House of Commons - Environmental Audit

Select Committee on Environmental Audit First Report

ENVIRONMENTAL AUDIT: THE FIRST PARLIAMENT

Targets

48. There have been a number of reasons for this paucity of audit and the first is a simple lack of Government targets to examine (as referred to above at paragraph 26). The present Government took office in May 1997. There were a plethora of policy reviews as one might expect and a lot of activity including some significant decisions (particularly coming out of the first spending review completed in 1998 and the Budget in March 1999). However, a framework did not crystallise around all this sustainable development activity until May 1999 when the Government's revised sustainable development strategy was published forming a 'guide' or 'handbook'.[81] In contrast a new system for the overall allocation of public expenditure; the establishment of related objectives and targets for departments; and the assessment of departmental performance was introduced in 1998—the Comprehensive Spending Review and revised for this year—Spending Review 2000. The relationship between the priorities and objectives set out in the sustainable development strategy and those manifest in the latest spending review is open to question.

49. The first Green Ministers' annual report published in July 1999 set out the arrangements for the Greening Government initiative. The revised set of sustainable development indicators published in December 1999 contained, amongst many other things, information relating the new indicators to existing policy and operational targets.[82]

50. Identifying what targets, goals, challenges and aspirations have been established is a challenge but also there is, inevitably, a time factor involved in starting to assess progress towards targets set for achievement in future years—up to 2010 in many instances. Sustainable development is a very inclusive concept as we have mentioned. It is difficult to rule out any target adopted by Ministers and this Government is fond of setting targets for some years ahead. However, the Government's target-setting has been subject to criticism, including from a number of select committees.

51. In 1997 the Labour Party General Election Manifesto stated that "We will lead the fight against global warming, through our target of a 20 per cent reduction in carbon dioxide emissions by the year 2010". The formulation of this target was somewhat weakened by December 1997 when a DETR press release, announcing the conclusion of the Kyoto Protocol, included the comment that "the UK remains committed to its aim of a 20 per cent cut in CO₂."[83] By May 1999, this had become a domestic goal.[84] Finally, in 2000, the target for energy reduction included in the DETR's new Public Service Agreement was to "moving towards a 20% reduction in CO₂ emissions by 2010.[85]

52. In the case of fuel poverty a number of different targets have been successively issued—all fundamentally unsatisfactory. The first target (set before the completion of the 1998 CSR) was to install energy efficiency measures in 1 million homes by 2002. This was repeated in the revised sustainable development strategy for the UK.[86] A second target was subsequently set in the conclusion of Spending Review 2000 for the DETR whereby the department would reduce fuel poverty among vulnerable households by improving the energy efficiency of 600,00 homes between 2001 and 2004.[87] These targets, with overlapping time periods but announced without reference to what has gone before, are confusing and reduce confidence in the value of performance targets. Such changes make the job of holding departments to account more difficult.

53. We also remain dissatisfied with the Government's failure to address our criticism of the original formulation and its further targets based on outputs rather than outcomes. The outcome we want to achieve is people actually relieved of the burden of having to spend more than 10% of household income on keeping warm etcetera. We remain of the view that prudence demands investment in energy efficiency rather than continuing subsidy of poor quality housing stock.[88]

54. Some other select committees have expressed concerns about the clarity, transparency and consistency of targets, as well as the extent to which they accurately reflect departmental objectives. The Environment, Transport and Regional Affairs Committee, for example, has concluded with respect to DETR's targets that: "...some are real, which the Department is determined to meet, others appear to be chosen by whim (e.g. the target for local authorities to recycle at least 25 per cent of the waste generated by their area), and dropped when they cannot be met or kept and ignored. The plan to double England's forest cover from 7 per cent to 15 per cent appears to fall into this category. Some have a life cycle: they start off as real targets, become aspirational targets, and are then dropped."[89]

55. The Culture, Media and Sport Committee has said "...the search for measurable outputs in Government appears akin to the search for the Holy Grail. In the case of the sectors with which the Department for Culture, Media and Sport is concerned, the links between Government action and outputs appear imprecise...The performance of the Department is determined to a large extent by the policy-making process which often escapes formal output measurement."[90]

56. Specific examples of environmental targets which appear to have been shelved, ignored or dropped include, for example; a target to double the amount of cycling by 2002;[91] a target for encouraging walking;[92] and the specific Public Service Agreement performance target from 1998, shared between HM Treasury, HM Customs and Excise and the Inland Revenue, to "continue to develop the tax system so that it underpins the strategy on sustainable development and delivers environmental objectives".[93] We are also concerned about the consistency with which progress against targets is measured. We have already highlighted our concerns about potential differences between departments in energy efficiency measurement, and we have similar concerns about the classification of sites as brownfield and the need for milestones in order to measure performance against the Government's target for 60% of development to be on such sites.[94]

57. We realise that the Government is wary of bureaucratic check-box procedures. It has resisted various recommendations for a consistent approach to the disclosure of the environmental impacts of policies—for instance that Bills should be accompanied by a formal statement of their environmental implications.[95] Similarly we have yet to see environmental appraisals systematically laid before the House, whereby the responsibility for knowing what policies are being considered, and which are significant, falls to the Government itself—as it should. We do feel strongly that there has been a lack of rigour in the Government's approach to date.

58. We recommend that the Government must now undertake to submit an explanatory memorandum to us for each sustainable development target (goal, aim, aspiration) that Ministers set—including the challenges occasionally posed by the Prime Minister.

59. In line with our priorities, explanatory memoranda (EM) are most urgently required by us covering targets related to environmental protection and the conservation of natural resources. Such an EM would cover: the target and the exact definition of terms; its relationship to other targets; its relationship to the sustainable development strategy (objectives, principles, priorities and headline indicators); the existence and status of any previous formulations; appropriate milestones and any available information on international, or other, benchmarks; and responsibilities and mechanisms for delivery and performance reporting. A memorandum of this kind could then form the rational basis, in time, for an audit of performance. Collectively these documents would allow the development of a robust and independent database of the sustainable development targets that the House has charged us with auditing.

Environmental reporting

60. Government reporting on its environmental performance is as yet immature.[96] Reporting by departments on the complex and difficult links and trade-offs involved in sustainable development seems to be positively foetal. We drew hope from Mr Roger Adams, Association of Chartered Certified Accountants (ACCA), who pointed out that it is only 10 years since the UK first established a meaningful system of financial reporting for individual departments and other public bodies—a system that is still evolving.[97] Mr Steve Rintoul, from the environmental consultants Enviros Aspinwall, set a five-year horizon for the development of a satisfactory green operations report.[98] We have welcomed the first Green Ministers' report and we have commented principally that comparability between departments was poor; and that to provide assurance on performance, access to the raw data (departmental submissions) would have to be provided.[99]

61. The Government has since confirmed that the Green Ministers' report is to be the main vehicle for reporting on greening government and departmental contributions to sustainable development. This somewhat lets departments off the hook in terms of producing details in their annual reports (beyond Treasury requirements) and also in terms of producing separate environmental reports.

62. Against this trend for centralising activity, we note that the DTI has published its much-trailed departmental sustainable development strategy.[100] We have yet to consider this plan in the context of the overall UK strategy but we would consider it unfortunate and unhelpful if the DTI strategy was not designed to dovetail with A better quality of life and the process developing within the Green Ministers Committee.

63. With regard to sustainable development more widely we look forward to seeing the first annual progress report on the sustainable development strategy which was published in May 1999. We are happy that the Sustainable Development Commission, amalgamating the Government Panel and UK Round Table on Sustainable Development, has now been appointed (on 24 October 2000) and is set to meet before the end of the year. We look forward to discussing the approach of the new Commission with its Chairman and members in due course.

64. Other government reporting that requires improvement is in Budget documentation. As we have discussed in our reports on the subject, the snapshot statement of impacts that specifically environmental measures in the Budget are expected to have is inadequate. This assessment needs to be broadened in scope to capture more of each Budget and deepened in quality to create an estimate/outcome data series over time.[101]

Central direction

65. Part of the difficulties posed by government reporting seem to be a lack of central direction and oversight in the field of sustainable development and the environment. Two of the six key areas for cross-cutting policies identified in the Cabinet Office report Wiring it up dealt with leadership—from Ministers and senior officials and from the 'centre' ("No. 10, the Cabinet Office and the Treasury")[102] However, in replies to our reports and in evidence on the sustainable development strategy it is apparent that monitoring and reporting progress towards sustainable development is more a matter of departmental pick 'n' mix than a concerted movement by Government.[103]

66. As Ms Andrea Ross-Robertson notes, the work of the EAC "highlights the problems surrounding cross-departmental policies such as sustainable development. In the drive for sustainable development the Government was going to lead by example yet it is clearly struggling. Government is not a single entity. Each department or agency has its own identity, objectives, culture, organisation and priorities."[104] This analysis goes against the aspiration expressed in Wiring it up that "departmental loyalties should be progressively replaced by corporate and cross-cutting ties to the Government's overall aims and objectives".[105]

67. We recognise the value of ownership of difficult initiatives, such as sustainable development, by those putting it into practice. However, our key finding has been of the value of leadership from the very top which allows figures throughout an organisation to drive the process forward. As Ms Ross-Robertson concludes: "For some departments like the DETR, sustainable development is a key objective; for others, like Treasury, it is one of many often conflicting policy objectives; and for others it is a non-issue...without a strong lead from the centre, it is very easy for cross-departmental policies to falter."[106]

68. For instance we have noted the Treasury's odd timidity and concern over a "backlash" if sustainable development was seen to be imposed from outside departments.[107] We still question whether Treasury Ministers would ever accept that argument in relation to financial or economic policy initiative. We were told that the Environment Minister has raised the spectre of mandatory environmental reporting requirements for the business and industry for four successive years but there is no sign of such a development[108] and no mention of such within the public sector.[109] The Government seems to be demanding much more in the way of environmental reporting from the private sector than, with a few exceptions, it is prepared to deliver itself.

Audit framework

69. A further difficulty in fulfilling its audit remit is that even if auditable targets had been more numerous at this stage, the Committee would have faced considerable difficulties in exercising its function. In trust for tomorrow originally envisaged that the work of the EAC would be "supported by an enhanced and expanded" National Audit Office.[110] However, as Ms Ross-Robertson notes "in moving from a conference policy document to a manifesto commitment this watchdog [the EAC] became only partially sighted" as it lost any formal link with an independent investigative function.[111]

70. Ms Kathryn Hollingsworth, Lecturer in Law at Cardiff Law School, analysed the EAC's constitutional context with reference to two models: (a) UK public audit, and (b) the relatively recent arrangements for environmental audit in federal Canada. She concluded that the system established by the House for environmental audit, at the instigation of the Government, was inadequate as a model of accountability because it lacked an independent auditor with access to both the files of the auditee and with an audience for any findings.[112] We agree.

71. Ms Hollingsworth identified some superficial similarities between the EAC and the Committee of Public Accounts (PAC). The EAC has elected an Opposition chairman, in the tradition of the PAC, reflecting a sense of increased independence as an audit committee. It is of a similar size to the PAC (16 Members). One of these is a Minister, in practice ex-officio and non-attending. This symbolises the comity of objectives between committee and department for the whole of government: HM Treasury and PAC desirous of financial probity and the efficient, effective and economic use of resources; and DETR and EAC looking to secure the integrated consideration of environmental impacts alongside economic and social issues in all decision-making.[113]

72. However, as both Hollingsworth and Ross-Robertson make clear, there are important differences between the two committees. The work of the PAC is based on the output of the Comptroller & Auditor General (C&AG) and the National Audit Office. This output is founded upon access to government records guaranteed by statute. Departments have the protection of 'clearance' whereby the facts, and the overall balance, in a report, are discussed between NAO and department concerned.

73. The constitutional quid pro quo, enshrined in statute, perhaps is that the C&AG does not question the merits of the government policy objectives only their implementation.[114] By extension and tradition this informs the approach of PAC and the main witness in any PAC hearing is almost invariably the 'Accounting Officer' usually the Permanent Secretary of a government department.

74. By contrast the EAC, like any other select committee, relies heavily on government memoranda and reports. These are recognised by all concerned as the Government's 'best story'. This accentuates the difficulty implementing the Committee's 'audit' responsibilities.

Conclusions

75. The evidence of the indicators and the verdict of our academic critics is that we have performed the first part of our remit (scrutinising Government policies for their effect on environmental protection and sustainable development) effectively.

76. On the other hand, the evidence on the second half of our remit (auditing the Government's performance against its targets) is equally plain that the record is inadequate.

77. This failure is because there have been few Government targets to audit, but we are also ill-equipped for the task.

78. There is therefore an "audit gap". If the Committee is to fulfill its remit this gap needs to be filled by both improved target-setting and reporting by the Government and the establishment of an independent environmental audit facility.

81 See HC 479-i, Q3 Back

82 Quality of life Counts, Government Statistical Service, December 1999 Back

83 509/Env, 11 December 1997 Back

84 A better quality of life, Cm 4345, para 3.29 and the 1999 Pre-Budget Report, Cm 4479, para 6.28 Back

85 Cm 4808, page 9 Back

86 Cm 4345, page 60 Back

87 Cm 4808, page 9 Back