asked Her Majesty's Government:

Following the publication of the European Commission's climate and energy package, whether they will ring-fence money raised by auctioning of European Union Emissions Trading Scheme carbon permits for energy savings, investments in renewable energy and other measures to combat climate change. [HL1659]

The Government's spending priorities are not, in general, determined by the way in which the money is raised. Hypothecating revenues to particular spending programmes imparts inflexibility in spending decisions and can lead to a misallocation of resources, with reduced value for money for taxpayers. The spending review process ensures that resources are allocated efficiently to deliver government objectives and ensures priorities, such as education and health, receive the increased levels of funding, as set out in the Comprehensive Spending Review (CSR).

The CSR increases Defra's budget by 1.4 per cent in real terms, from £3,508 million in 2007-08 to £3,960 million. This increase allows the Government to allocate substantial resources to tackle climate change including the Environmental Transformation Fund, and increased resources for flood defences to help the UK adapt.