Recommendation 65

HM Government · verbatim extract Accepted

As set out in the government response to the PAC, at spending reviews, departments are required to assess the costs and benefits of their proposals—including climate and environmental impacts—following the framework set out in the Green Book. Treasury spending teams consider these impacts when assessing the value for money of any proposal. HM Treasury continuously improves the Green Book. For example, in 2018, the Green Book and its supplementary guidance were revised with support from the Natural Capital a natural capital approach (Defra’s ‘Enabling a Natural Capital Approach’ (ENCA) provides further data, guidance and tools to support policymakers). HM Treasury has also convened a group of experts, including academic economists and scientists as well as practitioners, to produce supplementary guidance on Biodiversity Valuation for the Green Book, in addition to the guidance on natural capital. This world-leading guidance will complement the Environment Bill’s biodiversity net gain provisions in supporting better consideration of biodiversity in decision-making. With regards to the Environmental Principles Policy Statement, the exemption on the ‘allocation of resources’ refers to central spending decisions only individual policies that require spending will still need to consider the policy statement. At fiscal events and Spending Reviews, decisions must be taken with consideration to a wide range of policy priorities. These include sustainable economic growth, macroeconomic and financial stability, and sustainable levels of debt. These issues are too remote from the environmental principles for them to be directly applicable. Taxation, including environmental taxes, raises the revenue that allow us to deliver vital public services. Taxation is excluded from the remit of the principles to provide for maximum flexibility in respect of the nation’s finances. As part of considering tax changes, where appropriate HM Treasury already uses environmental data including that from other government departments and third parties, to assess environmental impacts. At Spring Budget 2021, the government published an assessment of the environmental impact of relevant tax measures—for example in the Tax Information and Impact Note for Plastic Packaging Tax which set out that the tax was estimated to lead to around 40% more recycled plastic being used in 2022- 23, saving nearly 200,000 tonnes of carbon dioxide.