Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 143 - 159)

TUESDAY 15 FEBRUARY 2000

RT HON JOHN PRESCOTT, MP AND RT HON MICHAEL MEACHER, MP

Chairman

  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 that—that 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 complaining—or you made the point—that 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 government—and the local government agenda will come out in questions—but 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 it—whether 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 price—which we thought was right—but 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 say—and I conclude on this point—that 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.

Mr Loughton

  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 happened—last 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 important—in 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 things—whether it is in housing, whether it is economic development, or whatever it may be—we 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 some—
  (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 review—CSR—did 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 guidance—which we are going to show to you—does 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 Committee—to 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 happened—it 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 Committee—which I strongly support—produce 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 administrations—looking at how you massage the price mechanism to achieve environmental objectives—although on the waste management side it means we have much more difficult programmes since Europe has now said we must put less into landfill—quite rightly, I think—but 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 government—and I have a strong view about that—but 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.

Chairman

  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.


 
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