Select Committee on Environmental Audit Second Report

Spending Review 2002

50. The Spending Review is a relatively new process which is still developing. It raises questions, for example, about the relationship between departmental objectives and Public Service Agreement targets, accountability for any shared targets, and the manner in which targets are overwritten in successive spending reviews. We have previously expressed our concerns over the extent to which environmental aspects were built into the Comprehensive Spending Review (1998) and Spending Review 2000.[56] The Spending Review 2002 (SR 2002) contains some positive developments, including the publication of the environmental guidance to departments (following a written request by this Committee for it).[57] We note that the nature of previous guidance was almost entirely defensive—amounting to little more than a warning to departments that they would have to be prepared to defend their decisions in the face of scrutiny by this Committee. We therefore welcome the new requirement this time round that each department must submit a sustainable development report (SDR) which sets out how its bid contributes to sustainable development.

51. While SR2002 therefore represents a significant step forward in mainstreaming environmental issues alongside social and economic, we remain concerned about a number of aspects. First, the Treasury has now confirmed Mr Boateng's insistence that the SDRs submitted by departments will not be made publicly available, nor even made available to us.[58] We can well understand the concern of the Treasury in not wishing to make these reports public during the Spending Review process. But we see little reason to keep them secret once the conclusions of the review have been made public: to do so invites accusations of ineffectiveness and removes departments' ability to defend their performance. We expect to receive copies of the sustainable development reports submitted by departments as part of Spending Review 2002, so as to be able to audit them in line with our remit from the House.

52. We are also perturbed that the Financial Secretary categorically ruled out the possibility of a role for the National Audit Office (NAO) in auditing departments' SDRs.[59] This is even more surprising in the light of the Government's eagerness to involve the NAO in the audit of the Budget assumptions—a role which has now become fully established. It seems inconceivable to us that the Treasury can countenance such secrecy and lack of accountability, while at the same time claiming that it wishes to pursue a more open and inclusive approach. If the Treasury continues to insist on keeping secret the sustainable development reports submitted by departments, then it must—at the very least—agree to allow the National Audit Office to audit these reports and report the results to this Committee.

53. Our second major cause for concern relates to the manner in which these SDRs will be evaluated. We have established that the Treasury is not intending to involve the SDRs within DEFRA but will rely on its own internal staff resources.[60] While we can appreciate that the SDU may have a role in helping some departments to prepare their SDRs (as indeed the Treasury argues), a number of larger departments have created their own internal sustainable development units. We have already raised in our First Report the issue of the role and location of the SDU.[61] This particular issue gives substance to our concern. If the Sustainable Development Unit is indeed a cross­governmental resource (as the Government have previously argued) then it should be involved in evaluating the sustainable development reports submitted by departments as part of their Spending Review bid. Otherwise, there is a clear need for a central SDU to provide just such expertise.

54. Linked closely to this is our third main concern—the extent of suitable expertise within the Treasury to evaluate these departmental SDRs. The Treasury itself has failed to establish an SDU within it, and we understand that the main input into evaluating these reports will be from the section which monitors DEFRA.[62] While such staff may clearly have expertise in some of the more 'traditional' environmental concerns, they will not necessarily have the expertise to spot the scope for synergies across the range of policy areas which they will be confronted by in assessing these reports. Furthermore, information from the latest Greening Government report indicates that the Treasury does not have a raising awareness strategy for sustainable development or provide any training to its staff on sustainable development issues (with the exception of one element of the induction course for all new staff).[63] This situation is entirely inadequate.

55. We recommend that the Treasury should establish a suitable internal unit which is adequately resourced and staffed so as to evaluate the sustainable development reports submitted by departments as part of Spending Review 2002. Such a unit could also encompass other responsibilities—in line with earlier recommendations in this report—such as the responsibility for environmental taxes, for developing resource productivity indicators, for monitoring the adequacy of environmental appraisal in new policy proposals, and for coordinating a more strategic approach to research and development in all these areas.

56. Our fourth main concern relates to the number and nature of the targets put forward for Public Service Agreements (PSAs). The environmental guidance states that "It is expected that most targets will be rolled forward from SR2000. The Chief Secretary is also looking for a reduction in the overall number of targets, so that departments are even more focussed on what really matters. Departments are not expected to add new 'sustainable development' targets to their PSA". We are deeply perturbed at the negative approach adopted in the environmental guidance for Spending Review 2002 to sustainable development targets. This conflicts directly with evidence given to us by the Secretary of State for Trade and Industry who told us that she expected to see a lot more targets relating to sustainable development as a result of this Spending Review.[64]

57. Moreover, the environmental guidance goes on to state that "The main Guidance sets out the conditions in which shared targets are appropriate. An analysis of sustainable development impacts is one tool that departments may wish to use when considering whether a particular outcome warrants a shared target".[65] However, when we asked for a copy of the relevant section of the main guidance, the Treasury denied our request.[66] It will therefore be impossible for us to evaluate whether departments have exploited the scope to set shared targets which the guidance allows. Yet this is of crucial importance, given the essentially 'joined­up' nature of sustainable development. We strongly regret the refusal of the Treasury to provide us with the Spending Review main guidance. This contrasts markedly with its readiness to make public the environmental guidance, and vividly demonstrates that the Treasury will only share what it does not value or consider important.

58. We also object to the tendency—whether intentional or not—to categorise any objective, even if purely economic or social, as contributing to sustainable development. In the table in the Green Ministers second annual report (November 2000) which sets out how PSA targets relate to sustainable development, many of the targets put forward by departments had no environmental aspects to them but were purely economic or social.

56   Third Report from the EAC, Session 1998-99, on The Comprehensive Spending Review and Public Service Agreements, HC 92. Back

57   The Treasury's guidance is printed in the second volume of this report at Ev. 68. Back

58   QQ. 204; 208. Back

59   Q. 209. Back

60   Ev. 14, question 16. Back

61   First Report from the EAC, Session 2001-02, on Departmental Responsibilities for Sustainable Development, HC 326. Back

62   Ev. 14, question 16. Back

63   The Third Greening Government Annual Report, November 2001. Detailed information on individual departments can be found in volume 2 which is available only on DEFRA's Greening Government web-site. Back

64   Minutes of Evidence taken before the EAC, Session 2001-02, on Departmental Responsibilities for Sustainable Development, HC 326, QQ. 5-8. Back

65   Ev. 68. Back

66   Ev. 14. Back

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Prepared 12 February 2002