Nature and Climate: What can we expect in the spending review on June 11th?

By Matthew Dawson, Account Manager

A week today, Rachel Reeves will deliver her first Spending Review as Chancellor.

While the Government has already set out plans for overall spending in the coming years (the ‘spending envelope'), this hugely important review will set detailed departmental budgets allocating funding over most of this parliament. As key Departments go to the wire securing their final settlement, Seahorse has been thinking about what this all means for climate and nature.

All Departments have an important role to play in achieving a net zero, nature positive future, but next week's settlements for DESNZ and Defra will paint a crucial picture of this government's ability to deliver clean power and protect and restore nature by 2030.

We already know that budgets for these departments will be crunched, but these targets should remain non-negotiable. While Steve Reed has reportedly reached agreement with the Treasury, DESNZ remains in negotiations so it can deliver on critical policy commitments like the Warm Homes Plan and keep in line with Carbon Budgets.

Over the Spending Review period, the IFS expects real-terms growth in day-to-day departmental spending of 1.2% per year over the next 3 years, and a 1.3% increase in total capital spending over the next four. However, both Defra and DESNZ are unprotected departments, meaning they are likely to feel the squeeze as spending is prioritised on issues like health, education and defence.

There may also be key differences between the outcomes for the two Departments. While Reeves' fiscal rules apply to everyday spending like farming subsidies, investment is not governed by the same limitations. This explains why we're already seeing trailed cuts in funds to support nature-friendly farming while energy infrastructure projects get the green light.

This all raises a fundamental question: what will the outcome of the Spending Review mean for Labour's ability to realise its legally binding targets, achieve its landmark mission of Clean Power by 2030 and take meaningful action to halt biodiversity loss that impacts communities right across the UK?

Seahorse will be tuning in to understand the implications for our clients and the sector more closely, if you have any questions about what this could mean for you then get in touch.