Select Committee on Economic Affairs Minutes of Evidence

Examination of Witnesses (Questions 120-129)

Professor David Henderson

25 JANUARY 2005

  Q120Lord Sheppard of Didgemere: I do not know how you measure the audience, or the family audience, but are you winning or losing the debate?

  Professor Henderson: You would have to ask a more neutral observer.

  Q121Lord Sheppard of Didgemere: How does it feel to you; you are not about to give up, are you?

  Professor Henderson: For me, if I were stating the case now, I would make two changes in my arguments. They do not weaken the arguments, in my opinion, I would just state it in a different way. First, I would withdraw the criticism, or, at least, not emphasise it so much, that the scenario-builders' procedure exaggerated emissions projections. The reasons are rather complex reasons, which I will try to sketch out. In fact, they have a built-in, legitimate, non-exaggerating factor and I had not taken account of that, the Norwegians pointed it out, so I would not protest. For reasons I have stated at the beginning, that does not weaken the other reasons I have for thinking that the SRES should not be taken, as it is being taken, as the basis for the Fourth Assessment Report. The other point I would make is, and this is something, as counsel for the defence for the scenario-builders, I would certainly argue, when we wrote we said, "Look, you're ignoring clearly-stated doctrine on the use of PPP. Nothing could be clearer than what is said in the system of national accounts in 1993, which is not referred to in your report, that purchasing power parities must be used and market exchange rates must not be used for inter-country comparisons do output." In saying that, we thought we were representing a clear majority of others in the profession of economics and statistics and economics. Not for the first time in my life I discovered that our profession—or trade, as Lord Lawson would prefer to call it—is more disordered than I thought. Indeed, the scales began to drop from my eyes in April last year, my Lord Chairman, when seated in the House of Lords, listening to questions being put by Lord Taverne and by Lord Lawson himself about the handling of economic issues by the IPCC,I heard one of your noble colleagues actually say that the choice between MER and PPPs was a matter of taste. I must say, that rather shocked me. We have found other instances since. Economists are less agreed than I thought, but that has only made me feel that more people than I thought have to be brought round to what has been called the creeping acceptance of purchasing power parity.

  Q122Lord Sheldon: If you had the responsibility, and we have dealt with some of these matters already, how would you have gone ahead in looking at the IPCC process, how would you have started it?

  Professor Henderson: That depends what responsibilities you are putting on my shoulders, Lord Sheldon.

  Q123Lord Sheldon: The lot.

  Professor Henderson: If I can answer that in a way which perhaps you did not quite intend. If my responsibilities were those of a Treasury official—and I have been a Treasury official, and when I was in the OECD my clients were Treasury officials—I would have looked at this whole process with a much more critical and much more worried eye. This echoes a point you yourself were making earlier in the Committee's hearing, because I have the feeling that quite large, and possibly very large, expenditures are being undertaken on the basis of what is thought and believed about what might happen in the very long run, beliefs which, in fact, are not strong enough to bear this foundation. If I were a Treasury official I would be worried about that and I think there should have been more worry.

  Q124Lord Sheldon: Would you have settled for 30 years rather than 100 years, is the answer?

  Professor Henderson: I would have said, "Let's look very hard at 30 years and let's not do so on the basis just of the people you have involved now," I am told there are now 800 members of the Government Economic Service. Allow me to boast. Two score and four years ago I wrote an obscure article advocating the creation of a Government Economic Service, though I do not know that it had much to do with the result. I feel very strongly about the use of economics in administration. I cannot think why it is that, with so many of these people who seem to be involved in this process, the Treasury have not asked themselves the questions we have asked and made the points we have made, and I hope the Committee will ask the Treasury that, because certainly they have not responded to what I have been saying.

  Q125Chairman: Do national governments have much say in who is appointed to these bodies?

  Professor Henderson: Yes, almost the entire say.

  Q126Chairman: They have the complete say and they do not want to involve themselves?

  Professor Henderson: They have delegated to IPCC, but the whole process, quite rightly in my opinion, is closely supervised by governments. The IPCC is technically the creation of two UN agencies, so it reports to them, but the UN agencies themselves are government-controlled and they report to their member governments. The member governments are very strongly represented, as they are bound to be—again I think this is quite right—at the IPCC plenary meetings and particularly in the last stages of preparing the big reports, the Summaries for Policymakers. My criticism is of government departments just as much as of the IPCC.

  Q127Lord Lawson of Blaby: Specifically, what would you like to see the Treasury doing now that it is not doing?

  Professor Henderson: I would like to see the Treasury making it difficult for the IPCC to continue with business as usual, which clearly they are determined to do. I have a very specific way into that, which I have suggested, in fact, more than once in different places. After talking to all the others concerned in other countries, the Treasury should instruct its delegates to the next meeting of the OECD Economic Policy Committee to request the Committee to look at these issues, to open the issues that we have opened up.

  Q128Lord Sheppard of Didgemere: I want to ask a bottom-line question, of which I realise there are many, many variables. Supposing we, or more relevantly the IPCC, accepted all of your arguments and rolled over, what would be the temperature range that you would be projecting, all other factors remaining the same? Is it quite a dramatic impact or small?

  Professor Henderson: I am worried about the way a process is being handled rather than the final results, which are very difficult for a lay person to judge. I do think that there is in this whole process what I might call a tendency towards alarmism, but I may be wrong.

  Q129Chairman: Thank you very much. I am really very grateful to you and the whole Committee is very grateful to you for coming to give us your views on these things and answering the questions in a clear and precise way. It has been very helpful to us in our inquiry.

  Professor Henderson: Can I say just one thing, my Lord Chairman. If at any stage you or any member of the Committee, or your Special Adviser or the Clerk have any questions or points on which they would like my opinion or to have any information from me, I am at your disposal.

Chairman: Thank you very much indeed. We are most grateful to you.

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