Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Please note that under each subject heading is text in italics which repeats the section from the Committee's Fifth report that was addressed in the Secretary of State's memorandum to the Environment Select Committee.


  "As in previous years, we are pleased to be able to praise the generally high standard of the Department's Annual Report which continues to provide a great deal of complex information in an accessible form" although there is concern about ".. the occasional failure to present information in the Estimates and the Annual Report which can be readily understood"

  The Introduction to this memorandum provides details of the presentation of information in the Annual Report 1998 and the Main Estimates 1998-99.


  "We are concerned that a misleading impression of the PFI's place in the Department's work may have been given. As officials told us, the Department uses a "broad definition of private finance", confirming our view that the Department's programmes designed to lever in private capital are not actually part of the Private Finance Initiative as such."

  The Annual Report 1998 includes a section headed "Public Private Partnership and the Private Finance Initiative" on page 9. This covers the Department's involvement in PFI as well as other Government programmes which have helped to lever in substantial amounts of private sector investment. The section is presented to reflect the Government's policy of support for the PFI as one form of public private partnership.

  DETR—unlike former DoE—has a number of high value projects procured under the PFI. This is reflected in table C1. The Department is also responsible for programmes—particularly housing and regeneration—where other schemes which generate private investment have been successfully pursued. Further details of PFI and other PPPs in DETR can be provided to the Committee if required.


  "We wish to see in next year's Annual Report a much fuller discussion of how the Department has pursued its mission to integrate environmental concerns across Government."

  The Department has pursued its mission to integrate environmental concerns across Government with renewed vigour, consistent with the Manifesto commitment to put concern for the environment at the heart of policy making.

  The amalgamation of the former Departments of the Environment and Transport has been a major step in this. In the current UK Presidency of the EU the Department is carrying this important focus of integration further by holding the first ever Joint Informal and Joint Formal Councils of the Environment and Transport Committees. We are also leading a separate special initiative to integrate the environment into all EU policy making. The Environment has been made one of the major themes of the UK Presidency as a whole.

  The 1994 UK strategy for sustainable development is being revised and as part of this the Government has just held a four month public consultation to gain views and ideas on the best ways to make progress toward sustainable development. Indicators and targets will be an integral part of this new strategy.

  A Parliamentary Environmental Audit Committee has been established and is already active. In addition the Government has set up other machinery to integrate the environment into policy making including:

    —  a new network of Green Ministers;

    —  a Sustainable Development Unit in the DETR;

    —  revised guidance on environmental appraisal.

  The ENV Committee, chaired by the Deputy Prime Minister, considers environmental policy issues. All Departments with a close interest in environmental policy are represented on it. The responsibility for ensuring that each Department meets the commitments set by ENV for Government rests with the relevant Secretary of State.

  ENV is supported by the network of Green Ministers, under the Chairmanship of the Minister for the Environment; the group is responsible for all Government Departments. There are 18 Departmental Green Ministers. Thirteen attended the first meeting in July 1997 and 11 the second meeting in December.

  Collectively, Green Ministers have the lead responsibility at Ministerial level for developing the greening Government initiative, including promoting environmental appraisals for policies, programmes and projects and greening operations. They share best practice and are responsible for establishing an effective programme to deliver sustainable development across Government.

  Individually within their Departments they operate as advocates for greening Government and sustainable development, encouraging colleagues and officials to undertake effective environmental integration and appraisal of policies. Their main role is to ensure that appropriate systems are in place; responsibility for ensuring that the environment is fully taken into account in a particular area of policy rests with the Minister with oversight of that policy area.

  The third meeting of Green Ministers due on 8 June will include consideration of systems for central collection of information about environmental appraisals.

  The Sustainable Development Unit, located in DETR, works with the Scottish Office, Welsh Office, Northern Ireland Office and a network of green contacts across all Departments with a Government-wide remit to promote sustainable development and concern for the environment. Its programme includes the sustainable development strategy and the Greening Government initiative.

  Environmental appraisal guidance is being provided in a series of documents. These include the new simpler "Appraisal and the Environment: Policy Guidance" published in April 1998. The Department is currently reviewing the basis for amplifying the technical guidance to Departments which was set out in the 1991 document, "Policy Appraisal and the Environment". Their production takes account of the findings of the KPMG study of the effectiveness of environmental policy appraisal, which was published in July 1997.

  This amounts to a significant and active programme for integration. The importance of integrating environmental concerns across Government is also shown by its inclusion in the introduction of the Annual Report 1998 (see paragraph 1.26). In addition the details are included in the Environment chapter (see paragraphs 10.14-10.16).


  "We are concerned that it is by no means clear, at the present rate of improvement, that the Government will achieve its energy savings target, and it is even less certain that its ambitious proposed target up to the year 2000 of a 20 per cent improvement is realistic. Accordingly, we suggest that the Department consider what further actions might be taken to ensure that these laudable targets are achieved."

  Results to 1995-96 were published on 17 December 1996 [Official Report col 546] and to 1996-97 on 1 April 1998 (copy of Press Notice attached, as the Official Report did not print all the tables). The updated results published in that News Release show that the target of a 15 per cent improvement over 1990-91 levels in the five years to 1996 was achieved; the overall figures are to be found in Table 4.

  Energy efficiency is one of the areas of green housekeeping which the strengthened system of Green Ministers introduced by the new administration last year will continue to look at carefully. It is highlighted in the model framework for greening government operations published on 20 May.

  In order to set future targets in relation to national best practice levels, rather than a specific improvement in efficiency for all which takes no account of the base-year position, the Department is developing new benchmark indicators to run alongside the existing ones. These will be based on the performance of individual building types (e.g., naturally-ventilated offices, air-conditioned offices, stores) and aggregated to give a department-wide indicator. They will help energy managers identify which parts of their estate would most benefit from closer energy management and/or investment. It is hoped to pilot some provisional indicators later this year.

  Energy efficiency and management of energy is now an integral part of the business of Departments. As well as co-ordinating the publication of Government-wide results, the Department continues, with the Building Research Energy Conservation Support Unit (BRECSU), to work with Departments to offer practical guidance and help to improve energy efficiency. A new comprehensive guide for energy managers on the Government estate, which will include the new indicators, is currently being developed in consultation with energy managers and will be published later this financial year. Among other relevant recent publications are:

    An updated Energy Conservation Guide for Offices (EnCon Guide 19); and

    GPCS [Good Practice Case Study] 325 (showing how Customs and Excise manage energy and motivate their staff to do so).


  "Without reliable and consistent figures, local authorities, central Government and Parliament will not be able to make proper informed judgment on what future action is necessary and whether good value is being achieved for investment of public money."

  In 1996 the Department of the Environment commissioned a new annual survey of municipal and household waste management by local authorities in England and Wales. The survey collected data for the financial year 1995-96 and achieved a very high response rate from local authorities. Summary statistics from the survey were published in December 1997. Responses have been received for the 1996-97 survey and the Department of the Environment, Transport and the Regions is currently in the process of analysing this data. The data supplied from these surveys will significantly improve the quality of information available on the management of municipal and household waste.


  "We consider that if the management of the Centre is to be expected to continue to make attempts further to reduce its operating deficit, while paying a rent which has regard to the full commercial value of the site, then it should also be entitled to charge government customers a fee which fully and explicitly reflects in the sums charged at the point of supply the peculiar requirements and restrictions made by them".

  The Queen Elizbeth II Conference Centre was established as a government trading fund on 1 April 1997 (SI 1997 No. 933). As a trading fund the Centre operates on a commercial basis. It charges government and private sector clients commercial rates, including the cost of additional security where that is requested by clients.

  The Centre is required to recover its costs, taking one year with another, and to achieve such other financial objectives which may from time to time be set for the trading fund. The (then) Secretary of State for Environment, with Treasury's agreement, set the following further financial objectives, which are contained in a Treasury Minute dated 19 March 197 which was laid before the House of Commons:

    (b)  to achieve cumulative financial surpluses, after interest but before payment of dividends, individual years during this period as follows:

      (i)  at least £0.966 million in 1997-98;

      (ii)  at least £1.9635 million in 1998-99;

      (iii)   at least £3.297 million in 1999-2000.

  The Centre is well on course to achieve the financial objective set out at (a) above. It has exceeded the required cumulative financial surplus for 1997-98 as set out at (b)(i) above and has already achieved the cumulative surplus required to have been accumulated by the end of 1998-99. The cumulative financial surplus at the end of 1997-98 stood at £2.4 million. The financial surpluses are paid to the Exchequer as Consolidated Fund Extra Receipts.


  "There is a risk that a short-term desire to save on annual upkeep may be undermining in the longer term the enormous public capital investment represented by local authority housing."

  Since 1996-97 average management and maintenance (M&M) allowances per dwelling have remained constant in cash terms, although allowances for individual authorities have moved closer to targets. Authorities which were below target in 1997-98 benefited from allowances on average 0.8 per cent higher than the previous year. For those below target in 1998-99 they were on average 0.7 per cent higher than the previous year. At the same time no authority which was above target faced a reduction of more than 1 per cent of the previous year's allowance.

  In aggregate, authorities' M&M expenditure continues to be higher than total M&M allowances. Authorities estimate that they spent £4,066 million on M&M in 1997-98, compared with total M&M allowances of £3,307 million. For 1998-99 they are budgeting to spend £3,976 million compared with total allowances of £3,208 million.

  The Government has given authorities in England additional resources in 1997-98 and 1998-99 totalling some £784 million under the Capital Receipts Initiative. These resources will help them to begin to tackle poor housing, poor health and run down estates. Resources and priorities for local authority housing for 1999-2000 and beyond are being considered as part of the Comprehensive Spending Review.


  "The Department appears tacitly to have recognised the problem [of demand pressures for mandatory renovation grants] and is taking steps in current legislation to resolve it; clearly this is desirable, however surely it would be still better if this were openly acknowledged and guidance provided to local authorities so that we could be confident that the same situation prevails across the country."

  The provisions to replace mandatory house renovation grants with discretionary grants, referred to in paragraph 26 of the Select Committee's Fifth Report, were enacted in Part I of the Housing Grants, Construction and Regeneration Act 1996 and came into force on 17 December 1996. Local authorities may now use their judgment in deciding where best to use the resources available to best effect. DoE Circular 17/96 gives guidance to local authorities on how best to take strategic approach to private sector renewal.

  While the legislation was going through Parliament the Department reminded local authorities that they remained under a duty to act in accordance with the provisions of Part VIII of the Local Government and Housing Act 1989. This required that an authority inform a grant applicant as soon as is reasonably practicable, and no later than six months after the application was made, whether the grant was approved or refused.

  To assist in a smooth transition from the mandatory grant regime the 1996 Act included transitional provisions to deal with the arrangements for applications for mandatory grant made under Part VIII of the Local Government and Housing Act 1989, but not approved before the commencement of the 1996 Act. Applications for mandatory grant that were less than six months old and had not been determined before 17 December 1996 were then treated as applications for discretionary grant under the 1989 Act. However, applications for mandatory grant that had been made longer than six months before that date and had not been determined by that date remained valid applications for mandatory grant.

  The former Select Committee recognised that the queues of grant applications operated by local authorities where the demand for grants exceeded the resources available were a pragmatic solution that may not have been entirely proper under the previous legislation. The Department, for its part, could not condone any action by a local authority that was contrary to the law at the time. The 1996 Act has now resolved this issue.

  The Department has commissioned research to monitor the impact of the legislative changes. The results so far suggest that only a small number of large authorities are still dealing with a backlog of valid applications for mandatory renovation grant. These authorities will be less able to introduce new policies until they are clear of their commitments. While virtually all authorities are continuing with the past practice of targeting the award of renovation grants to unfit properties it would appear the more strategic approach to those receiving grant assistance is now well established.

  We expect that this research will be completed and published later in the year.


  "We invite the Department to comment in its response to this Report on the balance between central and local funding of local government, with particular reference to the present level of Revenue Support Grant."

  In its Fifth Report, the Committee initially focused on the council tax equalisation role of the revenue support grant (RSG), and then widened its considerations to include the general issue of the balance between central and local funding of local government.

  For 1998-99, local authorities in England are budgeting for council tax to finance slightly over 24 per cent of revenue expenditure. This is associated with an average council tax for Band D properties of £748, and an average per dwelling of £614.

  The proportion of revenue expenditure financed by council tax has increased from 21 per cent (at the inception of the council tax in 1993-94 up until 1995-96). This was consistent with the stated policy of the previous Government that local taxpayers should pay slightly more of the cost of local services.

  The Government recognises that there may be some further scope to shift the balance of funding slightly towards the council tax. The Government has however a broader agenda of modernising local government, part of which is to enhance local financial accountability, and reduce central government's involvement in local tax and spending decisions.

  The Government is conducting a review of local government finance in collaboration with the Local Government Association and, as part of that review, is consulting on its agenda for modernising local government.

  Consultation on local financial accountability focuses on ways of strengthening local accountability for levels of council tax, hand in hand with a reduction of central government's involvement in decisions on local tax levels.

  The Government is also consulting on whether some local discretion over the business rate should be allowed. If it were, that would increase local financial autonomy by increasing the proportion of local expenditure that is funded from local tax income. The Government will publish a White Paper later in the summer mapping out the way forward in the light of consultation responses.

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Prepared 17 August 1998