Fears for green projects as Liz Truss calls for cull of 'white elephant' capital spending

Could Treasury push for a rollback of UK green policies post-Brexit? That is the question sparked by Treasury Minister Liz Truss insistence this weekend that government ministers must be prepared to "junk… white elephant projects", including low-carbon initiatives, and focus government infrastructure spending on schemes that offer the most "bang for buck" for the UK economy.

Writing in The Telegraph, Truss said the upcoming Spending Review will be a "zero-based capital review" of all big capital spending projects, suggesting green projects and high profile infrastructure programmes such as HS2 could be in the firing line as part of a drive to streamline state spending. 

"This year's Spending Review will set government budgets from 2020; and it's vital that, accompanied with supply-side reforms, we use it as a catalyst to unleash the economy," Truss wrote. 

"In reviewing this evidence, we must be prepared to junk the white elephants, the programmes that haven't worked, and roll back mission creep, where government involves itself in areas the private sector can deliver," she argued. "Growth and bang-for-buck must take precedence."

She also hinted strongly that green schemes could be impacted by the review. "We must use best-practice around the world to improve the way we regulate important goods and services or deal with market failures," Truss wrote. "Could we increase competition and reduce prices in energy by simplifying our approach to lowering carbon emissions?"

No further details were provided on how such simplification could play out. Industry insiders will be hoping the reference to increased competition and reduced prices could refer to a review of whether to allow onshore wind and solar farms - widely thought to be the cheapest form of new generating capacity available currently - should be allowed to compete for new government clean energy contracts. Trade bodies have been arguing for months that allowing such projects to compete would help curb emissions and reduce costs for households and businesses. 

However, the focus on simplification of the clean energy policy environment could also refer to Professor Dieter Helm's recent review of the Cost of Energy, which called for a streamlining of decarbonisation policies centred on clearer carbon pricing signals, but which garnered a mixed response from industry groups and the Department for Business, Energy, and Industrial Strategy (BEIS).

Green business groups and environmental campaigners will also be extremely wary of Truss' well documented hostility to a range of environmental policies. She has publicly joked about Michael Gove's efforts to tackle plastic waste and air pollution, mocking what she regards as a 'nanny state' approach. She is also thought to be at the centre of recent Treasury efforts to curb the power of the government's planned new Green Watchdog. And Truss was last week reported to be promoting plans to create a new mega-ministry by merging BEIS, the Department for Transport, and the Department for Digital, Culture, Media, and Sport. Green groups were quick to voice fears such a reorganisation would serve to push climate action down the government's agenda, while Number 10 said no such plans were being worked on.

However, concerns are growing that the Treasury would likely have more joy pushing through capital spending cuts for certain green projects. Meanwhile, it is increasingly evident that a number of Ministers are seeking to stake out proposals that could either bolster a leadership run or find favour under Theresa May's eventual successor.  

Every Whitehall department will be forced to justify its capital expenditure under the Spending Review, Truss warned in her article, adding the Treasury will be targeting 'mission creep' of policy into areas where the private sector can take control.

Inspiration could be taken from other countries, Truss suggested, such as the US "about-turn" on its regulatory approach - a reference to President Trump's controversial push to roll back environmental standards across swathes of the US economy, from vehicle emissions to water quality under the guise of freeing industry from regulations to boost economic growth. 

"Fast growth requires getting into the weeds of regulatory and competition policy, and taking on the vested interests that often shape policies to their own benefit, at the expense of consumers," Truss wrote.

Truss positioned her argument as a necessary step to unleash growth in the UK economy after Brexit. But it will revive enduring fears Brexit could become a vehicle for those on the right wing of the Conservative party to push ahead with a deregulatory agenda that could see rollbacks in environmental standards. Downing Street has repeatedly insisted it will deliver a 'Green Brexit' with no fall in environmental standards. 

But with the key Parliamentary vote on the Prime Minister's Brexit deal little more than a week away, fears are mounting the PM is no closer to securing a majority in the Commons for her deal.

If Theresa May's deal fails to make it through the Commons next week, the UK could be heading squarely for a 'no deal' Brexit, which threatens major economic disruption and would inevitably spark ever louder calls for a bonfire of environmental regulations.

Green campaigners fear a no-deal Brexit would push the UK into a 'race to the bottom' on environmental standards in a desperate battle to preserve the country's short term economic outlook. Truss' latest comments suggest such fears are not without foundation.

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