Westminster, London, 26 March 2025 – The Environmental Industries Association (EIA) raises concerns over the reduction in growth which is now projected to grow by 1.0 per cent in 2025, half the 2.0 per cent assumed in October budget but welcomes the Chancellor Rachel Reeves' Spring Statement in keeping the Government within the fiscal rules set by the Chancellor. However, the EIA expresses significant concerns over the proposed cuts to the Department for Environment, Food and Rural Affairs (DEFRA) and subsequently the Environment Agency expected in June as part of the Spending Review, as well as the ongoing impact of the increase in employers' National Insurance contributions.
Growth in the Green Economy
The EIA is encouraged by the Chancellor's commitment to fostering growth, but failed to mention the important contribution that UK environmental services and technology sector. The transition towards sustainable energy systems and environmentally sustainable economic growth is crucial for achieving the UK's climate goals and creating new job opportunities in sectors such as renewable energy, green agriculture, and sustainable forestry. The EIA supports initiatives that drive investment in green technologies and infrastructure, which are essential for a resilient and sustainable future.
EIA raises concerns over DEFRA and Environment Agency cuts
However, the EIA is deeply concerned about the announced cuts to DEFRA and the Environment Agency. These cuts threaten to undermine the progress made in environmental protection and conservation efforts. The reduction in funding could lead to job losses and hinder the ability of these agencies to effectively manage and protect the UK's natural resources.
The EIA urges the government to reconsider these cuts and prioritize funding for environmental protection to ensure the continued health and sustainability of our ecosystems.
Impact of Employers' National Insurance Increase remains a concern for business
The increase in employers' National Insurance contributions in the Autumn Budget from 13.8% to 15.0%, along with the reduction in the contribution threshold, continues to pose a significant challenge for businesses, particularly small and medium-sized enterprises (SMEs). This increase in operational costs may deter job creation, reduction in investment, leading to salary freezes, and potentially result in redundancies. The EIA calls on the government to provide additional support to businesses to mitigate these impacts and ensure that the environmental economy can continue to grow and thrive.
Proposal for VAT Reduction
To further support business growth and stimulate the green economy, the EIA suggests a reduction in Value Added Tax (VAT) for the Environmental Services and Technology Sector to aid green growth economy. Lowering VAT would reduce the cost of goods and services, encouraging investment and consumption in the environmental services and technology sector. This measure would not only benefit businesses but also promote sustainable practices and help the UK achieve its environmental targets.
Peter Atchison, Chairman of the Environmental Industries Association, stated, "The chief moral obligation of the Government is to build a sustainable economy that is strong enough to lift people out of poverty. Introducing cuts to an already under resourced DEFRA and Environment Agency is a backward step. These cuts will further undermine confidence and regulatory enforcement which helps to drive green growth and supports thousands of jobs in the environmental sector.
Conclusion
The EIA remains committed to working with the government to promote a sustainable and prosperous green economy. We urge the Chancellor to consider the long-term benefits of investing in environmental protection and to take steps to support businesses during this transition. Together, we can build a sustainable and more resilient future for the UK.
