Achieving government’s long-term environmental goals

The Department for Environment, Food & Rural Affairs has the policy responsibility for the environment, but not the clout to hold other departments to account or manage trade-offs between policy areas. In July 2018, the Environmental Audit Committee recommended that government needed to do more to ensure that all departments, not just Environment, Food & Rural Affairs, were held to account for oversight of the Plan. But the Comptroller and Auditor General found no evidence of shared ownership of the Plan, with the Implementation Board having no representation from delivery bodies outside of the Department’s own group. Moreover, no other department specifically mentioned the Plan in their single departmental plans for 2019. Government established a new cross- government board for the environment on 2 December 2020, in response to the Comptroller and Auditor General’s finding that joint working between departments on environmental issues was patchy. The Department expects this board will help manage trade-offs between policy areas, but it is not clear how it will decide between competing priorities. All environmental goals are closely linked and require joint working across government. It is therefore crucial that this board has the authority and influence to hold all parts of government to account and has robust processes for evaluating the effectiveness of policies across all departments. 6 Achieving government’s long-term environmental goals Recommendation: After the new cross-government environment board has been in operation for six months, the Department and Cabinet Office should carry out a review and report back to the Committee on the board’s effectiveness to assess whether it has achieved a step-change in accountability and ownership for the environment across government. The review should include whether it has been effective in managing trade-offs between policy areas and in assessing the effectiveness of environmental policies across departments.

Government still does not have a good grip of the total costs required to deliver its environmental goals and funding so far has been piecemeal. The Department received an additional £1 billion in funding for 2020–21 in the Spending Review 2020, though it is not clear how much of this is genuinely new money for environmental work, as this includes a previously announced increase in flood defence spending over the next five years. The Environment Agency and Natural England have a key role to play in delivering the goals, but budget cuts over the last decade hinder their ability to do so alongside day-to-day responsibilities. Neither HM Treasury nor the Department has a good understanding of the total costs required to deliver government’s environmental goals. We recognise that costs cannot be pinned down precisely for such long-term issues, but we do expect the two departments to come to a shared view of the broad scale of costs involved. Without this, government’s approach to funding will continue to be piecemeal, with risks for value-for-money and for whether the goals can be achieved at all. Recommendation: In parallel with developing clear objectives to meet environmental goals, the Department should work together with the Treasury to review and outline the total costs required to meet these goals, and how these will be paid for, akin to the Treasury’s Net Zero review.

Skills gaps in departments and arm’s length bodies jeopardise government’s capacity to deliver on its environmental ambitions. Progress towards environmental goals requires skills across government, and particularly in arm’s length bodies who have key responsibility for delivery of the goals. The Environment Agency has a particular risk of skills loss in nuclear and hazardous waste management, partly due to its inability to pay the market rate offered in the private sector. Moreover, there is more to do to make sure workforces are diverse and reflect the communities that these bodies work with. Progress has been made on gender, with the Environment Agency having a scheme in place to help recruit female engineers, and more than half of the Natural England workforce are women, but both bodies acknowledge that there is more work to do in recruiting Black, Asian and minority ethnic candidates. Government must identify and fill skills gaps through diverse recruitment strategies to ensure it has the capacity to deliver on environmental goals. Targeted interventions such as the Green Recovery Challenge Fund, initially £40 million and extended in the Spending Review 2020 to £80 million, to create and retain ‘green’ jobs across the economy will also be key to success. Recommendation: The Department and the Treasury should work together to: • establish what skills gaps exist, across the key delivery partners and sectors, which are likely to inhibit government’s progress in achieving its environmental ambitions; Achieving government’s long-term environmental goals 7 • where there are such gaps, develop a realistic plan to close them; and • assess the impact of targeted interventions such as the Green Recovery Challenge Fund on safeguarding ‘green’ jobs.

Environmental impacts are still not being taken into account in spending decisions. For the last Spending Review, the Treasury asked departments to set out how their proposals would contribute towards the UK’s statutory carbon targets, and to explain their impact on, and coherence with, the 25 Year Plan. However, departments struggled to do this. As part of updating its Green Book guidance on evaluating projects, the Treasury has made changes to better prioritise the environment, and it has commissioned further work to understand the economic implications of environmental issues. But it recognises it has more to do to make sure it has the right structures and guidance to ensure environmental impacts are properly factored into the next spending review. Recommendation: Alongside the next Comprehensive Spending Review, the Treasury should publish analysis showing: how the full value of environmental impacts has been taken into account, and the impact of spending decisions on meeting government’s long-term environmental goals.

We are concerned that the new Office for Environmental Protection will inherit a backlog of cases, and remain to be convinced that it will be sufficiently independent. It will take some months for the Office for Environmental Protection and its responsibilities for enforcing environmental law to be established fully under the provisions of the Environment Bill. The Department says that, in the interim, a secretariat and chair designate will make initial assessments on reported breaches of environmental law by public authorities. The Office for Environmental Protection will have to play catch up in looking at these reports once established. Unlike the Climate Change Committee, the Office for Environmental Protection will report to Ministers and not to Parliament directly. We are concerned that this will affect its ability to act independently. Recommendation: The Department should write to the Committee to set out what steps it is taking to minimise the delay between the passing of the Environment Bill and the establishment of the Office for Environmental Protection. As is the case with the Climate Change Committee, the Office for Environmental Protection should have a mandate to report directly to Parliament. 8 Achieving government’s long-term environmental goals 1 Progress, power and funding

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for the Environment, Food & Rural Affairs (the Department), HM Treasury, Natural England and the Environment Agency about achieving government’s long-term environmental goals.1

Government has not yet met European Union concentration limits for nitrogen dioxide that had an original compliance deadline of 2010, and the UK was one of six member states referred to the European Court in May 2018 over non-compliance.15 In addition, the most recent update on Biodiversity 2020 targets showed that government was on track to meet only a quarter of them.16 Responsibility but not enough power

To deliver government’s ambitions as set out in the 25 Year Environment Plan, the Department for Environment, Food & Rural Affairs (the Department) has lead responsibility for all environmental policy areas apart from climate change mitigation, for which the Department for Business, Energy & Industrial Strategy has the policy lead. Other parts of government including the Department for Transport, the Ministry for Housing, Communities and Local Government and local authorities also have important 9 C&AG’s Report, para 18 10 Q 16 11 C&AG’s Report, Figure 6. 12 Q 12 13 C&AG’s Report, para 1.8 14 Qq 12–14 15 C&AG’s Report, para 1.18 16 Joint Nature Conservation Committee, United Kingdom’s 6th National Report to the Convention on Biological Diversity, 11 March 2019 10 Achieving government’s long-term environmental goals roles to play.17 In a July 2018 report on the Plan, the Environmental Audit Committee recommended that: “The government’s proposals for oversight and accountability of the Plan need to ensure all Government departments—not just Defra—are held to account.”18

While the Plan sets out a whole-of-government commitment to improve the environment within a generation, the existing arrangements for joint working between departments on environmental issues are patchy, with no clear indications of senior ownership of the Plan outside the Department and its own arms-length bodies.19 The Department was the only government department which specifically mentioned the Plan in its 2019 single departmental plan objectives.20 The Department has two oversight groups for its environmental work: a 25 Year Environment Plan Implementation Board, and a more senior and pre-existing Environment Committee, however these groups are ‘Defra-centric’, with no representation from delivery bodies outside the Department’s own group.21 The Department told us that its implementation board is a forum for its own work , and that, at a working level, it has a range of relationships to make progress with the responsibilities of other departments; but it accepted the need to do more to understand interdependencies and bring together departments with responsibilities under the Plan.22 It has since established a new cross-government board of lead directors- general from key delivery departments.23 The Department expects that the new cross- government board will build on existing relationships with other departments to follow up their responsibilities; hold other departments to account for their contributions; and map out the systems and interdependencies underpinning the Plan.24

We asked the Department whether it has sufficient clout to manage trade-offs where there is competition between departments; and how it plans to bring to bear its responsibility for leading government to deliver on the Plan.25 The Department expects that the new cross-government group will expose difficult choices and trade-offs but told us that judgements on competing priorities will ultimately be made through escalating issues to Ministers or through cabinet committees such as the Climate Action Strategy and Implementation committees.26 In discussing how the Department will bring its responsibilities to bear, it told us that, with the introduction of the Environment Bill, certain environmental principles will be enshrined into the way policy is made and there will be a new legal framework and statutory targets that all departments will have to work with.27 The Department expects that the requirements placed on public authorities by the Environment Bill will become very noticeable to departments; and sees its new cross- government board as having a key role, to help departments gear up for the things they will have to do in law as the Environment Bill comes into effect.28 17 C&AG’s Report, para 5 18 Environmental Audit Committee, The Government’s 25 Year Plan for the Environment, Session 2017–19, HC 803, 24 July 2018 19 C&AG’s Report, para 15 20 C&AG’s Report, para 2.5 21 C&AG’s Report, paras 2.6, 14 22 Qq 54, 51–52 23 Q 23 24 Qq 52, 54 25 Qq 56–57 26 Qq 55–57 27 Q 54 28 Qq 57, 54 Achieving government’s long-term environmental goals 11 Funding and total costs

The Department received an additional £1 billion in funding for 2020–21 in the Spending Review, however it confirmed that this includes a previously announced increase in flood defence spending.29 It noted that the increase will allow for significant investment in other environmental areas, including tree planting and peatland restoration, however was unable to specify the exact break down. It told us it would provide us with full details in due course.30

The Environment Agency and Natural England have a key role to play in delivering government’s environmental goals. Natural England confirmed that it has had its budget reduced by almost half in recent years which has affected its ability to meet demand for its services and deliver its work.31 As a result of this, it had discussions with the Department and received a 10% increase in grant in aid in 2019–20 to help it focus on getting ready for new duties under the Environment Bill, and to help ensure that it could carry out day-to-day responsibilities. It is hopeful that the increase in the Department’s budget, and particularly in areas that Natural England will be involved in, will similarly lead to a funding increase in 2020–21.32 The Environment Agency told us that its budget has also been under heavy pressure, and though it is not yet sure what its settlement from the Department will be for 2020–21, it remains committed to doing the best with the money it has. But it noted that, ultimately, “we will get the environment that we are prepared to pay for”.33

There is no single point of responsibility within government for monitoring overall spend on environmental goals, and neither the Department nor the Treasury yet have a good understanding of the long-term costs involved in delivering the goals. Moreover, while the Department had started an analysis of spend by environmental goal as part of its preparations for the Spending Review 2020, it did not yet have a good breakdown of annual costs. Without a good understanding of the costs of delivering the Plan as a whole, there are risks that decisions about funding allocations are made in a piecemeal way, rather than on the basis of a strategic view of long-term priorities.34 29 Qq 95–96 30 Q 97 31 Qq 48–49 32 Qq 49–50 33 Q 83 34 C&AG’s Report, paras 12, 19, 1.21 12 Achieving government’s long-term environmental goals 2 Skills, impact and regulation Skills gaps

Government needs to ensure that organisations have access to the skills and resources they require to play their part in delivering environmental goals.35 The Department told us that both scientific and project management skills are required to make progress, particularly in the Environment Agency and Natural England as key delivery bodies.36 The Treasury acknowledged the skills gap in scientific capability in the Department’s group, as a result of the reduction in financing between 2010 and 2015. But it noted that the Spending Review is a move towards rectifying the situation, and that “institutional and structural” backing from the Treasury will be forthcoming as it better integrates the environment into the way it makes spending decisions.37 The Environment Agency told us it has a particular risk of skills loss in nuclear and hazardous waste management. This is largely due to its inability to pay the market rate offered in the private sector, though it seeks to mitigate this by topping up salaries where possible and developing in-house talent.38 Natural England noted that, although it does not yet have any “real, hard gaps” in skills, it has also experienced problems in attracting and retaining staff due to salary gaps between itself and environmental non-governmental organisations.39

We asked about the diversity of the workforce to deliver these environmental goals, and the Environment Agency noted the steps it has taken to improve diversity, for example going into technical institutes where there may be a higher proportion of Black, Asian and minority ethnic candidates and offering apprenticeships to help attract them to the organisation.40 Natural England acknowledged that the communities it needs to engage with in driving nature as a health solution, including those with high proportions of Black, Asian and minority ethnic people, are not currently reflected in its workforce. It told us that it wants to invest in tackling this in future to build a more representative workforce.41 On gender, the Environment Agency noted that currently 44% of its senior leaders are women, with a target of 50%. It also noted other measures to improve female representation throughout the organisation, such as a scheme to attract female engineers and a network to help support them once recruited.42 Natural England told us that it has the right balance, with 56% of its workforce being women.43

We asked the Department what its role is in relation to creating and retaining ‘green’ jobs. It told us that the Green Recovery Challenge Fund, established in response to the Covid-19 pandemic and initially funded to £40 million, has been extended in the recent Spending Review, and the fund doubled to £80 million. The Department noted that the initial fund was oversubscribed and estimates that the projects started by it will create around 3,000 new jobs and safeguard around 2,000 existing jobs in a range of nature and conservation activities.44 35 C&AG’s Report, para 2.17 36 Q 77 37 Q 61 38 Q 77 39 Q 80 40 Q 78 41 Q 80 42 Q 79 43 Q 80 44 Q 82 Achieving government’s long-term environmental goals 13 Environmental impacts in spending decisions

We asked the Treasury what it was doing to ensure departments factor the environment into their spending bids. Treasury told us that for the 2020 Spending Review it asked departments for an assessment of the contribution of their proposals towards delivering the UK’s statutory climate objectives in terms of emissions; and asked them in looser language to talk about the impact and coherence of their bids with the environment plan.45 Ahead of the spending review, Treasury updated guidance on assessing and valuing effects on the natural environment in the Green Book.46 It told us it also has an academic review on discounting underway, a key issue being whether the public value discount rate is an appropriate discounting rate for natural capital, given the associated health benefits.47

Treasury told us that the extent to which departments appraise the environmental impact of what they are doing is variable, a good example being the Department for Transport which has worked closely with Defra and the Treasury on its programme to improve air quality in local authorities, and another being the Ministry of Defence which has requested support from Treasury to improve its assessments and appraisals in the way it does its spending submissions.48 However, Treasury acknowledged that departments had generally struggled to articulate their contribution to climate change, let alone the environment, in part due to a lack of science capability (following reductions in funding between 2010 and 2015).49

Treasury conceded that there is a long way to go before accounting for the environment is fully embedded within the spending review process and is on a level pegging with carbon emissions where there is a statutory budget-setting process. It said it needed to do more to ensure the guidance and the structures used reflect the natural environment, and would have to do a great deal of work at next year’s spending review “to try to cobble together the Environment Bill and the spending cycle”.50 Regulation of environmental law

As the Office for Environmental Protection is yet to be established under the provisions of the Environment Bill, we asked the Department about interim arrangements for holding public bodies to account on environmental law. The Department told us that a secretariat is in place, and the Chair-Designate of the Office appeared at a joint Environmental Audit Committee and Environment, Food and Rural Affairs Committee pre-appointment session on 15 December 2020.51 The Department noted that it will also progress appointments of other members of the Board of the new Office.52

The interim secretariat will be able to make assessments around reported breaches of environmental law by public bodies. It will then be up to the Office to catch up on these 45 Q 20 46 HM Treasury, The Green Book: Central Government Guidance on Appraisal and Evaluation, 2020 47 Q 59 48 Qq 22, 29 49 Qq 20, 61 50 Qq 20–21 51 Qq 84–85 52 Q 90 14 Achieving government’s long-term environmental goals assessments once it is established.53 However the Department told us that it has laid much of the foundation, including draft frameworks, to ensure that everything will be in place to allow the Office to get going as soon as it is operational.54

In discussing the reporting obligations of the Office, the Department explained that it will report to Ministers, who can then be held to account by Parliament. We noted that this is in contrast to the Climate Change Committee, which must report directly to Parliament.55 The Department told us that Ministers will not have power over the work programme and decision making of the Office, and will have a duty to have regard to its independence. The Office itself will also have a duty to operate objectively and impartially.56 53 Qq 89 54 Q 90 55 Qq 85–87 56 Q 87 Achieving government’s long-term environmental goals 15