Examination of Witnesses (Questions 143
TUESDAY 15 FEBRUARY 2000
MP AND RT
143. Good morning, Deputy Prime Minister, and
good morning, Minister. We are delighted you could come to the
Committee to see us. We are talking this morning about the sustainable
development strategy which you produced last May. Is there anything
you would like to add before we start questioning you on it?
(Mr Prescott) Yes, with respect, I would
like to make one or two opening remarks.
144. Perhaps they could be reasonably brief.
(Mr Prescott) I will do my best but I wanted one or
two points brought to your attention. What we have tried to do
since we last appeared before you is to make the point that environment
is mainstream and not a kind of "add-on" situation,
so we are concerned with economic and social progress as well
as the environment. In our sustainable document it really is about
that, it is not just simply making the point about the environment;
it is about economic prosperity, it is about social justice and
it is also about environmental considerations and how we achieve
that in a sustainable policy. That means there are quite a few
balls in the air to be brought together at the same time, and
I think it is important for your Committee to make a judgment
on whether we are actually achieving thatthat is what audit
is. We have not fully read your report yesterday, but we have
taken on board some of the points made. Perhaps we can give you
a response to that later and have an opportunity to have an exchange
about it. I would like to say that I did notice that in paragraph
11 of the report you were complainingor you made the pointthat
you had not received the guidance note on the environmental sustainability
approach to the Government's expenditure programmes. I was a little
disappointed that was the case, so I have made it clear this morning
that that document can be made available to you and will be made
available today, so that you can see the approach that we are
adopting. I am sorry that, perhaps, we have not made it public,
as such, as yet, but you can certainly have it and, perhaps, cross-examine
us on that point. I wanted to make that point. Secondly, whilst
we are talking here about what we do domestically we are also
concerned to make sure that we get that sustainable policy identified
internationally. One, for example, is the Kyoto agreement, and
it is a very important for us to try and get agreement at the
end of this year on the Kyoto Protocol. We have been spending
quite a bit of time on that and, also, some of the biodiversity
conventions we have been involved in. Also, nationally and regionally.
I think some of the changes that we have made, particularly from
having established the sustainable development strategy, are that
we have had to make sure that that not only works through government
setting the objectives and aims, but we want to make sure that
government implements that policy and make sure that it is across
government. We have, as you know, a Cabinet Environment Committee,
of which I am Chair, and Michael chairs the Green Ministers and
we have a report coming in a few months' time. No doubt the Committee
will want to examine us on that, and that may be the appropriate
time to see how successful we have been in getting the sustainable
strategy into the Government's expenditure programme set for the
next three years, which we are involved in at the present time.
So we are working internationally, locally, regionally and in
local governmentand the local government agenda will come
out in questionsbut I think our main point is that we have
had, we believe, some success in laying out the strategy, and
certainly some success in regard to getting business to co-operate,
of which climate change is an example. In conclusion could I just
use one example where I think sustainable strategy is really coming
into account, if we are trying to achieve environmental objectives?
The water industry is a very good example of where we got an agreement
with the water industry and the regulator, but not only to cut
prices. This raises a very important question about is the price
mechanism the only way by which you achieve the environmental
objective, because if it becomes more expensive people use less
of itwhether it is fuel or water. In reality we have to
get a balance, so in the water industry we secured a 7.5 per cent
reduction in pricewhich we thought was rightbut
we also got a £7 billion investment in the environment. Neither
of those things appear in the equation about public expenditure
programmes and environmental targets or objectives, but I think
that with industry we have shown that we have done this through
agreement and co-operation. I believe our sustainable development
strategy, published less than a year ago, has in fact had its
effect on government. How effective, you will make a judgment
about, but I must sayand I conclude on this pointthat
it is a hell of a culture shock to government itself to find it
has to consider sustainable strategies. It has gone on, usually,
with economic objectives and it has then taken into account social
objectives but now we have environmental objectives and, indeed,
human rights objectives which come from Europe, in the sense that
judgment of economic decisions has consequences for human rights.
It is surprising, if you like, that it means we have a number
of balls in the air which we have to put into sustainable strategy,
and I do not think we should under-estimate that. We have been
in two-and-a-half years, and I know that in transport it seems
that I am supposed to have cleared congestion in two-and-a-half
years, but I think anybody who knows the difficulty in transport
realises that it does not come by simply making a statement. You
well know that to bring environment and transport together was
quite a culture shock. As you remember from your previous time
in government, Chairman, it is not easy to bring those two departments
together, but we have had some success. We have laid down the
grounds, laid down the objectives, the sustainable strategy is
a radical change in government, and, hopefully, we will be successful
in its implementation.
Chairman: Thank you, Deputy Prime Minister.
You will remember that the last Labour Government actually split
up transport and environment, but you have now decided to bring
it back together again. I remember that period very well indeed.
Thank you also for your offer to supply us with the background
guidance for the second Comprehensive Spending Review. We would
obviously have preferred to have had it before this meeting because
we could have questioned you directly on it, but we do welcome
your offer to let us have it very shortly. That does raise the
issue, which is central to our concern, of what effect the sustainable
strategy has had on Government, on Treasury and on other departments?
We are very concerned about that.
145. Thank you very much, Deputy Prime Minister,
and welcome back. It has been over two years, but it is an interesting
point to compare what has happened with what you said would happen
then. You broadly referred to the report we published last week
on the review of the CSR. The sustainable development strategy
was published last May, and six months on the CSR happenedlast
November. Have we missed something, or does the CSR completely
ignore the sustainable development strategy?
(Mr Prescott) No, and I think that when you get the
report you will see that in the Treasury guidance notes on this,
in fact, it is at the heart of the government on public expenditure.
Again, I think what I have to say is that, firstly, it is long-term,
and therefore we have started on that process. As you rightly
pointed out, we have produced a report, which is our guidance
and our priorities, and we have had this effect on the machinery
of government, and that is where it is importantin getting
people to see not only that you set the strategy but how you implement
it. The machinery of government, I think, and your Committee,
is to see that it is implemented right across government. Michael's
Green Ministers is another way of doing it. The new kind of strategy,
of sustainable social, economic and environment has helped in
getting governments to look at the assessment of each piece of
legislation. Let me give you an example. The Strategic Rail Authority
is a body that was set up primarily to deal with rail before the
House and the Committee. We not only asked them to produce a regulatory
framework and its impact, clearly, but also on the environment
and equal treatment. There are now statements made about each
piece of legislation coming before the House, and our job is to
see that it is implemented in that way. I have already mentioned
to you, I think, the changes in the regional planning machinery
of government, and that sustainable strategy now has to be built
into what they are talking about. We have changed the whole planning
framework now, so that for all thingswhether it is in housing,
whether it is economic development, or whatever it may bewe
now have a sustainable strategy built into that. Of course, changing
the planning framework is a difficult and timely process, but
it shows that the machinery of government is actually working
and implemented, and selling what is, I believe, a long-term strategy
in the normal run of government decision-making. So we have had
that effect. If I was to point to you, "Has it had an effect
on different A, B and Cs and on targets", one would have
to wait and see, but I believe the machinery is now right.
146. You talk about the machinery and you talk
about "tool kits" in the sustainable development strategy.
What we are interested in is the impacts that these aspirations
have in the Comprehensive Spending Review and how they affect
spending policies by the Treasury. In the response to that CSR
paper the Government suggested, and I quote, "Building in
a requirement on Departments to involve their Green Ministers
fully in the preparation and conduct of the Review", and,
also, "To recommend the Sustainable Development Unit to Departments
as a source of expertise on environmental issues". We agree
with that, but what on earth have Green Ministers and the SDU
been doing during the last CSR? You told us last time that that
is what they were there to do. So we are just having, again, more
innovations which are not in fact innovations.
(Mr Prescott) I do not think so. I have already told
you that I am sorry the Committee did not get the advice notes
that cover the whole second round of the spending review. I think
that is an important document and I was dismayed to see that was
the case, but I have now made that available. You must make a
judgment about that. I am convinced that we are beginning to have
that effect in government on its expenditures, and the real judgment
for that will come when we conclude these negotiations. Let me
say that in order that I can check on it I have asked Michael,
at the next meeting of the Green Ministers, to see how far we
have got in the first stages of that. As you know, the White Paper
on public expenditure will be out, probably in the July period,
and then you will be able to make a judgment. Our Ministers will
be meeting, with Michael, myself and with the Committee as well,
to see how far we have been able to advance that. That will give
us a check after the first rounds of discussions in all the departments
that are now under way on the CSR.
147. But we want to start seeing some results,
do we not, Deputy Prime Minister?
(Mr Prescott) So do I.
148. The Prime Minister, in the foreword to
that report says "Talking about sustainable development is
not enough". When you visited us two years and one month
ago you said that that is precisely what the Green Ministers should
be doing, in response to the paragraph that I have just read out.
Two years and one month on it is not happening. Can you give us
(Mr Prescott) I am sorry. What do you mean "it
is not happening"? I have already told you it is happening.
I have told you about the guidance notes that we have had for
guidance through this present position on the spending review.
What do you want as evidence?
149. Can you give us examples of how the environmental
concerns of the sustainable development strategy are featuring
in the CSR round? What concrete effects has it had on processes
or policies that you can point to us? For example, as part of
the CSR when it was first announced the "additional money"
that was supposedly going to schools would be linked to the progress
those schools were making in reaching targets and such like. If
that progress was not achieved then those education authorities
could not assume that additional money in years two and three
would be forthcoming. What this Committee wanted to see is some
equivalent in the CSR for environmental concerns. If various departments
of state were not bringing environmental concerns into their spending
plans, then they should not assume that extra funding in years
two and three of the CSR is actually going to be forthcoming.
What evidence is there that any parts of the CSR have been linked
to environmental concerns and environmental targets being reached?
This Committee has not seen that evidence, and that is our concern.
(Mr Prescott) I think we were referring to the next
stage of these negotiations on public expenditure. Michael sits
on the Committee dealing with the different departments. Michael,
do you want to give any examples we have had in these discussions?
I am bound to say that I do not think we have accepted it as the
principle that the amounts of money that would be available if
you failed in year one of the CSR you would get in year two and
year three, but there will be an assessment, not only on environmental
aspects but on the sustainable aspects of it, because there are
other objectives than simply the environment in these matters.
(Mr Meacher) I think Mr Loughton has a point that
the first round of the spending reviewCSRdid not
reflect sustainable development considerations as strongly as
we would have wished. I think they are there, I think they are
bolted on, but I do not think they are as integrated within the
process as we would have liked. However, I do think you are going
to notice a major change in the spending review process which
is now under way. I say that for three main reasons. First of
all, as John has already referred to, the Treasury guidancewhich
we are going to show to youdoes require departments to
demonstrate how their priorities and spending proposals do contribute
to sustainable development and how they link to sustainable development
indicators. Secondly, the Green Ministers did, at the meeting
which I chaired last November, decide that we would ensure that
sustainable development is considered in each case and each department
as part of their spending review. It is the responsibility of
each of those Green Ministers to do that within their own departments,
and I shall be checking on how far that is done. I am currently
writing round to all Green Ministers to remind them of what they
have agreed, and that they should now seek to ensure it is fully
carried out. Thirdly, the Treasury has produced a list of around
15 cross-cutting themes in their financial advice to departments.
One of those is sustainable development. I would also add to that
that we are encouraging the Treasury to require other government
departments to consider how other departments contribute to their
public service agreements on a particular cross-cutting theme.
In other words, it is not only what that department does but they
should consider how that fits into the general pattern of delivery
of that cross-cutting theme. Those are new innovations. You will
be checking on how far they are realised in practice. So will
we. We realise this is a patchy and slow-moving process but we
are determined to push it forward and we do think the new pattern
of guidance and requirements centrally should deliver that much
more fully in this second round of the spending review.
150. So "patchy and slow-moving" in
just over two years of "Watch this space". It has been
bolted on and not integrated. Can we turn
(Mr Prescott) You have suggested there should be a
faster pace. How would you have done it?
151. That is not for me, as a Member of this
Committee, to dictate
(Mr Prescott) You just ask the questions.
152.to the Secretary of State. That is
the role of this Committeeto ask questions and produce
reports. Two years and one month on, after the comments that the
Deputy Prime Minister has made in response to our review, we seem
to be back to square one.
(Mr Meacher) Can I respond to that, because I did
say "patchy and slow-moving", but I am a perfectionist
and I want things to go fast and a long way. However, I did not
mean by that that quite a lot has not happenedit has. I
suppose the most important departments outside DETR in terms of
delivering environmental impacts are the DTI, the Treasury and
MAFF. All of those have currently and are currently making what
I do regard as major strides in this area. First of all, the DTI
is consulting on its own sustainable development strategy. If
I may say, five years ago that, I think, would have been inconceivable.
MAFF are now producing their own sustainable development indicators,
and the Treasury did, I have to say at the bidding of this Committeewhich
I strongly supportproduce an environmental impact assessment
for their last budget, including a table and two or three pages
of text, and maybe that can be extended further. So all those
three key departments are already making, I think, major strides.
You also mentioned the Department for Education and Employment.
They have set up, in this area, a sustainable development education
panel, which has actually produced a very good report, and it
is trying to ensure that sustainable development, even if it is
not part of the National Curriculum, is part of the culture of
schools and the education of a new generation. Again, I think
they have responded. So we are seeing significant and major changes,
and I do not think we should understate that.
153. Can I finish by leaving the government
side and taking what the Minister said? The job or remit of this
Committee is to review all departments of government, not just
the ones that necessarily have an obvious connection. That is
a concern we may have to come back to. What has the impact of
the sustainable development strategy been, so far, on, for example,
the business industry community? Deputy Prime Minister, you have
just mentioned that you believe you have had some impact on business.
How has that manifested itself?
(Mr Prescott) I have mentioned the water one, and
I should have said a 12.5 per cent price cut, not 7.5 per cent.
In that sense, acting through the regulator we have an effect
on the utility about both price and environmental investment,
which shows that sometimes the price mechanism is not the only
way to achieve the objective. For example, we have our policy
on water wastage, which we cut quite considerably by making it
clear that the level of leakages we had in the industry was not
acceptable. In regard to the Climate Change Levy, I think that
has been quite successful in trying to get industry to agree between
us what we might do in regard to achieving climate change. That
has been agreed with industry and I think they find the 80 per
cent discount in some areas to be very acceptable to them. I think
that is done with a broad deal of agreement. So, in that sense,
we have achieved a number of things. There are the areas of waste
strategy. It follows on, if you like, from the successful landfill
policy of the previous administrationslooking at how you
massage the price mechanism to achieve environmental objectivesalthough
on the waste management side it means we have much more difficult
programmes since Europe has now said we must put less into landfillquite
rightly, I thinkbut then we have to move to more difficult
objectives of waste strategy, which Michael is involved in negotiating.
154. And on regional and local government bodies?
(Mr Prescott) I think the Prime Minister made it clear
that he would like to see more on the local government bodies.
I think it is now well over 80 per cent that are working on the
Local Agenda 21, although we are still pressing to get a higher
figure, but we are quite pleased about it. In regard to the regions,
there is an interesting question about how you need accountability
in regional governmentand I have a strong view about thatbut
at the moment if you look at the regional strategies there are
through planning agreements or with the Regional Development Agencies,
they now have to build the sustainable strategy into their planning
and strategy developments for the regions. So we are making movement.
It is never as fast as we would want it to be but, given all the
kinds of changes that we have to make, I am quite satisfied we
are making good progress.
155. In Mr Meacher's reply to Mr Loughton he
said there was a cross-cutting review of sustainable development.
This surprised me because I have a list here with 13 cross-cutting
reviews announced at the time of the CSR which does not include
sustainable development. Has it been added on later?
(Mr Meacher) I said there were 15, or around 15.
156. We have a list of 13.
(Mr Meacher) Certainly sustainable development is
one. That is my understanding. If you have reason to doubt that
I will check it.
157. Can we have that checked because we were
under the impression there was not a cross-cutting review of sustainable
development. We were particularly surprised about that because
it is the perfect subject for a cross-cutting review. You say
there is one.
(Mr Meacher) I entirely agree with you, and if it
is not it certainly should be there, but my belief is that it
is. I will check that and we will come back to you on that.
(Mr Prescott) I think it is in your latest report
as well, is it not?
158. Yes, it is.
(Mr Prescott) We will respond to that and we will
give you a quicker reply on that.
(Mr Meacher) It is amazing how quickly, in the electronic
age, this information arrives. Perhaps I can read out what it
says on overarching themes in regard to the spending review. "The
Treasury Review guidance deals with sustainable development as
the first of a number of common issues immediately after the overarching
themes are set out."
159. That is not the same as a cross-cutting
review, and we have still got 13.
(Mr Prescott) Can we come back on that?
(Mr Meacher) I think it certainly has the same effect.
(Mr Prescott) Let us come back with a proper response.