Examination of Witnesses (Question Numbers
124- 152)
MR
BARRY GARDINER
MP, DR
SAMUEL FANKHAUSER,
MR CHARLES
SEAFORD.
17 NOVEMBER
Q124 Chair: I welcome
all three of you to our inquiry this afternoon. I will just say
to you that we're very keen that we have a broad as possible cross-section
of evidence into this particular inquiry on embedding sustainable
development. I thought it might just be helpful, because you're
representing three different organisations, if you could perhaps
each introduce yourselves and perhaps say in no more than about
two sentences the important issue you want to get across to us,
and then we'll go ahead with our questions if that's okay.
Mr Seaford: I'm
Charles Seaford. I'm from the New Economics Foundation and I'm
concerned with the way that Government are organised to ensure
that there's effective sustainable development policy.
Chair: Thank you. You need no introduction,
Barry, but please go ahead in terms of GLOBE.
Mr Gardiner: Barry
Gardiner. In this capacity, I am the Vice Chair of GLOBE UK. I'm
really representing John Gummer, Lord Deben, who is the President
of GLOBE and I'm also here in my capacity as the Co-Chair of the
Land Use and Eco-Systems Commission, which is looking specifically
at the issue of the valuation of natural capital.
Dr Fankhauser:
My name is Sam Fankhauser. I'm here as the Chief Economist of
GLOBE International. My day job, as it were, is at the London
School of Economics in the Grantham Research Institute.
Chair: Fine; I think Neil Carmichael
is going to kick off on governance issues.
Q125 Neil Carmichael:
Yes, I am; thank you very much. Both GLOBE and the New Economics
Foundation have been talking about establishing a new unit or
committee of some sort to oversee sustainable development. First
of all, what sort of unit or structure do you envisage?
Mr Seaford: I envisage
a small unit; probably but not necessarily a civil service unit
located in the Cabinet Office and it should probably report to
a Cabinet Office Minister who would have responsibility for it.
Its role would be to develop a strategy for economic development
that would be relevant across Government and then to act as a
mediator between the conflicting positions that different departments
are bound to have when it comes to implementing that strategy.
I think it's important to say that we see this unit as not simply
sitting around developing strategy but also engaging very widely
with business, with the public, with NGOs and so on, and with
different tiers of Government—local government and national
devolved Administrations. So we see it as central, but by virtue
of being central and not departmental that might facilitate a
wider engagement.
Q126 Neil Carmichael:
Is the Cabinet Office a powerful enough Department to accomplish
that task?
Mr Seaford: Not
in itself, but the key is that it reports to a Minister who has
the confidence of the Prime Minister and perhaps the director
of the unit should be part of the Number 10 staff. If you just
think of it as another Cabinet Office unit, then absolutely right,
it won't work. But if it has the right people and the right levels
of confidence with the right people, then it has a good chance
of working.
Q127 Neil Carmichael:
Jack Cunningham or David Hunt could tell you how difficult it
was having that office and being expected to co-ordinate the flow
of information of Government when they both tried it. They had
different political complexions but the job was the same, and
I think they'd probably both concede that it wasn't a very easy
thing to do. I'm just wondering if that is an example of why perhaps
we should be looking at something else.
Mr Seaford: I wouldn't
say it was easy but I'd say there are things you can do to make
it easier. One of the things we suggest is that this unit has
a budget; not a new budget, but it would take in some of the budgets
that are currently allocated to different Departments and would
then allocate it. So it would be a little bit like a mini-Treasury
and the Treasury does have enough power to make things happen.
You could say this should be a unit within the Treasury but the
feedback I get is that the sorts of things we want this unit to
do just aren't the kinds of things that the Treasury does.
Q128 Neil Carmichael:
There are two alternative, aren't there? One is to set up a strong
Cabinet Committee, which might work. Would you like to comment
on that, Barry?
Mr Gardiner: May
I first of all make it clear that Charles and I are not speaking
with one voice here?
Neil Carmichael: No, I
gathered that because I could see you needed to say something.
Mr Gardiner: My
perception of this, and certainly GLOBE's perception of this,
and what we have tested now with over 100 legislators in 35 different
countries, 16 of the G20 countries, is a very different model
indeed from that which Charles is talking about. What we are suggesting
is that unless you have a clear focus, a clear line into the Treasury,
then these things will not happen. We all know in our own experience
as legislators that the control of the purse, the control of revenue
is absolutely critical. That's why we believe that it is absolutely
essential that this is something that is mainlined into the heart
of Government at the Treasury. That is why one of the proposals
that you will see in the natural capital action plan, which I
hope the Committee has been circulated with, can I just check
that, Chair?
Chair: Yes.
Neil Carmichael: Yes, thanks for that.
Mr Gardiner: One
of the key recommendations there is that a new ministerial position
should be set up within the Treasury, which really has almost
the powers of the Chief Secretary of the Treasury but in relation
to valuation of natural capital. Each Department should have to
prepare an inventory of its area of work and all the resources
that lie under it or which its decision making has an impact upon
and that that report should be signed off, in effect, with that
new ministerial position within the Treasury and that ministerial
position should be responsible, to a large extent, for the use
of Government's natural capital, use of Government's natural resource.
We think that is absolutely essential and talking to colleagues
all across the world from Angola to the Chair of the Finance Committee
in Japan, that model has buy-in from them.
Q129 Neil Carmichael:
Would you expect that to be a Cabinet rank appointment because
a Chief Secretary hasn't always been?
Mr Gardiner: Indeed.
I think it would have to be of that substantial level. The Chief
Secretary has often been looked at as the number 22 in the Cabinet,
around the Cabinet table, but I think we all know that the power
that the Chief Secretary wields is considerably higher up the
pecking order than that.
Neil Carmichael: That's because he's
in charge of expenditure.
Mr Gardiner: But,
you see, the key thing here is when you're looking at any decision
making in Government, what Ministers are bound to do is to look
at the cost benefit analysis and they have to take into account
all the different elements in the decision that they take—the
revenue costs of that, the likely ramifications of it. What we
are trying to say is if you do not take into account the value
of natural capital in exactly the same way that you would take
into account the value of built capital or indeed human and social
capital, then you are not conducting a proper cost benefit analysis.
It's not to say that that valuation of natural capital captures
the only value that it has; there are other values. There are
aesthetic values, there are spiritual values that the environment
has but it's critical that the valuation does capture that economic
value to human society because very often in classical economics—and
here I have to defer to Sam—these things have been regarded
as externalities. They've been regarded outside of the equation
and they're not taken into proper account. We're simply saying,
"Treasury, do your job properly. That means, in your cost
benefit analysis, include all the relevant factors".
Q130 Neil Carmichael:
Two weeks ago, we heard from DEFRA about policy and implementation
in terms of their role in sustainable development. I was left
with the feeling that it was yet another job that DEFRA have to
do. It made me think, "Do we have a strong enough Department
here?" Then I was looking at DECC the other day and thinking
there was a bit of poacher/gamekeeper situation there. What I'm
driving at is should we, if we're serious about this, be looking
at a Department that really does have all the bells and whistles
for dealing with these issues, not just in terms of sustainable
development and the activities of Government, but far and wide?
Mr Gardiner: A
big question. I think there are many ways in which you could cut
and carve the departmental responsibilities. You could very easily
argue the same case for a combination of international development
and environment going together or have a separate farming department.
There are all sorts of things one could look at here but, ultimately,
this is not about having a single, strong Department. This is
about having sustainable development mainlined into the heart
of Government and that means the Treasury. Unless it's that, no
single Department will ever have the clout with all the other
permanent secretaries because it will be their issue. It's only
when it's the Treasury's issue that every other Department has
to pay attention.
Q131 Chair: Can I
just ask you, in terms of the Treasury and what you're suggesting,
how would that be positioned inside the Treasury in such a way
to influence what goes into the Green Book because it strikes
me that it's the Green Book and the Treasury that is so critical
to whether we are keen and committed to embedding sustainable
development? It would be influencing every single decision that
comes out of the Green Book.
Mr Gardiner: Yes.
Again this is one of our proposals; I understand exactly what
you're saying about the Green Book, Chair. At the moment, the
Green Book is pretty thin in comparison with other Green Books
around the globe and in other legislative countries. I think what
we said is that there should be a parallel set of natural capital
accounts and I think it's probably important that Sam sets out
how far technically down the road we are to being able to do this.
We're not saying that everything is there to be able to do it
fully, but it's there far enough for us to be able to start the
process of implementing parallel natural capital accounts with
the Budget each year and, ultimately, not just having them in
parallel but incorporating them into the whole Budget process.
Chair: I know Dr Whitehead wants to come
in on the issue of natural capital and I know that Zac Goldsmith
wants to come in as well. Do you want to start off on natural
capital and then get a response?
Q132 Dr Whitehead:
Yes; thank you. I'll start off halfway through because you've
already raised a number of the issues I wanted to raise myself.
You will of course be aware of the Government Economic Service
recommendations in the July report. How far do you think they
go in terms of what you're saying this afternoon? What do you
think of the strengths and weaknesses?
Mr Gardiner: I'm
sorry, I'm not aware of the Government Economic Service's—
Dr Whitehead: On valuing natural capital.
Mr Gardiner: No.
Tell me.
Dr Whitehead: The review was launched
in 2008 and reported in July 2010 and made a number of recommendations
on the impact assessments, scope of environmental evaluation and
the way in which natural capital could be valued between Departments.
I was wondering what you thought of those recommendations, but
if you haven't read the report, you can't say.
Chair: Presumably what
you're saying is that we need a step change in terms of how natural
capital is evaluated and taken account of.
Mr Gardiner: Certainly
from where we are with the Green Book today, we do and there is
technical work going on to make sure that we have further tools
available to integrate yet more into the Government's accounts.
Q133 Dr Whitehead:
The fact that this report has made a number of recommendations
and you are strongly advocating that process seems to me to be
quite a process of momentum. There is then the issue, as you've
mentioned, of getting departmental buy-in to that process and
clearly that would entail, say, the Defence Department and the
Department of Health valuing natural capital in a coherent way
across their Departments. How would you see that buy-in process
taking place?
Mr Gardiner: The
buy-in comes from the control that the ministerial position in
the Treasury would have over their use of resource. Instead of
simply allocating the Department's revenue and its capital resource
each year, looking at its built capital, the Department would
have to justify its use of all the other resources that are affected
by its decision making during the year. For example, if you were
in the Department of Transport, you would not simply be conducting
separate environmental impact assessments on what you are doing,
which, if you like, at the moment function as a sort of environmental
commentary on your decisions and your policies. You would have
to show that there is an actual economic effect, that there is
real cost here that needs to be taken into account and put into
the whole of the decision- making process. Instead of an environmental
commentary on the policy debate, it's an economic contribution
to it, and that's the key difference.
Q134 Dr Whitehead:
Particularly in Departments that perhaps might not regard themselves
as having such a brief at their heart, how do think that might
become an integral part of the process? For example, the natural
capital of the Ministry of Defence includes Salisbury Plain, Tynan
village and gallery ranges. If one were to say to the Ministry
of Defence, "Right, you've got to value the natural capital
with which you are charged and bring that into your policy process"
but it believes there are other imperatives within its department
that perhaps cancel that out, how would that negotiation take
place?
Mr Gardiner: There
are separate elements of the negotiation that have to be brought
to bear. What we're saying in the process of assimilating natural
capital accounts into your accounting framework is that you must
take account of the economic costs and benefits of what you propose
to do as it pertains to your natural capital. I can't think of
an appropriate example for the Ministry of Defence but let me
give you an example from America, and that's the well known example
of the Catskills watershed, which I know you will know well. New
York had the option of building a very large sewage plant and
it would have cost hundreds of millions of dollars and it could
have done that and built that to deal with all the effluent of
the city and purify the water. Instead, it used the natural capital
it had in the Catskill mountains for the remediation and there
is now an effective payment system that goes on with the people
for managing that land in that appropriate way to provide the
purification in the water services.
In Japan, in a very similar situation, they looked
at the development of an estuary until they found out that each
hectare of the mudflats contained the lug worms that remediated
the effluent of 100,000 people. To have built the separate sewage
facilities needed in default of the lug worms would have meant
that the development was no longer financially viable. It's simply
looking at those sorts of costs and benefits and saying, "These
are real costs and benefits". It's not that there aren't
other values attached to having mudflats and an estuary, in terms
of the birdlife and the habitat and the aesthetic and spiritual
benefits that one gets from that environment, but it's a question
of looking at the very real costs and benefits.
Chair: Zac, did you want to come in?
Zac Goldsmith: I was about to ask for
practical examples.
Chair: You have them.
Q135 Martin Caton:
How can the Government ensure that it deals with all three strands
of sustainable development—economic, social and environmental—in
developing its policy and programme?
Mr Gardiner: Is
that to me?
Martin Caton: It is to
whoever feels they can make a useful contribution.
Dr Fankhauser:
If they're all quiet, let me have a go. One of the aggregates
that people are using is to incorporate sustainable development
into macro-economic language— the sort of language that
Ministers of Finance and Treasury officials understand. One of
the concepts the Treasury officials understand is savings. You
can translate the savings rate, which is a physical economic concept,
into a sustainable development or adjusted savings rate; it's
a concept that the World Bank is using. What you then do is start
off with your economic savings and you add the social and the
environmental capital aspects to it. You increase your human capital
every year as a society through things like education, so you
can measure that and add that to your economic traditional savings
rate. You depreciate or increase your environmental capital by
depleting your natural resources, cutting down your trees or preserving
your eco-systems. You can value that and you adjust your savings
rate for that. So that's one example. You start off with an economic
concept that Treasury understands, namely savings, and you adjust
it for human capital, social capital or sustainability—if
you will—environmental capital, (environmental sustainability)
and you end up with an aggregate number that is comprehensive
sustainable development.
Q136 Martin Caton:
Can I just say that some other witnesses we've had, or at least
evidence we've had, suggests that a fundamental problem is this
add-on approach—at the core is the economic and then you
add on the social and the environmental? The economic always trumps
the other two pillars. Do you see any justice in that particularly?
Dr Fankhauser:
The first thing to say is I'm not sure the economic always trumps,
in fact, I'm pretty sure it doesn't always trump. On the question
whether adding on is the right way of going about it, you're absolutely
right; it doesn't always make sense to just add things up. The
question you have to answer is to what extent you can replace
man-made capital as it were and environmental capital. Does an
extra TV set make up for a lost species? In that particular example,
it doesn't, but in Barry's Catskill example, you could say it
could. You lose the Catskills and you build a treatment plant—New
York had the same odds. In that case there was an opportunity
to substitute but in many other cases the substitution will not
be possible and then you shouldn't add up.
Q137 Zac Goldsmith:
Can I just jump in? On that example and the other examples that
Barry gave, it is economics that trumped. It's a question as well
as the statement I think, that when you add a new layer of accounts
and you take account of things that have value that are otherwise
not currently valued, decisions that may appear commercially attractive
one day, appear less commercially attractive the next day. Now
I'm assuming that is pretty much the case with all the examples
you've just given. Those were economic judgments that were made,
based on a complete set of information.
Mr Gardiner: I
think that's very helpful because I think the difficulty in the
past and the way in which the environment has been ridden roughshod
over has often been because the true value of natural capital,
the true value of the environment, has never been cashed out and
it's never been shown to have an economic value. As I say, I'm
really keen to make it clear that we're not trying to say economic
value is the only value that exists here. There are other values
that exist, but the environment has them all and, in the past,
it's very often been the case that we've thought, "Well,
it has aesthetic value". We all like to have lots of species
and biodiversity and that's good in and of itself; it has intrinsic
value, it has spiritual value, it has aesthetic value. What we've
been very bad about is realising it has hard cash value as well.
When you put that into the equation, very often the environmental
solutions become a lot more powerful and the environmental argument
then trumps the otherwise purely economic one.
An extremely good example, if I can give more here,
is in what's going on at the moment in and around New Orleans
after Hurricane Katrina. The US Army Engineering Corps came out
with the extraordinary statement that every levee that had watershed
protection, wetland protection, remained intact. Every levee that
did not have wetland protection was breached. At the moment, the
US Army Engineering Corps is building a 350- mile ring of concrete
and steel around that city at a cost of $16 billion. Yet the reason
that Katrina and hurricanes are coming in over the levees is that
the cypress-tupelo swamp
that used to exist there has been destroyed at the rate of one
acre per 48 minutes over the past 35 years. Each mile width of
cypress-tupelo swamp cuts down the surge swells during a hurricane
by six feet. That's the real cost of losing that swamp. The real
cost of losing that swamp was the $125 billion that Katrina cost.
It's the $16 billion that it's costing to build that ring of steel
and concrete around the city, and all because, in 1956, they decided
that they would make the navigation on the lower part of the Mississippi
River a lot straighter and easier and they cut through the swamp.
The new channel killed off, through salination, the old cypress-tupelo
swamp.
Chair: Charles, you wanted to come in?
Mr Seaford: Coming
back to your question about the different forms of sustainability,
I just want to add that what they all have in common is perspective
on the long term. In a sense, although you can reduce everything
to an economic calculation, when you're looking at the long term,
it becomes increasingly difficult because there's more and more
uncertainty as you look out beyond the short term and medium term
perspective. In the process of deciding what to do, you can no
longer rely purely upon that kind of economic analysis. That is
the reason why we were proposing a unit outside the Treasury because
we think that there are strong institution biases within the Treasury
that mean that although it's perfect for the kind of thing that
you've been talking about, I believe there is a need for people
to take a different strategic perspective that doesn't reduce
to the "certain" analysis that economists tend to favour.
If I can just go back to the point about the
Treasury and the Cabinet Office, I totally agree that you need
to be tied into the people with the money; that's where the power
is and that will always be where the power is. I am not in any
way disagreeing with what has been said, but whether that power
is located in the Treasury or whether it's located in the Cabinet
Office is a separate issue.
Mr Gardiner: I
have two things to say on that, if I may? The first relates to
the whole reason that GLOBE has advanced this natural capital
action plan and the valuation of natural capital. We've done this
over a period of 18 months with more than 100 legislators in 35
different countries, always on a cross-party basis, because that's
how GLOBE functions in each of the jurisdictions that we operate
in. The model that has been agreed is precisely that it should
be located in the Ministry of Finance. Legislators across the
world do not believe that unless it's located in the Ministry
of Finance, it will work. I am not just saying that as one individual
partisan—we've tested these proposals as policies with legislators
and these are the policies they've bought into. If I can just
also add, Chair, again I hope the Committee has a copy of the
document, "Natural capital: the new political imperative",
which provides a whole set of examples from around the world in
which legislators and different legislatures have advanced that.
Mr Seaford: You're
probably right—perhaps it should be located in the Treasury.
I just think that would have to be handled with great care to
make sure that the whole process isn't captured by the existing
Treasury view. For what you're describing, Barry, I can see it
works perfectly, but, for what I am describing, you would have
to take great care that the whole thing wasn't captured by the
existing Treasury view of the world. That's the only point I'm
making.
Chair: There's also the
cross-cutting issue.
Mr Seaford: Exactly
and it would have to be done strategically. You would have to
get all the Treasury officials going out and engaging with everyone
around the country. Maybe that would happen, but it's going to
take some effort.
Q138 Martin Caton:
All your inspiring examples are in other parts of the world. Can
I ask you, all of you, how is the UK Government measuring up to
bringing these three pillars together in the sustainability agenda?
Mr Gardiner: I
am hugely heartened that it is something that is seeping out of
DEFRA and I think beginning to get traction in the ears of other
Ministers and Ministries where it may make an impact. I think
it's hugely positive that it is likely to be something that is
featured, I hope very strongly, in the White Paper that DEFRA
produces. I would hope that, with the support of the Cabinet Office,
it would then be taken up at the highest levels in Government.
I think if you look at what's happening internationally, the World
Bank has just launched its new global partnership to Green National
Accounts. There are researchers at the World Bank, Langer and
others, who have been working on these ideas as theories for years.
They've been working on them for between 20 and 30 years, but
it's not until now that the World Bank has picked up and said,
"We're going to launch this as the pilot initiative with
Ministries of Finance in key countries, both developed and developing".
I've had two meetings with Bob Zoellick of the World Bank and
GLOBE representatives, and he is really aware of the impact that
this can have. I think our own Government is not blind to that
and I think there can be a very good all-party consensus that
says, "We see that this makes sense. We want to implement
it and we need to get on with it".
Q139 Neil Carmichael:
First of all, surely economics in its broader sense is all about
resource management and the scarcity of resources and so forth.
It is not necessarily a question of finance only; it's everything.
The fundamental issue about equilibrium is where the scarcity
is and where the supply is. You apply that logic to the whole
issue, which is why I find it so baffling that in terms of protecting
the environment, sustainability and so forth, we don't seem to
be applying that logic. I would just like to ask for a brief comment
from all of you as to why we do not, because we're obviously not,
otherwise we wouldn't be sitting here.
I have a feeling that the reason why everybody thinks
the Ministry of Finance is the place to be is that they know it's
very powerful in Government and the assumption is that because
it's so powerful, it will be able to drive forward the appropriate
changes. A key thing is to make sure that there is something driving
the right kind of changes. How can we guarantee that Ministries
of Finance will always do that?
Chair: Can we have brief
answers, please? Charles.
Mr Seaford: Why
doesn't the economics take into account the environment, which
it should? There are a number of reasons. Firstly, because the
discipline of environmental economics is relatively new compared
with the discipline of economics as a whole, it just takes time
for these to filter through. That's one reason. I think there's
a second point though, which is that the environment is more difficult;
there's less certainty and there's a theological certainty about
the core of micro-economics that is very emotionally satisfying.
Neil Carmichael: I don't
think many economists would agree with that.
Mr Seaford: You
read what Treasury economists say; you listen to it. It's very
beautiful in a way. It's a wonderful, enclosed system that is
quite similar to certain varieties of theology.
Q140 Neil Carmichael:
I think you've just inadvertently put your finger on the problem.
It is too enclosed, isn't it?
Mr Seaford: Yes,
exactly.
Q141 Neil Carmichael:
I'm asking why? I think we know it's enclosed. I think the question
is why is it so enclosed?
Mr Seaford: The
reason is because that is emotionally satisfying and institutionally
satisfying. That's how you get promoted. You don't get promoted
in the Treasury by saying, "This whole system's complete
rubbish. I think we should start again". You get promoted
by saying, "This is very good; just a tiny little tweak here
or a tiny little tweak there". That's how you get promoted,
so that's the answer to your question.
Dr Fankhauser:
Just very quickly on what you've just said. The first thing I
would say is that good economics does integrate the environment.
If you look at good textbook economics, of how public economics
and cost-benefit analysis should be done, the environment is in
there. So the question is whether in the real world applied economics
is as good as the textbook? The answer is no. There are probably
two reasons at least I can think of. One is a methodological one
in that to do good economics and put the environment into those
processes and analyses is expensive, and not necessarily cheap
and straightforward. The second is an institutional one in that
there's some inertia in the system that uses the old-fashioned
approach, as it were, as opposed to a new one.
Q142 Peter Aldous:
You have put forward two fascinating alternative models. Can I
just come back to the third model, which is what the Secretary
of State, Caroline Spelman, put forward last week with DEFRA very
much taking the lead role. That is where the resources are at
the moment. Rather than reinventing the wheel, do you think that
her model can work?
Mr Gardiner: No.
Q143 Peter Aldous:
Why not?
Mr Gardiner: If
you wanted to do a pecking order of Departments of Government,
nobody around this table would say that DEFRA was the most powerful
Department. If you did a pecking order, I suspect that most people
round this table would say that it was fairly low down it. Let's
be realistic. Of course, a Secretary of State will big-up the
capacity of their Department and the influence and the power of
their Department and so on. Goodness me, Caroline doesn't even
have a seat at the Cabinet Sub-Committee that deals with these
things. So let's have some perspective on this. If this policy
is owned by a separate environmental Department, it will not happen.
The only way of getting this to happen is to have it owned, not
just in the Treasury but by a special and senior Minister created
for the purpose of doing this job in the Treasury. That's how
it will happen.
Q144 Zac Goldsmith:
Can I just quickly come in on that point? I totally agree with
you. The ownership needs to be at the level of the Treasury. A
lot of people who have given evidence over the last week have
said the same thing but there's a difference between the workload
and the ownership. First of all, I would have thought that DEFRA
is a Department where natural capital is the biggest issue by
far. It's also the place where there's most expertise and there's
a real appetite there, as we heard last week, for leading on this
agenda. Do you agree there's a distinction between the workload
and the responsibility of carrying this assessment out and the
ownership that ought to be considered?
Mr Gardiner: Again,
thank you. I think that's extremely helpful. Yes, I do. In the
proposals that we put forward, we've also said that there should
be an external committee. We've specifically put in a role for
the National Audit Office; again as a way of making sure that
these policies are embedded, which goes back to Neil's point.
This has to be holistic. It hasn't to be locked in the Treasury,
it has to be held to account all across Government so that all
of these strands are brought to bear. That happens through your
own Committee, it happens through the EFRA Committee, it happens
through the ECC Select Committee, it happens through those Departments.
It will take all that combined work in Government, and above all
parliamentarians doing what we are supposed to do in holding the
Government to account, to make sure that it happens.
Q145 Chair: But surely
the issue is that this is Parliament—we are Select Committees,
we are not Government Ministers nor are we Government Departments.
In the previous Government, up until some time before the general
election, a cross-cutting committee existed that was meant to
bring the leadership from the top down to exercise that wide-ranging
scrutiny and appraisal. Why did that not work?
Mr Gardiner: Chair,
you're absolutely right. It didn't work. Again, if I can go back
in time; in 1956, the US Department of the Interior commented
on the new river channel that I described earlier and said that
it could cause severe environment consequences. That was seen
as an environmental commentary on what was otherwise an economic
decision and no matter how good and how great the people on a
sustainable development committee might be, no matter how esteemed
in their own environmental sphere, they will always be seen as
giving commentary upon what is fundamentally an economic and political
decision. It will be environmental commentary, which is valuable
but it doesn't control. That's why it needs to be in the Treasury.
Mr Seaford: Cross-cutting
has never worked or very rarely, and I agree with Barry on this
one. What unifies people is a plan, a sense of where we're going,
a sense of moving forward. Our perspective would be that you only
get that cross-Government agreement through thinking strategically.
Q146 Chair: So you
want all the Departments of State to sign up for the ride.
Mr Seaford: They
will have to do their bit and they will have to negotiate, but,
on the details, yes.
Chair: We need to move on.
Q147 Caroline Lucas:
Thank you. I wanted to move us on a little bit more to the scrutiny
role because we had an interesting debate about where the drivers
need to be for sustainable development across Government, whether
it's in the Treasury or in the Cabinet. What about the role that
the SDC used to carry out of real scrutiny and not just external
scrutiny but working very hard within Departments, giving support,
giving advice, giving that quite labour intensive input? In the
absence of the SDC, where do you see that coming from? You began
to touch on it, Barry, when you started to talk about the NAO
but can you say a bit more about that scrutiny role in particular?
Mr Gardiner: One
of the things that we were very keen to do in the GLOBE process
that we put together was to involve the former Comptroller and
Auditor General in that process, because I don't think anybody
in the world had more experience of that audit and scrutiny function
of Government. Also, it fits very naturally with the fact that
in most legislators around the globe, it is Parliament that has
the power of scrutiny as we do here within the Public Accounts
Committee, the Environmental Audit Committee; it is a power reserved
to Parliament. Therefore, we think it's very important that the
audit function or the equivalent of our National Audit Office
should always have a very key role in ensuring that this is being
performed properly. We will need not just auditors; we will need
key scientific interlocutors as well and that's why, as part of
the recommendations that we put forward, we said that there would
need to be some external independent advice that is able to work
with Government to achieve that.
Chair: Any comments, Charles?
Mr Seaford: Broadly
speaking, I agree. However, as a matter of fact, if you're talking
about audited policy, the Sustainable Development Commission didn't
do very much of that, it was stronger on the operations and procurement
side. Clearly, for this Committee, the appropriate form of advice
is that offered by the National Audit Office, obviously also working
for the Climate Change Committee.
Q148 Caroline Lucas:
How do you see that really working though because I was a bit
disturbed when the Secretary of State came and spoke rather airily
of this Committee taking on lots of the role that the SDC has
been playing in the past? We're all terribly committed I'm sure
but, nonetheless, the SDC had a lot of staff at its disposal in
a way that we don't. So practically speaking, would you imagine
a secondment of NAO staff auditors to us or how would you see
that working in practice?
Mr Gardiner: I
think the model would be much more along the lines of the independent
Climate Change Committee on which there are scientists and economists
who are able to exercise their professional skills to look at
an issue. I defer to Sam, who sits on Climate Change Committee,
and who may want to add something, but I envisage that the proposed
model would be a similar parallel body that has the power to make
recommendations and decisions.
Dr Fankhauser:
If I may very briefly; as Barry says, I'm a member of the Committee
on Climate Change, which is an independent committee that works
reasonably well in terms of independent scrutiny. I see some differences
between the climate change agenda and the sustainable development
agenda in the sense that the climate change agenda is internationally
driven. There's an almost "outside the UK" target because
there has to be an international agreement to decarbonise the
whole world. For that reason alone, in a sense, you need the external
scrutiny that something like the CCC can provide. There may be
a role for that on sustainable development but sustainable development
is much more an issue of good internal management and managing
your own economy properly. Decarbonisation has to become that
too, but sustainability is perhaps, more mainstream, it's more
bread and butter. The balance of power is probably more towards
exercising scrutiny internally in the Government and in Parliament,
and internal audit, rather than through external scrutiny.
Mr Gardiner: Can
I also just point out that we do have bodies such as Natural England
and one of the worries I would see at the moment is the way in
which their resources are being trimmed, because if sustainable
development is an area of Government that is really going to take
off, Natural England's powers as an arm's length advisory body
to Government will need to be beefed up, not trimmed down.
Mr Seaford: Can
I just make one small additional point? It's much easier to audit
something if you're auditing it against something. In other words,
saying "This is the agreed strategy, this is where we're
going, this is what we're going to do" rather than just saying,
"Well, you're doing quite well; you're not going quite well".
So the proposals we were putting forward for the audit function
were very much to be seen as the other half of the strategy development.
Is the strategy adequate? Are we performing against the target
set in that strategy? That is how the Climate Change Committee
works.
Q149 Zac Goldsmith:
I have one thing to add, which is slightly off topic, because
we don't have that much time. If this Committee were to try to
make suggestions and recommendations as to the kind of model the
Government should adopt, what would be the one, two or three countries
that we should look to for inspiration, not just in terms of individual
projects you described already, but in terms of the approach of
the Finance Department in different Governments? Who is leading
the way on this issue?
Dr Fankhauser:
I don't know about the best institutional arrangements, but one
example that's always used in terms of good environmental management
and the good management of the natural resource assets of the
country is, surprisingly, Botswana, which has very disciplined
rules as to how the diamond wealth and other natural resources
get accounted for, including the depreciation every year and what
you do to compensate for the depreciation of those assets. There
are probably countries closer by that are similarly good at that,
maybe Norway.
Mr Gardiner: Mexico
is another example, and there are other countries that have gone
some way down the road to recognising payment for ecosystem services,
for example, Costa Rica. But this is something that is very much
in its infancy and we need to be championing and taking it to
the next phase.
Q150 Neil Carmichael:
This is not in connection with the questions that we have been
asking, but I wanted to probe the role of arm's length Government
agencies. How can we be sure that we can hold them accountable
on questions of accountability? We're already worrying about whether
DEFRA is powerful enough but just imagine the agencies that are
responsible to DEFRA. How are we going to direct them to be more
interested in the environment?
Chair: No answer. If not,
we are beginning to run short of time. I'm conscious that Caroline
Nokes wants to come in.
Neil Carmichael: Will
you think about it because it's an important question?
Chair: Please write in
with the answer.
Q151 Caroline Nokes:
Unfortunately, I'm going straight back to arm's length bodies.
Barry, you made a comment about arm's length bodies needing to
have their role beefed up rather than trimmed down, but we have
the Secretary of State saying that the Government should not be
paying arm's length bodies like the Sustainable Development Commission
to be holding the Government to account. Is that a workable strategy
and what are the risks involved?
Mr Gardiner: I'm
not here either to agree or disagree with the decision that was
taken on the Sustainable Development Commission; that's not part
of my purpose. To try and get to the nub of your question as to
the function and role of arm's length bodies alongside Government,
there are clear dangers with such bodies—speaking as someone
who, as a Minster, had to work closely with them—because
they are bloody frustrating things in that when they get things
right, well, it's the arm's length body that decided it or the
regulator that decided it, and when it gets it wrong, well, of
course, it's all your fault as the Minister. So, in many senses,
it's a pure and more accountable Government if it's the Minister
taking those decisions but Ministers cannot expect to have the
wealth of technical expertise that a body like Natural England
has and that's why we have those advisory bodies to say, "Look,
I don't know about coral sea fans off the south coast of England
but I know a body that does. It's called Natural England."
They've got technical experts; they go down, they photograph the
blinking stuff. They show you what the trawlers have dredged.
They show you what it looked like with the pink sea fans beforehand
and they show what it looked like afterwards—a desecrated
graveyard. They then come back and they provide you with the evidence
and then, of course, you go and you take the wrong decision. At
least you're taking it on the basis of clear evidence and that's
what we need; as Government, as Ministers, that's what you want.
You want somebody who's going to present with those facts and
say, "These are the parameters that your decision has to
take account of".
Mr Seaford: A very
quick comment on that. Arm's length bodies need to have a very
clear mandate—no mission creep. They need a very clear mandate
that is linked, as in the case of the Climate Change Committee,
to statutes, which stops them getting too big and going off and
doing all kinds of things that aren't relevant—which is
also relevant to the point about trimming down costs—and
also gives what they have to say more credibility and more authority.
Q152 Chair:
How should Governments allow organisations like yours to get involved
in this process of scrutiny?
Mr Gardiner: As
GLOBE, we are a group of legislators both in this Parliament and
across the world within the G20 broadly, but in other countries
as well, and therefore it is simply our role as parliamentarians
that means that we have a responsibility to scrutinise what Government
do. In some of our Parliaments, of course, parliamentarians can
be Ministers. In many legislatures that's not the case, but always,
always, whichever legislative jurisdiction you're in, it is the
parliamentarians' role to be holding Government to account. I
think that's something that we feel within GLOBE has been very
useful in this process, because we believe there is a natural
location here for us to be looking, scrutinising, auditing what
the Government do in relation to the natural environment.
Chair: Charles, did you want to come
in on that last question?
Mr Seaford: Yes.
I would say what any NGO like ours would say, that we can add
more value through informal discussion than through formal stand-off.
Chair: Well, at that stage thank you
very much, all three of you, for the time that you have given
us this afternoon. Thank you.
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