7 questions George Osborne didn’t answer in his Spending Review

Chancellor George Osborne spoke for an hour and the Government released a 154-page document detailing the changes made to Britain's economic plan today, but when it comes to green policy, there STILL seems to be more questions than answers.

edie has covered everything a green business needs to know from the Autumn Statement and the Spending Review here, but in this article we digs a little deeper into the questions that remain unanswered on the UK’s energy and environment policy. 

1) Are the cuts to DECC really reasonable?

DECC saw its budget cut by 22%, lower than the widespread expectation of 30%, but some commentators have suggested that the planned savings were gained by simply delaying costs.

The Government said the department could save £1bn between 2016-17 and 2019-20, through “efficiencies and savings in the Nuclear Decommissioning Authority”.

Part of the plan is to delay the decommissioning of ‘non-safety-critical projects’, but as Simon Evans, policy editor at Carbon Brief, pointed on on Twitter, that is simply delaying the cost rather than reducing it. 

2) Is Defra’s budget cut steeper than it looks?

Defra’s budget was cut by 15% – roughly half of what was initially expected.

The Autumn Statement document said the savings would be delivered through “efficiencies within the department and across its network”.

Good news? Concerns remain that £2.3bn of the budget was earmarked for flood defences over the next six years, meaning that the cuts could be felt more severely in other areas like waste and recycling.

3) Are those flood defence plans flawed?

On the topic of flooding, Osborne said that 300,000 homes would be protected from flooding by a ring-fenced £2.3bn.

However, another change may limit the ability of local authorities to invest in their own defences.

Osborne said that by the end of the parliament, local governments will keep all of the revenue from business rates.

However, because of this cash boost, the existing local government grant will be phased out entirely, meaning that councils with flourishing businesses could have significantly more funds those councils in poorer areas.

4) Has Osborne really “committed” to energy efficiency?

The Autumn Statement document included a pledge to reduce the projected cost of green policies on the average annual household energy bill by £30 from 2017.

It said the bulk of these savings would come from reform of the Energy Company Obligation (ECO) scheme, which forces large energy suppliers to deliver energy efficiency measures to homes.

Surprisingly, the Government said this will be replaced in April 2017 with a new cheaper domestic energy efficiency supplier obligation, which will run for five years.

According to the official statement: “The new scheme will upgrade the energy efficiency of over 200,000 homes per year, saving those homes up to £300 off their annual energy bill, tackling the root cause of fuel poverty and delivering on the government’s commitment to help 1 million more homes this Parliament.”

However, industry experts are less impressed…

Greenpeace chief scientist Doug Parr added: “One of the ways George Osborne said he intends to cut fuel bills is by slashing the energy efficiency fund.This is nonsensical as this fund actually helps people to cut their bills and keep warm by draft proofing and insulating their homes.

“Cutting the fund simply means fewer homes will be kept warm. The number of people dying from cold in their homes is rising and this short-termist approach to that horrible fact will do nothing to help that.”

5) Will renewables subsidy cuts actually “keep bills down”?

The Autumn Statement document also suggested that the Governments proposed cuts to the Feed-in Tariff and the Renewables Obligation would cut bills by £6 a year by 2020/21.

However, nearly all of that saving will actually be put back onto bills by Osborne’s announcement that energy intensive industries (such as steel) would be exempt from the policy costs of the Renewables Obligation and Feed-in Tariffs.

The Government said these industries shouldn’t have to bear the costs of supporting renewables, “to ensure that they have long-term certainty and remain competitive”. This change will add £5 on to the average household bill every year until 2020/21.

Commentators pointed out that the Government had essentially cut renewable energy subsidises in order to lower bills, and then put those bills right back up to support some of the most polluting industries.

6) Is the Government really “doubling” support for renewables?

Earlier in the day, Chancellor and Prime Minister David Cameron both proclaimed that”spending on renewable energy is to double”. But it is important to note that this is not actually ‘new’ money – it is just the existing fund for supporting renewable energy agreed under the coalition Government.

7) Why was CCS ignored?

The Autumn Statement speech and document both completely ignored carbon capture and storgae (CCS), prompting industry insiders to wonder:

Littlecott was proved right when the Government released a note to the stock market, stating: “HM Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available.

“This decision means that the CCS Competition cannot proceed on its current basis.  We will engage closely with the bidders on the implications of this decision for them.”

What does it mean for the UK’s decarbonisation targets? Thats a question we don’t know the answer to yet.

Brad Allen

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