Alistair Darling's plans to implement the 'the world's first carbon budget' has drawn criticism for failing 'green' industries and alienating traditional manufacturers.
In his Budget report, the chancellor announced a £1.4bn environmental package designed to support high-technology industries in areas such as offshore wind, carbon capture and storage (CSS), energy efficiency and advanced manufacturing.
Responding to this package, Danny Stevens, the Environmental Industries Commission's (EIC's) policy director, said: 'The government has failed to focus on the environmental industries as a key growth area.
'Its initiatives have not gone far enough in terms of the stimulus for the industry and it fails on most of the things that we were asking for in advance of the Budget,' he added.
In March, the EIC outlined its own £10bn 'Green Jobs Investment Fund' that included the retrofit of particulate matter (PM) and nitrogen oxide (NOx) abatement technologies in the UK's transport fleet. According to the EIC, the £1.4bn from the government falls short of this initiative and places the UK at a global disadvantage.
Adrian Wilkes, chairman of the EIC, said: 'Other countries around the world, from the US to Korea, have used multi-billion "green deals" to create thousands of jobs in their environmental industries, putting them at the heart of a future global low-carbon economy.'
While the EIC supports the government's move away from traditional manufacturing sectors and towards high-growth green industries, it claims that its stimulus package needs to be increased in order to take advantage of the export opportunities that these industries have to offer.
'Even Gordon Brown recognises that the UK's future competitiveness will depend on an urgent transition to a low-carbon economy. The Budget was a real test of how serious the government is about making this transition and the thousands of new British businesses and hundreds of thousands of new jobs it could create. Sadly, it is another wasted opportunity', said Wilkes.
Stevens added: 'There's £405m very broadly defined to support low-carbon manufacturing, focused on trying to stimulate further supply. What we really need is to support that with demand-side policies, which were definitely lacking in the Budget. For example, the Environmental Transformation Fund [ETF] has been designed to promote innovation within the high-technology sector. However, if that's not supported by demand, then the sector won't stimulate the economy.'
In addition to providing inadequate support for emerging technologies, the Budget has come under fire for taking the focus away from the UK's core manufacturing sector — an area that the Chartered Management Institute (CMI) argues is crucial to the country's economic recovery.
Petra Wilson, the CMI's director of research and policy, said: 'Companies that have a viable business model should not have lost out to emerging technologies. Often, more traditional manufacturing might benefit from the introduction of new processes or low-carbon technologies to what, fundamentally, might be core manufacturing activities and wouldn't necessarily be branded as the "the new technologies" sector.
'Heavy machine-tool manufacturing, which isn't necessarily at the high-tech end of the spectrum, could potentially be missing out. Manufacturing is a wide industry and focusing on digital, emerging and biotechnologies may undermine good wealth creators in terms of the core manufacturing industry.
'This isn't to say we shouldn't focus on low-carbon technologies, but some of those applications can be within traditional manufacturing industries where we already have an established manufacturing sector. It seems short-sighted to invest everything in new technology and not provide some support for those organisations who will benefit from using some of the low-carbon technologies themselves,' she added.
Echoing the sentiments of the CMI, the Manufacturing Technologies Association (MTA) has highlighted the importance of bridging the gap between what many see as an emerging high-technology industry and more traditional manufacturing practices.
Graham Dewhurst, director general at the MTA, said: 'It is vital, especially in these straitened times, that what the government does invest is not squandered on eye-catching projects with little substance behind them.
'The divide isn't between high- and low-tech, but between companies with the right technology and those with no technology. Situated at the heart of the UK's engineering base, we supply the products that enable businesses such as those engaged in low-carbon energy generation to thrive. We are determined that our sector doesn't miss out on the opportunities these emerging technologies present,' he added.