House of Commons - Environmental Audit

Select Committee on Environmental Audit Second Report

GREENING GOVERNMENT REPORT

Identifying indicators (continued)

69. We recognise the advantages of identifying a new single measure of welfare. We consider that a measure of this kind could play a very useful part in increasing awareness of the different elements that contribute to the well-being of society and to the achievement of sustainable development. There are technical and judgmental challenges in constructing such an index, but we recommend that the Government should examine this concept with a view to developing and publishing an index of this kind itself by the year 2002.

70. It is clear from the evidence given to this Committee that the Government will need to take great care in the selection of the core indicators and other indicators to ensure that the resulting package does not result in a large amount of additional data collection work and dovetails appropriately with other indicator work. We heard that in local government, as a response to the Local Agenda 21 initiative, local authorities have developed their own indicators and consulted the public over them.[74] There has been an annual publication of a Digest of Environmental Statistics produced by the Government Statistical Service;[75] and the Environment Agency and Scottish Environment Protection Agency have produced their own State of the Environment Reports.[76] Mr Rooker told the Committee that the Ministry of Agriculture, Fisheries and Food is working on a set of sustainable development indicators for agriculture.[77] Together with the preliminary set of indicators there appears to be a large number of existing indicators to choose from, with tried and tested data collection procedures and there is no need for the Government to reinvent the wheel.

71. For the sustainable development indicators to be suitable for measuring progress the Committee considers they need to meet a number of basic technical requirements. There needs to be a baseline to allow change to be measured and if possible past trend data. There also needs to be openness about the source of the data, any calculation involved and the resulting likely degree of accuracy in order for there to be general acceptance of their validity. Finally the statistics may be given greater authority and gain greater acceptance if they are prepared and published by an independent professional organisation rather than the Government, as is now the case for employment statistics. We regard it as important that development of the revised indicators and the creation of the Sustainable Development Strategy itself be linked. At present it is therefore appropriate that this work should continue to be located in DETR alongside the Sustainable Development Unit. When the indicators of sustainable development have been established there would be advantage in giving the responsibility for maintaining the series to a more free-standing and independent body such as the Office for National Statistics.

Setting targets

72. It is an unrealistic expectation that the Government could be directly accountable for changes in all of the 150 or so Sustainable Development Indicators which they identify. It will therefore be important for the Strategy to identify a sub-set of key indicators for which targets are set. Since taking up the reins the Government has set a number of new targets (for example for air quality) and it has indicated that policy reviews to be completed in the summer of 1998, including the Integrated Transport Policy and the Waste Strategy, will also set new targets. We hope that all these targets will be clearly identified in the new strategy. The Committee expects to review the new targets against the full range established by the last Government and ensure that this Government account for any changes to the targets, both up and down; and to ensure that they provide a comprehensive basis for assessing the Government's performance.

73. The Committee considered whether the Government could make greater use of the policy instrument of setting sectoral targets for environmental improvements. Mr Prescott said this had been a useful approach with the water companies to meet the Government's objective of reducing leakage.[78] The Advisory Committee on Business and the Environment (ACBE) drew attention to the fact that the Chemical Industries Association have already agreed a target to cut energy use by 20% from 1990 to 2005.[79] ACBE told us they see voluntary agreements with industry as one, very useful, policy tool which with others can produce a balanced solution for achieving a policy objective.[80] But we also heard from the Confederation of British Industry and the Institute of Directors of the need for care and consultation so that such targets are set fairly for all concerned.[81] MAFF has been working on a set of indicators and targets for sustainable agriculture as a tool to assess the impact of policies although it considers that setting targets for the sector must take account of the practicality and cost-effectiveness of achieving them.[82] DTI commented that it was in favour of establishing appropriate and realistic industry targets.[83] We are enthusiastic about the use of targets, reflecting voluntary agreements with the sectors concerned, to achieve environmental improvements. We hope that the Government will work to agree more sectoral targets with those concerned reporting back regularly on their achievements and therefore we welcome Mr Meacher's June 1998 challenge to industry sectors to come forward with their proposals.[84]

74. The Committee also discovered in the course of its work that the Government has set a number of different challenges to industry to adopt environment management systems and to improve their environmental reporting. For example, in September 1997 Mr Meacher said to the Confederation of British Industry that the Government would like to see all UK businesses with over 250 employees have a publicly declared environmental policy and report to stakeholders on progress;[85] in December 1997, DETR's Green Guide for Buyers referred to a challenge to industry that 50 per cent of companies with more than 200 employees should have environmental management systems in place by the end of 1999;[86] whilst in 1998 the Government set a target that at least 75 per cent of the FTSE 100 companies should have at least one Eco Management and Audit Scheme registered site or ISO 14001 certified site by 2001.[87] The Committee considers it important that the Government should take setting such challenges seriously, taking care to set them at the right level and follow them up over time.

Tax and spending priorities

75. To affect government action the revised Sustainable Development Strategy will have to bear on government tax and spending decisions. The Committee reviewed the Government's Pre-Budget Report in their First Report of Session 1997-98 and concluded that it did not contain any evidence of a strategic approach in line with the Statement of Intent on Taxation and that the Government should establish an advisory body to explore the potential for environmental taxation.[88] The Committee will be considering the 1998 Budget further in the light of the Treasury's response to the Committee's report. In future years we will also review budgetary measures in light of the Sustainable Development Strategy.

76. In their third report the Government Panel on Sustainable Development drew attention to the way subsidies, tax exemptions and government expenditure on infrastructure create incentives or directly create adverse impacts on the environment, particularly in the areas of agriculture, energy and transport.[89] The Government accepted the Panel's recommendation that it should draw up aims and principles for the future use of subsidies and noted that as part of the Comprehensive Spending Review all policies and programmes were being looked at except those determined by the wider international community and the EU (such as the Common Agricultural Policy).[90] We were pleased to hear in the Chancellor's June 1998 statement on the Government's Economic and Fiscal Strategy that "before allocations are made from the Comprehensive Spending Review, departments will have to demonstrate how they propose to root out unjustified subsidies".[91]

77. The Comprehensive Spending Review, as a fundamental review of tax and spend, is an excellent starting point for reorienting government towards a sustainable development agenda. It was against this background of high hopes that non-governmental organisations expressed to the Committee their concern that sustainable development was not being adequately addressed in the Comprehensive Spending Review. Indeed, Ms Reynolds of CPRE said that as she understood it after the Comprehensive Spending Review had started a note was sent round reminding departments to address sustainable development.[92] We were therefore disappointed that DETR confirmed this, saying that: whilst it had incorporated sustainable development in the terms of reference for its Comprehensive Spending Review, other departments had not; and that DETR staff had reminded departments that the environment should be part of the Review, although they did not consider this was because it had "slipped through the net".[93] In their memoranda to the Committee all Green Ministers had themselves assured the Committee that where environmental implications of their activity were significant either the reviews addressed the sustainable development issues or the environmental implications of the review recommendations would be addressed subsequently.[94]

78. The Committee considers it is not ideal that the Sustainable Development Strategy will not be complete before the Comprehensive Spending Review is concluded. Mr Meacher told us that the Review was expected to result in some quite profound changes but it would not rule out further changes being made.[95] We welcome the emphasis placed by the Chancellor on the strategic planning of resources and spending to achieve defined results.[96] What we consider will be important is that the results of the Comprehensive Spending Review and the Sustainable Development Strategy together move resources towards the support of sustainable development and remove support for unsustainable development. Changes in public expenditure resulting from the Comprehensive Spending Review should be analysed for their impact on sustainable development. The Sustainable Development Strategy should set out the Government's aims for any further changes in the allocation of public expenditure and tax measures within the economic and fiscal framework. We would also expect the Sustainable Development Strategy to set out the Government's aims and principles for the future use of subsidies in accordance with the commitments given to the Panel and, by the Chancellor, to Parliament.

79. The Committee found some indication that there are currently a number of disincentives for departments considering making environmental improvements. The Energy Services Association put it to the Committee that, under the government's accounting rules, schemes involving private sector investment can be blocked because they are counted against the Public Sector Borrowing Requirement or because the initial cost is high and departments do not appraise the costs and benefits over a longer period.[97] Mr Spellar also indicated that this was a problem area saying that the Government needed "to get a satisfactory arrangement with Treasury in terms of getting proper evaluation of spend-to-save measures".[98] In their memorandum to the Committee the Department of Social Security noted that there was no incentive to pursue recycling schemes because the income generated is all returned to the consolidated fund.[99]

80. In our view departments should not let such concerns get in the way of schemes that are of proven value. Nonetheless it is also important that wherever possible such disincentives should be removed. Indeed, the Committee considers there could be a case for introducing positive incentives. We heard from the London Borough of Sutton that it has had an energy conservation fund. To encourage the occupiers of buildings to take part in the scheme they receive half of the savings generated and the other half returns to the fund to pump-prime further measures.[100] We were therefore pleased to hear the Chancellor speak of a new programme to invest in Britain's future and we consider this should be used as an opportunity to make investments which push the country further towards sustainable development.[101] We recommend that the Green Ministers Committee should ask Treasury to review the accounting rules, incentives and disincentives and any proposals for new investment programmes to ensure that positive measures in pursuit of the Greening Government Initiative are encouraged.

74 Q494 Back

75 See Op cit No. 18, 1996 Back

76 The Environment of England and Wales, Environment Agency, April 1996; the State of the Environment, Scottish Environment Protection Agency, 1996 Back

77 Q105 Back

78 Q22 Back

79 Ev p206, paragraph 32 Back

80 QQ535 &549 Back

81 Ev p232, paragraph 4 & Ev 229 paragraphs 13 &16 Back

82 Ev p29 paragraph 89 & Ev p51 paragraph 11 Back

83 Ev p160 Back

84 DETR Press Release, 8 June 1998, 445 Back

85 HC Deb 11 June 1998 Col. 1198 Back