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."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
peopleMathematician John Nash inspired the film Beautiful Mind
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
music
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine