Defra reveals full scale of green budget cuts

The CBI has written to ministers at Defra and the Treasury to protest at the recent round of budget cuts to hit key green business advisory and support services.

BusinessGreen has learned that the letters, which were sent just prior to last month's announcement of cuts designed to address a budget shortfall at Defra of £1bn over the next three years, accuse the government of badly mishandling the new budget settlement.

The CBI states that the government left it far too late to give various agencies and delivery bodies their budgets for April onwards, resulting in many of them having to revise and even scrap plans for the next year.

The employers' organisation also accuses the government of reneging on an agreement to ensure that revenue raised from businesses through the landfill tax would be returned to the corporate sector through investment in the government's Business Resource Efficiency & Waste (BREW) programme. It also argues that the government is downgrading support for green business programmes just as they are beginning to gain momentum.

The news comes as the full scale of the budget cuts inflicted on the government's green business support services have finally been revealed, after Defra confirmed a raft of key programmes are to face funding cuts of between 29 and 58 per cent.

Business advisory body Envirowise is to be the worst effected, with its budget for next year having been slashed by 58 per cent compared to 2007/08. Meanwhile, sustainable procurement programme Action Sustainability joins waste and recycling body WRAP in having to make do with 30 per cent less funding; the National Industrial Symbiosis Programme (NISP) is to have 39 per cent axed from its budget; and spending on researching waste data is to be cut by 30 per cent.

Furthermore, while receiving more money for its work on flood defences the Environment Agency is to receive 38 per cent less funding for its waste-management programmes and Defra's Business Reuse Fund, which provided grants to charities promoting material re-use among businesses, is to be axed completely. Defra's contribution towards the Department for Innovation, Universities and Skills' environmental technology R&D programme, which stood at £26.8m for 2007/08, is also to be axed.

A Defra spokeswoman defended the cuts, claiming they were the result of a shift in the government's approach to green business support that will see it move away from funding individual firms, and in some cases bolstering their profits, and towards promoting change among the wider business community.

She said that this shift in emphasis explained the deep cuts to Envirowise's budget. "Envirowise has a large focus on supporting individual companies through detailed and specific advice," she said. "While there is no argument this has delivered major environmental and financial benefits to business, the very nature of the support only allows for the programme to reach a small proportion of the target audience."

She added that in future, funding for the programme, while reduced, would focus more on events and best practice case studies capable of providing evidence to the business community at large on the benefits of resource efficiency.

Simon Briault of the Federation of Small Businesses said that any cut in spending on green business support services was unwelcome, but insisted that the shift in emphasis from Defra could have favourable results. "Part of the problem for small business owners is that there are all these different support services, but none of them are particularly well promoted and there has not been massive takeup," he said. "If the government is to try and put the various services under one roof and spend more on promoting the practical measures firms need to take, that is to be welcomed."

However, Matthew Farrow, head of environment at the CBI, rejected the government's claims that the changes would prove beneficial to businesses. "In a few years' time I could understand the argument that it is not the government's place to provide this support and it should be self sustaining, but now the timing is all wrong," he said. "To pull much of the money out just as many of these programmes, such as NISP for example, are gaining momentum is wrong."

Farrow added, "It is like the plane is halfway down the runway and the government has now decided to cut the engine and see if it still takes off."

The round of budget cuts is the result of a major overhaul to the BREW programme, which had previously been the main source of funding for many of the affected business support services.

BREW was launched in 2005 as a means of ensuring that revenue raised from businesses through the new landfill tax was invested in helping firms reduce the amount of waste they produce. Between 2005 and 2008 it provided £284m of funding to a raft of business resource efficiency agencies.

However, the Defra spokeswoman said that this "ringfencing" arrangement would be scrapped and that while the department will continue to invest in many of the agencies funded by BREW, the programme itself would cease to exist.

Farrow said there is a lot of frustration among CBI members at the decision, with many believing that the revenue from landfill tax should continue to be " recycled" to support businesses in their efforts to cut waste.

Briault agreed the changes risked leaving business leaders with the impression that the landfill tax represents less a genuine green tax and more a means of bolstering the Treasury's coffers. "It is pretty rare for the government to ringfence tax revenue," he said. "But if they were more inclined to do so, they might find their tax decisions earn a bit more respect from the business community."

The spokeswoman for Defra said that getting rid of the BREW programme was necessary to provide the department with "greater budgetary flexibility" and enable "a single, more focused approach" to allocating resource efficiency funding.