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MPs: "Treasury failing to take environmental costs into account"

The Treasury has come under fire from MPs for failing to adequately consider long-term sustainability risks into its decisions. In particular, ministers are saying that carbon capture and storage (CCS) and zero-carbon homes policies could be detrimental to both the economy and investor confidence.

Following a major investigation, the Environmental Audit Committee (EAC) has criticised the Treasury, saying that its approach puts short-term priorities ahead of long-term improvements. The EAC has also stated that there is a perceived lack of environmental leadership in the Treasury, which is failing to encourage departments to work together on environmental and sustainability issues.

EAC Chair Mary Creagh MP explained that the Treasury is highly influential and uniquely placed to ensure the entire government works to promote sustainability.

"But we have seen considerable evidence that it fails to do this. The Treasury tends not to take full account of the long-term environmental costs and benefits of decisions which would reduce costs for taxpayers and consumers in the long run," she added.

During a recent EAC hearing, the Treasury provided evidence and defended government decisions to scrap energy schemes like the zero-carbon homes initiative and the CCS competition.

Last year, the government was also criticised for scrapping Green Deal schemes, which were meant to help homeowners pay for efficiency measures such as solid wall insulation. Although the schemes were not as successful as expected, they have not been replaced with anything better.

At the hearing, the department's financial secretary insisted that previous decisions had been made in the interest of environmental and economic sustainability. However, the EAC disagrees, pointing to several long-established projects that have been changed or cancelled at short notice, with little or no consultation with relevant businesses or industries.

For example, the decision to cancel the CCS competition was described as "devastating" by businesses that were left "in shock" by the way the Treasury had handled the situation. Experts have estimated it could now cost an additional £30 billion for the country to meet its 2050 carbon targets.

Meanwhile, scrapping the zero-carbon homes policy cost construction industry time, as well as money - because work to implement the policy had been going on for more than a decade. The move left the housing industry in a state of uncertainty, and is said to have harmed the development of new markets for innovative energy-saving products. It's believed that it will ultimately lead to increased long-term housing costs due to a reduction in energy efficiency. It also did nothing to help tackle the problem of fuel poverty.

"On the CCS competition and zero-carbon homes we saw the Treasury riding roughshod over departments, cancelling long-established environmental programmes at short notice with no consultation, costing businesses and the taxpayer tens of millions of pounds. With a week to go until the next Autumn Statement, we hope our inquiry will be a wake-up call to the Treasury," Ms Creagh said.

Responding to the EAC report, John Alker, campaign and policy director at the UK Green Building Council said that the committee was "absolutely right" to criticise the "ill-conceived deregulation" from the Treasury.

"The scrapping of Zero Carbon Homes was an example of politically motivated policy-making. It showed not only an irresponsible disregard for the steps we need to take to tackle climate change, but also overlooked the years of investment and preparation made by thousands of companies across the construction supply chain. This volatility in the policy landscape is highly damaging to industry, jobs and investor confidence."