Examination of Witnesses (Questions 120-134)
MR SIMON
BULLOCK AND
DR MICHAEL
WARHURST
7 NOVEMBER 2006
Q120 Dr Turner: Nothing affects biodiversity
and ecosystems quite as much as climate change can.
Mr Bullock: We are absolutely
not in disagreement here.
Dr Warhurst: One of the concerns
is that, yes, climate change is a huge issue, but to some extent
it is the limit we are being presented with first, maybe also
fisheries because they are not doing very well either. We have
to be a bit cautious because we do not know that in 20 years we
might suddenly realise that we have some other fundamental environmental
problem. Obviously some of the supposed climate change solutions,
for example some of the areas around biofuels, end up having quite
massive impacts in other areas, like palm oil plantations in the
Far East.
Mr Bullock: Another issue also,
which Michael alluded to before, is that you have to look at the
other impacts as well. The Waste Strategy is a clear example of
that. They are using, rightly, the climate change impacts of recycling
versus incineration, which I think scores much higher, but also
recycling prevents the initial primary extraction of metals in
Jamaica or Ghana or wherever they are, and those are major environmental
impacts as well, which means that recycling is a better environmental
option than incineration on other environmental grounds other
than climate change. We would be concerned that there would be
a danger that climate change would be the only thing that was
assessed. We are seeing that in the Waste Strategy now, that it
is kind of, "The environment, climate change, that is ticked,
let us go on to the next thing". We do need to see all of
the impacts measured.
Q121 David Howarth: Can I carry on
with this theme about what you would do instead. How would you
deal with the social cost of carbon issue? You said 70 is too
low, you claim that 200 is too low, how do you propose to present
this to the ministers who make the decision?
Mr Bullock: It is a very complicated
question, and you are right that we claim to be saying two things
at once, both that it should be higher and—
Q122 David Howarth: You say it should
be higher?
Mr Bullock: It should be higher,
yes. What I think it means is that it is the issue about uncertainty
in climate change impacts, we do not know, the uncertainty is
very high. It is just another example of why cost-benefit analysis
is such a poor way of making policy decisions. For example, if
Stern is right—and we would argue that he is right because
we have argued it before—that the social cost of carbon
they are currently using is far too low—and Stern is now
advocating that it should be three times higher—that means
that all the policies we have had over the last five years on
climate change have been wildly underestimating the amount of
climate change mitigation that you need to do. There is a US academic,
Frank Ackerman, who does a lot of work on precaution, and his
take on the social cost of carbon—I do hope I am not misrepresenting
him—is that the figure, whatever figure you use, because
of uncertainty, anything that comes in at a cost less than the
cost of carbon that you use is certainly worth doing because the
costs that you have got at the moment are ones that we do know
about. It does not mean that anything that costs more than the
social cost of carbon should not be done because it could well
be that the cost of carbon is much higher. Our future information,
three years from now or five years from now, may be saying we
can say how likely an extreme event is, which we currently cannot
do.
Q123 David Howarth: I am still worried
about this point on trade-offs, that ultimately policymakers have
to trade-off because not very many policies all point in the same
direction. You have talked about different sorts of environmental
impact, and although it is true to some extent that carbon is
a measure of the impact on biodiversity, you said yourself it
is not. What happens when policies are pointing in different directions
on different sorts of environmental impact?
Mr Bullock: This comes down to
the issue of cost-effectiveness. What we should be doing on climate
change overall is rather than saying what is the best social cost
of carbon and let us make our policy reflect that, is to say that
overall we make a political judgment that the UK's carbon emissions
need to come down by X% within the next 20 or 30 years and then
set a carbon budget for the economy and for the sectors within
it and say we are going to bring emissions down in each of the
sectors by this amount according to what is the best thing to
do. It could well be that in some sectors emissions do go up and
that requires much bigger reductions in other sectors. It seems
likely that even if we set a carbon budget tomorrow and year-on-year
reductions and all the rest of it, the aviation sector would still
go up because of the inertia of momentum in there and that would
require much bigger cuts from other sectors. What that would be
doing is rather than using social cost of carbon to determine
a policy, is to say we are going to have an overall framework
for dealing with all of the carbon emissions and that is the way
you determine policy.
Q124 David Howarth: That is ideal
if the government consisted of one decision-maker but it does
not, it consists of lots of different decision-makers in different
departments. This comes back to the point of how would you do
it instead. What would you present to ministers in such a way
as they can make decisions that are inline with that overall framework
in their department without having to refer everything up?
Mr Bullock: It is a collective
action. You are right that climate change is not the responsibility
of any one government department and there needs to be an overall
strategy led by the Prime Minister or the Cabinet Office with
Cabinet taking collective responsibility for it and saying to
each department, "This is our responsibility for dealing
with the problem". That is why we are advocating a bill through
Parliament to mandate exactly that, that you would have an overall
framework for cutting carbon emissions, year-on-year reductions,
policy packages to do it with an independent body to monitor whether
that is being effective or not so they can say, "Are the
government's policy packages as a whole meeting the challenge
that we face with climate change?" If they are not, then
it goes back to the overseeing body within government, however
that is structured.
Q125 David Howarth: And targets for
each department, is that the crucial part of you package?
Mr Bullock: There could be targets
for each department. It is difficult because in some sectors,
for example the transport sector, the policies of different department
are affect it in different ways. It is a complex problem. We have
commissioned Ecofys Consultants to publish a report for us on
how you would set a carbon budget. It is a complex business and
there is not necessarily a best answer at the moment. What they
present is a range of five or six different options on how you
could set a carbon budget. It is something that we believe should
be a big issue for this Committee, and indeed government, as to
how we would do that in practice. We are not saying that we, Friends
of the Earth, or indeed any other campaigning groups who are campaigning
for this, have exactly the right answer but we do know that the
current system of long-term targets and no collective responsibility
does not work. That is why we are arguing that a different structure
is needed. We have sent copies to you about this report, but it
is something we feel would be of interest to you all.
Q126 Mr Chaytor: On the guidance,
you have been critical of the guidance on the summary sheet, in
particular you criticised the yes/no tick-box on sustainable development.
What is the alternative? What would you put in its place?
Dr Warhurst: I think there is
too much effort. At some point you do simplify things so they
are meaningless. You have to be very careful. If you look at the
summary, 250 words maximum at the beginning, the second bullet
says, "Say what the expected monetary benefit will be for
the government's recommended option". In those cases where
environmental impacts are not being costed or social impacts,
then that is going to look pretty bad. That summary will get transplanted
from this document into all sorts of other places. I think at
a point you have to stop simplifying.
Q127 Mr Chaytor: Have you produced
an alternative? It there an alternative model that you are advocating?
Mr Bullock: What we would advocate
is rather than yes/no for sustainable development principles,
that it assessed the effect of the policy on the five key principles
in the sustainable development strategy and saying it will have
this effect on the economic goal, not just growth but jobs and
resilience of the economy, and the effect on the environmental
limit principle, the effects on the social and justice principle,
to set that out clearly in a way that policymakers are aware of
the potential negative impacts on the different strands of sustainable
development. Simply just to say yes or no does not do it. An assessment
against the principles requires probably half a page rather than
three letters.
Dr Warhurst: Just to follow on
from that, if you look at what is in the policy option questions,
the questions that are there are very loaded on admin, they have
other things which have not been that well established in UK law
like, "Is a sunset clause included? If so, when?" It
all creates an environment where if you are a civil servant and
you have to do this, you would think, "I had better have
a sunset clause, let us say that in 10 years this legislation
ceases to exist". Our point is sunset clauses are generally
pretty negative. We would say it is fine to have a review clause,
and many pieces of EU legislation have a review clause by a detailed
process, but there is a big difference between a review clause
and a sunset clause. You also have a question asking if the implementation
is going beyond the minimum EU requirements. Again, a civil servant
would feel under pressure to say that it does not go beyond the
minimum EU requirements, so it is not gold-plating. Not gold-plating
means we must have our standards equal with the lowest in Europe
and it also means that we will run our environmental policy entirely
on the basis of what Europe decides. It is funny that gold-plating
is pushed as a euro-sceptic thing but it means you make yourself
completely dependent on the EU. The questions there are generally
very loaded. If you took out three or four of the loaded questions
you could put in three or four environmental ones: "Does
this contribute to climate change" and split out the sustainable
development then you may be improving a bit, but, as it stands,
it is very much loaded in a certain direction. As a civil servant
doing that, I imagine that would definitely make me think about
what I was proposing, which is what it is written to do, of course.
Q128 Mr Chaytor: It has to be signed
off by the chief economist?
Dr Warhurst: Yes.
Q129 Mr Chaytor: Does that send a signal,
or is there an alternative way? Should somebody else be signing
it off?
Dr Warhurst: I do not know how
many departments have someone who has a responsibility for sustainable
development, but if you were trying to put sustainable development
up on the same level then obviously you would have a signature
by that person. In general, when you look at the summary you do
not think this is about finding the best solution to sustainable
development.
Mr Chaytor: That was a slight digression
there. Can we move on lastly to ask about the review and scrutiny
process?
Q130 Mr Caton: Academics from Manchester
University told us that the single greatest problem with RIAs
is the lack of a strong review system to ensure compliance with
guidelines. They wanted to see a structure for assessing coverage
and quality of analysis of RIAs prior to finalisation. Would you
support moving in that direction?
Mr Bullock: Very briefly, yes,
we would, although this is not an area in which we have any expertise,
so we would defer to Manchester University for the details of
that.
Q131 Mr Caton: Are there any particular
criteria you would like to see in that review?
Dr Warhurst: Ensuring that it
really has identified all the potential significant environmental
and social impacts and that it is clearly indicating where they
have not been calculated or where there are significant uncertainties
in the calculation. We are trying to create a situation where
ultimately the reality that these are political decisions is expressed
in the summary, for example we have the list of things which cannot
be worked out, so politically you then have to work out how to
deal with that rather than an approach which gives a false sense
of security to the decision-maker because they think of one number
and it is usually yes or no. Certainly half of the review would
be making sure that there really was proper consideration of all
the impacts.
Q132 Mr Caton: In your view, does
every RIA need to have an environmental Impact Assessment? People
have argued with us, for example, that if you do that you create
this tick-box mentality and also a reaction from officials who
feel it is not really necessary in this case. How do you feel
about that?
Mr Bullock: I am sure there are
types of policy which have very minimal environmental impacts.
As part of assessing any decent assessment against sustainable
development principles it may well come up quite quickly saying,
"There are limited environmental impacts here, we do not
need to worry about it in this case". As long as it is clearly
set out there in a way that if people within the consultation
process have a chance to challenge that and if that decision is
wrong then it can lead to a revision of the Impact Assessment
policy, then fine. Absolutely, there will be some policies which
have no environmental impact.
Dr Warhurst: One of the problems
we do see is a tendency for environmental policies to be almost
singled out for Impact Assessment much more than in other areas
of policy. Effectively, it is important to establish a level playing
field across government because I think there has been a very
strong movement coming particularly from the US to really focus
on environmental policies as obstructions to business and not
to look at other policy areas. It is important that the official
has to think about whether there is an environmental impact rather
than just being told that the policies you are making do not need
assessment. You do not want to create a bureaucratic process which
is not generating something useful at the end of the day.
Q133 Mr Caton: Dr Warhurst, you mentioned
your concern about how RIAs are used in looking at European Union
legislation and tend to go for a bottom line rather than what
you call "gold-plating". Do you think potentially RIAs
could be used to interpret EU legislation where we gold-plate
but we have got the highest environmental standards possible?
Dr Warhurst: It could be. I think
ultimately it is down to political will to do that. In some ways,
the Impact Assessment can provide the political cover to not do
anything almost, rather than saying, "What we are going to
do is we will look at this". The specific example I was using
is still in negotiation. It is increasingly common now for the
government to do an official RIA for something that they are still
negotiating, which is fair enough in itself, the question is how
comprehensive it is. In this case, the RIA is really assuming
that the government will not make any attempt to improve the environmental
objectives of the proposal, though that assumption is not spelt
out in the provisional RIA but it is clearly in the document.
Even though the proposal came out of the European Commission at
a time when the European Commission was very much in a deregulatory
mode and the proposals were very poor, the government has not
come out and said, "Let us check because there are things
which could improve environmental outcomes". They have not
done that, they have purely looked at the proposal. In some ways
it is almost like they are trying to make sure they do not gold-plate
some proposal from the Commission. If a proposal comes from the
Commission, all it will do is chop back on it, it will never improve
it. In theory, you could get better implementation or better negotiation
from doing an RIA, but at first you would have to remove this
political assumption that whatever is out there is the top level
and you are never going to go higher than that.
Q134 Mr Caton: My next question is
on the RIA consultation, which you have already dealt with in
some detail and identified what you see as the flaws. Do you see
any potential positive outcomes coming out of it?
Mr Bullock: The main positive
thing is the clear commitment that it should be at the beginning
of the process and much earlier in the process rather than this
post hoc justification we talked about earlier; I think that is
a very positive thing. However, it is only positive if the other
flaws in it from a sustainable development perspective are tackled.
As we said, it will lead to worse policy outcomes, in our view,
if they are not. Overall, we are concerned with it. We have put
our views, and I am sure lots of other people have from both sides
of the debate, but we are concerned that there is a strong drive
within government to simplify it and that means that argument
will carry the strongest weight. Yes, we are concerned.
Dr Warhurst: We have a box in
the document, the United States comparison, where it talks of
the Office of Management and Budget in the US operating a federal
level processing, for examining regulation and if you talk to
anyone who works in the environmental field in the US, it is almost
impossible to get any environmental regulation through at federal
level. The federal agencies, like the Environmental Protection
Agency, are virtually toothless. One of the ways in which this
is happening is because of the power of the Office of Management
and Budget. Drawing a parallel with that in this document is a
clear warning sign. It really is very, very difficult. I spent
nine months working in the US last year, and it is amazing how
difficult it is to get any sort of federal environmental measures
through there.
Mr Chaytor: Thank you for that. I know
it is the congressional elections today, but we do not want to
get dragged into that. Thank you very much indeed, Michael and
Simon, that was extremely interesting, and we are grateful for
your time.
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