appraisal of budgetary measures
17. In previous reports the Committee has expressed
its concern about the lack of an overall appraisal of the environmental
effect of budgetary measures. We acknowledge some progress in
this area and on balance we welcome the greater weight now given
to particular environmental measures within a dedicated chapter
in Budget reports. However, this chapter may also represent the
'coralling' of environmental concerns. It deals only with measures
which are obviously environmental in their objectives and the
impact of which can be, in Mr Timms' words, "sensibly"
quantified (though we note that in 7 out of 12 cases in Table
6.2 impacts are in fact not quantified).
18. The Financial Secretary set out one of the Government's
main priorities as the promotion of growth.
The Budget Report contains extensive discussion of the need to
stimulate competition and enterprise, and to reduce the productivity
gap, assessed in terms of labour, between the UK and other countries
such as the United States. It includes measures such as the reduction
of corporation tax rates, major reforms to capital gains tax,
and a £1 billion target umbrella fund to finance enterprise
growth. Whilst we welcome such initiatives, it is clear that the
pursuit of GDP growth will have a significant impact, albeit difficult
to quantify, on environmental pressures. At present, neither the
Budget nor the Pre-Budget Reports contain any serious discussion
or evaluation of the likely environmental impacts of these "mainstream"
19. We were concerned at the Financial Secretary's
statement that the Government wanted to continue to promote growth
but to do it "in a sustainable way",
as the issue is indeed how this can be achieved and assessed.
The UK Round Table for Sustainable Development has recently highlighted
the fact that growth is currently being pursued in a non-sustainable
way and that some of the "traffic light" indicators
in the DETR's Quality of Life Counts have been wrongly
characterised as green instead of orange or red.
We hope that Mr Timms' comments do not indicate complacency in
view of the seriousness of the issues involved. Indeed, Mr Nick
Raynsford MP, the Minister for Housing, Planning, and Construction,
recently stated in a related context that "to pretend that
there is an easy way of reconciling the potentially conflicting
pressures [of environment and development] is facile."
20. We consider that the way forward must involve
integrating into the main parts of Budget Reports more consideration
of implications for environmental, alongside social and economic,
impacts. A start has been made in terms of two important developments
during 1999the publication by the DETR of Quality of
Life Counts, and by the ONS of environmental accounts as part
of the Blue Book.
If these documents are to become more than 'interesting but peripheral',
the analyses they contain must act as drivers for budgetary and
fiscal processes. The budgetary reporting system should form the
context in which policy trade-offs between the various components
of sustainable development are openly discussed and set out, together
with the likely impact on indicators and environmental accountslinks
between economic growth and demands for energy, aggregates, transport
services and housing are all key examples. We expect much more
discussion of environmental impacts alongside social and financial
issues in the earlier "mainstream" parts of Budget Reports,
and of the implications of Budget measures forat the very
leastthe 'headline' set of sustainable development indicators.
21. We also consider that there is further scope
for the development of indicators and targets for the environmental
impact of policies. A key example is afforded by the interesting
analyses in Chapter 5 of the Quality of Life Counts of
the extent to which energy consumption has been decoupled from
economic growth. The Government could readily develop an indicator
and target for this, and the likely impact and focus of mainstream
budget proposals should be discussed in this context. For example
the recent report on energy policy from the Royal Commission on
Environmental Pollution (RCEP) has recommended that the UK reduce
carbon emissions by 60 per cent on 1990 levels by 2050.
Given the scale of the environmental challenges facing the
UK, we urge the Government to set longer term goals and annual
targets by which we can measure our progress year by year.
22. In its response to our Eighth Report, 1998-99,
on the 1999 Budget, the Government stated that it "would
expect to publish an ex post evaluation of its existing environmental
tax measures on an annual basis, to complement the appraisal data
for proposed new or amended measures which are already included
in the Budget."
We consider that it should develop tables 6.1 and 6.2 of the Budget
Report so as to build up a data series of outturns and estimates
on an annual basis along similar lines to the year on year financial
data given in departmental annual reports.
This should include greater clarity where policy shifts affect
forecasts of environmental benefit (up or down). We were unimpressed
with the Government's response to our original criticism that
the form of Budget 2000's appraisal failed to make clear, for
instance, that the estimated environmental benefits from fuel
duties had halved since the Budget Report 1999 as a result of
shelving the escalator.
We further note that this approach was in contrast to the way
in which the increasing environmental benefits of the Climate
Change Levy were set out.