UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 740 -i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

ENVIRONMENTAL AUDIT COMMITTEE

 

The structure and operation of government
and the challenge of climate change

 

Tuesday 19 June 2007

DR DUNCAN RUSSEL

MR NICK MABEY

Evidence heard in Public Questions 1 - 63

 

 

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Oral Evidence

Taken before the Environmental Audit Committee

on Tuesday 19 June 2007

Members present

Mr Tim Yeo, in the Chair

Colin Challen

Mr David Chaytor

David Howarth

Mark Lazarowicz

Mr Shahid Malik

Mark Pritchard

Dr Desmond Turner

________________

Memorandum submitted by CSERGE

 

Examination of Witness

 

Witness: Dr Duncan Russel, ESRC Post-doctoral Research Fellow, Centre for Social and Economic Research on the Global Environment (CSERGE), gave evidence.

Q1 Chairman: Welcome to the Committee. Thank you for coming in. This is the first of our public sessions on this new subject we have just decided to address. I think you believe that the proliferation of mechanisms to deal with climate change in the various bits of government should be resisted if possible and it would be better to focus on sustainable development as a whole in terms of trying to improve the policymaking process. What do you think the consequences of too much proliferation are going to be in terms of our ability to tackle climate change and, indeed, sustainable development?

Dr Russel: Could I start by thanking you for inviting me and could I send apologies from my colleague Dr Andrew Jordan who would have liked to have come but could not make it. I find the proceedings of this Committee very useful for my own research, so your work is to be commended.

Q2 Chairman: Thank you for that.

Dr Russel: A bit of flattery always helps! In terms of answering your question, it is acknowledged by international bodies such as the OECD that, commonly, when you have a new policy problem, the initial instinct is to establish new institutions of government to deal with 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 policymakers 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. We have been looking at these issues or related issues since about 2001. Even in our early research, when we went into departments for some ESRC-funded research, we were talking to policymakers about how to deal with issues and they were saying, "We have to consider race impact, health impact, environmental impact. We do not have the time. We have ministerial demand. We have to deal with these other things related to policymaking, and so we pick those things that are core to government priorities, usually of economic concern, and those things which are core to our department." So if you are in the Department of Health you would look essentially at health impacts and nothing else. Unless there is a common interest for departments to head forward in the same direction on a cross-cutting issue - and I would argue in sustainable development and climate change there is not yet a common interest in departments - then there are just too many things for them to consider and they will pick and choose which ones to do. Our research findings suggest this.

Q3 Chairman: We have had the Climate Change Programme alongside the Sustainable Development Strategy. Does that make it better or worse? Is there a way to find of bringing them together?

Dr Russel: We have an existing Sustainable Development Strategy and a whole host of interrelated environmental coordination, mechanisms such as the Green or Environment and Energy Cabinet Committees, and our research shows - and I think this Committee has shown many times - that these are not working properly. I think it would be better to focus on getting the Sustainable Development Strategy working properly and coordination around that, because then climate change can be considered alongside those other issues with which it interacts, such as biodiversity. Climate change will have major impacts on biodiversity management in the UK. Also, you have to consider that action to mitigate against climate change or to decarbonise the UK economy could have negative as well as positive environmental impacts; for example, a lot of environmentalists would argue against the nuclear option because it has separate environmental impacts. By considering all these things alongside each other, you can give them proper balance, proper weight and proper consideration. By siphoning off climate change, not only does it give policymakers another thing to think about - "Sustainable development and climate change - are they not the same? Which one do I have to do?" - but it also means that climate change is almost treated as a separate issue and you lose that holistic nature and that interrelated nature of all these issues to do with sustainable development.

Q4 Dr Turner: Some of us find it difficult to disassociate climate change from energy policy. If government structures do anything to promote joined-up thinking across the whole field of energy, then I have yet to see it. We are all familiar with the turf war between DTI and Defra on energy and there is also not an inconsiderable involvement in the Department of Transport. Do you think there is mileage in having a single government department estate responsible for all facets of energy policy, in order to get some proper joined-up thinking and joined-up action in this field?

Dr Russel: Some of our research has looked at energy policy. I would agree, it is a very fragmented policy sector and the coordination of it has been a bit of a mess, to say the least. As for putting it under one department, I think there are things to be said for that, in that it would bring all these activities under one roof and provide strong leadership and a unified approach. On the other hand, my concern would be, firstly, that it takes up to five years for a department to bed down and operate properly following major restructuring or reorganisation - and climate change is an issue which has to be dealt with now according to climate scientists - so would that five-year delay have a detrimental effect. The second aspect is that, when you consider the nature of energy use, you have transport, local government, building regulations and that aspect of it; you have energy production and consumption patterns which all affect climate change; and then you have the whole private sector in terms of even the energy production companies. By putting it under one roof, would that department become too unwieldy to operate effectively? I think it could work. In principle, it would be a good idea, but I am a little worried that it could take too long to settle down and it could be an unwieldy department.

Q5 Dr Turner: I take your point that to throw everything into one department could create a negative chaos of its own. If we have to work with the structures that we have now, can you see any way of streamlining them and making them more effective in the immediate future?

Dr Russel: There is an existing array of mechanisms available that are suitable for coordinating these things and I think a lot of it boils down to having a sustained period of political leadership. Someone at the very top - that is, the Prime Minister - needs to grapple with this issue. I can imagine that DTI would not be too happy with such an involvement but someone from the top needs to grapple this issue and push it through the Whitehall agenda. Also, you cannot just impose this top-down leadership. Our researchers 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 that into the different committees of government which can act as a core committee so that then they can 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.

Q6 Dr Turner: That is quite a long-term perspective.

Dr Russel: Yes.

Q7 Dr Turner: But I understand what you are saying. Something, I have to say, I have suspected myself for a long time is that too many of our silos are occupied by people without the right expertise. We need a quick fix for dealing with that situation. Can you propose one?

Dr Russel: A quick fix would be for the Prime Minister or someone of very high standing in government to take the lead on this, to take a sustained lead and follow it through. That would be my suggestion from my research. If you look, for example, at the Treasury spending review, it is a very centralised process but what the Treasury wants from that they often get and the departments pull together because there is funding related to it. A good centralised process would be a quick fix.

Q8 Dr Turner: We are also proposing to set up an Office of Climate Change. That will be yet another institution but, on the other hand, an overarching institution, able to comment and offer advice on all aspects, and with the Climate Change Committee would be an arm's length body to advise, hopefully with the right expertise. How do you see this operating with all the other myriad branches of Whitehall?

Dr Russel: The first thing I would say is that placing it in Defra is probably not the best place. I think this Climate Change Office should be placed at the heart of Government; that is, the Cabinet Office, which has a traditional coordinating role in Whitehall. Defra, as has been found with the Sustainable Development Unit - and I think this Committee has criticised its stature and status by being placed in Defra - has insufficient clout to get other departments to work together towards this cross-cutting agenda. In the Cabinet Office, it is at the apex of the departmental system and, if you take the example of the Better Regulation Executive, it has more authority, is better resourced for these types of things and has better expertise to work on cross-cutting issues. I also have concerns that it overlaps with aspects of the Sustainable Development Unit and the work that it does. I think the Government really needs to clarify the roles and to make sure that there is not overlap or one thinks the other is picking up on an issue and it is not and therefore you do not get an issue addressed. I think those roles need to be clarified and the office needs to be put in the heart of Government.

Q9 Dr Turner: Mark you, if we follow your line of argument to its logical conclusion: the Cabinet Office or the Office of the Prime Minister, which one might alternatively call? it is going to become so all-powerful that departments like Defra and the DTI could be very much downgraded which of course they would resist. Do you see problems there?

Dr Russel: I can see departmental resistance. This is the centre getting in on some departments' turf, if you like. However, one of the centre's role in this, especially since the Modernising Government Agenda, has been to try to manage and tackle cross-cutting issues which cut across all departmental remits or many departmental remits. In many ways, as it is such a crucial cross-cutting issue and something that Tony Blair is signalling as a major, major concern for his Government, I would say the Cabinet Office is the logical place to put it, as that is where cross-cutting issues which have been the priority of the core part of government have naturally been situated.

Q10 Dr Turner: Of course this would not be the first cross-cutting issue to be addressed through a cross-departmental Cabinet Committee, even if it is the most important one so far. How do you view the precedence in terms of the history of these committees and their effectiveness as giving hope for the future of climate change?

Dr Russel: I would go back to looking at the most successful initiatives that have been centrally driven, like issues to do with social exclusion. The National Audit Office has done some work on this and they have been quite complementary - okay, nothing is ever perfect - about the way they tried to join the departments in this, and that was initially managed from the Cabinet Office. That worked quite well. However, if things are not managed more centrally, unless it is in a department's common interest ... Let us take the European Union, for example. It is in every department's interest to speak with a common voice and to coordinate, so that they do not end up having to implement policy of which they were not aware and which they did not have a full input into. You have the departments coming together there. There is also a centralised process that is managed by the Foreign Office rather than the Cabinet Office, but, because there is that common interest, not being placed in the Cabinet Office I do not think is an issue. But where there is not a common interest, such as areas of climate change, I think that central location is the key thing. There are examples, such as with environmental coordination, where some bits have been in the Cabinet Office, such as the Cabinet Committee on the Environment, but other bits have been managed by Defra, and that has lowered the status and made it more difficult to operate.

Q11 Dr Turner: So no easy answers.

Dr Russel: No easy answers, no.

Q12 Mark Pritchard: You mentioned common interest. Of course, there is increasing common interest across government departments in the area of fiscal control and taxation, et cetera. I understand why you say the Cabinet Office, and I agree with your point on that, but, in the ideal world, if there were more believers in the Treasury - given that common interest and given that the Treasury really is the heart of Government, we believe, rather than the Cabinet Office - do you think there should be a dedicated unit or that this unit should perhaps be placed in the Treasury?

Dr Russel: When I was doing earlier work on environmental policy coordination, the one question I asked of people within the departments and within Defra was: Do you think it should be placed in Defra, the Cabinet Office or the Treasury? The common perception was Cabinet Office perhaps, Treasury perhaps not, and the Treasury was quite reluctant to take on board this issue. The Treasury has tried with the Comprehensive Spending Review (which, as you know, is where the funding is allocated, so it ties funding to core priorities which the Treasury sets) to integrate sustainable development into the spending review. In the 2002 review they introduced this compulsory Sustainable Development Report but our research shows that these reports are really done after they have put together their spending bids. The people we interviewed said, "No one took it seriously. We just wrote it in a few days at the end of the bids" and yet the Treasury still approved funding and did not appear to put any conditions or to change the departments' spending plans, because their Sustainable Development Report was up to scratch. I would say that the Treasury is very hesitant to take any leadership on this.

Q13 Mark Pritchard: It is very unusual for the Treasury to have a light touch on important strategic issues in government unless it has other reasons for which it wants to have a lighter touch. Do you think the leadership you alluded to at the beginning of your comments today needs to come as much from the Treasury as it does top-down, from the Prime Minister?

Dr Russel: I think the Treasury is a very useful focus for coordinating such issues because it is the department which controls public spending and it has a very sophisticated coordination machinery of its own which is related to that public spending. In theory, it is a very good place to put an Office for Climate Change, for example, but I am not sure at the moment whether the Treasury will be willing to take leadership.

Q14 Colin Challen: In your evidence you have referred to a number of centralised and diffuse mechanisms to deal with cross-cutting issues like climate change. Could you give us one or two examples of best practice of either type, whether it is the vertical, top-down approach or the diffuse, horizontal approach? Are there good examples that you can cite?

Dr Russel: In my own research, I have come across few very good examples. There has been very little research on this, apart from at the delivery, the policy implementation end, where it tends to be more bottom-up, where they use local expertise and that kind of thing; for example, when dealing with unemployment issues, creating the one-stop shop and that kind of thing, so it has been very localised implementation, so very much a bottom-up approach. In our recent research, we looked at the Strategic Defence Review and did an environmental appraisal of the Strategic Defence Review. That had a combination of top-down and bottom-up processes, where the Minister said, "Okay, we want an environmental appraisal on this" and then a team from the Defence estates came together - it was almost like an organic process - and said, "Okay, we are going to do the environmental appraisal. We are going to bring in the experts and we are going to do it in this way." They produced quite a good assessment of the environmental impact in the Defence Review and the information they generated was used to coordinate. They said, "This could be the impact here, what do you think? Which option would you prefer us to take?" and then they could choose an option based on the possible or respective impacts. The initial call came from the top down but then it tended to be a very bottom-up process, where they did not initially have the expertise, they brought it in, they learned as they went along. My only criticism of it was that it occurred too late in the process, so the policy direction had already been set, but it still had an impact on the final outcomes and they tweaked it here and there to reduce the environmental impact based on the assessment.

Q15 Colin Challen: Could the environmental impact that you have mentioned been further reduced if they had started earlier? Was it a bit of an add-on?

Dr Russel: It was not strictly an add-on, but it was not done at the very beginning. It started mid way through the process. I think it would have been more robust had they started it earlier.

Q16 Colin Challen: In a general sense, does that indicate that departments should really have, internally, their own experts, rather than having to feel that they are told to go and get somebody from outside?

Dr Russel: I personally think departments should have their own experts. I suspect that they probably do have their own experts in many cases but the people do not really know where find them. It is the case with some of the people I have interviewed, where they have been told to do something like a regulatory impact assessment or a strategic environmental assessment or some other evidence-gathering process, that they have asked their boss: "Where do I go?" and they have said, "I don't know. Try here" and they have been bounced around from place to place and eventually found someone who can help them but it is probably too late by then.

Q17 Colin Challen: They cannot really help when they do have this multiplicity of different organisations, the SDU, the SDC, the OCC - and I am sure there are many other acronyms that you could come up with as well. It does not seem to me to be just a case of in which department one of these bodies may be located, although we seem to have heard already that being located within Defra is not always the best, most powerful place to be in this sense. Do you get a sense that perhaps some of these bodies are just a product of "initiative-itis" or the need for a political statement to create an office, to have a few civil servants running around for a while doing it, saying, "Box ticked, job done," and then, after a while, it loses its impetus?

Dr Russel: This goes back to the point I made at the beginning, I think. We already have a strategy, for example, for sustainable development which is not working very well and then it is, "Oh, climate change is an issue, so we'll set this up," box ticked and not following it through and not providing that sustained leadership and dedication to the task.

Q18 Colin Challen: Who should provide that leadership? We can always say it is the Prime Minister but that is a bit of -----

Dr Russel: The Prime Minister has lots of issues they have to deal with. I think the initial spark probably has to come from the Prime Minister but then you need other senior colleagues, such as the Chancellor, and you also need other core parts of government, such as the Treasury and the Cabinet Office on board, just to keep the sustained momentum behind it. In my interviews, departmental officials also said there is a lack of support within their own departments from the senior Civil Service. So it has to go beyond senior ministers and down to the next level of the senior Civil Service for them to provide the leadership within their departments.

Q19 Colin Challen: We have had the creation of the Office of Climate Change, we have the SDU. Is there a case that some of these bodies ought to be merged? We have already touched on departmental mergers, and perhaps with some of these bodies it would be easier and more commonsensical to merge them, so that, when people do go looking for experts, they can go straight to the obvious choice and perhaps get things done a bit quicker and more efficiently.

Dr Russel: I think there probably is a case for rationalising the amount of these bodies. Probably what department officials need is a centralised body or a few centralised bodies they can go to, then that body feeds them back to their own departmental experts, and then there is communication between all three of them - so you have departmental experts, policymakers and a centralised body.

Q20 Colin Challen: Do you have any signals that these bodies themselves would like to see a merger, or are they a little bit defensive of their roles?

Dr Russel: I could not answer that question. I would not know.

Q21 Colin Challen: Is there a case really that, rather than the Government creating the Office of Climate Change, you should have done more to strengthen the SDU?

Dr Russel: Yes. That is what I would argue. When you compare the SDU to something like the Better Regulation Executive, the SDU is massively under-resourced. It has to do so many things. It deals not only with estate issues, government estates and green estates, it also deals with green policy issues and yet it has a very small core staff. When we were doing our research on environmental policy appraisal and I was speaking to the head of that, she had three people, and not only were they dealing with environmental policy appraisal, giving best practice, supposed to be collecting a database but they were also dealing with the Green Cabinet Committee and other issues to do with integrating environmental concerns into policymaking. If you compare that with the Better Regulation Executive, they have team members who shadow the departments, so there is a centre of expertise. They comment on regulatory impact assessments or impact assessments, as they are now called, and they have a whole host of people working on the guidance and that aspect, so it is far better resourced and centrally located. I think the SDU could be better resourced, centrally located and climate change should, by its nature, be a major part of its work anyway.

Q22 Colin Challen: Do these bodies try to coordinate their own activities, so that if they, say, move into similar areas of research, they try to avoid duplicating each other?

Dr Russel: I would not be able to say. My fear is that there would be some duplication and that there would also be some areas, possibly, where if they are not communicating properly, one thinks the other is picking up and the other thinks the other is picking it up and it is not being picked up at all. I do not have any evidence for that but that is what has happened before in other areas that other researchers have picked up on.

Q23 Mark Pritchard: The Green Cabinet Committee, I wonder who sits on that.

Dr Russel: You have the main Green Cabinet Committee, which is a Cabinet Committee for Environment and Energy. The Prime Minister has just been confirmed about a year ago as the Chairman of that Committee. Off the top of my head, I cannot remember who else is on that. Then you have the Sub-Committee Energy, which is comprised of sustainable development ministers, who are mainly junior ministers within their departments who, in addition to their junior ministerial profile, also have a sustainable development profile and are supposed to help promote sustainable development.

Q24 Mark Pritchard: Mr Challen was talking about the different agencies in different government departments dealing with climate change and environmental issues. I was thinking back to the amount of intelligence agencies we have, the intelligence gathering organisations across government, the MOD intelligence agencies and one or two others. Of course the way they deal with that is not to set up yet another body but to draw senior people from each of those organisations into a single body that would discuss strategic issues to try to have joined-up thinking wherever possible. Seeing as the Office of Climate Change is a new body, rather than drawing down expertise that already exists, do you see the former model as something that might be more helpful?

Dr Russel: I can see that can help with coordination. The one thing I would say is that coordination needs to happen at the very beginning, so, if they are just coming together to discuss what they are already doing and what they have done, then you are going to get coordination far later on, when it is harder trying to resolve some of the thorny issues., It is better if you start at the beginning. It tends to be a smoother process. If you take that kind of structure, I would say that it needs to be proactive, so they need to discuss future work rather than the work they are already working on and focus. The focus needs to be there, and that, again, needs to come from the top. You need a remit which says that.

Q25 Mr Chaytor: Your report talks about the need for stronger leadership but for the last ten years we have had a presidential style Prime Minister with an enormous parliamentary majority who has taken an international lead on climate change issues. How do you reconcile your criticism with that reality?

Dr Russel: Tony Blair has made something like seven major speeches on sustainable development and related issues such as climate change. In terms of raising the profile of these issues, he has been there, but I would say that what has not been picked up on is that he makes a speech and moves on. It is very interesting, when you go into departments and talk to these people. They will say, "Tony Blair makes a speech, there is a flurry of activity: 'We need sustainable development reports, blah, blah, blah,' the speech finishes and then everything calms down again" and so it is not sustained enough. I think Tony Blair's leadership has been good in raising the profile but what has not been effective is ensuring, once that speech has been made, that action is sustained. Again, that comes down to bringing it down to the other parts of the higher tiers of government to ensure that the leadership is sustained, because the Prime Minister has other things to think about, other than just sustainable development.

Q26 Mr Chaytor: I am consideration that there is a contradiction in your argument. On the one hand you are calling for greater centralisation, but then you are accepting that if decisions and policy leadership are centralised it cannot be sustained because of the sheer volume of work for which the Prime Minister or the Cabinet Office have to take responsibility. Where is the balance between the leadership the Prime Minister needs to show and the leadership in delivery to follow it through?

Dr Russel: I would say the balance is that the Prime Minister needs to do more than just make a speech. He needs to go the Cabinet Office, he needs to put the Sustainable Development Unit in there and say, "I expect action on this." I get the feeling that that is not happening, that kind of setting of targets. You have this whole coordination machinery, an imperative of government - and it is just not being utilised properly - so that when the Prime Minister moves on to other things that machinery is working effectively and smoothly. I see that Tony Blair makes a speech, but then I do not see any end result of that - other than a speech is made and you get this flurry of activity. It does not appear that he is saying to senior civil servants or it is not coming down to senior civil servants, "This is a core part of our government strategy. It is one of the key things we think needs tackling and therefore your departments have to tackle it."

Q27 Mr Chaytor: The weakness in the current arrangements is at the level of permanent secretary in not picking up the Prime Minister's lead.

Dr Russel: Permanent secretary and maybe even ministers. It has to be sustained beyond the Prime Minister's focus on that issue, and that comes from ministerial lead, levering key bodies like the Treasury and the Cabinet Office and senior permanent secretaries.

Q28 Mr Chaytor: Do you think it is fair to say that because we have had a presidential style Prime Minister and between 1979 and 1990 we had a presidential style Prime Minister, that weakens the capacity of other cabinet ministers to lead and follow through and ensure that policies are developed into action? Does it become more difficult for cabinet ministers to establish their own authority in a presidential style system?

Dr Russel: I would say if we have a very strong prime minister and they say, "We want action on climate change," then it would make it easier for ministers to say it.

Q29 Mr Chaytor: But your research suggests that is not happening.

Dr Russel: There is a lot of commentary on whether Tony Blair is in fact a presidential style Prime Minister or just a different style of Prime Minister. Some people say in fact he is less presidential that is often thought and others say he is very presidential. I would say that the evidence appears to be to the contrary, that Tony Blair makes these statements of intent and that ministers still go about things in their own way, beyond maybe a few mutterings of, "Yes, you have to do an environmental appraisal on that" but never really following it through once the appraisal has been done. I do not know the answer to that. I cannot say Blair is presidential or not presidential but the implications are that ministers are not picking this up, despite Blair having it as one of the key parts of his Government.

Q30 Mr Chaytor: On balance, are you calling for more of a command type government, an absolutely top-down government where the line is established and at ministerial and permanent secretary level it is followed through? If so, how does that leave the question of entrepreneurialism and individual flair within departments? Doest it not stifle innovation in individual departments?

Dr Russel: I do not propose that we would have a command and control style. I think it needs to be a two-way process. I think there needs to be demand at the very top, so ministers must be saying, "I want to see regulatory impact assessments" or permanent secretaries or senior policy advisors: "I want to see the regulatory impact assessment and I want to make sure they have environmental appraisals or that they cover environmental impact and climate change matters, societal impacts and that kind of thing." They need to create the demand for that but I do not think they should be telling you how you should do it, in this way, this way or this way. I think they should set targets, they should set goals, and they should be interested in finding the results of the work that has been done in these types of things, but it should be left to ground-level expertise to work out the best way to deal with these challenges and issues. No one at the bottom is going to do anything unless there is a common interest, unless there is some kind of reason to in terms of your boss, who will appear as a demand. However, you do not want to stifle creativity, because then you get a rather awkward and clunky response to the issue. These people have local-level expertise and they are probably best placed to decide the best way to respond to these challenges once they are prompted to.

Q31 David Howarth: I am going to ask about regulatory impact assessments but, before I do that, could I just follow up on what you said earlier about the Treasury and what you have just said now about the Prime Minister. The formal, top-down, cascade down the priorities to decide between different priorities, is the system of a Comprehensive Spending Review and of public service agreements. We have the formal system run from the Treasury and then we have an informal system run from Number 10 where the basic unit of decision-making is not anything of a formal system at all, it is the speech; it does not have any great constitutional status. Is that the problem, that there seems to be no linkage between the formal and informal systems of policy?

Dr Russel: I think that is probably a very truthful observation. There is research to show that coordination at the very centre of Government is as poor as it can be elsewhere. Yes, I suspect it is the Treasury and Number 10 not communicating with people and the Cabinet Office as well, and these formal mechanisms not really picking up on these informal aspects of where the leadership says we should be going.

Q32 David Howarth: On the regulatory impact assessments, you gave evidence to our previous report on this and we came to the conclusion that they were having no important impact on policy outcomes. Your view, I think, was that has a lot to do with lack of expertise. I suppose what we have been trying to get at in other areas but now coming on to this specifically, is that it could be lack of expertise but it is also a lack of strong leadership or lack of engagement with the environmental issues in general and climate change in particular. Is there any evidence for those other two explanations?

Dr Russel: Yes. The evidence we gave in your last hearing was based on some recent work we did on regulatory impact assessments. Before that, I was looking at specifically environmental policy appraisals, which is a separate appraisal process before it was grouped together in regulatory impact assessments. I wanted to find out why these things were not being done and the factors that were restricting people. When you went and spoke to people they said, "It has nothing to do with our work. We're the Department of Health, why would we do an environmental impact assessment?" Also, there was gross ignorance and a lack of awareness as to even the existence of an environmental policy appraisal: what to do, how to do it and what was sustainable development. It is understandable. Sustainable development is a very difficult concept to get your head around. Part of it is a subconscious resistance: "What has this to do with us?" and the other is a lack of awareness - not necessarily, "I should consider this but I do not have the expertise to do it" but a lack of awareness that they even should consider such things.

Q33 David Howarth: If that is the reason for their lack of effectiveness, is any of that going to change with the new system and a greater emphasis on trying to be more like a cost-benefit analysis?

Dr Russel: I should add that that was another finding from the research we did on environmental policy appraisal and regulatory impact assessments, that almost the cost-benefit analysis type model of policy appraisal was very unsuited to what policymakers did, and the fact that they would have a minister saying, "I need a decision on this tomorrow" and they would have a manifesto commitment, EU requirements, et cetera, so therefore having this rational linear model, where you would have lots of options and you would do a cost-benefit analysis. That was one aspect and there is another aspect to do with quantifying environmental impacts. Environmental economists will tell you that you can do this but there is still a lot of scepticism amongst the public and officials that you can do this accurately. Also, I was talking to an economist in Defra who said that there is a lot of data missing, and you could work it out but you would have to commission so much research to get this missing data. The new impact assessment regime has gone further down this technical, rational cost-benefit analysis, so you are not giving policymakers, I would say, a tool with which they feel comfortable to join up. The whole point of doing this appraisal is that they do the appraisal, they generate some information, qualitative and quantitative, on the spill-overs of the policy, so that other groups can look at it and say, "Hang on, that is technically my turf. Can we talk about this and bring that together?" I would say at the very beginning, by doing that, you are more likely to stifle innovation because policymakers do not feel comfortable, especially on these wider issues to do with environmental sustainable development. Secondly, sustainable development seems to have been dropped. I was looking at the guidance the other day. I was trying to look for references to sustainable development and the environment as something they should consider and the only thing that is highlighted is carbon. On the one hand, I do not think it is an appropriate tool and on the other hand I do not think it deals with this issue of departments picking up on what they want to pick up on. I think it was a good idea for the Government to look initially at regulatory impact assessment and where it is heading but, based on our research, I think they have come out with the wrong model. Others may argue differently.

Q34 David Howarth: I suppose there is the example of Defra's work on ecosystem services as a way of trying to get a valuation of a wider range of environmental benefits. Is that a way forward? You could argue it is a way forward on both the problems you have just raised: on the one side, on the problem of consultation and trying to get the two branches reconciled, and, on the other - which is a point you made earlier, and it is a very important point, and we found in our investigation of the FCO as well - that if you put all the emphasis on to climate change and you have a carbon line in the impact assessment, you then tend to ignore everything else.

Dr Russel: Yes, it detracts from the other aspects.

Q35 David Howarth: There is an argument that Defra is trying to attempt to meet both those problems.

Dr Russel: It is attempting to increase the evidence base and to come up with some good costings to put into a regulatory impact assessment, but there is still this issue of the fact that this type of appraisal system does not necessarily fit neatly with the way policy is made. I think that guidance writers and people in the Better Regulation Executive need to sit down with the people who have to write the regulatory impact assessments and say, "What do you need?" You may not get the perfect instrument but you may get something which is used and used more effectively than the impact assessment or regulatory impact assessment. But I think Defra is going down the right line and this should improve the generating of data.

Chairman: Thank you very much. That has been very helpful

Witness: Mr Nick Mabey, Chief Executive, E3G, gave evidence.

Q36 Chairman: Good morning and welcome to the Committee. It is our first session on this subject. You have had a fair amount of experience of government in terms of how the reality of developing policies and achieving outcomes and so on works. Would you like to start by using that experience to say how you think the structure of government and the way it operates can help or achieve effective action on climate change issues and sustainable development issues?

Mr Mabey: Thank you and good morning to members of the Committee. That is a huge question but I will try to boil it down to four core areas. Having tried to do this in government, joined-up government, and also being in a department where this is being done and an NGO lobbying outside government, climate change fundamentally challenges any complex organisation as does sustainable development. It is a non-trivial task of organisation innovation and that is both an excuse for why it sometimes fails but also it should make people focus on why we should not look for incremental improvement but we should be looking for more radical issues here. We do not know how to do this, so we should be bold if we are taking international leadership in both our targets but also our structures and implementation. Setting an institutional lead in the UK is probably as important, to be honest, as setting something about reducing tonnes of carbon because institutional evolution is very, very hard, especially in the public sector. The second point is that I think getting climate change, if not right, at least better will be what drives sustainable development more broadly across government, not the other way round. I am happy to take questions on why I think that. There are four areas in which you look for failure and where some of the problems are. The first is strategic focus. On climate change we have had a very strong strategic focus from the centre on the overall strategy at high level. On sustainable development that has been completely lacking - so very contrasting. At the next level down, in terms of integrating innovative policymaking, we have failed to identify synergies and do the innovation and capture the real joint policymaking well, although the UK has probably explored more different ways than any other government. We have often politically failed to understand the implication of our decisions. We used to call it "piranha-ing" the climate change programme: it is all those thousands of little decisions which cut tonnes of carbon here and tonnes of carbon there, and there was no way of making the opportunity cost of that nibbling away at the programmes. To be honest, the Treasury and others were often responsible for that and the lack of transparency on the implications of not joining up and Defra never had the capacity or power to really challenge those decisions. Those are both policy and political failures, I think. The third area - which in some ways is more mundane but probably as important - is an enormous failure on project management. The climate change programme, once you have decided what to do, is essentially an enormously complex piece of project management. You would not manage a sweet shop using the systems we manage. When we asked to get a read out of how well we were doing, it took three or four months to get the data back from the departments. Ministers cannot be accountable to riskiness in programmes. When the data came, we said, "What is the risk around this? What is the range of likely outcomes of these different programmes?" and they went back again, made up some numbers and came back. As somebody who worked in the construction industry, the engineering industry, this is just so poor, I cannot believe it. Basic project management and risk management skills are not up to the task. The last area concerns the skills sets of the people trying to do this. I think we are trying to do very complicated things with people who are under-trained and under-skilled. The only professional skills in government are the Government Economic Service and its predecessors which is not a very good ground in these areas. We give hardly any training to people. We do not second enough skills in and we do not open enough senior posts to competitive management. We have an amazing set of people in the UK in the private sector and the academic sector who do this work and we do not use them inside the real policymaking process, so we waste a lot of investment outside. You cannot drive complex policies through substandard, unskilled staff. That is one of the big areas, that unwillingness to draw on the outside talent pool. I worry that people are mistaking the outcome of sustainable development for how you achieve it, having been told to do integrated policymaking, join up everything and do everything all at once. I know that is not how you drive change in organisations. How you drive change is very different. If we want to get environment integrated and long-term decision making and risk management, we drive those through the organisation; we do not ask people to hit some mythical three pillar model of sustainable development. I think that appraisal, three-pillar approach has held back us doing real day-to-day sustainable development in real processes as opposed to just tick-box assessment and nice reports, which has dominated the discussion today.

Chairman: That is very helpful. Thank you.

Q37 Dr Turner: That does not give us much joy to grasp at, I have to say. It occurs to me that what you have been describing is obviously a very dysfunctional Whitehall as far as organised change is concerned. Do you think this is a cultural problem as far as Whitehall is concerned, and that the people in Whitehall do not understand there is a problem here? Obviously, if they do not understand there is a problem, they will not be able to do very much about it. Do you feel this is the case?

Mr Mabey: I would say they will respond to problems set by their political masters. Until recently, these were not problems. Now it is very clear to the structure that dealing with climate change is a problem big enough to look at internal structures. In the Prime Minister's Strategy Unit, we tried to look at them after the White Paper in 2003. It bounced off the bureaucracy: they did not take the political momentum seriously enough to make those decisions. I think that has changed. In essence, across other parts of government, in domestic policy and in foreign and intelligence policy, we have seen much more radical structural reforms in terms of blending departments, building new joint departments, joint conflict prevention pools. The Post-Conflict Reconstruction Unit is blended of three departments. We see it on drugs policy, we see it on criminal justice. There are many innovations in joint, long-term strategic policymaking in Whitehall, but, funnily enough, they have not been picked up in this area. That is more a reflection of the seriousness of the political signals that have gone through and perhaps of the lack of clear understanding by the policymakers involved about what they needed to do. That has changed. With the new political impetus, we are starting to see the type of experimentation we have seen in other areas in Whitehall.

Q38 Dr Turner: You have quoted examples which have been more successful. Is that because they happen to involve the skill sets that were there? When we come to either sustainable development or dealing with climate change, there is a much more subtle and complex set of issues and these are not readily understood. How are we going to get that understanding into the system and who do you think is best placed to do it?

Mr Mabey: I agree with you on that. I have worked a lot on looking at how government joined up on conflict prevention and failed states and on organised crime and it was interesting. As you say, where there was an established body of expertise - and organised crime looked quite like it - they could change quite rapidly, given a political signal. Where you were inventing a new field, potentially, and you were trying to plug together lots of different people - and conflict prevention was like that - it has taken a lot longer. Some of the innovations there include having created a new intelligence analyst area from the post-Iraq reform, where people can have a career now as an intelligence analyst across government, across many departments, and therefore keep the expertise and judgment skills growing over their career, whereas it used to be, if you were an analyst, that you stopped at a certain grade and had to go into management, even if you were a very experienced and very knowledgeable analyst. You have to give people those incentives to skill-up and grow and think they can become senior and powerful. This is back to the clever use of broad specialisation, as opposed to generalisation, which even under the Gus O'Donnell reforms still tried to be all things to all people and did not and did not really recognise the complexity of some of these areas and the skills they need.

Q39 Dr Turner: We are still talking about the Civil Service culture which is perhaps one of the greatest obstacles to positive change that we have. One would hope that the strategy and delivery units, of which you have had some experience, are there to try to change this. Have they really got to grips with the culture?

Mr Mabey: I think we were getting somewhere before the Strategy Unit or the PIU, as it was, changed base. The beast that was the Strategy Unit, in particular, changed phases many times and I think it was at its best when it was driven by clear Cabinet decisions backed by the PM to do something in a place that added value with a full public process and departmental process and a clear follow-up. For two, three, four years it worked in that mode and also was working with departmental strategic units and working on training. It started to lay the foundation for something which was culture shifting: people saw there were rewards in standing up and doing things a bit differently and ministers saw that if they gave a mandate they could get something interesting back. Unfortunately, it then, partly because of the political lifecycle, collapsed back to something which was a little more short-term and more private and less rigorous. One of my fears and certainly of my other colleagues at the Strategy Unit is that we will forget the good lessons of that broader public, which gave us the Energy Review - the first Energy Review in 2002-03 - which I think has shown how high quality works stands the test of time in the High Court better than things that are dreamt up in shorter periods of time.

Q40 Dr Turner: The only difficulty with the Energy Review is that nothing ever happened about it as a consequence. We are still discussing the very issues set out in the 2003 Energy Review four years later. The PMSU used small project teams to focus on specific challenges. How effective a technique was that? Did that get to the climax of problems like climate change by cutting across the structures, working around the cultural silos?

Mr Mabey: The most difficult thing of any Strategy Unit project was defining good terms of reference and commission, so precisely you did add value. Sometimes when the Strategy Unit tried to go head-to-head with departments, mainly because ministers wanted to break a cultural impasse, it was usually bloody on both sides, sometimes productively and sometimes less productively. But, in terms of the quality of work produced by the Strategy Unit through a small team method which was generally 50 per cent civil servants, 50 per cent external experts and analysts, I think it is some of the highest quality work I have ever seen. I have worked at MIT, the London Business School and in industry and it is certainly the most intellectually and practically aggressive unit in which I have ever worked. It somehow created a peer culture of quality and some very, very good people were attracted to work there. That seemed to work. As always, the difficulty was in implementation, in getting that out into Whitehall, but essentially it got better at doing that over time too, so a lot of projects were followed by small teams, usually of three or four people from the team, going to work inside the delivery department in a joint follow-up team with regular reports to the PMDU or to Cabinet. It got to the point where, rather than just being a think-tank, it turned into a delivery structure as well, where the intellectual capital was spent. Even after initial hostility sometimes, if you produced good work people would say, "Great, you have helped us on a very difficult problem," as long as it was that spirit of joint problem-solving and not invading their space. I think it is great because it allows you to devote resources in a way in which frontline civil servants never have the opportunity to do: when you are doing a frontline job, you just cannot do that kind of work.

Q41 Dr Turner: You are telling us that it can be done but you have to infiltrate the departmental structure specially in order to make it happen.

Mr Mabey: Yes.

Q42 Dr Turner: From the centre.

Mr Mabey: One of the things we saw was a growth of departmental aversion. Sometimes there was a bit of a reaction from permanent secretaries, "If we have our own Strategy Unit and they are doing a good job, then we do not have to have PMSU come in." In some ways, that is brilliant: it is the decisive dynamic you want. You want them to get to the point where they are using the lessons, the tools, the methodologies, the training and the quality people they second in who come back, to drive their own processes, for those things they can do inside a department. The PMSU should really be kept to do very long-term work and cross-departmental work - that is what it was designed to do - if the rest of government was functioning. There was always seen a slight tug-of-war between those two models but, to me, that was healthy, because it was positive competition as opposed to negative, bunker mentality, turf war. When you did not get it right, that is what it turned into.

Q43 Dr Turner: If anybody writes a new series of Yes, Minister, they can call on you for script advice.

Mr Mabey: Yes. We used to use Yes, Minister as our training video for people outside government.

Q44 Mr Malik: In your view, how effective are public service agreements and targets at getting departments to account for sustainable development in the work that they do?

Mr Mabey: To date - and I do not know the current round, which is meant to try to address some of these issues - I must admit I thought they were an absolute failure in trying to produce joined-up government. Essentially, you needed to create a joint strategic view among politicians and senior civil servants that there was a need for this collaboration, and trying to impose that through a target never worked. Sometimes, the PSA process produced that joint view and sometimes it did not. It sometimes focused too much on the money and not enough on the process of getting strategic alignment. This is back to the constant struggle between the Treasury and Cabinet Office structures, as the Cabinet Office tries to align objectives and the Treasury tried to align people around money. In the end, money does not align people. If the Cabinet Office and the Treasury worked in the same way. It was very powerful. When they were working apart from each other, it generally produced words on paper but not results. I think all the people involved recognise that, that it was part of a broader political problem we had, as everybody knows.

Q45 Mr Malik: What do you think are the key factors to get that strategic alignment in order to be effective?

Mr Mabey: It is different in every case but the core element is that the political level involved have had an extremely clear discussion about objectives and how they are shared or not, and if there is a dispute that is clearly resolved by the Prime Minister not being ambiguous. Sometimes you have to do that, sometimes you cannot resolve things that clearly, but that means you are set up for lack of inclination. That is the core thing, the clear political message from above. Then you have to devolve responsibility for driving it forward, either to Cabinet Office or to the permanent secretary or the deputy permanent secretary with the authority to challenge departments to come up with answers. They have to have the authority of the politicians to drive it through otherwise they will be completely stranded and left in a bureaucratic exercise. It always worked when that political alignment was there. It could fail for personalities or for other reasons, that it was just too difficult, but if you were not giving someone authority it never did happen. If you look at how we have tackled issues such as Afghanistan and Iraq, in those crisis situations that is how Whitehall refers. It has direct authority given to either a minister or a senior official to challenge and push Whitehall. Unfortunately, we tend to do it too much in crisis situations and not enough of a bold approach in normal day-to-day business. It is not tsars, either, because I believe it is better to have people in the machine. Make the machine work for you. If you put people outside the machine, in the end it comes back to bite you because it effectively puts power there. Those are some of the core elements.

Q46 Mr Malik: Des spoke earlier on about institutional change. You will be aware that departments now have to produce Sustainable Development Action Plans. Do you think these will stimulate the climate change you want to see?

Mr Mabey: They are certainly better than they used to be. It certainly gives us some leverage. There is a bit of me that is always suspicious of an action plan because it tends to be a list of bullet points of things people are doing already. Of those I know who have made progress, I can identify the group of three to five individuals in that department who have used that mandate to produce something which is alive and vibrant and plugged into their department. Where there have not been those individuals, it has not worked. This comes back to the fact that you cannot just throw those institutional instruments into a vacuum and expect them to work on their own. They have to have land on people who have commitment and skills and the ability to persuade political leaders to make it happen or there is public political pressure to make them happen. So, yes, potentially useful, but in some ways there are out of a broader process and not the driver of it. I have never seen an action plan requirement drive anything substantive in Whitehall ever - or in any other organisation, to be honest. This is just normal organisational practice.

Q47 Mr Malik: You might be aware that the Sustainable Development Commission reported last year on Sustainable Development Action Plans and they found that departments continued to fail to understand the business case or benefits of sustainable development. Why, after ten years of the Government promoting sustainable development in government, is this still the case?

Mr Mabey: I would put the blame for that in some ways squarely on two sides. I am not going to talk about the recipients but about the promoters. You can blame people for not listening to you but I think you should really focus on whether you are putting the message out. The people who are pushing sustainable development have not produced a clear operational model for how it should be done. There has been too much fluff and not enough tools, methodologies, training, skills. We do not have a serious sustainable development professional training course in this government - if you go on any of them, you will see that they are cobbled together - or a set of tools which let you think through complex problems. The Strategy Unit has one. It has built one up over four or five years, internal training. If you look at the strategy survival guide toolkit, some of the policy type of work that the Strategy Unit set up, you will find a lot of the tools that you need to do long-term, risk-managed, integrated, holistic decision-making, which is what sustainable development is, you will not find any of those in an of the sustainable development parts of government: websites, internal tools, internal manuals. You will find assessment and appraisal but not the things that help people deliver. The sustainable development community has not produced an operational model. As a set of academic think-tanks, trainers, those people inside government have not produced a toolkit to help people do it in practice - and it is not that it cannot be one, it is just that they have not done it - I think they have been a bit befuddled by their overly grandiose outcome and not looked at the basics, which are very simple. You look at a problem, you look at it over the long term, you look at how the various elements add up, including environmental resources, and you divide them into strategies. It is what the Strategy Unit did all the time; it just did not call it sustainable development. It just did it for long-term policymaking. That is one piece that was not a very clear model to bring in. The other is that I just think that Defra in its various incarnations was never empowered to drive that change across government. The Sustainable Development Unit was never really very front-foot. Occasionally some individuals there did do very good work but it had some pretty bruising fights to go, especially with the Treasury and the Government Economic Service, and in the end Defra never took its argument to the rest of Whitehall in a very strong way. Now it is building up its capacity to make an economic case as well perhaps building the capacity to do it, but, if you do not win the argument, in the end other people are not going to start doing it your way. The real problem of having all this legislation coming from the EU is the fact that they were swamped with things that government had to do and they really did not have to make the case for people to do it until quite recently.

Q48 Mr Malik: Is institutional resistance not a key factor in the failure of the Government to incorporate and embed environmental considerations into policymaking?

Mr Mabey: It is difficult to know what institutional resistance means. I have been amazed, in some ways, how environmental people in government and government departments have been, when given the right signals and pushed across. In some ways they have been more radical than some of the NGOs I know. Certainly in other areas in which I have worked I find government more joined up, more holistic and more long term than many other organisations, especially in the academic, non-governmental sector. I do not think people in government dislike the environment. The signal is that has changed over ten years. There is a very clear signal that the environment should be covered. In the end, there are lots of people competing with policy time and policy space and the fact that the Government is cut up the way it is makes the environment a bit of an uphill struggle. That is back to the point that stronger leadership, in terms of strategic direction from the centre and a stronger advocate in terms of Defra and a clearer understanding of what it means to do this, would overcome the friction, the inertia, the previous skill set we are dealing with, but I do not think there is an intentional resistance, apart from the usual one: "My job is really difficult, please do not over-complicate it." I find that as much from environmentalists who refuse to absorb development or economic issues or security issues. They are just as resistant to having a more complicated life. Again, that is something you have to manage, because sustainable development is partly about making people's lives more complicated but, hopefully, for the purpose that it makes better policy and better outcomes.

Q49 David Howarth: Is it not the problem that if you want to bring about enormous change in the way people operate you can probably only do one of those, you cannot do lots of them at the same time, and you have to have a very clear idea about the trade-offs and the priorities? If one day you say that climate change is the top priority and the next day you say something else has top priority, then that will never change anything. The institutions' internal inertia just leaves them where they are. It is not that they actively resist; it is that they do not know how to change so there is no need to bother.

Mr Mabey: I agree with you. That is something I learned very much, having seen my own failures as a lobbyist outside government, asking the Government to do things I would never ask WWF to do in their complexity and skills. It is like skiing down hill in a straight line and getting to a turn, but you are not very good at turning so you fall over and you get up and you point at the next straight bit down. That is me skiing down a wooded slope - best of luck to the skis! That is the analogy. You have to be willing to do stupid but clever things, to know that you have to change course. A good example of how powerful that approach would be is Clare Short at the Department of Development. As someone who has done development for years, I did not think her philosophy of development and the way it focused on the NPGs was going to be a development but she drove an immense amount of positive change in that department, internationally and everywhere else, and they then went to a point where they had to change and move to a different mode. That is fine. But, yes, sometimes, especially on the sustainable development side, there have been too many saying, "We have to do everything or nothing" and this has confused people and so you do not get change. If you are advocating change, you have to make the hard choices yourself about what you want to see happen and know that means some of the things will not get done.

Q50 Chairman: In the response on climate change, some people suggested the fragmentation of responsibility sometimes impedes effective action. Do you think the creation of the Office of Climate Change is going to help that situation?

Mr Mabey: I think the fragmentation, going back to my first statement, is on two levels. On the political level, the Office of Climate Change really makes no difference at all. It does not help you ensure that housing policy and climate policy are joined up or aircraft policy. That is a decision that is rightly made in Cabinet Committee and should be properly informed by proper analysis. I doubt that climate change will be particularly involved in that. I do not think you can organisationally solve that problem; it has to be done at Cabinet level. In terms of the second piece, which is finding innovative and integrated solutions, I think the Office of Climate Change has huge potential and that is one of the ways you can get around things like solving political arguments, so, again, the whole issue around heating and housing. I think there has been a lot of people fighting about how much restrictions to put on housing and how fast to move in that sector, based on very, very poor analysis of what the opportunity and the way forward and the potential that we can improve energy security immensely far faster than any nuclear programme anybody could build, protect pensioners, produce better living quality for people and provide lots and lots of jobs for UK workers, but no one was gripping that because it fell between everybody's stools in terms of departments. That is the kind of problem where the OCC should get a break out of the impasse. That is the main thing it can do, to provide creative, integrated solutions that previously were languishing in gaps between departments.

Q51 Chairman: That clearly would be a great prize, if that opportunity were seized. This Committee has been frustrated by the failure to pick up what really is very low hanging fruit there. Are you saying that there is not any institutional change that is likely to produce some dramatic step forward?

Mr Mabey: I have always been in favour on sustainable development and climate change of using Cabinet Office better and more strongly, and, to be honest, it has been Defra that has always been very resistant to allowing that. I think that has been a mistake. It was a mistake borne of weakness. There have been various ideas through the years. When I was in government we recommended, in terms of putting a body like the OCC, particularly a body that was in charge of project managing or monitoring the project management of the climate programme, in the Cabinet Office, which is where other things like that sit, and having a very clearly senior civil servant grade, grade 2 and above, responsible for it. I think if Jeremy Heywood and John Cunliffe were given the responsibilities people say they are going to have, they could be very powerful drivers of the internal climate change programme. I personally would like to see someone with a dedicated brief to run the international strategy, especially for the next few years, at senior departmental level. You find that in the centre of government the Cabinet Office can work in two ways in terms of preparing the arguments for ministers. It can sit and do what we used to call "strategy by stapler", which asks everybody their position, brings it together, gets a big stapler on the pages, clunks it down and says, "That's the strategy" or it drafts a very elegant piece of nonsense that basically does not resolve anything because they are given no time and they are just there to be a secretariat. Or, if they are empowered, they sit there and they challenge and say, "That does not add up. That does not meet what the Prime Minister wants and the Cabinet wants. The Cabinet wants us to come up with this. Go back and try again." That challenge function does work, but it requires somebody, whether it be Jeremy Heywood or John Cunliffe or someone else, to be given that mandate. Especially as we go into a very tricky political period of trying to make a global deal in what is now politically a very highly charged programme, you need that kind of bureaucratic centre to drive things forward. They do not have the power. It is more that they are there to make sure we do not fudge. All organisations fudge in extremis and you need someone to sit there saying, "No, that is not going to produce the outcome. Try again." That is one of the core institutional extras which we need.

Q52 Chairman: Most of us around the table are also sitting on the Committee of both Houses looking at the draft Climate Change Bill. One of the proposals there, of course, is the Climate Change Committee. Do you think the role of that committee should include making specific policy recommendations?

Mr Mabey: Yes. The idea of a committee like that was first discussed at a Strategy Unit in 2003 in the first White Paper, because it was extremely clear that we needed someone who could authoritatively monitor what was going on and publicly discuss it, otherwise we would not do what we said we would do. I think the Climate Committee is precisely the right idea. I think it should have the authority and analytical capacity to make clear observation of what is going on and be able to recommend remedial solutions and do that in a way that is linked to Parliament and linked to public debate in a very powerful way. I think that is good for the country and I think it is good for the government concerned, to be honest, because this is hard stuff to do. I think it is will be a helpful innovation for Whitehall to do that. As opposed to people seeing it as some criticism of Whitehall, I think you need something that strong, if you are going to drive this forward.

Q53 Chairman: Would the Committee get into mildly controversial areas like road pricing, putting more substantial taxes on aviation and so on, domestic aviation to start with? Do you see it going ahead of the Government and making it easier therefore for ministers to come behind and say, "We are doing two-thirds of what was suggested"?

Mr Mabey: It will always produce options and bundles of options. It can stop government nibbling away at the programme so that it does not deliver its outcome. It cannot and should not try to prescribe the political trade-offs between taxing aircraft and taxing roads and taxing domestic fuel. That is rightly a job of the Government, but at the moment the Government does not know why it should care about each of those. This is one of my worries about the committee. If the committee tries to manage our carbon budget over 15 years, it will not find answers, sensible recommendations about the issues, because they are about the long-term shape of our infrastructure over 50 years. If they try to manage a carbon budget, they will manage the wrong thing, because they really need to manage the carbon intensity in-locking of our over structure. If you are looking to 2050 and if you are trying to get to minus 60 or minus 80, whatever number, and you are building an infrastructure now that locks in carbon for 50 years, then you can start to say, "You cannot do that" or "If you do that, you must do this". My problem is this is far too short term to make decisions. We tried this. We audited the UK climate programme and we had this discussion internally. It was very clear that there was no basis for making decisions. "Shall I take carbon from China or from Huddersfield in 2020?" The only way you can make that decision is by looking at how it affects the long-term costs and benefits of decarbonising your economy. You cannot make that decision based on 2020. On the 15-year time horizon, if they stick with that and this approach, they will be stuck in a difficult position of not really having a basis for making the recommendations and that would be a problem.

Q54 Chairman: How about the relationship between different government departments, different sectors? We notice in this Committee, with the advantage of our cross-departmental remit, quite a big difference in the responses from different bits of government. I do not want to point any fingers, but the Department of Transport perhaps could be a bit more aggressive in terms, given the technology that is available, to reduce emissions. Would the committee be helpful in that role, in saying, "Let's have a bigger sectoral emphasis on a particular sector"?

Mr Mabey: Yes, if they think about it in the right way. If you look at road transport, not very responsive, very high value in terms of the economic benefits - more so than aircraft travel, for example - actually it turns over its capital stock every ten years, in terms of cars, so you could afford to wait a bit, because it is not like a house or a power station where it is 50 or 100 years, perhaps you should more road patterns because they last a very long time, but it needs very strong technological system at an international scale to drive innovation in car fleets. So there are several arguments about how much you should do. Do you have a very strong policy to drive innovation or do you wait and let innovation happen and then turnover policy later? To answer that question, which is an empirical modelling, analytical question, you need to be looking at the whole of the infrastructure versus, say, housing. My biggest argument inside government was over the suggestion that we meet our targets by buying permits abroad. I said, "What's the point of that? Why don't we put that money into serving the housing stock? That is going to last 100 years. Buying a few permits from Indian companies who are not really saving energy is a waste of public money." Italian policymakers are particularly incensed by spending €3 million from their efficient companies on inefficient companies in other countries, when it could be spent on innovation at home, to meet an arbitrary target. If we want the politics of climate change to work out over time, so people think we are making sensible decisions, we cannot make decisions based on that basis. They will look more and more ridiculous as time goes on. We need to be saying, "Here is our investment going forward. Here is how we are balancing between changing to a lower carbon system, and this is a sensible basis." There are arguments, of course there are arguments, but at least then you can make a decision. I find it very difficult to make a decision, which I am often asked to, about the balance between traded and non-traded sector, going abroad or staying at home. On the 2020 carbon budget, I do not know the basis for making that decision apart from cost, and I do not think cost is the right base in terms of our long-term policy.

Q55 Chairman: That takes us into rather interesting territory. The Treasury is by far the most obdurate department as far as we are concerned. One observation, both inside and outside government, is that we have a Treasury driven model of government in this country and it is getting more so. Do you think the Climate Change Committee is going to be any more effective than, for example, this Committee is in influencing the Treasury?

Mr Mabey: An interesting question. I do not know, is the answer. I think you can increase the odds. I would increase the odds by making it as much like the Monetary Policy Committee as I could in certain ways. The first is that I would make sure it had the analytical capability to do the type of in-depth risk analysis the Bank of England does and the MPC, so it is authoritative and risk managing - which is what the Government is not doing. Secondly, I would make every single piece of government modelling on climate change, including the broken transport model in DfT which has been broken for three years, open source to the public just like the government's model of interest rates is. I used to work in the London Business School and we used to use the Treasury model. We would calibrate it ourselves, we would run our own data, using ONS data, and then we would argue with them about the answers. At the moment, no one, including Defra, has access to DTI's modelling or anybody else's modelling. I do not think Defra shares its modelling. They should all be open source and open to public scrutiny. The Commission should be allowed to ask ONS to collect data which it needs on different time scales and different rates, and to argue about the costs of that, but it needs to be able to find out what is going on and to ask departments to collect data and do project management in different ways. It cannot just be a passive recipient of whatever is there, or it will be, perhaps, that people can hide things from it. Finally, I think it needs a friend. The Government funds someone to beat it up on fiscal policy: it is called the Institute of Fiscal Studies. It is run out of the research councils, it has an authority on every budget, it sits there and says, "Chancellor, your numbers do not add up" - as it has done with every chancellor ever since it was founded - and "Your money has been spent in the wrong place" or "It has been badly managed." We should have an Institute of Carbon Studies, based in an authoritative university, which essentially provides an external check but is a non-departmental body. They are not completely independent. We know there are all sorts of issues they have to look at in terms of their alliances, they can be stymied by not having enough capacity, but if we had a dialogue between the Government, the Climate Committee and its analysis, and an external body, all working off the same models - an enriched data set, with Parliament putting its oar in - I think that would create enough public debate and enough commercial interest in this. Because it affects the carbon price, it would be covered in all the financial papers, it would be covered by serious commentators. Then we have a chance of it working. But it is a system of combinations. It cannot just be put on one arm. You have to get those dynamics right.

Q56 Mr Malik: You have talked about developing a framework for managing risk. What does that mean in the context of climate change?

Mr Mabey: It reflects on some of the issues I said earlier about how you make a choice between working in transport and working in housing, about how you look at the risk of delivering a programme that needs to generate new technologies and how quickly they come on board. Is there an upside or downside risk to climate? Does it matter if we do too much or too little? Is it more likely the science is going to push the targets harder or softer? These are discussions which we had a lot in Whitehall and I found it terribly frustrating because there is not a culture of risk management, except for in a couple of very specialised places around chemicals and animal health nowadays. In government, it is not normal in many departments. I once had a secondee from Unilever when I was in the Foreign Office and he knew nothing about climate change but I explained risk management in climate change to him in five minutes. Because he built soap factories in China, he said, "Oh, you mean, you think about whether the investment irreversible and where is the upside and downside of my risk and do I care about investing too much or too little" - he grasped it immediately because he had a way of thinking through the problem. At the moment, it does not balance: "Okay, we might have those tonnes out there but these tonnes are more certain," and there is no framework for managing those risks. That is the same in lots of areas. In the way fisheries work, it is the same thing there. That is a real skills issue in senior management. If you look at industry, they spend a lot of money educating their senior management in understanding how to balance risk and to understand risk. You do not learn it at school, you do not learn it at university, it is a professional skill, both in producing risk management and understanding it as a manager. It is something we need to do, otherwise it is the core missing skill. They are just illiterate in it at the moment. In some ways it is not their fault: they have never been told it is something they have to do, but in these really complicated areas it holds back the policy of making wise policy choices.

Q57 Mr Malik: Do you think the Committee on Climate Change could play some kind of role in this risk management mechanism process?

Mr Mabey: Yes. Going back to the Monetary Policy Committee analogy, the fact that the Monetary Policy Committee analysis is produced probabilistically (it is the probability of missing inflation targets), the fact that it has quite a sophisticated way of discussing how the outcome of its models is affected by other data that comes in has created a conversation which is essentially a risk management conversation. I think the Climate Committee could do exactly the same thing. It has the opportunity, which I think is very exciting, to be the international leader in describing what you need to do to manage the transformation to a low carbon economy effectively and efficiently, including managing the risk of success and failure. That is one of the real advantages and one of the things we should try to make it do. If it does it, other people will copy, and they will copy a lot faster and that will mean they will all cut their emissions faster and more reliably. That is good for all of us. It is a bit of a public good investment, in my opinion.

Q58 Mr Malik: You have talked about motivating preventative strategies using decisions for systems and tools. Do you think the impact assessment process deals with this?

Mr Mabey: No. In some ways it is not its fault because, again, they keep on trying to make it not a reactive, end of pipe process, but whenever I was sent an impact assessment form, whether sustainable development or regulatory, it was always at the end of the process and it was always at my most busy and it was always a pain. It was something I ticked boxes on and tried to get out of the way and had a discussion with the Cabinet Office about. It has not done that job. Decision support is a set of internal systems that provide the right information in the right format to decision makers at the right time to enable them to make choices. An externally imposed tick-box system of recording is very unlikely to do that. It is the opposite of that. The argument therefore is that integrating a regulatory impact assessment or a sustainable element into organisations requires more fundamental change. Mainstreaming is everybody getting that they have to account for the carbon in a project, account for the resources used, and that is just the way things are done. Essentially, if they produce something that does not do that, it falls below the professional standard in the organisation because it is something for which they would get mainstream marks docked off. We were doing work in the public convention realm about what is an acceptable risk analysis of the country at risk of instability and if you fail to notice its massive economic dysfunctionality because you are a politically trained analyst and you are not doing that job, is that acceptable, professionally, for you to be an analyst? The answer is no. That should come off your professional marks if you have not spotted that. That is the difference between those two types of approach organisationally. It is embedding it really as a mainstream set of issues and in mainstream professional skills. If you do not produce analysis of environmental issues, that means you do not get to be a grade 2. That would give an incentive to people to learn, gain and hold their skills. That is a decision support mechanism for me. In different areas you need particular bits of machinery to do certain things. Impact assessment forms really do not support decisions because they tend to be done after the decision.

Q59 Mr Chaytor: Can you say a little bit more about the use of secondments and the expectation of the risk management strength outside the permanent secretaries.

Mr Mabey: It has been quite a large change since 1997 about bringing in more people - and I saw it both as an external person working in government, a secondee, and then a civil servant in government - has been incredibly positive. It has not always been recognised as being as positive as it should be. A lot of secondees have been appalled and amazed at the opportunities for making change inside government, appalled, in some ways, that people were not doing all this stuff already. It just shows that if you put someone who has been working for 20 years on an issue inside an organisation where most people only spend two or three years working on an issue, they can add an awful lot of value. I do not think I heard of any examples of secondees being seen as negative in the context of the organisation. Perhaps they were chosen well. The problem is that when a secondee leaves generally the system closes up behind. In the discussions among people seconded to government, the basic rule we developed was: build a partnership with people outside government because that is how you will leave an institutional mark. If you managed to embed a process which was partly external, then that would keep the processes you had worked on there going. More should be done both ways: to bring in professional and to keep them there. Also more should be done to make sure people do skills transfers. In some ways more importantly, there should be a much more ambitious role about target on the porosity of the Civil Service, both at junior grades, grades 7 and below, and at senior grades, and there should be quite ambitious targets about the percentage of externally advertised jobs. Really the core Civil Service should be a lot narrower. There is a core. There is a core that needs to do parliamentary work well and legal work well and drive through bills, but, to be honest, the rest of it is similar things that people do in the public and private sector outside. They have a lot more skill and expertise because they are not generalists. It would be a much better governed country if more people also had an experience of how difficult it is to run the government and be a civil servant and to understand the pressures and difficulties and tensions. One of the reasons why we have such poor discussions about these issues is that so few people know how government works. There is a two-way benefit of looking for a much more aggressive system of both secondments and openness in hiring that reserves the core of the Civil Service but minimises that, rather than the feeling at the moment that we are trying to maximise that untouchable core.

Q60 Mr Chaytor: What is the role of the National School of Government? How do you evaluate its success so far?

Mr Mabey: I do not feel particularly qualified to talk about it because it was just setting up as I was leaving government and I have not had a lot of experience of it. I was not impressed by some of the things I saw it do. I think it is needed. Do we need it to be a government-held body, or would we be better using the existing expertise and policy courses and skills around our universities? For the interests of integrating those institutions into better understanding how government works, I come back constantly in a lot of my work now and in government is about trying to sit the people who do the thinking and the people who do the policymaking together in rooms so they can learn directly from each other and not through someone else's training course. That is by far the most productive thing to do. I am not quite sure where the National School of Government is going but I think we are perhaps not being as innovative and open about how we bring those skills into government and set up and train civil servants. I think people have done it in lots of areas but, again, people do not talk about it.

Q61 Mr Chaytor: You are calling for a reduced central Civil Service with presumably a stronger strategic role but are there questions you would raise about the traditional process of recruitment? How does our system compare to other similar countries? Are there other countries who have their central civil service working better than we have?

Mr Mabey: It is different in different places. The smaller countries are always better at being strategic and joined up because there are fewer of them. We used to have a whole round of strategy units coming through, whether it was from China or Sweden, and you could always tell the difference between small/medium sized and big countries. Small countries work better. They tend to have less red tape in the way, even if they have less capacity, and they therefore draw a lot more strongly on outside expertise. I think the complexity of government has got so much larger now that we should essentially consider ourselves a medium to small sized government on the global scale and therefore realise that we cannot afford the classic great power approach of keeping everything in-house. The French still keep that as their approach and the Germans are midway between us and the French. The Americans have a far more open approach, both in terms of bringing in expertise and also because of the political appointee system. I am not a fan of their political appointee system but I am a fan of how they draw on their best expertise. You hardly ever meet a university professor in the US who does not have an in-depth knowledge of how government works and does not work, who has not been involved in a serious piece of legislative work. They do serious pieces of research. Sometimes they do too much research, but they certainly involve people in the process much more strongly. I think there should be a larger Civil Service than there is now in terms of people who do policy and implementation, governed by good Civil Service ethics and some type of professionalism of civil servants, but only a small proportion, say 20 per cent, should do that for the whole of their career. I think there are plenty of people who know how to run large, complex organisations, lots of people who know how to do strategy and policy outside government, who could make up the other 80 per cent for a significantly large piece of their career. If you had a good enough institutional management system and learning system, that would work, and that would use all our talents in this country rather than showing people in at one end and getting them out at the other end with a marginal five per cent interchange, most of it in the agencies rather than in the core Whitehall sense. As I say, that would educate the people outside government as much as the people inside government and would therefore make us a better governed country, both in civil society terms and in terms of government.

Q62 Mr Chaytor: Finally, can I ask about sustainable development and climate change policies specifically. How successful do you think the Government has been in raising awareness of the standing of the Civil Service and the relevant departments? Is there a difference in the level of understanding about policy implementation in respect of climate change as against the broader area of sustainable development?

Mr Mabey: Yes. Climate change is an easier sell but it has the advantage of having a far higher public interest in it and political interest in it and there are a lot of people trying to communicate it outside government in an exciting way. From being slightly behind, climate change has caught up and overtaken immensely. Going back to my previous answer, I think sustainable development has suffered from being communicated in the wrong way and not being backed up by things people can grip. The constant frustration I face in talking to policymakers was: "I don't know what you mean. I don't know what this is. I don't know how to do it. How do I do sustainable development?" We say, "You look long term, you bring in environmental resource issues and you make sensible policy." They said, "Why didn't someone tell me that? It sounded so complicated. It was all this balancing and fillers." In fact, climate change is pretty much common sense. Why would you leave out an important piece of policy area like environmental resources? As environmental resources have seemed to get more scarce, they have naturally flowed into heftier decision making, where people have the tools to handle that. I think sustainable development as a concept has become a bit of a millstone at the operational level. It is fine to talk about it as an objective and to use that to say, "This is what we are trying to go to" but operationally it has got in the way and the successes of integrated policymaking with which I have been involved has generally avoided using the term.

Q63 Mr Chaytor: Is it time to kill it completely?

Mr Mabey: We do not try to integrate liberty across government. We integrate specific issues on human rights and have tools about human rights policy and laws and training, because that is how you operationalise some aspects of liberty, through human rights, and sometimes using freedom of information. That for me is the difference between sustainable development as a goal, a discussion of high level politics with political parties, balancing issues around long-term objectives, but that is not how you operationalise it. You cannot operationalise it with one goal. We do not do it on anything else. We do not do it on economics, we do not do it on social policy, we do not do it on human rights, we do not do it on security policy, but for some reason we have tried to do it on sustainable development and I just do not think it has worked. Yes, as an objective. No, as an operational way of doing things.

Chairman: Thank you very much. That has been very interesting indeed.