Treasury Minutes Government responses to the Committee of Public Accounts on the Forty-Fifth to the Fifty-First reports from Session 2019-21 - GOV.UK

 
Treasury Minutes
Government responses to the Committee of
Public Accounts on the Forty-Fifth to the Fifty-
First reports from Session 2019-21

CP 434                                   May 2021
Treasury Minutes
Government responses to the Committee of Public
Accounts on the Forty-Fifth to the Fifty-First reports
from Session 2019-21

Presented to Parliament
by the Exchequer Secretary to the Treasury
by Command of Her Majesty

May 2021

CP 434
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Government responses to the Committee of Public Accounts
Session 2019-21

    #    Report Title                                                   Page

    45   Managing Flood risk                                              2
         Department for Environment, Food and Rural Affairs

    46   Achieving Net Zero                                              10
         Department for Business, Energy and the Industrial Strategy

    47   COVID-19: Test, track and trace (part 1)                        14
         Department of Health and Social Care, Public Health England,

    48   Digital services at the Border                                  19
         Home Office

    49   COVID-19 housing people sleeping rough                          24
         Ministry of Housing, Communities and Local Government

    50   Defence Equipment Plan 2020–2030                                28
         Ministry of Defence

    51   Managing the expiry of PFI contracts                            32
         HM Treasury and the Infrastructure and Projects Authority

.

                                                      1
Forty-Fifth Report of Session 2019-21
The Department for Environment, Food & Rural Affairs
Managing flood risk

Introduction from the Committee

The Agency estimates that 5.2 million properties in England are at risk of flooding. There are different types
of flooding: river, coastal, surface water (when rainfall cannot drain away), sewer flooding and groundwater
flooding (where the water table level rises above ground). Flood risks are managed in a number of ways
ranging from early warning systems to building flood defences. The Department has the policy lead for
flooding. The Agency is an executive non-departmental public body, sponsored by the Department. It has a
strategic overview role and an operational role to manage the risk of flooding from main rivers, reservoirs,
estuaries and the sea. Other bodies are responsible for managing local flood risks. The Agency is on track
to achieve its target to better protect 300,000 homes through its £2.6 billion capital investment programme
(2015–16 to 2020–21)1. Government has increased future capital investment to £5.6 billion between 2021–
22 and 2026–27.

Based on a report by the National Audit Office, the Committee took evidence, on Thursday 14 January 2021
from the Department for Environment, Food and Rural Affairs (the Department) and the Environment Agency
(the Agency). The Committee published its report on 26 February 2021. This is the government’s response
to the Committee’s report.

Relevant reports

      •   NAO report: Managing flood risk – Session 2019-21 (HC 962)
      •   PAC report: Managing flood risk– Session 2019-21 (HC 931)

Government response to the Committee

  1: PAC conclusion: The Department is not doing enough to challenge the Agency’s performance
  and hold it to account.

  1: PAC recommendation: The Department should immediately strengthen its scrutiny of the
  Agency so that its new approach is in place for the new investment period starting in April 2021
  and should report to us by July 2021 on how the new scrutiny arrangements are operating.

1.1       The government agrees with the Committee’s recommendation.

Recommendation implemented

1.2     The Department for Environment, Food and Rural Affairs (the department or Defra) and the
Environment Agency (the Agency) already undertake robust assurance of the individual projects within the
capital programme, as set out in both the department’s and the Agency’s Integrated Assurance and
Approvals Strategies (IAAS). The rigour of these arrangements is evident in the recent successful
completion of the previous six-year capital programme, on time and on budget.

1.3     In line with the Committee’s recommendation, the department is implementing enhanced oversight
and assurance of programme delivery. This work will be overseen by a dedicated new Defra board with a
remit covering both the capital programme and asset maintenance. The board will undertake quarterly
monitoring and assurance of performance against a new suite of key performance indicators (KPIs) as well
as taking an independent view of programme risks, with the ability to commission external evidence as
required to support assurance.

1 The Environment Agency and partners have now completed more than 700 projects to better protect more than 300,000 homes
since 2015, exceeding the target. Press release

                                                             2
1.4      The KPIs will track the programme’s outcomes and benefits (including properties better protected
and relevant environmental and economic benefits and nature-based solutions) to ensure that the
department and the Agency can identify new or ongoing issues in delivering the capital programme and
allow for greater scrutiny and accountability.

1.5      The headline metrics will be detailed in the Investment Plan published in Spring 2021 and the
broader, full suite of KPIs (including financial metrics) will be included in the new investment programme.
An initial set of changes have been put in place for the start of the new programme and further work is
planned to build on this during 2021-2022, drawing on external expertise to inform Defra’s independent
approach.

 2: PAC conclusion: Scarce local authority resources and low levels of private sector investment
 are barriers to the effective management of flood risks, especially given the impact of Covid-19.

 2: PAC recommendation: The Department and the Agency should identify areas where there is
 likely to be a shortfall in local authority resources and private sector contributions to ensure the
 effective management of flood risk in local areas. They should report to us on their assessment
 by July 2021.

2.1     The government agrees with the Committee’s recommendation.

Target Implementation date: alongside Spending Review 2021

2.2      The Agency tracks partnership funding for the capital programme monthly to identify what
contributions need to be secured. The Agency also monitors those schemes that most reduce flood risk but
are at highest risk of not delivering to focus on viable schemes where shortfalls in funding are preventing
their progression. The government’s policy statement of June 2020 on flood and coastal erosion risk
management (FCERM) sets out a number of actions that will further strengthen incentives for generating
partnership funding.

2.3      Funding for flood risk management is part of the overall Local Government Settlement. Depending
on local decisions, the settlement for 2021-22 will see councils’ core spending power in England rise from
£49 billion in 2020-21 to up to £51.3 billion in 2021-22, a 4.6% increase in cash terms. The majority of local
government funding is un-ringfenced, recognising that local authorities are best placed to decide how to
meet the major service pressures in their local areas.

2.4       The government has committed to review local government funding for statutory flood and coastal
erosion risk management functions, and as part of Spending Review 2021 (SR21) is considering the
priorities for local government finance reform, including how funding is allocated to councils.

 3: PAC conclusion: In 2014 the NAO report on strategic flood management found there was a
 profusion of plans that often duplicate across geographical or administrative areas.

 3: PAC recommendation: Defra should write to the Committee within 6 months with an update
 on the opportunities to streamline local planning and with a timeline for implementation of any
 reforms.

3.1     The government agrees with the Committee’s recommendation.

Recommendation implemented

3.2      The department is exploring opportunities to streamline local flood risk planning and has committed
to transform the current approach to local flood and coastal erosion risk planning so that every area of
England will have a more strategic and comprehensive plan that drives long-term local action and investment
by 2026. The department will consult on these reforms in due course and intends to implement the updated
approach to local flood risk planning ahead of the start of future capital programmes to enable stronger links
between plan making and investment.

                                                      3
3.3      Ahead of these longer-term changes, and by example, the Agency is working closely with Lead
Local Flood Authorities to update existing Flood Risk Management Plans and aims to consult on updated
draft plans in Autumn 2021.

 4: PAC conclusion: Short-term funding cycles are impacting on the Agency’s ability to manage
 flood risks effectively.

 4a: PAC recommendation: The Department and the Agency should work with HM Treasury to
 reduce the adverse impacts of short-term funding cycles.

4.1     The government agrees with the Committee’s recommendation.

Target implementation date: ongoing ahead of Spending Review 2021

4.2     The government recognises that there can be benefits to setting budgets for key priorities on a multi-
year basis. This is why the government has taken a multi-year approach to flood and coastal defence
investment, now commencing its second six-year floods programme. Between 2015 and 2021, £2.6 billion
has been invested across six years and starting in April 2021 a record £5.2 billion will be invested in the next
six-year capital investment programme for flood defences. This investment will deliver around 2,000 flood
schemes and will better protect 336,000 properties from flooding.

4.3     Defra and the Agency recognise the need to ensure a smooth transition across programmes. That
is why they have worked jointly with HM Treasury to bring forward £100 million of capital development
funding into the final year of the 2015-21 programme.

4.4     Between 2015 and 2020, the government significantly increased funding for the maintenance of
flood defence assets and wider maintenance, for example river conveyance work. The government will
continue to review future budgets as part of SR21.

 4b: PAC recommendation: The Government should also undertake a cost benefit assessment of
 the level of funding needed to maintain flood defences and flood risk management assets both
 at and above current Environment Agency target condition.

4.5     The government agrees with the Committee’s recommendation.

Recommendation implemented

4.6.    In 2018, the Agency undertook a detailed review of its flood and coastal risk management
maintenance investment to better understand the optimum maintenance approaches and cost benefit of
maintenance work for assets owned by the Agency. The review found there is a strong economic case
backed by evidence, to maintain or increase investment in maintenance and that maintenance delivers an
average return on investment of over 11:1. This review is updated regularly and the next full review of
maintenance investment is scheduled to take place in 2023. Defra, the Environment Agency and HM
Treasury will continue to review the costs and benefits of maintenance investment to inform future spending
reviews.

4.7      The Agency operates, maintains and replaces national flood and coastal defences with a value of
£26 billion; 7,000km of river and coast defences, 20,000 structures such as pumping stations and tidal
barriers including the Thames Barrier. These assets reduce the risk of flooding to 1.8 million households
and provide to the nation an estimated reduction in annual average flood damages of £2.8 billion.

4.8     The Agency’s maintenance programme works to makes the most effective use of its resources. Its
assessment is that the optimum target for its highest risk assets is that 98% of them are at the ‘required
condition’. The ‘required condition’ of an asset is set so that remedial work can be planned and delivered
before the asset deteriorates to a state where flood risk is significantly increased. Where there is an
increased risk, the Agency will take mitigating action to manage that risk until a repair is completed and
inform third party owners of actions they may need to take.

                                                       4
4c: PAC recommendation: The Environment Agency should have a duty to maintain flood
 defence assets;

4.9     The government disagrees with the Committee’s recommendation.

4.10    The Agency regularly inspects over 175,000 flood risk management assets on main rivers. These
include assets maintained by the Agency, other risk management authorities (RMAs) and third parties.

4.11      The Agency currently operates under permissive powers for maintenance which enable it to make
informed choices on prioritisation, allocation of funding, and how and when to intervene to repair or restore
assets. The Agency also has an overview role of other RMA assets, such as those from local authorities or
internal drainage boards (IDBs).

4.12      Implementing a duty on the Agency to maintain assets, would require imposing a specific standard
of maintenance that would need to be upheld both by the Agency and other RMAs. This would result in the
Agency and other RMAs being liable for damages should this standard fail to be met. If the duty was imposed
on the Agency, then all flood defence maintenance costs for local authorities, IDBs, water PLCs, highways
and the rail network, as well as private and commercial asset owners would fall on the public purse. This
would cut across the decommissioning and transferring of low benefit/cost assets in line with the
maintenance protocol and implementing coastal retreat policies. It would also then prevent the Agency from
being able to maintain assets in a way that creates climate resilient places by removing the discretion in
prioritising and allocating finite funding to areas of greatest risk and taking account of climate change (2020
National Flood and Coastal Erosion Risk Management Strategy).

 4d: PAC recommendation: and the Government should commit to maintenance funding in
 revenue funding settlements for longer-term security.

4.13    The government agrees with the Committee’s recommendation.

Recommendation implemented

4.14    Following Spending Review 2020, the government is increasing the amount it invests in
maintenance for 2021-22. The department will continue to work with HM Treasury and the Agency to review
future maintenance budgets at Spending Review 2021.

4.15    The government recognises the importance of maintaining existing flood defence assets to ensure
they are delivering a required standard of protection in a changing climate. Between 2015 and 2020, the
government significantly increased funding for the maintenance of FCERM assets and wider maintenance
work compared to its spend in the previous five years. In addition, at Budget 2020, the government provided
additional funding of £120 million for 2020-21 to repair assets damaged in the autumn and winter floods of
2019-2020 where exceptional flooding affected 4,600 properties.

 5: PAC conclusion: The current indicators used to monitor national flood risk do not cover
 important elements such as risks to agricultural land, business premises, and infrastructure.

 5: PAC recommendation: The Department’s new set of national flood risk indicators should
 incorporate all types of flood risk to ensure they provide a full picture of what is happening to
 flood risk including for homes, non-residential property, agricultural land, and infrastructure
 across England and should facilitate the comparison of flood risk across previous years so
 progress can be clearly assessed.

5.1     The government agrees with the Committee’s recommendation.

Target implementation date: Spring 2022

5.2     The department and the Agency are developing a framework for understanding overall flood risk.
This framework uses an improved method for calculating the risk reduction achieved by the capital

                                                      5
investment programme alongside changes in risk due to other factors such as housing development, climate
change and the condition of flood defence assets. Flood risk will be measured using expected annual
damages (EAD) and changes to numbers of properties at different flood likelihood. During 2021, further work
will be done to improve these measures, more accurately identifying the contribution of different factors,
including the capital investment programme, to changes in overall risk. The Agency will also consider what
changes could be made to the current National Flood Risk Assessment (NaFRA) to improve the interim
position before a new NaFRA becomes available in 2024.

5.3      This work on understanding overall flood risk includes the development of a set of KPIs that will
better track progress of the 2021-2027 capital programme specifically. By Spring 2022, the department will
have in place the full suite of metrics (KPIs), agreed with the Agency, and a new oversight process that will
aid in monitoring flood risk. Methods of data collection, validations and reporting will be subject to ongoing
refinement once the metrics are in place.

5.4      In addition, the department has committed to develop an overall national set of indicators by Spring
2022 to monitor trends over time in tackling flood and coastal erosion in England. These will enable a better
understanding of the impacts of government’s policies and will inform future action. The department will set
out further details in due course.

  6: PAC conclusion: The Department has not ensured that all regions, deprived areas in
  particular, get a fair share of the available funding.

  6: PAC recommendation: The Department and the Agency should undertake and publish annual
  analysis of investment levels across regions and deprived areas. This should be followed up by
  appropriate action to reduce any funding inequality. Annual analysis and reporting should start
  at the end of the first year of the next investment period (March 2022).

6.1     The government agrees with the Committee’s recommendation.

Target implementation date: Spring 2022

6.2      The government invests wherever flood risk is highest across the country, and where it will benefit
the most people and property. This is reflected in the government’s Partnership Funding policy which
allocates funding as grant in aid (GiA) for flood and coastal defence projects. This provides a fair and
consistent basis for allocating GiA and securing wider contributions where others stand to benefit from a
defence scheme. Households in the 20% most deprived parts of the country continue to qualify for funding
at 2.25 times the rate than that available to non-deprived households. The government will monitor the
performance of the FCERM flood defence investment programme, including regional investment, to ensure
it continues to better protect and better prepare communities and properties across England.

6.3      Going forward, the department will be working with the Agency to report on properties better
protected in deprived areas and investment by Office for National Statistics (ONS) region through its KPIs
to track performance against our investment policy. These reports will be reviewed by a new governance
board which will be in place to review and track progress across the next investment period.

6.4      More widely, the department has committed to strengthen reporting of progress towards its goals
so that it is clearer and more accessible, and to consider how the existing arrangements can be improved,
by Spring 2022. The department will consider how the changes in monitoring of investment across regions
and deprived areas can be incorporated as part of this wider work.

6.5     Flood and coastal defence schemes can also have local economic benefits. The department is
exploring as part of the Call for Evidence on Partnership funding policy, how the department can further
support the resilience of lower performing local economies and small communities to flood and coastal
erosion risks.

  7: PAC conclusion: We are not convinced that the Department has yet done enough to address
  the difficulties those recently flooded have in getting affordable insurance.

                                                      6
7: PAC recommendation: The Department should write to us by April 2021 setting out the
 findings of its research into non-take up of insurance and how it is going to ensure remaining
 obstacles to obtaining affordable insurance are addressed. It should include what it is doing to
 overcome the obstacles to households implementing property-level flood resilience measures.

7.1     The government agrees with the Committee’s recommendation

Recommendation implemented

7.2      The department wrote to the Committee on 7 April 2021 in response to this recommendation.

7.3      The Independent Review of Flood Insurance in Doncaster, published on 5 November 2020, made
12 proposals that government is considering. One of the proposals suggests the department repeats the
2018 research into the affordability and availability of flood insurance for households and small and medium
sized enterprises. This research is due to commence in Spring 2021 and run until Autumn 2022. The
research, the department’s fourth since 2013, will identify trends in relation to the availability and affordability
of flood insurance and explore the number of policies with flood exclusions.

7.4      On 1 February 2021, government published a consultation on proposed changes to improve the
efficiency and effectiveness of the Flood Re scheme and to accelerate uptake of Property Flood Resilience
(PFR). The government also published a Call for Evidence (CfE) on 1 February 2021 seeking evidence on
key PFR enablers to inform policy development and action required to drive PFR uptake. The government
will be publishing its response to these in due course.

7.5     The government further supports the installation and development of an effective PFR market
through the £5.2 billion capital investment programme, the PFR recovery grant scheme, three regional
Property Flood Resilience Pathfinders and through the PFR Roundtable.

7.6    At the 2020 Budget, the government announced a new £200 million ‘place-based resilience
programme’ to run to 2027 which will help over 25 local areas to take forward wider innovative actions that
improve resilience to flooding and coastal erosion, including PFR.

 8: PAC conclusion: Despite the known risks, there are still plans to build houses on flood plains.

 8a: PAC recommendation: Planning policy guidance notes should be strengthened to avoid new
 builds in areas prone to flooding wherever possible, but in any case, the environment agency
 should be involved in measures to mitigate the risk.

8.1     The government disagrees with the Committee’s recommendation.

8.2     Government agrees that not building in flood prone areas is and should remain a key principle but
recognises that in some parts of the country there may not be any alternative space to develop and support
economic growth. The National Planning Policy Framework (NPPF) already provides a strong steer to avoid
development in high-risk areas, including strict tests to protect people and property from flooding. Where
these tests are not met, national policy and guidance is clear that new development should not be allowed.

8.3      Where development is considered necessary, it should be made safe for its lifetime without
increasing flood risk elsewhere, while also providing wider sustainability benefits to the community. The
recent consultation on changes to the NPPF clarifies some aspects of policy from the emergent findings of
our review of planning policy for flood risk. The Planning White Paper is committed to ensuring that the
reformed planning system will support our efforts on avoidance of flood risk. A response later this year will
set out decisions on the proposed way forward.

8.4      The Agency has an important role in the planning system and is a statutory consultee for the
preparation of local and neighbourhood plans. The Agency must be consulted on planning applications in
flood risk zones 2 and 3, and in areas with critical drainage problems. It can also provide standing advice on
flood risk assessments for certain developments. The vast majority of planning decisions are determined in

                                                         7
line with the Agency’s advice, over 95% in 2019-20, and over 97% of new homes proposed complied with
the Agency’s advice.

  8b: PAC recommendation: The Department should report to us by July 2021 on the outcome of
  its discussions to date with MHCLG on reforms to the planning system and how this will mitigate
  the risks of building on flood plains and other flood risk areas including those at risk from
  surface water flooding. This should consider approaches to ensure developers guarantee
  property can be insured and contributes to flood mitigation measures.

8.5     The government agrees with the Committee’s recommendation.

Recommendation implemented

8.6    In 2020, the government announced that it would review policy for building in areas at flood risk, to
assess whether current protections in the NPPF are enough and to consider options for reform. The
department is working closely with the Agency and the Ministry for Housing, Communities and Local
Government (MHCLG) to undertake this review.

8.7     In January 2021, informed by the emerging findings, the government published a consultation which
set out proposals to make changes to the NPPF, including to strengthen environmental protections and
some aspects of planning policy concerning flood risk. For example, the proposed changes clarify that plans
should manage any residual flood risk by using opportunities provided by new development and
improvements in green and other infrastructure to reduce the causes and impacts of flooding.

8.8     The government will consider what further measures may be required in the longer term to
strengthen planning policy and guidance for proposed development in areas at risk of flooding from all
sources when the review concludes and will set out further detail later this year.

  8c: PAC recommendation: The Department should work with MHCLG to:
         • ensure mandatory reporting on planning decisions approved in flood risk areas –
             particularly when the Agency disagrees.

8.9     The government agrees with the Committee’s recommendation.

Target implementation date: to be determined as part of the implementation of the planning reform
agenda. MHCLG will write to inform the Committee of the date as soon as it has been determined.

8.10    The Planning for the Future White Paper sets out government’s vision for greater digitalisation of
the planning systems. As set out in the White Paper, data sets that underpin the planning system, including
planning decisions, need to be standardised and made open and digitally accessible. The government has
proposed that a digital template for planning notices will be created so that planning application information
can be more effectively communicated and understood by local communities and used by new digital
services. Government will set out further detail on how this will be implemented in due course.

8.11    In advance of this, and to support the government’s commitment to consider ways to boost
transparency, data collection and reporting, the Agency is planning to publish more detailed information
where local planning authorities have granted planning permission against flood risk advice when the
Agency records the final planning decision by the local planning authority. This will increase transparency
and make it easier for the public to track which applications have been granted against advice and the
reasons for the Agency’s objection. The Agency will start to report on this by September 2021.

 8d: PAC recommendation: The Department should work with MHCLG to:
        • ensure mandatory installation of Sustainable Drainage Systems (SuDS) in new builds

8.12    The government disagrees with the Committee’s recommendation.

                                                      8
8.13    The government’s planning policy is clear that Sustainable Drainage Systems (SuDS) are to be
provided in all major, new developments, unless there is clear evidence that this would be inappropriate,
and that they should be given priority in new developments in flood risk areas.

8.14    In 2018, a government review on the application and effectiveness of planning policy for SuDS found
that 87% of the sample of approved planning applications explicitly stated that SuDS would feature.

8.15     The suitability of SuDS in a planning application is for the local planning authority to determine, with
advice from relevant stakeholders, for example, the lead local flood authority. There is also guidance in the
NPPF, including promoting the use of multi-functional SuDS, future maintenance and multiple benefits.

8.16    The government is also completing a research project on the Non-Statutory Technical Standards
for SuDS investigating whether there is a case for updating the standards to include standards on multi-
functional benefits.

 8e: PAC recommendation: The Department should work with MHCLG to:
        • consider changes to building regulations to include mandatory flood protection
            measures in new builds such as raised electrical sockets, fuse boxes and sealed
            floors.

8.17    The government agrees with the Committee’s recommendation.

Target implementation date: Autumn 2021

8.18    Building Regulations 2010 cover the construction and extension of buildings and are supported by
Approved Documents. These set out detailed practical guidance on compliance with the regulations for
developments. Although flood resilience is not currently a requirement of Building Regulations, Approved
Document C includes recommendations for developers on construction techniques for buildings in flood
prone areas and signposts them to a publication called ‘Improving the Flood Resilience of New Buildings’
which was published by Defra and MHCLG in 2007. In 2015, the scope of this publication was updated and
expanded to include retrofit and was formalised as British Standard 85500:2015. Approved Document M:
Access to and Use of Buildings; recommends in new dwellings that switches and socket-outlets for lighting
and other equipment should be set between 450mm and 1200mm from finished floor level.

8.19     The government has committed to review the current approach to flood resilient design to consider
how to ensure quality, safe housing for all, as part of the wider commitment to support the development of
high-quality buildings. On 1 February 2021, the government published a Call for Evidence. Part 2 of the
Call for Evidence sought evidence about the key PFR enablers to help inform policy development and the
action required to drive the uptake of PFR. It looked into a range of enablers, including building regulations.
The government will now be reviewing the responses and will provide a government response in due course.

                                                       9
Forty-Sixth Report of Session 2019-21
Department for Business, Energy & Industrial Strategy
Achieving Net Zero

Introduction from the Committee
In June 2019, government committed in law to achieving ‘net zero’ greenhouse gas emissions by 2050,
requiring the UK’s emissions in 2050 to be equal to or less than what is removed from the atmosphere by
either the natural environment or carbon capture technologies. This target aims to deliver on the
commitments it had made by signing the Paris Agreement in 2016. Net zero is an increase in ambition from
the government’s previous target, set in 2008, to reduce net emissions by 80% by 2050 compared with 1990
levels. Reducing emissions further to achieve net zero is a colossal challenge, requiring wide-ranging
changes to the UK economy and to the way we all live our lives. This includes further investment in
renewable electricity generation, as well as changing the way people travel, how land is used and how
buildings are heated. The all-encompassing nature of achieving net zero means that organisations across
central and local government, as well as the public, all have a role to play. The Department for Business,
Energy and Industrial Strategy (the Department) has overall responsibility for achieving net zero. It also has
lead responsibility for decarbonising many of the highest-emitting sectors of the economy, such as power
and industry. The Department must work with the Devolved Administrations and other departments, such
as the Ministry of Housing, Communities and Local Government, Department for Environment, Food & Rural
Affairs and the Department for Transport, which each hold responsibility for decarbonisation in their
respective policy areas. Progress has not been uniform and whilst emissions from power have declined by
62% between 2008–2018, surface transport emissions have declined by only 3% over the same time period.
HM Treasury has a key role to play given it allocates budgets to government departments and is central to
assessing the relative priority of policies across government.

Based on a report by the National Audit Office, the Committee took evidence, on Thursday 28 January 2021
from the Department for Business, Energy and Industrial Strategy (the Department) and HM Treasury. The
Committee published its report on 5 March 2021. This is the government’s response to the Committee’s
report.

Relevant reports
      •   NAO report: Achieving Net Zero– Session 2019-21 (HC 1035)
      •   PAC report: Achieving Net Zero– Session 2019-21 (HC 935)

Government responses to the Committee

  1: PAC conclusion: Government has not set out how it plans to achieve net zero despite having
  set the target in 2019.

 1: PAC recommendation: The Department should ensure that the key sector strategies, and the
 overarching net zero strategy, are published by September 2021. These strategies should
 include a clear timeline of key net zero milestones and decision points, to give Parliament and
 the public an overview of government’s net zero plans, what it plans to achieve and when.

1.1       The government agrees with the Committee’s recommendation.

Target implementation date: Autumn 2021

1.2     The government has made progress bringing forward key sector strategies such as the Industrial
decarbonisation strategy, with others to follow including on Transport and on Heat and Buildings. The
Department for Business, Energy and Industrial Strategy (BEIS or the department) has also committed to
publishing a comprehensive Net Zero Strategy ahead of this year’s (2021) COP26 summit which brings

                                                     10
together its plans for making the transition to a net zero economy. Work is underway on this strategy which
will build on the sectoral plans. The department will aim for the Net Zero Strategy to set out as
comprehensive plans as possible for the transition, acknowledging where uncertainty remains, or future
decisions will need to be taken.

 2: PAC conclusion: The Department is not yet reporting on the programmes across government
 that are crucial to the delivery of net zero in a way that enables Parliament or the public to
 scrutinise progress.

 2: PAC recommendation: The Department should develop a clear set of metrics that provide a
 system-wide view of progress towards net zero. These metrics, which should include reporting
 on progress of emissions levels compared to expectations within each sector, should be
 reported regularly from the end of 2021, in as close to real time as is feasible and produced in a
 user-friendly manner for the public.

2.1       The government agrees with the Committee’s recommendation.

Target implementation date: Winter 2021

2.2     The government already publishes the ‘Energy and Emissions Projections’ every year, which is a
world-leading approach to projecting the UK’s annual emissions, by sector, according to United Nations
Framework Convention on Climate Change guidelines. The department will continue to publish these
annually.

2.3      The government’s 10 Point Plan also sets out a range of ambition metrics by sector. The department
is planning a comprehensive Net Zero Strategy, covering all sectors, to set out the pathway to net zero by
2050 – and this will set out in more detail the metrics the department will track towards net zero. The
government will need to continue to review and refine sectoral plans and contributions to net zero as
technologies, as well as government policies, evolve.

 3: PAC conclusion: HM Treasury has not yet clarified how it will ensure net zero is given
 adequate weight in the assessment of government policies and projects.

  3: PAC recommendation: HM Treasury should, within two months, write to us outlining:

      •    how it will ensure its guidance, such as the Green Book, will lead to departments
           adequately considering and reporting the impact of policy decisions on net zero;
      •    how all fiscal stimulus packages and infrastructure proposals will be stress tested
           against net zero and what measures will be incorporated into the Green Book to ensure
           projects are only approved if they align with 2050 net-zero target; and
      •    how it will ensure the development of skills across Whitehall to assess the impact of
           decisions on net zero.

3.1       The government agrees with the Committee’s recommendation.

Target implementation date: May 2021

3.2      At Spending Review 2020, guidance required departments to include the greenhouse gas emissions
of bids, and their impact on meeting carbon budgets and net zero. Guidance also sought qualitative
commentary on the impact of delivery of the 25 Year Environment Plan. HM Treasury (HMT) is currently
reviewing the learning from this exercise and these issues will remain at the forefront of HMT’s priorities for
this year. Information on the 2021 Spending Review will be published in due course.

3.3     HMT uses spending reviews to set departments’ overall budgets. Departments then prioritise within
these to make sure they have the skills and capacity to deliver their objectives, including net zero. HMT has

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provided funding to reflect the challenges of delivering additional net zero programmes and assessing the
impact of policy decisions – for example, Spending Review 2020 set out that BEIS’s core resource budget
would grow by 3.3 per cent in real terms in 2021-22 relative to 2019-20.

  4: PAC conclusion: Government does not have a clear way of determining whether its actions
  to reduce emissions in the UK are transferring emissions to other countries.

 4: PAC recommendation: The Department should review how policies aimed at reducing UK-
 based emissions take into account the risk that emissions are passed to other countries and
 explore how to make the level of emissions generated in the manufacture of imported goods
 more transparent.

4.1     The government agrees with the Committee’s recommendation.

Target implementation date: Winter 2021

4.2     BEIS is jointly leading a cross-government work programme with HMT on the issue set out in this
recommendation (often referred to as ‘carbon leakage’). This includes developing an analytical framework
to consider the risk and potential impact of carbon leakage and assessing the range of mitigation measures
available.

4.3     The recently published Industrial Decarbonisation Strategy sets out government's current approach
to mitigating carbon leakage and includes a commitment to establish a targeted approach to mitigating
industry’s leakage risk throughout the journey to net zero as the UK’s emissions reduction policies become
more ambitious. HMT will be publishing more analysis on risks and possible mitigation options in the
upcoming Net Zero Review.

4.4      The department will also be reviewing ‘free allocation’ policy as part of a wider review into the UK
Emissions Trading Scheme (UK ETS) now that it has been set up. This review will focus on how free
allocations can be distributed more fairly or better targeted in line with a reduction to the overall cap. The
department currently has a call for evidence open that is part of this review.

4.5     Regarding transparency, the Department for Environment, Food and Rural Affairs (Defra) publishes
estimates of the emissions associated with final demand in the UK irrespective of where these arise globally
(UK-Carbon-footprint). BEIS will continue to engage with Defra and researchers who provide these statistics
to explore opportunities to provide more transparency.

4.6     The Industrial Decarbonisation Strategy commits to developing proposals to improve embodied
emissions data transparency and for new product standards to support the development of the market for
low carbon industrial products. A call for evidence will be launched on low carbon industrial products in 2021-
22.

  5: PAC conclusion: Government has not adequately communicated to the general public the
  changes that individuals will need to make in the transition to net zero emissions.

  5: PAC recommendation: The Department should, in the next 12 months, develop a public
  engagement strategy that sets out how communications will be coordinated.

5.1     The government agrees with the Committee’s recommendation.

Target implementation date: Autumn 2021

5.2       Reaching net zero will not only require changes to our energy systems with new technologies and
infrastructure, but also shifts in how we as individuals travel, what we buy and how we use energy. It will be
vital to engage the public on the challenge of, and their role in, and views on meeting our net zero target by
2050.

                                                     12
5.3      In November 2020, the department launched its ‘Together for our Planet’ campaign, marking the
one year to COP26 milestone. This campaign aims to raise awareness and understanding of COP26 and
the work the UK is doing to combat climate change, while creating opportunities for people across the UK
to participate in taking action on climate change the run-up to COP26.

5.4      Looking ahead, the government as a whole is increasing public engagement on climate action and
our plans for net zero will take account of the importance of public engagement. The department agrees
with the recommendation that government should set out more detail on its approach to public engagement
on net zero, including how it plans to co-ordinate communications. It is planned to do so as part of the
forthcoming Net Zero Strategy.

 6: PAC conclusion: The Department has not sufficiently engaged with local authorities on their
 role in the achievement of net zero across the UK.

 6: PAC recommendation: Government should respond with a coherent National Fiscal and
 Policy Framework. This should set out Government’s national responsibilities. Local Authorities
 local and regional responsibilities and be clear how government proposes to work with local
 authorities to secure the funding, skills, resources and outcomes required to deliver Net Zero.

6.1     The government agrees with the Committee’s recommendation.

Target implementation date: Autumn 2021

6.2     The department agrees that there should be a clearer statement of the respective responsibilities at
national, regional and local level, and of how it proposes to work with local authorities.

6.3     The department already works closely with local government and the role of local government is
being taken into account in sector strategies and individual programmes, including, in some cases, with local
government taking a direct role in delivery of national programmes. The department will build on this ongoing
work to provide a more comprehensive statement in the Net Zero Strategy.

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Forty-Seventh Report of Session 2019-21
Department of Health and Social Care
COVID-19: Test, track and trace (Part 1)

Introduction from the Committee

Test and trace programmes are a core public health response in epidemics. The basic principles of test and
trace are identifying infected individuals, or groups of individuals, through testing, and tracing their contacts
as early as possible. Potentially infectious contacts are then encouraged or obliged to reduce interactions
with other people (to self-isolate), thereby reducing the spread of disease. On 28 May 2020, the government
launched the new NHS Test and Trace Service (NHST&T), to lead the national test and trace programme,
working in conjunction with Public Health England (PHE) and English local authorities. The ‘isolate’ part of
the COVID-19 strategy is not part of the scope of the Test and Trace programme, but is key to successfully
controlling the disease.

NHST&T is part of the Department of Health & Social Care (the Department), which has overall responsibility
for testing and tracing. Throughout the pandemic, the Secretary of State for Health has had ministerial
accountability for the test and trace programme. Up to December 2020, NHST&T had an unusual
accountability relationship with the Department: it was subject to the Department’s financial, information and
staffing controls, but its head, the executive chair, reported directly to the Prime Minister and the Cabinet
Secretary. The Department told us this relationship changed on 3 December 2020, with the executive chair
now reporting to the Secretary of State for Health. PHE is England’s expert public health agency, with
responsibilities for public health advice, analysis and support, and for responding to public health
emergencies. Local authorities employ directors of public health who have a statutory duty to control local
COVID-19 outbreaks.

Based on a report by the National Audit Office, the Committee took evidence, on Monday 18 January 2021
from the Department of Health & Social Care.The Committee published its report on 10 March 2021. This is
the Government’s response to the Committee’s report.

Relevant reports

      •   NAO report: The government’s approach to test and trace in England – interim report – Session
          2019-21 (HC 1070)
      •   PAC report: COVID-19: Test, track and trace (part 1) – Session 2019-21 (HC 932)

Government response to the Committee

  1: PAC conclusion: NHST&T publishes a lot of performance data but these do not demonstrate
  how effective test and trace is at reducing transmission of COVID-19.

 1: PAC recommendation: NHST&T should improve the data it publishes so people get a better
 sense of its effectiveness. In future, its weekly statistics should include the total time taken to
 reach contacts after an initial person develops symptoms (the “cough to contact” metric), how
 many actual days NHST&T asks people to self-isolate for, as well as the latest indicators of
 people’s compliance with self-isolation. NHST&T should also publish periodic evaluations of its
 impact on infection levels.

1.1       The government agrees with the Committee’s recommendation.

Target implementation date: June 2021

1.2     NHS Test and Trace (NHST&T) is committed to transparency and to publishing data that is properly
validated, meets the highest standards, and provides a meaningful gauge of its effectiveness. NHST&T
publishes data across a wide range of business areas.

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1.3      The total time taken to reach contacts after the ‘index case’ (the person who has tested positive)
first reports symptoms and orders a test is a critical indicator. The government has begun publishing this in
the weekly statistics for NHST&T (link below). The number of days for which people are asked to self-isolate
depends on the time taken for the index case to report symptoms and book a test, the turnaround time for
testing, and the time taken to identify and reach contacts. By June 2021, the Department of Health and
Social Care (the department) will explore the quality of the data on this with a view to regular publication if
acceptable. The Office for National Statistics (ONS) has been commissioned to gather information on
compliance with self-isolation, but on a monthly basis, rather than weekly, because levels of compliance are
unlikely to be volatile enough to need weekly tracking. ONS has begun publishing compliance data for those
who have tested positive, and those who have been in contact with a positive case.

1.4   The time taken to reach contacts after the index case reporting symptoms is in the “data tables”
document which can be accessed here (selecting the relevant week).

1.5      The department continues to evaluate the impact of the NHST&T service on infection levels. In
February it published the Rὺm Model Technical Annex which estimated the effect of testing, tracing and self-
isolation on the R number. The department is developing plans to publish estimates periodically in future, in
line with the Committee’s recommendation.

1.6      Alongside this, the department is conducting a review of the impact of asymptomatic testing,
including the public health and economic benefits, looking both at progress thus far and forecasts in the
coming months as prevalence reduces. The department’s aim is to understand how it can deploy and
organise testing in ways that find the greatest number of cases and has the biggest impact on breaking the
chains of transmission. This review will include understanding of the behavioural responses to asymptomatic
testing and how to address any real or perceived barriers to testing.

 2: PAC conclusion: NHST&T still struggles to consistently match supply and demand for its test
 and trace services, resulting in either sub-standard performance or surplus capacity.

 2: PAC recommendation: For all aspects of its testing and tracing operations, NHST&T should
 identify opportunities to make better use of the capacity it has paid to create. Where it retains
 surplus capacity, this should be for a clear and explicit purpose. It needs to strike a better
 balance between meeting surges in demand, maintaining timely services, having eligibility
 criteria that allow it to identify as many people with the virus as possible, and not paying
 unnecessarily for surplus capacity.

2.1     The government agrees with the Committee’s recommendation.

Recommendation implemented

2.2      Over the past year, the UK government has built the largest network of diagnostic testing facilities
in British history. NHST&T now has the capacity to carry out more than 600,000 PCR tests per day,
compared to 2,000 in April 2020 (statistics are updated daily on the government’s data dashboard).

2.3      The COVID-19 pandemic presents a uniquely unpredictable challenge. NHST&T needs to have
sufficient surge capacity to be able to respond swiftly and accurately to increases in demand. But striking a
better balance between retaining this essential resilience and demands on public funding is a priority for the
service.

2.4       Testing sites are now being used to support both symptomatic and asymptomatic testing, improving
utilisation while allowing focus to change quickly (in day) when needed. The service’s laboratory structure
has been revised to consolidate processing capacity, automation has increased, and NHST&T has built
more flexibility into commercial contracts with laboratories, improving value for money while still allowing
capacity for surge. Through these measures the aim is to run at 80% capacity – the highest possible without
threatening turnaround times - while being able to respond to surges. For contact tracing, NHST&T has
improved forecasting capability and operational response times to judge better what contact tracing resource
is needed, and negotiated flexible contracts with commercial providers to allow numbers to be scaled up
and down while retaining a pool of surge capacity to support local public health colleagues with sudden
outbreaks.

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2.5     NHST&T continues to explore ways to use assets more efficiently and is working with the National
Audit Office (NAO) on a future report which will provide more detail on plans for the service.

 3: PAC conclusion: Although it had to act quickly to scale up the service, NHST&T is still overly
 reliant on expensive contractors and temporary staff.

 3: PAC recommendation: NHST&T should put in place a clear workforce plan and recruitment
 strategy which aim to reduce significantly, month by month, its reliance on costly consultants
 and temporary staff. NHST&T would benefit from learning lessons on how other NHS bodies
 manage the need for additional personnel, for example, through staff banks and should explore
 incorporating these into its approach.

3.1     The government agrees with the Committee’s recommendation.

Recommendation implemented

3.2     Consultants offer quick access to expertise that may otherwise be difficult to recruit – either quickly
or indeed at all. They will always have a place but need to be used selectively. NHST&T has therefore
established a consultancy ramp-down plan, based on current demand assumptions, which aims to reduce
the number of consultants by over 40% between March 2021 and December 2021.

3.3     NHST&T continues to reduce consultancy headcount through the following mechanisms:

        •   capability mapping and staff development;
        •   increasing recruitment – NHST&T has launched a careers microsite and as of March 2021 had
            over 154 campaigns live;
        •   replacing consultancy resources with cheaper contract resources while long-term recruitment
            continues;
        •   a Commercial Challenge Board to provide increased scrutiny when consultancy resource is
            requested and ensure there is clear evidence that there is no alternative and that rates are
            appropriate to the work being delivered;
        •   regular challenge sessions with each business area; and
        •   including short term termination clauses in contracts to ensure maximum flexibility and to
            support the roll-off of consultants.

3.4    NHST&T is currently working across government and with Public Health England (PHE) to
understand the most effective ways to attract and secure clinical capability. It is also reaching out to NHS
networks to understand better and learn from their supply routes and where NHST&T can improve.

 4: PAC conclusion: The introduction of rapid-results testing was supposed to be a
 ‘gamechanger’ but confusion persists over why and how it should be used in different
 community settings.

 4: PAC recommendation: The Department and NHST&T should set out clearly how and why
 mass rapid testing should be used in each of the settings where roll-out is planned, alongside
 clear targets and updates on progress in the various sectors. Any plans should take account of
 the approved purpose and accuracy of rapid tests, and how to manage the risks associated with
 false assurances the tests may provide. If LFD testing is not suitable in some circumstances,
 NHST&T should urgently bring forward other plans for identifying more asymptomatic carriers
 of COVID-19.

4.1     The government agrees with the Committee’s recommendation.

Target implementation date: June 2021

4.2     Regular rapid tests are a vital tool in helping to identify cases of coronavirus that would otherwise
not be found. Around one in three cases show no symptoms, and testing with rapid lateral flow devices

                                                     16
(LFDs) helps find these cases and prevent the spread of infection. Regular rapid testing was initially focused
on asymptomatic NHS and care home staff to support the resilience of health and care services and protect
vulnerable people. It was then extended on a targeted basis to settings such as schools, universities and
workplaces, and from April 2021 targeted eligibility has been replaced with a universal testing offer available
to all. This includes a new pharmacy collect option alongside expanded home delivery.

4.3     Alongside the department’s universal testing offer, it is in the process of reviewing its plan on
asymptomatic testing and intend to publish this information, with updates on progress in each setting, and
with agreed targets focused on impact and outcomes.

4.4       All plans take account of the performance of available tests. Extensive and ongoing clinical
evaluation, and MHRA approval, support the use of lateral flow devices and PCR (polymerase chain
reaction) tests for asymptomatic people. With some limited exceptions, we have not identified circumstances
where LFD testing is not suitable, but its use complements existing regular PCR testing which has higher
sensitivity but longer processing times. There are some circumstances where individuals may have physical
difficulty in taking LFD and PCR tests and we are rapidly exploring alternative solutions for these groups.
LFD testing forms part of a wider strategy to identify asymptomatic carriers, which includes contact tracing
(including ‘backward’ contact tracing) and wastewater analysis.

 5: PAC conclusion: NHST&T claims to be a learning organisation, but since last May many
 important stakeholders have at times felt ignored by it.

 5: PAC recommendation: NHST&T should review how it engages with and draws expertise from
 the wider public health establishment and other sectors that are especially dependent on its
 work. This should include, but is not limited to, local government, the schools sector and the
 hospitality industry.

5.1     The government agrees with the Committee’s recommendation.

Recommendation implemented

5.2      The department agree with the committee that NHST&T cannot support citizens and businesses
unaided. It is only by working across local and national partners in government, and in critical sectors, that
we will break the chains of transmission.

5.3      Since the NAO’s report in December 2020 on the Government’s approach to test and trace in
England was produced, NHST&T has significantly extended engagement with partners, especially local
authorities. Local communities are at the heart of breaking the chains of transmission. It is vital to have a
continued strong local, regional and national partnership to support people to understand and comply with
the guidance and regulations designed to protect their health. The department has worked with local and
regional partners to update the Contain Framework which sets out the roles and responsibilities of each
partner, the requirements of local authorities and the support they can expect from regional and national
teams. Regional teams are now meeting with local authorities daily on risks/issues, support needs and good
practice. The Community Testing Programme supports local authorities in making testing accessible to
people in local communities, particularly in disproportionately affected groups.

5.4       NHST&T is engaging with all sectors that need testing to reopen, but this relationship is mediated
through the relevant government departments which have more knowledge and expertise in the needs of
these sectors. For example, the Department for Education leads on schools and the Department for
Business, Energy and Industrial Strategy and Department for Digital, Culture, Media and Sport are leading
on hospitality, supported by NHST&T. It ensures that all interested departments are engaged in any testing
initiatives.

 6: PAC conclusion: As we hope for longer-term and sustained reductions in infection levels, the
 Department needs to think about the future shape of national test and trace services, and how
 it will secure lasting benefits from its spending.

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