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Published online by Cambridge University Press: 02 January 2018
In November 1997 the Environmental Audit Committee of the House of Commons (EAC) was established. The Committee is modelled in some ways on the Public Accounts Committee of the House of Commons (PAC) but, unlike the PAC, the EAC is not supported by an independent auditor. This article argues that, despite the limitations of audit made in accountancy literature, audit can be a useful mechanism by which to hold government to account for the impact of its policies and operations on the environment. However, as a model of accountability, the current system of environmental audit is inadequate. In making this argument, the article draws on two existing audit models. First, because the government has chosen to model the EAC on the PAC, the mechanisms in place for securing financial and value for money accountability in UK central government will be considered. Second, the article looks to the arrangements in Canada, where a more developed system of environmental audit exists.
1. In Trust for Tomorrow: Report of the Labour Party Policy Commission on the Environment (1994). This document built on the principles set out in the Labour Party's statement, An Earthly Chance (1990).
2. Ibid, p 44.
3. The Committee was established by Standing Order 152 (A). For further information on the background of the Committee, see A Ross ‘Monitoring environmental performance in government: the role of the new Environmental Audit Committee of the House of Commons’ (1998) PL 190.
4. This membership is largely symbolic. See below n 39. 5. See above n 1, p 44.
6. See below n 22 and associated text.
7. Environmental auditors or commissioners have been established in other Westminster-style jurisdictions, for example in Australia, New Zealand and Ontario (for a brief discussion of the latter two see below n 99 and associated text). The purpose of this article is not to provide a comprehensive review of such systems, but to draw from one set of arrangements which in particular provide a useful comparator for the UK.
8. Cm 1200 (1990).
9. Cm 2426 (1994).
10. For example, the Green Ministers Committee; the establishment of advisory bodies (the Royal Commission on Environmental Pollution; the Advisory Committee on Business and the Environment; and a new Sustainable Development Commission is to be established in 2000 which will subsume the UK Round Table on Sustainable Development and the Government Panel on Sustainable Development); the use of Environmental Management Systems (see EC Regulation 1836/93 and IS0 14000) and Environmental Impact Assessments in government; the inclusion of environmental information in departmental annual reports; environmental appraisals of policies (see Department of the Environment Policy Appraisal and the Environment (1991, revised in 1998); a revised sustainable development strategy (Department of the Environment, Transport and the Regions A Better Quality of Life: A Strategy for Sustainable Development for the United Kingdom (Cm 4345) (May 1999); and consultation is taking place concerning revised sustainable development indicators and headline indicators to complement GDP (Department of the Environment, Transport and the Regions Sustainability Counts 1998 identifies 13 headline indicators. A full set of indicators will follow later, replacing Department of the Environment Indicators of Sustainable Development for the UK (March 1996)). See generally House of Commons Environmental Audit Committee Second Report, The Greening Government Initiative (1997-98) HC 517-1, para 53 and Greening Government, First Annual Report of the Green Ministers Committee, 1998/99 (July 1999).
11. Government of Wales Act 1998, s 121.
12. Regional Development Agencies Act 1998, s 4(1)(e). The government is also considering whether to incorporate sustainable development into the aims and objectives of all new public bodies when they are set up. See Greening Government, First Annual Report of the Green Ministers Committee, 1998/99 (July 1999), paras 6.9 and 6.10.
13. The unit has two main tasks - to lead the review of the UK sustainable development strategy and to oversee the greening of government. It has a cross-governmental remit and as such can be compared to the Social Exclusion Unit and the Women's Unit. It is interesting to note that of the three units, all of which have cross-governmental responsibilities, the sustainable development unit is the only one not within the Cabinet Office. In opposition, the Labour Party said that the unit would be within the Cabinet Office (In Trust for Tomorrow Report of the Labour Party Environment Policy Commission to the 1994 Party Conference). Arguably, placing the unit within the DETR reflects a perception that sustainable development is primarily the concern of the DETR, rather than government as a whole. However, it could be seen as more appropriate to place the unit within that department which has the most expertise in the area. The EAC stated in their second report of 1997-98 that they doubted whether location of the sustainable development unit in the Cabinet Office would be an improvement. They recommended secondments to the sustainable development unit from across government in order for the unit to act as a genuine pan-governmental resource. See above n 10, at paras 32-33.
14. The EAC's remit is limited to government departments and NDPBs. so it will not be responsible for monitoring the Scottish Parliament or the National Assembly for Wales. The Parliament and the Assembly will be responsible for those areas within their own competence. The Scotland Act 1998 does not include any provision for environmental monitoring. The Parliament could, if it chose, create an environmental audit committee by standing order, but has not done so: see the Scotland Act 1998, s 22 and Sch 3, para 6 and Minutes of Proceedings, vol 1, no 7, session 1, Tuesday 8 June 1999. There is no mention, either, of environmental monitoring in the Government of Wales Act 1998. Under s 54(1)(b), the National Assembly for Wales could establish an environmental audit committee, but it has not done so. Both the Parliament and the Assembly may decide that a different system of environmental monitoring would be more useful. See below n 99 and associated text.
15. EC Regulation 1836/93.
16. See further M Power The Audit Explosion (London: DEMOS, 1994) p 25; M Power The Audit Society: Rituals of Verification (Oxford: Oxford University Press, 1997) pp 84–86; and Ball and Bell on Environmental Law (London, Blackstone Press; 4th edn, 1997). For the use of this type of audit in central government, see Greening Government, First Annual Report of the Green Ministers Committee, 1998/99 (July 1999). ch 4.
17. These are: Session 1997-98: Pre-Budget Report, HC 547; The Greening Government Initiative, HC 517-1; The Pre-Budget Report: Government Response and Follow Up, HC 985; Climate Change: UK Emission Reduction Targets and Audit Arrangements, HC 899; Session 1998-99: Multilateral Agreement on Investment, Volumes I and II, HC 58-I, HC 58-II; Climate Change: Government Response and Follow up, HC 88; The Comprehensive Spending Review and Public Service Agreements, HC 92; The Pre-Budget Report 1998, HC 95; Genetically Modified Organisms and the Environment: Co-ordination of Government Policy, Volumes I and II, HC 384 I, HC 384 11; The Greening Government Initiative 1999, Volumes I, II and III, HC 426 I, HC 426 II, HC 426 III; Energy Efficiency, Volumes I and II, HC 159 I and HC 159 II; The Budget 1999: Environmental Implications, HC 326.
18. The ‘lead department’ is responsible for the drafting of the response. Which department that is varies according to the report - for example, for the pre-budget reports, the lead department was HM Treasury, for the Greening Government report it was the DETR.
19. In some of their reports the EAC have looked at individual departments but this is used to give an example of the bigger picture rather than to hold that department and the minister to account.
20. See again In Trust for Tomorrow and the comparisons made between the Public Accounts Committee and an Environmental Audit Committee, above n 1.
21. Defined as ‘the independent examination of, and expression of opinion on, the financial statements of an enterprise’ . Councils of the Institute of Chartered Accountants of England and Wales, the Institute of Chartered Accountants of Scotland, the Institute of Chartered Accountants of Ireland, and the Chartered Association of Certified Accountants Explanatory Foreword (1980).
22. Audit does not have a precise definition, so many systems of monitoring and checking, beyond those mentioned above, can be described as audit. See Power The Audit Society: Rituals of Verification, above n 16, ch 1.
23. Power The Audit Explosion, above n 16.
24. Ibid, pp 1–9.
25. For an example see below n 74 and associated text.
26. For example, assessing the effectiveness of a policy (as part of a value for money audit) can come close to questioning the policy itself, particularly if the objectives of the policy are not clearly defined.
27. See Power The Audit Explosion, above n 16, pp 8–9 and 41–46.
28. Note that since the Government of Wales Act 1998 and the Scotland Act 1998, the audit of expenditure by the National Assembly for Wales and the Scottish Parliament is governed by the Government of Wales Act 1998 and the Scotland Act 1998 respectively. The Government of Wales Act 1998 provides for an Auditor General for Wales (s 90) and an Audit Committee (s 60) to be established. These bodies will exist alongside the C&AG and PAC, who still have powers to audit the Assembly (see generally Pt IV of the Act). The Scotland Act 1998 provides that the Parliament shall establish an auditor (s 69).
29. See further J F McEldowney ‘The Control of Public Expenditure’ in J Jowell and D Oliver (eds) The Changing Constitution (Oxford Clarendon Press, 3rd edn, 1995); IJ Harden ‘Money and the Constitution: Financial Control, Reporting and Audit’ (1993) 13 LS 16.
30. See National Audit Act 1983, s 1(2).
31. See further, H Roseveare The Treasury (London: Penguin, 1969) and M Wright Treasury Control of the Civil Service 1854-1974 (Oxford: Oxford University Press, 1969).
32. Set out in HM Treasury Government Accounting: a guide on accounting and financial procedures for the use of government departments (2 vols, looseleaf) (London: HMSO, 1989 and seven amendments 1989-97).
33. Generally, the accounting officer must secure a high standard of financial management in the department, which includes ensuring that financial considerations are taken fully into account in decisions on policy proposals.
34. See further F White and K Hollingsworth Audit, Accountability and Government (Oxford: Oxford University Press, 1999).
35. Ibid, ch 5.
36. Ibid, ch 6.
37. Ibid, ch 1.
38. See above n 31 and associated text.
39. In practice the minister only attends the first meeting of the newly formed committee for a few minutes. The membership therefore seems to be a symbolic one.
40. The Treasury Officer of Accounts is responsible for promoting a high standard of propriety, regularity and effective accountability across government.
41. See White and Hollingsworth above, n 34, p 127.
42. Report of the Standing Committee on Environment and Sustainable Development The Commissioner of the Environment and Sustainable Development (1994) Appendix B ‘Terms of Reference for the Study’.
43. Hereafter referred to as ‘The Commissioner’ . The term ‘Commissioner’, rather than auditor, was preferred because the proposed officer would have a policy evaluation role as well as an audit function. See above n 42, pp 2–3.
44. The Committee was not unanimous, however, and there was a dissenting opinion given by Bloc Quebecois MPs, who agreed with the Auditor General that an environmental commissioner was unnecessary because the Auditor General could carry out those functions.
45. Section 15.1.
46. This approach represented a middle way between the options favoured by the majority of the Committee on the one hand, and the dissenting members and the Auditor General on the other.
47. For example, initially the Commissioner had responsibility for two teams within the office — the Environment Canada team and the Sustainable Development Strategy team. It became apparent that it would also be more appropriate for the Natural Resources Canada team to be responsible to the Commissioner, as most of their work was environmental in nature.
48. Hereafter the 1977 Act.
49. Section 21.1. The section further provides that this aim may be achieved, by, amongst other things: (a) the integration of the environment and the economy; (b) protecting the health of Canadians; (c) protecting ecosystems; (d) meeting international obligations; (e) promoting equity; (f) taking an integrated approach to planning and making decisions that take into account the environmental and natural resource costs of different economic options and the economic costs of different environmental and natural resource options; (g) preventing pollution; (h) respect for nature and the needs of future generations.
50. Section 15.1 (2).
51. Section 7 (2)(f) provides that the Auditor General should report on and bring to the attention of Parliament any cases where ‘… money has been expended without due regard to the environmental effects of those expenditures in the context of sustainable development’.
52. Section 23(2)(a). Category I departments are defined as: (a) any department named in Sch I to the Financial Administration Act; (b) any department in respect of which a direction has been made under sub-s 24(3); and (c) any department, as defined in the Financial Administration Act, set out in the Schedule.
53. See above n 51. This can be called environmental audit. These are vfm audits which focus on the fourth ‘E’ of the environment. Consequently, the Commissioner is responsible for the vfm audits of those departments which have the biggest impact on the environment, namely, Environment Canada and Natural Resources Canada.
54. Section 8(1). The Commissioner considers these ‘capacity building’ opportunities, to step outside an audit framework and work directly with departments, helping them strengthen their capacity to manage environmental and sustainable development issues. Examples include looking at Canada's international environmental commitments, managing for sustainable development and accounting for sustainable development. See Commissioner for the Environment and Sustainable Development Annual Report, Foreword and Main Points (1998) para 64 and chs 2,5 and 7.
55. Sections 22 and 23(2)(b). This is not an ombudsman role and the Commissioner is not responsible for investigating individual complaints. He receives petitions from individuals concerning an environmental matter in the context of sustainable development, which he registers and then passes on to the minister concerned. The minister then has a specified time limit within which to respond.
56. See further White and Hollingsworth, above n 34, ch 5.
57. The Commissioner's personal independence was questioned by some when he was appointed, as he had spent a large part of his career within government. Environmentalists were concerned that there was not enough distance between him and those he was auditing. However, the Commissioner has demonstrated a willingness to be critical of government where necessary and is regarded highly by both those subject to his audit and others such as the Committee for Environment and Sustainable Development.
58. Section 23(2) of the 1977 Act.
59. Of eight chapters, one related to the sustainable development strategies, three were concerned with substantive audits, and four were themed, ‘capacity building’ chapters. The 1997 report set out his work plan.
60. In the UK, although the C&AG attends every PAC hearing, it is unusual for him to actually be called upon to give evidence
61. Although the Auditor General is similarly restricted (she is only able to report three times a year), this does not provide justification for restricting the reporting powers of the Commissioner, though it may help to explain the limitation.
62. It should be noted, however, that the Canadian PAC does not have quite the same reputation as its UK equivalent.
63. See above n 36 and associated text.
64. This may also have the added advantage of increasing the esteem with which the committee is held within Parliament. At present, as a new committee, the EAC lacks the kudos associated with sitting on other committees such as the PAC or defence committee.
65. Joan Walley, Cynog Dafis and Norman Baker.
66. See above n 27 and associated text.
67. Departments can voluntarily produce their own sustainable development strategies. For example, the Department of Trade and Industry is developing a strategy which will set out how the department will promote sustainable development in pursuit of its own objectives. See Greening Government, First Annual Report of the Green Ministers Committee, 1998/99 (July 1999) para 2.17. In addition, under Resource Accounting and Budgeting, performance measures and targets will cover sustainable development where it is covered in the department's aims and objectives, or in underlying targets in public service agreements or output and performance analysis. However, it should be noted that the output and performance analysis and the statement of resources which is analysed by aims and objectives accompany the departmental resource account but are not part of it and so will not be audited by National Audit Office. See further Greening Government, First Annual Report of the Green Ministers Committee, para 2.30 and F white and K Hollingworth ‘Resource Accounting and Budgeting: the constitutional implications’ (1997) PL 437.
68. Cm 2068. The third annual report confirmed that by May 1994, all departments had prepared green housekeeping strategies (Cm 2549).
69. DETR A Better Quality of Life: A Strategy for Sustainable Development for the United Kingdom (Cm 4345) (May 1999).
70. The EAC recommends that the strategy should be auditable, a role which an environmental auditor could fulfil. See above n 10, para 65 and recommendation gg.
71. See the Committee's Greening Government Initiative 1999, above n 17, recommendation (h).
72. See above n 54, ch 1, para 1.3.
73. See below n 94 and associated text.
74. Published in 1995.
75. The First Annual Report of the Green Ministers Committee was published in September 1999. See http://www.environment.detr.gov.uk/greening/ar9899/index.htm. The Annual Report sets out where the government is in relation to sustainable development, particularly greening operations.
76. See above n 10, EAC's Second Report 1997-98, para 91.
77. See above n 17, Greening Government Initiative 1999.
78. See above n 10, para 34.
79. See Department of the Environment, Transport and the Regions The Government's Response to the Environmental Audit Committee Report on the Greening Government Initiative (1998) para 15.
80. See Power The Audit Society above n 16, pp 60–66.
81. The EAC recognise that a gap exists for periodic independent audit of government practice in appraising the implications of policies for sustainable development, and it called upon Green Ministers to sponsor such audits regularly, see above n 10 above, EAC Second Report 1997-98 at para 111. In its response to the report, the government stated that ‘it will be for individual departments to decide whether to seek independent audit of their own activities as set out in their annual reports or separate environmental reports’ . See above n 79, para 46.
82. See above n 51.
83. See above n 1.
84. For an example of an environmental-type vfm report, See National Audit Office It's a Small World: Local Government's Role as a Steward of the Environment (London, 1997).
85. See White and Hollingsworth, above n 34, pp 35–46.
86. Ibid, ch 4.
87. Power The Audit Explosion above n 16, p 25.
88. See above n 55 and associated text.
89. This is similar to a system used in Ontario. See below n 99 and associated text.
90. Note that any select committee can use NAO reports as a source of information. However, only the PAC uses them to directly hold departments to account on the basis of the reports.
91. Similar issues have been raised in relation to departmentally related select committees having a role as audience for NAO reports. See White and Hollingsworth, above n 34, pp 134–137.
92. For example, an NAO secondee works for the committee as committee specialist.
93. See Power The Audit Society, above n 16, p 78.
94. This is the case for both the Commissioner for the Environment and Sustainable Development's staff and the staff of the Ontario Commissioner for the Environment. The NAO recruit graduates from different disciplines but all are trained as professional accountants.
95. See above n 37 and associated text.
96. See standing order 152 (A).
97. National Audit Act 1983, s 6(2).
98. See J Morison ‘The Case Against Constitutional Reform?’ (1998) JLS 510.
99. See above n 14.