Home energy efficiency is to bear the brunt of savings at the energy and climate department (Decc), with £40 million of this year's £70 million cuts coming from this area.
Departments were asked to identify savings in May and chancellor George Osborne announced the results yesterday. Government departments have found £3 billion savings to March 2016, equivalent to around 3% of unprotected spending this year, he said.
Decc has put forward £70 million savings for 2015-16. This includes £20 million from underspends of last year’s budget by arms’ length bodies, and £40 million from energy efficiency subsidies, according to a spokesperson from the department.
The department released £70 million extra for the green deal programme in March, which will continue to provide a pipeline of work for the energy efficiency industry over the next six months, it said. The long-term framework for home energy efficiency is to be reviewed, he added.
Richard Twinn, policy advisor at the UK Green Building Council, said: “Home energy efficiency is one of the most cost effective ways of keeping the lights on and keeping bills low for families, and the fact that £40m of savings - more than half of DECC’s £70 million budget cut - are to be made in this area, is an ominous sign of the new government’s priorities.
“This represents another blow in what has been a bruising week for the UK’s energy efficiency industry,” he said.
Yesterday, the European Court of Justice ruled that the UK’s reduced VAT rate for energy saving measures was in breach of EU laws and should only apply to social housing.
Defra will cut £83 million from its 2015-16 budget. A spokesperson said the department was looking at stopping low priority projects such as a £250,000 research project on urban seagulls. “We are also looking at increased efficiency savings,” he said.
