BusinessGreen investigation: How Defra is quietly killing off green business funding

Having delivered cuts in both business carbon emissions and waste going to landfill of almost three million tonnes since its launch in 2005, the National Industrial Symbiosis Programme (NISP) had been hoping for an increase in its modest budget of under £9m as part of Defra's recent budget settlement.

Instead the programme – which provides a network for firms to share or resell unwanted resources, cutting the amount of waste sent to landfill and providing new revenue streams – saw its budget slashed by around 40 per cent to just over £5m, leaving officials to work out how best to scale back the scheme.

A week on from Defra's budget announcement, the full impact of the department's attempts to cut annual costs by around £300m over the next three years is becoming apparent. A raft of initiatives aimed at cutting business waste and reducing carbon emissions have received deep funding cuts with a number of programmes likely to be axed altogether.

Defra last week attempted to downplay the impact of the new budget, which was necessitated after a series of computer problems and animal health crises left the department on track to overspend by around £1bn over the next three years. Despite announcing that 1,400 jobs were to go across the department, environment secretary Hilary Benn insisted the government remains committed to "supporting and influencing governments, businesses and consumers locally and globally" and announced increased funding for flood defences and low carbon technologies.

However, BusinessGreen has learned that in addition to a widely reported 30 per cent cut in the budget of recycling advisory board WRAP, one government-backed scheme to promote wider reuse of business waste has already been scrapped and a wide variety of other support services, including NISP, are facing major cuts in funding.

Central to the cuts are changes to the Business Resource Efficiency and Waste (BREW) Programme, which is funded through revenue from the landfill tax and has invested £284m since it was launched in 2005 in a wide range of business support agencies, including the Carbon Trust, Envirowise, WRAP, the Environment Agency, NISP and various regional development agencies.

A spokeswoman for Defra confirmed the department is now assessing BREW's role as part of a wider review into how it delivers support to the business community. She insisted that many of the agencies supported by BREW will continue to receive similar or improved levels of funding next year, but suggested that other agencies would be scrapped or scaled back.

"We've raised awareness of climate change and government has helped in that process, but now the market should dictate which services are of use to businesses," she explained. "Defra does not have a role in providing direct support to profit making businesses... that is why we are reviewing the [business support] delivery mechanisms."

At the time of publication, Defra had failed to respond to repeated requests for more detailed information on the latest budget settlement for the BREW programme, and the impact on BREW-supported agencies such as Envirowise, Action Sustainability, Waste Matters and the Business Reuse Fund.

However, sources familiar with the agencies involved insist many of the initiatives BREW supports have received sizable budget reductions for next year on a par with the 30 per cent cut dished out to WRAP. They also claim there are signs the government has already made up its mind about the results of a review into delivery mechanisms, and the BREW programme is likely to be scrapped or at least rebranded as a result.

BusinessGreen has also learned that the BREW funding cuts have already led to the cancellation of at least one business support service, in the form of Envirowise's Resource Efficiency Clubs (REC) programme.

The REC initiative sets up local networks of firms, allowing businesses wanting to dispose of materials to approach counterparts who may be able to recycle or reuse that waste. But a letter from Envirowise to local club leaders seen by BusinessGreen confirms that the scheme is to be axed from April as a direct result of the Defra budget cuts.

The letter says Defra has reassured all BREW partners that the budget cuts are "no reflection on past performance and the significant achievements made across the board", but adds that the department has "made a strategic decision on the allocation of funds and how they should be used to support businesses in the future".

Meanwhile, a raft of business advisory services delivered through the third sector are also at risk, after Defra reportedly axed a number of funds that invest in various green charities committed to raising awareness of environmental issues and promoting green best practices.

The £6.1m Climate Change Communications Initiative and £7m Citizens and Public Engagement fund have both been terminated, according to sources close to the funds, while the £2.2m Environment Action Fund is also reportedly set to end in March with no guarantees as yet that it will be relaunched next year. Again, Defra had failed to confirm the cuts at the time of publication.

Trewin Restorick of environmental charity Global Action Plan, which provides a range of business advisory services and is likely to see funding it receives from Defra cut, predicted that countless business support functions operating at a local level will be affected. "What Defra is stopping funding is a lot of the awareness and behaviour change programmes around climate change," he said. "Funding targeting small and medium businesses has also been quite substantially cut, as has waste management support at a time when the most recent waste strategy said there needed to be a carbon angle to waste."

Restorick added that Defra's handling of the cutbacks appears to have been tailored to limit media criticism of the move. "What we're seeing is death by a thousand cuts," he said. "It's not headline grabbing stuff, but it is lots of small groups that work day-to-day on these [environmental] issues. The cuts have also been passed down to the various agencies, which then dish them out in a piecemeal fashion, which makes it very difficult for people to work out what is going on."

Business groups also reacted angrily to the scale of the cuts, arguing that they run completely counter to ministerial commitments to make tackling climate change a central plank of government policy.

"What we're concerned about is that these cuts are coming at a time when the carbon agenda is just beginning to gather momentum amongst businesses," said Matthew Farrow, head of environment at the CBI. "It is exactly the wrong time to cut back on programmes that help to limit businesses' environmental impacts."

He added that firms are likely to be particularly frustrated by any attempt to axe the BREW programme, as it would undermine the government's original pledge to reinvest revenue raised from businesses through the landfill tax to support firms' attempts to improve their waste management. "The BREW money came from landfill tax receipts," he said. "Revenue is increasing through the landfill tax accelerator, but now it seems there'll be no guarantees that money is going towards improving businesses waste reduction efforts."

Craig Bennett of the Corporate Leaders Group on Climate Change agreed that the budget cuts could undermine firms' attempts to reduce their carbon emissions. "Many businesses take their lead from signals from government and want to see some help and guidance as they seek to cut their carbon footprint," he said. "When there are budget cuts in areas like this it just doesn't send out the right signal."

Bennett called for a shift in government thinking towards green investments. "At a time when there is concern about the state of the economy, what is required is a low-carbon stimulus package," he said. "The government needs to realise this type of business support is not just a cost, but an investment that bears long term dividends."

However, Matthew Thompson of the London Community Recycling Network, which could also see its funding impacted by Defra's budget cuts, insisted those criticising Defra had picked the wrong target.

"To my mind Defra is doing its best with the very awkward hand it has been dealt by the Treasury," he said. "Businesses should be supportive of Defra and look at where the problem originates. The Treasury can find £50bn to bail out a failing building society but not £1bn to support Defra."