Select Committee on Environmental Audit Third Report



APPENDIX 2

MEMORANDUM FROM THE COUNCIL FOR THE PROTECTION OF RURAL ENGLAND (CPRE): PUBLIC SERVICE AGREEMENTS—REALISING THE POTENTIAL FOR SUSTAINABLE DEVELOPMENT

Introduction

"Our aim is to reallocate money to key priorities; to change policies so that money is well spent; to ensure that departments work better together to improve services . . ."

Tony Blair, Prime Minister (July 1998)

1. The development of Public Service Agreements (PSAs) and the Performance Indicators contained within them are designed to highlight the Government's priorities and set out clear targets and outcomes which are to be achieved. The Labour Party Manifesto make it clear that ensuring the environment is integrated into the work of all Government departments was one such priority.

"The foundation of Labour's environmental approach is that protection of the environment cannot be the sole responsibility of any one department of state. All departments must promote policies to sustain the environment."

Labour Party General Election Manifesto 1997


2. This has been reinforced by statements made by the Prime Minister in addressing the United Nations General Assembly Special Session (UNGASS). The publication of the Sustainable Development Strategy in May 1999 stated "the Government is putting sustainable development at the heart of every Government Department's work" (Sustainable Development Strategy 1999, paragraph 5.2).

3. At the same time we have seen exciting new initiatives to tackle issues which cut across narrow departmental boundaries. The Comprehensive Spending Review, the establishment of the Social Exclusion Unit, the Performance and Innovation Unit and the Sustainable Development Unit, and the Modernising Government White Paper all indicate a clear desire to overcome institutional obstacles and focus on achieving policy objectives.

4. CPRE welcomes the commitment to Sustainable Development and the need for greening government as a core part of that. The enthusiasm with which the Government is looking to address issues which cannot be solved by individual departments acting in isolation is also encouraging. We believe the new Public Service Agreements (PSAs) present an exciting new opportunity to progress this agenda and establish new and more effective environmental goals for governance.

This report:

  • examines the potential for Public Service Agreements for greening government;

  • reviews the extent to which the environment featured within the Public Services for the Future White Paper;

  • makes a number of recommendations on how the new system of PSAs could further the objectives of greening government and help implement the Sustainable Development Strategy.

5. There are a number of actions which can be taken immediately to show the Governments resolve to use the CSR process and PSAs, in particular, to promote greater environmental integration. Other recommendations are more relevant in the medium term as Treasury officials look to develop the second Comprehensive Spending Review.

The Benefits of Public Service Agreements

6. The Public Service White Paper set out the overall objectives of the Government and provides public service agreements for each Government department. A new development was also the production of joint PSAs (eg for the Criminal Justice System) which combine the work of different Departments around cross-cutting themes. A new Countryside PSA is promised which should bring greater consistency between the work of MAFF and DETR and provide an important vehicle for implementing the commitments in the forthcoming Rural White Paper.

7. The PSAs are a new feature of the machinery of government whose characteristics are well suited to encouraging more joined up thinking within Government. Below we summarise briefly the benefits which we perceive PSAs as having and how they can further the implementation of the Government's commitments to environmental integration and sustainable development. The benefits include:

8. Clear Framework for Government Activity: Each PSA includes the aims and objectives of the department, or cross cutting theme, the resources available to achieve them and a set of measurable targets. Some targets are also shared between departments. The PSAs, therefore, set a clear framework for Government activity, enabling officials to see how their work programme fits within wider goals.

9. Cross Departmental: Because PSAs transcend different levels of Government, and apply to all departments, they have an ability to cross administrative boundaries and assist in changing the way Government works. Traditionally, Government departments have become specialised in their areas of responsibility and have not always seen 'the bigger picture' or how their work inter-relates with that of other areas of Government. Furthermore, each department has operated under a strict vertical hierarchy which can reduce the possibility for networking between departments and even within them. The use of joint targets can encourage horizontal integration within and between departments and instil a collective 'ownership' for certain issues. This is particularly beneficial in relation to sustainable development as is indicated in the statement below.

"Sustainable development is the cross-cutting issue most affected by overt conflicts of policy and interest . . . the problem is primarily one of policy conflicts which are inadequately resolved, and where the institutional framework for doing so is not up to the job"

  DETR (1999), Cross-Cutting Issues in Public Policy and Public Service


10. The PSAs have the potential, for example, to allow DETR to work constructively with other departments to reduce any environmental impact from policies or decisions elsewhere in Government from the outset, instead of having to intervene in the closing stages of discussions.

11. Aims and Objectives: The development of the CSR process provides an opportunity to ensure that the aims and objectives of individual departments, and between departments are consistent. CPRE has previously highlighted our concerns that sustainable development did not figure in the remit of many individual CSRs or as one of the Government's overarching objectives—a point re-iterated by the Commons Environmental Audit Committee. That said, we believe further opportunities exist to address this anomaly which are described later in the paper. This should involve examining the scope to introduce sustainable development into departmental aims and objectives. But it also needs to go further and lead to a close examination of whether existing aims and objectives are consistent with the promotion of sustainable development and to identify it as an overarching objective for the Government as a whole.

12. Leadership: The PSAs have been described as a contract with the people and it is clear from the Public Services for the Future White Paper that monitoring of progress will be undertaken at the highest level. The Prime Minister's involvement in the process, along with the key role to be played by Permanent Secretaries within individual departments ensures that the necessary momentum can be maintained for achieving policy objectives and performance targets contained within the PSAs. The need for strong political leadership on sustainable development has been described as being "absolutely vital" by the House of Commons Environmental Audit Committee.

13. Establishes Indicators: Ensuring departments 'take account' of the environment, while important, is hard to measure. This causes difficulties for individual departments and the public alike, who cannot see how policies have changed to incorporate environmental concerns. The effective use and publishing of environmental appraisals would significantly improve matters, although the PSAs have a role too. By setting out performance targets and indicators the Government is in a better position to assess its performance in meeting policy objectives. Such targets may relate to the quality of life (using the Sustainable Development Indicators) or cover procedures (such as improving the production and recording of environmental appraisals).

14. Transparency/Auditing: The Public Services White Paper and the follow-up including details on progress in meeting individual performance targets will potentially provide a valuable reference for auditing the Government's record. Ensuring sustainable development objectives are incorporated into the PSAs will assist in monitoring progress in this area. The Output and Performance Analysis which will be undertaken will assist in promoting a system of continuous self assessment by departments. It will be critical, however, that such monitoring reflects the Government's strategic vision and cross cutting issues, including the promotion of sustainable development. Without it, public policy will be accused of 'focussing on the ball rather than the game'.

15. Long Term/Strategic Perspective: An important dimension to sustainable development is the emphasis placed on making real benefits to people's quality of life and the environment both in the short, and the long term. Indeed, taking a long term perspective is one of the key principles included within the Sustainable Development Strategy. Unfortunately, it has sometimes proved hard for departments to address sustainable development on a consistent basis or to take the necessary strategic approach in the face of a range of short term pressures. As the Prime Minister has made clear on a number of occasions, it is important to avoid events dictating policy. Incorporating sustainable development into the PSAs of individual departments requires longer term, strategic thinking.

16. Joint Budgets: A PSA can be the vehicle to develop joint budgets between departments. Reports by the Social Exclusion Unit have stressed the need for greater use of joint budgets and CPRE endorses this. The environment and sustainable development are fruitful areas in which to develop this approach. By focussing on outcomes first, the PSA can also help identify environmental damaging subsidies and conflicts in Government spending programmes which—if rectified—can lead to improvements in the environment and more efficient Government. Key areas include, for example, the desired outputs from agricultural support payments, the environmental impact of industries selected for assistance by the DTI, and the relationship between traffic growth and the availability of rural services.

17. In essence, we believe the new PSAs can tackle multi-dimensional policy objectives, such as sustainable development, in a way which incentivises environmental protection and enables individual departments and officials to 'buy in' to the process. Furthermore, this can be done in a way which involves high level commitment, regular monitoring and transparency. Through the PSA, and the strengthening of existing mechanisms for greening government, the Government will be in a stronger position to change the 'hidden wiring' of Government and how it operates—and further its manifesto commitment to environmental integration.

The Public Services White Paper and Greening Government Initiative

18. CPRE has undertaken an analysis of the PSAs which have been published in the Public Services for the Future White Paper. In doing so, we looked for evidence of joined up thinking and clear integration of environmental concerns across administrative boundaries. It is regrettable that the PSAs, which provide a clear context for Government activity, were published before the Sustainable Development Strategy. This may have reduced the flexibility of departments to adopt new approaches, or review existing objectives or programmes which might lead to unsustainable consequences. CPRE is concerned, in particular, that the Sustainable Development Strategy has not used the opportunity to incentivise Government activity which furthers its objectives. A number of recommendations are provided later which may help to integrate the Sustainable Development Strategy into mainstream Government activity.

19. The assessment of the Public Services White Paper can be divided into:

    (a)  broad strategic issues regarding the aims and objectives of different parts of Government;

    (b)  the detail of specific targets or performance indicators within departmental PSAs.

Strategic Issues

"Ministerial promises that innovative Whitehall agreements on delivery of public services would mark a new stage in the "greening Government" initiative have come to little".

ENDS Report 288 (Jan 1999)


20. The White Paper sets out the key Government objectives which are to underpin all PSAs. Three objectives are given—sustainable growth and employment, fairness and opportunities, efficient and modern public services. There is no reference to integrating environmental concerns into all departments or to sustainable development. The aim to increase "sustainable growth and employment" does not, on its own, equate to sustainable development, a point which has already been raised in reports by the Commons Environmental Audit Committee, the Round Table on Sustainable Development, and is reflected in the Government's Sustainable Development Strategy:

"...delivering the best possible quality of life for us all means more than concentrating solely on economic growth"

Prime Minister, Tony Blair MP,
Foreword to A Better Quality of life:
A Strategy for Sustainable Development (1999)

21. Upon reading the White Paper there is no indication of how environmental concerns have been taken into account. In particular, no environmental appraisal has been produced to accompany it. The Treasury has stated that "the Treasury expects that all the PSAs will be relevant to sustainable development" but also explained that it was for individual departments to produce environmental appraisals (Treasury Memorandum to EAC Inquiry: 9.12.98). The implementation of the performance targets which have been set could have significant environmental implications, and therefore warrant environmental appraisal. One example is the target to reduce the productivity gap relative to other industrialised countries (DTI Target (i)), where those other countries may be following unsustainable economic policies.

22. Two cross departmental PSAs have been produced on drugs and criminal justice and more are to follow. The PSA on Criminal Justice involves the work of three departments and Ministers are jointly made responsible for its implementation. In contrast, no PSA has been produced which deals with sustainable development.

23. The lack of reference to either environmental integration or sustainable development in the overall objectives of Government is matched by many departmental PSAs. An analysis of the aims and objectives of the departments, as set out in their PSAs, is included in Annex A. The table compares this with the aims and objectives contained in 1998 departmental annual reports, as set out in the second report of the Environmental Audit Committee.

24. CPRE accepts that the analysis, which is based on whether sustainable development or the environment is specifically mentioned, may be rather crude. The PSA for the Customs and Excise, for example, states that its aim is "to provide a world class tax and customs service in accordance with government objectives". While this could relate to the promotion of sustainable development, it is far from explicit, and contrary to the aim of the White Paper to provide transparency in public finances. Furthermore, implicit references are unlikely to encourage the horizontal integration of Government departments and will make effective auditing difficult. As the, then, Chief Secretary to the Treasury, Rt Hon Stephen Byers MP said to the Environmental Audit Committee, "I do think there is a distinction between presentational matters—and we could talk about sustainable development all the time and mention it a lot—but it is the outcome which is important" (Minutes to Environmental Audit Committee 9.12.98). CPRE shares the view that outcomes are important and we believe that the process of developing PSAs focuses attention on aims and objectives, outcomes, and how these can be achieved. As such, the inclusion of sustainable development in the PSAs should not be seen as an end in itself, but rather a first step towards a more comprehensive approach to incentivising Government activity which promotes the objective.

25. The network of Green Ministers is currently assessing how far sustainable development can be incorporated into the aims and objectives of Government departments and Non Departmental Public Bodies. What happens to the report and whether the necessary links will be made to the PSAs which have already been produced will be an important test of the commitment to greening government.

Detailed Issues

26. CPRE believes that the White Paper also provides a good indication of the core priorities of individual Government departments, evidenced by the Prime Minister's Foreword. It is therefore disappointing that only 10 of 19 PSAs mention the environment or make reference to sustainable development in their aims and objectives. Even where these issues are mentioned, such as with the PSAs for the Department for International Development, DTI and Welsh Office, there are few examples of relevant performance targets being set.

27. The section below considers the extent to which the greening government initiative features within the Public Services for the Future White Paper for three key departments and draws comparisons with how other cross-cutting issues were dealt with in the paper.

DETR Public Service Agreement

28. The PSA for the DETR makes clear that one of the main objectives of the Department is "to integrate the environment with other policies across government and in international fora". While this is encouraging, there are no performance targets relating to the greening government programme. Such performance targets could relate, for example, to the progress in collating environmental appraisals across Whitehall and the work of the Green Ministers network. It is unlikely that the greening government initiative will feature in the DETR's Output and Performance Analysis tables or be monitored through the PSA process. CPRE believes this is a missed opportunity.

29. The Sustainable Development Unit resides within the DETR and is a key resource for promoting the greening government programme. In attempting to ensure the Government effectively tackles issues which cross departmental boundaries, it performs a similar role to the Social Exclusion Unit, Women's Unit and Performance and Innovation Unit which are all located in the Cabinet Office. The PSA for the Cabinet Office sets performance targets for these units, such as by December 1999 for the Women's Unit to have "developed arrangements in line with the published guidelines, to ensure that women's interests are taken into account in the development and delivery of policies by all government departments". In contrast, no targets are set within the DETR's PSA which cover the work of the Sustainable Development Unit.

30. The production of Sustainable Development Indicators provides a new and welcome mechanism to audit whether Government policies are delivering changes in the quality of life. It is envisaged that these will be the main vehicle for measuring progress in implementing the Sustainable Development Strategy. These do not appear to be incorporated into the PSA process in any meaningful way. It is interesting to note that the PSA for the DTI includes a performance target "to secure improvements in performance against a set of competitiveness indicators to be developed and published annually from 1999". It is disappointing that a Performance Target has not been established relating to the Sustainable Development Indicators. This would assist in integrating the indicators into policy formulation across the Government.

Cabinet Office Public Service Agreement

31. A further indication that the greening government programme has been unable to gain a purchase on the PSA process is its absence within the Cabinet Office PSA. While initial responsibility for promoting the greening government programme rests with the DETR, CPRE would expect links to have been established since the Cabinet Office is developing expertise and already has responsibility for addressing many cross cutting issues. Reference is made to the establishment of the Centre for Management and Policy Studies which will provide training to Ministers and Civil Servants on policy formulation. This is not linked in the PSA, however, to the greening government initiative, despite this being an area where its expertise and training is needed.

32. The lack of links between the Cabinet Office and Sustainable Development Unit is further emphasised in the Modernising Government White Paper. The Sustainable Development Unit is conspicuous by its absence in a list of units established to tackle cross cutting issues within Government and mentioned in the Modernising Government White Paper.

Treasury Public Service Agreement

33. The PSA covering the Treasury includes a performance target to "ensure that all departments are set testing output and efficiency targets by the end of 1998 and work with them to ensure that they meet their targets by their deadlines". This enables the Treasury to take a strategic view and monitor progress throughout the Government. The Treasury has long played this supervisory role. Given the Government's commitment to sustainable development, questions remain as to the extent to which the Treasury will see it as its own responsibility to ensure Government departments work together to promote sustainable development. The fact that the Treasury did not see it as its responsibility, for example, to ensure environmental appraisals were conducted during the CSR is an ominous sign. This is all the more important given the promotion of sustainable development is not included within the Treasury's aims and objectives. Traditionally, the co-ordinating role has been assumed by the former Department of the Environment. Yet, this is not reflected in the performance targets of the DETR.

34. An important development is the joint performance target on the tax system and sustainable development. This welcome target is shared between HM Treasury/Customs and Excise and Inland Revenue and should promote horizontal integration. The Treasury can also develop its new system of resource based budgeting (performance target xxiii) to help underpin the strategy for sustainable development by ensuring that the Output and Resource Analysis tables which departments will produce to measure policy outcomes place the environment and quality of life at their heart.

Ways Forward

35. Broadly, there are two complementary approaches which could be taken to integrate the environment and sustainable development into the PSA process. These include:

  • a separate PSA on Sustainable Development to be published jointly between departments as a means of implementing the Sustainable Development Strategy. This would assist in focussing minds on specific and measurable targets and provide an unavoidable spur to action. It could be developed as part of the second Comprehensive Spending Review;

  • incorporation of environmental considerations into existing PSAs and especially into the performance targets and indicators. The White Paper states that "... while the PSAs are intended to set out firm plans, departments will also be seeking, where they can and within existing resources, to better existing targets and some departments may wish to add to them".

36. CPRE believes there is merit in a twin track approach which looks to use the PSA process as a means of furthering the collective implementation of the Sustainable Development Strategy including, for example, the setting of sectoral targets. Some of these proposals may be low budget, but they can be crucial in delivering the Strategy. This should be developed over the cycle of the next CSR. It should be combined with immediate measures to 'green' existing PSAs and make clearer links between the PSA process and existing machinery for greening government.

Recommendations

37. In order to place the environment at the heart of decision making and implement the Sustainable Development Strategy. CPRE recommends:

Immediate Action

DETR

DETR should establish a new performance target for working across the Government to ensure progress is made in improving all the indicators for sustainable development;

  • a joint performance target should be established with the Cabinet Office to guide the work of the Sustainable Development Unit;

  • the Sustainable Development Unit should feed into the Regulation PSA which is being prepared to ensure consistency is achieved between the objective of better regulation and the promotion of sustainable development;

Treasury

  • the monitoring by the Cabinet Committee of departmental performance in achieving PSA objectives and performance targets contained in CSR-I should examine any environmental implications, with assistance from the DETR to ensure objectives and targets which are inconsistent with the objective of sustainable development are amended immediately;

  • guidance should be provided to departments to assist them in incorporating suitable indicators into Schedule 5 of the Output and Performance Analysis to ensure progress in moving towards sustainable development can be audited;

Cross Cutting (all government departments)

  • the review by Green Ministers of the aims and objectives of Government departments and non departmental public bodies should be sent to the Cabinet Committee charged with monitoring the PSAs as well as the Cabinet Committee on the Environment so that their recommendations can be incorporated into the PSA of Government departments, and published;

  • all departments should seek to amend their departmental PSAs by incorporating new performance targets which relate to the greening government initiative. These could include, for example, "to establish a publicly available register of environmental appraisals undertaken within the department by July 1999";

  • separate performance targets should be established concerning Green Operations;

  • all departments should identify relevant sustainable development indicators for inclusion in Schedule 5 of their Output and Performance Analysis to ensure progress in moving towards sustainable development can be audited;

  • the annual monitoring reports produced by each department should include details of how the PSA/Performance Targets, and Output and Performance Analysis are being amended to better reflect the objectives of the Sustainable Development Strategy;

Parliament

  • the Parliamentary Environmental Audit Committee should assess the extent to which the annual reports and Public Service Agreements lead to the promotion of sustainable development and greening government;

  • individual select committees should audit whether departments are meeting their environmental commitments, as contained in their PSA, and instigate an inquiry into departments who fail to incorporate such measures in their PSA;

Key issues for CSR-II

  • the CSR-II should include sustainable development as an overarching objective which underpins all the PSAs;

  • the Cabinet Office, Treasury and DETR should work towards the production of a sustainable development PSA with clear performance targets for all departments, to act as benchmarks for measuring progress in implementation of the Sustainable Development Strategy;

  • officials currently examining the process for developing CSR-II should establish a clear mechanism for ensuring the environment and sustainable development is incorporated into departmental reviews and future PSAs from the outset, including in the guidance issued to departments, and early involvement of the Sustainable Development Unit (see Annex B).

38. Clearly the greening government initiative and promotion of sustainable development is not solely concerned with budgets. Continued strengthening of other mechanisms is still required so that, for example, all policies, plans and programmes are effectively assessed for their environmental implications. CPRE is convinced that if such changes can be made, and coupled with an improved series of PSAs, that the Government will be in a much better position to implement, and demonstrate, its commitment to greening government and sustainable development.


 
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