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The main item on today’s agenda is an evidence session on the budget strategy phase 2011-12. We will hear from three panels of witnesses. The first comprises John Barrett, a senior research associate from the Stockholm Environment Institute, and Phil Matthews, senior policy adviser at the Sustainable Development Commission Scotland. I welcome you both to the committee—thank you for joining us.
Good afternoon. Yes, there is a strong relationship between economic growth and carbon emissions. There is a lot of evidence to demonstrate that and a number of analyses that we have carried out have shown that economic growth is the strongest driver of emissions of all the different components. Any increase in final demand always results in an increase in emissions and vice versa, so our view is that they are intrinsically linked. There has been a relative decoupling of the two—one has grown at a faster pace than the other—but at this stage there is no sign of a complete decoupling of economic growth and greenhouse gas emissions.
Are you able to say anything about the impact that the current recession will have had on emissions?
It is early days and there is quite a lot of uncertainty, partly because the data on environmental accounts and all the economic data have not yet caught up. There is usually a three-year time lag before we can be completely sure about the data. Potentially we are looking at a reduction in emissions of between 6 and 9 per cent due to the recession.
I agree with everything that John Barrett has said. That is clear. The Sustainable Development Commission Scotland is interested in the link between economic development and carbon emissions. We produced our report “Prosperity without Growth?—The transition to a sustainable economy” last year, and this year one of our focuses at a United Kingdom level is a bit of research on prosperity without energy growth. If, as most people want, we move back towards a growing economy, what will the challenge be for emissions? How do we ensure that we achieve the decoupling that, as John Barrett said, we have not achieved to date?
Are you able to say anything about the emissions reductions that will result from the recession in different sectors of the economy? Will there be a greater connection between the recession and emissions in some industries or sectors than in others?
It is a little early to be precise about that, but the energy sector is linked more strongly to emissions than other sectors are. We do not see significant reductions in energy consumption by households and are likely to see more reductions in the goods and services sectors at this stage. However, the carbon intensity of those sectors is usually slightly lower—at least, that is the case for services—than that of the large manufacturing sectors. We have a greater understanding of how the energy sector will behave than others.
What about the trajectory that the Scottish Government proposes for its emissions cuts over the next few years? Should we examine what happens in the recession and use it as an opportunity to propose a more ambitious trajectory by reprofiling the annual targets to aim to retain over the coming years the cuts in emissions that have happened?
We would have to be clear that we could not claim the emissions reductions as being due to active policy unless it was an active policy to go into recession, which I guess that it was not. The United Kingdom Department of Energy and Climate Change has not been 100 per cent clear on that. It recognises the recession but also points to the success of its policy. Who has done what is blended and merged a bit more than it could have been.
We welcomed the Scottish Government’s reaffirming of the target of a 42 per cent reduction by 2020. That is crucial to the success of any climate change action in Scotland. We also support the integration of the advice from the Committee on Climate Change. The Scottish Government should hold to that. It has done so and, indeed, has gone slightly further in the first couple of years. As John Barrett said, we will now see a significant dip in emissions. The question is whether we want to respond with further reductions and, even if we do not, how we ensure that any appraisal shows that the short-term success is nothing to do with underlying trends in emissions or the actions of Government but, instead, is a result of the knock-on effects of a recessive period in the economy.
Can you give any examples of mitigation and adaptation measures not only that we need to take but that are good for the Scottish budget as well as for our greenhouse gas targets?
There is a clear link between spending, final demand and greenhouse gas emissions, which means that any cut could reduce the upstream consequences of greenhouse gases. It is unfortunate that those elements are so closely connected but the fact that they are offers further opportunities to tackle the issue. Therefore, it is important to reduce expenditure in the carbon-intensive sectors—those that have the highest carbon intensity per pound spent in the economy—and take the whole of the upstream consequence of that expenditure into account.
It would not be hard to convince me of the arguments about transport infrastructure, but the fact is that some of the decisions that you have referred to have not been taken. Are there any other new ideas for reducing carbon emissions and saving money on the Scottish budget that the Government might not find as hard to adopt? Reducing spending might well reduce the Government’s emissions but, if we are seeking to reduce emissions in Scotland as a whole, we might need to spend more, not less, on buildings and energy generation.
I see your point. However, Scottish Government expenditure will have downstream effects on household emissions. Such a saving exists, and infrastructure will be extremely important in that respect.
Phil, do you have any win-win ideas to add?
Yes. As you say, convener, there needs to be extra investment in, for example, community energy improvements. However, given the financial constraints, such investment should be made at the most appropriate level. A lot of evidence suggests that the current piecemeal and community-level approach is much more efficient in delivering outcomes, and ideally we need to focus the money where we will get wider social, economic and environmental benefits.
You will be aware that the Climate Change (Scotland) Act 2009 contains a commitment to public engagement. Will that public engagement make a difference by spreading out actions, such as the exciting pilots that we have talked about, to encourage people to think about their role?
Yes—absolutely. That is a low-cost measure—behaviour change is about as low in cost as anything to which one can aspire. If it is done properly, it does not require a huge amount of capital and it can yield longer-term benefits for people and communities, too.
A recent briefing from the Stockholm Environment Institute said:
My prediction or estimate—whatever you want to call it—is that emissions will reduce reasonably in tandem with that. That is partly because a recession often results in lower expenditure on goods and services, which are the imported components of Scotland’s footprint. I feel that emissions will reduce slightly over time, but we must remember that Scotland’s carbon footprint has increased in the past 15 years, which we covered in the report. That means that emissions will still not be lower than those 15 years ago. Emissions will not reduce significantly to that level, but the recession will mean a slight reduction in consumer and territorial emissions.
Should the Government take action to produce a reduction sooner?
In consumer emissions or territorial emissions?
In both.
Without a doubt, the Government should take such action. The cumulative emission perspective is extremely important. Having an 80 per cent target for a certain period has the danger of leading to very different amounts of carbon in the atmosphere.
I like the idea of early action.
I have talked about some of that. We have mentioned to the committee before work that we are doing on sustainable transport, which we hope finally to publish in the near future. We are also interested in seeing the Government’s refresh of the national transport strategy, which will be a crucial document for encapsulating the carbon agenda and the wider health and community agenda in transport policy.
The increase in demand for transport has still not been tackled. There seems to be no clear answer on how we tackle it, but the issue will not go away. The growth in demand for transport means that the whole carbon budget will be allocated to transport by about 2030, so demand management within transport is a necessity. That growth in carbon emissions from transport will occur in the context of significant efficiency improvements in each kilometre or mile travelled, so tackling growth on the demand side is what is lacking.
If we do not roll out those pilots and put in place the necessary measures, will we fail to meet our early and longer-term targets because of a failure to build on progress year on year?
I do not know exactly whether the transport impacts will counteract any benefits that might be made in the energy system. I would need to look at the figures on that in more detail. However, given growth of 3 to 4 per cent per year, those benefits could be counteracted quite easily.
What have been the most expensive measures to mitigate greenhouse gas emissions so far?
Do you mean of those measures that have been successful?
Yes.
Investment in renewables through various mechanisms has, I guess, been the thrust of Government policy to date. As I said, we would like a greater focus on demand reduction through investment in housing and other infrastructure. That will be expensive, but it will have much wider benefits for employment, living conditions and economic savings for individual residents.
Is there an urgency to rolling out such measures? Given the need for more public engagement to ensure that people accept that it is possible for them to do things, is the roll-out of such measures vital?
Absolutely. As John Barrett pointed out, behaviour change is an important aspect, but behaviour change works only when the infrastructure is in place that enables people to make the right choices easily. Over the decades since the second world war, investment in more dispersed settlement patterns and so on has made it very difficult for people to walk or cycle to work, the shops or leisure activities. Putting that genie back in the box, as it were, will be a long-term job.
Your answer leaves us with a serious problem. You have talked about existing expenditure on renewables, which is largely at UK level, although policy is often devolved, and you have talked about what needs to happen. Housing and building measures are devolved. The purpose of this session is to look a few years ahead. Whether we agree or disagree about what a potential UK Government might do over the next short period, there is the prospect that serious cuts will have to be made in the Scottish budget. If the most expensive measure that is successful that you can think of is a UK budget line, you are calling for a Scottish budget line, and the challenge that we face is Scottish cuts, the situation is not convenient, is it? Is there a way through that? Can an argument be put forward that will resonate with those who are responsible for considering the Scottish budget and seeing where cuts can be made?
That is why I touched on different finance mechanisms. I recognise that money may be hard to come by through the existing mechanisms. It is hard to separate the Scottish and UK levels, but Scottish Government money, the possible reallocation of money and different ways of doing things should be considered. I alluded to transport. Money could be saved in certain budgets. The funding that the utilities could bring to schemes and new pots of money should be considered. We have started to be involved in discussions about the potential for a green new deal-type approach in Scotland. Our sister organisation in Northern Ireland is doing something similar, and that has been successful. This is not my area of knowledge, but green bonds issued by local authorities and other ways of financing investment in green infrastructure can be discussed. There are many suggestions out there that the Government should consider. The Calman report suggested that ecological or green taxes could be devolved. I do not want to get into party politics, but that might be an alternative approach if Scotland had extra powers.
I hope that, when times are tough, we will look for policies that will both have significant social benefits and affect greenhouse gas emissions. I would not necessarily say that if I were to allocate expenditure, I would protect a budget line, but I would allocate expenditure on the demand side for the retrofit of houses, as people would see direct benefits from that. There is considerable evidence that doing that would also boost the economy, that the revenue would be greater than the expenditure over a certain period of time, and that the payback periods would be fairly short. Such an approach has everything; indeed, it makes one question why on earth it has not been done already. That is what I would concentrate on most for social advantages combined with reduced greenhouse gas emissions.
What impact will future constraints in the budget have on the ability of the wider public sector in Scotland to address climate change? The health service has been mentioned briefly, but what about local authorities and anything else in the public sector?
I was recently involved in pre-consultation discussions with public bodies on the public duty guidance that the Government will put out to consultation this summer. It is clear that there are many concerns among public bodies about the additional requirements that there will be and the availability of funding. I refer to the suggestions that have been made about different ways of financing and doing things. During the pre-consultation, suggestions were made about possible seed money from central Government, changes to the timeframe within which costs and benefits are analysed, and different ways of doing things. Perhaps there could be more joined-up working among local authorities and other public bodies.
I want to add something about the payback periods, which will support what Phil Matthews said. In the context of sustainable design and construction, if the first thing to drop off the list were to be the passive solar system—or whatever measure had been decided on—the payback period would demonstrate that that would not be the right move. The relaxation of the payback period would be a key measure, which I hope would protect environmental and sustainability initiatives in relation to new infrastructure.
In discussions in local authorities, are people keeping an open mind on new ideas and innovative ways of thinking? Do people realise what has to be done, in particular in relation to the public duty in the 2009 act? Is it too optimistic of me to hope that at least some public bodies are more enlightened and have gone past the stage at which people say, “Budgets are tight and it just can’t be done”?
I used to work for a local authority. Like all other types of organisation, local authorities are a mixed bag. Some local authorities, health boards and so on in Scotland and in the rest of the United Kingdom are doing impressive progressive work around carbon and sustainability more widely, but others seem to have an attitude of retrenchment. Our discussions were interesting, because some people were positive whereas others thought that the issue was yet another that they must think about among the many other things that they must balance. I can understand where they are coming from, so there is still a job to be done in that regard. On the Government’s engagement on the public duty, constructive engagement to encourage innovative thinking in public bodies—not just guidance—would be welcome.
We have heard about measures that are working in Scotland and about some of the most expensive measures. Are there lessons that we can learn from abroad on how to tackle climate change in an efficient and cost-effective manner? Are we making the right decisions about what to take forward?
Probably one of the most successful examples in Europe comes from Germany, which drove forward the renewable energy market by putting in place a tax and giving a clear indication of its intentions to businesses and individuals. The approach gave the market confidence to move forward with investment, because it knew that the tax was in place for the long term and would not go away. People knew what the price for renewables would be in the future. It was a good initiative and a brave move, which now has public support—as is often the case with policy.
There are lots of good examples of cities that have done progressive work on transport. Copenhagen, for example, has done much on cycling and the reclaiming of public space, as have cities in Germany, such as Freiburg.
In a recent report, the Sustainable Development Commission Scotland set out five challenges for the Scottish Government, one of which was to
In my previous answer, I said that the scale of the cuts in finances that people are predicting may drive more collaborative working between public bodies, where that is not happening already. I mentioned police stations and schools. Many local authorities around Glasgow are also talking about collaborative working on services. There is potential for quite radical thinking about how services, construction projects and other types of procurement are delivered.
That is about right.
I should never make such assertions when the report’s author is beside me. There are challenges in the NHS. The gross carbon assessment throws up interesting information on what leads to carbon impacts and it identifies areas, such as pharmaceuticals, in which it is more challenging to find an alternative. Let us get the evidence, so that we can start to think more radically about how we can deliver services in a more cost-effective but lower-carbon way.
I have nothing to add.
So—that was a good summary of your report.
Yes. Well done, Phil.
The committee is aware that both the Sustainable Development Commission Scotland and the Stockholm Environment Institute have an interest in alternatives to growth-based economic measures, such as ecological footprints and indicators of wellbeing. What do you consider to be the benefits of considering such broader objectives? If they were used, how might they influence spending priorities?
We advocate the use of both territorial and consumer-based greenhouse gas accounting over the ecological footprint. That opinion is based on a number of methodological reasons. An indicator of economic growth does not and cannot encompass fully the direction in which we want to take society. Recent evidence demonstrates that some countries have done significantly better than others at getting social value out of £1 of economic growth. That alone shows that an indicator that measures only economic growth is completely flawed. A recent European analysis by researchers at the University of York and the University of Nottingham demonstrates that growth in inequalities leads to significant social problems, and vice versa.
I agree with a lot of that, but I will make a couple of points. First, in the Government’s cost versus carbon benefit appraisal of different options, walking comes out as being very low cost and beneficial. Cycling comes out as having a higher cost. However, if you factor in the wider benefits of encouraging cycling, such as health benefits to individuals, then the equation changes. We want tools that appraise the widest possible sustainability of different outcomes and different policy instruments. In that way, we move towards policies that deliver the things we want across the board rather than focusing on one thing, whether it is carbon, the economy or whatever else.
What is your view of the methodology that was used in the carbon assessment that the Scottish Government produced last year to go along with the draft budget?
A colleague of mine has already given evidence specifically on the methodologies that were used. We are generally in favour of the approaches that have been used. They try to take account of the full life-cycle impacts of expenditure, which is a good start. They are also specific to Scotland, which is unique in accounting at present. The fact that the Scottish Government supports accounting is very encouraging. It is not done at UK level, which is in breach of European law, although that does not seem to matter. The methodology needs to be improved in order that we can understand the full downstream consequences of expenditure. That is where it has fallen down, although it is perhaps unfair to say that, because it is a good start. However, that is where it needs to move to in the future. It has not necessarily taken into account the fact that building new unsustainable infrastructure will lead to unsustainable behaviour. It merely understands the upstream elements of the expenditure. It is a good start, but improvements need to be made.
So, we are taking a lead. You have partly answered my next question. The carbon assessment signals a recognition of the need to provide more of a balance between emissions reduction policies and efforts to deliver economic growth. What more would you like to see being done in this area?
Do you mean in accounting?
Yes.
I would like to see more on the downstream impacts of policies. We cannot have economic growth traded off against climate change. We need to identify the policies that move towards both. One reason why we would generate money in the economy is to pay to sort out the inadequacies of the market. Therefore, this is just a correction in the market. I do not want a situation in which we are trying to understand and determine the cost of climate change. We must ensure that climate change is part of an economic decision that will lead to a more prosperous future. Society as a whole has not got its head around what a future temperature increase of 4°C or 6°C really means. It means a future in which economic growth will be a lot more difficult than it has been in the last two years. We would have migration at an unprecedented level and the current discussion on immigration will seem like nothing in comparison. Climate change and the economy must be brought together as opposed to our just working on the cost of climate change. That is the key challenge.
I ask Phil Matthews to respond to that. Do we need to move beyond the idea of balancing policies to reduce greenhouse gas emissions against policies to increase economic growth? Surely, we need an economic policy that is designed to achieve the emissions cuts.
That is very much the case—I have given various examples of that over the past half hour. It is about integration, factoring in objectives, designing policies to achieve those and having the appraisal tools to enable making the right choices to drive policy towards the right outcomes.
Thank you very much. There are no more questions for this panel of witnesses. Is there anything that you wanted to raise that has not been touched on in our questions? John Barrett is looking contemplative.
One of my major concerns about the carbon budgets is that they will be set to ensure that we have an equal distribution of carbon emissions by 2050, which is the direction of the Committee on Climate Change. That will never be agreed by developing countries, which will expect an equal distribution of carbon emissions from 2010 at the latest. I would encourage the aligning of carbon budgets by looking for an equal distribution of carbon emissions from 2010 to 2050 to get a total cumulative budget for Scotland, and I suggest that we attempt to live within that budget over that time period, otherwise it will be impossible to restrict any future temperature rise to 2°C. However, no one has gone that far at this stage. The language is all about restricting the temperature rise to 2°C, but the budgets clearly suggest that we will not achieve that.
I thank you both for taking the time to answer our questions.
With our second panel of witnesses we will continue our consideration of the budget strategy phase for 2011-12. I welcome Dave Watson, who is the Scottish organiser for Unison, Duncan McLaren, who is the chief executive of Friends of the Earth Scotland, and Chas Booth, who is the senior press and parliamentary officer for the Association for the Conservation of Energy. Thank you all, and welcome to the committee.
I can give one example. From our perspective, the development of green workplaces is important, especially given that two thirds of emissions come from workplaces. That has been an underdeveloped area in tackling climate change.
Does anyone else want to comment on levels of Government support for and work with the third sector in this area?
We are here today on behalf of the wider Stop Climate Chaos Scotland body as well as our individual organisations. Some of the partner organisations in Stop Climate Chaos Scotland are more affected than Friends of the Earth Scotland by the pledge on adaptation support.
We are holding this session to discuss future budgets in the expectation that difficult times might be ahead, and that resources might become increasingly scarce. There are estimates of what we can expect, but we will not know until some time down the line. What approach should the Scottish Government take to directing spending, recognising that it has responsibility for that one level alone and cannot necessarily change what the UK Government is going to do or the context within which it is working? What areas should we be looking to protect? What areas might it be beneficial to cut in respect of climate change?
The committee will have to excuse me—you have probably heard this before—but it is important to get it on the record. There are clear opportunities to deliver carbon savings through budgetary savings, or actual cuts in budgets. I will give some illustrations, but I do not mean to say that they are all SCCS-agreed policies. By making savings through cutting capital expenditure on large transport infrastructure, particularly roads infrastructure, we would make emissions savings in future years.
The important point is that we regard tackling climate change as an opportunity and not as a cost. That is difficult, but energy efficiency and fuel poverty are two examples—Chas Booth can probably talk more about them. Ideas such as active travel plans link in with some of the green workplaces ideas that I spoke about earlier, and we have a range of initiatives that the Trades Union Congress green workplace project has highlighted as a result of considerable experience of delivering them across the UK.
I agree with my colleague Dave Watson’s comment that tackling climate change is an opportunity and not just a cost. For example, we have done some research that suggests that up to £3.10 of lifetime savings can be delivered for every £1 invested in energy efficiency. Energy efficiency is one of the rare things in which you get your money back: it has a negative net cost.
Thank you. You have all given such thorough answers that some of the questions that we plan to ask you might sound like a bit of a retread.
Yes, you have answered some of my questions already. How might a reduction in budget provision affect the ability of public bodies to respond to the duties that the Climate Change (Scotland) Act 2009 places on them?
As I said, we are looking at that in the context of the guidance. Your previous witnesses referred to the consultation sessions that have been taking place as part of that. There is a difficulty, and a number of public bodies—perhaps not surprisingly the finance directors in particular—are saying, “Look, there is only one issue.”
As Chas Booth has outlined, public bodies can do things that are financially beneficial to them. Measures such as making efficiency savings in their energy use are, at least in the more enlightened public authorities, still likely to go ahead and will be seen. However, the public bodies duty covers a much broader set of duties. It requires local authorities to address the emissions of their communities in all their activities, including planning and so forth, and I fear that that is where we will see the greatest inclination for short-term thinking. They may decide to cut expenditure on measures that are designed to deliver emissions reductions that do not bring them a financial saving. We must, therefore, be better at identifying where the financial, environmental, social and health benefits of public authorities’ actions arise for other public or private bodies. For example, smarter choices transport schemes are among the most cost-effective carbon emissions reduction tools when account is taken of the benefits from reduced congestion that accrue to individuals and private businesses, although those benefits do not accrue to the public bodies that deliver the schemes. We must somehow account for those benefits.
Cathy Peattie asked how easy it will be for public bodies to achieve their responsibilities if budgets are tightened. If the Scottish Government squeezes the wrong sorts of budgets and cuts tiny sums of money such as the central energy efficiency fund, it will send the wrong signals, which would be regrettable.
My next question is similar. A Unison press release stated that UK local authorities lead the way in
The honest answer is that we need a mixture of carrot and stick. There must be a regulatory stick. I am concerned that budget cuts in some regulatory bodies in this policy area might impact on their ability not only to enforce regulation when they need to but to spread good practice, advise and guide. There are some fairly crude across-the-board budget cuts in some of those budget headings and in bodies such as the Scottish Environment Protection Agency. Those will present some real challenges and the risk is that such bodies will simply pull back from the type of work that I mentioned.
Alongside regulation, funds and a sensible approach to efficiencies, public bodies need to be given a clear set of accounting guidance on how to account for the greenhouse gas implications of their activities, so that we can assess whether the efficiency savings, for example, are delivering. A clear mechanism for carbon or greenhouse gas budgeting by public bodies should be part of the framework so that we can see not only how much is generated in total by their activities and associated activities, but what share of Scotland’s budget it would be fair for them to have.
The question was about how we can encourage action on the ground. One key way in which to do that is by the Scottish Government leading by example. In energy efficiency, it could do that by setting and delivering on ambitious targets to reduce carbon from its estate. The Scottish Government currently has a target of a 30 per cent cut in emissions from its estate by 2020, which as members will no doubt spot is not in line with the target that was set last year in the Climate Change (Scotland) Act 2009. One way would be to increase that target at least in line with the target in the 2009 act, if not beyond that.
We discussed with the previous panel the power of the public sector to deliver more sustainable outcomes. How can the power of public spend be used to deliver more sustainable outcomes and how will the power be constrained under future budgets? You have in a sense already answered some of that.
Yes—I gave examples of that earlier. One reason why we pressed so strongly on the duties on public bodies in the Climate Change (Scotland) Act 2009 was to do with leading by example. If we do not construct schools and hospitals and do all the other things that we do efficiently, there is no drive for anybody else to do so. The public pound can drive best practice in that way and in other practical ways.
We come back to the question of what best value really is in the current circumstances. It would be all too easy for procurement to be driven purely by financial considerations and for people to say, “We must get the cheapest possible outcomes,” but that would not necessarily mean that we had the cheapest outcomes for other public services or the best value for the public. The guidance—and its implementation—from the Scottish Government, the Audit Commission and so forth must be fairly tough to ensure that, where procurement decisions do not genuinely follow best value, even if that is financially more expensive than the cheapest available offer, that is highlighted and revealed.
I agree with my colleagues. Given the context of tight budgets and the ambitious climate change targets in the Climate Change (Scotland) Act 2009, we need an invest-to-save approach. The Government must accept that, in energy efficiency and in some other areas, some up-front investment will be required if the downstream cash and carbon savings are to be delivered. It is vital that we take that approach to budgets in future.
We have had some discussion about good practice. Do you have any examples of good practice in the public or private sectors in this country or further afield in which organisations have successfully addressed climate change in a challenging economic climate?
I can only point to the TUC green workplace project, which includes a range of examples in which real change has been made in the public and private sectors. There are some inspirational examples—even in heavy industry—of substantial savings being made as a result of the changes. I am not as familiar with international examples, although I know that some of our sister unions in Scandinavian countries have done some innovative stuff. I am not overly familiar with that work, but I have certainly heard them speak about it. There are some impressive examples, and we have built them into some of our projects.
I am afraid that I do not have any examples from the economic circumstances that we are experiencing, and the examples that we have tend to be patchy. We find that particular health boards or particular parts of the education system have generated examples that should be more widely shared.
I am delighted that the energy efficiency standards for domestic new build will be improved by 30 per cent by 2010, but the fact is that current standards in Scotland do not reach the standard that Sweden set in 1978. In other words, we are still more than 30 years behind the best in Europe. The changes that will come in this year are good news, and the Minister for Transport, Infrastructure and Climate Change, who is giving evidence after us, should be congratulated on them, but a couple of things are missing.
If the changes in the standards for domestic new build that are coming through later this year do not quite bring us up to the best standards, do they at least bring us up to Swedish standards in the 1980s or 1990s?
About that. I would say the mid to late 1990s.
That is not as bad as I was expecting.
That is a guess. If you want a precise date, I will need to get back to you.
Witnesses both in this inquiry and in our parallel inquiry on the links between spatial planning and transport have highlighted transport as an area of concern because of a lack of alignment between national planning guidance and planning decisions on the ground. Do you share those concerns? Do you see any lack of alignment between national policy and local decisions in other sectors?
We definitely share those concerns. There is a serious lack of alignment at the national level, where, despite good investment and good approaches to public transport—including, for example, encouragement for high-speed rail—significant investment is still flowing towards road infrastructure, with current and future projects such as the M74, the Aberdeen western peripheral route and the Forth crossing taking a very significant slice of capital budgets.
I do not think that the carbon impact of transport policy is properly reflected. I am not sure whether there is a particular disconnect between the national and local levels—I do not think that there is a connection at any stage.
We were invited here to give evidence on behalf of the Stop Climate Chaos Coalition. The coalition’s agreed line is that it is sensible for Government to invest in the lower-carbon forms of transport and to disinvest from the higher-carbon forms. Individual members have positions on specific projects but, as a coalition, we would not identify specific projects that should or should not go ahead—beyond the broader point about taking carbon into account in the decision-making process.
Demand reduction has been alluded to by a couple of people in this and the previous panels. With domestic energy and the management of waste, we have reached the point where reducing demand is seen as one of the most obvious things to do, so why has it been so difficult for us to do the same with transport? Is there a way for the Scottish Government to use the current economic climate as a spur to get back to that agenda?
I would hope that the Government would use that opportunity. It is possibly unfair to say that the issues have not been considered, because the ideas of supporting transfer to walking and cycling are in the proposals. Although they are not central to Scottish Government spend, neither is waste reduction central to its spend on waste management—nor, to be frank, is energy demand reduction central to its spend on energy. You are right that the emphasis on demand reduction is less obvious in transport. That may reflect the political sensitivity with which such measures are seen, following, for example, the vote on congestion charging in Edinburgh, in the lead-up to which the consensus of several parties was that Edinburgh needed better public transport before congestion charging could be introduced. I would differ on that, and I suggest that the current financial situation should lead us to reconsider that sort of thinking—before Chas Booth tells us that that is not something that the Stop Climate Chaos Coalition as a whole has considered, I should point out that I am giving the view of Friends of the Earth.
The development of renewable energy is a key policy aim of the Government. Do you see public investment in renewable energy as a priority for public funds in the current economic climate and to what extent do you think that the private sector will make any necessary investments in the renewables industry?
That expenditure has to be predominantly in the private sector, because of the taxation and other incentives that are already available to it. There is a role for Government to drive innovation, and the best example of that is clean-coal technology. An initial decision in favour of clean coal at Longannet has been taken by the UK Government, which we welcome. Obviously, a bigger prize is still to come, if the final decision is in favour of Longannet. A lot of work has been done in that regard, and that is an example of how Government can drive innovation. Not insignificant sums of money are involved in that, of course. When the Minister for Enterprise, Energy and Tourism met the Scottish Trades Union Congress before Christmas, I described that investment as modest, but he did not, in the context of his budget. In any case, it is useful money.
I will not contradict Dave Watson, who is wearing sandals under the table, but there is a need for investment as part of a package of interventions. There is a need to intervene in the transmission charging regime, so that it does not disadvantage people, and to invest directly in some leading-edge technologies. We welcomed the increased finance for marine energy in the previous budget. There is also a need somehow to support micro-scale renewables. Feed-in tariffs will help in that area, but perhaps not enough.
We argue that micro-renewables should be a priority for Government spending. The Government should use microgeneration on its estate, where suitable. Siting is vital—there is no point in putting up a mini-wind turbine in an area that is not windy. The Government should also support domestic microgeneration. It does so successfully through energy saving Scotland, which used to be called the Scottish community and householder renewables initiative. We argue that that support should continue.
The Scottish Government’s national outcome 14 is:
That is a very big question. An understanding of the implications of our consumption patterns is incredibly important. That is embedded in the 2009 act, and the reporting that the act requires on the consumption side of climate change will reveal that there is a clear difference between the emissions that we produce and the emissions that the goods and services that we consume produce. I hope that that will provide a foundation on which we can build more significant intervention to reduce the implications of consumption.
According to its website, the Association for the Conservation of Energy exists to promote
As I said, it is not always about what is most cost effective now. The committee is considering a budget strategy. If the Scottish Government is to look strategically at how it can achieve its 2020 and 2050 carbon reduction targets, it will not always choose the measure that is most cost effective now; it must also give a boost to technologies that will help us to deliver in future.
It is inconvenient that we are trying to achieve unprecedented, transformational change on emissions at a time when we face not just constraints but the potential for serious cuts in the Scottish budget. It might well be right to say that we must do not just the things that immediately provide value but things that strategically will be best in the long run, but we must have the money to achieve our year 1 objectives in year 1 and our year 2 objectives in year 2. The money has to be there.
Yes, absolutely. There is a role for Government in incentivising private sector investment in, for example, energy efficiency. We welcome the domestic energy efficiency loans scheme that the Government launched last year, but it is not extensive enough and the Government is not doing enough to promote it.
A similar question that follows on from that is about the universalist approach that is referred to in the WWF Scotland report. Chas Booth and Duncan McLaren were both signatories to a letter that appeared in The Herald recently that argued for a street-by-street, house-by-house universal approach to Government programmes. The committee has, in the past, discussed what the costs might be of such an approach. Can you give us any more recent figures for the cost of that kind of approach? I accept what Chas Booth says about its paying the investment back in the long term, but it needs to be paid for in the first instance. Do you have any current estimates for the cost of such an approach?
The report by WWF Scotland looks at three Scottish area-based energy efficiency schemes, all of which were universal, and states that the cost per tonne of CO2 saved varied from £196 in Fintry to £376 in Hadyard Hill. As I mentioned, that is less than half the cost of the current home insulation scheme. Universalism is an essential element of the running of a successful area-based energy efficiency scheme, but it is not the only determinant. All three schemes were very much bottom-up schemes that used local community organisations to contact people and so on. The assumption that universal schemes must be more expensive to the taxpayer is absolutely not true.
You would measure how effectively the Government was spending its money by the cost of such schemes per tonne of CO2 saved rather than by the global cost to the country of implementing the schemes.
We must recognise both costs. Seen from a narrow perspective, the schemes are carbon-saving schemes, but you are right to suggest that we need to look beyond that and see their benefits in terms of alleviating fuel poverty. Duncan McLaren mentioned that energy efficiency investment also brings health benefits—people who live in warmer, healthier homes are less likely to suffer from a range of health problems. Therefore, although it is difficult to quantify, investing more in energy efficiency reduces costs to the health service. You are right to say that we need to consider such schemes not just in narrow carbon-saving terms.
I echo that point. When we look at the marginal abatement cost curves, in addition to calculating the relative cost of carbon we must do our best to quantify the financial value of the non-carbon effects—the health benefits and, as in this case, the employment benefits—of universal schemes as opposed to means-tested schemes.
Just after the recent UK budget, Friends of the Earth Scotland stated in a press release:
I will try to give members a condensed summary. I am a member of the green fiscal commission, but the views that I will give are those of Friends of the Earth Scotland rather than those of the commission, although they are informed by its work. That work suggests that, by 2020 or so, we should aim to have doubled the share of revenue that comes from green taxes, from around 7 per cent to around 15 per cent, and that doing so, particularly through a package of taxes on energy and transport fuel, increased taxes on things such as waste to landfill, and potential water charging, could deliver the UK’s 34 per cent carbon emissions reduction target. Those measures illustrate the green fiscal commission’s model, which says what scale of change is needed. They would all be offset by reductions in other taxes, particularly in national insurance contributions.
What do you make of the argument that, if the Government comes to rely on a larger share of its revenue coming from such taxes, it will depend on people carrying on with their polluting behaviours? Those behaviours would be taxed in order to pay for public services.
That is an interesting theoretical argument. Even if it were true, it is clear that we are a long way short of getting such shares of revenue. The essential view is that we will continue to use energy and transport, even in a sustainable economy. There would be future shifts in the basis of taxation. I would still not argue for moving away from a primarily redistributive tax system that is based on income as the foundation for fair taxes.
Finally, will you comment on the evidence that we heard in our earlier session on the relationship between emissions growth and economic growth and, building on the arguments around fiscal reform, on whether there needs to be a changed perspective on economic priorities? Earlier, the option of a wider or different range of economic measures as determinants of the success or health of an economy was discussed. Do you want to comment on that and the relationship, such as it still exists, between emissions growth and gross domestic product growth?
Friends of the Earth Scotland has long advocated alternative indicators of wellbeing or economic health. We still back those strongly. It is useful to note that looking at such indicators is not completely different from looking at economic growth. We need to recognise that if we can measure directly the outcomes that we want to see—an increase in human wellbeing, a reduction in poverty and so on—we will be more efficient in delivering them than we would if we were to use the rough proxy of the size of the economy. We need to do that instead of simply assuming that the bigger the economy, the better we can deliver outcomes.
I agree with the idea of a broader range of indicators. We sponsored the Compass report “Building the Good Society”, in which many of those arguments were made. The report pointed to a range of indicators that would better describe the wealth of the nation than GDP alone would do. A lot of work has already been done in this field. Obviously, a high degree of political leadership is needed to make the changes that will be required.
Last year, we undertook research into the economic effect of achieving the Scottish Government’s 42 per cent emissions reduction target for domestic buildings. We found that there would be a contribution to the Scottish economy of more than £4 billion and that more than 10,000 jobs would be safeguarded or created. Significant economic development can come through the right sort of investment.
Thank you. As the committee has no further questions for the panel, do panel members have anything to put on the record that did not come up in questioning?
Given that part of the committee’s remit is Scottish Water, you will not be surprised to hear me raise the subject. I am sure that the committee will be urged by siren voices to save a few pounds by losing a modest borrowing line in the budget by privatising Scottish Water. We urge you not to go down that road. The business model that is being urged on you is to sell off Scottish Water at a cut-down price—the value seems to have gone down from £15 billion to £1 billion—give the money to the Treasury and get a new owner to take on all the debt and so forth. The water charge payer will then have to pick up and repay all the debt and pay for dividends, fees and fat-cat salaries. If ever there was a stealth tax, that is it. We urge you not to do that. I am reminded of English football clubs with debt-laden owners such as Manchester United and Liverpool, whose fans are asked to repay the money. In this case, it is the water charge payer who will pay.
I am sure that committee members are not exactly astonished to hear that position from Unison. I am grateful to you for putting it on the record.
I have one brief comment, albeit that I will make it in a less impassioned manner. I mentioned cross-compliance in agriculture as a way of delivering carbon benefits. The committee would be well advised to look at the opportunities for imposing carbon cross-compliance on things such as enterprise budgets and business support as a way of maximising the carbon savings that can be delivered from the public budget.
That is a useful suggestion, which might have come up in questioning but did not. It might lead to fewer VisitScotland-funded adverts that encourage people to fly to Glasgow or Edinburgh. Thank you all for your time and for answering our questions.
The meeting will continue with our third panel of witnesses on the strategy phase of the 2011-12 budget. I welcome the Minister for Transport, Infrastructure and Climate Change, Stewart Stevenson, who is joined by his colleagues David Middleton, who is Transport Scotland’s chief executive; Gavin Barrie, who is the head of unit for climate change policy in the Scottish Government; and—in a slight change to the advertised programme—Janet Egdell, who is the Government’s head of transport strategy. Thank you for joining us.
I will be brief. I assure members that the Sunday Herald apologised to the Government for, and published a correction to, the entirely false story several weeks ago that suggested that the Government was contemplating privatising Scottish Water. The Government has never advocated such a policy position. We are not advocating the policy. In the light of the remarks that I have just heard, I thought that it would be useful to make that clear.
It is useful to have that on the record. I expect the topic to come up in questioning, so perhaps you will have time to elaborate on what you said.
It is worth saying that staff were made aware of the proposal at the same time as the Parliament was made aware of it. The shaping up exercise is civil service led rather than politically led. The committee will have heard previous comments that the complex structures for dealing with transport that faced us when we came into office were not what one would use if one started with a blank sheet of paper—of course, one never has blank sheets of paper. What is proposed, which will come into operation in August, will maximise effectively our use of resources and join up more tightly delivery and policy making.
It is clear that the change will have an impact on costs, efficiency and so on—I am sure that the minister will provide details on that in due course. I assume that it will also change the relationship between ministers and the functions. Given that the two organisations were previously separate and will now become one, what will be the new organisation’s status, its relationship to you as the minister and the impact on the policy-making process?
I do not expect the relationship between the minister and parts of what are currently two functional areas in the Government to change fundamentally. As the minister, I regularly visit Transport Scotland to meet a wide range of people at their instance or mine. The same is true of the transport directorate.
The new organisation will be called Transport Scotland. Will it function as an agency, as Transport Scotland does now? Are policy-making functions simply being transferred from the Government to Transport Scotland? How are we to understand the change?
It is clear that Transport Scotland also makes policy and that ministers are directly engaged in that. I return to my initial remark that I do not expect a change in the relationship between ministers and the activities that are currently undertaken in two separate organisations. However, what falls in the envelope that is labelled “Transport Scotland” will be redefined.
So the organisation will still be Transport Scotland and it will acquire the new functions from the transport directorate.
That is correct.
I hope that you have been apprised of some of the evidence that we heard from the first panel of witnesses and particularly from the Stockholm Environment Institute, which argued that, if we include emissions that arise from production processes overseas, Scotland’s carbon footprint has increased. What measures are being taken to reduce those emissions?
You made two comments. First, you said that our carbon footprint has increased. It has not; in fact, as a result of the 1990 baseline for carbon dioxide and the 1995 baseline for other gases in the Kyoto protocol, it has been substantially reduced. I am not quite sure of the basis for your question.
The Stockholm Environment Institute has argued that if we include the emissions that arise from overseas production processes and the carbon embodied in the goods that we import and the services that we buy our carbon footprint has in fact increased.
And if you subtract from our carbon footprint the carbon embedded in our exports you end up with broadly the same figures.
So the Scottish Government does not have an objective to reduce consumption emissions from overseas processes.
If I may say, convener, that is different from the debate that we are having about the figures. By incorporating into the Climate Change (Scotland) Act 2009 the requirement to report on a consumption basis, we are not only cognisant of the need to ensure that greenhouse gas emissions from activities related to the production and delivery of services in Scotland are reduced by 42 per cent by 2020 and 80 per cent by 2050, but understand the very real risk of trying to deliver the target simply by exporting the carbon-intensive effort. However, we have not set any targets in that respect.
Accepting that there is a degree of uncertainty in how these things are measured, I come back to my original question. What measures is the Scottish Government taking to reduce emissions that arise from production processes overseas?
It is clearly for the Governments of the countries overseas to reduce carbon emissions. I am not clear how we can directly influence the carbon costs of Kenyan beans or Brazilian beef.
We will discuss procurement issues later, but surely Scottish Government spend could have an impact. After all, the Government makes decisions on whether, for example, to import the Kenyan beans that are served in schools, hospitals and prisons—although I have to say that I do not know whether prisons get Kenyan beans.
That is a subject on which I have some now probably obsolete knowledge—not, I hasten to add, as a prisoner but as someone who is familiar with prisons from visits and from having one in his constituency.
Are specific measures being taken that are designed to reduce emissions that arise from production abroad?
We clearly face a variety of environmental pressures. Rising levels of consumption in general are part of that. We are taking the lead, for example by planting 100 million trees in Scotland to make us more sustainable in terms of wood and thereby reduce our impact. Such steps will have the effect of reducing the import of other people’s carbon, but ultimately it is for foreign Governments to take the much more substantial steps that will have an impact on the carbon that they use in their production processes.
I think that that was a no.
The committee has probably heard me say this—I have certainly said it on a number of occasions, in a number of fora. As with the commercial world, so in government, it is the case that energy is a significant cost, so it is a natural economic driver that one should look to reduce one’s energy use and to get more out of the energy that one must, of necessity, use.
Minister, you have said:
In his report, Sir Nicholas Stern identified—as I think that we are all aware, at least in this forum—that the cost of not dealing with climate change could be 20 per cent of GDP and the cost of dealing with it could be in the order of 1 to 2 per cent of GDP. Therefore, although dealing with climate change involves the spending of money, if we do not deal with it, we will spend a great deal more money. There is clearly a good economic driver for going in the direction that members of the committee and members of the Parliament clearly wish us to go.
I will stay on the theme of spending. Given the future constraints on public spending that is directed at climate change, what is vital and must go ahead? What is less important and could be dropped?
For at least the next 48 hours plus a little bit, we all face some political uncertainty. We do not know the future actions of whatever Government the United Kingdom will have at the end of this week, next week or the week after—in the relatively near future. At least one political party that may form a Government has suggested that there would be an emergency budget in July. Therefore, we are in a period of significant uncertainty about the funds that will be available to us.
Can you not tell us what is important and what could be dropped or is less important?
We have laid out our budget for the current year. It shows the different areas that we have identified for spending. I am pointing to the fact that there is uncertainty about whether the allocation of funds to Scotland will allow us to deliver on that budget, which the Parliament voted on and agreed to earlier this year.
You must have had plans until now.
The plans are articulated in our budget.
You seem to be basing your reply on what might happen or on issues that are reserved. I would like to know, given the budget, the plans and the Climate Change (Scotland) Act 2009, which you and I are very proud of, what is important to the Government. I accept that some things may be less important.
I make the point that we will make policy proposals in September—we have always planned to do that at that time. I am merely pointing to the rather obvious difficulty that will exist if the amount of money that is available to us changes from the basis on which we put forward our budget and on which the Parliament approved that budget earlier this year.
I think that we will want to come back to that.
I have a supplementary question. Minister, I take your points about the current financial year’s budget, which has been passed, and about the prospect of an emergency budget, should that come to pass. However, we are also looking at 2011-12 and further ahead. The Scottish Government must have contemplated different scenarios based on various levels of cuts that might be imposed or required. It would be helpful if you gave some indication of your thinking on that.
In advance of our knowing what finance we will have in the next three-year spending review, it is difficult for me to give a response that would in any way align with the outcome that we will get when we know what funding is available to us.
Has there been no attempt in the areas under your responsibility in Government to think about what you might have to cut?
It is speculative to talk about cuts or increases, projects or non-projects, in advance of knowing what funds are available.
It is speculative; I am asking whether you have speculated on it and what those speculations are.
I do not speculate with committees. I am held to account at committees for the decisions that we bring to the Parliament and the action that we take. I do not think that speculation is helpful to either side of the table.
The committee’s role in scrutinising Government is not just about whether, after the fact, we like the decision that you took; it is also a question of satisfying ourselves that some of the serious questions that need to be asked are being asked. It would be a problem if the Government faced having to make an immediate decision after an emergency budget without having previously thought through what the scenarios might be.
Let me assure you that we consider the questions. I am saying only that one cannot determine the answers until one knows the context in which the questions have to be answered. Until one knows the finance that one has, one cannot answer the questions.
One could choose to explore what the options might be; you are clearly choosing not to.
Clearly, since I do not know what finance will be available to me for the three years after the current year, it is very difficult for me to tell you how I will spend that money—the amount of which I know not.
As I said, I am looking not for a prediction, but to know whether you have explored options for the various scenarios that you might face. If you are not able to answer that question, we will simply move on.
We have objectives that we wish to progress, and our ability to do so will be supported or constrained by the money that becomes available to us.
We will move back to questions from Cathy Peattie.
I want to continue on the funding issue; perhaps I will get a similar answer. What are the main elements of the public sector’s role in building a more resilient Scotland in the context of climate change? How might spending constraints impede the public sector in fulfilling that role?
That is a perfectly reasonable question. The public sector generally has an important role to play. When I say “public sector” I include local government, for example—I am not simply looking at the areas of the public sector for which the Scottish Government is responsible. Indeed, for that matter, I include the United Kingdom agencies that operate in Scotland in non-devolved areas, and the European Union to the extent that, in particular through its emission trading scheme, it has a huge influence on what goes on in Scotland.
Every two months.
That feels about right; every two months. The group also cross-connects to the 2020 delivery group, chaired by Ian Marchant, which is outside Government but works very closely with Government. We are trying to ensure that we have all the bits joined up and that different levels of Government work together. I go back, for example, to energy being a very significant cost for all parts of the public sector, as it is for the private sector. We would expect central procurement of energy, for example, to help manage costs. We have a range of ways in which we are working together. We will have to give guidance on climate change duties to public bodies, and we are working on that. There will be a public consultation on that over the summer and we will be engaging at an even greater level on that subject.
If the public sector comes back to you and says, “We recognise our responsibility but, given spending constraints, we cannot do anything,” how will you look at public sector plans and what kind of reporting and monitoring will you put in place? What will you do if the public sector says that there is not enough money to do what is asked and that it is not playing?
I do not expect, on the basis of the body that Alison Hay and I jointly chair, that the public sector will come back and say that it cannot do anything. Without having got to the point of being specific about what the public sector might do, I am clear that it will not say that—if only because in areas such as energy efficiency you can save money without spending money, to be blunt. I am clear that things will happen. We will seek to find ways of building partnerships that make things possible and which leverage in the maximum economic and greenhouse gas benefit for the expenditure that is available to each of us. I am quite clear that we will do that. Part of the reason why we sit down and talk and listen to one another is to understand which things are relatively easy to do and can be done within the financial envelopes in which we operate and those that we will have to defer until another day. That is absolutely clear, and we will continue to work on that basis.
Having outlined the strategic groups that you have set up to take things forward, can you identify some specific steps that you have seen local authorities take towards national outcome 14—the undertaking to reduce the local and global environmental impact of consumption and production? I realise that that is a very grand claim, and it would be good to start to look at the specific things that local authorities have been doing.
Planning policy is an obvious and useful thing to point to, because it shows that, quite simply, local authorities are not starting from ground zero. Many local authorities have been doing work in this area for some considerable time.
You are probably right that lots of activity is going on throughout Scotland. Do you see any need to channel that activity in a particular direction, or should the approach be only a bottom-up one?
I am clear that, without a bottom-up approach, we will fail. Equally, if we do not give councils the responsibility and opportunity to develop local responses and to innovate locally, they will sit on their hands and wait for somebody else to do it. That applies more broadly than just to tackling climate change. To be blunt, we must mobilise everybody and their thinking. I certainly do not want to suggest that what local councils do and think should come solely, or even mainly, from the centre. However, the Parliament has set targets that affect the whole of Scotland, including the private and public sectors and central and local government. There is a role for setting targets and for ensuring that we understand the contribution that is being made.
In your earlier answer on energy efficiency, you said that you expect departments and public bodies to secure energy efficiency savings, which will of course provide budgetary and carbon savings. What hard evidence is there that all the departments in your Government are mainstreaming the adaptation and mitigation efforts?
One key feature of the way in which Government was structured after the most recent election is that we now have directors general, who have responsibilities that transcend the area that they manage. They are responsible for delivery across Government. Of course, work on climate change is the ultimate cross-cutting activity, although it is by no means the only one.
Energy efficiency is the simplest and easiest thing to do. We have known that for a long time, but it appears that it is still not being delivered. We heard from a previous panel that energy use has gone up in the Government’s estate. Can you provide us with hard examples of where you have started to make a difference there?
I would be astonished if energy consumption had risen in our estate. I have no idea where that suggestion comes from.
The latest report indicates that there was a short-term increase in energy consumption in some of our main buildings. At Victoria Quay, for example, a new lighting project is being installed. Once that project is finished, energy consumption is expected to go down.
I am so glad that I brought him.
You are using a lot of conditional language—Gavin Barrie said that consumption is “expected to go down”, for example. I would have expected that, by now, we would be able to see hard facts. I invite you to write to the committee about some of the schemes where such facts have been seen.
In the project to which Gavin Barrie referred, we are making an investment to reduce the energy consumption of a building that houses 2,000 civil servants. As he has just reminded me, during the installation period we have in place all sorts of temporary measures that are causing consumption to go up for a brief period.
If you write to the committee, it would be helpful if you would look not just at examples such as the lighting project but at the whole three years during which the current Scottish Government has been in place and at what has been achieved by various departments, not just the Government estate, to reduce energy use overall. It would be less helpful for you write to us with just one or two specific examples—a broader sweep would be welcome.
There are 12 separate initiatives on which I could readily comment—I refer only to those initiatives of which people have made me aware.
When the carbon assessment of the draft budget was published last year, the document stated that
At the moment, I cannot give you a timeline for the next iteration. I make the general point that it will remain a work in progress for a substantial time to come, because no other country in the world has developed such a tool. I believe in copying good ideas from anyone; I would love to be able to do so in this case, but I cannot. We are doing a lot of additional work to ensure that we understand what is happening and are able better to analyse it.
Given what you have just said, it might be impossible for you to answer my first question. I was going to ask whether there have been any changes to the carbon assessment methodology for future years. Is it too early to go into detail on that?
It is too early. A lot of parallel work is going on, as I have said. We continue to look for ways in which to improve the assessment and to normalise how we state the carbon costs, both in terms of seeking to measure the embedded carbon in a project—the carbon that we invest to bring something forward—and in terms of the operational carbon that is associated with running a project. To be frank, however, we cannot yet make the like-for-like comparisons of carbon that we can make in financial terms.
In its report on the budget, the committee stated:
Our main source of independent advice on climate change matters is the UK Committee on Climate Change. We are working with a wide range of stakeholders and experts on the subject, but again, given that we are leading the way, there are not many people who can come to us and say, “We’ve done it, and here is the outcome.” We are hugely ambitious in what we are doing and we will listen to and engage with anyone who appears to have good ideas on the subject.
So there is at least a commitment to develop and increase the use of the carbon assessment tool so that we can get more information out of it. It is very much a first step and it will be developed. You are not in a position to tell us how that will be done, but is the Government still committed to developing the methodology as the years go on?
It is very much a first step. Indeed, it is probably at such an early stage compared with where we want to get to eventually that its publication should lead to a longer list of questions. At the current stage, we might not know all the questions, far less all the answers. The more work we do on the subject, the more our and other people’s understanding will increase and the more we will understand the nature of the challenge and the work that we need to do.
The climate challenge fund is one of the most important funding streams in the climate change budget, certainly from the perspective of communities. We talked earlier about whether you can guarantee funding for particular projects, but I ask you to address that with specific reference to the climate challenge fund. Has there been a review of the fund’s effectiveness and what it has delivered in terms of emissions reductions, with a view to continuing that funding?
Each of the several hundred projects that are related to that fund has associated with it a projected carbon saving. I am not certain whether any of those projects has yet reached completion—my colleagues who are with me at the table are not giving me any help in that regard at the moment. As part of the process, we will review the outcomes of each of the projects and determine what carbon savings we were able to get in return for our investment.
My first question was going to be about Scottish Water, but I will take the minister’s opening statement and evidence at face value at this stage, although I recall him being equally bullish not so long ago about the Glasgow airport rail link.
It was no inconvenience to arrive here a little earlier, convener; it just meant that I had to get the earlier bus from Victoria Quay—note that I travelled by bus—and that I had the opportunity to hear some of the previous panel’s contributions.
You mentioned the Aberdeen western peripheral route. I will ask you about that and about another road scheme—the new Forth crossing. Indeed, I will also ask you about a railway scheme that is not going to be funded via Network Rail’s credit card—the Borders rail link. Are finances in place for any or all of those projects?
The finance for the Borders rail link will be via a non-profit distributing route, and five consortia have expressed an interest in that. That is a substantial response to our publication of a notice in the Official Journal of the European Union. In legal terms, the project started at the beginning of March this year. The vehicle that we are using for that project is different from the regulatory asset base approach. Having considered the various options, including the regulatory asset base approach, we concluded that, given the interest in other financial models, we could use the NPD route—that is the one that came out ahead.
Why does the Government take the view that it is okay for the Aberdeen western peripheral route and the Borders rail link to be off balance sheet, in Treasury terms, but not okay for the additional Forth crossing to be off balance sheet?
I counsel the member not to express it in that way. Those projects are actually on balance sheet. When the international financial reporting system came in, a whole series of protocols were associated with it—about 40, if I recall correctly. Basically, if Government provides the money that provides the finance, it comes on balance sheet, even if money is borrowed elsewhere. Initially, that was a significant problem, until the Treasury changed the rules, which it did within the past year—I cannot give you the exact date. The projects are now on balance sheet, but they no longer count against the capital spending. In financial terms, they look as if they are off balance sheet. In accounting terms, however, they are now counted on balance sheet. I am sorry to be technical, but I wanted to—
Nevertheless, that is still advantageous. Otherwise, you would do them all in the way that you plan to do the Forth crossing project.
Correct.
You have said quite a lot about existing spending and projects that are to some extent already under way. Can you move on a little bit and say something about how the Government intends to approach priorities for future expenditure, given that budgets are likely to come under a great deal of pressure? How will you prioritise future spending to ensure that you achieve not only carbon cuts in transport, for example, but the greatest social benefit?
I return to the strategic transport projects review, which I make clear is about surface transport. In the review’s hierarchy of investment, the top level comprises investments that would make transport safer. The middle level consists of investments that would enable us to drive up utilisation of the existing infrastructure. That includes intelligent traffic management systems that vary speed limits at different parts of the network, and hard shoulder running for public transport, for which we might have to make some investments, particularly at motorway junctions. After all, you cannot simply have a bus shoot across a junction without taking some cognisance of the fact that the traffic outside the bus has to cross over a lane of bus traffic. Finally, at the bottom level of the hierarchy are investments that would deliver economic value.
In previous evidence sessions, the Sustainable Development Commission and others made arguments about the infrastructure projects that the Government has chosen to support. Of course, that will not come as a surprise to you, minister. After all, most of those organisations have been very consistent in arguing that the Government places too much emphasis on infrastructure projects that lock in unsustainable travel patterns and behaviour. Some have talked about “grand capital projects”, while others have referred to “unsustainable infrastructure”. I assume that the Scottish Government will be equally consistent in rejecting that view.
If someone could point me to some specifics, I might be able to comment on them.
Some have already been mentioned. Certain road building schemes, for example, will facilitate an increase in road traffic levels, and it has been argued that they will simply lock in unsustainable behaviours.
It is perhaps worth reminding ourselves of the day on which the Parliament considered the road orders for the AWPR. As I said to the Parliament, the carbon cost of the scheme, when it has been built, will be 10,000 tonnes. However, on the same day, the Parliament approved the draft order on the carbon reduction commitment energy efficiency scheme, which will provide a carbon benefit that is some 40—nearly 50—times as great.
You mentioned the M74 extension, which will lead to an increase in emissions every year of some 50 times the figure that you mentioned.
No.
I do not think that the figure has been questioned. The public local inquiry accepted it.
As far as I can see, the only 500,000 tonnes figure that is associated with the M74 project is the 500,000 tonnes of aggregate from demolition that will be recycled in the building of the road.
Will you respond to the wider point? We can disagree until the cows come home about what the carbon impact will be from the additional journeys that are generated by the M74. The argument is that if we want people to reduce their transport demand, as has been clearly and consistently argued for by witnesses to the committee, we need to invest in choices that will facilitate that. However, we are currently building infrastructure that will support continued unsustainable transport behaviour.
The first of 130 new class 380 rail carriages will be deployed on Scotland’s network in September. There has been significant investment in the rail network on the line to Kilmarnock. In a few weeks’ time, two new platforms will open at Glasgow Central station. Those of us who travel on the railway to the west of Edinburgh will have seen electric overhead wires being installed for the Airdrie to Bathgate line. Work has been commissioned and is being undertaken to investigate where the overhead posts will be put on the main line through Falkirk, as part of the Edinburgh-Glasgow improvements programme. We are making substantial investment to give people choices that will enable them to travel more sustainably. The new carriages will provide 9,000 extra seats on our rail network.
I do not think that any of our witnesses would argue that the additional spending on public transport is a bad thing; they would argue that it is happening in addition to rising road traffic levels, which mean rising emissions. If we want to reduce emissions we need to provide alternatives, not additions.
The fuel economy of the cars that people can purchase and drive on our roads has improved by 50 per cent or so during the past five years. There will be a move towards more sustainable road transport as a result of the introduction of greater numbers of electric cars and hydrogen-powered vehicles. We are making moneys available so that we can have hybrid buses on our road network.
What does the prospect of tight financial circumstances do to the space that will exist for spending on other projects, including walking and cycling, and the maintenance of the trunk road network, as opposed to the building of new roads? What do you expect to happen to such spending areas over the coming period?
I will discuss one of the things that shows our interest in the subject. We have £76 million of consequentials from the UK budget that has just been passed—we will leave aside whether that might be contaminated by future change—of which £10 million will be spent on sustainable transport. That is a significant part of the consequentials and we will produce detail of that spend in relatively early course. We will take every opportunity that we can get hold of to improve sustainable transport, as we have done with the Barnett consequentials.
I apologise to Alison McInnes, as I missed her supplementary question earlier.
That is okay; it ties in quite well with the current question, although it will challenge the minister on something that he said in response to Mr Gordon. The minister said that he had invested more in cycling, but that was certainly not the evidence that we heard during our inquiry into active travel, which has just finished. Will the minister give us some hard evidence of that greater investment in cycling, or otherwise lend me his rose-tinted spectacles?
Recall that a substantial amount of expenditure is through local government. I can write to the committee on expenditure on cycling throughout Scotland.
I welcome the extra £10 million of Barnett consequentials for active travel. It shows the influence of the committee.
It is for sustainable travel, to be clear.
Okay. We will wait for the detail of the minister’s announcement. Is there any chance of spending the other £66 million on transport, too?
My persuasive powers are not always able to get every single penny devoted to transport. There are other important needs—for example, we have said that we will protect spending in the health service—so some of the consequentials have to go to other urgent priorities.
Two weeks ago, I think, we heard concerns that the Scottish Government may not be securing best value from FirstGroup or Network Rail in the provision of rail services. How content are you that, under the current arrangements, those organisations provide best value?
You ask two separate questions. I will deal with Network Rail first.
The national transport strategy is to be reviewed later this year. What impact might any future budget restraint have on the scope and contents of the strategy, accepting that you do not know the extent of the constraints?
The strategy, which was introduced by the previous Administration but which we adopted, has a 20-year life, so it is a long-term strategy. There was always a commitment to review it, which is right and proper. The fact that there is to be a review of the national transport strategy should not be seen as necessarily implying that there will be radical change to it. I do not know, because we have not done the review, but we are not motivated to do the review based on an idea that we need radical change.
The committee has heard that consideration may need to be given to the eligibility criteria for the national concessionary travel scheme for elderly and disabled people if the scheme is to continue to be affordable in future years. How do you respond to such suggestions?
We have just completed a review of the national concessionary travel scheme. We concluded that we do not wish fundamentally to change it. Indeed, next year we are changing the scheme to bring disabled and injured ex-servicemen into it.
To follow on from that, are you ruling out any change that would limit eligibility, for example by income, so that people on ministerial salaries would not be able to access the concessionary scheme?
We have carried out the review. We have made it clear that we will not change the eligibility for the scheme or the scope of the services that are delivered.
So you are also ruling out a cap on the number of journeys, which was suggested by a witness at a previous meeting.
That is correct.
Thank you for the clarity.
The minister may already have answered this question when he talked about the bus service operators grant. The committee has heard concerns that reductions in local authority transport budgets could result in the withdrawal of support for socially necessary bus services that are not commercially viable. What else is the Scottish Government doing to support bus companies to ensure that they provide services in different areas?
In essence, the bus service operators grant is the money that is provided to support the route network. We have increased it by 10 per cent, which is quite a significant uplift—in round figures, the increase is from £60 million to £66 million. We have given the bus companies—the CPT—what they asked for, which is greater long-term clarity because that helps them to plan. We said, “Here’s the figure for the next three years.”
What impact will future budget restraint have on the ferry services of Caledonian MacBrayne and NorthLink Orkney and Shetland Ferries? I am thinking in particular of the roll-out of the road equivalent tariff pilot scheme.
The road equivalent tariff is a great success of recent ferry policy and practice. Initially, RET was put in place as a pilot on ferry routes to the Western Isles where, over a 20-year period, we have seen a 19 per cent drop in population. Average weekly earnings on the Western Isles are some £50 or £60 below the Scottish average. If we were to apply the road equivalent tariff formula to Shetland, we would, of course, put up fares. It is worth saying that the NorthLink budget has increased from £37 million when we came into office to a figure that is now approaching £47 million. We have done quite a lot of different things.
Will any reductions in UK transport budgets have a negative impact on transport in Scotland? I am thinking of recent press reports of a reduction in the access for all small schemes fund, for example.
Access for all is a scheme from the Department for Transport, on which it receives administrative advice from Transport Scotland. In essence, we are given our share and we choose how to spend it. When we planned in late autumn for the current year, we thought that the scheme would have more than £700,000, but that has been halved. It is worth saying that, even at the previous rate of funding for Scotland, achieving appropriate level access at every railway station would probably have taken the best part of 100 years. It is particularly disappointing that such a small saving, which I do not imagine is significant in the wider context of the public spending challenges, yet which affects many of the most vulnerable in our society, is thought to be an appropriate cut to make at this or any other time. I hope that that will be reconsidered.
I thank the minister and his colleagues for taking time to answer questions. You undertook to provide written evidence that climate change mitigation and adaptation are being mainstreamed throughout Government departments in policy and in practice. This is our last evidence session for the budget strategy phase, so if you could provide that written information by the end of the week, that would be extremely helpful to us in preparing our report.
The information was about energy efficiency in particular.
The issue arose in the context of energy efficiency. It would help if the response covered that, but it could cover broader issues.
As you have set a rather challenging timescale, I ask for clarity. Although the context was energy efficiency, are you making the question more general?
The issue was really the integration and mainstreaming of climate change objectives in Government departments.
I will certainly ask for the information to be provided. I give the caveat that, if we had more time, the committee might receive something more substantial, but we will do our best to meet your timetable. I accept that your need is valid.
Whatever can be provided in a time that allows us to consider the information before we report to the Finance Committee would help. Thank you all very much. We have one further agenda item, which we have agreed to take in private.