Spending review leaves DECC with the second biggest increase

– As a result of last week's comprehensive spending review, the Department of Energy and Climate Change (DECC) will see an increase in its spending over the next four years. This will allow DECC to deliver the planned green investment bank, Green Deal energy efficiency scheme and promised support for wind energy and carbon capture and storage (CCS) projects.

Energy and climate change secretary Chris Huhne said the department that came out better from the spending review, after looking at capital and resource spending together, was the Department for International Development that saw its budget increased in 50%. The Department of Energy and Climate Change had the second biggest increase in spending, with better luck than other departments that have just been ring fenced such as Health.

Over the four-year spending review period, DECC will reduce resource spending by 18% and administration costs by 33%, but capital spending will increase 41%. As a result, the department's total resource and capital spending will increase from £2.9bn in 2010-11 to £3.7bn by 2014-15.

Huhne and his ministerial team fought a lengthy battle with the Treasury to secure a better than expected spending review for the department. He said that the spending review was a conclusive evidence of DECC's independence and the coalition's commitment to the low-carbon agenda.

The Treasury's spending review seems to have billions of pounds promised for a Green Investment Bank, carbon capture and storage (CCS) and developing ports to support offshore wind. Feed-in tariffs also dodged the axe and will be complemented by a fully funded renewable heat incentive (RHI) from April.

In particular, Huhne reassured that the Green Investment Bank would operate as a genuine bank and would secure further capitalisation on top of the £1bn of funding promised yesterday by chancellor George Osborne. Huhne also dismissed speculation the bank would operate as a low-carbon investment fund, rather than a full-blown bank with the ability to raise private finance.

However, businesses reactions were not that positive after knowing that CRC revenues no longer go to participants in the CRC scheme and the fate of numerous other green initiatives remains unresolved.


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