Treasury Green Book

Baroness Bennett of Manor Castle Excerpts

Thursday 28th October 2021 Lords Chamber

Asked by

[Baroness Bennett of Manor Castle]

To ask Her Majesty’s Government what changes, if any, they plan to make to HM Treasury’s Green Book and related guidance to demonstrate global leadership as chair of COP 26.

[Baroness Bennett of Manor Castle (GP)]

My Lords, when I tabled this Question for Short Debate, I was of course aware that it would be on the day after the Budget and the first ping-pong on the Environment Bill, and on the House’s last Sitting before the commencement of the COP 26 climate talks.

I thought that meant that I would be able to bounce off the Budget announcements, which would take full account of the climate emergency and nature crisis, the former of which the Prime Minister has at least, somewhat grudgingly, acknowledged in his own words. I hoped—perhaps against hope—that we might have seen the Government accept the majority of the 14 carefully considered amendments to the Environment Bill that your Lordships’ House sent to the other place, particularly the crucial amendments on the power and independence of the office for environmental protection and on the acceptance of the need for interim targets, as provided for under the Climate Change Act. I also hoped that they would have accepted my own amendment on soils and the amendment driven by the noble Baroness, Lady Parminter, which would see the Treasury and the military included under the crucial five environmental principles at the heart of the Act. That would have seen us, as the chair of COP 26, beginning this crucial fortnight for the future of the planet, if not in the place where our nation should be, in at least a moderately prepared state.

Instead, we can feel a palpable sense of shock across the nation at the delivery, yesterday, of a Budget that can only be a reminder of the movie “Back to the Future”, for those old enough to remember it. For the Budget yesterday was one that, almost to the last word, could have been delivered in the year in which that film begins, 1985. The words “climate” and “nature” appear in it an easily measurably number of times: none. The word “growth” appears 14 times. The phrase,

“biggest business tax cut in modern British history”—[Official Report, Commons, 27/10/21; cols. 282-83.]

appears, in a manner wholly redolent of the sixth year of Margaret Thatcher’s prime ministership.

The only significant new measure that the Government might call “green”—a chunk of funding for new nuclear power—is also a return to 1985 and the movie where the dangerous vehicle that drives the plot is powered by plutonium. This is a reminder of how nuclear power seemed to be the future then, whereas it is clear now, to most of the world at least, that it is an outdated, astonishingly expensive and inflexible technology that is deeply unreliable in delivery.

However, it was of course in 1985 that the first major international conference on the greenhouse effect, in Villach, Austria, warned that greenhouse gases could, in the last half of the next century,

“cause a rise of global … temperature which is greater than any in man’s history”,

adding the risk of sea-level rises of up to one metre. Some 36 years ago, this was, we now know, an astonishingly accurate warning, yet it seems one that parts of this Government at least, most notably the Chancellor and the Treasury, have still not heard.

Yet we have a Government who also say that they accept the legal duty in the Environment Bill—indeed, they wrote it—that Ministers must have due regard to the environmental principles policy statement when making policy across government. Of course, the Treasury’s Green Book is an important guide to that policy-making. In a Written Answer to Green MP Caroline Lucas in the other place on 16 June, Rebecca Pow confirmed:

“These principles will … be embedded into existing government policy making guidance, including HM Treasury’s Green Book.”


Yet that policy statement still exists only in draft form, on which the Government completed a consultation on 2 June. Noble Lords can read on the government website that the results would be published within 12 weeks, which by my calculation is 26 August. It is now 28 October.

In a Written Answer to the noble Baroness, Lady Parminter, on Tuesday, the noble Lord, Lord Goldsmith of Richmond Park, said for the Government that the result of the consultation would be published “later in the year”. This does not compute, and I hope that the Minister will be able to provide a firmer timetable for the completion of this process, which would seem to be essential for the urgent process of making Her Majesty’s Treasury’s Green Book fit for the age of the climate emergency, which the Green Alliance, among other organisations, called for as a matter of urgency in its submission to that consultation.

The first of the five environmental principles listed in the Environment Bill is the integration principle. It is there on page 11 of the Bill, in its current form, which cites

“the principle that environmental protection should be integrated into the making of policies”.

Yet the Green Book and the Budget are built on an assumption of growth as a desirable and achievable outcome of investment. I go to Professor Jason Hickel of the Institute for Environmental Science and Technology at the Autonomous University of Barcelona, writing in Nature Energy earlier this year:

“Established climate mitigation scenarios assume continued economic growth in all countries, and reconcile this with the Paris targets by betting on speculative technological change. Post-growth approaches may make it easier to achieve rapid mitigation while improving social outcomes.”


Carbon capture and storage, new nuclear and nature- based off-setting—check, check, check—all sound like “speculative technological change”. This is not to mention it not being possible to square these with number 5 of the environmental principles: the precautionary principle.

The Green Book starts with the idea of a project and then counts its effects. If it were truly to meet the environmental principles, it should surely adopt the approach of the “mission-oriented government”, as advocated by Professor Mariana Mazzucato, founder of the Institute for Innovation and Public Purpose at UCL:

“instead of having an industrial strategy that is a list of sectors”

that government is

“going to give subsidies to … the question should be: What are the problems you’re facing (climate change …, for example). And then work backward to figure out how all sectors and actors in the economy … can help deliver solutions.”

That is what a 21st-century Budget and Green Book fit for the age of shocks in which we live, on a planet where humans have stretched right up to, and all too frequently exceeded, the limits and boundaries of what the earth can bear, would look like.

Indeed, in its own review of the Green Book in 2020, the Treasury acknowledged serious faults: a failure to ensure that the strategic relevance of projects was clear from the outset and too heavy a reliance on the benefit-to-cost ratio because of a lack of strategic direction in the appraisal process. It has since attempted to remedy these faults with what is generally accepted as limited success. There are also attempts, through the supplementary guidance, to integrate consideration of well-being in project proposals and guidance for enabling a “natural capital approach”, which the Treasury could of course be drawing on from its own Dasgupta review. But there is still no consideration of our inability to continue GDP growth, an alternative qualitative metric to the benefit-to-cost ratio or an assessment of the overall impact of Treasury spending, rather than a project-by-project approach.

But I do not just want to posit all of this in the abstract; I am a Green, so of course I am ready to set out solutions. One worked-through example of this approach, to which I have already referred in your Lordships’ House, is the New Zealand Living Standards Framework, which is underpinned by four measured forms of capital that, it directs, must be enhanced and protected: natural capital, human capital, social capital, and the combination of financial and physical capital.

If you look at the budget delivered in New Zealand this May, you can start to see what a truly green budget, and a Green Book approach, could look like. It is called a well-being budget, and that is not just spin in the title. It is clear that the strategic direction driving every part of it is improving human and natural well-being. It is not just looking at this year, or the problems of this moment; it has a focus on the well-being of future generations—an approach that the noble Lord, Lord Bird, has been so clear in promoting in your Lordship’s House, which the Welsh Government are already well on the way to promoting, and which the UK Government have yet to even consider.

Underlying this is an ability to think systemically, to truly operate within the framework of the sustainable development goals that the whole world—the UK included—has signed up to. But I am a realist, and it is clear that to suddenly update the Green Book to truly measure and advance, in a balanced and systematic way, natural, human, social, financial and physical capital, would be well beyond the capacity of Her Majesty’s Treasury. So, I am going to offer a simpler solution, one that would enable the Government to expand beyond their one 20th-century, outdated, misleading, measure of GDP, into at least two dimensions. It is something the Green Party has been proposing for many years—that each government spending decision, each project, should have a carbon budget attached, as well as a financial one. Many critics have pointed out the lack of such in the Government’s other recent big announcements—the net-zero review and the heat and buildings strategy. It is not that difficult; it is entirely appropriate licence for the chair of COP. Can the Minister tell me when the Treasury plans to provide at least that modest step towards systems thinking?