Treasury demands Network Rail cuts, while energy department eyes further solar subsidy cuts

Network Rail has been dragged into George Osborne’s spending cuts round, with the rail infrastructure client asked to cut its £38.5bn budget as part of the Treasury’s deep cost-cutting drive.

According to a report in the Sunday Times, a senior Department for Transport civil servant has written to Network Rail demanding extra cuts, which the paper believes could amount to around a £1.5bn budget cut over the next three and a half years.

The Treasury is demanding that non-protected government departments make cuts of 25-40% ahead of the Autumn Spending Review in November.

Network Rail’s budget is currently set in five-year installments and is protected by law.

Meanwhile, energy secretary Amber Rudd is expected to announce plans to cut subsidies for solar power under the spending cuts round.

The plans are desiged to rein in the popularity of the industry which is bolstered by payments of 43p per kilowatt hour, up to nine times the wholesale rate, and has seen more solar power installed on UK homes than any other European country in the past year.

The UK currently has approximately 625,000 homes with solar panels, which produce 8GW of electricty, about twice that of Britain’s largest power plant at Drax.

Rudd is expected to cut the current subsidy of 12.9p per kilowatt hour by as much as half this autumn. A consultation on the solar subsidy scheme is currently running.

A spokesperson for the Department for Energy and Climate Change said: “We always look to get the best deal for consumers, so when forecasts showed that spending on renewable energy subsidy schemes was set to be higher than expected, we were determined to get a grip.”

The cut is the latest in a long line of measures which has also seen the new Conservative government scrap the zero carbon homes and the Green Deal.