Cuts at the Carbon Trust and EST - perhaps not a bad thing.

(Published on the Guardian web site on 14th February 2011) The Carbon Trust is the latest body to announce a substantial cut in its funding from government. The 40% reduction in its grant income is marginally less severe than the 50% cut imposed on the Energy Saving Trust (EST) a few weeks ago. The job of both these bodies is to reduce energy use and carbon emissions with the Carbon Trust focusing on large companies and the EST on households. They have both claimed major successes in recent years.

So should those of us worried about climate change be upset with the government’s cost savings? I suggest our reaction should be very muted indeed. Both bodies had become bloated and inefficient. I have dealt with many entrepreneurs and small businesses who have found them to be actively unhelpful. Their contribution to the climate change effort may not be worth the money we spend on them.

First of all, we should put the funding cuts in perspective. The EST had a budget of about £70m in 2009/10. But two years earlier, its funding was only £36m, just over half the current level. In other words, the cuts imposed by DECC last month simply take the EST income back to where it was in 2008. And, incidentally, the claim the EST makes for its impact on carbon emissions as a result of work carried out in 2009/10 is actually less than the figure of two years earlier, despite the much higher level of income. Similarly, the number of people employed at the agency has risen sharply in recent years with no apparent impact on the energy savings it achieved.

The position at the Carbon Trust is very similar. Its income rose from just under £100m in 2007/8 to £166m last year. As with the EST, the reduction announced today simply takes its funding from central government back to where it was two years ago. Chief Executive Tom DeLay says that the 40% cut will mean 35 redundancies but this will still leave its employee numbers substantially higher than they were only a couple of years ago.

Both bodies have large and expensive offices in central London. The Carbon Trust, for example, occupies space in an office block in one of the most desirable areas of the City. I have recently watched an entrepreneur struggling to establish his business gasp at the disparity between the conditions in which he works and the standards he saw at the Carbon Trust offices.

Other small business people have commented to me on the ponderousness of both organisations and their lack of industrial expertise. I have also heard one successful entrepreneur refuse to deal again with these bodies because of his strongly expressed fear that details of his technology had been leaked to a competitor. Perhaps these criticisms are unfair but views like these are very widely held amongst companies and individuals working in the low carbon sectors.

Both bodies can rightly claim that their jobs have got much more complicated in recent years, demanding higher allocations of funds from the taxpayer’s purse and putting strain on their ability to respond quickly and efficiently. As organisations dependent on pleasing their bosses in DECC and other government departments, they are forced to focus on projects given to them at very short notice, such as the domestic boiler scrappage scheme handled by the EST with three weeks notice.

Put together, these two agencies spent around £250m in the last financial year. No doubt there was some benefit from this expenditure: for example, the EST communicated in some way with over 3m people to give energy-saving advice and the Carbon Trust invested in some very interesting new technologies. Nevertheless the scale of taxpayer’s money being spent at these organisations looks wildly disproportionate. Much of the funding seems to go on bureaucratic activities rather than real research. Contrast the £250m bill with, for example, the total spending on research into the use of deep geothermal energy in Cornwall at around £1m a year, a technology which might produce a measurable fraction of the UK’s total electricity needs. If slimming the Carbon Trust and the EST means more money can go directly to pathbreaking research, I don’t think we should complain.