Examination of witnesses
(Questions 1 - 19)
WEDNESDAY 9 DECEMBER 1998
and MS PATRICIA
1. Good morning to both of you. Welcome,
Chief Secretary, and, Minister, to our session. It is the first
time you have appeared in front of this Committee. Your predecessor,
as Green Minister, Mrs Primarolo, has been before us oncememorably.
(Mr Byers) We will do our best!
2. I am sure this will be equally as memorable.
As you know, we are looking at the Comprehensive Spending Review,
not only the outcomes but also, as it were, the process. We would
like to talk about this first, Chief Secretary, so we will be
directing our questions to you in the first instance; and then
following that and your evidence to us on that, we will be coming
to the Pre-Budget Report, and I imagine we will switch our questioning
more to the Economic Secretary. That will be later in the proceedings.
On the Comprehensive Spending Review itself, as I say, we want
to look at process and also outcomes. However, before we do that,
is there anything you, yourself, would like to say by way of preliminary
remarks before you answer questions from us.
(Mr Byers) If I may. First of all, could I say
on behalf of the Economic Secretary, as the Treasury's Green Minister,
and myself, as Chief Secretary with responsibility for the Comprehensive
Spending Review, as it is to be followed throughindeed,
we are developing Comprehensive Spending Review number 2, should
we have something described along those lines, which we expect
to havewe are already doing some preliminary work on how
we can learn from Comprehensive Spending Review 1; but we very
much welcome, first of all, the opportunity to give evidence before
the Committee today and also to be informed by your recommendations.
This is because, as I said, we are looking at the lessons to be
learnt from the first Comprehensive Spending Review. We hope to
begin the process again in the year 2000. We will, no doubt, do
things in a slightly different waylearning from what happened
last timeand the report and the recommendations coming
from this Committee will be very helpful. The Comprehensive Spending
Review was a fundamental look at the priorities of spending across
the whole of Government. It is the first time it has been done.
It is very significant in terms of looking at the relative priorities
of Government. Obviously, within that context, those issues which
are the concern of this Committee are particularly relevant. I
will be interested to hear what Committee members have to say
this morning. I do think individual reviews conducted by departments
were able to touch on environmental matters. There was very strong
guidance given by the Deputy Prime Minister, who wrote to all
Cabinet Ministers saying that as part of their consideration of
the Comprehensive Spending Review, they should be looking at issues
related to sustainable development. I am sure that was in the
minds of many Cabinet colleagues when they conducted their particular
reviews. Individual reviews did consider environmental impact
where that was particularly significant. Just to give the Committee
two very brief examples. As far as schools were concerned, when
we were looking at capital spending in schools, we were very conscious
of the environmental impact of that. Obviously the Roads Review
looked at environmental matters as well. I would like to think
that coming out of the Comprehensive Spending Review were some
specific proposals which will be of assistance to environmental
protection. The 1.1 billion for an integrated transport strategy
will clearly make a big difference; a 9 per cent. real increase
in money for environmental programmes over the Comprehensive Spending
Review period; £174 million for Home Energy Efficiency Schemes;
an extra 8 million a year for British Waterways. That is an increase
on their present budget of 53 million. I think those are some
specific examples of how the Comprehensive Spending Review was
able to take on board concerns and issues in relation to sustainable
development. I have to say that I come here almost wearing two
hats. During the Comprehensive Spending Review period I was a
spending Minister in the Department for Education and Employment,
and by chance happened to be the Minister in that Department charged
with the responsibility by my Secretary of State for carrying
through the Comprehensive Spending Review process within that
Department. I now find myself, after the end of July, as the Minister
responsible for the Comprehensive Spending Review itself. I hope
that those two experiences will be helpful in ensuring that when
we do come to Comprehensive Spending Review 2, that we can reflect
on the process first time round and improve upon it. That is why
we will find the views of this Committee very helpful when we
are making those decisions.
Chairman: As I said,
the Audit Committee is very interested not only in outcomes but
also the way you go about your procedures. This is because clearly
the way you go about them has a very fundamental effect on financial
outcomes. May I remind you that in view of what you said, the
Treasury itself said in the Statement of Intent on Environmental
Taxation in July 1997 that: "sustainable growth means stable
and environmentally sustainable growth. Delivering such growth
is a core feature of economic policy." That is one thing
we attach great importance to in your main mission statement.
Secondly, the Prime Minister himself added to this in his statement
at the United Nations that year when he made the point that environmental
considerations should be at the heart of policy making and should
not be a bolt-on to policy making, so we are looking very much
at things from this point of view. We would, therefore, like to
begin with the whole process of doing the Comprehensive Spending
Review, by asking you questions on that.
3. Chairman, before we do that, may I take
up one point you mentioned in terms of the current Green Minister
at the Treasury, who is now the Economic Secretary. Am I not right
in thinking it was previously the Financial Secretary who was
the Treasury's Green Minister? What happened?
(Mr Byers) As always we review responsibilities
and as part of that review we decided that the Economic Secretary
would be the most appropriate person to have responsibility for
4. I do hope that it was not subsequent
to her appearance in front of this Committee that those priorities
were reset! As the Chairman said, it has been the policy of the
Government to "put the environment at the heart of decision-making."
The Financial Secretary, ex-Green Minister, also in front of this
Committee said that she wanted to ensure that the environment
is placed at the centre of the objectives for the tax system.
In your letter to us, Minister, you said that: "The Comprehensive
Spending Review was a root and branch review of the Government's
spending priorities..." You confirmed that in your opening
comments; that environmental impacts were looked at in depth.
When we look at the Comprehensive Spending Review, out of the
119 pages and the first 19 pages of the overview, we find environmental
considerations to be rather lacking. With the exception on page
25, I think it is, of the 119 pages under the heading of "Environmentally
Sustainable Growth" that is the only time this phrase appears
in the entire Comprehensive Spending Review. There is very little
on environmentally sustainable growth matters which are of particular
interest to this Committee. Can you comment on how we can take
seriously those warm words and soundbites with the actual contents,
bar a few specific but quite minor issues in terms of the amount
of money spent that you have mentioned in your comments.
(Mr Byers) I do not think we have had a soundbite
yet, though there might be more to come as the morning progresses,
but we have not had one so far. No, I think the important point,
as the Deputy Prime Minister made clear in his letter to all departments
as part of the Comprehensive Spending Review process, was that
sustainable development should be a key issue. That was addressed
by individual departments in bringing forward their proposals
and in their discussions with the Treasury. The nature of the
Comprehensive Spending Review was that there was a dialogue between
the Treasury and individual departments. Individual departments,
I am sure, in the light of the Deputy Prime Minister's letter,
have sustainable development at the forefront of their minds.
The issue is whether, looking at both the Comprehensive Spending
Review and also the Public Service Agreements, which we will be
publishing in the very near future, we have addressed effectively
sustainable development. I am not sure it is a question of how
many times we mention it. It is what we do in practice. I do think
there is a distinction between presentational mattersand
we could talk about sustainable development all the time and mention
it a lotbut it is the outcome which is important. People
will see, as we go through both the Comprehensive Spending Review,
White Paper published in July, and the White Paper that will include
the Public Service Agreements; and the document coming out from
DETR in the spring on a sustainable development policy will reflect
the priorities that the Government is attaching to this particular
5. May I come back a bit. Was this not the
place to set out your stall in pretty dramatic terms? You talk
through the Comprehensive Spending Review that the Government's
central economic aim is to raise the rate of growth and employment.
I am sure we all agree with that. You are constantly touting the
Comprehensive Spending Review as this great first time ever: as
you have already said, £40 billion extra on some of the key
services, the major spending document of this Government to date.
Yet there is no remote detail about how that growth should be
handled hand in hand with environmentally sustainable objectives,
which is what we are interested in. Was that not the opportunity
to do it? Even if you did not put the real fleshy detail on the
bones, there should at least be within each sectional head where
their priorities are going to be; how that is going to be achieved
(Mr Byers) I do not particularly want to disagree
with any member of the Committee but if you look through the detail
of both the White Paper and when we see the actual agreements
which the Treasury has now reached with individual departments,
members will be able to see that rather than just have soundbites,
what we are seeing is a practical agenda for action. I touched
on a couple of examples in my introductory remarks. The 1.1 billion
integrated transport system. The way we intend to use a big increase
for capital in schools, to drive forward on energy efficiency.
Very practical examples of how we intend to ensure that sustainable
development is at the heart of the proposals coming out of the
Comprehensive Spending Review. I should make it clear that the
White Paper published in July is not the end of the Comprehensive
Spending Review process. It is really just the beginning. We will
have the Public Service Agreements coming out in the near future.
Members of this Committee and the wider public will then be able
to see very clearly what individual departments are intending
to do as far as sustainable development is concerned; as far as
environmental impact studies are concerned and so on; and will
be able to judge them and evaluate them accordingly. I think that
is breaking new ground. It is being very open and honest with
the public. It will mean that individual departments can be held
to account. I personally welcome that because it will provide
the opportunity for this Committee and for the public to see exactly
what we are getting with the extra money which has been voted
to particular departments.
6. Nevertheless, as Mr Loughton has said,
this is your prime statement about public expenditure in a lifetime
of Parliament. It begins with an overview, which is presumably
highlighting your priorities. There is not a single mention of
the environment in that overview, why not?
(Mr Byers) Within the context of the Comprehensive
Spending Review we are operating within Government policy. Government
policy has some very clear statements, the Treasury in particular,
which are supportive of sustainable development. Therefore, I
do not think we should see the Comprehensive Spending Review as
a sort of free-standing publication which bears no relation to
the rest of Government policy. It is part of Government policy.
You are right to say it is our main statement on public expenditure
for the Comprehensive Spending Review periodthe three years
starting in April of next yearbut it is at one with those
other policy statements coming from Government.
7. Minister, could you give us your definition
of sustainable development?
(Mr Byers) The Chancellor has made it clear what
we have understood sustainable development to be. It is development
which reflects the needs of the environment but also needs to
take on board economic and social developments as well. It should
not be seen in isolation.
8. So would you agree that it is necessary
for the needs of the environment and the needs of the economy
in the traditional sense to be considered hand in hand and in
parallel, as decision making progresses through Government?
(Mr Byers) I think it would be short-sighted not
to do so.
9. So would you say that all decisions taken
as part of the Comprehensive Spending Review have considered the
environmental implications? Before they have been taken, that
(Mr Byers) As I said at the beginning, the Deputy
Prime Minister wrote to each Cabinet Minister saying that as part
of the Comprehensive Spending Review process they needed to take
into account issues relating to sustainable development, so they
had that very clear remit which had been given to them.
10. You see, when we looked at previous
statements when the Financial Secretary was here before, her argument
appeared to be that DETR were the lead body for this. They were
undertaking one or two useful environmental measures and you have
highlighted one or two yourself this morning. The implication
was, therefore, that DETR was progressing with its agenda and
that was somehow all right; and the big boys, the Treasury, the
DTI, did not need to bother so much.
(Mr Byers) I would have thought the DETR was quite
a big boy actually, especially with the Deputy Prime Minister
with responsibility for it. I think both the Treasury, as the
Department with responsibility for finance; and the DETR, as the
Department with responsibility for the environment; can work very
well together and we should not necessarily try to set up a conflict
between the two. I think our policies can complement each other.
This is what the Comprehensive Spending Review reveals. You have
two departments with different responsibilities but working together.
11. I am pleased you say that because Mr
Meacher was here yesterday when we were talking to him about Climate
Change. You will be pleased to know that he was stoutly defending
the Treasury under questioning from myself and other members of
the Committee. He made the statement yesterday that the Chancellor
is committed to a substantial expansion of green taxation. Would
you care to indicate to the Committee exactly what direction that
(Mr Byers) I have not had the opportunity of seeing
the evidence from the Minister with responsibility for the Environment
in the DETR. I would like to see exactly the context in which
those comments were made. As you will know from the Pre-Budget
Report we now have received a number of recommendations, particularly
coming from the Marshall Report, and the Government has indicated
that it will consider very carefully those initial recommendations.
12. So it is the case that you are committed
to substantial expansion of green taxation then? Or not?
(Mr Byers) What I have said is that in the Pre-Budget
Report we also publish the recommendations coming from the Marshall
Report, which are many and varied. We are now giving those consideration.
We will draw our conclusions in due course. As you will be aware,
it is a complex area. It is an area that we want to get right.
That is why we are looking at it very carefully. This is because
when we make our decisions on this we want to make sure both that
we can do it in a way that is environmentally supportive, taking
the public with us; and also ensuring that we are acting throughout
in the national interests.
13. It is just as well to be blunt about
what is going on here. It is widely suspected that the Treasury
is not enthusiastic about sustainable development. It is not enthusiastic
about integrating environmental considerations and key decisions.
When we look at the evidence I think we tend to find some support
for that interpretation of things. In particular, in this document
we are looking for indications that there is a strong commitment
to environmental sustainability and sustainable development. The
very fact that the rhetoric is absent from this documentrhetoric
does count and rhetoric is not quite the same as soundbitethe
absence of rhetoric confirms our suspicions that the Treasury
is not on message. Can I ask you to make sure then, when we come
to the next Comprehensive Spending Review, that the Treasury quite
clearly in its documentation shows its commitment to what is a
fundamental Government commitment to sustainable development.
(Mr Byers) The Treasury, of course, is always
on message. There is a very serious point here. There is the issue
to do with the relationship between the Treasury and individual
Government departments. It is the extent to which the Treasury,
if you like, from a top-down approach, says to departments: "You
have to, in everything you do, address sustainable development."
Whether that is the best way of doing that, or whether through
the Deputy Prime Minister in the case of the Comprehensive Spending
Review, individual departments are told that they should consider
sustainable development as a key issue, it is for those individual
departments then to build that into the programmes they are putting
forward. The reality is that the only way in which sustainable
development, in my view, will be at the heart of individual department's
work is if the department feels they have ownership of it and
it is not being imposed on them from above. If they have in place
proper mechanisms for evaluation and for monitoring whether those
programmes are delivering as far as sustainable development is
concerned. I actually do not think it would work if it was the
Treasury saying: "We can tick these boxes to ensure that
you are following policies which will support sustainable development,"
and that is it. It is far better, in my view, for those departments
to treat it as a priority and bring forward programmes which reflect
14. We will come back to the process later
of the relationship between Treasury decisions and Treasury analysis
of departmental decisions, but the point that is being made here
is that this document purports to be a description of what the
priorities ought to be in relation to public expenditure; what
conditions departments ought to comply with in relation to that.
The absence of serious understanding and serious statements about
sustainable development in this document we thinkat least,
I thinkis a serious deficiency.
(Mr Byers) What we should have done, Chairman,
is actually to have at the beginning a copy of the Deputy Prime
Minister's letter. This would have put a lot of the work in context
because that was part of the process.
15. You see, your constant reference to
the Deputy Prime Minister does concern usalthough we like
what he says about the environment in that respectbecause
what it seems to imply is that it is not central to the Treasury.
It is his central concern but it is not your central concern.
Indeed, in the evidence we received in our inquiry on the Greening
Government Initiative, it was said by Mrs Reynolds of the Council
for the Protection of Rural England that the Comprehensive Spending
Review, after it was started, a note was subsequently sent round
reminding departments to address sustainable developmentperhaps
a note from the Deputy Prime Minister. This was confirmed by DETR
when they came to give us evidence. In other words, it was precisely
what the Prime Minister said it should not be, i.e. a bolt-on.
You are really rather saying, in what you say now, that in your
view this is something separate. I accept what you say about it
being important to be integral to departments' policies and the
way they look at things, but nonetheless you are not taking it
on the same level as your concern for efficiency and accountability,
which are central to the Treasury's thinking. Environmental sustainability
is not being considered in the same way as these other traditional
Treasury concerns. That is what bothers us.
(Mr Byers) There is a danger here. I know it is
a perception that people have that somehow the Treasury is out
on its own and is almost not part of Government. However, the
Treasury is operating within the policies and the priorities laid
down by Government. I think if members of the Committee look at
statements which the Government has made, then they will be able
to see that sustainable development is seen to be a priority.
The Comprehensive Spending Review, like the other work which goes
on in Treasury, fits within the umbrella of policies as determined
by the Government as a whole. That is how we operate within those
16. I appreciate that but in a sense the
difficulty we have is that we do think the Treasury is very important
in this process. One need only look at the way in which you review
public expenditure allocations to see that. You are the Department
which is making the allocations and which, therefore, prioritises
how public resources are going to be shifted around to meet Government
priorities. Now we have seen already and commented on the shift
towards public transportalbeit, Friends of the Earth felt
it was wholly insufficient and did not reflect a real major shift
towards getting transport off the roadsbut apart from that,
and a certain amount of money for the DETR, (most of which has
gone on Home Energy Efficiency Schemes, which may be unrelated
to environmental considerations), can you provide us with figures;
or can you suggest how the figures are going to start to emerge
in the future, which suggests that the Comprehensive Spending
Review is achieving a discernible shift in public resources towards
environmental improvements. This is because if there is one thing
we have learnt, and from hearing the Minister for the Environment,
it is that the level of the problem is such that it is going to
require major governmental thinking about reallocating resources
towards producing the end which you want. It is the Treasury ultimately
that is the only department which can do that.
(Mr Byers) There are two ways in which the Treasury
can be supportive. One is the priorities that we give to particular
programmes, which are specifically linked to energy efficiency;
to supporting improvements as far as British Waterways are concerned,
which I mentioned at the beginning; and those sorts of areas which
are clearly specifically related to environmental concerns and
to sustainable development. In addition, there is ensuring that
when individual departmentsfor example, the National Health
Service had a big increase as far as capital spending was concerned,
as has the Education Departmentthat when they make decisions
in relation to building of hospitals or repair or renovation;
or schools, as far as education is concerned; that in that context
they look very carefully at supporting schemes which have energy
efficiency built into them. That then becomes part of their mainstream
work. I have to say that this is for me, and for the Treasury,
a very important responsibility that we want individual departments
to take on. So we can look at it in two ways. There is specific
money allocated to support environmental concerns and issues which
we have done in the Comprehensive Spending Review; but there is
also getting individual departments, in terms of the additional
resources that they have received, to spend that money in a way
which is environmentally friendly.
17. Just before we leave this whole issue
about the process of the Comprehensive Spending Review, given
the importance you have attached to the Deputy Prime Minister's
letter which as we have seen appears to have been a bit of a bolt-on
extra once the Treasury had got the Comprehensive Spending Review
under way, how does that square with your view that the Deputy
Prime Minister should not be included in the new Cabinet Committee
with responsibility for reviewing public expenditure allocations?
If his letter and his particular position are so important, that
it is him who is at the heart of trying to get sustainability
in Government policy, should he not actually be included in that
Committee in order that he can maintain that ownership, if you
like, of the sustainability agenda?
(Mr Byers) I think there will be ways in which
the Deputy Prime Minister can be involved in those matters. The
membership of the particular Cabinet Committee that you are referring
to, reflects broadly the membership of the former PSX Committee,
which was a body which dealt specifically with public expenditure.
The Government took the decision that no Cabinet Minister in charge
of a major spending department should be a member of that Committee
because of potential conflict of interests. So it is as simple
as that. But conscious of the points that you have made, there
are opportunities for the Deputy Prime Minister to comment on
individual Public Service Agreements coming from individual departments,
if he feels they are not addressing sufficiently the areas of
sustainable development and so on.
18. Quite frankly, I am very concerned about
this, particularly in relation to the Deputy Prime Minister. It
seems that his letters can be mentioned to give some sort of status
to the environment, but when it comes to real powersurely
he should be directing policy here, should he not?
(Mr Byers) As I said, the Deputy Prime Minister
is also Head of the Department of the Environment, Transport and
the Regions. The decision was taken that no Minister with a major
spending department responsibility should be on the Committee
looking at the post Comprehensive Spending Review process.
19. Then how precisely can we really give
status to the claim that the environment is going to be at the
heart of every aspect of Government policy? What ways would you
(Mr Byers) I think there are many other Ministers
who see environment as being a key issue. That is one of the reasons
why every department has a Green Minister. I am sure they will
have been involved in drawing up the Public Service Agreements
which follow on from the Comprehensive Spending Review. Indeed,
the Deputy Prime Minister himself is in a position to comment
on the individual agreements following through from the Comprehensive