Spending Review 2013 - a preview

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Spending Review 2013 - a preview

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Later today we shall hear the results of the now traditional Westminster sporting spectacle of the Spending Review.

The Chancellor is due to announce the departmental spending settlements for Whitehall for the period 2015-16. While much of the commentary will focus on the winners and losers in the Cabinet, there are real consequences, not least, for the State's ability to protect the environment.

We are not expecting any major surprises from today's announcement (the 10% ballpark figure has been known for some time) but it is worth remembering the context.

In the last CSR, DEFRA volunteered to shoulder a 30% real terms cut between 2010 and 2015. This took their budget from £2.4 billion in 2010/11 down to £1.8 billion in 2014/15. Due to DEFRA underspend, this has now been revised down to £1.7 billion. We will be keeping an eye on whether spending for 2014/15 is revised downwards again. If DEFRA has negotiated an 8% cut for 2015/16, its budget will be closer to £1.5 billion. This is around a 40% cut in real terms, but the costs to conservation are likely to be much larger as these costs will not be shared equally around the Department. Flooding, for instance, which represents a large chunk of DEFRAs budget, is effectively ring-fenced. The UK has an agreement with insurers who guarantee to provide affordable flood risk insurance to all households in exchange for flood defence spending from Government. That agreement ends very soon and the thought of hundreds of thousands of homeowners suddenly finding their homes uninsurable will have made a strong argument for the Secretary of State in his negotiations with the Treasury.

A glance over last year's DEFRA budget highlights the vulnerability of other areas of DEFRA spending. Natural England, for example, was asked to make a 38% cut after the last CSR. There must be a real danger that further cuts will damage some of its core services (e.g. monitoring, enforcement of the law, providing advice on the impacts of damaging development, supporting farmers who want to do more for wildlife, identification of Marine Conservation Zones, etc).

George Osborne announced in his post-election ‘emergency’ Budget 2010 that the budget deficit would be balanced within four years. That is now forecast to happen in 2017-18, leaving us still four years away from achieving the target. This economic downturn is taking a lot longer to fix than many expected and, particularly given the Labour party's new position of sticking with current goverment's spending plans, we need to get used to the idea that we could be living in what some refer to as an "age of austerity" for a long time to come yet.

Yet, even when spending is tight there is still a valid debate about what constitutes the right level of spend for the environment. As I have argued through this blog (see here and here) - it pays to invest in wildlife. And, irrespective of today's announcement, it is this debate that needs to be resuscitated with each of the political parties.

Watch this space for our reaction to today's announcement.

Comments
  • Assuming you accept the logic of Osborne's position - when in fact the Conservative obsession with cuts & destroying the public sector is a key - if not the - key factor in the Government's failure to generate growth. Is there any real interest in growth in Defra ? One test is whether they grasp the opportunity to promote woodland management - with the prospect of generating £100 of millions of new business and thousands of new jobs - as well as reversing the decline in woodland biodiversity - a complete no-brainer - the clearest possible test of their intensions. And further cuts to forestry & trivial & destructive re-organisation under the banner of the triennial review will demonstrate quite clearly that this is a Department with no interest in economic growth.

  • The level of govt spending is key for all areas of policy and social cohesion. I am considering the future of my membership of the Labour party and have said so in the Bristol Eve Post; just as German growth is collapsing, the loss of this engine threatens the entire Eurozone and the wheels come off austerity. This is not good timing as the Labour Party makes this statement. It is worth remembering that De Gaulle surrounded the tax haven Monaco with the French army and that sort of action is required coherently across the European Union as money is leached from the continent.