Seven months of savage cuts leave coalition’s green hue fading

With the final nails hammered into the coffin of the Green Investment Bank, it’s time for a look bac

14 May: "This will be the greenest government ever", pledges David Cameron, three days after the formation of the coalition government. He announces his commitment to the 10:10 campaign, saying that all government departments will cut their greenhouse-gas emissions by 10 per cent before the end of 2010.

29 June: The government's Green Investment Bank Commission predicts that £550bn of investment will be needed to meet Britain's renewable energy targets under the Climate Change Act, and recommends the establishment of a Green Investment Bank to meet the challenge by providing finance for clean-power stations, windfarms and smart grids. Experts agree on a fundamental principle: to be capable of kick-starting private-sector investment in potentially risky renewable projects, the GIB must have the ability to issue government-backed "green bonds" to raise money. This kicks off a feud between the bank's backers – led by Chris Huhne – and the Treasury, in which there could only ever be one winner.

16 July: The Department of Energy and Climate Change (DECC) announces a £34m cut to its low-carbon technology programme, including a £12m cut to the Carbon Trust, which provides funding to sustainable technology and businesses.

22 July: The Sustainable Development Commission is axed on the day of the first great quango cull. Environmentalists question the value of the move: the £3m per year it cost to run the SDC was a negligible saving, far outweighed by the estimated £70m the SDC saved the taxpayer annually by recommending green efficiency savings. Caroline Spelman, Secretary of State at the Department for Environment, Food and Rural Affairs (Defra), says the decision was an easy one: because she is "personally dedicated to driving the sustainability agenda across government", there is no longer any need for external agencies.

8 August: More good news! All new homes will run on green power by 2016. That, at least, is the improbable but cheery-sounding claim of the housing minister Grant Shapps. Developers that fail to meet the target must pay a levy to fund local renewable energy projects. As Shapps pointed out, being so very green, the coalition government hardly had a choice in the matter. "We are committed to being the greenest government ever," said Shapps, "and an essential part of that is to ensure that all homes in the future will be built without emitting any carbon."

20 September: Two election pledges are struck from the list of things that the coalition might bring itself to do something about. The government will not carry out its proposal to make it an offence to possess illegally felled timber or to bring it into the country; nor will it extend the subsidy for small-scale solar production under the Feed-In Tariff.

20 October (the Spending Review): This is the point where it really starts to look bad for the greenest government ever, as George Osborne's axe falls hard on environmental spending.

  • The review includes proposals to sell off national nature reserves, privatise parts of the Forestry Commission and sell off the Met Office (which has contributed as much as any organisation to the public understanding of climate change).
  • The review cuts Defra's budget by 30 per cent, compared to a government average of 19 per cent, equating to efficiency savings of £700m by end of the four-year review period. Chris Huhne's tiny DECC gets away with an 18 per cent cut.
  • The Environment Agency will shed 5,000-8,000 out of 30,000 jobs, while Natural England's budget is cut by 30 per cent – about 800 full-time jobs. Flood defence spending will be cut by 27 per cent (though citizens of the "big society" are pleased to learn that they will be allowed to pitch in themselves).
  • Confusion about the GIB: Clegg writes to his party members telling them that £2bn has been set aside, but Osborne says £1bn.

21 October: Huhne tells the Guardian that the government may sell off one-third of Urenco, a company that makes enriched uranium for nuclear power – and that the money raised may fund the GIB. £1bn probably isn't enough for a proper bank, but still – better than nothing.

25 October: Caroline Spelman announces that 150,000 hectares of forest may be sold off by the government.

18 November: Chris Huhne signals his frustration with the Treasury, which is continuing to oppose the Green Investment Bank, preferring to repackage some existing green pledges in a sparkly new fund. An anonymous member of the GIB commission says: "Frankly, if it doesn't [have the ability to raise money by issuing government-backed bonds] there's no point in it existing. If we were only ever going to do one thing, the green bond is the thing we need to do . . ."

18 November (continued): Later that day, Cameron puts these fears to rest in a rare speech on the environment. The GIB will be a proper bank, he promises. The Labour MP Joan Walley asks whether it would really be a bank with the ability to issue money, whether a dispute was likely between the Department for Business and the Treasury, and whether he would take a personal interest. Cameron replies: "Yes, yes and yes, to all of those questions."

25 November: Oops! Grant Shapps messed up back in August when he said that all homes must be zero-carbon by 2016. What he meant to say was, "Some homes, but not all, will probably be zero-carbon by 2016."

19 November: Chris Huhne's frustrations in pursuit of his bank spill over into an open attack on the Treasury. He compares its obdurate opposition to the bank with the mistakes that led to the Great Depression.

15 December: The Treasury gets its wish: there will be no GIB. Huhne acknowledges that the "bank" will in fact be merely a green fund, and is also forced humiliatingly into repudiating his principles, saying that sustainability must not take precedence over cutting the deficit. The £550bn Britain needs to meet its emissions targets will have to come from somewhere else.

The greenest government ever – the seven-month summary: Forests for sale, a slashed green-tech budget, no green bank, flood defence budget hammered, no independent sustainability watchdog. But, looking on the bright side, developers will be allowed to build energy-inefficient houses for a few more years at least, and you can still import illegally logged timber if you like.

Getty.
Show Hide image

What Brussels can learn from the Italian referendum

Matteo Renzi's proposed reforms would have made it easier for eurosceptic forces within Italy to gain power in upcoming elections in 2018.

The Austrian presidential elections can justifiably be claimed as a victory for supporters of the European Union. But the Italian referendum is not the triumph for euroscepticism some have claimed.

In Austria, the victorious candidate Alexander van der Bellen ruthlessly put the EU centre stage in his campaign. “From the beginning I fought and argued for a pro-European Austria,” he said after a campaign that saw posters warning against “Öxit”.

Austrians have traditionally been eurosceptic, only joining the bloc in 1995, but Brexit changed all that.  Austrian voters saw the instability in the UK and support for EU membership soared. An overwhelming majority now back continued membership.

Van der Bellen’s opponent Norbert Hofer was at an immediate disadvantage. His far right Freedom Party has long pushed for an Öxit referendum.

The Freedom Party has claimed to have undergone a Damascene conversion but voters were not fooled.  They even blamed Nigel Farage for harming their chances with an interview he gave to Fox News claiming that the party would push to leave the EU.

The European Commission, as one would expect, hailed the result. “Europe was central in the campaign that led to the election of a new president and the final result speaks for itself,” chief spokesman Margaritis Schinas said today in Brussels.

“We think the referendum in Italy was about a change to the Italian constitution and not about Europe,” Schinas added.

Brussels has a history of sticking its head in the sand when it gets political results it doesn’t like.

When asked what lessons the Commission could learn from Brexit, Schinas had said the lessons to be learnt were for the government that called the referendum.

But in this case, the commission is right. The EU was a peripheral issue compared to domestic politics in the Italian referendum.

Alberto Alemanno is Jean Monnet Professor of EU Law and an Italian. He said the reforms would have been vital to modernise Italy but rejected any idea it would lead to an Italian Brexit.

“While anti-establishment and eurosceptic actors are likely to emerge emboldened from the vote, interpreting the outcome of the Italian referendum as the next stage of Europe’s populist, anti-establishment movement – as many mainstream journalists have done – is not only factually wrong, but also far-fetched.”

Renzi was very popular in Brussels after coming to power in a palace coup in February 2014. He was a pro-EU reformer, who seemed keen to engage in European politics.

After the Brexit vote, he was photographed with Merkel and Hollande on the Italian island of Ventotene, where a landmark manifesto by the EU’s founding fathers was written.

This staged communion with the past was swiftly forgotten as Renzi indulged in increasingly virulent Brussels-bashing over EU budget flexibility in a bid to shore up his plummeting popularity. 

Commission President Jean-Claude Juncker even publicly reprimanded Renzi for demonising the EU.

Renzi’s vow to resign personalised the referendum. He gave voters a chance to give him a bloody nose when his popularity was at an all-time low.

Some of the reforms he wanted were marked “to be confirmed”.  The referendum question was astonishingly verbose and complex. He was asking for a blank cheque from the voters.

Ironically Renzi’s reforms to the constitution and senate would have made it easier for the eurosceptic Five Star Movement to gain power in upcoming elections in 2018.

For reasons best known to themselves, they campaigned against the changes to their own disadvantage.

Thanks to the reforms, a Five Star government would have found it far easier to push through a “Quitaly” referendum, which now seems very distant.  

As things stand, Five Star has said it would push for an advisory vote on membership of the euro but not necessarily the EU.

The Italian constitution bans the overruling of international treaties by popular vote, so Five Star would need to amend the constitution. That would require a two thirds majority in both houses of parliament and then another referendum on euro membership. Even that could be blocked by one of the country’s supreme courts.

The Italian referendum was closely watched in Brussels. It was hailed as another triumph for euroscepticism by the likes of Farage and Marine Le Pen. But Italians are far more likely to be concerned about the possibility of financial turbulence, which has so far been mildly volatile, than any prospect of leaving the EU in the near future.

James Crisp is the news editor at EurActiv.com.