Viscount Younger of Leckie
Main Page: Viscount Younger of Leckie (Conservative - Excepted Hereditary)
Viscount Younger of Leckie (Con)
My Lords, I am pleased to respond to this debate at what is a significant moment for efforts to tackle climate change. I also want to thank the noble Baroness, Lady Bennett of Manor Castle, for bringing forward this debate at a time when we must ensure that we all work together more than ever to preserve and enhance the world for ourselves and, as she alluded to, for future generations. I applaud the ingenuity of her timing, which I gather is by design. As she said, it is just after the Budget and just before COP 26. Perhaps, before I begin, I should recognise the key role that the United Kingdom is playing this year. At the COP 26 gathering in Glasgow, the UK will seek to boost global climate action and help to deliver a long-term transition to a net-zero, resilient and environmentally sustainable global economy.
I realise that the focus of this debate is on the Green Book, but I should just like to address some points raised by the noble Lord, Lord Oates, and in particular the noble Baroness, Lady Bennett of Manor Castle, on the spending review. I simply do not agree which either of them, particularly the noble Baroness and her pessimistic and negative assessments of the Budget. Let me say why. The spending review confirms our plan to deliver more than £600 billion in gross public sector investment over the Parliament. Our investment plans over the next five years mean that we will deliver the highest sustained levels of public sector net investment as a proportion of GDP since the late 1970s. The UK will lead international efforts to agree co-ordinated action on climate change, and the spending review reconfirms the Government’s commitment to doubling international climate finance from 2021. It also provides a significant increase in R&D funding to help UK researchers and business push the frontiers of knowledge in order to find solutions to major international development challenges, including on climate change. We do not hear this from the noble Baroness, and I wanted to put her right because it is easy to hear the negativity.
COP 26 will be the biggest summit of its kind the UK has ever held, with over 120 world leaders attending. Our ambition at this summit is to ensure that action is actually taken on the ground and across the world to tackle climate change, as it is these actions, not words, that will result in a transition to an environmentally sustainable global economy. The Government’s agenda has been simple: we are urging all countries to submit bold nationally determined contributions—NDCs—transformational long-term strategies and net-zero commitments, and to come forward with new adaptation and finance plans to ensure that this is a decade of ambitious climate action.
Day three of COP 26, the finance day, will include a strong focus on mobilising public and private capital to reach global net zero. The UK is leading the way here—for example, through our new infrastructure bank and the issuance of green gilts. The Treasury’s work, including on the Green Book—which I will come to in a moment—is part of our wider aim to mainstream climate into all decision-making.
The Government are convinced that to do this, international co-operation is key. That is why we have taken our influential work on the Green Book to international fora, such as the Coalition of Finance Ministers for Climate Action and the Paris Collaborative led by the OECD. Sharing our knowledge and expertise, but also the challenges we face when appraising policy, is crucial to making sure that climate change is tackled not just at home but internationally.
The Treasury’s Green Book plays an important role in framing decisions on domestic public spending. The Green Book provides guidance on the appraisal of policies, programmes and projects, and sets out a framework for providing objective advice to decision-makers by public servants. That does not mean that it represents the be-all and end-all of government spending, and we should be wary of giving it undue emphasis. That is because it does not outline the Government’s policy objectives. It simply provides an official framework for ensuring that policy objectives are met, such as our goals at COP 26 and our commitments on net zero, and that the relevant costs, benefits and risks of alternative approaches for meeting those objectives are also considered.
As I said earlier, it is actions that matter—and yes, leadership, which was alluded to in the title of this debate from the noble Baroness. For example, the net-zero strategy confirmed £26 billion of public capital investment since the 10-point plan. The Budget and the spending review confirm that since March 2021 the Government will have committed a total of £30 billion of domestic investment for the green industrial revolution. Taken together, this spending package, along with action on regulation and green finance, will keep the UK on track for its carbon budgets and 2030 nationally determined contribution and establishes the long-term pathway towards net zero by 2050.
I want to address the main focus of this debate. I will highlight the five areas of recent and planned action to comprehensively improve the Green Book on environmental appraisal to best support our policy objectives on net zero. From the tone of her speech, the noble Baroness is wholly unaware of such improvements and I am pleased, if I may, to put the House right and to inform the noble Baroness on this.
First, the 2020 Green Book review specifically focused on ensuring that strategic objectives are central to policy development and judging whether a proposal is value for money. When using the Green Book to appraise policy interventions, officials must start by assessing the strategic case for investment and how their intervention affects government objectives. Your Lordships will know that the Government’s policy objective to achieve net zero is a legal commitment.
In 2019, we amended the Climate Change Act 2008 to commit the UK to achieving net zero by 2050. The previous target was an 80% reduction in emissions by 2050. This was the world’s first legally binding national commitment to cut greenhouse gas emissions. In addition to the net-zero target, the Climate Change Act 2008 sets out a system of interim carbon budgets, which are also legally binding, to ensure targets are met.
Secondly, the Green Book is continually updated so that it reflects the latest evidence, particularly for understanding the impacts of policy interventions on the environment, so that decision-makers are presented with robust evidence before making decisions. This work to continuously update the Green Book is led by the Treasury, with support from other departments.
Thirdly, the Treasury has worked with the Department for Business, Energy and Industrial Strategy to update supplementary guidance to the Green Book on carbon values. These are used across government for assessing greenhouse gas impacts in cost-benefit analysis. Only last month, these values were updated to reflect the latest evidence. They are consistent with the UK’s domestic pathway to net zero and meeting the Paris 1.5 degrees climate commitments. Noble Lords will be interested to know that reflecting these updates in appraisals leads to an increase in the cost estimates resulting from higher emissions.
Fourthly, Defra’s supplementary guidance to the Green Book, Enabling a Natural Capital Approach, was updated in August this year to incorporate new values available for environmental appraisal when using the Green Book.
Fifthly, the Treasury has convened a group of experts—including academic economists and scientists, and officials who use the Green Book—to inform and advise decision-makers to produce supplementary guidance on biodiversity valuation for the Green Book. This will lead to new supplementary guidance to the Green Book for valuing biodiversity as part of appraisal.
I would like to go slightly further and raise three further points to address some questions the noble Baroness raised. First, the Green Book mandates the consideration of climate and environmental impacts in appraisal. That applies to appraising spending, including spending review bids from departments. Secondly, the Treasury continues to develop the Green Book and its supplementary guidance alongside its cross-government chief economist appraisal group, which oversees developments, so that it is at the forefront of the latest evidence, including its environmental appraisal. Thirdly, the Treasury is currently working alongside the group of experts. I go further by saying that this is supplementary guidance on the biodiversity valuation.
We have taken significant steps to update the Green Book, but it is also true that improving policy appraisal and evidence in the Green Book is a continuous and cross-government effort that will continue after COP 26. That is particularly true for environmental appraisal.
The noble Lord, Lord Oates, in most of his speech, raised some important points about heat pumps. It may well be that I need to write a letter to him about the specific and technical questions he raised, but I will say this. The approach we are setting out will ensure that the transition is fair and affordable for consumers. These are two important points. It will mean people living in warmer and more efficient homes that are cheaper to heat. We will work with the grain of consumer choice. No one will be required to rip out or scrap their existing boiler and we will ensure that the biggest polluters pay the most for the transition.
We will work with businesses to continue delivering deep cost reductions in low-carbon tech through support for the latest state-of-the-art kit to bring down costs for consumers and deliver benefits for businesses. Our £450 million boiler upgrade scheme will provide £5,000 towards the costs of new air source heat pumps, making green heating more affordable. That is just a short answer, but the noble Lord raised a lot of questions.
The noble Lord, Lord Tunnicliffe, talked about the Dasgupta Review and raised an important point. I think he will know that the Government published their formal response to the review in June. The Government agree with the review’s central conclusion that nature, and the biodiversity that underpins it, ultimately sustain our economies, livelihoods and well-being. Economic and financial decision-making must account for this. Building on the ambitious existing nature agenda, the response sets out the ways in which the Government will go further, framed around two high-level commitments.
The noble Lord, Lord Tunnicliffe, mentioned the discount rate. I think we could probably have a whole debate on that subject. I will say very briefly that, as committed to in the 2020 Green Book review—to bring us back to this subject—the Treasury worked with leading academics to understand whether there is a case for reducing the discount rate for environmental impacts. He will know that the outcome of this was published in September. Following a series of workshops and engagement, the academic consensus was that discount rates should be no different for environmental impacts from other impacts considered in appraisal.
The focus of COP 26 will be on how we continue to take ambitious climate action. As I am sure the House will agree, tackling climate change is a huge undertaking requiring both national and international action. Updates to the Green Book are a small but influential element of that action where we will strive to remain at the forefront of international best practice.
It is fair to say that we cannot be certain of the outcomes of COP 26, but one thing is sure. I want to emphasise to the House today that this Government have worked tirelessly to ensure that climate stays at the very top of the global agenda in the international effort to keep 1.5 degrees within reach.
I conclude simply by again thanking the noble Baroness and the other noble Lords for their insightful and constructive contributions. As David Attenborough said only a few days ago on the news, which I happened to see:
“If we don’t act now, it’ll be too late.”
He is absolutely right.