My Lords, as part of Defra’s recent budget reduction exercise, the 2006-07 budgets for the founding bodies of Natural England, which are English Nature, the Countryside Agency and the Rural Development Service, were cut by £14 million, £12.9 million of which falls to Natural England. We hope to make an announcement on the 2007-08 budget in the next few weeks.
My Lords, I thank the Minister for his Answer. As usual, he was disarming in his candour. However, the candour cannot conceal the crisis that has overwhelmed Defra. What jobs will be lost in the light of the cuts and what of Natural England’s promised programme will be shelved or reduced?
My Lords, the technical adjustment to this year’s budget is approximately £200 million. Our overall spend is £3.7 billion. I do not diminish the significance of £200 million—noble Lords should not misunderstand me—but it is a very small part of our overall budget. Within that, the adjustments to each of the bodies affected are quite small.
No part of Natural England’s programme will be affected. Some areas will proceed a little more slowly than others. Its start-up money has not been affected. It is important for a new organisation to be able to start up effectively—it was launched earlier this month. Its core budget is £170 million. When other funding streams for which it is responsible are factored in, that rises to some £225 million. It has overall responsibility for more than £400 million when one adds in the EU agrimoney schemes. I realise that that is not core funding, but Natural Englandcan comfortably cope this year at the start-up. I understand that no one will be dismissed from their job as a result of the cuts to which the Question refers.
My Lords, as I understand it, Natural England’s major function is to enhance the environment. Is this not a crazy time to be contemplating a cut in the budget, especially when the whole budget is petty cash in public expenditure terms? Will my noble friend reconsider the cut?
My Lords, I would probably have difficulty explaining to anybody that £200 million is petty cash, but it is petty cash in terms of our overall budget of £3.7 billion. It is a small part of the money. We have a satisfactory arrangement for readjusting Natural England’s budget, and we do not envisage any of its major schemes being affected. Some will probably start a little later than others—it had a spending moratorium in the period before it was launched. I understand that the moratorium was lifted on the launch day of 11 October.
My Lords, despite those answers, the Minister said categorically on 16 October that the budgets for flood defences would not be cut and that it would be possible to proceed with the EU water framework directive. Can he confirm that that is still the case, or will there not inevitably be some long-term cuts?
My Lords, although the Minister said that the cut was small beer, does he acceptthat it would have been crucial to many areas of Natural England’s work? Does he not regret the announcement of a £12 million budget cut on theday of the launch? That is hardly good PR. Isthe £200 million cut due to overspend or underspend in Defra? Various views on what caused it have been put around.
My Lords, it is both. The£200 million is made up of approximately £40 million of work for various agencies that was delayed last year and brought into this year, as that helped to meet last year’s pressures relating to TB compensation and the final cost of foot and mouth disease; £55 million of work that was delayed last year and moved into this year to cope with a reduction in end-of-year funding arrangements; and £65 million of surplus capital charges that turned out to be no longer available under new rules. Some £23 million related to the RPA’s running costs, and there was £10 million extra emergency preparedness for avian influenza. That is how the £200 million is made up; there is no secret about it. Some was underspend, some was overspend, and some was expenditure delayed last year and brought into this year.
My Lords, I probably need a bit more advice on British Waterways, because Natural England does not deal with it. British Waterways is a trading body. It is true that it has had a cut, but, again, it is a fairly small percentage of its income. Some people might say that the cut is not the reason why it has had to make the redundancies, but I do not know. I would have to take further advice on that.
Certainly not, my Lords. The reality is that a team of Ministers went into Defra at the time of the reshuffle in May, and at the end of June it was drawn to our attention that there was a hole in the budget. We are trying to deal with it as best as we can.
My Lords, with respect, I do not think that that is a fair way of putting it. I have explained how the pressures behind the £200 million have come about. The fact that they came to light and were put to Ministers only at the end of June, to be dealt with this year, makes it more difficult. People have expectations. The budget was fixed at least at the last CSR and would therefore have been known last autumn. It certainly was not known when the legislation for Natural England was going through. I have explained that each amount is justifiable, and we cannot ignore them. We have to deal with this as best as we can, as we have tried to do in the department’s overall budget and spending of nearly £4 billion.