ANNEX
CONCLUSIONS OF THE BRITISH GOVERNMENT
PANEL ON SUSTAINABLE DEVELOPMENT: ENVIRONMENTALLY
DAMAGING GOVERNMENT SUBSIDIES
In its Third Report, January 1997, the British Government
Panel on Sustainable Development (the Panel) considered the issue
of government subsidies. Within this term the Panel considered
the inclusion of, not only conventional public expenditure, but
also, tax exemptions, capital grants, provision of transport infrastructure,
insurance cover, research and publicity, and, going wider, implicit
subsidies which occur where market pricing fails adequately to
reflect external costs (i.e. pollution costs falling on the community
as a whole). As part of this work, it commissioned research from
CSERGE which indicated that environmentally damaging government
subsidies might amount to in excess of £20 billion per annum.
This was broken down as follows:
| Sector | £ million per annum |
| Electricity and gas supply | 1450 |
| Coal protection | 225 |
| Agriculture | 2387 |
| Transport | greater than 14,378 |
| Water supply | 2118 |
| Total | greater than 20,638 |
The Panel recommended that "the Government should
set up a task force to draw up, within a year, aims and principles
for the future use of subsidies" and that any proposals for
new subsidies should be subject to environmental impact assessment.
The Government in its response accepted that it should
draw up, by April 1998, aims and principles for the future use
of subsidies. But it did not consider that setting up a task force
was the most efficient or effective route as subsidies varied
greatly from sector to sector and were best dealt with by those
who understood the sectors in detail rather than by a central
team. In addition the Government said that within the CSR, then
underway, "each Government Department is charged specifically
with reviewing existing subsidies within its remit to see whether
the objective of its subsidies are compatible with the Government's
commitment to achieving sustainable development or could be met
in a less environmentally damaging way".
In its Fourth Report the Panel therefore followed
up the issue and concluded that: "Whether this piecemeal
approach will be effective remains to be seen. Until there is
evidence to this effect the Panel remains unconvinced." (Fourth
Report, February 1998, p.21). There was no further comment on
this issue from the Government in its response to the Fourth Report
and the Panel has not pursued the matter in subsequent reports.
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