George Osborne's spending cuts: the green revolution's obituary?

Do you remember the heady days of the general election campaign, back in April when all three party leaders vied with each other to assure a troubled nation that, if they were elected, our devastated economy would be restored to robust health by the creation of ‘green jobs’? Figures of hundreds-of thousands, and even millions, were bandied about. Terms like  ‘energy efficiency’, ‘energy security’, ‘de-carbonisation’, ‘low carbon economy’   and ‘green industrial revolution’ were duly trotted out. But those of us who were watching carefully noticed that these initiatives were only mentioned in passing, and the politicians seemed relieved when they could move on to other parts of the policy agenda.

It’s true that Nick Clegg’s commitment to this bright new world shone through rather more convincingly than the others, but then he could not have seriously expected to become deputy prime minister in a coalition with the Tories a few weeks later.

On Wednesday, George Osborne delivered his much heralded statement on spending cuts to a packed House of Commons and a nervous nation. It quite soon became clear that a ‘statement’ was not quite what all this was about. The Chancellor of the Exchequer was in fact delivering a budget, and one on a scale that dwarfs the usual annual event of that name. The sums of money he was juggling were huge, and the consequences of his strategy failing far more perilous.

So how have the heady aspirations that revolve around all that is most green and sustainable fed through into the cold reality of economic planning for the next five years? Here are the relevant passages from the Chancellor’s speech; they won’t take long to read.

Long term investment in the capacity of our transport, our science, our green energy will all help move Britain from its decade long dependence on one sector of the economy in one part of the country – and the ruin that has led to.

….. when money is short we should ruthlessly prioritise those areas of public spending which are most likely to support economic growth, including investments in our transport and green energy infrastructure, our science base and the skills and education of our citizens.

Do the references to ‘greenness’ herald major initiatives that will transform the economy, the energy infrastructure of the country and the way that we live? Or are they just necessary platitudes to stave off trouble with the more environmentally minded half of the coalition? The answer becomes all too clear when Mr Osborne gets down to specifics.

Britain is a world leader in scientific research. And that is vital to our future economic success. That is why I am proposing that we do not cut the cash going to the science budget. It will be protected at £4.6 billion a year.

Building on the Wakeham Review of science spending, we have found that within the science budget significant savings of £324 million can be found through efficiency.

If these are implemented, then with this relatively protected settlement I am confident that our country’s scientific output can increase over the next four years. We will also: invest £220 million in the UK centre for Medical Research and Innovation at St Pancras; fund the molecular biology lab in Cambridge; the Animal Health Institute in Pirbright; and the Diamond synchrotron in Oxford.

Research and technological innovation will also help us with one of the greatest scientific challenges of our times – climate change – and it will support new jobs in low-carbon industries.

So today, even in these straightened times, we commit public capital funding of up to £1 billion to one of the world’s first commercial scale carbon capture and storage demonstration projects.

We will also invest over £200 million in the development of off-shore wind technology and manufacturing at port sites.

Yesterday, protestors scaled the Treasury urging us to proceed with our idea for a Green Investment Bank.

Mr Speaker, it’s the first time anyone has protested in favour of a bank. We will go ahead. I have set aside in this Spending Review £1 billion of funding for that Bank, but I hope much more will be raised from the private sector and the proceeds of future government asset sales.

The aim of all these investments is for Britain to be a leader of the new green economy. Creating jobs, saving energy costs, reducing carbon emissions.

We will also introduce incentives to help families reduce their bills. We will introduce a funded Renewable Heat Incentive.

Our Green Deal will encourage home energy efficiency at no upfront cost to home-owners and allow us to phase out the Warm Front programme.

Overall, the total resource settlement for the Department for Energy and Climate Change will fall by an average 5% a year – but there will be a large increase in capital spending, partly to meet unavoidable commitments we’ve been left on nuclear decommissioning.

DEFRA will deliver resource savings of an average 8% a year – but we will fund a major improvement in our flood defences and coastal erosion management that will provide better protection for 145,000 homes.

When you strip out the window dressing, what is left amounts to this:

The science budget is to be frozen at £4.6bn a year, with the forlorn hope that efficiency savings will allow research effort to help combat climate change and support new green jobs will grow nonetheless. Taking inflation into account, this looks like a year-on-year reduction in spending on scientific research even though the chancellor goes on to say that research is just what we need at the moment. It sounds as though business as usual with a tightened belt is the new order of the day for scientists.

Four research projects will attract £220 million. None have anything to do with green energy or climate change.

The apparent pledge of £1 billion for ‘commercial scale carbon capture and storage demonstration projects’ is hedged with the weasel words ‘up to’. If I was a green activist that would worry me.

Allocating £200 million to offshore wind infrastructure is no more than tossing loose change to the crowd. It may be significant that this is likely to be spent in the North East, an electorally very sensitive area for both Liberals and Conservatives.

Just £1 billion has been ‘set aside’ – those weasel words again – for the green bank that is supposed to finance the green energy revolution, with a pious hope that something will turn up from the private sector or asset sales. To put this in context, £30 billion was allocated to transport infrastructure in other parts of the speech.

To qualify for the Warm Front scheme, you needed to be on benefits, which isn’t very fashionable at the moment so it’s being dumped, which seems a pity as it helped those on low incomes, and the especially the elderly, with insulation and new efficient heating systems.

The new Green Deal doesn’t arrive until 2012. It is a government sponsored mortgage scheme that allows people to borrow money from the government to make their homes more energy efficient. Repayments are made via utility bills over twenty-five years. The likely take-up rate is anyone’s guess, and Chris Huhne’s Department of Energy and Climate Change press release,  suggesting that the new scheme will create a quarter-of-a-million new jobs by 2030 makes amusing reading. Significantly, the Chancellor did not mention Huhne’s job creation claim in his speech.

If the government is serious about a green energy revolution, then one might expect that DECC would have escaped the axe. Instead it faces a cut which is magnified by the fact that much of the department’s budget is consumed by nuclear decommissioning liabilities incurred decades ago. DECC are to receive further help with this, but no mention of more money for green projects.

DEFRA, the ancestral home of climate alarmism, faces an even more swinging cut. Those who remember the havoc caused to new housing unwisely built on flood planes over the last few years, and the last government’s neglect of coastal defences, will not be surprised that there is an allocation – albeit an unspecified amount – to address these problems.

With major statements on the economy from government, it is often days before the true impact emerges, so I’ve been keeping an eye on the media to see what priority the green revolution would receive in interviews with the main protagonists.

First up was a rather worried looking Danny Alexander on Newsnight. In response to a series of taunting questions from Jeremy Paxman about the half-million jobs in the public sector that will be lost as a result of the cuts – with maybe another half-million to come –, the Chief Secretary to the Treasury reeled off a list of ways in which the government would help the private sector grow and provide new jobs: supporting the creation of small businesses, tax breaks for businesses, a ‘falling path’ for corporation tax, supporting exports ……. All this, claimed an increasingly flustered Danny, would create two million new jobs in the private sector. Only when a persistent Paxo asked whether the people of Swansea would have to get on their bikes to look for work when the Passport Office there closes did the chief secretary remember the Green Bank, and suggest that might be able to help. His tormentor didn’t let up, “Your finding an awful lot from a single billion, aren’t you’, he sneered. Alexander insisted that a lot more than that would go into the bank from asset sales, but he looked as though he was trying to convince himself rather than the audience. He certainly wasn’t suggesting that the £1 billion ‘set asside’ for the bank was a realistic sum.

The next morning George Osborne was interviewed at length by the ever astute and well-informed Evan Davis on the Today programme. The green revolution got very short shrift when the Chancellor said that capital going into transport infrastructure and green investment would help us through the bad times. No specifics were offered, and no follow-up question was asked by the interviewer.

The Chancellor’s statement seems to contain just enough greenwash  to keep the Liberals quiet, and with other measures that are already in place, will allow the claim that this is the ‘greenest government ever’ to be wheeled out when necessary. But the real situation is far more worrying. The only thing that is worse than a full-blown green revolution that would have an enormous impact on the cost of energy and the competitiveness of industry is a half-blown green revolution that is heading nowhere and cannot be halted because of the momentum that it has gained.

For the moment, the glorious prospect of us all having a windmill at the bottom of our garden – and probably a solar panel where the sun don’t shine too – now seems to exist only in the realms of political rhetoric.