Select Committee on Environmental Audit Third Report



APPENDIX 6

Memorandum from Friends of the Earth

SUMMARY

  Friends of the Earth has serious concerns over the extent to which the Government's commitment to environmental protection and sustainable development has been pursued within the comprehensive spending review. In particular we are concerned that:

    —  the focus on Departmental planning has not been complemented by cross-Departmental planning that offers significant opportunities to both advance sustainable development and ensure well-targeted expenditure that is good value;

    —  the review has not picked up on the Chancellor's statements regarding the need to plan for the long-term and, as the Code for Fiscal Stability states, the need to be fair to future as well as present generations;

    —  as a consequence the comprehensive spending review has failed to provide a firm foundation for the Government in its pursuit of sustainable development.

NARROW FOCUS MISSES LARGER STRATEGIC GAINS

  It is clearly sensible that each primary organisational unit of Government should have aims and objectives that allow it to plan and control public expenditure in a transparent manner. However, focus almost exclusively at this level hinders the ability of Government to deliver sustainable development and to ensure well-targeted expenditure that is good value for money.

  Sustainable development requires Government to think strategically across its functional organisations. On some issues the present Government, according to previous public statements, has begun to embrace this process, making the failure of comprehensive spending review to do so all the more disappointing. The linkages of environmental protection with employment and health have been made the Government elsewhere yet this review fails to realise the significant opportunities for these key themes in sustainable development to inform strategic spending decisions.

Example: Fuel Poverty—spend to save

  Spending decisions that could be taken to eradicate fuel poverty provide a clear example of how cross-departmental approach to spending can help deliver sustainability and cost-savings. At present 8 million households in the UK suffer from fuel poverty—they cannot afford to heat their homes properly. One effect is that this winter between 30,000 and 60,000 more people will die than during summer months. This will continue to happen every year unless something is done about poverty.

  Present Government expenditure to deal with, and because of, fuel poverty includes: around £1 billion per year to the National Health Service because of cold-related illnesses such as respiratory diseases, heart and cerebro-vascular complaints; £3.6 billion over the next three years on personal subsidy payments to deal with the effects of fuel poverty;[6] and spending on energy conservation measures through property improvement programmes totalling £835 million over the next three years. Only a small proportion of this expenditure is aimed at eradicating the cause of fuel poverty. FOE agrees that the immediate needs of the fuel poor should be met by cold weather payments but the Government should invest money now to eradicate the problem to avoid continual expenditure on treating the effects rather than removing the cause. It is the energy efficiency of the home environment that determines whether a low income family can obtain adequate warmth and it is here that the Government can spend to save at the same time as making environmental and social progress toward sustainability.

  The comprehensive spending review does imply that a proportion of the money available under broad programmes (such as the New Deal for Community Pathfinders Programme and the Single Regeneration Budget) may be directed at increasing energy efficiency but no figures on these proportions or a strategy on how these various funding streams will be co-ordinated into a programme have been produced. FOE supports the campaign to secure the implementation of a comprehensive 15 year programme of insulation and other energy efficiency measures in 500,000 cold homes each year. Detailed costings prepared by FOE suggest that such a programme would be revenue positive—with the costs of £1.25 billion a year being recouped by savings in other areas over the life of the programme. Areas where savings would be made include: the £1 billion per annum burden on the NHS of coping with cold related diseases; savings in welfare payments including benefits paid to the unemployed who would find employment from the 30,000 long-term jobs that would be created; and large savings in the maintenance and management of public sector houses improved under the programme.

  In addition to these expenditure benefits this policy of investment would make significant contributions to the Government efforts to deliver on policy objectives including investing in decent housing provision, reducing health inequalities, offering employment opportunities, cutting CO2 emissions and reducing air pollution.

SHORT-TERM FOCUS PROTECTS PROGRAMMES IN NEED OF FUNDAMENTAL REVIEW

  Securing Britain's long-term economic future has been a theme of the Chancellor's approach. Given the changes that will be required in order for Britain to prosper by achieving sustainable development it is an approach that FOE supports. In particular, we support the inclusion in the Code for Fiscal Stability the principle of fairness both within and between generations. Unfortunately, the opportunity to review expenditure programmes in the same manner has not been taken.

  The framework for new expenditure decisions may have been partially reformed but existing major public expenditure programmes have not received fundamental reviews that would allow immediate and long-term savings to be made. In the case of transport infrastructure the balance of strategic spending between roads and rail does not appear to have been addressed with regard to the fundamental changes demanded by sustainable development. There is also a concern that although several trunk schemes have been removed from immediate expenditure plans the review is more about introducing a stagger rather than redefining the aims and objectives of expenditure on trunk roads. Other programmes have been left almost completely untouched.

Example: Nuclear liabilities

  The nuclear industry in the UK has been built up with public money. Despite the privatisation of some sections of the industry its operations still have significant implications for future public expenditure, most importantly with regard to nuclear waste.

  The cost of dealing with the unwanted debris of the nuclear industry is officially estimated at nearly £42 billion. Research published by Sussex University and FOE in October 1997[7] revealed that the nuclear industry has failed to put aside sufficient funds to meet these costs. As a result, nuclear waste costs of almost £30 billion are likely to be picked up by the taxpayer in the future. In other words the costs of decades of public subsidy are to be paid for by future generations but the Government can act now to ensure that expenditure now minimises costs to both present and future generations.

  Under the present programme nuclear wastes from the UK and other countries are chemically treated by the taxpayer-owned company British Nuclear Fuels (BNFL) to separate out uranium for return to power plants but also produces large quantities of nuclear waste, including highly radioactive plutonium, which stays in the UK. Although it was initially believed that the plutonium would provide a commercial fuel source it is now clear that it represents an extremely expensive and dangerous liability. The industry is still searching for a method of disposing of the nuclear waste generated by reprocessing as efforts to dump the waste underground near Sellafield, costing more than £400 million, have been shown to be scientifically flawed.

  Three point seven billion pounds is due to be spent in the period from 1997 to 1999, and a further £9.5 billion in the following ten years. The majority of this money is due to fund the continuation of BNFL's plutonium separation work at Sellafield in Cumbria. As a matter of urgency, this programme must be re-evaluated to identify the opportunity for both cost-savings through the development of a waste management strategy more relevant to present environmental and sustainability needs and a minimisation of future liabilities.

  In October last year, the Government redirected £102 million from the nuclear waste budget to fund urgent spending requirements in the NHS. A thorough review of the complete nuclear waste management system offers the opportunity for this welcome initiative to be repeated, but on a larger and on-going basis. It also provides a vital opportunity for the Government to control escalating nuclear waste costs.

CONCLUSIONS

    —  The comprehensive spending review does not consider fully the cross-Departmental nature of the spending implications of pursuing sustainable development and has as a consequence missed opportunities to simultaneously save public money and make advances in environmental protection and toward sustainable development.

    —  Fuel poverty provides an example of where the comprehensive spending review did not allow for a clear Government-wide perspective on spending to inform a strategic response that would deliver good value for money overall to the tax-payer.

    —  The comprehensive spending review has failed to establish the principle of fairness between generations in the Government's approach to public expenditure.

    —  The case of controlling nuclear liabilities and the costs of the current nuclear waste programme offers an example of where costs to future generations have not been addressed adequately.

    —  As a consequence the comprehensive spending review does not provide a firm foundation for the Government in its pursuit of sustainable development with regard to public expenditure policy.
November 1998


6  This includes: £520 million per year on VAT compensation on income support and pensions; £450 million per year foregone due to the VAT reduction from 8 per cent. to 5 per cent. on domestic fuel; £400 million over two years in winter fuel supplements (plus further £400 million over the following two years announced in the CSR; and £35 million per year in cold weather payments. Inter-Departmental Working Group on Fuel Poverty, 18 October 1998 "Fuel Poverty and Current Government Programmes". Back
7   Sadnicki, M and MacKerron, G, 1997. Managing UK Nuclear Liabilities. Brighton, Science Policy Research Unit, University of Sussex. Back

 
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