Green Deal: Energy efficiency programme may be axed amid austerity drive

The Green Deal home improvement plan may be mothballed while some spending on nuclear decommissioning would be delayed

The Magnox Trawsfynydd nuclear power station in Wales is in the middle of the transition into a 'care and maintenance' period of its decommissioning (Getty)

Spending on energy efficiency and the clean-up of Britain’s old nuclear reactors is set be significantly reduced as part of the Government’s austerity drive.

In order to save money it is being proposed that the controversial Green Deal home improvement plan should be mothballed while some spending on nuclear decommissioning would be delayed.

Amber Rudd, the Climate Change Secretary, told The Independent on Sunday that all Department of Energy and Climate Change (DECC) spending on energy efficiency was being looked at: “We’re reviewing that whole area.”

Overall, DECC’s £3.3bn annual budget is expected to be one of the biggest casualties in percentage terms of George Osborne’s latest austerity drive. He announced last week that it would have to find £70m in this financial year and that figure is expected to rise significantly in the autumn Spending Review. The department has already lost the equivalent of one full-time minister following last month’s reshuffle and there are expected to be significant staff cuts as big projects such as the Green Deal and Electricity Market Reform are wound down.

Significantly, the Green Deal no longer has a minister directly responsible for the programme, while the energy efficiency brief has been handed to Lord Bourne – the most junior minister in the department who divides his time with the Welsh Office, and is unpaid.

Amber Rudd, the new Climate Change Secretary, has confirmed that all departmental spending on energy efficiency is being looked at (AFP)

The former Liberal Democrat energy secretary Ed Davey told the IoS that the Chancellor had repeatedly tried to cut Government subsidies for energy efficiency and would now enforce his writ.

“My concern is over the Treasury wanting to cut back and not give energy efficiency the prominence it merits,” Mr Davey said. “Not least because I know how hard we had to fight almost on a daily basis [to protect the budget]. The Treasury is quite short-termist in the way it looks at these issues. I have huge concerns.”

He added that he welcomed the appointment of Ms Rudd as his successor, but warned that she would be in a far weaker position in a Conservative-only government to see off plans for further cuts.

“Amber Rudd has always been a real champion of energy efficiency. I wouldn’t imagine that she or the department is going cold on the issue – it will depend on the winds blowing from the Treasury.”

Alan Simpson, a former Labour MP and environmental consultant who advised the coalition, said he was in no doubt that the Green Deal would be wound down: “In place of climate denial we are going to see resource denial.

“Energy efficiency has become a huge embarrassment.

“You had a scheme that was a donkey. It was quite clear that the limit of credible deception was going to be the end of the last Parliament. Whoever came in was going to look at the debacle and have to do something about it … This is the end of the Green Deal.”

Around 65 per cent of DECC’s budget (£2.1bn) is spent managing the UK’s nuclear waste and decommissioning old nuclear power stations. While some of this work is time-critical, other parts of it, such as decommissioning the old Magnox power stations, could be delayed.

“Clearly this money is going to have to be spent at some stage, but we are fully expecting some budget cuts and delays,” said a source.

“This will ultimately cost the taxpayer more in the long term, but it could provide savings in the short term.”

The Treasury currently allocates DECC around £150m a year towards household energy efficiency which forms part of the Green Deal Home Improvement Fund. This funding could be cut both this year and next and is unlikely to be renewed in 2017.

Another possible area for cuts would be the £392m that DECC currently contributes to the International Climate Fund, which supports climate adaptation and mitigation efforts in developing countries.

Currently DECC provides a third of the UK’s total contribution to the fund, but this obligation could be transferred to the Department of International Development, whose budget is ring-fenced and guaranteed not to fall below 0.8 per cent of GDP.

Ms Rudd said she was not in a position to comment on where the cuts would be made.

“There will be more detail on it to follow – but I don’t think it will have a negative impact on our current plans,” she said.