Select Committee on Environmental Audit Minutes of Evidence

Examination of witnesses (Questions 1 - 19)




  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 once—memorably.
  (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 through—indeed, we are developing Comprehensive Spending Review number 2, should we have something described along those lines, which we expect to have—we 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 way—learning from what happened last time—and 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.

Mr Loughton

  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 green issues.

  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 matters—and we could talk about sustainable development all the time and mention it a lot—but 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 matter.

  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 environmentally.
  (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 period—the three years starting in April of next year—but it is at one with those other policy statements coming from Government.

Mr Baker

  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 is.
  (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 will take.
  (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.

Mr Dafis

  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 document—rhetoric does count and rhetoric is not quite the same as soundbite—the 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 that.

  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 think—at least, I think—is 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 us—although we like what he says about the environment in that respect—because 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 development—perhaps 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 priorities.

Mr Grieve

  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 transport—albeit, Friends of the Earth felt it was wholly insufficient and did not reflect a real major shift towards getting transport off the roads—but 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 departments—for example, the National Health Service had a big increase as far as capital spending was concerned, as has the Education Department—that 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.

Joan Walley

  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.

Mrs Brinton

  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 power——surely 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 suggest?
  (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 Spending Review.

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