Select Committee on Environmental Audit Ninth Report


THE INSTITUTIONAL LANDSCAPE

14. The range of bodies with a stake in climate change policy creation and delivery is extensive. This is in part a function of the wide-ranging causes of, impacts of, and solutions to climate change. Nevertheless, it might be argued that the proliferation of both institutions and tools to deal with climate change might make the effective coordination of policy more difficult. Dr Duncan Russel told us that the various mechanisms, processes and tools established to facilitate cross-Governmental action on sustainable development (including climate change) have been developed and established in a "rather incremental and incoherent manner through successive waves of initiatives".[12]

Figure 1: Part of the UK climate change policy framework


The Climate Change Committee is yet to be established.

15. A Tyndall Centre working paper from 2005 analysed the climate change policy network in the UK, and the impact that this might have on action on climate change. This found that there is a complex political process in which climate change policy is formulated. It also raised concerns that, although there has been widespread adoption of the issue across Government, the "spaghetti-like" structures or "policy mess" can "result in duplication of effort, repetition, political manoeuvring, and ultimately wasted effort and lack of action". It concluded that there might be "very little difference" to emissions "unless major structural and institutional issues are addressed". We have heard during the course of this inquiry that there is a need to ensure that climate change mechanisms and policies do not become confused and disjointed by the involvement of multiple Government actors. Professor Helm, in an article discussing the implications of the 2007 Energy White Paper, elaborated on the complex policy and institutional landscape with regards to energy policy:

    Looking at the patchwork quilt of policies that emerges, the striking feature is just how complex it is—more like a Greenplan version of Gosplan, as the Financial Times aptly put it… The complexity is mind-boggling… The obvious cliché about the road to hell being paved with good intentions naturally springs to mind. And it is not as if this sort of serial intervention has had good results so far. The RO is one of the developed world's most expensive interventions—some wind is costing up to £500 per tonne of carbon abated according to OFGEM. The UK has not even stabilised carbon emissions since 1997—they have actually gone up around 5% since 1997. Fuel poverty has gone up, and security of supply has gone down.

    This policy complexity is mirrored by institutional complexity too. Instead of sorting out the interfaces between the Environment Agency, OFGEM, the Carbon Trust, the Energy Savings Trust and all the other specific bodies—by creating a single Energy Agency - the White Paper is silent on the institutional front.[13]

16. Dr Russel told us that the Organisation for Economic Co-operation and Development (OECD) acknowledges that the natural instinct of a Government in response to a new policy problem is to establish new institutions to deal with it. He went on that "the OECD suggest that you get such a bureaucratic overload by adding additional cross-cutting issues to be looked at, adding additional mechanisms, that Departments and policy makers do not necessarily have the capacity or ability to cope. With having too many cross-cutting issues to deal with at one time, you tend to get administrative burden or administrative overload. We find that in our own research".[14] Professor Dieter Helm argued in a lecture from 2006 that "without a reform of institutions, the UK will continue to pay an unnecessarily high price for the CO2 reductions that are made (because of the existing overlapping and muddled plethora of bodies), and, more importantly, the cost of capital to the private sector will be higher because it will have to price in the political and regulatory risk associated with the current policy framework and institutions".[15] In evidence to us he agreed with Dr Russel that there had been problems with reducing emissions due to the number of bodies and initiatives, leading to a "mess or chaos of different institutions and initiatives without any attempt to join them together… so institutions, tedious and rather academic as they may seem, seem to me to be one critical building block in trying to achieve [a] better outcome".[16] In written evidence to us, Professor Helm also argued that institutional and policy design has to be such that it minimises the chances of institutional meddling negatively impacting on delivery. He told us that such behaviour develops as a result of institutions developing and protecting their own interests, such as with respect to budgets and influence. This can lead to institutional competition where duties and responsibilities overlap. In order to help mitigate this conflict he argues for a rationalisation of bodies to minimise avenues for competition, "precision in the specification of objectives" to minimise the scope for institutions to pursue institutional self-interest, and the bringing together of bodies where there is a clear overlap of objectives. In relation to this final point Professor Helm argues that there is a good case for internalising the trade-offs between climate change objectives and security of supply objectives through the creation of an Energy Agency covering both objectives:

    In energy, Ofgem, the Environment Agency, the Energy Saving Trust and the Carbon Trust all overlap. They all compete for budgets and they all separately interact with Government. In the case of the Environment Agency and Ofgem, it is noticeable how little impact (or even input) the Environment Agency has on periodic reviews of operating and capital expenditure for the electricity and gas networks. In the case of the Energy Saving Trust and the Carbon Trust, both have an interest in energy efficiency, as indeed in its secondary duties does Ofgem. All of them do their own separate analysis of energy markets, duplicating each other's research—and that of the DTI and Defra as well. All have their own offices too, and an administration to support them.… The multiple bodies and overlapping initiatives, strategies and policies not only increase direct costs, but also impose higher costs on the private sector, creating multiple interfaces.

    There is a clear case for merging Ofgem, the Energy Saving Trust, the Carbon Trust; some of the DTI functions (currently undertaken by the JESS Committee); and some of the DEFRA functions in respect of energy efficiency programmes and the Climate Change Agreements into a single Energy Agency and, in the process, bringing the various objectives together into a single set. An Energy Agency would: maximise expertise; internalise the overlaps; reduce administrative costs and head offices; provide a single interface for business; eliminate the competition between regulatory bodies; and internalise the multiple objectives.[17]

17. Dr Russel agreed that delivery in the energy sector had been particularly fragmented, and that the co-ordination had been "a bit of a mess, to say the least". He could see the value of rationalising the bodies in this sector in that it might provide "strong leadership and a unified approach".[18] Nevertheless, he warned that extensive restructuring could lead to long delays in the delivery of policies, and that a body given responsibility for a large range of issues could be unwieldy.[19] Dr Russel argued that what is required in order for the current system to work more effectively, is a "sustained period of political leadership":

    Someone at the very top—that is, the Prime Minister—needs to grapple with this issue… and push it through the Whitehall agenda. Also, you cannot just impose this top-down leadership. Our research has found that officials do not necessarily have the skills and the capacity to work day-to-day on these things, to coordinate and know where to go to and the know-how to generate information so they can feed it into the different committees of Government, which is a core aspect of coordination as it can help identify where the impacts of a policy are likely to spill over. I would say that you need sustained political leadership but you also need to have appropriate training and help for those people who have to make the policy. That is either through providing training or providing them with a pool of expertise on which they can draw to help them come together and help them join up.[20]

18. EEF, the Manufacturers' Organisation, and CABE, the Government's advisor on architecture, urban design and public space, both agreed that there is scope for improving the coordination of policy and responsibility between bodies.[21] An alternative view was taken by Professor Tom Burke, who thought that the importance of institutional factors should not be over-played. He believes that the political will to address environmental issues is of greater importance. Nevertheless he did concede that institutional failures in relation to climate change were a "consequence of the ad hoc approach to governance taken by the previous Prime Minister".[22] He went on:

    It is really important to retain mission focus, which is partly why I am reluctant on this idea, whether it is in the Departmental way or whether it is Dieter Helm's idea, of bringing all the various extra Governmental bodies together into a single agency; you will lose mission focus. There are reasons why you have different bits because there are different missions. As long as you have a mechanism for transparently reconciling those conflicts rather than burying them, I do not think that is a bad thing. I think you want a more informed public debate not a less informed public debate.[23]

19. Elliot Morley MP told us that there is "certainly a need for a cultural shift" in the delivery of climate change policies, to ensure that leadership is translated into outcomes.[24] We asked an official from the Department for Business, Enterprise and Regulatory Reform (DBERR) whether he saw the need for a rationalisation of the bodies involved with climate change policy delivery:

    It is quite easy to look at a list of all the bodies involved in delivering energy and climate change and conclude that it is all a mess. No doubt you could look at a list of Government Departments or select committees and conclude there are rather a lot of them too. I think where you have to start is with the policy that has got to be delivered and have a delivery mechanism that is tailored for delivering those policies… Is it realistic to suppose that all of those elements of a successful policy should be delivered by a single agency?... [L]eaping to the conclusion that a single agency is the solution to delivery, or leaping to the conclusion that a single Government Department responsible for everything is the solution to the fragmentation of Government or whatever, it is not quite as simple as that.[25]

20. It is clear that the Government has responded institutionally to the challenge of climate change through the creation of new bodies to tackle specific climate issues. Although this process signifies the Government's willingness to tackle the issue, the organic process by which leadership and responsibility have evolved appears to have created a confusing framework that cannot be said to promote effective action on climate change. Although we accept that extensive rationalisation of climate change bodies might prove counter-productive there is clearly the need for a strategic review of Government bodies with a major stake in the climate change policy creation and delivery framework, to ensure that there is clear leadership and responsibility for the delivery of climate change mitigation and adaptation policies. This review must seek also to assess the opportunities for the minimisation of inter-institutional conflict, and to aid in the development of effective synergies, through the rationalisation of bodies along, for example, sectoral lines.

21. Ideally this review should have been completed prior to the creation of yet another body, the Committee on Climate Change, to ensure that it has suitable well-defined roles and responsibilities. Given that the time available precludes this, we recommend that the Committee itself conducts the review upon its creation.


12   Ev 1 Back

13   "Labour's third energy white paper", Dieter Helm, 25 May 2007, www.dieterhelm.co.uk Back

14   Q 2 Back

15   Energy policy and climate change, Dieter Helm, Beesley Lecture, New College Oxford, 2 November 2006 Back

16   Q 64 Back

17   Ev 24 Back

18   Q 4 Back

19   ibid Back

20   Q 5  Back

21   Ev 23 Back

22   Q188 Back

23   Q126 Back

24   Q 89 Back

25   Q 182 Back


 
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Prepared 29 October 2007