Envirotec

Defra and DECC budget cuts loom

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Spending Review criticised for lack of detail

The UK government Spending Review in late June inflicted a 10% cut on the Department for Environment, Food and Rural Affairs (Defra), the highest for any government department, with the Department of Energy and Climate Change (DECC) not far behind, with a budget reduction of 8% on the cards.

In his address to the House of Commons, George Osborne provided few details on where exactly the cuts will be made. The departments in question were expected to announce more details later.
However, the Chancellor also pledged £50 billion for capital investment in 2015, to increase infrastructure, with more than £300 billion also earmarked for further capital investment before the end of the decade (see “UK infrastructure investment highlights”, below).
Labour criticised the spending package on the grounds that it didn’t amount to any actual increase in capital spending on top of earlier announcements, and there was no guarantee that the promises would be acted upon. Quoted in The Guardian, The Institute of Fiscal Studies’ Paul Johnson said that public-sector net investment would be broadly flat over the next four years, falling in 2015-16 to 1.5% of GDP, from 1.6% in 2014-15, and falling further as a share of national income in 2016-17 and 2017-18. The IFS also accused George Osborne of failing to explain many of the spending cuts in his spending review statement, saying the documents that accompanied the 2015-16 review were “woeful”.
The CBI welcomed evidence that pro-growth areas like science, innovation, skills and exports were being relatively shielded from cuts. “The £185 million boost for the Technology Strategy Board – a crucial anchor for innovation – is particularly welcome,” said a statement.

UK infrastructure investment highlights
ON the day after the UK government Spending Review in June, Chief secretary to the treasury Danny Alexander laid out the details of a new infrastructure plan. Underpinned by plans to spend £100 billion of taxpayers’ money over the next five years, Alexander described it as “the most comprehensive, ambitious and long-lasting capital investment plan this country has ever known.”
The plan includes a programme of investment in Britain’s roads, the equivalent of £28 billion over the next five years. Criticism levelled at this element of the plan by commentators included the fact that many of the relevant projects are already in progress, while others appear to be little more than feasibility studies at this stage.
The five-year-plan also included a programme to renew the UK’s ageing power stations, in addition to plans to invest in renewables and to develop shale gas. However, these energy plans will be paid for by the consumer through higher energy bills.
Britain’s flood defences – previously subject to 25% year-on-year cuts set in motion in 2010 – appeared to receive a boost with the provision of £370 million in 2015, increasing until 2020. There will also be help for high flood risk households with a scheme to limit insurance pricing, with no additional cost to the taxpayer.

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