Select Committee on Environmental Audit Second Report


Treasury Guidance on Sustainable Development in SR2002


  1.  The Chief Secretary to the Treasury identified the overarching aims of SR2002 in a Parliamentary answer on 25 June 2001 (Official Report, Cols 38-39W). Consideration of the wider social, economic and environmental implications of their proposals will help departments to deliver those aims and will contribute to the wider evidence base. This note provides advice on how and when departments might wish to consider sustainable development and should be read in conjunction with the general "SR2002 Guidance" (and is subordinate to it in any case of doubt).

  2.  It applies to each department with its own PSA. In many cases, sustainable development issues are already being considered by policymakers in these departments and are being reflected in proposals. Departments may not, therefore, need to provide all of the material suggested below, or may only need to provide a summary (if in doubt, contact your spending team). But where a department does not provide a particular piece of material it should be ready to explain this decision.


  3.  The UK Sustainable Development Strategy will provide the basis for departments' consideration of SD during SR2002. Published in 1999, this Strategy sets out the Government's 15 headline indicators[3], which highlight priority issues for sustainable development in the UK. The list of indicators is set out in Annex A. The Government's policy is "for all the headline indicators to move in the right direction over time . . . Where a trend is unacceptable the Government will adjust policies accordingly."

  4.  The 15 headline indicators provide a starting point for departments' consideration of sustainable development but do not represent an exhaustive list. Departments will therefore also want to consider other social, environmental and economic impacts. An indicative list of additional impacts that departments may wish to consider is contained in Annex B. Overall the Government has identified 147 indicators, which are contained in the 1999 document "Quality of Life Counts"[4]. When preparing proposals, departments may find this a useful source of additional information on possible impacts, but will not, of course, be expected to address them all.


  5.  Each department participating in SR2002 should produce a separate, freestanding Sustainable Development Report (SDR). We would expect this Report to come from the Secretary of State to the Chief Secretary.

  6.  This SDR will be the main sustainable development product of SR2002, giving departments an opportunity to explain in more detail the sustainable development implications of their proposals and expanding on information provided elsewhere in the SR2002 proposal. The SDR should set out any anticipated significant social, economic and environmental implications for departments' five or so top priorities.

  7.  Where possible this Report should include quantitative data, though qualitative assessments may be more appropriate in some cases. Departments should identify both positive and negative impacts and in particular examine any trade-offs. Where trade-offs are identified the Report should explain how spillovers will be minimised, and explain any alternatives that were considered and why they were rejected. The analysis should also highlight any significant distributional effects—e.g. rural and urban; generational; between regions. The Report should also explain any significant SD implications for non-priority elements.

  8.  Through the SDR most departments should be able to demonstrate that they have considered the significant social, economic and environmental impacts of their bids. (Where this is not appropriate for a department as a whole or for particular elements of the proposal this should be noted). Departments should be prepared for their SDR to be discussed at Ministerial bilaterals.

  9.  Departments' proposals should summarise how sustainable development informed their prioritisation, giving departments an opportunity to demonstrate the influence of SD issues. Departments are encouraged to highlight any instances where priorities changed as a result of an analysis of SD impacts.

  10.  Where appropriate, departments may wish to include information on the SD implications in the section on resources by objective - for example where a sustainable development issue is a relevant part of the background to any increases or savings proposed.


  11.  Departments should also consider sustainable development issues when preparing their draft PSA agreements and targets.

  12.  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 focused on what really matters. Departments are not expected to add new "sustainable development" targets to their PSA.

  13.  Nevertheless, when doing any redrafting of PSAs departments should consider how the targets relate to sustainable development. The production of the SDR should help to identify the SD implications of particular targets. Where there are significant negative implications departments should be able to offer a justification (supported by analysis) for continuing to pursue the target, explaining how the overall benefits outweigh the costs.

  14.  As the main Guidance notes, departments should only drop existing targets under exceptional circumstances. One such circumstance would be where a target creates damaging distortions. Departments should make clear in the Annex to their draft PSAs if a live target is being dropped because of damaging impacts on sustainable development and provide an account of the nature and extent of this impact.

  15.  When preparing the delivery section of their PSA departments are also encouraged to cross-refer, if appropriate, to sustainable development and particularly to the UK Sustainable Development Strategy. Where PSA targets contribute directly to a UK SDS headline indicator this should be highlighted. For example, the last MAFF PSA noted that "Targets 2 and 5 contribute to the Government's rural and countryside objectives". Departments may consider whether a similar link should be made to sustainable development.

  16.  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. Where this is the case, departments are encouraged to highlight the fact.

  17.  Where it is relevant to them, departments may also wish to consider whether sustainable development should appear in their service delivery agreement. The SDA can include further information on the impacts of particular PSA targets and details on precisely how those targets will be met. Departments may wish to set out in the SDA any significant impacts for sustainable development of the delivery mechanisms they envisage and the impacts of any alternative mechanisms they have been considered. Departments should consult their Treasury Spending Team on whether such discussion would be appropriate in their SDA.


  18.  Sustainable development is principally an issue for departmental teams preparing SR2002 bids and for Treasury Spending Teams. It is not intended as a specialist "add-on", but should be seen as a natural extension of the desire to achieve evidence-based policy and joined up government.

  19.  However, further information and advice can be sought from the Treasury. The first port of call should be the relevant Treasury Spending Team dealing with your department. Alternatively, contact HMT's environment branch, who have an overall interest in sustainable development in SR2002.

  20.  Further information, and additional contact points, will be made available by the Treasury.


IndicatorTrend (1990-2000)


Economic output (GDP) significant positive change

Investment (% of GDP) significant negative change

Employmentno significant change


Poverty and social exclusionno significant change

Education (qualifications at 19) significant positive change

Health (exp. years of healthy life) no significant change

Housing (unfit / non-decent homes) no significant change


  violent crimesignificant negative change

  vehicle, burglarysignificant positive change


Climate change (greenhouse gases) significant positive change

Air quality (days of air pollution) significant positive change

Road trafficno significant change

River water qualitysignificant positive change

Wildlife (farmland birds) significant negative change

Land use (% of new homes on brownfield sites) no significant change

Waste (more waste reduction, reuse, recycling

and recovery) significant negative change



Energy efficiency

Waste and materials recycling

Emissions of pollutants to air and water



UK competitiveness (eg labour productivity; imports/exports and trade)

Public finances


Traffic congestion

Proportion of lone parents, long-term ill and the disabled that are economically active

Fuel poverty

Local deprivation

Death rates from cancer, circulatory disease, accidents and suicide

International impacts

Significant social, economic and environmental effects (positive and negative)

Distributional Issues

eg rural and urban; between regions; generational

3   The 15 headline indicators are updated regularly and can be found at the following web address: Back

4   The full list can be found at:


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Prepared 12 February 2002