A subsidy for green heating systems worth more than £400m a year is set to be pruned in the autumn spending review as ministers seek to rein back spending at the Department of Energy and Climate Change. Decc is playing down a rumour that it could be merged into another ministry.
Energy ministers have drawn up cuts to the Renewable Heat Incentive , a scheme designed to encourage a shift to low-carbon heating systems.
The Decc submission to the Treasury for the autumn spending review will also feature heavy job cuts; the department’s headcount rose by 35 per cent under the coalition even as other ministries saw net staff cuts.
Officials have also proposed earmarking some of the money Decc gives to the International Climate Fund — amounting to £335m in 2015 — and instead taking it from other areas, such as the ringfenced international development department.
Meanwhile, Decc is playing down a rumour that it could be merged into another ministry, the business department, for example, to cut costs. “I’d strongly, strongly steer you away from that,” said one insider.
Big cuts to the RHI would be disastrous for a sector supporting 32,000 jobs and which has installed thousands of green heating systems across the country, said the Renewable Energy Association, a trade group.
“It would be a catastrophe for the industry if the government chooses to cut it,” said Frank Aaskov, a policy analyst at the association, explaining the main point of the scheme was to encourage a stable supply chain and reduce costs so the sector could eventually survive without government aid. […]
A Decc spokesman said the department’s priority was to keep bills as low as possible, while cutting emissions in a cost-effective way.
“Departmental spending will be set out in the spending review this autumn and any estimates before this is published are pure speculation,” he said.