Examination of Witnesses (Questions 160
- 179)
TUESDAY 15 FEBRUARY 2000
RT HON
JOHN PRESCOTT,
MP AND RT
HON MICHAEL
MEACHER, MP
Joan Walley
160. I shall look forward to us having that
discussion because I think what we really want to see—as
you said at the very beginning, Deputy Prime Minister—is
how we can mainstream sustainability into every aspect of policy.
Just before we leave our first bit of questioning, can I ask a
little bit more about the detail because, I think, the Devil is
always in the detail—as you know only too well. In terms
of your championing of the Private/Public Partnerships and the,
if you like, extension of what was introduced as PFI, one of my
concerns is that whatever we might be saying about how things
have been done at a regional and local level and how things have
been done within the Treasury across all government departments,
if so much of government expenditure is going to be through these
PPPs can I ask how you are making sure that every specification
that actually comes out has had an exhaustive environmental assessment
made of it? Have you got a mechanism for doing that within this
broad theme we are now discussing?
(Mr Prescott) We do attempt to do all environmental
assessments that are sustainable—and I keep coming back
to this point, because it is quite an important difference. If
we look at the Channel Tunnel Rail investment and say "We
are going to get an awful lot more money from PPP", in that
case we will obviously be taking into account the relief on public
expenditure, which is most important, and the environmental assessment
of whether it makes it more attractive for people to use their
cars less and use public transport more—which is quite an
important consideration. So they will be taken into account. I
think the most important one for the development of Public/Private
Partnership is like the Underground financing. It may be very
controversial but if you can get the money from the private sector
and meet the objective that you want and it improves a public
transport system for people to make a better choice between using
their private car and public transport, which is an environmental
objective, it does relieve government expenditure itself of quite
an awful lot of investment and is something that can be raised
by private funds. I was making the point before that often when
we do it with privatised industries much of the gains of that
are not made in the public expenditure programme. So we do try
and make the assessment, but the most important thing, to my mind,
is relieving public expenditure which can be used more profitably
in other areas.
161. In terms of the submissions that are now
coming through under the various Pathfinder schemes for investment
in, say, hospitals or school buildings, is it the responsibility
of the local authorities putting in the contracts in the first
place as a procurer of government policy, or is it the government
departments? Who is making sure that buildings and the specification
for buildings meets with all the detail of environmental sustainability
and assessment?
(Mr Prescott) Hospitals are a good example, because
I find many local authorities will press me for hospitals, then
we have the Health Department saying "Can we not have this
PFI hospital building?" and often they want to build outside
the town and we get into the controversy about whether you use
a site inside—a brownfield site as a hospital development
there—or outside. Then they will demand they want to build
it on a greenfield site, and we have to argue about that. It is
about the amount of car space, it is about the accessibility for
people—all these environmental objectives are taken into
account.
162. Who by?
(Mr Prescott) With our reviewed planning programme.
You have to get agreement now about how many cars, where it is
situated and the environmental assessment. It is at that stage.
163. In terms of the specification for energy
efficiency in terms of the actual building design, whose responsibility
is that and would the Treasury not agree it if it did not meet
with tight details?
(Mr Prescott) It is true that we will have these balanced
objectives about getting new hospitals. All these considerations
have to be taken into account.
164. There will not be any cost-cutting on environmental
specifications?
(Mr Prescott) Again, I think you are just taking it
simply as environment. Sometimes I have to agree a hospital and
many circumstances might go into this area—and not only
a hospital but since I have responsibility for planning I have
to take these judgments into account. The planning guidance notes
do take these assessments into account, but at the end of the
day it is not just simply the environmental objective that will
decide it, it will be a number of things in regard to what we
call the sustainable policy.
(Mr Meacher) The government procurement certainly
fully takes into account environmental appraisal, and particularly
with the new Office of Government Finance it is one of the issues
which is taken into account in determining value for money. However,
as John has said, it does have to be balanced; you cannot make
a decision on one criterion alone, you have to balance all three,
but it is certainly there in a way that it has not been there
before.
(Mr Prescott) Also, in the Egan Report, I should mention,
that has been dealing with public buildings and public procurement
policies, something like a target of £500 million, they have
now been looking at a number of government projects and how you
build more efficiently, how you use energy efficiency. Frankly,
the Millennium project which we have now developed on the Greenwich
site is all about how we get better building, better utilisation
of water, energy etc. and we hope this will become the standard
throughout the industry.
165. I hope it will too, but in the sustainable
document all it says is that government purchasing policy will
help to influence the suppliers, both to offer sustainable goods
and services and become more competitive. It does not say how
those sustainability considerations are going to be built into
it.
(Mr Prescott) Perhaps we could have said more about
Egan's work. I think that report finalised the Egan Report, but
we have done quite a lot of work with that and it is now part
of the Government's procurement policy in regard to public building.
Mr Shaw
166. You often talk about changing people's
behaviour—hearts and minds—and encouraging people
to think about the environment, and with the launch of the strategy
there is also the campaign "Are you doing your bit?"
on which there are initiatives up and down the country. Can you
tell us whether that campaign has been evaluated and whether you
feel it has been cost-effective?
(Mr Prescott) We took on board the criticisms you
made about this, that we had a number of programmes and they did
not seem to come together. Indeed, the "doing your bit"
campaign was an attempt to achieve that by bringing all these
various aspects of environmental considerations together and to
get people to do things that might have an effect. The assessment
since is that we have taken the high levels of public awareness
and generated that nine out of ten people recognise the campaign.
We believe that the awareness of the slogan is up from 40 to 59
per cent, and there have been other recognitions. I get a bit
sceptical about some of this information in a way. What we are
trying to do is bring it together, and if you get people's awareness—for
example, do you fill the kettle full of water, or do you use the
actual tap when you are cleaning your teeth—they can be
important considerations and they can have considerable consequences.
However, I was thinking about this the other day and I think it
is a bit like road safety—Drink and Drive—it is very
effective in awareness when you do it at the time but I suspect
if you did not do it every year we would not have had the consequential
effects on reducing, through all governments, the deaths from
accidents on roads. So I am not sure what effect it has. It is
about a culture change, is it not? You can say to people "Switch
off your lights and you are saving energy" but I think there
is a tendency to feel, in high and low income households, that
somehow you do not save so much by switching off the light, whereas
when I was a kid you got your head belted if you did not. You
cannot do that these days, but my old dad would give me a clip
round the ear if I left the light on. You cannot introduce that
kind of policy at the moment, and whilst it is still useful to
increase awareness and have people change in attitude towards
these things, I am not sure it has a major effect overall.
167. Do you agree with us that the campaign
was rather drowned by the competing price signals from the gas
and electricity market? You mentioned earlier on, on the one hand,
people want to see a price reduction in water but, also, you wanted
to see an investment in the environment.
(Mr Prescott) It is a difficult question. It is in
regard to the fuel duty escalator, if you like. You can say "Why
do we not keep putting up the price of fuel and keep the escalator
and people will use less of it" but I do not think you can
price simply on the escalator; it might be that the world price
of oil—as we have found—has been reduced. It is like
water. If we say that you keep a high price for water, do you
freeze people out of being able to use it, or do the cut-offs
increase? I think what we tried to do with water was to say "Right,
we can reduce the price but we are quite prepared to allow the
industry to bring in water meters". That is a price mechanism,
if you like, that people take into account, but at the same time
we have come to an agreement with the industry that people on
low incomes will not be automatically cut off from their supply
of water if they are unable to pay their bills. Price mechanism
is not the only way of achieving your objectives.
(Mr Meacher) I really do not think you have a conflicting
message. It is to the benefit of poorer people that they get cuts
in gas and electricity prices and now they are going to have it
in water. It keeps them warmer and at less cost. The key message,
though, is that they can have even lower bills if they invest—either
themselves or the home energy efficiency scheme—in the improved
use of energy. Now, that is not in conflict. It is built on what
has already been achieved by price cuts to say that you can do
even better and it will actually cost you less once the pay-back
period has been gone through.
168. Do you agree with our recommendation that
we should see some reduction in the VAT on energy saving materials,
because that very much follows through on the point you are making?
The satellite schemes we have at the moment are limited and, clearly,
a lot of employment could be created for the installation of home
efficiency materials, and it would also be cheaper for people
to keep warm—and so getting to grips with poverty that we
want to see. Are you encouraging Treasury on that? You referred
to encouraging the Treasury, and I was pleased to see you are
encouraging Treasury to harmonise VAT on brownfield renovation
and greenfield development this morning in the papers, but I wonder
if you are encouraging Treasury on that.
(Mr Meacher) We certainly are. We would like to see
a reduction in the price of energy saving materials. That cut
in VAT has already been put in place in terms of government supported
schemes. The issue is whether it should apply more widely, and
although I find this area rather confusing—confusing messages
seem to come out of Brussels, and it does seem to be suggested
that this is incompatible with EU rules—the counter to that,
I am well aware, is that the French have done it.
Mr Shaw: And the Italians.
Chairman: And the Isle of Man.
Mr Shaw
169. The Isle of Man, the French and the Italians.
(Mr Meacher) Okay. One still has to ask the question
whether that is in accordance with the EU rules or whether they
are going to be forced to back down and remove it. We have certainly
pressed Customs & Excise, who are responsible for this, to
clarify the rules. I agree, we do need to get an authoritative
answer. We would like to see an extension of VAT cuts on energy
saving materials across the board.
170. The Treasury, in response to us, said that
they had not expressed an interest to apply for a VAT reduction
and preferred to have other employment schemes, such as the New
Deal.
(Mr Meacher) I do not think it is incompatible with
that. Obviously the New Deal has its obvious and impressive
attraction.
Chairman
171. Is it not disappointing that they say they
have not expressed an interest in applying for such a scheme when
the French and the Italians have got one?
(Mr Meacher) I certainly know that Customs & Excise
have been making their inquiries in Brussels about this. I do
not know whether that is expressing an interest. I thought it
was. Clearly, we are looking to see whether it is legally possible
for us to do this under EU rules. I would have said that was certainly
expressing an interest.
172. They admitted they had not expressed an
interest to that extent and, also, this correspondence has gone
on for a very long time now—18 months—with no end
in sight.
(Mr Meacher) I entirely agree, Mr Chairman, and we
share your frustration. I have heard an official say that in many
years within the Civil Service he has never encountered a more
opaque document than that which purported to set out the position
over this issue coming out of Brussels.
Mr Jones
173. Deputy Prime Minister, in your initial
remarks you recognised that the sustainable development strategy
now reflects a far greater emphasis on social and economic concerns.
Is there not a danger—and this Committee certainly feels
there is—that the third leg of that tripod (economic, social
and environmental, the third leg being environmental) loses focus
and loses any sense of priority as a result of the, perhaps, justifiable
priority given to social and economic concerns?
(Mr Prescott) I think that is a concern and it is
one dominating a lot of thinking in the last decade or so, in
which the feeling is that environment was not treated as the important
issue, and what we had to do was bring it to the fore. I think
that is very much to the fore at the moment, perhaps due to Kyoto
and things like that that influence domestic policy and how you
set your environmental agenda. I think the change has come about,
largely, because environmental issues have been seen as a gain
and not a pain, in that measures to combat climate change, for
example, is approached generally as kind of cost effective to
us in that you help save the environment. The trading in gases
and flexibilities that come from the Kyoto negotiations have shown
that it can be, again, efficient utilisation of energy, and the
more efficient utilisation of energy is an important part. I believe
those three can be put together. I do not think that environment
is the sole objective. If we wanted clean air we could say "Let
us close down all industry together, no polluting will take place",
but then you have to take into account the other leg of it which
is economic prosperity. Or, in water, when we talk about the simple
use of the price mechanism to get less water being used because
it is so expensive, but then how do you meet the needs of low-income
people? It has to be a balancing of these three things. That is
why we say sustainable is not just about the environment, it is
about economic prosperity, social justice and the environment.
I think we are getting that balance right in sustainability and
I think that is now being readily accepted. Climate change is
a good example of where industry has come round to accept, not
only in Britain but in other countries, that this is a better
way of doing it and there are some efficiency gains in it. One
was struck by the opposition to Kyoto by all the big energy using
industries, including the motor car industry, but they now recognise
that perhaps there is something to be got from having a cleaner,
greener car, if you like, and they are now putting an awful lot
of investment in, and it is very profitable to them to do so.
So we are reducing CO2 gases, which is an environmental objective,
and more investment goes into new types of car—cars still
play a part, although we still want to see people using public
transport more and getting a balance between them—and those
things get brought together. That is what sustainability is about.
174. I do not think the Committee would question
your commitment or the Minister's commitment—I certainly
would not—to ensuring that you make those environmental
gains. However, how can you reassure the Committee that you have
sold this to other departments? The fact that there are social
and economic considerations encompassed within the entire strategy
gives some departments an easy way out. All the departments will
buy up on our social policies, all departments will buy up on
the economic policies, but they may be a bit more reluctant on
some of the environmental policies, and this is a way out because
they can say "Look, what we are achieving in the social sector",
but forget the environment.
(Mr Prescott) All those departments will say that
they share the same objectives we are talking about, on economic
prosperity and social justice. Michael has made the point that
he has to deal with an awful lot of the Ministers who come along
with their departmental case, and he has to argue "You must
take into account these other objectives that we have outlined
in the sustainable programme". I think the DTI, in their
programme to be announced, I think, in the next few months, has
made quite a considerable change—and the Treasury as well—in
identifying what they think are environmental objectives. I agree
with you, that the true test will be in the period of time. You
will certainly want to judge that in the next three-year expenditure
programme. It is right to be concerned about it, the question
is what different departments are about. We are, if you like,
at the declaration stage; that we are saying "This is an
important strategy, we are having an effect in other departments
to declare and make it so, it is not just one line that you all
put in". If I read your reports, all departments will put
in "Yes, we believe in a sustainable strategy" as they
used to say about the environment—replacing "environment"
with "sustainability". We can argue what those differences
are. However, it has to go further than that, and I think what
we are doing is building in the kind of machinery that will monitor
and report back, and that is why I have always been a strong supporter
of the establishing of this Committee. We have to try and come
along and say to you "This is what we have done so far, although
it may not be fast enough", and we will have to take those
criticisms on board. However, at the end of the day we will be
judged. You either did it or you did not. I am just saying that
I think the next round of that will be a very important judge
of the new expenditure programmes in the second round of public
expenditure.
(Mr Meacher) I think it is very difficult to convince
you purely on the basis of general statements. I think the evidence,
for all of us, and certainly for you, depends on the cumulative
growth of specific evidence in the case of other departments.
That is, in the end, what it is all about. I did indicate what
other departments are beginning to do, including very significant
ones in terms of environmental impact. If I can just add to that,
in the case of MAFF, they have, of course, produced a rural development
regulation which is going to make a major shift towards agri-environment
and modulation, which is a very brave exercise in reducing subsidies
for production and shifting them towards environmental measures.
In the case of the DTI they have now produced, for example—and
I just give these as examples but it is the weight of these examples
which, I think, is significant—a draft strategy guidance
to the gas and electricity market authority setting out the contribution
that the authority is expected to make to social and environmental
aspects of sustainable development as well as to the economic.
If I can look at MoD, which is often not—I think, unfairly—regarded
as being a particularly environmental department, they have now
included an environmental impact assessment in terms of their
rural estates strategy, which, considering the wildlife that exists
on them, is actually very important. The DTI has now included
environmental assessment on its utilities review, and the Sustainable
Development Unit and the Cabinet Office are now reviewing how
far papers submitted to Cabinet Committees take account of the
environmental costs and benefits. We are checking on how far new
policy proposals that are put into the central machine fully contain
environmental data. That review started in December, it is coming
to an end now and we will be looking at the results. If there
are deficiencies we intend to address them. So those are just
some examples, and there are many more, and it is the cumulative
weight of that which is the best answer to your question.
175. I certainly agree with you that, using
the example of MAFF, there has certainly been evidence of a culture
change, although I think we can go a bit further on modulation.
You acknowledge the move on modulation is a huge culture change
from the position that used to exist. You mentioned a number of
departments, like DTI and MAFF, for praise. I could not tempt
you to mention some departments which you regard as laggardly?
I am sure there is a mental list emblazoned on your mind.
(Mr Meacher) Despite your meretricious advances I
am still inclined to reject them.
Chairman
176. Can we assume that the departments you
have not mentioned are subject for caution?
(Mr Meacher) I mentioned the most important ones,
I am not saying they are necessarily the best I am saying they
are the most important ones, which have massive impact on the
environment. Contrary to the general conventional wisdom, they
are beginning to move very significantly. Okay, it is not far
enough and maybe it should be done quicker—
Mr Jones
177. What the Committee wants to do is help
you move them. So if you want to name one or two here we would
be delighted to give you the opportunity of having them—
(Mr Meacher) I am pressing, harassing and hassling
them considerably, indeed nearly all the time, particularly at
Green Minister meetings, but I think it is better that it be done
in that context rather than the openness of this Committee.
Chairman: Perhaps you could suggest the
departments that might come before this Committee.
Mr Thomas
178. First of all, good morning. The sustainable
development document makes it clear that much of domestic policy
will, in fact, be devolved, in terms of meeting targets and meeting
those ways of working. What is the latest picture on that? What
sort of liaisons have you been having with the Assembly in Wales
and the Scottish Parliament on how the targets will be met by
the devolved parliaments and assemblies, and how that feeds into
the national and United Kingdom counts?
(Mr Prescott) We have had some considerable discussions
with both the Welsh Assembly and the Scottish Parliament. Indeed,
in Wales they have developed their own document, I think, called
Learning to Live Differently. The sustainable strategy
is applicable whether in Scotland or in Wales in considering these
matters, or, indeed, in Northern Ireland. What they, obviously,
have had to decide, is in the light of their own country's particular
circumstances in which they have a devolved responsibility to
deal with. So there is a close liaison with us. This whole business,
of course, of relations between Central Government, Scotland,
Wales and Northern Ireland has been very much tested and worked
out, and we are in the early stages of it, but we do not find
any difficulties whatsoever in dealing with these matters of environmental
agreement between us. If we recognise that environmental issues
do not really recognise national boundaries, that is equally true
within the United Kingdom as it is outside it. So we have found
a great deal of agreement for it. Again, however, we are back
to what we can express as an agreement and what will be the hard
reality of implementing the public expenditure programmes. Here,
again, I think we will have to be back with you to talk about
how successful we were in influencing that sustainable strategy
within the CSR.
179. Can I follow that line on the public expenditure
programme, because as you know—and the Committee knows—the
Welsh funding is consequential on the expenditure in the English
departments. Nevertheless, within Wales, for example—and
as was said earlier the Devil is in the detail—we have National
Assembly legislators who have a duty to promote a sustainable
development scheme, which you have just referred to. How can you
ensure that what has been happening in Wales, in the promotion
of that sustainable development scheme and the objectives coming
forward in Wales, is going to be reflected in the Comprehensive
Spending Review? Because if they are not, there is a gap there,
is there not, between a statutory duty which the Government has
taken on and what the Treasury may be doing or may not be doing?
We have not seen the guidance, so we do not know. Does the guidance
make allusion to this statutory duty in Wales?
(Mr Prescott) It recognises the responsibilities of
each of the Welsh Assembly and the Scottish Parliament, although
they are different ones in some dimensions of this. What we do
is have regular meetings bilaterally between the ministers involved—and
Michael has these meetings—and we try to take into account
the different judgments as to how you achieve that sustainable
target. In the main the central thrust is to improve the environment,
taking into account economic progress, social justice and the
environment, within the sustainable policy which is agreed between
all of us. How you might achieve it is, perhaps, emphasised somewhat
differently in each party in the United Kingdom. Michael, since
you have these bilateral discussions and deal with the difficulties
which are raised by the ministers, would you care to comment on
that?
(Mr Meacher) We did decide that because environment
is a devolved issue it is very important that there should be
close consultation with the devolved administrations. The United
Kingdom, of course, has an override in terms of its commitment
to meet legally binding international obligations—for example,
over climate change—and in those circumstances we could
require a devolved administration to comply. However, in other
respects it is devolved and, therefore, it can only be done by
persuasion. I have had extensive discussion with my opposite numbers,
Sarah Boyack in Scotland and Peter Law in Wales, on these matters,
mainly by correspondence, but there have been meetings as well,
and, of course, there is consultation with regard to all major
environmental proposals by the United Kingdom Government with
their counterparts in the devolved adminstration.
(Mr Prescott) You can get into situations, of course,
as we have seen recently, where we can make decisions about ending
fuel duty. That, of course, is a matter of national policy, but
then, when you come to making decisions about if you wish to hypothecate
a fuel duty and then distribute it, I am sure we would get into
arguments about who has the responsibility for dividing up resources,
and should the overall judgment be that it is ring-fenced or hypothecated
for public transport investments. These are clearly issues where,
sometimes, a principle in one area may be in conflict with another
and we have to find a balance with that. That is an on-going discussion.
Secondly, on the European side, whereas we agree to sustainable
policies in Europe we must not ignore that either Kyoto, through
an international convention, or the European requirements in sustainable
policies, impose targets and duties on us in different areas of
environmental policy. We have to have an agreement within the
United Kingdom, and to assist that sometimes we need discussions,
and Michael will have ministers from the devolved assemblies and
Parliament who will attend those meetings to take part in the
discussions.
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