Chancellor of the Exchequer George Osborne delivering the Autumn Statement in London

Spending review: science budgets protected energy efficiency measures cut

Chancellor George Osborne has bowed to pressure from scientists to protect their core government funding from the effects of inflation, but slashed financial support for household energy efficiency.

In his Autumn Statement, Osborne said the science resource budget would rise to £4.7bn and would remain "protected in real terms" until the end of this Parliament.

By the end of the decade, total science spending, excluding the funding of facilities and equipment, will be more than £500m higher than it was in the 2015-16 financial year.

However, it is unlikely that the announcement will quash the calls from some in the sector for a major increase in science investment to help Britain compete with other countries.

Earlier this month, the cross-party Science and Technology Committee urged Osborne to use the spending review as an opportunity to set out a road map for boosting public and private investment in science.

Currently, UK spending on science represents just 1.7 per cent of GDP, compared with an average of 2.4 per cent for all OECD developed nations.

The MPs wanted Osborne to commit to a goal of 3 per cent of GDP, the target set by the European Union, but he made no mention of the committee or any commitment to science spending as a proportion of GDP.

Neil Stansfield, who heads the Ministry of Defence's Centre of Excellence for Technology Innovation, recently said that the government needs greater engagement with UK scientists and engineers to bolster its defence capabilities.

Household energy efficiency

A new household energy-efficiency scheme was also introduced in the spending review that is designed to help keep homes warm and cut energy use and bills for up to 200,000 households a year.

It is estimated that homes benefiting from the scheme will save up to £300 on their fuel costs and it will be £30 cheaper per year on average for consumers who currently subsidise other green measures through their energy bills.

However, anti fuel-poverty campaigners said the announcement, which came as figures showed a large jump in the number of people dying in winter, would mean a cut of almost 80 per cent in the number of homes receiving support compared to the last parliament.

Shadow energy secretary Lisa Nandy said: "It's extraordinary that the Chancellor has announced huge cuts to home insulation on the very same day we discovered that thousands of people died last winter because of the scandal of cold homes.

"By slashing investment in energy efficiency yet again millions of families will be left paying more for their energy bills and people will suffer."

As well as cutting energy-efficiency funding, the Chancellor also confirmed his backing for UK shale gas industry and the biggest road-building programme since the 1970s.

Disappointment in the steel sector

Roy Rickhuss, leader of the steelworkers' union Community, said there was little hope for the steel industry in Osborne’s spending plans: "We want to see the UK steel industry survive long enough to benefit from planned infrastructure spending and the apprenticeship funding [also announced in the spending review]. However the future of the industry is at risk now.

"Crowing about the Northern Powerhouse only adds insult to injury to the thousands of our members in Redcar, Rotherham, Scunthorpe and North Lanarkshire, who are already jobless or who are facing an uncertain future."

Last month, coke ovens at the Redcar steel works were shut down after last-minute attempts to find a buyer fell through. The closure resulted in the loss of 1,700 jobs.

Just weeks later, steelmaker Caparo Industries announced it was cutting 452 jobs across its sites in the West Midlands after having entered administration earlier in October.

Industry responses

Big names in engineering and technology have offered a decidedly mixed response to the Chancellor’s announcements.

Colin Brown, director of engineering at the Institution of Mechanical Engineers, said: “Although some of the proposals in today’s spending review are encouraging, the cuts and efficiency savings earmarked for transport, energy and healthcare are worrying.

“It also worrying that in his hour-long speech there was not one mention of the word ‘engineering’. It is only by the application of science and engineering that we will achieve the efficiency savings the Government is aiming for.”

Carolyn Fairbairn, director-general of the Confederation of British Industry, offered a more positive outlook that focused on the Chancellor's announcements rather than what was left out.

“Standouts include maintaining spending on infrastructure; ramping up housebuilding; support for energy-intensive sectors and for advanced manufacturing,” she said.

“Firms will be reassured by the protection of the science budget, but the shift from grants to loans for Innovate UK could dampen bold and game changing innovation, particularly amongst smaller businesses,” Fairbairn added.

Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, praised some of the energy announcements that related to his sector.

“Moving to an exemption of energy-intensive sectors from the costs of renewables is enormously welcome and demonstrates that government is dedicated to finding a long term solution to this problem,” he said.

Osborne’s additional funding for transport infrastructure was generally well received by Nathan Marsh, Northern Infrastructure Leader at EY.

“By boosting the Department of Transport’s budget by 50 per cent, the Chancellor has freed up some capital to help address one of his biggest challenges for the ‘Northern Powerhouse’; directly financing its infrastructure, such as HS2 and Northern rail electrification,” he said.

“Many of the key projects in the North will fall under the £13bn earmarked specifically for Northern transport over this parliament, which was first announced in August.”


However, John Holland-Kaye, CEO of Heathrow, was concerned that Osborne failed to mention anything about an extension to Britain’s largest airport.

“A single decision by the government to allow the privately funded expansion of Heathrow would transform productivity within the UK – unlocking more domestic connections, making it cheaper and more efficient for British exports to reach fast-growing markets and creating up to £211bn of economic growth and 180,000 new skilled jobs in the UK,” he said. “Let’s build it.”

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