Decc could lose 90% of staff budget

3rd July 2015

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Paul Jackson

Delivery of energy and climate change policy could be severely hit by spending cuts, which could halve the energy and climate change department's staffing budget by 90% by 2018-19.

The warning comes from think tank the Green Alliance, which has published an analysis of how Decc could be affected by the government’s plans to cut spending across departments by 3.3% over the next five years.

However, the analysis highlights that once ring-fenced areas of education, international development and health are factored in, the remaining departments will have to cut their budgets by 11.6%. The alliance highlights analysis by the Institute for Fiscal Studies, which found that departments will have to cut budgets rapidly, even if they recover later in parliament.

Three-quarters of Decc’s budget to 2020 (£16.3 billion) is likely to be ring-fenced for nuclear decommissioning, international development assistance, wind-up costs from regional development agencies and coal liabilities, leaving the department with £3.5 billion, or £700 million per year on average, the Green Alliance said.

Spending on non ring-fenced areas would fall by a quarter, it said. But once the speed at which the savings must be made has been factored in, funding would in effect fall by nearly a half by 2017-18, before rebounding, it calculated. Only £40 million would be available for all staffing, analysis and policy implementation functions by 2018-19, it said.

This could mean limiting the UK to a single carbon capture and storage demonstration project, and largely end spending on energy efficiency, or stop the electricity market reform and the rollout of smart meters, the alliance suggested.

Matthew Spencer, director of the Green Alliance, said: “Less than 20% of Decc’s budget is spent on its core mission of reducing energy costs and accelerating low-carbon energy investment. Spending reductions will focus on these areas because the department is lumbered with huge historic liabilities from the nuclear and coal industries.”

Decc should get a better settlement than average in next week’s budget to ensure that it can deliver, he added.

The Green Alliance’s findings have alarmed senior academics, including Robert Gross, director of the centre for energy policy and technology at Imperial College, Paul Ekins, professor of resources and environmental policy at University College London, and Jim Watson, research director at the UK Energy Research Centre.

They have written to the government’s minister for policy, Oliver Letwin, to express their concern over the impact cuts could have on Decc’s ability to reform the energy market and deliver on climate policy.

Ekins said: “The prime minister went into the general election with an admirable commitment to deliver a low-carbon energy system for the UK. Decc civil servants are already very stretched in delivering this historic imperative.”

Last month, Decc announced savings of £70 million for 2015-16, £40 million of which would be cut from spending on energy efficiency. A spokesperson for Decc said: “DECC’s budget will be set out by the Chancellor and any estimates before that are pure speculation.”


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