as much to the Treasury.
Opinions varied amongst speakers as to whether this level of cuts were likely. The average cut requested by Treasury across Whitehall is 25% – and whilst some departments may be forced to cut up to 40%, others will escape with shallower wounds. (Although PIRC understands that some departments have offered in excess of even 40% – naming no names, but young Conservative Ministers tend to be more ‘ambitious’ in this regard.)
Even if DECC emerges from the Spending Review with three-quarters of its budget intact, questions remain over how much power it will continue to wield, with a resurgent Treasury extending its mandate across Whitehall. The Guardian reported recently that the Treasury was considering absorbing DECC into its own fold – somewhat overblown rumours, as it turned out; but as the future of climate policy in the UK becomes increasingly bound up in finding sufficient low-carbon finance (notably for the Green Investment Bank), the role of the Treasury will only grow. A member of the audience, who identified himself as a former civil servant, worried that BIS or Treasury would take an increasing control over climate policy, with DECC emasculated just two years since its creation. It would take strong Ministers to resist this trend, said one of the speakers. Today’s Morning Star carries an article on this by former MP Alan Simpson, under the headline, ‘All hands on DECC’ [although they seem to have put up the wrong article at present – 1.30pm]
Looking at the figures, it’s worth highlighting again how much of DECC’s current responsibilities lie in the realm of managing liabilities – both nuclear and fossil. The Nuclear Decommissioning Authority, one of the bodies that will survive the Coalition’s ‘bonfire of the quangos’ – as revealed in a Cabinet Office document leaked last week – swallows up £880m on its own. Clearly no-one is arguing we should stop cleaning up nuclear waste. But it does underline how the full price of a nuclear-powered energy system isn’t confined to set-up costs; something that should always be borne in mind when people balk at the high up-front costs of renewables, which do not, however, incur costs for either fuel or waste processing.
Separately, in conversations after the workshop with staff working in local government, it appears that the low-carbon agenda isn’t just under threat from cuts to DECC. The Department of Communities and Local Government (DCLG) has also staged a full-scale retreat from all things climate since the Coalition government coming to power, with Minister Eric Pickles appearing to pursue a ‘back to basics’ approach and hiving off his low-carbon teams to DECC. Sustainable development used to be understood as something that had to be embedded across government, not just in one department. But that was in the days when we had a Sustainable Development Commission scrutinising all of Whitehall – and now that’s been axed, too.