Treasury hijacks funds meant for green causes

Hundreds of millions of pounds raised from electricity bills to help develop renewable energy are being diverted to the Treasury, creating a new " stealth tax".

So far, the Treasury has taken £210m from the so-called NFFO Fund, while only £60m has been spent on renewable energy.

By 2010, the fund is expected to have raised as much as £1bn, which is likely to be taken by the Treasury for general spending. The process is based on the fund being a "hereditary revenue of the Crown" along with income arising from the Crown's traditional rights to treasure trove, swans and sturgeons.

A former environment minister, Michael Meacher, has condemned the move as "perverse and illicit", referring to "the predator of Whitehall" . He said: "The use to which this money is put should be determined by the purpose for which it was levied in the first place."

The discovery comes as Britain faces gas and power shortages this winter and the climate change conference in Montreal grinds to an inconclusive end. The UK's emissions of greenhouse gases are rising steeply and the UK is expected barely to meet its Kyoto protocol target for CO2 reductions. If the £1bn were spent on renewable energy, it could displace a major coal-burning power station and significantly help the Government to meet its emissions targets.

Since it was set up in 2002, the NFFO (Non-Fossil Fuel Obligation) fund has raised £321m from consumers' electricity bills - more than £13 for every household in England and Wales. Of that, the Treasury has so far taken £210m. Just £60m has been spent on capital grants for offshore windpower installations, leaving a balance of £51m.

The Department of Trade and Industry has confirmed that once the money is in what is known as the Consolidated Fund, it belongs to the Treasury. "It is the policy of the Government that we do not hypothecate revenue, so once the funds are transferred that is it," said the DTI's renewables policy adviser, Alex King.

The Treasury took a first tranche of £60m in 2004, as it was allowed to do under a one-off provision in the Sustainable Energy Act 2003. However the power regulator Ofgem, which administers the fund, has now revealed that on 20 September it paid a further £150m to the Treasury.

"Further funding was paid to Her Majesty's Treasury under the Civil List Act 1952," said an Ofgem spokesman. "As receipts of levy surplus are regarded as hereditary revenues of the Crown, it is intended that annual transfers to the Treasury will continue, in accordance with the 1952 Act."

The Civil List Act 1952 states that "hereditary revenues of the Crown" are to be paid into the Treasury's Consolidated Fund. The nature of these revenues is not specified, however Halsbury's Laws of England, written by Lord Hailsham in 1932, states that the hereditary revenues of the Crown include revenues from Crown lands, and other revenues from treasure trove, fines, forfeitures and "prerogative rights relating to royal mines, royal fish and swans". It is not clear on what basis the NFFO fund could be so regarded.

The Energy minister, Malcolm Wicks, failed to mention the transfer of funds in a written answer on 12 September, in response to a parliamentary question by Bill Wiggin MP, the Conservative environment spokesman. Instead he said the estimated "size of the fund" would be £500m by 2008. This figure, which does not account for the 20 September transfer or other subsequent transfers, was thus wrong.

"I am astonished," said Mr Wiggin, when presented with the facts. "Did the minister know he would transfer the money out a week later? He must have done. I suspect his officials could have tried harder to ensure that I knew what was going on. I find it hard to believe he has control over his department if this is what is going on. Either that or he did know and did not want me to know, which is not acceptable in a parliamentary written answer."

The director of Greenpeace, Stephen Tindale, said: "This sounds like a scandal in the making. Money raised from consumers for renewable energy must be spent on renewables - not on general expenditure. This is enough money to make Britain the world leader in offshore wind power, and that is how we believe it should be used."

Mike Childs, of Friends of the Earth, said: "This money has been raised for renewables and that's how it should be spent, for example, to bring on a new generation of renewable technologies such as wave and tidal power."

Arts & Entertainment
The Honesty Policy is a group of anonymous Muslims who believe that the community needs a space to express itself without shame or judgement
music
News
Waitrose will be bringing in more manned tills
newsOverheard in Waitrose: documenting the chatter in 'Britain's poshest supermarket'
Life & Style
life
Arts & Entertainment
Back in the suit: There are only so many variations you can spin on the lives or adventures of Peter Parker
filmReview: Almost every sequence and set-up in The Amazing Spider-Man 2 seems familiar from some earlier superhero film
VIDEO
Have you tried new the Independent Digital Edition iPad app?
Arts & Entertainment
Jack Gleeson as Joffrey Baratheon in Game of Thrones
tv
Life & Style
Father and son: Michael Williams with son Edmund
lifeAs his son’s bar mitzvah approaches, CofE-raised Michael Williams describes the unexpected joys he’s experienced in learning about his family’s other faith
Arts & Entertainment
Ian Anderson, the leader of British rock band Jethro Tull, (right) and British guitar player Martin Barre (left) perform on stage
musicJethro Tull frontman leads ‘prog rock’ revival
Sport
Gareth Bale dribbled from inside his own half and finished calmly late in the final to hand Real a 2-1 win at the Mestalla in Valencia
sport
Arts & Entertainment
Who laughs lass: Jenny Collier on stage
comedy... writes Jenny Collier, the comedian whose recent show was cancelled because there were 'too many women' on the bill
News
House proud: keeping up with the Joneses now extends to children's playhouses
newsLuxury playhouses now on the market for as much as £800
News
news
Life & Style
Stir it up: the writer gets a lichen masterclass from executive chef Vivek Singh of the Cinnamon restaurants
food + drinkLichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines
Extras
indybest
Arts & Entertainment
Ken Loach (left) and Mike Leigh who will be going head to head for one of cinema's most coveted prizes at this year's Cannes Film Festival
filmKen Loach and Mike Leigh to fight it out for the Palme d'Or
News
The academic, Annamaria Testa, has set out on her website a list of 300 English words that she says Italians ought to stop using
newsAcademic speaks out against 'Italianglo' - the use of English words in Italian language
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Apprentice IT Technician

£150.00 per week: QA Apprenticeships: This company is a company that specializ...

1st Line Technical Service Desk Analyst IT Apprentice

£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Sales Associate Apprentice

£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit