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Treasury halts resource review

by Susanne Baker, Senior Climate & Environment Policy Adviser 4. March 2013 12:12

It emerged today that a planned major review assessing issues around resource security and climate change failed to engage the Treasury – despite strong cross governmental support from BIS, DECC, Defra, the Foreign Office and Dfid.

Indeed, Treasury officials appear to have quashed the project citing a lack of resources and said any review presenting long-term, global analysis and UK policy and strategy growth would be too “speculative” for an independent review to get into.

Putting Treasury’s staffing issues aside, is Treasury right to consider any assessment to be too speculative in nature to be worth doing? Well for one, it would be just a review. Presumably if an independent expert was to conduct it isn’t it for them to determine whether that link is too speculative or not? Personally, I’m struggling to understand why we would not want a solid evidence base on which to base decisions – even if that decision ultimately is a “do nothing for now” recommendation.

The story has emerged following a Freedom of Information request made by Friends of the Earth which was reported today in the Financial Times.  We can be pretty certain about what was going to be explored as a draft terms of reference was included in the disclosed emails. It would have assessed:

·         The extent to which expected social, economic and demographic trends could result in changes to the global availability of resources, with specific consideration given to the implications of the economic convergence of emerging economies and the potential advances in the supply of resources.

·         To identify and present the macroeconomic consequences for the UK that could result from the risks identified above including the UK's potential for sustainable growth, its terms of trade, exposure to commodity price shocks and the security of resource supply

·         To investigate the global scope for improved resource efficiency and the linkages between increased resource efficiency and progress towards a low carbon economy acknowledging complementaries and trade-offs between the two outcomes

·         To identify the constraints that changes in resource availability may have on sectoral growth and also the opportunities for growth arising from resource efficiency and low carbon innovation (inc. which sectors have a competitive advantage, the barriers restricting take-up of growth opportunities and preventing sectors from overcoming constraints resulting from resource accessibility, the role of government in overcoming these barriers and the practical solutions for removing constraints and exploiting opportunities cost-effectively.

A chain of emails reveal that DECC’s chief economist had been gathering cross-governmental support. Successfully too. The disclosure shows that the proposal generated interest and good discussions. It also reveals that William Hague has a personal interest in the subject. DECC’s Economic Advisory Group, which includes academics Nick Stern, Dieter Helm and Cameron Hepburn as well as McKinsey's Jeremy Oppenhiem and Julian Allwood were also consulted . The topics and analysis “resonated well and provoked good discussion” – signalling wider support for the Review.

And there would be business support for a review. Far from the impacts being potentially speculative, we believe we are starting to see impacts already. As society explores more sustainable ways to produce energy, driven in part because of our climate change strategies, demand for biomass-based materials is already beginning to increase and is forecast to rocket. This diversion of material to energy production has implications for those industries currently using it in products, be it packaging, paper, chipboard or furniture. This is just one example of some of the trade-offs that are starting to emerge.

There is another important argument for doing this work. Our survey data is now consistently showing that access to materials features highly as a potential risk to growth (2013, 2012). This trend is mirrored in other surveys – the Global Agenda Survey, run by the World Economic Forum Network of Global Agenda Councils in preparation to this year’s Davos summit, asks businesses about the most important global trends likely to impact on the world’s economy, society and environment in the next 12-18 months. Business respondents ranked resource scarcity fourth, up from seventh in 2011. Interestingly it topped its “controversially” index – the issues that were most underestimated and most overestimated. It scored highly for both lists.

To me this underlines why a proper independent review is so desperately needed.

Furthermore, a major review would signal to businesses that their future success matters to the UK and that the government is committed to supporting a healthy, vibrant manufacturing base in the long-term.

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