Introduction
1. Since its inception in 1997 the Environmental
Audit Committee (EAC) has held annual inquiries into the Treasury's
Pre-Budget Reports. In these inquiries our core objective is to
review the annual progress made by the Treasury in placing environmental
protection at the heart of its tax and spending policies. In addition,
we usually choose one or more topical developments or more specific
areas of Treasury policy to focus on.
2. In reviewing the Treasury's overall momentum in
building environmental objectives into the heart of its policies,
in recent years we (and, in the last Parliament, our predecessor
Committee) have expressed a mounting frustration with what has
appeared to be a dwindling of action. Last year we concluded:
"PBR 2005 signifies a continued slowing down of the Treasury's
momentum in turning its rhetoric on the environment into action."[1]
Reflecting this growing frustration, we took the unusual step
in October of writing to the Chancellor prior to publication of
Pre-Budget Report 2006 (PBR 2006), to highlight a number of our
more recent findings and recommendations, and to urge him to make
this PBR more ambitious than those of recent years.[2]
Following the main themes pursued in this letter to the Chancellor,
and reflecting the memos we received for this inquiry, in this
report we focus in particular on the ambition of the PBR's fiscal
policy announcements in four areas—aviation, motoring, waste,
and energy.
3. Our major additional—indeed, owing to its
importance, our primary—focus in this year's report is the
Stern Review,[3] the much
anticipated report on the economics of climate change published
last autumn. Its importance was underlined by the remarks made
at its launch on 30 October, the Chancellor describing it as "the
most comprehensive analysis yet done of not just the challenges,
but the opportunities from climate change",[4]
while the Prime Minister remarking that it had "demolished
the last remaining argument for inaction in the face of climate
change."[5] In our
report last year, we looked forward to the Stern Review's publication,
voicing some of our hopes and concerns as to its findings. Notably,
one concern was that it should focus primarily on achieving safe
limits to greenhouse gases and only secondarily on the cost of
these reductions, while another related to its possible use of
cost-benefit analysis, given the intrinsic difficulties in placing
monetary values on the effects of climate change. We concluded
by suggesting: "We may review the Stern Review's final report
once this is published, to examine the extent to which it takes
these […] points on board, […] in our inquiry into Pre-Budget
2006."[6] We do that
here in the next chapter. Beyond this, throughout the report we
focus on the extent to which Stern's conclusions are reflected
in Pre-Budget 2006, and make recommendations as to how they ought
to be reflected in future PBRs.
4. We also return to a theme we examined last year,
statutory reporting by listed companies of their environmental
impacts. Our report last year dealt with the abolition at short
notice of proposals to require listed companies to publish annual
Operation and Financial Reviews, which would have included requirements
to publish audited information on environmental factors affecting
companies' businesses. In that report we noted that the Government
had at the time issued renewed consultation on the form in which
business reporting on environmental factors should take; and concluded
that: "We may return to these Business Reviews, and the form
they finally take, in our inquiry into next year's Pre-Budget
Report".[7] The outcome
of that consultation was seen in the Companies Act 2006, receiving
Royal Assent on 8 November 2006. In this report we review the
reporting requirements as finally established and contained in
the Act.
5. In our inquiry we received memoranda from 21 organisations,
and took evidence from Sir Nick Stern, Friends of the Earth, Greenpeace,
Green Alliance, the National Industrial Symbiosis Programme (NISP),
Biffa Waste Services, and the Financial Secretary to the Treasury,
John Healey MP. We thank them all for their assistance.
1 Environmental Audit Committee, Fourth Report of Session
2005-06, Pre-Budget 2005: Tax, economic analysis, and climate
change, HC 882, para 15 Back
2
"Pre-Budget 2006: Issues of particular interest to the Environmental
Audit Committee", letter from Tim Yeo MP to the Rt Hon Gordon
Brown MP, Chancellor of the Exchequer, 26 October 2006 (unpublished) Back
3
HM Treasury, Stern Review: The Economics of Climate Change,
October 2006 Back
4
"Remarks by the Chancellor of the Exchequer, the Rt Hon
Gordon Brown MP, at the launch of the Stern Review on
the economics of climate change", HM Treasury, 30
October 2006 Back
5
"PM's comments at launch of Stern Review", Cabinet
Office, 30 October 2006 Back
6
Environmental Audit Committee, Pre-Budget 2005: Tax, economic
analysis, and climate change, para 69 Back
7
Environmental Audit Committee, Pre-Budget 2005: Tax, economic
analysis, and climate change, para 64 Back
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