Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



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.


  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.


  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.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2000
Prepared 16 March 2000