The Budget: A conspiracy of silence on nature?

This blog is penned by Jenna Coull, the RSPB's Principal Economist, in reaction to the UK Government's Spring Budget 2024.

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Once more, we are presented with a government budget that largely overlooks the nature crisis.

Despite experiencing the hottest year on record and a State of Nature report placing the UK in the bottom 10% globally for biodiversity health, the Chancellor failed to mention either the climate or nature crises on budget day.

Rather than setting the groundwork for future economic prosperity through investment in nature's recovery, the Spring Budget is short-termism and ignores the fact that investing today will reduce the costs of inaction in the future. The Institute of Fiscal Studies (IFS) warned of a ‘conspiracy of silence’ over difficult future tax and spending decisions.

Nature’s value must be at the heart of economics

The Dasgupta Review on The Economics of Biodiversity emphasises that protecting and investing in nature is vital to sustain our economy in the long term. As a signatory of the UN Convention on Biological Diversity, the UK has pledged to halt the loss of nature and protect 30% of its land and sea by 2030. At the RSPB, we want to see our economy transition to one that is nature positive and net-zero, where people work together to deliver nature recovery and improved wellbeing for all.

We had four key asks for the Spring Budget to move forward this agenda. These were: a plan setting out public funding in nature to address the finance gap ; reform of the fiscal framework to encourage investment in nature; supporting the development of emerging nature markets ; and new policies to boost green energy growth. While there were some announcements related to the latter, there was little beyond that.

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The horrible fiscal bind

The UK is undoubtedly in a difficult fiscal situation; previously described by the IFS as a ‘horrible fiscal bind’ . High inflation, low growth, and significant levels of public debt have put pressure on the public purse. This, combined with other budgetary demands on defence and healthcare, along with the set of fiscal rules chosen by the government, meant there was very little room for manoeuvre.

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What the budget offered for nature

This budget saw some increases in funding for green energy growth (such as ￡1bn for the green industries growth accelerator and a ￡1bn auction for renewable energy projects). However, it falls drastically short of the ￡26bn recommendation from a recent LSE report on green infrastructure investment and offered no new specific funding for nature projects.

There were some adjustments to tax duties, including Fuel Duty, Energy Profits Levy, Air Passenger Duty, and Landfill Taxes, but without any significant fiscal reforms proposed.

A small win for nature was the extension of agricultural property relief to environmental land management agreements - an issue the RSPB engaged with the Treasury on. While limited, it aligns tax schemes for environmental land management schemes with those for farmed land, potentially encouraging the uptake.

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Time to invest in nature

Our most urgent request was for a substantial increase in both public and private investment in nature. This requires a detailed plan of how this investment will combine to address the nature crisis head on.

So far government has a Green Finance Strategy that sets a target of ￡1bn additional private investment into nature’s recovery by 2030 but has not set any public sector investment targets. ? Nor is it clear how the private investment target will be reached.

In previous blogs , we have addressed the finance gap for nature – the gap between environmental policy and the funding committed to it. There is some debate around what the total amount is - the GFI estimate it is ￡6 billion a year for the next 10 years – but it is sizable.

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The cost will only increase

The longer the inaction on the nature crisis, the more costly it will become to fix it. Last year, BloombergNEF estimated that $166 billion a year was spent on restoring the planet’s most fragile ecosystems, but this needs to jump to $1 trillion by 2030. ????

In 2006, Nicholas Stern, former Chief Economist for the World Bank and author of the Stern Review , noted that ‘the benefits of strong and early action (on climate change) far outweigh the economic costs of not acting’. Yet humans are biased towards the present, placing greater value on a ￡1 today than in the future.? This Spring budget is a fine example of this.

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So, what needs to be done?

This budget had little wriggle room to address the nature crisis and get the UK on track to meet its 2030 UN nature targets.? While the fiscal position was limited, better choices could have been made for nature.

Ultimately, we need a new fiscal framework which gives government the space to invest in nature for years to come.?