Investigation: budget cuts cripple green business support

How do you hide £1bn of budget cuts to key government agencies from the business community and the wider public?

It's certainly not easy. But that, according to several sources close to the agencies involved, is precisely what the Department for Environment, Food and Rural Affairs (Defra) has been attempting to do – and pretty successfully it seems – for much of this year.

The department first announced back in February that the combination of last summer's floods, animal health scares, and a series of high-profile computer glitches meant it was facing a budget shortfall of almost £1bn over the next three years.

In an attempt to balance the books, a number of the government's key green business support agencies saw their annual budgets for the financial year starting in April slashed by between 29 and 58 per cent.

Business advisory body Envirowise was worst affected, seeing its budget slashed by 58 per cent, while recycling body WRAP and sustainable procurement programme Action Sustainability saw theirs cut by 30 per cent.

Similarly, the National Industrial Symbiosis Programme (NISP), which provides a network for firms to share or resell unwanted resources, had to make do with 39 per cent less funding and the Environment Agency saw its budget for waste management programmes reduced by 38 per cent.

Meanwhile, Defra's Business Resource Efficiency & Waste (BREW) programme, which provided the funding for many of the government's waste-focused agencies using revenue raised through the landfill tax, was axed altogether.

Several green charities also saw funding from government dry up after it failed to renew the multimillion-pound climate change challenge and environmental action funds.

The cuts sparked uproar at the time, with environmental groups slamming the government for failing to back up its climate change rhetoric with proper funding.

The CBI wrote a formal letter of complaint to ministers and accused the government of reneging on an agreement to ensure revenue raised from the landfill tax was earmarked to help businesses reduce waste levels.

But despite the protests, the new budgets were pushed through and since then a number of green business services have been quietly axed.

For some critics, Defra's decision to focus the cuts on relatively small-scale programmes, primarily targeting decidedly unglamorous areas such as waste management and small business support, smacks of a deliberate damage-limitation strategy.

"They have become obsessed with climate change and big business and forgotten about everything else," comments one observer. "It's always the small business programmes that get hit as they are less noticeable - it's death by 1,000 cuts. "

And one insider argues that when deciding where the axe would fall, Defra sought the path that would provoke the least opposition. "The BREW team was quite a junior team within Defra and there was a big gap between them and the ministers making the decisions," says our source. "The BREW programme was really important, but they did not have the clout within the department to stick up for it."

Adding to the sense that the government is trying to hide the impact of the budget cuts, many of the affected departments are attempting to downplay their effect.

A spokeswoman for WRAP, for example, insisted that while 18 people were made redundant in the wake of the new budget being imposed, subsequent recruitment in other roles meant that the net loss had been kept to a minimum.

She also argued that the launch of a new business programme focused on resource efficiency and climate change meant it was difficult for the agency to detail precisely which services had been cut as a result of the smaller budget. "We can't sit down and say x, y, and z suffered as a result," she said.

Similarly, Emma Jane Allen, business manager at Action Sustainability, claims that its 30 per cent annual budget cut has had little impact.

But when pushed, she admits the agency's initiative to raise awareness of sustainable procurement among small and medium-sized enterprises (SMEs) has been scrapped.

"Last year we did six SME awareness events around the country, telling them about sustainable procurement and advising them on what they had to do to win business from government departments increasingly focusing on sustainability," she says.

"We were telling them that this is a huge issue and advising them on what tack they needed to adopt to get a piece of the pie."

But she still maintains the cuts have not had a major impact. "Our expertise is in advising procurement professionals on sustainability, so we felt the SME events were not core to our activities," she says.

It is a similar story at NISP, the sharing and efficiency programme, which helps many SMEs pass on unwanted waste and resources to other firms for re-use.

Maggie Morrissey, spokeswoman for the organisation, argues that the programme's core services have not been affected by the budget cuts, but admits it has cut back its recruitment activities.

"Prior to the funding cuts, one of our biggest goals was to grow the membership," she says. "We have signed up 10,000 members since 2005, but we are no longer looking to grow that membership as fast and have cut down on the number of recruitment workshops."

The decision is a considerable blow for a programme that, according to its latest figures, has diverted almost three million tonnes of waste from going to landfill since its launch in 2005.

Morrissey admits that "opportunities are being missed" as a result of the scaled-back recruitment activities and confirms the organisation is now applying for investment from the EU regional development fund.

Other agencies are more evasive when questioned about their budget settlements. Envirowise diverts all enquiries about the matter to Defra, which in turn offers a rather cryptic assessment of the agency's current activities.

"Instead of working on programmes to support businesses on an individual basis, it will work on programmes to engage multiple businesses at the same time," offers a Defra spokeswoman.

"Envirowise staff resources have been redeployed in other areas to ensure that specialist advice and information about resource efficiency is made widely available to a broad range of business groups."

In practice, this means a huge downsizing in its attempts to promote green business best practices.

As BusinessGreen.com revealed earlier this year, Envirowise's Resource Efficiency Clubs programme – which set up local networks of firms that allowed businesses wanting to dispose of materials to approach counterparts who may be able to recycle or re-use that waste – was scrapped within days of the new budget being announced, while observers claim other activities have also been scaled back.

"Envirowise has been the worst hit out of everyone," observes one source who has worked with the agency. "It has a really important job in trying to engage with business over green issues and as a result it spent a lot on partnerships, sponsorships and marketing, much of which has stopped."

Similarly, a number of green charities have had to trim operations after government funding was pulled.

One example is green advisory charity Global Action Plan, which has been forced to scrap its Eco Teams programme that promoted behavioural change in the home.

Chief executive Trewin Restorick said the programme, which was run in conjunction with the Women's Institute, was successful but had to be abandoned as a result of the loss of government funding.

"An independent study from the University of East Anglia found that participants in the Eco Teams cut their household emissions by 18 per cent," he said. "But that's all gone now."

Despite the changes, a Defra spokeswoman insists the department is improving its business support services.

"Defra is improving access to business advice services through the government-wide Business Support Simplification Programme," she says. " Streamlining the wide range of support available will make it easier for business to access Defra's services."

She adds that a wide range of business advice and support can now be accessed through the government's online Business Link service.

But business groups have been left frustrated by the cuts, accusing the government of undermining its own rhetoric on climate change and cutting support for the types of smaller firms that need advice and guidance the most.

A spokesman for the Federation of Small Businesses expressed concern that the cutting of any government services would make it harder for smaller firms to embrace the environmental agenda.

"Environmental regulation is complex enough and business does need help and support – it is hugely detrimental when help is taken away and there are still problems," he said.

He added that there were still very low levels of awareness over green regulations such as the forthcoming Registration Evaluation and Authorisation of Chemicals directive.

Restorick agreed small businesses would be badly affected by the cuts. " Small businesses don't want to send people on courses or get advice off the internet, they want someone to come in and show them what to do to be greener," he argues. "That was the type of service organisations such as Envirowise offered. "

He adds that the decision to target small business services was based on a false assumption that to deliver deep cuts in carbon emissions, government should focus on supporting big business. "Larger firms are embracing sustainability anyway – it is smaller businesses that need the help."

There are also those who are convinced that, nine months on from the original budget shortfall, the impact is still being felt in the form of Defra's upcoming Landscape Review.

As revealed last week, the review is expected to recommend a major consolidation of the number of green business agencies that will see smaller agencies such as Envirowise folded into three or four super agencies built around the Carbon Trust, the Energy Saving Trust, WRAP and possibly NISP.

But at least one source close to the process is adamant the proposed overhaul is driven as much by a need to balance the books as a desire to improve support for businesses.

"I'd say that the budget cuts from earlier in the year have had a significant impact [on the Landscape Review]," he says. "They have been directed to come in under budget and this [consolidation of services] is their way of doing it."

It appears that at a time when the government is only too keen to tout the UK as a leader in the fight against climate change, it has simultaneously been successfully downplaying cuts in services to some of the very agencies tasked with putting its supposedly world-leading climate change strategy into practic e.

And not content with heaping one budget-imposed overhaul on its green business agencies already this year, it looks as if another revamp could be instigated from as early as next April if the Landscape Review's central recommendations are adopted.

"The consensus from business is that we want the delivery model we have now, but performing even more effectively," concludes one insider. "But that is not the preferred option – it looks like the changes are a done deal."