Cutting the budget for energy-saving programmes will cost us all in the long run

George Osborne's aim is to cut public spending with the minimum squawking: politically astute, but not in our collective interest

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The Independent Online

If ever you wanted a definition of short-termism, we suspect that the Government is about to provide it. As we report today, Ed Davey, the Liberal Democrat former energy and climate change secretary, fears that the Treasury will finally succeed in cutting the budget for energy-saving programmes. It was a budget he fought hard to defend, he tells The Independent on Sunday, and, although he praises Amber Rudd, his Conservative successor, he thinks George Osborne will now prevail.

The problem is that energy efficiency is unglamorous, hard to get right, and no one suffers immediately if it does not happen. It is, therefore, an obvious target for the Chancellor looking to make savings. Mr Osborne’s announcement last week of cuts of £3bn in this year’s departmental budgets was a statement of intent. Although the Department of Energy and Climate Change (Decc) got off quite lightly, with just 2 per cent shaved off its spending, this was merely a hint of the deep cuts to come.

Part of the problem that Ms Rudd will have in making the case for the energy efficiency budget is that existing programmes have been badly designed and poorly implemented. The Green Deal, the scheme to subsidise home insulation and more efficient boilers, which would be paid for in the long run by savings on energy bills, has had a disappointing take-up. After two and a half years, only 7,800 households had taken advantage of it.

Greg Barker, the Conservative former minister who launched it, blames the Big Six energy companies for failing to seize the opportunity provided by the scheme. In an interview today, he says: “They prefer to invest their capital in just selling electricity down a wire, as they always have.” While he admits that making houses energy efficient is complex, it was not an unforeseeable problem and it must be asked whether the energy sector has the right structure of incentives in place to give the companies a sufficient interest in helping their customers to save energy.

The failure of the Coalition to drive this programme ahead with more vigour is a classic example of how short-termism gets in the way of doing the right thing in the long run. If the Green Deal were to be wound down, rather than redesigned and revitalised, that would compound the error. 

Other parts of the Decc budget also seem vulnerable. There is speculation that the decommissioning of some old nuclear stations could be delayed as a way of saving money. Again, this is an unglamorous and technical subject, which seems as if it might yield short-term savings, but incurring greater costs for the taxpayer in the long run.

Mr Osborne is like an inverted Jean-Baptiste Colbert. The 17th-century French minister of finances said: “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing.” Mr Osborne’s aim is not to tax but to cut public spending with the minimum of squawking. Politically astute, sadly, but not in our collective interests in the long term.

Perhaps we are naïve. We prefer to think of ourselves as optimistic. But it is at least possible that there might be an appetite for a new kind of political leadership, one more honest with the voters about the choices we have to make in the here and now to secure the best outcomes a decade or two hence.

That would require political commitment to schemes that actually work and give the millions in this country who want to save money and preserve the environment the chance to do the right thing. Using less energy would require practical problem-solving applied to unfashionable policy detail. Perhaps Oliver Letwin, the PM’s wonder-worker, should be charged with  delivering on our carbon emission targets. Or have we forgotten those?