Article for Sustainable Building Magazine
Date: 29 October 2010

Spending review impact on the environment industry
Sunil Shah (Sustainability Partner), DPP

The much anticipated Comprehensive Spending Review was formally set out on 20 October, but the ramifications and finer detail will take weeks if not months to become clear and understood.

Much of what was detailed is not new – the broad outline is well understood, is focussed upon the need to significantly reduce the size of the state by 25% to 30%. Other key trends are to drive the decision making to the local level as part of the Big Society ethos and to provide greater accountability for bodies through elected officials.

The ‘bonfire of the quangos’ recently released has affected over 50% of the various non-governmental bodies has been combined with the reduction of funding for many infrastructure projects. The emphasis has shifted towards increasing accountability, with the transfer of functions to government departments not expected to yield significant savings. The review of arms length public bodies had asked three questions: does it perform a technical function; does it need to be impartial; and does it need to act independently?

Many of these bodies focus upon environmental issues covering niche areas and ensuring a voice and technical expertise is brought to the fore. The obvious examples are reductions in the size and scope of the Environment Agency and Natural England. However, other groups affected include the Renewables Advisory Board, the Renewable Fuels Agency, and the Royal Commission on Environmental Pollution.

Their removal will limit our ability to challenge environmental practices and policies at the same time as the burden of regulation is reduced on business. This regulatory cut back has been seen with the review of waste policies due to report shortly with the intention to reduce the complexity and detail of the legislation.

A consequence will be the removal of the regulatory driver and direct mechanism for many products and innovations to gain traction within the market, effectively providing a barrier to get the best products into the market.

We only have to look at the paralysis affecting house building to try and innovate to understand what may occur.

On a more positive note, many councils are looking to outsource services and to partner with surrounding authorities to share provisions. It is conceivable that councils will look in different directions to tie up services with those who best share their core values on a specific service.

The need to tender services formed part of the Labour government’s requirements to reduce costs but has been further accelerated by the Government.

In most cases larger packages of work are being put out to the market and will pose a significant opportunity in a relatively tight market. With fewer bodies to engage with, the wider environmental profession will also benefit from greater consistency within these larger council bodies.

The development of localism as a policy measure providing a greater say to local communities to direct and promote local activities can provide a significant boost to the environment industry.

The reduction of pollution and improvement of the local environment are high priorities of most communities and localism provides a mechanism to galvanise support and co-ordinate a direct response.

What has become clear is that David Cameron’s call to arms to preside over the ‘greenest government ever’ is unravelling dramatically as a result of the spending cuts.

With the removal of Government’s independent environmental practitioners and advisors, and a reduction on the environmental regulatory burden on business we are seeing the profile of the environmental industries market reduced and a return to the market led system which has failed previously.

As a result, many of the drivers for innovations have also been sidelined with a greater focus on regulatory compliance without the ‘gold-plating’.

There are many opportunities in this gloom which are up for grabs, principally the advent of localism and the outsourcing of services by many local authorities seeking efficiencies in cost and service.

Sunil Shah is a Sustainability Partner in the London office of independent planning consultants DPP and Chair of the Carbon and Environment Management Group at EIC.  For more information visit www.sustainable-build.com