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UK Government Plans Deep Cuts In Green Energy Policy & Funding

Jim Pickard and Elizabeth Rigby, Financial Times

Officials have drawn up plans to cut the funding for household energy efficiency in the autumn spending review as they seek savings from the energy department’s budget. DECC is also braced for job cuts in the autumn. 

The government has allocated £220m this year and £150m next year towards the Green Deal Home Improvement Fund to provide incentives and cashback on double-glazing, boilers and insulation.

Despite the scheme’s name it is not part of the wider “Green Deal”, under which households can use a credit finance scheme to improve their energy efficiency.

The main Green Deal is also the subject of intense speculation after Whitehall’s “Major Projects Authority” gave it an “amber-red” score in its annual review of government schemes.

Although it has lent £34m since it was set up two years ago, it has fallen far short of ministers’ original expectations.

One insider at the Department of Energy and Climate Change said he expected the GDHIF to be cut — with the whole scheme potentially cancelled after the programme ends in 2017.

Officials are also braced for job cuts in the autumn. Decc’s headcount rose by 35 per cent under the coalition, making it one of only three departments — including DfiD and the Cabinet Office — not to see net personnel cuts.

The department justifies its headcount of 1,605 by arguing that it has had to deliver a “challenging agenda” including electricity market reform and the implementation of the Wood Review into North Sea oil.

“I hate to say it but it could lose some staff without too much pain,” said one person familiar with the situation.

Earlier in the year civil servants drew up various options for cuts to Decc spending for whichever party won the general election.

A huge proportion of Decc’s spending — £2.2bn out of £3.4bn in 2013/14 — goes on decommissioning old nuclear power stations, according to the department’s accounts.

On top of that was a further £5.5bn relating to a jump in the estimate for total liabilities for Britain’s nuclear industry, which increased last year to £64.9bn.

Some of this expenditure — such as decommissioning old Magnox power stations — could be delayed under one option put in front of ministers, although it could prove controversial.

Officials have also proposed earmarking some of the money that Decc gives to the International Climate Fund — £335m in 2015 — and instead switching the money from the ringfenced Department of International Development instead.

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