Embedding sustainable development across Government, after the Secretary of State's announcement on the future of the Sustainable Development Commission - Environmental Audit Committee Contents

Examination of Witnesses (Question Numbers 124- 152)



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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