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Treasury must factor in long term impact of policies on environment, says Committee

By 17th November 2016 News No Comments
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The Environmental Audit Committee is calling for the Treasury to “green-check” all its decisions after a major investigation into its approach found that it puts short term priorities over long term sustainability – potentially increasing costs to the economy in the future, and harming investor confidence.

Following an investigation launched in February 2016, the Environmental Audit Committee has finally issued a report of its findings in which it concludes the Treasury could be doing more to ensure sustainability features at the heart of Government decisions.

Mary Creagh MP, the Chair of the Environmental Audit Committee, said:

“The Treasury is highly influential and uniquely placed to ensure the whole of Government works to promote sustainability. But we have seen considerable evidence that it fails to do this.

“The Treasury tends not to take full account of the long term environmental costs and benefits of decisions which would reduce costs for taxpayers and consumers in the long run.

“On the carbon capture and storage competition and zero carbon homes we saw the Treasury riding roughshod over departments, cancelling long-established environmental programmes at short notice with no consultation, costing businesses and the taxpayer tens of millions of pounds. With a week to go until the next Autumn Statement, we hope our inquiry will be a wake-up call to the Treasury.”

In a summary of its report, the Committee says it ‘heard multiple examples of where the Treasury has ridden roughshod over other departments’ objectives, changing and cancelling long-established environmental policies and projects at short notice with little or no consultation with relevant businesses and industries’ and that ‘these decisions caused “shock” and “uproar” among sectors affected, with some businesses describing them as “devastating”’.

All these changes, taken together, have had a damaging effect on investor confidence it says.

The Committee also found that ‘the technical and political frameworks the Treasury uses to support these choices consistently favour short-term priorities over long-term sustainability, and comparatively expensive, glamorous low carbon technologies (e.g. offshore wind, wave, tidal and nuclear) have received more attention than cheaper alternatives (e.g. onshore wind and energy efficiency) which might represent better value for money. In part, this is because the frameworks do not take adequate account of future environmental costs and benefits. As result, a number of Treasury’s decisions could lead to higher costs to the economy in the future. Cancellation of the Carbon Capture and Storage Commercialisation Competition was a case in point.’

Read our thoughts on the lessons for businesses.

If the Treasury is going to improve its performance and provide greater leadership on environmental sustainability, the Committee says that it must:

Ensure Spending Reviews provide strong incentives for collaboration between departments on environmental matters;

Incorporate new evidence on long-term environmental risks and benefits into its frameworks for assessing the value for money of government interventions;

Increase transparency and accountability by providing publically available justifications for its decisions;

Work with other departments whose policies affect the environment to ensure the Government’s new industrial strategies promote sustainability.

The full report is available to read here.

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