Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Environmental impacts are still not being taken into account in spending decisions.
Recommendation
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.
Government Response
Not Addressed
HM Government
Not Addressed
5.1 The government agrees with the Committee’s recommendation. Target implementation date: April 2022 5.2 HM Treasury recognises its important role in supporting the delivery of the government’s climate and environmental objectives. Both the Stern and the Dasgupta Reviews, on the economics of climate change and biodiversity respectively, were commissioned by the Treasury. Its Net Zero Review will also be published later in 2021. 5.3 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 strategic importance and value for money of any proposal. 5.4 HM Treasury continuously improves the Green Book in line with the latest scientific evidence. In 2018, the Green Book and its supplementary guidance were revised with support from the Natural Capital Committee to require more comprehensive appraisal of environmental impacts following a natural capital approach. Resources such as Defra’s Enabling a Natural Capital Approach (ENCA) make data, guidance and tools available to support policymakers. The Treasury is also currently conducting an expert-led review of the environmental discount rate. 5.5 Spending Review 2020 guidance required departments to include the greenhouse gas emissions of bids, and their impact on meeting Carbon Budgets and Net Zero. Guidance also sought qualitative commentary on the impact of delivery of the 25 Year Environment Plan. HM Treasury is currently reviewing the learning from this exercise and considering what additional information should be published following the next spending review to support public understanding of the role the Treasury plays in meeting government’s environmental objectives.