A budget-crunch within the Environment Department (DEFRA) has forced it to make significant cuts in spending on business advice services on waste and resource efficiency, as well as recycling and wildlife protection.
The cuts were confirmed in February after months of speculation. Last November DEFRA’s permanent secretary, Helen Ghosh, said that although the department’s budget would be increased overall, £270 million would have to be cut from existing programmes in order to help pay for its new commitments such as the Environmental Transformation Fund and the new greener homes advisory service (ENDS Report 395, p 57 ).
In March, the National Audit Office criticised DEFRA for a range of financial management deficiencies. It said the department had repeatedly allocated more money than it had and failed to manage financial risks effectively.1 However, DEFRA got off lightly. The NAO failed to mention the cost of current IT system delays and the ongoing EU penalties incurred after the single farm payments fiasco. It was also silent on the department’s decision not to set aside a budget for emergencies, despite spending £65 million it did not budget for following last summer’s floods and outbreaks of bluetongue and foot and mouth disease.
Although DEFRA’s budget will increase by 1.4% per year between 2007/08 and 2010/11, most of the growth is restricted to capital projects such as flood defences and waste management facilities. The department is cutting 1,400 staff, reducing consultancy spend and moving out of two London offices.
Among those most seriously affected by the budget changes are the Waste and Resource Action Programme (WRAP), which has had its budget slashed by 30%. It will have to shed 31 jobs, drop its small business recycling programme and pull its televised advertising for the Recycle Now campaign.
Natural England suffered a 13.2% budget cut and will receive £24.5 million less than its predecessors - English Nature and parts of the Countryside Agency and Rural Development Service.
Although DEFRA will continue to fund programmes that help businesses become more resource-efficient, it says the rationale for intervention has changed. Funding will be focused on "providing the necessary evidence to encourage businesses to change behaviour, rather than funding profit-making business beyond that point".
Businesses "increasingly understand the case for integrating environmental and business objectives", it says, with the use of instruments such as raising the landfill tax more quickly and the EU emissions trading scheme ensuring shorter pay-back periods. As a result, there will be "a shift from funding support to individual companies, to influencing the wider business community to take action".
As part of this restructuring, from April the government’s Business Resource Efficiency and Waste (BREW) funding scheme will be amalgamated into a broader funding programme to improve resource efficiency and cut carbon dioxide emissions.
This shift has led to budget cuts ranging between 29% and 57.9% for all delivery bodies previously supported by the programme bar the Carbon Trust, which retains stable funding .
Envirowise had its budget slashed from £22.19 million to £9.39 million. The National Industrial Symbiosis Programme also suffered a 42% cut in funding. The Market Transformation Programme, which assesses the environmental impact of appliances, has had its remit restricted once more to energy-efficiency.
The Confederation of British Industry said the move could compromise the government’s ambitions on waste: "DEFRA has to wonder whether it will reach its business and industrial waste targets without it," said its senior policy advisor, Richard Foreman.
The CBI also said the amalgamation of the BREW programme into a broader fund meant the government was reneging on its promise that increases in landfill tax would be returned to businesses in a revenue-neutral way. The CBI estimated that the Treasury is set to profit by £500 million in the next year following landfill tax hikes.