The Treasury's failure to promote sustainability leads to higher costs to the economy, businesses and consumers, a cross-party group of MPs has said.
MPs on the Environmental Audit Committee said that the Treasury was arguably the most important department for ensuring the UK meets its environmental obligations because of its control over government spending, taxation policy and regulation.
However, the committee found ‘considerable evidence’ that the department is failing adequately to factor in long-term environmental risks into its decisions.
Witnesses to its inquiry reported multiple examples of the Treasury changing or cancelling long-established environmental policies and projects at short notice, with little or no consultation with relevant businesses and industries. According to the committee’s report, these decisions caused ‘shock’ and ‘uproar’ among the affected sectors, and some businesses described them as devastating.
The Treasury’s scrapping of the zero-carbon homes policy in 2015 is one example. The decision surprised and angered many in the construction industry because they had been working towards implementing the policy for more than a decade, the committee said.
As a consequence, MPs said new homes would now need to be retrofitted to improve their energy efficiency and contribute towards meeting the UK's 2050 carbon targets. They also said the decision had harmed the development of new markets for innovative energy-saving products and wasted years of effort by the industry to achieve the policy goals.
The committee also criticised the Treasury for not quantifying all the costs and benefits of delaying deployment of carbon capture and storage (CCS) when it cancelled the long-running competition to award financial support to pilot projects.
Environmental Audit Committee chair Mary Creagh, said: ‘On the CCS competition and zero-carbon homes we saw the Treasury riding roughshod over [other] 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.’
The committee made several recommendations to the Treasury, including:
- ensuring spending reviews provide strong incentives for collaboration between departments on environmental matters;
- incorporating new evidence on long-term environmental risks and benefits into its frameworks for assessing the value for money of government interventions;
- increasing transparency and accountability by providing publically available justifications for its decisions; and
- working with other departments whose policies affect the environment to ensure the government’s new industrial strategies promote sustainability.
Chancellor Philip Hammond is to present the autumn statement on 23 November. In the run-up to the announcement, six UK environmental organisations, including the RSPB and the Green Alliance, called on him to announce new investment in low-carbon infrastructure.
UK domestic policy is now undermining progress on low-carbon development, according to a report by the organisations. For example, investment in renewable energy is expected to drop by 96% from a £7.7bn peak in 2017-18 to £0.3bn by 2020-21 after the government cut subsidies.
They also pointed out that total public investment in domestic energy efficiency declined from £1.5bn in 2012 to £0.7bn last year, and that the number of energy efficiency measures installed in homes had fallen by 80% over the same period.
Meanwhile, government prioritisation of infrastructure projects like Heathrow will lock the UK into high carbon growth, the organisations said.
Leah Davis, acting director at Green Alliance, said: ‘The government has given welcome early signs that it is committed to ambitious leadership on climate change. But, in the wake of the US election result, it is now critical that it states its position unequivocally to the world and backs it up with clear actions.’
The autumn statement is an ideal opportunity for the government to show it is serious about action at home, by providing much needed fiscal support for low carbon power, heat and transport, she added.
