Response to Budget 2020

On Monday, I posed some environmental tests for the Budget: to back up strong political commitments to restore nature in a generation with adequate resourcing; to reverse declines in public spending on nature; and also to ensure the ensure that the UK Government sounds consistent and coherent on the environment.

The new Chancellor Rishi Sunak has delivered his first Budget and what follows below is our assessment based on some rapid analysis by our Principal Economist, Paul Morling.

While much of the attention will rightly go on measures to deal with the coronavirus pandemic, it was pleasing that there were announcements of new funding to meet the UK Government’s environmental commitments.  Specifically, there will be a…

…Nature for Climate Fund: the UK Government will invest £640 million in afforestation and peatland restoration (35,000has planned) in England over 5 years. It is great to see peatland referenced but we believe all spending from this fund must (as I wrote yesterday) deliver for biodiversity as well as carbon.

….Nature Recovery Network Fund: the government will invest up to £25 million in England to partner with landowners, businesses, and local communities in the creation of Nature Recovery Areas.  This is the significantly more than previous spending on ecological networks (like the Nature Improvement Areas) and is a prerequisite for sub national authorities in England if we are to maximise the benefits of the new biodiversity net gain system.   We still believe local Authorities will need increased ecological capacity to make net gain work.

…Darwin Plus expansion: this has been tripled to £10 million per year to support conservation in the UK Overseas Territories.   We estimate an annual need of £40 million but it is a significant increase and this recognition of the importance of our OTs is a very welcome development.  That said, we are uncertain what has happened to the £500 million Blue Planet Fund in the Conservative Party election manifesto.  

…Natural Environment Impact Fund: this £10 million is designed to stimulate private investment and market-based mechanisms to improve and safeguard our environment.  Again, this is something the RSPB have been actively trying to make happen and such a fund could be transformational. 

…Flooding: £120 mill to repair flood damage, £200 mill for local communities to build future resilience and a total of £5.2bn promised over 6 years. This is a major commitment and close to the EA estimate of need.   

The new funding is to be welcomed and means the Chancellor passed one of our tests – to back up political commitments with new money. 

But, we will have to wait until the Comprehensive Spending Review planned later this year to see whether the cuts we have seen over to the past decade to core environmental public spending (such as the 40% cuts to the statutory agencies) are reversed.  We assume details of new governance arrangements will be firmed up once the Environment Bill is passed but new bodies and effective enforcement cannot be done on the cheap.  So on the second test, we shall have to wait to pass judgement.

And the final test, as ever is on government coherence and consistency on the environment.  And, once again we are left scratching our heads.  There were two things that caught our attention this afternoon.  First, we feared the announcement of new “Red Tape Challenge” signalling a move to deregulation which could harm environmental standards.  Instead, the Budget announced that the Department of Business, Energy and Industrial Strategy is launching a Reforming Regulation Initiative in order “to ensure that regulation is sensible and proportionate now that the UK has left the EU”.  This sounds more benign and it might be!  This may amplify funding shortfalls depending on whether its focus is better regulation or simply reducing regulation with reducing costs to business being the main objective.

And the second thing of concern will be how the UK Government plans to spend £600 billion over the next five years on infrastructure in a way that contributes to the UK’s attempts to tackle the climate and ecological emergency including meet its ambitions for net zero economy by 2050 and restoring nature in a generation.  Achieving a fair and green transition where our prosperity is decoupled from environmental harm will require the levels of investment outlined above but also high environmental standards and good strategic planning to guide new transport, housing and production.   We haven’t yet seen the Treasury’s net zero carbon review or the National Infrastructure Strategy but they must be integrated into a green growth strategy.  Infrastructure which drives further ecological loss or lock us in to carbon based futures will be self-defeating. 

This Budget may have had more environmental content than most – which is to be warmly welcomed.  But, we shall have to wait a while to know whether the UK Government has genuinely integrated environmental considerations across Whitehall and is prepared to replace core and essential resources for bodies like Natural England.