Conservation charities have written to Sajid Javid, the Economic Secretary to the Treasury, to express concern about changes to the Landfill Communities Fund, which gives grants to projects near landfill sites.
The LCF is a tax-credit scheme, valued at £78m in 2012/13, in which landfill operators give money to not-for-profit environmental bodies to fund projects that restore the natural environment and benefit communities near landfill operations.
The Treasury raised concerns in the 2011 and 2012 Budgets about the level of unspent funds held by the environmental bodies. The Treasury challenged them to reduce the amount of unspent funds by 25 per cent from the 2010 level of £152m by March 2013.
The environmental bodies say they are trying to meet the challenge, but are being forced to change their grant-making processes to do so. Charities that receive funding from the scheme are concerned that the challenge is restricting the projects that can be funded, particularly those that benefit the environment.
In their letter to Javid, the chief executives of the National Trust, the RSPB and the Wildlife Trusts, the Woodland Trust, Butterfly Conservation, and Wildfowl & Wetlands Trust, say the move has made it more difficult to access funding for projects that take longer than one or two years.
Kim Gutteridge, grants development manager at the RSPB, said the challenge was making it increasingly difficult to get funding for biodiversity projects.
"You cannot restore a habitat, or do a lot of work with a particular species in one season, the project needs to run for several years," she said.
The Veolia Environmental Trust, one of the environmental bodies, receives between £5m and £6m a year from the landfill operator Veolia Environmental, and is one of the scheme’s main funders.
McNabb Laurie, executive director of the trust, said: "It is a valid view taken by the Treasury – to get the money spent. But the problem is that vast majority of the funds held by organisations such as ourselves are already committed to projects.
"We don’t pay our grants up-front because money can only be spent on items dictated by the governing regulations, and my trustees choose projects based on their merit, rather than how quickly the project will spend money.
"The concern is that this pressure to get the money spent will become so intense that trustees will no longer be able to focus funding where the maximum benefit will result, but will be restricted to those projects that spend funds quickly."
Laurie said the trust has not yet changed its grant-making criteria but is requiring projects to be at a more developed stage and, for example, have already secured planning permission. Projects now have to start within four months of being awarded a grant, instead of the previous six, or funding could be withdrawn.
Cath Hare, programme manager at Biffa Award, which distributes about £10m of funding a year through the scheme, said: "We’ve had to change our criteria and procedures.
"We will only fund smaller schemes, which should hopefully get the money spent faster. We are trying to do as much as we can and we are on target to meet the challenge."
The grant-maker has also put a time limit on its funding of two years for biodiversity projects and one year for community projects.