Sustainability and HM Treasury Contents


1.Our remit includes a responsibility to audit the Government’s performance against sustainable development and environmental protection targets.1 Our predecessor Committee carried out this function through a series of ‘sustainability audits’ of government departments.2 This is something we have continued in this Parliament. This report contains the findings of our audit of HM Treasury.

2.We recognise that the Treasury, and indeed the whole Government, has undergone significant change over the past few months. Since our inquiry started, a new Prime Minister has appointed a new Chancellor and a new ministerial team, and the Government has developed a new focus on industrial strategy. This report aims to learn lessons from the past and provide proposals that we hope will be useful to Treasury in the future. In Chapter two we look at the role and influence of the Treasury. In Chapter three we explore how the Treasury takes account of the environment. In Chapter four we assess the Treasury’s track record to date and focus on a number of specific policy areas. In Chapter five we identify areas where it might improve its performance in the future.

3.To support our work we asked the National Audit Office (NAO) to investigate whether the 2015 Spending Review process led to well-informed decision-making in relation to environmental protection and sustainable development (referred to as ‘the report’).3 Separately we asked them to look at whether the Government was meeting its recycling and waste diversion targets and the extent to which the cancellation of PFI credits may have impacted its performance in this area.4 We are very grateful to the NAO for their help and support throughout this inquiry. In addition, we issued two calls for evidence and received 68 written submissions. We held three public evidence sessions with a range of stakeholders including Treasury Ministers and officials. All written and oral evidence can be found on our website. We are grateful to all those who contributed and to Dr Martin Hurst, our Specialist Adviser during the inquiry.

Defining sustainability

4.There are three pillars of sustainability: economic, social and environmental. These pillars of sustainability were brought together in the 1987 ‘Brundtland report’ which set out a definition for ‘sustainable development’:

Humanity has the ability to make development sustainable to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs. The concept of sustainable development does imply limits - not absolute limits but limitations imposed by the present state of technology and social organization on environmental resources and by the ability of the biosphere to absorb the effects of human activities.5

5.The Treasury most frequently uses the term sustainability in the context of economic growth. Its departmental objectives include placing the public finances on a sustainable footing and ensuring the stability of the macro-economic environment and financial system, enabling strong, sustainable and balanced growth.6 Jane Ellison, Financial Secretary to the Treasury, told us that the Treasury “takes sustainability very seriously” and that “sustainable economic growth is absolutely key”.7 However, it was not clear whether the Treasury’s use of the term sustainability aligns with the concept of sustainable development.

6.The Treasury acknowledged the relationship between the economy and the environment stating in written evidence that, ‘there is a complex relationship between the natural environment and economic growth. Environmental capital plays a valuable role in supporting our economy’.8 This was reflected in the views of a large number of respondents to this inquiry. Karen Ellis, Chief Adviser on Economics and Development at WWF, told us for example that the, “environment completely underpins the economy and the economy has a huge impact on the environment”.9 In this report we focus on environmental sustainability.

1 Standing Order No. 152A

2 Environmental Audit Committee, ‘Sustainability in the NHS,’ accessed 2 November 2016; Environmental Audit Committee, Fourth Report of Session 2014–15, Sustainability in the Home Office, HC 222; Environmental Audit Committee, Sixth Report of Session 2013–14, Sustainability in BIS, HC 613

3 National Audit Office, Sustainability in the spending review (July 2016)

5 World Commission on Environment and Development, Our Common Future (March 1987), p16

6 HM Treasury, ‘About Us,’ accessed 18 October 2016

7 Q101 [Jane Ellison]

8 HM Treasury (SAT 0034)

9 Q1 [Karen Ellis]

16 November 2016