Spending Review 2002
50. The Spending Review is a relatively new process
which is still developing. It raises questions, for example, about
the relationship between departmental objectives and Public Service
Agreement targets, accountability for any shared targets, and
the manner in which targets are overwritten in successive spending
reviews. We have previously expressed our concerns over the extent
to which environmental aspects were built into the Comprehensive
Spending Review (1998) and Spending Review 2000.
The Spending Review 2002 (SR 2002) contains some positive developments,
including the publication of the environmental guidance to departments
(following a written request by this Committee for it).
We note that the nature of previous guidance was almost entirely
defensiveamounting to little more than a warning to departments
that they would have to be prepared to defend their decisions
in the face of scrutiny by this Committee. We therefore welcome
the new requirement this time round that each department must
submit a sustainable development report (SDR) which sets out how
its bid contributes to sustainable development.
51. While SR2002 therefore represents a significant
step forward in mainstreaming environmental issues alongside social
and economic, we remain concerned about a number of aspects. First,
the Treasury has now confirmed Mr Boateng's insistence that the
SDRs submitted by departments will not be made publicly available,
nor even made available to us.
We can well understand the concern of the Treasury in not wishing
to make these reports public during the Spending Review process.
But we see little reason to keep them secret once the conclusions
of the review have been made public: to do so invites accusations
of ineffectiveness and removes departments' ability to defend
their performance. We expect to receive copies of the sustainable
development reports submitted by departments as part of Spending
Review 2002, so as to be able to audit them in line with our remit
from the House.
52. We are also perturbed that the Financial Secretary
categorically ruled out the possibility of a role for the National
Audit Office (NAO) in auditing departments' SDRs.
This is even more surprising in the light of the Government's
eagerness to involve the NAO in the audit of the Budget assumptionsa
role which has now become fully established. It seems inconceivable
to us that the Treasury can countenance such secrecy and lack
of accountability, while at the same time claiming that it wishes
to pursue a more open and inclusive approach. If the Treasury
continues to insist on keeping secret the sustainable development
reports submitted by departments, then it mustat the very
leastagree to allow the National Audit Office to audit
these reports and report the results to this Committee.
53. Our second major cause for concern relates to
the manner in which these SDRs will be evaluated. We have established
that the Treasury is not intending to involve the SDRs within
DEFRA but will rely on its own internal staff resources.
While we can appreciate that the SDU may have a role in helping
some departments to prepare their SDRs (as indeed the Treasury
argues), a number of larger departments have created their own
internal sustainable development units. We have already raised
in our First Report the issue of the role and location of the
SDU. This particular
issue gives substance to our concern. If the Sustainable Development
Unit is indeed a crossgovernmental resource (as the Government
have previously argued) then it should be involved in evaluating
the sustainable development reports submitted by departments as
part of their Spending Review bid. Otherwise, there is a clear
need for a central SDU to provide just such expertise.
54. Linked closely to this is our third main concernthe
extent of suitable expertise within the Treasury to evaluate these
departmental SDRs. The Treasury itself has failed to establish
an SDU within it, and we understand that the main input into evaluating
these reports will be from the section which monitors DEFRA.
While such staff may clearly have expertise in some of the more
'traditional' environmental concerns, they will not necessarily
have the expertise to spot the scope for synergies across the
range of policy areas which they will be confronted by in assessing
these reports. Furthermore, information from the latest Greening
Government report indicates that the Treasury does not have
a raising awareness strategy for sustainable development or provide
any training to its staff on sustainable development issues (with
the exception of one element of the induction course for all new
staff). This situation
is entirely inadequate.
55. We recommend that the Treasury should establish
a suitable internal unit which is adequately resourced and staffed
so as to evaluate the sustainable development reports submitted
by departments as part of Spending Review 2002. Such a unit could
also encompass other responsibilitiesin line with earlier
recommendations in this reportsuch as the responsibility
for environmental taxes, for developing resource productivity
indicators, for monitoring the adequacy of environmental appraisal
in new policy proposals, and for coordinating a more strategic
approach to research and development in all these areas.
56. Our fourth main concern relates to the number
and nature of the targets put forward for Public Service Agreements
(PSAs). The environmental guidance states that "It is expected
that most targets will be rolled forward from SR2000. The Chief
Secretary is also looking for a reduction in the overall number
of targets, so that departments are even more focussed on what
really matters. Departments are not expected to add new 'sustainable
development' targets to their PSA". We are deeply perturbed
at the negative approach adopted in the environmental guidance
for Spending Review 2002 to sustainable development targets. This
conflicts directly with evidence given to us by the Secretary
of State for Trade and Industry who told us that she expected
to see a lot more targets relating to sustainable development
as a result of this Spending Review.
57. Moreover, the environmental guidance goes on
to state that "The main Guidance sets out the conditions
in which shared targets are appropriate. An analysis of sustainable
development impacts is one tool that departments may wish to use
when considering whether a particular outcome warrants a shared
when we asked for a copy of the relevant section of the main guidance,
the Treasury denied our request.
It will therefore be impossible for us to evaluate whether departments
have exploited the scope to set shared targets which the guidance
allows. Yet this is of crucial importance, given the essentially
'joinedup' nature of sustainable development. We strongly
regret the refusal of the Treasury to provide us with the Spending
Review main guidance. This contrasts markedly with its readiness
to make public the environmental guidance, and vividly demonstrates
that the Treasury will only share what it does not value or consider
58. We also object to the tendencywhether
intentional or notto categorise any objective, even if
purely economic or social, as contributing to sustainable development.
In the table in the Green Ministers second annual report (November
2000) which sets out how PSA targets relate to sustainable development,
many of the targets put forward by departments had no environmental
aspects to them but were purely economic or social.
56 Third Report from the EAC, Session 1998-99, on
The Comprehensive Spending Review and Public Service Agreements,
HC 92. Back
The Treasury's guidance is printed in the second volume of this
report at Ev. 68. Back
QQ. 204; 208. Back
Q. 209. Back
Ev. 14, question 16. Back
First Report from the EAC, Session 2001-02, on Departmental
Responsibilities for Sustainable Development, HC 326. Back
Ev. 14, question 16. Back
The Third Greening Government Annual Report, November 2001.
Detailed information on individual departments can be found in
volume 2 which is available only on DEFRA's Greening Government
Minutes of Evidence taken before the EAC, Session 2001-02, on
Departmental Responsibilities for Sustainable Development,
HC 326, QQ. 5-8. Back
Ev. 68. Back
Ev. 14. Back