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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