Select Committee on Environment, Food and Rural Affairs Second Report


Purpose of our inquiry

1. One of the core tasks of select committees is to scrutinise the expenditure of Government departments and to monitor their performance against Public Service Agreement (PSA) targets.[1] The Environment, Food and Rural Affairs Committee carries out this task in two ways: through a wide range of inquiries into particular aspects of the work of the Department for Environment, Food and Rural Affairs (Defra); and by carrying out a short inquiry each year into Defra's Departmental Report.[2]

Defra's Departmental Report

2. Government departments publish their Departmental Reports on an annual basis. The reports provide an important opportunity for a department to explain to Parliament, and the public, about its administrative structures, spending, objectives and performance.

3. Defra published its Departmental Report 2006 on 25 May 2006.[3] As with Defra's other recent Departmental Reports, the 2006 Report includes information about:

  • Defra's progress in delivering its aims, objectives and Spending Review 2002 PSA targets, by reference to the Department's strategic priorities;
  • other key areas of the Department's work, which support its objectives;
  • the Department's key achievements during the previous twelve months and forecast for the next year;
  • Departmental finance with tables, showing Defra's staffing and expenditure plans;
  • Defra's executive agencies and Non-Departmental Public Bodies (NDPBs), and how they work in partnership with the core Department to achieve its aims and objectives; and
  • the management of the Department, its Policy Centre Review Programme, its corporate services and systems aligned to business needs, and the progress of departmental reform.[4]

Development of our inquiry

4. This year we amended our normal approach to this type of inquiry by holding two oral evidence sessions with senior Defra officials instead of the usual one. Our initial evidence session, held on 19 July 2006, concentrated on the Department's progress in meeting its efficiency savings and PSA targets. Our second session, held on 4 December 2006, focussed on Defra's management of its 2006-07 budget. Defra was represented in both sessions by Helen Ghosh, the Department's Permanent Secretary, and Ian Grattidge, Director of Finance, Planning and Resources.

5. During our first session, the Permanent Secretary surprised us by telling the Committee that the Department was currently dealing with some serious financial difficulties. She explained that Defra was in the process of revising its own 2006-07 core budget, as well as those of some of its affiliated executive agencies and NDPBs, such as the Environment Agency and Natural England.[5] The Department was making these revisions in-year to cope with an estimated deficit in its 2006-07 budget of about £200 million. At this time, the Permanent Secretary was unable to give exact details about the extent and impact of potential cuts. Such details had yet to be finalised. Instead, she gave rough estimates about the scale of the problem.[6]

6. Over the summer, and particularly once Parliamentary business resumed in October, the issue of Defra's 2006-07 budget cuts received considerable attention from Members in the House and in the media. Information about the causes and impact of the budget cuts, however, was only made available by the Department in a disjointed and piecemeal fashion. This was primarily through answers to Parliamentary Questions and by ministers giving radio interviews. A definitive explanation of the causes and impacts of the cuts was not given by officials or ministers. Consequently, in October 2006, we agreed to extend our inquiry into Defra's Departmental Report 2006 to take further oral evidence specifically about the 2006-07 budgetary changes. A second session with Helen Ghosh and Ian Grattidge was held on 4 December about this issue and the name of our inquiry was changed to Defra's Departmental Report 2006 and Defra's budget.

7. Before and after both evidence sessions with these officials, we sent written questions to Defra, prepared with the assistance of the House of Commons Scrutiny Unit. Some of these questions highlighted a number of technical details and discrepancies in the Departmental Report; others asked for further information relating to the 2006-07 budget. The Department's responses to our questions are published as written evidence along with this report.[7] Before our second evidence session in December, we also sent written questions to some of Defra's affiliated agencies and NDPBs affected by the in-year budget cuts. These were the Environment Agency, Natural England, British Waterways, the Veterinary Laboratories Agency and the State Veterinary Service.[8] We also invited two voluntary interest groups reliant on Defra funding—the Bat Conservation Trust and Butterfly Conservation—to comment on the impact on their work of these cuts. Written evidence from all these bodies has also been published along with this Report.[9] We are grateful to all of those who provided this evidence.

Departmental changes in 2006

8. On 5 May 2006, the Rt Hon David Miliband was appointed Secretary of State for Environment, Food and Rural Affairs. Mr Miliband's foreword to the 2006 Departmental Report identified progress on climate change as his "top priority" and risk management and contingency planning—particularly in relation to avian influenza—as key areas for continued focus.[10] Mr Miliband also set out his priorities relating to energy, water, waste, food and farming, land and the marine environment in an open letter to the Prime Minister on 11 July.[11]

9. Mr Miliband gave evidence to the Committee on 12 July 2006 in relation to the Committee's inquiry into The UK Government's "Vision for the Common Agricultural Policy", and to discuss other areas of Defra's work.[12]

1   Liaison Committee, Second Report of Session 2001-02, Select Committees: modernisation proposals, HC 692, para 16; Modernisation Committee, First Report of Session 2001-02, Select Committees, HC 224-I. Back

2   Environment, Food and Rural Affairs Committee, Twelfth Report of Session 2002-03, The Departmental Annual Report 2003, HC 832; Fifteenth Report of Session 2003-04, The Departmental Annual Report 2004, HC 707; and Fourth Report of Session 2005-06, The Departmental Annual Report 2005, HC 693. Back

3   Defra, Departmental Report 2006, Cm 6827, May 2006 Back

4   Defra, Resource Accounts 2004-05, HC 445, October 2005, p 5. Back

5   Q 59 Back

6   Q 63 Back

7   Evs 1, 33, 43 and 44.  Back

8   There was initially some confusion about the State Veterinary Service's (SVS) in-year budget reductions. Although the SVS's resource budget was reduced by £3 million, this money was actually re-classified within the SVS as capital expenditure. SVS's budget, therefore, has not been reduced in total. For further information about changes to SVS's 2006-07 budget, see para 47 of this Report and SVS's evidence, Ev 101. For more information about resource and capital budgets, see para 12 and footnote 14 of this Report. Back

9   Ev 81 [Environment Agency]; Ev 89 [Natural England]; Ev 95 [British Waterways]; Ev 79 [Veterinary Laboratories Agency]; Ev 101 [State Veterinary Service]; Evs 77 and 78 [Butterfly Conservation]; Ev 98 [Bat Conservation Trust]. Back

10   Defra, Departmental Report 2006, pp. 6-7 Back

11   David Miliband's letter to the Prime Minister, My priorities for Defra, 11 July 2006. Available on Defra's website at: Back

12   Environment, Food and Rural Affairs Committee, Session 2005-06, The Work of Defra, HC1520-i Back

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Prepared 23 February 2007