Defra one of biggest losers in spending review

The environment department's annual budget has been slashed by 9.6%, one of the biggest cuts seen in the chancellor's review of government spending

Defra’s budget in 2015/16 will be £100 million lower than in 2014/15 the Treasury has confirmed, with £54 million of savings expected to be generated through “better joint working” between the department’s bodies, which include the Environment Agency, Natural England and the Forestry Commission.

In his speech announcing the results of the latest spending review, the chancellor said that the government would set out plans for a “major commitment to new flood defences”, however, documents from the Treasury confirm that Defra’s budget for investing in new defences will remain the same in “cash terms”, resulting in real term cut when inflation is factored in.

The energy and climate change department, meanwhile, has had its year-on-year budgets cut by 8% in real terms. The department is expected to save more than £80 million in administration savings through “efficiencies”, such as replacing IT systems and by reducing the costs associated with bodies such as the Nuclear Decommissioning Authority.

Treasury documents confirm that Decc will, however, be able to generate £5.3 billion from levies on energy bills to finance policies, including subsidies for renewables, and that the funds for the Renewable Heat Incentive are to be increased by £6 million, to £430 million in 2015/16 in a bid to boost lacklustre uptake.

However, the Renewable Energy Association (REA) warned that the cash injection was far below what was needed to meet the UK’s carbon reduction targets. According to the REA, spending on renewable heat technologies needs to double every year in the early years to meet necessary deployment levels, which means a budget of £800 million was needed in 2015/16.

“It is important that the UK meets its renewables target in the most cost-effective way possible. Heating from biomass is one of the cheapest means of doing this. This poor settlement, coupled with next week’s tariff reductions for medium scale biomass installations, sends a very bad message over the government’s long term support for this sector,” commented REA’s chief executive Gaynor Hartnell.